EXHIBIT 10.2
FUNDING AGREEMENT
THIS FUNDING AGREEMENT (this “
Agreement ”) is made as of July 1, 2009, by and
among NeoStem, Inc., a Delaware corporation (“
NeoStem ”), RimAsia Capital Partners L.P., a
limited partnership organized under the laws of the Cayman Islands
(“ RimAsia ”), China Biopharmaceuticals
Holdings, a Delaware corporation (“ CBH
”), and China Biopharmaceutical Corp., a British Virgin
Islands corporation (“ CBC
”). Each of the foregoing parties is sometimes
hereinafter referred to as a “ Party ”;
collectively, the “ Parties ”; references
to amounts in $ herein are to such amounts in United States
dollars.
RECITALS:
A. Based
upon a Conditional Loan Conversion Agreement between RimAsia and
CBH dated as of November 16, 2007, RimAsia holds certain preferred
shares and modified warrants to purchase common shares of
CBH.
B. RimAsia
also currently holds 1,000,000 shares of common stock, warrants to
purchase 5,000,000 shares of common stock, 400,000 shares of Series
D Convertible Redeemable Preferred Stock of NeoStem.
C. As
of November 2, 2008, NeoStem entered into an Agreement and Plan of
Merger (the “ Merger Agreement ”) with
CBH and CBC, which provides for the merger of CBH with a
wholly-owned subsidiary of NeoStem (the “
Merger ”). Pursuant to the Merger
Agreement, RimAsia is entitled to receive in connection with the
closing of the Merger, (a) 5,383,009 shares of NeoStem common
stock, (b) 6,977,512 shares of NeoStem Series C Convertible
Preferred Stock, each with a liquidation preference of $1.125 and
convertible to shares of NeoStem common stock at $.90 and (c) Class
B warrants to purchase 2,400,000 shares of NeoStem common stock at
$.80 per share (the “ Class B Warrants
”).
C. In
anticipation of the Merger, RimAsia has incurred as of the date of
this Agreement substantial expenses and costs in connection with
the business activities of NeoStem and CBH. These
expenses and costs have included expenses of NeoStem, CBH and
RimAsia internal costs which unreimbursed expenses and advances
totaled approximately $1,024,800 as of June 15, 2009 (the “
Current Unreimbursed Expenses
”). Separately, a combined $250,000 advance (the
“ SRC Fees ”) towards the $150,000
initial capitalization of China StemCell Medical Holding Ltd.
(“ CSCMH ”) and the payment of $100,000
audit fees for Shandong New Medicine Research Institute of
Integrated Traditional and Western Medicine Limited Liability
Company (“ SRC ”) have been
made by RimAsia.
D. In
connection with RimAsia’s advancement of certain fees
included in the Current Unreimbursed Expenses to CBH, RimAsia and
CBH entered into an Acknowledgement of Advance Payment as of
February 3, 2009 (the “ Prior
Acknowledgement ”), pursuant to which RimAsia
would be entitled to deduct such amounts from a $300,000 payment
that CBH was to receive at the closing of the Merger.
E. At
the request of NeoStem and CBH, subject to the terms and conditions
of this Agreement, RimAsia agrees to provide additional funding
(the “ Additional Funding ”) to cover
business activities leading to the closing of the Merger for the
benefit of NeoStem and CBH, subject to a total funding cap of
$1,600,000 that includes the Current Unreimbursed Expenses,
provided that if the SRC Fees are not agreed to be satisfied by
CSCMH by the issuance to RimAsia by CSCMH of not less than 150,000
shares of NeoStem Common Stock then the amount of the SRC Fees will
be included in the Additional Funding.
F. In
consideration of RimAsia’s funding, NeoStem and CBH agree
that RimAsia shall receive, at the closing of the Merger,
additional NeoStem securities, subject to the terms and conditions
of this Agreement and as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises
and the mutual promises herein made, and in consideration of the
representations, warranties and covenants herein contained,
intending to be legally bound, the Parties agree as
follows:
1. Additional
Funding .
1.1 Additional
Funding . Pursuant to the terms and subject to the
conditions of this Agreement, from the date of this Agreement
through the closing of the Merger (the “ Additional
Funding Period ”), RimAsia shall provide Additional
Funding to cover business activities leading to the closing of the
Merger for the benefit of NeoStem and CBH, subject to a total
funding cap of $1,600,000 (the “ Funding Cap
”) and subject to the mutual agreement of NeoStem and
RimAsia, that includes the Current Unreimbursed Expenses and
Additional Funding (which Additional Funding shall include the SRC
Fees unless separately provided for as described in Recital
E.).
1.2 Third-Party
Payments . If at any time during the Additional
Funding Period either CBH or NeoStem wishes to have a payment made
on its behalf to its outside legal counsel, auditor or accountant
or to any other third party with respect to payment of expenses in
connection with the Merger or transactions incidental thereto, CBH
or NeoStem, as the case may be, shall make a funding request to
RimAsia through electronic mail, and in the case of CBH copying
NeoStem, and RimAsia shall send the requested payment directly to
such third party accordingly so long as the Funding Cap has not
been reached, and provided that RimAsia deems such payment request
to be reasonable, and in the case of CBH, NeoStem and RimAsia agree
to the making of such payment. RimAsia will also be able to make,
as part of the Additional Funding, such payments to other
third-party service providers as RimAsia deems re
