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Exhibit 10.7

EXCLUSIVE PURCHASE OPTION AGREEMENT

by and among

NEOSTEM (CHINA), INC.

BEIJING RUIJIEAO BIO-TECHNOLOGY LTD.

and

THE SHAREHOLDER OF BEIJING RUIJIEAO BIO-TECHNOLOGY LTD.

June 1, 2009

 
 

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Exclusive Purchase Option Agreement

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EXCLUSIVE PURCHASE OPTION AGREEMENT

This Exclusive Option Purchase Agreement (the “Agreement”) is executed by the
following parties on June 1, 2009 in Qingdao City, the People’s Republic of
China.

(1) NeoStem (China), Inc. (“Party A”)

Registered Address: Room 0425A, Building C, No.6 XiangGangZhong Road, Shinan
District, Qingdao City

Legal representative: Robin Smith

(2) Beijing Ruijieao Bio-Technology Ltd. (“Party B”)

Registered Address: Room 2007 20/F, Qingyundangdai Building, No.9
Mantingfangyuan Community, Qingyun Li, Haidian District, Beijing City

Legal representative: Fu Wenyuan

(3) Sole shareholder of Beijing Ruijieao Bio-Technology Ltd.
    (hereinafter called the “Shareholder”)

Name of the
Shareholder
 
Shareholding
Ratio （%）
 
ID Card No.
 
Contact Address
Fu Wenyuan
 
100
     
No.27 Shandabei Road, Licheng District, Ji’nan City

Party A, Party B, and the Shareholder of Party B are hereinafter from time to
time, collectively, referred to as the “Parties”, and each of them is
hereinafter from time to time referred to as a “Party”.  The equity interests in
Party B held by the Shareholder now existing or hereafter acquired is
hereinafter from time to time referred to as the “Equity Interests” or “Equity”.

WHEREAS:

1.
Party A, a wholly foreign-owned enterprise incorporated under the laws of the
People’s Republic of China (the “PRC”), which engages the research &
development, transfer and technological consultation service of biotech
technology, regenerative medical technology and anti-aging technology (excluding
the development or application of human stem cell, gene diagnosis and treatment
technologies); consultation of economic information; import, export and sales of
machines and equipments (the import and export do not involve the goods
specifically stipulated in/by state-operated trade, import & export quota
license, export quota bidding, export permit, etc.) (The aforesaid business
scope should be operated with relevant permits if such permits are required).

 
 
 

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Exclusive Purchase Option Agreement 

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2.
Party B, as a domestic limited liability company, incorporated under PRC laws in
Beijing, and licensed by Beijing Administration for Industry and Commerce, it
engages in technology development, technology transfer, technology consultation
and technology service.

3.
As of the date of this Agreement, the percentage ownership of the Equity
Interests in Party B held by the Shareholder shall be set forth as described
above.

4.
To secure the performance of the obligations assumed by Party B and the
Shareholder under this Agreement, the Shareholder agrees to pledge all their
equity in Party B to Party A, and has executed Equity Pledge Agreement on June
1, 2009 with respect thereto (the “Equity Pledge Agreement”).

NOW, THEREFORE, the Parties through mutual negotiations hereby enter into this
Agreement with respect of the exclusive purchase option right:

1.
THE GRANT AND EXERCISE OF PURCHASE OPTION

 
1.1
The Shareholder hereby irrevocably grants to Party A an exclusive purchase right
at any time, or designate any third party to purchase all or part of the
Shareholder’ Equity Interests in Party B, provided permitted under the PRC laws
and regulations and Party B agrees to such grant by the Shareholder to Party A.
Apart from Party A or any third party designated by Party A, no other person
shall have the right to purchase such Equity Interests. The Shareholder shall
transfer his Equity Interests in Party B to Party A provided Party A selects to
purchase the Shareholder’ Equity Interests.
       
1.2
Party B hereby irrevocably grants to Party A an exclusive purchase option, at
any time to acquire all or a substantial part of Party B’s assets, provided
permitted under the PRC laws and regulations and the Shareholder agrees to such
grant by Party B to Party A.
       
1.3
For the purpose of this Agreement, a “third party” or a “person” may be a
natural person, company, partnership, enterprise, trust agency or other
non-corporate entity.

 
1.4
To the extent permitted under the PRC laws and regulations, Party A shall
determine at any time and at its own option to exercise such exclusive right to
(i) purchase the Equity Interests as provided in Section 1.1 by written notice
to the applicable Shareholder(s) specifying the amount of equity to be purchased
and the identity of the purchaser (hereinafter referred to as “Equity Transfer”)
or (ii) purchase all or substantially all of Party B’s assets as provided in
Section 1.2 (hereinafter referred to as “Assets Transfer”) by written notice to
Party B (each an "Exercise Notice"). Each Exercise Notice shall be signed by
either the sole shareholder, or the Executive Director, of Party A.

 
 
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Exclusive Purchase Option Agreement 

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1.5
Within thirty (30) days of the receipt of the Exercise Notice, the applicable
Shareholder and Party B shall execute a share/asset transfer agreement and other
documents (collectively, the "Transfer Documents") necessary to effect the
respective transfer of equity or assets to Party A (or any eligible party
designated by Party A), and shall unconditionally assist Party A to obtain all
approvals, permits, registrations, filings and other procedures necessary to
effect the Equity or Assets Transfer.

 
1.6
Unless otherwise required under the PRC laws and regulations, the transaction
price for the Equity Transfer or the Assets Transfer hereunder, as applicable,
shall be the lowest price permitted under the PRC laws and regulations.
       
1.7
The consideration after tax payment (the “Consideration of Equity Transfer”)
obtained by the Shareholder from Equity Transfer in Party B hereunder shall be
used to satisfy their repayment obligations under the Loan Agreement dated as of
June 1, 2009, signed by and among, Party A and the Shareholder (the “Loan
Agreement”);
 
The consideration after tax payment (the “Consideration of Assets Transfer”) by
the  Party B, if as applicable, from Assets Transfer hereunder shall be
allocated to the Shareholder, to the largest extent as permitted by PRC laws and
regulations, through profit allocation proposal and fulfill their payment
obligations under the Loan Agreement, and Party B shall give full cooperation;
 
And if the Consideration of Equity Transfer or Assets Transfer is higher than
the total principal under the Loan Agreement due to the requirement by the
applicable law or any other reasons, the excess shall be deemed as loan
interests and/or utilizing fees of the Loan to the largest extent being
permitted by PRC Laws, and be paid to Party A by the Shareholder together with
loan principal.

2.
REPRESENTATIONS AND WARRANTIES

 
2.1
Each Party hereto represents to the other Parties that: (1) it has all the
necessary rights, powers and authorizations to enter into this Agreement and
perform its duties and obligations hereunder; and (2) the execution or
performance of this Agreement shall not violate or conflict with the terms of
any other contracts or agreements to which it is a party.

 
2.2
The Shareholder hereby represents to Party A that: (1) the Shareholder is the
legally registered shareholder of party B and has paid full amount of registered
capital in Party B as required to be contributed by the Shareholder under the
PRC laws and regulations; (2)except for the Equity Pledge Agreement executed
among the Parties, the Shareholder has not created any other mortgage, pledge,
secured interests or other form of debt liabilities over the Equity Interests
held by the Shareholder; and (3) the Shareholder has not transfer to any third
party (and entered into any agreement in respect of)  such Equity Interests.

 
 
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Exclusive Purchase Option Agreement 

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2.3
Party B hereto represents to Party A that: (1) it is a limited liability company
duly registered and validly existing under the PRC laws and regulations; and (2)
its business operations are in compliance with applicable laws and regulations
of the PRC in all material respects.

3.
 OBLIGATIONS OF PARTY B AND ALL SHAREHOLDER

The Parties further agree as follows:

 
3.1
Before Party A has acquired all the equity/assets of Party B by exercising the
purchase option provided hereunder, Party B:

 
a.
without Party A’s prior written consent, shall not supplement or amend the
articles of association or rules of Party B in any manner, nor shall it increase
or decrease the registered capital or change the shareholding structure of
aforesaid entities in any manner;
 
b.
shall prudently and effectively maintain its business operations according to
good financial and business standards so as to maintain or increase the value of
its assets;

 
c.
shall not transfer, mortgage or otherwise dispose of the lawful rights and
interests to and in its assets or incomes, nor shall it encumber its assets and
income in any way that would affect Party A’s security interests unless as
required necessary for the business operation of Party B or upon prior written
consent by Party A ;

 
d.
shall not incur or succeed to any debts or liabilities without Party A’s prior
written consent;

 
e.
without Party A’s prior written consent, shall not enter into or materially
amend any material contract (exceeding RMB 100,000 in value) except for the
routine business contracts;

 
f.
without Party A’s prior written consent, shall not provide any loans or guaranty
to any third party;

 
g.
at Party A’s request, it shall provide Party A with all information regarding
Party B’s business operation and financial condition;

 
 
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Exclusive Purchase Option Agreement 

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h.
shall purchase insurance from insurance companies acceptable to Party A in such
amounts and of such kinds as are customary in the region among companies doing
similar business and having similar assets;

 
i.
without Party A’s prior written consent,  shall not acquire or consolidate with
any third party, nor shall they invest in any third party;

 
j.
shall promptly notify Party A of any pending or threatened lawsuit, arbitration
or administrative dispute which involve Party B’s assets, business or incomes,
and take positive measures against aforesaid lawsuits, arbitrations or
administrative dispute;

 

 
k.
without Party A’s prior written consent, shall not distribute any dividends to
the Shareholder in any manner, and, at Party A’s request, shall promptly
distribute all distributable dividends to the Shareholder of Party B;
       
l.
without Party A’s prior written consent, shall not commit any act or omission
that would materially affect Party B’s assets, business or liabilities;
       
m
at Party A’s request, shall promptly and unconditionally transfer its assets to
Party A or its designated third party as permitted by PRC laws and regulations;
       
n
shall strictly comply with the provisions of this Agreement, and effectively
perform its obligations hereunder, and shall be prohibited from committing any
act or omission which may affect the validity or enforceability of this
Agreement.

 
3.2
Before Party A has acquired all the equity/assets of Party B by exercising the
purchase option provided hereunder, the Shareholder:

 

 
a.
apart from relevant provisions in each of the Equity Pledge Agreements, without
Party A’s prior written consent, shall not transfer, sell, mortgage or otherwise
dispose of the Equity Interests in Party B; nor shall the Shareholder places
encumbrances on the Equity Interests that would affect Party A’s interest
hereunder and thereunder;
       
b.
without Party A’s prior written consent, shall not supplement or amend the
articles of association or rules of Party B in any manner, nor shall it increase
or decrease its registered capital or change the shareholding structure in any
manner;
       
c.
without Party A’s prior written consent, shall not approve for the resolutions
on  the dissolution, liquidation and change of legal form of Party B;

 
 
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Exclusive Purchase Option Agreement 

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d.
shall not approve for any Profit Distribution Proposal, nor shall accept such
distributed dividend without Party A’s written consent; At Party A’s request, he
shall promptly approve for the Profit Distribution Proposal, and accept such
distributed dividend.

 
e.
at Party A’s request, shall provide Party A with all information regarding Party
B’s business operation and financial condition;

 
f.
shall not incur or succeed to any debts or liabilities which may adversely
affect its Equity Interests in Party B without Party A’s prior written consent;

 
g.
shall appoint, and appoint only, the candidates nominated by Party A to be the
executive director of Party B, and shall not replace such candidates without
Party A’s prior written consent;

 
h.
shall not approve any acquisition of, any consolidation with, or any investment
in any third party without Party A’s prior written consent;

 
i.
shall promptly notify Party A of any pending or threatened lawsuit, arbitration
or administrative dispute which involve Party B’s assets, business or incomes,
and take positive measures against aforesaid lawsuits, arbitrations or
administrative dispute;

 
j.
without Party A’s prior written consent, shall not commit any act or omission
that would materially affect Party B’s assets, business or liabilities;

 
k.
to the extent permitted by the PRC laws and regulations, and at any time upon
Party A’s request, shall promptly and unconditionally transfer their Equity
Interests in Party B to Party A or a third party designated by Party A;

 
l.
shall approve for the resolution in respect of the Equity Transfer or Assets
Transfer hereunder within the extent permitted by the PRC laws;

 
m.
shall make every efforts to cause Party B perform the obligations of
Section  3.1 hereunder; and

 
n.
shall strictly comply with the provisions of this Agreement, and effectively
perform its obligations hereunder, and shall be prohibited from committing any
act or omission which may affect the validity or enforceability of this
Agreement.

 
 
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Exclusive Purchase Option Agreement 

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3.3
The Shareholder shall, to the extent permitted by applicable laws, cause Party
B's operational term (including the circumstance of change of business terms) to
be extended to equal the operational term of Party A (including the circumstance
of change of business terms).

4.
GUARANTY OF THIS AGREEMENT

 
4.1
To secure the performance of the obligations assumed by the Shareholder and
Party B hereunder, the Parties agree to execute the Equity Pledge Agreement with
respect thereto.

5.
TAXES AND FEES

 
5.1
The Parties shall pay, in accordance with relevant PRC laws and regulations,
their respective taxes arising from Equity or Assets transfer and related
registration formalities and other charges during the transactions contemplated
herein and therein.

6.
ASSIGNMENT OF AGREEMENT

 
6.1
Party B and the Shareholder shall not transfer the Shareholder’s rights and
obligations under this Agreement to any third party without the prior written
consent of Party A.

 
6.2
The Shareholder and Party B agree that Party A shall have the right to transfer
any or all of its rights and obligations under this Agreement to any third party
upon a six(6)–day written notice to the Shareholder and Party B without approval
by the Shareholder and Party B.

7.
EVENTS OF DEFAULT

 
7.1
Any violation of any provision hereof, incomplete performance of any obligation
provided hereunder, any misrepresentation made hereunder, material concealment
or omission of any material fact or failure to perform any covenants provided
hereunder by any Party shall constitute an event of default. The defaulting
Party shall assume all the legal liabilities pursuant to the applicable PRC laws
and regulations.

 
7.2
In the event of default by Party B or the Shareholder, Party A shall be entitled
to exercise the Pledgee’s right under the Equity Pledge Agreement  in the event
that  Party B and Shareholder commit an event of default and fail to redress
such default within sixty (60) business days upon receipt of written
notification from Party A.

 
 
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Exclusive Purchase Option Agreement 

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8.
EFFECTIVEMESS, MODIFICATION AND CANCELLATION

 
8.1
This Agreement shall be effective upon the execution hereof by all Parties
hereto.

 
8.2
The modification of this Agreement shall not be effective without written
agreement through negotiation. If the Parties could not reach an agreement, this
Agreement remains effective.

 
8.3
This Agreement shall not be discharged or canceled without  written agreement
through negotiation, provided Party A may, by giving a thirty (30) days prior
notice to the other Parties hereto, terminate this Agreement.

9.
CONFIDENTIALITY

 
9.1
Any information, documents, data and all other materials (herein “confidential
information”) arising out of the negotiation, signing, and implement of this
Agreement, shall be kept in strict confidence by the Parties. Without the
written approval by the other Parties, any Party shall not disclose to any third
party any relevant materials, but the following circumstances shall be excluded:

 
a.
The materials that is known by the Public (but not include the materials
disclosed by each Party receiving the materials);

 
b.
The materials required to be disclosed subject to the applicable laws or the
rules or provisions of stock exchange; or

 
c.
The materials disclosed by each Party to its legal or financial consultant
relating the transaction of this Agreement, and this legal or financial
consultant shall comply with the confidentiality set forth in this Section. The
disclosure of the confidential materials by staff or employed institution of any
Party shall be deemed as the disclosure of such materials by such Party, and
such Party shall bear the liabilities for breaching the contract.

 
9.2
If this Agreement is terminated or becomes invalid or unenforceable, the
validity and enforceability of Article 9 shall not be affected or impaired.

10.
FORCE MAJEURE

 
10.1
An event of force majeure means an event that could not be foreseen, and could
not be avoided and overcome, which includes among other things, but without
limitation, acts of nature (such as earthquake, flood or fire), government acts,
strikes or riots;

 
10.2
If an event of force majeure occurs, any of the Parties who is prevented from
performing its obligations under this Agreement by an event of force majeure
shall notify the other Parties without delay and within fifteen (15) days of the
event provide detailed information about and notarized documents evidencing the
event and take appropriate means to minimize or remove the negative effects of
force majeure on the other Parties, and shall not assume the liabilities for
breaching this Agreement.  The Parties shall keep on performing this Agreement
after the event of force majeure disappears.

 
 
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Exclusive Purchase Option Agreement 

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11.
APPLICABLE LAW AND DISPUTE RESOLUTION

 
11.1
   Applicable Law

   
The execution, validity, construing and performance of this Agreement and the
disputes resolution under this Agreement shall be governed by the laws and
regulations of the PRC.

 
11.2
   Dispute Resolution

   
The Parties shall strive to settle any dispute arising from or in connection
with this Agreement through friendly consultation. In case no settlement can be
reached through consultation within thirty (30) days after such dispute is
raised, each party can submit such matter to Qingdao Arbitration Commission for
arbitration in accordance with its rules. The arbitration shall take place in
Qingdao. The arbitration award shall be final conclusive and binding upon the
Parties.

12.
MISCELLANEOUS

 
12.1
   Entire Agreement

   
The Parties acknowledge that this Agreement constitutes the entire agreement of
the Parties with respect to the subject matters therein and supersedes and
replaces all prior or contemporaneous oral or written agreements and
understandings.

 
12.2
   Successor

   
This Agreement shall bind and benefit the successor of each Party and the
transferee permitted hereunder with the same rights and obligations as if the
original parties hereof.

 
12.3
   Notice

   
Any notice required to be given or delivered to the Parties hereunder shall be
in writing and delivered to the address as indicated below or such other address
or as such party may designate, in writing, from time to time. All notices shall
be deemed to have been given or delivered upon by personal delivery, fax and
registered mail. It shall be deemed to be delivered upon: (1) registered air
mail: 5 business days after deposit in the mail; (2) personal delivery: the next
business day after transmission. If the notice is delivered by fax, it should be
confirmed by original through registered air mail or personal delivery.

 
 
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Exclusive Purchase Option Agreement

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Party A
Contact person: Robin Smith
Address:
Tel:
Fax:

Party B
Contact person: Fu Wenyuan
Address: Room 2007 20/F, Qingyundangdai Building, No.9
               Mantingfangyuan Community, Qingyun Li, Haidian District,
               Beijing City
Tel:
Fax:

The Shareholder
Contact person: Fu Wenyuan
Address: No.27 Shandabei Road, Licheng District, Ji’nan City
Tel:
Fax:

 
12.4
   Copies

   
This Agreement is executed in three (3) originals with each of the person for
signing this Agreement holding one original, and each of the originals shall be
equally valid and authentic.

.

 
12.5
Whenever the consent of Party A is required under this Agreement, such consent
shall not be effective unless such consent is also provided by either the sole
shareholder, or the Executive Director, or Party A.

[Signature page follows]

 
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Exclusive Purchase Option Agreement 

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IN WITNESS THEREFORE, the parties hereof have caused this Agreement to be
executed and delivered as of the date first written above.

Party A NeoStem (China), Inc. (Seal)

Legal Representative (or Authorized Representative):
/s/ Robin Smith

Party B  Beijing Ruijieao Bio-Technology Ltd. (Seal)

Legal Representative (or Authorized Representative):
/s/ Fu Wenyuan

The Shareholder

Name of the
Shareholder
 
Signature
Fu Wenyuan
 
/s/ Fu Wenyuan

 
 
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