STOCK EXCHANGE AGREEMENT
Exhibit
10.1
This
Stock Exchange Agreement (“Agreement”) between BioStem, Inc., a Nevada
corporation(“BioStem”), Joytoto Co., Ltd., a Korean company (“Joytoto”) and
Joyon Entertainment Co., Ltd., a Korean Company (“Joyon,” and together with
Joytoto, the “Shareholders”), being the owners of record of all of the issued
and outstanding stock of Joyon Entertainment, Inc., a Delaware corporation
(“JEI”), is entered into as of October 12, 2007
RECITALS
A. BioStem
is a public company quoted on the Nasdaq Over-The-Counter market
(OTCBB).
B. The
Shareholders own all of the issued and outstanding shares of common stock of
JEI
(the “JEI Stock”). JEI owns 100% of the capital stock of Joytoto
America, Inc. and Joytoto Technologies, Inc.
C. The
Shareholders have agreed to sell to BioStem and BioStem has agreed to purchase
the JEI Stock from the Shareholders in exchange for 115,000,000 common shares
of
BioStem, pursuant to the terms and conditions set forth in this
Agreement.
D. JEI
will
become a wholly-owned subsidiary of BioStem.
In
consideration of the mutual representations, warranties, covenants and
agreements contained in this Agreement, the parties agree as
follows:
1. Exchange
of
Stock.
(a) The
Shareholders agree to transfer to BioStem, and BioStem agrees to purchase from
the Shareholders, all of the Shareholders' right, title and interest in their
JEI Stock, representing 100% of the issued and outstanding stock of JEI, free
and clear of all mortgages, liens, pledges, security interests, restrictions,
encumbrances, or adverse claims of any nature.
(b) At
the
Closing (as defined in Section 2 below), upon surrender by the Shareholders
of
the certificates evidencing the JEI Stock duly endorsed for transfer to BioStem
or accompanied by stock powers executed in blank by the Shareholders, BioStem
will cause 115,000,000 shares of its common voting stock, par value $0.001
(the
“BioStem Stock”) to be issued to the Shareholders, in full satisfaction of any
right or interest which each Shareholder held in the JEI Stock. The
BioStem Stock will be issued to the Shareholders with a restrictive legend
as
required by applicable securities laws. As a result of the exchange
of the JEI Stock in exchange for the BioStem Stock, JEI will become a
wholly-owned subsidiary of BioStem.
2.
Closing.
(a) The
parties to this Agreement will hold a closing (the “Closing”) for the purpose of
executing and exchanging all of the documents contemplated by this Agreement
and
otherwise effecting the transactions contemplated by this
Agreement. The Closing will be held as soon as possible but not later
than October 15, 2007, in Santa Monica, California, unless another place or
time
is mutually agreed upon in writing by the parties. All proceedings to
be taken and all documents to be executed and exchanged at the Closing will
be
deemed to have been taken, delivered and executed simultaneously, and no
proceeding will be deemed taken nor documents deemed executed or delivered
until
all have been taken, delivered and executed. If agreed to by the
parties, the Closing may take place through the exchange of documents by fax
and/or express courier.
(b) With
the
exception of any stock certificates which must be in their original form, any
copy, fax, e-mail or other reliable reproduction of the writing or transmission
required by this Agreement or any signature required thereon may be used in
lieu
of an original writing or transmission or signature for any and all purposes
for
which the original could be used, provided that such copy, fax, e-mail or other
reproduction is a complete reproduction of the entire original writing or
transmission or original signature, and the originals are promptly delivered
thereafter.
(c) At
closing, BioStem shall have not more than fifty thousand dollars ($50,000)
of
accrued but unpaid accounts payable, and shall have no other
liabilities.
3.
Representations
and Warranties of BioStem.
BioStem
represents and warrants as follows:
(a) BioStem
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Nevada and is licensed or qualified as a foreign
corporation in all states in which the nature of its business or the character
or ownership of its properties makes such licensing or qualification
necessary.
(b) The
only
authorized capital stock of BioStem, as of the Closing Date, shall consist
of
310,000,000 shares of capital stock, of which 300,000,000 shares will be common
stock, $0.001 par value per share, of which, based on the records of BioStem's
stock transfer agent, not more than 34,500,000 shares will be issued and
outstanding as of the closing date, and 10,000,000 shares of preferred stock,
of
which none shall be outstanding as of the closing date. There shall
be 21,000,000 warrants to purchase common stock at an exercise price of $0.10
per share, and 3,400,000 warrants to purchase common stock at an exercise price
of $0.35 per share, outstanding as of the closing date. To the best
knowledge of BioStem, all issued and outstanding shares of BioStem's common
stock are fully paid and nonassessable.
(c) BioStem
will have no subsidiaries as of the closing date.
(d) Execution
of this Agreement and performance by BioStem hereunder has been or will be
duly
authorized by all requisite corporate action on the part of BioStem, and this
Agreement constitutes a valid and binding obligation of BioStem, and BioStem's
performance hereunder will not violate any provision of any charter, bylaw,
indenture, mortgage, lease, or agreement, or any order, judgment, decree, or,
to
BioStem's knowledge any law or regulation, to which any property of BioStem
is
subject or by which BioStem is bound.
(e) BioStem
has full corporate power and authority to enter into this Agreement and to
carry
out its obligations hereunder, and will deliver at the Closing a copy of
resolutions of its board of directors authorizing execution of this Agreement
by
its officers and performance hereunder.
(f) BioStem
has provided all financial statements and financial information in its
possession as have been requested byte Shareholders.
(g) There
is
no litigation or proceeding pending, or to BioStem's knowledge threatened,
against or relating to BioStem, its properties or business.
(h) BioStem
is acquiring the JEI Stock to be transferred to it under this Agreement for
investment and not with a view to the sale or distribution thereof.
4.
Representations
and Warranties of the Shareholders.
The
Shareholders, jointly and severally, represent and warrant as
follows:
(a) JEI
is a
corporation duly organized, validly existing, and in good standing under the
laws of Delaware and is licensed or qualified as a foreign corporation in all
places in which the nature of its business or the character or ownership of
its
properties makes such licensing or qualification necessary.
(b) There
are
no agreements purporting to restrict the transfer of the JEI Stock, nor any
voting agreements, voting trusts or other arrangements restricting or affecting
the voting of the JEI Stock. The JEI Stock held by the Shareholders
are duly and validly issued, fully paid and non-assessable, and issued in full
compliance with all federal, state, and local laws, rules and
regulations. There are no subscription rights, options, warrants,
convertible securities, or other rights (contingent or otherwise) presently
outstanding, for the purchase, acquisition, or sale of the capital stock of
JEI,
or any securities convertible into or exchangeable for capital stock of JEI
or
other securities of JEI, from or by JEI.
(c) The
Shareholders have full right, power and authority to sell, transfer and deliver
the JEI Stock, and upon delivery of the certificates therefore as contemplated
in this Agreement, the Shareholders will transfer to BioStem valid and
marketable title to the JEI Stock, including all voting and other rights
to the
JEI Stock, free and clear of all pledges, liens, security interests, adverse
claims, options, rights of any third party, or other encumbrances.
(d) There
is
no litigation or proceeding pending, or to any Shareholder's knowledge,
threatened, against or relating to JEI or to the JEI Stock.
(e) JEI
has
filed in correct form all tax returns of every nature required to be filed
by it
and has paid all taxes as shown on such returns and all assessments, fees
and
charges received by it to the extent that such taxes, assessments, fees and
charges have become due.JEI has also paid all taxes which do not require
the
filing of returns and which are required to be paid by xx.Xx the extent that
tax
liabilities have accrued, but have not become payable, they have been adequately
reflected as liabilities on the books of JEI.
(f) The
JEI
shareholders have had the opportunity to perform all due diligence
investigations of BioStem and its business as they have deemed necessary
or
appropriate and to ask questions of BioStem's officers and directors and
have
received satisfactory answers to all of their questions. The Shareholders
have
had access to all documents and information about BioStem and have reviewed
sufficient information to allow them to evaluate the merits and risks of
their
exchange for the BioStem Stock.
(g) The
Shareholders are acquiring the BioStem Stock for their own account (and not
for
the account of others) for investment and not with a view to the distribution
therefor.The Shareholders will not sell or otherwise dispose of the BioStem
Stock without registration under the Securities Act of 1933, as amended,
or an
exemption therefrom, and the certificate or certificates representing the
BioStem Stock will contain a legend to the foregoing effect.
5.
Additional
Covenants.
(a) Between
the date of this Agreement and the Closing, the Shareholders, with respect
to
JEI, and BioStem, with respect to itself, will, and will cause their respective
representatives to: (i) afford the other party and its representatives access
to
their personnel, properties, contracts, books and records, and other documents
and data, as reasonably requested by the other party; (ii) furnish the other
party and its representatives with copies of all such contracts, books and
records, and other existing documents and data as the other may reasonably
request in connection with the transaction contemplated by this Agreement;
and
(iii) furnish the other party and its representatives with such additional
financial, operating, and other data and information as the other may reasonably
request.
6.
Termination.
This
Agreement may be terminated (1) by mutual consent in writing; (2) by either
the
Shareholders or BioStem if there has been material misrepresentation or material
breach of any warranty or covenant by any other party that is not cured by
October 15, 2007; or (3) by any of the Shareholders or BioStem if the Closing
has not taken place within 45 business days following execution of this
Agreement, unless adjourned to a later date by mutual consent in
writing.
7.
Expenses.
Whether
or not the Closing is consummated, each of the parties will pay all of his,
her,
or its own legal and accounting fees and other expenses incurred in the
preparation of this Agreement and the performance of the terms and provisions
of
this Agreement.
8. Survival
of Representations and Warranties.
The
representations and warranties of the Shareholders and BioStem set out in
this
Agreement will survive the Closing for a period of 30 days.
9. Waiver.
Any
failure on the part of either party hereto to comply with any of its
obligations, agreements, or conditions hereunder may be waived in writing
by the
party to whom suchcompliance is owed.
10. Brokers.
Each
party agrees to indemnify and hold harmless the other party against any fee,
loss, or expense arising out of claims by brokers or finders employed or
alleged
to have been employedby the indemnifying party.
11. General
Provisions.
(a) This
Agreement will be governed by and under the laws of the State of Nevada,
USA
without giving effect to conflicts of law principles.If any provision hereof
is
found invalid or unenforceable, that part will be amended to achieve as nearly
as possible the same effect as the original provision and the remainder of
this
Agreement will remain in full force and effect.
(b) Any
dispute arising under or in any way related to this Agreement will be resolved
by binding arbitration under the commercial arbitration rules of the American
Arbitration Association in Santa Monica, California.
(c) In
any
adverse action, the parties will restrict themselves to claims for compensatory
damages and/or securities issued or to be issued and no claims will be made
by
any party or affiliate for lost profits, punitive or multiple damages or
any
other consequential damages.
(d) This
Agreement constitutes the entire agreement and final understanding of the
parties with respect to the subject matter hereof and supersedes and terminates
all prior and/or contemporaneous understandings and/or discussions between
the
parties, whether written or verbal, express or implied, relating in any way
to
the subject matter hereof.This agreement may not be altered, amended, modified
or otherwise changed in any way except by a written agreement, signed by
both
parties.
(e) This
Agreement will inure to the benefit of, and be binding upon, the parties
hereto
and their successors and assigns; provided, however, that any assignment
by
either party of its rights under this Agreement without the written consent
of
the other party will be void.
(f) The
parties agree to take any further actions and to execute any further documents
which may from time to time be necessary or appropriate to carry out the
purposes of this Agreement.
(g) The
headings of the Sections, paragraphs and subparagraphs of this Agreement
are
solely for convenience of reference and will not limit or otherwise affect
the
meaning of any of the terms or provisions of this Agreement.The references
in
this Agreement to Sections, unless otherwise indicated, are references to
sections of this Agreement.
(h) This
Agreement may be executed in counterparts, each one of which will constitute
an
original and all of which taken together will constitute one document.This
Agreement may be executed by delivery of a signed signature page by fax to
the
other parties hereto and such fax execution and delivery will be valid in
all
respects.
BIOSTEM,
INC.
By:/s/
Xxxx Xxxxxxxx
Xxxx
Xxxxxxxx
Chief
Executive Officer
JOYTOTO
CO. LTD.
By:/s/
Seong Xxx Xxx
Name:
Xxx, Xxxxx Xxx
Title:
Chairman
JOYON
ENTERTAINMENT CO., LTD.
By:/s/
Seong Xxxx Xxx
Name:
Xxx, Xxxxx Yong
Title:
Chief Executive Officer
