Exhibit 10.38
AMENDMENT NO. 2
REORGANIZATION AND STOCK PURCHASE AGREEMENT
This Amendment No. 2 (the "Amendment No. 2") is dated as of June 17, 2008,
and amends that certain Reorganization and Stock Purchase Agreement (the
"Original Agreement") dated March 10, 2008, as amended by Amendment No. 1 dated
as of April 19, 2008, by and between Histostem Co., Ltd. ("Histostem"), and Stem
Cell Therapy International, Inc. ("SCII").
RECITALS:
WHEREAS, Histostem and SCII propose to amend the certain of the terms of
the Original Agreement as set forth below; and
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein set forth, the parties hereto agree as follows:
1. CONFLICT. In the event there is a conflict between the terms of the
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Original Agreement or Amendment No. 1 with this Amendment No. 2, the terms of
this Amendment No. 2 shall control any interpretation. Unless this Amendment
No. 2 expressly amends or supplements the language of the Original Agreement or
Amendment No. 1, the Original Agreement and/or Amendment No. 1 shall remain in
full force and effect. Unless otherwise defined in this Amendment No. 2, terms
defined in the Original Agreement or Amendment No. 1 shall be similarly defined
herein.
2. AMENDMENT.
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(a) Paragraph 1(c) of the Original Agreement is hereby amended to read
as follows:
"SCII shall issue and deliver to Xxxxxx Law Group as Escrow (the "Escrow
Agent") for a total of 24,172,685 shares of common stock of SCII (reflecting a 1
for 3 reverse stock split of SCII common shares prior to closing) for delivery
to Histostem upon satisfaction of the Litigation Condition (as defined below)
(the "Escrowed SCII Shares")."
(b) New paragraph 1(f) is hereby added to the Agreement as a
"Pre-Closing Action of SCII":
"SCII shall prepare and file a 14C information statement, mail it to its
shareholders, and subsequently complete a 1 for 3 reverse stock split of its
common stock."
(c) Paragraph 2(b) of the Original Agreement is hereby amended to read
as follows:
"Histostem shall issue and deliver to Xxxxxx Law Group as Escrow (the
"Escrow Agent") for a total of 177,875,865 shares of common stock of Histostem
for delivery to SCII upon satisfaction of the Litigation Condition (as defined
below) (the "Escrowed Histostem Shares")."
(d) Condition to Closing 3(g) of the Original Agreement is hereby
amended to provide that: Both parties have agreed that there will be no
requirement for immediate funding at the date of the actual closing, with the
parties intention to close the transaction immediately upon execution of this
Amendment No. 2.
(e) New paragraph 3(g) is hereby added to the Agreement:
"(g) Histostem Litigation:
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(i) Histostem acknowledges and represents that it is a named defendant in
that certain litigation matter entitled "Histostem, Inc. v. Dr. Hoon Han,
Histostem Corporation and does 1 through 100 inclusive", which was initially
filed July 24, 2006 and remains unresolved (the "Histostem USA Litigation).
Histostem acknowledges that the Histostem USA Litigation and other possible
claims against Histostem were missed and not disclosed in the Original
Agreement.
(ii) Histostem acknowledges and agrees that the resolution of the
Histostem USA Litigation and the other claims is a material component to the
completion of the transactions contemplated by the Original Agreement, and
consequently acknowledges and agrees that the Escrowed Histostem Shares and the
Escrowed SCII Shares shall be retained by Escrow at Closing.
(iii) Satisfactory resolution of the Histostem USA Litigation and the
other claims shall be a condition to termination of the Escrow and release of
the Escrowed Histostem Shares and the Escrowed SCII Shares (the "Litigation
Condition"). The Litigation Condition shall be satisfied upon mutual acceptance
in writing by SCII and Histostem and its counsel of any resolution, whether by
settlement or otherwise, of the Histostem USA Litigation and the other claims.
Immediately upon such mutual satisfaction of the Litigation Condition, Escrow
shall release the Escrowed SCII Shares to Histostem and shall release the
Escrowed Histostem Shares to SCII.
(iv) In the event the Litigation Condition is not satisfied as set forth
above within 30 days from the date of this Amendment No. 2, both parties need to
agree to terminate the Escrow upon which Escrow shall return the Escrowed SCII
Shares to SCII and shall return the Escrowed Histostem Shares to Histostem.
Upon such mutual termination agreement, both parties reserve their legal rights
with the understanding that both parties will use good faith best efforts to
resolve any and all differences between them prior to taking any other more
formal actions, if needed.
(v) The parties hereto acknowledge that upon satisfaction of the
Litigation Condition, they will immediately finalize their best efforts to
obtain financing of $1,000,000 ("Initial Funding") towards the Initial Round
within 30 days of satisfaction of the Litigation Condition. Histostem
acknowledges and agrees that if the Initial Funding is raised prior to the
satisfaction of the Litigation Condition and prior to the satisfaction of the
GAAP Condition (defined below); such Initial Funding shall be placed in Escrow
and released to Histostem upon such satisfaction. The GAAP Condition for
purposes of this Agreement means that Histostem's financial Statements shall be
translated into English and converted into US GAAP in compliance with
Item 310 of Regulation S-X of the Securities and Exchange Commission. SCII
agrees to pay any and all costs associated with the conversion of the Histostem
Financial Statements into US GAAP and compliance with Item 310 of Regulation S-X
of the Securities and Exchange Commission.
(vi) All the representations and warranties made by Histostem and SCII
herein or in the Original Agreement, and all of the statements, documents or
other information pertaining to the transactions contemplated herein made or
given by Histostem and SCII, its agents or representatives, are complete and
accurate, and do not omit any information required to make the statements and
information provided, in light of the transaction contemplated herein,
non-misleading, accurate and meaning, including without limitation any
information relating to the Histostem USA Litigation or any other claims or
judgments, or facts which could give rise to any further litigation, claims or
judgments.
(vii) The undersigned represents and warrants that the execution, delivery
and performance of this Amendment No. 2, as well as the Original Agreement and
Amendment No. 1, have been duly authorized by all necessary corporate action of
Histostem and this Agreement constitutes a valid and binding obligation of
Histostem; enforceable against it in accordance with its terms.
(f) Paragraphs 4(b) and (c) of the Original Agreement are hereby
amended to read as follows:
"(b) At the Closing, Xxxxxx Law Group shall retain the Escrowed SCII
Shares for delivery to Histostem upon satisfaction of the Litigation Condition.
(c) At the Closing, Xxxxxx Law Group shall retain the Escrowed
Histostem Shares for delivery to SCII upon satisfaction of the Litigation
Condition."
(g) Paragraph 5 of the Original Agreement is hereby amended to provide
that the parties hereto intend to close the transactions contemplated by the
Original Agreement as amended by this Amendment No. 2 immediately upon execution
of this Amendment No. 2.
(h) Paragraph 9(d) of the Original Agreement is hereby amended to read
as follows:
"Immediately upon satisfaction of the Litigation Condition an initial round
(the "Initial Round") of funding will be undertaken by SCII and a broker-dealer
its selects on a best efforts basis for a total up to $7,500,000 subject to
approval of the investment banker after making the due diligence and onsite
inspection trip to the Histostem facility in Korea. The parties shall use their
best efforts such that this funding shall be completed, closed and funded within
60-90 days after the "Initial Funding" and the satisfaction of the Litigation
Condition.
3. SIGNATURE IN COUNTERPARTS. This Amended Agreement may be executed
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in separate counterparts, none of which need contain the signature of all
parties, each of which shall
be deemed to be an original and all of which taken together constitute one and
the same instrument. It is not necessary in making proof of this Amended
Agreement to produce or account for more than the number of counterparts
containing the respective signatures of, or on behalf of, all of the Parties to
this Amended Agreement is sought.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2 on the
date first above written.
For and on behalf of: Histostem Co., Ltd
a Korean corporation
By:/s/ Dr. Hoon Han
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Dr. Hoon Han, Md, Phd.
Chief Executive Officer
For and on behalf of: Stem Cell Therapy International, Inc.
a Nevada corporation
By:/s/ Xxxxxx Xxx
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Xxxxxx Xxx
President
