Document:

Execution
Copy

    

    COMMON
STOCK PURCHASE AGREEMENT

     

    Dated
as of May 19, 2010

     

    by
and between

     

    NEOSTEM,
INC.

     

    and

     

    COMMERCE
COURT SMALL CAP VALUE FUND, LTD.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    TABLE OF
CONTENTS

    

    
      
        
          
            	 
      	 
      	
                    Page

                  
	 
      	 
      	 
      
	
                    ARTICLE
      I PURCHASE AND SALE OF COMMON STOCK

                  	 
      	
                    1

                  
	
                    Section
      1.1

                  	 
      	
                    Purchase
      and Sale of Stock

                  	 
      	
                    2

                  
	
                    Section
      1.2

                  	 
      	
                    Effective
      Date; Settlement Dates

                  	 
      	
                    2

                  
	
                    Section
      1.3

                  	 
      	
                    Reservation
      of Common Stock

                  	 
      	
                    2

                  
	
                    Section
      1.4

                  	 
      	
                    Current
      Report; Prospectus Supplement

                  	 
      	
                    2

                  
	 
      	 
      	 
      
	
                    ARTICLE
      II FIXED REQUEST TERMS; OPTIONAL AMOUNT

                  	 
      	
                    3

                  
	
                    Section
      2.1

                  	 
      	
                    Fixed
      Request Notice

                  	 
      	
                    3

                  
	
                    Section
      2.2

                  	 
      	
                    Fixed
      Requests

                  	 
      	
                    3

                  
	
                    Section
      2.3

                  	 
      	
                    Share
      Calculation

                  	 
      	
                    4

                  
	
                    Section
      2.4

                  	 
      	
                    Limitation
      of Fixed Requests

                  	 
      	
                    5

                  
	
                    Section
      2.5

                  	 
      	
                    Reduction
      of Commitment

                  	 
      	
                    5

                  
	
                    Section
      2.6

                  	 
      	
                    Below
      Threshold Price

                  	 
      	
                    5

                  
	
                    Section
      2.7

                  	 
      	
                    Settlement

                  	 
      	
                    5

                  
	
                    Section
      2.8

                  	 
      	
                    Reduction
      of Pricing Period

                  	 
      	
                    5

                  
	
                    Section
      2.9

                  	 
      	
                    Optional
      Amount

                  	 
      	
                    6

                  
	
                    Section
      2.10

                  	 
      	
                    Calculation
      of Optional Amount Shares

                  	 
      	
                    7

                  
	
                    Section
      2.11

                  	 
      	
                    Exercise
      of Optional Amount

                  	 
      	
                    7

                  
	
                    Section 2.12

                  	 
      	
                    Aggregate
      Limit

                  	 
      	
                    7

                  
	
                    Section
      2.13

                  	 
      	
                    Commitment
      Shares

                  	 
      	
                    8

                  
	 
      	 
      	 
      
	
                    ARTICLE
      III REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

                  	 
      	
                    9

                  
	
                    Section
      3.1

                  	 
      	
                    Organization
      and Standing of the Investor

                  	 
      	
                    9

                  
	
                    Section
      3.2

                  	 
      	
                    Authorization
      and Power

                  	 
      	
                    9

                  
	
                    Section
      3.3

                  	 
      	
                    No
      Conflicts

                  	 
      	
                    9

                  
	
                    Section
      3.4

                  	 
      	
                    Information

                  	 
      	
                    10

                  
	 
      	 
      	 
      
	
                    ARTICLE
      IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY

                  	 
      	
                    10

                  
	
                    Section
      4.1

                  	 
      	
                    Organization,
      Good Standing and Power

                  	 
      	
                    10

                  
	
                    Section
      4.2

                  	 
      	
                    Authorization,
      Enforcement

                  	 
      	
                    10

                  
	
                    Section
      4.3

                  	 
      	
                    Capitalization

                  	 
      	
                    11

                  
	
                    Section
      4.4

                  	 
      	
                    Issuance
      of Securities

                  	 
      	
                    11

                  
	
                    Section
      4.5

                  	 
      	
                    No
      Conflicts

                  	 
      	
                    11

                  
	
                    Section
      4.6

                  	 
      	
                    Commission
      Documents, Financial Statements

                  	 
      	
                    12

                  
	
                    Section
      4.7

                  	 
      	
                    Subsidiaries

                  	 
      	
                    13

                  
	
                    Section
      4.8

                  	 
      	
                    No
      Material Adverse Effect

                  	 
      	
                    13

                  
	
                    Section
      4.9

                  	 
      	
                    Indebtedness

                  	 
      	
                    14

                  
	
                    Section
      4.10

                  	 
      	
                    Title
      To Assets

                  	 
      	
                    14

                  
	
                    Section
      4.11

                  	 
      	
                    Actions
      Pending

                  	 
      	
                    14

                  
	
                    Section
      4.12

                  	 
      	
                    Compliance
      With Law

                  	 
      	
                    14

                  
	
                    Section
      4.13

                  	 
      	
                    Certain
      Fees

                  	 
      	
                    15

                  
	
                    Section
      4.14

                  	 
      	
                    Operation
      of Business

                  	 
      	
                    15

                  
	
                    Section
      4.15

                  	 
      	
                    Environmental
      Compliance

                  	 
      	
                    17

                  

          

        

      

    

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                	
                        Section
      4.16

                      	 
      	
                        Material
      Agreements

                      	 
      	
                        17

                      
	
                        Section
      4.17

                      	 
      	
                        Transactions
      With Affiliates

                      	 
      	
                        17

                      
	
                        Section
      4.18

                      	 
      	
                        Securities
      Act

                      	 
      	
                        18

                      
	
                        Section
      4.19

                      	 
      	
                        Employees

                      	 
      	
                        19

                      
	
                        Section
      4.20

                      	 
      	
                        Use
      of Proceeds

                      	 
      	
                        20

                      
	
                        Section
      4.21

                      	 
      	
                        Investment
      Company Act Status

                      	 
      	
                        20

                      
	
                        Section
      4.22

                      	 
      	
                        ERISA

                      	 
      	
                        20

                      
	
                        Section
      4.23

                      	 
      	
                        Taxes

                      	 
      	
                        20

                      
	
                        Section
      4.24

                      	 
      	
                        Insurance

                      	 
      	
                        20

                      
	
                        Section
      4.25

                      	 
      	
                        Acknowledgement
      Regarding Investor’s Acquisition of Securities

                      	 
      	
                        21

                      
	 
      	 
      	
                         
      

                      
	
                        ARTICLE
      V COVENANTS

                      	 
      	
                        21

                      
	
                        Section
      5.1

                      	 
      	
                        Securities
      Compliance; FINRA Filing

                      	 
      	
                        21

                      
	
                        Section
      5.2

                      	 
      	
                        Registration
      and Listing

                      	 
      	
                        22

                      
	
                        Section
      5.3

                      	 
      	
                        Compliance
      with Laws.

                      	 
      	
                        22

                      
	
                        Section
      5.4

                      	 
      	
                        Keeping
      of Records and Books of Account; Foreign Corrupt Practices
      Act.

                      	 
      	
                        23

                      
	
                        Section
      5.5

                      	 
      	
                        Limitations
      on Holdings and Issuances

                      	 
      	
                        24

                      
	
                        Section
      5.6

                      	 
      	
                        Other
      Agreements and Other Financings.

                      	 
      	
                        24

                      
	
                        Section
      5.7

                      	 
      	
                        Stop
      Orders

                      	 
      	
                        25

                      
	
                        Section
      5.8

                      	 
      	
                        Amendments
      to the Registration Statement; Prospectus Supplements; Free Writing
      Prospectuses.

                      	 
      	
                        25

                      
	
                        Section
      5.9

                      	 
      	
                        Prospectus
      Delivery

                      	 
      	
                        26

                      
	
                        Section
      5.10

                      	 
      	
                        Selling
      Restrictions.

                      	 
      	
                        27

                      
	
                        Section
      5.11

                      	 
      	
                        Effective
      Registration Statement

                      	 
      	
                        27

                      
	
                        Section
      5.12

                      	 
      	
                        Non-Public
      Information

                      	 
      	
                        27

                      
	
                        Section
      5.13

                      	 
      	
                        Broker/Dealer

                      	 
      	
                        27

                      
	
                        Section
      5.14

                      	 
      	
                        Disclosure
      Schedule

                      	 
      	
                        28

                      
	 
      	 
      	 
      
	
                        ARTICLE
      VI OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE
      OF THE SHARES

                      	 
      	
                        28

                      
	
                        Section
      6.1

                      	 
      	
                        Issuance
      of Commitment Shares; Opinion of Counsel; Certificate

                      	 
      	
                        28

                      
	
                        Section
      6.2

                      	 
      	
                        Conditions
      Precedent to the Obligation of the Company

                      	 
      	
                        28

                      
	
                        Section
      6.3

                      	 
      	
                        Conditions
      Precedent to the Obligation of the Investor

                      	 
      	
                        30

                      
	 
      	 
      	 
      
	
                        ARTICLE
      VII TERMINATION

                      	 
      	
                        33

                      
	
                        Section
      7.1

                      	 
      	
                        Term,
      Termination by Mutual Consent

                      	 
      	
                        33

                      
	
                        Section
      7.2

                      	 
      	
                        Other
      Termination

                      	 
      	
                        34

                      
	
                        Section
      7.3

                      	 
      	
                        Effect
      of Termination

                      	 
      	
                        34

                      
	 	 	 
	
                        ARTICLE
      VIII INDEMNIFICATION

                      	 
      	
                        35

                      
	
                        Section
      8.1

                      	 
      	
                        General
      Indemnity.

                      	 
      	
                        35

                      
	
                        Section
      8.2

                      	 
      	
                        Indemnification
      Procedures

                      	 
      	
                        37

                      
	 
      	 
      	 
      
	
                        ARTICLE
      IX MISCELLANEOUS

                      	 
      	
                        38

                      
	
                        Section
      9.1

                      	 
      	
                        Fees
      and Expenses.

                      	 
      	
                        38

                      
	
                        Section
      9.2

                      	 
      	
                        Specific
      Enforcement, Consent to Jurisdiction, Waiver of Jury Trial

                      	 
      	
                        39

                      
	
                        Section 9.3

                      	 
      	
                        Entire
      Agreement; Amendment

                      	 
      	
                        39

                      

              

            

          

        

      

    

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    

    
      
        
          
            	
                    Section
      9.4

                  	 
      	
                    Notices

                  	 
      	
                    40

                  
	
                    Section
      9.5

                  	 
      	
                    Waivers

                  	 
      	
                    41

                  
	
                    Section
      9.6

                  	 
      	
                    Headings

                  	 
      	
                    41

                  
	
                    Section
      9.7

                  	 
      	
                    Successors
      and Assigns

                  	 
      	
                    41

                  
	
                    Section
      9.8

                  	 
      	
                    Governing
      Law

                  	 
      	
                    41

                  
	
                    Section
      9.9

                  	 
      	
                    Survival

                  	 
      	
                    41

                  
	
                    Section
      9.10

                  	 
      	
                    Counterparts

                  	 
      	
                    41

                  
	
                    Section
      9.11

                  	 
      	
                    Publicity

                  	 
      	
                    42

                  
	
                    Section
      9.12

                  	 
      	
                    Severability

                  	 
      	
                    42

                  
	
                    Section 9.13

                  	
                      

                  	
                    Further
      Assurances

                  	
                      

                  	
                    42

                  

          

        

      

    

    

    
      	
              Annex
      A.

            	
              Definitions

            

    

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

    COMMON
STOCK PURCHASE AGREEMENT

     

    This
COMMON STOCK PURCHASE
AGREEMENT, made and entered into on this 19th day of
May 2010 (this “Agreement”), by and
between Commerce Court Small Cap Value Fund, Ltd., a business company
incorporated under the laws of the British Virgin Islands (the “Investor”), and
NeoStem, Inc., a corporation organized and existing under the laws of the State
of Delaware (the “Company”).
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in Annex
A hereto.

     

    RECITALS

     

    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
may issue and sell to the Investor and the Investor shall thereupon purchase
from the Company up to $20,000,000 of newly issued shares of the Company’s
common stock, $0.001 par value (“Common Stock”),
subject, in all cases, to the Trading Market Limit;

     

    WHEREAS, in partial
consideration for the Investor’s execution and delivery of this Agreement, the
Company is concurrently causing its transfer agent to issue to the Investor the
Commitment Shares in accordance with the terms and subject to the conditions of
this Agreement; and

     

    WHEREAS, the issuance of the
Commitment Shares and the offer and sale of the Shares hereunder have been
registered by the Company in the Registration Statement, which has been declared
effective by order of the Commission under the Securities Act;

     

    NOW, THEREFORE, the parties
hereto, intending to be legally bound, hereby agree as follows:

     

    ARTICLE
I

    PURCHASE
AND SALE OF COMMON STOCK

     

    Section
1.1        Purchase and Sale of
Stock.  Upon
the terms and subject to the conditions of this Agreement, during the Investment
Period the Company in its discretion may issue and sell to the Investor up to
$20,000,000 (the “Total Commitment”) of
duly authorized, validly issued, fully paid and non-assessable shares of Common
Stock (subject in all cases to the Trading Market Limit, the “Aggregate Limit”), by
(i) the delivery to the Investor of not more than 24 separate Fixed Request
Notices (unless the Investor and the Company mutually agree that a different
number of Fixed Request Notices may be delivered) as provided in Article II
hereof and (ii) the exercise by the Investor of Optional Amounts, which the
Company may in its discretion grant to the Investor and which may be exercised
by the Investor, in whole or in part, as provided in Article II
hereof.  The aggregate of all Fixed Request Amounts and Optional
Amount Dollar Amounts shall not exceed the Aggregate Limit.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Section
1.2        Effective Date; Settlement
Dates. This
Agreement shall become effective and binding upon the payment of the fees
required to be paid on or prior to the Effective Date pursuant to Section 9.1,
the delivery of irrevocable instructions to issue the Commitment Shares to the
Investor or its designees as provided in Section 2.13 and 6.1, the delivery of
counterpart signature pages of this Agreement executed by each of the parties
hereto, and the delivery of all other documents, instruments and writings
required to be delivered on the Effective Date, in each case as provided in
Section 6.1 hereof, to the offices of Greenberg Traurig, LLP, 200 Park Avenue,
New York, New York 10166, at 5:00 p.m., New York time, on the Effective Date. In
consideration of and in express reliance upon the representations, warranties
and covenants, and otherwise upon the terms and subject to the conditions, of
this Agreement, from and after the Effective Date and during the Investment
Period (i) the Company shall issue and sell to the Investor, and the Investor
agrees to purchase from the Company, the Shares in respect of each Fixed Request
and (ii) the Investor may in its discretion elect to purchase Shares in respect
of each Optional Amount.  The issuance and sale of Shares to the
Investor pursuant to any Fixed Request or Optional Amount shall occur on the
applicable Settlement Date in accordance with Sections 2.7 and 2.9 (or on such
Trading Day in accordance with Section 2.8, as applicable), provided in each case
that all of the conditions precedent thereto set forth in Article VI theretofore
shall have been fulfilled or (to the extent permitted by applicable law)
waived.

     

    Section
1.3        Reservation of Common
Stock.  The
Company has or will have duly authorized and reserved for issuance, and
covenants to continue to so reserve once reserved for issuance, free of all
preemptive and other similar rights, at all times during the Investment Period,
the requisite aggregate number of authorized but unissued shares of its Common
Stock to timely effect the issuance, sale and delivery in full to the Investor
of all Shares to be issued in respect of all Fixed Requests and Optional Amounts
under this Agreement, in any case prior to the issuance to the Investor of such
Shares.

     

    Section
1.4        Current Report; Prospectus
Supplement.  As
soon as practicable, but in any event not later than 5:30 p.m. (New York time)
on the first Trading Day immediately following the Effective Date, the Company
shall file with the Commission a report on Form 8-K relating to the transactions
contemplated by, and describing the material terms and conditions of, this
Agreement and disclosing all information relating to the transactions
contemplated hereby required to be disclosed in the Registration Statement and
the Base Prospectus (but which permissibly has been omitted therefrom in
accordance with the Securities Act), including, without limitation, information
required to be disclosed in the section captioned “Plan of Distribution” in the
Base Prospectus (the “Current
Report”).  The Current Report shall include a copy of this
Agreement as an exhibit. To the extent applicable, the Current Report shall be
incorporated by reference in the Registration Statement in accordance with the
provisions of Rule 430B under the Securities Act. The Company heretofore has
provided the Investor a reasonable opportunity to comment on a draft of such
Current Report and has given due consideration to such comments.  The
Company shall file a final Base Prospectus pursuant to Rule 424(b) under the
Securities Act on or prior to the second Trading Day immediately following the
Effective Date.  Pursuant to Section 5.9 and subject to the provisions
of Section 5.8, on the first Trading Day immediately following the last Trading
Day of each Pricing Period, the Company shall file with the Commission a
Prospectus Supplement pursuant to Rule 424(b) under the Securities Act
disclosing the number of Shares to be issued and sold to the Investor
thereunder, the total purchase price therefor and the net proceeds to be
received by the Company therefrom and, to the extent required by the Securities
Act, identifying the Current Report.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    ARTICLE
II

    FIXED
REQUEST TERMS; OPTIONAL AMOUNT

     

    Subject
to the satisfaction of the conditions set forth in this Agreement, the parties
agree (unless otherwise mutually agreed upon by the parties in writing) as
follows:

     

    Section
2.1        Fixed Request
Notice.  The
Company may, from time to time in its sole discretion, no later than 9:30 a.m.
(New York time) on the first Trading Day of the Pricing Period, provide to the
Investor a Fixed Request notice, substantially in the form attached hereto as
Exhibit A (the
“Fixed Request
Notice”), which Fixed Request Notice shall become effective at 9:30 a.m.
(New York time) on the first Trading Day of the Pricing Period specified in the
Fixed Request Notice; provided, however, that if the
Company delivers the Fixed Request Notice to the Investor later than 9:30 a.m.
(New York time) on a Trading Day, then the first Trading Day of such Pricing
Period shall not be the Trading Day on which the Investor received such Fixed
Request Notice, but rather shall be the next Trading Day (unless a subsequent
Trading Day is therein specified). The Fixed Request Notice shall specify the
Fixed Amount Requested, establish the Threshold Price for such Fixed Request,
designate the first and last Trading Day of the Pricing Period and specify the
Optional Amount, if any, that the Company elects to grant to the Investor during
the Pricing Period and the applicable Threshold Price for such Optional Amount
(the “Optional Amount
Threshold Price”). The Threshold Price and the Optional Amount Threshold
Price established by the Company in a Fixed Request Notice may be the same or
different, in the Company’s sole discretion. Upon the terms and subject to the
conditions of this Agreement, the Investor is obligated to accept each Fixed
Request Notice prepared and delivered in accordance with the provisions of this
Agreement.

     

    Section
2.2        Fixed
Requests.  From
time to time during the Investment Period, the Company may in its sole
discretion deliver to the Investor a Fixed Request Notice for a specified Fixed
Amount Requested, and the applicable discount price (the “Discount Price”)
shall be determined, in accordance with the price and share amount parameters as
set forth below or such other parameters mutually agreed upon by the Investor
and the Company, and upon the terms and subject to the conditions of this
Agreement, the Investor shall purchase from the Company the Shares subject to
such Fixed Request Notice at the Discount Price; provided, however, that (i) if
an ex-dividend date is established by the Trading Market in respect of the
Common Stock on or between the first Trading Day of the applicable Pricing
Period and the applicable Settlement Date, the Discount Price shall be reduced
by the per share dividend amount and (ii) the Company may not deliver any single
Fixed Request Notice for a Fixed Amount Requested in excess of the lesser of (a)
the amount in the applicable Fixed Amount Requested column below and (b) 2.5% of
the Market Capitalization:

     

    
      
        	
                Threshold Price

              	 
      	
                Fixed Amount Requested

              	 
      	
                Discount Price

              
	 
      	 
      	 
      	 
      	 
      
	
                Equal
      to or greater than $8.00

              	 
      	
                Not
      to exceed $4,500,000

              	 
      	
                95.00%
      of the VWAP

              
	 
      	 
      	 
      	 
      	 
      
	
                Equal
      to or greater than $6.00 and less than $8.00

              	 
      	
                Not
      to exceed $4,000,000

              	 
      	
                95.00%
      of the VWAP

              
	 
      	 
      	 
      	 
      	 
      
	
                Equal
      to or greater than $5.00 and less than $6.00

              	 
      	
                Not
      to exceed $3,500,000

              	 
      	
                95.00%
      of the VWAP

              
	 
      	 
      	 
      	 
      	 
      
	
                Equal
      to or greater than $4.50 and less than $5.00

              	 
      	
                Not
      to exceed $3,000,000

              	 
      	
                95.00%
      of the VWAP

              
	 
      	 
      	 
      	 
      	 
      
	
                Equal
      to or greater than $4.00 and less than $4.50

              	 
      	
                Not
      to exceed $2,500,000

              	 
      	
                95.00%
      of the VWAP

              
	 
      	 
      	 
      	 
      	 
      
	
                Equal
      to or greater than $3.50 and less than $4.00

              	 
      	
                Not
      to exceed $2,000,000

              	 
      	
                95.00%
      of the VWAP

              
	 
      	 
      	 
      	 
      	 
      
	
                Equal
      to or greater than $3.00 and less than $3.50

              	
                  

              	
                Not
      to exceed $1,600,000

              	
                  

              	
                95.00%
      of the VWAP

              

      

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    Anything
to the contrary in this Agreement notwithstanding, at no time shall the Investor
be required to purchase more than $4,500,000 worth of Common Stock in respect of
any Pricing Period (not including Common Stock subject to any Optional
Amount).  The date on which the Company delivers any Fixed Request
Notice in accordance with this Section 2.2 hereinafter shall be referred to as a
“Fixed Request
Exercise Date”.

     

    Section
2.3        Share
Calculation.  With
respect to the Trading Days during the applicable Pricing Period for which the
VWAP equals or exceeds the Threshold Price, the number of Shares to be issued by
the Company to the Investor pursuant to a Fixed Request shall equal the
aggregate sum of each quotient (calculated for each Trading Day during the
applicable Pricing Period for which the VWAP equals or exceeds the Threshold
Price) determined pursuant to the following equation (rounded to the nearest
whole Share):

     

    
      	
              N
      =

            	
              (A
      x B)/C, where:

            

    

     

    
      	
              N
      =

            	
              the
      number of Shares to be issued by the Company to the Investor in respect of
      a Trading Day during the applicable Pricing Period for which the VWAP
      equals or exceeds the Threshold
Price,

            

    

     

    
      	
              A
      =

            	
              0.10
      (the “Multiplier”),
      provided,
      however,
      that if the Company and the Investor mutually agree prior to the
      commencement of a Pricing Period that the number of consecutive Trading
      Days constituting a Pricing Period shall be less than 10, then the
      Multiplier correspondingly shall be increased to equal the decimal
      equivalent (in 10-millionths) of a fraction, the numerator of which is one
      and the denominator of which equals the number of Trading Days in the
      reduced Pricing Period (it being hereby acknowledged and agreed that this
      proviso shall not apply to any unilateral determination by the Company to
      reduce a Pricing Period, but rather, Section 2.8 hereof shall
      apply),

            

    

     

    
      	
              B
      =

            	
              the
      total Fixed Amount Requested, and

            

    

     

    
      	
              C
      =

            	
              the
      applicable Discount Price.

            

    

     

    Section
2.4        Limitation of Fixed
Requests.  The
Company shall not make more than one Fixed Request in each Pricing
Period.  Not less than five Trading Days shall elapse between the end
of one Pricing Period and the commencement of any other Pricing Period during
the Investment Period.  There shall be permitted a maximum of 24 Fixed
Requests during the Investment Period.  Each Fixed Request
automatically shall expire immediately following the last Trading Day of each
Pricing Period.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    Section
2.5        Reduction of
Commitment.  On
the Settlement Date with respect to a Pricing Period, the Investor’s Total
Commitment under this Agreement automatically (and without the need for any
amendment to this Agreement) shall be reduced, on a dollar-for-dollar basis, by
the total amount of the Fixed Request Amount and the Optional Amount Dollar
Amount, if any, for such Pricing Period paid to the Company at such Settlement
Date.

     

    Section
2.6        Below Threshold
Price.  If
the VWAP on any Trading Day in a Pricing Period is lower than the Threshold
Price, then for each such Trading Day the Fixed Amount Requested shall be
reduced, on a dollar-for-dollar basis, by an amount equal to the product of (x)
the Multiplier and (y) the total Fixed Amount Requested, and no Shares shall be
purchased or sold with respect to such Trading Day, except as provided below. If
trading in the Common Stock on the Amex (or any other U.S. national securities
exchange on which the Common Stock is then listed) is suspended for any reason
for more than three hours on any Trading Day, the Investor may at its option
deem the price of the Common Stock to be lower than the Threshold Price for such
Trading Day and, for each such Trading Day, the total amount of the Fixed Amount
Requested shall be reduced as provided in the immediately preceding sentence,
and no Shares shall be purchased or sold with respect to such Trading Day,
except as provided below.  For each Trading Day during a Pricing
Period on which the VWAP is lower (or is deemed to be lower as provided in the
immediately preceding sentence) than the Threshold Price, the Investor may in
its sole discretion elect to purchase such U.S. dollar amount
of Shares equal to the amount by which the Fixed Amount Requested has been
reduced in accordance with this Section 2.6, at the Threshold Price multiplied
by 0.95. The Investor shall inform the Company via facsimile transmission not
later than 8:00 p.m. (New York time) on the last Trading Day of such Pricing
Period as to the number of Shares, if any, the Investor elects to purchase as
provided in this Section 2.6.

     

    Section
2.7        Settlement.  The
payment for, against simultaneous delivery of, Shares in respect of each Fixed
Request shall be settled on the second Trading Day next following the last
Trading Day of each Pricing Period, or on such earlier date as the parties may
mutually agree (the “Settlement Date”). On
each Settlement Date, the Company shall, or shall cause its transfer agent to,
electronically transfer the Shares purchased by the Investor by crediting the
Investor’s or its designees’ account at DTC through its Deposit/Withdrawal at
Custodian (DWAC) system, which Shares shall be freely tradable and transferable
and without restriction on resale, against simultaneous payment therefor to the
Company’s designated account by wire transfer of immediately available funds;
provided that
if the Shares are received by the Investor later than 1:00 p.m. (New York time),
payment therefor shall be made with next day funds.  As set forth in
Section 9.1(ii), a failure by the Company to deliver such Shares shall result in
the payment of liquidated damages by the Company to the Investor.

     

    Section
2.8        Reduction of Pricing
Period.  If
during a Pricing Period the Company elects to reduce the number of Trading Days
in such Pricing Period (and thereby amend its previously delivered Fixed Request
Notice), the Company shall so notify the Investor before 9:00 a.m. (New York
time) on any Trading Day during a Pricing Period (a “Reduction Notice”)
and the last Trading Day of such Pricing Period shall be the Trading Day
immediately preceding the Trading Day on which the Investor received such
Reduction Notice; provided, however, that if the
Company delivers the Reduction Notice later than 9:00 a.m. (New York time) on a
Trading Day during a Pricing Period, then the last Trading Day of such Pricing
Period instead shall be the Trading Day on which the Investor received such
Reduction Notice.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    Upon
receipt of a Reduction Notice, the Investor (i) shall purchase the Shares in
respect of each Trading Day in such reduced Pricing Period for which the VWAP
equals or exceeds the Threshold Price in accordance with Section 2.3 hereof;
(ii) may elect to purchase the Shares in respect of any Trading Day in such
reduced Pricing Period for which the VWAP is (or is deemed to be) lower than the
Threshold Price in accordance with Section 2.6 hereof; and (iii) may elect to
exercise all or any portion of an Optional Amount on any Trading Day during such
reduced Pricing Period in accordance with Sections 2.10 and 2.11
hereof.

     

    In
addition, upon receipt of a Reduction Notice, the Investor may elect to purchase
such U.S. dollar amount of additional Shares equal to the product determined
pursuant to the following equation:

     

    
      	
              D
      =

            	
              (A/B)
      x (B – C), where:

            

    

     

    
      	
              D
      =

            	
              the
      U.S. dollar amount of additional Shares to be
  purchased,

            

    

     

    
      	
              A
      =

            	
              the
      Fixed Amount Requested,

            

    

     

    
      	
              B
      =

            	
              10
      or, for purposes of this Section 2.8, such lesser number of Trading Days
      as the parties may mutually agree to,
and

            

    

     

    
      	
              C
      =

            	
              the
      number of Trading Days in the reduced Pricing
  Period,

            

    

     

    at a per
Share price equal to (x) the Fixed Amount Requested attributable to the reduced
Pricing Period divided by (y) the number of Shares to be purchased during such
reduced Pricing Period pursuant to clauses (i) and (ii) (as applicable) of the
immediately preceding paragraph.

     

    The
Investor may also elect to exercise any portion of the applicable Optional
Amount which was unexercised during the reduced Pricing Period by issuing an
Optional Amount Notice to the Company not later than 10:00 a.m. (New York time)
on the first Trading Day next following the last Trading Day of the reduced
Pricing Period. The number of Shares to be issued upon exercise of such Optional
Amount shall be calculated pursuant to the equation set forth in Section 2.10
hereof, except that “C” shall equal the greater of (i) the VWAP for the Common
Stock on the last Trading Day of the reduced Pricing Period or (ii) the Optional
Amount Threshold Price.

     

    The
payment for, against simultaneous delivery of, Shares to be purchased and sold
in accordance with this Section 2.8 shall be settled on the second Trading Day
next following the Trading Day on which the Investor receives a Reduction
Notice.

     

    Section
2.9        Optional
Amount.  With
respect to any Pricing Period, the Company may in its
sole discretion grant to the Investor the right to exercise, from time to time
during the Pricing Period (but not more than once on any Trading Day), all or
any portion of an Optional Amount.  The maximum Optional Amount Dollar
Amount and the Optional Amount Threshold Price shall be set forth in the Fixed
Request Notice.  If an ex-dividend date is established by the Trading
Market in respect of the Common Stock on or between the first Trading Day of the
applicable Pricing Period and the applicable Settlement Date, the applicable
exercise price in respect of the Optional Amount shall be reduced by the per
share dividend amount.  Each daily Optional Amount exercise shall be
aggregated during the Pricing Period and settled on the next Settlement
Date.  The Optional Amount Threshold Price designated by the Company
in its Fixed Request Notice shall apply to each Optional Amount exercised during
the applicable Pricing Period.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Section
2.10     Calculation of Optional
Amount Shares.  The
number of shares of Common Stock to be issued in connection with the exercise of
an Optional Amount shall be the quotient determined pursuant to the following
equation (rounded to the nearest whole Share):

     

    
      	
              O
      =

            	
              A/(B
      x C), where:

            

    

     

    
      
        
          	
                  O
      =

                	
                  the
      number of shares of Common Stock to be issued in connection with such
      Optional Amount
exercise,

                

        

      

    

     

    
      
        	
                A
      =

              	
                the
      Optional Amount Dollar Amount with respect to which the Investor has
      delivered an Optional Amount
Notice,

              

      

    

     

    
      
        	
                B =
      

              	
                0.95,
      and

              

      

    

     

    
      
        
          	
                  C =
      

                	
                  the
      greater of (i) the VWAP for the Common Stock on the day the Investor
      delivers the Optional Amount Notice or (ii) the Optional Amount Threshold
      Price.

                

        

      

    

     

    Section
2.11   Exercise of Optional
Amount.  If
granted by the Company to the Investor with respect to a Pricing Period, all or
any portion of the Optional Amount may be exercised by the Investor on any
Trading Day during the Pricing Period, subject to the limitations set forth in
Section 2.9.  As a condition to each exercise of an Optional Amount
pursuant to this Section 2.11, the Investor shall issue an Optional Amount
Notice to the Company no later than 8:00 p.m. (New York time) on the day of such
Optional Amount exercise.  If the Investor does not exercise an
Optional Amount in full by 8:00 p.m. (New York time) on the last Trading Day of
the applicable Pricing Period, such unexercised portion of the Investor’s
Optional Amount with respect to that Pricing Period automatically shall lapse
and terminate.

     

    Section
2.12   Aggregate
Limit.  Notwithstanding
anything to the contrary contained in this Agreement, in no event may the
Company issue a Fixed Request Notice or grant an Optional Amount to the extent
that the sale of Shares pursuant thereto and pursuant to all prior Fixed Request
Notices and Optional Amounts issued hereunder, and as liquidated damages
pursuant to Section 9.1(ii), would cause the Company to sell or the Investor to
purchase Shares which in the aggregate are in excess of the Aggregate
Limit.  If the Company issues a Fixed Request Notice or Optional
Amount that otherwise would permit the Investor to purchase shares of Common
Stock which would cause the aggregate purchases by Investor hereunder to exceed
the Aggregate Limit, such Fixed Request Notice or Optional Amount shall be void
ab initio to the extent
of the amount by which the dollar value of shares or number of shares, as the
case may be, of Common Stock otherwise issuable pursuant to such Fixed Request
Notice or Optional Amount together with the dollar value of shares or number of
shares, as the case may be, of all other Common Stock purchased by the Investor
pursuant hereto, or issued as liquidated damages pursuant to Section 9.1(ii),
would exceed the Aggregate Limit.  The Company hereby represents,
warrants and covenants that neither it nor any of its Subsidiaries (i) has
effected any transaction or series of transactions, (ii) is a party to any
pending transaction or series of transactions or (iii) shall enter into any
contract, agreement, agreement-in-principle, arrangement or understanding with
respect to, or shall effect, any Other Financing which, in any of such cases,
may be aggregated with the transactions contemplated by this Agreement for
purposes of determining whether approval of the Company’s stockholders is
required under any bylaw, listed securities maintenance standards or other rules
of the Trading Market; provided, however, that the
Company shall be permitted to take any action referred to in clause (iii) above
if (a) the Company has timely provided the Investor with an Integration Notice
as provided in Section 5.6(ii) hereof and (b) unless the Investor has previously
terminated this Agreement pursuant to Section 7.2, the Company obtains any
requisite stockholder approval which may be required for the Company to
consummate such Other Financing described in such Integration
Notice.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    At the
Company’s sole discretion, and effective automatically upon receipt by the
Investor of notice thereof from the Company, this Agreement may be amended by
the Company from time to time to reduce the Aggregate Limit by a specified
dollar amount of Common Stock which shall be no greater than is required to
enable the Company to utilize the Registration Statement to consummate an
underwritten public offering of Common Stock or a registered direct public
offering of Common Stock during the Investment Period; provided, however, that any
such amendment of this Agreement (and any such purported amendment) shall be
void and of no force and effect if the effect thereof would restrict, materially
delay, conflict with or impair the ability or right of the Company to perform
its obligations under this Agreement, including, without limitation, the
obligation of the Company to deliver the Commitment Shares to the Investor in
accordance with the terms of Section 2.13 and Section 6.1 of this Agreement, the
obligation of the Company to deliver the Shares to the Investor in respect of a
previously delivered Fixed Request Notice or Optional Amount on the applicable
Settlement Date. In the event the Company shall have elected to reduce the
Aggregate Limit as provided in the immediately preceding sentence, at the
Company’s sole discretion, and effective automatically upon delivery of notice
by the Company to the Investor, the Company may subsequently amend this
Agreement to increase the Aggregate Limit up to $20,000,000; provided, however, that in no
event shall the Company be entitled to issue Fixed Requests and grant Optional
Amounts during the remainder of the Investment Period for an aggregate amount
greater than the amount obtained by subtracting (x) the aggregate of all Fixed
Request Amounts and Optional Amount Dollar Amounts (including any amounts paid
as liquidated damages pursuant to Section 9.1(ii) hereunder) covered by all
Fixed Requests and Optional Amounts theretofore issued or granted by the Company
in respect of which a settlement has occurred pursuant to Section 2.7 from (y)
$20,000,000, subject in all cases to the Trading Market Limit.

     

    Section
2.13        Commitment
Shares. In
consideration for the Investor’s execution and delivery of this Agreement,
concurrently with the execution and delivery of this Agreement on the Effective
Date, the Company shall deliver irrevocable instructions to its transfer agent
to electronically transfer the Commitment Shares to the Investor, not later than
4:00 p.m. (New York time) on the second Trading Day immediately following the
Effective Date, by crediting the Investor’s or its designees’ account at DTC
through its Deposit/Withdrawal at Custodian (DWAC) system, which Commitment
Shares shall be issued pursuant to the Registration Statement and without any
restriction on resale. For the avoidance of doubt, all of the Commitment Shares
shall be fully earned as of the Effective Date, regardless of whether any Fixed
Requests are issued by the Company or settled hereunder.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    ARTICLE
III

    REPRESENTATIONS
AND WARRANTIES OF THE INVESTOR

     

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

     

    Section
3.1        Organization and Standing of
the Investor.  The
Investor is a business company duly organized, validly existing and in good
standing under the laws of the British Virgin Islands.

     

    Section
3.2        Authorization and
Power.  The
Investor has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement and to purchase the Shares in
accordance with the terms hereof.  The execution, delivery and
performance of this Agreement by the Investor and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Investor, its
Board of Directors or stockholders is required.  This Agreement has
been duly executed and delivered by the Investor.  This Agreement
constitutes a valid and binding obligation of the Investor enforceable against
it in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership, or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application.

     

    Section
3.3        No
Conflicts.  The
execution, delivery and performance by the Investor of this Agreement and the
consummation by the Investor of the transactions contemplated herein do not and
shall not (i) result in a violation of such Investor’s charter documents, bylaws
or other applicable organizational instruments, (ii) conflict with, constitute a
default (or an event which, with notice or lapse of time or both, would become a
default) under, or give rise to any rights of termination, amendment,
acceleration or cancellation of, any material agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Investor is a party or is bound, (iii) create or impose any lien,
charge or encumbrance on any property of the Investor under any agreement or any
commitment to which the Investor is party or under which the Investor is bound
or under which any of its properties or assets are bound, or (iv) result in a
violation of any federal, state, local or foreign statute, rule, or regulation,
or any order, judgment or decree of any court or governmental agency applicable
to the Investor or by which any of its properties or assets are bound or
affected, except, in the case of clauses (ii), (iii) and (iv), for such
conflicts, defaults, terminations, amendments, acceleration, cancellations and
violations as would not, individually or in the aggregate, prohibit or otherwise
interfere with the ability of the Investor to enter into and perform its
obligations under this Agreement in any material respect.  The
Investor is not required under federal, state, local or foreign law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or to
purchase the Shares in accordance with the terms hereof.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Section
3.4        Information.  All
materials relating to the business, financial condition, management and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by the Investor have been furnished or
otherwise made available to the Investor or its advisors (subject to Section
5.12 of this Agreement).  The Investor and its advisors have been
afforded the opportunity to ask questions of representatives of the
Company.  The Investor has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Securities.  The Investor
understands that it (and not the Company) shall be responsible for its own tax
liabilities that may arise as a result of this investment or the transactions
contemplated by this Agreement. The Investor is aware of all of its obligations
under U.S. federal and applicable state securities laws and all rules and
regulations promulgated thereunder in connection with this Agreement and the
transactions contemplated hereby and the purchase and sale of the
Shares.

     

    ARTICLE
IV

    REPRESENTATIONS
AND WARRANTIES OF THE COMPANY

     

    Except as
set forth in the disclosure schedule delivered by the Company to the Investor
(which is hereby incorporated by reference in, and constitutes an integral part
of, this Agreement) (the “Disclosure
Schedule”), the Company hereby makes the following representations and
warranties to the Investor:

     

    Section
4.1        Organization, Good Standing
and Power.  The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power
and authority to own, lease and operate its properties and assets and to conduct
its business as it is now being conducted.  The Company and each
Subsidiary is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except for
any jurisdiction in which the failure to be so qualified would not have a
Material Adverse Effect.

     

    Section
4.2        Authorization,
Enforcement.  The
Company has the requisite corporate power and authority to enter into and
perform this Agreement and to issue and sell the Securities in accordance with
the terms hereof.  Except for approvals of the Company’s Board of
Directors or a committee thereof as may be required in connection with any
issuance and sale of Shares to the Investor hereunder (which approvals shall be
obtained prior to the delivery of any Fixed Request Notice), the execution,
delivery and performance by the Company of this Agreement and the consummation
by it of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required. This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor’s rights and remedies or by
other equitable principles of general application.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    Section
4.3        Capitalization.  The
authorized capital stock of the Company and the shares thereof issued and
outstanding are as set forth in the Commission Documents as of the dates
reflected therein.  All of the outstanding shares of Common Stock have
been duly authorized and validly issued, and are fully paid and
nonassessable.  Except as set forth in the Commission Documents or
Section 4.3 of the Disclosure Schedule, as of the Effective Date, no shares of
Common Stock were entitled to preemptive rights or registration rights and there
were no outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of capital stock of the
Company, other than those issued or granted in the ordinary course of business.
Except as set forth in the Commission Documents, as of the Effective Date, there
were no contracts, commitments, understandings, or arrangements by which the
Company is or may become bound to issue additional shares of the capital stock
of the Company or options, securities or rights convertible into or exchangeable
for any shares of capital stock of the Company.  Except for customary
transfer restrictions contained in agreements entered into by the Company to
sell restricted securities or as set forth in the Commission Documents, as of
the Effective Date, the Company was not a party to, and it had no knowledge of,
any agreement restricting the voting or transfer of any shares of the capital
stock of the Company.  Except as set forth in the Commission
Documents, the offer and sale of all capital stock, convertible or exchangeable
securities, rights, warrants or options of the Company issued prior to the
Effective Date complied with all applicable federal and state securities laws,
and no stockholder has any right of rescission or damages or any “put” or
similar right with respect thereto that would have a Material Adverse
Effect.  The Company has furnished or made available to the Investor
via the Commission’s Electronic Data Gathering, Analysis and Retrieval System
(“EDGAR”) true
and correct copies of the Company’s Certificate of Incorporation as in effect on
the Effective Date (the “Charter”), and the
Company’s Bylaws as in effect on the Effective Date (the “Bylaws”).

     

    Section
4.4        Issuance of
Securities.  The
Commitment Shares have been, and the Shares to be issued under this Agreement
have been or will be (prior to the delivery of any Fixed Request Notice to the
Investor hereunder), duly authorized by all necessary corporate action on the
part of the Company. The Commitment Shares, when issued in accordance with the
terms of this Agreement, and the Shares, when paid for in accordance with the
terms of this Agreement, shall be validly issued and outstanding, fully paid and
nonassessable and free from all liens, charges, taxes, security interests,
encumbrances, rights of first refusal, preemptive or similar rights and other
encumbrances with respect to the issue thereof.

     

    Section
4.5        No
Conflicts.  The
execution, delivery and performance by the Company of this Agreement
and the consummation by the Company of the transactions contemplated hereby do
not and shall not (i) result in a violation of any provision of the Company’s
Charter or Bylaws, (ii) conflict with, constitute a default (or an event which,
with notice or lapse of time or both, would become a default) under, or give
rise to any rights of termination, amendment, acceleration or cancellation of,
any material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company or any of its
Significant Subsidiaries is a party or is bound (including, without limitation,
any listing agreement with the Trading Market), (iii) create or impose a lien,
charge or encumbrance on any property of the Company or any of its Significant
Subsidiaries under any agreement or any commitment to which the Company or any
of its Significant Subsidiaries is a party or under which the Company or any of
its Significant Subsidiaries is bound or under which any of their respective
properties or assets are bound, or (iv) result in a violation of any federal,
state, local or foreign statute, rule, regulation, order, judgment or decree
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries are bound or affected, except,
in the case of clauses (ii), (iii) and (iv), for such conflicts, defaults,
terminations, amendments, acceleration, cancellations, liens, charges,
encumbrances and violations as would not, individually or in the aggregate, have
a Material Adverse Effect.  The Company is not required under federal,
state, local or foreign law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement, or to issue and sell the Securities to the
Investor in accordance with the terms hereof (other than any filings which may
be required to be made by the Company with the Commission, the Financial
Industry Regulatory Authority (the “FINRA”) or the
Trading Market subsequent to the Effective Date, including but not limited to a
Prospectus Supplement under Sections 1.4 and 5.9 of this Agreement, and any
registration statement, prospectus or prospectus supplement which has been or
may be filed pursuant to this Agreement).

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Section
4.6        Commission Documents,
Financial Statements.  (a) The
Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act and, except as disclosed in the Commission Documents, as of the Effective
Date the Company had timely filed (giving effect to permissible extensions in
accordance with Rule 12b-25 under the Exchange Act) all Commission
Documents.  The Company has delivered or made available to the
Investor via EDGAR or otherwise true and complete copies of the Commission
Documents filed with the Commission prior to the Effective Date (including,
without limitation, the 2009 Form 10-K) and has delivered or made available to
the Investor via EDGAR or otherwise true and complete copies of all of the
Commission Documents heretofore incorporated by reference in the Registration
Statement and the Prospectus.  The Company has not provided to the
Investor any information which, according to applicable law, rule or regulation,
should have been disclosed publicly by the Company but which has not been so
disclosed, other than with respect to the transactions contemplated by this
Agreement.  As of its filing date, each Commission Document filed with
the Commission and incorporated by reference in the Registration Statement and
the Prospectus (including, without limitation, the 2009 Form 10-K) complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as applicable, and other federal, state and local laws, rules and
regulations applicable to it, and, as of its filing date (or, if amended or
superseded by a filing prior to the Effective Date, on the date of such amended
or superseded filing), such Commission Document did not contain any untrue
statement of a material fact or omit 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.  Each
Commission Document to be filed with the Commission after the Effective Date and
incorporated by reference in the Registration Statement, the Prospectus and any
Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9
hereof during the Investment Period (including, without limitation, the Current
Report), when such document becomes effective or is filed with the Commission,
as the case may be, shall comply in all material respects with the requirements
of the Securities Act or the Exchange Act, as applicable, and other federal,
state and local laws, rules and regulations applicable to it, and shall not
contain any untrue statement of a material fact or omit 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.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (b)           The
financial statements, together with the related notes and schedules, of the
Company included in the Commission Documents comply as to form in all material
respects with all applicable accounting requirements and the published rules and
regulations of the Commission and all other applicable rules and regulations
with respect thereto.  Such financial statements, together with the
related notes and schedules, have been prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements or are subject to normal
year-end audit adjustments), and fairly present in all material respects the
financial condition of the Company and its consolidated Subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).

     

    (c)           The
Company has timely filed with the Commission and made available to the Investor
via EDGAR or otherwise all certifications and statements required by (x) Rule
13a-14 or Rule 15d-14 under the Exchange Act or (y) 18 U.S.C. Section 1350
(Section 906 of the Sarbanes-Oxley Act of 2002 (“SOXA”)) with respect
to all relevant Commission Documents.  The Company is in compliance in
all material respects with the provisions of SOXA applicable to it as of the
date hereof.  Except as set forth in the Commission Documents, the
Company maintains disclosure controls and procedures required by Rule 13a-15 or
Rule 15d-15 under the Exchange Act; such controls and procedures are effective
to ensure that all material information concerning the Company and its
Subsidiaries is made known on a timely basis to the individuals responsible for
the timely and accurate preparation of the Company’s Commission filings and
other public disclosure documents.  As used in this Section 4.6(c),
the term “file” shall be broadly construed to include any manner in which a
document or information is furnished, supplied or otherwise made available to
the Commission.

     

    (d)           Holtz
Rubenstein Reminick LLP, who have expressed their opinions on the audited
financial statements and related schedules included or incorporated by reference
in the Registration Statement and the Base Prospectus are, with respect to the
Company, independent public accountants as required by the Securities Act and is
an independent registered public accounting firm within the meaning of SOXA as
required by the rules of the Public Company Accounting Oversight
Board.

     

    Section
4.7        Subsidiaries.  Except
as set forth in the Disclosure Schedule, the 2009 Form 10-K sets forth each
Subsidiary of the Company as of the Effective Date, showing its jurisdiction of
incorporation or organization and the percentage of the Company’s ownership of
the outstanding capital stock or other ownership interests of such Subsidiary,
and the Company does not have any other Subsidiaries as of the Effective
Date.

     

    Section
4.8        No Material Adverse
Effect.  Since
December 31, 2009, the Company has not experienced or suffered any Material
Adverse Effect, and there exists no current state of facts, condition or event
which would have a Material Adverse Effect, except (i) as disclosed in any
Commission Documents filed since December 31, 2009 or (ii) continued losses from
operations.

     

    
      
        
        

      

      
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    Section
4.9        Indebtedness.  The
2009 Form 10-K sets forth, as of December 31, 2009, all outstanding secured
and unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments through such date.  For the
purposes of this Agreement, “Indebtedness” shall
mean (a) any liabilities for borrowed money or amounts owed in excess of
$10,000,000 (other than trade accounts payable incurred in the ordinary course
of business), (b) all guaranties, endorsements, indemnities and other contingent
obligations in respect of Indebtedness of others in excess of $10,000,000,
whether or not the same are or should be reflected in the Company’s balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; and (c) the present value of any lease payments in excess of
$10,000,000 due under leases required to be capitalized in accordance with
GAAP.  There is no existing or continuing default or event of default
in respect of any Indebtedness of the Company or any of its
Subsidiaries.

     

    Section
4.10      Title To
Assets.  Each
of the Company and its Subsidiaries has good and marketable title to all of
their respective real and personal property reflected in the Commission
Documents, free of mortgages, pledges, charges, liens, security interests or
other encumbrances, except for those indicated in the Commission Documents or
those that would not have a Material Adverse Effect.  To the Company’s
knowledge, all real property leases of the Company are valid and subsisting and
in full force and effect in all material respects.

     

    Section
4.11      Actions
Pending.  There
is no action, suit, claim, investigation or proceeding pending, or to the
knowledge of the Company threatened, against the Company or any Subsidiary which
questions the validity of this Agreement or the transactions contemplated hereby
or any action taken or to be taken pursuant hereto or thereto.  Except
as set forth in the Commission Documents, there is no action, suit, claim,
investigation or proceeding pending, or to the knowledge of the Company
threatened, against or involving the Company, any Subsidiary or any of their
respective properties or assets, or involving any officers or directors of the
Company or any of its Subsidiaries, including, without limitation, any
securities class action lawsuit or stockholder derivative lawsuit, in each case
which, if determined adversely to the Company, its Subsidiary or any officer or
director of the Company or its Subsidiaries, would have a Material Adverse
Effect.

     

    Section
4.12      Compliance With
Law.  The
business of the Company and the Subsidiaries has been and is presently being
conducted in compliance with all applicable federal, state, local and foreign
governmental laws, rules, regulations and ordinances, except as set forth in the
Commission Documents and except for such non-compliance which, individually or
in the aggregate, would not have a Material Adverse Effect.

     

    
      
        
        

      

      
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    Section
4.13      Certain
Fees.  Except
for the placement fee payable by the Company to Reedland Capital
Partners, an Institutional Division of Financial West Group, Member FINRA/SIPC
(“Reedland”),
which shall be set forth in a separate engagement letter between the Company and
Reedland (a true and complete fully executed copy of which has heretofore been
provided to the Investor), no brokers, finders or financial advisory fees or
commissions shall be payable by the Company or any Subsidiary (or any of their
respective affiliates) with respect to the transactions contemplated by this
Agreement. Except as set forth in this Section 4.13 or as disclosed in Section
4.13 of the Disclosure Schedule or in the Registration Statement, the Prospectus
or the Current Report, there are no contracts, agreements or understandings
between the Company and any person that would give rise to a valid claim against
the Company, the Investor or the Broker-Dealer for a brokerage commission,
finder’s fee or other like payment in connection with the transactions
contemplated by this Agreement or, to the Company’s knowledge, any arrangements,
agreements, understandings, payments or issuance with respect to the Company or
any of its officers, directors, stockholders, partners, employees, Subsidiaries
or Affiliates that may affect the FINRA’s determination of the amount of
compensation to be received by any FINRA member (including, without limitation,
those FINRA members set forth on Schedule 4.13 of the Disclosure Schedule) or
person associated with any FINRA member in connection with the transactions
contemplated by this Agreement.  Except as set forth in this Section
4.13 or as disclosed in Section 4.13 of the Disclosure Schedule or in the
Registration Statement, the Prospectus or the Current Report, no “items of
value” (within the meaning of FINRA Rule 5110) have been received, and no
arrangements have been entered into for the future receipt of any items of
value, from the Company or any of its officers, directors, stockholders,
partners, employees, Subsidiaries or Affiliates by any FINRA member (including,
without limitation, those FINRA members set forth on Schedule 4.13 of the
Disclosure Schedule) or person associated with any FINRA member, during the
period commencing 180 days immediately preceding the Effective Date and ending
on the date this Agreement is terminated in accordance with Article VII, that
may affect the FINRA’s determination of the amount of compensation to be
received by any FINRA member or person associated with any FINRA member in
connection with the transactions contemplated by this Agreement.

     

    Section
4.14      Operation of
Business.  (a) The
Company or one or more of its Subsidiaries possesses such
permits, licenses, approvals, consents and other authorizations (including
licenses, accreditation and other similar documentation or approvals of any
local health departments) (collectively, “Governmental
Licenses”) issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies, including, without limitation, the United States
Food and Drug Administration (“FDA”), necessary to
conduct the business now operated by it, except where the failure to possess
such Governmental Licenses, individually or in the aggregate, would not have a
Material Adverse Effect.  The Company and its Subsidiaries are in
compliance with the terms and conditions of all such Governmental Licenses and
all applicable FDA rules and regulations, guidelines and policies, and all
applicable rules and regulations, guidelines and policies of any governmental
authority exercising authority comparable to that of the FDA (including any
non-governmental authority whose approval or authorization is required under
foreign law comparable to that administered by the FDA), except where the
failure to so comply, individually or in the aggregate, would not have a
Material Adverse Effect.  All of the Governmental Licenses are valid
and in full force and effect, except where the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force and
effect, individually or in the aggregate, would not have a Material Adverse
Effect.  As to each product that is subject to FDA regulation or
similar legal provisions in any foreign jurisdiction that is developed,
manufactured, tested, packaged, labeled, marketed, sold, distributed and/or
commercialized by the Company or any of its Subsidiaries, each such product is
being developed, manufactured, tested, packaged, labeled, marketed, sold,
distributed and/or commercialized in compliance with all applicable requirements
of the FDA (and any non-governmental authority whose approval or authorization
is required under foreign law comparable to that administered by the FDA),
including, but not limited to, those relating to investigational use,
investigational device exemption, premarket notification, premarket approval,
good clinical practices, good manufacturing practices, record keeping, filing of
reports, and patient privacy and medical record security, except where such
non-compliance, individually or in the aggregate, would not have a Material
Adverse Effect.  As to each product or product candidate of the
Company or any of its Subsidiaries subject to FDA regulation or similar
applicable legal provision in any foreign jurisdiction, all manufacturing
facilities of the Company and its Subsidiaries are operated in compliance with
the FDA’s Quality System Regulation requirements at 21 C.F.R. Part 820, as
applicable, except where such non-compliance, individually or in the aggregate,
would not have a Material Adverse Effect.  Except as set forth in the
Commission Documents or the Registration Statement, neither the Company nor any
of its Subsidiaries has received any written notice of proceedings relating to
the revocation or modification of any such Governmental Licenses or relating to
a potential violation of, failure to comply with, or request to produce
additional information under, any FDA rules and regulations, guidelines or
policies which, if the subject of any unfavorable decision, ruling or finding,
individually or in the aggregate, would have a Material Adverse
Effect.  Except as set forth in the Commission Documents or the
Registration Statement, neither the Company nor any of its Subsidiaries has
received any correspondence, notice or request from the FDA, including, without
limitation, notice that any one or more products or product candidates of the
Company or any of its Subsidiaries failed to receive approval from the FDA for
use for any one or more indications.  This Section 4.14 does not
relate to environmental matters, such items being the subject of Section
4.15.

     

    
      
        
        

      

      
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    (b)        Except
as set forth in the Commission Documents, the Company or one or more of its
Subsidiaries owns or possesses adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names, trade dress, logos,
copyrights and other intellectual property, including, without limitation, all
of the intellectual property described in the Commission Documents as being
owned or licensed by the Company (collectively, “Intellectual
Property”), necessary to carry on the business now operated by it, except
where the failure to own, license or have such rights would not, individually or
in the aggregate, have a Material Adverse Effect.  Except as set forth
in the Commission Documents, there are no actions, suits or judicial proceedings
pending, or to the Company’s knowledge threatened, relating to patents or
proprietary information to which the Company or any of its Subsidiaries is a
party or of which any property of the Company or any of its Subsidiaries is
subject, and neither the Company nor any of its Subsidiaries has received any
notice or is otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any facts or
circumstances which could render any Intellectual Property invalid or inadequate
to protect the interest of the Company and its Subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, individually or in the aggregate, would
have a Material Adverse Effect.

     

    (c)         No
clinical trials are currently conducted by, or on behalf of, the Company or any
of its Subsidiaries, and neither the Company nor any of its Subsidiaries
currently participates in any clinical trials.

    
      
         

      

      
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      Section
4.15        Environmental
Compliance.  Except
as disclosed in the Commission Documents, the Company and each of its
Subsidiaries have obtained all material approvals, authorization, certificates,
consents, licenses, orders and permits or other similar authorizations of all
governmental authorities, or from any other person, that are required under any
Environmental Laws, except for any approvals, authorization, certificates,
consents, licenses, orders and permits or other similar authorizations the
failure of which to obtain does not or would not have a Material Adverse
Effect.  “Environmental Laws”
shall mean all applicable laws relating to the protection of the environment
including, without limitation, all requirements pertaining to reporting,
licensing, permitting, controlling, investigating or remediating emissions,
discharges, releases or threatened releases of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in
nature.  Except for such instances as would not, individually or in
the aggregate, have a Material Adverse Effect, to the Company’s knowledge, there
are no past or present events, conditions, circumstances, incidents, actions or
omissions relating to or in any way affecting the Company or its Subsidiaries
that violate or would reasonably be expected to violate any Environmental Law
after the Effective Date or that would reasonably be expected to give rise to
any environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance.

       

      Section
4.16        Material
Agreements.  Except
as set forth in the Commission Documents, neither the Company nor any Subsidiary
of the Company is a party to any written or oral contract, instrument, agreement
commitment, obligation, plan or arrangement, a copy of which would be required
to be filed with the Commission as an exhibit to an annual report on Form 10-K
(collectively, “Material
Agreements”).  Except as set forth in the Commission Documents,
the Company and each of its Subsidiaries have performed in all material respects
all the obligations required to be performed by them under the Material
Agreements, have received no notice of default or an event of default by the
Company or any of its Subsidiaries thereunder and are not aware of any basis for
the assertion thereof, and neither the Company or any of its Subsidiaries nor,
to the knowledge of the Company, any other contracting party thereto are in
default under any Material Agreement now in effect, the result of which would
have a Material Adverse Effect.  Each of the Material Agreements is in
full force and effect, and constitutes a legal, valid and binding obligation
enforceable in accordance with its terms against the Company and/or any of its
Subsidiaries and, to the knowledge of the Company, each other contracting party
thereto, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditor’s rights and remedies or by other equitable principles of general
application.

       

      Section
4.17        Transactions With
Affiliates.  Except
as set forth in the Commission Documents, there are no loans, leases,
agreements, contracts, royalty agreements, management contracts, service
arrangements or other continuing transactions exceeding $120,000 between (a) the
Company or any Subsidiary, on the one hand, and (b) any person or entity who
would be covered by Item 404(a) of Regulation S-K, on the other
hand.  Except as disclosed in the Commission Documents, there are no
outstanding amounts payable to or receivable from, or advances by the Company or
any of its Subsidiaries to, and neither the Company nor any of its Subsidiaries
is otherwise a creditor of or debtor to, any beneficial owner of more than 5% of
the outstanding shares of Common Stock, or any director, employee or Affiliate
of the Company or any of its Subsidiaries, other than (i) reimbursement for
reasonable expenses incurred on behalf of the Company or any of its Subsidiaries
or (ii) as part of the normal and customary terms of such persons’ employment or
service as a director with the Company or any of its
Subsidiaries.

      
        
           

        

        
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      Section
4.18        Securities
Act.  The
Company has complied with all applicable federal and state securities laws in
connection with the offer, issuance and sale of the Securities contemplated by
this Agreement.

       

      (i)           The
Company has prepared and filed with the Commission in accordance with the
provisions of the Securities Act the Registration Statement, including a base
prospectus relating to the Securities.  The Registration Statement was
declared effective by order of the Commission on May 11, 2010.  As of
the date hereof, no stop order suspending the effectiveness of the Registration
Statement has been issued by the Commission or is continuing in effect under the
Securities Act and no proceedings therefor are pending before or, to the
Company’s knowledge, threatened by the Commission.  No order
preventing or suspending the use of the Prospectus or any Permitted Free Writing
Prospectus has been issued by the Commission.

       

      (ii)          The
Company satisfies all of the requirements for the use of Form S-3 under the
Securities Act for the offering and sale of the Securities contemplated by this
Agreement. The Commission has not notified the Company of any objection to the
use of the form of the Registration Statement pursuant to Rule 401(g)(1) under
the Securities Act. The Registration Statement complied in all material respects
on the date on which it was declared effective by the Commission, and will
comply in all material respects at each deemed effective date with respect to
the Investor pursuant to Rule 430B(f)(2) of the Securities Act, with the
requirements of the Securities Act, and the Registration Statement (including
the documents incorporated by reference therein) did not on the date it was
declared effective by the Commission, and shall not at each deemed effective
date with respect to the Investor pursuant to Rule 430B(f)(2) of the Securities
Act, contain 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; provided that this
representation and warranty does not apply to statements in or omissions from
the Registration Statement made in reliance upon and in conformity with
information relating to the Investor or Reedland furnished to the Company in
writing by or on behalf of the Investor or Reedland expressly for use therein.
The Registration Statement, as of the Effective Date, meets the requirements set
forth in Rule 415(a)(1)(x) under the Securities Act.  The Base
Prospectus complied in all material respects on its date and on the Effective
Date, and will comply in all material respects on each applicable Fixed Request
Exercise Date and, when taken together with the applicable Prospectus Supplement
and any applicable Permitted Free Writing Prospectus, on each applicable
Settlement Date, with the requirements of the Securities Act and did not on its
date and on the Effective Date and shall not on each applicable Fixed Request
Exercise Date and, when taken together with the applicable Prospectus Supplement
and any applicable Permitted Free Writing Prospectus, on each applicable
Settlement Date contain 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, in the light of the circumstances under which they were
made, not misleading; provided that this
representation and warranty does not apply to statements in or omissions from
the Base Prospectus made in reliance upon and in conformity with information
relating to the Investor furnished to the Company in writing by or on behalf of
the Investor expressly for use therein.

      
        
           

        

        
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      (iii)         Each
Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9
hereof, when taken together with the Base Prospectus and any applicable
Permitted Free Writing Prospectus, on its date and on the applicable Settlement
Date, shall comply in all material respects with the provisions of the
Securities Act and shall not on its date and on the applicable Settlement Date
contain 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, in
the light of the circumstances under which they are made, not misleading, except
that this representation and warranty does not apply to statements in or
omissions from any Prospectus Supplement made in reliance upon and in conformity
with information relating to the Investor furnished to the Company in writing by
or on behalf of the Investor expressly for use therein.

       

      (iv)         At
the earliest time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) under the Securities Act) relating to the Securities,
the Company was not and is not an “ineligible issuer” (as defined in Rule 405
under the Securities Act).  Each Permitted Free Writing Prospectus (a)
shall conform in all material respects to the requirements of the Securities Act
on the date of its first use, (b) when considered together with the Prospectus
on each applicable Fixed Request Exercise Date and on each applicable Settlement
Date, shall not contain 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, in the light of the circumstances under which they are made,
not misleading, and (c) shall not include any information that conflicts with
the information contained in the Registration Statement, including any document
incorporated by reference therein and any Prospectus Supplement deemed to be a
part thereof that has not been superseded or modified.  The
immediately preceding sentence does not apply to statements in or omissions from
any Permitted Free Writing Prospectus made in reliance upon and in conformity
with information relating to the Investor furnished to the Company in writing by
or on behalf of the Investor expressly for use therein.

       

      (v)          Prior
to the Effective Date, the Company has not distributed any offering material in
connection with the offering and sale of the Securities.  From and
after the Effective Date and prior to the completion of the distribution of the
Securities, the Company shall not distribute any offering material in connection
with the offering and sale of the Securities, other than the Registration
Statement, the Base Prospectus as supplemented by any Prospectus Supplement or a
Permitted Free Writing Prospectus.

       

      Section
4.19        Employees.  As
of the Effective Date, neither the Company nor any Subsidiary of the Company has
any collective bargaining arrangements or agreements covering any of its
employees, except as set forth in the Commission Documents.  As of the
Effective Date, except as disclosed in the Registration Statement or the
Commission Documents, no officer, consultant or key employee of the Company or
any Subsidiary whose termination, either individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect, has terminated or, to
the knowledge of the Company, has any present intention of terminating his or
her employment or engagement with the Company or any Subsidiary.

       

      Section
4.20        Use of
Proceeds. The
proceeds from the sale of the Shares shall be used by the Company and its
Subsidiaries as set forth in the Base Prospectus and any Prospectus Supplement
filed pursuant to Sections 1.4 and 5.9.

      
        
           

        

        
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      Section
4.21        Investment Company Act
Status. The
Company is not, and as a result of the consummation of the transactions
contemplated by this Agreement and the application of the proceeds from the sale
of the Shares as set forth in the Base Prospectus and any Prospectus Supplement
shall not be, an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended.

       

      Section
4.22        ERISA.  No
liability to the Pension Benefit Guaranty Corporation has been incurred with
respect to any Plan by the Company or any of its Subsidiaries which has had or
would have a Material Adverse Effect.  No “prohibited transaction” (as
defined in Section 406 of ERISA or Section 4975 of the Code) or “accumulated
funding deficiency” (as defined in Section 203 of ERISA) or any of the events
set forth in Section 4043(b) of ERISA has occurred with respect to any Plan
which has had or would have a Material Adverse Effect, and the execution and
delivery of this Agreement and the issuance and sale of the Shares hereunder
shall not result in any of the foregoing events.  Each Plan is in
compliance in all material respects with applicable law, including ERISA and the
Code; the Company has not incurred and does not expect to incur liability under
Title IV of ERISA with respect to the termination of, or withdrawal from, any
Plan; and each Plan for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualifications.  As used in this
Section 4.22, the term “Plan” shall mean an
“employee pension benefit plan” (as defined in Section 3 of ERISA) which is or
has been established or maintained, or to which contributions are or have been
made, by the Company or any Subsidiary or by any trade or business, whether or
not incorporated, which, together with the Company or any Subsidiary, is under
common control, as described in Section 414(b) or (c) of the Code.

       

      Section
4.23        Taxes.  The
Company (i) has filed all necessary federal, state and foreign income and
franchise tax returns or has duly requested extensions thereof, except for those
the failure of which to file would not have a Material Adverse Effect, (ii) has
paid all federal, state, local and foreign taxes due and payable for which it is
liable, except to the extent that any such taxes are being contested in good
faith and by appropriate proceedings, except for such taxes the failure of which
to pay would not have a Material Adverse Effect, and (iii) does not have any tax
deficiency or claims outstanding or assessed or, to the Company’s knowledge,
proposed against it which would have a Material Adverse Effect.

       

      Section
4.24        Insurance.  The
Company carries, or is covered by, insurance in such amounts and covering such
risks as the Company deems is adequate for the conduct of its and its
Subsidiaries’ businesses and the value of their respective properties and as is
customary for companies engaged in similar businesses in similar
industries.

       

      Section 4.25       Acknowledgement Regarding
Investor’s Acquisition of Securities.  The
Company acknowledges and agrees that the Investor is acting solely in the
capacity of an arm’s length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that the
Investor is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement or the transactions
contemplated hereby, and any advice given by the Investor or any of its
representatives or agents in connection with this Agreement or the transactions
contemplated hereby is merely incidental to the Investor’s acquisition of the
Securities.

      
        
           

        

        
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      ARTICLE
V

      COVENANTS

       

      The
Company covenants with the Investor, and the Investor covenants with the
Company, as follows, which covenants of one party are for the benefit of the
other party, during the Investment Period:

       

      Section
5.1          Securities Compliance; FINRA
Filing.

       

      (i)           The
Company shall notify the Trading Market, as necessary, in accordance with its
rules and regulations, of the transactions contemplated by this Agreement, and
shall take all necessary action, undertake all proceedings and obtain all
registrations, permits, consents and approvals for the legal and valid issuance
of the Securities to the Investor in accordance with the terms of this
Agreement.

       

      (ii)           The
Company shall (with the Investor’s assistance) assist Reedland with the
preparation and filing with the FINRA’s Corporate Financing Department via
CobraDesk (not later than 24 hours after the Effective Date) of all documents
and information required to be filed with the FINRA pursuant to FINRA Rule 5110
with regard to the transactions contemplated by this Agreement (the “FINRA Filing”). In
connection therewith, on or prior to the Effective Date, the Company shall pay
to the FINRA by wire transfer of immediately available funds the applicable
filing fee with respect to the FINRA Filing, and the Company shall be solely
responsible for payment of such fee.  The parties hereby agree to
provide each other and Reedland all requisite information and otherwise to
assist each other and Reedland in a timely fashion in order for Reedland to
complete the preparation and submission of the FINRA Filing in accordance with
this Section 5.1(ii) and to assist Reedland in promptly responding to any
inquiries or requests from FINRA or its staff. Each party hereto shall (A)
promptly notify the other party and Reedland of any communication to that party
or its affiliates from the FINRA, including, without limitation, any request
from the FINRA or its staff for amendments or supplements to or additional
information in respect of the FINRA Filing and permit the other party and
Reedland to review in advance any proposed written communication to the FINRA
and (B) furnish the other party and Reedland with copies of all written
correspondence, filings and communications between them and their affiliates and
their respective representatives and advisors, on the one hand, and the FINRA or
members of its staff, on the other hand, with respect to this Agreement or the
transactions contemplated hereby. Each of the parties hereto agrees to use its
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other party and
Reedland in doing, all things necessary, proper or advisable to obtain as
promptly as practicable (but in no event later than 60 days after the Effective
Date) written confirmation from the FINRA to the effect that the FINRA’s
Corporate Financing Department has determined not to raise any objection with
respect to the fairness and reasonableness of the terms of the transactions
contemplated by this Agreement; provided, however, that the
Investor shall have no responsibility for the compliance or non-compliance of
any Broker-Dealer with FINRA Rule 5110 and shall not be required to (x) disclose
to the FINRA or to any other governmental agency, person or entity any business,
financial or other information that the Investor deems, in its sole and absolute
discretion, to be proprietary, confidential or otherwise sensitive information,
(y) amend, modify or change any of the terms or conditions of this Agreement or
(z) otherwise take any other action, including, without limitation, modifying
the Discount Price thresholds referred to in Section 2.2, the number of
Commitment Shares or the amount of fees and commissions to be paid to the
Broker-Dealer in connection with the transactions contemplated by this
Agreement, in each case, in such a manner that would, in the Investor’s sole and
absolute discretion, render the terms and conditions of this Agreement or the
transactions contemplated hereby to be no longer advisable to the Investor.
Notwithstanding anything to the contrary contained in this Agreement, the
Company shall not be permitted to deliver any Fixed Request Notice to the
Investor, and the Investor shall not be obligated to purchase any Shares
pursuant to a Fixed Request Notice, unless and until the parties hereto and
Reedland shall have received written confirmation from the FINRA to the effect
that the FINRA’s Corporate Financing Department has determined not to raise any
objection with respect to the fairness and reasonableness of the terms of the
transactions contemplated by this Agreement.

      
        
           

        

        
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      Section
5.2          Registration and
Listing.  The
Company shall take all action necessary to cause the Common Stock to continue to
be registered as a class of securities under Sections 12(b) or 12(g) of the
Exchange Act, shall comply with its reporting and filing obligations under the
Exchange Act, and shall not take any action or file any document (whether or not
permitted by the Securities Act) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under the Exchange Act
or Securities Act, except as permitted herein. The Company shall take all action
necessary to continue the listing and trading of its Common Stock and the
listing of the Commitment Shares and the Shares acquired or purchased by the
Investor hereunder on the Trading Market (including, without limitation,
maintaining sufficient tangible net assets), and shall comply with the Company’s
reporting, filing and other obligations under the bylaws, listed securities
maintenance standards and other rules and regulations of the FINRA and the
Trading Market. The Company shall not take any action which could reasonably be
expected to result in the delisting or suspension of the Common Stock on the
Trading Market.

       

      Section
5.3          Compliance with
Laws.

       

      (i)           The
Company shall comply, and cause each Subsidiary to comply, (a) with all laws,
rules, regulations and orders applicable to the business and operations of the
Company and its Subsidiaries except as would not have a Material Adverse Effect
and (b) with all applicable provisions of the Securities Act, the Exchange Act,
the rules and regulations of the FINRA and the listing standards of the Trading
Market.  Without limiting the generality of the foregoing, neither the
Company nor any of its officers, directors or Affiliates has taken or will take,
directly or indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company, or which caused or resulted
in, or which would in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the
Company.

       

      (ii)          The
Investor shall comply with all laws, rules, regulations and orders applicable to
the performance by it of its obligations under this Agreement and its investment
in the Securities, except as would not, individually or in the aggregate,
prohibit or otherwise interfere with the ability of the Investor to enter into
and perform its obligations under this Agreement in any material respect.
Without limiting the foregoing, the Investor shall comply with all applicable
provisions of the Securities Act and the Exchange Act and any applicable
securities laws of any non-U.S. jurisdictions and all applicable laws of the
British Virgin Islands.

      
        
           

        

        
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      Section
5.4          Keeping of Records and Books
of Account; Foreign Corrupt Practices Act.

       

      (i)           The
Company shall keep and require each Subsidiary to keep adequate records and
books of account, in which complete entries shall be made in accordance with
GAAP consistently applied, reflecting all financial transactions of the Company
and its Subsidiaries, and in which, for each fiscal year, all proper reserves
for depreciation, depletion, obsolescence, amortization, taxes, bad debts and
other purposes in connection with its business shall be made.  The
Company shall maintain a system of internal accounting controls that (a) pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the Company; (b)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of
the Company; and (c) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the Company’s
assets that would likely have a material effect on the Company’s financial
statements.

       

      (ii)          Neither
the Company, nor any of its Subsidiaries, nor to the knowledge of the Company,
any of their respective directors, officers, agents, employees or any other
persons acting on their behalf shall, in connection with the operation of the
Company’s and its Subsidiaries’ respective businesses, (a) use any corporate
funds for unlawful contributions, payments, gifts or entertainment or to make
any unlawful expenditures relating to political activity to government
officials, candidates or members of political parties or organizations, (b) pay,
accept or receive any unlawful contributions, payments, expenditures or gifts,
or (c) violate or operate in noncompliance with any export restrictions,
anti-boycott regulations, embargo regulations or other applicable domestic or
foreign laws and regulations.

       

      (iii)         Subject
to the requirements of Section 5.12 of this Agreement, from time to time from
and after the period beginning with the third Trading Day immediately preceding
each Fixed Request Exercise Date through and including the applicable Settlement
Date, the Company shall make available for inspection and review by the
Investor, customary documentation allowing the Investor and/or its appointed
counsel or advisors to conduct due diligence.

       

      Section
5.5          Limitations on Holdings and
Issuances.  Notwithstanding
any other provision of this Agreement, the Company shall not be obligated to
issue and the Investor shall not be obligated to purchase any shares of Common
Stock which, (i) when aggregated with all other shares of Common Stock then
beneficially owned (as calculated pursuant to Section 13(d) of the Exchange Act
and Rule 13d-3 promulgated thereunder) by the Investor and its Affiliates, would
result in the beneficial ownership by the Investor of more than 4.9% of the then
issued and outstanding shares of Common Stock or (ii) when aggregated with all
other shares of Common Stock offered pursuant to the Registration Statement
would exceed the maximum amount permissible under General Instruction I.B.6. of
Form S-3.

      
        
           

        

        
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      Section
5.6          Other Agreements and Other
Financings.

       

      (i)           The
Company shall not enter into, announce or recommend to its stockholders any
agreement, plan, arrangement or transaction in or of which the terms thereof
would restrict, materially delay, conflict with or impair the ability or right
of the Company or any Subsidiary to perform its obligations under this
Agreement, including, without limitation, the obligation of the Company to
deliver the Commitment Shares to the Investor not later than 4:00 p.m. (New York
time) on the second Trading Day immediately following the Effective Date, and
the obligation of the Company to deliver the Shares to the Investor in respect
of a previously provided Fixed Request Notice or Optional Amount on the
applicable Settlement Date.

       

      (ii)          The
Company shall notify the Investor, within 48 hours, if it enters into any
agreement, plan, arrangement or transaction with a third party, the principal
purpose of which is to obtain during a Pricing Period an Other Financing not
constituting an Acceptable Financing (an “Other Financing
Notice”); provided, however, that the
Company shall notify the Investor promptly (but in no event later than 24 hours)
(an “Integration
Notice”) if it enters into any agreement, plan, arrangement or
transaction with a third party, the principal purpose of which is to obtain at
any time during the Investment Period an Other Financing that may be aggregated
with the transactions contemplated by this Agreement for purposes of determining
whether approval of the Company’s stockholders is required under any bylaw,
listed securities maintenance standards or other rules of the Trading Market
and, if required under applicable law, including, without limitation, Regulation
FD promulgated by the Commission, or under the applicable rules and regulations
of the Trading Market, the Company shall publicly disclose such information in
accordance with Regulation FD and the applicable rules and regulations of the
Trading Market. For purposes of this Section 5.6(ii), any press release issued
by, or Commission Document filed by, the Company shall constitute sufficient
notice, provided that it is issued or filed, as the case may be, within the time
requirements set forth in the first sentence of this Section 5.6(ii) for an
Other Financing Notice or an Integration Notice, as applicable.  For
greater certainty, the entry by the Company into any agreement, plan,
arrangement or transaction with a third party to obtain an Other Financing (or
any other financing) outside of a Pricing Period shall not trigger any
requirement for the Company to deliver an Other Financing Notice (it being
acknowledged and agreed that nothing contained in this Section 5.6(ii) shall
limit or modify in any respect the Company’s obligations in Section 7.2). During
any Pricing Period in which the Company is required to provide an Other
Financing Notice pursuant to the first sentence of this Section 5.6(ii), the
Investor shall (i) have the option to purchase the Shares subject to the Fixed
Request at (x) the price therefor in accordance with the terms of this Agreement
or (y) the third party’s per share purchase price in connection with the Other
Financing, net of such third party’s discounts, Warrant Value and fees, or (ii)
the Investor may elect to not purchase any Shares subject to the Fixed Request
for that Pricing Period. An “Other Financing”
shall mean (x) the issuance of Common Stock for a purchase price less than, or
the issuance of securities convertible into or exchangeable for Common Stock at
an exercise or conversion price (as the case may be) less than, the then Current
Market Price of the Common Stock (in each case, after all fees, discounts,
Warrant Value and commissions associated with the transaction) (a “Below Market
Offering”); (y) the implementation by the Company of any mechanism in
respect of any securities convertible into or exchangeable for Common Stock for
the reset of the purchase price of the Common Stock to below the then Current
Market Price of the Common Stock (including, without limitation, any
antidilution or similar adjustment provisions in respect of any Company
securities, but specifically excluding customary adjustments for stock splits,
stock dividends, stock combinations and similar events); or (z) the issuance of
options, warrants or similar rights of subscription in each case not
constituting an Acceptable Financing. “Acceptable Financing”
shall mean the issuance by the Company of: (1) debt securities or any class or
series of preferred stock of the Company, in each case that are not convertible
into or exchangeable for Common Stock or securities convertible into or
exchangeable for Common Stock; (2) shares of Common Stock or securities
convertible into or exchangeable for Common Stock (including, without
limitation, convertible debt securities) other than in connection with a Below
Market Offering; (3) shares of Common Stock or securities convertible into or
exchangeable for Common Stock (including, without limitation, convertible debt
securities) in connection with an underwritten public offering of securities of
the Company or a registered direct public offering of securities of the Company,
in each case where the price per share of such Common Stock (or the conversion
or exercise price of such securities, as applicable) is fixed concurrently with
the execution of definitive documentation relating to such offering, and the
issuance of shares of Common Stock upon the conversion, exercise or exchange
thereof; (4) shares of Common Stock or securities convertible into or
exchangeable for Common Stock in connection with awards under the Company’s
benefit and equity plans and arrangements and the issuance of shares of Common
Stock upon the conversion, exercise or exchange thereof; (5) shares of Common
Stock issuable upon the conversion or exchange of equity awards or convertible
or exchangeable securities (including, without limitation, convertible debt
securities) outstanding as of the Effective Date; (6) shares of Common Stock or
securities convertible into or exchangeable for Common Stock (including, without
limitation, convertible debt securities) issued in connection with the
acquisition, license or sale of one or more other companies, equipment,
technologies or lines of business, and the issuance of shares of Common Stock
upon the conversion, exercise or exchange thereof; (7) shares of Common Stock or
securities convertible into or exchangeable for Common Stock (including, without
limitation, convertible debt securities) or similar rights to subscribe for the
purchase of shares of Common Stock in connection with technology sharing,
licensing, research and joint development agreements (or amendments thereto)
with third parties, and the issuance of shares of Common Stock upon the
conversion, exercise or exchange thereof; and (8) shares of Common Stock and/or
warrants or similar rights to subscribe for the purchase of shares of Common
Stock issued in connection with equipment financings and/or real property leases
(or amendments thereto) and the issuance of shares of Common Stock upon the
exercise thereof.

      
        
           

        

        
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      Section
5.7          Stop
Orders.  The
Company shall advise the Investor promptly (but in no event later than 24 hours)
and shall confirm such advice in writing: (i) of the Company’s receipt of notice
of any request by the Commission for amendment of or a supplement to the
Registration Statement, the Prospectus, any Permitted Free Writing Prospectus or
for any additional information; (ii) of the Company’s receipt of notice of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or prohibiting or suspending the use of the Prospectus or
any Prospectus Supplement, or of the suspension of qualification of the
Securities for offering or sale in any jurisdiction, or the initiation or
contemplated initiation of any proceeding for such purpose; and (iii) of the
Company becoming aware of the happening of any event, which makes any statement
of a material fact made in the Registration Statement, the Prospectus or any
Permitted Free Writing Prospectus untrue or which requires the making of any
additions to or changes to the statements then made in the Registration
Statement, the Prospectus or any Permitted Free Writing Prospectus in order to
state a material fact required by the Securities Act to be stated therein or
necessary in order to make the statements then made therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not
misleading, or of the necessity to amend the Registration Statement or
supplement the Prospectus or any Permitted Free Writing Prospectus to comply
with the Securities Act or any other law. The Company shall not be required to
disclose to the Investor the substance or specific reasons of any of the events
set forth in clauses (i) through (iii) of the immediately preceding sentence,
but rather, shall only be required to disclose that the event has
occurred.  The Company shall not issue any Fixed Request during the
continuation of any of the foregoing events. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration Statement
or prohibiting or suspending the use of the Prospectus or any Prospectus
Supplement, the Company shall use commercially reasonable efforts to obtain the
withdrawal of such order at the earliest possible time. The Company shall also
advise the Investor promptly (but in no event later than 24 hours) and shall
confirm such advice in writing of the Company becoming aware of the happening of
any event, which makes any statement made in the FINRA Filing untrue or which
requires the making of any additions to or changes to the statements then made
in the FINRA Filing in order to comply with FINRA Rule 5110.

       

      Section
5.8          Amendments to the
Registration Statement; Prospectus Supplements; Free Writing
Prospectuses.

       

      (i)           Except
as provided in this Agreement and other than periodic reports required to be
filed pursuant to the Exchange Act, the Company shall not file with the
Commission any amendment to the Registration Statement that relates to the
Investor, this Agreement or the transactions contemplated hereby or file with
the Commission any Prospectus Supplement that relates to the Investor, this
Agreement or the transactions contemplated hereby with respect to which (a) the
Investor shall not previously have been advised, (b) the Company shall not have
given due consideration to any comments thereon received from the Investor or
its counsel, or (c) the Investor shall reasonably object after being so advised,
unless the Company reasonably has determined that it is necessary to amend the
Registration Statement or make any supplement to the Prospectus to comply with
the Securities Act or any other applicable law or regulation, in which case the
Company shall promptly (but in no event later than 24 hours) so inform the
Investor, the Investor shall be provided with a reasonable opportunity to review
and comment upon any disclosure relating to the Investor and the Company shall
expeditiously furnish to the Investor an electronic copy thereof. In addition,
for so long as, in the reasonable opinion of counsel for the Investor, the
Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the
Securities Act) is required to be delivered in connection with any acquisition
or sale of Securities by the Investor, the Company shall not file any Prospectus
Supplement with respect to the Securities without delivering or making available
a copy of such Prospectus Supplement, together with the Base Prospectus, to the
Investor promptly.

      
        
           

        

        
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    (ii)           The
Company has not made, and agrees that unless it obtains the prior written
consent of the Investor it will not make, an offer relating to the Securities
that would constitute an Issuer Free Writing Prospectus or that would otherwise
constitute a Free Writing Prospectus required to be filed by the Company or the
Investor with the Commission or retained by the Company or the Investor under
Rule 433 under the Securities Act.  The Investor has not made, and
agrees that unless it obtains the prior written consent of the Company it will
not make, an offer relating to the Securities that would constitute a Free
Writing Prospectus required to be filed by the Company with the Commission or
retained by the Company under Rule 433 under the Securities Act.  Any
such Issuer Free Writing Prospectus or other Free Writing Prospectus consented
to by the Investor or the Company is referred to in this Agreement as a “Permitted Free Writing
Prospectus.”  The Company agrees that (x) it has treated and
will treat, as the case may be, each Permitted Free Writing Prospectus as an
Issuer Free Writing Prospectus and (y) it has complied and will comply, as the
case may be, with the requirements of Rules 164 and 433 under the Securities Act
applicable to any Permitted Free Writing Prospectus, including in respect of
timely filing with the Commission, legending and record keeping.

     

    Section
5.9          Prospectus
Delivery.  The
Company shall file with the Commission a Prospectus Supplement pursuant to Rule
424(b) under the Securities Act on the first Trading Day immediately following
the last Trading Day of each Pricing Period.  The Company shall
provide the Investor a reasonable opportunity to comment on a draft of each such
Prospectus Supplement and any Issuer Free Writing Prospectus, shall give due
consideration to all such comments and, subject to the provisions of Section 5.8
hereof, shall deliver or make available to the Investor, without charge, an
electronic copy of each form of Prospectus Supplement, together with the Base
Prospectus, and any Permitted Free Writing Prospectus on each applicable
Settlement Date.  The Company consents to the use of the Prospectus
(and of any Prospectus Supplement thereto) in accordance with the provisions of
the Securities Act and with the securities or “blue sky” laws of the
jurisdictions in which the Securities may be sold by the Investor, in connection
with the offering and sale of the Securities and for such period of time
thereafter as the Prospectus (or in lieu thereof, the notice referred to in Rule
173(a) under the Securities Act) is required by the Securities Act to be
delivered in connection with sales of the Securities. If during such period of
time any event shall occur that in the judgment of the Company and its counsel
is required to be set forth in the Registration Statement or the Prospectus or
any Permitted Free Writing Prospectus or should be set forth therein in order to
make the statements made therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, or if it is necessary
to amend the Registration Statement or supplement or amend the Prospectus or any
Permitted Free Writing Prospectus to comply with the Securities Act or any other
applicable law or regulation, the Company shall forthwith prepare and, subject
to Section 5.8 above, file with the Commission an appropriate amendment to the
Registration Statement or Prospectus Supplement to the Prospectus (or supplement
to the Permitted Free Writing Prospectus) and shall expeditiously furnish or
make available to the Investor an electronic copy thereof. The Investor shall
comply with any Prospectus delivery requirements under the Securities Act
applicable to it. The Investor acknowledges and agrees that it is not authorized
to give any information or to make any representation not contained in the
Prospectus or the documents incorporated by reference or specifically referred
to therein in connection with the offer and sale of the Securities.

     

    
      
        
        

      

      
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    Section
5.10        Selling
Restrictions.

    (i)           Except
as expressly set forth below, the Investor covenants that from and after the
date hereof through and including the 90th day
next following the termination of this Agreement (the “Restricted Period”),
neither the Investor nor any of its Affiliates nor any entity managed or
controlled by the Investor (collectively, the “Restricted Persons”
and each of the foregoing is referred to herein as a “Restricted Person”)
shall, directly or indirectly, (i) intentionally engage in any Short Sales
involving the Company’s securities or (ii) grant any option to purchase, or
acquire any right to dispose of or otherwise dispose for value of, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for any shares of Common Stock, or enter into any swap, hedge or other similar
agreement that transfers, in whole or in part, the economic risk of ownership of
the Common Stock. Notwithstanding the foregoing, it is expressly understood and
agreed that nothing contained herein shall (without implication that the
contrary would otherwise be true) prohibit any Restricted Person during the
Restricted Period from: (1) selling “long” (as defined under Rule 200
promulgated under Regulation SHO) the Commitment Shares or the Shares; or (2)
selling a number of shares of Common Stock equal to the number of Shares
that such Restricted Person is or may be obligated to purchase under a
pending Fixed Request Notice but has not yet taken possession of so long as
such Restricted Person (or the Broker-Dealer, as applicable) delivers the Shares
purchased pursuant to such Fixed Request Notice to the purchaser thereof or the
applicable Broker-Dealer; provided, however, such
Restricted Person (or the applicable Broker-Dealer, as applicable) shall not be
required to so deliver any such Shares subject to such Fixed Request Notice if
(a) such Fixed Request is terminated by mutual agreement of the Company and the
Investor and, as a result of such termination, no such Shares are delivered to
the Investor under this Agreement or (b) the Company otherwise fails to deliver
such Shares to the Investor on the applicable Settlement Date upon the terms and
subject to the provisions of this Agreement.

     

    (ii)           In
addition to the foregoing, in connection with any sale of Securities (including
any sale permitted by paragraph (i) above), the Investor shall comply in all
respects with all applicable laws, rules, regulations and orders, including,
without limitation, the requirements of the Securities Act and the Exchange
Act.

     

    Section
5.11         Effective Registration
Statement.  During
the Investment Period, the Company shall use its best efforts to maintain the
continuous effectiveness of the Registration Statement under the Securities
Act.

     

    Section
5.12         Non-Public
Information.  Neither
the Company nor any of its directors, officers or agents shall disclose any
material non-public information about the Company to the Investor, unless a
timely public announcement thereof is made by the Company in the manner
contemplated by Regulation FD.

     

    Section
5.13         Broker/Dealer.  The
Investor shall use one or more broker-dealers to effectuate all sales, if any,
of the Securities that it may acquire or purchase from the Company pursuant to
this Agreement, which (or whom) shall be unaffiliated with the Investor and not
then currently engaged or used by the Company (collectively, the “Broker-Dealer”). The
Investor shall provide the Company with all information regarding the
Broker-Dealer reasonably requested by the Company.  The Investor shall
be solely responsible for all fees and commissions of the Broker-Dealer, which
shall not exceed customary brokerage fees and commissions.

     

    
      
        
        

      

      
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    Section
5.14         Disclosure
Schedule.

    (i)           During
the Investment Period, the Company shall from time to time update the Disclosure
Schedule as may be required to satisfy the condition set forth in Section
6.3(i).  For purposes of this Section 5.14, any disclosure made in a
schedule to the Compliance Certificate substantially in the form attached hereto
as Exhibit D
shall be deemed to be an update of the Disclosure
Schedule.  Notwithstanding anything in this Agreement to the contrary,
no update to the Disclosure Schedule pursuant to this Section 5.14 shall cure
any breach of a representation or warranty of the Company contained in this
Agreement and shall not affect any of the Investor’s rights or remedies with
respect thereto.

     

    (ii)           Notwithstanding
anything to the contrary contained in the Disclosure Schedules or in this
Agreement, the information and disclosure contained in any Schedule of the
Disclosure Schedules shall be deemed to be disclosed and incorporated by
reference in any other Schedule of the Disclosure Schedules as though fully set
forth in such Schedule for which applicability of such information and
disclosure is readily apparent on its face.  The fact that any item of
information is disclosed in the Disclosure Schedules shall not be construed to
mean that such information is required to be disclosed by this
Agreement.  Except as expressly set forth in this Agreement, such
information and the thresholds (whether based on quantity, qualitative
characterization, dollar amounts or otherwise) set forth herein shall not be
used as a basis for interpreting the terms “material” or “Material Adverse
Effect” or other similar terms in this Agreement.

     

    ARTICLE
VI

    OPINION
OF COUNSEL AND CERTIFICATE;

    CONDITIONS
TO THE SALE AND PURCHASE OF THE SHARES

     

    Section
6.1           Issuance of Commitment
Shares; Opinion of Counsel; Certificate.  On
the Effective Date, the Company shall deliver irrevocable instructions to its
transfer agent to electronically transfer the Commitment Shares to the Investor,
not later than 4:00 p.m. (New York time) on the second Trading Day immediately
following the Effective Date, by crediting the Investor’s or its designees’
account at DTC through its Deposit/Withdrawal at Custodian (DWAC) system, which
Commitment Shares shall be issued pursuant to the Registration Statement and
without any restriction on resale. For the avoidance of doubt, all of the
Commitment Shares shall be fully earned as of the Effective Date, regardless of
whether any Fixed Requests are issued by the Company or settled hereunder.
Simultaneously with the execution and delivery of this Agreement, the Investor’s
counsel has received (a) an opinion of outside counsel to the Company, dated the
Effective Date, in the form mutually agreed to by the parties hereto, (b) a
certificate from the Company, dated the Effective Date, in the form of Exhibit C hereto, and
(c) a copy of the irrevocable instructions to the transfer agent regarding the
Commitment Shares.

     

    Section
6.2           Conditions Precedent to the
Obligation of the Company.  The
obligation hereunder of the Company to issue and sell the Shares to the Investor
under any Fixed Request or Optional Amount is subject to the satisfaction or (to
the extent permitted by applicable law) waiver of each of the conditions set
forth below. These conditions are for the Company’s sole benefit and (to the
extent permitted by applicable law) may be waived by the Company at any time in
its sole discretion.

     

    
      
         

      

      
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    (i)           Accuracy
of the Investor’s Representations and Warranties.  The
representations and warranties of the Investor contained in this Agreement (a)
that are not qualified by “materiality” shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the applicable Fixed Request Exercise Date and the applicable
Settlement Date with the same force and effect as if made on such dates, except
to the extent such representations and warranties are as of another date, in
which case, such representations and warranties shall be true and correct in all
material respects as of such other date and (b) that are qualified by
“materiality” shall have been true and correct when made and shall be true and
correct as of the applicable Fixed Request Exercise Date and the applicable
Settlement Date with the same force and effect as if made on such dates, except
to the extent such representations and warranties are as of another date, in
which case, such representations and warranties shall be true and correct as of
such other date.

     

    (ii)           Registration
Statement.  The Registration Statement is effective and neither
the Company nor the Investor shall have received notice that the Commission has
issued or intends to issue a stop order with respect to the Registration
Statement.  The Company shall have a maximum dollar amount certain of
Common Stock registered under the Registration Statement which (A) as of the
Effective Date, is sufficient to issue to the Investor not less than (1) the
Total Commitment plus (2) the Commitment Shares and (B) as of the applicable
Fixed Request Exercise Date and the applicable Settlement Date, is sufficient to
issue to the Investor not less than the maximum dollar amount worth of Shares
issuable pursuant to the applicable Fixed Request Notice and applicable Optional
Amount, if any. The Current Report shall have been filed with the Commission, as
required pursuant to Section 1.4, and all Prospectus Supplements shall have been
filed with the Commission, as required pursuant to Sections 1.4 and 5.9 hereof,
to disclose the sale of the Shares prior to each Settlement Date, as applicable.
Any other material required to be filed by the Company or any other offering
participant pursuant to Rule 433(d) under the Securities Act shall have been
filed with the Commission within the applicable time periods prescribed for such
filings by Rule 433 under the Securities Act.

     

    (iii)          Performance
by the Investor.  The Investor shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Investor at or prior to the applicable Fixed Request Exercise Date
and the applicable Settlement Date.

     

    (iv)          No
Injunction.  No statute, regulation, order, decree, writ,
ruling or injunction shall have been enacted, entered, promulgated, threatened
or endorsed by any court or governmental authority of competent jurisdiction
which prohibits the consummation of or which would materially modify or delay
any of the transactions contemplated by this Agreement.

     

    (v)           No
Suspension, Etc.  Trading in the Common Stock shall not have
been suspended by the Commission or the Trading Market (except for any
suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the applicable Fixed Request Exercise
Date and applicable Settlement Date), and, at any time prior to the applicable
Fixed Request Exercise Date and applicable Settlement Date, none of the events
described in clauses (i), (ii) and (iii) or the last sentence of Section 5.7
shall have occurred, trading in securities generally as reported on the Trading
Market shall not have been suspended or limited, nor shall a banking moratorium
have been declared either by the United States or New York State authorities,
nor shall there have occurred any material outbreak or escalation of hostilities
or other national or international calamity or crisis of such magnitude in its
effect on, or any material adverse change in, any financial, credit or
securities market which, in each case, in the reasonable judgment of the
Company, makes it impracticable or inadvisable to issue the Shares.

     

    
      
         

      

      
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    (vi)          No
Proceedings or Litigation.  No action, suit or proceeding
before any arbitrator or any court or governmental authority shall have been
commenced or threatened, and no inquiry or investigation by any governmental
authority shall have been commenced or threatened, against the Company or any
Subsidiary, or any of the officers, directors or Affiliates of the Company or
any Subsidiary, seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.

     

    (vii)         Aggregate
Limit.  The issuance and sale of the Shares issuable pursuant
to such Fixed Request Notice or Optional Amount shall not violate Sections 2.2,
2.12 and 5.5 hereof.

     

    (viii)        No
Unresolved FINRA Objection.   There shall not exist any
unresolved objection raised by the FINRA’s Corporate Financing Department with
respect to the fairness and reasonableness of the terms of the transactions
contemplated by this Agreement, and the parties hereto and Reedland shall have
obtained written confirmation thereof from the FINRA.

     

    Section
6.3           Conditions Precedent to the
Obligation of the Investor.  The
obligation hereunder of the Investor to accept a Fixed Request Notice or
Optional Amount grant and to acquire and pay for the Shares is subject to the
satisfaction or (to the extent permitted by applicable law) waiver, at or before
each Fixed Request Exercise Date and each Settlement Date, of each of the
conditions set forth below. These conditions are for the Investor’s sole benefit
and (to the extent permitted by applicable law) may be waived by the Investor at
any time in its sole discretion.

     

    (i)           Accuracy
of the Company’s Representations and Warranties.  The
representations and warranties of the Company contained in this Agreement, as
modified by the Disclosure Schedule (a) that are not qualified by “materiality”
or “Material Adverse Effect” shall have been true and correct in all material
respects when made and shall be true and correct in all material respects as of
the applicable Fixed Request Exercise Date and the applicable Settlement Date
with the same force and effect as if made on such dates, except to the extent
such representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct in all material
respects as of such other date and (b) that are qualified by “materiality” or
“Material Adverse Effect” shall have been true and correct when made and shall
be true and correct as of the applicable Fixed Request Exercise Date and the
applicable Settlement Date with the same force and effect as if made on such
dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct as of such other date.

     

    
      
         

      

      
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    (ii)     
     Registration
Statement. The Registration Statement is effective and neither the
Company nor the Investor shall have received notice that the Commission has
issued or intends to issue a stop order with respect to the Registration
Statement. The Company shall have a maximum dollar amount certain of Common
Stock registered under the Registration Statement which (A) as of the Effective
Date, is sufficient to issue to the Investor not less than (1) the Total
Commitment plus (2) the Commitment Shares and (B) as of the applicable Fixed
Request Exercise Date and the applicable Settlement Date, is sufficient to issue
to the Investor not less than the maximum dollar amount worth of Shares issuable
pursuant to the applicable Fixed Request Notice and applicable Optional Amount,
if any. As of the Effective Date, the applicable Fixed Request Exercise Date and
the applicable Settlement Date, the Investor shall be permitted to utilize the
Prospectus to resell all of the Securities it then owns or has the right to
acquire pursuant to all Fixed Request Notices issued pursuant to this Agreement.
The Current Report shall have been filed with the Commission, as required
pursuant to Section 1.4, and all Prospectus Supplements shall have been filed
with the Commission, as required pursuant to Sections 1.4 and 5.9 hereof, to
disclose the sale of the Shares prior to each Settlement Date, as applicable,
and an electronic copy of each such Prospectus Supplement together with the Base
Prospectus shall have been delivered or made available to the Investor in
accordance with Section 5.9 hereof. Any other material required to be filed by
the Company or any other offering participant pursuant to Rule 433(d) under the
Securities Act shall have been filed with the Commission within the applicable
time periods prescribed for such filings by Rule 433 under the Securities
Act.

     

    (iii)          No
Suspension.  Trading in the Common Stock shall not have been
suspended by the Commission or the Trading Market (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to the applicable Fixed Request Exercise Date and applicable
Settlement Date), and the Company shall not have received any notice that the
listing or quotation of the Common Stock on the Trading Market shall be
terminated on a date certain (which termination shall be final and
non-appealable). At any time prior to the applicable Fixed Request Exercise Date
and applicable Settlement Date, none of the events described in clauses (i),
(ii) and (iii) or the last sentence of Section 5.7 shall have occurred, trading
in securities generally as reported on the Trading Market shall not have been
suspended or limited, nor shall a banking moratorium have been declared either
by the United States or New York State authorities, nor shall there have
occurred any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in, any financial, credit or securities market which, in
each case, in the reasonable judgment of the Investor, makes it impracticable or
inadvisable to purchase the Shares.

     

    (iv)         Performance
of the Company.  The Company shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the applicable Fixed Request Exercise Date
and the applicable Settlement Date. The Company shall have delivered to the
Investor on the applicable Settlement Date the Compliance Certificate
substantially in the form attached hereto as Exhibit
D.

     

    (v)          No
Injunction. No statute, rule, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any of the
transactions contemplated by this Agreement.

     

    
      
        
        

      

      
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    (vi)         No
Proceedings or Litigation.  No action, suit or proceeding
before any arbitrator or any court or governmental authority shall have been
commenced or threatened, and no inquiry or investigation by any governmental
authority shall have been commenced or threatened, against the Company or any
Subsidiary, or any of the officers, directors or Affiliates of the Company or
any Subsidiary, seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.

     

    (vii)        Aggregate
Limit.  The issuance and sale of the Shares issuable pursuant
to such Fixed Request Notice or Optional Amount shall not violate Sections 2.2,
2.12 and 5.5 hereof.

     

    (viii)       Shares
Authorized and Delivered.  The Shares issuable pursuant to such
Fixed Request Notice or Optional Amount shall have been duly authorized by all
necessary corporate action of the Company. The Company shall have delivered all
Shares relating to all prior Fixed Request Notices and Optional Amounts, as
applicable.

     

    (ix)          Listing
of Shares, Commitment Shares. All Commitment Shares shall have been
approved for listing or quotation on the Trading Market as of the Effective Date
(if such approval is required for the listing or quotation thereof on the
Trading Market). The Company shall have submitted to the Trading Market, at or
prior to the applicable Fixed Request Exercise Date, a notification form of
listing of additional shares related to the Shares issuable pursuant to such
Fixed Request and Optional Amount, in accordance with the bylaws, listed
securities maintenance standards and other rules of the Trading Market and,
prior to the applicable Settlement Date, such Shares shall have been approved
for listing or quotation on the Trading Market (if such approval is required for
the listing or quotation thereof on the Trading Market), subject only to notice
of issuance.

     

    (x)           Opinions
of Counsel; Bring-Down.  Subsequent to the filing of the
Current Report pursuant to Section 1.4 and prior to the first Fixed Request
Exercise Date, the Investor shall have received an opinion from outside counsel
to the Company in the form mutually agreed to by the parties hereto and an
opinion from in-house counsel to the Company in the form mutually agreed to by
the parties hereto.  On each Settlement Date, the Investor shall have
received an opinion “bring down” from outside counsel to the Company in the form
mutually agreed to by the parties hereto and an opinion “bring down” from
in-house counsel to the Company in the form mutually agreed to by the parties
hereto.

     

    (xi)          No
Unresolved FINRA Objection.  There shall not exist any
unresolved objection raised by the FINRA’s Corporate Financing Department with
respect to the fairness and reasonableness of the terms of the transactions
contemplated by this Agreement, and the parties hereto and Reedland shall have
obtained written confirmation thereof from the FINRA.

     

    (xii)         Payment
of Investor’s Counsel Fees; Due Diligence Expenses.  On the
Effective Date, the Company shall have paid by wire transfer of immediately
available funds to an account designated by the Investor’s counsel, the fees and
expenses of the Investor’s counsel in accordance with clause (B) of the proviso
to the first sentence of Section 9.1(i) of this Agreement.  The
Company shall have paid by wire transfer of immediately available funds to an
account designated by the Investor the due diligence expenses incurred by the
Investor in accordance with the provisions of the second sentence of Section
9.1(i) of this Agreement (as applicable).

     

    
      
         

      

      
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    ARTICLE
VII

    TERMINATION

     

    Section
7.1           Term, Termination by Mutual
Consent.  Unless
earlier terminated as provided hereunder, this Agreement shall terminate
automatically on the earliest of (i) the first day of the month next following
the 24-month anniversary of the Effective Date (the “Investment Period”),
(ii) the date that the entire dollar amount of Common Stock registered under the
Registration Statement have been issued and sold and (iii) the date the Investor
shall have purchased the Total Commitment of shares of Common Stock (subject in
all cases to the Trading Market Limit). Subject to Section 7.3, this Agreement
may be terminated at any time (A) by the mutual written consent of the parties,
effective as of the date of such mutual written consent unless otherwise
provided in such written consent, it being hereby acknowledged and agreed that
the Investor may not consent to such termination during a Pricing Period or
prior to a Settlement Date in the event the Investor has instructed the
Broker-Dealer to effect an open-market sale of Shares which are subject to a
pending Fixed Request Notice but which have not yet been physically delivered by
the Company (and/or credited by book-entry) to the Investor in accordance with
the terms and subject to the conditions of this Agreement, or (B) by either the
Company or the Investor effective upon written notice to the other party under
Section 9.4, if the FINRA’s Corporate Financing Department has raised any
objection with respect to the fairness and reasonableness of the terms of the
transactions contemplated by this Agreement, or has otherwise failed to confirm
in writing that it has determined not to raise any such objection, and such
objection shall not have been resolved, or such confirmation of no objection
shall not have been obtained, prior to (1) the 60th day immediately following
the Effective Date, in the case of an objection raised or confirmation failure
occurring prior to the first Fixed Request Exercise Date, or (2) prior to the
60th day immediately following the receipt by the Company or the Investor of
notice of such objection, in the case of an objection raised after the first
Fixed Request Exercise Date; provided however, that (x) the
party seeking to terminate this Agreement pursuant to this clause (B) of Section
7.1 shall have used its commercially reasonable efforts to resolve such
objection and/or to obtain such confirmation of no objection in accordance with
and subject to the provisions of Section 5.1(ii) of this Agreement and (y) the
right to terminate this Agreement pursuant to this clause (B) of Section 7.1
shall not be available to any party whose action or failure to act has been a
principal cause of, or has resulted in, such objection or confirmation failure
and such action or failure to act constitutes a breach of this Agreement.
Subject to Section 7.3, the Company may terminate this Agreement effective upon
three Trading Days’ prior written notice to the Investor delivered in accordance
with Section 9.4; provided, however, that (i)
such termination shall not occur during a Pricing Period or, subsequent to the
issuance of a Fixed Request Notice, prior to the Settlement Date related to such
Fixed Request Notice, and (ii) prior to issuing any press release, or making any
public statement or announcement, with respect to such termination, the Company
shall consult with the Investor and shall obtain the Investor’s consent to the
form and substance of such press release or other disclosure, which consent
shall not be unreasonably delayed or withheld.

     

    
      
         

      

      
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    Section
7.2           Other
Termination.  If
the Company provides the Investor with an Other Financing Notice or an
Integration Notice, in each case pursuant to Section 5.6(ii) of this Agreement,
or if the Company otherwise enters into any agreement, plan, arrangement or
transaction with a third party, the principal purpose of which is to obtain
outside a Pricing Period, but otherwise during the Investment Period, an Other
Financing not constituting an Acceptable Financing, in which latter case the
Company shall so notify the Investor within 48 hours thereof, then in all such
cases, subject to Section 7.3, the Investor shall have the right to terminate
this Agreement within the subsequent 30-day period (the “Event Period”),
effective upon one Trading Day’s prior written notice delivered to the Company
in accordance with Section 9.4 at any time during the Event Period. The
Company shall promptly (but in no event later than 24 hours) notify the Investor
(and, if required under applicable law, including, without limitation,
Regulation FD promulgated by the Commission, or under the applicable rules and
regulations of the Trading Market, the Company shall publicly disclose such
information in accordance with Regulation FD and the applicable rules and
regulations of the Trading Market), and, subject to Section 7.3, the Investor
shall have the right to terminate this Agreement at any time after receipt of
such notification, if: (i) any condition, occurrence, state of facts or event
constituting a Material Adverse Effect has occurred; (ii) a Fundamental
Transaction has occurred or the Company enters into a definitive agreement
providing for a Fundamental Transaction; or (iii) a default or event of default
has occurred and is continuing under the terms of any agreement, contract, note
or other instrument to which the Company or any of its Subsidiaries is a party
with respect to any indebtedness for borrowed money representing more than 10%
of the Company’s consolidated assets, in any such case, upon one Trading Day’s
prior written notice delivered to the Company in accordance with Section 9.4
hereof.

     

    Section
7.3           Effect of
Termination.  In
the event of termination by the Company or the Investor pursuant
to Section 7.1 or 7.2, as applicable, written notice thereof shall forthwith be
given to the other party as provided in Section 9.4 and the transactions
contemplated by this Agreement shall be terminated without further action by
either party. If this Agreement is terminated as provided in Section 7.1 or 7.2
herein, this Agreement shall become void and of no further force and effect,
except that (i) the provisions of Article VIII (Indemnification), Section 9.1
(Fees and Expenses), Section 9.2 (Specific Enforcement, Consent to Jurisdiction,
Waiver of Jury Trial), Section 9.4 (Notices), Section 9.8 (Governing Law),
Section 9.9 (Survival), Section 9.11 (Publicity), Section 9.12 (Severability)
and this Article VII (Termination) shall remain in full force and effect
indefinitely notwithstanding such termination, (ii) the covenants and agreements
contained in Section 5.1(i) (Securities Compliance; FINRA Filing), Section 5.3
(Compliance with Laws), Section 5.7 (Stop Orders), Section 5.8 (Amendments to
the Registration Statement; Prospectus Supplements; Free Writing Prospectuses),
Section 5.9 (Prospectus Delivery), Section 5.11 (Effective Registration
Statement), Section 5.12 (Non-Public Information) and 5.13 (Broker/Dealer) shall
remain in full force and effect notwithstanding such termination for a period of
six months following such termination, (iii) the covenants and agreements of the
Investor contained in Section 5.10 (Selling Restrictions) shall remain in full
force and effect notwithstanding such termination for a period of 90 days
following such termination, and (iv) the covenants and agreements of the Company
contained in Section 5.2 (Registration and Listing) shall remain in full force
and effect notwithstanding such termination for a period of 30 days following
such termination. Notwithstanding anything in this Agreement to the contrary, no
termination of this Agreement by any party shall (a) affect any Commitment
Shares, or any rights of any holder thereof (it being hereby acknowledged and
agreed that all of the Commitment Shares shall be fully earned as of the
Effective Date, regardless of whether any Fixed Requests are issued by the
Company or settled hereunder), or (b) affect any cash fees paid to the Investor
or its counsel pursuant to Section 9.1, in each case all of which fees shall be
non-refundable, regardless of whether any Fixed Requests are issued by the
Company or settled hereunder. Nothing in this Section 7.3 shall be deemed to
release the Company or the Investor from any liability for any breach under this
Agreement or to impair the rights of the Company and the Investor to compel
specific performance by the other party of its obligations under this
Agreement.

     

    
      
        
        

      

      
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    ARTICLE
VIII

    INDEMNIFICATION

     

    Section
8.1           General
Indemnity.

     

    (i)           Indemnification
by the Company.  The Company shall indemnify and hold harmless
the Investor, each Affiliate, employee, representative and advisor of and to the
Investor, and each person, if any, who controls the Investor within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act from
and against all losses, claims, damages, liabilities and expenses (including
reasonable costs of defense and investigation and all attorneys’ fees) to which
the Investor, and each such other person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses (or actions in respect thereof) arise out of or are
based upon (a) any violation of United States federal or state securities laws
or the rules and regulations of the Trading Market in connection with the
transactions contemplated by this Agreement by the Company or any of its
Subsidiaries, affiliates, officers, directors or employees, (b) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Registration Statement or any amendment
thereto or any omission or alleged omission to state therein, or in any document
incorporated by reference therein, a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (c) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Prospectus, any Issuer Free Writing
Prospectus, or in any amendment thereof or supplement thereto, or in any “issuer
information” (as defined in Rule 433 under the Securities Act) of the Company,
which “issuer information” is required to be, or is, filed with the Commission
or otherwise contained in any Free Writing Prospectus, or any amendment or
supplement thereto, or any omission or alleged omission to state therein, or in
any document incorporated by reference therein, a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however, that (A) the
Company shall not be liable under this Section 8.1(i) to the extent that a court
of competent jurisdiction shall have determined by a final judgment (from which
no further appeals are available) that such loss, claim, damage, liability or
expense resulted directly and solely from any such acts or failures to act,
undertaken or omitted to be taken by the Investor or such person through its bad
faith or willful misconduct, (B) the foregoing indemnity shall not apply to any
loss, claim, damage, liability or expense to the extent, but only to the extent,
arising out of or based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Investor
expressly for use in the Current Report or any Prospectus Supplement or
Permitted Free Writing Prospectus, or any amendment thereof or supplement
thereto, and (C) with respect to the Prospectus, the foregoing indemnity shall
not inure to the benefit of the Investor or any such person from whom the person
asserting any loss, claim, damage, liability or expense purchased Common Stock,
if copies of all Prospectus Supplements required to be filed pursuant to Section
1.4 and 5.9, together with the Base Prospectus, were timely delivered or made
available to the Investor pursuant hereto and a copy of the Base Prospectus,
together with a Prospectus Supplement (as applicable), was not sent or given by
or on behalf of the Investor or any such person to such person, if required by
law to have been delivered, at or prior to the written confirmation of the sale
of the Common Stock to such person, and if delivery of the Base Prospectus,
together with a Prospectus Supplement (as applicable), would have cured the
defect giving rise to such loss, claim, damage, liability or
expense.

     

    
      
         

      

      
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    The
Company shall reimburse the Investor, and each such controlling person promptly
upon demand (with accompanying presentation of documentary evidence) for all
legal and other costs and expenses reasonably incurred by the Investor, or such
indemnified persons in investigating, defending against, or preparing to defend
against any such claim, action, suit or proceeding with respect to which it is
entitled to indemnification.

     

    (ii)          Indemnification
by the Investor. The Investor shall indemnify and hold harmless the
Company, each of its directors and officers, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act from and against all losses, claims, damages,
liabilities and expenses (including reasonable costs of defense and
investigation and all attorneys fees) to which the Company and each such other
person may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities and expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Current Report or any Prospectus
Supplement or Permitted Free Writing Prospectus, or in any amendment thereof or
supplement thereto, or any 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 under which they were made, not
misleading, in each case, to the extent, but only to the extent, the untrue
statement, alleged untrue statement, omission or alleged omission was made in
reliance upon, and in conformity with, written information furnished by the
Investor to the Company expressly for inclusion in the Current Report or such
Prospectus Supplement or Permitted Free Writing Prospectus, or any amendment
thereof or supplement thereto.

     

    The
Investor shall reimburse the Company and each such director, officer or
controlling person promptly upon demand for all legal and other costs and
expenses reasonably incurred by the Company or such indemnified persons in
investigating, defending against, or preparing to defend against any such claim,
action, suit or proceeding with respect to which it is entitled to
indemnification.

     

    
      
         

      

      
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    Section
8.2         Indemnification
Procedures.  Promptly
after a person receives notice of a claim or the commencement of an action for
which the person intends to seek indemnification under Section 8.1, the person
will notify the indemnifying party in writing of the claim or commencement of
the action, suit or proceeding; provided, however, that failure
to notify the indemnifying party will not relieve the indemnifying party from
liability under Section 8.1, except to the extent it has been materially
prejudiced by the failure to give notice.  The indemnifying party will
be entitled to participate in the defense of any claim, action, suit or
proceeding as to which indemnification is being sought, and if the indemnifying
party acknowledges in writing the obligation to indemnify the party against whom
the claim or action is brought, the indemnifying party may (but will not be
required to) assume the defense against the claim, action, suit or proceeding
with counsel satisfactory to it.  After an indemnifying party notifies
an indemnified party that the indemnifying party wishes to assume the defense of
a claim, action, suit or proceeding, the indemnifying party will not be liable
for any legal or other expenses incurred by the indemnified party in connection
with the defense against the claim, action, suit or proceeding except that if,
in the opinion of counsel to the indemnifying party, one or more of the
indemnified parties should be separately represented in connection with a claim,
action, suit or proceeding, the indemnifying party will pay the reasonable fees
and expenses of one separate counsel for the indemnified
parties.  Each indemnified party, as a condition to receiving
indemnification as provided in Section 8.1, will cooperate in all reasonable
respects with the indemnifying party in the defense of any action or claim as to
which indemnification is sought.  No indemnifying party will be liable
for any settlement of any action effected without its prior written
consent.  Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested (by written notice provided in accordance
with Section 9.4) an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated hereby effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received written notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such
settlement.  No indemnifying party will, without the prior written
consent of the indemnified party, effect any settlement of a pending or
threatened action with respect to which an indemnified party is, or is informed
that it may be, made a party and for which it would be entitled to
indemnification, unless the settlement includes an unconditional release of the
indemnified party from all liability and claims which are the subject matter of
the pending or threatened action.

     

    If for
any reason the indemnification provided for in this Agreement is not available
to, or is not sufficient to hold harmless, an indemnified party in respect of
any loss or liability referred to in Section 8.1 as to which such indemnified
party is entitled to indemnification thereunder, each indemnifying party shall,
in lieu of indemnifying the indemnified party, contribute to the amount paid or
payable by the indemnified party as a result of such loss or liability, (i) in
the proportion which is appropriate to reflect the relative benefits received by
the indemnifying party, on the one hand, and by the indemnified party, on the
other hand, from the sale of Shares which is the subject of the claim, action,
suit or proceeding which resulted in the loss or liability or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above, but also the relative fault of the indemnifying party,
on the one hand, and the indemnified party, on the other hand, with respect to
the statements or omissions which are the subject of the claim, action, suit or
proceeding that resulted in the loss or liability, as well as any other relevant
equitable considerations.

     

    The
remedies provided for in Section 8.1 and this Section 8.2 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified person at law or in equity.

     

    
      
         

      

      
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    ARTICLE
IX

    MISCELLANEOUS

     

    Section
9.1          Fees and
Expenses.

     

    (i)           Each
party shall bear its own fees and expenses related to the transactions
contemplated by this Agreement; provided, however, that (1) the
Company has heretofore paid directly to the Investor’s counsel $17,500,
representing a portion of the reasonable attorneys’ fees and expenses (exclusive
of disbursements and out-of-pocket expenses) incurred by the Investor in
connection with the preparation, negotiation, execution and delivery of this
Agreement and legal due diligence of the Company, and (2) the Company shall have
paid, on or prior to the Effective Date, by wire transfer of immediately
available funds (A) to the FINRA, the applicable filing fee with respect to the
FINRA Filing and (B) to an account designated by the Investor’s counsel,
promptly following the receipt of an invoice therefor, all reasonable attorneys’
fees and expenses (exclusive of disbursements and out-of-pocket expenses)
incurred by the Investor up to $17,500 (which payment shall be in addition to
the $17,500 payment referenced in Section 9.1(i)(1) above), in connection with
the preparation, negotiation, execution and delivery of this Agreement, legal
due diligence of the Company and review of the Registration Statement, the Base
Prospectus, the Current Report, any Permitted Free Writing Prospectus and all
other related transaction documentation. In addition, during any full calendar
quarter that falls within the Investment Period when no Shares have been
purchased or sold because the Company did not deliver a Fixed Request Notice,
the Company shall pay following the end of such calendar quarter, promptly upon
receipt of an invoice therefor (however, the Investor shall not be required to
provide detailed time sheets), all reasonable attorneys’ fees and expenses, up
to $5,000, representing the due diligence expenses incurred by the Investor
during such calendar quarter. The Company shall pay all U.S. federal, state and
local stamp and other similar transfer and other taxes and duties levied in
connection with issuance of the Securities pursuant hereto. For the avoidance of
doubt, all of the fees payable to the Investor or its counsel pursuant to this
Section 9.1 shall be non-refundable, regardless of whether any Fixed Requests
are issued by the Company or settled hereunder.

     

    (ii)          If
the Company issues a Fixed Request Notice and fails to deliver the Shares (which
have been approved for listing or quotation on the Trading Market, if such an
approval is required for the listing or quotation thereof on the Trading Market)
to the Investor on the applicable Settlement Date and such failure continues for
10 Trading Days, the Company shall pay the Investor, in cash (or, at the option
of the Investor, in shares of Common Stock which have not been registered under
the Securities Act valued at the applicable Discount Price of the Shares failed
to be delivered; provided that the
issuance thereof by the Company would not violate the Securities Act or any
applicable U.S. federal or state securities laws), as liquidated damages for
such failure and not as a penalty, an amount equal to 2.0% of the payment
required to be paid by the Investor on such Settlement Date (i.e., the sum of
the Fixed Amount Requested and the Optional Amount Dollar Amount) for the
initial 30 days following such Settlement Date until the Shares (which have been
approved for listing or quotation on the Trading Market, if such an approval is
required for the listing or quotation thereof on the Trading Market) have been
delivered, and an additional 2.0% for each additional 30-day period thereafter
until the Shares (which have been approved for listing or quotation on the
Trading Market, if such an approval is required for the listing or quotation
thereof on the Trading Market) have been delivered, which amount shall be
prorated for such periods less than 30 days (subject in all cases to the Trading
Market Limit).

     

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

     

    Section
9.2          Specific Enforcement,
Consent to Jurisdiction, Waiver of Jury Trial.

     

    (i)           The
Company and the Investor acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that either party shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement by
the other party and to enforce specifically the terms and provisions hereof this
being in addition to any other remedy to which either party may be entitled by
law or equity.

     

    (ii)           Each
of the Company and the Investor (a) hereby irrevocably submits to the
jurisdiction of the United States District Court and other courts of the United
States sitting in the City and State of New York, Borough of Manhattan, for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement, and (b) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Investor consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section 9.2 shall affect or limit any right to serve
process in any other manner permitted by law.

     

    (iii)           Each
of the Company and the Investor hereby waives to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect to any
litigation directly or indirectly arising out of, under or in connection with
this Agreement or the transactions contemplated hereby or disputes relating
hereto. Each of the Company and the Investor (a) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce the foregoing waiver and (b) acknowledges that it and the other
parties hereto have been induced to enter into this Agreement by, among other
things, the mutual waivers and certifications in this Section 9.2.

     

    Section
9.3          Entire Agreement;
Amendment.  This
Agreement, together with the exhibits referred to herein and the Disclosure
Schedule, represents the entire agreement of the parties with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by either party relative to subject matter hereof not expressly
set forth herein. No provision of this Agreement may be amended other than by a
written instrument signed by both parties hereto.  The Disclosure
Schedule and all exhibits to this Agreement are hereby incorporated by reference
in, and made a part of, this Agreement as if set forth in full
herein.

     

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    Section
9.4          Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery or facsimile (with facsimile machine confirmation of delivery received)
at the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received) or (b) on the
second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The address for such communications shall
be:

     

    
      	
              If
      to the Company:

            	
              NeoStem,
      Inc.

            
	 
      	
              420
      Lexington Avenue, Suite 450

            
	 
      	
              New
      York, New York 10170

            
	 
      	
              Telephone
      Number:  (212) 584-4180

            
	 
      	
              Fax:  (646)
      514-7787

            
	 
      	
              Attention:
      Catherine M. Vaczy, Esq.

            
	 
      	
              General
      Counsel

            
	 
      	 
      
	
              With
      copies to:

            	
              Lowenstein
      Sandler PC

            
	 
      	
              65
      Livingston Avenue

            
	 
      	
              Roseland,
      New Jersey 07068

            
	 
      	
              Telephone
      Number:  (973) 597-2500

            
	 
      	
              Fax:  (973)
      597-2400

            
	 
      	
              Attention:
      Alan Wovsaniker, Esq.

            
	 
      	 
      
	
              If
      to the Investor:

            	
              Commerce
      Court Small Cap Value Fund, Ltd.

            
	 
      	
              Fiduciary
      Services (BVI) Limited

            
	 
      	
              Qwomar
      Complex, 4th
      Floor

            
	 
      	
              P.O.
      Box 3170

            
	 
      	
              Road
      Town, Tortola

            
	 
      	
              British
      Virgin Islands

            
	 
      	
              Telephone
      Number: (284) 494-8086

            
	 
      	
              Fax:  (284)
      494-9474

            
	 
      	
              Attention:
      Peter W. Poole

            
	 
      	 
      
	
              With
      copies to:

            	
              Greenberg
      Traurig, LLP

            
	 
      	
              The
      MetLife Building

            
	 
      	
              200
      Park Avenue

            
	 
      	
              New
      York, NY 10166

            
	 
      	
              Telephone
      Number:  (212) 801-9200

            
	 
      	
              Fax:  (212)
      801-6400

            
	 
      	
              Attention:  Anthony
      J. Marsico, Esq.

            

    

    

    Either
party hereto may from time to time change its address for notices by giving at
least 10 days advance written notice of such changed address to the other party
hereto.

     

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

     

    Section
9.5          Waivers.  No
waiver by either party of any default with respect to any provision,
condition
or requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provisions, condition or requirement hereof
nor shall any delay or omission of any party to exercise any right hereunder in
any manner impair the exercise of any such right accruing to it thereafter. No
provision of this Agreement may be waived other than in a written instrument
signed by the party against whom enforcement of such waiver is
sought.

     

    Section
9.6          Headings.  The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose and
shall not be deemed to limit or affect any of the provisions
hereof.

     

    Section
9.7          Successors and
Assigns.  The
Investor may not assign this Agreement to any person without the prior consent
of the Company, in the Company’s sole discretion. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
assigns. The assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this
Agreement.

     

    Section
9.8          Governing
Law.  This
Agreement shall be governed by and construed in accordance with the internal
procedural and substantive laws of the State of New York, without giving effect
to the choice of law provisions of such state  that would cause the
application of the laws of any other jurisdiction.

     

    Section
9.9          Survival.  The
representations, warranties, covenants and agreements of the Company and the
Investor contained in this Agreement shall survive the execution and delivery
hereof until the termination of this Agreement; provided, however, that (i) the
provisions of Article VII (Termination), Article VIII (Indemnification), Section
9.1 (Fees and Expenses), Section 9.2 (Specific Enforcement, Consent to
Jurisdiction, Waiver of Jury Trial), Section 9.4 (Notices), Section 9.8
(Governing Law), Section 9.11 (Publicity), Section 9.12 (Severability) and this
Section 9.9 (Survival) shall remain in full force and effect indefinitely
notwithstanding such termination, (ii) the covenants and agreements contained in
Section 5.1(i) (Securities Compliance; FINRA Filing), Section 5.3 (Compliance
with Laws), Section 5.7 (Stop Orders), Section 5.8 (Amendments to the
Registration Statement; Prospectus Supplements; Free Writing Prospectuses),
Section 5.9 (Prospectus Delivery), Section 5.11 (Effective Registration
Statement), Section 5.12 (Non-Public Information) and 5.13 (Broker/Dealer) shall
remain in full force and effect notwithstanding such termination for a period of
six months following such termination, (iii) the covenants and agreements of the
Investor contained in Section 5.10 (Selling Restrictions) shall remain in full
force and effect notwithstanding such termination for a period of 90 days
following such termination, and (iv) the covenants and agreements of the Company
contained in Section 5.2 (Registration and Listing) shall remain in full force
and effect notwithstanding such termination for a period of 30 days following
such termination.

     

    Section
9.10       Counterparts.  This
Agreement may be executed in counterparts, all of which taken together shall
constitute one and the same original and binding instrument and shall become
effective when all counterparts have been signed by each party and delivered to
the other parties hereto, it being understood that all parties hereto need not
sign the same counterpart. In the event any signature is delivered by facsimile,
digital or electronic transmission, such transmission shall constitute delivery
of the manually executed original and the party using such means of delivery
shall thereafter cause four additional executed signature pages to be physically
delivered to the other parties within five days of the execution and delivery
hereof.  Failure to provide or delay in the delivery of such
additional executed signature pages shall not adversely affect the efficacy of
the original delivery.

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

     

    Section
9.11       Publicity.  On
or after the Effective Date, the Company may issue a press release or otherwise
make a public statement or announcement with respect to this Agreement and the
transactions contemplated hereby or the existence of this Agreement (including,
without limitation, by filing a copy of this Agreement with the Commission);
provided, however, that prior
to issuing any such press release, or making any such public statement or
announcement, the Company shall consult with the Investor on the form and
substance of such press release or other disclosure (unless the disclosure has
been previously reviewed and approved by the Investor).

     

    Section
9.12       Severability.  The
provisions of this Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement, and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.

     

    Section
9.13       Further
Assurances.  From
and after the date of this Agreement, upon the request of the Investor or the
Company, each of the Company and the Investor shall execute and deliver such
instrument, documents and other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.

     

    [Signature
Page Follows]

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officer as of the date first above
written.

     

    
      	 
      	
              NEOSTEM,
      INC.:

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Robin L. Smith

            
	 
      	 
      	
              Name:  Robin
      L. Smith

            
	 
      	 
      	
              Title:  Chief
      Executive Officer

            
	 
      	 
      
	 
      	
              COMMERCE COURT SMALL CAP VALUE
      FUND, LTD.:

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Peter Poole

            
	 
      	 
      	
              Name:
      Peter Poole

            
	 
      	 
      	
              Title:
      Director

            

    

     

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

    ANNEX
A TO THE

    COMMON
STOCK PURCHASE AGREEMENT

    DEFINITIONS

     

    “Acceptable Financing”
shall have the meaning assigned to such term in Section 5.6(ii)
hereof.

     

    “Affiliate” shall have
the meaning assigned to such term in Rule 12b-2 under the Exchange
Act.

     

    “Aggregate Limit”
shall have the meaning assigned to such term in Section 1.1 hereof.

     

    “Amex” means the NYSE
Amex or any successor thereto.

     

    “Base Prospectus”
shall mean the Company’s prospectus, dated May 19, 2010, a preliminary form of
which is included in the Registration Statement, including the documents
incorporated by reference therein.

     

    “Below Market
Offering” shall have the meaning assigned to such term in Section 5.6(ii)
hereof.

     

    “Broker-Dealer” shall
have the meaning assigned to such term in Section 5.13 hereof.

     

    “Bylaws” shall have
the meaning assigned to such term in Section 4.3 hereof.

     

    “Charter” shall have
the meaning assigned to such term in Section 4.3 hereof.

     

    “Code” shall mean the
Internal Revenue Code of 1986, as amended.

     

    “Commission” shall
mean the Securities and Exchange Commission or any successor
entity.

     

    “Commission Documents”
shall mean (1) all reports, schedules, registrations, forms, statements,
information and other documents filed by the Company with the Commission
pursuant to the reporting requirements of the Exchange Act, including all
material filed pursuant to Section 13(a) or 15(d) of the Exchange Act, which
have been filed by the Company since December 31, 2009 and which hereafter shall
be filed by the Company during the Investment Period, including, without
limitation, the Current Report and the Form 10-K filed by the Company for its
fiscal year ended December 31, 2009 (the “2009 Form 10-K”), (2)
the Registration Statement, as the same may be amended from time to time, the
Prospectus and each Prospectus Supplement, and each Permitted Free Writing
Prospectus and (3) all information contained in such filings and all documents
and disclosures that have been and heretofore shall be incorporated by reference
therein.

     

    “Commitment Shares”
means 63,792 shares of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock which, concurrently with the execution and
delivery of this Agreement on the Effective Date, the Company has caused its
transfer agent to electronically transfer to the Investor not later than 4:00
p.m. (New York time) on the second Trading Day immediately following the
Effective Date.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Common Stock” shall
have the meaning assigned to such term in the Recitals.

     

    “Current Market Price”
means, with respect to any particular measurement date, the closing price of a
share of Common Stock as reported on the Trading Market for the Trading Day
immediately preceding such measurement date.

     

    “Current Report” shall
have the meaning assigned to such term in Section 1.4 hereof.

     

    “Discount Price” shall
have the meaning assigned to such term in Section 2.2 hereof.

     

    “EDGAR” shall have the
meaning assigned to such term in Section 4.3 hereof.

     

    “Effective Date” shall
mean the date of this Agreement.

     

    “Environmental Laws”
shall have the meaning assigned to such term in Section 4.15
hereof.

     

    “ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended.

     

    “Event Period” shall
have the meaning assigned to such term in Section 7.2 hereof.

     

    “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder.

     

    “FDA” shall have the
meaning assigned to such term in Section 4.14(a) hereof.

     

    “FINRA” shall have the
meaning assigned to such term in Section 4.5 hereof.

     

    “FINRA Filing” shall
have the meaning assigned to such term in Section 5.1 hereof.

     

    “Fixed Amount
Requested” shall mean the amount of a Fixed Request requested by the
Company in a Fixed Request Notice delivered pursuant to Section 2.1
hereof.

     

    “Fixed Request” means
the transactions contemplated under Sections 2.1 through 2.8 of this
Agreement.

     

    “Fixed Request Amount”
means the actual amount of proceeds received by the Company pursuant to a Fixed
Request under this Agreement.

     

    “Fixed Request Exercise
Date” shall have the meaning assigned to such term in Section 2.2
hereof.

     

    “Fixed Request Notice”
shall have the meaning assigned to such term in Section 2.1
hereof.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Free Writing
Prospectus” shall mean a “free writing prospectus” as defined in Rule 405
promulgated under the Securities Act.

     

    “Fundamental
Transaction” means any one or more of the following: (i) the Company
shall, directly or indirectly, in one or more related transactions, (1)
consolidate or merge with or into (whether or not the Company is the surviving
corporation) another Person, with the result that the holders of the Company’s
capital stock immediately prior to such consolidation or merger together
beneficially own less than 50% of the outstanding voting power of the surviving
or resulting corporation, or (2) sell, lease, license, assign, transfer, convey
or otherwise dispose of all or substantially all of the properties or assets of
the Company to another Person, or (3) allow another Person to make a purchase,
tender or exchange offer that is accepted by the holders of more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the Person or Persons making or party to, or associated or affiliated
with the Persons making or party to, such purchase, tender or exchange offer),
or (4) consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business combination), or (5)
reorganize, recapitalize or reclassify its Common Stock, or (ii) any “person” or
“group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act) is or shall become the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate
ordinary voting power represented by issued and outstanding Common
Stock.

     

    “GAAP” shall mean
generally accepted accounting principles in the United States of America as
applied by the Company.

     

    “Governmental
Licenses” shall have the meaning assigned to such term in Section 4.14(a)
hereof.

     

    “Indebtedness” shall
have the meaning assigned to such term in Section 4.9 hereof.

     

    “Integration Notice”
shall have the meaning assigned to such term in Section 5.6(ii)
hereof.

     

    “Intellectual
Property” shall have the meaning assigned to such term in Section 4.14(b)
hereof.

     

    “Investment Period”
shall have the meaning assigned to such term in Section 7.1 hereof.

     

    “Issuer Free Writing
Prospectus” shall mean an “issuer free writing prospectus” as defined in
Rule 433 promulgated under the Securities Act.

     

    “Market
Capitalization” shall be calculated on the Trading Day preceding the
applicable Pricing Period and shall be the product of (x) the number of shares
of Common Stock outstanding and (y) the closing bid price of the Common Stock,
both as determined by Bloomberg Financial LP using the DES and HP
functions.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    “Material Adverse
Effect” shall mean any condition, occurrence, state of facts or event
having, or insofar as reasonably can be foreseen would likely have, any effect
on the business, operations, properties or condition (financial or otherwise) of
the Company that is material and adverse to the Company and its Subsidiaries,
taken as a whole, and/or any condition, occurrence, state of facts or event that
would prohibit or otherwise materially interfere with or delay the ability of
the Company to perform any of its obligations under this Agreement; provided, however, that none of
the following, individually or in the aggregate, shall be taken into account in
determining whether a Material Adverse Effect has occurred or insofar as
reasonably can be foreseen would likely occur: (i) changes in conditions in the
U.S. or global capital, credit or financial markets generally, including changes
in the availability of capital or currency exchange rates, provided such changes
shall not have affected the Company in a materially disproportionate manner as
compared to other similarly situated companies; (ii) changes generally affecting
the biotechnology or pharmaceutical industries, provided such changes shall not
have affected the Company in a materially disproportionate manner as compared to
other similarly situated companies; and (iii) any effect of the announcement of
this Agreement or the consummation of the transactions contemplated by this
Agreement on the Company’s relationships, contractual or otherwise, with
customers, suppliers, vendors, bank or commercial lenders, lessors,
collaboration partners, employees or consultants.

     

    “Material Agreements”
shall have the meaning assigned to such term in Section 4.16
hereof.

     

    “Multiplier” shall
have the meaning assigned to such term in Section 2.3 hereof.

     

    “Optional Amount”
means the transactions contemplated under Sections 2.9 through 2.11 of this
Agreement.

     

    “Optional Amount Dollar
Amount” shall mean the actual amount of proceeds received by the Company
pursuant to the exercise of an Optional Amount under this
Agreement.

     

    “Optional Amount
Notice” shall mean a notice sent to the Company with regard to the
Investor’s election to exercise all or any portion of an Optional Amount, as
provided in Section 2.11 hereof and substantially in the form attached hereto as
Exhibit
B.

     

    “Optional Amount Threshold
Price” shall have the meaning assigned to such term in Section 2.1
hereof.

     

    “Other Financing”
shall have the meaning assigned to such term in Section 5.6(ii)
hereof.

     

    “Other Financing
Notice” shall have the meaning assigned to such term in Section 5.6(ii)
hereof.

     

    “Permitted Free Writing
Prospectus” shall have the meaning assigned to such term in Section
5.8(ii) hereof.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    “Plan” shall have the
meaning assigned to such term in Section 4.22 hereof.

     

    “Pricing Period” shall
mean a period of 10 consecutive Trading Days commencing on the Pricing Period
start date set forth in the Fixed Request Notice, or such other period mutually
agreed upon by the Investor and the Company.

     

    “Prospectus” shall
mean the Base Prospectus, together with any final prospectus filed with the
Commission pursuant to Rule 424(b), as supplemented by any Prospectus
Supplement, including the documents incorporated by reference
therein.

     

    “Prospectus
Supplement” shall mean any prospectus supplement to the Base Prospectus
filed with the Commission pursuant to Rule 424(b) under the Securities Act,
including the documents incorporated by reference therein.

     

    “Reduction Notice”
shall have the meaning assigned to such term in Section 2.8 hereof.

     

    “Reedland” shall have
the meaning assigned to such term in Section 4.13 hereof.

     

    “Registration
Statement” shall mean the registration statement on Form S 3, Commission
File Number 333-166169, filed by the Company with the Commission under the
Securities Act for the registration of the Shares, as such Registration
Statement may be amended and supplemented from time to time (including pursuant
to Rule 462(b) under the Securities Act), including all documents filed as part
thereof or incorporated by reference therein, and including all information
deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A
or Rule 430B under the Securities Act.

     

    “Restricted Period”
shall have the meaning assigned to such term in Section 5.10(i)
hereof.

     

    “Restricted Person”
shall have the meaning assigned to such term in Section 5.10(i)
hereof.

     

    “Restricted Persons”
shall have the meaning assigned to such term in Section 5.10(i)
hereof.

     

    “Securities” shall
mean, collectively, the Shares and the Commitment Shares.

     

    “Securities Act” shall
mean the Securities Act of 1933, as amended, and the rules and regulations of
the Commission thereunder.

     

    “Settlement Date”
shall have the meaning assigned to such term in Section 2.7 hereof.

     

    “Shares” shall mean
shares of Common Stock issuable to the Investor upon exercise of a Fixed Request
and shares of Common Stock issuable to the Investor upon exercise of an Optional
Amount.

     

    “Short Sales” means
“short sales” as defined in Rule 200 promulgated under Regulation SHO under the
Exchange Act.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    “Significant
Subsidiary” means any Subsidiary of the Company that would constitute a
Significant Subsidiary of the Company within the meaning of Rule 1-02 of
Regulation S-X of the Commission.

     

    “SOXA” shall have the
meaning assigned to such term in Section 4.6(c) hereof.

     

    “Subsidiary” shall
mean any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries.

     

    “Threshold Price” is
the lowest price (except to the extent otherwise provided in Section 2.6) at
which the Company may sell Shares during the applicable Pricing Period as set
forth in a Fixed Request Notice (not taking into account the applicable
percentage discount during such Pricing Period determined in accordance with
Section 2.2); provided, however, that at no
time shall the Threshold Price be lower than $3.00 per share unless the Company
and the Investor shall mutually agree.

     

    “Total Commitment”
shall have the meaning assigned to such term in Section 1.1 hereof.

     

    “Trading Day” shall
mean a full trading day (beginning at 9:30 a.m., New York City time, and ending
at 4:00 p.m., New York City time) on the Amex.

     

    “Trading Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the Amex, the Nasdaq Capital Market, the
Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock
Exchange (or any successors to any of the foregoing), whichever is at the time
the principal trading exchange or market for the Common Stock.

     

    “Trading Market Limit”
means, at any time, 10,536,208 shares of duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock (as adjusted for any stock
splits, stock combinations, stock dividends, recapitalizations and other similar
transactions that occur on or after the date of this Agreement); provided, however, that the
Trading Market Limit shall not exceed under any circumstances that number of
shares of Common Stock that the Company may issue pursuant to this Agreement and
the transactions contemplated hereby without (a) breaching the Company’s
obligations under the rules and regulations of the Trading Market or (b)
obtaining stockholder approval under the applicable rules and regulations of the
Trading Market.

     

    “VWAP” shall mean the
daily volume weighted average price (based on a Trading Day from 9:30 a.m. to
4:00 p.m. (New York time)) of the Company on the Amex as reported by Bloomberg
Financial L.P. using the AQR function.

     

    “Warrant Value” shall
mean the fair value of all warrants, options and other similar rights issued to
a third party in connection with an Other Financing, determined by using a
standard Black-Scholes option-pricing model using an expected volatility
percentage as shall be mutually agreed by the Investor and the
Company.  In the case of a dispute relating to such expected
volatility assumption, the Investor shall obtain applicable volatility data from
three investment banking firms of nationally recognized reputation, and the
parties hereto shall use the average thereof for purposes of determining the
expected volatility percentage in connection with the Black-Scholes calculation
referred to in the immediately preceding sentence.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
A TO THE

    COMMON
STOCK PURCHASE AGREEMENT

    FORM
OF FIXED REQUEST NOTICE

     

    Reference
is made to the Common Stock Purchase Agreement dated as of  May 19,
2010, (the  “Purchase Agreement”)
between NeoStem, Inc., a corporation organized and existing under the laws of
the State of Delaware (the “Company”), and
Commerce Court Small Cap Value Fund, Ltd., a business company incorporated under
the laws of the British Virgin Islands. Capitalized terms used and not otherwise
defined herein shall have the meanings given such terms in the Purchase
Agreement.

     

    In
accordance with and pursuant to Section 2.1 of the Purchase Agreement, the
Company hereby issues this Fixed Request Notice to exercise a Fixed Request for
the Fixed Amount Requested indicated below.

     

    
      
        	
                Fixed
      Amount Requested:

              	 
      	 
      
	 
      	 
      	 
      
	
                Optional
      Amount Dollar Amount:

              	 
      	 
      
	 
      	 
      	 
      
	
                Pricing
      Period start date:

              	 
      	 
      
	 
      	 
      	 
      
	
                Pricing
      Period end date:

              	 
      	 
      
	 
      	 
      	 
      
	
                Settlement
      Date:

              	 
      	 
      
	 
      	 
      	 
      
	
                Fixed
      Request Threshold Price:

              	 
      	 
      
	 
      	 
      	 
      
	
                Optional
      Amount Threshold Price:

              	 
      	 
      
	 
      	 
      	 
      
	
                Dollar
      Amount of Common Stock Currently Unissued under the Registration
      Statement

              	 
      	 
      
	 
      	 
      	 
      
	
                Dollar
      Amount of Common Stock Currently Available under the Aggregate
      Limit:

              	 
      	 
      
	 
      	 
      	 
      	 
      
	
                Dated: 
      ____________________

              	 
      	
                By:  

              	 
      
	 
      	 
      	 
      	
                Name:

              
	 
      	 
      	 
      	
                Title:

              
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                Address:

                Facsimile
      No.:

              

      

    

    

    
      
        	
                AGREED
      AND ACCEPTED

              
	 
      
	
                By:  

              	 
      
	 
      	
                Name:

              
	 
      	
                Title:

              

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
B TO THE

    COMMON
STOCK PURCHASE AGREEMENT

    FORM
OF OPTIONAL AMOUNT NOTICE

     

    
      
        
          	
                  To:

                	 
      
	
                  Fax#:  

                	 
      

        

      

    

    

    Reference
is made to the Common Stock Purchase Agreement dated as of May 19, 2010 (the
“Purchase
Agreement”) between NeoStem, Inc., a corporation organized and existing
under the laws of the State of Delaware (the “Company”), and
Commerce Court Small Cap Value Fund, Ltd., a business company incorporated under
the laws of the British Virgin Islands (the “Investor”).
Capitalized terms used and not otherwise defined herein shall have the meanings
given such terms in the Purchase Agreement.

     

    In
accordance with and pursuant to Section 2.1 of the Purchase Agreement, the
Investor hereby issues this Optional Amount Notice to exercise an Optional
Amount for the Optional Amount Dollar Amount indicated below.

     

    
      
        	
                Optional
      Amount Dollar Amount Exercised

              	 
      	 
      
	 
      	 
      	 
      
	
                Number
      of Shares to be purchased

              	 
      	 
      
	 
      	 
      	 
      
	
                VWAP
      on the date hereof:

              	 
      	 
      
	 
      	 
      	 
      
	
                Discount
      Price:

              	 
      	 
      
	 
      	 
      	 
      
	
                Settlement
      Date:

              	 
      	 
      
	 
      	 
      	 
      
	
                Threshold
      Price:

              	 
      	 
      
	 
      	 
      	 
      	 
      
	
                Dated: 
      ____________________

              	 
      	
                By:  

              	 
      
	 
      	 
      	 
      	
                Name:

              
	 
      	 
      	 
      	
                Title:

              
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                Address:

                Facsimile
      No.:

              

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
C TO THE

    COMMON
STOCK PURCHASE AGREEMENT

    CERTIFICATE
OF THE COMPANY

    

    CLOSING
CERTIFICATE

    

    _________
200__

     

    The
undersigned, the [___________] of NeoStem, Inc., a corporation organized and
existing under the laws of the State of Delaware (the “Company”), delivers
this certificate in connection with the Common Stock Purchase Agreement, dated
as of May 19, 2010 (the “Agreement”), by and
between the Company and Commerce Court Small Cap Value Fund, Ltd., a business
company incorporated under the laws of the British Virgin Islands (the “Investor”), and
hereby certifies on the date hereof that (capitalized terms used herein without
definition have the meanings assigned to them in the Agreement):

     

    1.           Attached
hereto as Exhibit A is a
true, complete and correct copy of the Certificate of Incorporation of the
Company as filed with the Secretary of State of the State of Delaware. The
Certificate of Incorporation of the Company has not been further amended or
restated, and no document with respect to any amendment to the Certificate of
Incorporation of the Company has been filed in the office of the Secretary of
State of the State of Delaware since the date shown on the face of the state
certification relating to the Company’s Certificate of Incorporation, which is
in full force and effect on the date hereof, and no action has been taken by the
Company in contemplation of any such amendment or the dissolution, merger or
consolidation of the Company.

     

    2.           Attached
hereto as Exhibit B is a
true and complete copy of the Bylaws of the Company, as amended and restated
through, and as in full force and effect on, the date hereof, and no proposal
for any amendment, repeal or other modification to the Bylaws of the Company has
been taken or is currently pending before the Board of Directors or stockholders
of the Company.

     

    3.           The
Board of Directors of the Company has approved the transactions contemplated by
the Agreement; said approval has not been amended, rescinded or modified and
remains in full force and effect as of the date hereof.

     

    4.           Each
person who, as an officer of the Company, or as attorney-in-fact of an officer
of the Company, signed (i) the Agreement and (ii) any other document delivered
prior hereto or on the date hereof in connection with the transactions
contemplated by the Agreement, was duly elected, qualified and acting as such
officer or duly appointed and acting as such attorney-in-fact, and the signature
of each such person appearing on any such document is his genuine
signature.

     

    IN WITNESS WHEREOF, I have
signed my name as of the date first above written.

     

    
      
        	   
      
	
                By:

              
	
                Title:

              

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
D TO THE

    COMMON
STOCK PURCHASE AGREEMENT

    COMPLIANCE
CERTIFICATE

     

    In
connection with the issuance of shares of common stock of NeoStem, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
“Company”),
pursuant to the Fixed Request Notice, dated [_____________], delivered by the
Company to Commerce Court Small Cap Value Fund, Ltd. (the “Investor”) pursuant
to Article II of the Common Stock Purchase Agreement, dated as of May 19, 2010,
by and between the Company and the Investor (the “Agreement”), the
undersigned hereby certifies as follows:

     

    1.           The
undersigned is the duly elected [_____________] of the Company.

     

    2.           Except
as set forth in the attached Disclosure Schedule, the representations and
warranties of the Company set forth in Article IV of the Agreement (i) that are
not qualified by “materiality” or “Material Adverse Effect” are true and correct
in all material respects as of [insert Fixed Request Exercise Date] and as of
the date hereof with the same force and effect as if made on such dates, except
to the extent such representations and warranties are as of another date, in
which case, such representations and warranties are true and correct in all
material respects as of such other date and (ii) that are qualified by
“materiality” or “Material Adverse Effect” are true and correct as of [insert
Fixed Request Exercise Date] and as of the date hereof with the same force and
effect as if made on such dates, except to the extent such representations and
warranties are as of another date, in which case, such representations and
warranties are true and correct as of such other date.

     

    3.           The
Company has performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Agreement to be performed,
satisfied or complied with by the Company at or prior to [insert Fixed Request
Exercise Date] and the date hereof.

     

    Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
them in the Agreement.

     

    The
undersigned has executed this Certificate this [___] day of [___________],
200[__].

     

    
      
        	
                By:

              	 
      
	 
      	 
      
	
                Name:  

              	 
      
	 
      	 
      
	
                Title:This Note is a Global Security within
the meaning of the Indenture hereinafter referred to and is registered in the
name of the Depository named below or a nominee of the
Depository.  This Note is not exchangeable for Notes registered in the
name of a Person other than the Depository or its nominee except in the limited
circumstances described herein and in the Indenture, and no transfer of this
Note (other than a transfer of this Note as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository) may be registered except in the limited
circumstances described herein.

    

    Unless this certificate is presented
by an authorized representative of The Depository Trust Company, a New York
corporation (the “Depository”), to the Company or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of the Depository (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of the
Depository), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede &
Co., has an interest herein.

    

    CITIGROUP
INC.

    4.750%
Notes due May 19, 2015

    
      	
              REGISTERED

            	
              REGISTERED

            

    

    

                                                                                                                                    CUSIP:
172967FD8

                                                                                                                                    ISIN:
US172967FD81

                                                                                                                                    Common
Code: 051106253

    

    
      	
              No.
      R-______

            	
              $________________

            

    

    

    CITIGROUP INC., a Delaware
corporation (the “Company”, which term includes any successor Person under the
Indenture), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of $__________ on May 19, 2015 and to pay
interest thereon from and including May 19, 2010 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually, on May 19 and November 19 of each year, commencing November 19,
2010 at the rate of 4.750% per annum, until the principal hereof is paid or made
available for payment.  The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Note is registered at the
close of business on the Record Date for such interest, which shall be the May
15 and November 15 (whether or not a Business Day) immediately preceding such
Interest Payment Date.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the holder on
such Record Date and may either be paid to the Person in whose name this Note is
registered at the close of business on a subsequent Record Date, such subsequent
Record Date to be not less than five days prior to the date of payment of such
defaulted interest, notice whereof shall be given to holders of Notes of this
series not less than 15 days prior to such subsequent Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in the Indenture.

    

    Interest
hereon will be calculated on the basis of a 360-day year comprised of twelve
30-day months.

    

    If either
an Interest Payment Date or the Maturity of the Notes falls on a day that is not
a Business Day, such Interest Payment Date or Maturity will be the next
succeeding Business Day.  If a date for payment of interest or
principal on the Notes falls on a day that is not a business day in the place of
payment, such payment will be made on the next succeeding business day in such
place of payment as if made on the date the payment was due.  No
interest will accrue on any amounts payable for the period from and after the
due date for payment of such principal or interest.

    

    For these purposes, “Business Day”
means any day which is a day on which commercial banks settle payments and are
open for general business in The City of New York.

    

    Payment of the principal of and
interest on this Note will be made at the office or agency of the Trustee
maintained for that purpose in The City of New York.

    

    Reference is hereby made to the
further provisions of this Note set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set forth at this
place.

    

    Unless the certificate of
authentication hereon has been executed by the Trustee or by an authenticating
agent on behalf of the Trustee by manual signature, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

    IN WITNESS WHEREOF, the Company has
caused this instrument to be duly executed under its corporate
seal.

    

    Dated:  May
19, 2010

     

    
      
        	 	
                CITIGROUP
      INC.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	Title:   
      	      
                Treasurer

              	 
	 	 	 	 
	 	 	 	 

      

    

     

    
      
        	
                ATTEST:

              	 
	 	 	 
	
                By:
      

              	 	 
	Title:  	Assistant
      Secretary	 
	 	 	 
	 	 	 

      

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    This is one of the Notes of the
series issued under the within-mentioned Indenture.

    

    Dated:  May
19, 2010

     

    
      
        	 	
                THE
      BANK OF NEW YORK MELLON,

                as
      Trustee

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 

      

    

     

    
      
        	 	
                -or-

                  

                  

                CITIBANK,
      N.A.,

                as
      Authenticating Agent

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 

      

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    This Note is one of a duly authorized
issue of Securities of the Company (the “Notes”), issued and to be issued in one
or more series under the Indenture, dated as of March 15, 1987 (as amended and
supplemented to date, the “Indenture”), between the Company and The Bank of New
York Mellon, formerly known as The Bank
of New York, as Trustee (the “Trustee”, which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the holders of the Notes and of the terms upon which the Notes are,
and are to be, authenticated and delivered.  This Note is one of the
series designated on the face hereof, initially limited in aggregate principal
to $1,500,000,000.

    

    If an event of default (as defined in
the Indenture) with respect to Notes of this series shall occur and be
continuing, the principal of the Notes of this series may be declared due and
payable in the manner and with the effect provided in the
Indenture.

    

    The Indenture contains provisions for
defeasance at any time of the entire indebtedness of this Note upon compliance
by the Company with certain conditions set forth in Sections 11.03 and 11.04
thereof, which provisions apply to this Note.

    

    The Indenture contains provisions
permitting the Company and the Trustee, without the consent of the holders of
the Securities, to establish, among other things, the form and terms of any
series of Securities issuable thereunder by one or more supplemental indentures,
and, with the consent of the holders of not less than 66 2/3% in aggregate
principal amount of Securities at the time outstanding which are affected
thereby, to modify the Indenture or any supplemental indenture or the rights of
the holders of Securities of such series to be affected, provided that no such
modification will (i) extend the fixed maturity of any Securities, reduce the
rate or extend the time of payment of interest thereon, reduce the principal
amount thereof or the premium, if any, thereon, reduce the amount of the
principal of Original Issue Discount Securities payable on any date, change the
currency in which Securities are payable, or impair the right to institute suit
for the enforcement of any such payment on or after the maturity thereof,
without the consent of the holder of each Security so affected, or (ii) reduce
the aforesaid percentage of Securities of any series the consent of the holders
of which is required for any such modification without the consent of the
holders of all Securities of such series then outstanding, or (iii) modify,
without the written consent of the Trustee, the rights, duties or immunities of
the Trustee.

    

    No reference herein to the Indenture
and no provision of this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency, herein prescribed.

    

    This Note is a Global Security
registered in the name of a nominee of the Depository.  This Note is
exchangeable for Notes registered in the name of a person other than the
Depository or its nominee only in the limited circumstances hereinafter
described.  Unless and until it is exchanged in whole or in part for
definitive Notes in certificated form, this Note may not be transferred except
as a whole by the Depository to a nominee of the Depository or by a nominee of
the Depository to the Depository or another nominee of the
Depository.

    

    
      
         

      

      
        R-1

        
          

        

      

      
         

      

       

    

    The Notes represented by this Global
Security are exchangeable for definitive Notes in certificated form of like
tenor as such Notes in denominations of $1,000 and whole multiples of $1,000 in
excess thereof only if (i) the Depository notifies the Company that it is
unwilling or unable to continue as Depository for the Notes or (ii) the
Depository ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, or (iii) the Company in its sole discretion
decides to allow the Notes to be exchanged for definitive Notes in registered
form.  Any Notes that are exchangeable pursuant to the preceding
sentence are exchangeable for certificated Notes issuable in authorized
denominations and registered in such names as the Depository shall
direct.  As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of definitive Notes in certificated
form is registrable in the register maintained by the Company in The City of New
York for such purpose, upon surrender of the definitive Note for registration of
transfer at the office or agency of the registrar, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the registrar duly executed by, the holder thereof or his attorney
duly authorized in writing, and thereupon one or more new Notes of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or
transferees.  Subject to the foregoing, this Note is not exchangeable,
except for a Global Security or Global Securities of this issue of the same
principal amount to be registered in the name of the Depository or its
nominee.

    

    No service charge shall be made for any
such registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

    

    Prior to due presentment of this Note
for registration of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.

    

    The Company will pay additional amounts
(“Additional Amounts”) to the beneficial owner of any Note that is a non-United
States person in order to ensure that every net payment on such Note will not be
less, due to payment of U.S. withholding tax, than the amount then due and
payable.  For this purpose, a “net payment” on a Note means a payment
by the Company or a paying agent, including payment of principal and interest,
after deduction for any present or future tax, assessment or other governmental
charge of the United States. These Additional Amounts will constitute additional
interest on the Note.

    

    The Company will not be required to pay
Additional Amounts, however, in any of the circumstances described in items (1)
through (13) below.

    

    
      
         

      

      
        R-2

        
          

        

      

      
         

      

       

    

    
      	
               
      

            	
              (1)

            	
              Additional
      Amounts will not be payable if a payment on a Note is reduced as a result
      of any tax, assessment or other governmental charge that is imposed or
      withheld solely by reason of the beneficial
  owner:

            

    

    

    
      	
               
      

            	
              (a)

            	
              having
      a relationship with the United States as a citizen, resident or
      otherwise;

            

    

    
      	
               
      

            	
              (b)

            	
              having
      had such a relationship in the past
or

            

    

    
      	
               
      

            	
              (c)

            	
              being
      considered as having had such a
relationship.

            

    

    

    
      	
               
      

            	
              (2)

            	
              Additional
      Amounts will not be payable if a payment on a Note is reduced as a result
      of any tax, assessment or other governmental charge that is imposed or
      withheld solely by reason of the beneficial
  owner:

            

    

    

    
      	
               
      

            	
              (a)

            	
              being
      treated as present in or engaged in a trade or business in the United
      States;

            

    

    
      	
               
      

            	
              (b)

            	
              being
      treated as having been present in or engaged in a trade or business in the
      United States in the past or

            

    

    
      	
               
      

            	
              (c)

            	
              having
      or having had a permanent establishment in the United
    States.

            

    

    

    
      	
               
      

            	
              (3)

            	
              Additional
      Amounts will not be payable if a payment on a Note is reduced as a result
      of any tax, assessment or other governmental charge that is imposed or
      withheld in whole or in part by reason of the beneficial owner being or
      having been any of the following (as such terms are defined in the
      Internal Revenue Code of 1986, as
amended):

            

    

    

    
      	
               
      

            	
              (a)

            	
              personal
      holding company;

            

    

    
      	
               
      

            	
              (b)

            	
              foreign
      personal holding company;

            

    

    
      	
               
      

            	
              (c)

            	
              foreign
      private foundation or other foreign tax-exempt
    organization;

            

    

    
      	
               
      

            	
              (d)

            	
              passive
      foreign investment company;

            

    

    
      	
               
      

            	
              (e)

            	
              controlled
      foreign corporation or

            

    

    
      	
               
      

            	
              (f)

            	
              corporation
      which has accumulated earnings to avoid United States federal income
      tax.

            

    

    

    
      	
               
      

            	
              (4)

            	
              Additional
      Amounts will not be payable if a payment on a Note is reduced as a result
      of any tax, assessment or other governmental charge that is imposed or
      withheld solely by reason of the beneficial owner owning or having owned,
      actually or constructively, 10 percent or more of the total combined
      voting power of all classes of stock of the Company entitled to vote or by
      reason of the beneficial owner being a bank that has invested in a Note as
      an extension of credit in the ordinary course of its trade or
      business.

            

    

    

    For
purposes of items (1) through (4) above, “beneficial owner” means a fiduciary,
settlor, beneficiary, member or shareholder of the holder if the holder is an
estate, trust, partnership, limited liability company, corporation or other
entity, or a person holding a power over an estate or trust administered by a
fiduciary holder.

    

    
      
         

      

      
        R-3

        
          

        

      

      
         

      

       

    

    
      	
               
      

            	
              (5)

            	
              Additional
      Amounts will not be payable to any beneficial owner of a Note that is
      a:

            

    

    

    
      	
               
      

            	
              (a)

            	
              fiduciary;

            

    

    
      	
               
      

            	
              (b)

            	
              partnership;

            

    

    
      	
               
      

            	
              (c)

            	
              limited
      liability company or

            

    

    
      	
               
      

            	
              (d)

            	
              other
      fiscally transparent entity

            

    

    

    
      	
               
      

            	
              or
      that is not the sole beneficial owner of the Note, or any portion of the
      Note. However, this exception to the obligation to pay Additional Amounts
      will only apply to the extent that a beneficiary or settlor in relation to
      the fiduciary, or a beneficial owner or member of the partnership, limited
      liability company or other fiscally transparent entity, would not have
      been entitled to the payment of an Additional Amount had the beneficiary,
      settlor, beneficial owner or member received directly its beneficial or
      distributive share of the payment.

            

    

    

    
      	
               
      

            	
              (6)

            	
              Additional
      Amounts will not be payable if a payment on a Note is reduced as a result
      of any tax, assessment or other governmental charge that is imposed or
      withheld solely by reason of the failure of the beneficial owner or any
      other person to comply with applicable certification, identification,
      documentation or other information reporting requirements. This exception
      to the obligation to pay Additional Amounts will only apply if compliance
      with such reporting requirements is required by statute or regulation of
      the United States or by an applicable income tax treaty to which the
      United States is a party as a precondition to exemption from such tax,
      assessment or other governmental
charge.

            

    

    

    
      	
               
      

            	
              (7)

            	
              Additional
      Amounts will not be payable if a payment on a Note is reduced as a result
      of any tax, assessment or other governmental charge that is collected or
      imposed by any method other than by withholding from a payment on a Note
      by  the Company or a paying
agent.

            

    

    

    
      	
               
      

            	
              (8)

            	
              Additional
      Amounts will not be payable if a payment on a Note is reduced as a result
      of any tax, assessment or other governmental charge that is imposed or
      withheld by reason of a change in law, regulation, or administrative or
      judicial interpretation that becomes effective more than 15 days after the
      payment becomes due or is duly provided for, whichever occurs
      later.

            

    

    

    
      	
               
      

            	
              (9)

            	
              Additional
      Amounts will not be payable if a payment on a Note is reduced as a result
      of any tax, assessment or other governmental charge that is imposed or
      withheld by reason of the presentation by the beneficial owner of a Note
      for payment more than 30 days after the date on which such payment becomes
      due or is duly provided for, whichever occurs
  later.

            

    

    

    
      	
               
      

            	
              (10)

            	
              Additional
      Amounts will not be payable if a payment on a Note is reduced as a result
      of any:

            

    

    

    
      
         

      

      
        R-4

        
          

        

      

      
         

      

       

    

    
      	
               
      

            	
              (a)

            	
              estate
      tax;

            

    

    
      	
               
      

            	
              (b)

            	
              inheritance
      tax;

            

    

    
      	
               
      

            	
              (c)

            	
              gift
      tax;

            

    

    
      	
               
      

            	
              (d)

            	
              sales
      tax;

            

    

    
      	
               
      

            	
              (e)

            	
              excise
      tax;

            

    

    
      	
               
      

            	
              (f)

            	
              transfer
      tax;

            

    

    
      	
               
      

            	
              (g)

            	
              wealth
      tax;

            

    

    
      	
               
      

            	
              (h)

            	
              personal
      property tax or

            

    

    
      	
               
      

            	
              (i)

            	
              any
      similar tax, assessment, withholding, deduction or other governmental
      charge.

            

    

    

    
      	
               
      

            	
              (11)

            	
              Additional
      Amounts will not be payable if a payment on a Note is reduced as a result
      of any tax, assessment, or other governmental charge required to be
      withheld by any paying agent from a payment of principal or interest on a
      Note if such payment can be made without such withholding by any other
      paying agent.

            

    

    

    
      	
               
      

            	
              (12)

            	
              Additional
      amounts will not be payable if a payment on a Note is reduced as a result
      of any tax, assessment or other governmental charge that is required to be
      made pursuant to any European Union directive on the taxation of savings
      income or any law implementing or complying with, or introduced to conform
      to, any such directive.

            

    

    

    
      	
               
      

            	
              (13)

            	
              Additional
      Amounts will not be payable if a payment on a Note is reduced as a result
      of any combination of items (1) through (12)
  above.

            

    

    

    Except as specifically provided herein,
the Company will not be required to make any payment of any tax, assessment or
other governmental charge imposed by any government or a political subdivision
or taxing authority of such government.

    

    As used in this Note, “United States
person” means:

    

    
      	
               
      

            	
              (a)

            	
              any
      individual who is a citizen or resident of the United
    States;

            

    

    
      	
               
      

            	
              (b)

            	
              any
      corporation, partnership or other entity created or organized in or under
      the laws of the United States;

            

    

    
      	
               
      

            	
              (c)

            	
              any
      estate if the income of such estate falls within the federal income tax
      jurisdiction of the United States regardless of the source of such income
      and

            

    

    
      	
               
      

            	
              (d)

            	
              any
      trust if a United States court is able to exercise primary supervision
      over its administration and one or more United States persons have the
      authority to control all of the substantial decisions of the
      trust.

            

    

    

    Additionally, “non-United States
person” means a person who is not a United States person, and “United States”
means the states of the United States of America and the District of Columbia,
but excluding its territories and its possessions.

    

    
      
         

      

      
        R-5

        
          

        

      

      
         

      

       

    

    Except as provided below, the Notes may
not be redeemed prior to maturity.

    

    
      	
                
      

            	
              (1) 

            	
              The
      Company may, at its option, redeem the Notes
if:

            

    

    

    
      	
               
      

            	
              (a)

            	
              the
      Company becomes or will become obligated to pay Additional Amounts as
      described above;

            

    

    
      	
               
      

            	
              (b)

            	
              the
      obligation to pay Additional Amounts arises as a result of any change in
      the laws, regulations or rulings of the United States, or an official
      position regarding the application or interpretation of such laws,
      regulations or rulings, which change is announced or becomes effective on
      or after May 12, 2010 and

            

    

    
      	
               
      

            	
              (c)

            	
              the
      Company determines, in its business judgment, that the obligation to pay
      such Additional Amounts cannot be avoided by the use of reasonable
      measures available to it, other than substituting the obligor under the
      Notes or taking any action that would entail a material cost to the
      Company.

            

    

    

    
      	
               
      

            	
              (2)

            	
              The
      Company may also redeem the Notes, at its option,
  if:

            

    

    

    
      	
               
      

            	
              (a)

            	
              any
      act is taken by a taxing authority of the United States on or after May
      12, 2010, whether or not such act is taken in relation to the Company or
      any affiliate, that results in a substantial probability that the Company
      will or may be required to pay Additional Amounts as described
      above;

            

    

    
      	
               
      

            	
              (b)

            	
              the
      Company determines, in its business judgment, that the obligation to pay
      such Additional Amounts cannot be avoided by the use of reasonable
      measures available to it, other than substituting the obligor under the
      Notes or taking any action that would entail a material cost to the
      Company and

            

    

    
      	
               
      

            	
              (c)

            	
              the
      Company receives an opinion of independent counsel to the effect that an
      act taken by a taxing authority of the United States results in a
      substantial probability that the Company will or may be required to pay
      the Additional Amounts described under above, and delivers to the Trustee
      a certificate, signed by a duly authorized officer, stating that based on
      such opinion the Company is entitled to redeem the Notes pursuant to their
      terms.

            

    

    

    Any
redemption of the Notes as set forth in clauses (1) or (2) above shall be in
whole, and not in part, and will be made at a redemption price equal to 100% of
the principal amount of the Notes Outstanding plus accrued interest thereon to
the date of redemption.  Holders shall be given not less than 30 days
nor more than 60 days prior notice by the Trustee of the date fixed for such
redemption.

    

    All terms used in this Note which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.  The Notes are governed by the laws of the State of New
York.

     

    
      
         

      

      
        R-6

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