Document:

Exhibit
4.3

     

    SUBSCRIPTION
AGREEMENT

     

    NeoStem,
Inc.

    420
Lexington Avenue

    Suite
450

    New York,
New York  10170

    Attention:  Chief
Executive Officer

     

    Ladies
and Gentlemen:

     

    The
undersigned investor (the “Investor”) under the
following terms and conditions, offers to subscribe (the “Offer”) for the securities of
NeoStem, Inc., a Delaware corporation. (the “Company” or “NeoStem”).  The
Company is issuing units (“Units”) at a per Unit price
of $12.50 with each Unit consisting of (a) one share (the “Preferred Shares”) of Series
D Convertible Redeemable Preferred Stock, $0.01 par value (the “Preferred Stock”) (the
shares of Common Stock issuable upon conversion of the Preferred Shares (10
Common Shares for each Preferred Share) are referred to as the “Conversion Shares”)and (b)
one accompanying warrant (each, a “Warrant” and together the
“Warrants”) for the
purchase of ten  shares of the Company’s common stock, $0.001 par
value (the “Common
Stock”) at an exercise price equal to $2.50 per share, subject to
adjustment, expiring five years from the date of issuance (the shares of Common
Stock issuable under the Warrants are referred to as the “Warrant
Shares”).  The form of the Warrants is attached hereto as Exhibit A-1 for an
Investor purchasing under the exemption from registration under Regulation D
promulgated under the United States Securities Act of 1933, as amended (the
“Securities Act” or the
“Act”) and Exhibit A-2 for an
Investor purchasing under the exemption from registration under Regulation S
promulgated under the Securities Act (see below).  The
Certificate of Designation of Series D Convertible Redeemable Preferred Stock is
attached hereto as Exhibit
B.  The Company is offering up to 1,280,000 Units (the “Offering”); however the
Company reserves the right to increase the Offering to up to 1,680,000
Units.

     

    The
Investor understands that the Units are being issued pursuant to one or more
exemptions from the registration requirements of the Securities Act, in either a
private placement pursuant to an exemption from registration under Regulation D
promulgated under Section 4(2) and Rule 506 of the Act and/or an exemption from
registration under Regulation S promulgated under the Securities
Act.  As such, the Preferred Shares, the Conversion Shares, the
Warrants and the Warrant Shares each are “restricted securities” and
may not be sold or transferred absent a registration statement declared
effective under the Act or an exemption from the registration requirements of
the Act.

     

    1.           Subscription.

     

    The
closing (the “Closing”)
of the transactions hereunder shall take place at the offices of the Company or
at such other location as the Company may determine after the receipt by the
Company of subscriptions for Units from Investors from time to time and after it
has been determined that all conditions in this Subscription Agreement have been
met.  At the Closing, funds equal to the Subscription Amount of each
Investor shall be delivered to the Company and the Company shall promptly
thereafter deliver to each such Investor his, her or its respective Preferred
Shares and Warrants as provided herein.  The Company may close on any
number of Units it may choose in its sole determination and is not required to
sell all 1,280,000 Units in this Offering nor is it required to increase the
size of the Offering to 1,680,000 Units.

     

    Subject
to the terms and conditions hereinafter set forth in this Subscription
Agreement, and the Company’s due execution of this Subscription Agreement, the
Investor hereby offers to subscribe for Units as set forth in the Investor
Signature Page attached hereto and contemporaneously herewith makes payment for
the purchase of the Units by wire transfer or bank check.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.           Conditions.

     

    The Offer
is made subject to the following conditions:  (i) that the Company,
acting in good faith, shall have the right to accept or reject this Offer, in
whole or in part, for any reason; (ii) that the Investor agrees to comply with
the terms of this Subscription Agreement.

     

    Acceptance
of this Offer shall be deemed given by the countersigning of this Subscription
Agreement by the Company.  In the event the Company does not accept
the Offer, any and all proceeds for the purchase of the Units by the Investor
shall be returned to Investor.

     

    3.           Representations and
Warranties of the Investor.

     

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

     

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

     

    o Investor is
purchasing under Regulation D

     

    OR

     

    o Investor is
purchasing under Regulation S

     

    (a)           Organization;
Authority.  The Investor, if not an individual, is an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite power and authority to enter
into and to consummate the transactions contemplated by this Subscription
Agreement and otherwise to carry out its obligations hereunder.  The
purchase by Investor of the Units hereunder has been duly authorized by all
necessary action on the part of Investor.  This Subscription Agreement
has been duly executed by Investor, and when delivered by Investor in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of Investor, enforceable against it in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.

     

    (b)           Investor Representation for
Purchase under Regulation D.

     

    (i) Restricted
Securities.  Investor understands that the Units, Preferred
Shares, the Conversion Shares, Warrants and Warrant Shares (collectively, the
“Securities”) are each
“restricted securities” and have not been registered under the Securities Act or
qualified under any applicable state securities law by reason of their issuance
in a transaction that does not require registration or qualification (based in
part on the accuracy of the representations and warranties of the Investor
contained herein), and that such securities must be held indefinitely unless a
subsequent disposition is registered under the Securities Act or any applicable
state securities laws or is exempt from such registration.  The
Investor hereby agrees that the Company may insert the following or similar
legend on the face of the certificates evidencing the Units, Preferred Shares,
Conversion Shares, Warrants and Warrant Shares, if required in compliance with
federal and state securities laws:

     

    “THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”) NOR UNDER THE SECURITIES LAWS OF ANY
STATE.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED PURSUANT TO A VALID EXEMPTION THEREFROM
UNDER THE SECURITIES ACT.”

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    The
Investor understands and acknowledges that the U.S. Securities and Exchange
Commission (the “Commission”) currently takes
the position that coverage of short sales of shares of the Preferred Shares,
Conversion Shares or Warrant Shares “against the box” prior to the effective
date of a registration statement registering the re-sale of the Preferred
Shares, Conversion Shares or Warrant Shares is a violation of Section 5 of the
Securities Act, as set forth in Item 65, Section 5 under Section A, of the
Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation
Finance.  Accordingly, without limiting the restrictions set forth
herein, the Investor agrees not to use any of the Preferred Shares, Conversion
Shares or Warrant Shares to cover any short sales made prior to the effective
date of such registration statement.

     

    (ii)           No
Distribution.  Investor is acquiring the Units as principal for
its own account, in the ordinary course of its business, and not with a view to
or for distributing or reselling such Units or any part
thereof.  Investor has no present intention of distributing any of
such Preferred Shares,  Conversion Shares, Warrants or Warrant Shares
and has no agreement or understanding, directly or indirectly, with any other
individual, corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof), or other entity of any kind
(each, a “Person”)
regarding the distribution of such Preferred Shares, Conversion Shares, Warrants
or Warrant Shares (this representation and warranty not limiting such Investor’s
right or intent to sell the Preferred Shares, Conversion Shares, Warrants or
Warrant Shares  pursuant to a Registration Statement or otherwise in
compliance with applicable federal and state securities laws).

     

    (iii)           Investor
Status.  Investor is, and on each date on which it exercises
any Warrants it will be  an “Accredited Investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) under the Securities
Act.  In general, an Accredited Investor is deemed to be an
institution with assets in excess of $5,000,000 or individuals with net worth in
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly
with their spouse and is defined on Schedule A hereto..

     

    (iv)           Experience of
Investor.  Investor, either alone or together with its
representatives, has such knowledge, sophistication, and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Units, and has so evaluated the merits and
risks of such investment.  The Investor has not authorized any Person
to act as his Purchaser Representative (as that term is defined in Regulation D
of the General Rules and Regulations under the Act) in connection with this
transaction.  Investor is able to bear the economic risk of an
investment in the Units and, at the present time, is able to afford a complete
loss of such investment.

     

    (v)           General
Solicitation.  Investor is not purchasing the Units as a result
of any advertisement, article, notice or other communication regarding the Units
published in any newspaper, magazine, or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.

     

    (c)           Investor Representations for
Purchase under Regulation S.

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    (i)           Restricted
Securities.  Investor understands that the Units, Preferred
Shares, Conversion Shares, Warrants and Warrant Shares (collectively, the “Securities”) are each
“restricted securities” and have not been registered under the Securities Act or
qualified under any applicable state securities law by reason of their issuance
in a transaction that does not require registration or qualification (based in
part on the accuracy of the representations and warranties of the Investor
contained herein), and that such securities must be held indefinitely unless a
subsequent disposition is registered under the Securities Act or any applicable
state securities laws or is exempt from such registration.  The
Investor hereby agrees that the Company may insert the following or similar
legend on the face of the certificates evidencing the Units, Preferred Shares,
Conversion Shares, Warrants and Warrant Shares, if required in compliance with
federal and state securities laws:

     

    "THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISTRIBUTED, DIRECTLY
OR INDIRECTLY, IN THE UNITED STATES, ITS TERRITORIES, POSSESSIONS, OR AREAS
SUBJECT TO ITS JURISDICTION, OR TO OR FOR THE ACCOUNT OR BENEFIT OF A "U.S.
PERSON" AS THAT TERM IS DEFINED IN RULE 902 OR REGULATION S OF THE ACT, AT ANY
TIME PRIOR TO ONE (1) YEAR AFTER THE ISSUANCE OF THIS CERTIFICATE, IN THE
ABSENCE OF (i) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
ACT, OR (ii) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED PURSUANT TO A VALID EXEMPTION THEREFROM FROM
UNDER THE ACT.  HEDGING TRANSACTIONS INVOLVING THE SHARES REPRESENTED
HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.  ANY
SALES, TRANSFERS OR OTHER DISTRIBUTIONS OF THE SECURITIES MUST BE MADE IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S OF THE ACT.  THIS
CERTIFICATE MUST BE SURRENDERED TO THE COMPANY OR ITS TRANSFER AGENT AS A
CONDITION PRECEDENT TO THE SALE, TRANSFER OR OTHER DISTRIBUTION OF ANY INTEREST
IN ANY OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE."

     

    The
Investor understands and acknowledges that the U.S. Securities and Exchange
Commission (the “Commission”) currently takes
the position that coverage of short sales of shares of the Preferred Shares,
Conversion Shares or Warrant Shares “against the box” prior to the effective
date of a registration statement registering the re-sale of the Preferred
Shares, Conversion Shares or the Warrant Shares is a violation of Section 5 of
the Securities Act, as set forth in Item 65, Section 5 under Section A, of the
Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation
Finance.  Accordingly, without limiting the restrictions set forth
herein,  Investor agrees not to use any of the Preferred Shares,
Conversion Shares or Warrant Shares to cover any short sales made prior to the
effective date of such registration statement.

     

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

     

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

     

    
      	
               
      

            	
              (1)

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

            

    

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (2)

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

            

    

     

    
      	
               
      

            	
              (3)

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

            

    

     

    
      	
               
      

            	
              (4)

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

            

    

     

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

     

    
      	
               
      

            	
              (1)

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

            

    

     

    
      	
               
      

            	
              (2)

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

            

    

     

    
      	
               
      

            	
              (3)

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

            

    

     

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

     

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

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

    (viii)           The
Investor acknowledges that upon exercising the Warrants, the holder shall be
required to give: (1) written certification that it is not a U.S. Person and the
warrant is not being exercised on behalf of a U.S. Person; or (2) a written
opinion of counsel to the effect that the Warrant and the Warrant Shares
delivered upon exercise thereof have been registered under the Securities Act or
are exempt from registration thereunder.  The Investor further
acknowledges that procedures set forth in the Warrant have been implemented to
ensure that the Warrant may not be exercised within the United States, and that
the Warrant Shares may not be delivered within the United States upon exercise,
other than in offerings deemed to meet the definition of "offshore transaction
pursuant to Rule 902(h) under Regulation S, unless registered under the Act or
an exemption from such registration is available.

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

    (xvii)          Investor
Status.  Investor is, and on each date on which it exercises
any Warrants it will be  an “Accredited Investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) under the Securities
Act.  In general, an Accredited Investor is deemed to be an
institution with assets in excess of $5,000,000 or individuals with net worth in
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly
with their spouse and is defined on Schedule A hereto..

     

    (xviii)         Experience of
Investor.  The Investor, either alone or together with its
representatives, has such knowledge, sophistication, and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment.  The Investor is able to bear the
economic risk of an investment in the Securities and, at the present time, is
able to afford a complete loss of such investment.

     

    (d)          Access to
Information.  The Investor has reviewed the SEC Reports (as
that term is defined in Section 4(g)) as well as certain supplemental
information (the “Supplemental Information”) provided to Investor on a
confidential basis relating to (i) a voluntary production of certain
documents  to the SEC and (ii) the Proposed Acquisition Transactions
(as hereinafter defined) and neither the Company nor any of its representatives
have made any other representations or warranties to the Investor with respect
to the Company except as contained herein, in the SEC Reports or in the
Supplemental Information.  Specifically, the Investor acknowledges
that the SEC Reports include two Form 8-Ks filed by the Company on November 6,
2008, and disclose that (A) On November 2, 2008, the Company entered into a
Share Exchange Agreement (the “Share Exchange Agreement”), with China StemCell
Medical Holding Limited, a Hong Kong company (the "HK Entity"), Shandong New
Medicine Research Institute of Integrated Traditional and Western Medicine
Limited Liability Company, a China limited liability company ("Shandong"),
Beijing HuaMeiTai Bio-technology Limited Liability Company (“WFOE”) and Zhao
Shuwei, the sole shareholder of the HK Entity (“HK Shareholder”), pursuant to
which NeoStem agreed to acquire from the HK Entity all of the outstanding
interests in the HK Entity, and through a series of contractual arrangements,
establish control over Shandong, and (B) on November 2, 2008, NeoStem, Inc., a
Delaware corporation ("NeoStem"), entered into an Agreement and Plan of Merger
(the “Merger Agreement”), with China Biopharmaceuticals Holdings, Inc., a
Delaware corporation ("CBH"), China Biopharmaceuticals Corp., a British Virgin
Islands corporation and wholly-owned subsidiary of CBH ("CBC"), and CBH
Acquisition LLC, a Delaware limited liability company and wholly-owned
subsidiary of NeoStem ("Merger Sub") (the “Proposed Acquisition Transactions”)
and the Supplemental Information contains additional  information with
respect thereto as well as with respect to the Company’s other initiatives to
expand operations into China.  Investor acknowledges that there can be
no assurance that any acquisition will be consummated, including but not limited
to the Proposed Acquisition Transactions and that in the event the Proposed
Acquisition Transactions are consummated they may not be consummated on the
terms disclosed to the Investor.    The Investor has also
been afforded the opportunity to ask questions of, and receive answers from, the
officers and/or directors of the Company concerning the terms and conditions of
the Offering, the Proposed Acquisition Transactions and any other information
disclosed in the Supplemental Information and to obtain any additional
information, to the extent that the Company possesses such information, which
Investor considers necessary and appropriate in order to permit Investor to
evaluate the merits and risks of an investment in the Units.  It is
understood that all documents, records, and books pertaining to this investment
have been made available for inspection by the Investor during reasonable
business hours at the Company’s principal place of
business.  Notwithstanding the foregoing, it is understood that the
Investor is purchasing the Units without being furnished any prospectus setting
forth all of the information that would be required to be furnished under the
Securities Act and this Offering has not been passed upon or the merits thereof
endorsed or approved by any state or federal authorities.

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    (e)  Placement Agent Fees.
The Investor has been advised by any placement agent (the "Placement Agent")
through whom the Units have been purchased of the fees being paid to the
Placement Agent in connection with its acting as Placement Agent in the Offering
which fees shall not exceed 8% of the aggregate price paid for the Units by the
Investor and Investor has no objections to the fees being paid.

    

    4.           Representations and
Warranties of the Company.

     

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

     

    (a)           Organization and
Qualification.  Each of the Company and its subsidiaries (each,
a “Subsidiary”) is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted.  Neither the Company nor any Subsidiary is in
violation or default of any of the provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or charter
documents.  Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, would not
have or reasonably be expected to result in (i) a material adverse effect on the
legality, validity or enforceability of this Subscription Agreement, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or financial condition of the Company and the Subsidiaries, taken as a
whole, or (iii) a material adverse effect on the Company’s ability to perform in
any material respect on a timely basis its obligations under this Subscription
Agreement (any of (i), (ii), or (iii), a “Material Adverse Effect”) and
no Proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.

     

    (b)           Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the Offering, to issue the Units and,
upon due exercise of the Warrants or conversion of the Preferred Shares, to duly
issue the shares of Common Stock deliverable thereunder.  The
execution and delivery of this Subscription Agreement and the Units by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of the Company and no
further consent or action is required by the Company, other than the Required
Approvals and the Stockholder Approval (each as defined below).  This
Subscription Agreement, when executed and delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors’ rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    (c)           No
Conflicts.  The execution, delivery, and performance of this
Subscription Agreement by the Company and the consummation by the Company of the
Offering and issuance of the Units does not and will not: (i) conflict with or
violate any provision of the Company’s or any Subsidiary’s certificate or
articles of incorporation, bylaws or other organizational or charter documents
or (ii) subject to obtaining the Required Approvals, conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of any agreement, credit facility, debt, or other instrument
(evidencing the Company’s or a Subsidiaries’ debt or otherwise) or other
understanding to which the Company or either of the Subsidiaries is a party or
by which any property or asset of the Company or its Subsidiaries is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree, or other restriction of any court or governmental
authority as currently in effect to which the Company or any of the Subsidiaries
is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or either of the Subsidiaries is
bound or affected; except in the case of each of clauses (ii) and (iii), such as
could not, individually or in the aggregate have a Material Adverse
Effect.

     

    (d)           Filings, Consents, and
Approvals.  Neither the Company nor any of the Subsidiaries is
required to obtain any consent, waiver, authorization, or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local, or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of this Subscription
Agreement, other than:  (i) the filing with the Commission of the
Registration Statement pursuant to Section 5, (ii) the filing with the
Commission of a Form D pursuant to Commission Regulation D (as applicable), and
(iii) any applicable Blue Sky filings (collectively, the “Required
Approvals”).

     

    (e)           Issuance of the
Units.  The Units, and each component or underlying security,
are duly authorized and, when issued and paid for in accordance with this
Subscription Agreement, will be duly and validly issued, fully paid and
nonassessable, free and clear of all liens, and not subject to any preemptive
rights.  The Company will reserve from its duly authorized capital
stock a number of shares of Common Stock required for issuance of the Conversion
Shares and Warrant Shares.

     

    (f)           Capitalization.  The
number of shares and type of all authorized, issued, and outstanding capital
stock of the Company is as set forth in the SEC Reports as of the respective
dates set forth therein.   No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the Offering.  Other than the stockholder approval
required by Section 5(A) of the Company’s Certificate of Designation of Series D
Convertible Redeemable Preferred Stock in order to permit holders to have voting
rights and to be able to exercise the Warrants under the rules of the NYSE Amex
(the “Stockholder
Approval”), no further approval or authorization of any stockholder, the
Board of Directors of the Company, or others except as may be required in
connection with the Proposed Acquisition Transactions, is required for the
issuance and sale of the Units and the underlying Conversion Shares and Warrant
Shares.  Upon exercise of the Warrants in accordance with their terms,
the Conversion Shares and Warrant Shares issuable thereby will be deemed duly
authorized, validly issued, fully paid and non-accessible in all
respects.

     

    (g)           SEC Reports; Financial
Statements.  The Company has filed all reports required to be
filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the one year preceding the date hereof (or
such shorter period as the Company was required by law to file such material)
(the foregoing materials being collectively referred to herein as the “SEC Reports”).  As
of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.  The Company has advised Investor(s)
that a copy of each of the SEC Reports (together with all exhibits and schedules
thereto and as amended to date) is available at http://www.sec.gov,
a website maintained by the Commission where Investor(s) may view the SEC
Reports.

    
      
         

      

      
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    (h)           Material
Changes.  Since the date of the latest audited financial
statements included in the SEC Reports, except as disclosed in the SEC Reports
or referred to in this Subscription Agreement and the Supplemental Information,
(i) there has been no event, occurrence, or development that has had a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company’s financial statements pursuant to
GAAP or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting or the identity of its
auditors, and (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders except in the
ordinary course of business consistent with prior practice, or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock except consistent with prior practice or pursuant to existing Company
stock option or similar plans.

     

    (i)           Litigation.  Except
as set forth in the SEC Reports or Supplemental Information, there is no action,
suit, inquiry, notice of violation, proceeding, or investigation pending or, to
the knowledge of the Company, threatened against or affecting the Company, the
Subsidiaries or any of its properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state,
county, local, or foreign) (collectively, an “Action”)
which:  (i) adversely affects or challenges the legality, validity or
enforceability of this Subscription Agreement or the Units or (ii) could, if
there were an unfavorable decision, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect.

     

     (j)           Compliance.  Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement, (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is in violation of any statute, rule or regulation
of any governmental authority, including without limitation all foreign,
federal, state and local laws applicable to its business except in each case as
could not have a Material Adverse Effect.

     

    (k)           Regulatory
Permits.  The Company and the Subsidiaries possess the
certificates, authorizations, and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct its business
as described in the SEC Reports, except where the failure to possess such
permits would not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect (“Material
Permits”).

     

    (l)           Title to
Assets.  Except as set forth in the SEC Reports, the Company
and the Subsidiaries have good and marketable title in all real and personal
property owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of any liens, encumbrances or other
restrictions.

     

    (m)           Patents and
Trademarks.  To the best of the Company’s knowledge, the
Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses, and other similar rights necessary or material for use in
connection with their respective businesses as described in the SEC Reports and
which the failure to so have could have a Material Adverse Effect (collectively,
the “Intellectual Property
Rights”).  Neither the Company nor any Subsidiary has received
a written notice that the Intellectual Property Rights used by the Company or
any Subsidiary violates or infringes upon the rights of any
Person.  To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights of others.

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    (n)           Insurance.  The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent in the Company’s
reasonable discretion.  The Company has no reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business.

     

    (o)           Private
Placement.  Assuming the accuracy of the Investor
representations and warranties set forth in Section 3, no registration under the
Securities Act is required for the offer and sale of the Units by the Company to
the Investor as contemplated hereby or the exercise of the
Warrants.

     

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

     

    (q)           Foreign Corrupt
Practices.  The Company has not to its knowledge (i) directly
or indirectly, used any corrupt funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is  in violation of law, or (iv)
violated in any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended

     

    (r)           Accountants.  The
Company’s accountants are set forth in the SEC Reports.  To the
Company’s knowledge, such accountants, who the Company expects will express
their opinion with respect to the financial statements to be included in the
Company’s upcoming financial statements, are a registered public accounting firm
as required by the Securities Act.

     

     (s)           Listing and Maintenance
Requirements.  The Company’s Common Stock currently is quoted
on the NYSE Amex.

     

    5.           Registration
Rights.

     

    The
Company grants registration rights to the Investor under the following terms and
conditions:

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    (a)              The
Company will prepare and file (which may include the preparation and filing of
one or more pre-effective amendments to any registration statements that relates
to the Company’s securities, which may be currently on file or may be
subsequently filed with the Commission), at its own expense, a registration
statement under the Securities Act (the “Registration Statement”) with
the Commission no later than October 31, 2009 for the non-underwritten public
offering and resale of the Conversion Shares and the Warrant Shares (subject to
adjustment as set forth in the Warrants) (the “Registrable Securities”)
through the facilities of all appropriate securities exchanges, if any, on which
the Company’s Common Stock is being sold or on the over-the-counter market if
the Company’s Common Stock is quoted thereon.  Such registration
statement may include other securities required to be included by the Company
pursuant to registration rights granted by the Company prior to the date of this
Subscription Agreement.  Notwithstanding anything in this Subscription
Agreement to the contrary, if the Commission refuses to declare a Registration
Statement filed pursuant to this Agreement effective as a valid secondary
offering under Rule 415 promulgated pursuant to the Securities Act due to the
number of securities included in such Registration Statement relative to the
outstanding number of shares of Common Stock, then, without any liability under
Section 5(f) or any further obligation to register such excess Registrable
Securities, the Company shall be permitted to reduce the number of Registrable
Securities included in such Registration Statement to an amount such that the
number of securities included in such Registration Statement does not exceed an
amount that the Commission allows for the offering thereunder to qualify as a
valid secondary offering under Rule 415.  In this event, Investor will have
priority with respect to the inclusion of the Conversion Shares and Warrant
Shares vis-à-vis any shareholder investing in the Company after the date of the
Closing.  The Company shall not be liable for liquidated damages
pursuant to Section 5(f) under this Agreement or otherwise as to any Registrable
Securities which are not permitted by the Commission to be included in a
Registration Statement due solely to SEC Guidance from the time that it is
determined that securities are not permitted to be registered due to SEC
Guidance or as to any delay occasioned by such SEC Guidance solely to the extent
it relates to the time needed to reduce the amount of securities included in the
Registration Statement.  In such case, the liquidated damages shall be
calculated to only apply to the percentage of Registrable Securities which are
permitted in accordance with SEC Guidance to be included in such Registration
Statement.  Notwithstanding the foregoing, Registrable Securities
shall not include those Securities defined in  Section 4(c)(ii) and
4(c)(iii) below (the “Freely
Tradable Securities”).

     

    “SEC Guidance” means (i) any
written or oral guidance, comments, requirements or requests of the Commission
staff and (ii) the Securities Act.

     

    (b)           The
Company will use its reasonable best efforts to cause such Registration
Statement to become effective.  Subject to Section 5(a), the number of
shares designated in the Registration Statement to be registered shall include
appropriate language regarding reliance upon Rule 416 to the extent permitted by
the Commission.

     

    (c)           The
Company will maintain the Registration Statement or post-effective amendment
filed under the terms of this Subscription Agreement effective under the
Securities Act until the earlier of (i) the date that the Investor's Registrable
Securities have been sold pursuant to such Registration Statement, (ii) the
Investor's Registrable Securities have been otherwise transferred to Persons who
may trade such shares without restriction under the Securities Act, and the
Company has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend, (iii) the Investor's Registrable
Securities may be sold at any time, without volume or manner of sale limitations
pursuant to Rule 144(b)(1) or any similar provision then in effect under the
Securities Act in the opinion of counsel to the Company, or (iv) one year from
the effective date of the Registration Statement (the “Effectiveness
Period”).

     

    (d)            All
fees, disbursements and out-of-pocket expenses and costs incurred by the Company
in connection with the preparation and filing of the Registration Statement, in
making filings with FINRA (including without limitation, pursuant to FINRA Rule
2710) and in complying with applicable federal securities laws (including,
without limitation, all attorneys’ fees of the Company) shall be borne by the
Company.  The Investor shall bear any cost of underwriting and/or
brokerage discounts, fees, and commissions, if any, applicable to the
Registrable Securities being registered and sold by an underwriter for the
Investor and the fees and expenses of their counsel.  The Company
shall use its reasonable best efforts to qualify the Conversion Shares and
Warrant Shares in the State of residence of the Investor.  However,
the Company shall not be required to qualify in any state which will require an
escrow or other restriction relating to the Company and/or the sellers, or which
will require the Company to qualify to do business in such state or require the
Company to file therein any general consent to service of
process.  The Company at its expense will supply the Investor with
copies of the applicable Registration Statement and any prospectus included
therein and other related documents in such quantities as may be reasonably
requested by the Investor.

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

     

    (e)            Certificates
evidencing the Registrable Securities shall not contain any
legend:  (i) following any sale of Conversion Shares or Warrant Shares
pursuant to Rule 144, or (ii) if such Conversion Shares or Warrant Shares are
eligible for sale under Rule 144(b)(1); or (iii) following any sale of
Conversion Shares or Warrant Shares pursuant to the Registration Statement;
provided, however, in connection with
the sale or transfer of the Conversion Shares or Warrant Shares, Investor hereby
agrees to adhere to and abide by all prospectus delivery requirements under the
Securities Act and rules and regulations of the Commission and provide the
Company with customary documentation, as applicable.  The Company
shall cause its counsel to issue a legal opinion to the Company’s transfer agent
promptly upon request of the Investor if required by the Company’s transfer
agent to effect the removal of the legend hereunder.

     

    (f)           In
the event that the Registration Statement is not filed as set forth in above,
and the Company does not use its reasonable best efforts to respond to any
comments of the SEC within twenty (20) business days following receipt thereof,
then the Company will issue to each Investor  one percent (1%) of the
net proceeds received from such Investor in the Offering for no additional
cost.  Additionally, for every thirty (30) days that the Company
continues to be delayed from filing the Registration Statement with the
Commission or continues to fail to use its reasonable best efforts to respond to
any comments from the Commission, the Company will issue to each Investor 1% of
the net proceeds received from such Investor in the Offering for no additional
cost.  All additional amounts that may be issued as provided herein
shall not exceed 5% of the net proceeds received in the Offering. Such amounts
shall be as partial compensation for such failure and not as a
penalty.  The provisions of this paragraph 5(f) shall not apply in the
event the Company does not file as set forth above the Registration Statement
because the Company does not have available audited financial statements
required by the SEC of a company with which the Company has a letter of intent
or definitive agreement to acquire.

     

    (g)           The
Company will use its reasonable best efforts to prepare and make publicly
available in accordance with Rule 144(c) such information as is required for
Investor to sell the Registrable Securities under Rule 144 in the event the
Registration Statement is unavailable.  The Company further covenants
that, in the event the Registration Statement is unavailable, it will take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such Person to sell such
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.

     

    (h)           In
the case of each registration effected by the Company pursuant to any section
herein, the Company will:

     

    (i)           Prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to a disposition of all securities covered by such
registration statement;

     

    (ii)           Notify
the Investor at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or incomplete in light of the circumstances then existing, and at
the request of the shareholders, prepare and furnish to them a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the Investor, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or incomplete in light of the circumstances then
existing; provided that, for not more than 120
consecutive business days (or a total of not more than 240 calendar days in any
12-month period), the Company may delay the disclosure of material non-public
information concerning the Company the public disclosure of which at the time is
not, in the good faith opinion of the Company in the best interests of the
Company and which may, based on advice of outside counsel, be delayed under
applicable law or regulation (an “Allowed Delay”); provided, further, that the Company
shall promptly (a) notify each Investor in writing of the existence of (but in
no event, without the prior written consent of such Investor, shall the Company
disclose to such Investor any of the facts or circumstances regarding) material
non-public information giving rise to an Allowed Delay and (b) advise each
Investor in writing to cease all sales under such registration statement until
the termination of the Allowed Delay; provided, further; that the
provisions of this section shall not apply to Investors who hold Freely
Tradeable Securities.Use its reasonable best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a registration statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest possible moment and to notify Investor (and, in the event of an
underwritten offering, the managing underwriter) of the issuance of such order
and the resolution thereof;

    
      
         

      

      
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    (iii)           If
FINRA Rule 2710 requires any broker-dealer to make a filing prior to executing a
sale of Registrable Securities by an Investor, make an Issuer Filing with the
FINRA Corporate Financing Department pursuant to FINRA Rule 2710 and respond
within five business days to any comments received from FINRA in connection
therewith.

     

    (iv)           Otherwise
use its reasonable best efforts to comply with all applicable rules and
regulations of the Commission.

     

    (i)           To
the extent Investor includes any Conversion Shares or Warrant Shares in a
registration statement pursuant to the terms hereof, the Company will indemnify
and hold harmless Investor, its directors and officers, and each Person, if any,
who controls Investor within the meaning of the Securities Act, from and
against, and will reimburse Investor, its directors and officers and each
controlling Person with respect to, any and all loss, damage, liability, cost,
and expense to which Investor or such controlling Person may become subject
under the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs, or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided,
however, that the
Company will not be liable in any such case to the extent that any such loss,
damage, liability, cost or expense arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by Investor or any such controlling Person
in writing specifically for use in the preparation thereof.

     

    (j)           To
the extent Investor includes any Conversion Shares or Warrant Shares in a
registration statement pursuant to the terms hereof, Investor will indemnify and
hold harmless the Company, its directors and officers and any controlling Person
from and against, and will reimburse the Company, its directors and officers and
any controlling Person with respect to, any and all loss, damage, liability,
cost, or expense to which the Company, its directors and officers or such
controlling Person may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs, or expenses are caused by
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
conformity with  information furnished by or on behalf of the Investor
specifically for use in the preparation thereof and provided further, that the
maximum amount that may be recovered from Investor shall be limited to the
amount of proceeds received by Investor from the sale of such shares of Common
Stock.

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

     

    (k)           To
the extent any indemnification by an indemnifying party is prohibited or limited
by law, the indemnifying party agrees to make the maximum contribution with
respect to any amounts for which it would otherwise be liable hereunder to the
extent permitted by law, provided that (i) no contribution shall be made under
circumstances where the indemnifying party would not have been liable for
indemnification pursuant to the provisions hereof, (ii) no seller of securities
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any seller of
securities who was not guilty of such fraudulent misrepresentation, and
(iii) the amount of the contribution together with any other payments made
in respect of such loss, damage, liability, or expense, by any seller of
securities shall be limited to the net amount of proceeds received by such
seller from the sale of such securities.

     

    (l)           The
Investor will cooperate with the Company in connection with this Subscription
Agreement, including timely supplying all information and executing and
returning the Selling Securityholder Notice and Questionnaire attached hereto as
Exhibit C, and any other
documents requested by the Company that are required to enable the Company to
perform its obligations to register the Conversion Shares and Warrant Shares and
to the extent Investor fails to provide the Questionnaire Investor’s right to
include Investor’s Registrable Securities under this Section 5 in any
Registration Statement shall cease following written notice from the Company
..

     

    6.           Other Agreements of the
Company and the Investor.

     

    (a)           Acknowledgment of
Dilution.  The Company and Investor acknowledge that the
issuance of the Preferred Shares (and the Conversion Shares issuable thereof)
and the Warrant Shares will result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial.

     

    (b)           Exercise
Procedures.  Other than the Stockholder Approval required under
NYSE Amex rules, the form of Notice of Exercise included in the Warrants sets
forth the totality of the procedures required of the Investor in order to
exercise the Warrants.

     

    (c)           Use of
Proceeds.  The Company shall use the net proceeds from the sale
of the Units hereunder for general working capital purposes including the
pursuit of strategic relationships and investments, the purchase of equipment
related to the conduct of research and development, marketing and sales, the
payment of costs associated with the Proposed Acquisition Transactions and the
payment of accrued payroll.

     

    (d)           Press
Releases.  The Company shall issue a press release or file a
Current Report on Form 8-K as required disclosing all material terms of the
transactions contemplated hereby upon the final closing of the offering and in
its reasonable discretion.

     

    (e)           Confidentiality.  Each
Investor agrees that he, she or it will keep confidential and will not disclose,
divulge or use for any purpose any confidential, proprietary or secret
information, including  the Supplemental Information, which such
Investor may obtain from the Company pursuant to financial statements, reports
and other materials or information submitted by the Company to such Investor
pursuant to or in connection with this Subscription Agreement or otherwise (but
not including the SEC Reports) (“Confidential Information”), unless such
Confidential Information is known, or until such Confidential Information
becomes known, to the public (other than as a result of a breach of this section
by such Investor); provided, however, that an
Investor may disclose Confidential Information (i) to his, her or its
attorneys, accountants, consultants, and other professionals to the extent
necessary to obtain their services in connection with monitoring his, her or its
investment in the Company, or (ii) as may otherwise be required by law, provided
that the Investor takes reasonable steps to minimize the extent of any such
required disclosure and promptly notifies the Company when it becomes aware of
such legal requirement .

     

    
      
        
        

      

      
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    7.           Miscellaneous.

     

    (a)           Termination.  The
Investor agrees that he shall not cancel, terminate, or revoke this Subscription
Agreement or any agreement of the Investor made hereunder other than as set
forth herein, and that this Subscription Agreement shall survive the death or
disability of the Investor.  If the Company elects to cancel this
Subscription Agreement, provided that it returns to the Investor, without
interest and without deduction, all sums paid by the Investor, this Offer shall
be null and void and of no further force and effect, and no party shall have any
rights against any other party hereunder.

     

    (b)           Entire
Agreement.  This Subscription Agreement, together with the
exhibits hereto, contains the entire understanding of the Company and the
Investor with respect to the subject matter hereof.

     

    (c)           Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the second Business Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (b)
upon actual receipt by the party to whom such notice is required to be
given.  The address for such notices and communications shall be to
the Investor at his address set forth on the Investor Signature Page, and to the
Company at the addresses set forth in the SEC Reports.

     

    (d)           Amendments;
Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, or
in the case of a waiver, by the Company and the individual
Investor.  No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right.

     

    (e)           Construction.  The
headings herein are for convenience only, do not constitute a part of this
Subscription Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

     

    (f)           Successors and
Assigns.  This Subscription Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Subscription Agreement or
any rights or obligations hereunder without the prior written consent of each
Investor in the Offering.  Investor may assign any or all of its
rights under this Agreement to any Person to whom Investor assigns or transfers
any of the Preferred Shares (or the Conversion Shares issuable thereof) or
Warrant Shares.

     

    (g)           No Third-Party
Beneficiaries.  This Subscription Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.

     

    (h)           Governing
Law.  All questions concerning the construction, validity,
enforcement, and interpretation of this Subscription Agreement shall be governed
by and construed and enforced in accordance with the internal laws of the State
of New York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Subscription Agreement (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees, or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Subscription
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.  The parties hereby waive all rights to a trial by
jury.  If either party shall commence an action or proceeding to
enforce any provisions of this Subscription Agreement, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation, and prosecution of such action or proceeding.

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

     

     (i)           Survival.  The
representations and warranties contained herein shall survive the closing of the
transaction hereunder.

     

     (j)           Execution.  In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile signature page were an original thereof.  This
Agreement may be executed in two or more counterparts each of which shall be
deemed an original, but all of which shall together constitute one and the same
instrument.

     

    (k)           Severability.  If
any provision of this Subscription Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Subscription Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Subscription
Agreement.

     

    (l)           Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of Investor and the Company will be
entitled to specific performance under this Subscription
Agreement.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

     

    (m)           Fees and Expenses.
Except as provided in writing, the parties hereto shall be responsible for their
own legal and other expenses, if any, in connection with this
transaction.

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    INVESTOR
SIGNATURE PAGE FOR NEOSTEM, INC. SUBSCRIPTION AGREEMENT

    Please
print or type, Use ink only.  (All Parties Must Sign)

     

    The
undersigned Investor hereby certifies that he (i) has received and relied solely
upon the SEC Reports, this Subscription Agreement and their respective exhibits
and schedules, (ii) agrees to all the terms
and conditions of this Subscription Agreement, (iii) meets the suitability
standards set forth herein and (iv) is a resident of the state or foreign
jurisdiction indicated below.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	
                                        Dollar
      Amount of Units Subscribed for: $_______________

                                      
	
                                        ______________________________________________ 
      

                                        
                                          Name of Investor (Print)

                                        

                                      	 
      	
                                        If
      other than individual check one and indicate capacity of signatory
      under the signature: 

                                      
	
                                        ______________________________________________

                                      	 
      	
                                        o

                                      	
                                        Trust

                                      
	
                                        Name
      of Joint Investor (if any) (Print)

                                      	 
      	
                                        
                                          o

                                        

                                      	
                                        Estate

                                      
	 
      	 
      	
                                        
                                          o  

                                        

                                      	
                                        Uniform
      Gifts to Minors Act

                                      
	
                                        ______________________________________________

                                      	  
      	 
      	
                                        State
      of_______________

                                      
	
                                        Signature
      of Investor

                                      	 
      	
                                        
                                          o

                                        

                                      	
                                        Attorney-in-fact

                                      
	 
      	                               	
                                        
                                          o

                                        

                                      	
                                        Corporation

                                      
	
                                        ______________________________________________

                                      	 
      	
                                        
                                          o

                                        

                                      	
                                        Other

                                      
	
                                        Signature
      of Joint Investor (if any)

                                      	 
      	 
      	 
      
	 
      	 
      	
                                        If
      Joint Ownership, Check one:

                                      
	
                                        ______________________________________________

                                        
                                          Capacity
      of Signatory (if applicable)

                                        

                                      	 
      	
                                        
                                          o

                                        

                                      	
                                        Joint
      Tenants with Right of

                                        Survivorship

                                      
	
                                         

                                      	 
      	
                                        o

                                      	
                                        Tenants
      in Common  

                                      
	
                                        ______________________________________________ 
      

                                      	 
      	
                                        o

                                      	
                                        Tenants
      by the Entirety  

                                      
	
                                        Social
      Security or Taxpayer Identification Number

                                      	 
      	
                                        
                                          o

                                        

                                      	
                                        
                                          Community
      Property

                                        

                                      
	 
      	 
      	 	 
      
	
                                        Investor
      Address:

                                      	 
      	
                                        Backup
      Withholding Statement:

                                      
	
                                        ______________________________________________

                                        
                                          Street
      Address

                                        

                                      	 
      	
                                        
                                          o

                                        

                                      	
                                        Please
      check this box only if the

                                        investor
      is subject to backup

                                        withholding

                                      
	 
      	 
      	 
      	 
      
	
                                        ______________________________________________

                                      	 
      	
                                        Foreign
      Person:

                                      
	
                                        City              State              Zip
      Code

                                         

                                        
                                          Telephone:  (_____)______________________________

                                        

                                      	 
      	
                                        o

                                      	
                                        Please
      check this box only if the

                                        investor
      is a nonresident alien, foreign

                                        foreign
      partnership, foreign trust,

                                        corporation,
      or foreign estate

                                      
	 
      	 
      	 
      	 
      
	
                                        Fax:  (_______) _________________________________

                                      	 
      	 
      	
                                        Country ______________

                                      
	 
      	 
      	 
      	
                                        Passport # ____________

                                      
	 
      	 
      	 
      	
                                        ID # _________________

                                      
	
                                        E-mail: ________________________________________

                                      	 
      	 
      	
                                        ID Type ______________

                                      
	 
      	 
      	 
      	 
      
	
                                        Address
      for Delivery of Units (if different from above):

                                      	 
      	 
      	 
      
	
                                        ______________________________________________ 
      

                                      	 
      	 
      	 
      
	
                                        ______________________________________________

                                      	 
      	 
      	 
      
	
                                        
                                          City              State              Zip
      Code

                                        

                                      	 
      	 
      	 
      

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

     

    THE
SUBSCRIPTION FOR UNITS OF NEOSTEM, INC. BY THE ABOVE NAMED INVESTOR(S) IS
ACCEPTED THIS ___ DAY OF ___________, 2009.

    
      
        
          
            	
                    NEOSTEM,
      INC.

                  
	 
      	 
      
	
                    By:

                  	 
      
	
                    Name:

                  	
                    Robin
      Smith

                  
	
                    Title:

                  	
                    Chairman
      of the Board and
CEO

                  

          

        

      

    

     

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

    Schedule
A

    

    Accredited
Investor

     

    An
“accredited Investor” means:

     

    
      	
               
      

            	
              i.

            	
              a
      bank, insurance company, registered investment company, business
      development company, or small business investment
  company;

            

    

    
      	
               
      

            	
              ii.

            	
              an
      employee benefit plan, within the meaning of the Employee Retirement
      Income Security Act, if a bank, insurance company, or registered
      investment adviser makes the investment decisions, or if the plan has
      total assets in excess of $5
million;

            

    

    
      	
            	
              iii.

            	
              a
      charitable organization, corporation, or partnership with assets exceeding
      $5 million;

            

    

    
      	
            	
              iv.

            	
              a
      director, executive officer, or general partner of the company selling the
      securities;

            

    

    
      	
               
      

            	
              v.

            	
              a
      business in which all the equity owners are accredited
      investors;

            

    

    
      	
            	
              vi.

            	
              a
      natural person who has individual net worth, or joint net worth with the
      person’s spouse, that exceeds $1 million at the time of the
      purchase;

            

    

    
      	
            	
              vii.

            	
              a
      natural person with income exceeding $200,000 in each of the two most
      recent years or joint income with a spouse exceeding $300,000 for those
      years and a reasonable expectation of the same income level in the current
      year; or

            

    

    
      	
            	
              viii.

            	
              a
      trust with assets in excess of $5 million, not formed to acquire the
      securities offered, whose purchases a sophisticated person
      makes.

            

    

     

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

    

    Schedule
B

    

    U.S.
Person

    

    A "U.S.
person" means:

     

    
      	
               
      

            	
              i.

            	
              Any
      natural person resident in the United
States;

            

    

     

    
      	
               
      

            	
              ii.

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

            

    

     

    
      	
               
      

            	
              iii.

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

            

    

     

    
      	
               
      

            	
              iv.

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

            

    

     

    
      	
               
      

            	
              v.

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

            

    

     

    
      	
               
      

            	
              vi.

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

            

    

     

    
      	
               
      

            	
              vii.

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

            

    

     

    
      	
               
      

            	
              viii.

            	
              Any
      partnership or corporation if:

            

    

     

    
      	
               
      

            	
              A.

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

            

    

     

    
      	
               
      

            	
              B.

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

            

    

     

    
      
         

      

      
        -21-

        
          

        

      

      
         

      

    

    Schedule
C

    

    Non-U.S.
Person

     

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

     

    
      	
               
      

            	
              i.

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

            

    

     

    
      	
               
      

            	
              ii.

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

            

    

     

    
      	
               
      

            	
              A.

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

            

    

     

    
      	
               
      

            	
              B.

            	
              The
      estate is governed by foreign law;

            

    

     

    
      	
               
      

            	
              iii.

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

            

    

     

    
      	
               
      

            	
              iv.

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

            

    

     

    
      	
               
      

            	
              v.

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

            

    

     

    
      	
               
      

            	
              A.

            	
              The
      agency or branch operates for valid business reasons;
  and

            

    

     

    
      	
               
      

            	
              B.

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

            

    

     

    
      	
               
      

            	
              vi.

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

            

    

    
      
         

      

      
        -22-Impact Medical Solutions,
Inc.

    Code of Business Conduct and
Ethics

    

    This Code of Business Conduct and Ethics
(the “Code”) sets forth legal and ethical standards of conduct for directors,
officers and employees of Impact Medical Solutions, Inc. (the “Company”). This
Code is intended to deter wrongdoing and to promote the conduct of all Company
business in accordance with high standards of integrity and in compliance with
all applicable laws and regulations.

    

    If you have any questions regarding this
Code or its application to you in any situation, you should contact your
supervisor or the President of the Company.

    

    Compliance with Laws,
Rules and Regulations

    

    The Company requires that all employees,
officers and directors comply with all laws, rules and regulations applicable to
the Company wherever it does business. You are expected to use good judgment and
common sense in seeking to comply with all applicable laws, rules and
regulations and to ask for advice when you are uncertain about
them.

    

    If you become aware of the violation of
any law, rule or regulation by the Company, whether by its officers, employees,
directors, or any third party doing business on behalf of the Company, it is
your responsibility to promptly report the matter to your supervisor or the
President. While it is the Company’s desire to address matters internally,
nothing in this Code should discourage you from reporting any illegal activity,
including any violation of the securities laws, antitrust laws, and
environmental laws or any other federal, state or foreign law, rule or
regulation, to the appropriate regulatory authority. Employees, officers and
directors shall not discharge, demote, suspend, threaten, harass or in any other
manner discriminate or retaliate against an employee because he or she reports
any such violation, unless it is determined that the report was made with
knowledge that it was false. This Code should not be construed to prohibit you
from testifying, participating or otherwise assisting in any state or federal
administrative, judicial or legislative proceeding or
investigation.

    

    Conflicts of
Interest

    

    Employees, officers and directors must
act in the best interests of the Company. You must refrain from engaging in any
activity or having a personal interest that presents a “conflict of interest.” A
conflict of interest occurs when your personal interest interferes, or appears
to interfere, with the interests of the Company. A conflict of interest can
arise whenever you, as an officer, director or employee, take action or have an
interest that prevents you from performing your Company duties and
responsibilities honestly, objectively and effectively.

    

    For example:

    

    
      	
               
      

            	
              ·

            	
              No employee, officer or director
      shall perform services as a consultant, employee, officer, director,
      advisor or in any other capacity for, or have a financial interest in, a
      competitor of the Company, other than services performed at the request of
      the Company and other than a financial interest representing less than one
      percent (1%) of the outstanding shares of a publicly-held company;
      and

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              ·

            	
              No employee, officer or director
      shall use his or her position with the Company to influence a transaction
      with a supplier or customer in which such person has any personal
      interest, other than a financial interest representing less than one
      percent (1%) of the outstanding shares of a publicly-held
      company.

            

    

    

    It is your responsibility to disclose
any transaction or relationship that reasonably could be expected to give rise
to a conflict of interest to the President or, if you are an executive officer or
director, to the Board of Directors, who shall be responsible for determining
whether such transaction or relationship constitutes a conflict of
interest.

    

    Insider
Trading

    

    Employees, officers and directors who
have material non-public information about the Company or other companies,
including our suppliers and customers, as a result of their relationship with
the Company are prohibited by law and Company policy from trading in securities
of the Company or such other companies, as well as from communicating such
information to others who might trade on the basis of that information. To help
ensure that you do not engage in prohibited insider trading and avoid even the
appearance of an improper transaction, the Company has adopted an Insider
Trading Policy, which is available in the Employee Handbook.

    

    If you are uncertain about the
constraints on your purchase or sale of any Company securities or the securities
of any other company that you are familiar with by virtue of your relationship
with the Company, you should consult with the President before making any such purchase or
sale.

    

    Confidentiality

    

    Employees, officers and directors must
maintain the confidentiality of confidential information entrusted to them by
the Company or other companies, including our suppliers and customers, except
when disclosure is authorized by a supervisor or legally mandated. Unauthorized
disclosure of any confidential information is prohibited. Additionally,
employees should take appropriate precautions to ensure that confidential or
sensitive business information, whether it is proprietary to the Company or
another company, is not communicated within the Company except to employees who
have a need to know such information to perform their responsibilities for the
Company.

    

    Third parties may ask you for
information concerning the Company. Employees, officers and directors (other
than the Company’s authorized spokespersons) must not discuss internal Company
matters with, or disseminate internal Company information to, anyone outside the
Company, except as required in the performance of their Company duties and after
an appropriate confidentiality agreement is in place. This prohibition applies
particularly to inquiries concerning the Company from the media, market
professionals (such as securities analysts, institutional investors, investment
advisers, brokers and dealers) and security holders. All responses to inquiries
on behalf of the Company must be made only by the Company’s authorized
spokespersons. If you receive any inquiries of this nature, you must decline to
comment and refer the inquirer to your supervisor or one of the Company’s
authorized spokespersons.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    You also must abide by any lawful
obligations that you have to your former employer. These obligations may include
restrictions on the use and disclosure of confidential information, restrictions
on the solicitation of former colleagues to work at the Company, and
non-competition obligations.

    

    Honest and Ethical
Conduct and Fair Dealing

    

    Employees, officers and directors should
endeavor to deal honestly, ethically and fairly with the Company’s suppliers,
customers, competitors and employees. Statements regarding the Company’s
products and services must not be untrue, misleading, deceptive or fraudulent.
You must not take unfair advantage of anyone through manipulation, concealment,
abuse of privileged information, misrepresentation of material facts or any
other unfair-dealing practice.

    

    Protection and Proper
Use of Corporate Assets

    

    Employees, officers and directors should
seek to protect the Company’s assets. Theft, carelessness and waste have a
direct impact on the Company’s financial performance. Employees, officers and
directors must use the Company’s assets and services solely for legitimate
business purposes of the Company and not for any personal benefit or the
personal benefit of anyone else.

    

    Employees, officers and directors must
advance the Company’s legitimate interests when the opportunity to do so arises.
You must not take for yourself personal opportunities that are discovered
through your position with the Company or the use of property or information of
the Company.

    

    Gifts and
Gratuities

    

    The use of Company funds or assets for
gifts, gratuities or other favors to employees or government officials is
prohibited, except to the extent such gifts are in compliance with applicable
law, nominal in amount and not given in consideration or expectation of any
action by the recipient.

    

    Employees, officers and directors must
not accept, or permit any member of his or her immediate family to accept, any
gifts, gratuities or other favors from any customer, supplier or other person
doing or seeking to do business with the Company, other than items of nominal
value. Any gifts that are not of nominal value should be returned immediately
and reported to your supervisor. If immediate return is not practical, they
should be given to the Company for charitable disposition or such other
disposition as the Company believes appropriate in its sole
discretion.

    

    Common sense and moderation should
prevail in business entertainment engaged in on behalf of the Company.
Employees, officers and directors should provide, or accept, business
entertainment to or from anyone doing business with the Company only if the
entertainment is infrequent, modest and intended to serve legitimate business
goals.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Bribes and kickbacks are criminal acts,
strictly prohibited by law. You must not offer, give, solicit or receive any
form of bribe or kickback anywhere in the world.

    

    Accuracy of Books and
Records and Public Reports

    

    Employees, officers and directors must
honestly and accurately report all business transactions. You are responsible
for the accuracy of your records and reports. Accurate information is essential
to the Company’s ability to meet legal and regulatory
obligations.

    

    All Company books, records and accounts
shall be maintained in accordance with all applicable regulations and standards
and accurately reflect the true nature of the transactions they record. The
financial statements of the Company shall conform to generally accepted
accounting rules and the Company’s accounting policies. No undisclosed or
unrecorded account or fund shall be established for any purpose. No false or
misleading entries shall be made in the Company’s books or records for any
reason, and no disbursement of corporate funds or other corporate property shall
be made without adequate supporting documentation.

    

    It is the policy of the Company to
provide full, fair, accurate, timely and understandable disclosure in reports
and documents filed with, or submitted to, the Securities and Exchange
Commission and in other public communications.

    

    Concerns Regarding
Accounting or Auditing Matters

    

    Employees with concerns regarding
questionable accounting or auditing matters or complaints regarding accounting,
internal accounting controls or auditing matters may confidentially, and
anonymously if they wish, submit such concerns or complaints in writing to the
President or to the Company’s outside counsel,
Troy and Gould LLP, 1801 Century Park East, 16th Floor, Los Angeles,
California  90067-2367. All such concerns and complaints will
be forwarded to the Audit Committee of the Board of Directors unless they are
determined to be without merit by the President and Chief Financial Officer of the
Company. In any event, a record of all complaints and concerns received will be
provided to the Audit Committee each fiscal quarter. Any such concerns or
complaints may also be communicated, confidentially and, if you desire,
anonymously, directly to any member of the Audit Committee of the Board of
Directors.

    

    The Audit Committee will evaluate the
merits of any concerns or complaints received by it and authorize such follow-up
actions, if any, as it deems necessary or appropriate to address the substance
of the concern or complaint.

    

    The Company will not discipline,
discriminate against or retaliate against any employee who reports a complaint
or concern, unless it is determined that the report was made with knowledge that
it was false.

    

    Waivers of this Code
of Business Conduct and Ethics

    

    While some of the policies contained in
this Code must be strictly adhered to and no exceptions can be allowed, in other
cases exceptions may be possible. Any employee or officer who believes that an
exception to any of these policies is appropriate in his or her case should
first contact his or her immediate supervisor. If the supervisor agrees that an
exception is appropriate, the approval of the President must be obtained. The President shall be responsible for maintaining a
complete record of all requests for exceptions to any of these policies and the
disposition of such requests.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Any executive officer or director who
seeks an exception to any of these policies should contact the Chairman of the
Audit Committee of the Board of Directors. Any waiver of this Code for executive
officers or directors or any change to this Code that applies to executive
officers or directors may be made only by the Board of Directors of the Company
and will be disclosed as required by law or stock market
regulation.

    

    Reporting and
Compliance Procedures

    

    Every employee, officer and director has
the responsibility to ask questions, seek guidance, report suspected violations
and express concerns regarding compliance with this Code. Any employee, officer
or director who knows or believes that any other employee or representative of
the Company has engaged or is engaging in Company-related conduct that violates
applicable law or this Code should report such information to his or her
supervisor or to the President. You may report such conduct openly or
anonymously without fear of retaliation. The Company will not discipline,
discriminate against or retaliate against any employee who reports such conduct,
unless it is determined that the report was made with knowledge that it was
false, or who cooperates in any investigation or inquiry regarding such conduct.
Any supervisor who receives a report of a violation of this Code must
immediately inform the President.

    

    You may report violations of this Code,
on a confidential or anonymous basis, by contacting the Company’s General
Counsel by fax, mail or e-mail at: (fax) (310) 789-1431, (mail) Troy and Gould LLP, 1801 Century Park East, 16th Floor, Los Angeles,
California  90067-2367, or (e-mail) aspatz@troygould.com.

    

    If the General Counsel receives
information regarding an alleged violation of this Code, he or she shall, as
appropriate, (a) evaluate such information, (b) if the alleged violation
involves an executive officer or a director, inform the Chief Executive Officer
and Board of Directors of the alleged violation, (c) determine whether it is
necessary to conduct an informal inquiry or a formal investigation and, if so,
initiate such inquiry or investigation and (d) report the results of any such
inquiry or investigation, together with a recommendation as to disposition of
the matter, to the Chief Executive Officer for action, or if the alleged
violation involves an executive officer or a director, report the results of any
such inquiry or investigation to the Board of Directors or a committee thereof.
Employees, officers and directors are expected to cooperate fully with any
inquiry or investigation by the Company regarding an alleged violation of this
Code. Failure to cooperate with any such inquiry or investigation may result in
disciplinary action, up to and including discharge.

    

    The Company shall determine whether
violations of this Code have occurred and, if so, shall determine the
disciplinary measures to be taken against any employee who has violated this
Code. In the event that the alleged violation involves an executive officer or a
director, the Chief Executive Officer and the Board of Directors, respectively,
shall determine whether a violation of this Code has occurred and, if so, shall
determine the disciplinary measures to be taken against such executive officer
or director.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Failure to comply with the standards
outlined in this Code will result in disciplinary action including, but not
limited to, reprimands, warnings, probation or suspension without pay,
demotions, reductions in salary, discharge and restitution. Certain violations
of this Code may require the Company to refer the matter to the appropriate
governmental or regulatory authorities for investigation or prosecution.
Moreover, any supervisor who directs or approves of any conduct in violation of
this Code, or who has knowledge of such conduct and does not immediately report
it, also will be subject to disciplinary action, up to and including
discharge.

    

    Dissemination and
Amendment

    

    This Code shall be distributed to each
new employee, officer and director of the Company upon commencement of his or
her employment or other relationship with the Company. The Company reserves the
right to amend, alter or terminate this Code at any time for any reason. The
most current version of this Code can be found in the Company’s Employee Handbook.

    

    This document is not an employment
contract between the Company and any of its employees, officers or directors and
does not alter the Company’s at-will employment policy.

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