SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported): January 18,
2011
NEOSTEM,
INC.
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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0-10909
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22-2343568
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(State
or Other Jurisdiction of Incorporation)
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(Commission
File
Number)
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(IRS
Employer Identification
No.)
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420 Lexington Avenue, Suite
450, New York, New York 10170
(Address
of Principal Executive Offices)(Zip Code)
(212)
584-4180
Registrant's
Telephone Number
Check
the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2.
below):
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o
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Written communications pursuant
to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
2.01.
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Completion
of Acquisition or Disposition of
Assets.
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The Merger —
General.
On
January 19, 2011 (the “Closing Date”), NBS Acquisition Company LLC (“Subco”), a
newly formed wholly-owned subsidiary of NeoStem, Inc. (“NeoStem”), merged (the
“Merger”) with and into Progenitor Cell Therapy, LLC, a Delaware limited
liability company (“PCT”), with PCT as the surviving entity, in accordance with
the terms of the Agreement and Plan of Merger, dated September 23, 2010 (the
“Merger Agreement”), among NeoStem, PCT and Subco. As a result of the
consummation of the Merger, NeoStem acquired all of the membership interests of
PCT, and PCT is now a wholly-owned subsidiary of NeoStem. PCT is
engaged in a wide range of services in the stem cell therapy market for the
treatment of human disease, including but not limited to contract manufacturing,
product and process development, consulting, product characterization and
comparability, and storage, distribution, manufacturing and transportation of
cell therapy products.
Pursuant
to the terms of the Merger Agreement, all of the membership interests of PCT
outstanding immediately prior to the effective time of the Merger (the
“Effective Time”) were converted into the right to receive, in the aggregate,
(i) 10,600,000 shares of the common stock, par value $0.001 per share, of
NeoStem (the “NeoStem Common Stock”) (reflecting certain final price adjustments
agreed to at the closing) and (ii) warrants to purchase an aggregate 3,000,000
shares of NeoStem Common Stock as follows:
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(i)
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common
stock purchase warrants to purchase one million (1,000,000) shares of
NeoStem Common Stock, exercisable over a seven year period at an exercise
price of $7.00 per share (the “$7.00 Warrants”), and which will vest only
if a specified business milestone (described in the Merger Agreement) is
accomplished within three (3) years of the Closing Date of the Merger;
and
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(ii)
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common
stock purchase warrants to purchase one million (1,000,000) shares of
NeoStem Common Stock exercisable over a seven year term at an exercise
price of $3.00 per share (the “$3.00 Warrants”);
and
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(iii)
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common
stock purchase warrants to purchase one million (1,000,000) shares of
NeoStem Common Stock exercisable over a seven year period at an exercise
price of $5.00 per share (the “$5.00 Warrants” and, collectively with the
$7.00 Warrants and the $3.00 Warrants, the
“Warrants”).
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The
Warrants will be delivered in book entry form to the former members of PCT as
promptly as possible after the Effective Time and NeoStem’s receipt of
appropriate letters of transmittal from the former members. The
Warrants are redeemable in certain circumstances. Transfer of the
shares issuable upon exercise of the Warrants is restricted until the one year
anniversary of the Closing Date.
In
accordance with the Merger Agreement, NeoStem has deposited into an escrow
account with the escrow agent (who is initially NeoStem’s transfer agent),
10,600,000 shares of NeoStem Common Stock for eventual distribution to the
former members of PCT (subject to downward adjustment to satisfy any
indemnification claims of NeoStem, all as described in the Merger
Agreement). The Escrow Agreement is filed as Exhibit 10.4 of this
Current Report on Form 8-K.
The
issuance of NeoStem securities in the Merger was approved at a special meeting
of stockholders of NeoStem held on January 18, 2011 (the “NeoStem Special
Meeting”) (see Item 5.07 below), on which date the Merger was approved at a
special meeting of members of PCT (the “PCT Special Meeting”).
The
description of the Merger contained in this Item 2.01 does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement,
which is attached to NeoStem’s Joint Proxy Statement/Prospectus dated December
16, 2010 and filed with the Securities and Exchange Commission on December 17,
2010 (the “Joint Proxy Statement/Prospectus”), and is incorporated by reference
as Exhibit 2.1 of this Current Report on Form 8-K.
The above
description of the Warrants does not purport to be complete and is qualified in
its entirety by reference to the Warrant Agreement between NeoStem and
Continental Stock Transfer & Trust Company, and the forms of $3.00 Global
Warrant, $5.00 Global Warrant and $7.00 Global Warrant attached thereto, which
is filed as Exhibit 4.1 of this Current Report on Form 8-K.
Business Relationships
Between NeoStem and PCT Existing Prior to the Merger.
Prior to
the Merger, NeoStem and PCT had entered into certain agreements with each other
for the provision of various services, as described in the Joint Proxy
Statement/Prospectus.
Interests of Certain PCT
Officers in the Merger.
Certain
officers of PCT entered into employment agreements with PCT that became
effective upon the closing of the Merger. The terms of these
employment agreements are described in the Joint Proxy
Statement/Prospectus. The Employment Agreements with Andrew L. Pecora
(who will serve as Chief Medical Officer of PCT in a part-time capacity after
the Merger) and Robert A. Preti (who will serve as President of PCT and Chairman
of the to-be-formed Quality Assurance and Ethics Committee after the Merger) are
filed with this Current Report on Form 8-K as Exhibits 10.1 and 10.2,
respectively. In addition, Dr. Pecora will be invited to join the
Board of Directors of NeoStem, as described in the Joint Proxy
Statement/Prospectus.
Dr.
Pecora (PCT’s Chairman, CEO and Chief Medical Officer prior to the Merger), Mr.
Preti (PCT’s President and Chief Scientific Officer prior to the Merger), and
George S. Goldberger (PCT’s Chief Business and Financial Officer, Treasurer and
Secretary prior to the Merger) beneficially owned approximately 17.4%, 16.9% and
2.5%, respectively, of the membership interests of PCT outstanding immediately
prior to the Merger. Certain of the shares of NeoStem Common Stock
that will be issued to these individuals in connection with the Merger will be
released from escrow earlier than the first release of shares for other former
members of PCT for the purpose of enabling them to pay taxes that will be due as
a result of the Merger.
In
addition, NeoStem has agreed to repay PCT’s credit line with Northern New Jersey
Cancer Associates (“NNJCA”), in an amount equal to $3 million, within seven days
of the closing. Dr. Pecora has served as Managing Partner of NNJCA
since 1996.
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Item
5.02.
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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(e) Compensatory
Arrangements.
Amendment to the 2009
Plan.
At the
NeoStem Special Meeting held on January 18, 2011, the stockholders of NeoStem
duly approved an amendment to the NeoStem, Inc. 2009 Equity Compensation Plan
(the “2009 Plan”) to increase the number of shares of NeoStem Common Stock
authorized for issuance thereunder by 4,000,000 shares (that is, from 13,750,000
shares to 17,750,000 shares), and NeoStem thereupon effected such amendment to
the 2009 Plan. Persons eligible to receive restricted and
unrestricted stock awards, options, stock appreciation rights or other awards
under the 2009 Plan are those employees, consultants and directors of NeoStem
and its subsidiaries who, in the opinion of the Compensation Committee of
NeoStem’s Board of Directors, are in a position to contribute to NeoStem’s
success. A description of the 2009 Plan and the amendment thereto is
set forth in the Joint Proxy Statement/Prospectus, and the full text of the 2009
Plan, as amended, is filed as Exhibit 10.3 of this Current Report on Form
8-K.
Equity
Awards.
On the
Closing Date of the Merger, and in accordance with their respective employment
agreements, NeoStem issued to Robert A. Preti, Andrew L. Pecora, George S.
Goldberger and Daryl LeSueur, options covering an aggregate of 1,200,000 shares
of NeoStem Common Stock.
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Item
5.07.
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Submission
of Matters to a Vote of Security
Holders.
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The
following is a brief description of each matter voted upon at the NeoStem
Special Meeting held on January 18, 2011 (for a full description of each such
matter see the Joint Proxy Statement/Prospectus), as well as the final voting
results with respect to each such matter:
The
proposal to approve the issuance of NeoStem securities in connection with the
Merger pursuant to the Merger Agreement among NeoStem, PCT and Subco was
approved by the stockholders. The final voting results with respect
to this matter were as follows: 44,180,657 votes for; 646,405 votes
against; 508,724 votes abstaining; and 11,671,477 broker non-votes.
The
proposal to approve an amendment to the NeoStem, Inc. 2009 Equity Compensation
Plan (the “2009 Plan”) to increase the number of shares of NeoStem Common Stock
authorized for issuance thereunder by 4,000,000 shares (that is, from 13,750,000
shares to 17,750,000 shares), was approved by the stockholders. The
final voting results with respect to this matter were as
follows: 42,504,879 votes for; 2,609,658 votes against; 221,249 votes
abstaining; and 11,671,477 broker non-votes.
The
proposal to approve an amendment to NeoStem’s Amended and Restated Certificate
of Incorporation to effect a reverse stock split of NeoStem Common Stock at a
ratio within the range of 1:2 to 1:5, as determined by the NeoStem Board of
Directors, in the event it is deemed by the NeoStem Board of Directors advisable
in connection with permitting NeoStem to maintain its listing with the NYSE Amex
or to list NeoStem Common Stock on any other exchange, was approved by the
stockholders. The final voting results with respect to this matter
were as follows: 53,265,298 votes for; 3,514,688 votes against;
227,277 votes abstaining; and 0 broker non-votes.
The
proposal to approve the issuance of NeoStem Common Stock upon the conversion or
redemption of the NeoStem Series E 7% Senior Convertible Preferred Stock and
upon exercise of the warrants issued with such shares of preferred stock was
approved by the stockholders. The final voting results with respect
to this matter were as follows: 44,468,689 votes for; 567,255 votes
against; 299,842 votes abstaining; and 11,671,477 broker non-votes.
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Item
7.01.
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Regulation
FD Disclosure.
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NeoStem
intends, from time to time, to present and/or distribute to the investment
community and utilize at various industry and other conferences a slide
presentation. The slide presentation is accessible on NeoStem’s
website at www.neostem.com and is attached hereto as Exhibit
99.1. NeoStem undertakes no obligation to update, supplement or amend
the materials attached hereto as Exhibit 99.1.
In
accordance with General Instruction B.2 of Form 8-K, the information in this
Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, shall not
be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference in
any filing under the Exchange Act of the Securities Act of 1933, as amended,
except as shall be expressly set forth by reference in such a
filing.
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Item
8.01.
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Other
Events.
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On
January 20, 2011, NeoStem issued a press release announcing the effectiveness of
the Merger. A copy of the press release is attached as Exhibit 99.2
to this Current Report on Form 8-K and is incorporated herein by
reference.
Forward
Looking Statements
This
Current Report on Form 8-K, including Exhibits 99.1 and 99.2 hereto, contains
“forward-looking” statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are
typically preceded by words such as “believes,” “expects,” “anticipates,”
“intends,” “will,” “may,” “should,” or similar expressions. These
forward-looking statements are subject to risks and uncertainties that may cause
actual future experience and results to differ materially from those discussed
in these forward-looking statements. Important factors that might
cause such a difference include, but are not limited to, events and factors
disclosed previously and from time to time in NeoStem’s filings with the
Securities and Exchange Commission (the “SEC”), including NeoStem’s Annual
Report on Form 10-K for the year ended December 31, 2009 (the “10-K”) and
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed after such
10-K. Additionally, this Current Report on Form 8-K contains
forward-looking statements with respect to the Merger. Important
factors that might cause such a difference relating to the Merger include the
factors disclosed in NeoStem’s filings as set forth above and in the proxy
statement / prospectus included in NeoStem’s registration statement on Form S-4
filed with the SEC in connection with the Merger. NeoStem’s further
development is highly dependent on future medical and research developments and
market acceptance, which is outside its control. NeoStem may
experience difficulties in integrating PCT’s business and could fail to realize
potential benefits of the Merger. Acquisitions may entail numerous
risks for NeoStem, including difficulties in assimilating acquired operations,
technologies or products, including the loss of key employees from acquired
businesses.
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Item
9.01.
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Financial
Statements and Exhibits.
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(a) Financial
statements of business acquired
(b) Pro Forma Financial
Information
No
financial statements of PCT or pro forma financial information with respect to
PCT and NeoStem are required to be filed with, or incorporated in, this
8-K. NeoStem included in its Registration Statement on Form S-4
pertaining to the Merger (which was declared effective on December 16, 2010)
certain financial statements of PCT and pro forma information because based on
the information it had at the time the registration statement was filed,
including estimates as to the value of the merger consideration to be issued,
NeoStem believed that PCT would meet the definition of a "significant
subsidiary" under Regulation S-X 3-05 and 8-04. However, based
on updated information, NeoStem believes that PCT does not meet the definition
of a "significant subsidiary."
(d) Exhibits
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Exhibit Number
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Description
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2.1
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Agreement
and Plan of Merger, dated as of September 23, 2010 (incorporated by
reference to Exhibit 2.1 to NeoStem’s Current Report on Form 8-K
filed on September 23, 2010).
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4.1
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Warrant
Agreement, dated as of January 19, 2011, between NeoStem, Inc. and
Continental Stock Transfer & Trust Company, with the forms of $3.00
Warrant, $5.00 Warrant and $7.00 Warrant attached
thereto.
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10.1
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Employment
Agreement, dated as of September 23, 2010 and effective on January 19,
2011, by and between Progenitor Cell Therapy, LLC, NeoStem, Inc. and
Andrew L. Pecora.
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10.2
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Employment
Agreement, dated as of September 23, 2010 and effective on January 19,
2011, by and between Progenitor Cell Therapy, LLC, NeoStem, Inc. and
Robert A. Preti.
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10.3
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NeoStem,
Inc. 2009 Equity Compensation Plan, as amended.
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10.4
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Escrow
Agreement, dated as of January 19, 2011, among NeoStem, Inc., Progenitor
Cell Therapy, LLC, Andrew Pecora as PCT Representative and Continental
Stock Transfer & Trust Company, as Escrow Agent.
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99.1
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Slide
Presentation of NeoStem, Inc. dated January 2011*
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99.2
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Press
release dated January 20,
2011.
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*Exhibit
99.1 is furnished as part of this Current Report on Form 8-K.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, NeoStem, Inc. has
duly caused this Report to be signed on its behalf by the undersigned hereunto
duly authorized.
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NEOSTEM,
INC.
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By:
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/s/ Catherine
M. Vaczy
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Name: Catherine
M. Vaczy
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Title: Vice
President and General Counsel
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Date:
January 21, 2011
WARRANT
AGREEMENT
THIS
WARRANT AGREEMENT (this “Agreement”), dated as of January 19, 2011, is entered
into by and between NeoStem, Inc., a Delaware corporation ("NeoStem" or the
“Company”), and Continental Stock Transfer & Trust Company, a New York
corporation (the “Warrant Agent”).
WHEREAS,
on January 19, 2011, the Company consummated a merger of its wholly-owned
subsidiary NBS Acquisition Company LLC ("Subco") with and into Progenitor Cell
Therapy, LLC, a Delaware limited liability company (“PCT”) (the "Merger")
pursuant to an Agreement and Plan of Merger, dated September 23, 2010 (as such
agreement may be amended from time to time, the “Merger Agreement”), among
NeoStem, PCT and Subco;
WHEREAS,
the Merger Agreement provides that the Company will issue (i) warrants to
purchase one million (1,000,000) shares of the Company's common stock, par value
$0.001 per share, (the "NeoStem Common Stock") exercisable over a seven year
period at an exercise price of $7.00 per share (the “$7.00
Warrants”); (ii) warrants to purchase one million (1,000,000) shares
of NeoStem Common Stock exercisable over a seven year term at an exercise price
of $3.00 per share (the “$3.00 Warrants”); and (iii) warrants to purchase one
million (1,000,000) shares of NeoStem Common Stock exercisable over a seven year
period at an exercise price of $5.00 per share (the “$5.00 Warrants" and
together with the $7.00 Warrants and the $3.00 Warrants, the
“Warrants”);
WHEREAS,
the Company desires the Warrant Agent to act on behalf of the Company, and the
Warrant Agent is willing to so act, in connection with the issuance, transfer,
exchange, redemption and exercise of the Warrants; and
WHEREAS,
the Company desires to provide for the form and provisions of the Warrants, the
terms upon which they shall be issued and exercised, and the respective rights,
limitation of rights, and immunities of the Company, the Warrant Agent, and the
holders of the Warrants.
NOW,
THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
1. Appointment of Warrant Agent
and Depository. The Company hereby appoints the Warrant Agent
to act as agent for the Company for the Warrants, and the Warrant Agent hereby
accepts such appointment and agrees to perform the same in accordance with the
terms and conditions set forth in this Agreement. The Company
initially appoints the Warrant Agent to act as Depository with respect to the
Global Warrants as hereinafter defined.
2. Warrants.
2.1 Issuance of
Warrants. Each $3.00 Warrant, $5.00 Warrant and $7.00 Warrant
shall be (a) issued by book-entry registration only and (b) evidenced by the
Global $3.00 Warrant, the Global $5.00 Warrant and the Global $7.00 Warrant, as
applicable, in substantially the forms of Exhibit A, Exhibit B and Exhibit C hereto
(individually a "Global Warrant" and together, the "Global Warrants"),
respectively, the provisions of which are incorporated herein.
2.2 Execution and Delivery of
the Global Warrants.
2.2.1 Each
Global Warrant shall be dated and may have such letters, numbers or other marks
of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as the officers of the Company executing the
same may approve (execution thereof to be conclusive evidence of such approval)
and as are not inconsistent with the provisions of this Agreement or the
respective Warrants, or as may be required to comply with any law or with any
rule or regulation made pursuant thereto. The Global Warrants shall
be signed on behalf of the Company by its chairman or vice chairman of the Board
of Directors of the Company (the "Board of Directors"), the chief financial
officer, the president, any vice president, any assistant vice president, the
treasurer or any assistant treasurer of the Company, which may but need not be
attested by its secretary or one of its assistant secretaries. Such
signatures may be manual or facsimile signatures of such authorized officers and
may be imprinted or otherwise reproduced on each Global Warrant. From
time to time, in accordance with the Warrant Agent’s customary practices, the
Warrant Agent shall send to each Holder (as hereinafter defined) a statement
reflecting such Holder’s book-entry position in the Warrants and any changes
thereto (the “Warrant Statement”). The terms and conditions of each
Global Warrant are incorporated herein by this reference and made a part
hereof. Notwithstanding anything contained herein to the contrary, if
any terms or conditions of the Global Warrant or the Warrant Statement shall be
found to conflict with any terms or conditions of this Agreement, the terms and
conditions of the respective Global Warrants shall control except that the
Warrant Agent's procedures relating to the exercise of book-entry interests in
the Global Warrants shall control the exercise of the
Warrants.
2.2.2 Each
Global Warrant shall represent the respective number of outstanding Warrants
from time to time endorsed thereon and the respective number of outstanding
Warrants represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges, redemptions, exercises and other similar
transactions.
2.2.3 No
Warrant shall be valid for any purpose, and no Warrant evidenced thereby shall
be exercisable, until the applicable Global Warrant has been countersigned by
the Warrant Agent by manual or facsimile signature. Such signature by
the Warrant Agent upon the Global Warrant executed by the Company shall be
conclusive evidence, and the only evidence, that the Global Warrant so
countersigned has been duly issued hereunder.
2.2.4 In
case any officer of the Company who shall have signed any of the Global Warrants
either manually or by facsimile signature shall cease to be such officer before
such Global Warrant so signed shall have been countersigned and delivered by the
Warrant Agent as provided herein, such Global Warrant may be countersigned and
delivered notwithstanding that the person who signed such Global Warrant ceased
to be such officer of the Company; and such Global Warrant may be signed on
behalf of the Company by such persons as, at the actual date of the execution of
such Global Warrant, shall be the proper officers of the Company, although at
the date of the execution of this Agreement any such person was not such
officer.
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2.2.5 The
term "Holder," when used with respect to any Warrant, shall mean any person in
whose name at the time such Warrant shall be registered upon the books to be
maintained by the Warrant Agent for that purpose.
3. Terms and Exercise of
Warrants.
3.1 Exercise
Price. For purposes of this Agreement, "Exercise Price" shall
mean the initial exercise price for each Warrant as set forth in the applicable
Global Warrant, subject to adjustment as provided in the applicable Global
Warrant.
3.2 Duration of
Warrants. A Warrant may be exercised only during the period
(“Exercise Period”) specified in the respective Global Warrant or as the same
may be extended as hereinafter provided. Except with respect to the
right to receive the Redemption Price if the Warrants have been redeemed (as set
forth in the applicable Global Warrant), each Warrant not exercised on or before
the expiration date, as set forth in the applicable Global Warrant, (the
"Expiration Date") shall become void, and all rights thereunder and all rights
in respect thereof under this Agreement shall cease at the close of business on
the Expiration Date.
3.3 Exercise of
Warrants. Warrants may be exercised, at the option of the
Holder, in whole or in part, at any time or from time to time during the
Exercise Period, by complying with the Warrant Agent's procedures relating to
the exercise of such book-entry interest in the Global Warrant. In
addition, the Holder shall deliver to the Company at the then designated office
of the Warrant Agent (the "Warrant Agent Office") (i) the Exercise Form
substantially in the form attached to the applicable Global Warrant duly
executed by such Holder or its duly authorized agent or attorney (the “Exercise
Form) and (ii) payment of the aggregate Exercise Price. In case an
exercise of Warrants is in part only, the Warrant Agent shall make an
appropriate adjustment to the account of the Holder to reflect a number of
Warrants for the number of shares of Common Stock equal (without giving effect
to any adjustment thereof) to the number of such shares called for by such
Holder's Warrants prior to such exercise, minus the number of shares designated
by the Holder upon such exercise.
3.3.1 Payment. The
Holder shall pay the applicable Exercise Price in accordance with the procedures
in the applicable Global Warrant and this Agreement.
3.3.2 Procedures and
Validity.
(a) Any
exercise of a Warrant by a Holder pursuant to the terms of this Agreement shall be irrevocable and
shall constitute a binding agreement between the Holder and the Company,
enforceable in accordance with its terms.
(b) The
Warrant Agent shall:
(i) examine
all Exercise Forms and all other documents delivered to it by or on behalf of
Holders as contemplated hereunder to ascertain whether or not, on their face,
such Exercise Forms and any such other documents have been executed and
completed in accordance with their terms and the terms hereof;
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(ii) where
an Exercise Form or other document appears on its face to have been improperly
completed or executed or some other irregularity in connection with the exercise
of the Warrants exists, the Warrant Agent shall endeavor to inform the
appropriate parties (including the person submitting such instrument) of the
need for fulfillment of all requirements, specifying those requirements which
appear to be unfulfilled;
(iii) inform
the Company of and cooperate with and assist the Company in resolving any
reconciliation problems between the Exercise Forms received and the crediting of
Warrant Shares to the respective Holders’ accounts; and
(iv) advise
the Company no later than two (2) business days after receipt of an Exercise
Form, of (i) the receipt of such Exercise Form and the number of Warrants
exercised in accordance with the terms and conditions of this Agreement, (ii)
the percentage of the then outstanding Warrants represented by such exercise and
(iii) such other information as the Company shall reasonably
require.
(c) All
questions as to the validity, form and sufficiency (including time of receipt)
of an exercised Warrant and any Exercise Form will be determined by the Company
in good faith. The Company reserves the right to reject any and all
Exercise Forms not in proper form or for which any corresponding agreement by
the Company to exchange would, in the opinion of the Company, be
unlawful. Moreover, the Company reserves the absolute right to waive
any of the conditions to the exercise of Warrants or defects in the exercise
thereof with regard to any particular exercise of Warrants. Other
than as required in Section 3.3.2(b)(ii) above, neither the Company nor the
Warrant Agent shall be under any duty to give notice to the Holders of the
Warrants of any irregularities in any exercise of Warrants or any Exercise Form,
nor shall it incur any liability for the failure to give such
notice.
3.3.3 Issuance of
Certificates. As soon as practicable after the exercise of any
Warrant and the clearance of the funds in payment of the Exercise Price, the
Company shall cause its Transfer Agent to issue to the Holder of such Warrant a
certificate or certificates representing the number of full shares of Common
Stock to which he, she or it is entitled, registered in such name or names as
may be directed by him, her or it. Notwithstanding the
foregoing, the Company shall not be obligated to deliver any securities pursuant
to the exercise of a Warrant unless (a) a registration statement under the
Securities Act of 1933 (the "Securities Act") with respect to the Common Stock
issuable upon exercise of such Warrants is effective and a current prospectus
relating to the shares of Common Stock issuable upon exercise of the Warrants is
available for delivery to the Holders or (b) in the opinion of counsel to the
Company, the exercise of the Warrants is exempt from the registration
requirements of the Securities Act and such securities are qualified for sale or
exempt from qualification under applicable securities laws of the states or
other jurisdictions in which the registered holder resides. Warrants
may not be exercised by, or securities issued to, any Holder in any state in
which such exercise or issuance would be unlawful. In the event
that a registration statement under the Securities Act with respect to the Common
Stock underlying the Warrants is not effective or a current prospectus is not
available, the registered holder shall not be entitled to exercise such Warrants
unless an exemption from registration is available. In the event that
during the last 20 business days immediately prior to the Expiration Date both
(i) a registration statement with respect to the Common Stock underlying the
Warrants is not effective or a current prospectus is not available and (ii) the
Exercise Price of the Warrants is less than the price at which the Common Stock
is trading on the NYSE Amex (or if the Common Stock is no longer trading on the
NYSE Amex, such other stock exchange on which the shares of Common Stock
trades), the Exercise Period shall automatically be extended for a period of 20
business days after the date that the Company causes a registration statement
covering the Common Stock underlying the Warrants to be effective and a current
prospectus is made available. In no event will
the Company be required to “net cash settle” the warrant
exercise.
-4-
3.3.4 Valid
Issuance. All shares of Common Stock issued upon the proper
exercise of a Warrant in conformity with this Agreement shall be validly issued,
fully paid and nonassessable.
3.3.5 Date of
Issuance. All shares of Common Stock so issued shall be
registered in the name of the Holder or such other name as shall be designated
in the Exercise Form delivered by the Holder. Such shares of Common
Stock shall be deemed to have been issued and any person so designated to be
named therein shall be deemed to have become the holder of record of such shares
of Common Stock as of the date of delivery of the Exercise Form to the Warrant
Agent Office duly executed by the Holder thereof and upon the Company’s receipt
of payment of the Exercise Price.
4. Adjustments.
4.1 Adjustments
Generally. The Exercise Price, the number of shares of Common
Stock issuable upon exercise of the Warrants and the number of Warrants
outstanding are subject to adjustment from time to time upon the occurrence of
certain events in accordance with the provisions of the applicable Global
Warrant.
4.2 Notices of Changes in
Warrant. Upon every adjustment of the Exercise Price, the
number of shares of Common Stock issuable upon exercise of the Warrants and the
number of Warrants outstanding, the Company shall give written notice thereof to
the Warrant Agent, which notice shall state the Exercise Price resulting from
such adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of a Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Upon the occurrence of any event specified in
the applicable Global Warrant then, in any such event, the Company shall give
written notice to each Holder, at the last address set forth for such Holder in
the Warrant Register, of the record date or the effective date of the
event. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of such event.
4.3 No Fractional
Shares. Notwithstanding any provision contained in
this Agreement to the contrary, the Company shall not issue
fractional shares upon exercise of Warrants. If, by reason of any
adjustment made pursuant to this Section 4, the Holder of any Warrant would be
entitled, upon the exercise of such Warrant, to receive a fractional interest in
a share, the Company shall, upon such exercise, round up or down to the nearest
whole number the number of shares of Common Stock to be issued to the
Holder.
-5-
4.4 Form of
Warrant. The form of Global Warrant need not be changed
because of any adjustment pursuant to this Section 4. However, the
Company may, at any time, in its sole discretion, make any change in the form of
Global Warrant that the Company may deem appropriate and that does not affect
the substance thereof.
5. Transfer and Exchange of
Warrants.
5.1 Exchange and
Transfer.
5.1.1 The
Warrant Agent shall keep, at the Warrant Agent Office, books in which, subject
to such reasonable regulations as it may prescribe, it shall register Warrants
and exchanges and transfers of outstanding Warrants upon request to exchange or
transfer such Warrants, provided, that the Warrant Agent shall have received a
written instruction of transfer or exchange in form satisfactory to the
Warrant Agent, duly executed by the Holder thereof or by his duly
authorized agent or attorney, providing all information required to
be delivered hereunder, such signature to be guaranteed by an eligible
guarantor institution to the extent required by the Warrant Agent or the
Depository. Upon any such registration of transfer, a Warrant
Statement shall be issued to the transferee.
5.1.2 No
service charge shall be made for any exchange or registration of transfer of
Warrants; however, the Warrant Agent and/or the Company may require payment of a
sum sufficient to cover any stamp or other tax or other charge that may be
imposed in connection with any such exchange or registration of
transfer. Neither the Warrant Agent nor the Company shall be required
to pay any stamp or other tax or other charge required to be paid in connection
with such transfer, and neither the Warrant Agent nor the Company shall be
required to issue or deliver any Warrant Share until it has been established to
the Company's and the Warrant Agent's satisfaction that such tax or other charge
has been paid or that no such tax or other charge is due.
5.1.3 The
Warrant Agent shall not effect any exchange or registration of transfer which
will result in the issuance of a Warrant evidencing a fraction of a Warrant or a
number of full Warrants and a fraction of a Warrant.
5.1.4 All
Warrants credited to a Holder's or transferee's account upon any
exchange or transfer of Warrants in accordance with the provisions of this
Agreement shall be the valid obligations of the Company evidencing the same
obligations, and entitled to the same benefits under this Agreement, as the
Warrants that were so exchanged or transferred.
5.2 Treatment of Holders of
Warrants. Each Holder of Warrants, by accepting the same,
consents and agrees with the Company, the Warrant Agent and every subsequent
Holder of such Warrants that until the transfer of such Warrants is registered
on the books of such Warrant Agent, the Company and the Warrant Agent may treat
the registered Holder of such Warrants as the absolute owner thereof for any
purpose and as the person entitled to exercise the rights represented by the
Warrants evidenced thereby, any notice to the contrary
notwithstanding.
-6-
5.3 Restrictions on
Transfers. Notwithstanding anything in this Agreement to the
contrary, in no event may any Holder transfer any Warrant Shares until after the
first annual anniversary of the date of issuance of the applicable Global
Warrant.
5.4 Cancellation of Global
Warrant. Promptly following the Expiration Date or at such
earlier time that there are no longer outstanding any Warrants, the applicable
Global Warrant shall be cancelled or destroyed and the Warrant Agent shall
deliver a certificate of such cancellation or destruction to the
Company.
6.
Redemption. The
Warrants may be redeemed, at the option of the Company, in accordance with the
provisions of the applicable Global Warrant.
7. Other Provisions Relating to
Rights of Holders of Warrants.
7.1 No Rights as
Stockholder. No Warrant shall, and nothing contained in this
Agreement, in the Global Warrants or in the Warrant Statement shall be construed
to, entitle the Holder or any beneficial owner thereof to any of the rights of a
holder or beneficial owner of Warrant Shares, including, without limitation, the
right to vote or to consent or to receive notice as a stockholder in respect of
any meeting of stockholders for the election of directors of the Company or any
other matter, to receive dividends on Warrant Shares or any rights whatsoever as
stockholders of the Company, until such Warrant is duly exercised in accordance
with this Agreement and such Holder is issued the Warrant Shares to which it is
entitled in connection therewith.
7.2 Reservation of Common
Stock. The Company shall at all times reserve and keep
available a number of its authorized but unissued shares of Common Stock that
will be sufficient to permit the exercise in full of all outstanding Warrants
issued pursuant to this Agreement.
7.3 Registration of Common
Stock. The Company included the shares of Common Stock
underlying the Warrants in the registration statement on Form S-4 that was filed
with the Securities and Exchange Commission in connection with the Merger (the
"Registration Statement"). The Company will use its commercially
reasonable efforts to maintain the effectiveness of such Registration Statement
or file and maintain the effectiveness of another registration statement
covering the shares of Common Stock issuable upon exercise of the Warrants at
any time that both (a) the Warrants are exercisable and (b) the Exercise Price
of the Warrants is less than 105% of the price at which the Common Stock is
trading on the NYSE Amex (or if the Common Stock is no longer trading on the
NYSE Amex, such other stock exchange on which the shares of Common Stock
trades). In no event will any Holder of a Warrant be entitled to receive a “net
cash settlement” in lieu of physical settlement in shares of Common Stock
regardless of whether the Company complies with this Section 7.3.
7.4 Limitation on Monetary
Damages. In no event shall the Holder of a Warrant be entitled to receive
monetary damages for failure to settle any Warrant exercise if the Common Stock
issuable upon exercise of the Warrants has not been registered with the SEC
pursuant to an effective registration statement or if a current prospectus is
not available for delivery by the Warrant Agent, provided the Company has
fulfilled its obligations under Section 7.3 to use its commercially reasonable
efforts to effect the registration under the Securities Act of the Common Stock
issuable upon exercise of the Warrants. The foregoing limitation on damages
shall not apply to an exercise in connection with a Redemption.
-7-
8.
Concerning the Warrant
Agent and Other Matters.
8.1 Payment of
Taxes. The Company will from time to time promptly pay all
taxes and charges that may be imposed upon the Company or the Warrant Agent in
respect of the issuance or delivery of shares of Common Stock upon the exercise
of Warrants, but the Company shall not be obligated to pay any transfer taxes in
respect of the Warrants or such shares.
8.2 Resignation, Consolidation,
or Merger of Warrant Agent.
8.2.1 Appointment of Successor
Warrant Agent. The Warrant Agent, or any successor to it
hereafter appointed, may resign its duties and be discharged from all further
duties and liabilities hereunder after giving sixty (60) days’ notice in
writing to the Company and to each Holder. If the office of the Warrant Agent
becomes vacant by resignation or incapacity to act or otherwise, the Company
shall appoint in writing a successor Warrant Agent in place of the Warrant
Agent. If the Company shall fail to make such appointment within a
period of 30 days after it has been notified in writing of such resignation or
incapacity by the Warrant Agent or by any Holder of a Warrant, then the Holder
of any Warrant may apply to the Supreme Court of the State of New York for the
County of New York for the appointment of a successor Warrant Agent at the
Company’s cost. Any successor Warrant Agent, whether appointed by the
Company or by such court, shall be a corporation organized and existing under
the laws of the State of New York, in good standing and having its principal
office in the Borough of Manhattan, City and State of New York, and authorized
under such laws to exercise corporate trust powers and subject to supervision or
examination by federal or state authority. After appointment, any
successor Warrant Agent shall be vested with all the authority, powers, rights,
immunities, duties, and obligations of its predecessor Warrant Agent with like
effect as if originally named as Warrant Agent hereunder, without any further
act or deed; but if for any reason it becomes necessary or appropriate, the
predecessor Warrant Agent shall execute and deliver, at the expense of the
Company, an instrument transferring to such successor Warrant Agent all the
authority, powers, and rights of such predecessor Warrant Agent hereunder; and
upon request of any successor Warrant Agent the Company shall make, execute,
acknowledge, and deliver any and all instruments in writing for more fully and
effectually vesting in and confirming to such successor Warrant Agent all such
authority, powers, rights, immunities, duties, and obligations.
8.2.2 Notice of Successor Warrant
Agent. In the event a successor Warrant Agent shall be
appointed, the Company shall give notice thereof to each Holder, the predecessor
Warrant Agent and the transfer agent for the Common Stock not later than the
effective date of any such appointment.
8.2.3 Merger or Consolidation of
Warrant Agent. Any corporation into which the Warrant Agent
may be merged or with which it may be consolidated or any corporation resulting
from any merger or consolidation to which the Warrant Agent shall be a party
shall be the successor Warrant Agent under this Agreement without any further
act.
-8-
8.3 Fees and Expenses of Warrant
Agent.
8.3.1 Remuneration. The
Company agrees to pay the Warrant Agent reasonable remuneration for its services
as such Warrant Agent hereunder and will reimburse the Warrant Agent upon demand
for all expenditures that the Warrant Agent may reasonably incur in the
execution of its duties hereunder.
8.3.2 Further
Assurances. The Company agrees to perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Warrant Agent for the carrying out or performing
of the provisions of this Agreement.
8.4 Liability of Warrant
Agent.
8.4.1 Reliance on Company
Statement. Whenever in the performance of its duties under
this Agreement the Warrant Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a statement signed by the General
Counsel, President or Chairman of the Board of the Company and delivered to the
Warrant Agent. The Warrant Agent may rely upon such statement for any
action taken or suffered in good faith by it pursuant to the provisions of this
Agreement.
8.4.2 Indemnity. The
Warrant Agent shall be liable hereunder only for its own gross negligence,
willful misconduct or bad faith. The Company agrees to indemnify the
Warrant Agent and save it harmless against any and all liabilities, including
judgments, costs and reasonable counsel fees, for anything done or omitted by
the Warrant Agent in the execution of this Agreement, except as a result of the
Warrant Agent’s gross negligence, willful misconduct or bad faith.
8.4.3 Exclusions. The
Warrant Agent shall have no responsibility with respect to the validity of this
Agreement or with respect to the validity or execution of any Warrant (except
its countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Warrant; nor shall it be responsible to make any adjustments required under the
provisions of Section 4 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment; nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
shares of Common Stock to be issued pursuant to this Agreement or any Warrant or
as to whether any shares of Common Stock will when issued be valid and fully
paid and nonassessable.
8.5 Acceptance of
Agency. The Warrant Agent hereby accepts the agency
established by this Agreement and agrees to perform the same upon the terms and
conditions herein set forth and, among other things, shall account promptly to
the Company with respect to Warrants exercised and concurrently account for, and
pay to the Company, all moneys received by the Warrant Agent for the purchase of
shares of Common Stock through the exercise of Warrants.
-9-
9. Miscellaneous
Provisions.
9.1 Successors. All
the covenants and provisions of this Agreement by or for the benefit of the
Company or the Warrant Agent shall bind and inure to the benefit of their
respective successors and assigns.
9.2 Notices. Any
notice, statement or demand authorized by this Agreement to be given or made by
the Warrant Agent or by the holder of any Warrant to or on the Company shall be
delivered by hand or sent by registered or certified mail or overnight courier
service, addressed (until another address is filed in writing by the Company
with the Warrant Agent) as follows:
NeoStem,
Inc.
420
Lexington Avenue, Suite 450
New York,
New York 10170
Attention: General
Counsel
Any
notice, statement or demand authorized by this Agreement to be given or made by
the holder of any Warrant or by the Company to or on the Warrant Agent shall be
delivered by hand or sent by registered or certified mail or overnight courier
service, addressed (until another address is filed in writing by the Company
with the Warrant Agent) as follows:
Continental
Stock Transfer & Trust Company
17
Battery Place
New York,
New York 10004
Attn: Compliance
Department
with a
copy in each case to:
Lowenstein
Sandler PC
65
Livingston Avenue
Roseland,
NJ 07068
Telephone:
973-597-2564
Facsimile: 973-597-2565
Attention:
Alan Wovsaniker, Esq.
Any
notice, sent pursuant to this Agreement shall be effective, if delivered by
hand, upon receipt thereof by the party to whom it is addressed, if sent by
overnight courier, on the next business day of the delivery to the courier, and
if sent by registered or certified mail on the third day after registration or
certification thereof.
-10-
9.3 Notices to Holders of
Warrants. Any notice to Holders of Warrants which by any
provisions of this Warrant Agreement is required or permitted to be given shall
be given by first class mail prepaid at such Holder's address as it appears on
the books of the Warrant Agent.
9.4 Applicable
Law. The validity, interpretation and performance of this
Agreement and of the Warrants shall be governed in all respects by the laws of
the State of New York, without giving effect to conflicts of law principles that
would result in the application of the substantive laws of another
jurisdiction. The Company hereby agrees that any action, proceeding
or claim against it arising out of or relating in any way to this Agreement
shall be brought and enforced in the courts of the State of New York or the
United States District Court for the Southern District of New York, and
irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company hereby waives any objection to such exclusive
jurisdiction and that such courts represent an inconvenient
forum. Any such process or summons to be served upon the Company may
be served by transmitting a copy thereof by registered or certified mail, return
receipt requested, postage prepaid, addressed to it at the address set forth in
Section 9.2 hereof. Such mailing shall be deemed personal service and
shall be legal and binding upon the Company in any action, proceeding or
claim.
9.5 Persons Having Rights under
this Agreement. Nothing in this Agreement expressed and
nothing that may be implied from any of the provisions hereof is intended, or
shall be construed, to confer upon, or give to, any person or corporation other
than the parties hereto and the registered holders of the Warrants, any right,
remedy, or claim under or by reason of this Agreement or of any covenant,
condition, stipulation, promise, or agreement hereof. All covenants,
conditions, stipulations, promises, and agreements contained in this Agreement
shall be for the sole and exclusive benefit of the parties hereto and their
successors and assigns and of the registered holders of the
Warrants.
9.6 Examination of the Warrant
Agreement. A copy of this Agreement shall be available at all
reasonable times at the office of the Warrant Agent in the Borough of Manhattan,
City and State of New York, for inspection by the Holder of any
Warrant. The Warrant Agent may require any such Holder to submit his,
her or its Warrant Statements for inspection by it.
9.7 Counterparts. This
Agreement may be executed in any number of original or facsimile counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
9.8 Effect of
Headings. The section headings herein are for convenience only
and are not part of this Agreement and shall not affect the interpretation
thereof.
9.9 Amendments. This
Agreement may be amended by the parties hereto without the consent of any Holder
for the purpose of curing any ambiguity, or curing, correcting or supplementing
any defective provision contained herein or adding or changing any other
provisions with respect to matters or questions arising under this Agreement as
the parties may deem necessary or desirable and provided such amendment shall
not adversely affect the interest of the Holders. All other
modifications, adjustments or amendments of this Agreement, shall require the
written consent of the registered holders of a majority of the then outstanding
Warrants provided that no amendment to the Global Warrant shall be effective to
charge any Holder who has not consented thereto. The Warrant Agent
may request from either the Company or the Holders an opinion of counsel with
respect to the validity of any amendment as a condition to its exercise of any
amendment.
-11-
9.10 Severability. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
[Signature
page follows]
-12-
IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as
of the day and year first above written.
|
NEOSTEM,
INC.
|
||
|
By:
|
/s/ Robin L. Smith
|
|
|
Name: Robin
L. Smith
|
||
|
Title: CEO
|
||
|
CONTINENTAL
STOCK TRANSFER &
TRUST
COMPANY
|
||
|
By:
|
/s/ John W. Comer, Jr.
|
|
|
Name: John
W. Comer, Jr.
|
||
|
Title: Vice
President
|
||
-13-
EXHIBIT
A
FORM OF
GLOBAL WARRANT CERTIFICATE FOR $3.00 WARRANTS
-14-
[FORM OF
GLOBAL WARRANT CERTIFICATE FOR $3.00 WARRANTS]
EXERCISABLE
ONLY IF AUTHENTICATED BY THE
WARRANT
AGENT AS PROVIDED HEREIN
VOID
AFTER THE CLOSE OF BUSINESS ON JANUARY 18, 2018
NEOSTEM,
INC.
Global
Warrant Certificate representing
Warrants
to purchase 1,000,000 shares of common stock, par value $0.001 per
share
as
described herein
NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED, OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
Each
$3.00 Warrant (each a "Warrant") represented hereby, entitles the holder to
purchase one share (the "Warrant Share") of common
stock, $.001 par value (the “Common Stock”) of NeoStem,
Inc., a Delaware corporation, (the "Corporation") for the benefit
of certain Holders (as defined in the Warrant Agreement) of such Warrants on the
following terms. This Global Warrant Certificate represents the
number of outstanding Warrants from time to time endorsed hereon and the number
of outstanding Warrants represented hereby may from time to time be reduced or
increased, as appropriate to reflect exchanges, redemptions, exercises and other
similar transactions. This Global Warrant Certificate is issued under
and in accordance with the Warrant Agreement, and is subject to the terms and
provisions contained therein, all of which terms and provisions the Holders
consent to by acceptance of their book-entry interests in the Global Warrant
Certificate. Copies of the Warrant Agreement are on file at the
Corporation's headquarters. In the event of any conflict or
inconsistency between this Global Warrant Certificate and the Warrant Agreement,
this Global Warrant Certificate shall control. Capitalized terms used
and not otherwise defined herein shall have the meanings set forth in that
certain Warrant Agreement dated as of January 19, 2011 by and between the
Corporation and Continental Stock Transfer & Trust Company (as such
agreement may be amended from time to time, the “Warrant
Agreement”).
1.
Exercise
Period. The Warrants shall vest in full and become exercisable
on January 19, 2011 (the “Vesting Date”) and,
notwithstanding anything to the contrary contained herein, shall expire at 5:00
p.m. (Eastern Time) on January 18, 2018 (the “Termination
Date”).
-15-
2. Exercise of
Warrants. Each Holder may, at any time on or after the Vesting
Date and prior to the Termination Date, exercise his, her or its Warrant in
whole or in part at an exercise price per share equal to $3.00 per
share, subject to adjustment as provided herein (the “Exercise Price”), by the
delivery of the Warrant Exercise Form annexed hereto duly completed and executed
to the Warrant Agent at the Warrant Agent Office or at such other agency or
office of the Corporation in the United States of America as the Corporation may
designate by notice in writing to the Holder at the address of such Holder
appearing on the books of the Corporation, and by payment to the Corporation of
the Exercise Price in lawful money of the United States by certified check or
wire transfer for each share of Common Stock being purchased. Upon
any partial exercise of a Warrant, the Warrant Agent shall make an appropriate
adjustment to the account of the Holder to reflect a number of warrants for the
account of the Holder equal (without giving effect to any adjustment thereof) to
the number of shares called for by such Holder's Warrants prior to such
exercise, minus the number of shares designated by the Holder upon such
exercise. In the event of the exercise of the rights represented by
any Warrant, a certificate or certificates for the Warrant Shares so purchased,
as applicable, registered in the name of the Holder, shall be delivered to the
Holder hereof as soon as practicable after the rights represented by such
Warrant shall have been so exercised.
3. Reservation of Warrant
Shares. The Corporation agrees that, prior to the expiration
of this Warrant, it will at all times have authorized and in reserve, and will
keep available, solely for issuance or delivery upon the exercise of all
outstanding Warrants represented by this Global Warrant Certificate, the number
of Warrant Shares as from time to time shall be issuable by the Corporation upon
the exercise of this Warrant.
4. No Stockholder Rights; No
Rights to Net Cash Settled. No Warrant shall entitle the
holder hereof to any voting rights or other rights as a stockholder of the
Corporation. In no event may any Warrant be net cash
settled.
5. Transferability of Warrant
and Underlying Shares. Prior to the Termination Date and
subject to compliance with applicable Federal and State securities and other
laws, this Warrant and all rights hereunder are transferable, in whole or in
part, at the office or agency of the Corporation by the Holder in person or by
duly authorized attorney in accordance with the provisions of the Warrant
Agreement and upon delivery of the Assignment Form annexed hereto properly
endorsed for transfer. The Corporation or the Warrant Agent shall be
entitled to require, as a condition of any such transfer, that the Holder and
the transferee execute or provide such documents and make such representations
and warranties as the Corporation or the Warrant Agent may deem appropriate to
evidence compliance with applicable law or otherwise. None of the
Warrant Shares, if issued, may be transferred by the Holder until after the date
that is one year after the date of issuance of this Warrant.
6. Certain
Adjustments. With respect to any rights that any Holder has to
exercise any Warrant and convert into shares of Common Stock, Holder shall be
entitled to the following adjustments:
(a) Merger or
Consolidation. If at any time there shall be a merger or a
consolidation of the Corporation with or into another entity when the
Corporation is not the surviving corporation, then, as part of such merger or
consolidation, lawful provision shall be made so that the holder hereof shall
thereafter be entitled to receive upon exercise of each Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or other securities or property (including
cash) of the successor corporation resulting from such merger or consolidation,
to which the holder hereof as the holder of the stock deliverable upon exercise
of each Warrant would have been entitled in such merger or consolidation if each
Warrant had been exercised immediately before such transaction. In
any such case, appropriate adjustment shall be made in the application of the
provisions of each Warrant with respect to the rights and interests of the
holder hereof as the holder of each Warrant after the merger or
consolidation.
(b) Reclassification,
Recapitalization, etc. If the Corporation at any time shall,
by subdivision, combination or reclassification of securities, recapitalization,
automatic conversion, or other similar event affecting the number or character
of outstanding shares of Common Stock, or otherwise, change any of the
securities as to which purchase rights under each Warrant exist into the same or
a different number of securities of any other class or classes, each Warrant
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under each Warrant
immediately prior to such subdivision, combination, reclassification or other
change.
-16-
(c) Split or Combination of
Common Stock and Stock Dividend. In case the Corporation shall
at any time subdivide, redivide, recapitalize, split (forward) or change its
outstanding shares of Common Stock into a greater number of shares or declare a
dividend upon its Common Stock payable solely in shares of Common Stock, the
Exercise Price shall be proportionately reduced and the number of Warrant Shares
proportionately increased. Conversely, in case of a reverse stock
split or the outstanding shares of Common Stock of the Corporation shall be
combined into a smaller number of shares, the Exercise Price shall be
proportionately increased and the number of Warrant Shares proportionately
reduced.
7. Compliance with Securities
Laws; Legend
and Stop Transfer Orders. Unless the Warrant Shares are
subject to an effective registration statement under the Securities Act, upon
exercise of any part of any Warrant represented hereby, (i) the Corporation
shall be entitled to require that the Holder make such representations and
warranties as may be reasonably required by the Corporation to assure that the
issuance of Warrant Shares is exempt from the registration requirements of
applicable securities laws and (ii) the Corporation shall instruct its transfer
agent to enter stop transfer orders with respect to such Warrant Shares, and all
certificates or instruments representing the Warrant Shares shall bear on the
face thereof substantially the following legend:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR
OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
8. Redemption of
Warrant. Each Warrant is subject to redemption by the
Corporation as provided in this Section
8.
(a) Each
Warrant may be redeemed, at the option of the Corporation, in whole and not in
part, at a redemption price of $.0001 per Warrant (the “Redemption Price”),
provided the average closing price of the Common Stock as quoted by Bloomberg,
LP., or the Principal Trading Market (as defined below) on which the Common
Stock is included for quotation or trading, shall equal or exceed $5.00 per
share (taking into account all adjustments) for twenty (20) out of thirty (30)
consecutive trading days.
(b) If
the conditions set forth in Section 8(a) are met,
and the Corporation desires to exercise its right to redeem each Warrant, it
shall mail a notice (the “Redemption Notice”)
to the registered holder of each Warrant by first class mail, postage prepaid,
at least fourteen (14) business days prior to the date fixed by the Corporation
for redemption of the Warrants (the “Redemption
Date”).
(c
) The Redemption Notice
shall specify (i) the Redemption Price, (ii) the Redemption Date, (iii) the
redemption price payable, and (iv) that the right to exercise each Warrant shall
terminate at 5:00 p.m. (New York time) on the business day immediately
preceding the Redemption Date. No failure to mail such notice nor any defect
therein or in the mailing thereof shall affect the validity of the proceedings
for such redemption except as to a holder (a) to whom notice was not mailed, or
(b) whose notice was defective. An affidavit of the Secretary or an
Assistant Secretary of the Corporation that the Redemption Notice has been
mailed shall, in the absence of fraud, be prima facie evidence of the
facts stated therein.
-17-
(d) Any
right to exercise a Warrant shall terminate at 5:00 p.m. (New York time) on
the business day immediately preceding the Redemption Date. On and after the
Redemption Date, the holder of each Warrant shall have no further rights except
to receive the Redemption Price.
(e) From
and after the Redemption Date, the Corporation shall, at the place specified in
the Redemption Notice, upon presentation and surrender to the Corporation by or
on behalf of the holder thereof the warrant certificates evidencing each Warrant
being redeemed, deliver, or cause to be delivered to or upon the written order
of such holder, a sum in cash equal to the Redemption Price of each Warrant.
From and after the Redemption Date, each Warrant shall expire and become void
and all rights hereunder, except the right to receive payment of the Redemption
Price, shall cease.
9. Miscellaneous. This
Global Warrant Certificate and each Warrant represented hereby shall be governed
by and construed in accordance with the laws of the State of New
York. All the covenants and provisions of this Global Warrant
Certificate and each Warrant by or for the benefit of the Corporation shall bind
and inure to the benefit of its successors and assigns
hereunder. Nothing in this Global Warrant Certificate shall be
construed to give to any person or corporation other than the Corporation and
the holder of each Warrant represented hereby any legal or equitable right,
remedy, or claim under this Global Warrant Certificate and each Warrant
represented hereby. This Global Warrant Certificate and each Warrant
represented hereby shall be for the sole and exclusive benefit of the
Corporation and the Holder. The section headings herein are for
convenience only and are not part of this Global Warrant Certificate and shall
not affect the interpretation hereof.
10. Validity. This
Global Warrant Certificate shall not be valid or obligatory for any purpose
until authenticated by the Warrant Agent.
-18-
IN
WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by its
duly authorized officer, this ______ day of January 2011.
|
NEOSTEM,
INC.
|
|
|
|
|
|
Robin
L. Smith
|
|
|
Chairman
& Chief Executive
Officer
|
Certificate
of Authentication
This is
the Global Warrant Certificate for the $3.00 Warrants referred to in the
within-mentioned Warrant Agreement.
|
CONTINENTAL
STOCK TRANSFER
|
||
|
&
TRUST COMPANY, As Warrant Agent
|
||
|
By:
|
|
|
|
Authorized
Signature
|
||
-19-
[TO BE
ATTACHED TO GLOBAL WARRANT CERTIFICATE]
SCHEDULE
OF INCREASES OR DECREASES IN GLOBAL WARRANT CERTIFICATE
$3.00
WARRANT
The
following increases or decreases in this Global Warrant have been
made:
|
Date
|
|
Amount
of decrease in the number of Warrants represented by this Global
Warrant
|
|
Amount
of increase in number of Warrants represented by this Global
Warrant
|
|
Number
of Warrants represented by this Global Security following such decrease or
increase
|
|
Signature
of authorized officer of the
Depositary
|
-20-
FORM
OF EXERCISE FORM
To
Be Executed by the Holder in Order to Exercise $3.00 Warrant
|
|
The
undersigned hereby irrevocably elects to exercise the right, represented
by the book-entry Warrant(s), to purchase ____________ shares of the
Common Stock of NeoStem, Inc. (the "Warrant Shares")
and undersigned herewith makes payment of the full purchase
price for such shares at the price per share provided for in such Warrant
in accordance with the terms of the Warrant Agreement. Such
payment takes the form of $__________ in lawful money of the United
States.
|
The
undersigned hereby requests that certificates for the Warrant Shares purchased
hereby be issued in the name of:
|
(please
print or type name and address)
|
|
|
(please
insert social security or other identifying number)
|
|
|
and
be delivered as follows:
|
|
|
(please
print or type name and address)
|
|
|
(please
insert social security or other identifying number)
|
and if
such number of shares of Common Stock shall not be all the shares evidenced by
this Warrant Certificate, that a new Warrant for the balance of such shares be
registered in the name of, and delivered to, Holder.
|
Signature
of Holder
|
|
|
SIGNATURE
GUARANTEE:
|
|
This
Warrant may be exercised by delivering the Exercise Form to Continental Stock
Transfer & Trust Company at the following addresses:
|
By
mail at
|
Continental
Stock Transfer & Trust Company
|
17
Battery Place
New York,
New York 10004
Attn: [_______________]
-21-
[FORM OF
ASSIGNMENT]
(TO BE
EXECUTED TO TRANSFER THE WARRANT)
For value
received, ______________________________ hereby sells, assigns and transfers
unto the Assignee(s) named below the rights represented by such number of $3.00
Warrants listed opposite the respective name(s) of the Assignee(s) named below
and all other rights of the Holder with respect to such Warrants, and does
hereby irrevocably constitute and appoint _____________________________
attorney, to transfer said Warrant on the books of the Depositary and/or the
Warrant Agent with respect to the number of Warrants set forth below, with full
power of substitution:
|
Name(s)
of
Assignee(s)
|
Address
|
No. of Warrants
|
||
|
Dated:
|
|
Signature
|
||
|
(Signed
exactly as name appears in the
|
||
|
records
of the Depositary)
|
||
|
Signature
Guarantee:
|
|
EXHIBIT
B
FORM OF
GLOBAL WARRANT CERTIFICATE FOR $5.00 WARRANTS
-23-
[FORM OF
GLOBAL WARRANT CERTIFICATE FOR $5.00 WARRANTS]
EXERCISABLE
ONLY IF AUTHENTICATED BY THE
WARRANT
AGENT AS PROVIDED HEREIN
VOID
AFTER THE CLOSE OF BUSINESS ON JANUARY 18, 2018
NEOSTEM,
INC.
Global
Warrant Certificate representing
Warrants
to purchase 1,000,000 shares of common stock, par value $0.001 per
share
as
described herein
NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED, OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
Each
$5.00 Warrant (each a "Warrant") represented hereby,
entitles the holder to purchase one share (the "Warrant Share") of common
stock, $.001 par value (the “Common Stock”) of NeoStem,
Inc., a Delaware corporation, (the "Corporation") for the benefit
of certain Holders (as defined in the Warrant Agreement) of such Warrants on the
following terms. This Global Warrant Certificate represents the
number of outstanding Warrants from time to time endorsed hereon and the number
of outstanding Warrants represented hereby may from time to time be reduced or
increased, as appropriate to reflect exchanges, redemptions, exercises and other
similar transactions. This Global Warrant Certificate is issued under
and in accordance with the Warrant Agreement, and is subject to the terms and
provisions contained therein, all of which terms and provisions the Holders
consent to by acceptance of their book-entry interests in the Global Warrant
Certificate. Copies of the Warrant Agreement are on file at the
Corporation's headquarters. In the event of any conflict or
inconsistency between this Global Warrant Certificate and the Warrant Agreement,
this Global Warrant Certificate shall control. Capitalized terms used
and not otherwise defined herein shall have the meanings set forth in that
certain Warrant Agreement dated as of January 19, 2011 by and between the
Corporation and Continental Stock Transfer & Trust Company (as such
agreement may be amended from time to time, the “Warrant
Agreement”).
1. Exercise
Period. The Warrants shall vest in full and become exercisable
on January 19, 2011 (the “Vesting Date”) and,
notwithstanding anything to the contrary contained herein, shall expire at 5:00
p.m. (Eastern Time) on January 18, 2018 (the “Termination
Date”).
-24-
2. Exercise of
Warrant. Each Holder may, at any time on or after the
Vesting Date and prior to the Termination Date, exercise his, her or its Warrant
in whole or in part at an exercise price per share equal to $5.00 per
share, subject to adjustment as provided herein (the “Exercise Price”), by the
delivery of the Warrant Exercise Form annexed hereto duly completed and executed
to the Warrant Agent at the Warrant Agent Office or at such other agency or
office of the Corporation in the United States of America as the Corporation may
designate by notice in writing to the Holder at the address of such Holder
appearing on the books of the Corporation, and by payment to the Corporation of
the Exercise Price in lawful money of the United States by certified check or
wire transfer for each share of Common Stock being purchased. Upon
any partial exercise of a Warrant, the Warrant Agent shall make an appropriate
adjustment to the account of the Holder to reflect a number of warrants for the
account of the Holder equal (without giving effect to any adjustment thereof) to
the number of shares called for by such Holder's Warrants prior to such
exercise, minus the number of shares designated by the Holder upon such
exercise. In the event of the exercise of the rights represented by
any Warrant, a certificate or certificates for the Warrant Shares so purchased,
as applicable, registered in the name of the Holder, shall be delivered to the
Holder hereof as soon as practicable after the rights represented by such
Warrant shall have been so exercised.
3. Reservation of Warrant
Shares. The Corporation agrees that, prior to the expiration
of this Warrant, it will at all times have authorized and in reserve, and will
keep available, solely for issuance or delivery upon the exercise of all
outstanding Warrants represented by this Global Warrant Certificate, the number
of Warrant Shares as from time to time shall be issuable by the Corporation upon
the exercise of this Warrant.
4. No Stockholder Rights; No
Rights to Net Cash Settled. No Warrant shall entitle the
holder hereof to any voting rights or other rights as a stockholder of the
Corporation. In no event may any Warrant be net cash
settled.
5. Transferability of Warrant
and Underlying Shares. Prior to the Termination Date and
subject to compliance with applicable Federal and State securities and other
laws, this Warrant and all rights hereunder are transferable, in whole or in
part, at the office or agency of the Corporation by the Holder in person or by
duly authorized attorney in accordance with the provisions of the Warrant
Agreement and upon delivery of the Assignment Form annexed hereto properly
endorsed for transfer. The Corporation or the Warrant Agent shall be
entitled to require, as a condition of any such transfer, that the Holder and
the transferee execute or provide such documents and make such representations
and warranties as the Corporation or the Warrant Agent may deem appropriate to
evidence compliance with applicable law or otherwise. None of the
Warrant Shares, if issued, may be transferred by the Holder until after the date
that is one year after the date of issuance of this Warrant.
6. Certain
Adjustments. With respect to any rights that any Holder has to
exercise any Warrant and convert into shares of Common Stock, Holder shall be
entitled to the following adjustments:
(a) Merger or
Consolidation. If at any time there shall be a merger or a
consolidation of the Corporation with or into another entity when the
Corporation is not the surviving corporation, then, as part of such merger or
consolidation, lawful provision shall be made so that the holder hereof shall
thereafter be entitled to receive upon exercise of each Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or other securities or property (including
cash) of the successor corporation resulting from such merger or consolidation,
to which the holder hereof as the holder of the stock deliverable upon exercise
of each Warrant would have been entitled in such merger or consolidation if each
Warrant had been exercised immediately before such transaction. In
any such case, appropriate adjustment shall be made in the application of the
provisions of each Warrant with respect to the rights and interests of the
holder hereof as the holder of each Warrant after the merger or
consolidation.
(b) Reclassification,
Recapitalization, etc. If the Corporation at any time shall,
by subdivision, combination or reclassification of securities, recapitalization,
automatic conversion, or other similar event affecting the number or character
of outstanding shares of Common Stock, or otherwise, change any of the
securities as to which purchase rights under each Warrant exist into the same or
a different number of securities of any other class or classes, each Warrant
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under each Warrant
immediately prior to such subdivision, combination, reclassification or other
change.
-25-
(c) Split or Combination of
Common Stock and Stock Dividend. In case the Corporation shall
at any time subdivide, redivide, recapitalize, split (forward) or change its
outstanding shares of Common Stock into a greater number of shares or declare a
dividend upon its Common Stock payable solely in shares of Common Stock, the
Exercise Price shall be proportionately reduced and the number of Warrant Shares
proportionately increased. Conversely, in case of a reverse stock
split or the outstanding shares of Common Stock of the Corporation shall be
combined into a smaller number of shares, the Exercise Price shall be
proportionately increased and the number of Warrant Shares proportionately
reduced.
7. Compliance with Securities
Laws; Legend
and Stop Transfer Orders. Unless the Warrant Shares are
subject to an effective registration statement under the Securities Act, upon
exercise of any part of any Warrant represented hereby, (i) the Corporation
shall be entitled to require that the Holder make such representations and
warranties as may be reasonably required by the Corporation to assure that the
issuance of Warrant Shares is exempt from the registration requirements of
applicable securities laws and (ii) the Corporation shall instruct its transfer
agent to enter stop transfer orders with respect to such Warrant Shares, and all
certificates or instruments representing the Warrant Shares shall bear on the
face thereof substantially the following legend:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR
OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
8. Redemption of
Warrant. Each Warrant is subject to redemption by the
Corporation as provided in this Section
8.
(a) Each
Warrant may be redeemed, at the option of the Corporation, in whole and not in
part, at a redemption price of $.0001 per Warrant (the “Redemption Price”),
provided the average closing price of the Common Stock as quoted by Bloomberg,
LP., or the Principal Trading Market (as defined below) on which the Common
Stock is included for quotation or trading, shall equal or exceed $7.00 per
share (taking into account all adjustments) for twenty (20) out of thirty (30)
consecutive trading days.
(b) If
the conditions set forth in Section 8(a) are met,
and the Corporation desires to exercise its right to redeem each Warrant, it
shall mail a notice (the “Redemption Notice”)
to the registered holder of each Warrant by first class mail, postage prepaid,
at least fourteen (14) business days prior to the date fixed by the Corporation
for redemption of the Warrants (the “Redemption
Date”).
(c
) The Redemption
Notice shall specify (i) the Redemption Price, (ii) the Redemption Date, (iii)
the redemption price payable, and (iv) that the right to exercise each Warrant
shall terminate at 5:00 p.m. (New York time) on the business day
immediately preceding the Redemption Date. No failure to mail such notice nor
any defect therein or in the mailing thereof shall affect the validity of the
proceedings for such redemption except as to a holder (a) to whom notice was not
mailed, or (b) whose notice was defective. An affidavit of the Secretary or
an Assistant Secretary of the Corporation that the Redemption Notice has been
mailed shall, in the absence of fraud, be prima facie evidence of the
facts stated therein.
-26-
(d) Any
right to exercise a Warrant shall terminate at 5:00 p.m. (New York time) on
the business day immediately preceding the Redemption Date. On and after the
Redemption Date, the holder of each Warrant shall have no further rights except
to receive the Redemption Price.
(e) From
and after the Redemption Date, the Corporation shall, at the place specified in
the Redemption Notice, upon presentation and surrender to the Corporation by or
on behalf of the holder thereof the warrant certificates evidencing each Warrant
being redeemed, deliver, or cause to be delivered to or upon the written order
of such holder, a sum in cash equal to the Redemption Price of each Warrant.
From and after the Redemption Date, each Warrant shall expire and become void
and all rights hereunder, except the right to receive payment of the Redemption
Price, shall cease.
9. Miscellaneous. Miscellaneous. This
Global Warrant Certificate and each Warrant represented hereby shall be governed
by and construed in accordance with the laws of the State of New
York. All the covenants and provisions of this Global Warrant
Certificate and each Warrant by or for the benefit of the Corporation shall bind
and inure to the benefit of its successors and assigns
hereunder. Nothing in this Global Warrant Certificate shall be
construed to give to any person or corporation other than the Corporation and
the holder of each Warrant represented hereby any legal or equitable right,
remedy, or claim under this Global Warrant Certificate and each Warrant
represented hereby. This Global Warrant Certificate and each Warrant
represented hereby shall be for the sole and exclusive benefit of the
Corporation and the Holder. The section headings herein are for
convenience only and are not part of this Global Warrant Certificate and shall
not affect the interpretation hereof.
10. Validity. This
Global Warrant Certificate shall not be valid or obligatory for any purpose
until authenticated by the Warrant Agent.
-27-
IN
WITNESS WHEREOF, the Corporation has caused this $5.00 Warrant to be executed by
its duly authorized officer, this ______ day of January, 2011.
|
NEOSTEM,
INC.
|
|
|
Robin
L. Smith
|
|
|
Chairman
& Chief Executive
Officer
|
Certificate
of Authentication
This is
the Global Warrant Certificate for the $5.00 Warrant referred to in the
within-mentioned Warrant Agreement.
CONTINENTAL
STOCK TRANSFER
&
TRUST COMPANY, As Warrant Agent
|
By:
|
||
|
Authorized
Signature
|
||
-28-
[TO BE
ATTACHED TO GLOBAL WARRANT CERTIFICATE]
SCHEDULE
OF INCREASES OR DECREASES IN GLOBAL WARRANT CERTIFICATE
$5.00
WARRANTS
The
following increases or decreases in this Global Warrant have been
made:
|
Date
|
Amount of decrease
in the number of
Warrants
represented by this
Global Warrant
|
Amount of increase
in number of
Warrants
represented by this
Global Warrant
|
Number of
Warrants
represented by this
Global Security
following such
decrease or increase
|
Signature of
authorized officer
of the Depositary
|
-29-
FORM
OF EXERCISE FORM
To
Be Executed by the Holder in Order to Exercise $5.00 Warrant
|
|
The
undersigned hereby irrevocably elects to exercise the right, represented
by the book-entry Warrant(s), to purchase ____________ shares of the
Common Stock of NeoStem, Inc. (the "Warrant Shares")
and undersigned herewith makes payment of the full purchase
price for such shares at the price per share provided for in such Warrant
in accordance with the terms of the Warrant Agreement. Such
payment takes the form of $__________ in lawful money of the United
States.
|
The
undersigned hereby requests that certificates for the Warrant Shares purchased
hereby be issued in the name of:
|
(please
print or type name and address)
|
|
|
(please
insert social security or other identifying number)
|
|
|
and
be delivered as follows:
|
|
|
(please
print or type name and address)
|
|
|
(please
insert social security or other identifying number)
|
and if
such number of shares of Common Stock shall not be all the shares evidenced by
this Warrant Certificate, that a new Warrant for the balance of such shares be
registered in the name of, and delivered to, Holder.
|
Signature
of Holder
|
|
|
SIGNATURE
GUARANTEE:
|
|
This
Warrant may be exercised by delivering the Exercise Form to Continental Stock
Transfer & Trust Company at the following addresses:
|
By
mail at
|
Continental
Stock Transfer & Trust Company
|
17
Battery Place
New York,
New York 10004
Attn: [_______________]
-30-
[FORM OF
ASSIGNMENT]
(TO BE
EXECUTED TO TRANSFER THE WARRANT)
For value
received, ______________________________ hereby sells, assigns and transfers
unto the Assignee(s) named below the rights represented by such number of $5.00
Warrants listed opposite the respective name(s) of the Assignee(s) named below
and all other rights of the Holder with respect to such Warrants, and does
hereby irrevocably constitute and appoint _____________________________
attorney, to transfer said Warrant on the books of the Depositary and/or the
Warrant Agent with respect to the number of Warrants set forth below, with full
power of substitution:
|
Name(s) of
Assignee(s)
|
Address
|
No. of Warrants
|
||
|
|
|
|
Dated:
|
|
Signature
|
||
|
(Signed
exactly as name appears in the
|
||
|
records
of the Depositary)
|
||
|
Signature
Guarantee:
|
|
-31-
EXHIBIT
C
FORM OF
GLOBAL WARRANT CERTIFICATE FOR $7.00 WARRANTS
-32-
[FORM OF
GLOBAL WARRANT CERTIFICATE FOR $7.00 WARRANTS]
EXERCISABLE
ONLY IF AUTHENTICATED BY THE
WARRANT
AGENT AS PROVIDED HEREIN
VOID
AFTER THE CLOSE OF BUSINESS ON JANUARY 18, 2018
NEOSTEM,
INC.
Global
Warrant Certificate representing
Warrants
to purchase 1,000,000 shares of common stock, par value $0.001 per
share
as
described herein
NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED, OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
Each
$7.00 Warrant (each a "Warrant") represented hereby,
entitles the holder to purchase one share (the "Warrant Share") of common
stock, $.001 par value (the “Common Stock”) of NeoStem,
Inc., a Delaware corporation, (the "Corporation") for the benefit
of certain Holders (as defined in the Warrant Agreement) of such Warrants on the
following terms. This Global Warrant Certificate represents the
number of outstanding Warrants from time to time endorsed hereon and the number
of outstanding Warrants represented hereby may from time to time be reduced or
increased, as appropriate to reflect exchanges, redemptions, exercises and other
similar transactions. This Global Warrant Certificate is issued under
and in accordance with the Warrant Agreement, and is subject to the terms and
provisions contained therein, all of which terms and provisions the Holders
consent to by acceptance of their book-entry interests in the Global Warrant
Certificate. Copies of the Warrant Agreement are on file at the
Corporation's headquarters. In the event of any conflict or
inconsistency between this Global Warrant Certificate and the Warrant Agreement,
this Global Warrant Certificate shall control. Capitalized terms used
and not otherwise defined herein shall have the meanings set forth in that
certain Warrant Agreement dated as of January 19, 2011 by and between the
Corporation and Continental Stock Transfer & Trust Company (as such
agreement may be amended from time to time, the “Warrant
Agreement”).
1. Exercise
Period. The Warrants shall vest in full and become exercisable
upon achievement of the $7.00 Warrant Condition set forth in Section 9 below
(the “Vesting Date”)
and, notwithstanding anything to the contrary contained herein, shall expire at
5:00 p.m. (Eastern Time) on January 18, 2018 (the “Termination
Date”).
-33-
2. Exercise of
Warrants. Each Holder may, at any time on or after the Vesting
Date and prior to the Termination Date, exercise his, her or its Warrant in
whole or in part at an exercise price per share equal to $7.00 per
share, subject to adjustment as provided herein (the “Exercise Price”), by the
delivery of the Warrant Exercise Form annexed hereto duly completed and executed
to the Warrant Agent at the Warrant Agent Office or at such other agency or
office of the Corporation in the United States of America as the Corporation may
designate by notice in writing to the Holder at the address of such Holder
appearing on the books of the Corporation, and by payment to the Corporation of
the Exercise Price in lawful money of the United States by certified check or
wire transfer for each share of Common Stock being purchased. Upon
any partial exercise of a Warrant, the Warrant Agent shall make an appropriate
adjustment to the account of the Holder to reflect a number of warrants for the
account of the Holder equal (without giving effect to any adjustment thereof) to
the number of shares called for by such Holder's Warrants prior to such
exercise, minus the number of shares designated by the Holder upon such
exercise. In the event of the exercise of the rights represented by
any Warrant, a certificate or certificates for the Warrant Shares so purchased,
as applicable, registered in the name of the Holder, shall be delivered to the
Holder hereof as soon as practicable after the rights represented by such
Warrant shall have been so exercised.
3. Reservation of Warrant
Shares. The Corporation agrees that, prior to the expiration
of this Warrant, it will at all times have authorized and in reserve, and will
keep available, solely for issuance or delivery upon the exercise of all
outstanding Warrants represented by this Global Warrant Certificate, the number
of Warrant Shares as from time to time shall be issuable by the Corporation upon
the exercise of this Warrant.
4. No Stockholder Rights; No
Rights to Net Cash Settled. No Warrant shall entitle the
holder hereof to any voting rights or other rights as a stockholder of the
Corporation. In no event may any Warrant be net cash
settled.
5. Transferability of Warrant
and Underlying Shares. Prior to the Termination Date and
subject to compliance with applicable Federal and State securities and other
laws, this Warrant and all rights hereunder are transferable, in whole or in
part, at the office or agency of the Corporation by the Holder in person or by
duly authorized attorney in accordance with the provisions of the Warrant
Agreement and upon delivery of the Assignment Form annexed hereto properly
endorsed for transfer. The Corporation or the Warrant Agent shall be
entitled to require, as a condition of any such transfer, that the Holder and
the transferee execute or provide such documents and make such representations
and warranties as the Corporation or the Warrant Agent may deem appropriate to
evidence compliance with applicable law or otherwise. None of the
Warrant Shares, if issued, may be transferred by the Holder until after the date
that is one year after the date of issuance of this Warrant.
6. Certain
Adjustments. With respect to any rights that any Holder has to
exercise any Warrant and convert into shares of Common Stock, Holder shall be
entitled to the following adjustments:
(a) Merger or
Consolidation. If at any time there shall be a merger or a
consolidation of the Corporation with or into another entity when the
Corporation is not the surviving corporation, then, as part of such merger or
consolidation, lawful provision shall be made so that the holder hereof shall
thereafter be entitled to receive upon exercise of each Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or other securities or property (including
cash) of the successor corporation resulting from such merger or consolidation,
to which the holder hereof as the holder of the stock deliverable upon exercise
of each Warrant would have been entitled in such merger or consolidation if each
Warrant had been exercised immediately before such transaction. In
any such case, appropriate adjustment shall be made in the application of the
provisions of each Warrant with respect to the rights and interests of the
holder hereof as the holder of each Warrant after the merger or
consolidation.
(b) Reclassification,
Recapitalization, etc. If the Corporation at any time shall,
by subdivision, combination or reclassification of securities, recapitalization,
automatic conversion, or other similar event affecting the number or character
of outstanding shares of Common Stock, or otherwise, change any of the
securities as to which purchase rights under each Warrant exist into the same or
a different number of securities of any other class or classes, each Warrant
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under each Warrant
immediately prior to such subdivision, combination, reclassification or other
change.
-34-
(c) Split or Combination of
Common Stock and Stock Dividend. In case the Corporation shall
at any time subdivide, redivide, recapitalize, split (forward) or change its
outstanding shares of Common Stock into a greater number of shares or declare a
dividend upon its Common Stock payable solely in shares of Common Stock, the
Exercise Price shall be proportionately reduced and the number of Warrant Shares
proportionately increased. Conversely, in case of a reverse stock
split or the outstanding shares of Common Stock of the Corporation shall be
combined into a smaller number of shares, the Exercise Price shall be
proportionately increased and the number of Warrant Shares proportionately
reduced.
7. Compliance with Securities
Laws; Legend
and Stop Transfer Orders. Unless the Warrant Shares are
subject to an effective registration statement under the Securities Act, upon
exercise of any part of any Warrant represented hereby, (i) the Corporation
shall be entitled to require that the Holder make such representations and
warranties as may be reasonably required by the Corporation to assure that the
issuance of Warrant Shares is exempt from the registration requirements of
applicable securities laws and (ii) the Corporation shall instruct its transfer
agent to enter stop transfer orders with respect to such Warrant Shares, and all
certificates or instruments representing the Warrant Shares shall bear on the
face thereof substantially the following legend:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR
OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
8. Redemption of
Warrant. Each Warrant is subject to redemption by the
Corporation as provided in this Section
8.
(a) Each
Warrant may be redeemed, at the option of the Corporation, in whole and not in
part, at a redemption price of $.0001 per Warrant (the “Redemption Price”),
provided the average closing price of the Common Stock as quoted by Bloomberg,
LP., or the Principal Trading Market (as defined below) on which the Common
Stock is included for quotation or trading, shall equal or exceed $9.00 per
share (taking into account all adjustments) for twenty (20) out of thirty (30)
consecutive trading days. Notwithstanding the foregoing, the
Corporation may not redeem such Warrant (a) unless it waives (if then
applicable) the last sentence of Section 5 of the Warrant, (b) unless the
issuance of the Warrant Shares is registered or there is an effective resale
registration statement available to the Holders with respect to the Warrant
Shares and (c) unless the $7.00 Warrant Condition has been achieved or the
Corporation waives the $7.00 Warrant Condition concurrently with its provision
of the Redemption Notice (as defined below).
(b) If
the conditions set forth in Section 8(a) are met,
and the Corporation desires to exercise its right to redeem each Warrant, it
shall mail a notice (the “Redemption Notice”)
to the registered holder of each Warrant by first class mail, postage prepaid,
at least fourteen (14) business days prior to the date fixed by the Corporation
for redemption of the Warrants (the “Redemption
Date”).
-35-
(c
) The
Redemption Notice shall specify (i) the Redemption Price, (ii) the Redemption
Date, (iii) the redemption price payable, and (iv) that the right to exercise
each Warrant shall terminate at 5:00 p.m. (New York time) on the business
day immediately preceding the Redemption Date. No failure to mail such notice
nor any defect therein or in the mailing thereof shall affect the validity of
the proceedings for such redemption except as to a holder (a) to whom notice was
not mailed, or (b) whose notice was defective. An affidavit of the
Secretary or an Assistant Secretary of the Corporation that the Redemption
Notice has been mailed shall, in the absence of fraud, be prima facie evidence of the
facts stated therein.
(d) Any
right to exercise a Warrant shall terminate at 5:00 p.m. (New York time) on
the business day immediately preceding the Redemption Date. On and after the
Redemption Date, the holder of each Warrant shall have no further rights except
to receive the Redemption Price.
(e) From
and after the Redemption Date, the Corporation shall, at the place specified in
the Redemption Notice, upon presentation and surrender to the Corporation by or
on behalf of the holder thereof the warrant certificates evidencing each Warrant
being redeemed, deliver, or cause to be delivered to or upon the written order
of such holder, a sum in cash equal to the Redemption Price of each Warrant.
From and after the Redemption Date, each Warrant shall expire and become void
and all rights hereunder, except the right to receive payment of the Redemption
Price, shall cease.
9. $7.00 Warrant
Condition. The $7.00 Warrants will not vest and will not become
exercisable unless the Surviving Company secures, prior to the third annual
anniversary of the Closing Date, one or more material binding commercial
manufacturing contracts with one or more third parties, each on an arm’s length
basis, which commercial manufacturing contracts result in aggregate revenues to
the Surviving Company in excess of $5 million per year over a period of at least
3 years and in the reasonable judgment of the Corporation’s Board of Directors
the manufacturing contracts will be profitable each year during the term of such
contracts in accordance with GAAP (the “$7.00 Warrant
Condition”). The $7.00 Warrant Condition will be deemed to have
been achieved, and the $7.00 Warrants will vest, upon certification by the
Corporation's Board of Directors that all the elements of the $7.00 Warrant
Condition have been met, which certification shall be provided as soon as
practicable following the presentation by the PCT Representative to the
Corporation's Board of Directors of all appropriate supporting documents and
materials necessary to determine whether each of the elements of the $7.00
Warrant Condition has been met.
10. Miscellaneous. This
Global Warrant Certificate and each Warrant represented hereby shall be governed
by and construed in accordance with the laws of the State of New
York. All the covenants and provisions of this Global Warrant
Certificate and each Warrant by or for the benefit of the Corporation shall bind
and inure to the benefit of its successors and assigns
hereunder. Nothing in this Global Warrant Certificate shall be
construed to give to any person or corporation other than the Corporation and
the holder of each Warrant represented hereby any legal or equitable right,
remedy, or claim under this Global Warrant Certificate and each Warrant
represented hereby. This Global Warrant Certificate and each Warrant
represented hereby shall be for the sole and exclusive benefit of the
Corporation and the Holder. The section headings herein are for
convenience only and are not part of this Global Warrant Certificate and shall
not affect the interpretation hereof.
11. Validity. This
Global Warrant Certificate shall not be valid or obligatory for any purpose
until authenticated by the Warrant Agent.
-36-
IN
WITNESS WHEREOF, the Corporation has caused this $7.00 Warrant to be executed by
its duly authorized officer, this ______ day of January 2011.
|
NEOSTEM,
INC.
|
|
|
Robin
L. Smith
|
|
|
Chairman
& Chief Executive
Officer
|
Certificate
of Authentication
This is
the Global Warrant Certificate for the $7.00 Warrants referred to in the
within-mentioned Warrant Agreement.
CONTINENTAL
STOCK TRANSFER
&
TRUST COMPANY, As Warrant Agent
|
By:
|
||
|
Authorized
Signature
|
||
-37-
[TO BE
ATTACHED TO GLOBAL WARRANT CERTIFICATE]
SCHEDULE
OF INCREASES OR DECREASES IN GLOBAL WARRANT CERTIFICATE
$7.00
WARRAMT
The
following increases or decreases in this Global Warrant have been
made:
|
Date
|
Amount of decrease
in the number of
Warrants
represented by this
Global Warrant
|
Amount of increase
in number of
Warrants
represented by this
Global Warrant
|
Number of
Warrants
represented by this
Global Security
following such
decrease or increase
|
Signature of
authorized officer
of the Depositary
|
-38-
FORM
OF EXERCISE FORM
To
Be Executed by the Holder in Order to Exercise $7.00 Warrant
|
|
The
undersigned hereby irrevocably elects to exercise the right, represented
by the book-entry Warrant(s), to purchase ____________ shares of the
Common Stock of NeoStem, Inc. (the "Warrant Shares") and undersigned
herewith makes payment of the full purchase price for such shares at the
price per share provided for in such Warrant in accordance with the terms
of the Warrant Agreement. Such payment takes the form of
$__________ in lawful money of the United
States.
|
The
undersigned hereby requests that certificates for the Warrant Shares purchased
hereby be issued in the name of:
|
(please
print or type name and address)
|
|
|
(please
insert social security or other identifying number)
|
|
|
and
be delivered as follows:
|
|
|
(please
print or type name and address)
|
|
|
(please
insert social security or other identifying number)
|
and if
such number of shares of Common Stock shall not be all the shares evidenced by
this Warrant Certificate, that a new Warrant for the balance of such shares be
registered in the name of, and delivered to, Holder.
|
Signature
of Holder
|
|
|
SIGNATURE
GUARANTEE:
|
|
This
Warrant may be exercised by delivering the Exercise Form to Continental Stock
Transfer & Trust Corporation at the following addresses:
|
By
mail at
|
Continental
Stock Transfer & Trust Company
|
17
Battery Place
New York,
New York 10004
Attn: [_______________]
-39-
[FORM OF
ASSIGNMENT]
(TO BE
EXECUTED TO TRANSFER THE $7.00 WARRANT)
For value
received, ______________________________ hereby sells, assigns and transfers
unto the Assignee(s) named below the rights represented by such number of
Warrants listed opposite the respective name(s) of the Assignee(s) named below
and all other rights of the Holder with respect to such Warrants, and does
hereby irrevocably constitute and appoint _____________________________
attorney, to transfer said Warrant on the books of the Depositary and/or the
Warrant Agent with respect to the number of Warrants set forth below, with full
power of substitution:
|
Name(s) of
Assignee(s)
|
Address
|
No. of Warrants
|
||
|
|
|
|
Dated:
|
|
Signature
|
||
|
(Signed
exactly as name appears in the
|
||
|
records
of the Depositary)
|
||
|
Signature
Guarantee:
|
|
NEOSTEM,
INC.
2009
EQUITY COMPENSATION PLAN
1. Purposes of the
Plan. The purposes of this NeoStem, Inc. 2009 Equity
Compensation Plan (the “Plan”) are: to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentives to Employees, Directors and
Consultants, and to promote the success of the Company and any Parent or
Subsidiary. Options granted under the Plan may be Incentive Stock
Options or Nonstatutory Stock Options, as determined by the Administrator at the
time of grant. Stock Awards, Unrestricted Shares and Stock
Appreciation Rights may also be granted under
the Plan.
2. Definitions. As
used herein, the following definitions shall apply:
“Administrator” means
a Committee which has been delegated the responsibility of administering the
Plan in accordance with Section 4 of the Plan or, if there is no such Committee,
the Board.
“Applicable Laws”
means the requirements relating to the administration of equity compensation
plans under the applicable corporate and securities laws of any of the states in
the United States, U.S. federal securities laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Awards are, or will
be, granted under the Plan.
“Award” means an
Option, a Stock Award, a Stock Appreciation Right and/or the grant of
Unrestricted Shares.
“Board” means the
Board of Directors of the Company.
“Cause”, with respect
to any Service Provider, means (unless otherwise determined by the
Administrator) such Service Provider’s (i) conviction of, or plea of nolo
contendere to, a felony or crime involving moral turpitude; (ii) fraud on
or misappropriation of any funds or property of the Company; (iii) personal
dishonesty, willful misconduct, willful violation of any law, rule or regulation
(other than minor traffic violations or similar offenses) or breach of fiduciary
duty which involves personal profit; (iv) willful misconduct in connection
with the Service Provider’s duties; (v) chronic use of alcohol, drugs or
other similar substances which affects the Service Provider’s work performance;
or (vi) material breach of any provision of any employment, non-disclosure,
non-competition, non-solicitation or other similar agreement executed by the
Service Provider for the benefit of the Company, all as reasonably determined by
the Committee, which determination will be
conclusive. Notwithstanding the foregoing, if a Service Provider and
the Company (or any of its Affiliates) have entered into an employment
agreement, consulting agreement, advisory agreement or other similar agreement
that specifically defines “cause,” then with respect to such Service Provider,
“Cause” shall have the meaning defined in that employment agreement, consulting
agreement, advisory agreement or other agreement.
“Code” means the
Internal Revenue Code of 1986, as amended.
“Committee” means a
committee of Directors appointed by the Board in accordance with Section 4 of
the Plan.
“Common Stock” means
the common stock, par value $.001 per share, of the Company.
“Company” means
Neostem, Inc., a Delaware corporation.
“Consultant” means any
person, including an advisor, engaged by the Company or a Parent or Subsidiary
to render services to such entity, other than an Employee or a
Director.
“Director” means a
member of the Board.
“Disability” means
total and permanent disability as defined in Section 22(e)(3) of the
Code.
“Employee” means any
person, including officers and Directors, serving as an employee of the Company
or any Parent or Subsidiary. An individual shall not cease to be an
Employee in the case of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company, its Parent,
any Subsidiary or any successor. For purposes of an Option initially
granted as an Incentive Stock Option, if a leave of absence of more than three
months precludes such Option from being treated as an Incentive Stock Option
under the Code, such Option thereafter shall be treated as a Nonstatutory Stock
Option for purposes of this Plan. Neither service as a Director nor
payment of a director’s fee by the Company shall be sufficient to constitute
“employment” by the Company.
“Exchange Act” means
the Securities Exchange Act of 1934, as amended.
“Fair Market Value”
means, as of any date, the value of Common Stock determined as
follows:
(i) if
the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the NYSE Amex, Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, or any
successor to any of them, the Fair Market Value of a Share of Common Stock shall
be the closing sales price of a Share of Common Stock as quoted on such exchange
or system for such date (or the most recent trading day preceding such date if
there were no trades on such date), as reported in The Wall Street
Journal or such other source as the Committee deems reliable, including
without limitation, Yahoo! Finance;
(ii) if
the Common Stock is regularly quoted by a recognized securities dealer but is
not listed in the manner contemplated by clause (i) above, the Fair Market Value
of a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock for such date (or the most recent trading day
preceding such date if there were no trades on such date), as reported in The Wall Street Journal
or such other source as the Committee deems reliable, including without
limitation Yahoo! Finance; or
(iii) if
neither clause (i) above nor clause (ii) above applies, the Fair Market Value
shall be determined in good faith by the Administrator based on the reasonable
application of a reasonable valuation method.
“Grant Agreement”
means an agreement between the Company and a Participant evidencing the terms
and conditions of an individual Option or Stock Appreciation Right
grant. Each Grant Agreement shall be subject to the terms and
conditions of the Plan.
-2-
“Incentive Stock
Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated
thereunder.
“Nonstatutory Stock
Option” means an Option not intended to qualify as an Incentive Stock
Option.
“Notice of Grant”
means a written or electronic notice evidencing certain terms and conditions of
an individual Option grant, Stock Award grant or grant of Unrestricted Shares or
Stock Appreciation Rights. The Notice of Grant applicable to Stock
Options or Stock Appreciation Rights shall be part of the Grant
Agreement.
“Option” means a stock
option granted pursuant to the Plan.
“Optioned Stock” means
the Common Stock subject to an Option.
“Optionee” means the
holder of an outstanding Option granted under the Plan.
“Parent” means a
“parent corporation” of the Company (or, for purposes of Section 16(b) of the
Plan, a successor to the Company), whether now or hereafter existing, as defined
in Section 424(e) of the Code.
“Participant” shall
mean any Service Provider who holds an Option, Restricted Stock, a Stock Award,
Unrestricted Shares or a Stock Appreciation Right granted or issued pursuant to
the Plan.
“Rule 16b-3” means
Rule 16b-3 of the Exchange Act or any successor to such Rule 16b-3, as such rule
is in effect when discretion is being exercised with respect to the
Plan.
“Section 16(b)” means
Section 16(b) of the Exchange Act.
“Service Provider”
means an Employee, Director or Consultant.
“Share” means a share
of the Common Stock, as adjusted in accordance with Section 16 of the
Plan.
“Stock Appreciation
Right” means a right awarded pursuant to Section 14 of the
Plan.
“Stock Award” means an
Award of Shares pursuant to Section 11 of the Plan or an award of Restricted
Stock Units pursuant to Section 12 of the Plan.
“Stock Award
Agreement” means an agreement, approved by the Administrator, providing
the terms and conditions of a Stock Award.
“Stock Award Shares”
means Shares subject to a Stock Award.
“Stock Awardee” means
the holder of an outstanding Stock Award granted under the Plan.
“Subsidiary” means a
“subsidiary corporation” of the Company (or, for purposes of Section 16(b) of
the Plan, a successor to the Company), whether now or hereafter existing, as
defined in Section 424(f) of the Code.
-3-
“Unrestricted Shares”
means a grant of Shares made on an unrestricted basis pursuant to Section 13 of
the Plan.
3. Stock Subject to the
Plan. Subject to the provisions of Section 16(a) of the Plan,
the maximum aggregate number of Shares that may be issued under the Plan is
17,750,000 Shares, all of which may be issued in respect of Incentive Stock
Options. The Shares may be authorized but unissued, or reacquired,
shares of Common Stock. The maximum number of Shares subject to
Options and Stock Appreciation Rights which may be issued to any Participant
under the Plan during any calendar year is 1,900,000 Shares. If an Option or Stock Appreciation
Right expires or becomes unexercisable without having been exercised in full or
is canceled or terminated, or if any Shares of Restricted Stock or Shares
underlying a Stock Award are forfeited or reacquired by the Company, the Shares
that were subject thereto shall be added back to the Shares available for
issuance under the Plan. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
4. Administration of the
Plan.
(a) Appointment. The
Plan shall be administered by a Committee to be appointed by the Board, which
Committee shall consist of not less than two members of the Board and shall be
comprised solely of members of the Board who qualify as both non-employee
directors as defined in Rule 16b-3(b)(3) of the Exchange Act and outside
directors within the meaning of Department of Treasury Regulations issued under
Section 162(m) of the Code. The Board shall have the power to add or
remove members of the Committee, from time to time, and to fill vacancies
thereon arising; by resignation, death, removal, or
otherwise. Meetings shall be held at such times and places as shall
be determined by the Committee. A majority of the members of the
Committee shall constitute a quorum for the transaction of business, and the
vote of a majority of those members present at any meeting shall decide any
question brought before that meeting.
(b) Powers of the
Administrator. The Administrator shall have the authority, in
its discretion:
(i) to
determine the Fair Market Value of Shares;
(ii) to
select the Service Providers to whom Options, Stock Awards, Unrestricted Shares
and/or Stock Appreciation
Rights may be granted
hereunder;
(iii) to
determine the number of shares of Common Stock to be covered by each Award
granted hereunder;
(iv)
to approve forms of agreement for use under the Plan;
(v) to
determine the terms and conditions, not inconsistent with the terms of the Plan
or of any Award granted hereunder. Such terms and conditions include,
but are not limited to, the exercise price, the time or times when Options and
Stock Appreciation Rights may be exercised (which may be based on performance
criteria), any vesting, acceleration or waiver of forfeiture provisions, and any
restriction or limitation regarding any Option, Stock Appreciation Right or
Stock Award, or the Shares of Common Stock relating thereto, based in each case
on such factors as the Administrator, in its sole discretion, shall
determine;
-4-
(vi)
to construe and interpret the terms of the Plan, Awards granted pursuant
to the Plan and agreements entered into pursuant to the Plan;
(vii)
to prescribe, amend and rescind rules and regulations relating to the
Plan, including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax
laws;
(viii)
to modify or amend each Award (subject to Section 19(c) of the Plan),
including the discretionary authority to extend, subject to the terms of the
Plan, the post-termination exercisability period of Options or Stock
Appreciation Rights longer than is otherwise provided for in a Grant Agreement
and to accelerate the time at which any outstanding Option or Stock Appreciation
Right may be exercised;
(ix)
to allow grantees to satisfy withholding tax obligations by having the
Company withhold from the Shares to be issued upon exercise of an Option or
Stock Appreciation Right, upon vesting of a Stock Award, or upon the grant of
Unrestricted Shares that number of Shares having a Fair Market Value equal to
the amount required to be withheld, provided that withholding is calculated at
the minimum statutory withholding level. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All determinations to have Shares
withheld for this purpose shall be made by the Administrator in its
discretion;
(x) to
reduce the exercise price of any Option or Stock Appreciation
Right;
(xi) to
authorize any person to execute on behalf of the Company any agreement entered
into pursuant to the Plan and any instrument required to effect the grant of an
Award previously granted by the Administrator; and
(xii) to
make all other determinations deemed necessary or advisable for administering
the Plan.
(c) Effect of Administrator’s
Decision. The Administrator’s decisions, determinations and
interpretations shall be final and binding on all holders of Awards and
Restricted Stock. None of the Board, the Committee or the
Administrator, nor any member or delegate thereof, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in
connection with the Plan, and each of the foregoing shall be entitled in all
cases to indemnification and reimbursement by the Company in respect of any
claim, loss, damage or expense (including without limitation reasonable
attorneys’ fees) arising or resulting therefrom to the fullest extent permitted
by law and/or under any directors’ and officers’ liability insurance coverage
which may be in effect from time to time.
(d) Delegation of Grant
Authority. Notwithstanding any other provision in the Plan,
the Board may authorize the Company’s Chief Executive Officer or another
executive officer of the Company or a committee of such officers (“Authorized Officers”)
to grant Options under the Plan; provided, however, that in no
event shall the Authorized Officers be permitted to grant Options to (i) any
Director, (ii) any person who is identified by the Company as an executive
officer of the Company or who is subject to the restrictions imposed under
Section 16 of the Exchange Act, (iii) any person who is not an employee of the
Company or any Subsidiary, or (iv) such other person or persons as may be
designated from time to time by the Board. If such authority is
provided by the Board, the Board shall establish and adopt written guidelines
setting forth the maximum number of shares for which the Authorized Officers may
grant Options to any individual during a specified period of time and such other
terms and conditions as the Board deems appropriate for such
grants. Such guidelines may be amended by the Board prospectively at
any time. Subject to the foregoing, the Authorized Officers shall
have the same authority as the Administrator under this Section 4 with respect
to the grant of Options under the Plan.
-5-
5. Eligibility. Nonstatutory
Stock Options, Stock Awards, Unrestricted Shares and Stock Appreciation Rights
may be granted to Service Providers. Incentive Stock Options may be
granted only to Employees. Notwithstanding anything contained herein
to the contrary, an Award may be granted to a person who is not then a Service
Provider; provided, however, that the grant of such Award shall be conditioned
upon such person becoming a Service Provider at or prior to the time of the
execution of the agreement evidencing such Award.
6. Limitations.
(a) Each
Option shall be designated in the Grant Agreement as either an Incentive Stock
Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, if a single Employee becomes eligible in any given year to exercise
Incentive Stock Options for Shares having a Fair Market Value in excess of
$100,000, those Options representing the excess shall be treated as Nonstatutory
Stock Options. In the previous sentence, “Incentive Stock Options”
include Incentive Stock Options granted under any plan of the Company or any
Parent or any Subsidiary. For the purpose of deciding which Options
apply to Shares that “exceed” the $100,000 limit, Incentive Stock Options shall
be taken into account in the same order as granted. The Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
(b) Neither
the Plan nor any Award nor any agreement entered into pursuant to the Plan shall
confer upon a Participant any right with respect to continuing the Participant’s
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Participant’s right or the Company’s right to terminate such
relationship at any time, with or without cause.
7. Term of the
Plan. Subject to Section 22 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect
for a term of ten (10) years unless terminated earlier under Section 19 of the
Plan.
8. Term of
Options. Unless otherwise provided in the applicable Grant
Agreement, the term of each Option granted to anyone other than a Consultant
shall be ten (10) years from the date of grant and the term of each Option
granted to any Consultant shall be five (5) years from the date of
grant. In the case of an Incentive Stock Option, the term shall be
ten (10) years from the date of grant or such shorter term as may be provided in
the applicable Grant Agreement. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Incentive Stock Option
is granted, owns, directly or indirectly, stock representing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Incentive Stock Option
shall be five (5) years from the date of grant or such shorter term as may be
provided in the applicable Grant Agreement.
9. Option Exercise Price;
Exercisability.
(a) Exercise
Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In
the case of an Incentive Stock Option
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(A) granted
to an Employee who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of grant, or
(B) granted
to any Employee other than an Employee described in paragraph (A) immediately
above, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant.
(ii) In
the case of a Nonstatutory Stock Option, the per Share exercise price shall be
determined by the Administrator; provided, however, that in the case of a
Nonstatutory Stock Option intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the per Share
exercise price of a Nonstatutory Stock Option shall be no less than 100% of the
Fair Market Value per Share on the date of grant, as determined by the
Administrator in good faith.
(iii) Notwithstanding
the foregoing, Options may be granted with a per Share exercise price of less
than 100% (or 110%, if clause (i)(A) above applies) of the Fair Market Value per
Share on the date of grant pursuant to a merger or other comparable corporate
transaction.
(b) Exercise Period and
Conditions. At the time that an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and
shall determine any conditions that must be satisfied before the Option may be
exercised.
(c) Reload
Options. The Administrator may grant Options with a reload
feature. A reload feature shall only apply when the option price is
paid by delivery of Common Stock (as set forth in Section 10(f)) or by
having the Company reduce the number of shares otherwise
issuable to an Optionee (as provided for in Section 10(f)) (a “Net
Exercise”). The Grant Agreement for the Options containing the
reload feature shall provide that the Option holder shall receive,
contemporaneously with the payment of the exercise price in shares of
Common Stock or in the event of a Net Exercise, a reload stock option
(the “Reload
Option”) to purchase that number of shares of Common Stock equal to the
sum of (i) the number of shares of Common Stock used to exercise the
Option (or not issued in the case of a Net Exercise), and (ii) with respect to
Nonstatutory Stock Options, the number of shares of Common Stock used to satisfy
any tax withholding requirement incident to the exercise of such Nonstatutory
Stock Option. The terms of the Plan applicable to the
Option shall be equally applicable to the Reload Option with the
following exceptions: (i) the exercise price per share of Common
Stock deliverable upon the exercise of the Reload Option, (A) in the case of a
Reload Option which is an Incentive Stock Option being granted to a 10%
Stockholder, shall be one hundred ten percent (110%) of the Fair Market Value of
a share of Common Stock on the date of grant of the Reload Option, and (B) in
the case of a Reload Option which is an Incentive Stock Option being granted to
a person other than a 10% Stockholder or is a Nonstatutory Stock Option, shall
be the Fair Market Value of a share of Common Stock on the date of grant of the
Reload Option; and (ii) the term of the Reload Option shall be equal to the
remaining option term of the Option (including a Reload Option) which gave rise
to the Reload Option. The Reload Option shall be evidenced by an
appropriate amendment to the Grant Agreement for the Option which gave rise to
the Reload Option. In the event the exercise price of an
Option containing a reload feature is paid by check and not in shares of Common
Stock, the reload feature shall have no application with respect to such
exercise.
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10. Exercise of Options;
Consideration.
(a) Procedure for Exercise; Rights as a
Shareholder. Any Option granted hereunder shall be exercisable
according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Grant
Agreement. Unless the Administrator provides otherwise, vesting of
Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a
Share. An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Grant
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is
exercised. Full payment may consist of any consideration and method
of payment authorized by the Administrator and permitted by the Grant Agreement
and Section 10(f) of the Plan. Shares issued upon exercise of an
Option shall be issued in the name of the Optionee. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 16 of the Plan. Exercising an
Option in any manner shall decrease the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised.
(b) Termination of Relationship as a
Service Provider. Unless otherwise specified in the Grant
Agreement or provided by the Administrator, if an Optionee ceases to be a
Service Provider, other than as a result of (x) the Optionee’s death or
Disability, or (y) termination of such Optionee’s employment or relationship
with the Company with Cause, or (z) the Optionee’s voluntary termination of
employment other than as a result of retirement, the Optionee may exercise his
or her Option for up to ninety (90) days following the date on which the
Optionee ceases to be a Service Provider to the extent that the Option is vested
on the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Grant Agreement). If, on the
date that the Optionee ceases to be a Service Provider, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after the date
that the Optionee ceases to be a Service Provider the Optionee does not exercise
his or her Option in full within the time set forth herein or the Grant
Agreement, as applicable, the unexercised portion of the Option shall terminate,
and the Shares covered by such unexercised portion of the Option shall revert to
the Plan. An Optionee who changes his or her status as a Service
Provider (e.g., from being an Employee to being a Consultant) shall not be
deemed to have ceased being a Service Provider for purposes of this Section
10(b), nor shall a transfer of employment among the Company and any Subsidiary
be considered a termination of employment; however, if an Optionee holding
Incentive Stock Options ceases being an Employee but continues as a Service
Provider, such Incentive Stock Options shall be deemed to be Nonstatutory Stock
Options three months after the date of such cessation.
(c) Disability of an
Optionee. Unless otherwise specified in the Grant Agreement,
if an Optionee ceases to be a Service Provider as a result of the Optionee’s
Disability, the Optionee may exercise his or her Option, to the extent the
Option is vested on the date that the Optionee ceases to be a Service Provider,
up until the one-year anniversary of the date on which the Optionee ceases to be
a Service Provider (but in no event later than the expiration of the term of
such Option as set forth in the Grant Agreement). If, on the date
that the Optionee ceases to be a Service Provider, the Optionee is not vested as
to his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after the Optionee ceases to be
a Service Provider, the Optionee does not exercise his or her Option in full
within the time set forth herein or the Grant Agreement, as applicable, the
unexercised portion of the Option shall terminate, and the Shares covered by
such unexercised portion of the Option shall revert to the Plan.
-8-
(d) Death of an
Optionee. Unless otherwise specified in the Grant Agreement,
if an Optionee dies while a Service Provider, the Option may be exercised, to
the extent that the Option is vested on the date of death, by the Optionee’s
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance up until the one-year anniversary of the Optionee’s death (but in
no event later than the expiration of the term of such Option as set forth in
the Notice of Grant). If, at the time of death, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If the Option is not
so exercised in full within the time set forth herein or the Grant Agreement, as
applicable, the unexercised portion of the Option shall terminate, and the
Shares covered by the unexercised portion of such Option shall revert to the
Plan.
(e) Termination for Cause or Voluntary
Termination. If a Service Provider’s relationship with the Company is
terminated for Cause, or if a Service Provider voluntarily terminates his or her
relationship with the Company other than as a result of retirement, then, unless
otherwise provided in such Service Provider’s Grant Agreement or by the
Administrator, such Service Provider shall have no right to exercise any of such
Service Provider’s Options at any time on or after the effective date of such
termination.
(f) Form of
Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of consideration at the time
of grant. Such consideration may consist entirely of:
(i)
cash;
(ii) check;
(iii) other
Shares which (A) in the case of Shares acquired upon exercise of an option at a
time when the Company is subject to Section 16(b) of the Exchange Act, have been
owned by the Optionee for more than six months on the date of surrender, and (B)
have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be
exercised;
(iv) consideration
received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan;
(v) a
reduction in the number of Shares otherwise issuable by a number of Shares
having a Fair Market Value equal to the exercise price of the Option being
exercised;
(vi) any
combination of the foregoing methods of payment; or
(vii) such
other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws.
11. Stock Awards. The
Administrator may, in its sole discretion, grant (or sell at par value or such
higher purchase price as it determines) Shares to any Service Provider subject
to such terms and conditions as the Administrator sets forth in a Stock Award
Agreement evidencing such grant. Stock Awards may be granted or sold
in respect of past services or other valid consideration or in lieu of any cash
compensation otherwise payable to such individual. The grant of Stock
Awards under this Section 11 shall be subject to the following
provisions:
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(a) At
the time a Stock Award under this Section 11 is made, the Administrator shall
establish a vesting period (the “Restricted Period”)
applicable to the Stock Award Shares subject to such Stock Award. The
Administrator may, in its sole discretion, at the time a grant is made,
prescribe restrictions in addition to the expiration of the Restricted Period,
including the satisfaction of corporate or individual performance
objectives. None of the Stock Award Shares may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of during the Restricted
Period applicable to such Stock Award Shares or prior to the satisfaction of any
other restrictions prescribed by the Administrator with respect to such Stock
Award Shares.
(b) The Company shall issue,
in the name of each Service Provider to whom Stock Award Shares have been
granted, stock certificates representing the total number of Stock Award Shares
granted to such person, as soon as reasonably practicable after the
grant. The Company, at the direction of the Administrator, shall hold
such certificates, properly endorsed for transfer, for the Stock Awardee’s
benefit until such time as the Stock Award Shares are forfeited to the Company,
or the restrictions lapse.
(c) Unless otherwise
provided by the Administrator, holders of Stock Award Shares shall have the
right to vote such Shares and have the right to receive any cash dividends with
respect to such Shares. All distributions, if any, received by a
Stock Awardee with respect to Stock Award Shares as a result of any stock split,
stock distribution, combination of shares, or other similar transaction shall be
subject to the restrictions of this Section 11.
(d) Any Stock Award Shares
granted to a Service Provider pursuant to the Plan shall be forfeited if the
Stock Awardee voluntarily terminates employment with the Company or its
subsidiaries or resigns or voluntarily terminates his consultancy or advisory
arrangement or directorship with the Company or its subsidiaries, or if the
Stock Awardee’s employment or the consultant’s or advisor’s consultancy or
advisory arrangement or directorship is terminated for Cause, in each case prior
to the expiration or termination of the applicable Restricted Period and the
satisfaction of any other conditions applicable to such Stock Award
Shares. Upon such forfeiture, the Stock Award Shares that are
forfeited shall be retained in the treasury of the Company and be available for
subsequent awards under the Plan. If the Stock Awardee’s employment,
consultancy or advisory arrangement or directorship terminates for any other
reason prior to the expiration or termination of the applicable Restricted
Period and the satisfaction of any other conditions applicable to such Stock
Award Shares, the Stock Award Shares held by such person shall be forfeited,
unless the Administrator, in its sole discretion, shall determine
otherwise.
(e) Upon the expiration or
termination of the Restricted Period and the satisfaction of any other
conditions prescribed by the Committee, the restrictions applicable to the Stock
Award Shares shall lapse and, at the Stock Awardee’s request, a stock
certificate for the number of Stock Award Shares with respect to which the
restrictions have lapsed shall be delivered, free of all such restrictions, to
the Stock Awardee or his beneficiary or estate, as the case may be.
(f) Prior to the delivery of
any shares of Common Stock in connection with a Stock Award under this Section
11, the Company shall be entitled to require as a condition of delivery that the
Stock Awardee shall pay or make adequate provision acceptable to the Company for
the satisfaction of the statutory minimum prescribed amount of federal and state
income tax and other withholding obligations of the Company, including, if
permitted by the Administrator, by having the Company withhold from the number
of shares of Common Stock otherwise deliverable in connection with a Stock
Award, a number of shares of Common Stock having a Fair Market Value equal to an
amount sufficient to satisfy such tax withholding obligations.
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12. Restricted Stock
Units. The Committee may, in its sole discretion, grant
Restricted Stock Units to a Service Provider subject to such terms and
conditions as the Committee sets forth in a Stock Award Agreement evidencing
such grant. “Restricted Stock Units” are Awards denominated in units
evidencing the right to receive Shares of Common Stock, which may vest over such
period of time and/or upon satisfaction of such performance criteria or
objectives as is determined by the Committee at the time of grant and set forth
in the applicable Stock Award Agreement, without payment of any amounts by the
Stock Awardee thereof (except to the extent required by law). Prior
to delivery of shares of Common Stock with respect to an award of Restricted
Stock Units, the Stock Awardee shall have no rights as a stockholder of the
Company.
Upon
satisfaction and/or achievement of the applicable vesting requirements relating
to an award of Restricted Stock Units, the Stock Awardee shall be entitled to
receive a number of shares of Common Stock that are equal to the number of
Restricted Stock Units that became vested. To the extent, if any, set
forth in the applicable Stock Award Agreement, cash dividend equivalents may be
paid during, or may be accumulated and paid at the end of, the applicable
vesting period, as determined by the Committee.
Unless
otherwise provided by the Stock Award Agreement, any Restricted Stock Units
granted to a Service Provider pursuant to the Plan shall be forfeited if the
Stock Awardee’s employment or service with the Company or its Subsidiaries
terminates for any reason prior to the expiration or termination of the
applicable vesting period and/or the achievement of such other vesting
conditions applicable to the award.
Prior to
the delivery of any shares of Common Stock in connection with an award of
Restricted Stock Units, the Company shall be entitled to require as a condition
of delivery that the Stock Awardee shall pay or make adequate provision
acceptable to the Company for the satisfaction of the statutory minimum
prescribed amount of federal and state income tax and other withholding
obligations of the Company, including, if permitted by the Administrator, by
having the Company withhold from the number of shares of Common Stock otherwise
deliverable in connection with an award of Restricted Stock Units, a number of
shares of Common Stock having a Fair Market Value equal to an amount sufficient
to satisfy such tax withholding obligations.
13. Unrestricted Shares. The
Administrator may grant Unrestricted Shares in accordance with the following
provisions:
(a) The
Administrator may cause the Company to grant Unrestricted Shares to Service
Providers at such time or times, in such amounts and for such reasons as the
Administrator, in its sole discretion, shall determine. No payment shall be
required for Unrestricted Shares.
(b) The
Company shall issue, in the name of each Service Provider to whom Unrestricted
Shares have been granted, stock certificates representing the total number of
Unrestricted Shares granted to such individual, and shall deliver such
certificates to such Service Provider as soon as reasonably practicable after
the date of grant or on such later date as the Administrator shall determine at
the time of grant.
(c) Prior
to the delivery of any Unrestricted Shares, the Company shall be entitled to
require as a condition of delivery that the Stock Awardee shall pay or make
adequate provision acceptable to the Company for the satisfaction of the
statutory minimum prescribed amount of federal and state income tax and other
withholding obligations of the Company, including, if permitted by the
Administrator, by having the Company withhold from the number of Unrestricted
Shares otherwise deliverable, a number of shares of Common Stock having a Fair
Market Value equal to an amount sufficient to satisfy such tax withholding
obligations.
-11-
14. Stock Appreciation
Rights. A Stock Appreciation Right may be granted by the
Committee either alone, in addition to, or in tandem with other Awards granted
under the Plan. Each Stock Appreciation Right granted under the Plan
shall be subject to the following terms and conditions:
(a) Each
Stock Appreciation Right shall relate to such number of Shares as shall be
determined by the Committee.
(b) The
Award Date (i.e., the
date of grant) of a Stock Appreciation Right shall be the date specified by the
Committee, provided that that date shall not be before the date on which the
Stock Appreciation Right is actually granted. The Award Date of a
Stock Appreciation Right shall not be prior to the date on which the recipient
commences providing services as a Service Provider. The term of each
Stock Appreciation Right shall be determined by the Committee, but shall not
exceed ten years from the date of grant. Each Stock Appreciation
Right shall become exercisable at such time or times and in such amount or
amounts during its term as shall be determined by the
Committee. Unless otherwise specified by the Committee, once a Stock
Appreciation Right becomes exercisable, whether in full or in part, it shall
remain so exercisable until its expiration, forfeiture, termination or
cancellation.
(c) A
Stock Appreciation Right may be exercised, in whole or in part, by giving
written notice to the Committee. As soon as practicable after receipt
of the written notice, the Company shall deliver to the person exercising the
Stock Appreciation Right stock certificates for the Shares to which that person
is entitled under Section 14(d) hereof.
(d) A
Stock Appreciation Right shall be exercisable for Shares only. The
number of Shares issuable upon the exercise of the Stock Appreciation Right
shall be determined by dividing:
(i) the
number of Shares for which the Stock Appreciation Right is exercised multiplied
by the amount of the appreciation per Share (for this purpose, the “appreciation
per Share” shall be the amount by which the Fair Market Value of a Share on the
exercise date exceeds (x) in the case of a Stock Appreciation Right granted in
tandem with an Option, the exercise price or (y) in the case of a Stock
Appreciation Right granted alone without reference to an Option, the Fair Market
Value of a Share on the Award Date of the Stock Appreciation Right);
by
(ii) the
Fair Market Value of a Share on the exercise date.
15. Non-Transferability. Unless
determined otherwise by the Administrator, an Option or Stock Appreciation Right
may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in
any manner other than by will or by the laws of descent or distribution and may
be exercised, during the lifetime of the Optionee, only by the
Optionee. If the Administrator makes an Option or Stock Appreciation
Right transferable, such Option or Stock Appreciation Right shall contain such
additional terms and conditions as the Administrator deems
appropriate. Notwithstanding the foregoing, the Administrator, in its
sole discretion, may provide in the Grant Agreement regarding a given Option
that the Optionee may transfer, without consideration for the transfer, his or
her Nonstatutory Stock Options to members of his or her immediate family, to
trusts for the benefit of such family members, or to partnerships in which such
family members are the only partners, provided that the transferee agrees in
writing with the Company to be bound by all of the terms and conditions of this
Plan and the applicable Option. During the period when Shares of
Restricted Stock and Stock Award Shares are restricted (by virtue of vesting
schedules or otherwise), such Shares may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution.
-12-
16. Adjustments Upon Changes in
Capitalization, Dissolution, Merger or Asset Sale.
(a) Changes in
Capitalization. Subject to any required action by the
shareholders of the Company, the number of Shares of Common Stock covered by
each outstanding Option, Stock Appreciation Right and Stock Award, the number of
Shares of Restricted Stock outstanding and the number of Shares of Common Stock
which have been authorized for issuance under the Plan but as to which no
Options, Stock Appreciation Rights or Stock Awards have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, Stock Appreciation Right or Stock Award, as well as the price per share
of Common Stock covered by each such outstanding Option or Stock Appreciation
Right, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Administrator,
whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of Shares of Common Stock subject
to an Award hereunder. Except as expressly provided herein, the
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of
the Company convertible into sub-shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number or
price of Shares of Common Stock then subject to outstanding Options and Stock
Appreciation Rights.
(b) Corporate
Transactions. If the Company merges or consolidates with
another corporation, whether or not the Company is the surviving corporation, or
if the Company is liquidated or sells or otherwise disposes of substantially all
its assets, or if any “person” (as that term is used in Section 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing greater than 50% of the
combined voting power of the Company’s then outstanding securities (each such
event a “Corporate
Transaction Event”) then (i) after the effective date of such Corporate
Transaction Event, each holder of an outstanding Option or Stock Appreciation
Right shall be entitled, upon exercise of such Option or Stock Appreciation
Right to receive, in lieu of Shares of Common Stock, the number and class or
classes of shares of such stock or other securities or property to which such
holder would have been entitled if, immediately prior to such Corporate
Transaction Event, such holder had been the holder of record of a number of
Shares of Common Stock equal to the number of shares as to which such Option and
Stock Appreciation Right may be exercised; and (ii) the Board may waive any
limitations set forth in or imposed pursuant hereto so that all Options and
Stock Appreciation Rights from and after a date prior to the effective date of
such Corporate Transaction Event, as specified by the Board, shall be
exercisable in full. Notwithstanding anything contained herein to the
contrary, the proposed transaction between the Company and China
Biopharmaceutical Holdings, Inc. shall not constitute a Corporate Transaction
Event.
In the
event of a Corporate Transaction Event, then each outstanding Stock Award shall
be assumed or an equivalent agreement or award substituted by the successor
corporation or a Parent or Subsidiary of the successor
corporation. In the event that the Committee determines that the
successor corporation or a Parent or a Subsidiary of the successor corporation
has refused to assume or substitute an equivalent agreement or award for each
outstanding Stock Award, all vesting periods and conditions under Stock Awards
shall be deemed to have been satisfied. The Board may also, in its
discretion, cause all vesting periods and conditions under Stock Awards to be
deemed to have been satisfied.
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17. Substitute
Options. In the event that the Company, directly or
indirectly, acquires another entity, the Board may authorize the issuance of
stock options (“Substitute Options”)
to the individuals performing services for the acquired entity in substitution
of stock options previously granted to those individuals in connection with
their performance of services for such entity upon such terms and conditions as
the Board shall determine, taking into account the conditions of Code Section
424(a), as from time to time amended or superseded, in the case of a Substitute
Option that is intended to be an Incentive Stock Option. Shares of
capital stock underlying Substitute Stock Options shall not constitute Shares
issued pursuant to the Plan for any purpose.
18. Date of Grant. The
date of grant of an Option, Stock Appreciation Right, Stock Award or
Unrestricted Share shall be, for all purposes, the date on which the
Administrator makes the determination granting such Option, Stock Appreciation
Right, Stock Award or Unrestricted Share, or such other later date as is
determined by the Administrator. Notice of the determination shall be
provided to each grantee within a reasonable time after the date of such
grant.
19. Amendment and Termination of the
Plan.
(a) Amendment and
Termination. The Board may at any time amend, alter, suspend
or terminate the Plan.
(b) Shareholder
Approval. The Company shall obtain shareholder approval of any
Plan amendment to the extent necessary to comply with Applicable
Laws.
(c) Effect of Amendment or
Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any grantee, unless mutually
agreed otherwise between the grantee and the Administrator, which agreement must
be in writing and signed by the grantee and the Company. Termination
of the Plan shall not affect the Administrator’s ability to exercise the powers
granted to it hereunder with respect to Awards granted under the Plan prior to
the date of such termination.
20. Conditions Upon Issuance of
Shares.
(a) Legal
Compliance. Shares shall not be issued in connection with the
grant of any Stock Award or Unrestricted Share or the exercise of any Option or
Stock Appreciation Right unless such grant or the exercise of such Option or
Stock Appreciation Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment
Representations. As a condition to the grant of any Stock
Award or Unrestricted Share or the exercise of any Option or Stock Appreciation
Right, the Company may require the person receiving such Award or exercising
such Option or Stock Appreciation Right to represent and warrant at the time of
any such exercise or grant that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
required.
-14-
(c) Additional
Conditions. The Administrator shall have the authority to
condition the grant of any Award in such other manner that the Administrator
determines to be appropriate, provided that such condition is not inconsistent
with the terms of the Plan.
(d) Trading Policy
Restrictions. Option and or Stock Appreciation Right exercises
and other Awards under the Plan shall be subject to the terms and conditions of
any insider trading policy established by the Company or the
Administrator.
21. Inability to Obtain
Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have
been obtained.
22. Shareholder
Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner
and to the degree required under Applicable Laws. Notwithstanding any
provision in the Plan to the contrary, any exercise of an Option or Stock
Appreciation Right granted before the Company has obtained shareholder approval
of the Plan in accordance with this Section 22 shall be conditioned upon
obtaining such shareholder approval of the Plan in accordance with this Section
22.
23. Withholding; Notice of
Sale. The Company shall be entitled to withhold from any
amounts payable to an Employee or other Service Provider any amounts which the
Company determines, in its discretion, are required to be withheld under any
Applicable Law as a result of any action taken by a holder of an
Award.
24. Governing Law. This
Plan shall be governed by the laws of the State of Delaware, without regard to
conflict of law principles.
-15-
ESCROW
AGREEMENT
THIS
ESCROW AGREEMENT (“Agreement”) is made and entered into as of January 19, 2011,
by and among: NeoStem
Inc., a Delaware corporation (“Parent”); Progenitor Cell Therapy, LLC,
a Delaware limited liability company (the “Company”), Andrew Pecora, as
representative (the “PCT Representative”), of the Members of the Company
identified from time to time on Schedule 1 hereto; and Continental Stock Transfer &
Trust Company, a New York corporation (the “Escrow Agent”).
RECITALS
WHEREAS,
Parent, NBS Acquisition Company, LLC, a Delaware limited liability company and a
wholly-owned subsidiary of Parent (“Subco”), the Company and the PCT
Representative have entered into an Agreement and Plan of Merger dated as of
September 23, 2010 (the “Merger Agreement”), pursuant to which, among other
things, (i) Subco is merging with and into the Company, and (ii) certain stock
issuances are to be made by Parent to the Members (as defined
below). A copy of the Merger Agreement is attached hereto as Exhibit
A;
WHEREAS,
the Merger Agreement contemplates the establishment of an escrow account to
secure certain rights of the Parent Indemnified Parties (as defined in the
Merger Agreement) to indemnification, compensation and reimbursement as provided
in the Merger Agreement; and
WHEREAS,
pursuant to Section 8.5 of the Merger Agreement, Andrew Pecora has been
irrevocably appointed by the Members to serve as the PCT Representative in
connection with all matters under this Agreement and the resolution of all
claims for Damages under the Merger Agreement.
AGREEMENT
The
parties, intending to be legally bound, agree as follows:
Section
1. Defined
Terms.
1.1 Capitalized
terms used and not defined in this Agreement shall have the meanings given to
them in the Merger Agreement.
1.2 As
used in this Agreement, the term “Members” refers to the Persons who were
members, or equity holders, of the Company immediately prior to the Effective
Time or to which the rights under this Agreement have been assigned as set forth
herein. “Escrowed Shares” refers to the 10,600,000 shares of Parent
Common Stock being issued as Stock Consideration under the Merger
Agreement.
Section
2. Escrow and
Indemnification.
2.1 Appointment of Escrow Agent;
Shares and Stock Powers Placed
in Escrow. Continental Stock Transfer & Trust Company is
hereby appointed to serve as Escrow Agent hereunder, and Continental Stock
Transfer & Trust Company hereby agrees to serve as Escrow Agent
hereunder. In accordance with the Merger Agreement, at the Closing,
(a) Parent shall issue certificates for the Escrowed Shares registered in the
name of the Escrow Agent evidencing 10,600,000 shares of Parent Common Stock to
be held in escrow under this Agreement, and shall cause such certificates to be
delivered to the Escrow Agent, and (b) the PCT Representative shall deliver to
the Escrow Agent an “assignment separate from certificate” (“Stock Power”)
endorsed by him in blank. Such endorsement by the PCT Representative
shall have been guaranteed by a national bank or an NYSE-Amex member
firm.
2.2 Escrow Account. The
Escrowed Shares being held in escrow pursuant to this Agreement, together with
any distributions on the Escrowed Shares, shall collectively constitute an
escrow fund securing the indemnification rights of Parent and the other Parent
Indemnified Parties under the Merger Agreement. The Escrow Agent
agrees to accept delivery of the Escrowed Shares and to hold the Escrowed Shares
in a separate escrow account (such account, the “Escrow Account”), subject to
the terms and conditions of this Agreement and the Merger
Agreement.
2.3 Voting of Escrow
Shares. The Escrow Agent, as record owner of the Escrowed
Shares, shall exercise all voting rights with respect to such Escrowed Shares in
accordance with Section 3.5 of the Merger Agreement, upon receipt of written
instructions from the Parent. The Escrow Agent is not obligated to
distribute to the Members or to the PCT Representative any proxy materials or
other documents relating to the Escrowed Shares received by the Escrow Agent
from Parent.
2.4 Reports. Upon the
request of either Parent or the PCT Representative, the Escrow Agent shall
provide a statement to the requesting party that describes any deposit,
distribution or investment activity or deductions with respect to shares held in
the Escrow Account in addition to quarterly account statements from the Escrow
Agent.
2.5 Dividends,
Etc. Parent and the PCT Representative, on behalf of each of
the Members, agree that any shares of Parent Common Stock or other property
(including ordinary cash dividends) distributable or issuable (whether by way of
dividend, stock split or otherwise) in respect of or in exchange for any
Escrowed Shares (including pursuant to or as a part of a merger, consolidation,
acquisition of property or stock, reorganization or liquidation involving
Parent) shall not be distributed or issued to the beneficial owners of such
Escrowed Shares, but rather shall be distributed or issued to and held by the
Escrow Agent in the Escrow Account. Any securities or other property
received by the Escrow Agent in respect of any Escrowed Shares held in escrow as
a result of any stock split or combination of shares of Parent Common Stock,
payment of a stock dividend or other stock distribution in or on shares of
Parent Common Stock, or change of Parent Common Stock into any other securities
pursuant to or as a part of a merger, consolidation, acquisition of property or
stock, reorganization or liquidation involving Parent, or otherwise, shall be
held by the Escrow Agent as part of the Escrow Account.
2.6 Transferability. Except
as expressly provided for herein or by operation of law, the interests of the
Members in the Escrow Account shall not be assignable or
transferable.
-2-
2.7 Trust Fund. The
Escrow Account shall be held as trust funds and shall not be subject to any
lien, attachment, trustee process or any other judicial process of any creditor
of Escrow Agent, any Member or Parent, respectively, or of any party
hereto. The Escrow Agent shall hold and safeguard the Escrow Account
until the Termination Date (as defined in Section 6) or earlier distribution in
accordance with this Agreement.
Section
3. Release of Escrow
Shares.
3.1 General. (X) Within
ten (10) calendar Days after receiving either (a) written instructions from the
Parent (a “Parent Notice”) which have not been objected to by the PCT
Representative within seven (7) calendar days after the later of the PCT
Representative’s receipt of the Parent Notice or the Escrow Agent’s receipt of
such Parent Notice, (b) joint written instructions from Parent and the PCT
Representative (“Joint Instructions”), (c) a decision and/or award from the
Arbitrator (an “Arbitration Award”) or (d) an order issued by a court of
competent jurisdiction (a “Court Order”) relating to the release of any Escrowed
Shares from the Escrow Account or (Y) in accordance with Section 3.4 hereof, the
Escrow Agent shall release or cause to be released any such Escrowed Shares and
any other amounts from the Escrow Account, in the amounts, to the Persons and in
the manner set forth in such Parent Notice, Joint Instructions, Arbitration
Award, Court Order or as provided in Section 3.4. If a Parent Notice
is sent under Section 8.4 of the Merger Agreement and such Parent Notice is not
disputed as provided in Section 8.4 within 7 calendar days, the Escrow Agent
shall make the distribution requested by the Parent Notice without action by the
PCT Representative.
3.2 Potential Tax
Liability. Upon receipt of (i) a certification from a Taxable
Member pursuant to Section 8.4(a)(i) of the Merger Agreement, and
(ii) joint instructions from the Parent and the PCT Representative, the Escrow
Agent shall release shares to a Taxable Member in accordance with the
certification of the Taxable Member and such joint instructions.
3.3 Pro Rata
Distributions. For purposes of this Agreement, (i) all
distributions (except distributions to the Taxable Members as such pursuant to
Section 3.2 above and Section 8.4(i) of the Merger Agreement) to the Members
shall be pro rata distributions made based on the percentages set forth on
Schedule 1, as may be amended from time to time pursuant to Section 9.8 of this
Agreement, except as follows:
(1) the
Escrow Agent will maintain sub-accounts, referred to as the Taxable Account and
the Balance Account, as provided in Section 8.4 of the Merger Agreement, until
the first anniversary of the date hereof. The distributions at the
end of the first year pursuant to Section 8.4(a)(ii) shall be made to the
Taxable Members from the Taxable Account and to the Members other than the
Taxable Members from the Balance Account. The Parent and the PCT
Representative shall provide the Escrow Agent with joint instructions with
respect to the amounts to be distributed to each Member after the first
anniversary of the Closing Date.
(2) no
fractional shares shall be issued, and all amounts released from escrow and
distributed to the Members shall be rounded up or down pursuant to Section
3.4(c) of the Merger Agreement.
-3-
The
Company and the PCT Representative represent and warrant that Schedule 1 (the
“Percentage Certifications”) accurately reflects each Member’s percentage
membership interest in the Company immediately prior to the consummation of the
Merger.
3.4 Release of the Escrowed
Shares. Within 10 Business Days following the two year
anniversary of the Closing Date, if there are no claims for Damages against the
Escrow Account that have not been finally resolved and paid, the Escrow Agent
shall deliver to the Members pro rata in accordance with the Percentage
Certification the balance of shares of Parent Common Stock and other property
held in the Escrow Account at such time. If, on the Termination Date
there are claims for Damages against the Escrow Account that have not been
finally resolved, then, within 10 Business Days of the Termination Date, the
Escrow Agent shall deliver to the Members the excess, if any, by which the value
of the amounts held in the Escrow Account exceed an amount equal to 120% of the
amount of any claims for Damages against the Escrow Account that have not been
finally resolved and paid at such time. The Parent and the PCT
Representative shall provide the Escrow Agent with joint instructions with
respect to the amounts to be distributed to each Member after the second
anniversary of the Closing Date (and thereafter if shares remain in the Escrow
Account after the second anniversary with respect to unresolved claims for
Damages at such date). Thereafter, final distributions of the Escrow
Account shall be made in accordance with Section 3.1(X)(a), (b), (c) or (d), as
applicable.
3.5 Distributions. Whenever
a distribution of a number of shares of Parent Common Stock is to be made
pursuant to the terms of this Agreement, the Escrow Agent shall requisition the
appropriate number of shares from Parent’s stock transfer agent, delivering to
the transfer agent the appropriate stock certificates accompanied by the
respective Stock Powers, together with the specific instructions, as
appropriate. Within 5 Business Days prior to the date the Escrow
Agent is required to make a distribution of shares of Parent Common Stock or
other property (including ordinary cash dividends) to the Members pursuant to
the terms of this Agreement, the Escrow Agent shall provide the PCT
Representative and the Parent with a notice specifying that a distribution will
be made and requesting that the PCT Representative update the then current
Schedule 1 to this Agreement. The Escrow Agent shall make the
corresponding distributions to the Persons listed on such updated Schedule 1 in
accordance with the terms hereof, to their respective addresses as set forth
therein. Notwithstanding anything to the contrary set forth herein,
the Escrow Agent shall not be obligated to make any distribution under this
Agreement to the Members unless it has received from the PCT Representatives an
updated Schedule 1 to this Agreement as provided herein. Any
distributions to Parent pursuant to the terms of this Agreement shall be made to
the address set forth in Schedule 2 hereto.
3.6 Disputes. All
disputes, claims, or controversies arising out of or relating to Section 3 of
this Agreement that are not resolved by mutual agreement between Parent and the
PCT Representative shall be resolved solely and exclusively as set
forth in Section 8.4 of the Merger Agreement by the PCT Representative and the
Parent.
-4-
Section
4. Fees and
Expenses.
The
Escrow Agent shall be entitled to receive, from time to time, fees in accordance
with Schedule 3. In accordance with Schedule 3, the Escrow Agent will
also be entitled to reimbursement for reasonable and documented out-of-pocket
expenses incurred by the Escrow Agent in the performance of its duties hereunder
and the execution and delivery of this Agreement. All such fees and
expenses shall be paid by Parent.
Section
5. Limitation of Escrow
Agent’s Liability.
5.1 The
Escrow Agent undertakes to perform such duties as are specifically set forth in
this Agreement only and shall have no duty under any other agreement or
document, and no implied covenants or obligations shall be read into this
Agreement against the Escrow Agent. The Escrow Agent shall incur no
liability with respect to any action taken by it or for any inaction on its part
in reliance upon any notice, direction, instruction, consent, statement or other
document believed by it in good faith to be genuine and duly authorized, nor for
any other action or inaction except for its own gross negligence or willful
misconduct. In all questions arising under this Agreement, the Escrow
Agent may rely on the advice of counsel, and for anything done, omitted or
suffered in good faith by the Escrow Agent based upon such advice the Escrow
Agent shall not be liable to anyone. In no event shall the Escrow
Agent be liable for incidental, punitive or consequential damages.
5.2 Parent
and the PCT Representative, acting on behalf of the Members hereby agree to
indemnify the Escrow Agent and its officers, directors, employees and agents
for, and hold it and them harmless against, any loss, liability or expense
incurred without gross negligence or willful misconduct on the part of Escrow
Agent, arising out of or in connection with the Escrow Agent’s carrying out its
duties hereunder. This right of indemnification shall survive the
termination of this Agreement and the resignation of the Escrow
Agent.
Section
6. Termination.
This
Agreement shall terminate upon the release by the Escrow Agent of the final
amounts held in the Escrow Account in accordance with Section 3 (the date of
such release being referred to as the “Termination Date”).
Section
7. Successor Escrow
Agent.
In the
event the Escrow Agent becomes unavailable or unwilling to continue as escrow
agent under this Agreement, the Escrow Agent may resign and be discharged from
its duties and obligations hereunder by giving its written resignation to the
parties to this Agreement. Such resignation shall take effect not
less than 30 days after it is given to all the other parties
hereto. In such event, Parent may appoint a successor Escrow Agent
(acceptable to the PCT Representative, acting reasonably). If Parent
fails to appoint a successor Escrow Agent within 15 days after receiving the
Escrow Agent’s written resignation, the Escrow Agent shall have the right to
apply to a court of competent jurisdiction for the appointment of a successor
Escrow Agent. The successor Escrow Agent shall execute and deliver to
the Escrow Agent an instrument accepting such appointment, and the successor
Escrow Agent shall, without further acts, be vested with all the estates,
property rights, powers and duties of the predecessor Escrow Agent as if
originally named as Escrow Agent herein. The Escrow Agent shall act
in accordance with written instructions from Parent and the PCT
Representative as to the transfer of the Escrow Accounts to a
successor Escrow Agent.
-5-
Section
8. PCT
Representative.
8.1 Unless
and until Parent and the Escrow Agent shall have received written notice of the
appointment of a successor PCT Representative, Parent and the Escrow Agent shall
be entitled to rely on, and shall be fully protected in relying on, the power
and authority of the PCT Representative to act on behalf of the
Members.
Section
9. Miscellaneous.
9.1 Attorneys’ Fees. In
any action at law or suit in equity to enforce or interpret this Agreement or
the rights of any of the parties hereunder, the prevailing party in such action
or suit shall be entitled to receive a reasonable sum for its attorneys’ fees
and all other reasonable costs and expenses incurred in such action or
suit.
9.2 Notices. Any notice
or other communication required or permitted to be delivered to any party under
this Agreement shall be in writing and shall be deemed properly delivered, given
and received when delivered (by hand, by registered mail, by courier or express
delivery service or by facsimile) to the address or facsimile telephone number
set forth beneath the name of such party below (or to such other address or
facsimile telephone number as such party shall have specified in a written
notice given to the other parties hereto):
if to Parent:
NeoStem,
Inc.
Suite
450
420
Lexington Avenue
New York,
NY 10170
Attention: Catherine
M. Vaczy, Esq.
Facsimile:
(646) 607-4672
with a
copy, which shall not constitute notice, to:
Lowenstein
Sandler PC
65
Livingston Avenue
Roseland,
NJ 07068
Attention: Alan
Wovsaniker, Esq.
Facsimile:
(973) 597-2565
if
to the PCT Representative :
Dr.
Andrew L. Pecora
Progenitor
Cell Therapy, LLC
4 Pearl
Court, Suite C
Allendale,
NJ 07401
Facsimile: (201)
883-1409
-6-
with a
copy, which shall not constitute notice, to:
Epstein
Becker & Green, P.C.
1227 25th
Street, NW
Suite
700
Washington,
DC 20037-1156
Attention: Robert
D. Reif, Esq.
Facsimile:
(202) 861-3529
if
to the Escrow Agent:
Continental
Stock Transfer & Trust Company
17
Battery Place
New York,
NY 10004
Attention: John
W. Comer, Jr.
Facsimile:
(212) 616-7615
Notwithstanding
the foregoing, notices addressed to the Escrow Agent shall be effective only
upon receipt. If any notice or other document is required to be
delivered to the Escrow Agent and any other Person, the Escrow Agent may assume
without inquiry that notice or other document was received by such other Person
on the date on which it was received by the Escrow Agent.
9.3 Headings. The
bold-faced headings contained in this Agreement are for convenience of reference
only, shall not be deemed to be a part of this Agreement and shall not be
referred to in connection with the construction or interpretation of this
Agreement.
9.4 Counterparts and Exchanges by
Facsimile or Other Electronic Transmission. This Agreement may
be executed in several counterparts, each of which shall constitute an original
and all of which, when taken together, shall constitute one
agreement. The exchange of a fully executed Agreement (in
counterparts or otherwise) by facsimile or other means of electronic
transmission shall be sufficient to bind the parties to the terms and conditions
of this Agreement.
9.5 Applicable Law;
Jurisdiction. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof. Subject to Section 3.5 of this Agreement, in any action
between the parties arising out of or relating to this Agreement or any of the
transactions contemplated by this Agreement: (a) each of the parties irrevocably
and unconditionally consents and submits to the non-exclusive jurisdiction and
venue of the state and federal courts located in the State of New York; (b) if
any such action is commenced in a state court, then, subject to applicable law,
no party shall object to the removal of such action to any federal court located
in the State of New York; and (c) each of the parties irrevocably waives the
right to trial by jury.
-7-
9.6 Successors and
Assigns. This Agreement shall be binding upon and shall inure
to the benefit of each of the parties hereto and each of their respective
permitted successors and assigns, if any. No director indirect
interest in the Escrow Account or the shares of Parent Common Stock held in the
Escrow Account may be sold, assigned, transferred or pledged except by operation
of law.
9.7 Waiver. No failure
on the part of any Person to exercise any power, right, privilege or remedy
under this Agreement, and no delay on the part of any Person in exercising any
power, right, privilege or remedy under this Agreement, shall operate as a
waiver of such power, right, privilege or remedy; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude any other
or further exercise thereof or of any other power, right, privilege or
remedy. No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
9.8 Amendment. This
Agreement may not be amended, modified, altered or supplemented other than by
means of a written instrument duly executed and delivered on behalf of Parent,
the PCT Representative and the Escrow Agent; provided, however, that any
amendment executed and delivered by the PCT Representative shall be deemed
to have been approved by and duly executed and delivered by all of the
Members.
9.9 Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties hereto agree that the court making such determination
shall have the power to limit the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified. In the event such
court does not exercise the power granted to it in the prior sentence, the
parties hereto agree to replace such invalid or unenforceable term or provision
with a valid and enforceable term or provision that will achieve, to the extent
possible, the economic, business and other purposes of such invalid or
unenforceable term.
9.10 Parties in
Interest. Except as expressly provided herein, none of the
provisions of this Agreement, express or implied, is intended to provide any
rights or remedies to any Person other than the parties hereto and their
respective successors and assigns, if any.
9.11 Entire
Agreement. This Agreement and the Merger Agreement set forth
the entire understanding of the parties hereto relating to the subject matter
hereof and supersede all prior agreements and understandings among or between
any of the parties relating to the subject matter hereof.
-8-
9.12 Waiver of Jury
Trial. Each of the parties hereto hereby irrevocably waives
any and all right to trial by jury in any action arising out of or related to
this Agreement or the transactions contemplated hereby.
9.13 Cooperation. The
PCT Representative on behalf of the Members and Parent agree to cooperate fully
with each other and the Escrow Agent and to execute and deliver such further
documents, certificates, agreements, stock powers and instruments and to take
such other actions as may be reasonably requested by Parent, the PCT
Representative or the Escrow Agent to evidence or reflect the transactions
contemplated by this Agreement and to carry out the intent and purposes of this
Agreement.
9.14 Construction.
(a)
For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neutral genders; the feminine gender shall
include the masculine and neutral genders; and the neutral gender shall include
masculine and feminine genders.
(b) The
parties hereto agree that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be applied
in the construction or interpretation of this Agreement.
(c) As
used in this Agreement, the words “include” and “including,” and variations
thereof, shall not be deemed to be terms of limitation, but rather shall be
deemed to be followed by the words “without limitation.”
(d) Except
as otherwise indicated, all references in this Agreement to “Sections”,
“Schedules” and “Exhibits” are intended to refer to Sections of this Agreement,
Schedules to this Agreement and Exhibits to this Agreement.
[Remainder
of page intentionally left blank]
-9-
IN WITNESS WHEREOF, the
parties have duly caused this Agreement to be executed as of the day and year
first above written.
|
NEOSTEM, INC., a
Delaware corporation
|
||
|
By:
|
/s/
Robin L. Smith
|
|
|
Name:
|
Robin
L. Smith
|
|
|
Title:
|
Chief
Executive Officer
|
|
|
PROGENITOR
CELL THERAPY, INC.
|
||
|
By:
|
/s/
George S. Goldberger
|
|
|
Name:
|
George
S. Goldberger
|
|
|
Title:
|
Chief
Business & Financial Officer, Secretary
|
|
|
/s/
Andrew Pecora
|
||
|
Andrew
Pecora, as PCT Representative
|
||
|
CONTINENTAL
STOCK TRANSFER &
TRUST COMPANY, a New
York corporation
|
||
|
By:
|
/s/
John W. Comer, Jr.
|
|
|
Name:
|
John
W. Comer, Jr.
|
|
|
Title:
|
Vice
President & Senior
Account Manager
|
|
[Escrow
Agreement Signature Page]
-10-
SCHEDULE
1
MEMBERS
Percentage
Certification Attached.
-11-
SCHEDULE
2
ESCROWED
SHARES
|
Number
of Escrowed Shares:
|
10,600,000
|
|
Address
for distributions to Parent:
|
NeoStem
Inc.
|
|
Suite
450
|
|
|
420
Lexington Avenue
|
|
|
New
York, New York 10170
|
|
|
Attention: Catherine
M. Vaczy, Esq.
|
-12-
SCHEDULE
3
ESCROW
AGENT’S FEES AND EXPENSES
|
Monthly
Fee for holding securities and/or cash:
|
$200
per month
|
|
Additional
out of pocket expenses including postage and stationary:
|
Additional
|
|
Disbursement
fees at termination:
|
Additional
|
-13-
EXHIBIT
A
MERGER
AGREEMENT
-14-
NeoStem
Acquires Progenitor Cell Therapy
Becomes
single source for collection, storage, manufacturing, therapeutic development
and transportation of cells for cell
based
medicine and regenerative science globally
NEW YORK
and ALLENDALE, N.J., Jan. 20, 2011 /PRNewswire/ -- NeoStem, Inc. (NYSE Amex:
NBS) and Progenitor Cell Therapy LLC announced today the closing of their
previously announced merger transaction. NeoStem is an international
biopharmaceutical company with a 51% ownership interest in a profitable Chinese
generic pharmaceutical manufacturing company and has stem cell operations in the
U.S. and China, while Progenitor Cell Therapy, LLC is a privately held cell
therapy company with operations on the east and west coast of the U.S. serving
the cell therapy community with cGMP state-of-the art cell therapy manufacturing
facilities, and processing and storage facilities for stem cells collected from
the umbilical cord at birth.
PCT's
revenue generating business will complement NeoStem's growing adult stem cell
operations and PCT's management adds to NeoStem the over 100 years' collective
experience of the PCT management team in the business and science of cell
therapy and its development. Since its inception in 1999, PCT has served over
100 clients from around the world and has experience with more than 20 different
cell based therapeutics. PCT has performed over 30,000 cell therapy procedures
in its cell therapy manufacturing facilities, and processed and stored over
18,000 cell therapy products (including approximately 7,000 umbilical cord blood
units, 10,000 blood and marrow derived stem cell units and 1,000 dendritic cell
units) and arranged the logistics and transportation for over 14,000 cell
therapy products for clinical use by over 5,000 patients.
Dr. Robin
Smith, MD, MBA, CEO of NeoStem said, "The merger with PCT is a significant step
toward NeoStem's goal of becoming a leader in the fast-growing Stem Cell
Industry, generating revenues, and developing and licensing therapies to be used
in the United States and abroad. We have purchased revenues and expertise, and
reduced NeoStem's prior expense line as PCT was a vendor to NeoStem. We are
developing a 'one-stop-shop' global network of cell therapy core competencies by
adding cell therapy manufacturing and storage facilities as well as integrated
regulatory compliant distribution capacity for the evolving cell therapy
industry. The addition of PCT will allow NeoStem to focus on growing the cord
blood and adult stem cell banking, cellular manufacturing and therapeutic
business, as well as expanding our businesses in Asia and other countries, while
continuing to develop our intellectual property and acquire new
technology."
Dr.
Andrew Pecora, PCT's CEO, will continue his involvement with the combined
companies by shifting his role from PCT's Chief Executive Office to Chief
Medical Officer, and has been invited and has agreed to join the NeoStem Board
of Directors. Dr. Pecora said, "Our merger with NeoStem will provide the rapidly
developing cell therapy industry with a dynamic global development and
manufacturing platform that can accelerate the pace of commercialization of
future cell therapeutics."
LifeTech
Capital, an investment banking firm focused on the life science industry,
advised NeoStem by providing a valuation analysis of the transaction. LifeTech
Capital is a division of Aurora Capital LLC.
About
NeoStem, Inc.
NeoStem,
Inc. is an international biopharmaceutical company with adult stem cell
operations in the U.S., a network of adult stem cell therapeutic providers in
China as well as a 51% ownership interest in a profitable Chinese generic
pharmaceutical manufacturing company. NeoStem is focused on accelerating the
development of proprietary cellular therapies and becoming a single source for
collection, storage, manufacturing, therapeutic development and transportation
of cells for cell based medicine and regenerative science globally. The Company
also has licensed various cellular therapy technologies, including worldwide
exclusive licenses to a wound healing technology and to VSEL™
Technology which uses very small embryonic-like stem cells, which are adult stem
cells that have been shown to have several physical characteristics that are
generally found in embryonic stem cells, and a T-cell regulatory technology
through the acquisition of Progenitor Cell Therapy, LLC.
For more
information, please visit: http://www.neostem.com.
Forward-Looking
Statements
This
press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
reflect management's current expectations, as of the date of this press release,
and involve certain risks and uncertainties. Forward looking statements include
statements herein with respect to the ability of PCT's business to complement
NeoStem's adult stem cell operations and successful execution of the Company's
strategy, as well as other advances in the Company's business, about which no
assurances can be given. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
various factors. Factors that could cause future results to materially differ
from the recent results or those projected in forward-looking statements include
the "Risk Factors" described in the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March 31, 2010, its Form S-4/A
filed with the Securities and Exchange Commission on December 3, 2010 as well as
other periodic filings made with the Securities and Exchange Commission. The
Company's further development is highly dependent on future medical and research
developments and market acceptance, which is outside its control. NeoStem may
experience difficulties in integrating PCT's business and could fail to realize
potential benefits of the merger. Acquisitions may entail numerous risks for
NeoStem, including difficulties in assimilating acquired operations,
technologies or products, including the loss of key employees from acquired
businesses.
For more
information, please contact:
NeoStem,
Inc.
Robin
Smith, CEO
Phone:
+1-212-584-4174
Email:
rsmith@neostem.com
Web:
http://www.neostem.com
CONTACT:
NeoStem, Inc.: Robin Smith, CEO, +1-212-584-4174, rsmith@neostem.com