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
offering (the “Offering”) shares (the “Common Shares”) of Common Stock, $0.001
par value (the “Common Stock”) at a per share purchase price equal to $0.___.

 

The Investor understands that the Common Shares are being issued pursuant to an
exemption from the registration requirements of the United States Securities Act
of 1933, as amended (the “Securities Act” or the “Act”), in either a private
placement pursuant to an exemption from registration under Regulation D
promulgated under Section 4(2) and Rule 506 of the Act and/or an exemption from
registration under Regulation S promulgated under the Securities Act.  As such,
the Common Shares 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 Common Shares
from Investors from time to time and after it has been determined that all
conditions in this Subscription Agreement have been met.  At the 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 Common Shares as provided herein.  The Company may
close on any number of Common Shares it may choose in its sole determination.

 

Subject to the terms and conditions hereinafter set forth in this Subscription
Agreement, and the Company’s due execution of this Subscription Agreement, the
Investor hereby offers to subscribe for Common Shares as set forth in the
Investor Signature Page attached hereto and contemporaneously herewith makes
payment for the purchase of the Common Shares by wire transfer or bank 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) that the Common Shares are
accepted for listing on the NYSE-Amex.

 

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 Common Shares by the
Investor shall be returned to Investor.

 

3.           Representations and Warranties of the Investor.

 

The Investor, in order to induce the Company to accept this Offer, hereby
warrants and represents as set forth below; provided, that Investor may choose
to either make the representations in (b) (Regulation D) or in (c) (Regulation
S) by checking the appropriate box.

 

PLEASE CHECK ONE OR BOTH OF THE TWO BOXES BELOW AS APPROPRIATE:

 

¨ Investor is purchasing under Regulation D

 

OR

 

¨ Investor is purchasing under Regulation S

 

(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 Common Shares 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 for Purchase under Regulation D.

 

(i) Restricted Securities.  Investor understands that the Common Shares (the
“Securities”) are “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
Common Shares, if required in compliance with federal and state securities laws:

 

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“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 U.S. Securities and Exchange
Commission (the “Commission”) currently takes the position that coverage of
short sales of shares of the Common Shares “against the box” prior to the
effective date of a registration statement registering the re-sale of the Common
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, without limiting the restrictions
set forth herein, the Investor agrees not to use any of the Common Shares to
cover any short sales made prior to the effective date of such registration
statement.

 

(ii)          No Distribution.  Investor is acquiring the Common Shares 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 Common Shares or any part
thereof.  Investor has no present intention of distributing any of such Common
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
(this representation and warranty not limiting such Investor’s right or intent
to sell the Common Shares pursuant to a Registration Statement or otherwise in
compliance with applicable federal and state securities laws).

 

(iii)        Investor Status.  Investor is 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 (excluding the value of the Investor's home) or annual income
exceeding $200,000, or $300,000 jointly with their spouse and is defined on
Schedule A hereto.

 

(iv)        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 Common Shares, 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
Common Shares and, at the present time, is able to afford a complete loss of
such investment.

 

-3-

 

 

(v)         General Solicitation.  Investor is not purchasing the Common Shares
as a result of any advertisement, article, notice or other communication
regarding the Common Shares 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.

 

(c)         Investor Representations for Purchase under Regulation S.

 

(i)          Restricted Securities.  Investor understands that the Common Shares
(the “Securities”) are “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
Common 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 "ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISTRIBUTED,
DIRECTLY OR INDIRECTLY, IN THE UNITED STATES, ITS TERRITORIES, POSSESSIONS, OR
AREAS SUBJECT TO ITS JURISDICTION, OR TO OR FOR THE ACCOUNT OR BENEFIT OF A
"U.S. PERSON" AS THAT TERM IS DEFINED IN RULE 902 OR REGULATION S OF THE ACT, AT
ANY TIME PRIOR TO ONE (1) YEAR AFTER THE ISSUANCE OF THIS CERTIFICATE, IN THE
ABSENCE OF (i) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
ACT, OR (ii) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED PURSUANT TO A VALID EXEMPTION THEREFROM FROM
UNDER THE ACT.  HEDGING TRANSACTIONS INVOLVING THE SHARES REPRESENTED HEREBY MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.  ANY SALES, TRANSFERS OR
OTHER DISTRIBUTIONS OF THE SECURITIES MUST BE MADE IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S OF THE ACT.  THIS CERTIFICATE MUST BE SURRENDERED TO
THE COMPANY OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, TRANSFER
OR OTHER DISTRIBUTION OF ANY INTEREST IN ANY OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE."

 

The Investor understands and acknowledges that the U.S. Securities and Exchange
Commission (the “Commission”) currently takes the position that coverage of
short sales of shares of the Common Shares “against the box” prior to the
effective date of a registration statement registering the re-sale of the Common
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, without limiting the restrictions
set forth herein,  Investor agrees not to use any of the Common Shares to cover
any short sales made prior to the effective date of such registration statement.

 

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(ii)  (a)  Non-U.S. Person.  The Investor is a Non-U.S. Person (as defined
herein).  As used herein, the term “United States” means and includes the United
States of America, its territories and possessions, any State of the United
States, and the District of Columbia, and the term “Non-U.S. Person” means any
person who is not a U.S. Person, within the meaning of Regulation S, the
definition of which is set forth on Schedule B attached hereto, or is deemed not
to be a U.S. Person pursuant to Rule 902(k)(2) of Regulation S, as set forth on
Schedule C attached hereto.

 

                      (b)     The Investor has been advised and acknowledges
that:

 

  (1) the Securities have not been, and when issued, will not be registered
pursuant to the Securities Act, the securities laws of any state of the United
States or the securities laws of any other country;

 

  (2) in issuing and selling the Securities to the Investor pursuant hereto, the
Company is relying upon the “safe harbor” provided by Regulation S;

 

  (3) it is a condition to the availability of the Regulation S “safe harbor”
that the Securities not be offered or sold in the United States or to a U.S.
Person until the expiration of a period of one year following the Closing (the
“Restricted Period”); and

 

  (4) notwithstanding the foregoing, prior to the expiration of the Restricted
Period the Securities may be offered or sold by the holder thereof if such offer
and sale is made in compliance with the terms of this Agreement and either: (A)
if the offer or sale is within the United States or to or for the account of a
U.S. Person (as such terms are defined in Regulation S), the sale is made
pursuant to an effective registration statement or pursuant to an exemption from
the registration requirements of the Securities Act; or (B) the offer and sale
is outside the United States and to other than a U.S. Person.

 

(iii)           The Investor agrees that with respect to the Securities until
the expiration of the Restricted Period:

 

  (1) the Investor, its agents or its representatives have not and will not
solicit offers to buy, offer for sale or sell any of the Securities, or any
beneficial interest therein in the United States or to or for the account of a
U.S. Person during the Restricted Period; and

 

-5-

 

 

  (2) notwithstanding the foregoing, prior to the expiration of the Restricted
Period the Securities shall not be offered or sold by the holder thereof unless
such offer and sale is made in compliance with the terms of this Agreement and
either: (A) if the offer or sale is within the United States or to or for the
account of a U.S. Person (as such terms are defined in Regulation S), the sale
is made pursuant to an effective registration statement or pursuant to an
exemption from the registration requirements of the Securities Act; or (B) the
offer and sale is outside the United States and to other than a U.S. Person; and

 

  (3) the Investor will not engage in hedging transactions with regard to the
Securities unless in compliance with the Securities Act.

 

The foregoing restrictions are binding upon subsequent transferees of the
Securities, except for transferees pursuant to an effective registration
statement.  The Investor agrees that after the Restricted Period, the Securities
may be offered or sold within the United States or to or for the account of a
U.S. Person only pursuant to applicable securities laws, including, without
limitation, Regulation S.

 

(iv)        The Investor is not purchasing the Securities as a result of any
advertisement, article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or other general solicitation or
advertisement.  The Investor has not engaged, nor is it aware that any party has
engaged, and the Investor will not engage or cause any third party to engage, in
any “directed selling efforts," as such term is defined in Regulation S, in the
United States with respect to the Securities.

 

(v)         The Investor: (1) is domiciled and has its principal place of
business outside the United States; (2) certifies it is not a U.S. Person and is
not acquiring the Securities for the account or benefit of any U.S. Person; and
(3) at the time of the Closing, the Investor or persons acting on the Investor's
behalf in connection therewith will be located outside the United States.

 

(vi)        At the time of offering to the Investor and communication of the
Investor’s order to purchase the Securities and at the time of the Investor’s
execution of this Agreement, the Investor or persons acting on the Investor’s
behalf in connection therewith were located outside the United States.

 

(vii)       The Investor is not a “distributor” (as defined in Regulation S) or
a “dealer” (as defined in the Securities Act).

 

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(viii)      The Investor acknowledges that the Company shall make a notation in
its stock books regarding the restrictions on transfer set forth in this
Agreement and shall transfer such shares on the books of the Company only to the
extent consistent therewith.  In particular, the Investor acknowledges that the
Company shall refuse to register any transfer of the Securities not made in
accordance with the provisions of Regulation S, pursuant to registration
pursuant to the Securities Act or pursuant to an available exemption from
registration.

 

(ix)         The Investor hereby represents that the Investor is satisfied as to
the full observance of the laws of the Investor’s jurisdiction in connection
with any invitation to subscribe for the Securities or any use of the Agreement,
including (i) the legal requirements within such Investor's jurisdiction for the
purchase of the Securities, (ii) any foreign exchange restrictions applicable to
such purchase, (iii) any governmental or other consents that may need to be
obtained and (iv) the income tax and other tax consequences, if any, that may be
relevant to the purchase, holding, redemption, sale or transfer of the
Securities.  The Investor’s subscription and payment for, and the Investor's
continued beneficial ownership of, the Securities will not violate any
applicable securities or other laws of the Investor’s jurisdiction.

 

(x)          The Investor is a resident of a country (an “International
Jurisdiction”) other than Canada or the United States and the decision to
subscribe for the Securities was taken in such International Jurisdiction.

 

(xi)         The delivery of this Subscription Agreement, the acceptance of it
by the Company and the issuance of the Securities to the Investor complies with
all laws applicable to the Investor, including the laws of the Investor’s
jurisdiction of formation, and all other applicable laws, and will not cause the
Company to become subject to, or require it to comply with, any disclosure,
prospectus, filing or reporting requirements under any applicable laws of the
International Jurisdiction.

 

(xii)        The Investor is knowledgeable of, or has been independently advised
as to, the application or jurisdiction of the securities laws of the
International Jurisdiction which would apply to the subscription (other than the
securities laws of Canada and the United States).

 

(xiii)       The Investor is purchasing the Securities pursuant to exemptions
from the prospectus and registration requirements (or their equivalent) under
the applicable securities laws of that International Jurisdiction or, if such is
not applicable, each is permitted to purchase the Securities under the
applicable securities laws of the International Jurisdiction without the need to
rely on an exemption.

 

(xiv)       The applicable securities laws do not require the Company to
register any of the Securities, file a prospectus or similar document, or make
any filings or disclosures or seek any approvals of any kind whatsoever from any
regulatory authority of any kind whatsoever in the International Jurisdiction.

 

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(xv)       The Investor will not sell, transfer or dispose of the Securities
except in accordance with all applicable laws, including, without limitation,
applicable securities laws of each of International Jurisdiction, Canada and the
United States, and the Investor acknowledges that the Company shall have no
obligation to register any such purported sale, transfer or disposition which
violates applicable, International Jurisdiction, Canadian or United States or
other securities laws.

 

(xvi)      Investor Status.  Investor is 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
(excluding the value of an Investor’s home) or annual income exceeding $200,000,
or $300,000 jointly with their spouse and is defined on Schedule A hereto.

 

(xvii)     Experience of Investor.  The 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 Securities, and has so evaluated the
merits and risks of such investment.  The Investor is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

 

(d)         Access to Information.  The Investor has reviewed the SEC Reports
(as that term is defined in Section 4(g)).  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, which Investor considers necessary and
appropriate in order to permit Investor to evaluate the merits and risks of an
investment in the Common Shares.  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 Common Shares 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.

 

4.           Representations and Warranties of the Company.

 

The Company hereby makes the following representations and warranties to the
Investor:

 

(a)         Organization and Qualification.  The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.  Each
of the Company and its subsidiaries (each, a “Subsidiary”) 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”).

-8-

 

 

(b)         Authorization; Enforcement.  The Company has the requisite corporate
power and authority to enter into and to consummate the Offering, and to issue
the Common Shares.  The execution and delivery of this Subscription Agreement
and the Common Shares 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 Common Shares 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 Commission of
a Form D pursuant to Commission Regulation D (as applicable), (ii) any
applicable Blue Sky filings and (iii) listing with the NYSE-Amex (collectively,
the “Required Approvals”).

 

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(e)         Issuance of the Common Shares.  The Common Shares 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.

 

(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; provided that it is understood that the
Company’s Series E Preferred Stock (and the warrants issued in connection with
such Series E Preferred Stock) have certain anti-dilution rights as described in
the SEC Reports. No approval or authorization of any stockholder of the Company,
or others is required for the issuance and sale of the Common Shares.

 

(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)           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 Common Shares by the
Company to the Investor as contemplated hereby.

 

(i)           No General Solicitation.  Neither the Company nor any Person
acting on behalf of the Company has offered or sold any of the Common Shares by
any form of general solicitation or general advertising.  The Company has
offered the Common Shares for sale only to each investor in the Offering and
certain other “accredited investors” within the meaning of Rule 501 under the
Securities Act.

 

5.           Other Agreements of the Company and the Investor.

 

(a)         Press Releases.  The Company may issue a press release if required
upon the final closing of the offering and in its reasonable discretion.

 

-10-

 

 

(b)         Confidentiality.  Each Investor agrees that he, she or it will keep
confidential and will not disclose, divulge or use for any purpose 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 or in
connection with this Subscription 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.

 

(c)         Registration Rights.  If, at any time after the date hereof the
Company shall determine to prepare and file with the Securities and Exchange
Commission (the “SEC”) a registration statement relating to an offering for its
own account or the account of others under the Securities Act of 1933, as
amended (the “Securities Act”) or any of its equity securities (a "Registration
Statement"), other than a pre-effective or post-effective amendment to a current
registration statement or other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with stock option
or other employee benefit plans, then the Company shall provide to Investor with
respect to the Shares (hereinafter, the “Registrable Securities”) the
opportunity to have such Registrable Securities included in such Registration
Statement; provided, that the Company shall only be required to provide such
opportunity until the earliest of (i) the date all of such Registrable
Securities have been sold pursuant to a Registration Statement, (ii) the date
all of such Registrable Securities have otherwise been 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, and (iii) the date all of such
Registrable Securities may be sold without volume or manner of sale limitations
pursuant to Rule 144 (the "Effectiveness Period").  In connection with any
registration:

 

(i)  Investor may not participate in any registration hereunder which is
underwritten unless Investor (A) agrees to sell its securities on the basis
provided in any underwriting arrangements approved by the Company and (B) with
respect to any registration, timely completes and executes all questionnaires
and other customary documents.

 

(ii)  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 shall be borne by the Company.  Investor shall bear any reasonable
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 the Investor’s
counsel.  The Company shall use its reasonable best efforts to qualify any of
the Registrable Securities for sale in such states as the Investor reasonably
designates provided that 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 Companyto qualify to do business
in such state or require the Company to file therein any general consent to
service of process and the Company shall in no event be required to qualify in
greater than five states.

 

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(iii) Notwithstanding any other provisions hereof, with respect to an
underwritten public offering by the Company, if the managing underwriter advises
the Company that marketing or other factors require a limitation of the number
of shares to be underwritten, then there shall be excluded from such
registration and underwriting to the extent necessary to satisfy such
limitation, Registrable Securities held by the Investor prior to any cutback of
shares to be sold for the Company or any other holder of shares with
registration rights.  Further, the Investor shall agree not to sell any
Registrable Securities included in the underwritten public offering for such
period as may be reasonably required by the managing underwriter.  In connection
with filing any Registration Statement; if the SEC limits the amount of
securities to be registered, then the Company shall be allowed to exclude the
Registrable Securities from the Registration Statement prior to excluding any
securities it desires to register on its own account and any securities entitled
to registration rights under any other agreement to which the Company is a
party.

 

6.           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
schedules 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.

 

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(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.

 

(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.

 

(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.

 

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(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. The parties hereto shall be responsible for their
own legal and other expenses, if any, in connection with this transaction.

 

[ remainder of page intentionally left blank ]

 

-14-

 

 

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 Common Shares Subscribed for: $_______________

Number of Common Shares Subscribed for: ________________

 

    If other than individual check one and indicate capacity of signatory under
the signature :  Name of Investor (Print)       ¨ Trust Name of Joint Investor
(if any) (Print)   ¨ Estate     ¨   Uniform Gifts to Minors Act       State
of_______________ Signature of Investor   ¨ Attorney-in-fact     ¨ Corporation  
  ¨ Other Signature of Joint Investor (if any)                   If Joint
Ownership, Check one:      ¨  Joint Tenants with Right of Survivorship Capacity
of Signatory (if applicable)   ¨

Tenants in Common

    ¨ Tenants by the Entirety Social Security or Taxpayer Identification Number
  ¨ Community Property         Investor Address:   Backup Withholding
Statement: 

  £  Please check this box only if the Street Address  

investor is subject to backup

withholding

            Foreign Person:

City           State           Zip Code

 

Telephone:  (_____)______________________________

  ¨

Please check this box only if the

investor is a nonresident alien,

foreign partnership, foreign trust,

corporation, or foreign estate

        Fax:  (_______) _________________________________    
Country ______________       Passport # ____________      
ID # _________________ E-mail: _______________________________________    
ID Type ______________         Address for Delivery of Common Shares (if
different from above):                       City           State           Zip
Code      

 

 

-15-

 

 

THE SUBSCRIPTION FOR COMMON SHARES OF NEOSTEM, INC. BY THE ABOVE NAMED
INVESTOR(S) IS ACCEPTED THIS ___ DAY OF FEBRUARY, 2012

 

  NEOSTEM, INC.         By:     Name: Robin Smith   Title: Chairman of the Board
and CEO

 

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Schedule A

 

Accredited Investor

 

An “accredited Investor” means:

 

  i. a bank, insurance company, registered investment company, business
development company, or small business investment company;         ii. an
employee benefit plan, within the meaning of the Employee Retirement Income
Security Act, if a bank, insurance company, or registered investment adviser
makes the investment decisions, or if the plan has total assets in excess of $5
million;    iii. a charitable organization, corporation, or partnership with
assets exceeding $5 million;         iv. a director, executive officer, or
general partner of the company selling the securities;   v. a business in which
all the equity owners are accredited investors;         vi. a natural person who
has individual net worth, or joint net worth with the person’s spouse, that
exceeds $1 million at the time of the purchase, exclusive of the value of the
person's primary residence;   vii. a natural person with income exceeding
$200,000 in each of the two most recent years or joint income with a spouse
exceeding $300,000 for those years and a reasonable expectation of the same
income level in the current year; or         viii. a trust with assets in excess
of $5 million, not formed to acquire the securities offered, whose purchases a
sophisticated person makes.

 

-17-

 

 

Schedule B

 

U.S. Person

 

A "U.S. person" means:

 

  i. Any natural person resident in the United States;

 

  ii. Any partnership or corporation organized or incorporated under the laws of
the United States;

 

  iii. Any estate of which any executor or administrator is a U.S. person;

 

  iv. Any trust of which any trustee is a U.S. person;

 

  v. Any agency or branch of a foreign entity located in the United States;

 

  vi. Any non-discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary for the benefit or account of a U.S.
person;

 

  vii. Any discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the United States; and

 

  viii. Any partnership or corporation if:

 

  A. Organized or incorporated under the laws of any foreign jurisdiction; and

 

  B. Formed by a U.S. person principally for the purpose of investing in
securities not registered under the Act, unless it is organized or incorporated,
and owned, by accredited investors (as defined in Rule 501(a)) who are not
natural persons, estates or trusts.

 

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Schedule C

 

Non-U.S. Person

 

The following are not "U.S. persons":

 

  i. Any discretionary account or similar account (other than an estate or
trust) held for the benefit or account of a non-U.S. person by a dealer or other
professional fiduciary organized, incorporated, or (if an individual) resident
in the United States;

 

  ii. Any estate of which any professional fiduciary acting as executor or
administrator is a U.S. person if:

 

  A. An executor or administrator of the estate who is not a U.S. person has
sole or shared investment discretion with respect to the assets of the estate;
and

 

  B. The estate is governed by foreign law;

 

  iii. Any trust of which any professional fiduciary acting as trustee is a U.S.
person, if a trustee who is not a U.S. person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of the trust
(and no settlor if the trust is revocable) is a U.S. person;

 

  iv. An employee benefit plan established and administered in accordance with
the law of a country other than the United States and customary practices and
documentation of such country;

 

  v. Any agency or branch of a U.S. person located outside the United States if:

 

  A. The agency or branch operates for valid business reasons; and

 

  B. The agency or branch is engaged in the business of insurance or banking and
is subject to substantive insurance or banking regulation, respectively, in the
jurisdiction where located; and

 

  vi. The International Monetary Fund, the International Bank for Reconstruction
and Development, the Inter-American Development Bank, the Asian Development
Bank, the African Development Bank, the United Nations, and their agencies,
affiliates and pension plans, and any other similar international organizations,
their agencies, affiliates and pension plans.

 

-19-