EXHIBIT 10.3
 
LOCK UP AND VOTING AGREEMENT
 
LOCK UP AND VOTING AGREEMENT dated November 2, 2008 (the “Voting Agreement”) is
by and between NEOSTEM, INC., a Delaware corporation (the “Parent”), The CHINA
BIOPHARMACEUTICALS HOLDINGS, INC., a Delaware corporation (the “Company”), and
the individuals or entities listed on Schedule A annexed hereto (collectively,
the “Stockholders” and each individually is a “Stockholder”).
 
RECITALS
 
WHEREAS, concurrent with the execution of this Voting Agreement, the Company,
Parent and CBH Acquisition LLC (“Subco”), a Delaware limited liability company
and a wholly owned subsidiary of Parent, have entered into an Agreement and Plan
of Merger dated of even date herewith (as amended from time to time, the “merger
agreement”) pursuant to which the Company, which owns 51% of the equity of
Suzhou Erye Pharmaceuticals Co. Ltd (“Erye”), will be merged with and into Subco
with Subco continuing as the surviving company and as a direct wholly owned
subsidiary of Parent (the “merger”);
 
WHEREAS, the Stockholders are the record and beneficial owners of certain shares
of common stock, par value $0.001 per share, of the Parent (the “Common Shares”)
in the amounts set forth opposite the Stockholder’s name on Schedule A hereto,
and/or may become, at any time after the date hereof, the record and beneficial
owners of shares of capital stock of Parent (the Common Shares and any shares of
capital stock of Parent that may be acquired after the date hereof are
collectively referred to herein as the “Shares”); and
 
WHEREAS, as an inducement and a condition to entering into the merger agreement,
the Company desires that each of the Stockholders agree, and each of the
Stockholders is willing to agree, to enter into this Voting Agreement.
 
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parent, the Company and each of the Stockholders, intending to
be legally bound, hereby agree as follows:
 
1.           Certain Definitions.  In addition to the terms defined elsewhere
herein, capitalized terms used and not defined herein have the respective
meanings ascribed to them in the merger agreement.  For purposes of this Voting
Agreement:
 
 
(a)
“Beneficially Own” or “Beneficial Ownership” with respect to any securities
means having “beneficial ownership” of such securities as determined pursuant to
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), including pursuant to any agreement, arrangement or understanding,
whether or not in writing.  Without duplicative counting of the same securities
by the same holder, securities Beneficially Owned by a Person shall include
securities Beneficially Owned by all other Persons with whom such Person would
constitute a “group” within the meaning of Section 13(d)(3) of the Exchange Act.

 

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(b)
“Person” means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency or
political subdivision thereof.

 
2.           Disclosure.  Each of the Stockholders hereby agrees to permit the
Company and Parent to publish and disclose in the Company’s Proxy Statement, and
any press release or other disclosure document which Parent and the Company
reasonably determine to be necessary or desirable in connection with the merger
and any transactions related thereto, each Stockholder’s identity and ownership
of the Shares and the nature of each Stockholder’s commitments, arrangements and
understandings under this Voting Agreement.
 
3.           Voting of Shares.  Each of the Stockholders, to the extent they are
holders of Shares, in satisfaction of all contractual and legal
requirements, hereby: (i) consents to the Parent’s execution and delivery of the
merger agreement and the taking of all actions by the Company to effect the
merger; and (ii) agrees that, during the period commencing on the date hereof
and continuing until the Termination Date (as defined below), contemporaneously
with any meeting of the holders of the Shares, however called, or in connection
with any written consent of the holders of the Shares, the Stockholder shall
cause the Shares held of record or Beneficially Owned by the Stockholder,
whether now owned or hereafter acquired, to consent in writing to the merger,
adoption of the merger agreement and any actions required in furtherance
thereof.
 
4.           Covenants, Representations and Warranties of the Parent and each
Stockholder.  Each of the Stockholders hereby severally represents and warrants
(with respect to such Stockholder only and not with respect to each other
Stockholder) to, and agrees with, the Company as follows:
 
 
(a)
Ownership of Securities.  Such Stockholder is the sole record and Beneficial
Owner of the number of shares set forth opposite such Stockholder’s name on
Schedule A hereto.  On the date hereof, the Shares set forth opposite the
Stockholder’s name on Schedule A hereto constitute all of the Shares or other
securities of the Parent owned of record or Beneficially Owned by such
Stockholder or with respect to which such Stockholder has voting power by proxy,
voting agreement, voting trust or other similar instrument.  Such Stockholder
has sole voting power and sole power to issue instructions with respect to the
matters set forth in Section 3 hereof, sole power of disposition, sole power of
conversion, sole power to demand and waive appraisal rights and sole power to
agree to all of the matters set forth in this Voting Agreement, in each case
with respect to all of the Shares set forth opposite such Stockholder’s name on
the signature page hereof, with no limitations, qualifications or restrictions
on such rights, subject to applicable securities laws, and the terms of this
Voting Agreement.

 
 
(b)
Authorization.  Such Stockholder has the legal capacity, power and authority to
enter into and perform all of such Stockholder’s obligations under this Voting
Agreement.  The execution, delivery and performance of this Voting Agreement by
such Stockholder will not violate any other agreement to which such Stockholder
is a party including, without limitation, any voting agreement, stockholders
agreement, voting trust, trust or similar agreement.  This Voting Agreement has
been duly and validly executed and delivered by such Stockholder and constitutes
a valid and binding agreement enforceable against such Stockholder in accordance
with its terms.  There is no beneficiary or holder of a voting trust certificate
or other interest of any trust of which such Stockholder is a trustee whose
consent is required for the execution and delivery of this Voting Agreement or
the consummation by such Stockholder of the transactions contemplated
hereby.  If such Stockholder is married and such Stockholder’s Shares constitute
community property, this Voting Agreement has been duly authorized, executed and
delivered by, and constitutes a valid and binding agreement of, such
Stockholder’s spouse, enforceable against such person in accordance with its
terms.

 
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(c)
No Conflicts.  (i)  Except as may be required under Section 13 of the Exchange
Act, no filing with, and no permit, authorization, consent or approval of, any
state or federal public body or authority is necessary for the execution of this
Voting Agreement by such Stockholder and the consummation by such Stockholder of
the transactions contemplated hereby and (ii) none of the execution and delivery
of this Voting Agreement by such Stockholder, the consummation by such
Stockholder of the transactions contemplated hereby or compliance by such
Stockholder with any of the provisions hereof shall (A) conflict with or result
in any breach of the organizational documents of such Stockholder (if
applicable), (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which such Stockholder is a
party or by which such Stockholder or any of its properties or assets may be
bound, or (C) violate any order, writ injunction, decree, judgment, order,
statute, rule or regulation applicable to such Stockholder or any of its
properties or assets.

 
 
(d)
No Encumbrances.  Such Stockholder’s Shares at all times during the term hereof
will be Beneficially Owned by such Stockholder, free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements, understandings
or arrangements or any other encumbrances whatsoever.

 
 
(e)
No Solicitation.  Such Stockholder agrees not to take any action inconsistent
with or in violation of the merger agreement.

 
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(f)
Restriction on Transfer; Proxies and Non-Interference.  At any time during the
period (the “Lock-Up Period”) from the date hereof until the earlier of (i) one
hundred and eighty (180) days following the closing of the Merger or (ii) the
termination of the Merger Agreement, such Stockholder shall not, directly or
indirectly, (i) except for a Permitted Transfer (as defined below) and except as
contemplated by the merger agreement, offer for sale, sell, transfer, tender,
pledge, encumber, assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to or consent to the
offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of any such Stockholder’s Shares, or any interest
therein, whether such shares are held by such Stockholder as of the date hereof
or are acquired by such Stockholder from and after the date hereof, whether in
connection with the merger or otherwise (together with the Shares, the “Lock-Up
Shares”), (ii) except as contemplated by this Voting Agreement, grant any
proxies or powers of attorney, deposit any Shares into a voting trust or enter
into a voting agreement with respect to the Lock-Up Shares, or (iii) take any
action that would make any representation or warranty of such Stockholder
contained herein untrue or incorrect or have the effect of preventing or
disabling such Stockholder from performing such Stockholder’s obligations under
this Voting Agreement.

 
 
(g)
Reliance by the Company.  Such Stockholder understands and acknowledges that the
Company is entering into the merger agreement in reliance upon such
Stockholder’s execution and delivery of this Voting Agreement.

 
 
(h)
Permitted Transfer.  Notwithstanding the foregoing or any other provision of
this Agreement to the contrary, any Stockholder may sell or transfer any Shares
to any Stockholder or any other Person who executes and delivers to the Company
an agreement, in form and substance acceptable to the Company, to be bound by
the terms of this Agreement to the same extent as the transferring Stockholder
(any such transfer, a “Permitted Transfer”).

 
5.           Stop Transfer Legend.
 
 
(a)
Each of the Stockholders agrees and covenants to the Company that such
Stockholder shall not request that the Parent register the transfer (book-entry
or otherwise) of any certificate or uncertificated interest representing any of
such Stockholder’s Shares, unless such transfer is made in compliance with this
Voting Agreement.

 
 
(b)
Without limiting the covenants set forth in paragraph (a) above, in the event of
a stock dividend or distribution, or any change in Shares by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, other than pursuant to the merger, the term “Shares” shall be deemed to
refer to and include any and all shares into which or for which any or all of
the Shares may be changed or exchanged, and appropriate adjustments shall be
made to the terms and provisions of this Voting Agreement.

 
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6.           Further Assurances.  From time to time until the expiration of the
Lock-Up Period, at the Company’s request and without further consideration, each
Stockholder shall execute and deliver such additional documents and take all
such further lawful action as may be necessary or desirable to consummate and
make effective, in the most expeditious manner practicable, the transactions
contemplated by this Voting Agreement.
 
7.           Stockholder Capacity.  If any Stockholder is or becomes during the
term hereof a director or an officer of the Parent, such Stockholder makes no
agreement or understanding herein in his capacity as such director or
officer.  Each of the Stockholders signs solely in his or her capacity as the
record and Beneficial Owner of the Stockholder’s Shares.
 
8.           Termination.  Except as otherwise provided herein, the covenants
and agreements contained herein with respect to the Shares shall terminate upon
the earlier of (a) the Termination Date regardless of the circumstances or (b)
the expiration of the Lock-Up Period.
 
9.           Miscellaneous.
 
 
(a)
Entire Agreement.  This Voting Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.

 
 
(b)
Certain Events.  Subject to Sections 4(f) and (g) hereof, each of the
Stockholders agrees that this Voting Agreement and the obligations hereunder
shall attach to each such Stockholder’s Shares and shall be binding upon any
Person to which legal or Beneficial Ownership of such Shares shall pass, whether
by operation of law or otherwise, including without limitation, each
Stockholder’s heirs, guardians, administrators or successors.  Notwithstanding
any such transfer of Shares, the transferor shall remain liable for the
performance of all obligations under this Voting Agreement.

 
 
(c)
Assignment.  This Voting Agreement shall not be assigned by operation of law or
otherwise without the prior written consent of the Company in the case of an
assignment by any Stockholder and each Stockholder in the case of any assignment
by the Company; provided that the Company may assign, in its sole discretion,
its rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of the Company, but no such assignment shall relieve the Company of
its obligations hereunder if such assignee does not perform such obligations.

 
 
(d)
Amendment and Modification.  This Voting Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by the parties hereto
affected by such amendment.

 
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(e)
Notices.  Any notice or other communication required or which may be given
hereunder shall be in writing and delivered (i) personally, (ii) via telecopy,
(iii) via overnight courier (providing proof of delivery) or (iv) via registered
or certified mail (return receipt requested). Such notice shall be deemed to be
given, dated and received (i) when so delivered personally, via telecopy upon
confirmation, or via overnight courier upon actual delivery or (ii) two days
after the date of mailing, if mailed by registered or certified mail. Any notice
pursuant to this section shall be delivered as follows:

 
If to the Stockholder, to the address set forth for the Stockholder on Schedule
A to this Voting Agreement.

If to Parent:

NeoStem, Inc.
420 Lexington Avenue
Suite 450
New York, New York 10170
Attn:                      Catherine Vaczy, Esq.
Facsimile: (646) 514-7787
with copies to:

Lowenstein Sandler, PC
65 Livingston Avenue
Roseland, NJ  07078
Attention:  Alan Wovsaniker, Esq.
Fax:  973-597-2565

If to the Company:

China Biopharmaceuticals, Inc.
No. 859, Pan Xu Road
Suzhou, Jiangsu Province, China, 215000
Attention: Chris Mao
Telecopy: _______________

with a copy (which shall not constitute notice) to:

Troutman Sanders LLP
The Chrysler Building
405 Lexington Avenue
New York, New York  10174
Attention:  Howard H. Jiang, Esq.
Telecopy:  (212) 704-6288
 
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(f)
Severability.  Whenever possible, each provision or portion of any provision of
this Voting Agreement will be interpreted in such a manner as to be effective
and valid under applicable law but if any provision or portion of any provision
of this Voting Agreement is held to be invalid, illegal or unenforceable in any
respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or portion of
any provision of this Voting Agreement in such jurisdiction, and this Voting
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.

 
 
(g)
Specific Performance.  Each of the parties hereto agrees, recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Voting Agreement will cause the other parties to sustain damages for which
they would not have an adequate remedy at law for money damages, and therefore
each of the parties hereto agrees that in the event of any such breach any
aggrieved party shall be entitled to the remedy of specific performance of such
covenants and agreements (without any requirement to post bond or other security
and without having to prove actual damages) and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or in
equity.

 
 
(h)
Remedies Cumulative.  All rights, powers and remedies provided under this Voting
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any such rights, powers or
remedies by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.

 
 
(i)
No Waiver.  The failure of any party hereto to exercise any right, power or
remedy provided under this Voting Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, will not constitute a waiver by such party of
its right to exercise any such or other right, power or remedy or to demand such
compliance.

 
 
(j)
No Third Party Beneficiaries.  This Voting Agreement is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.

 
 
(k)
Governing Law.  This Voting Agreement will be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflict of laws thereof.

 
 
(l)
Submission to Jurisdiction.  Each party to this Voting Agreement irrevocably
consents and agrees that any legal action or proceeding with respect to this
Agreement and any action for enforcement of any judgment in respect thereof will
be brought in the state or federal courts located within the jurisdiction of the
United States District Court for the Southern District of New York, and, by
execution and delivery of this Voting Agreement, each party to this Voting
Agreement hereby irrevocably submits to and accepts for itself and in respect of
its property, generally and unconditionally, the exclusive jurisdiction of the
aforesaid courts and appellate courts from any appeal thereof.  Each party to
this Voting Agreement further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof in the manner set forth in Section 9(e).  Each party
to this Voting Agreement hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Voting Agreement brought
in the courts referred to above and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.  Nothing in
this Section 9(l) shall be deemed to constitute a submission to jurisdiction,
consent or waiver with respect to any matter not specifically referred to
herein.

 
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(m)
WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A TRIAL BY
JURY IN CONNECTION WITH ANY ACTION, SUIT OR PROCEEDING IN CONNECTION WITH THIS
VOTING AGREEMENT.

 
 
(n)
Description Headings.  The description headings used herein are for convenience
of reference only and are not intended to be part of or to affect the meaning or
interpretation of this Voting Agreement.

 
 
(o)
Counterparts.  This Voting Agreement may be executed in counterparts, each of
which will be considered one and the same Voting Agreement and will become
effective when such counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.

 
 
(p)
No Survival.  No representations, warranties and covenants of the Stockholder in
this Agreement shall survive the merger.  The Stockholder shall have no
liability hereunder except for any willful and material breach of this Agreement
by the Stockholder.

 
 
(q)
Action in Stockholder Capacity Only.  The parties acknowledge that this
Agreement is entered into by each Stockholder solely in such Stockholder’s
capacity as the beneficial owner of such Stockholder’s Shares and,
notwithstanding anything herein to the contrary, nothing in this Agreement in
any way restricts or limits any action taken by such Stockholder or any designee
or related party of such Stockholder in his or her capacity as a director or
officer of the Company and the taking of any actions in his or her capacity as
an officer or director of the Company will not be deemed to constitute a breach
of this Agreement, regardless of the circumstances related thereto.

 

[SIGNATURE PAGE FOLLOWS]
 
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IN WITNESS WHEREOF, Parent and each of the Stockholders have caused this Voting
Agreement to be duly executed as of the day and year first above written.
 

  NEOSTEM, INC.          
 
By:
       Name           Title              

 

  CHINA BIOPHARMACEUTICALS HOLDINGS, INC.          
 
By:
       Name           Title        

 

     
 
  
         Richard Berman     Director    

 

     
 
 
      Steven Myers     Director  

 

     
 
  
       Dr. Joseph Zuckerman     Director  

 

     
 
  
       Larry A. May     Vice President and Chief Financial Officer  

 

     
 
  
       Catherine M. Vaczy     Vice President and General Counsel  

 
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       Mark Weinreb     President and Director  

 

     
 
  
       Dr. Robin L. Smith     Chief Executive Officer and Chairman of the Board
 

 
 
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