Exhibit 10.39
 
CONSULTING AGREEMENT
 
This CONSULTING AGREEMENT (this “Agreement”) is effective as of February 7, 2016
(the “Effective Date”), by and between Cellular Biomedicine Group, Inc., a
Delaware corporation (the “Company”), and Wei (William) Cao, having a place of
business at 22B, 3131 Hong Mei Rd., Shanghai 201103 (the “Consultant”).
 
Section 1. SERVICES.  The Company hereby retains Consultant and Consultant
hereby agrees to render consulting services (“Services”) to the Company as
Advisor to the Chief Executive Officer for the term of this Agreement.  The
Services shall include those duties set forth on Exhibit A hereto.  The
Consultant will not perform any Services for the Company except as authorized or
requested by the Company.  Consultant agrees to engage in and complete the
Services in a professional and workmanlike manner.
 
Section 2. TERM AND TERMINATION.
 
(a) This Agreement is effective as of the Effective Date, and will terminate on
February 7, 2018 (the “Termination Date”), unless terminated earlier pursuant to
subsection (b) or (c) below or extended by mutual consent of the Consultant and
the Company.
 
(b) Prior to August 7, 2016, this agreement may be terminated by the Company
only for the following:
 
(i)  
a material breach by the Consultant of his obligations under this Agreement;

 
(ii)  
intentional non-performance or mis-performance of Consultant’s Services, or, in
the sole judgment of the Chief Executive Officer, the refusal to abide by or
comply with the directives of the Chief Executive Officer or the Company's
policies and procedures;

 
(iii)  
conviction of, or a plea of nolo contendere to, a felony or other crime
involving moral turpitude provided such conviction is not the result of the
Consultant carrying out his Services under this Agreement for the Company (given
the nature of the Company’s business activities);

 
(iv)  
Consultant’s gross negligence in the performance of his Services under this
Agreement;

 
(v)  
Consultant’s willful dishonesty, fraud or misconduct with respect to the
business or affairs of the Company, that in the sole judgment of the Company’s
Board of Directors, materially and adversely affects the Company;

 
(vi)  
Consultant’s commission of any willful act in direct competition with or
materially detrimental to the best interests of Company; or

 
(vii)  
misappropriation by the Consultant of any material amount of funds, property, or
rights of the Company.

 
(c) This Agreement may be terminated as of August 7, 2016 or at any time
thereafter for any reason by either the Company or the Consultant by giving at
least thirty (30) days’ prior written notice of termination to the other party.
 
 
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(d) Termination of this Agreement shall not affect (i) the Company’s obligation
to pay for Services previously rendered by the Consultant or expenses reasonably
incurred by the Consultant for which the Consultant is entitled to reimbursement
under Section 3 of this Agreement, or (ii) the Consultant’s continuing
obligations to the Company under Sections 5, 6 and 7 of this Agreement.
 
Section 3. COMPENSATION.
 
(a) As compensation for the Services to be rendered pursuant to this Agreement,
the Company shall pay to Consultant the sum of $12,500 per month (or
approximately $288.46 per hour), for an average  of 10 hours of Service per week
but not to exceed 10 hours per week for the term, , to be paid in cash [on a
monthly basis] in accordance with Company policy. Consultant’s time spent on (i)
travel required by the Company in connection with Services rendered, (ii) the
performance of his duties as a member of the board of directors of the Company,
or (iii) any other activity outside of the Services provided for herein shall
not be compensated and shall not count towards the 10 hour maximum set forth
herein.
 
(b) The Company shall reimburse the Consultant for actual travel and other
out-of-pocket expenses incurred solely in connection with Services performed
pursuant to the Company’s request.  Prior to August 7, 2016, such expenses may
include up to 10,000 RMB per month for car and driver expenses incurred while
performing Services in Shanghai.  All travel and out-of-pocket expenses pursuant
to this Section 3(b) shall be incurred in accordance with Company policy
(including but not limited to economy class air travel) and pre-approved by the
Company and after submission by the Consultant of reasonably detailed invoices
documenting such expenses.
 
(c) During the 12-month period following the Effective Date (the “Coverage
Period”), the Company shall pay for the Consultant’s premiums charged to
continue medical coverage pursuant to the Company’s existing employee health
plan commencing with continuation coverage for the month in which the date of
determination occurs, provided, that to the extent the Consultant is ineligible
to receive, or the Company is not able to provide, continuation coverage under
the Company’s existing employee health plan, the Company shall pay the
Consultant a cash payment equal to $1,667 for each month in the Coverage Period
during which such continuation coverage is ineligible.  No cash payment made
pursuant to this Section 3(c) shall, in the aggregate, exceed $20,000.
Notwithstanding the foregoing provisions of this Section 3(c), in the event the
Consultant becomes re-employed with another employer during any month in the
12-month continuation period provided for by this Section 3(c), the Company
shall have no obligation to pay, reimburse or otherwise provide the Consultant
with continuation coverage for any such month.
 
(d) As additional consideration for the Services rendered herein, the terms of
Consultant’s existing stock options shall be amended pursuant to Exhibit B
attached hereto.
 
(e) Consultant shall not be entitled to any other compensation or benefits for
the Services other than as set forth in this Section 3.
 
Section 4. RELATIONSHIP OF THE PARTIES; NO CONFLICTS.
 
(a) Notwithstanding any provision of this Agreement to the contrary, the
Consultant is and shall at all times be an independent contractor and not an
employee, agent, partner, or joint venture of the Company.  The Consultant shall
have no right under this Agreement, or as a result of its, his or her consulting
services to the Company, to participate in any other employee, retirement,
insurance or other benefit program of the Company, nor will the Company make any
deductions from the Consultant’s compensation for taxes, the payment of which
shall be solely the Consultant’s responsibility.  The Consultant is and shall
not be eligible to participate in any employee benefit programs of the Company.
 
 
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(b) The Consultant shall pay, when and as due, any and all taxes incurred as a
result of its, Consultant’s compensation hereunder, including estimated taxes,
and if requested by the Company, provide the Company with proof of said
payments.  The Consultant further agrees to indemnify the Company and hold it
harmless to the extent of any obligation imposed on the Company: (i) to pay
withholding taxes or similar items; or (ii) resulting from the Consultant being
determined not to be an independent contractor.
 
(c) The Consultant represents and warrants that (a) neither this Agreement nor
the performance thereof will conflict with or violate any obligation of the
Consultant or right of any third party; (b) the Consultant has obtained all
licenses or certifications necessary to perform the Services; and (c) the
Consultant shall comply with all applicable laws, rules and regulations in the
performance of the Services.
 
Section 5. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
 
(a) The Consultant recognizes and acknowledges that all oral or written
knowledge and information which Consultant has, will or may acquire or develop
relating to the business of the Company or its subsidiaries or affiliates,
including, without limitation, any financial or accounting information, business
plans, business strategies, business forecasts, sales and merchandising
materials, patents, patent applications, copyrights, trademarks, trademark
applications or other intellectual property, models, techniques, know-how, trade
secrets, processes, formulations and apparatus relating to the same and any
other confidential or proprietary information related to the current, future and
proposed products, services and business generally of the Company or its
subsidiaries or affiliates (collectively, “Confidential Information”) are the
valuable property of the Company or its subsidiaries or
affiliates.  Confidential Information also includes proprietary or confidential
information of any third party who may disclose such information to the Company
or Consultant in the course of the Company’s business.
 
(b) The Consultant covenants and agrees that: (i) Consultant will use and hold
all Confidential Information in accordance with all applicable laws, rules and
regulations and in no event will use or cause to be used Confidential
Information in a manner harmful to or competitive with the Company and (ii)
without the prior written consent of the Company, the Consultant will not use,
disclose, divulge or publish any Confidential Information at any time during the
term hereof or thereafter except as may be necessary to perform the Services;
provided, however, that the Consultant shall not be obligated to treat as
confidential, any Confidential Information that the Consultant can prove through
Consultant’s own written documentation that (A) was publicly known at the time
of disclosure to the Consultant, (B) became publicly known or available
thereafter other than by means in violation of this Agreement or any other duty
owed to the Company by the Consultant, or (C) was lawfully disclosed to the
Consultant by a third party.  In the event a court or governmental agency
legally compels Consultant to disclose Confidential Information, Consultant
shall promptly inform the Company of the compelled disclosure, so that the
Company may seek a protective order or other remedy or waive compliance with
this Agreement, or both, and Consultant shall reasonable cooperate with the
Company in those efforts.  Consultant shall limit any compelled disclosure of
Confidential Information to that which is legally required.
 
(c) The Consultant agrees that any disclosure of Confidential Information will
only be such as is reasonably necessary to the performance of the Services and
will only be to Consultant’s employees and assistants who are bound by written
agreements with Consultant to maintain the Confidential Information in
confidence.
 
(d) The Consultant agrees not to disclose to the Company, or use in connection
with the Consultant’s efforts for the Company, any Confidential Information
belonging to any third party, including the Consultant’s prior employers, or any
prior inventions made by him or her and which the Company is not otherwise
legally entitled to learn of or use.
 
 
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(e) Upon termination of service hereunder or upon the Company’s request at any
time, the Consultant agrees to promptly deliver to the Company, all Confidential
Information in Consultant’s possession that is written or other tangible form
(together with all copies or duplicates thereof, including computer files), and
all other property, materials or equipment that belong to the Company, its
affiliates, subsidiaries, customers, prospects or suppliers.
 
Section 6. INTELLECTUAL PROPERTY.
 
(a) As used herein, the term “Intellectual Property” means any and all new or
useful art, discovery, improvement, technical development, or invention, whether
or not patentable, and all related or other copyrights, trademarks, know-how,
designs, logos, formulae, processes, manufacturing or other techniques, trade
secrets, ideas, artworks, software or other copyrightable, trademarkable or
patentable work, that the Consultant, solely or jointly with others, makes,
conceives or reduces to practice that resulted from the Consultant’s Services
for the Company under this Agreement.
 
(b) Consultant agrees that all right, title and interest of every kind and
nature whatsoever in and to the Intellectual Property made, discussed,
developed, secured, obtained or learned by the Consultant during the term of
this Agreement, or the 90-day period immediately following termination of this
Agreement, shall be deemed “work for hire” and are hereby assigned to the
Company on a perpetual, worldwide and exclusive basis without further
consideration, and shall be the sole and exclusive property of the Company for
any purposes or uses whatsoever, and shall be disclosed promptly by the
Consultant to the Company during the course of Consultant’s performance of the
Services hereunder.
 
(c) The Consultant agrees to assist the Company in any reasonable manner to
obtain and enforce for the Company’s benefit any patents, copyrights, trademarks
and other property rights in any and all countries, with respect to any
Intellectual Property, and the Consultant agrees to execute, when requested,
patent, copyright, trademark or similar applications and assignments to the
Company and any other lawful documents deemed necessary by the Company to carry
out the purposes of this Agreement with respect thereto.  In the event that the
Company is unable for any reason to secure the Consultant’s signature to any
document required to apply for or execute any patent, copyright or other
applications with respect to any Intellectual Property (including improvements,
renewals, extensions, continuations, divisions or continuations in part
thereof), after a written demand is made therefor upon the Consultant (which
shall refer to the provisions of this Section 6(c)), the Consultant hereby
irrevocably designates and appoints the Company and its officers and agents as
the Consultant’s agents and attorneys-in-fact to act for and on the Consultant’s
behalf and instead of the Consultant, to execute and file any such application
and to do all other lawfully permitted acts to further the prosecution and
issuance of patents, copyrights, mask works or other rights thereon with the
same legal force and effect as if executed by the Consultant.
 
Section 7. NON-SOLICITATION, NON-COMPETITION AND AVOIDANCE OF CONFLICTS.During
the term of this Agreement and for a period of two (2) years thereafter, the
Consultant agrees that, without the prior written consent of the Company, the
Consultant will not, directly or indirectly, on its, his or her behalf or on
behalf of any other person or entity: (i) call upon, solicit, divert or take
away or attempt to solicit, divert or take away any of the customers, vendors,
business or patrons of the Company; (ii) solicit or attempt to solicit for
employment or consultancy any person who is then an employee of or consultant to
the Company or who was an employee of or consultant to the Company at any time
during the three (3) month period immediately prior to the date of the subject
solicitation; or own, operate, manage, join, control, participate in the
ownership, management, operation or control of, or be paid or employed by, or
acquire any securities of, or otherwise become associated with or provide
assistance to, as an employee, consultant, director, officer, shareholder,
partner, agent, associate, principal, representative or in any other capacity,
any business entity which engages in any competitive line of business in which
the Company is engaged.
 
 
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Section 8. EMPLOYMENT OF ASSISTANTS.  Should the Consultant deem it necessary to
employ assistants to aid Consultant in the performance of the Services, the
Consultant shall so notify the Company and obtain the Company’s prior written
consent.  The parties agree that the Company will not direct, supervise, or
control in any way such assistants to the Consultant in their performance of
Services.  The parties further agree that such assistants are employed solely by
the Consultant, and that Consultant alone is responsible for providing workers’
compensation insurance for Consultant’s employees, for paying the salaries and
wages of Consultant’s employees, and for ensuring that all required tax
withholdings are made.  Consultant further represents and warrants that
Consultant maintains workers’ compensation insurance coverage for Consultant’s
employees and acknowledges that Consultant alone has responsibility for such
coverage.  Consultant shall impose upon such assistants the same confidentiality
obligations as contained in this Agreement. In addition to the foregoing,
Consultant shall not utilize any Company employees to aid Consultant in the
performance of the Services without the Company’s prior written consent and in
any event, in accordance with the confidentiality obligations as contained in
this Agreement.
 
Section 9.  INDEMNIFICATION.  The Consultant agrees to indemnify, defend, and
hold the Company free and harmless from all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties, attorneys’ fees, and costs, that the Company may
incur as a result of a breach by Consultant of any representation or covenant
contained in this Agreement or the that arise as a result of the provision by
the Consultant of the Services.
 
Section 10.  RIGHTS AND REMEDIES UPON BREACH.  If the Consultant breaches or
threatens to commit a breach of any of the provisions of Sections 5, 6 or 7 of
this Agreement (the “Protective Covenants”), Consultant agrees that such breach
or threatened breach of the Protective Covenants would cause irreparable injury
to the Company and that money damages would not provide an adequate remedy to
the Company.  Accordingly, and in addition to any other remedies that may be
available, in law, in equity or otherwise, the Company shall be entitled to
obtain injunctive relief against the breach or threatened breach of this
Agreement or the continuation of any such breach in any court of competent
jurisdiction, without the necessity of proving actual damages and without the
necessity of posting bond or other security.
 
Section 11. MISCELLANEOUS.
 
(a This Agreement shall be governed in all respects by the laws of the State of
New York, without regard to any provisions thereof relating to conflict of laws
among different jurisdictions.
 
(b) The parties agree that any dispute or controversy arising out of or relating
to any interpretation, construction, performance or breach of this Agreement
shall be brought only in the state courts of New York or in the federal courts,
in each case located in the state and county of New York. The parties to this
Agreement hereby irrevocably waive any objection to jurisdiction and venue of
any action instituted hereunder and shall not assert any defense based on lack
of jurisdiction or venue or based upon forum non conveniens.
 
(c) This Agreement is the entire agreement of the parties with respect to the
Services to be provided by the Consultant and supersedes any prior agreements
between the parties with respect to the subject matter of this Agreement.  This
Agreement may only be amended in writing by the Company and the Consultant and
their respective permitted successors and assigns.
 
(d) The Consultant may not assign, subcontract or otherwise delegate its, his or
her obligations under this Agreement without the Company’s prior written
consent.  Subject to the foregoing, this Agreement will be binding upon and
inure to the benefit of the parties and their respective heirs, legal
representatives, successors and assigns.
 
 
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(e) Either party’s failure to enforce any right resulting from a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach by the other party.
 
(f)           All notices required or permitted to be given by one party to the
other under this Agreement shall be in writing and shall be sufficient if sent
by either certified mail return receipt requested, nationally recognized
courier, facsimile or email transmission or hand delivery to the parties at the
respective addresses of the parties on the books and records of the
parties.  All notices shall be effective (i) when delivered personally, (ii)
when transmitted by fax, electronic or digital transmission, (iii) the business
day when delivered by a nationally recognized courier, or (iv) upon receipt if
sent by certified or registered mail.
 
(g) If any of the provisions of this Agreement are found to be invalid under an
applicable statute or rule of law, they are to be enforced to the maximum extent
permitted by law and beyond such extent are to be deemed omitted from this
Agreement, without affecting the validity of any other provision of this
Agreement.
 
(h) This Agreement may be executed in counterparts, each of which will be deemed
an original and all of which together shall constitute one and the same
instrument.  Such counterparts may be signed and delivered by facsimile or other
electronic transmission, which shall constitute valid execution and delivery
hereof.
 
(i) The covenants, representations and warranties in this Agreement shall
survive the termination of this Agreement.
 
IN WITNESS WHEREOF, the Company and the Consultant have signed this Agreement as
of the day and year written above.
 
CONSULTANT
 
CELLULAR BIOMEDICINE GROUP, INC.
                          By: 
/s/Wei (William) Cao
  By:
/s/ Bizuo (Tony) Liu
   
Wei (William) Cao
   
Name: Bizuo (Tony) Liu
   
 
   
Title: Chief Executive Officer
 

 
 
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Exhibit A
 
DUTIES OF CONSULTANT
 
During the term of this Agreement, Consultant shall in a timely and professional
manner provide up to 10 hours per week of the following Services to the Company:
 
1.  
As directed by the Chief Executive Officer of the Company (the “Executive”),
advise the Executive on M&A and other strategic opportunities, especially
international opportunities in the pharmaceutical industry, and to assist the
Company evaluating/exploring future international expansion.

 
2.  
As directed by the Executive, advise the Company on KOA and stem cell and immune
cell (cancer therapy) discussions with technical leaders in connection with the
Company’s R&D and expansion efforts.

 
3.  
Participate in the Company’s internal scientific reviews and actively work with
the Company’s Scientific Advisory Board.

 
4.  
Support the Executive and others in connection with financing, recruitment and
other activities as requested by Executive. Consultant shall make himself
reasonably available for consultation, either in person or by phone, email or
video conference, on an as-needed basis.

 
5.  
Timely provide all necessary information and assistance to the Company and take
all action requested by the Company in order to effect the transfer of
Consultant’s role as a representative of the Company’s subsidiaries or
controlled entities to a new Company designee, including but not limited to
Consultant’s resignation from any and all positions with the Company’s
subsidiaries or variable interest entities, transfer of any equity interest in
[Cellular Biomedicine Group Ltd. (Shanghai)], and the transfer or removal of
signatory status, legal representative status, or bank account access
authorization in connection therewith.

 
6.  
Provide other related services and advice to the Company as agreed by the
parties from time to time.

 
 
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Exhibit B
 
OPTION RESTRUCTURING
 
1.  
Any unvested portion of the Non-Qualified Stock Option with an exercise price of
$15.53 issued to the Consultant pursuant to that certain Stock Option Award
Agreement dated December 31, 2014 will vest until February 4, 2017 at the
existing monthly rate.   The options will have an expiration date of August 6,
2017.   After February 4, 2017, vesting will continue monthly for up to another
six (6) months as long as this Agreement is effective.  However, after the
termination of this Agreement, all vesting will cease.  Notwithstanding the
above, if the Consultant ceases to serve as a director of the Company prior to
February 6, 2017, he will be deemed to have forfeited such options and any
unvested options will vest and expire pursuant to the terms of the
above-referenced Stock Option Award Agreement.

 
2.  
Any unvested portion of the Non-Qualified Stock Option issued to Consultant
pursuant to that certain Stock Option Award Agreement dated February 20, 2013
shall immediately vest in full on February 6, 2016 pursuant to the Company’s
Notice of Termination to Consultant dated January 5, 2016 and shall expire on
February 6, 2017.

 
3.  
Options granted in September 2013 shall cease vesting February 6, 2016 and shall
expire February 6, 2017.

 
4.  
Any other options held by Consultant will cease to vest on February 6, 2016 and
will expire on February 7, 2016 pursuant to the terms of their respective option
award agreements.

 

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