CONSULTING AGREEMENT
Exhibit
4.2
This
Consulting Agreement (the "Agreement") is made and entered into to be effective
as of January 1, 2008 (the "Effective Date") by and NeoStem located at 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX (the "Company") and JFS Investments Inc. and
Assigns (''the Consultant").
WHEREAS:
A.
The
Consultant has the business and financial expertise and experience to assist
the
Company, and
B.
The
Consultant is offering its services as a consultant to the Company;
and
C.
The
Company desires to retain the Consultant as an independent consultant and to
memorialize the Consultant's work for the Company by entering into this written
Agreement.
D.
The
parties agree that this Agreement reflects the entire understanding and
agreements
between
the parties hereto.
NOW,
THEREFORE, in
consideration of the premises and promises, warranties and representations
herein contained, it is agreed as follows:
1.
DUTIES.
The
Company hereby engages the consultant and the Consultant hereby accepts
engagement as a consultant. It is understood and agreed, and it is the express
intention of the parties to this Agreement, that the Consultant is an
independent contractor, and not an employee or agent of the Company for any
purpose whatsoever. Consultant shall perform all duties and obligations as
described on Exhibit
A
hereto
and agrees to be available at such times as may be scheduled by the Company
and
as otherwise reasonably requested by the Company. It is understood, however,
that the Consultant will maintain Consultant's own business in addition to
providing services to the Company. The Consultant agrees to promptly perform
all
services required of the Consultant hereunder in an efficient, professional,
trustworthy and businesslike manner. A description of the Consultant's services
are attached hereto as Exhibit
A
and
incorporated by reference herein. In such capacity, Consultant will utilize
only
materials, reports, financial information or other documentation that is
approved in writing in advance by the Company.
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2.
CONSULTING
SERVICES COMPENSATION; REGISTRATION RIGHTS.
(a)
Compensation. Subject
to paragraph 6, the Consultant will be retained as a consultant and independent
contractor for the Company. For services rendered hereunder, the Consultant
shall receive (i) 50,000 shares (the “Shares”) of restricted Company common
stock (the “Common Stock”); and (ii) two warrants (the “Warrants”) to purchase
an aggregate of 120,000 shares of restricted Common Stock (the "Warrant Shares")
on the terms set forth in the Warrants attached hereto as Exhibit
B
which
are incorporated herein. The first Warrant grants the Consultant the right
to
purchase up to 20,000 shares of Common Stock at a per share purchase price
equal
to $2.00; and the second Warrant grants the Consultant the right to purchase
up
to 100,000 shares of Common Stock at a per share purchase price equal to $5.00,
all as set forth in the Warrants. The Warrants shall vest as to one-twelfth
of
the Warrant Shares on the last day of each monthly anniversary during the Term
of this Agreement and in the event this Agreement is terminated before the
expiration of the Term (as set forth in Section 6 hereof) then the Warrants
shall remain vested and exercisable with respect to Warrant Shares for which
they were vested and exercisable as of the date of termination and the Warrants
shall terminate immediately with respect to any remaining Warrant Shares.
Subject to the foregoing, the Warrants shall have a term of five years from
the
Effective Date. The two Warrants shall be identical except for the number of
Warrant Shares to which they relate and their per share purchase price. The
Shares and the Warrant Shares shall have piggyback registration rights as set
forth below. All applicable federal, state and local taxes with respect to
the
Warrants, the Shares and the Warrant Shares shall be the sole responsibility
of
the Consultant. This Consulting Agreement may be terminated prior to expiration
of its Term as described in Section 6 below. Any expenses incurred by Consultant
hereunder shall be borne by Consultant unless otherwise agreed to by the parties
in advance. The issuance of the Shares, the Warrants and the Warrant Shares
shall be subject to the prior approval of the American Stock Exchange.
(b)
Registration
Rights.
If, at
any time after the date hereof the Company shall determine to prepare and file
with the Securities and Exchange Commission (the “SEC”) a registration statement
relating to an offering for its own account or the account of others under
the
Securities Act of 1933, as amended (the “Securities Act”) or any of its equity
securities (a "Registration
Statement"),
other
than a pre-effective or post-effective amendment to a current registration
statement or other than on Form S-4 or Form S-8 (each as promulgated under
the
Securities Act) or their then equivalents relating to equity securities to
be
issued solely in connection with any acquisition of any entity or business
or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall provide to Consultant with respect to
the
Shares and the Warrant Shares (hereinafter, the “Registrable
Securities”)
the
opportunity to have such Registrable Securities included in such Registration
Statement; provided,
that
the Company shall only be required to provide such opportunity until the
earliest of (i) the date all of such Registrable Securities have been sold
pursuant to a Registration Statement, (ii) the date all of such Registrable
Securities have otherwise been transferred to persons who may trade such shares
without restriction under the Securities Act, and the Company has delivered
a
new certificate or other evidence of ownership for such securities not bearing
a
restrictive legend, and (iii) the date all of such Registrable Securities may
be
sold without volume or manner of sale limitations pursuant to Rule 144(k) or
any
similar provision then in effect under the Securities Act in the opinion of
counsel to the Company (the "Effectiveness
Period").
In
connection with any registration:
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(i)
Consultant may not participate in any registration hereunder which is
underwritten unless Consultant (A) agrees to sell its securities on the basis
provided in any underwriting arrangements approved by the Company and (B) with
respect to any registration, timely completes and executes all questionnaires
and other customary documents.
(ii)
All
fees, disbursements and out-of-pocket expenses and costs incurred by the Company
in connection with the preparation and filing of the Registration Statement
shall be borne by the Company. Consultant shall bear any reasonable cost of
underwriting and/or brokerage discounts, fees, and commissions, if any,
applicable to the Registrable Securities being registered and sold by an
underwriter for the Consultant and the fees and expenses of the Consultant’s
counsel. The Company shall use its reasonable best efforts to qualify any of
the
Registrable Securities for sale in such states as the Consultant reasonably
designates provided that the Company shall not be required to qualify in any
state which will require an escrow or other restriction relating to the Company
and/or the sellers, or which will require the Companyto qualify to do business
in such state or require the Company to file therein any general consent to
service of process and the Company shall in no event be required to qualify
in
greater than five states.
(iii)
Notwithstanding any other provisions hereof, with respect to an
underwritten
public
offering by the Corporation, if the managing underwriter advises the Company
that marketing or other factors require a limitation of the number of shares
to
be underwritten, then there shall be excluded from such registration and
underwriting to the extent necessary to satisfy such limitation, Registrable
Securities held by the Consultant prior to any cutback of shares to be sold
for
the Company or any other holder of shares with registration rights. Further,
the
Consultant shall agree not to sell any Registrable Securities included in the
underwritten public offering for such period as may be reasonably required
by
the managing underwriter. In connection with filing any Registration Statement;
if the SEC limits the amount of securities to be registered, then the
Companyshall be allowed to exclude the Registrable Securities from the
Registration Statement prior to excluding any securities it desires to register
on its own account and any securities entitled to registration rights under
any
other agreement to which the Company is a party.
3.
CONFIDENTIALITY.
All
knowledge and information of a proprietary and confidential nature relating
to
the Company which the Consultant obtains during the Consulting period, from
the
Company or the Company's employees, agents or consultants shall be for all
purposes regarded and treated as strictly confidential. Such obligation of
Consultant shall be governed by the terms of the confidentiality agreement
attached hereto as Exhibit
C
and it
shall be Consultant’s obligation to ensure that Consultant and consultants,
employees or agents comply with its terms.
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4.
INDEPENDENT
CONTRACTOR STATUS.
Consultant
understands that since the Consultant is not an employee of the Company, the
Company will not withhold income taxes or pay any employment taxes on its behalf
(which shall remain the sole obligation of the Consultant), nor will it receive
any fringe benefits. The Consultant shall not have any authority to assume
or
create any obligations, express or implied, on behalf of the Company and shall
have no authority to represent the Company as agent, employee or in any other
capacity other than as herein provided.
The
Consultant does hereby indemnify and hold harmless the Company from and against
any and all claims, liabilities, demands, losses or expenses incurred by the
Company if (1) the Consultant fails to pay any applicable income and or
employment taxes (including interest or penalties of whatever nature), in any
amount relating to the Consultant's rendering of consulting services to the
Company, including any attorney's fees or costs to
the
prevailing party to enforce this indemnity or (2) Consultant takes any action
or
fails to and any action in accordance with the companies
instructions.
The
Consultant shall be responsible for obtaining workers' compensation insurance
coverage and agrees to indemnify, defend and hold the Company harmless of and
from any and all claims arising out of any injury, disability or death of the
Consultant.
5.
REPRESENATIONS
AND WARRANTS.
For
purposes of this Agreement and in connection with Consultant’s receipt of the
Warrants, the Shares and the Warrant Shares (sometimes referred to herein as
the
“Securities”), the Consultant represents and warrants as follows:
a.
The
Consultant (i) has adequate means of providing for the Consultant's current
needs and possible personal contingencies, (ii) has no need for liquidity in
the
investment in the Securities, (iii) is able to bear the substantial economic
risks of an investment in the Securities for an indefinite period, (iv) at
the
present time, can afford a complete loss of such investment, whether or not
the
Warrants are exercised and (v) is an "accredited investor" as defined in the
Securities Act of 1933, as amended.
b.
The
Consultant does not have a preexisting personal or business relationship with
the Company or any of its directors or executive officers, or by reason of
any
business or financial experience or the business or financial experience of
any
professional advisors who are unaffiliated with and who are compensated by
the
Company or any affiliate or selling agent of the Company, directly or
indirectly, could be reasonably assumed to have the capacity to protect the
Consultant's interests in connection with the investment in the
Securities.
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c.
The
Consultant is aware that:
i.
The
Warrants are transferable under this Agreement only as provided in the warrants
and applicable securities laws; and
ii.
The
Articles of Incorporation and Bylaws of the Company contain provisions that
limit or eliminate the personal liability of the officers, directors and agents
of the Company and indemnify such parties for certain damages relating to the
Company, including damages in connection with the Securities and the good-faith
management and operation of the Company.
d.
The
Consultant acknowledges that the Securities are currently not registered under
any registration statement with the Securities and Exchange Commission (SEC)
and
may only be registered in accordance with the terms of this Agreement, if at
all.
e.
The
Consultant has not been furnished any offering literature and has not been
otherwise solicited by the Company.
f.
The
Company and its officers, directors and agents have answered all inquiries
that
the Consultant has made of them concerning the Company or any other matters
relating to the formation, operation and proposed operation of the Company
and
the offering and sale of the Securities.
g.
The
Consultant, if a corporation, partnership, trust or other entity, is duly
organized and in good standing in the state or country of its incorporation
and
is authorized and otherwise duly qualified to purchase and hold the Securities.
Such entity has its principal place for business as set forth on the signature
page hereof and has not been formed for the specific purpose of acquiring the
Securities unless all of its equity owners qualify as accredited individual
investors.
h.
All
information that the Consultant has provided to the Company concerning the
Consultant, the Consultant's financial position and the Consultant's knowledge
of financial and business matters, or, in the case of a corporation,
partnership, trust or other entity, the knowledge of financial and business
matters of the person making the investment decision on behalf of such entity,
including all information contained herein, is correct and complete as of the
date set forth at the end hereof and may be relied upon, and if there should
be
any material adverse change in such information prior to this subscription
being
accepted, the Consultant will immediately provide the Company with such
information.
i.
The
Consultant certifies, under penalties of perjury (i) that the taxpayer
identification number shown on the signature page of this Consulting Agreement
is true, correct and complete, and (ii) that the Consultant is not subject
to
backup withholding as a result of a failure to report all interest or dividends,
or because the Internal Revenue Service has notified the Consultant that the
Consultant is no longer subject to backup withholding.
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j.
In
rendering the services hereunder and in connection with the Securities, the
Consultant agrees to comply with all applicable federal and state securities
laws, the rules and regulations thereunder, the rules and regulations of any
exchange or quotation service on which the Company's securities are listed
'and
the rules and regulations of the National Association of Securities Dealers,
Inc.
6.
TERM
AND TERMINATION.
The
term
of this Agreement shall be one year commencing as of January 1, 2008 (the
“Term”). Either party may terminate this Agreement at anytime with or without
cause by giving thirty (30) days written notice to the other party. Should
the
Consultant default in the performance of this Agreement or materially breach
any
of its provisions, the Company may, in its sole discretion, terminate this
Agreement immediately upon written notice to the Consultant.
7.
NO
THIRD PARTY RIGHTS.
The
parties warrant and represent that they are authorized to enter into this
Agreement and that no third parties, other than the parties hereto, have any
interest in any of the services or the Securities contemplated hereby. The
services provided hereunder by the Consultant are personal to the Consultant
and
may not be assigned.
8.
ABSENCE
OF WARRANTIES AND REPRESENTATIONS.
Each
party hereto
acknowledges
that they have signed this Agreement without having relied upon or being induced
by any agreement, warranty or representation of fact or opinion of any person
not expressly set forth herein. All representations and warranties of either
party contained herein shall survive its signing and delivery.
9.
GOVERNING
LAW. This
Agreement shall be governed by and construed in accordance with the law of
the
State of New York.
10.
ATTORNEY'S
FEES.
In the
event
of any controversy, claim or dispute between the parties hereto, arising out
of
or in any manner relating to this Agreement, including an attempt to rescind
or
set aside, the prevailing party in any action brought to settle such
controversy, claim or dispute shall be entitled to recover reasonable attorney's
fees and costs.
11.
ARBITRATION.
Any
controversy between the parties regarding the construction or application of
this Agreement, any claim arising out of this Agreement or its breach, shall
be
submitted to arbitration in New York, New York before one arbitrator in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, upon the written request of one party after service of that request
on the other party. The cost of arbitration shall be borne by the losing party.
The arbitrator is also authorized to award attorney's fees to the prevailing
party.
12.
VALIDITY.
If any
paragraph, sentence, term or provision hereof shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall not
affect the validity or enforceability of any other paragraph, sentence, term
and
provision hereof. To the extent required, any paragraph, sentence, term or
provision of this Agreement may be modified by the parties hereto by written
amendment to preserve its validity.
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13.
NON-DISCLOSURE
OF TERMS.
The
terms
of this Agreement shall be kept confidential, and no party, representative,
attorney or family member shall reveal its contents to any third party except
as
required by law or regulation (including the regulations of the American Stock
Exchange) or as necessary to comply with law or preexisting contractual
commitments.
14.
ENTIRE
AGREEMENT. This
Agreement contains the entire understanding of the parties and cannot be altered
or amended except by an amendment duly executed by all parties hereto. This
Agreement shall be binding upon
and
inure to the benefit of the successors, assigns and personal representatives
of
the parties.
IN
WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement
effective as of the date first written above.
/s/Xxxxx
Xxxxx
Xxxxx
Xxxxx
CEO
NeoStem
/s/Xxxxxx
Xxxxxxx
Xxxxxx
Xxxxxxx
President,
CEO
JFS
Investments Corp.
TAXPAYER
ID NO. _______________________
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EXHIBIT
A
DESCRIPTION
OF CONSULTING SERVICES
The
Consultant agrees, to the extent reasonably required in the conduct of its
business with the Company, to place at the disposal of the Company its judgment
and experience and to provide business development services to the Company
including, but not limited, to, the following:
(i)
review the Company's financial requirements;
(ii)
analyze and assess alternatives for the Company's financial
requirements;
(iii)
provide introductions to professional analysts and money managers;
(iv)
assist the Company in financing arrangements to be determined and governed
by
separate and distinct financing agreements;
(v)
provide analysis of the Company's industry and competitors in the form of
general industry reports provided directly to Company.
(vi)
Assist the Company in developing corporate partnering relationships;
and,
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