Document:

scoutexh10_1.htm

    
      

    

    Exhibit
10.1

     

    SETTLEMENT,
SHARE SALE & RELEASE AGREEMENT

     

    THIS
AGREEMENT MADE AS OF THE 22ND DAY OF
APRIL 2009;

     

    BETWEEN:

     

    SCOUT
EXPLORATION INC.

    a
corporation incorporated under the laws of the State of Nevada USA,

    having an
office in the City of Vancouver, Province of British Columbia

    (“Scout”)

     

    and

     

    BRIAN
MAHOOD

    Businessman,
residing in the City of Calgary, Province of Alberta

    (“Mahood”)

     

    and

    KERRISDALE
RESOURCES LTD.

    a
corporation incorporated under the laws of Alberta,

    having an
office in the City of City of Calgary, Province of Alberta

    that is
the wholly owned subsidiary of Scout

    (“Corporation”)

     

    and

     

    KERRISDALE
CONSULTING INC.

    a
corporation incorporated under the laws of Alberta,

    having an
office in the City of City of Calgary, Province of Alberta

    that is
owned, controlled and managed by Mahood

    (“Kerrisdale”)

     

    WHEREAS:

     

    
      	
              A.

            	
              The
      Parties hereto are parties to a Share Purchase Agreement dated effective
      January 1, 2008, under which Scout as “Purchaser” agreed with Mahood as
      “Vendor” to purchase all the issued securities of the Corporation that
      were owned by Mahood alone – 100 Class “A” Common Voting Shares – the
      “Shares” for a
      purchase price of Cdn $775,000.00 – the “Purchase Price” – the
      “Agreement”.  Scout
      paid $425,000 of the Purchase Price to the closing of the
      Agreement.

            

    

     

    
      	
              B.

            	
              The
      Agreement provides that a portion of the Purchase Price be paid by the
      Corporation for Scout as its parent corporation after the closing of the
      Agreement,  in an amount to be paid of $350,000.00 under
      post-closing, interest bearing payment provisions, the intent being that
      the Corporation would finance for Scout, the balance of the purchase
      payable by Scout from the Corporation’s cash flow from
      operations.

            

    

     

    
      	
              C.

            	
              The
      Parties agreed to amend the Agreement under the “Share Purchase Agreement
      – Amendment Agreement” entered into amongst the Parties effective December
      31, 2008, under which the Purchase Price was increased by $10,000.00 to
      $785,000.00, and the Corporation for Scout, paid Mahood $35,000.00 of the
      balance of the Purchase Price, the balance remaining to be paid over time
      under the Agreement then being reduced to $325,000.00, the portion of the
      Purchase Price having been paid by Scout and the Corporation to Mahood
      being $460,000.00 – such agreements shall be referred to collectively as
      the “Agreements”.

            

    

     

    

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

    

     

    
      	
              D.

            	
              Pursuant
      to the Agreements and as security to Mahood for the payment in full of the
      balance of the Purchase Price, the Corporation issued to Mahood a General
      Security Agreement over and in respect of its assets, for the balance
      owing under the Purchase Price obligation of Scout to Mahood, registered
      in Alberta under the Personal Property Security Act as Registration
      08061834982 on June 18, 2008 – the “GSA”.

            

    

     

    
      	
              E.

            	
              The
      cash flow from operations of the Corporation have not been sufficient to
      fund the obligations of Scout and the Corporation as joint obligors to
      Mahood under the Agreements for the payment of the balance of the Purchase
      Price, to enable the Corporation to keep current on its term payments
      under the Agreements and the GSA.

            

    

     

    
      	
              F.

            	
              Mahood
      has agreed with Scout and the Corporation to forego his right to collect
      the balance of the Purchase Price owing to him under the Agreements on the
      condition that Scout sell him the Shares for $1.00; and that all Parties
      involved in the Agreements release each
other.

            

    

     

    NOW THEREFORE in consideration
of the Recitals to this Agreement which are included herein by this reference,
and the mutual covenants contained herein the sufficiency of which consideration
is acknowledged by the Parties hereto, the Parties agree as
follows:

     

    DEFINITIONS

     

    
      	
              1.

            	
              “Closing
      Date” means such date, time and place as the Parties agree for the
      closing of the transactions comprising this Settlement Agreement, namely
      on June 16, 2009.

            

    

     

    
      	
              2.

            	
              “Effective
      Date” means the date this Settlement Agreement becomes effective;
      namely the same date set out at the head of this Settlement Agreement –
      April 1, 2009 at 12:01 a.m. MST.

            

    

     

    
      	
              3.

            	
              “Management
      Agreement” means the agreement entered into between Scout and
      Kerrisdale, dated as of January 1, 2008, under which Kerrisdale has been
      retained by Scout to provide management services for the
      Corporation.

            

    

     

    
      	
              4.

            	
              “Rental
      Arrangement” means the agreement entered into between the
      Corporation and Kerrisdale and contained in the Agreements, wherein
      Kerrisdale has agreed to provide the use of space to the Corporation in
      premises that Kerrisdale leases in the building with an address of 600,
      600 – 6th
      Avenue S.W. Calgary Alberta T2P
0S5.

            

    

     

    
      	
              5.

            	
              “Settlement
      Agreement” means this agreement and in all agreements, instruments
      and documents relating hereto, entered into and delivered on the Closing
      Date among the Parties, and if applicable,
  thereafter.

            

    

     

    
      	
              6.

            	
              “Three
      Parties” means jointly and severally, Scout, the Corporation and
      Mahood;

            

    

     

    
      	
              7.

            	
              “Unpaid
      Purchase Price” means that portion of the Purchase Price payable by
      Scout and the Corporation to Mahood under the Agreements and the GSA
      remaining for them to pay Mahood to the Effective Date for the purchase of
      the Shares, plus all interest that shall have accrued due for payment on
      such amount from and after April 1, 2009 as provided in the Agreements,
      the principal portion of which is
$325,000.00.

            

    

     

    
      	
              8.

            	
              The
      expressions defined in the Recitals hereto shall have those defined
      meanings when used in this Settlement Agreement and in all agreements,
      instruments and documents relating
hereto.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              9.

            	
              Except
      to the extent an expression is defined anew in this Settlement Agreement,
      all definitions contained in the Agreements and the GSA shall have the
      same meanings when used in this Settlement Agreement and in all
      agreements, instruments and documents relating
  hereto

            

    

     

    MERGER
OF AGREEMENTS, RIGHTS AND OBLIGATIONS OF THE PARTIES

     

    
      	
              10.

            	
              The
      Parties’ entering into of this Settlement Agreement shall witness the
      Parties’ agreement to merge all their rights and obligations contained in
      and relating to the Agreements, the GSA, the Management Agreement and the
      Rental Arrangement, and all agreements, instruments and documents relating
      thereto and the release of the Parties from any and against and in respect
      of all terms and conditions of those
  instruments.

            

    

     

    SETTLEMENT
& DISCHARGE OF RIGHTS & OBLIGATIONS

     

    
      	
              11.

            	
              Upon
      the closing to all Parties’ satisfaction of the terms and conditions of
      this Settlement Agreement upon the Closing Date, and effective as of the
      Effective Date:

            

    

     

    
      	
               
      

            	
              (a)

            	
              The
      Three Parties agree that the Agreements, the GSA, the Management Agreement
      and are terminated;

            

    

     

    
      	
               
      

            	
              (b)

            	
              Kerrisdale
      and Scout agree that the Rental Arrangement is
  terminated;

            

    

     

    
      	
               
      

            	
              (c)

            	
              The
      Three Parties agree that any and all obligations that accrued amongst or
      between the Three Parties to the Effective Date under the Agreements, the
      GSA and the Management Agreement and that remain to be discharged in whole
      or in part as of the Closing Date, are hereby fully and absolutely
      discharged and settled in full;

            

    

     

    
      	
               
      

            	
              (d)

            	
              Kerrisdale
      and Scout agree that any and all obligations that accrued between them to
      the Effective Date under the Rental Arrangement and that remain to be
      discharged in whole or in part as of the Closing Date, are hereby fully
      and absolutely discharged and settled in
full;

            

    

     

    
      	
               
      

            	
              (e)

            	
              The
      Three Parties agree that any and all rights that each of the Three Parties
      held amongst or between the Three Parties to the Effective Date under the
      Agreements, the GSA, and the Management Agreement and that remain to each
      such Party’s account as of the Closing Date, are hereby fully and
      absolutely released and are of no further validity or
      enforceability;

            

    

     

    
      	
               
      

            	
              (f)

            	
              Kerrisdale
      and Scout agree that any and all rights that each of them held between
      themselves to the Effective Date under the Rental Arrangement and that
      remain to each such Party’s account as of the Closing Date, are hereby
      fully and absolutely released and are of no further validity or
      enforceability;

            

    

     

    
      
        	
                 
      

              	
                (g)

              	
                Mahood fully and absolutely
      releases Scout and the Corporation jointly and severally, their
      officers, directors, employees, agents, professional advisors,
      contractors, associated and affiliated corporations, their successors and
      assignees, from any and all claims, liabilities or obligations in relation
      to all prior association and conduct between them whatsoever and however
      arising and for all work, services and products rendered or delivered by
      and between them under the Agreements and the GSA, including any and all
      claims in contract, in equity and in quantum
      meruit;

              

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

    

     

    
      
        	 	(h)	Scout and the Corporation
      jointly and severally fully and absolutely release Mahood, his
      employees, agents, professional advisors, contractors, associated and
      affiliated corporations, their successors and assignees, from any and all
      claims, liabilities or obligations in relation to all prior association
      and conduct between them whatsoever and however arising and for all work,
      services and products rendered or delivered by and between them under the
      Agreements and the GSA, including any and all claims in contract, in
      equity and in quantum
      meruit;
	 	 	 

      

    

    
      	
               
      

            	
              (i)

            	
              Kerrisdale fully and absolutely
      releases Scout and the Corporation jointly and severally, their
      officers, directors, employees, agents, professional advisors,
      contractors, associated and affiliated corporations, their successors and
      assignees, from any and all claims, liabilities or obligations in relation
      to all prior association and conduct between them whatsoever and however
      arising in any and all ways between them under the Rental Arrangement,
      including any and all claims in contract, in equity and in quantum
      meruit;

            

    

     

    
      	
               
      

            	
              (j)

            	
              Scout and the Corporation
      jointly and severally fully and absolutely release Kerrisdale, its
      officers, directors, employees, agents, professional advisors,
      contractors, associated and affiliated corporations, their successors and
      assignees, from any and all claims, liabilities or obligations in relation
      to all prior association and conduct between them whatsoever and however
      arising in any and all ways between them under the Rental Arrangement,
      including any and all claims in contract, in equity and in quantum
      meruit;

            

    

     

    
      	
               
      

            	
              (k)

            	
              The Corporation fully and
      absolutely releases Scout, its officers, directors, employees,
      agents, professional advisors, contractors, associated and affiliated
      corporations, their successors and assignees, from any and all claims,
      liabilities or obligations in relation to all prior association and
      conduct between them whatsoever and however arising in any and all ways
      between them, including any and all claims in contract, in equity and in
      quantum
      meruit;

            

    

     

    
      	
               
      

            	
              (l)

            	
              Scout fully and absolutely
      releases the Corporation, its officers, directors, employees,
      agents, professional advisors, contractors, associated and affiliated
      corporations, their successors and assignees, from any and all claims,
      liabilities or obligations in relation to all prior association and
      conduct between them whatsoever and however arising in any and all ways
      between them, including any and all claims in contract, in equity and in
      quantum
      meruit;

            

    

     

    
      	
               
      

            	
              (m)

            	
              Notwithstanding
      particular covenants, representations, warranties, terms and conditions of
      this Settlement Agreement, each of the Parties effecting a release to one
      or more other Parties hereto as provided above, hereby agrees to indemnify
      and hold harmless each Party so released, from and against any and all
      claims, damages, suits, proceedings, causes of action, and all other third
      party liability that has arisen, now exists or that might arise by,
      through and under the conduct, acts and omissions of such releasing Party
      in its having held the status of such Party in the affairs and agreements
      between and amongst the Parties that are the subject of those releases,
      which indemnification shall include all legal fees (on a solicitor and own
      client basis) related costs and expenses that an indemnified Party might
      sustain or pay in regard to its defence of any such matter for which such
      an indemnity is now granted, including any and all proceedings that
      indemnified Party might be required to maintain against the indemnifying
      Party to cause that indemnifying party to perform and discharge its
      obligations of indemnity hereunder.

            

    

     

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

     

    TERMS
AND CONDITIONS FOR SETTLEMENT

     

    
      	
              12.

            	
              At
      the closing on the Closing Date and as of the Effective
    Date:

            

    

     

    
      	
               
      

            	
              (a)

            	
              Scout’s Performance
      Obligations

            

    

     

    
      	
               
      

            	
              (i)

            	
              Scout
      shall sign and deliver to Mahood a Transfer of the Shares for
      consideration payable by Mahood to Scout of
  $1.00;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Scout
      shall cause to be signed and delivered to Mahood a Resignation of Mr.
      Jason Walsh, as both a Director and as the President and
      Secretary-Treasurer of the Corporation; and if since the entering into of
      the Agreements, Scout has caused any other directors to be elected for the
      Corporation or any other officers to be appointed by the Board of
      Directors of the Corporation, Scout shall also cause to be delivered
      resignations from such person or
persons;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Scout
      shall cause the Board of Directors of the Corporation to sign Consent
      Resolutions to conduct the following business for the
      Corporation;

            

    

     

    
      
        	
                 
      

              	
                (A)

              	
                To
      approve the transfer of the Shares from Scout to Mahood and to issue a
      replacement Share certificate therefor in the name of
    Mahood;

              
	 	 	 
	 	(B)	To
      approve the change of counsel, auditors, accountants and registered and
      records office of the Corporation
to:

      

    

     

    
      	
               
      

            	
              (1)

            	
              Counsel
      – Colin Q. Winter Professional Corporation, 240, 600 – 6th
      Avenue S.W. Calgary Alberta T2P
0S5;

            

    

    
      	
               
      

            	
              (2)

            	
              Accountants
      – Jim Robinson C.A.

            

    

    
      	
               
      

            	
              (3)

            	
              Registered
      & Records Office – c/o Colin Q. Winter Professional Corporation, 240,
      600 – 6th
      Avenue S.W. Calgary Alberta T2P
      0S5;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              Scout
      shall cause the Board of Directors of the Corporation to sign and deliver
      a replacement certificate for the certificate for the Shares, issued in
      the name of Mahood on the Effective Date for 100 Class “A” Common Shares
      of the Corporation;

            

    

     

    
      	
               
      

            	
              (v)

            	
              Scout
      shall cause counsel of its choice for Scout, to issue an opinion letter to
      Mahood, for the specific and limited purposes of this Agreement, that to
      the Closing Date Scout has not in any way at law or in equity, alienated
      or burdened any or all its rights in and to the Shares, including by way
      of hypothecation, pledge, the granting of legal or equitable rights of
      charge or security therein, conditional sale, assignment and transfer to
      and including the Closing Date;

            

    

     

    
      	
               
      

            	
              (vi)

            	
              Scout
      shall cause all counsel for both Scout and the Corporation, including
      Hemsworth Schmidt
      Barristers &
      Solicitors of Vancouver, B.C., and Hustwick Hodgson &
      Payne Barristers
      & Solicitors of Edmonton Alberta, to issue releases to the
      Corporation as to any and all outstanding obligations for the payment of
      fees, disbursements, other charges and GST to such firms accruing to the
      Closing Date;

            

    

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
       

      
        	 	(vii)	Scout
      shall cause all accountants and auditors for both Scout and the
      Corporation, including MacKay LLP, Chartered
      Accountants of Vancouver, B.C., to issue releases to the
      Corporation as to any and all outstanding obligations for the payment of
      fees, disbursements, other charges and GST to such firms accruing to the
      Closing Date;
	 	 	 
	
                 
      

              	
                (viii)

              	
                Board
      of Directors of the Corporation to sign and deliver a replacement
      certificate for the certificate for the Shares, issued in the name of
      Mahood on the Effective Date for 100 Class “A” Common Shares of the
      Corporation;

              

      

    

     

    
      	
               
      

            	
              (ix)

            	
              From
      and after April 22, 2009, to and including the Closing Date, Scout shall
      not permit any signing officer of the Corporation on its bank account(s)
      to sign any cheques, authorize any draws or use to any purpose the money
      in the bank account(s) of the Corporation on that date and the money that
      might be deposited into such bank account(s) from and after that date,
      Mahood to retain the right to sign and deliver any and all payments he
      believes in good faith and in the best interests of the Corporation to be
      paid to and including the Closing Date (but which payments if made, shall
      not be made to Mahood, any person related or associated with Mahood or to
      any legal entity in which Mahood holds any legal or beneficial rights,
      unless and until Mahood obtains the written consent of a representative of
      Scout so to do) and Mahood shall deliver to Scout at the closing a full
      list of such cheques and all draws or other withdrawals of money from the
      bank account(s) to the Closing
Date;

            

    

     

    
      	
               
      

            	
              (x)

            	
              No
      later than 48 hours before the agreed time for the closing on the Closing
      Date, Scout shall deliver to counsel for Mahood a copy of Scout’s proposed
      Press Release and Mahood shall have an opportunity to comment on the
      content of that Release;

            

    

     

    
      	
               
      

            	
              (xi)

            	
              Scout
      shall cause to be delivered to Mahood the Closing Book and Seal for the
      Corporation.

            

    

     

    
      	
              13.

            	
              At
      the closing on the Closing Date and as of the Effective
    Date:

            

    

     

    
      	
               
      

            	
              (a)

            	
              Mahood’s Performance
      Obligations

            

    

     

    
      	
               
      

            	
              (i)

            	
              Mahood
      shall deliver to counsel for Scout a Discharge of Security Interest from
      Mahood to the Corporation under the GSA; and immediately following the
      closing, Mahood shall cause to be filed a Discharge of Financing Statement
      in the Personal Property Registry for the Province of Alberta under the
      Personal Property
      Security Act RSA in respect of the registration made by Mahood as
      Secured Party against the Corporation as Debtor 08061834982 that Mahood
      caused to be registered on June 18, 2008; and shall then cause to be
      delivered to Scout or its counsel as Scout shall choose at or before the
      closing hereof, a copy of the confirmation of registration of that
      Discharge

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Mahood
      shall accept delivery of Scout’s and where applicable, the Corporation’s,
      obligations for delivery at the
closing.

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              14.

            	
              There
      shall not be any adjustments made or to be made amongst the Parties at the
      closing in respect of liabilities of the Corporation arising both before
      and after the Effective Date;  however, the Corporation shall
      not be liable for any unpaid invoices of or for work in progress not to
      that date invoiced, of accountants, auditors and lawyers that have acted
      or that may act for either or both Scout and the
      Corporation.  Accordingly, Mahood shall accept the transfer of
      the Shares in the Corporation and cause the Corporation to pay all other
      liabilities of the Corporation to the Closing Date, and all cash in the
      bank account(s) of the Corporation and all receivables of the Corporation
      as at the Closing Date shall remain the property of the Corporation as
      acquired by Mahood on the Closing
Date.

            

    

     

    
      	
              15.

            	
              Mahood,
      as new owner of the Corporation on the Closing Date, shall assume the
      responsibility for and shall cause to be prepared the stub-year financial
      statements of the Corporation to the Closing Date and the Income Tax Act RSC
      return for that fiscal period; for which from the date of signing hereof,
      Scout and its representatives shall co-operate fully with Mahood, his
      agents and contractors and the agents and contractors of the Corporation
      in respect of the Corporation’s securing for its own record and use the
      financial records of the Corporation and whatever assistance Mahood and
      the Corporation may require for the completion of such financial
      statements and the preparation and filing of that
  return.

            

    

     

    TERMS
AND CONDITIONS FOR THE TRANSFER OF THE SHARES

     

    
      	
              16.

            	
              At
      the closing on the Closing Date and as of the Effective
    Date:

            

    

     

    
      	
               
      

            	
              (a)

            	
              Scout’s Representations,
      Warranties & Covenants

            

    

     

    
      	
               
      

            	
              (i)

            	
              Scout
      by this instrument represents and warrants to Mahood the same
      representations and warranties Mahood, as “Vendor” in the Agreement, made
      to Scout as “Purchaser” in the Agreement, as set out in Clause 4.1
      thereof, which representations and warranties are included in this
      Settlement Agreement by this reference, subject to these
      provisos:

            

    

     

    
      	
               
      

            	
              (A)

            	
              All
      references to “the Company” shall be to the
  Corporation;

            

    

     

    
      	
               
      

            	
              (B)

            	
              Clause
      4.1(cc) shall be deleted;

            

    

     

    
      	
               
      

            	
              (C)

            	
              Clause
      4.1(dd) shall have inserted for “Brian Mahood – President,
      Secretary and Director” – “Jason Walsh – President,
      Secretary Treasurer and
Director”;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Scout
      by this instrument makes the covenants to Mahood that Mahood, as “Vendor”
      in the Agreement, made to Scout as “Purchaser” in the Agreement, as set
      out in Clause 4.2 to 4.8 thereof, which covenants are included in this
      Settlement Agreement by this reference, subject to these
      provisos:

            

    

     

    
      	
               
      

            	
              (A)

            	
              All
      references to “the Company” shall be to the
  Corporation;

            

    

     

    
      	
               
      

            	
              (B)

            	
              In
      Clause 4.2(b) vi) “thirty (30) days” shall
      be replaced with “fifteen (15)
      days”;

            

    

     

    
      	
               
      

            	
              (C)

            	
              In
      Clause 4.6 “$700,000.00” shall be
      replaced with “$50,000.00”;

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      
        	
                 
      

              	
                (b)

              	
                Mahood’s Representations,
      Warranties &
Covenants

              

      

    

     

    
      	
               
      

            	
              (i)

            	
              Mahood
      by this instrument represents and warrants to, and makes covenants to
      Scout and agrees to be bound by the same representations, warranties an
      covenants that Scout, as “Purchaser” in the Agreement, made to Mahood as
      “Vendor” in the Agreement, as set out in Clause 5.1 to 5.3 (numbered in
      error in the Agreement as a second Clause 5.2) thereof, which
      representations, warranties and covenants are included in this Settlement
      Agreement by this reference, subject to these
  provisos:

            

    

     

    
      	
               
      

            	
              (A)

            	
              All
      references to “the Company” shall be to the
  Corporation;

            

    

     

    
      	
               
      

            	
              (B)

            	
              Clause
      5.1(a) shall be deleted;

            

    

     

    
      	
               
      

            	
              (C)

            	
              Wherever
      references in the applicable Clauses are made to the Purchaser as a
      corporate entity, such references shall be ignored; to which purpose
      Clause 5.1(c)(i) shall be deleted.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Scout & Mahood Conditions
      Precedent and Closing
Arrangements

            

    

     

    
      	
               
      

            	
              (i)

            	
              Mahood
      and Scout by this instrument agree to be bound by the same terms and
      conditions of Clauses 6.1 to 6.5, Clauses 7.1 to 7.3 and Clauses 8.1 to
      8.7 of the Agreement that Scout, as “Purchaser” in the Agreement, agreed
      with Mahood as “Vendor” in the Agreement, with such terms and conditions
      to apply to Scout and Mahood as current Share vendor to Share purchaser
      respectively, which terms and conditions are included in this Settlement
      Agreement by this reference, subject to these
  provisos:

            

    

     

    
      	
               
      

            	
              (A)

            	
              All
      references to “the Company” shall be to the
  Corporation;

            

    

     

    
      	
               
      

            	
              (B)

            	
              In
      Clause 7.1, The time for closing on the Closing Date shall be as agreed in
      this Settlement Agreement;

            

    

     

    
      	
               
      

            	
              (C)

            	
              Clause
      7.2(e) shall be deleted;

            

    

     

    
      	
               
      

            	
              (D)

            	
              Clauses
      7.3(a) to 7.3(e) shall be deleted

            

    

     

    
      	
              17.

            	
              If
      the closing of this Agreement does not occur on or prior to the Closing
      Date, no Party to this Settlement Agreement shall have any further
      obligations hereunder, and this Settlement Agreement shall be of no
      further force or effect.

            

    

     

    CONFIDENTIALITY

     

    
      	
              18.

            	
              The
      Parties shall keep confidential the entering into of this Settlement
      Agreement and its terms and conditions except for disclosure as required
      by law and by operation and management of either Party’s
      affairs.

            

    

     

    GENERAL
PROVISIONS

     

    
      	
              19.

            	
              This
      Settlement Agreement shall be binding upon the Parties hereto and their
      successors and assignees where
applicable.

            

    

     

    
      	
              20.

            	
              In
      the event that any provision in this Settlement Agreement shall be deemed
      void or invalid by a court of competent jurisdiction, the remaining
      provisions shall be and remain in full force and
  effect.

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      
        	21.	The
      waiver by any Party or breach or violation of any provision of this
      Settlement Agreement shall not operate or be construed, as a waiver of any
      similar subsequent breach or violation of it.
	 	 
	
                22.

              	
                Any
      modification to this Settlement Agreement must be in writing and signed by
      all the Parties or it shall have no effect and shall be
    void.

              

      

    

     

    
      	
              23.

            	
              This
      Settlement Agreement shall be governed by and construed in accordance with
      the laws of the Province of Alberta, as they were on the date of execution
      of this Agreement.

            

    

     

    
      	
              24.

            	
              The
      Parties shall sign and deliver amongst themselves such additional and
      further agreements, instruments and documents as their counsel may
      consider necessary or advisable to effect and discharge the purposes and
      intent of this Settlement
Agreement.

            

    

     

    
      	
              25.

            	
              The
      headings utilized in this Settlement Agreement are for convenience only
      and are not to be covenants and agreements contained in this Settlement
      Agreement.

            

    

     

    
      	
              26.

            	
              This Settlement Agreement
      supersedes all prior written and oral agreements and arrangements among
      the Parties in any way relating to all or any portion of the obligations
      referred to and settled under this Settlement
      Agreement.

            

    

     

    IN WITNESS WHEREOF the parties
have executed this Settlement Agreement as of the day and year first above
written.

    

    
      
        
          
            
              
                
                  	
                          SCOUT
      EXPLORATION INC.

                           

                          Per:    
      ____________________

                        	
                          KERRISDALE
      RESOURCES LTD.

                           

                          Per:    
      ____________________

                        
	           Duly Authorized
      Officer	           
      Duly Authorized
      Officer 
	 	 
	 
      	
                          KERRISDALE
      CONSULTING INC.

                           

                          Per:    
      ____________________

                        
	 	           
      Brian Mahood,
      President 
	 	 
	 	 
	________________________________	________________________________
	
                          Witness
      to the signature of Brian Mahood

                        	
                          Brian
      Mahood

                        

                

              

            

          

        

      

    

    

     

     

     

     

     

     

    
 

    
      
         

      

      
        9Unassociated Document

    

    *  INDICATES
A PORTION OF THIS EXHIBIT THAT WAS OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.  THIS EXHIBIT INCLUDING SUCH OMITTED
INFORMATION WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION ON
A CONFIDENTIAL BASIS.

    

    

    Network
Agreement

     

    This
agreement (the “Agreement”) is made as of June 15, 2009 (the “Effective Date”)
by and between NeoStem, Inc., a Delaware corporation with its principal place of
business located at 420 Lexington Avenue, Suite 450, New York, New
York  10170 (“NEOSTEM”), and Enhance BioMedical Holdings Limited, a
China corporation with its principal place of business located at 6565 Bo Yuan
Road, Shanghai 201804 PRC (“SERVICE PROVIDER”) (NEOSTEM and SERVICE PROVIDER
each being individually referred to as a “Party” and collectively as the
“Parties”).

     

    WHEREAS,
NEOSTEM is a leader in adult stem cell collection, processing, cryopreservation
and storage services and has rights to a range of proprietary stem cell
technologies to be used in therapeutic applications;

     

    WHEREAS,
SERVICE PROVIDER is knowledgeable and experienced in the Asian healthcare market
and wishes to obtain from NEOSTEM the exclusive rights to provide the NEOSTEM
Stem Cell Services on the terms hereinafter set forth to a network of Centers as
herein described; and

     

    WHEREAS,
NEOSTEM desires to provide to SERVICE PROVIDER the exclusive rights to provide
the NEOSTEM Stem Cell Services on the terms hereinafter set forth.

     

    NOW
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, the Parties agree as follows:

     

    
      	
              Section
      1.  

            	
              Definitions.

            

    

     

    The
following capitalized terms used in this Agreement shall, unless the context
otherwise requires, have the following meaning:

     

    
      	
              1.1.  

            	
              “Affiliate”
      means, with respect to any entity, any other entity that, directly or
      indirectly, through one or more intermediaries, controls, is controlled
      by, or is under common control with, such entity.  The term
      “control” means the possession, directly or indirectly, of the power to
      direct or cause the direction of the management and policies of an entity,
      whether through the ownership of voting securities, by contract, or
      otherwise.  Affiliate includes with respect to NEOSTEM any WFOE
      or limited liability company of NEOSTEM relating to the conduct of the
      subject matter of this Agreement.

            

    

     

    
      	
              1.2.  

            	
              “Business” means
      the NEOSTEM Stem Cell Services.

            

    

     

    
      	
              1.3.  

            	
              “Center” means a
      facility or hospital constructed, furnished, equipped and staffed to
      operate and perform NEOSTEM Stem Cell Services in the
      Territory.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              1.4.  

            	
              “Client” means a
      person for whom NEOSTEM Stem Cell Services are
  provided.

            

    

     

    
      	
              1.5.  

            	
              “Exclusivity
      Period” has the meaning set forth in Section
  6.1.

            

    

     

    
      	
              1.6.  

            	
              “Intellectual
      Property” means all know-how, trade secrets, copyrights and other
      intellectual property rights (excluding the Marks) that NEOSTEM owns or
      otherwise has the right to grant licenses under and are relevant to the
      delivery of NEOSTEM Stem Cell Collection
  Services.

            

    

     

    
      	
              1.7.  

            	
              “Territory”
      means (i) Taiwan; (ii) Shanghai Municipality and the five provinces of
      Jiangsu, Zhejiang, Fujian, Anhui and Jiangxi in the People’s Republic of
      China (“PRC”); and (iii) up to 50 hospitals in selected parts of the PRC
      (subject to mutual written agreement) with which SERVICE PROVIDER has
      pre-existing relationships and such other territories as the parties may
      agree to in writing from time to
time.

            

    

     

    
      	
              1.8.  

            	
              “Center
      Agreement” means a separate agreement between SERVICE PROVIDER and
      a hospital, doctors office or facility with respect to enabling them to
      offer NEOSTEM Stem Cell Services.  SERVICE PROVIDER and or its
      Affiliates agree to use language in the Center Agreement that provides the
      Center will follow protocols and standard operating procedures for NEOSTEM
      Stem Cell Services and otherwise employ reasonable care in providing such
      services and  protect the IP, technology and know-how with
      respect to the delivery of NEOSTEM Stem Cell Services as well as requiring
      that any employee of a Center shall enter into NeoStem’s form of
      non-competition agreement.

            

    

     

    
      	
              1.9.  

            	
              “Marks” means
      the “NEOSTEM” mark and name, and such other marks and names used by
      NEOSTEM and relating to the
Business.

            

    

     

    
      	
              1.10.  

            	
              “NEOSTEM Stem Cell
      Services” means NEOSTEM’s adult stem cell collection, processing,
      cryopreservation and storage services for autologous use and therapies
      that may be provided through the use of NEOSTEM’s proprietary technologies
      as identified by NeoStem from time to
time.

            

    

     

    
      	
              1.11.  

            	
              “Operating
      Entity” means each operating entity, if any, organized by SERVICE
      PROVIDER in connection with the provision of the NEOSTEM Stem Cell
      Services.

            

    

     

    
      	
              1.12.  

            	
              “Stem Cell
      Collection” means that collection of human adult stem cells derived
      from peripheral blood and all related clinical
  procedures.

            

    

     

    
      	
              1.13.  

            	
              “Stem Cells”
      means adult human stem cells derived from peripheral
  blood.

            

    

     

    
      	
              1.14.  

            	
              “Center” means a
      facility within the Territory at which SERVICE PROVIDER desires to enable
      the use of NEOSTEM Stem Cell Services pursuant to this Agreement and with
      which SERVICE PROVIDER establishes a Center
  Agreement.

            

    

     

    
      	
              1.15.  

            	
              “SERVICE
      PROVIDER” means Enhance BioMedical Holdings Limited and any
      Affiliate, including any Operating Entity and is sometimes referred to
      herein as “SERVICE PROVIDER”.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              1.16.  

            	
              “Gross Revenues”
      means total gross receipts of sales of NEOSTEM Stem Cell
      Services.

            

    

     

    
      	
              Section
      2.  

            	
              Term of Agreement;
      Other Agreements.

            

    

     

    2.1 Term of
Agreement.  This Agreement will commence on the Effective Date
and will expire ten (10) years after the Effective Date, unless terminated
earlier as provided in Section 4 hereof (the “Term”).

     

    2.2 Renewal
Terms.  Upon the expiration of the Term SERVICE PROVIDER shall
be entitled at its option to renew this Agreement for a subsequent ten (10) year
period; provided that (i) SERVICE PROVIDER provides written notice of its desire
to renew not less than one year prior to the end of the initial term or any
renewal term, (ii) at the time of renewal SERVICE PROVIDER executes NEOSTEM’s
then current form of agreement, which could include, among other things, higher
or additional fees, (iii) SERVICE PROVIDER has paid or otherwise satisfied all
monetary obligations to NEOSTEM, and (iv) such other reasonable requirements as
NEOSTEM may require.

     

    
      	
              Section
      3.  

            	
              Training and
      Establishment of Centers.

            

    

     

    3.1 Training of SERVICE
PROVIDER.  NBS shall train or arrange training for the SERVICE
PROVIDER and other staff members of the SERVICE PROVIDER on the NEOSTEM Stem
Cell Services and SOPs.  NEOSTEM will train the SERVICE PROVIDER at
NEOSTEM’s option at a NEOSTEM facility or other location located in China or the
United States.  The cost of training the SERVICE PROVIDER shall be
borne by NEOSTEM.  All other expenses relating to the training,
including salary, wages and benefits, meals, lodging, travel and similar
expenses shall be borne by the SERVICE PROVIDER.

     

    3.2 Training of
Centers.  Training of the Centers shall be conducted by SERVICE
PROVIDER but if necessary and on request of SERVICE PROVIDER subject to the
availability of NEOSTEM personnel, NEOSTEM will at the cost of SERVICE PROVIDER
(or Center if passed down to Center) assist in training Centers based on a fee
for services.  Once the needs and fees are determined the rates set
forth will be added to this Agreement as Attachment A.  Such fees
shall be invoiced to SERVICE PROVIDER on a monthly basis for services provided
in the prior month and shall be payable within thirty (30) days of receipt
thereof.

     

    3.3 Other
Assistance.  Other assistance that NEOSTEM may provide, subject
to a separate written agreement, including with respect to the fee for services,
includes:

     

    3.3.1 Set-up
Assistance.  In connection with the establishment of any
Center, NEOSTEM shall offer services with respect to constructing, equipping,
furnishing and staffing such Center.

     

    3.3.2 Marketing and
Advertising.  NEOSTEM shall provide to SERVICE PROVIDER
marketing support and medical education with respect to the delivery of the
NEOSTEM Stem Cell Services.

     

    3.3.3 Costs.  The
costs of the assistance set forth in this section 3.3 shall be on a fee for
services basis as shall be determined by the Parties.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3.4 SERVICE PROVIDER
Responsibilities.  SERVICE PROVIDER solely shall be responsible
for (i) providing appropriate office space for any Center in the Territory, (ii)
all payroll, benefits and other employment-related matters with respect to the
personnel participating in the NEOSTEM Stem Cell Services in the Territory,
(iii) obtaining, setting up and maintaining all equipment and supplies necessary
for the provision of the NEOSTEM Stem Cell Services, and (iv) obtaining any and
all required licenses and permits, provided that if requested by SERVICE
PROVIDER, NEOSTEM will undertake on a best efforts basis to assist SERVICE
PROVIDER in the application for such licenses and permits and will assist
SERVICE PROVIDER in training their centers and collecting fees owed to them of
which NBS is entitled.

     

    3.5 Audit and
Survey.  NEOSTEM shall have the right to audit and survey,
prior to operational commencement of the NEOSTEM Stem Cell Services, appropriate
training with respect to the delivery of the NEOSTEM Stem Cell Services at the
Center.

     

    3.6 Execution of Center
Agreement.  In order to protect the IP, proprietary technology
and techniques and provide for standardization and quality of services, SERVICE
PROVIDER shall execute a Center Agreement with each Center and agrees that it
shall contain, in addition to other appropriate provisions, language ensuring
compliance with the terms of this Agreement.

     

    3.7 No Medical
Advice.  SERVICE PROVIDER acknowledges that NEOSTEM is not a
health care provider, licensed or otherwise.  NEOSTEM will not direct
patient clinical care and treatment services or emergency patient
issues.  NEOSTEM can not and will not assume responsibility for the
direct medical care of any patient, which shall, at all times remain the
responsibility of the treating physician.

     

    3.8 Standard of
Conduct.  SERVICE PROVIDER shall ensure the NEOSTEM Stem Cell
Services are provided in compliance with:

     

    
      	
              (i)  

            	
              all
      applicable laws, rules and
regulations;

            

    

     

    
      	
              (ii)  

            	
              all
      standards of conduct, codes of ethics and other policies and guidelines
      promulgated that are reasonably applicable to the delivery of the NEOSTEM
      Stem Cell Services;

            

    

     

    
      	
              (iii)  

            	
              such
      operating policies and procedures as may be provided by NEOSTEM in
      connection with the training provided for in this Agreement;
      and

            

    

     

    
      	
              (iv)  

            	
              with
      a high level of client service.

            

    

     

    
      	
              Section
      4.  

            	
              Termination of
      Agreement.

            

    

     

    4.1 Termination.  In
the event of a material breach of this Agreement by a Party, the other Party may
terminate this Agreement by giving thirty (30) days prior, written notice to the
breaching Party; provided, however, that this
Agreement will not terminate if the breaching Party has cured the breach before
the expiration of such thirty (30) day period.  This Agreement is
terminable immediately without notice by a Party if the other Party: (i)
voluntarily institutes insolvency, receivership or bankruptcy proceedings, (ii)
is involuntarily made subject to any bankruptcy or insolvency proceeding and
such proceeding is not dismissed within sixty (60) days of the filing of such
proceeding; (iii) makes an assignment for the benefit of creditors, or (iv)
undergoes any dissolution or cessation of business.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.2 Effect of
Termination.  Upon any termination or expiration of this
Agreement:

     

    
      	
              (i)  

            	
              Each
      Party shall pay the other Party all amounts due and payable as of the
      effective date of termination or
expiration;

            

    

     

    
      	
              (ii)  

            	
              SERVICE
      PROVIDER and each Center shall immediately cease all use of NEOSTEM
      Intellectual Property and provision of NEOSTEM Stem Cell Services and all
      rights granted under this Agreement shall terminate immediately;
      and

            

    

     

    
      	
              (iii)  

            	
              SERVICE
      PROVIDER, at NEOSTEM’s option, will either return to NEOSTEM or provide
      NEOSTEM with written certification of the destruction of, all documents,
      computer files and other materials containing any Proprietary Information
      that are in the SERVICE PROVIDER or a Center’s possession or
      control.

            

    

     

    4.3 Survival.  The
following provisions will survive any expiration or termination of this
Agreement:  “Use of Confidential Information.”; “Exclusivity.”,
“Effect of Termination”.

     

    
      	
              Section
      5.  

            	
              Use of Confidential
      Information.

            

    

     

    5.1 Proprietary
Information.  SERVICE PROVIDER agrees at all times to keep
confidential any and all Proprietary Information and will not, without the
express prior written consent of NEOSTEM, disclose directly or indirectly any
Proprietary Information to any other person or use directly or indirectly any
such Proprietary Information, for the benefit of SERVICE PROVIDER, or any third
party.  For the purposes of this Agreement, “Proprietary
Information” includes all trade secrets, know-how, show-how, technical,
operating, financial, and other business information related to NEOSTEM and its
Affiliates, the Business or the customers or suppliers of NEOSTEM, whether or
not reduced to writing or other medium and whether or not marked or labeled
confidential, proprietary or the like, specifically including, but not limited
to, information regarding procedures, methods and techniques regarding the
NEOSTEM Stem Cell Services, financial and other information regarding the
Business, the terms and conditions of this Agreement, marketing, sales and
pricing techniques, designs, inventions, products, improvements, modifications,
methodology, processes, concepts, records, files, memoranda, reports, plans,
proposals, price lists, client and supplier information, product development and
project procedures.  Proprietary Information will not include
information which (i) is or becomes generally available to the public (other
than as a result of a disclosure by the SERVICE PROVIDER or its
representatives), or (ii) becomes available on a non-confidential basis from a
source other than NEOSTEM or one of its representatives which is entitled to
disclose it.  The SERVICE PROVIDER acknowledges that the “Proprietary
Information” may include material, non-public information regarding the business
of NEOSTEM and its parent company (a publicly-traded company) and, without
limiting any of the foregoing, the SERVICE PROVIDER agrees not to use or
disclose any such information in violation of any applicable securities laws and
regulations.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.2 SERVICE PROVIDER Personnel
and Center Agreements.  SERVICE PROVIDER shall require all of
SERVICE PROVIDER’s employees, consultants and other personnel and all Centers
and their employees, consultants and other personnel, as a condition of their
employment or other arrangement, to execute a written agreement prohibiting
them, during the term of their employment or such other arrangement and
thereafter, from communicating, divulging, or using for the benefit of any
person, persons, agent, association, corporation or other entity any Proprietary
Information which may be acquired as a result of their employment or other
arrangement with SERVICE PROVIDER.  Each such agreement shall be in a
form that has been approved by NEOSTEM in writing and shall expressly provide
that NEOSTEM is a third party beneficiary thereof.

     

    5.3 Non-Disparagement.  Neither
Party will at any time disparage the business reputation of the other Party or
any of the other Party’s employees, officers, directors, agents and/or
clients.

     

    
      	
              Section
      6.  

            	
              Exclusivity.

            

    

     

    6.1 During
the Term or any Renewal Term and for a period
of   *   thereafter (the “Exclusivity Period”)
SERVICE PROVIDER shall not directly or indirectly, whether itself or through a
subsidiary, successor or affiliate, engage in (i) providing any adult stem cell
services inside or outside the Territory other than the NEOSTEM Stem Cell
Services being provided within the Territory pursuant to the terms of this
Agreement; or (ii) engaging in activities that are related, incidental or
incremental to the NEOSTEM Stem Cell Services inside the Territory without the
prior explicit written consent of NEOSTEM and the entering into of such
additional agreements as may be requested by NEOSTEM in connection with the
joint pursuit.  During the Term or any Renewal Term, NEOSTEM shall not
(i) enable any party (including NEOSTEM) other than SERVICE PROVIDER to provide
the NEOSTEM Stem Cell Services in the Territory; or (ii) provide knowledge,
technology and operating procedures in relation to the NEOSTEM Stem Cell
Services, directly or indirectly, to any party other than SERVICE PROVIDER in
the Territory.  The Parties acknowledges that the restrictions
contained in this Section 6 are
reasonable and necessary to protect the legitimate proprietary interests of the
Parties and that any breach by a Party of any provision hereof will result in
irreparable injury to the other Party.  The Parties acknowledges that,
in addition to all remedies available at law, each party will be entitled to
equitable relief, including injunctive relief and an equitable accounting of all
earnings, profits or other benefits arising from such breach and will be
entitled to receive such other damages, direct or consequential, as may be
appropriate.  NEOSTEM shall be released from its obligations contained
in this Section 6 to the extent SERVICE PROVIDER fails to comply with its
obligations contained in Section 7.

     

    
      	
              Section
      7.  

            	
              Technical Assistance
      Fee and Royalties.

            

    

     

    7.1 Technical Assistance
Fee.  SERVICE PROVIDER agrees to pay NEOSTEM US
    *    as Service Fee as
follows:

     

    
      	
              (i)  

            	
                 *     upon
      the signing of this Agreement;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              (ii)  

            	
                 *     upon
      the commencement of the training of SERVICE PROVIDER staff by NEOSTEM
      pursuant to Section 3.1 hereof;

            

    

     

    
      	
              (iii)  

            	
                 *     upon
      the satisfactory review by SERVICE PROVIDER (which review must be
      completed by no later
      than    *    ) of the necessary
      knowledge, technology and operating procedures (See Attachment B) in
      relation to the NEOSTEM Stem Cell Services to be provided by SERVICE
      PROVIDER in the Territory.  NEOSTEM will deliver the necessary
      knowledge, technology and operating procedures to SERVICE PROVIDER in
      order that they may provide the NEOSTEM Stem Cell Services and enable
      SERVICE PROVIDER and its affiliates in the methods of treatment using all
      of NEOSTEM technologies created and licensed to date and in the
      future.

            

    

     

    7.2 Royalties.

     

    7.2.1 SERVICE
PROVIDER agrees to pay to NEOSTEM a Royalty equal to * of Gross Revenues of
NEOSTEM Stem Cell Services in the Territory.  SERVICE PROVIDER agrees
to pay the Royalty within 30 days of receipt of Gross Revenues, provided such
Royalties will only become payable from the Gross Revenues of any NEOSTEM Stem
Cell Services.

     

    If annual Royalty paying to NEOSTEM do
not reach the following minimum payment during the Term, SERVICE PROVIDER may
pay NEOSTEM the difference:

     

    
      	
              (i)  

            	
                    *    on      *     (“Year
      One”);

            

    

     

    
      	
              (ii)  

            	
                   *    on      *     (“Year
      Two”);

            

    

     

    
      	
              (iii)  

            	
                  *    on      *    (“Year
      Three”);

            

    

     

    
      	
              (iv)  

            	
                  *     on       *     and
      each one year anniversary thereafter for the remainder of the Term;
      provided that in lieu of paying
      the     *     minimum
      payment SERVICE PROVIDER may terminate this
  Agreement.

            

    

     

    

    7.2.2 SERVICE
PROVIDER will be exempt from the payment of Royalties for any Royalty Period
during which NEOSTEM is in breach of the provisions set forth in Section 6 of
this Agreement.

     

    7.2.3 SERVICE
PROVIDER shall deliver to NEOSTEM un-audited monthly and quarterly financial
statements and audited annual statements as well as such other information as
may be reasonably requested.  Such reports shall be in sufficient
detail to enable NEOSTEM to verify the amount of Royalties payable
hereunder.

     

    7.3 Tax.  Any
tax that may be levied on such Royalty and other payments set forth in this
Agreement will be borne by NEOSTEM.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7.4 Interest.  The
Royalty and other payments set forth in this Agreement shall, if overdue, bear
interest until payment at the quarterly rate of 5%.  This penalty
would not begin until 30 days after which time  the payment was
due.

     

    7.5 Inspection.  SERVICE
PROVIDER shall allow NEOSTEM or its authorized representatives to visit and
inspect the properties of SERVICE PROVIDER and/or Holdco including their
corporate and financial records and to discuss their business and finances with
officers and other employees of SERVICE PROVIDER during normal business hours
following reasonable notice and as often as may be reasonably
requested.

     

    
      	
              Section
      8.  

            	
              Option in SERVICE
      PROVIDER.

            

    

     

    SERVICE PROVIDER will grant NEOSTEM for
a period of 5 years from the effective date of this Agreement the right to
acquire up to
a     *     fully diluted
equity interest in SERVICE PROVIDER based on the fair market value of SERVICE
PROVIDER as shall be determined by an independent third party designated by the
parties.  SERVICE PROVIDER may not provide the NEOSTEM Stem Cell
Services through any entity other than SERVICE PROVIDER.

     

    
      	
              Section
      9.  

            	
              Compliance with
      Government Regulations; Indemnification; Insurance and
      Liability.

            

    

     

    9.1 Compliance with Government
Regulations.  The parties agree to comply with all applicable
regulations and safety standards of government agencies, including without
limitation the Chinese Ministry of Health.

     

    9.2 Indemnification.  SERVICE
PROVIDER shall defend, indemnify and hold harmless NEOSTEM, and its trustees,
officers, employees and agents and their respective successors, heirs and
assigns (“Indemnitees”), against any and all liability, claims, demands, damage,
loss or expense (including reasonable attorneys’ fees and expenses of
litigation) resulting from, or alleged to have resulted from, or in connection
with SERVICE PROVIDER’s providing the NEOSTEM Stem Cell Services or that may be
incurred by or imposed upon the Indemnitees, or any of them, in connection with
any Third Party claim, suit, demand, action or judgment arising from this
Agreement.

     

    9.3 Insurance.  SERVICE
PROVIDER shall procure and maintain in full force and effect during the Term, at
SERVICE PROVIDER’s expense, an insurance policy or policies protecting SERVICE
PROVIDER and NEOSTEM and their officers, directors, agents and employees,
against any loss, liability or expense whatsoever relating to the conduct
provision of NEOSTEM Stem Cell Services.

     

    
      	
              Section
      10.  

            	
              Liability.

            

    

     

    10.1 Liability
Exclusion.  EXCEPT IN CONNECTION WITH CLAIMS ARISING FROM THE
UNAUTHORIZED USE OR DISCLOSURE OF PROPRIETARY INFORMATION OR THE GROSS
NEGLIGENCE. FRAUD OR WILLFUL MISCONDUCT OF A PARTY, NO PARTY WILL BE LIABLE TO
THE OTHER PARTY (NOR TO ANY PERSON CLAIMING RIGHTS DERIVED FROM SUCH OTHER
PARTY’S RIGHTS) FOR CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OF ANY KIND
(INCLUDING WITHOUT LIMITATION LOST REVENUES OR PROFITS OR LOSS OF BUSINESS) WITH
RESPECT TO ANY CLAIMS BASED ON CONTRACT, TORT OR OTHERWISE (INCLUDING NEGLIGENCE
AND STRICT LIABILITY) ARISING OUT OF THIS AGREEMENT, REGARDLESS OF WHETHER THE
PARTY LIABLE OR ALLEGEDLY LIABLE WAS ADVISED, HAD OTHER REASON TO KNOW, OR IN
FACT KNEW OF THE POSSIBILITY THEREOF.  For the purposes of clarity,
the exclusion set forth in this Section 10.1 shall
not be construed to limit SERVICE PROVIDER’s indemnity obligations under Section
9.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    10.2 Limitation of
Damages.  EXCEPT IN CONNECTION WITH (I) CLAIMS ARISING FROM THE
UNAUTHORIZED USE OR DISCLOSURE OF PROPRIETARY INFORMATION OR THE GROSS
NEGLIGENCE, FRAUD OR WILLFUL MISCONDUCT OF A PARTY AND (II) SERVICE PROVIDER’S
INDEMNITY OBLIGATIONS UNDER SECTION 9, EACH
PARTY’S MAXIMUM LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
SERVICES PROVIDED HEREUNDER, REGARDLESS OF THE CAUSE OF ACTION (WHETHER IN
CONTRACT, TORT, BREACH OF WARRANTY OR OTHERWISE), WILL NOT EXCEED ONE HUNDRED
FIFTY THOUSAND DOLLARS ($150,000.00), PLUS ANY FEES PAYABLE BUT UNPAID BY SUCH
PARTY.

     

    
      	
              Section
      11.  

            	
              Miscellaneous
      Provisions.

            

    

     

    11.1 Separate
Entities.  The Parties acknowledge that they are separate legal
persons and are not joint venturers, joint employers or agents of each other in
any sense whatsoever.  Nothing contained herein will be construed to
mean that the Parties are joint venturers, joint employers or agents of each
other or to create a membership association or organization.  No Party
has the right to bind or make commitments for the other Parties.  No
Party will be liable for any obligations or duties of the other
Parties.

     

    11.2 Publicity.  SERVICE
PROVIDER will not refer to NEOSTEM, or use NEOSTEM’s logo or trademarks, in any
press releases, marketing materials or other internal or external written
communication without NEOSTEM’s prior, written approval, which approval may be
granted or withheld in NEOSTEM’s sole and absolute discretion.

     

    11.3 Law Governing;
Jurisdiction.  This Agreement and any and all matters arising
directly or indirectly herefrom will be governed by and construed and enforced
in accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely in such state, without giving effect to the
conflict of law principles thereof.

     

    11.4 Entire
Agreement.  This Agreement (including the Schedule hereto)
contains, and is intended to be, a complete statement of all the terms of the
arrangements between or among the Parties with respect to the matters set forth
herein, and supersedes any previous agreements, understandings and discussions
between the Parties with respect to those matters.  There are no
promises, representations, warranties, covenants or undertakings other than
those set forth herein.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    11.5 No Waiver;
Modification.  No course of dealing and no delay on the part of
any Party in exercising any right, power or remedy conferred by this Agreement
will operate as a waiver thereof or otherwise prejudice such Party’s rights,
powers and remedies conferred by this Agreement or will preclude any other or
further exercise of any other right, power and remedy.  No term or
provision of this Agreement may be amended, altered, modified, rescinded,
supplemented, or terminated except by a writing signed by the Party against whom
enforcement is sought.

     

    11.6 Notices.  All
notices and other communications required or permitted to be given pursuant to
this Agreement will be in writing signed by the sender, and will be deemed duly
given (i) on the date delivered if personally delivered, or (ii) on the third
business day after being sent by Federal Express or another recognized overnight
mail service which utilizes a written form of receipt for third business day
delivery in the PRC, in each case addressed to the applicable party at the
address set forth below; provided that a Party may change its address for
receiving notice by the proper giving of notice hereunder:

     

    If to
NEOSTEM:

    

    NeoStem,
Inc.

    420
Lexington Avenue

    Suite
450

    NY, NY
10170

    Attention:  General
Counsel

    

    If to the
SERVICE PROVIDER:

    

    6565 Bo
Yuan Road

    Shanghai
201804 PRC

    Attention:  _______________

    

    11.7 Severability.  Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction will, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction will
not invalidate or render unenforceable such provision in any other
jurisdiction.  To the fullest extent permitted by applicable law, the
Parties hereby waive any provision of law which renders any provisions hereof
prohibited or unenforceable in any respect.  If it is ever held that
any restriction hereunder is too broad to permit enforcement of such restriction
to its fullest extent, such restriction will be enforced to the maximum extent
permitted by applicable law.

     

    11.8 Headings;
Counterparts.  The Section headings contained in this Agreement
are solely for the purpose of reference, are not part of the agreement of the
Parties and will not in any way affect the meaning or interpretation of this
Agreement.  This Agreement may be executed in any number of
counterparts, each of which will be an original, but all of which together will
constitute one instrument.  This Agreement may also be executed via
facsimile, which will be deemed an original.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    11.9 Assignment.  This
Agreement may not be assigned by either Party without first obtaining the
written consent of the other Party, which consent shall not be unreasonably
withheld.  Any purported assignment without the written consent of the
other Party shall be null and of no effect.  Notwithstanding the
foregoing, NEOSTEM may assign this Agreement without the consent of SERVICE
PROVIDER to a (i) an Affiliate, or (ii) the purchaser of all or substantially
all of NEOSTEM’s assets or business (or that portion thereof to which this
Agreement relates), or (iii) the surviving entity in a merger or other business
consolidation.

     

    IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed,
under seal, by their duly authorized representatives as of the day and year
first above written.

     

    

    

    
      	
              NeoStem,
      Inc.

            	 
      	
              SERVICE
      PROVIDER

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Signature

            	 
      	
              Signature

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Name
      of signer

            	 
      	
              Name
      of signer

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Title

            	 
      	
              Title

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