Document:

ex4_07.htm

    
      

    

    EXHIBIT
4.07

     

    SILICON
IMAGE, INC.

    

    2008
EQUITY INCENTIVE PLAN

    

    

    

    1.           
 PURPOSE.  The
purpose of this Plan is to provide incentives to attract, retain and motivate
eligible persons whose present and potential contributions are important to the
success of the Company, and any Parents and Subsidiaries that exist now or in
the future, by offering them an opportunity to participate in the Company’s
future performance through the grant of Awards.  Capitalized terms not
defined elsewhere in the text are defined in Section 27.

    

    2.          
  SHARES
SUBJECT TO THE PLAN.

    

    2.1           Number of Shares
Available.   Subject to Sections 2.5 and 21 and any other
applicable provisions hereof, the total number of Shares reserved and available
for grant and issuance pursuant to this Plan is 4,000,000.  Any Award
other than an Option or a SAR shall reduce the number of Shares available for
issuance under the Plan by 1.50 Shares.  The Company may issue Shares
that are authorized but unissued shares pursuant to the Awards granted under the
Plan. The Company will reserve and keep available a sufficient number of Shares
to satisfy the requirements of all outstanding Awards granted under the
Plan.

    

    2.2           Lapsed, Returned
Awards.  Shares subject to Awards, and Shares issued upon
exercise of Awards, will again be available for grant and issuance in connection
with subsequent Awards under this Plan to the extent such Shares:  (i)
are subject to issuance upon exercise of an Option or SAR granted under this
Plan but which cease to be subject to the Option or SAR for any reason other
than exercise of the Option or SAR; provided, however, that (x) Shares tendered
by a Participant as full or partial payment to the Company upon exercise of an
Option shall not be available for future grant, and (y) SARs to be settled in
Shares of the Company’s Common Stock shall be counted against the Shares
available for issuance as one (1) Share for every Share subject to the SAR,
regardless of the number of Shares issued upon settlement of the SAR; (ii) are
subject to Awards granted under this Plan that are forfeited, cancelled or
expire; or (iii) are surrendered pursuant to an Exchange Program.  To
the extent an Award under the Plan is paid out in cash rather than Shares, such
cash payment will not result in reducing the number of Shares available for
issuance under the Plan.  

    

    2.3           Minimum Share
Reserve.  At all times the Company shall reserve and keep
available a sufficient number of Shares as shall be required to satisfy the
requirements of all outstanding Awards granted under this Plan and all other
outstanding but unvested Awards granted under this Plan.

    

    2.4           Limitations.  No
more than 40,000,000 Shares shall be issued pursuant to the exercise of
ISOs.

    

    2.5           Adjustment of
Shares.  If the number of outstanding Shares is changed by a
stock dividend, recapitalization, stock split, reverse stock split, subdivision,
combination, reclassification or similar change in the capital structure of the
Company, without consideration, then (a) the number of Shares reserved for
issuance and future grant under the Plan set forth in Section 2.1, (b) the
Exercise Prices of and number of Shares subject to outstanding Options and SARs,
(c) the number of Shares subject to other outstanding Awards, (d) the maximum
number of shares that may be issued as ISOs set forth in Section 2.4, and (e)
the maximum number of Shares that may be issued to an individual or to a new
Employee in any one calendar year set forth in Section 3, shall be
proportionately adjusted, subject to any required action by the Board or the
stockholders of the Company and in compliance with applicable securities laws;
provided that fractions of a Share will not be issued.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.       
     ELIGIBILITY.  ISOs
may be granted only to Employees.  All other Awards may be granted to
Employees, Consultants, Directors and Outside Directors of the Company or any
Parent or Subsidiary of the Company; provided such
Consultants, Directors and Outside Directors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction.  No Participant will be eligible to receive more than
500,000 Shares in any calendar year under this Plan pursuant to the grant of
Awards except that new Employees of the Company or of a Parent or Subsidiary of
the Company (including new Employees who are also officers and directors of the
Company or any Parent or Subsidiary of the Company) are eligible to receive up
to a maximum of 750,000 Shares in the calendar year in which they commence their
employment.

    

    4.         
   ADMINISTRATION.

    

    4.1           Committee Composition;
Authority.  This Plan will be administered by the Committee or
by the Board acting as the Committee.  Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this
Plan.  The Committee will have the authority to:

    

    (a)           construe
and interpret this Plan, any Award Agreement and any other agreement or document
executed pursuant to this Plan;

    

    (b)           prescribe,
amend and rescind rules and regulations relating to this Plan or any
Award;

    

    (c)           select
persons to receive Awards;

    

    (d)           determine
the form and terms and conditions, not inconsistent with the terms of the Plan,
of any Award granted hereunder. Such terms and conditions include, but are not
limited to, the exercise price, the time or times when Awards may be exercised
(which may be based on performance criteria), any vesting acceleration or waiver
of forfeiture restrictions, and any restriction or limitation regarding any
Award or the Shares relating thereto, based in each case on such factors as the
Committee will determine;

    

    (e)           determine
the number of Shares or other consideration subject to Awards;

    

    (f)           determine
the Fair Market Value in good faith, if necessary;

    

    (g)           determine
whether Awards will be granted singly, in combination with, in tandem with, in
replacement of, or as alternatives to, other Awards under this Plan or any other
incentive or compensation plan of the Company or any Parent or Subsidiary of the
Company;

    

    (h)           grant
waivers of Plan or Award conditions;

    

    (i)           determine
the vesting, exercisability and payment of Awards;

    

    (j)           correct
any defect, supply any omission or reconcile any inconsistency in this Plan, any
Award or any Award Agreement;

    
      
         

      

      
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    (k)           determine
whether an Award has been earned;

    

    (l)           determine
the terms and conditions of any, and to institute any Exchange
Program;

    

    (m)           reduce
or waive any criteria with respect to Performance Factors;

    

    (n)           adjust
Performance Factors to take into account changes in law and accounting or tax
rules as the Committee deems necessary or appropriate to reflect the impact of
extraordinary or unusual items, events or circumstances to avoid windfalls or
hardships provided that such adjustments are consistent with the regulations
promulgated under Section 162(m) of the Code with respect to persons whose
compensation is subject to Section 162(m) of the Code; and

    

    (o)           make
all other determinations necessary or advisable for the administration of this
Plan.

    

    4.2           Committee Interpretation and
Discretion.  Any determination made by the Committee with
respect to any Award shall be made in its sole discretion at the time of grant
of the Award or, unless in contravention of any express term of the Plan or
Award, at any later time, and such determination shall be final and binding on
the Company and all persons having an interest in any Award under the
Plan.  Any dispute regarding the interpretation of the Plan or any
Award Agreement shall be submitted by the Participant or Company to the
Committee for review.  The resolution of such a dispute by the
Committee shall be final and binding on the Company and the
Participant.  The Committee may delegate to one or more executive
officers the authority to review and resolve disputes with respect to Awards
held by Participants who are not Insiders, and such resolution shall be final
and binding on the Company and the Participant.

    

    4.3           Section 162(m) of the Code
and Section 16 of the Exchange Act.  When necessary or
desirable for an Award to qualify as “performance-based compensation” under
Section 162(m) of the Code the Committee shall include at least two persons who
are “outside directors” (as defined under Section 162(m) of the Code) and at
least two (or a majority if more than two then serve on the Committee) such
“outside directors” shall approve the grant of such Award and timely determine
(as applicable) the Performance Period and any Performance Factors upon which
vesting or settlement of any portion of such Award is to be subject. When
required by Section 162(m) of the Code, prior to settlement of any such Award at
least two (or a majority if more than two then serve on the Committee) such
“outside directors” then serving on the Committee shall determine and certify in
writing the extent to which such Performance Factors have been timely achieved
and the extent to which the Shares subject to such Award have thereby been
earned. Awards granted to Insiders must be approved by two or more “non-employee
directors” (as defined in the regulations promulgated under Section 16 of the
Exchange Act).

    

    5.        
    OPTIONS.  The
Committee may grant Options to Participants and will determine whether such
Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or
Nonqualified Stock Options (“NQSOs”),
the number of Shares subject to the Option, the Exercise Price of the Option,
the period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:

    

    5.1           Option
Grant.  Each Option granted under this Plan will identify the
Option as an ISO or an NQSO.  An Option may be, but need not be,
awarded upon satisfaction of such Performance Factors during any Performance
Period as are set out in advance in the Participant’s individual Award
Agreement.  If the Option is being earned upon the satisfaction of
Performance Factors, then the Committee will: (x) determine the nature, length
and starting date of any Performance Period for each Option; and (y) select from
among the Performance Factors to be used to measure the performance, if
any.  Performance Periods may overlap and Participants may participate
simultaneously with respect to Options that are subject to different performance
goals and other criteria.

    
      
         

      

      
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    5.2           Date of
Grant.  The date of grant of an Option will be the date on
which the Committee makes the determination to grant such Option, or a specified
future date.  The Award Agreement and a copy of this Plan will be
delivered to the Participant within a reasonable time after the granting of the
Option.

    

    5.3           Exercise
Period.  Options may be exercisable within the times or upon
the conditions as set forth in the Award Agreement governing such Option; provided, however, that no
Option will be exercisable after the expiration of seven (7) years from the date
the Option is granted; and provided further that
no ISO granted to a person who, at the time the ISO is granted, directly or by
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any Parent or Subsidiary of the
Company (“Ten Percent
Stockholder”) will be exercisable after the expiration of five (5) years
from the date the ISO is granted.  The Committee also may provide for
Options to become exercisable at one time or from time to time, periodically or
otherwise, in such number of Shares or percentage of Shares as the Committee
determines.

    

    5.4           Exercise
Price.  The Exercise Price of an Option will be determined by
the Committee when the Option is granted; provided that: (i) the Exercise Price
of an ISO will be not less than one hundred percent (100%) of the Fair Market
Value of the Shares on the date of grant and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than one hundred ten
percent (110%) of the Fair Market Value of the Shares on the date of
grant.  Payment for the Shares purchased may be made in accordance
with Section 11.  The Exercise Price of a NQSO may not be less than
one hundred percent (100%) of the Fair Market Value per Share on the date of
grant.

    

    5.5           Method of
Exercise.  Any Option granted hereunder will be exercisable
according to the terms of the Plan and at such times and under such conditions
as determined by the Committee and set forth in the Award Agreement. An Option
may not be exercised for a fraction of a Share.  An Option will be
deemed exercised when the Company receives: (i) notice of exercise (in such form
as the Committee may specify from time to time) from the person entitled to
exercise the Option, and (ii) full payment for the Shares with respect to which
the Option is exercised (together with applicable withholding taxes). Full
payment may consist of any consideration and method of payment authorized by the
Committee and permitted by the Award Agreement and the Plan. Shares issued upon
exercise of an Option will be issued in the name of the Participant. Until the
Shares are issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder will exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
will issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 2.5 of the Plan. Exercising an Option in any manner will decrease the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.

    

    5.6           Termination.  The
exercise of an Option will be subject to the following (except as may be
otherwise provided in an Award Agreement):

    

    (a)           If
the Participant is Terminated for any reason except for the Participant’s death
or Disability, then the Participant may exercise such Participant’s Options only
to the extent that such Options would have been exercisable by the Participant
on the Termination Date no later than three (3) months after the Termination
Date (or such shorter time period or longer time period not
exceeding five (5) years as may be determined by the Committee, with any
exercise beyond three (3) months after the Termination Date deemed to be an
NQSO), but in any event no later than the expiration date of the
Options.

    
      
         

      

      
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    (b)           If
the Participant is Terminated because of the Participant’s death (or the
Participant dies within three (3) months after a Termination), then the
Participant’s Options may be exercised only to the extent that such Options
would have been exercisable by the Participant on the Termination Date and must
be exercised by the Participant’s legal representative, or authorized assignee,
no later than twelve (12) months after the Termination Date (or such shorter
time period or longer time period not exceeding five (5) years as may be
determined by the Committee), but in any event no later than the expiration date
of the Options.

    

    (c)           If
the Participant is Terminated because of the Participant’s Disability, then the
Participant’s Options may be exercised only to the extent that such Options
would have been exercisable by the Participant on the Termination Date and must
be exercised by the Participant (or the Participant’s legal representative or
authorized assignee) no later than twelve (12) months after the Termination Date
(with any exercise beyond (a) three (3) months after the Termination Date when
the Termination is for a Disability that is not a “permanent
and total disability” as defined in Section 22(e)(3) of the Code, or (b) twelve
(12) months after the Termination Date when the Termination is for a Disability
that is a
“permanent and total disability” as defined in Section 22(e)(3) of the Code,
deemed to be exercise of an NQSO), but in any event no later than the expiration
date of the Options.

    

    5.7           Limitations on
Exercise.  The Committee may specify a minimum number of Shares
that may be purchased on any exercise of an Option, provided that such minimum
number will not prevent any Participant from exercising the Option for the full
number of Shares for which it is then exercisable.

    

    5.8           Limitations on
ISOs.  With respect to Awards granted as ISOs, to the extent
that the aggregate Fair Market Value of the Shares with respect to which such
ISOs are exercisable for the first time by the Participant during any calendar
year (under all plans of the Company and any Parent or Subsidiary) exceeds one
hundred thousand dollars ($100,000), such Options will be treated as NQSOs. For
purposes of this Section 5.8, ISOs will be taken into account in the order in
which they were granted. The Fair Market Value of the Shares will be determined
as of the time the Option with respect to such Shares is granted.  In
the event that the Code or the regulations promulgated thereunder are amended
after the Effective Date to provide for a different limit on the Fair Market
Value of Shares permitted to be subject to ISOs, such different limit will be
automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.

    

    5.9           Modification, Extension or
Renewal.  The Committee may modify, extend or renew outstanding
Options and authorize the grant of new Options in substitution therefor,
provided that any such action may not, without the written consent of a
Participant, impair any of such Participant’s rights under any Option previously
granted.  Any outstanding ISO that is modified, extended, renewed or
otherwise altered will be treated in accordance with Section 424(h) of the
Code.  Subject to Section 18 of this Plan, by written notice to
affected Participants, the Committee may reduce the Exercise Price of
outstanding Options without the consent of such Participants; provided, however, that the
Exercise Price may not be reduced below the Fair Market Value on the date the
action is taken to reduce the Exercise Price.

    
      
         

      

      
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    5.10           No
Disqualification.  Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISOs will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code

    

    5.11           Termination of
Participant.  Except as may be set forth in the Participant’s
Award Agreement, vesting ceases on such Participant’s Termination Date (unless
determined otherwise by the Committee).

    

    6.        
    RESTRICTED
STOCK AWARDS.

    

    6.1           Awards of Restricted
Stock.  A Restricted Stock Award is an offer by the Company to
sell to a Participant Shares that are subject to restrictions (“Restricted
Stock”).  The Committee will determine to whom an offer will be
made, the number of Shares the Participant may purchase, the Purchase Price, the
restrictions under which the Shares will be subject and all other terms and
conditions of the Restricted Stock Award, subject to the Plan.

    

    6.2           Restricted Stock Purchase
Agreement.  All purchases under a Restricted Stock Award will
be evidenced by an Award Agreement.  Except as may otherwise be
provided in an Award Agreement, a Participant accepts a Restricted Stock Award
by signing and delivering to the Company an Award Agreement with full payment of
the Purchase Price, within thirty (30) days from the date the Award Agreement
was delivered to the Participant.  If the Participant does not accept
such Award within thirty (30) days, then the offer of such Restricted Stock
Award will terminate, unless the Committee determines otherwise.

    

    6.3           Purchase
Price.  The Purchase Price for a Restricted Stock Award will be
determined by the Committee and may be less than Fair Market Value on the date
the Restricted Stock Award is granted.  Payment of the Purchase Price
must be made in accordance with Section 11 of the Plan, and the Award
Agreement.

    

    6.4           Terms of Restricted Stock
Awards.  Restricted Stock Awards will be subject to such
restrictions as the Committee may impose or are required by law.  These restrictions may
be based on completion of a specified number of years of service with the
Company or upon completion of Performance Factors, if any, during any
Performance Period as set out in advance in the Participant’s Award
Agreement.  Prior to the grant of a Restricted Stock Award, the
Committee shall: (a) determine the nature, length and starting date of any
Performance Period for the Restricted Stock Award; (b) select from among the
Performance Factors to be used to measure performance goals, if any; and (c)
determine the number of Shares that may be awarded to the
Participant.  Performance Periods may overlap and a Participant may
participate simultaneously with respect to Restricted Stock Awards that are
subject to different Performance Periods and having different performance goals
and other criteria.

    

    6.5           Termination of
Participant.  Except as may be set forth in the Participant’s
Award Agreement, vesting ceases on such Participant’s Termination Date (unless
determined otherwise by the Committee).

    

    7.       
     STOCK
BONUS AWARDS.

    

    7.1           Awards of Stock
Bonuses.  A Stock Bonus Award is an award to an eligible person
of Shares (which may consist of Restricted Stock or Restricted Stock Units) for
services to be rendered or for past services already rendered to the Company or
any Parent or Subsidiary.  All Stock Bonus Awards shall be made
pursuant to an Award Agreement.  No payment from the Participant will
be required for Shares awarded pursuant to a Stock Bonus Award.

    
      
         

      

      
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    7.2           Terms of Stock Bonus
Awards.  The Committee will determine the number of Shares to
be awarded to the Participant under a Stock Bonus Award and any restrictions
thereon.  These restrictions may be based upon completion of a
specified number of years of service with the Company or upon satisfaction of
performance goals based on Performance Factors during any Performance Period as
set out in advance in the Participant’s Stock Bonus Agreement.  Prior
to the grant of any Stock Bonus Award the Committee shall: (a) determine the
nature, length and starting date of any Performance Period for the Stock Bonus
Award; (b) select from among the Performance Factors to be used to measure
performance goals; and (c) determine the number of Shares that may be awarded to
the Participant.  Performance Periods may overlap and a Participant
may participate simultaneously with respect to Stock Bonus Awards that are
subject to different Performance Periods and different performance goals and
other criteria.

    

    7.3           Form of Payment to
Participant.  Payment may be made in the form of cash, whole
Shares, or a combination thereof, based on the Fair Market Value of the Shares
earned under a Stock Bonus Award on the date of payment, as determined in the
sole discretion of the Committee.

    

    7.4           Termination of
Participation.  Except as may be set forth in the Participant’s
Award Agreement, vesting ceases on such Participant’s Termination Date (unless
determined otherwise by the Committee).

    

    8.          
  STOCK
APPRECIATION RIGHTS.

    

    8.1           Awards of
SARs.  A Stock Appreciation Right (“SAR”) is
an award to a Participant that may be settled in cash, or Shares (which may
consist of Restricted Stock), having a value equal to (a) the difference between
the Fair Market Value on the date of exercise over the Exercise Price multiplied
by (b) the number of Shares with respect to which the SAR is being settled
(subject to any maximum number of Shares that may be issuable as specified in an
Award Agreement).  All SARs shall be made pursuant to an Award
Agreement.

    

    8.2           Terms of
SARs.  The Committee will determine the terms of each SAR
including, without limitation: (a) the number of Shares subject to the SAR; (b)
the Exercise Price and the time or times during which the SAR may be settled;
(c) the consideration to be distributed on settlement of the SAR; and (d) the
effect of the Participant’s Termination on each SAR.  The Exercise
Price of the SAR will be determined by the Committee when the SAR is granted,
and may not be less than Fair Market Value.  A SAR may be awarded upon
satisfaction of Performance Factors, if any, during any Performance Period as
are set out in advance in the Participant’s individual Award
Agreement.  If the SAR is being earned upon the satisfaction of
Performance Factors, then the Committee will: (x) determine the nature, length
and starting date of any Performance Period for each SAR; and (y) select from
among the Performance Factors to be used to measure the performance, if
any.  Performance Periods may overlap and Participants may participate
simultaneously with respect to SARs that are subject to different Performance
Factors and other criteria.

    

    8.3           Exercise Period and
Expiration Date.  A SAR will be exercisable within the times or
upon the occurrence of events determined by the Committee and set forth in the
Award Agreement governing such SAR.  The SAR Agreement shall set forth
the expiration date; provided that no SAR will be exercisable after the
expiration of seven (7) years from the date the SAR is granted.  The
Committee may also provide for SARs to become exercisable at one time or from
time to time, periodically or otherwise (including, without limitation, upon the
attainment during a Performance Period of performance goals based on Performance
Factors), in such number of Shares or percentage of the Shares subject to the
SAR as the Committee determines.  Except as may be set forth in the
Participant’s Award Agreement, vesting ceases on such Participant’s Termination
Date (unless determined otherwise by the Committee).  Notwithstanding
the foregoing, the rules of Section 5.6 also will apply to
SARs.

    
      
         

      

      
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    8.4           Form of
Settlement.  Upon exercise of a SAR, a Participant will be
entitled to receive payment from the Company in an amount determined by
multiplying (i) the difference between the Fair Market Value of a Share on the
date of exercise over the Exercise Price; times (ii) the number of Shares with
respect to which the SAR is exercised. At the discretion of the Committee, the
payment from the Company for the SAR exercise may be in cash, in Shares of
equivalent value, or in some combination thereof.

    

    8.5           Termination of
Participation.  Except as may be set forth in the Participant’s
Award Agreement, vesting ceases on such Participant’s Termination Date (unless
determined otherwise by the Committee).

    

    9.          
  RESTRICTED
STOCK UNITS.

    

    9.1           Awards of Restricted Stock
Units.  A Restricted Stock Unit (“RSU”) is
an award to a Participant covering a number of Shares that may be settled in
cash, or by issuance of those Shares (which may consist of Restricted
Stock).  All RSUs shall be made pursuant to an Award
Agreement.

    

    9.2           Terms of
RSUs.  The Committee will determine the terms of an RSU
including, without limitation: (a) the number of Shares subject to the RSU; (b)
the time or times during which the RSU may be settled; and (c) the consideration
to be distributed on settlement, and the effect of the Participant’s Termination
on each RSU.  An RSU may be awarded upon satisfaction of such
Performance Factors (if any) during any Performance Period as are set out in
advance in the Participant’s Award Agreement.  If the RSU is being
earned upon satisfaction of Performance Factors, then the Committee will: (x)
determine the nature, length and starting date of any Performance Period for the
RSU; (y) select from among the Performance Factors to be used to measure the
performance, if any; and (z) determine the number of Shares deemed subject to
the RSU.  Performance Periods may overlap and participants may
participate simultaneously with respect to RSUs that are subject to different
Performance Periods and different performance goals and other
criteria.

    

    9.3           Form and Timing of
Settlement.  Payment of earned RSUs shall be made as soon as
practicable after the date(s) determined by the Committee and set forth in the
Award Agreement. The Committee, in its sole discretion, may settle earned RSUs
in cash, Shares, or a combination of both.

    

    9.4           Termination of
Participant.  Except as may be set forth in the Participant’s
Award Agreement, vesting ceases on such Participant’s Termination Date (unless
determined otherwise by the Committee).

    

    10.           PERFORMANCE
SHARES.

    

    10.1         Awards of Performance
Shares.  A Performance Share Award is an award to a Participant
denominated in Shares that may be settled in cash, or by issuance of those
Shares (which may consist of Restricted Stock).  Grants of Performance
Shares shall be made pursuant to an Award Agreement.

    
      
         

      

      
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    10.2         Terms of Performance
Shares.  The Committee will determine, and each Award Agreement
shall set forth, the terms of each award of Performance Shares including,
without limitation: (a) the number of Shares deemed subject to such Award; (b)
the Performance Factors and Performance Period that shall determine the time and
extent to which each award of Performance Shares shall be settled; (c) the
consideration to be distributed on settlement, and the effect of the
Participant’s Termination on each award of Performance Shares.  In
establishing Performance Factors and the Performance Period the Committee will:
(x) determine the nature, length and starting date of any Performance Period;
(y) select from among the Performance Factors to be used; and (z) determine the
number of Shares deemed subject to the award of Performance
Shares.  Prior to settlement the Committee shall determine the extent
to which Performance Shares have been earned.  Performance Periods may
overlap and Participants may participate simultaneously with respect to
Performance Shares that are subject to different Performance Periods and
different performance goals and other criteria.

    

    10.3         Value, Earning and Timing of
Performance Shares.  Each Performance Share will have an
initial value equal to the Fair Market Value of a Share on the date of
grant.  After the applicable Performance Period has ended, the holder
of Performance Shares will be entitled to receive a payout of the number of
Performance Shares earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding Performance
Factors or other vesting provisions have been achieved. The Committee, in its
sole discretion, may pay earned Performance Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Shares at the close of the applicable Performance Period) or
in a combination thereof.

    

    10.4         Termination of
Participant.  Except as may be set forth in the Participant’s
Award Agreement, vesting ceases on such Participant’s Termination Date (unless
determined otherwise by the Committee).

    

    11.           PAYMENT
FOR SHARE PURCHASES.

    

    Payment
from a Participant for Shares purchased pursuant to this Plan may be made in
cash or by check or, where expressly approved for the Participant by the
Committee and where permitted by law (and to the extent not otherwise set forth
in the applicable Award Agreement):

    

    (a)           by
cancellation of indebtedness of the Company to the Participant;

    

    (b)           by
surrender of shares of the Company held by the Participant that have a Fair
Market Value on the date of surrender equal to the aggregate exercise price of
the Shares as to which said Award will be exercised or settled;

    

    (c)           by
waiver of compensation due or accrued to the Participant for services rendered
or to be rendered to the Company or a Parent or Subsidiary of the
Company;

    

    (d)           by
consideration received by the Company pursuant to a broker-assisted and/or same
day sale (or other) cashless exercise program implemented by the Company in
connection with the Plan;

    

    (e)           by
any combination of the foregoing; or

    

    (f)           by
any other method of payment as is permitted by applicable law.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    12.           GRANTS TO
OUTSIDE DIRECTORS.

    

    12.1         Types of
Awards.  Outside Directors are eligible to receive any type of
Award offered under this Plan except ISOs.  Awards pursuant to this
Section 12 may be automatically made pursuant to policy adopted by the
Committee, or made from time to time as determined in the discretion of the
Board.

    

    12.2         Eligibility.  Awards
pursuant to this Section 12 shall be granted only to Outside
Directors.  An Outside Director who is elected or re-elected as a
member of the Board will be eligible to receive an Award under this Section
12.

    

    12.3         Vesting, Exercisability and
Settlement.  Except as set forth in Section 21, Awards shall
vest, become exercisable and be settled as determined by the
Committee.  With respect to Options and SARs, the exercise price
granted to Outside Directors shall not be less than the Fair Market Value of the
Shares at the time that such Option or SAR is granted.

    

    13.           WITHHOLDING
TAXES.

    

    13.1         Withholding
Generally.  Whenever Shares are to be issued in satisfaction of
Awards granted under this Plan, the Company may require the Participant to remit
to the Company an amount sufficient to satisfy applicable federal, state, local
and international withholding tax requirements prior to the delivery of Shares
pursuant to exercise or settlement of any Award.  Whenever payments in
satisfaction of Awards granted under this Plan are to be made in cash, such
payment will be net of an amount sufficient to satisfy applicable federal,
state, local and international withholding tax requirements.

    

    13.2         Stock
Withholding.  The Committee, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may require or
permit a Participant to satisfy such tax withholding obligation, in whole or in
part by (without limitation) (i) paying cash, (ii) electing to have the Company
withhold otherwise deliverable cash or Shares having a Fair Market Value equal
to the minimum statutory amount required to be withheld, or (iii) delivering to
the Company already-owned Shares having a Fair Market Value equal to the minimum
statutory amount required to be withheld. The Fair Market Value of the Shares to
be withheld or delivered will be determined as of the date that the taxes are
required to be withheld.

    

    14.           TRANSFERABILITY.  Unless
determined otherwise by the Committee, an Award may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution.  If the Committee
makes an Award transferable, such Award will contain such additional terms and
conditions as the Committee deems appropriate.  All Awards shall be
exercisable: (i) during the Participant’s lifetime only by (A) the Participant,
or (B) the Participant’s guardian or legal representative; and (ii) after the
Participant’s death, by the legal representative of the Participant’s heirs or
legatees

    

    15.           PRIVILEGES
OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.

    

    15.1         Voting and
Dividends.  No Participant will have any of the rights of a
stockholder with respect to any Shares until the Shares are issued to the
Participant.  After Shares are issued to the Participant, the
Participant will be a stockholder and have all the rights of a stockholder with
respect to such Shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such Shares; provided, that if
such Shares are Restricted Stock, then any new, additional or different
securities the Participant may become entitled to receive with respect to such
Shares by virtue of a stock dividend, stock split or any other change in the
corporate or capital structure of the Company will be subject to the same
restrictions as the Restricted Stock; provided, further, that the
Participant will have no right to retain such stock dividends or stock
distributions with respect to Shares that are repurchased at the Participant’s
Purchase Price or Exercise Price, as the case may be, pursuant to Section
15.2.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    15.2         Restrictions on
Shares.  At the discretion of the Committee, the Company may
reserve to itself and/or its assignee(s) a right to repurchase (a “Right of
Repurchase”) a portion of any or all Unvested Shares held by a
Participant following such Participant’s Termination at any time within ninety
(90) days after the later of the Participant’s Termination Date and the date the
Participant purchases Shares under this Plan, for cash and/or cancellation of
purchase money indebtedness, at the Participant’s Purchase Price or Exercise
Price, as the case may be.

    

    16.           CERTIFICATES.  All
certificates for Shares or other securities delivered under this Plan will be
subject to such stock transfer orders, legends and other restrictions as the
Committee may deem necessary or advisable, including restrictions under any
applicable federal, state or foreign securities law, or any rules, regulations
and other requirements of the SEC or any stock exchange or automated quotation
system upon which the Shares may be listed or quoted.

    

    17.           ESCROW;
PLEDGE OF SHARES.  To enforce any restrictions on a
Participant’s Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates.  Any Participant who is permitted to execute a
promissory note as partial or full consideration for the purchase of Shares
under this Plan will be required to pledge and deposit with the Company all or
part of the Shares so purchased as collateral to secure the payment of the
Participant’s obligation to the Company under the promissory note; provided, however, that the
Committee may require or accept other or additional forms of collateral to
secure the payment of such obligation and, in any event, the Company will have
full recourse against the Participant under the promissory note notwithstanding
any pledge of the Participant’s Shares or other collateral.  In
connection with any pledge of the Shares, the Participant will be required to
execute and deliver a written pledge agreement in such form as the Committee
will from time to time approve.  The Shares purchased with the
promissory note may be released from the pledge on a pro rata basis as the
promissory note is paid.

    

    18.           REPRICING;
EXCHANGE AND BUYOUT OF AWARDS.  Except in connection with a (i)
Corporate Transaction or (ii) a stock dividend, recapitalization, stock split,
reverse stock split, subdivision,  combination, reclassification or
similar change in the capital structure of the Company without consideration,
the terms of outstanding awards may not be amended to reduce the exercise price
of outstanding Options or SARs or cancel outstanding Options or SARS in exchange
for cash or other Awards (including Options or SARs) with an exercise price that
is less than the exercise price of the original Option or SAR without prior
stockholder approval.

    

    19.           SECURITIES
LAW AND OTHER REGULATORY COMPLIANCE.  An Award will not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other
issuance.  Notwithstanding any other provision in this Plan, the
Company will have no obligation to issue or deliver certificates for Shares
under this Plan prior to: (a) obtaining any approvals from governmental agencies
that the Company determines are necessary or advisable; and/or (b) completion of
any registration or other qualification of such Shares under any state or
federal law or ruling of any governmental body that the Company determines to be
necessary or advisable.  The Company will be under no obligation to
register the Shares with the SEC or to effect compliance with the registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company will have no liability
for any inability or failure to do so.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    20.           NO
OBLIGATION TO EMPLOY.  Nothing in this Plan or any Award
granted under this Plan will confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent or Subsidiary of the Company or limit in any way
the right of the Company or any Parent or Subsidiary of the Company to terminate
Participant’s employment or other relationship at any time.

    

    21.           CORPORATE
TRANSACTIONS.

    

    21.1         Assumption or Replacement of
Awards by Successor.  In the event of a Corporate Transaction
any or all outstanding Awards may be assumed or replaced by the successor
corporation, which assumption or replacement shall be binding on all
Participants.  In the alternative, the successor corporation may
substitute equivalent Awards or provide substantially similar consideration to
Participants as was provided to stockholders (after taking into account the
existing provisions of the Awards).  The successor corporation may
also issue, in place of outstanding Shares of the Company held by the
Participant, substantially similar shares or other property subject to
repurchase restrictions no less favorable to the Participant.  In the
event such successor or acquiring corporation (if any) refuses to assume,
convert, replace or substitute Awards, as provided above, pursuant to a
Corporate Transaction, then notwithstanding any other provision in this Plan to
the contrary, such Awards will expire on such transaction at such time and on
such conditions as the Board will determine; the Board (or, the Committee, if so
designated by the Board) may, in its sole discretion, accelerate the vesting of
such Awards in connection with a Corporate Transaction.  In addition,
in the event such successor or acquiring corporation (if any) refuses to assume,
convert, replace or substitute Awards, as provided above, pursuant to a
Corporate Transaction, the Committee will notify the Participant in writing or
electronically that such Award will be exercisable for a period of time
determined by the Committee in its sole discretion, and such Award will
terminate upon the expiration of such period.  Awards need not be
treated similarly in a Corporate Transaction.

    

    21.2         Assumption of Awards by the
Company.  The Company, from time to time, also may substitute
or assume outstanding awards granted by another company, whether in connection
with an acquisition of such other company or otherwise, by either; (a) granting
an Award under this Plan in substitution of such other company’s award; or (b)
assuming such award as if it had been granted under this Plan if the terms of
such assumed award could be applied to an Award granted under this
Plan.  Such substitution or assumption will be permissible if the
holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant.  In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain
unchanged (except that the
Purchase Price or the Exercise Price, as the case may be, and the number and
nature of Shares issuable upon exercise or settlement of any such Award will be
adjusted appropriately pursuant to Section 424(a) of the Code).

    

    21.3         Outside Directors’
Awards.  Notwithstanding any provision to the contrary herein,
in the event of a Corporate Transaction, the vesting of all Awards granted to
Outside Directors shall accelerate and such Awards shall become exercisable (as
applicable) in full prior to the consummation of such event at such times and on
such conditions as the Committee determines.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    22.           ADOPTION
AND STOCKHOLDER APPROVAL.  This Plan shall be submitted for the
approval of the Company’s stockholders, consistent with applicable laws, within
twelve (12) months before or after the date this Plan is adopted by the
Board.

    

    23.           TERM OF
PLAN/GOVERNING LAW.  Unless earlier terminated as provided
herein, this Plan will become effective on the Effective Date and will terminate
ten (10) years from the date this Plan is adopted by the Board.  This
Plan and all Awards granted hereunder shall be governed by and construed in
accordance with the laws of the State of Delaware.

    

    24.           AMENDMENT
OR TERMINATION OF PLAN.  The Board may at any time terminate or
amend this Plan in any respect, including, without limitation, amendment of any
form of Award Agreement or instrument to be executed pursuant to this Plan;
provided, however, that the
Board will not, without the approval of the stockholders of the Company, amend
this Plan in any manner that requires such stockholder approval; provided further,
that a Participant’s Award shall be governed by the version of this Plan then in
effect at the time such Award was granted.

    

    25.           NONEXCLUSIVITY
OF THE PLAN.  Neither the adoption of this Plan by the Board,
the submission of this Plan to the stockholders of the Company for approval, nor
any provision of this Plan will be construed as creating any limitations on the
power of the Board to adopt such additional compensation arrangements as it may
deem desirable, including, without limitation, the granting of stock awards and
bonuses otherwise than under this Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.

    

    26.           INSIDER
TRADING POLICY.  Each Participant who receives an Award shall
comply with any policy adopted by the Company from time to time covering
transactions in the Company’s securities by Employees, officers and/or directors
of the Company.

    

    27.           DEFINITIONS.  As used in this
Plan, and except as elsewhere defined herein, the following terms will have the
following meanings:

    

    “Award”
means any award under the Plan, including any Option, Restricted Stock, Stock
Bonus, Stock Appreciation Right, Restricted Stock Unit or award of Performance
Shares.

    

    “Award
Agreement” means, with respect to each Award, the written or electronic
agreement between the Company and the Participant setting forth the terms and
conditions of the Award, which shall be in substantially a form (which need not
be the same for each Participant) that the Committee has from time to time
approved, and will comply with and be subject to the terms and conditions of
this Plan.

    

    “Board”
means the Board of Directors of the Company.

    

     “Code”
means the United States Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.

    

    “Committee”
means the Compensation Committee of the Board or those persons to whom
administration of the Plan, or part of the Plan, has been delegated as permitted
by law.

    

    “Company”
means Silicon Image, Inc., or any successor corporation.

    

    “Consultant”
means any person, including an advisor or independent contractor, engaged by the
Company or a Parent or Subsidiary to render services to such
entity.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    “Corporate
Transaction” means the occurrence of any of the following events: (i) any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the total voting power represented by the Company’s
then-outstanding voting securities; (ii) the consummation of the sale or
disposition by the Company of all or substantially all of the Company’s assets;
(iii) the consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity or its parent outstanding immediately after
such merger or consolidation or (iv) any other transaction which qualifies as a
“corporate transaction” under Section 424(a) of the Code wherein the
stockholders of the Company give up all of their equity interest in the Company
(except for the acquisition, sale or transfer of all or substantially all of the
outstanding shares of the Company).

    

    “Director”
means a member of the Board.

    

    “Disability”
means total and permanent disability as defined in Section 22(e)(3) of the Code,
provided, however, that except with respect to Awards granted as ISOs, the
Committee in its discretion may determine whether a total and permanent
disability exists in accordance with non-discriminatory and uniform standards
adopted by the Committee from time to time, whether temporary or permanent,
partial or total, as determined by the Committee.

    

    “Effective
Date” means the date this Plan is approved by the Company’s stockholders,
the date of which shall be within twelve (12) months before or after the date
this Plan is adopted by the Board.

    

    “Employee”
means any person, including Officers and Directors, employed by the Company or
any Parent or Subsidiary of the Company. Neither service as a Director nor
payment of a director’s fee by the Company will be sufficient to constitute
“employment” by the Company.

    

    “Exchange
Act” means the United States Securities Exchange Act of 1934, as
amended.

    

    “Exercise
Price” means, with respect to an Option, the price at which a holder may
purchase the Shares issuable upon exercise of an Option and with respect to a
SAR, the price at which the SAR is granted to the holder thereof.

    

    “Exchange
Program” means a program pursuant to which outstanding Awards are
surrendered, cancelled or exchanged for cash, the same type of Award or a
different Award (or combination thereof).

    

    “Fair Market
Value” means, as of any date, the value of a share of the Company’s
Common Stock determined as follows:

    

    (a)           if
such Common Stock is publicly traded and is then listed on a national securities
exchange, its closing price on the date of determination on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading as reported in The
Wall Street Journal or such other source as the Board or the Committee
deems reliable;

    

    (b)           if
such Common Stock is publicly traded but is neither listed nor admitted to
trading on a national securities exchange, the average of the closing bid and
asked prices on the date of determination as reported in The Wall Street Journal or
such other source as the Board or the Committee deems reliable;
or

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (c)           if
none of the foregoing is applicable, by the Board or the Committee in good
faith.

    

    “GAAP”
means generally accepted accounting principles.

    

    “Insider”
means an officer or director of the Company or any other person whose
transactions in the Company’s Common Stock are subject to Section 16 of the
Exchange Act.

    

    “Option”
means an award of an option to purchase Shares pursuant to Section 5 or Section
12 of the Plan.

    

    “Outside
Director” means a Director who is not an Employee of the Company or any
Parent or Subsidiary.

    

    “Parent”
means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if each of such corporations other than the
Company owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

    

    “Participant”
means a person who holds an Award under this Plan.

    

     “Performance
Factors” means the factors selected by the Committee, which may include,
but are not limited to the, the following measures (whether or not in comparison
to other peer companies) to determine whether the performance goals established
by the Committee and applicable to Awards have been satisfied:

     

    
      
        	
                 
      

              	
                ·

              	
                Net
      revenue and/or net revenue growth;

              

      

      

      
        	
                 
      

              	
                ·

              	
                Earnings
      per share and/or earnings per share
growth;

              

      

      

      
        	
                 
      

              	
                ·

              	
                Earnings
      before income taxes and amortization and/or earnings before income taxes
      and amortization growth;

              

      

      

      
        	
                 
      

              	
                ·

              	
                Operating
      income and/or operating income
growth;

              

      

      

      
        	
                 
      

              	
                ·

              	
                Net
      income and/or net income growth;

              

      

      

      
        	
                 
      

              	
                ·

              	
                Total
      stockholder return and/or total stockholder return
  growth;

              

      

      

      
        	
                 
      

              	
                ·

              	
                Return
      on equity;

              

      

      

      
        	
                 
      

              	
                ·

              	
                Operating
      cash flow return on income;

              

      

      

      
        	
                 
      

              	
                ·

              	
                Adjusted
      operating cash flow return on
income;

              

      

      

      
        	
                 
      

              	
                ·

              	
                Economic
      value added;

              

      

      

      
        	
                 
      

              	
                ·

              	
                Individual
      business objectives;

              

      

      

      
        	
                 
      

              	
                ·

              	
                Company
      specific operational metrics;
and

              

      

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                ·

              	
                Any
      of the foregoing may be based on GAAP or NonGAAP
  standards.

              

      

      

      “Performance
Period” means the period of service determined by the Committee, not to
exceed five (5) years, during which years of service or performance is to be
measured for the Award.

      

      “Performance
Share” means an Award granted pursuant to Section 10 or Section 12 of the
Plan.

      

      “Plan”
means this Silicon Image, Inc. 2008 Equity Incentive
Plan.

      

      “Purchase
Price” means the price to be paid for Shares acquired under the Plan,
other than Shares acquired upon exercise of an Option or SAR.

      

      “Restricted Stock
Award” means an award of Shares pursuant to Section 6 or Section 12 of
the Plan, or issued pursuant to the early exercise of an Option.

      

      “Restricted Stock
Unit” means an Award granted pursuant to Section 9 or Section 12 of the
Plan.

      

      “SEC” means
the United States Securities and Exchange Commission.

      

      “Securities
Act” means the United States Securities Act of 1933, as
amended.

      

      “Shares”
means shares of the Company’s Common Stock and any successor
security.

      

      “Stock
Appreciation Right” means an Award granted pursuant to Section 8 and
Section 12 of the Plan.

      

      “Stock
Bonus” means an Award granted pursuant to Section 7 or Section 12 of the
Plan.

      

      “Subsidiary”
means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.

      

      “Termination”
or “Terminated”
means, for purposes of this Plan with respect to a Participant, that the
Participant has for any reason ceased to provide services as an employee,
officer, director, consultant, independent contractor or advisor to the Company
or a Parent or Subsidiary of the Company.  An employee will not be
deemed to have ceased to provide services in the case of (i) sick leave, (ii)
military leave, or (iii) any other leave of absence approved by the Committee;
provided, that
such leave is for a period of not more than 90 days, unless reemployment upon
the expiration of such leave is guaranteed by contract or statute or unless
provided otherwise pursuant to formal policy adopted from time to time by the
Company and issued and promulgated to employees in writing.  In the
case of any employee on an approved leave of absence, the Committee may make
such provisions respecting suspension of vesting of the Award while on leave
from the employ of the Company or a Parent or Subsidiary of the Company as it
may deem appropriate, except that in no event may an Award be exercised after
the expiration of the term set forth in the applicable Award
Agreement.  The Committee will have sole discretion to determine
whether a Participant has ceased to provide services and the effective date on
which the Participant ceased to provide services (the “Termination
Date”).

      

      “Unvested
Shares” means Shares that have not yet vested or are subject to a right
of repurchase in favor of the Company (or any successor thereto).

       

       

       16EXHIBIT
      10.1

     

    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 $1.20
      with each Unit consisting of (a) one share (the “Common Shares”) of common
      stock, $.001 par value (the “Common Stock”) and (b) one accompanying warrant
      (each, a “Warrant” and together the “Warrants”) for the purchase
      of one share of Common Stock at an exercise price equal to $1.75, subject to
      adjustment, expiring five years from the date of issuance (the “Warrant
      Shares”). The
      form
      of Warrant is attached hereto as Exhibits
      A.
      The
      Company is issuing up to 1,000,000 Units.

     

    The
      Investor understands that the Units are being issued pursuant to one or more
      exemptions from the registration requirements of the Securities Act of 1933,
      as
      amended (the “Securities
      Act”
or
      the
“Act”),
      in
      a
      private placement pursuant to an exemption from registration under Regulation
      D
      promulgated under Section 4(2) and Rule 506 of
      the
      Act. As such, the Common Stock, 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
      Agreement have been met. At each 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
      Shares and Warrants as provided herein. 

     

    Subject
      to the terms and conditions hereinafter set forth in 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 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; and (iii) the American Stock Exchange shall have
      approved the Offering. 

     

    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. 

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    3. Representations
      and Warranties of the Investor.

     

    The
      Investor, in order to induce the Company to accept this Offer, hereby warrants
      and represents as follows:

     

    (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.
      Investor understands that the Units,
      Common Shares, Warrants and Warrant Shares 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,
      Common 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.”

     

    The
      Investor understands and acknowledges that the Commission currently takes the
      position that coverage of short sales of shares of the Common Stock “against the
      box” prior to the effective date of a registration statement registering the
      re-sale of the Common Shares and 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, the Investor agrees not to use any of the Common Shares or Warrant
      Shares to cover any short sales made prior to the effective date of such
      registration statement.

     

    (c) 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 Common 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 Common Shares, Warrants or Warrant Shares
      (this representation and warranty not limiting such Investor’s right or intent
      to sell the Common Share, Warrants or Warrant Shares  pursuant
      to a Registration Statement or otherwise in compliance with applicable federal
      and state securities laws).

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (d)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. 

     

    (e)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.

     

    (f)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.

     

    (g)  Access
      to Information.
      The
      Investor has reviewed the SEC Reports (as that term is defined in Section 4(g))
      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
      or in
      the SEC Reports. Specifically, the Investor acknowledges that the SEC Reports
      disclose that the Company is actively exploring acquisition opportunities and
      that prior to the Closing the Company may enter into one or more letters of
      intent in connection with pursuing such an acquisition. 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 and to obtain any additional information, to the extent that the
      Company possesses such information or can acquire it without unreasonable effort
      or expense, necessary to verify the accuracy of the information furnished;
      and
      has availed himself of such opportunity to the extent he considers appropriate
      in order to permit him 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.

     

    (h)
      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 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:

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    (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, 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 (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.

     

    (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 Securities and Exchange Commission (“Commission”)
      of the
      Registration Statement pursuant to Section 5, (ii) the filing with the
      Commission of a Form D pursuant to Commission Regulation D, and
      (iii) any applicable Blue Sky filings (collectively,
      the “Required
      Approvals”).

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    (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 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. No
      further approval or authorization of any stockholder, the Board of Directors
      of
      the Company, or others is required for the issuance and sale of the Units and
      the underlying Warrant
      Shares.
      Upon
      exercise of the Warrants in accordance with their terms, the 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.
      

     

    (h) Material
      Changes.
      Since
      the date of the latest audited financial statements included in the SEC Reports,
      except as specifically disclosed in the SEC Reports or referred to in this
      Subscription Agreement, (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 and routine inquiries, 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.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    (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.

     

    (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.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    (s)Listing
      and Maintenance Requirements.
      The
      Company’s Common Stock currently is quoted on the American Stock Exchange
      (“AMEX”). 

     

    5. Registration
      Rights.

     

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

     

    (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 within forty five (45) days of the final closing of the offering
      for the non-underwritten public offering and resale of the Common 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 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 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.  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.

     

    “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 all of the Registrable
      Securities have been sold pursuant to such Registration Statement, (ii) all
      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) all Registrable Securities may be sold
      at any time, without volume or manner of sale limitations pursuant to Rule
      144(k) 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”).

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (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 NASD (including, without limitation, pursuant to NASD 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 Common 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.

     

    (e) Certificates
      evidencing the Registrable Securities shall not contain any legend: (i)
      following any sale of Common Shares or Warrant Shares pursuant to Rule 144,
      or
      (ii) if such Common Shares or Warrant Shares are eligible for sale under Rule
      144(k); or (iii) following any sale of Common Shares or Warrant Shares pursuant
      to the Registration Statement; provided,
      however,
      in
      connection with the sale or transfer of the Common 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 Private Placement 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 Private Placement 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 Private Placement. 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 signed a letter of intent 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:

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    (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;

     

    (iii)
      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;

     

    (iv) If
      NASD
      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 NASD
      Corporate Financing Department pursuant to NASD Rule 2710 and respond within
      five business days to any comments received from NASD in connection
      therewith.

     

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

     

    (i) To
      the
      extent Investor includes any Common 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.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    (j) To
      the
      extent Investor includes any Common 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 written
      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.

     

    (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
      B,
      and any
      other documents requested by the Company that are required to enable the Company
      to perform its obligations to register the Common Shares and Warrant
      Shares.

     

    6. Other
      Agreements of the Company and the Investor.

     

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

     

    (b)Exercise
      Procedures.
      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. 

     

    (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.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    (e)
       Confidentiality.
      Each
      Investor agrees that he, she or it will keep confidential and will not disclose,
      divulge or use for any purpose other than to monitor his, her or its investment
      in the Company any confidential, proprietary or secret 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
      this 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
      . 

     

    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 Common Shares 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.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    (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.

     

    (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.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    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: $____________

     

    
      	
              ______________________________________________

            	
              If
                other than individual check one and 

            
	
              Name
                of Investor (Print)

            	
              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:

            
	
              ______________________________________________

            	
              o Joint
                Tenants with Right of
                

            
	
              Capacity
                of Signatory (if applicable)

            	
                  
                Survivorship

            
	 	
              o Tenants
                in
                Common

            
	
              ______________________________________________

            	
              o Tenants
                by the
                Entirety

            
	
              Social
                Security or Taxpayer Identification Number

            	
              o Community
                Property

            
	 	 
	
              Investor
                Address:

            	
              Backup
                Withholding Statement:

            
	 	
              o Please
                check this box only if
                the 

            
	
              ______________________________________________

            	
                  
                investor is subject to backup

            
	
              Street
                Address

            	
                  
                withholding 

            
	
               

            	 
	
              
                ______________________________________________

              

            	
              Foreign
                Person:

            
	
              
                City                  
                   State                  
                  Zip Code

              

            	
              o Please
                check this box only if
                the 

            
	 	
                  
                investor is a nonresident alien, foreign

            
	
              Telephone:(             
                )                                                             

            	
                  
                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

            	 

    

     

    

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    THE
      SUBSCRIPTION FOR UNITS OF NEOSTEM, INC. BY THE ABOVE NAMED INVESTOR(S) IS
      ACCEPTED THIS ________ DAY OF ______________________, 2008.

    

    
      	 	
              NEOSTEM,
                INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	   

	 	
              Name:

            	
              Robin
                L. Smith

            
	 	
              Title:

            	
              Chairman
                and CEO 

            

    

    

    

    

     

    
      
        
        

      

      
        -14-

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