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): May 19, 2010
NEOSTEM,
INC.
(Exact
Name of Registrant as Specified in Charter)
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Delaware
(State
or Other Jurisdiction of
Incorporation)
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0-10909
(Commission
File
Number)
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22-2343568
(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):
¨
Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨ Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item
1.01
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Entry
Into a Material Definitive
Agreement
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On May
19, 2010, NeoStem, Inc., a Delaware corporation (“NeoStem”), entered into a
Common Stock Purchase Agreement (the “Purchase Agreement”) with Commerce Court
Small Cap Value Fund, Ltd. (“Commerce Court”), which provides that, upon the
terms and subject to the conditions set forth therein, Commerce Court is
committed to purchase up to $20,000,000 worth of shares of NeoStem’s common
stock over the approximately 24-month term of the Purchase Agreement (which term
is subject to earlier termination in accordance with the terms of the Purchase
Agreement); provided, however, that in no event may NeoStem issue under the
Purchase Agreement more than 10,536,208 shares of common stock, which is
approximately 19.9% of NeoStem’s outstanding shares of common stock on the
closing date of the Purchase Agreement, less 63,792 shares of common stock
issued to Commerce Court on the closing date in payment of its commitment
fee.
From time
to time over the term of the Purchase Agreement, and at NeoStem’s sole
discretion, NeoStem may present Commerce Court with draw down notices to
purchase NeoStem’s common stock over ten consecutive trading days or such other
period mutually agreed upon by NeoStem and Commerce Court, or the draw down
period, with each draw down subject to limitations based on the price of
NeoStem’s common stock and a limit of 2.5% of NeoStem’s market capitalization at
the time of such draw down (which limitations may be waived or modified by
mutual agreement of the parties). NeoStem is able to present Commerce
Court with up to 24 draw down notices during the term of the Purchase Agreement,
with only one such draw down notice allowed per draw down period and a minimum
of five trading days required between each draw down period.
Once
presented with a draw down notice, Commerce Court is required to purchase from
NeoStem a pro rata portion of the shares on each trading day during the trading
period on which the daily volume weighted average price for NeoStem’s common
stock exceeds a threshold price determined by NeoStem for such draw
down. The per share purchase price for these shares will equal the daily
volume weighted average price of NeoStem’s common stock on each date during the
draw down period on which shares are purchased, less a discount of 5.0%, based
on the trading price of NeoStem’s common stock. If the daily volume
weighted average price of NeoStem’s common stock falls below the threshold price
on any trading day during a draw down period, the Purchase Agreement provides
that Commerce Court will not be required to purchase the pro-rata portion of
shares of common stock allocated to that day. However, at its
election, Commerce Court may buy the pro-rata portion of shares allocated to
that day at the threshold price less the discount described above.
The
Purchase Agreement also provides that, from time to time and at NeoStem’s sole
discretion, NeoStem may grant Commerce Court the right to exercise one or more
options to purchase additional shares of NeoStem’s common stock during each draw
down period for an amount of shares specified by NeoStem based on the trading
price of NeoStem’s common stock. Upon Commerce Court’s exercise of an
option, NeoStem would sell to Commerce Court the shares of NeoStem’s common
stock subject to the option at a price equal to the greater of the daily volume
weighted average price of NeoStem’s common stock on the day Commerce Court
notifies NeoStem of its election to exercise its option or the threshold price
for the option determined by us, less a discount calculated in the same manner
as it is calculated in the draw down notices.
NeoStem’s
issuance of shares of common stock to Commerce Court pursuant to the Purchase
Agreement, and the sale of those shares from time to time by Commerce Court to
the public, will be covered by NeoStem’s Registration Statement on Form S-3 (No.
333-166169), filed with the Commission on April 19, 2010, as amended and
supplemented from time to time. Commerce Court is an “underwriter” within
the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended,
or the Securities Act. Commerce Court has informed NeoStem that it
will use an unaffiliated broker-dealer to effectuate all sales, if any, of
common stock that it may purchase from NeoStem pursuant to the Purchase
Agreement. Such sales will be made on the NYSE Amex at prices and at terms
then prevailing or at prices related to the then current market price.
Each such unaffiliated broker-dealer will be an underwriter within the meaning
of Section 2(a)(11) of the Securities Act. Commerce Court has
informed NeoStem that each such broker-dealer will receive commissions from
Commerce Court which will not exceed customary brokerage
commissions. Commerce Court may also pay other expenses associated
with the sale of the common stock it acquires pursuant to the Purchase
Agreement.
In
connection with this transaction, a filing was made with the Corporate Finance
Department of the Financial Industry Regulatory Authority (“FINRA”), pursuant to
FINRA Rule 5110, and NeoStem has received written confirmation from FINRA to the
effect that FINRA’s Corporate Finance Department has determined not to raise any
objection with respect to the fairness or reasonableness of the terms of the
Purchase Agreement or the transactions contemplated thereby.
The
shares of common stock issued under the Purchase Agreement may be sold in one or
more of the following manners:
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ordinary
brokerage transactions and transactions in which the broker solicits
purchasers; or
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a
block trade in which the broker or dealer so engaged will attempt to sell
the shares as agent, but may position and resell a portion of the block as
principal to facilitate the
transaction.
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Commerce
Court has agreed that during the periods listed above neither it nor any of its
affiliates will enter into a short position with respect to shares of NeoStem’s
common stock except that Commerce Court may sell shares that it is obligated to
purchase under a pending draw down notice but has not yet taken possession of so
long as Commerce Court covers any such sales with the shares purchased pursuant
to such draw down notice. Commerce Court has further agreed that during
the periods listed above it will not grant any option to purchase or acquire any
right to dispose or otherwise dispose for value of any shares of NeoStem’s
common stock or any securities convertible into, or exchangeable for, or
warrants to purchase, any shares of NeoStem’s common stock, or enter into any
swap, hedge or other agreement that transfers, in whole or in part, the economic
risk of ownership of NeoStem’s common stock, except for the sales permitted by
the prior sentence.
In
addition, Commerce Court and any unaffiliated broker-dealer will be subject to
liability under the federal securities laws and must comply with the
requirements of the Securities Act and the Securities Exchange Act or 1934, as
amended, or the Exchange Act, including, without limitation, Rule 10b-5 and
Regulation M under the Exchange Act. These rules and regulations may
limit the timing of purchases and sales of shares of common stock by Commerce
Court or any unaffiliated broker-dealer. Under these rules and
regulations, Commerce Court and any unaffiliated broker-dealer:
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may
not engage in any stabilization activity in connection with NeoStem’s
securities;
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must
furnish each broker which offers shares of NeoStem’s common stock covered
by the prospectus that is a part of NeoStem’s registration statement with
the number of copies of such prospectus and any prospectus supplement
which are required by each broker;
and
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may
not bid for or purchase any of NeoStem’s securities or attempt to induce
any person to purchase any of NeoStem’s securities other than as permitted
under the Exchange Act.
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These
restrictions may affect the marketability of the shares of common stock
purchased and sold by Commerce Court and any unaffiliated
broker-dealer.
NeoStem
has agreed to indemnify and hold harmless Commerce Court and each person who
controls Commerce Court against certain liabilities, including certain
liabilities under the Securities Act. NeoStem has agreed to pay up to
$35,000 of Commerce Court’s reasonable attorneys’ fees and expenses incurred by
Commerce Court in connection with the preparation, negotiation, execution and
delivery of the Purchase Agreement and related transaction documentation.
In addition, during any full calendar quarter that falls within the term of the
Purchase Agreement when no shares of NeoStem’s common stock have been purchased
or sold because NeoStem did not deliver a draw down notice, NeoStem is required
to pay all reasonable attorneys’ fees and expenses, up to $5,000, representing
the due diligence expenses incurred by Commerce Court during such calendar
quarter. Further, if NeoStem issue a draw down notice and fail to
deliver the shares to Commerce Court on the applicable settlement date, and such
failure continues for ten trading days, NeoStem has
agreed to pay Commerce Court liquidated damages in cash or restricted shares of
NeoStem’s common stock, at Commerce Court’s option.
Commerce
Court has agreed to indemnify and hold harmless NeoStem and each of NeoStem’s
directors, officers and persons who control NeoStem against certain liabilities
under the Securities Act that may be based upon written information furnished by
Commerce Court to NeoStem for inclusion in this prospectus or any other
prospectus or prospectus supplement related to this transaction.
Upon each
sale of NeoStem’s common stock to Commerce Court under the Purchase Agreement,
NeoStem has agreed to pay Reedland Capital Partners, an Institutional
Division of Financial West Group, Member FINRA/SIPC (“FWG”), a placement fee
equal to 2% of the aggregate dollar amount of common stock purchased by Commerce
Court. NeoStem also has agreed to pay up to $10,000 of FWG’s attorneys’
fees and expenses incurred by FWG in connection with the preparation with
filings required to be made on behalf of FWG in connection with the Purchase
Agreement and the related transaction pursuant to FINRA Rule 5110.
NeoStem has agreed to indemnify and hold harmless FWG and each person who
controls FWG against certain liabilities, including certain liabilities under
the Securities Act.
In
consideration of Commerce Court’s execution and delivery of the Purchase
Agreement, NeoStem agreed to issue to Commerce Court upon the execution of the
Purchase Agreement 63,792 shares of NeoStem’s common stock.
The
foregoing descriptions are qualified in their entirety by reference to the
Purchase Agreement, a copy of which is attached hereto as Exhibit 10.1 and
incorporated herein by reference.
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Item
9.01.
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Financial
Statements and Exhibits.
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Exhibit No.
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Description
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5.1
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Opinion
of Lowenstein Sandler PC
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10.1
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Common
Stock Purchase Agreement, dated as of May 19, 2010, by and between
NeoStem, Inc. and Commerce Court Small Cap Value Fund,
Ltd.
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SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, NeoStem 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: May 19,
2010