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REORGANIZATION AND STOCK PURCHASE AGREEMENT
This REORGANIZATION AND STOCK PURCHASE AGREEMENT dated as of March 10, 2008
(this "Agreement") is by and between Stem Cell Therapy International, Inc., a
Nevada corporation ("SCII"), and Histostem Co., Ltd., a Korean Company
("Histostem," and together with SCII, the "Parties").
WHEREAS, Histostem desires to acquire a controlling interest of SCII; and
WHEREAS, the Board of Directors of SCII desire to issue a controlling
interest of SCII to Histostem; and
WHEREAS, SCII desires to acquire a majority controlling interest in Histostem;
and
WHEREAS, the Board of Directors of Histostem desire to issue a controlling
interest of Histostem to SCII; and
WHEREAS, the parties hereto intend that the transaction contemplated here
by shall be completed as a tax-free exchange of stock.
NOW, THEREFORE, The respective Boards of Directors of Histostem and SCII
deem it advisable and in the best interests of their corporations and the
respective shareholders of their corporations that Histostem acquire a 60%
controlling interest in the securities of SCII, and SCII acquire a 95%
controlling interest in the securities of Histostem, in accordance with the
terms and conditions of this Reorganization and Stock Purchase Agreement.
1. Pre-Closing Actions ofSCII. Immediately upon execution of this Agreement
--------------------------
and prior to any Closing as set forth herein, SCII shall undertake the following
actions:
(a) The Board of Directors of SCII shall unanimously approve and
deliver to Xxxxxx Law Group ("Escrow") in escrow resolutions with
respect to (a) approving the Transactions set forth herein; (b)
increasing or directing the size of the Board of Directors to be seven
members; (c) electing five persons designated by Histostem to the
Board of Directors and electing two persons by the current management
of SCII (), (d) it is understood that there shall be a U.S. operations
division with its own budget as provided herein and the current
management of SCII shall appoint the president and other officers of
the division for U.S. operations, no changes can be made in the
management team for U.S. operations without the consent of the current
majority shareholders of SCII for a period of 24 months from the date
of Closing, and (e) approving a name change of the corporation to
Amstem International Corp.
(b) SCII shall prepare and file a 14C Information Statement with the
US Securities and Exchange Commission to increase the authorized
common stock of SCII to 500,000,000 shares and to change the name of
the Company to Amstem International Corp.
(c) SCII shall issue and deliver to Xxxxxx Law Group as Escrow (the
"Escrow Agent") for a total of 72,518,053 shares of common stock of
SCII for delivery to Histostem at closing (the "Escrowed SCII
Shares").
(d) SCII shall use its reasonable best efforts to prepare and
complete the documents necessary to be filed with local, state and
federal authorities to consummate the transactions contemplated
hereby.
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(e) SCII shall issue and deliver to Xxxxxx Law Group as Escrow
1,000,000 shares each to Xxxxx Xxx and Xxx Xxxxxxxx for services
rendered to Histostem, and 2,000,000 shares to Xxxxxx Xxxxxx. Such
shares shall be released and delivered at Closing.
2. Pre-Closing Action ofHistostem. Immediately upon execution of this
--------------------------------
Agreement and prior to the Closing as set forth herein, Histostem shall
undertake the following actions:
(a) The Board of Directors of Histostem shall execute and deliver
resolutions approving the Transactions set forth herein.
(b) Histostem shall issue and deliver to Xxxxxx Law Group as Escrow
certificates representing 185,515,696 shares of common stock of
Histostem (the "Escrowed Histostem Shares"), representing 95% of the
issued and outstanding equity of Histostem, for delivery to SCII at
Closing.
(c) On or before March 30, 2008, and prior to closing, Histostem
shall provide to SCII completed audited financial statements of
Histostem in accordance with US GAAP and Item 310 of Regulation S-X
promulgated by the US Securities and Exchange Commission, sufficient
to file any and all required filings with the US Securities and
Exchange Commission (the "Histostem Financial Statements").
(d) Histostem shall cooperate with its reasonable best efforts to
assist SCII to prepare and complete the documents necessary to be
filed with local, state and federal authorities to consummate the
transactions contemplated hereby.
(e) Histostem understands and agrees that in order for SCII to raise
capital to close the transaction Histostem must provide a current
business plan with all relevant information including use of proceeds
for the initial $2,000,000 and a forecast of income and expenses for
the next thirty-six months in quarterly increments (the "Post-Merger
Business Plan"), Histostem agrees to deliver the Post-Merger Business
Plan to SCII no later than March 30, 2008. In the event that Histostem
is not able to deliver the Post-Merger Business Plan in a timely
manner than the time for closing shall be extended accordingly.
3. Conditions to Closing
-----------------------
The parties' obligation to close the proposed Acquisition will be subject to
specified conditions precedent including, but not limited to, the following:
(a) the representations and warranties of Histostem as set forth in
Section 6 herein shall remain accurate as of the Closing Date and no
material adverse change in the business of Histostem shall have
occurred;
(b) the representations and warranties of SCII as set forth in
Section 7 herein shall remain accurate as of the Closing Date and no
material adverse change in the business of SCII shall have occurred;
(c) all the documents necessary to be filed with local, state and
federal authorities are prepared
(d) SCII shall have provided the board resolutions and any other
approval required to complete the board election and the name change.
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(e) SCII shall retain its good standing as a publicly traded company
under the Securities Exchange Act, trading on the over the counter
bulletin board under the symbol "SCII".
(f) Histostem shall have prepared and provided the Histostem
Financial Statements to the reasonable satisfaction of the current
auditing firm and counsel for SCII.
(g) Histostem shall have received funding at the date of the actual
closing a minimum of $2,000,000 towards the Initial Round as defined
below
4. At the Closing.
-----------------
(a) At the Closing, Xxxxxx Law Group shall release from escrow the
SCII Board Resolutions effectuating the election of five new members
of the Board of Directors. The members of the Board of Directors of
SCII except for two members prior to Closing shall submit resignations
at Closing.
(b) At the Closing, Xxxxxx Law Group shall release the Escrowed SCII
Shares to Histostem.
(c) At the Closing, Xxxxxx Law Group shall release the Escrowed
Histostem Shares to SCII.
(d) At the Closing, the existing officers of SCII shall resign and be
replaced by those officers appointed by the new Board of Directors,
except that the officers of the country-regionU.S. operations division
shall continue to provide services as per their employment agreements
following the closing and their salaries and expenses shall be paid
from the country-regionplaceU.S. operations budget
5. Timing of Closing. The Closing shall occur upon the satisfaction of the
------------------
conditions set forth in this Agreement and upon instructions from the parties
hereto to the Escrow Agent. The Closing Date shall occur on or before
dateMonth4Day30Year2008April 30, 2008, unless the Escrow Agent receives
instructions otherwise from the parties or notice from a party that the
conditions set forth herein have not occurred. In the event the Closing does
not occur on or before dateMonth5Day30Year2008May 30, 2008, (i) the Escrow Agent
shall return the Escrowed Histostem Shares to Histostem and (ii) the Escrow
Agent shall return the Escrowed SCII Shares to SCII.
6. Representations ofHistostem. Except as set forth in the Histostem
-----------------------------
Financial Statements, Histostem represents and warrants as follows:
(a) Ownership of Shares. As of the Closing Date, SCII will become the
owner of the Escrowed Histostem Shares. The Escrowed Histostem Shares
will be free from claims, liens or other encumbrances, except as
provided under applicable federal and state securities laws;
(b) Fully paid and Nonassessable. The Escrowed Histostem Shares
constitute duly and validly issued shares of Histostem, and are fully
paid and nonassessable, and Histostem further represents that it has
the power and the authority to execute this Agreement and to perform
the obligations contemplated hereby;
(c) Organization of Histostem; Authorization. Histostem is a
corporation duly organized, validly existing and in good standing
under the laws of the Republic of Korea with full corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this
Agreement
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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. Histostem has no subsidiaries.
(d) Capitalization. As of the Closing Date, Histostem will have a
total of 9,763,984 shares of common stock issued and outstanding (not
including the Escrowed Histostem Shares) and no shares of preferred
stock issued and outstanding. No shares have otherwise been registered
under state or federal securities laws. As of the Closing Date, all of
the issued and outstanding shares of common stock of Histostem are
validly issued, fully paid and non-assessable and there is not and as
of the Closing Date, except for up to 4,400,000 shares to be issued
based on the direction of the Board of Directors of Histostem, there
will not be outstanding any warrants, options or other agreements on
the part of Histostem obligating Histostem to issue any additional
shares of common or preferred stock or any of its securities of any
kind. Histostem will not issue any shares of capital stock from the
date of this Agreement through the Closing Date. The Common Stock of
Histostem is presently trading on the Freeboard Exchange in
country-regionplaceKorea.
(e) Ownership of Histostem Shares. The delivery of certificates
provided herein for the Escrowed Histostem Shares will result in SCII
immediate acquisition of record and beneficial ownership of the
Escrowed Histostem Shares, free and clear of all encumbrances.
(f) No Conflict as to Histostem and Subsidiaries. Neither the
execution and delivery of this Agreement nor the consummation of the
exchange of the Histostem Shares will (a) violate any provision of the
certificate of incorporation or by-laws (or other governing
instrument) of Histostem or (b) violate, or be in conflict with, or
constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or excuse
performance by any Person of any of its obligations under, or cause
the acceleration of the maturity of any debt or obligation pursuant
to, or result in the creation or imposition of any Encumbrance upon
any property or assets of Histostem under, any material agreement or
commitment to which Histostem is a party or by which its property or
assets is bound, or to which any of the property or assets of
Histostem is subject, or (c) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or other
Governmental Body applicable to Histostem except, in the case of
violations, conflicts, defaults, terminations, accelerations or
encumbrances described in clause (b) of this Section for such matters
which are not likely to have a material adverse effect on the business
or financial condition of Histostem.
(g) Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration
with, any Governmental Body is required to be made or obtained by
Histostem in connection with the execution, delivery and performance
of this Agreement by Histostem or the consummation of the sale of the
Escrowed Histostem Shares.
(h) Other Consents. No consent of any Person is required to be
obtained by Histostem to the execution, delivery and performance of
this Agreement or the consummation of the sale of the Histostem
Shares, including, but not limited to, consents from parties to leases
or other agreements or commitments, except for any consent which the
failure to obtain would not be likely to have a material adverse
effect on the business and financial condition of Histostem.
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(i) Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any Court or Governmental body pending or
threatened in writing against or involving Histostem which is likely
to have a material adverse effect on the business or financial
condition of Histostem, or which questions or challenges the validity
of this Agreement. Histostem is not subject to any judgment, order or
decree that is likely to have a material adverse effect on the
business or financial condition of Histostem.
(j) Absence of Certain Changes. Histostem has not:
1. suffered the damage or destruction of any of its properties
or assets (whether or not covered by insurance) which is
materially adverse to the business or financial condition of
Histostem, or made any disposition of any of its material
properties or assets other than in the ordinary course of
business;
2. made any change or amendment in its certificate of
incorporation or by-laws, or other governing instruments;
3. other than the Histostem Escrowed Shares and up to 4,400,000
share of Histostem common stock to be issued based on the
determination of the Histostem Board of Directors, issued or sold
any Equity Securities or other securities, acquired, directly or
indirectly, by redemption or otherwise, any such Equity
Securities, reclassified, split-up or otherwise changed any such
Equity Security, or granted or entered into any options,
warrants, calls or commitments of any kind with respect thereto;
4. organized any new Subsidiary or acquired any Equity
Securities of any Person or any equity or ownership interest in
any business;
5. borrowed any funds or incurred, or assumed or become subject
to, whether directly or by way of guarantee or otherwise, any
obligation or liability with respect to any such indebtedness for
borrowed money;
6. paid, discharged or satisfied any material claim, liability
or obligation (absolute, accrued, contingent or otherwise), other
than in the ordinary course of business;
7. prepaid any material obligation having a maturity of more
than 90 days from the date such obligation was issued or
incurred;
8. cancelled any material debts or waived any material claims
or rights, except in the ordinary course of business;
9. disposed of or permitted to lapse any rights to the use of
any material patent or registered trademark or copyright or other
intellectual property owned or used by it;
10. granted any general increase in the compensation of officers
or employees (including any such increase pursuant to any
employee benefit plan);
(k) Compliance with Law. The operations of Histostem have been
conducted in accordance with all applicable laws and regulations of
all Governmental Bodies having jurisdiction over them, except for
violations thereof which are not likely to have a material adverse
effect on the business or financial condition of Histostem. Histostem
has not received any notification of any asserted present or past
failure by it to comply with any such applicable laws or regulations.
Histostem has all material licenses, permits, orders or approvals from
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the Governmental Bodies required for the conduct of its business, and is
not in material violation of any such licenses, permits, orders and
approvals. All such licenses, permits, orders and approvals are in full
force and effect, and no suspension or cancellation of any thereof has been
threatened.
7. Representations ofSCII. SCII for their respective rights and interests
-----------------------
represent and warrant as follows:
(a) Organization; Authorization. SCII is a corporation duly
organized, validly existing and in good standing under the laws of
placeStateNevada with full corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder.
The execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action of SCII and this
Agreement constitutes a valid and binding obligation; enforceable
against in accordance with its terms. SCII has no subsidiaries.
(b) Capitalization. The authorized capital stock of SCII consists of
100,000,000 shares of common stock, par value $0.001 per share, and
10,000,000 shares of preferred stock, par value $0.001 per share. As
of the date of this Agreement, SCII has 41,545,269 shares of common
stock issued and outstanding and 500,000 shares of preferred stock
issued and outstanding. No shares have otherwise been registered under
state or federal securities laws. As of the Closing Date, all of the
issued and outstanding shares of common stock of SCII are validly
issued, fully paid and non-assessable and, except for 5,300,000
warrants currently outstanding, there is not and as of the Closing
Date there will not be outstanding any warrants, options or other
agreements on the part of SCII obligating any of SCII to issue any
additional shares of common or preferred stock or any of its
securities of any kind, except for such shares or securities issued in
conjunction with the raising of the necessary capital called for in
this Agreement to provide funds for this transaction. The Common Stock
of SCII is presently trading on the over the counter bulletin board
under the symbol "SCII". Upon completion of the transactions
contemplated by this Agreement, SCII shall be eligible for application
and then trading on the American Stock Exchange or the Nasdaq Small
Cap market provided that the combined companies meet the share price,
net tangible assets and other requirements for such listing.
(c) No Conflict as to SCII and Subsidiaries. Neither the execution
and delivery of this Agreement nor the consummation of the
transactions contemplated herein will (a) violate any provision of the
articles of incorporation or organization of SCII or any of its
Subsidiaries or (b) violate, or be in conflict with, or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or excuse performance by any
Person of any of its obligations under, or cause the acceleration of
the maturity of any debt or obligation pursuant to, or result in the
creation or imposition of any Encumbrance upon any property or assets
of any of SCII or any of its Subsidiaries under, any material
agreement or commitment to which any of SCII, any of its Subsidiaries
is a party or by which any of their respective property or assets is
bound, or to which any of the property or assets of any of SCII or any
of its Subsidiaries is subject, or (c) violate any statute or law or
any judgment, decree, order, regulation or rule of any court or other
Governmental Body applicable to SCII or any of its Subsidiaries
except, in the case of violations, conflicts, defaults, terminations,
accelerations or Encumbrances described in clause (b) of this Section
for such matters which are not likely to have a material adverse
effect on the business or financial condition of SCII and its
subsidiaries, taken as a whole.
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(d) Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration
with, any Governmental Body is required to be made or obtained by SCII
or any of either of its Subsidiaries in connection with the execution,
delivery and performance of this Agreement by SCII or the consummation
of the transactions contemplated herein.
(e) Other Consents. No consent of any Person is required to be
obtained by SCII to the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated herein,
including, but not limited to, consents from parties to leases or
other agreements or commitments, except for any consent which the
failure to obtain would not be likely to have a material adverse
effect on the business and financial condition of SCII.
(f) Buildings, Plants and Equipment. The buildings, plants,
structures and material items of equipment and other personal property
owned or leased by SCII or its Subsidiaries are, in all respects
material to the business or financial condition of SCII and its
Subsidiaries, taken as a whole, in good operating condition and repair
(ordinary wear and tear excepted) and are adequate in all such
respects for the purposes for which they are being used. SCII has not
received notification that it is in violation of any applicable
building, zoning, anti-pollution, health, safety or other law,
ordinance or regulation in respect of its buildings, plants or
structures or their operations, which violation is likely to have a
material adverse effect on the business or financial condition of SCII
and its Subsidiaries, taken as a whole or which would require a
payment by SCII or any of its subsidiaries in excess of $2,000 in the
aggregate, and which has not been cured.
(g) No Condemnation or Expropriation. Neither the whole nor any
portion of the property or leaseholds owned or held by SCII or any of
its Subsidiaries is subject to any governmental decree or order to be
sold or is being condemned, expropriated or otherwise taken by any
Governmental Body or other Person with or without payment of
compensation therefore, which action is likely to have a material
adverse effect on the business or financial condition of SCII and its
Subsidiaries, taken as a whole.
(h) Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or
threatened in writing against or involving SCII or any of its
Subsidiaries which is likely to have a material adverse effect on the
business or financial condition of SCII and any of its Subsidiaries,
taken as whole, or which would require a payment by SCII or its
subsidiaries in excess of $2,000 in the aggregate or which questions
or challenges the validity of this Agreement. Neither SCII nor any or
its Subsidiaries is subject to any judgment, order or decree that is
likely to have a material adverse effect on the business or financial
condition of SCII or any of its Subsidiaries, taken as a whole, or
which would require a payment by SCII or its Subsidiaries in excess of
$2,000 in the aggregate.
(i) Absence of Certain Changes. Neither SCII nor any of its Subsidiaries
has:
1. suffered the damage or destruction of any of its properties
or assets (whether or not covered by insurance) which is
materially adverse to the business or financial condition of SCII
and its Subsidiaries, taken as a whole, or made any disposition
of any of its material properties or assets other than in the
ordinary course of business;
2. made any change or amendment in its certificate of
incorporation or by-laws, or other governing instruments;
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3. paid, discharged or satisfied any material claim, liability
or obligation (absolute, accrued, contingent or otherwise), other
than in the ordinary course of business;
4. prepaid any material obligation having a maturity of more
than 90 days from the date such obligation was issued or
incurred;
5. cancelled any material debts or waived any material claims
or rights, except in the ordinary course of business;
6. disposed of or permitted to lapse any rights to the use of
any material patent or registered trademark or copyright or other
intellectual property owned or used by it;
7. granted any general increase in the compensation of officers
or employees (including any such increase pursuant to any
employee benefit plan);
8. purchased or entered into any contract or commitment to
purchase any material quantity of raw materials or supplies, or
sold or entered into any contract or commitment to sell any
material quantity of property or assets, except (i) normal
contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary
course business, (ii) normal contracts or commitments for the
sale of, and normal sales of, inventory in the ordinary course of
business, and (iii) other contracts, commitments, purchases or
sales in the ordinary course of business;
9. written off or been required to write off any notes or
accounts receivable in an aggregate amount in excess of $2,000;
10. written down or been required to write down any inventory in
an aggregate amount in excess of $ 2,000;
11. entered into any collective bargaining or union contract or
agreement; or
12. other than the ordinary course of business, incurred any
liability required by generally accepted accounting principles to
be reflected on a balance sheet and material to the business or
financial condition of SCII and their subsidiaries taken as a
whole.
(j) Labor Relations. Neither SCII nor any of its Subsidiaries is a
party to any collective bargaining agreement. Except for any matter
which is not likely to have a material adverse effect on the business
or financial condition of SCII and its Subsidiaries, taken as a whole,
(a) SCII and its Subsidiaries is in compliance with all applicable
laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and is not engaged in
any unfair labor practice, (b) there is no unfair labor practice
complaint against SCII or any of its Subsidiaries pending before the
National Labor Relations Board, (c) there is no labor strike, dispute,
slowdown or stoppage actually pending or threatened against SCII or
any of its Subsidiaries, (d) no representation question exists
respecting the employees of SCII or any of its Subsidiaries, (e)
neither SCII nor any of its Subsidiaries has experienced any strike,
work stoppage or other labor difficulty, and (f) no collective
bargaining agreement relating to employees of SCII or any of its
Subsidiaries is currently being negotiated.
(k) Compliance with Law. The operations of SCII and its Subsidiaries
have been conducted in accordance with all applicable laws and
regulations of all Governmental Bodies having jurisdiction over them,
except for violations thereof which are not likely to have a material
adverse effect on the business or financial condition of SCII and its
Subsidiaries, taken as
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a whole, or which would not require a payment by SCII or its
Subsidiaries in excess of $2,000 in the aggregate, or which have been
cured. Neither SCII nor any of its Subsidiaries has received any
notification of any asserted present or past failure by it to comply
with any such applicable laws or regulations. SCII and its
Subsidiaries have all material licenses, permits, orders or approvals
from the Governmental Bodies required for the conduct of their
businesses, and are not in material violation of any such licenses,
permits, orders and approvals. All such licenses, permits, orders and
approvals are in full force and effect, and no suspension or
cancellation of any thereof has been threatened.
(l) Tax Matters.
1. Each of SCII and its Subsidiaries (1) has filed or shall
file prior to Closing all nonconsolidated and noncombined Tax
Returns and all consolidated or combined Tax Returns that include
only SCII and not Histostem or its other Affiliates (for the
purposes of this Section, such tax Returns shall be considered
nonconsolidated and noncombined Tax Returns) required to be filed
through the date hereof and will have paid any Tax due through
the date hereof with respect to the time periods covered by such
nonconsolidated and noncombined Tax Returns and shall timely pay
any such Taxes required to be paid by it after the date hereof
with respect to such Tax Returns and (2) shall prepare and timely
file all such nonconsolidated and noncombined Tax Returns
required to be filed after the date hereof and through the
Closing Date and pay all Taxes required to be paid by it with
respect to the periods covered by such Tax Returns; (B) all such
Tax Returns filed pursuant to clause (A) after the date hereof
shall, in each case, be prepared and filed in a manner consistent
in all material respects (including elections and accounting
methods and conventions) with such Tax Return most recently filed
in the relevant jurisdiction prior to the date hereof, except as
otherwise required by law or regulation. Any such Tax Return
filed or required to be filed after the date hereof shall not
reflect any new elections or the adoption of any new accounting
methods or conventions or other similar items, except to the
extent such particular reflection or adoption is required to
comply with any law or regulation.
2. Each of SCII and its Subsidiaries represents that prior to
Closing, all consolidated or combined Tax Returns (except those
described in subparagraph (1) above) required to be filed by any
person through the date hereof that are required or permitted to
include the income, or reflect the Activities, operations and
Transactions, of SCII and its Subsidiaries for any taxable period
shall have been timely filed, and the income, activities,
operations and Transactions of SCII and its Subsidiaries shall
have been properly included and reflected thereon. SCII and its
Subsidiaries shall prepare and file, or cause to be prepared and
filed, all such consolidated or combined Tax Returns that are
required or permitted to include the income, or reflect the
activities, operations and transactions, of SCII and its
Subsidiaries, with respect to any taxable year or the portion
thereof ending on or prior to the Closing Date, including,
without limitation, SCII' and Subsidiaries' consolidated federal
income tax return for such taxable years. Prior to Closing, SCII
and its Subsidiaries will timely file a consolidated federal
income tax return for the taxable year ended December 31, 2007
and such return shall include and reflect the income, activities,
operations and transactions of SCII and its Subsidiaries for the
taxable period then ended, and hereby expressly covenants and
agrees to file a consolidated federal income tax return, and to
include and reflect thereon the income, activities, operations
and Transactions of SCII and its Subsidiaries for the taxable
period through the Closing Date. All Tax Returns filed pursuant
to this subparagraph (2) after the date hereof shall, in each
case, to the extent that such Tax Returns specifically relate to
SCII and its Subsidiaries, be prepared and filed in a manner
consistent in all material respects (including elections and
accounting methods and conventions) with the Tax Return most
recently filed in the relevant jurisdictions
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prior to the date hereof, except as otherwise required by law or
regulation. Each of SCII and its Subsidiaries has paid or will
pay all Taxes that may now or hereafter be due with respect to
the taxable periods covered by such consolidated or combined Tax
Returns.
3. Neither SCII nor its Subsidiaries have agreed, or are
required, to make any adjustment (x) under Section 481(a) of the
Code by reason of a change in accounting method or otherwise or
(y) pursuant to any provision of the Tax Reform Act of 1986, the
Revenue Act of 1987 or the Technical and Miscellaneous Revenue
Act of 1988.
4. There is no (nor has there been any request for an)
agreement, waiver or consent providing for an extension of time
with respect to the assessment of any Taxes attributable to SCII
or its Subsidiaries, or their assets or operations and no power
of attorney granted by SCII or its Subsidiaries with respect to
any Tax matter is currently in force.
5. There is no action, suit, proceeding, investigation, audit,
claim, demand, deficiency or additional assessment in progress,
pending or threatened against or with respect to any Tax
attributable to SCII, its Subsidiaries or their assets or
operations.
6. All amounts required to be withheld as of the Closing Date
for Taxes or otherwise have been withheld and paid when due to
the appropriate agency or authority.
7. There shall be delivered or made available to Histostem at
or prior to Closing true and complete copies of all income Tax
Returns (or with respect to consolidated or combined returns, the
portion thereof) and any other Tax Returns requested by Histostem
as may be relevant to SCII, its Subsidiaries, or their assets or
operations for any and all periods ending after December 31,
2005, or for any Tax years which are subject to audit or
investigation by any taxing authority or entity.
(m) Environmental Matters.
1. At all times prior to the date hereof, SCII and its
Subsidiaries have complied in all material respects with
applicable environmental laws, orders, regulations, rules and
ordinances relating to the Properties (as hereinafter defined),
the violation of which would have a material adverse effect on
the business or financial condition of SCII and its Subsidiaries,
taken as a whole, or which would require a payment by SCII or its
Subsidiaries in excess of $2,000 in the aggregate, and which have
been duly adopted, imposed or promulgated by any legislative,
executive, administrative or judicial body or officer of any
Governmental Body.
2. The environmental licenses, permits and authorizations that
are material to the operations of SCII and its Subsidiaries,
taken as a whole, are in full force and effect.
(n) Periodic Reports. SCII represents and warrants that it is current
in all material respects with its filing obligations for periodic and
other reports to be filed with the US Securities and Exchange
Commission.
8. Stock Market Application.
--------------------------
SCII is a placeStateNevada public corporation that currently trades on the
over the counter bulletin board under the symbol "SCII". At the earliest date
eligible, SCII agrees to apply for trading to the American Stock Exchange or the
Nasdaq Small Cap Market.
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9. Fundraising.
-----------
(a). Fundraising Goal. The fundraising efforts to be jointly
undertaken by SCII and Investment Bankers on a best efforts basis will
attempt to achieve a total fund raising goal of $80,000,000. The
parties acknowledge that the actual amount of funding in each round
may be affected by many factors outside of the one or more of the
Parties' control, including the status of the audited financial
statements of the combined entity, the business plan accomplishments
of the new entity, and changes in market conditions.
(b). Best Efforts Basis. It is understood that the fundraising efforts
to be undertaken will be on a Best Efforts Basis, as that term is
understood by placecountry-regionU.S. investment bankers and public
companies raising capital
(c). Source of Capital. The capital required for operations by
Histostem shall be provided from newly issued stock of SCII (as a
combined entity). Any additional capital raised after the first round,
either through debt or equity or through any other security,
regardless of how the capital is raised, shall be disbursed as deemed
in the best interests of the combined companies by the Board of
Directors and in accordance with the terms of this Agreement with
respect to providing a budget for U.S. operations
(d).InitialRound. The work for the initial round of financing
commenced immediately upon the execution of a Memorandum of
Understanding executed on dateMonth2Day27Year2008February 27, 2008
with respect to the transactions contemplated by this Agreement, and
shall be paid as soon as the funds are available provided that at the
time of paying the funds the Histostem Financial Statements are
complete. The initial round will be undertaken by SCII and a
broker-dealer its selects on a best efforts basis for a total of up to
$5,000,000. Of this amount, $4,000,000 from the initial round of
financing will be used by Histostem for immediate operating capital,
and $1,000,000 shall be used by SCII according to a budget to be
determined solely by the current management of SCII.
(e) First Round. The first round of financing shall occur as soon as
reasonably possible but no later than six months following the initial
round financing, and will be undertaken by SCII on a best efforts
basis for a total of up to $25,000,000, with proceeds to be
distributed 60% to Histostem and 40% to SCII as the US parent company,
whose officers for U.S. operations shall determine the appropriate use
of proceeds with respect to the 40% of the proceeds
(f). Further Rounds. Other financing rounds will occur, beginning
within twelve months following the first round, and will be undertaken
on a best efforts basis for a overall total of up to $80,000,000
including proceeds from the first two rounds. Proceeds from these
further rounds will be used by Histostem and SCII for long term growth
and operations according to a Use of Proceeds statement to be approved
by the Board of SCII.
(g). Limitations on Liability for Best Efforts Financing. It is
understood that the ability to obtain financing is dependent on
several factors that are out of the control of Xx. Xxx and SCII,
including Histostem successfully implementing its business plan and
meeting its pro forma financial milestones, and current market
conditions. It is understood that Xx. Xxx and SCII shall incur no
liability with respect to those events or the resulting price per
share.
10. Antidilution. For a period of twenty-four months from the date of the
------------
first round of financing, the Parties agree not to attempt or implement any
reverse splits or other efforts to dilute the shares of the minority
shareholders of SCII. For the purposes of this clause, shares are diluted only
where such efforts result in the reduction of the value of the
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minority shareholders' stock. It is understood that shares are not diluted due
to stock issued in the course of the anticipated three rounds of financing.
11. Consultants. For a period of five years Xx. Xxxxxx and Global Capital
-----------
Corp. agree to provide ongoing services to SCII in accordance with the terms of
those certain Consulting Agreements providing for payments of $100,000 and
250,000 shares annually each, copies of which are to be attached as Exhibits A
and B hereto and which shall be approved and signed by all parties prior to the
closing
12. Legal Advisors. The law firm of Xxxxxxx, Xxxxxx and Green may be
---------------
considered to serve as legal advisor to Histostem and the new entity as
necessary.
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13.Notices.
-------
Any notice which any of the parties hereto may desire to serve upon any of
the other parties hereto shall be in writing and shall be conclusively deemed to
have been received by the party at its address, if mailed, postage prepaid,
United States mail, registered, return receipt requested, to the following
addresses:
If to Histostem: Histostem, Ltd.
518-4
placeCitySeoul Life Foundation Xxxx.
Xxxxxxx-xxxx, Xxxxxxxx-xx,
xxxxxXxxxXxxxx 000-000,
xxxxxxxxxxxx-xxxxxxXxxxx Xxxxx
Attn: Dr. Hoon Han, Chief Executive Officer
If to SCII: Stem Cell Therapy International, Inc.
0000 X. Xxxx Xxxxxx, 0xx Xxxxx
Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx Xxx, President
Copy to:
Xxxxxx Law Group
addressStreet3206 Xxxx Xxxxxxxxx Xxxxx
xxxxxXxxxXxxxxxx, XxxxxXX XxxxxxXxxx00000
Facsimile No.: (000) 000-0000
Attention: M. Xxxxxxx Xxxxxx
14. Successors.
----------
This Agreement shall be binding upon and inure to the benefit of the heirs,
personal representatives and successors and assigns of the parties.
15. Choice of Law.
---------------
This Agreement shall be construed and enforced in accordance with the laws
of the State of placeStateNevada, and the parties submit to the exclusive
jurisdiction of the courts of placeStateNevada in respect of all disputes
arising hereunder.
16. Counterparts.
------------
This Agreement may be signed in one or more counterparts, all of which
taken together shall constitute an entire agreement.
17. Confidential Information.
-------------------------
Each of Histostem and SCII hereby acknowledges and agrees that all
information disclosed to each other whether written or oral, relating to the
other's business activities, its customer names, addresses, all operating plans,
information relating to its existing services, new or envisioned products or
services and the development thereof, scientific, engineering, or technical
information relating to the others business, marketing or product promotional
material, including brochures, product literature, plan sheets, and any and all
reports generated to customers, with regard to customers, unpublished list of
names, and
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all information relating to order processing, pricing, cost and quotations, and
any and all information relating to relationships with customers, is considered
confidential information, and is proprietary to, and is considered the
invaluable trade secret of such party (collectively "Confidential Information").
Any disclosure of any Confidential Information by any party hereto, its
employees, or representatives shall cause immediate, substantial, and
irreparable harm and loss to the other. Each party understands that the other
desires to keep such Confidential Information in the strictest confidence, and
that such party's agreement to do so is a continuing condition of the receipt
and possession of Confidential Information, and a material provision of this
agreement, and a condition that shall survive the termination of this Agreement.
Consequently, each party shall use Confidential Information for the sole purpose
of performing its obligations as provided herein.
18. Public Announcement.
--------------------
The parties shall make no public announcement concerning this agreement,
their discussions or any other letters, memos or agreements between the parties
relating to this agreement until such time as they agree to the contents of a
mutually satisfactory press release which they intend to release on the date of
execution of this Agreement. Either of the parties, but only after reasonable
consultation with the other, may make disclosure if required under applicable
law. For the protection of the Company and its shareholders, for a period of
twelve-months following the Closing no press releases shall be issued by the
Company until such time as the proposed press release has been approved in
writing by legal counsel to the Company and by the U.S. operations management
team.
19. Entire Agreement.
-----------------
This Agreement sets forth the entire agreement and understanding of the
Parties hereto with respect to the transactions contemplated hereby, and
supersedes all prior agreements, arrangements and understandings related to the
subject matter hereof. No understanding, promise, inducement, statement of
intention, representation, warranty, covenant or condition, written or oral,
express or implied, whether by statute or otherwise, has been made by any Party
hereto which is not embodied in this Agreement or the written statements,
certificates, or other documents delivered pursuant hereto or in connection with
the transactions contemplated hereby, and no party hereto shall be bound by or
liable for any alleged understanding, promise, inducement, statement,
representation, warranty, covenant or condition not so set forth.
20. Costs and Expenses.
--------------------
Except as otherwise specifically set forth herein, each party will bear its
own attorneys, brokers, investment bankers, agents, and finders employed by,
such party. The parties will indemnify each other against any claims, costs,
losses, expenses or liabilities arising from any claim for commissions, finder's
fees or other compensation in connection with the transactions contemplated
herein which may be asserted by any person based on any agreement or arrangement
for payment by the other party.
21. Attorney's Fees.
-----------------
Should any action be commenced between the parties to this Agreement
concerning the matters set forth in this Agreement or the right and duties of
either in relation thereto, the prevailing party in such Action shall be
entitled, in addition to such other relief as may be granted, to a reasonable
sum as and for its Attorney's Fees and Costs.
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22. Finders.
--------
Histostem represents and warrants that there are no finders or other
parties which have represented Histostem in connection with this transaction
which have not received appropriate compensation. In the event any such finders
make a claim for any fee, share issuance of other compensation in connection
with the transactions contemplated hereby, they shall be the sole responsibility
of Histostem. SCII represents and warrants that there are no finders or other
parties which have represented SCII in connection with this transaction. In the
event any such finders make a claim for any fee, share issuance of other
compensation in connection with the transactions contemplated hereby, they shall
be the sole responsibility of SCII.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
For and on behalf of: Histostem Ltd
a Korean corporation
By: \s\ Dr. Hoon Han
-------------------------
Dr. Hoon Han
Chief Executive Officer
For and on behalf of: Stem Cell Therapy International, Inc.
a placeStateNevada corporation
By: \s\ Xxxxxx Xxx
-------------------------
Xxxxxx Xxx
President
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