Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of the 5th day of September, 2017, between Jeffrey Peterson, an individual ("Executive"), and ACTIVECARE, INC., a Delaware corporation ("ActiveCare"). Executive and ActiveCare are sometimes collectively referred to herein as the "parties."

RECITALS

WHEREAS, ActiveCare is a corporation engaged in the business of monitoring individuals with diabetes; and

WHEREAS, Executive desires to obtain from ActiveCare certain benefits as set forth in this Agreement and ActiveCare desires to obtain from Executive a commitment to render services to ActiveCare and to provide various covenants relating to non-competition, intellectual property, non-disclosure and non-solicitation on the terms and conditions set forth in this Agreement, and Executive wishes to be employed by ActiveCare on such terms and conditions.

AGREEMENT

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

1. Employment.  ActiveCare hereby employs Executive in the position of Chief Executive Officer.

2. Term. The term of Executive's employment shall commence on the effective date of this Agreement and continue for an initial term of 2 year, unless sooner terminated as provided herein. Upon expiration of the initial term, the term of Executive's employment shall automatically renew on a year-to-year basis, unless and until terminated as provided herein.

3. Executive's Duties and Responsibilities.

	
3.1

	
Services with ActiveCare. During the term of Executive's employment, Executive shall be appointed as Chief Executive Officer and shall perform such duties as are commensurate with his position as Chief Executive Officer. The Executive may be asked to also serve as a director of ActiveCare during all or part of the Term of this Agreement. Executive shall not receive any additional compensation for serving on the Board of Directors (the "Board"). Executive shall abide by the rules, regulations, and practices as adopted or modified from time to time by ActiveCare, in its discretion.  Further, shall Executive's duties, responsibilities, or title change, said agreement shall remain in full force and effect in its entirety, and specifically including Sections 4 and 7 of said agreement herein.

	
3.2

	
Performance of Duties. Executive agrees to serve ActiveCare faithfully and to the best of Executive's ability. Executive will spend his full-time effort performing his duties for ActiveCare.  Executive may set his own schedule, and is not required to be present for any set hours per day, week or month.

	
3.3

	
No Conflict.  Executive hereby confirms that he is under no contractual commitments inconsistent with Executive's obligations set forth in this Agreement and that during the term of this Agreement, Executive will not render or perform services for any other corporation, firm, entity or person which are inconsistent with the provisions of this Agreement.  While Executive remains employed by ActiveCare, Executive may participate in outside business activities as described in section 3.5. and in reasonable charitable activities and personal investment activities so long as such activities do not interfere with the performance of Executive's obligations under this Agreement.

	
3.4

	
Location. Executive's principal office shall initially be located in Orem, Utah, subject to necessary travel requirements of his position and duties hereunder.  ActiveCare reserves the right to move Executive's principal office to a location within a 50 miles radius of said location.

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4. Compensation.

	
4.1

	
Base Salary. During the term of this Agreement, ActiveCare shall pay to Executive an annual Base Salary in the amount of $360,000 in consideration for Executive service to ActiveCare. Executive shall be entitled to annual compensation reviews in which all aspects of his compensation shall be compared with Chief Executive Officer of similarly situated companies with the objective of providing the Executive with appropriate rewards and incentives.  In no event shall Executive's compensation be decreased.  Executive's salary shall be paid in accordance with the Company's regularly established payroll practice.  Executive's Base Salary will be reviewed from time to time in accordance with the established procedures of the Company for adjusting salaries.  Effective as of the date of any change to Executive's Base Salary, the Base Salary as so changed shall be considered the new Base Salary for all purposes of this Agreement.

	
4.2

	
Bonus Compensation.  Subject to the attainment of such individual and ActiveCare objectives as the Board of Directors of ActiveCare shall establish, the Executive will be awarded a cash and or stock bonus from time to time as determined by the Board of Directors of ActiveCare.

	
4.3

	
Long Term Incentive. Executive shall receive 1,500 shares of Series H Preferred Stock of ActiveCare Stock.

	
4.4

	
Participation in Benefit Plans. During the Term, the Executive and, to the extent eligible, his dependents, shall be entitled to participate in and receive all benefits under any Executive benefit plans and programs provided by ActiveCare (including without limitation, 401(k), medical, dental, disability, group life (including accidental death and dismemberment) and business travel insurance plans and programs) to full-time senior management personnel of ActiveCare, subject, however, to the terms and conditions of the various plans and programs in effect from time to time.

	
4.5

	
Expenses. ActiveCare agrees to pay or to reimburse the Executive during the Term for all reasonable, ordinary and necessary vouchered business or entertainment expenses incurred in the performance of his services hereunder in accordance with the policy of ActiveCare as from time to time in effect.

	
4.6

	
Personal Time Off. Executive will be entitled to, and as described in the Executive Handbook, personal days off during each calendar year. The Executive shall accrue paid personal time off days in accordance with the personal time off days policy of ActiveCare applicable generally to Executives of ActiveCare in effect from time to time.

	
4.7

	
Benefit Program Changes. Notwithstanding anything contained herein to the contrary, ActiveCare reserves the right to modify, amend or terminate any Executive benefit plan or policy as it deems appropriate in its discretion; provided that unless required by law, ActiveCare shall not amend, modify or terminate any such plan or policy in a manner that treats the Executive differently from other similarly situated Executives.

	
4.8

	
Withholdings. All compensation, including without limitation the salary and bonus, paid to the Executive shall be subject to applicable tax withholding requirements as are required by federal, state and local laws, including, but not limited to, federal, state, and local income taxes, FICA and Medicare, and such other sums on which ActiveCare and Executive may agree from time-to-time in writing.

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5. Confidential Information.  Except as permitted or directed by the Board, during the term of Executive's employment or at any time thereafter, Executive shall not divulge, furnish or make accessible to anyone or use in any way (other than in the ordinary course of the business of ActiveCare) any confidential or secret knowledge or information of ActiveCare that Executive has acquired or become acquainted with or will acquire or become acquainted with prior to the termination of the period of Executive's employment by ActiveCare (including employment by ActiveCare prior to the date of this Agreement), whether developed by Executive or by others, concerning any trade secrets, confidential or secret designs, processes, formulae, plans, devices or material (whether or not patented or patentable) directly or indirectly useful in any aspect of the business of ActiveCare, any customer or supplier lists of ActiveCare, any confidential or secret development or research work of ActiveCare, or any other confidential information or secret aspects of the business of ActiveCare.  Executive acknowledges that the above-described knowledge or information constitutes a unique and valuable asset of ActiveCare and represents a substantial investment of time and expense by ActiveCare, and that any disclosure or other use of such knowledge or information other than for the exclusive benefit of ActiveCare would be wrongful and would cause irreparable harm to ActiveCare.  Both during and after the term of Executive's employment, Executive will refrain from any acts or omissions that would reduce the value of such knowledge or information to ActiveCare.  The foregoing obligations of confidentiality shall not apply to any knowledge or information that is (a) now made generally available to the public; (b) subsequently becomes generally publicly known in the form in which it was obtained from ActiveCare, other than as a direct or indirect result of the breach of this Agreement by Executive; or (c) was known to or held by Executive prior to disclosure thereof by ActiveCare to Executive, as evidenced by pre-existing written documentation.

	
5.1

	
Good Faith Effort. Notwithstanding the foregoing, in the event that Executive has knowledge of secret, confidential and/or proprietary information to which ActiveCare has a claim, then Executive shall not be liable to ActiveCare pursuant to the provisions of this Agreement for any disclosures of such information, if Executive makes a good faith attempt to maintain the information as secret, confidential and/or proprietary.

	
5.2

	
Right to Pursue "Outside Activities".  Notwithstanding anything else contained in this Agreement and unless subsequently agreed by ActiveCare and Executive in writing, Executive shall not be prohibited from engaging in other Outside Activities during the term of this Agreement, or after termination of the Agreement, and ActiveCare shall not be entitled to damages, or other relief, by virtue of the fact that Executive is or continues to engage in University or other Outside Activities.

6. Noncompetition Covenant.

6.1 Agreement Not to Compete.  During the term of Executive's employment with ActiveCare Executive agrees to not compete in any manner in which ActiveCare engages in.

6.2 Geographic Extent of Covenant.  The obligations of Executive under Section 6.1 shall apply to any geographic area in which ActiveCare (i) has engaged in business during the term of this Agreement through production, promotional, sales or marketing activity, or otherwise, or (ii) has otherwise established its goodwill, business reputation or any customer or supplier relations.

6.3 Acknowledgment.  Executive agrees that the restrictions and agreements contained in this Section 6 are reasonable and necessary to protect the legitimate interests of ActiveCare and that any violation of this Section 6 will cause substantial and irreparable harm to ActiveCare that would not be quantifiable and for which no adequate remedy would exist at law and accordingly injunctive relief shall be available for any violation of this Section 6.

6.4 Blue Pencil Doctrine.  If the duration or geographical extent of, or business activities covered by, this Section 6 are in excess of what is valid and enforceable under applicable law, then such provision shall be construed to cover only that duration, geographical extent or activities that are valid and enforceable.  Executive acknowledges the uncertainty of the law in this respect and expressly stipulates that this Agreement be given the construction which renders its provisions valid and enforceable to the maximum extent (not exceeding its express terms) possible under applicable law.

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7. Termination of Employment.

	
7.1

	
Termination for Cause. This Agreement may be terminated by ActiveCare immediately and without notice only upon the occurrence of any of the following events (each of which shall constitute "Reasonable Cause" for termination):

	
a.

	
 Executive commits any act of gross negligence, fraud, dishonesty, or willful violation of any law or material violation of any significant written policy of ActiveCare that causes any harm to ActiveCare;

	
b.

	
Conviction of Executive of a felony or serious crime involving moral turpitude;

	
c.

	
Repeated drunkenness or illegal narcotic drug use by Executive;

	
d.

	
Failure to substantially perform the duties reasonably assigned to Executive, or any intentional refusal without compelling reason by Executive to discharge Executive's job responsibilities and/or respond to ActiveCare's legitimate job-related requests, insofar as such responsibilities and/or requests do not contravene law;

	
e.

	
Any excessive and unexcused absenteeism by Executive;

	
f.

	
Failure to cooperate in an investigation conducted and/or undertaken by ActiveCare or a governmental agency which has reasonable and legitimate objectives; and

	
g.

	
Except as otherwise authorized by the terms of this Agreement, any act of intentional conflict of interest by Executive to ActiveCare which has the potential to cause economic and/or other damage to ActiveCare.

	
7.2

	
Voluntary Termination. The Executive may, with three months' notice, terminate this Agreement at any time.

Upon the termination of the employment of the Executive with ActiveCare pursuant to this Section 7.2, the Executive shall be entitled to receive, subject to any offsets, amounts as defined by Section 7.5 (a), (b), (c), and (d). In addition, Executive's unit options shall be governed by Section 7.5 (e).

7.3 Death or Disability. In the event the Executive shall be unable to perform his duties hereunder for a period of more than one hundred and twenty (120) days by virtue of illness or physical or mental incapacity or disability (from any cause or causes whatsoever) in substantially the manner and to the extent required hereunder prior to the commencement of such disability (all such causes being herein referred to as "disability"), ActiveCare shall have the right to terminate Executive's employment hereunder as at the end of any calendar month during the continuance of such disability upon at least 60 days' prior written notice to him. This provision shall comply with those rights to which Executive may be entitled under the Americans with Disabilities Act, Family Medical Leave Act, or other federal, state, or local laws.  In the event of the Executive's death, the Date of Termination shall be the date of such death.

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In the event the Executive's employment terminates pursuant to this Section 7.3, the Executive, or in the case of his death, the Executive's estate, shall be entitled to receive, subject to any offsets, amounts as defined by Section 7.5 (a), (b), (c), (d) and (f). In addition, Executive's unit options, if any, shall be governed by Section 7.5 (e).

Except as provided in this Section 7.3, ActiveCare shall have no further liability to the Executive or the Executive's heirs, beneficiaries or estate for damages, compensation, benefits, severance, indemnities or other amount of whatever nature.

7.4. Constructive Termination. In the event Executive terminates his employment as a result of a Constructive Termination (defined below), Executive shall be entitled to compensation, subject to any offsets, as set forth in Section 7.5 (a), (b), (c), (d), (f) and (i). Executive's unit options shall be governed by the provisions of Section 7.5 (g). In addition, Executive shall be entitled to the severance compensation as set forth in Section 7.5 (h).

A "Constructive Termination" will exist in the event the Executive terminates his employment with ActiveCare after ActiveCare:  (i) materially breaches this Agreement, which breach is not cured within 10 days following written notice from Executive; (ii) changes Executive's title, working conditions or duties such that Executive's powers are diminished, reduced or otherwise changed to include powers, duties, or working conditions which are not materially consistent with title, continuing after written notice and 10 days to cure; (iii) commits acts that would cause Executive to commit fraudulent acts or expose Executive to criminal liability; (iv) involuntarily relocates the Executive's primary place of employment beyond the location as defined in Section 1.2;  (v) merges with or is acquired by another person or entity, or another person or entity, directly or indirectly, acquires sufficient power or control to direct the  activities of ActiveCare, and ActiveCare fails to obtain the assumption in writing of its obligations to perform this Agreement by any within 15 days after the occurrence of the transaction resulting in such. For the purpose of this definition, "control" shall also mean the ability to cause any decision to be taken of or by ActiveCare through ownership of units, voting rights or control of the management; or (vi) ActiveCare decides to abandon or significantly change the direction of its scientific research and/or development, contrary to the direction advocated by Executive.

Except as provided in this Section 7.4, ActiveCare shall have no further liability to the Executive or the Executive's heirs, beneficiaries or estate for damages, compensation, benefits, severance, indemnities or other amount of whatever nature.

7.5. Termination Settlement. The specific consideration due the Executive is controlled by the nature of the termination as defined in the above Sections. In each instance, calculations will be based on Date of Termination.

a. Any earned but unpaid salary compensation;

b. Any earned but unpaid cash bonus;

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c. Any unused accrued vacation;

d. Any unpaid reimbursable expenses;

e. Subject to such terms and conditions as expressly required by the applicable unit plans, (i) all vested unit options shall remain exercisable for a ninety (90) days (ii) all unvested unit options shall be forfeited, and (iii) all unvested units, shall be forfeited notwithstanding any contrary provisions in the unit grant;

f. A pro rata annual incentive award for the year in which Executive's termination occurs, based on the maximum award opportunity for such year, payable in a single installment;

g. Full vesting of any outstanding long-term incentive awards, unit options and restricted units, granted to Executive under any long-term incentive plan or plans of ActiveCare in which Executive has participated;

h. A lump sum severance payment in an amount equal to twice the Executive's Base Salary.  This amount is to be paid within thirty (30) days of the termination of Executive's employment.

i. Continued medical insurance for eighteen (18) months, paid for entirely by ActiveCare.

j. All personal guarantees made by Executive on and in behalf the of ActiveCare shall be fully satisfied in all aspects, with no remaining personal guarantees by Executive to be remaining after 14 days of termination, by either voluntary or cause.

7.6. Base Salary for Severance Benefit Determinations.  Base salary shall be the highest received cash compensation by Executive over the last five years. 

7.7 New Employment. Executive shall inform ActiveCare of the identity of any new employer promptly (no more than twenty-four (24) hours) after accepting new employment and shall inform ActiveCare of all changes in employment for one (1) year following the termination, for any reason, of Executive's employment with ActiveCare.  The acceptance of new employment by Executive does not mitigate ActiveCare's obligations under this agreement.  ActiveCare may serve notice on any future employer of Executive that Executive has been exposed to secret, confidential or proprietary information, that Executive is subject to the terms of this Agreement, and that Executive has continuing obligations to ActiveCare under this Agreement.

7.8 Resignation and Cooperation.  Upon termination of Executive's employment, Executive shall be deemed to have resigned from all offices and directorships then held with the Company.  Following any termination of employment, Executive shall cooperate with the Company in the winding up of pending work on behalf of the Company and the orderly transfer of work to other Executives.  Executive shall also cooperate with the Company in the defense of any action brought by any third party against the Company that relates to Executive's employment by the Company.

	
7.9

	
Surrender of Records and Property.  Upon termination of Executive's employment with ActiveCare, Executive shall promptly deliver to ActiveCare all records, manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, data, tables, calculations or copies thereof that relate in any way to the business, products, practices or techniques of ActiveCare, and all other property, trade secrets and confidential information of ActiveCare, including, but not limited to, all documents that in whole or in part contain any trade secrets or confidential information of ActiveCare, which in any of these cases are in Executive's possession or under Executive's control.

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8. Settlement of Disputes.

	
8.1

	
Resolution of Certain Claims—Injunctive Relief.  Executive acknowledges that it would be difficult to fully compensate ActiveCare for damages resulting from any breach by him of the provisions of this Agreement.  Accordingly, Executive agrees that, in addition to, but not to the exclusion of any other available remedy, ActiveCare shall have the right to enforce the provisions of Sections 5, 6, 7, and 8) by applying for and obtaining temporary and permanent restraining orders or injunctions from a court of competent jurisdiction without the necessity of filing a bond therefore, and without the necessity of proving actual damages.

	
8.2

	
Venue.  Any action at law, suit in equity or judicial proceeding arising directly, indirectly, or otherwise in connection with, out of, related to or from this Agreement, or any provision hereof, shall be litigated only in the courts of the State of Utah, Utah County.  Executive waives any right Executive may have to transfer or change the venue of any litigation brought against the Executive by ActiveCare.

9. Miscellaneous Provision.

9.1 Waiver.  The parties hereby shall not be deemed to have waived any of their respective rights under this Agreement unless such waiver is in writing and signed by such waiving party.

9.2  Notices.  Any notice required or permitted to be given under this Agreement shall be sufficient if given in writing and sent by mail, postage prepaid, return receipt requested, or via hand delivery or overnight courier, to Executive at the last address given for Executive on file with ActiveCare, or to ActiveCare at its principal office.  Such notice shall be deemed complete upon receipt or upon refusal of such delivery as evidenced by the receipt from the postal service or courier.

	
9.3

	
Amendment.  No amendment or extension of this Agreement shall be deemed effective unless or until executed in writing by the parties hereto.

	
9.4

	
Governing Law.  This Agreement shall be governed by the laws of the State of Utah without giving effect to the conflict of law provisions thereof.

	
9.5

	
Binding Upon Heirs.  This Agreement shall inure to the benefit of and be binding upon the parties hereto, their successors, heirs, personal representative and permitted assigns.

	
9.6

	
Notice. Any notice given to Executive pursuant to this Agreement shall be sufficiently given if sent to Executive by registered or certified mail addressed to the Executive at such address as Executive shall have designated in writing to ActiveCare. Any notice given to ActiveCare pursuant to this Agreement shall be sufficiently given if sent to ActiveCare by registered or certified mail to ActiveCare at such address as ActiveCare shall have designated in writing to Executive.

	
9.7

	
Arbitration. Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be finally settled under the Commercial Arbitration Rules of AAA the arbitration shall be conducted before one (1) arbitrator selected by mutual agreement of ActiveCare and Executive; if no agreement is made within ten (10) business days from the date a demand for arbitration was filed with the AAA, ActiveCare and Executive shall request a list of at least seven (7) arbitrators from AAA, and the parties shall alternately strike a name from the list until one name is left. The arbitration shall otherwise be conducted as follows:

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a. The arbitration hearing shall take place no later than ninety (90) days following the AAA's notice of the selection of an arbitrator;

b. Discovery shall be permitted, including depositions, interrogatories, requests for admissions, or production of documents, as determined by the arbitrator;

c. The arbitrator shall give his/her decision in writing, after the conclusion of the proceeding. The arbitrator may request that the parties submit post-hearing briefs.

d. Any arbitration proceeding under this Agreement shall (1) be conducted in such a manner that the proprietary or confidential information of ActiveCare remains protected, and (2) occur in Salt Lake City, Utah; and

e. The decision of the arbitrator is final and binding, but is subject to review pursuant to the laws of the State of Utah.

	
9.8

	
Attorney Fees and Costs.  If there is a default hereunder, the defaulting party shall pay the attorney fees, legal expenses and costs of the non-defaulting party incurred in enforcing the terms of this Agreement or obtaining appropriate legal relief for such breach.

	
9.9

	
Nonassignability.  This Agreement and the rights and obligations of the parties hereto may not be assigned by any party without obtaining the prior written consent of the other, and the parties expressly agree that any attempt to assign the rights of any party hereunder without such consent shall be null and void.

	
9.10

	
Integration; Severability.  This Agreement supersedes any and all other employment agreements, oral or written, between the parties.  If any provision of this Agreement is held by a court and competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall nevertheless continue in full force and effect.

	
9.11

	
Authority. Each party represents and warrants that such party has the right, power and authority to enter into and execute this Agreement and to perform and discharge all of the obligations hereunder; and that this Agreement constitutes the valid and legally binding agreement and obligation of such party and is enforceable in accordance with its terms.

	
9.12

	
Counterparts.  This Agreement may be executed in more than one counterpart, and each executed counterpart shall be considered as the original.

	
9.13

	
Further Actions.  Each of the parties agree that it shall hereafter execute and deliver such further instruments and do such further acts and things as may be required or useful to carry out the intent and purpose of this Agreement and as are consistent with the terms hereof.

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EXECUTIVE ACKNOWLEDGEMENT

EXECUTIVE ACKNOWLEDGES EXECUTIVE HAS HAD THE OPPORTUNITY TO CONSULT LEGAL COUNSEL CONCERNING THIS AGREEMENT, THAT EXECUTIVE HAS READ AND UNDERSTANDS THE AGREEMENT, THAT EXECUTIVE IS FULLY AWARE OF ITS LEGAL EFFECT, AND THAT EXECUTIVE HAS ENTERED INTO IT FREELY BASED ON EXECUTIVE'S OWN JUDGMENT AND NOT ON ANY REPRESENTATIONS OR PROMISES OTHER THAN THOSE CONTAINED IN THIS AGREEMENT.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above to be effective on the Effective Date.

ACTIVECARE:

By:  ______________________________________

Its:  ______________________________________

EXECUTIVE:

__________________________________________

Jeffrey Peterson

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Addendum #1

To The Employment Agreement

Between ActiveCare and Jeffrey Peterson

Dated September 5, 2017

Effective this 12th day of October, 2017 that should Executive's title change and/or duties, specifically referencing section 7.4.ii in relation to constructive termination, are hereby waived by Executive.  The Employment Agreement in its entirety shall remain in full force and effect with the one stated alteration above.

Further, by way of clarification, Executive's compensation was verbally agreed to in the board meeting on July 7, 2016 when he became CEO, which served as the basis of his compensation within the Employment Agreement under section 4.1.

__________________________

Robert Welgos

Board Member

__________________________

Jeffrey Peterson

Executive

 

10Blueprint

 

Exhibit 4.1

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

This
Registration Rights Agreement (this “Agreement”) is
made and entered into as of January 30, 2018, by and among Cellular
Biomedicine Group, Inc., a Delaware corporation (the
“Company”),
Wealth Map Holdings Limited, Earls Mill Limited, and Bosun S. Hau
(each an “Investor” and
together the “Investors”).

 

WHEREAS, the
Investors have, pursuant to that certain Securities Purchase
Agreement, dated as of January 30, 2018, between the Company and
the Investors (the “Purchase
Agreement”), agreed to purchase the Securities,
subject to the terms and conditions set forth therein;
and

 

WHEREAS, it is a condition to the closing (the
“Closing”)
of the transactions contemplated by the Purchase Agreement that the
Company and the Investors enter into this Agreement at or prior to
the Closing in order to grant the Investors certain registration
rights as set forth herein.

 

NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company
and the Investors agree as follows:

 

1.           Definitions.
Capitalized terms used and not
otherwise defined herein that are defined in the Purchase Agreement
shall have the meanings given such terms in the Purchase
Agreement.  As used in this Agreement, the following terms
shall have the respective meanings set forth in this Section
1:

 

“Affiliate” of
any Person shall mean any other Person directly or indirectly
controlling or controlled by or under direct or indirect common
control with such Person. For
purposes of this definition, “control” when used with
respect to any Person has the meaning specified in Rule 12b-2 under
the Exchange Act; and the terms “controlling” and
“controlled” have meanings correlative to the
foregoing.

 

“Available”
means, with respect to a Registration
Statement, that such Registration Statement does 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 light of the circumstances under which they
were made, not misleading, such that such Registration Statement
will be available for the resale of Registrable
Securities.

 

“Black-Out
Period” means any period of time that the Company
prohibits the directors and officers of the Company from trading
securities of the Company (i) pursuant to the Insider Trading
Policy, or (ii) because the Board of Directors determines in good
faith that there is a valid business purpose for such suspension of
trading, which valid business purpose shall include without
limitation plans for a registered public offering, an acquisition
or other proposed or pending corporate developments and similar
events because of material developments known to the Company and
not yet disclosed to the public.

 

“Business Day”
means a day that is a Monday, Tuesday, Wednesday, Thursday or
Friday and is not a day on which banking institutions in New York,
New York generally are authorized or obligated by law, regulation
or executive order to close.

 

 

1

 

 

 

“Commission”
means the Securities and Exchange Commission or any other federal
agency then administering the Securities Act or Exchange
Act.

 

“Common Stock”
means the common stock, $0.001 par value per share, of the
Company.

 

“Effective
Date” means the time and date that the Registration
Statement filed pursuant to Section 2(a) is first declared
effective by the Commission or otherwise becomes
effective.

 

“Effectiveness
Date” means:

 

(a)           with
respect to the initial Registration Statement required to be filed
to cover the resale by the Holders of the Registrable Securities,
the 90th
day following the Closing; and

 

(b)           with
respect to any additional Registration Statements that may be
required pursuant to Section 2(a) hereof, the earlier of: (x) the
120th day
following the date on which the Company first knows, or reasonably
should have known, that such additional Registration Statement is
required under such Section and (y) the fifth Trading Day following
the date on which the Company is notified by the Commission that
such additional Registration Statement will not be reviewed or is
no longer subject to further review and comments.

 

“Effectiveness
Period” has the meaning set forth in Section
2(a).

 

“Electing
Holders” means one or more Investors that hold no less
than a majority of the Registrable Securities then held by the
Investors.

 

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

 

“Filing Date”
means:

 

(a)           with
respect to the initial Registration Statement required to be filed
to cover the resale by the Holders of the Registrable Securities,
the 30 th day following
the Closing; and

 

(b)           with
respect to any additional Registration Statements that may be
required pursuant to Section 2(a) hereof, the 30th day following the
date on which the Company first knows, or reasonably should have
known, that such additional Registration Statement is required
under such Section.

 

“Freely
Tradable” means, with respect to any security, a
security that is eligible to be sold by the Holder thereof without
any volume or manner of sale restrictions under the Securities Act
pursuant to Rule 144.

 

 

2

 

 

 

“Holder” or
“Holders” means
(i) the Investors and (ii) permitted assignees of the Investors who
are assigned rights hereunder, in each case to the extent that they
continue to hold Registrable Securities.

 

“Indemnified
Party” has the meaning set forth in Section
5(c).

 

“Indemnifying
Party” has the meaning set forth in Section
5(c).

 

“Insider Trading
Policy” means the Company’s Insider Trading
Policy as adopted and posted on the Company’s
website.

 

“Losses” has
the meaning set forth in Section 5(a).

 

“Person” means
an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.

 

“Plan of
Distribution” means the plan of distribution in
substantially the form attached hereto as Annex A.

 

“Proceeding”
means a pending action, claim, suit, or proceeding (including,
without limitation, an investigation or partial proceeding, such as
a deposition) or investigation known to the Company to be
threatened.

 

“Prospectus”
means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented
by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to
the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by
reference in such Prospectus.

 

“Questionnaire”
has the meaning set forth in Section 3(k).

 

“Registrable
Securities” means (i) the
Securities and (ii) any securities issued as (or issuable upon the
conversion or exercise of any warrant, right or other security that
is issued as) a dividend, stock split, recapitalization or other
distribution with respect to, or in exchange for, or in replacement
of, the securities referenced in clause (i) (without giving effect
to any election by the Company therein), above or this clause
(ii); provided,
however,
that the term “Registrable
Securities” shall exclude
in all cases any securities (1) sold or exchanged by a Person
pursuant to an effective registration statement under the Act or in
compliance with Rule 144, (2) that are Freely Tradable (it being
understood that for purposes of determining eligibility for resale
under clause (2) of this proviso, no securities held by any Holder
shall be considered Freely Tradable to the extent such Holder
reasonably determines that it is an Affiliate of the Company) or
(3) that shall have ceased to be outstanding.

 

“Registration
Default” has the meaning set forth in Section
2(b).

 

 

3

 

 

 

“Registration
Statement” means a registration statement in the form
required to register the resale of the Registrable Securities, and
including the Prospectus, amendments and supplements to each such
registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference
in such registration statement.

 

“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.

 

“Rule 405”
means Rule 405 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.

 

“Rule 415”
means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.

 

“Rule 424”
means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.

 

“Rule 433”
means Rule 433 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.

 

“Securities”
has the meaning set forth in the Purchase Agreement.

 

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

 

“Suspension
Notice” has the meaning set forth in Section
3(j)(B).

 

“Trading Day”
means a day during which trading in the Common Stock generally
occurs.

 

“Trading
Market” means the principal national securities
exchange on which the Common Stock is listed.

 

“Use Notice”
has the meaning set forth in Section 3(j).

 

 

4

 

 

 

2.           Registration.

 

(a)           On
or prior to each Filing Date, the Company will use commercially
reasonable efforts to prepare and file with the Commission a
Registration Statement covering the resale of all Registrable
Securities not already covered by an existing and effective
Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement (i) shall be
on Form S-3 (except if the Company is not then eligible to register
for resale the Registrable Securities on Form S-3, in which
case such registration shall be on another appropriate form for
such purpose) and (ii) shall contain (except if otherwise requested
by the Electing Holders or required pursuant to written comments
received from the Commission upon a review of such Registration
Statement) the Plan of Distribution. The Company will use its
commercially reasonable efforts to cause the Registration Statement
to be declared effective or otherwise to become effective under the
Securities Act as soon as possible but, in any event, no later than
the Effectiveness Date, and will use their commercially reasonable
efforts to keep the Registration Statement (or a replacement
Registration Statement) continuously effective under the Securities
Act until the registration rights under this Agreement terminate in
accordance with Section 2(d) (the “Effectiveness
Period”). In addition,
the Company will, promptly and from time to time, use commercially
reasonable efforts to file such additional Registration Statements
to cover resales of any Registrable Securities which are not
registered for resale pursuant to a pre-existing Registration
Statement no later than the Filing Date with respect thereto, and
will use its commercially reasonable efforts to cause such
Registration Statement to be declared effective or otherwise to
become effective under the Securities Act as soon as practicable
after the applicable Filing Date but, in any event, no later than
the applicable Effectiveness Date, and will use their commercially
reasonable efforts to keep the Registration Statement continuously
effective under the Securities Act at all times during the
Effectiveness Period; provided
that, the Company will not be
obligated to update the Registration Statement and no sales may
made under the applicable Registration Statement during any
Black-Out Period of which the Holders have received
notice.

 

(b)           If:
(i) any Registration Statement is not filed on or prior to its
Filing Date, (ii) a Registration Statement is not declared
effective by the Commission or does not otherwise become effective
on or prior to its required Effectiveness Date or (iii) after its
Effective Date, such Registration Statement ceases for any reason
to be effective as to all Registrable Securities to which it is
required to cover at any time prior to the expiration of the
Effectiveness Period (in each case, except as specifically
permitted herein with respect to any applicable Black-Out
Period; provided
that, the aggregate number of days of
any such Black-Out Period shall not exceed 30 days in any 180-day
period or 60 days in any 365-day period) (any such failure or
breach being referred to as a “Registration
Default”). Upon the
occurrence and during the continuance of a Registration Default,
the Company will make pro rata payments to each Investor, as
liquidated damages and not as a penalty, in an amount equal to 1%
of the aggregate amount invested by such Investor pursuant to the
Purchase Agreement for each 30-day period or pro rata for any
portion thereof during which such Registration Default is
continuing. Such payments shall constitute the Investors’
exclusive monetary remedy for such events, but shall not affect the
right of the Investors to seek injunctive relief. Such payments
shall be made to each Investor in cash no later than three (3)
Business Days after the end of each 30-day
period.

 

(c)           The
Company shall not, from the date hereof until the Effective Date of
the initial Registration Statement, prepare and file with the
Commission a registration statement relating to an offering of any
of its securities for its own account or the account of others
under the Securities Act.

 

(d)           The
registration rights granted under this Section 2 shall
automatically terminate upon the earlier of (i) such time as
there are no outstanding Registrable Securities and (ii) the
five-year anniversary of the Closing.

 

 

 

5

 

 

 

3.           Registration
Procedures.

 

The
procedures to be followed by the Company and each selling Holder,
and the respective rights and obligations of the Company and such
Holders, with respect to the preparation, filing and effectiveness
of a Registration Statement, and the distribution of Registrable
Securities pursuant thereto, are as follows:

 

(a)           The
Company will, at least five (5) Trading Days prior to the filing of
a Registration Statement or any related Prospectus or any amendment
or supplement thereto (other than any amendment or supplement made
through the incorporation by reference of ordinary course Exchange
Act filings), (i) furnish to the Holders copies of all such
documents proposed to be filed, which documents will be subject to
the reasonable review of such Holders and (ii) use its commercially
reasonable efforts to address in each such document when so filed
with the Commission such comments as the Holders reasonably shall
propose.

 

(b)           The
Company will use commercially reasonable efforts to (i) 
prepare and file with the Commission such amendments, including
post-effective amendments, and supplements to each Registration
Statement and the Prospectus used in connection therewith as may be
necessary under applicable law with respect to the disposition of
all Registrable Securities covered by such Registration Statement
continuously effective as to the applicable Registrable Securities
for its Effectiveness Period and prepare and file with the
Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; and (iii)
respond as promptly as reasonably possible to any comments received
from the Commission with respect to each Registration Statement or
any amendment thereto and, as promptly as reasonably possible
provide the Holders true and complete copies of all correspondence
from and to the Commission relating to such Registration Statement
that pertains to the Holders as selling securityholders but not any
comments that would result in the disclosure to the Holders of
material and non-public information concerning the
Company.

 

(c)           The
Company will comply in all material respects with the provisions of
the Securities Act and the Exchange Act with respect to the
Registration Statements and the disposition of all Registrable
Securities covered by each Registration
Statement.

 

(d)           The
Company will notify the Holders as promptly as reasonably possible
(i) of the issuance by the Commission of any stop order suspending
the effectiveness of a Registration Statement covering any or all
of the Registrable Securities or the initiation of any Proceedings
for that purpose; and (ii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities
for sale in any jurisdiction, or the initiation or threatening of
any Proceeding for such purpose.

 

(e)           The
Company will use commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of a
Registration Statement, at the earliest practicable moment, or if
any such order or suspension is made effective during any Black-Out
Period, at the earliest practicable moment after the Black-Out
Period is over.

 

 

 

6

 

 

 

(f)           During
the Effectiveness Period, the Company will furnish to each Holder,
without charge, at least one conformed copy of each Registration
Statement and each amendment thereto and all exhibits to the extent
requested by such Person (including those incorporated by
reference) promptly after the filing of such documents with the
Commission; provided,
that the Company will not have any obligation to provide any
document pursuant to this clause that is available on the EDGAR
system.

 

(g)           The
Company will promptly deliver to each Holder, without charge, as
many copies of each Prospectus or Prospectuses (other than any
amendment or supplement made through the incorporation by reference
of ordinary course Exchange Act filings) as such Persons may
reasonably request during the Effectiveness Period. The Company
consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection
with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto in
accordance with this Agreement.

 

(h)           The
Company will, prior to any public offering of Registrable
Securities, use commercially reasonable efforts to register or
qualify or cooperate with the selling Holders in connection with
the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for
offer and sale under the applicable state securities or blue sky
laws of those jurisdictions within the United States as any Holder
reasonably requests in writing to keep each such registration or
qualification (or exemption therefrom) effective during the
Effectiveness Period and use its commercially reasonable efforts to
do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statements;
provided,
that the Company will not be required to (i) qualify generally to
do business or as a dealer in securities in any jurisdiction where
it is not then so qualified or (ii) take any action which would
subject the Company to general service of process or any material
tax in any such jurisdiction where it is not then so
subject.

 

(i)           The
Company will cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to the
Registration Statements, which certificates shall be free of all
restrictive legends, and to enable such Registrable Securities to
be in such denominations and registered in such names as any such
Holders may request in writing. In connection therewith, if
required by the Company’s transfer agent, the Company will
promptly after the effectiveness of the Registration Statement
cause an opinion of counsel as to the effectiveness of the
Registration Statement to be delivered to its transfer agent when
and as required by such transfer agent from time to time, together
with any other authorizations, certificates and directions required
by the transfer agent which authorize and direct the transfer agent
to issue such Registrable Securities without legend upon sale by
the holder of such shares of Registrable Securities under the
Registration Statement.

 

 

 

7

 

 

 

(j)           The
Company will use commercially reasonable efforts to prepare such
supplements or amendments, including a post-effective amendment, if
required by applicable law, to each applicable Registration Statement and file
any other required document so that such Registration Statement will be Available at all times during the
Effectiveness Period; provided,
that no such supplement, amendment or filing will be required
during a Black-Out Period. No later than 8:00 p.m. (New York
time) on any Trading Day on which the Company receives a written notice (a
“Use
Notice”) prior to 2:00
p.m. (New York time) on such Trading Day (or if such request is received after
2:00 p.m. (New York time), no
later than 8:00 p.m.
(New York time) on the
following Trading Day) from
a Holder that such Holder
intends to use the Registration
Statement to resell Registrable Securities, the Company will (A) provide written confirmation to such Holder
that the applicable
Registration Statement is Available or (B) provide written notice (a
“Suspension
Notice”) that the use of
such Registration Statement is
suspended due to a Black-Out Period. No Suspension Notice will
contain the reason for the Black-Out Period. The Company will
promptly provide the Holders written notice when the Black-Out
Period. If a Black-Out Period commences during any 30 Trading Day
period following delivery of a Use Notice and a notice from the
Company under clause (A) above, the Company will provide as
promptly as practicable the Holders with written notice thereof and
that the Registration Statement is no longer
Available.

 

(k)           Notwithstanding
any other provision of the Agreement, no Holder of Registrable
Securities may include any of its Registrable Securities in the
Registration Statement pursuant to this Agreement unless the Holder
furnishes to the Company a completed questionnaire substantially in
the form of Exhibit A (the “Questionnaire”)
for use in connection with the Registration Statement at least ten
(10) Trading Days prior to the filing of the Registration
Statement; provided,
however,
an Investor shall not be required to furnish a Questionnaire in
connection with the initial Registration Statement if such Investor
owns Common Stock initially purchased by such Investor at the
Closing as of the initial Filing Date. Each Holder who intends to
include any of its Registrable Securities in the Registration
Statement shall promptly furnish the Company in writing such other
information as the Company may reasonably request in
writing.

 

(l)           The
Holders may distribute the Registrable Securities by means of up to
two underwritten offerings; provided
that (a) the Electing Holders
provide written notice to the Company of their intention to
distribute Registrable Securities by means of an underwritten
offering, (b) the managing underwriter or underwriters thereof
shall be designated by the Electing Holders; provided,
however,
that such designated managing underwriter or underwriters shall be
reasonably acceptable to the Company, (c) each Holder
participating in such underwritten offering agrees to sell such
Holder’s Registrable Securities on the basis provided in any
underwriting arrangements approved by the persons entitled
selecting the managing underwriter or underwriters hereunder and
(d) each Holder participating in such underwritten offering
completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements. The
Company hereby agrees with each Holder that, in connection with any
underwritten offering in accordance with the terms hereof, it will
negotiate in good faith and execute all indemnities, underwriting
agreements and other documents reasonably required under the terms
of such underwriting arrangements, including using all commercially
reasonable efforts to procure customary legal opinions and auditor
“comfort” letters.

 

 

 

8

 

 

 

(m)           In
the event the Holders seek to complete an underwritten offering
pursuant to Section 3(l), for a reasonable period prior to the
filing of any Registration Statement, and throughout the
Effectiveness Period, the Company will make available upon
reasonable notice at the Company’s principal place of
business or such other reasonable place for inspection by the
managing underwriter or underwriters selected in accordance with
Section 3(l), such financial and other information and books and
records of the Company, and cause the officers, employees, counsel
and independent certified public accountants of the Company to
respond to such inquiries, as shall be reasonably necessary (and in
the case of counsel, not violate an attorney-client privilege in
such counsel’s reasonable belief), to conduct a reasonable
investigation within the meaning of Section 11 of the
Securities Act; provided,
however,
that the foregoing inspection and information gathering on behalf
of the Holders (and any managing underwriter or underwriters) shall
be conducted by legal counsel to the Holders (and legal counsel to
such managing underwriter or underwriters); provided further,
that each such party shall be required to maintain in confidence
and not to disclose to any other Person any information or records
reasonably designated by the Company as being confidential, until
such time as (A) such information becomes a matter of public
record (whether by virtue of its inclusion in the Registration
Statement or in any other manner other than through the release of
such information by any Person afforded access to such information
pursuant hereto), or (B) such Person shall be required so to
disclose such information pursuant to a subpoena or order of any
court or other governmental agency or body having jurisdiction over
the matter (subject to the requirements of such order, and only
after such Person shall have given the Company prompt prior written
notice of such requirement).

 

4.           Registration
Expenses.
All fees and expenses incident to the
Company’s performance of or compliance with their obligations
under this Agreement (excluding any underwriting discounts and
selling commissions, but including all legal fees and expenses of
one legal counsel to the Holders) shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees
and expenses (A) with respect to filings required to be made with
the Trading Market, and (B) in compliance with applicable state
securities or blue sky laws), (ii) printing expenses (including,
without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing
of prospectuses is reasonably requested by the holders of a
majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance,
and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be
responsible for all of their internal expenses incurred in
connection with the consummation of the transactions contemplated
by this Agreement (including, without limitation, all salaries and
expenses of their officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees
and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required
hereunder. For the avoidance of doubt, each Holder shall pay all
underwriting and placement discounts and commissions, agency and
placement fees, brokers’ commissions and transfer taxes, if
any, relating to the sale or disposition of such Holder’s
Registrable Securities. In addition to the foregoing, the Company
shall pay the reasonable legal fees and expenses of the single
counsel to the Holders in connection with the Registration
Statement (not to exceed $35,000 in the aggregate);
provided,
however,
if the Holders reasonably determine that local counsel is required
in connection with the Registration Statement, then the Company
shall be obligated to pay such reasonable legal fees and expense as
well (not to exceed $20,000 in the aggregate).

 

 

 

9

 

 

 

5.           Indemnification.

 

(a)           Indemnification
by the Company. The Company
will, notwithstanding any termination of this Agreement, jointly
and severally, indemnify and hold harmless each Holder and each
underwriter, broker-dealer or selling agent, if any, which
facilitates the disposition of Registrable Securities, the
officers, directors, agents, partners, members, stockholders and
employees of each of them, each Person who controls any such
Holder, underwriter, broker-dealer or selling agent (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of
each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation,
reasonable costs of preparation and reasonable attorneys’
fees) and expenses (collectively, “Losses”),
as incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in any Registration
Statement, any Prospectus or any form of prospectus (including,
without limitation, any “issuer free writing
prospectus” as defined in Rule 433) or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of
prospectus (including, without limitation, any “issuer free
writing prospectus” as defined in Rule 433) or supplement
thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that
(i) such Losses arise out of or are based upon any untrue
statements, alleged untrue statements, omissions or alleged
omissions that are based solely upon information regarding such
Holder, underwriter, broker-dealer or selling agent furnished in
writing to the Company by such Person expressly for use therein
pursuant to Section 3(k) or (ii) such Losses arise out of or are
based upon transfers of Registrable Securities during a Black-Out
Period. The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated
by this Agreement.

 

(b)           Indemnification
by Holders. Each Holder shall,
notwithstanding any termination of this Agreement, severally and
not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers,
agents or employees of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue
statement of a material fact contained in any Registration
Statement, any Prospectus, or any form of prospectus (including,
without limitation, any “issuer free writing
prospectus” as defined in Rule 433), or in any amendment or
supplement thereto, or arising solely out of or based solely upon
any omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any
Prospectus, or any form of prospectus (including, without
limitation, any “issuer free writing prospectus” as
defined in Rule 433) or supplement thereto, in light of the
circumstances under which they were made) not misleading to the
extent, but only to the extent, that such untrue statements or
omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder in the
Questionnaire or otherwise expressly for use therein. In no event
shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to
such indemnification obligation.

 

 

 

10

 

 

 

(c)           Conduct
of Indemnification Proceedings.
If any Proceeding shall be brought or asserted against any Person
entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified
Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying
Party”) in writing, and
the Indemnifying Party shall be permitted to assume the defense
thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party (whose approval shall not be
unreasonably withheld) and the payment of all fees and expenses
incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and
materially adversely prejudiced the Indemnifying
Party.

 

An
Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party or Parties unless:  (1) the
Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such
Proceeding (whose approval shall not be unreasonably withheld); or
(3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist
if the same counsel were to represent such Indemnified Party and
the Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the
Indemnifying Party); provided that the Indemnifying
Party shall not be liable for the fees and expenses of more than
one separate firm of attorneys at any time for all Indemnified
Parties.  The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld.  No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding
in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of
such Proceeding.

 

All
fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner
not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, promptly upon receipt of written
notice thereof to the Indemnifying Party (regardless of whether it
is ultimately determined that an Indemnified Party is not entitled
to indemnification hereunder; provided that the Indemnifying
Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to
indemnification hereunder).

 

 

11

 

 

 

(d)           Contribution.
If a claim for indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as
well as any other relevant equitable considerations.  The
relative fault of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such action, statement or
omission.  The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the
limitations set forth in Section 5(c), any reasonable
attorneys’ or other reasonable fees or expenses incurred by
such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such
party in accordance with its terms.

 

The
parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not
take into account the equitable considerations referred to in the
immediately preceding paragraph.  Notwithstanding the
provisions of this Section 5(d), no Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by such Holder from the sale
of the Registrable Securities subject to the Proceeding exceeds the
amount of any damages that such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent
misrepresentation.

 

The
indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties and are not in diminution or limitation
of the indemnification provisions under the Purchase
Agreement.

 

6.           Facilitation
of Sales Pursuant to Rule 144.
To the extent it shall be required to
do so under the Exchange Act, the Company shall timely file the
reports required to be filed by it under the Exchange Act or the
Securities Act (including the reports under Sections 13 and
15(d) of the Exchange Act referred to in subparagraph (c)(1) of
Rule 144), and shall take such further action as any Holder
may reasonably request, all to the extent required from time to
time to enable the Holders to sell Registrable Securities without
registration under the Securities Act within the limitations of the
exemption provided by Rule 144. Upon the request of any Holder
in connection with that Holder’s sale pursuant to
Rule 144, the Company shall deliver to such Holder a written
statement as to whether it has complied with such
requirements.

 

 

 

12

 

 

 

7.           Miscellaneous.

 

(a)           Remedies.
In the event of a breach by the Company or by a Holder, of any of
their obligations under this Agreement, each Holder or the Company,
as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights
under this Agreement.  The Company and each Holder agree that
monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the
provisions of this Agreement and further agree that, in the event
of any action for specific performance in respect of such breach,
it shall waive the defense that a remedy at law would be
adequate.

 

(b)           Discontinued
Disposition. Each Holder agrees
by its acquisition of such Registrable Securities that, that it
will not commence a disposition of Registrable Securities under the
Registration Statement until such Holder has received (A) written
confirmation from the Company of the availability of the
Registration Statement as described in Section 3(j)(A), (B) written
confirmation from the Company that the Black-Out Period has ceased
as described in Section 3(j) or (C) copies of the supplemented
Prospectus and/or amended Registration Statement as described in
Section 3(j), and, in each case, has also received copies of any
additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such Prospectus or Registration
Statement.  The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.

 

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

 

(d)           Notices.
Except where explicitly stated otherwise, any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile or
electronic mail as specified in this Section prior to 5:00 p.m.
(New York time) on a Business Day, (ii) the Business Day after the
date of transmission, if such notice or communication is delivered
via facsimile or electronic mail as specified in this Agreement
later than 5:00 p.m. (New York time) on any date and earlier than
11:59 p.m. (New York time) on such date, (iii) the Business Day
following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given.  The address for
such notices and communications shall be as
follows:

 

 

 

13

 

 

 

	
 

	

If
to the Company:

	
 

	

Cellular
Biomedicine Group, Inc.

	
 

	
 

	
 

	

19925 Stevens
Creek Blvd., Suite 100

Cupertino, CA
95014

Attention: Andy
Chan, Secretary and Senior Vice President

E-mail:
andy.chan@cellbiomedgroup.com

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

With
a copy to:

	
 

	

Ellenoff
Grossman & Schole LLP

1345
Avenue of the Americas

New
York, New York 10105

Attention: Sarah
Williams

Facsimile: (212)
370-7889

E-mail:
swilliams@egsllp.com

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

If
to the Investors:

	
 

	

Sailing Capital
Overseas Investments Management Ltd

190
Elgin Avenue, George Town, Grand Cayman KY1-9005

Cayman
Islands

Attention: Bosun
S. Hau

Managing
Director / Partner

E-mail:
bosunhau@sailing-capital.com

	
 

	
 

	
 

	

With
a copy to:

	
 

	

Wilson Sonsini
Goodrich & Rosati, Professional Corporation

	
 

	
 

	
 

	

12235 El Camino
Real

San
Diego, CA 92130

	
 

	
 

	
 

	

Attention: Dan
Koeppen

	
 

	
 

	
 

	

Facsimile:
858-350-2393

	
 

	
 

	
 

	

Email:
dkoeppen@wsgr.com

 

or such
other address as may be designated in writing hereafter, in the
same manner, by such Person.

 

(e)           Successors
and Assigns. This Agreement
shall inure to the benefit of and be binding upon the successors
and permitted assigns of each of the parties and shall inure to the
benefit of each Holder. The Company may not assign (other than by
operation of law) its rights or obligations hereunder without the
prior written consent of the Electing Holders. The Investors may
not assign their rights and obligations hereunder (other than by
operation of law); provided
that an Investor may assign its rights
and obligations hereunder to an Affiliate of such Investor. Upon
any distribution of the Registrable Securities to the limited
partners of an Investor, this Agreement shall inure to the benefit
of and be binding upon such limited partners receiving the
Registrable Securities.

 

 

 

14

 

 

 

(f)           Execution
and Counterparts. This
Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and, all
of which taken together shall constitute one and the same
Agreement.  In the event that any signature is delivered by
facsimile or electronic mail transmission, such signature shall
create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same
force and effect as if such signature delivered by facsimile or
electronic mail transmission were the original
thereof.

 

(g)           Governing
Law. This Agreement shall be
governed by and construed in accordance with the laws of the State
of New York without regard to choice of laws or conflicts of laws
provisions thereof that would require the application of the laws
of any other jurisdiction.

 

(h)           Submission
to Jurisdiction. Each of the
parties to this Agreement irrevocably and unconditionally submits,
for itself and its property, to the exclusive jurisdiction of the
courts of the State of New York sitting in New York County and of
the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or for the
recognition or enforcement of any judgment, and each of the parties
hereto irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and
determined in such New York State court or, to the fullest extent
permitted by applicable law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law.

 

(i)           Waiver
of Venue. Each of the parties
to this Agreement irrevocably and unconditionally waives, to the
fullest extent permitted by applicable law, (i) any objection that
it may now or hereafter have to the laying of venue of any action
or proceeding arising out of or relating to this Agreement in any
court referred to in Section 7(h) and (ii) the defense of an
inconvenient forum to the maintenance of such action or proceeding
in any such court.

 

(j)           Cumulative
Remedies. The remedies provided
herein are cumulative and not exclusive of any remedies provided by
law.

 

(k)           Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or
restriction.  It is hereby stipulated and declared to be the
intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.

 

(l)           Entire
Agreement. This Agreement
constitutes the entire agreement between the parties hereto
pertaining to the subject matter hereof, and supersedes all other
prior agreements and understandings, both written and oral, between
the parties, with respect to the subject matter
hereof.

 

(m)           Headings;
Section References. The
headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof. Unless
otherwise stated, references to Sections, Schedules and Exhibits
are to the Sections, Schedules and Exhibits of this
Agreement.

 

[Signature
Pages Follow]

 

 

15

 

 

 

IN
WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

 

 

	

 

	
CELLULAR
BIOMEDICINE GROUP, INC.

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/
Bizuo
(Tony) Liu

	

 

	

 

	Name:	
Bizuo
(Tony) Liu	

 

	

 

	Title:	Chief Executive
Officer	

 

 

 

[Signature
Page to the Registration Rights Agreement]

 

IN
WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the date first written above.

 

 

INVESTOR:

 

WEALTH
MAP HOLDINGS LIMITED, A BVI COMPANY

 

 

By: /s/ James Xiao Dong Liu    
         

 

Name: James Xiao Dong Liu    
         

 

Title: Director                                     

 

 

Address: c/o Unit
2006-08

20/F
Harbour Centre, 25 Harbour Road

Wan
Chai, Hong Kong

 

Email:
jamesliu@sailing-capital.com

 

 

[Signature
Page to the Registration Rights Agreement]

 

 

IN
WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the date first written above.

 

 

INVESTOR:

 

EARLS
MILL LIMITED, A BVI COMPANY

 

 

By: /s/ James Xiao Dong Liu    
        

 

Name: James Xiao Dong
Liu             

 

Title: Director                                     

 

 

Address: c/o Unit
2006-08

20/F
Harbour Centre, 25 Harbour Road

Wan
Chai, Hong Kong

 

Email:
jamesliu@sailing-capital.com

 

 

[Signature
Page to the Registration Rights Agreement]

 

 

 

 

IN
WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the date first written above.

 

 

INVESTOR:

 

 

/s/ Bosun S.
Hau                             

Bosun
S. Hau

 

 

[Signature
Page to the Registration Rights Agreement]

 

 

 

 

 

ANNEX A

 

PLAN OF DISTRIBUTION

 

The
selling securityholders, including their pledgees, donees,
transferees, distributees, beneficiaries or other successors in
interest, may from time to time offer some or all of the shares of
common stock (collectively, “Securities”)
covered by this prospectus. To the extent required, this prospectus
may be amended and supplemented from time to time to describe a
specific plan of distribution.

 

     The
selling securityholders will not pay any of the costs, expenses and
fees in connection with the registration and sale of the shares
covered by this prospectus, but they will pay any and all
underwriting discounts, selling commissions and stock transfer
taxes, if any, attributable to sales of the shares. We will not
receive any proceeds from the sale of the shares of our common
stock covered hereby.

 

     The
selling securityholders may sell the Securities covered by this
prospectus from time to time, and may also decide not to sell all
or any of the Securities that they are allowed to sell under this
prospectus. The selling securityholders will act independently of
us in making decisions regarding the timing, manner and size of
each sale. These dispositions may be at fixed prices, at market
prices prevailing at the time of sale, at prices related to such
prevailing market prices, at varying prices determined at the time
of sale, or at privately negotiated prices. Sales may be made by
the selling securityholders in one or more types of transactions,
which may include:

 

● 

purchases by
underwriters, dealers and agents who may receive compensation in
the form of underwriting discounts, concessions or commissions from
the selling securityholders and/or the purchasers of the Securities
for whom they may act as agent;

 

● 

one or more block
transactions, including transactions in which the broker or dealer
so engaged will attempt to sell the Securities as agent but may
position and resell a portion of the block as principal to
facilitate the transaction, or in crosses, in which the same broker
acts as an agent on both sides of the trade;

 

● 

ordinary brokerage
transactions or transactions in which a broker solicits
purchases;

 

● 

purchases by a
broker-dealer or market maker, as principal, and resale by the
broker-dealer for its account;

 

● 

the pledge of
Securities for any loan or obligation, including pledges to brokers
or dealers who may from time to time effect distributions of
Securities;

 

● 

short sales or
transactions to cover short sales relating to the
Securities;

 

 

 

 

 

 

● 

one or more
exchanges or over the counter market transactions;

 

● 

through
distribution by a selling securityholder or its successor in
interest to its members, general or limited partners or
shareholders (or their respective members, general or limited
partners or shareholders);

 

● 

privately
negotiated transactions;

 

● 

the writing of
options, whether the options are listed on an options exchange or
otherwise;

 

● 

distributions to
creditors and equity holders of the selling securityholders;
and

 

● 

any combination of
the foregoing, or any other available means allowable under
applicable law.

 

     A
selling securityholder may also resell all or a portion of its
Securities in open market transactions in reliance upon Rule 144
under the Securities Act provided it meets the criteria and
conforms to the requirements of Rule 144.

 

     The
selling securityholders may enter into sale, forward sale and
derivative transactions with third parties, or may sell securities
not covered by this prospectus to third parties in privately
negotiated transactions. If the applicable prospectus supplement
indicates, in connection with those sale, forward sale or
derivative transactions, the third parties may sell securities
covered by this prospectus and the applicable prospectus
supplement, including in short sale transactions and by issuing
securities that are not covered by this prospectus but are
exchangeable for or represent beneficial interests in the common
stock. The third parties also may use shares received under those
sale, forward sale or derivative arrangements or shares pledged by
the selling securityholder or borrowed from the selling
securityholders or others to settle such third-party sales or to
close out any related open borrowings of common stock. The third
parties may deliver this prospectus in connection with any such
transactions. Any third party in such sale transactions will be an
underwriter and will be identified in the applicable prospectus
supplement (or a post-effective amendment to the registration
statement of which this prospectus is a part).

 

     In
addition, the selling securityholders may engage in hedging
transactions with broker-dealers in connection with distributions
of Securities or otherwise. In those transactions, broker-dealers
may engage in short sales of securities in the course of hedging
the positions they assume with selling securityholders. The selling
securityholders may also sell securities short and redeliver
securities to close out such short positions. The selling
securityholders may also enter into option or other transactions
with broker-dealers which require the delivery of securities to the
broker-dealer. The broker-dealer may then resell or otherwise
transfer such securities pursuant to this prospectus. The selling
securityholders also may loan or pledge shares, and the borrower or
pledgee may sell or otherwise transfer the Securities so loaned or
pledged pursuant to this prospectus. Such borrower or pledgee also
may transfer those Securities to investors in our securities or the
selling securityholders’ securities or in connection with the
offering of other securities not covered by this
prospectus.

 

 

 

 

 

 

     To
the extent necessary, we may amend or supplement this prospectus
from time to time to describe a specific plan of distribution. We
will file a supplement to this prospectus, if required, upon being
notified by the selling securityholders that any material
arrangement has been entered into with a broker-dealer for the sale
of shares through a block trade, offering or a purchase by a broker
or dealer. The applicable prospectus supplement will set forth the
specific terms of the offering of securities,
including:

 

● 

the number of
Securities offered;

 

● 

the price of such
Securities;

 

● 

the proceeds to the
selling securityholders from the sale of such
Securities;

 

● 

the names of the
underwriters or agents, if any;

 

● 

any underwriting
discounts, agency fees or other compensation to underwriters or
agents; and

 

● 

any discounts or
concessions allowed or paid to dealers.

 

     The
selling securityholders may, or may authorize underwriters, dealers
and agents to, solicit offers from specified institutions to
purchase Securities from the selling securityholders at the public
offering price listed in the applicable prospectus supplement.
These sales may be made under “delayed delivery
contracts” or other purchase contracts that provide for
payment and delivery on a specified future date. Any contracts like
this will be described in and be subject to the conditions listed
in the applicable prospectus supplement.

 

     Broker-dealers
or agents may receive compensation in the form of commissions,
discounts or concessions from the selling securityholders.
Broker-dealers or agents may also receive compensation from the
purchasers of Securities for whom they act as agents or to whom
they sell as principals, or both. Compensation as to a particular
broker-dealer might be in excess of customary commissions and will
be in amounts to be negotiated in connection with transactions
involving securities. In effecting sales, broker-dealers engaged by
the selling securityholders may arrange for other broker-dealers to
participate in the resales.

 

     In
connection with sales of Securities covered hereby, the selling
securityholders and any underwriter, broker-dealer or agent and any
other participating broker-dealer that executes sales for the
selling securityholders may be deemed to be an
“underwriter” within the meaning of the Securities Act
of 1933, as amended (the “Securities
Act”). Accordingly, any profits realized by the
selling securityholders and any compensation earned by such
underwriter, broker-dealer or agent may be deemed to be
underwriting discounts and commissions. Because the selling
securityholders may be deemed to be “underwriters”
under the Securities Act, the selling securityholders must deliver
this prospectus and any prospectus supplement in the manner
required by the Securities Act. This prospectus delivery
requirement may be satisfied through the facilities of the NASDAQ
Global Market in accordance with Rule 153 under the Securities
Act.

 

 

 

 

 

 

     We
and the selling securityholders have agreed to indemnify each other
against certain liabilities, including liabilities under the
Securities Act. In addition, we or the selling securityholders may
agree to indemnify any underwriters, broker-dealers and agents
against or contribute to any payments the underwriters,
broker-dealers or agents may be required to make with respect to,
civil liabilities, including liabilities under the Securities Act.
Underwriters, broker-dealers and agents and their affiliates are
permitted to be customers of, engage in transactions with, or
perform services for us and our affiliates or the selling
securityholders or their affiliates in the ordinary course of
business.

 

     The
selling securityholders will be subject to applicable provisions of
Regulation M of the Securities Exchange Act of 1934 and the rules
and regulations thereunder, which provisions may limit the timing
of purchases and sales of any of the Securities by the selling
securityholders. Regulation M may also restrict the ability of any
person engaged in the distribution of the Securities to engage in
market-making activities with respect to the Securities. These
restrictions may affect the marketability of such
Securities.

 

     In
order to comply with applicable securities laws of some states, the
Securities may be sold in those jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain
states the Securities may not be sold unless they have been
registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirements is
available. In addition, any Securities of a selling securityholder
covered by this prospectus that qualify for sale pursuant to Rule
144 under the Securities Act may be sold in open market
transactions under Rule 144 rather than pursuant to this
prospectus.

 

     In
connection with an offering of Securities under this prospectus,
the underwriters may purchase and sell securities in the open
market. These transactions may include short sales, stabilizing
transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a
greater number of securities than they are required to purchase in
an offering. Stabilizing transactions consist of certain bids or
purchases made for the purpose of preventing or retarding a decline
in the market price of the securities while an offering is in
progress.

 

     The
underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the
underwriting discount received by it because the underwriters have
repurchased securities sold by or for the account of that
underwriter in stabilizing or short-covering
transactions.

 

     These
activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the Securities offered under this
prospectus. As a result, the price of the Securities may be
higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued
by the underwriters at any time. These transactions may be effected
on the NASDAQ Global Market or another securities exchange or
automated quotation system, or in the over-the-counter market or
otherwise.

 

 

 

 

EXHIBIT A

 

FORM OF

 

SELLING SECURITYHOLDER QUESTIONNAIRE

 

Reference
is made to that certain registration rights agreement (the
“Registration Rights
Agreement”), dated as of [______________], by and
among Cellular Biomedicine Group, Inc. (the “Company”), and
[______________]. Capitalized terms used and not defined herein
shall have the meanings given to such terms in the Registration
Rights Agreement.

 

The
undersigned Holder (the “Selling
Securityholder”) of the Registrable Securities is
providing this Selling Securityholder Questionnaire pursuant to
Section 3(k) of the Registration Rights Agreement. The Selling
Securityholder, by signing and returning this Selling
Securityholder Questionnaire, understands that it will be bound by
the terms and conditions of this Selling Securityholder
Questionnaire and the Registration Rights Agreement. The Selling
Securityholder hereby acknowledges its indemnity obligations
pursuant to Section 5(b) of the Registration Rights
Agreement.

 

The
Selling Securityholder provides the following information to the
Company and represents and warrants that such information is
accurate and complete:

 

(1) 

(a) 

Full Legal Name of
Selling Securityholder:

    ______________________________________

   
(b) 

Full Legal Name of
Registered Holder (if not the same as (a) above) through which
Registrable Securities listed in (3) below are held:

                        
        ______________________________________

   
(c) 

Full Legal Name of
DTC Participant (if applicable and if not the same as (b) above)
through which Registrable Securities listed in (3) below are
held:

 

______________________________________

 

(2)            

Address for Notices
to Selling Securityholder:

______________________________________

______________________________________

Telephone
(including area code):

____________________

Fax (including area
code):

__________________________

Contact
Person:     

________________________________

 

(3)   

Beneficial
Ownership of Registrable Securities:

__________________________________________

(a) 

Type and Principal
Amount/Number of Registrable Securities beneficially
owned:

__________________________________________

(b) 

CUSIP No(s). of
such Registrable Securities beneficially owned:

__________________________________________

(4) 

Beneficial
Ownership of Other Securities of the Company Owned by the Selling
Securityholder:

 

 

 

Except as set forth below in this Item (4), the Selling
Securityholder is not the beneficial or registered owner of any
securities of the Company other than the Registrable Securities
listed above in Item (3).

(a) 

Type and Amount of
Other Securities beneficially owned by the Selling
Securityholder:

 

                             
_________________________________________

 

(b)            

CUSIP No(s). of
such Other Securities beneficially owned:

 

(5)            

Relationship with
the Company:

Except as set forth below, neither the Selling Securityholder nor
any of its affiliates, officers, directors or principal equity
holders (5% or more) has held any position or office or has had any
other material relationship with the Company (or its predecessors
or affiliates) during the past three years.

State
any exceptions here:

 

(6)            

Is the Selling
Securityholder a registered broker-dealer?

Yes

☐

No 

☐

If
“Yes”, please answer subsection (a) and subsection
(b):

(a) Did
the Selling Securityholder acquire the Registrable Securities as
compensation for underwriting/broker-dealer activities to the
Company?

Yes  

☐

No 

☐

(b) If
you answered “No” to question 6(a), please explain your
reason for acquiring the Registrable Securities:

 

                                                                 
___________________________________________________

 

                                                                 
___________________________________________________

 

(7)            

Is the Selling
Securityholder an affiliate of a registered
broker-dealer?

Yes   

☐

No   

☐

If
“Yes”, please identify the registered broker-dealer(s),
describe the nature of the affiliation(s) and answer subsection (a)
and subsection (b):

_________________________________________________

_________________________________________________

(a) Did
the Selling Securityholder purchase the Registrable Securities in
the ordinary course of business (if no, please
explain)?

Yes    

☐

No    

☐

Explain:

_________________________________________________

_________________________________________________

 

 

 

 

(b) Did
the Selling Securityholder have an agreement or understanding,
directly or indirectly, with any person to distribute the
Registrable Securities at the same time the Registrable Securities
were originally purchased (if yes, please explain)?

Yes   

☐

No   

☐

Explain:

(8)            

Is the Selling
Securityholder a non-public entity?

Yes    

☐

No    

☐

If
“Yes”, please answer subsection (a):

(a)
Identify the natural person or persons that have voting or
investment control over the Registrable Securities that the
non-public entity owns:

(9)            

Plan of
Distribution:

 

The
Selling Securityholder (including its donees and pledgees) intends
to distribute the Registrable Securities listed above in Item (3)
pursuant to the Registration Statement in accordance with the Plan
of Distribution attached as Annex A to the Registration Rights
Agreement.

 

The
Selling Securityholder acknowledges that it understands its
obligations to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and the rules thereunder relating
to stock manipulation, particularly Regulation M thereunder (or any
successor rules or regulations), in connection with any offering of
Registrable Securities pursuant to the Shelf Registration
Agreement. The Selling Securityholder agrees that neither it nor
any person acting on its behalf will engage in any transaction in
violation of such provisions.

 

Pursuant
to the Registration Rights Agreement, the Company has agreed under
certain circumstances to indemnify the Selling Securityholder
against certain liabilities.

 

In the
event the Selling Securityholder transfers all or any portion of
the Registrable Securities listed in Item (3) above after the date
on which such information is provided to the Company other than
pursuant to the Registration Statement, the Selling Securityholder
agrees to notify the transferee(s) at the time of the transfer of
its rights and obligations under this Selling Securityholder
Questionnaire and the Registration Rights Agreement.

 

In
accordance with the Selling Securityholder’s obligation under
the Registration Rights Agreement to provide such information as
may be required by law or by the staff of the Commission for
inclusion in the Registration Statement, the Selling Securityholder
agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur
subsequent to the date hereof at anytime while the Registration
Statement remains effective. All notices to the Selling
Securityholder pursuant to the Registration Rights Agreement shall
be made in writing, by hand-delivery, first-class mail, or air
courier guaranteeing overnight delivery to the address set forth
below.

 

 

 

 

By
signing below, the Selling Securityholder consents to the
disclosure of the information contained herein in its answers to
Items (1) through (9) above and the inclusion of such information
in the Registration Statement and the related Prospectus. The
undersigned understands that such information will be relied upon
by the Company in connection with the preparation or amendment of
the Registration Statement and the related Prospectus.

 

By
signing below, the undersigned agrees that if the Company notifies
the undersigned that the Registration Statement is not available
pursuant to the terms of the Registration Rights Agreement, the
undersigned will suspend use of the Prospectus until notice from
the Company that the Prospectus is again available.

 

Once
this Selling Securityholder Questionnaire is executed by the
undersigned and received by the Company, the terms of this Selling
Securityholder Questionnaire, and the representations, warranties
and agreements contained herein, shall be binding on, shall inure
to the benefit of and shall be enforceable by the respective
successors, heirs, personal representatives, and assigns of the
Company and the undersigned with respect to the Registrable
Securities beneficially owned by the undersigned and listed in Item
(3) above. This Selling Securityholder Questionnaire shall be
governed by and construed in accordance with the laws of the State
of New York without regard to choice of laws or conflicts of laws
provisions thereof that would require the application of the laws
of any other jurisdiction.

 

 

 

 

IN
WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Selling Securityholder Questionnaire to be executed and
delivered either in person or by its duly authorized
agent.

 

Dated:
_______________________

 

____________________________________

Beneficial
Owner

By:                                                                   

Name:                                                                   

Title:                                                                   

 

 

PLEASE
RETURN THE COMPLETED AND EXECUTED

SELLING
SECURITYHOLDER QUESTIONNAIRE TO THE COMPANY AT:

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