WARRANT CLARIFICATION
AGREEMENT
This Warrant Clarification Agreement (this
“Agreement”), dated as of __________, 2008, to the
Restated Warrant Agreement, made as of August 14, 2007 (the
“Warrant Agreement”) is made and entered into by and
between NeoStem, Inc., a Delaware corporation with offices at 420
Lexington Avenue, New York, New York 10170 (“Company”)
and Continental Stock Transfer & Trust Company, a New York
corporation, with offices at 17 Battery Place, New York, New York
10004 (“Warrant Agent”).
WHEREAS , Section 3.3.2 of the Warrant Agreement
provides that Company shall not be obligated to deliver any
securities pursuant to the exercise of a Warrant unless a
registration statement under the Securities Act of 1933, as amended
(‘‘Securities Act’’), with respect to the
Common Stock is effective.
WHEREAS , the Warrant Agreement does not contain any
provisions granting registered holders of Warrants the right to
receive any cash or other consideration or otherwise “net
cash settle” the Warrants in the event securities cannot be
issued upon exercise of the Warrants.
WHEREAS , in furtherance of the foregoing, the
Company’s final prospectus, dated July 16, 2007, indicated
that (i) for a warrant holder to be able to exercise their warrant,
the shares of common stock underlying the warrant must be covered
by an effective and current registration statement and qualify or
be exempt under the securities laws of the state or other
jurisdiction in which the holder lives, (ii) the Company cannot
assure prospective warrant holders that it will continue to
maintain a current registration statement relating to the shares of
common stock underlying the warrants or that an exemption from
registration or qualification will be available throughout their
term, and (iii) this may have an adverse effect on demand for the
warrants and the prices that could be obtained from reselling
them.
WHEREAS , as a result of certain questions that have
arisen regarding the accounting treatment applicable to the
warrants, the parties hereto deem it necessary and desirable to
amend the Warrant Agreement to clarify and confirm that the
registered holders do not have the right to receive a net cash
settlement in the event the Company does not maintain a current
prospectus relating to the common stock issuabl
