Document:

Unassociated Document

    FIRST
      AMENDMENT

     

    TO

     

    AMENDED
      AND RESTATED CREDIT
      AGREEMENT

     

    Dated
      as of August 28, 2008

     

    among

     

    EV
      ENERGY PARTNERS, L.P.,

    As
      Parent,

     

    EV
      PROPERTIES, L.P.,

    as
      Borrower,

     

    THE
      GUARANTORS,

     

    JPMORGAN
      CHASE BANK, N.A.

    as
      Administrative Agent,

     

    and

     

    THE
      LENDERS PARTY HERETO

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    FIRST
      AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

     

    THIS
      FIRST
      AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
      (this
“First
      Amendment”)
      dated
      as of August 28, 2008, is among EV
      ENERGY
      PARTNERS, L.P., a
      Delaware limited partnership (the “Parent”);
      EV
      PROPERTIES, L.P., a Delaware limited partnership (the “Borrower”);
      the
      undersigned guarantors (the “Guarantors”,
      and
      together with the Parent and the Borrower, the “Obligors”);
      each
      of the lenders party to the Credit Agreement referred to below (collectively,
      the “Lenders”);
      and
JPMORGAN
      CHASE BANK, N.A.,
      as
      administrative agent for the Lenders (in such capacity, together with its
      successors in such capacity, the “Administrative
      Agent”).

     

    R
      E C I T A L S

     

    A. The
      Borrower, the Parent, the Agents and the Lenders are parties to that certain
      Amended and Restated Credit Agreement dated as of October 1, 2007 (as amended,
      the “Credit
      Agreement”),
      pursuant to which the Lenders have made certain credit available to and on
      behalf of the Borrower. 

     

    B. The
      Borrower has requested and the Administrative Agent and the Lenders have agreed
      to amend certain provisions of the Credit Agreement.

     

    C. NOW,
      THEREFORE, to induce the Administrative Agent and the Lenders to enter into
      this
      First Amendment and in consideration of the premises and the mutual covenants
      herein contained, for good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the parties hereto agree as
      follows:

     

    Section
      1.  Defined
      Terms.
      Each
      capitalized term used herein but not otherwise defined herein has the meaning
      given such term in the Credit Agreement, as amended by this First Amendment.
      Unless otherwise indicated, all section references in this First Amendment
      refer
      to sections of the Credit Agreement. 

     

    Section
      2.  Amendments
      to Credit Agreement.

     

    2.1  Amendments
      to Section 1.02.

     

    (a)  The
      definition of “Agreement”
is
      hereby amended in its entirety to read as follows:

     

    “Agreement”
means
      this Credit Agreement, as amended by the First Amendment, including the
      Schedules and Exhibits hereto, as the same may be amended or supplemented from
      time to time.

     

    (b)  The
      definition of “Applicable
      Margin”
is
      hereby amended in its entirety to read as follows:

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Applicable
      Margin”
means,
      for any day, with respect to any ABR Loan or Eurodollar Loan, as the case may
      be, the rate per annum set forth in the Borrowing Base Utilization Grid below
      based upon the Borrowing Base Utilization Percentage then in
      effect:

     

    
      	
              Borrowing
                Base Utilization Grid

            
	
              Borrowing
                Base Utilization Percentage

            	
              ≤
                50%

            	
              >
                50% ≤ 75%

            	
              >
                75% ≤ 90%

            	
              >
                90%

            
	
              ABR
                Loans

            	
              0.000%

            	
              0.000%

            	
              0.250%

            	
              0.500%

            
	
              Eurodollar
                Loans

            	
              1.250%

            	
              1.500%

            	
              1.750%

            	
              2.000%

            

    

    

    Each
      change in the Applicable Margin shall apply during the period commencing on
      the
      effective date of such change and ending on the date immediately preceding
      the
      effective date of the next such change, provided, however, that if at any time
      the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a),
      then
      the “Applicable Margin” means the rate per annum set forth on the grid when the
      Borrowing Base Utilization Percentage is at its highest level.

     

    (c)  The
      following definitions are hereby added where alphabetically appropriate to
      read
      as follows:

     

    “Acquisition”
means
      each of (i) the Protégé Acquisition, (ii) the San Juan Acquisition and (iii) the
      Trek Acquisition.

     

    “Acquisition
      Documents”
means
      collectively, (i) the Protégé Acquisition Documents, (ii) the San Juan
      Acquisition Documents and (iii) the Trek Acquisition Documents.

     

    “Acquisition
      Properties”
means
      collectively, (i) the Protégé Acquisition Properties, (ii) the San Juan
      Acquisition Properties and (iii) the Trek Acquisition Properties.

     

    “First
      Amendment”
means
      that certain First Amendment to Amended and Restated Credit Agreement, dated
      as
      of August 28, 2008, among the Parent, the Borrower, the Guarantors, the
      Administrative Agent and the Lenders party thereto.

     

    “First
      Amendment Effective Date”
means
      August 28, 2008.

     

    “Protégé
      Acquisition”
means
      the acquisition of certain Oil and Gas Properties pursuant to the terms and
      conditions of the Protégé Acquisition Documents. 

     

    “Protégé
      Acquisition Documents”
means
      (a) the Purchase and Sale Agreement between Protégé Energy LLC, as Seller, and
      Borrower, as Buyer, dated as of July 16, 2008, to be effective as of June 1,
      2008, and (b) all bills of sale, assignments, agreements, instruments and
      documents executed and delivered in connection therewith, as
      amended.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Protégé
      Acquisition Properties”
means
      the Oil and Gas Properties and other properties acquired by the Borrower
      pursuant to the Protégé Acquisition Documents.

     

    “San
      Juan Acquisition”
means
      the acquisition of certain Oil and Gas Properties pursuant to the terms and
      conditions of the San Juan Acquisition Documents. 

     

    “San
      Juan Acquisition Documents”
means
      (a) the Purchase and Sale Agreement between EnerVest Energy Institutional Fund
      IX, L.P. and Energy Institutional Fund IX-WI, L.P., as Sellers, and Borrower,
      as
      Buyer, dated as of August 11, 2008, to be effective as of June 1, 2008, and
      (b)
      all bills of sale, assignments, agreements, instruments and documents executed
      and delivered in connection therewith, as amended.

     

    “San
      Juan Acquisition Properties”
means
      the Oil and Gas Properties and other properties acquired by the Borrower
      pursuant to the San Juan Acquisition Documents.

     

    “Trek
      Acquisition”
means
      the acquisition of certain Oil and Gas Properties pursuant to the terms and
      conditions of the Trek Acquisition Documents. 

     

    “Trek
      Acquisition Documents”
means
      (a) the Purchase and Sale Agreement between Trek Resources, Inc., as Seller,
      and
      Borrower, as Buyer, dated July 17, 2008, to be effective as of August 1, 2008,
      and (b) all bills of sale, assignments, agreements, instruments and documents
      executed and delivered in connection therewith, as amended.

     

    “Trek
      Acquisition Properties”
means
      the Oil and Gas Properties and other properties acquired by the Borrower
      pursuant to the Trek Acquisition Documents.

     

    2.2  Amendment
      to Section 2.07(a).
      Section
      2.07(a) is hereby amended in its entirety to read as follows:

     

    (a) Borrowing
      Base.
      For the
      period from and including the First Amendment Effective Date to but excluding
      the next Scheduled Redetermination Date, the amount of the Borrowing Base shall
      be $415,000,000. In connection with each Acquisition, assuming the conditions
      in
      Section 6.03 are satisfied with respect to such Acquisition, the Borrowing
      Base
      shall automatically increase by the amount set forth for such Acquisition on
      Attachment
      I
      to the
      First Amendment (the “Acquisition
      Borrowing Base Adjustment”).

     

    2.3  Amendment
      to Section 3.05(d). Section 3.05(d) is hereby amended in its entirety to read
      as
      follows:

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (d) Borrowing
      Base Increase Fees.
      The
      Borrower agrees to pay to the Administrative Agent, for the account of each
      Lender then party to this Agreement, ratably in accordance with its Applicable
      Percentage, a Borrowing Base increase fee in an amount to be agreed at such
      time, on the amount of any increase of the Borrowing Base over the highest
      Borrowing Base previously in effect, payable on the day a New Borrowing Base
      Notice is given.

     

    2.4  Amendment
      to Section 6.03.
      Section
      6.03 is hereby amended in its entirety as follows:

     

    Section
      6.03 Acquisition
      Borrowing Base Adjustments.
      Each
      Acquisition Borrowing Base Adjustment shall not become effective until the
      date
      on which each of the following conditions is satisfied:

    

    (a) The
      Acquisition related to such Acquisition Borrowing Base Adjustment closes on
      or
      before October 1, 2008.

     

    (b) The
      Administrative Agent shall have received (i) a certificate of a Responsible
      Officer certifying: (A) that the Borrower is concurrently consummating such
      Acquisition in accordance with the terms of the relevant Acquisition Documents
      (with all of the material conditions precedent thereto having been satisfied
      in
      all material respects by the parties thereto) and acquiring substantially all
      of
      the relevant Acquisition Properties contemplated by such Acquisition Documents;
      (B) as to the final purchase price for such Acquisition Properties after giving
      effect to all adjustments as of the closing date contemplated by the relevant
      Acquisition Documents and specifying, by category, the amount of such
      adjustment; (C) that attached thereto is a true and complete list of the
      Acquisition Properties which have been excluded from such Acquisition pursuant
      to the terms of the Acquisition Documents, specifying with respect thereto
      the
      basis of exclusion as (1) title defect, (2) preferential purchase right, (3)
      environmental or (4) casualty loss; (D) that attached thereto is a true and
      complete list of all Acquisition Properties for which any seller has elected
      to
      cure a title defect; (E) that attached thereto is a true and complete list
      of
      all Acquisition Properties for which any seller has elected to remediate an
      adverse environmental condition; and (F) that attached thereto is a true and
      complete list of all Acquisition Properties which are currently pending final
      decision by a third party regarding purchase of such property in accordance
      with
      any preferential right; (ii) a true and complete executed copy of each of the
      material Acquisition Documents; and (iii) such other related documents and
      information as the Administrative Agent shall have reasonably
      requested.

     

    (c) The
      Administrative Agent shall have received from the Borrower duly executed
      Security Instruments in compliance with Section 8.14(a) and (b), as applicable,
      for the relevant Acquisition Properties.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (d) The
      Administrative Agent shall have received title information as the Administrative
      Agent may reasonably require and which is satisfactory to the Administrative
      Agent setting forth the status of title to the relevant Acquisition Properties
      evaluated in the applicable Reserve Report.

     

    (e) The
      Administrative Agent shall be reasonably satisfied with the environmental
      condition of the relevant Acquisition Properties.

     

    (f) The
      Administrative Agent shall have received appropriate UCC search certificates
      reflecting no prior Liens encumbering the relevant Acquisition Properties other
      than those being released or assigned to Administrative Agent concurrently
      with
      the consummation of such Acquisition and Liens permitted under Section
      9.03.

     

    (g) The
      Administrative Agent shall have received a legal opinion of the Borrower’s legal
      counsel in a form and of substance reasonably acceptable to the Administrative
      Agent.

     

    (h) The
      Administrative Agent shall have received a certificate of a Responsible Officer
      certifying (i) that the Borrower has received all consents and approvals
      required by Section 7.03 in connection with such Acquisition and (ii) there
      are
      no actions, suits, investigations or proceedings by or before any arbitrator
      or
      Governmental Authority pending against or, to the knowledge of the Parent or
      the
      Borrower, threatened against or affecting the Parent, the Borrower or any of
      their Subsidiaries that involve any relevant Acquisition Document, the
      Transactions or that could impair the consummation of the Acquisition on the
      time and in the manner contemplated by such Acquisition Documents.

     

    (i) The
      Administrative Agent shall have received evidence satisfactory to it that all
      Liens associated with such Acquisition Properties (other than Liens permitted
      under Section 9.03) have been released or terminated or assigned to the
      Administrative Agent contemporaneously with the Acquisition and that
      arrangements satisfactory to the Administrative Agent have been made for
      recording and filing of such releases or assignments, as
      applicable.

     

    (j) The
      Administrative Agent shall have received such other documents as the
      Administrative Agent or special counsel to the Administrative Agent may
      reasonably request with respect to such Acquisition.

     

    2.5  Amendment
      to Annex I.
      Annex I
      is hereby amended in it entirety by substituting Annex I-A attached
      hereto.

     

    Section
      3.  Additional
      Lenders and Reallocation of Commitments and Loans.
      The
      Borrower has requested an increase in the Aggregate Maximum Credit Amounts
      pursuant to Section 2.06(c) of the Credit Agreement to an aggregate maximum
      amount of $700,000,000. In lieu of the requirements under Section
      2.06(c)(ii)(E), the Lenders have agreed among themselves, in consultation with
      the Borrower, to reallocate their respective Commitments. Further, ING Capital
      LLC, U.S. Bank National Association and The Frost National Bank shall each
      become party to the Credit Agreement as an Additional Lender. On the First
      Amendment Effective Date and after giving effect to such reallocation of the
      total Commitments, the Commitment of each Lender shall be as set forth on
Annex
      I-A
      of this
      First Amendment. Each Additional Lender shall be deemed to have acquired the
      Commitment allocated to it pursuant to the terms of the Additional Lender
      Certificate attached as Exhibit
      E-2
      to the
      Credit Agreement as if such Additional Lender had executed an Additional Lender
      Certificate with respect to such allocation. The Administrative Agent and the
      Borrower hereby consent to the reallocation of Commitments and each Additional
      Lender’s acquisition of an interest in the total Commitments. Pursuant to the
      terms hereof, the Borrower is increasing the Aggregate Maximum Credit Amounts
      to
      the maximum allowed under Section 2.06(c)(ii)(A); therefore, after giving effect
      to this First Amendment, Section 2.06(c) of the Credit Agreement shall have
      no
      further force or effect.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Section
      4.  Conditions
      Precedent.
      This
      First Amendment shall not become effective until the date on which each of
      the
      following conditions is satisfied (or waived in accordance with Section 12.02
      of
      the Credit Agreement):

     

    4.1  The
      Administrative Agent shall have received from each of the Lenders, the
      Additional Lenders, the Parent, the Borrower and the Guarantors, counterparts
      (in such number as may be requested by the Administrative Agent) of this First
      Amendment signed on behalf of such Person.

     

    4.2  The
      Administrative Agent and the Lenders shall have received all fees and other
      amounts due and payable on or prior to the date hereof.

     

    4.3  No
      Default shall have occurred and be continuing as of the date hereof, after
      giving effect to the terms of this First Amendment.

     

    The
      Administrative Agent is hereby authorized and directed to declare this First
      Amendment to be effective when it has received documents confirming or
      certifying, to the satisfaction of the Administrative Agent, compliance with
      the
      conditions set forth in this Section 4 or the waiver of such conditions as
      permitted hereby. Such declaration shall be final, conclusive and binding upon
      all parties to the Credit Agreement for all purposes.

     

    Section
      5.  Miscellaneous.

     

    5.1  Confirmation.
      The
      provisions of the Credit Agreement, as amended by this First Amendment, shall
      remain in full force and effect following the effectiveness of this First
      Amendment.

     

    5.2  Ratification
      and Affirmation; Representations and Warranties. Each Obligor hereby
(a)
      acknowledges the terms of this First Amendment; (b)
      ratifies
      and affirms its obligations under, and acknowledges, renews and extends its
      continued liability under, each Loan Document to which it is a party and agrees
      that each Loan Document to which it is a party remains in full force and effect,
      except as expressly amended hereby, notwithstanding the amendments contained
      herein and (c)
      represents and warrants to the Lenders that as of the date hereof, after giving
      effect to the terms of this First Amendment: (i) all of the representations
      and
      warranties contained in each Loan Document to which it is a party are true
      and
      correct, except to the extent any such representations and warranties are
      expressly limited to an earlier date, in which case, such representations and
      warranties shall continue to be true and correct as of such specified earlier
      date, (ii) no Default or Event of Default has occurred and is continuing and
      (iii) no event or events have occurred which individually or in the aggregate
      could reasonably be expected to have a Material Adverse Effect. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    5.3  Counterparts.
      This First Amendment may be executed by one or more of the parties hereto in
      any
      number of separate counterparts, and all of such counterparts taken together
      shall be deemed to constitute one and the same instrument. Delivery of this
      First Amendment by facsimile transmission shall be effective as delivery of
      a
      manually executed counterpart hereof.

     

    5.4  No
      Oral
      Agreement. This First Amendment, the Credit Agreement and the other Loan
      Documents executed in connection herewith and therewith represent the final
      agreement between the parties and may not be contradicted by evidence of prior,
      contemporaneous, or unwritten oral agreements of the parties. There are no
      subsequent oral agreements between the parties.

     

    5.5  GOVERNING
      LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
      WITH, THE LAWS OF THE STATE OF TEXAS.

     

    5.6  Payment
      of Expenses. In accordance with Section 12.03 of the Credit Agreement, the
      Borrower agrees to pay or reimburse the Administrative Agent for all of its
      reasonable out-of-pocket costs and reasonable expenses incurred in connection
      with this First Amendment, any other documents prepared in connection herewith
      and the transactions contemplated hereby, including, without limitation, the
      reasonable fees and disbursements of counsel to the Administrative
      Agent.

     

    5.7  Severability.
      Any provision of this First Amendment which is prohibited or unenforceable
      in
      any jurisdiction shall, 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 shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction.

     

    5.8  Successors
      and Assigns. This Agreement shall be binding upon and inure to the benefit
      of
      the parties hereto and their respective successors and assigns.

     

    [SIGNATURES
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        7

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
      duly
      executed as of the date first written above.

     

    
      	 	 	 
	BORROWER:  	EV
              PROPERTIES, L.P.
	 
 	 
By:  	 
EV
              Properties GP, LLC, its general partner 
	
            	By:  	/s/
              MICHAEL E.
              MERCER
	 	
              
Name:
              Michael E. Mercer
	 	Title:
              Senior
              Vice President and Chief Financial
              Officer

    

    
      	 	 	 
	PARENT
              AND
              GUARANTOR:  	EV
              ENERGY PARTNERS, L.P.
	 
 	 
By:  	 
EV
              Energy GP, L.P., its general partner
	 	By:  	EV Management, L.L.C., its general
              partner 
	
            	By:  	/s/
              MICHAEL E.
              MERCER
	 	
              
Name:
              Michael E. Mercer
	 	
              Title:
                Senior
                Vice President and Chief Financial
                Officer

            

      	 	 	 
	OTHER
              GUARANTORS:  	EV
              PROPERTIES
              GP, LLC
	 
 	
            	 
 
	
            	By:  	/s/
              MICHAEL E. MERCER
	 	
              
Name:
              Michael E. Mercer
	 	Title:
              Senior
              Vice President and Chief Financial
              Officer

      	 	 	 
	 	ENERVEST PRODUCTION PARTNERS,
              LTD.
	 
 	 
By:  	 
EVPP
              GP,
              LLC, its general partner 
	
            	By:  	/s/
              MICHAEL E. MERCER
	 	
              
Name:
              Michael E. Mercer
	 	Title:
              Senior
              Vice President and Chief Financial
              Officer

    

    
      	 	 	 
	 	CGAS
              PROPERTIES, L.P.
	 
 	 
By:	 
 EVCG
              GP, LLC, its general partner
	
            	By:  	/s/
              MICHAEL E.
              MERCER
	 	
              
Name:
              Michael E. Mercer
	 	Title:
              Senior
              Vice President and Chief Financial
              Officer

      	 	 	 
	 	ENERVEST-CARGAS,
              LTD.
	 
 	 
By:  	 
EVPP
              GP,
              LLC, its general partner 
	
            	By:  	/s/
              MICHAEL E.
              MERCER
	 	
              

              Name:
                Michael E. Mercer

            
	 	
              Title:
                Senior
                Vice President and Chief Financial
                Officer

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

       

    

    
      	 	 	 
	 	
              LOWER
                CARGAS
                OPERATING COMPANY 

              LLC

            
	 
 	 
By: 	 
Enervest-Cargas,
              Ltd., its sole member 
	 	By: 	Enervest-Cargas, Ltd., its sole member 
	
            	By:  	/s/
              MICHAEL E. MERCER
	 	
              

              Name:
                Michael E. Mercer

            
	 	Title:
              Senior
              Vice President and Chief Financial
              Officer

      	 	 	 
	 	
              EVPP
                GP, LLC

              EVCG
                GP, LLC

            
	 
 	 
 	 
 
	
            	By:  	/s/
              MICHAEL E.
              MERCER
	 	
              

              Name:
                Michael E. Mercer

            
	 	Title:
              Senior
              Vice President and Chief Financial
              Officer

      	 	 	 
	 	
              ENERVEST
                MONROE MARKETING, LTD.

              ENERVEST
                MONROE GATHERING, LTD.

            
	 
 	 
By: 	 
EVPP
              GP,
              LLC, its general partner
	
            	By:  	/s/
              MICHAEL E.
              MERCER
	 	
              

              Name:
                Michael E. Mercer

            
	 	Title:
              Senior
              Vice President and Chief Financial
              Officer

      	 	 	 
	ADMINISTRATIVE
              AGENT 	
              JPMORGAN
                CHASE BANK, N.A., as

              Administrative
                Agent and as a Lender

            
	 
 	 
 	 
	
            	By:  	/s/
              MICHAEL A.
              KAMAUF
	 	
              

              Name:
                Michael A. Kamauf

            
	 	
              Title:
                Vice President 

            

      	 	 	 
	LENDERS 	
              UNION
                BANK
                OF CALIFORNIA, N.A.,

              as a Lender

            
	 
 	 
 	 
 
	
            	By:  	/s/
              DANIEL A.
              DAVIS
	 	
              
Name:
              Daniel A. Davis 
	 	
              Title:
                Vice President

            

      	 	 	 
	 	
              WACHOVIA
                BANK, NATIONAL 

              ASSOCIATION,
                as a Lender

            
	 
 	 
 	 
 
	
            	By:  	/s/
              PAUL
              PRITCHETT
	 	
              
Name: Paul
              Pritchett
	 	Title: Vice
              President

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	 	 	 
	 	COMPASS
              BANK,
              as a Lender
	 
 	 
 	 
 
	
            	By:  	/s/
              DOROTHY MARCHAND
	 	
              
Name: Dorothy
              Marchand
	 	Title: Senior
              Vice President

    

    
      	 	 	 
	 	BNP
              PARIBAS,
              as a Lender
	 
 	 
 	 
 
	
            	By:  	/s/
              POLLY
              SCHOTT
	 	
              
Name: Polly
              Schott
	 	Title: Director

    

    
      	 	 	 
	
            	By:  	/s/
              BETSY
              JOCHER
	 	
              
Name: Betsy
              Jocher
	 	
              Title: Director

            

    

    
      	 	 	 
	 	COMERICA
              BANK,
              as a Lender
	 
 	 
 	 
 
	
            	By:  	/s/
              MATTHEW
              TURNER
	 	
              

              Name: Matthew
                Turner

            
	 	Title: Corporate
              Banking Officer

    

    
      	 	 	 
	 	WELLS
              FARGO BANK, N.A.,
              as
              a Lender
	 
 	 
 	 
 
	
            	By:  	/s/
              SCOTT
              HODGES
	 	
              
Name: Scott
              Hodges
	 	
              Title: Vice
                President

            

      	
            	 	 
	 	
              CITIBANK,
                N.A.,
                as a Lender

            
	 
 	 
 	 
 
	
            	By:  	/s/
              THOMAS
              BENAVIDES
	 	
              
Name: Thomas
              Benavides
	 	Title: Senior
              Vice President

      	
            	 	 
	 	THE
              BANK
              OF NOVA SCOTIA,
              as
              a Lender
	 
 	 
 	 
 
	
            	By:  	/s/
              ANDY
              OSTROV
	 	
              
Name: Andy
              Ostrov
	 	Title: Director

      	
            	 	 
	 	ROYAL
              BANK
              OF CANADA,
              as
              a Lender
	 
 	 
 	 
 
	
            	By:  	/s/
              DON J.
              MCKINNERNEY
	 	
              

              Name: Don
                J. McKinnerney

            
	 	Title: Authorized
              Signatory

      	
            	 	 
	 	
              AMEGY
                BANK NATIONAL

              ASSOCIATION,
                as a Lender

            
	 
 	 
 	 
 
	
            	By:  	/s/
              W. BRYAN
              CHAPMAN
	 	
              

              Name: W.
                Bryan Chapman

            
	 	Title: Senior
              Vice President

    

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
            	 	 
	 	
              CREDIT
                SUISSE, CAYMAN ISLANDS

              BRANCH,
                as a Lender

            
	 
 	 
 	 
 
	
            	By:  	/s/
              VANESSA
              GOMEZ
	 	
              
Name: Vanessa
              Gomez
	 	
              Title: Director

            

      	
            	 	 
	
            	By:  	/s/
              NUPUR
              KUMAR
	 	
              
Name:
              Nupur Kumar
	 	Title:
               Associate

      	
            	 	 
	ADDITIONAL
              LENDERS:  	 ING
              CAPITAL LLC,
              as a Lender
	 
 	 
 	 
 
	
            	By:  	/s/
              CHARLES
              HALL
	 	
              

              Name:
                Charles Hall

            
	 	Title: Managing
              Director

      	
            	 	 
	 	
              U.S.
                BANK NATIONAL

              ASSOCIATION,
                as a Lender

            
	 
 	 
 	 
 
	
            	By:  	/s/
              HEATHER H.
              HAN
	 	
              
Name: Heather
              H. Han
	 	Title: Vice
              President

      	
            	 	 
	 	
              THE FROST
                NATIONAL BANK,
                as a

              Lender

            
	 
 	 
 	 
 
	
            	By:  	/s/
              ANDREW A MERRYMAN
	 	
              
Name: Andrew
              A. Merryman
	 	Title: Senior
              Vice President

    

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    ATTACHMENT
      I

     

    
      	
              Acquisition

            	
              Borrowing
                Base Increase Amount

            
	
              Protégé
                Acquistion

               

              and

               

              Trek
                Acquisition

               

            	
               

               

              30,000,000
                (Total Borrowing Base of $445,000,000)

            
	
               

              San
                Juan Acquisition

               

            	
               

              $80,000,000
                (Total Borrowing Base of
                $525,000,000)EXHIBIT
      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 (the “Units”)
      at a
      per Unit price of $1.25 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 the Common Stock at an exercise price equal to $1.75, subject
      to
      adjustment, expiring five years from the date of issuance (the shares of the
      Common Stock issuable under the Warrants are referred to as the “Warrant
      Shares”).
      The
      form
      of the Warrants is attached hereto as Exhibit
      A.
      The
      Company is offering 1,000,000 Units (the “Offering”).
      

     

    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
      Offering pursuant to an exemption from registration under Regulation S
      promulgated under the
      Act
      (“Regulation
      S”).
      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 the Investor and after it has been determined
      that
      all conditions in this Subscription Agreement have been met. At the Closing,
      funds equal to the Subscription Amount of the Investor shall be delivered to
      the
      Company and the Company shall promptly thereafter deliver to the 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
      and the Company’s due execution of this Subscription Agreement, the Investor
      hereby offers to subscribe for Units as set forth in the Investor Signature
      Page
      attached hereto and contemporaneously herewith makes payment for the purchase
      of
      the Units by wire transfer or bank check.

     

    2. Conditions.

     

    The
      Offer
      is made subject to the following conditions: (i) that the Company, acting in
      good faith, shall have the right to accept or reject the 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 this offering. 

     

    
      
         

      

      
        -
          1
          -

        
          

        

      

      
         

      

    

    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 the Investor. 

     

    3. Representations,
      Warranties and Covenants of the Investor.

     

    The
      Investor, in order to induce the Company to accept this Offer, hereby warrants,
      represents and covenants 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 the Investor of the Units
      hereunder has been duly authorized by all necessary action on the part of the
      Investor. This Subscription Agreement has been duly executed by the Investor,
      and when delivered by the Investor in accordance with the terms hereof, will
      constitute the valid and legally binding obligation of the 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.
      The
      Investor understands that the Units,
      Common Shares, Warrants and Warrant Shares (collectively, the “Securities”),
      are
      each
      “restricted securities” and have not been registered under the Securities Act or
      qualified under any applicable state securities law by reason of their issuance
      in a transaction that does not require registration or qualification (based
      in
      part on the accuracy of the representations and warranties of the Investor
      contained herein), and that such securities must be held indefinitely unless
      a
      subsequent disposition is registered under the Securities Act or any applicable
      state securities laws or is exempt from such registration. The Investor hereby
      agrees that the Company may insert the following or similar legend on the face
      of the certificates evidencing the Securities
      if
      required in compliance with federal and state securities laws:

     

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

     

    
      
         

      

      
        -
          2
          -

        
          

        

      

      
         

      

    

    The
      Investor understands and acknowledges that the U.S. Securities and Exchange
      Commission (the “Commission”)
      currently takes the position that coverage of short sales of shares of the
      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, without limiting the restrictions
      set forth in Section (c) hereof 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) Regulation
      S.
      This
      Agreement is made by the Company with the Investor in reliance upon the
      Investor's representations, warranties and covenants made in this Agreement.
      The
      Investor is a Non-U.S. Person (as defined herein). As used herein, the term
      “United
      States”
means
      and includes the United States of America, its territories and possessions,
      any
      State of the United States, and the District of Columbia, and the term
“Non-U.S.
      Person”
means
      any person who is not a U.S. Person, within the meaning of Regulation S, the
      definition of which is set forth on Schedule
      A
      attached
      hereto, or is deemed not to be a U.S. Person pursuant to Rule 902(k)(2) of
      Regulation S, as set forth on Schedule
      B
      attached
      hereto.

     

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

     

    
      	 	
              (1)

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

            

    

     

    
      	 	
              (2)

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

            

    

     

    
      	 	
              (3)

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

            

    

     

    
      	 	
              (4)

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

            

    

     

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

     

    
      	 	
              (1)

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

            

    

     

    
      
         

      

      
        -
          3
          -

        
          

        

      

      
         

      

    

     

    
      	 	
              (2)

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

            

    

     

    
      	 	
              (3)

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

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
        -
          4
          -

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
        -
          5
          -

        
          

        

      

      
         

      

    

    (k) Access
      to Information.
      The
      Investor has reviewed and understands the SEC Reports (as that term is defined
      in Section 4(g)), as well as supplemental information with respect to the
      Company's warrants provided pursuant to the e-mail sent on August 26, 2008
      at
      11:51 a.m. (New York Time) from Robin Smith, on behalf of the Company, to,
      among
      others, Eric Wei, on behalf of the Investor (the "Supplemental
      E-mail"),
      and
      neither the Company nor any of its representatives have made any other
      representations or warranties to the Investor with respect to the Company except
      as contained herein,
      in the
      SEC Reports or in the Supplemental E-mail. Specifically, the Investor
      acknowledges that the SEC Reports disclose that the Company is actively
      exploring acquisition opportunities and the Investor acknowledges that there
      can
      be no assurance that any such acquisition will be consummated. 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 Securities. 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 Securities 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.

     

     

    4. Representations
      and Warranties of the Company.

     

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

     

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

     

    
      
         

      

      
        -
          6
          -

        
          

        

      

      
         

      

    

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

     

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

     

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

     

    
      
         

      

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
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    (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 not engaged, nor is it aware that any party has engaged, and the
      Company will not engage or cause any third party to engage, in any directed
      selling efforts in the United States with respect to the
      Securities.

     

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

     

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

     

    (s)Listing
      and Maintenance Requirements.
      The
      Company’s Common Stock currently is quoted on the 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 one hundred and eighty (180) 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 Subscription
      Agreement effective as a valid secondary offering under Rule 415 promulgated
      pursuant to the Securities Act due to the number of securities included in
      such
      Registration Statement relative to the outstanding number of shares of the
      Common Stock, then, without any liability under Section 5(f) or any further
      obligation to register such excess Registrable Securities, the Company shall
      be
      permitted to reduce the number of Registrable Securities included in such
      Registration Statement to an amount such that the number of securities included
      in such Registration Statement does not exceed an amount that the Commission
      allows for the offering thereunder to qualify as a valid secondary offering
      under Rule 415. In this event, the Investor will have priority with respect
      to the inclusion of the Common Shares and Warrant Shares vis-à-vis any
      shareholder investing in the Company after the date of this Subscription
      Agreement The Company shall not be liable for liquidated damages pursuant to
      Section 5(f) under this Subscription 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. We are currently unaware of circumstances under which the Commission
      may refuse to declare a Registration Statement filed pursuant to this
      Subscription 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 the Common Stock. 

     

    
      
         

      

      
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    “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”).

     

    (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,
      the
      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.

     

    
      
         

      

      
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          10
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    (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 the Investor one and one-half percent (1.5%) of the net
      proceeds received from such Investor in the Offering for no additional cost.
      Additionally, for every thirty (30) days (or part hereof) 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 the Investor 1.5%
      (or the pro rata share thereof) of the net proceeds received from the Investor
      in the Offering for no additional cost. All additional amounts that may be
      issued as provided herein shall not exceed 8% of the net proceeds received
      in
      the Offering. Such amounts shall be as partial compensation for such failure
      and
      not as a penalty.
      The
      provisions of this paragraph 5(f) shall not apply in the event the Company
      does
      not file as set forth above the Registration Statement because the Company
      does
      not have available audited financial statements required by the SEC of a company
      with which the Company has 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 the Investor to sell the
      Registrable Securities under Rule 144 in the event the Registration Statement
      is
      unavailable. The Company further covenants that, in the event the Registration
      Statement is unavailable, it will take such further action as any holder of
      Registrable Securities may reasonably request, all to the extent required from
      time to time to enable such Person to sell such Registrable Securities without
      registration under the Securities Act within the limitation of the exemptions
      provided by Rule 144. 

     

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

     

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

     

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

     

    
      
         

      

      
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    (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 the 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 the 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 the Investor includes any Common Shares or Warrant Shares in a
      registration statement pursuant to the terms hereof, the Company will indemnify
      and hold harmless the Investor, its directors and officers, and each Person,
      if
      any, who controls the Investor within the meaning of the Securities Act, from
      and against, and will reimburse the 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 the Investor or any such
      controlling Person in writing specifically for use in the preparation
      thereof.

     

    (j) To
      the
      extent the Investor includes any Common Shares or Warrant Shares in a
      registration statement pursuant to the terms hereof, the 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 the Investor shall be limited to
      the
      amount of proceeds received by the Investor from the sale of such shares of
      the
      Common Stock.

     

    
      
         

      

      
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    (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. No
      description of the Investor or reference to the Investor, other than the
      identity of the Investor, may be made in any press release or filing without
      the
      prior written approval of the Investor.

     

    (e)
       Confidentiality.
      The
      Investor agrees that he, she or it will keep confidential and will not disclose,
      divulge or use for any purpose any confidential, proprietary or secret
      information which the
      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 Subscription Agreement or otherwise (but not including the
      SEC
      Reports) (“Confidential
      Information”),
      unless such Confidential Information is known, or until such Confidential
      Information becomes known, to the public (other than as a result of a breach
      of
      this section by such Investor); provided,
      however,
      that
      the 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.

     

    
      
         

      

      
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    (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 Subscription 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 Subscription
      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. The Investor may assign
      any or all of its rights under this Subscription Agreement to any Person to
      whom
      the 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.

     

    (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 Delaware, 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 State of Delaware. Each party hereby
      irrevocably submits to the exclusive jurisdiction of the state and federal
      courts sitting in the City of Wilmington, Delaware 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.

     

    
      
         

      

      
        -
          14
          -

        
          

        

      

      
         

      

    

    (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 Subscription 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.

    

     

     

    
      
         

      

      
        -
          15
          -

        
          

        

      

      
         

      

    

    

    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:

            
	
                
                

            	 	
              Trust

            
	
              Name
                of Joint Investor (if any) (Print)

            	 	
              Estate

            
	 	 	
              Uniform
                Gifts to Minors Act

            
	
                
                

            	 	
              State
                of ________________

            
	
              Signature
                of Investor

            	 	
              Attorney-in-fact

            
	 	 	
              Corporation

            
	
               
                

            	 	
              Other

            
	
              Signature
                of Joint Investor (if any)

            	 	 
	 	 	
              If
                Joint Ownership, Check one:

            
	
                
                

            	 	
              Joint
                Tenants with Right of 

            
	
              Capacity
                of Signatory (if applicable)

            	 	
              Survivorship

            
	 	 	
              Tenants
                in Common

            
	
                
                

            	 	
              Tenants
                by the Entirety

            
	
              Social
                Security or Taxpayer Identification Number

            	 	
              Community
                Property

            
	 	 	 
	
              Investor
                Address:

            	 	
              Backup
                Withholding Statement:

            
	 	 	
              Please
                check this box only if the 

            
	
                
                

            	 	
              investor
                is subject to backup

            
	
              Street
                Address

            	 	
              withholding
                

            
	
               

            	 	 
	
                
                

            	 	
              Foreign
                Person:

            
	
              City         State
                Zip         Code

            	 	
              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

            	 	 

    

    
      
         

      

      
        -
          16
          -

        
          

        

      

      
         

      

    

     

    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 

            

    

    

    

    

    
      
         

      

      
        -
          17
          -

        
          

        

      

      
         

      

    

    Schedule
      A

    

    U.S.
      Person

    

    A
      "U.S.
      person" means:

     

    
      	
              i.

            	
               

            	
              Any
                natural person resident in the United
                States;

            

    

     

    
      	
              ii.

            	
               

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

            

    

     

    
      	
              iii.

            	
               

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

            

    

     

    
      	
              iv.

            	
               

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

            

    

     

    
      	
              v.

            	
               

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

            

    

     

    
      	
              vi.

            	
               

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

            

    

     

    
      	
              vii.

            	
               

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

            

    

     

    
      	
              viii.

            	 	
              Any
                partnership or corporation if:

            

    

     

    
      	 	
              A.

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

            

    

     

    
      	 	
              B.

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

            

    

     

    
      
         

      

      
        -
          18
          -

        
          

        

      

      
         

      

    

    Schedule
      B

    

    Non-U.S.
      Person

    

     

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

     

     

    
      	 	
              i.

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

            

    

     

    
      	 	
              ii.

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

            

    

     

    
      	 	
              A.

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

            

    

     

    
      	 	
              B.

            	
              The
                estate is governed by foreign law;

            

    

     

    
      	 	
              iii.

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

            

    

     

    
      	 	
              iv.

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

            

    

     

    
      	 	
              v.

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

            

    

     

    
      	 	
              A.

            	
              The
                agency or branch operates for valid business reasons;
                and

            

    

     

    
      	 	
              B.

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

            

    

     

    
      	 	
              vi.

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

            

    

    

     

    
      
         

      

      
        -
          19
          -

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