Unassociated Document


    

     

    


     

    
      December
18, 2008

       

      RimAsia
Capital Partners, L.P.

      1808
Hutchison House

      10
Harcourt Road,

      Admiralty

      Hong
Kong

      Attn:
Eric Wei


       

      Dear
Eric:

       

      This will
confirm our understanding with regard to (i) the amendment of that certain
outstanding warrant (the “September 2008
Warrants”) held by RimAsia Capital Partners, L.P. (“RimAsia”) to purchase
up to 1,000,000 shares of the common stock, $.001 par value (the “Common Stock”) of
NeoStem, Inc. (“NeoStem”) which was
issued to RimAsia in September 2008; (ii) the proposed issuance to RimAsia in a
capital raise in early 2009 of warrants (included as part of units) to purchase
up to 4,000,000 shares of Common Stock (the”2009 Capital Raise
Warrants”); and (iii) the proposed issuance to RimAsia pursuant to that
certain Agreement and Plan of Merger (the “Merger Agreement”)
entered into as of November 2, 2008, by and among NeoStem, CBH Acquisition LLC,
a Delaware limited liability company and a wholly owned subsidiary of NeoStem
(“Subco”),
China Biopharmaceuticals Holdings, Inc., a Delaware corporation (“CBH”) and China
Biopharmaceutical Corp., a British Virgin Islands corporation (“CBC”), of Class B
Warrants (the “Class B Warrants”) of NeoStem to purchase up to 2,400,000 shares
of Common Stock and 6,977,512 shares of NeoStem’s Series C Convertible Preferred
Stock (the “Preferred
Stock”).

       

      The
parties desire that the September 2008 Warrants, the 2009 Capital Raise
Warrants, the Class B Warrants (collectively, the “Warrants”) and the
Preferred Stock all contain a “blocker,” such that exercise of the Warrants
and/or conversion of the Preferred Stock will be blocked at any time that such
exercise or conversion would increase RimAsia’s beneficial ownership of the
Company’s common stock above 19.9% (with certain exceptions described below).
Accordingly, RimAsia agrees that the (i) September 2008 Warrants are hereby
amended to give effect to the paragraph set forth below, and (ii) the 2009
Capital Raise Warrants, Class B Warrants and Preferred Stock shall give effect
to the paragraph set forth below when and to the extent that they are
issued.

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      “Notwithstanding
anything herein to the contrary, in no event shall the Holder be entitled to
[exercise any portion of this Warrant/convert any portion of the Preferred
Stock] in excess of that portion of this [Warrant/Preferred Stock] upon
[exercised/conversion] of which the sum of (1) the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the [Warrant/Preferred Stock] or the unexercised or
unconverted portion of any other security of the Holder subject to a limitation
on exercise or conversion analogous to the limitations contained herein) and (2)
the number of shares of Common Stock issuable upon the conversion of the portion
of this [Warrant/Preferred Stock] with respect to which the determination of
this proviso is being made, would result in beneficial ownership by the Holder
and its Affiliates of any amount greater than 19.99% of the then outstanding
shares of Common Stock (whether or not, at the time of such exercise, the Holder
and its Affiliates beneficially own more than 19.9% of the then outstanding
shares of Common Stock). As used herein, the term “Affiliate” means any person
or entity that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a person or entity,
as such terms are used in and construed under Rule 144 under the Securities
Act.  For purposes of the second preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except as
otherwise provided in clause (1) of such sentence.  The preceding
limitations set forth herein shall not apply upon a merger, consolidation or
sale of all or substantially all of the assets of the Company if the
shareholders of the Company prior to such transaction do not own more than 50%
of the entity succeeding to the business of the Company after such transaction,
and does not apply following any exercise of any mandatory conversion or
redemption rights by the Company and shall remain in place until such time as
approval of NeoStem’s shareholders shall be obtained to remove such limitation
and such request shall be made of the shareholders by a proposal to be contained
in the Company’s  proxy statement/Form S-4 to be filed in connection
with the approval of the Merger Agreement.”

       

      


      Very
truly yours,

       

      /s/ Robin L.
Smith

       

      Robin L.
Smith, CEO, NeoStem, Inc.


       

       

      Accepted
and Agreed:

       

      RIMASIA
CAPITAL PARTNERS, L.P.

       

      By: /s/ Eric
Wei