Joint
Venture Contract

    OF

    SUZHOU
ERYE PHARMACEUTICAL CO., LTD.

     

      
        

      

    

    
       

    

    


    Superseding
the Version Executed on June 16, 2005

    Amended
and Restated on October 21, 2009

    


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                	
                                                        CHAPTER
      I GENERAL

                                                      	
                                                        2

                                                      
	 	 
	
                                                        CHAPTER
      II PURPOSE, BUSINESS SCOPE AND SCALE OF THE JV COMPANY

                                                      	
                                                        2

                                                      
	 	 
	
                                                        CHAPTER
      III TOTAL INVESTMENT AND REGISTERED CAPITAL

                                                      	
                                                        3

                                                      
	 	 
	
                                                        CHAPTER
      IV LIABILITIES OF THE PARTIES

                                                      	
                                                        4

                                                      
	 	 
	
                                                        CHAPTER
      V BUSINESS OPERATION

                                                      	
                                                        6

                                                      
	 	 
	
                                                        CHAPTER
      VI BOARD OF DIRECTORS

                                                      	
                                                        7

                                                      
	 	 
	
                                                        CHAPTER
      VII OPERATION AND MANAGEMENT ORGANIZATION

                                                      	
                                                        8

                                                      
	 	 
	
                                                        CHAPTER
      VIII YARD AND PLANT

                                                      	
                                                        9

                                                      
	 	 
	
                                                        CHAPTER
      IX EMPLOYMENT MANAGEMENT

                                                      	
                                                        9

                                                      
	 	 
	
                                                        CHAPTER
      X FINANCE, ACCOUNTING AND AUDITING

                                                      	
                                                        9

                                                      
	 	 
	
                                                        CHAPTER
      XI DISTRIBUTION OF PROFITS

                                                      	
                                                        10

                                                      
	 	 
	
                                                        CHAPTER
      XII NEW PLANT CONSTRUCTION

                                                      	
                                                        10

                                                      
	 	 
	
                                                        CHAPTER
      XIII COOPERATION TERM AND ASSET DISPOSAL AFTER TERMINATION

                                                      	
                                                        12

                                                      
	 	 
	
                                                        CHAPTER
      XIV AMENDMENT, CHANGE AND CANCELLATION OF CONTRACT

                                                      	
                                                        12

                                                      
	 	 
	
                                                        CHAPTER
      XV LIABILITIES FOR DEFAULT

                                                      	
                                                        13

                                                      
	 	 
	
                                                        CHAPTER
      XVI DISPUTE RESOLUTION

                                                      	
                                                        13

                                                      
	 	 
	
                                                        CHAPTER
      XVII EFFECTIVENESS AND OTHERS

                                                      	
                                                        14

                                                      


                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
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    This
Joint Venture Contract (this “Contract”)
is entered into by and between:

     

    
      
        	
                Party A:

              	
                Suzhou Erye Economy & Trade
      Co., Ltd.

              
	Registered
      Address:    	Tainan
      Road, Canglang District, Suzhou
	Legal
      Representative: 	Shi
      Mingsheng     Title:
      Chairman    Nationality:
      Chinese


      

    

                                   

    
      
        
          	
                  Party B

                	
                  China Biopharmaceuticals
      Holdings Inc.

                
	Legal
      Address:      	      
                  101
      East 52nd
      Street, New York, New York

                
	Legal
      Representative: 	Peng
      Mao    Title: CEO    Nationality:
      Canadian


        

      

          

    

     

    WHEREAS,

     

    (1)           Party
A is a limited liability company duly registered and established and validly
existing under the laws of the People’s Republic of China (the “PRC”), and
Party B is a limited liability company duly established and validly existing
under the laws of the State of Delaware of the United States of America (the
“U.S.”).

     

    (2)           NeoStem,
Inc. (“NeoStem”)
is a corporation duly established and validly existing under the laws of the
State of Delaware of the U.S., and Party B is a wholly-owned subsidiary of
NeoStem.

     

    (3)           Suzhou
Erye Pharmaceutical Co., Ltd. (the “JV
Company” or the “Subsisting
Company”) is a limited liability company duly registered and established
and validly existing under the laws of the PRC.

     

    (5)           To
further specify the rights and obligations of Party A and Party B, Party A and
Party B agree to enter into this Contract to supersede the original JV legal
documents by amending and restating all thereof so that the original JV legal
documents will have no further effect when this Contract becomes
effective.

     

    


     

    DEFINITIONS:

     

    (1)           “Subsistence-after-Split-off”
shall mean the status of the JV Company where it is split off on September [    ],
2009 according to a resolution of the Board of Directors of the JV
Company.  Specifically, the JV Company (the Subsisting Company) will
maintain business after the split-off and will carry on partial assets and all
liabilities (other than the liabilities related to the assets that are split
off), and, in the meanwhile, a new company (the “New
Company”) will be set up to carry on partial assets.  The
Subsisting Company has executed a Split-off Agreement with the New Company which
will become effective upon the change registration with the competent
administration of industry and commerce.

     

    
      
         

      

      
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    (2)           “Split-off
Date” shall mean the date of the change registration for the aforesaid
split-off, as approved by the PRC government, with the competent administration
of industry and commerce, being the first day as from which the Split-off
Agreement becomes effective pursuant to the PRC laws.

     

    (3)           “Relocation of the
JV Company” shall mean the construction plan for a new operation premises
already carried out by the JV Company, pursuant to which the JV Company will
purchase land and new equipment on the new yard (located at Huangdai Town,
Xiangcheng District, Suzhou) and build plants thereon, and remove its operating
activities from the old yard (859 Panxu Road, Suzhou) to the new yard after
obtaining the production permit from the government authority.

     

    (4)           “Control”
shall mean the activities of a party to influence the operation and decisions of
the other party, through holding more than fifty percent (50%) of the equity
interest, or being entitled to appoint or recommend more than fifty percent
(50%) of directors of the Board, or agreement or acceptance of authorization or
otherwise.  “Controlling
Person” or “Parent
Company” shall mean such controlling party.  The Control of a
third company by a Controlling Person through the controlled company shall be
deemed as a direct Control of such third company by the Controlling
Person.

     

    (5)           “Affiliate”
shall include the Parent Company controlling a party, any subsidiary under
control by such party or any company under the common control with such
party.

     

     

    CHAPTER I

    GENERAL

     

    Article
1                      Subject
to the Law of the People’s
Republic of China on Sino-Foreign Equity Joint Venter Enterprises and
other applicable laws and regulations of the PRC, Party A and Party B agree to
carry on the operation of Suzhou Erye Pharmaceutical Co., Ltd. as a joint
venture (the “JV
Company”).  The name of the JV Company is “Suzhou Erye
Pharmaceutical Co., Ltd.” in English and “苏州二叶制药有限公司” in
Chinese.

     

    Article
2                      The
legal address of the JV Company is at 859 Panxu Road, Canglang District, Suzhou,
Jiangsu Province.

     

    Article
3                      Any
and all of the activities of the JV Company shall be in compliance with the laws
and regulations of the PRC and subject to the jurisdiction and protection of the
PRC law.

     

     

    CHAPTER
II

    PURPOSE,
BUSINESS SCOPE AND SCALE OF THE JV COMPANY

     

    Article
4                      The
purpose of the JV Company is to develop an internationally leading company by
mutual efforts based on the desire of strengthening economic cooperation and
technical communications.  Both Party A and Party B will try to
achieve the satisfactory economic benefits through scientific operation and
management, and explore and develop the business of the JV Company in the spirit
of mutual understanding and mutual cooperation.

     

    
      
         

      

      
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    Article
5                      The
business scope of the JV Company covers the production and sale
of  sterile injection powder (penicillin and cefa-), hard capsule,
crude drug (including penicillin) and aluminum cover of injection bottle, the
operation of export of antibiotic active compound and antibiotic series sterile
injection powder and capsule manufactured by the JV Company and of technologies
related thereto, the operation of export of raw and auxiliary materials,
machinery equipment, instrumentations, fittings and components, and technologies
necessary for the production and scientific research of the JV Company
(excluding products and technologies the operation of which is restricted or the
import/export of which is prohibited by the State), and the operation of the
business of processing with imported materials and the business of processing
according to samples, assembling parts conducting supplied by investor or
clients and/or conducting compensation trade.

     

    Article
6                      The
scale of the JV Company’s production shall range from RMB200,000,000 to
300,000,000 as to its annual sales revenue, and the scale will be expanded or
adjusted gradually based on the market status.

    


     

    CHAPTER III

    TOTAL
INVESTMENT AND REGISTERED CAPITAL

     

    Article
7                      The
amount of the total investment of the JV Company, as a subsisting company upon
the Subsistence-after-Split-off, shall be changed to Renminbi Thirty Two Million
Two Hundred and Forty Thousand yuan (RMB32,240,000) from the
original Renminbi Forty Million Eight Hundred and Sixteen Thousand Four Hundred
yuan
(RMB40,816,400).

     

    Article
8                      The
amount of the registered capital of the JV Company, upon the
Subsistence-after-Split-off, shall be Renminbi Sixteen Million One Hundred and
Twenty Thousand yuan
(RMB16,120,000) and its paid-in capital then shall be Renminbi Sixteen Million
One Hundred and Twenty Thousand yuan
(RMB16,120,000).

     

    
      	
                  1.      

            	
              The
      amount of the registered capital of the JV Company before the aforesaid
      split-off, being Renminbi Twenty Million Four Hundred Thousand yuan (RMB20,400,000),
      has been fully paid up, among
which,

            


    

     

    A.           an
amount of Renminbi Ten Million yuan (RMB10,000,000) was
subscribed by the original 38 Chinese individual shareholders upon the
establishment of the JV Company on June 6, 2003 as a PRC domestic
company.  Party A became a shareholder of the JV Company by purchasing
such amount from those original 38 Chinese individual shareholders on May 19,
2008.

     

    B.           an
amount of Renminbi Ten Million Four Hundred Thousand yuan (RMB10,400,000) was
injected by CBH in two installments to increase the investment, respectively, in
February of 2006 and April of 2006, totaling Two Million Two Hundred Thousand US
dollars (US$2,200,000),  equal to Renminbi Eighteen Million Two
Hundred and Eight Thousand Three Hundred yuan (RMB18,208,300) as
converted at the then exchange rate, in which the amount of Renminbi Ten Million
Four Hundred Thousand yuan (RMB10,400,000) has been
confirmed as the registered capital of the JV Company and the residual of which
is accounted as capital surplus under its capital reserve.

     

    
      
         

      

      
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                  2.      

            	
              Since
      the JV Company has been split off, the JV Company, as a subsisting
      company, sees a reduction in the amount of its registered capital from
      Renminbi Twenty Million Four Hundred Thousand yuan (RMB20,400,000)
      down to Renminbi Sixteen Million One Hundred and Twenty Thousand yuan (RMB16,120,000),
      among which Party A is holding its registered capital of Renminbi Seven
      Million Eight Hundred and Ninety Eight Thousand Eight Thousand yuan (RMB7,898,800) and
      Party B is holding its registered capital of Renminbi Eight Million Two
      Hundred and Twenty One Thousand Two Hundred yuan
      (RMB8,221,200).  Party A and Party B have paid up their
      subscribed amounts of registered capital
  respectively.

            


    

     

    Article
9                      When
this Contract becomes effective, Party A holds 49% of the total registered
capital of the JV Company and Party B holds 51% of the total registered capital
of the JV Company.

     

    Article
10                    If
a party hereto (the “Transferring
Party”) intends to transfer its equity interest in the JV Company to a
third party, such Transferring Party must first offer such equity interest to
the other party hereto (the “Non-Transferring
Party”) in a writing (the “Offer”)
setting forth the terms and conditions for the interest to be
transferred.  If the Non-Transferring Party refuses the Offer, or
fails to accept the Offer within 90 days (the “Consideration
Period”), or fails to close on the Offer within 45 days (the “Closing
Period”) after accepting the Offer, the Transferring Party shall be free
to offer, within 90 days commencing from the earliest of such refusal, the end
of the Consideration Period or the end of the Closing Period, its equity
interest to any third party, and close the transfer within 45 days after such
offer is accepted, on such terms and conditions as can be verified by the
Non-Transferring Party to be no more favorable than those for the Offer to the
Non-Transferring Party.

     

    The
transfer of its equity interest by either party hereto to any other third party
shall mean such circumstance that causes the change of the actual Controlling
Person of the Transferring Party, including but not limited to:

     

    1.           Either
party hereto directly transfers its equity interest in the JV Company to any
third party, or otherwise disposes of such equity interest to the effect that
such equity interest would be actually transferred; or

     

    2.           The
actual Controlling Person of either party hereto holding more than 50% of the
equity interest of such party changes unless such Controlling Person is a public
company.

     

     

    CHAPTER IV

    LIABILITIES
OF THE PARTIES

     

    Article
11                      Either
party hereto represents and warrants to the other party hereto as
follows:

     

    
      
         

      

      
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    1.           It
has any and all of the civil rights and capacities necessary to the execution
and performance of this Contract which will not violate or breach any and all of
the legal documents, including but not limited to the articles of association,
contracts and agreements, binding on it.

     

    2.           It
has taken or will take any and all of the necessary actions in order to obtain
any and all of the consents, approvals, authorizations and permits required by
the execution and performance of this Contract.

     

    3.           It
will make its best efforts to cooperate closely with the other party hereto on
reliance of the doctrines of good faith, pragmatism and responsibility so as to
cause this Contract to be performed in a sound and smooth manner, and strictly
comply with any and all of the principles set out herein and commit nothing that
may impair the performance of this Contract.

     

    4.           As
of the date on which this Contract becomes effective, it has not, and undertakes
that none of its Affiliates has, individually or jointly with any third party,
engaged or participated in, or owned any interests or benefits in, any business
of chemical drugs that directly competes with the JV Company.

     

    5.           Either
party hereto confirms with the other party hereto that the equity interest of
the other party hereto in the JV Company is legitimate and valid and that it
will use its best efforts to defend the shareholder’s interests of the other
party hereto.

     

    Article
12             Party
A represents and warrants as follows:

     

    1.           Any
and all of the materials that have been or will be furnished to Party B by it
shall be true, complete, correct and not misleading.

     

    2.           It
has obtained any requisite authority, permit, authorization, license and
consent, including but not limited to the business license issued by the
competent administration of industry and commerce, necessary to carry on its
business operation, and its operation has not exceeded the approved business
scope and provisions of its articles of association.

     

    Article
13             Party
B represents and warrants as follows:

     

    1.           Any
and all of the information disclosed to Party A by it is true, timely and
complete.

     

    2.           It
shall not make any claim over or challenge any agreement entered into by the JV
Company as of the date hereof so long as such agreement has been disclosed
pursuant to the U.S. securities law or was entered into in the ordinary course
of business with normal commercial terms.

     

    3.           It
has informed NeoStem of the contents hereof.  NeoStem irrevocably
undertakes to guarantee its obligations and liabilities hereunder, and the
undertaking letter issued by NeoStem for such purpose in the form attached
hereto shall constitute an integral part of this Contract.

     

    
      
         

      

      
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    4.           Prior
to the investment by it in any chemical drug manufacturing company that competes
directly with the business of the JV Company, it must obtain the consent from
the JV Company.  It shall consult with the JV Company prior to
introducing any new chemical drug into the PRC with respect to whether the same
can be produced in a more cost-saving or efficient manner by the JV
Company.

    


     

    CHAPTER
V

    BUSINESS
OPERATION

     

    Article
14                      Any
business conducted by the JV Company shall be decided and carried out by the
Board of Directors of the JV Company.

     

    Party B
will be entitled to, with a reasonable prior notice to the JV Company,
periodically send its representatives to visit the JV Company and consult with
the senior management of the JV Company with respect to operation, financial
conditions, strategy and other similar issues.

     

    Article
15                      The
JV Company shall mainly purchase the raw and auxiliary materials necessary for
its production in the PRC domestic market, and sell most of its finished
products in the PRC domestic market, with a small amount sold
abroad.

     

    Article
16                      The
JV Company shall continue to use the existing production equipment and
technologies to conduct its business.  If the purchase of any
additional equipments or technologies becomes necessary, the priority will be
given to the PRC domestic market.

     

    Article
17                      Should
NeoStem succeed in its development of stem cell medicine, Party B shall, if
permitted by the applicable PRC law, be responsible for introducing such
medicine into the PRC, in which case the JV Company shall enjoy the priority
right of production and sale of the same in the PRC, subject, however, to the
capability of the JV Company in such production and sales activities, taking
into consideration factors including the competitive costs, time-to-market,
quality, stability and other similar aspects of the same.

     

    Article
18                      Party
B or NeoStem shall from time to time study the feasibility of introducing
certain commercially potential patented medicine into the PRC under the
appropriate market conditions, based on the existing resources and general
market circumstances.  In the event Party B or NeoStem fails to
support the JV Company in terms of products, Party B or NeoStem shall, subject
to the approval of their respective board of directors, provide the JV Company
with the R&D funds support based on its future demands and business
development.

     

    Article
19                      Since
the integration of the PRC domestic pharmaceutical industry provides a new
opportunity, Party A will seize any chance to seek and land some merger and/or
acquisition projects favorable for the development of the JV Company pursuant to
the guidelines and standards mutually agreed by Party A and Party B or
NeoStem.  Party B undertakes that NeoStem will conduct a due diligence
investigation towards the target acquisition together with Party A, and NeoStem
or Party B will, subject to the approval of NeoStem’s board of directors,
provide capital or equity support therefor.

     

    
      
         

      

      
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    CHAPTER
VI

    BOARD
OF DIRECTORS

     

    Article
20             The
number of the members of the Board of Directors of the JV Company shall be
reduced from seven (7) to five (5), among whom two (2) Directors shall be
appointed by Party A and three (3) Directors shall be appointed by Party
B.  One of the Directors appointed by Party B shall be the director on
the board of directors of NeoStem appointed by Party A (and such Director shall
represent the interests of Party B in the discharge of his or her duties as a
Director).  The tenure of each Director shall be four (4) years,
renewable upon re-appointment consecutively.

     

    The
Chairman of the JV Company shall be the Director appointed by Party A to the
Board of Directors and  shall be the legal representative of the JV
Company.

     

    The CFO
of the JV Company shall be appointed by Party A.

     

    Article
21             The
Board of Directors shall be the highest authority of the JV Company and shall
decide any and all of the major issues of the JV Company.

     

    With
regard to any of the following matters, no resolution may be adopted without the
affirmative voting of more than seventy five percent (75%) of the entire members
of the Board of Directors:

     

    1.           Disposition
of any and all of the material assets of the JV Company;

     

    2.           Change
of more than 50% of equity interest;

     

    3.           Change
of more than a half of the entire Directors, in the accumulative aggregate,
within any consecutive twenty four (24) months, excluding any change due to
retirement, injury, illness, death, voluntary resignation, termination of
employment or any other similar cause;

     

    4.           Decision
on the material strategy of operation and development of the JV Company;
and

     

    5.           Any
related-party transaction between the JV Company and its shareholders and/or
Affiliates.

     

    With
regard to any of the following matters, no resolution may be adopted without the
unanimous consensus of all the Directors present at a board
meeting:

     

    1.           Amendment
to the Articles of Association of the JV Company;

     

    2.           Termination
or dissolution of the JV Company;

     

    3.           Increase
or reduction of the registered capital of the JV Company; and

     

    
      
         

      

      
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    4.           Merger
or divestiture of the JV Company.

     

    Except
the major issues set forth above, decisions with respect to all other issues
required voting of the Directors may be adopted by more than half of the entire
members of Board of Directors.

     

    Article
22              The
Board of Directors shall meet at least one (1) time during each year, and shall
be convened and presided over by the Chairman or, if the Chairman is incapable
of doing so, by a Director authorized by the Chairman.  Upon the
request of any two Directors, the Chairman shall convene an interim meeting of
the Board of Directors.  Any Director may attend any Board meeting
telephonically.

     

    Article
23               The
quorum for any meeting of the Board of Directors shall be at least four (4)
Directors.

     

    If a
Director is unable to attend a meeting of the Board of Directors, he or she may
issue a proxy and entrust a representative to attend the meeting and vote on his
or her behalf, whose attendance shall be deemed the same as attendance by him or
her.

     

    The
minutes of any and all of the meetings of the Board of Directors shall be signed
by all the Directors present at the meeting before kept into files.

     

    A meeting
of the Board of Directors shall generally be held at the place of legal address
of the JV Company.

     

     

    CHAPTER VII

    OPERATION
AND MANAGEMENT ORGANIZATION

     

    Article
24               The
JV Company shall establish its management structure responsible for its
day-to-day corporate management.  The management structure shall
consist of one (1) General Manager who shall be engaged by the Board of
Directors for a tenure of four (4) years, renewable upon re-assignment
consecutively.

     

    Article
25               The
General Manager shall be responsible for carrying out any and all of the
resolutions of the Board of Directors and organizing and directing the
day-to-day management of the JV Company.  Within the authorization by
the Board of Directors, the General Manager shall act on behalf of the JV
Company, hire or dismiss any employees under his or her level, and exercise such
other powers as granted by the Board of Directors.

     

    Article
26                The
Chairman or any Director may concurrently serve as General Manager or other
senior officer of the JV Company upon the engagement by the Board of
Directors.  In the event the General Manager or any of other senior
officers practices graft or commits a gross neglect of duty, the Board of
Directors may make a resolution at any time to dismiss and impose a necessary
punishment on him or her.

     

    
      
         

      

      
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    CHAPTER
VIII

    YARD
AND PLANT

     

    Article
27                 With
respect to the old yard of the JV Company in use and located at 859 Panxu Road,
Suzhou, the land area is 45,024.2 square meters and construction area is
33,492.75 square meters.  The land use right to and all the buildings
on such old yard have been split off to the New Company because of the
occurrence of the Subsistence-after-Split-off to the JV Company which will
lease, at a token price, the land and plant buildings (i.e. the old yard) from
the New Company, and maintain the original operation and businesses
unchanged.

     

    The land
area of the new yard of the JV Company located at Huangdai Town, Xiangcheng
District, Suzhou is 107,385.6 square meters, while buildings and plants thereon
are now under construction.  The land use right to and the buildings
on such new yard belong to and are possessed by the JV Company.

     

    


     

    CHAPTER
IX

    EMPLOYMENT
MANAGEMENT

     

    Article
28                 The
JV Company undertakes that it will continue to employ each and every former
employee before joint venture.  Any recruitment and dismissal of the
employees of the JV Company shall be reviewed and determined by the Board
according to the PRC Labor Law, the PRC Labor Contract Law and other applicable
PRC regulations. The JV Company and the trade union thereof shall collectively
or with individual separately enter into labor contracts.  The labor
contract shall, once duly executed, be filed with the competent local labor
administration authority.

     

    Article
29                  All
payments in connection with salaries, benefits and labor insurances of the
employees of the JV Company shall be made pursuant to the PRC Labor Law and
other applicable PRC regulations.

     

    


     

    CHAPTER
X

    FINANCE,
ACCOUNTING AND AUDITING

     

    Article
30                 Any
fiscal year of the JV Company shall commence on January 1st and end
on December 31st of the
same year.  Any and all of the vouchers, bills, statements and books
shall be prepared in Chinese.  The JV Company shall use Renminbi as
its standard bookkeeping currency.

     

    The JV
Company shall, in most cases, make settlement of accounts monthly and final
settlement at the end of each year.  All financial statements shall be
prepared according to the accounting principles of the PRC.  The JV
Company shall, on the annual basis, deliver to Party B the complete audited
financial statements.

     

    Party A
shall use its efforts to cause the JV Company to take any and all of the
necessary actions and provide any and all of the necessary information of the JV
Company to NeoStem so that NeoStem can timely fulfill its reporting obligations
under the U.S. securities law, including compliance with the accounting rules of
the Securities and Exchange Commission of the U.S.  Party A shall
support NeoStem’s corporate development strategy and compliance with the U.S.
securities law.

     

    
      
         

      

      
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    Article
31                      A
PRC CPA shall be retained for financial auditing and shall report the results to
the Board of Directors and the General Manager.

     

    


    CHAPTER
XI

    DISTRIBUTION
OF PROFITS

     

    Article
32                      The
JV Company shall go through formalities in respect of reduction, exemption and
payment of income tax imposed upon its profits according to the Law of the People’s Republic of
China of Enterprise Income Taxes and regulations related
thereto.  After deduction of public reserves from the profits for a
given year, the Board of Directors shall make bonus distribution plan based on
the operation of that year.

     

    Article
33                      The
dividend distributions to the shareholders shall be made in proportion to the
shareholders’ equity, unless otherwise prescribed herein.

     

    


     

    CHAPTER
XII

    NEW
PLANT CONSTRUCTION

     

    Article
34                      For
the purpose of a smooth completion of the relocation of the JV Company, Party B
agrees to continue to be responsible for costs for such relocation, which is
only limited to, and will not be responsible for any cost
exceeding:

     

    1.           Profit distribution prior to the
Split-off Date

     

    Any and
all of the undistributed profits as of the Split-off Date (subject to the
statements audited under the PRC accounting principles) shall be used for
dividend distribution.  Party A and Party B agree that such dividend
distribution shall be made by the end of March of 2010 and shall instruct the
Directors to execute a board resolution authorizing such dividend
distribution.  Specifically,

     

    1.1           49%
of such dividend distribution (after tax) shall be allocated to Party A who
shall, upon its receipt of the same, loan back to the JV Company who shall later
repay Party A gradually following the completion of the construction of the new
plant (together with interest thereon, computed at the then applicable standard
interest rate for Renminbi loans by financial institutions announced by the
People’s Bank of China).  Such loan by Party A shall not be deemed as
the performance by Party B of part of its obligation to fund the relocation of
the JV Company.

     

    
      
         

      

      
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    1.2           51%
of such dividend distribution (after tax) shall be allocated directly to the JV
Company as the new plant construction fund.  Party A and Party B agree
to characterize such fund as the capital surplus for such 51% interest in the JV
Company as subscribed by Party B, to be recorded under the capital reserve entry
of the JV Company (subject to the auditing opinion of a PRC
accountant).  If such 51% dividend distribution results in any tax
liability onto Party B, the JV Company shall allocate a sufficient dividend in
cash to Party B to cover such tax liability.

     

    2.           Profit distribution in three years
following the Split-off Date

     

    For a
three (3) years period commencing on the first day of the first fiscal quarter
after this Contract becomes effective and ending on the third anniversary
thereof, the operating net profit of the JV company shall be distributed fully
as a dividend distributed annually within 90 days after the prior fiscal year
ends.  Specifically,

     

    2.1           49%
of the dividend distribution (after tax) shall be allocated to Party A who
shall, upon its receipt of the same, loan back to the JV Company who shall later
repay Party A gradually following the completion of the construction of the new
plant (together with interest thereon, computed at the then applicable standard
interest rate for Renminbi loans by financial institutions announced by the
People’s Bank of China).  Such loan by Party A shall not be deemed as
the performance by Party B of part of its obligation to fund the relocation of
the JV Company.

     

    2.2           
45% of the dividend distribution (after tax) shall be allocated directly to the
JV Company as part of the new plant construction fund. Party A and Party B agree
to characterize such fund as the capital surplus for such 51% interest in the JV
Company as subscribed by Party B, to be recorded under the capital reserve entry
of the JV Company (subject to the auditing opinion of a PRC
accountant).  If such 45% dividend distribution results in any tax
liability onto Party B, the JV Company shall allocate a sufficient dividend in
cash to Party B to cover such tax liability.

     

    2.3           6%
of the dividend distribution (after tax withholding) shall be allocated directly
to Party B for the direct purpose of NeoStem’s operating expenses.

     

    2.4           In
the event of the sale of all of the assets of the JV Company or liquidation of
the JV Company, Party B shall be entitled to receive the return of such capital
surplus before any distribution of the JV Company’s assets is made based upon
the shareholding percentages of the shareholders.  Upon an initial
public offering of the JV Company which raises at least Renminbi Fifty Million
yuan (RMB50,000,000),
to the extent permitted by the applicable PRC law and accounting principles and
approved by the Board of Directors, Party B shall be entitled to receive the
return of such capital surplus.

     

    
      
         

      

      
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    2.5           Party
A and Party B shall respectively instruct their Directors in the JV Company to
execute a board resolution authorizing such dividend distribution.

     

    Article
35               Party
A undertakes that, after the implementation of Article 34, if the JV Company is
still in need of fund, the JV Company may finance itself through
loans.  Party A shall exert its best efforts to assist the JV Company
in raising funds and shall endeavor to complete the relocation of the JV Company
within three (3) years.   Further, the land, buildings, equipment
and other assets of the new plant of the JV Company shall belong to and be
possessed by the JV Company and shall be recorded into the balance sheet of the
JV Company.

     

    Article
36                Party
B undertakes that, during the course of the relocation to the new plant, it
shall use its efforts to attempt to provide certain loan assistance to the JV
Company.

     

    Article
37                Relocation

     

    After the
new yard of the JV Company (located at Huangdai Town, Xiangcheng District,
Suzhou) meet such conditions precedent to its production as specified by the
competent governmental authority or authorities and any and all of the equipment
for its operation have been conveyed into the new yard and can run completely,
the Subsisting Company must use its best efforts to promptly terminate its
operating activities in the old yard, and the lease between the JV Company and
the New Company shall then terminate.

     

    


     

    CHAPTER
XIII

    COOPERATION
TERM AND ASSET DISPOSAL AFTER TERMINATION

     

    Article
38               The
cooperation term of the JV Company shall be twenty five (25) years, and the
issuance date of the JV Company’s business license shall be deemed as its
establishment date.

     

    Article
39               The
JV Company shall enter into liquidation according to law after the expiration or
upon any prior termination of cooperation term.  After the
verification of the liquidated finance by accounting firm, the remaining assets
shall be allocated or assumed by Party A and Party B pro rata in proportion to
their equity interests in the JV Company.

    


     

    CHAPTER
XIV

    AMENDMENT,
CHANGE AND CANCELLATION OF CONTRACT

     

    Article
40                      Any
amendment to this Contract and/or the exhibits hereto shall not become effective
unless and until Party A and Party B have executed a supplementary contract with
respect thereof.

     

    Article
41                      Upon
the proposal initiated by either Party and the unanimous consensus adopted at a
meeting of the Board of Directors, the cooperation term may be extended by
filing to the competent foreign economic and trade cooperation bureau or its
entrusted approval agency six (6) months prior to the expiration
thereof.

     

    
      
         

      

      
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    Article
42                      This
Contract can, after Party A and Party B have reached an agreement to the
aftermath matters, be early terminated for any of the following
reasons:

     

    1.           Either
party hereto proposes to terminate this Contract and such proposal has been
agreed by the two parties;

     

    2.           The
performance of this Contract become impossible because of such a force majeure
event as earthquake, typhoon, flood, fire or warfare which is unforeseeable and
the consequence of which cannot be prevented or is unavoidable;

     

    3.           The
JV Company has been suffering losses for consecutive years and is incapable of
continuing its operation; and

     

    4.           The
JV Company is unable to meet the sales scale set forth herein due to failure by
either party hereto to perform its obligations under, or its violation of, this
Contract or the Articles of Association.

     

     

    CHAPTER
XV

    LIABILITIES
FOR DEFAULT

     

    Article
43                      If
the JV Company has suffered any damages due to any fault of either party hereto,
such defaulting party shall indemnify the JV Company for the losses as a result
thereof.

     

    Article
44                      If
this Contract and/or the exhibits hereto shall become non-performable or cannot
be performed to its full extent due to any fault of either party hereto, such
defaulting party shall assume such liabilities for default and indemnify
relevant losses thereof.  If both Party A and Party B have been in
default, Party A and Party B shall assume their respective and separate
liabilities and indemnify relevant losses in light of the actual
circumstances.

     

    


     

    CHAPTER
XVI

     

    DISPUTE
RESOLUTION

     

    Article
45                      If
there is any dispute arising out of or in connection with this Contract, Party A
and Party B shall resolve such dispute through amicable negotiations, failing
which the dispute shall be submitted to China International Economic and Trade
Arbitration Commission for arbitration in Beijing in accordance with its
arbitration procedure and relevant rules.  Such arbitral award is
final and binding upon Party A and Party B.  The arbitration fees
shall be borne by the party hereto who loses the arbitration.

     

    Article
46                      During
the course of arbitration, except for the provisions hereof that are in dispute
and under arbitration, this Contract shall continue to be performed to the
effect that such disputed provisions shall not affect the normal operation of
the JV Company.

     

    
      
         

      

      
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    CHAPTER
XVII

    EFFECTIVENESS
AND OTHERS

     

    Article
47                      This
Contract shall be approved by the Ministry of Commerce of the PRC or its branch
offices and shall not become effective unless and until the date on which such
approval certificate has been obtained.

     

    Article
48                      The
ancillary agreements entered into in accordance with the principles set forth in
this Contract shall constitute an integral part of this
Contract.  Party A and Party B shall cooperate with each other to
amend the Articles of Association of the JV Company to reflect the terms of this
Contract as hereby amended.

     

    Article
49                      The
execution, validity, interpretation, performance and the dispute resolution of
this Contract shall be governed by the laws of the PRC.

     

    Article
50                      Such
legal addresses of Party A and Party B as set forth in this Contract shall be
their respective communication addresses to which the written documents to each
party hereto shall be addressed and shall be deemed delivered if so
addressed.

     

    Article
51                      This
Contract is made in Chinese into ten (10) originals, with Party A and Party B
each holding two (2) of them.  This Contract can be made into several
counterparts to be used for filing with the competent governmental
authorities.

     

    Article
52                      This
Contract is duly executed by the legal or authorized representatives of Party A
and Party B respectively on October [    ],
2009.

     

    [THE
REMAINING OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

     

    
      
         

      

      
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    (Execution Page of the Joint Venture
Contract of Suzhou Erye Pharmaceutical Co., Ltd.)

    


     

    
      	      
              For
      and on behalf of 

              Party
      A: Suzhou Erye Economy
      & Trade Co., Ltd.

               

              By: _________________________

              Shi
      Mingsheng, Chairman

              


              


              For
      and on behalf of 

              Party
      B: China
      Biopharmaceuticals Holdings Inc.

               

              By:___________________________

              Peng
      Mao, President

            	 
      
              )

              )

              )

              )

              )

              


              


              )

              )

              )

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    Undertaking


     

    NeoStem,
Inc. (“NeoStem”)
is a corporation duly established and validly existing under the laws of the
State of Delaware of the U.S.

     

    WHEREAS,

     

    NeoStem’s
wholly owned subsidiary China Biopharmaceuticals Holdings Inc. (“CBH”) and
Suzhou Erye Economic and Trade Co., Ltd. (“EET”) have
entered into a Joint Venture Contract of Suzhou Erye Pharmaceutical Co., Ltd.
(the “JV
Contract”) on October [    ],
2009.

     

    NOW,
THEREFORE NeoStem hereby undertakes:

     

    1.           THAT
NeoStem fully understands and absolutely agrees to the whole content of the JV
Contract;

     

    2.           THAT
CBH has obtained NeoStem’s necessary authorization to execute the JV
Contract;

     

    3.           THAT
CBH’s obligations and liabilities under the JV Contract shall be deemed the
obligations and liabilities of NeoStem who shall undertake to provide an
irrevocable guarantee for such joint liability;

     

    4.           THAT,
in accordance with the PRC law, the obligations and liabilities assumed by CBH
as a shareholder of Suzhou Erye Pharmaceutical Co., Ltd. shall be deemed to be
NeoStem’s obligations and liabilities for which NeoStem shall undertake to
provide an irrevocable guarantee;

     

    5.           THAT
NeoStem’s performance of its undertakings contained herein shall constitute the
consideration of EET’s performance of its obligations under the JV Contract, and
shall remain effective and irrevocable throughout the validity ofthe JV
Contract, and, if the JV Contract becomes invalid or terminates, this
Undertaking shall be canceled in accordance with any supplementary covenant by
and between NeoStem and EET;

     

    6.           THAT
NeoStem shall be entitled to the rights and benefits to which CBH is entitled to
under the JV Contract or should be entitled to under any other document relating
to the JV Company to which CBH is a party, provided that such rights and
benefits may not be enjoyed by CBH in a duplicative manner; and

     

    7.           THAT
this Undertaking, as part of the JV Contract, shall be governed by the PRC
law.

    
      


       

      
        
          	      
                        
                    For
      and on behalf of  

                    NeoStem,
      Inc. 

                     

                    By:  ___________________

                    Date:
      October [    ],
      2009

                  

                	      
                  )

                  )

                  )

                  )

                  )

                


        

      

       

      
        
           

        

        
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