SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 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): July 1, 2009
NEOSTEM,
INC.
(Exact
Name of Registrant as Specified in Charter)
|
Delaware
(State
or Other Jurisdiction of Incorporation)
|
0-10909
(Commission
File
Number)
|
22-2343568
(IRS
Employer Identification
No.)
|
420 Lexington Avenue, Suite
450, New York, New York 10170
(Address
of Principal Executive Offices)(Zip Code)
(212)
584-4180
Registrant's
Telephone Number
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):
o
Written communications pursuant to Rule 425 under
the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item
1.01.
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Entry
into a Material Definitive
Agreement.
|
As of
July 1, 2009, NeoStem, Inc. (“NeoStem” or the “Company”) entered into an
Amendment No. 1 to Agreement and Plan of Merger with China Biopharmaceuticals
Holdings, Inc. (“CBH”), China Biopharmaceuticals Corp., CBH’s wholly-owned
subsidiary (“CBC”) and CBH Acquisition LLC, NeoStem’s wholly-owned
subsidiary. Pursuant to the terms of the Amendment:
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·
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The
number of shares of NeoStem Common Stock to be issued to the CBH Common
Stockholders was reduced to an aggregate of 7,150,000 shares (such that
the Exchange Ratio in the merger will be 0.19255), with no additional
shares being escrowed;
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|
·
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The
number of shares to be issued to RimAsia Capital Partners, L.P.
("RimAsia") will be increased to 6,458,009 shares of Common Stock and
8,177,512 shares of NeoStem Series C Convertible Preferred Stock, each
with a liquidation preference of $1.125 and convertible to shares of
NeoStem Common Stock at an initial conversion price of $.90 (with the
Class B warrants to be issued to RimAsia eliminated), in
exchange for certain advances made or to be made by RimAsia and described
below;
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|
·
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125,000
shares of NeoStem Common Stock will be issued to EET (the 49% holder of
Erye, 51% of which is owned by CBH) or its designee for
assistance in effectuating the
merger;
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|
·
|
The
number of shares to be issued to Steven E. Globus and Chris Mao,
respectively a director and CEO of CBH, in exchange for satisfaction of
loans made by them to CBH, shall be reduced to an aggregate of
approximately 17,158 shares;
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|
·
|
Conditions
to closing were amended to (a) add a condition that in order to satisfy
its obligations under a memorandum of understanding with EET, CBH shall
have caused Erye to transfer the land and building for its principal
manufacturing facility to EET or its affiliate for a sum to be agreed
upon, and for EET or its affiliate to lease that facility back to Erye at
a nominal fee for a term through construction of Erye's new manufacturing
facility and until such date as Erye’s new facility is completed and fully
operational (which transaction will remove a significant asset from the
CBH balance sheet) and (b) provide that instead of a spinoff of the CBC
shares as a liquidating distribution to the shareholders of CBH, such
shares may be privately sold or transferred to a liquidating
trust;
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|
·
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Eric
Wei will be added to the current NeoStem Board of Directors after the
merger is effected, and thereafter, Shi Mingsheng will also be added after
receipt of PRC approvals;
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|
·
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Privately
issued NeoStem warrants outstanding immediately prior to the closing of
the merger shall be amended to reduce their exercise price if the current
exercise price is $4.00 and above;
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|
·
|
the
Compensation Committee of NeoStem’s Board of Directors may in lieu of
lowering the exercise price of outstanding options to $.80 as provided in
the original merger agreement, lower the exercise price to a price which
is greater than $.80 (but not less than fair market value) and provide
alternative cash or equity consideration to eligible NeoStem employees,
directors, advisors and
consultants;
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|
·
|
The
outside date for completion of the merger is extended to October 31,
2009.
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The full
text of Amendment No. 1 to the Merger Agreement is annexed hereto as Exhibit
10.1, and the above description is qualified in its entirety by reference to
such Amendment.
Additionally,
as of July 1, 2009, NeoStem, CBH, CBC and RimAsia, which is already a
significant investor in the Company and CBH, entered into a Funding Agreement
pursuant to which it was agreed that RimAsia shall supply additional funding to
both NeoStem and CBH in an amount up to $1.6 million (including approximately $1
million advanced to date), which amount shall be forgiven upon its receipt of
the increased amount of NeoStem securities described above to be received by
RimAsia as part of the merger consideration. If less than $1.6
million has been advanced at that time, the difference shall be paid to NeoStem
at the closing of the merger. In the event the merger has not
received shareholder approval by October 31, 2009, NeoStem is required to repay
RimAsia all payments incurred or made by RimAsia on behalf of
NeoStem. The full text of the Funding Agreement is annexed hereto as
Exhibit 10.2, and the above description is qualified in its entirety by
reference to such agreement.
Additional Information about
the Merger and Where to Find It
NeoStem
intends to file a Proxy Statement/Registration Statement with the SEC with
respect to the shares of NeoStem Common Stock to be issued in connection with
the Merger. Investors and security holders are advised to read the
Proxy Statement/Registration Statement when it becomes available because it
contains important information about NeoStem, CBH, the proposed Merger and other
related matters. The Proxy Statement/Registration Statement will be sent to
stockholders of NeoStem seeking their approval of the proposed
transaction. Investors and security holders will be able to obtain
the documents free of charge at the SEC’s web site,
http://www.sec.gov. Since such documents are not currently available,
NeoStem's stockholders will receive information at an appropriate time as to how
to obtain transaction-related documents free of charge from
NeoStem.
Safe Harbor for
Forward-Looking Statements
This
Current Report on Form 8-K contains “forward-looking” statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are typically preceded by words such as “believes,” “expects,”
“anticipates,” “intends,” “will,” “may,” “should,” or similar expressions. These
forward-looking statements are subject to risks and uncertainties that may cause
actual future experience and results to differ materially from those discussed
in these forward-looking statements. Important factors that might
cause such a difference include, but are not limited to, costs related to the
merger; failure of NeoStem's or CBH’s stockholders to approve the Merger;
NeoStem's or CBH's inability to satisfy the conditions of the Merger; NeoStem's
inability to maintain its NYSE Amex listing; the inability to integrate
NeoStem’s and CBH's businesses successfully; the need for outside financing to
meet capital requirements; failure to have an effective Joint Venture Agreement
with respect to Erye satisfactory to the parties and regulatory authorities and
other events and factors disclosed previously and from time to time in NeoStem’s
filings with the SEC, including NeoStem’s Annual Report on Form 10-K for the
year ended December 31, 2008, and the Proxy Statement/Registration Statement to
be filed. NeoStem does not undertake any obligation to release publicly any
revisions to such forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated
events.
This
Current Report on Form 8-K may be deemed to be solicitation material in respect
of the proposed Merger. The directors and executive officers of each of NeoStem
and CBH may be deemed to be participants in the solicitation of proxies from the
holders of NeoStem Common Stock in respect of the proposed
transaction. Information about the directors and executive officers
of NeoStem is set forth in NeoStem’s Proxy Statement for its 2009 Annual Meeting
of Stockholders and in subsequent Forms 8-K. Investors may obtain
additional information regarding the interest of NeoStem and its directors and
executive officers, and CBH and its directors and executive officers in
connection with the proposed Merger, by reading the Proxy Statement/Registration
Statement when it becomes available.
Item
9.01. Financial
Statements and Exhibits.
(d) Exhibits
Exhibit
10.1 Amendment No. 1 to Agreement and Plan of Merger made as of July
1, 2009
Exhibit
10.2 Funding Agreement made as of July 1, 2009
SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, NeoStem has duly caused this Report to be
signed on its behalf by the undersigned hereunto duly authorized.
| NEOSTEM, INC. | |||
|
|
By:
|
/s/ Catherine M. Vaczy | |
| Name: Catherine M. Vaczy | |||
| Title: Vice President and General | |||
Date: July 8, 2009
EXHIBIT 10.1
AMENDMENT
NO. 1 TO
AGREEMENT
AND PLAN OF MERGER
THIS AMENDMENT NO. 1 TO AGREEMENT AND
PLAN OF MERGER (this “Amendment”) is made
and entered into as of the 1st day of
July, 2009, by and among NEOSTEM, INC., a Delaware
corporation (“NeoStem”), CBH ACQUISITION LLC, a
Delaware limited liability company and a wholly owned subsidiary of NeoStem
(“Subco”),
CHINA BIOPHARMACEUTICALS
HOLDINGS, INC., a Delaware corporation (“CBH”) and CHINA BIOPHARMACEUTICALS
CORP., a British Virgin Islands corporation (“CBC”). NeoStem,
Subco and CBH are sometimes collectively referred to as the “Parties,” each
individually a “Party.”
The
Parties entered into an Agreement and Plan of Merger (the “Original Agreement”)
on November 2, 2008, and hereby wish to amend certain provisions in that
Original Agreement. Terms not defined herein shall have the meanings
set forth in the Original Agreement.
1. Exchange
Securities. (a) The definition of “Exchanged Common
Shares” in Preliminary Statement E(1) of the Original Agreement is
amended to reduce it from 7,500,000 shares to 7,150,000 shares of NeoStem Common
Stock.
(b) The
definition of “Exchange Ratio” set
forth in Section 2.2.4 is amended to be equal to the quotient of 7,150,000
shares divided by the sum of (x) the number of shares of CBH stock outstanding
as of the Effective Time and (y) the number of shares of CBH common stock
issuable upon exercise of in-the-money warrants of CBH immediately prior to the
Effective Time, subject to adjustment as set forth in the Original
Agreement. CBH represents and warrants that the denominator of the
Exchange Ratio as of the date hereof is 37,132,313 shares (after conversion of
all CBH Series A Preferred shares to CBH Common Stock, which CBH represents was
effective in June 2009), such that as of the date hereof, the Exchange Ratio
would be 0.19255.
(c) Sections
2.12 and 2.3.1 are amended to change the references from 7,500,000 shares to
7,150,000 shares. Further, notwithstanding any omission in this
Amendment, all similar references to the purchase price of 7,500,000 shares
shall hereafter refer to 7,150,000 shares. NeoStem shall not be
required to issue 150,000 shares of NeoStem Common Stock in escrow.
2. RimAsia
Securities. (a) Preliminary Statement E(2) of the Original
Agreement is deleted and replaced with the following:
(b) 6,458,009
shares of NeoStem Common Stock (“RimAsia Exchanged Common
Shares”), and (b) 8,177,512 shares of NeoStem Series C Convertible
Preferred Stock (as defined herein), each with a liquidation preference of
$1.125 and convertible to shares of Neo Stem Common Stock at $.90 (“RimAsia Exchanged Preferred
Shares”) (collectively, the RimAsia Exchanged Common Shares and the
RimAsia Exchanged Preferred Shares are referred to as the “RimAsia Exchanged
Securities”), to be issued to RimAsia Capital Partners, L.P. (“RimAsia”);
All
references in the Original Agreement to the Class B Warrants or the Class B
Warrant Agreement are deleted, and Exhibit A (the Class B Warrant Agreement) is
deleted from the Original Agreement.
In addition, the parties acknowledge
that since November 2008 RimAsia has provided certain advances in connection
with the parties’ business initiatives, and will continue to incur costs
relating to the transaction, including costs for legal and accounting services
and the increased stock consideration set forth above relates in part to the
forgiveness of such advances as further specified in a separate agreement among
the parties.
3. CBH Common Stock Purchase
Warrants. (a) Preliminary Statement E(3) of the
Original Agreement is deleted and replaced with the following:
(b)
Subject to acceptance by the holders of CBH Common Stock Purchase Warrants to
purchase an aggregate of up to 8,370,298 shares of CBH Common Stock (collectively, the “CBH
Common Stock Purchase Warrants”), Class C warrants (the “Class C Warrants”) to
purchase up to 2,012,097 shares of NeoStem Common Stock at an exercise price
equal to $2.50 per share under the Class C Warrant Agreement, the form of which
is attached hereto as Exhibit B, to be
issued to such holders of CBH Common Stock Purchase Warrants.
4. EET
Shares. A new Preliminary Statement E(4) is added to the
Original Agreement as follows:
125,000 shares of NeoStem Common Stock
to be issued to EET or its designee (“EET Exchanged Common Shares”) for
assistance in effecting the Merger.
5. Escrow
Shares. Section 2.5 of the Original Agreement is
modified. NeoStem shall have no obligation to issue the 200,000
shares of NeoStem Common Stock into escrow as set forth therein, since the
payment is now highly unlikely, as the parties acknowledge that the Share
Exchange Agreement of NeoStem with respect to the Shandong Institute, dated as
of November 2, 2008, has been or is being terminated, and CBH and CBC consent to
such termination. The Escrow Agreement attached as Exhibit D to the
Original Agreement is also deleted. Notwithstanding the lack of an
escrow, NeoStem will still owe CBC a payment of 200,000 shares of its Common
Stock if it does purchase the Shandong Institute within six (6) months of
consummation of the Merger but shall have no other obligations to CBC whatsoever
in connection with acquisition activity.
6. Globus/Mao. Section
2.7 of the Original Agreement is amended to read in its entirety as
follows:
At the
Effective Time, NeoStem shall issue (a) to Steven E. Globus, a director of CBH
(“Globus”), in exchange for a complete release and full satisfaction of the
Globus Obligation (as defined in Section 6.2.21), 9,532 shares of NeoStem Common
Stock, and (b) to Chris Peng Mao, the Chief Executive Officer of CBH (“Mao”) in
exchange for a complete release and full satisfaction of the Mao Obligation (as
defined in Section 6.2.21), 7,626 shares of NeoStem Common Stock.
7. Section
5.5.7(vii) is hereby amended to clarify that such issuances may be options or
shares of Common Stock, with applicable withholding paid by the Company, and
that such issuances may be made, in the discretion of the Compensation
Committee, to NeoStem officers, consultants and advisors upon the Closing of the
Merger, and such officers, significant employees and/or directors of Erye (“Erye
Personnel”) following receipt of all PRC approvals after the Closing of the
Merger, as the Compensation Committee shall determine in connection with the
closing of the transactions contemplated by this Agreement.
8. Real
Estate. As an additional covenant of CBH and an additional
condition to NeoStem’s obligation to close, at least 15 days prior to Closing,
in order to satisfy its obligations under a Memorandum of Understanding with
EET, CBH shall have caused Erye and EET to enter into binding agreements whereby
(a) Erye is bound to transfer the land and building for its principal
manufacturing facility to EET or its affiliate for a sum to be agreed upon by
the parties, with such transfer reported and accounted for in the financial
records of Erye and CBH prior to Closing, and (b) EET or its affiliate is bound
to lease such principal manufacturing facility back to Erye at a nominal fee for
a term through the construction and validation period of Erye’s new
manufacturing facility and until such date as Erye’s new facility is completed
and fully operational, such that Erye is assured that there is no interruption
of its operations by reason of such transfers and agreements. All
documents and accounting for such transactions shall be reasonably acceptable to
NeoStem, including release by Erye of all obligations due to it from NeoStem or
CBH under the Memorandum of Understanding or otherwise.
9. CBC
Spin-Off. Preliminary Statement C and Section 6.2.12 are
amended. CBC shall not be spun-off to the shareholders of CBH in a
liquidating distribution. Instead, as an additional covenant of CBH
and an additional condition to NeoStem’s obligation to close, (a) no later than
15 days prior to the effective date of the Form S-4, CBH shall have entered into
a binding agreement to transfer the stock of CBC to a third party in a private
transaction and (b) no later than 15 days prior to the Closing, CBH shall have
consummated the transfer of all of the CBC stock to such third party, all in a
manner such that, following the transfer, as contemplated by the Original
Agreement, the only material assets and liabilities of CBH at the time
of the merger shall be the Eyre Ownership, land rights and at least
$550,000 cash, and CBH shall have no liabilities except transaction related
expenses of $450,000 or less. All documents and accounting for such
CBC sale transaction shall be reasonably acceptable to NeoStem and shall include
a full release in favor of NeoStem and its affiliates from any and all claims or
liabilities due or asserted to be due to CBC, Keyuan or any of their
affiliates. CBH shall take appropriate action to liquidate or
extinguish any intercompany debt owed to CBH or Erye by CBC or Keyaun or any of
their affiliates. CBH and CBC represent and warrant that CBC has de
minimis value, if any, and that it has the corporate power and authority to
effect the CBC sale transaction on the terms set forth herein without any
further corporate action other than approval of its Board of Directors, so that
no shareholder approval is required. No CBC shares will be registered
as part of the Prospectus/Joint Proxy Statement. Where appropriate
following this Amendment, references to the Spin-Off in the Original Agreement
shall refer to the private sale of CBC.
10. Board of
Directors. Section 5.8(i) of the Original Agreement is
deleted. Eric Wei will be added to the current Board of Directors of
NeoStem immediately after the Effective Time. Shi Mingsheng will be
added to the current Board of Directors of NeoStem immediately after receipt of
all PRC approvals following the Effective Time.
11. Capitalization; Equity Incentive
Compensation Plan. Section 4.19.1(ii) and Section
5.5.7(iv)(b) of the Original Agreement (relating to the amendment of NeoStem
option vesting schedules) are hereby deleted in their entirety, and Section
4.19.1(ii) is replaced with the following: “NeoStem may make the issuances of
securities described in Section 5.5.7(vii) hereof, including the issuance of
shares.” Further, it was agreed under Sections 4.19.1 and 5.5
of the Original Agreement, that the exercise price of certain outstanding
options and warrants of NeoStem will be reduced as provided for in Schedule
4.19. It is agreed that Schedule 4.19 in the Original Agreement is
deleted in its entirety and replaced as follows.
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(a)
|
All warrants outstanding
immediately prior to the closing of the Merger (other than warrants issued
to the public or the underwriters in the Company’s August 2007 public
offering) shall be amended to provide that the Current Exercise Price
shall be amended effective on the Closing of the Merger to provide the
Adjusted Exercise as set forth
below:
|
NeoStem Warrant Repricing
Table
|
Current
Exercise Price
|
Adjusted
Exercise Price
|
|
$ 4.00
|
$ 3.8182
|
|
$ 4.50
|
$ 4.1932
|
|
$ 4.61
|
$ 4.2726
|
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$ 4.70
|
$ 4.3368
|
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$ 4.90
|
$ 4.4768
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|
$ 4.95
|
$ 4.5113
|
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$ 5.00
|
$ 4.5455
|
|
$ 5.10
|
$ 4.6132
|
|
$ 5.30
|
$ 4.7459
|
|
$ 5.50
|
$ 4.8750
|
|
$ 5.80
|
$ 5.0618
|
|
$ 6.00
|
$ 5.1818
|
|
$ 6.10
|
$ 5.2405
|
|
$ 6.50
|
$ 5.4659
|
|
$ 6.70
|
$ 5.5732
|
|
$ 7.00
|
$ 5.7273
|
|
$ 8.00
|
$ 6.1818
|
(b) The Compensation
Committee in its discretion may determine for any or all options outstanding
immediately before the closing of the Merger, to lower the exercise price to as
low as the $.80 originally provided in the Original Agreement; however, if the
Compensation Committee determines to lower the exercise price of such
outstanding options to a price that is greater than $.80, it may also, in its
sole discretion, grant to the respective holder of such outstanding options,
additional stock, options or other consideration (including cash) such that the
value overall of consideration granted to the optionee is generally equivalent,
in the judgment of NeoStem’s Compensation Committee, to the value
that would have been provided if the exercise prices of the options
had been reduced to $.80 and in each case the vesting schedule of the options
shall be maintained. The exercise price shall in no case be reduced
below fair market value on the closing of the Merger.
12. Outside
Date. Section 7.1.13 of the Original Agreement is hereby
amended to mean “October 31, 2009.
13. Employment
Agreements. Section 6.1.5 of the Original Agreement, with
respect to the need for new employment contracts for Robin Smith and Zhang Jian,
is deleted. Robin Smith will continue to serve as CEO pursuant to the
terms of her existing employment agreement as it may be amended from time to
time. Section 6.2.18 of the Original Agreement is hereby amended to
delete the consulting agreement for Chris Mao and to add the underlined
language:
Mao shall have executed and delivered
to NeoStem a NeoStem Confidentiality Agreement and shall release NeoStem
and CBH from any obligation with respect to any employment agreement or
arrangements which he had with CBH or any of its Subsidiaries. Any
other parties with employment agreements with CBH will execute amendments
whereby CBC will assume all liabilities of CBH under such
agreements. The employees will release NeoStem and CBH from all
liabilities due to them as employees, whether under such agreements or
otherwise, and CBH and CBC will certify to NeoStem that no other employment or
consulting agreements with CBH exist.
14. PRC
Approvals. Section 6.1.6 of the Original Agreement
contemplates that as a condition of Closing, certain approvals from PRC
regulatory authorities shall have been obtained prior to Closing, including
approvals with respect to the Merger, and the terms of the Amended and Restated
Erye Joint Venture Agreement, the Erye Articles of Incorporation and related
organizational documents. Section 6.2.23 of the Original Agreement
also contemplates certain assurances from PRC Governmental
Authorities. The parties now understand that under PRC law, they may
not be able to obtain certain approvals until after Closing. CBH
shall use reasonable commercial efforts to obtain such approvals prior to the
Closing, however, the Parties agree that if NeoStem, in its sole and unfettered
discretion, determines to waive such condition in whole or in part, and agree to
consummate the Merger prior to approval from any PRC Governmental Authority
including but not limited to approval of the matters listed above, the condition
shall remain as a condition subsequent to the Merger and all related
transactions, and the parties shall at Closing either permit NeoStem to defer
delivery of any NeoStem securities to holders of CBH securities through a
provison in the certificate of merger or otherwise, or enter into an escrow
agreement on terms satisfactory to NeoStem, such that in either event
consummation of the Merger or issuance of all consideration to be paid or issued
by NeoStem in connection with, related to, or contingent upon the consummation
of the Merger (except as contemplated by Sections 5.5.7(iv) and (vii)) may be
deferred or held back by NeoStem, or held in escrow, in each case
subject to an absolute right of NeoStem to receive back all such consideration
and rescind the Merger and all related transactions if any such PRC regulatory
approvals are not obtained within a reasonable period of time after Closing
(such time period to be fixed in the escrow agreement; but not in excess of 45
days). Mr. Shi and Madame Jian shall be paid an aggregate of 203,338
shares of NeoStem Common Stock if all PRC approvals are timely
received.
15. Potential
Reverse Stock Split. It is acknowledged that share numbers and prices
shall be appropriately adjusted to reflect any reverse stock split the Company
may undertake at the time of the Merger.
16. Representations and
Warranties. The parties hereto reaffirm their respective
representations and warranties contained in the Original Agreement through the
date hereof. CBH and CBC also represent and warrant to NeoStem that
the financial statements of CBC delivered to NeoStem for the year ended December
31, 2008 and for the three month period ended March 31, 2009 comply in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with U.S. generally accepted accounting principles consistently
applied and SEC accounting standards, and present fairly in all material
respects, the consolidated financial position and results of operations of CBC
and its consolidated subsidiaries as of their respective dates, and for the
periods presented therein (subject, in the case of the unaudited interim
financial statements, to notes and normal year-end adjustments that were not
material in amount or effect). Each party represents and warrants to
the other, that with respect to the information about it contained in the draft
joint Form S-4 which they are participating in preparing, the information is
accurate in all material respects and does not omit to state any 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. CBC acknowledges that neither it nor any of its
affiliates or associates has or will have any claims against NeoStem or CBH and
hereby releases NeoStem and CBH in full.
17. Opinions. As
an additional closing condition, NeoStem shall provide CBH with an opinion of
its counsel with respect to NeoStem's corporate authorization of the Merger, and
CBH shall provide NeoStem with an opinion of its counsel with respect to CBH's
corporate authorization of the Merger.
18. Acceptance. Except
as amended pursuant to the terms of this Amendment, the Original Agreement shall
continue in full force and effect. The Amendment shall be considered
as part of the Original Agreement. The Amendment shall be governed in
accordance with the laws of the State of Delaware, without regard to any
internal conflicts of law principles.
19. Language
Translation. Each party acknowledges that this Amendment has
been prepared in English. In the event of a conflict between
different translations of these terms, the English translation will
govern.
20. Counterparts. This
Amendment may be executed in counterparts, which together shall constitute one
and the same agreement. The parties may execute more than one copy of
the Amendment, each of which shall constitute an original. Execution
and delivery of this Amendment by pdf or facsimile transmission shall constitute
execution and delivery of this Amendment for all purposes, with the same force
and effect as execution and delivery of an original manually signed
copy.
[Balance
of Page is Intentionally Blank]
IN WITNESS WHEREOF, NeoStem,
Subco, CBH and CBC have signed this Amendment as of the date first written
above.
| NEOSTEM,
INC.
By:
/s/ Robin Smith
Name: Robin
Smith
Title: CEO
CBH
ACQUISITION LLC
By: /s/
Robin Smith
Name: Robin
Smith
Title: CEO
CHINA
BIOPHARMACEUTICALS
HOLDINGS,
INC.
By: /s/Chris
Peng Mao
Name: Chris
Peng Mao
Title: CEO
CHINA
BIOPHARMACEUTICALS
CORP.
By:
/s/ Stephen Globus
Name:
Stephen Globus
Title: Director
|
[Signature
Page to Amendment No. 1 to Agreement and Plan of Merger]
EXHIBIT 10.2
FUNDING
AGREEMENT
THIS FUNDING AGREEMENT (this “Agreement”)
is made as of July 1, 2009, by and among NeoStem, Inc., a Delaware corporation
(“NeoStem”),
RimAsia Capital Partners L.P., a limited partnership organized under the laws of
the Cayman Islands (“RimAsia”),
China Biopharmaceuticals Holdings, a Delaware corporation (“CBH”), and
China Biopharmaceutical Corp., a British Virgin Islands corporation (“CBC”). Each
of the foregoing parties is sometimes hereinafter referred to as a “Party”;
collectively, the “Parties”;
references to amounts in $ herein are to such amounts in United States
dollars.
RECITALS:
A. Based
upon a Conditional Loan Conversion Agreement between RimAsia and CBH dated as of
November 16, 2007, RimAsia holds certain preferred shares and modified warrants
to purchase common shares of CBH.
B. RimAsia
also currently holds 1,000,000 shares of common stock, warrants to purchase
5,000,000 shares of common stock, 400,000 shares of Series D Convertible
Redeemable Preferred Stock of NeoStem.
C. As
of November 2, 2008, NeoStem entered into an Agreement and Plan of Merger (the
“Merger
Agreement”) with CBH and CBC, which provides for the merger of CBH with a
wholly-owned subsidiary of NeoStem (the “Merger”). Pursuant
to the Merger Agreement, RimAsia is entitled to receive in connection with the
closing of the Merger, (a) 5,383,009 shares of NeoStem common stock, (b)
6,977,512 shares of NeoStem Series C Convertible Preferred Stock, each with a
liquidation preference of $1.125 and convertible to shares of NeoStem common
stock at $.90 and (c) Class B warrants to purchase 2,400,000 shares of NeoStem
common stock at $.80 per share (the “Class B
Warrants”).
C. In
anticipation of the Merger, RimAsia has incurred as of the date of this
Agreement substantial expenses and costs in connection with the business
activities of NeoStem and CBH. These expenses and costs have included
expenses of NeoStem, CBH and RimAsia internal costs which unreimbursed expenses
and advances totaled approximately $1,024,800 as of June 15, 2009 (the “Current
Unreimbursed Expenses”). Separately, a combined $250,000
advance (the “SRC Fees”)
towards the $150,000 initial capitalization of China StemCell Medical Holding
Ltd. (“CSCMH”)
and the payment of $100,000 audit fees for Shandong New Medicine Research
Institute of Integrated Traditional and Western Medicine Limited Liability
Company (“SRC”) have
been made by RimAsia.
D. In
connection with RimAsia’s advancement of certain fees included in the Current
Unreimbursed Expenses to CBH, RimAsia and CBH entered into an Acknowledgement of
Advance Payment as of February 3, 2009 (the “Prior
Acknowledgement”),
pursuant to which RimAsia would be entitled to deduct such amounts from a
$300,000 payment that CBH was to receive at the closing of the
Merger.
E. At
the request of NeoStem and CBH, subject to the terms and conditions of this
Agreement, RimAsia agrees to provide additional funding (the “Additional
Funding”) to cover business activities leading to the closing of the
Merger for the benefit of NeoStem and CBH, subject to a total funding cap of
$1,600,000 that includes the Current Unreimbursed Expenses, provided that if the
SRC Fees are not agreed to be satisfied by CSCMH by the issuance to RimAsia by
CSCMH of not less than 150,000 shares of NeoStem Common Stock then the amount of
the SRC Fees will be included in the Additional Funding.
F. In
consideration of RimAsia’s funding, NeoStem and CBH agree that RimAsia shall
receive, at the closing of the Merger, additional NeoStem securities, subject to
the terms and conditions of this Agreement and as hereinafter set
forth.
NOW, THEREFORE, in consideration of the
premises and the mutual promises herein made, and in consideration of the
representations, warranties and covenants herein contained, intending to be
legally bound, the Parties agree as follows:
1. Additional
Funding.
1.1 Additional
Funding. Pursuant to the terms and subject to the conditions
of this Agreement, from the date of this Agreement through the closing of the
Merger (the “Additional
Funding Period”), RimAsia shall provide Additional Funding to cover
business activities leading to the closing of the Merger for the benefit of
NeoStem and CBH, subject to a total funding cap of $1,600,000 (the “Funding
Cap”) and subject to the mutual agreement of NeoStem and RimAsia, that
includes the Current Unreimbursed Expenses and Additional Funding (which
Additional Funding shall include the SRC Fees unless separately provided for as
described in Recital E.).
1.2 Third-Party
Payments. If at any time during the Additional Funding Period
either CBH or NeoStem wishes to have a payment made on its behalf to its outside
legal counsel, auditor or accountant or to any other third party with respect to
payment of expenses in connection with the Merger or transactions incidental
thereto, CBH or NeoStem, as the case may be, shall make a funding request to
RimAsia through electronic mail, and in the case of CBH copying NeoStem, and
RimAsia shall send the requested payment directly to such third party
accordingly so long as the Funding Cap has not been reached, and provided that
RimAsia deems such payment request to be reasonable, and in the case of CBH,
NeoStem and RimAsia agree to the making of such payment. RimAsia will also be
able to make, as part of the Additional Funding, such payments to other
third-party service providers as RimAsia deems reasonable and necessary in the
furtherance of the Merger so long as the Funding Cap has not been reached;
provided that other than expenses that are routine based on RimAsia’s course of
conduct in 2009 in connection with NeoStem’s expansion activities in
China, RimAsia shall obtain the prior approval of
NeoStem.
2. Modification
of the Prior Acknowledgement.
2.1 No
Deduction. In modification of the Prior Acknowledgement,
RimAsia hereby agrees that it will no longer be entitled to deduct certain
Current Unreimbursed Expenses totaling $212,500 from the $300,000 that CBH is to
receive at the closing of the Merger pursuant to the Understanding on Litigation
Residual Payment dated as of September 2, 2008.
2.2 CBH Loan
Liability. In modification of the Prior Acknowledgement,
RimAsia and CBH agree that, in the event that the Merger does not close for any
reason by October 31, 2009, all Current Unreimbursed Expenses made on behalf of
CBH and any other payments made by RimAsia on behalf of CBH since the date of
this Agreement shall be deemed a loan liability of CBH in favor of RimAsia and
be added to the accreted dividend amount on the outstanding shares of the Series
B Preferred Stock of CBH held by RimAsia.
3. Issuance
of Additional NeoStem Securities.
3.1 Common Stock and Preferred
Stock. In consideration of RimAsia’s funding for the benefit
of NeoStem and CBH in anticipation of the Merger, and in full satisfaction of
any and all obligations to repay RimAsia $1,600,000 in funding provided, the
Parties agree that in connection with the closing of the Merger RimAsia shall
receive (a) 1,200,000 shares of NeoStem common stock in addition to the
5,383,009 shares RimAsia is to receive pursuant to the Merger Agreement, so that
the total number of shares of NeoStem common stock RimAsia shall receive in
connection with the closing of the Merger shall be 6,458,009 (after giving
effect to other adjustments); and (b) 1,200,000 shares of NeoStem Series C
Convertible Preferred Stock in addition to the 6,977,512 shares of NeoStem
Series C Convertible Preferred Stock RimAsia is to receive pursuant to the
Merger Agreement, so that the total number of shares of NeoStem Series C
Convertible Preferred Stock RimAsia shall receive in connection with the closing
of the Merger shall be 8,177,512.
3.2 Elimination of Class B
Warrants. In consideration of the additional securities to be
received as set forth under Section 3.1 above, RimAsia shall no longer be
entitled to receive in connection with the closing of the Merger the Class B
Warrants to purchase 2,400,000 shares of NeoStem common stock as originally
provided in the Merger Agreement.
3.3 Shortfall
Adjustment. In the event that at the closing of the Merger the
total funding provided by RimAsia, including the Current Unreimbursed Expenses
and Additional Funding, is less than the Funding Cap of $1,600,000, RimAsia
shall at the closing of the Merger pay NeoStem cash, as supplemental
consideration for the additional securities to be received pursuant to Section
3.1 above, in an amount equal to the difference between the Funding Cap and the
aggregate funding actually provided.
3.4 NeoStem
Loan Liability. In the event that the Merger does not obtain
shareholder approval by October 31, 2009, NeoStem shall repay RimAsia promptly
following October 31, 2009, all the expenses, costs and payments incurred or
made by RimAsia on behalf or for the benefit of NeoStem.
4. Miscellaneous.
4.1 Successors and
Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the Parties (including transferees of
any securities). Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the Parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
4.2 Governing Law;
Jurisdiction. This Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to agreements among
Delaware residents, entered into and to be performed entirely within
Delaware. The Parties agree that the courts of the State of Delaware
and Federal District Courts located in Delaware, shall have exclusive
jurisdiction and venue of any action or proceeding directly or indirectly
arising out of or related to the negotiation, execution, delivery, performance,
breach, enforcement or interpretation of this Agreement, regardless of whether
or not any claim, counterclaim or defense in any such action or proceeding is
characterized as arising out of fraud, negligence, intentional misconduct,
breach of contract or fiduciary duty, or violation of any law. Each
Party irrevocably consents to the personal jurisdiction of such courts, to such
venue, and to the service of process in the manner provided for the giving of
notices in this Agreement. Each Party waives all objections to such
jurisdiction and venue, including all objections that are based upon
inconvenience or the nature of the forum.
4.3 Waiver of Jury
Trial. TO THE
EXTENT PERMITTED BY LAW, THE PARTIES HEREBY IRREVOCABLY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this Agreement including, without
limitation, contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each Party (i) acknowledges
that this waiver is a material inducement to enter into a business relationship,
that each has already relied on this waiver in entering into this relationship,
and that each will continue to rely on this waiver in their related future
dealings and (ii) further warrants and represents that each has reviewed
this waiver with its legal counsel and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal
counsel. THIS WAIVER
IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS OF THE AGREEMENT. In the event of litigation,
this provision may be filed as a written consent to a trial by the
court.
4.4 Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. Signatures transmitted via facsimile or PDF files shall
be deemed to be same as the originals.
4.5 Entire
Agreement. This Agreement, together with the Merger Agreement
and the Prior Acknowledgement as such documents are modified by this Agreement
or otherwise, and the other documents delivered pursuant hereto or thereto,
constitute the entire agreement among the Parties regarding the subject matters
hereof and thereof, and no Party shall be liable or bound to any other Party in
any manner by any warranties, representations, or covenants except as
specifically set forth herein or therein.
4.6 Amendment and
Waiver. Any term of this Agreement may be amended and the
observance of any term of this Agreement may only be waived (either generally or
in a particular instance and either retroactively or prospectively), with the
written consent of the Parties.
4.7 Severability. If
one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
[SIGNATURE
PAGE FOLLOWS]
IN WITNESS WHEREOF, the
Parties have executed this Funding Agreement as of the date first written
above.
|
NeoStem,
Inc.
By: /s/
Robin Smith
Name:
Robin Smith
Title:
CEO
|
RimAsia
Capital Partners, L.P.
By: /s/ Eric Wei
Name: _________________
Title: __________________
|
|
China
Biopharmaceuticals Holdings, Inc.
By: /s/
Stephen Globus
Name:
Stephen Globus
Title:
Director
|
China
Biopharmaceutical Corporation
By: /s/ Chris Peng Mao
Name: Chris Peng Mao
Title: Director
|