SETTLEMENT AGREEMENT AND RELEASE PARTIES

Exhibit 10.1

SETTLEMENT AGREEMENT AND RELEASE

PARTIES

This SETTLEMENT AGREEMENT AND RELEASE (the “Agreement”) is dated as of September 4, 2009 and is entered into by and among the following natural persons and corporations which are parties to various cases now pending before the Los Angeles Superior Court, as set forth below, plus one company which is not a party but highly interested in the proceedings:

HISTOSTEM, INC. (“H-USA”) is a corporation, formed and existing under the laws of the State of Delaware, and based in Los Angeles, California.

HISTOSTEM CORP. (“HK”) is a corporation, formed and existing under the laws of South Korea, and based in Seoul, South Korea. HK is a party to the Reorganization and Stock Exchange Agreement (the “Merger”) with Stem Cell Therapy International, Inc.

STEM CELL THERAPY INTERNATIONAL, INC. (“SCII” or the “Company”) is a corporation formed and existing under the laws of the State of Nevada and based in Tampa, Florida. SCII is a Party to this Agreement, but is not a party to any of the Litigation set forth below. SCII is a party to the Merger with HK.

DR. HOON HAN (“Dr. Han”) is a natural person and resident of South Korea. He is a founder, major shareholder, Chairman and Chief Executive Officer of HK.

MICHAEL SHEN (“Mr. Shen”) is a natural person and resident of California, and CEO of H-USA.

ROBERT C. ROSEN (“Mr. Rosen”) is a natural person, and an attorney at law in the state of California.

ROSEN & ASSOCIATES, P.C. (“Rosen & Associates” or “R&A” collectively, with Mr. Rosen, “the Rosen Parties”) is a Professional Corporation formed and existing under the laws of the State of California. Mr. Rosen is the President of Rosen & Associates.

THE LITIGATION

Histostem, Inc. v. Histostem Corp . American Arbitration Association Case No. 50 133 T 00059 06 (“AAA Arbitration”). This Arbitration was initiated by H-USA against HK for breach of the Underlying Agreements.

 

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Histostem, Inc. v. Han. Los Angeles Superior Court (“LASC”) Case No. BC 355 927. The present parties are HK, H-USA, Dr. Hoon Han and Mr. Shen.

Rosen et al. v. Han LASC Case No. BC 398 577 (related to BC 355 927) Plaintiffs. The Rosen Parties sued Dr. Han for Malicious Prosecution.

Histostem et al v. Han , Court of Appeal, Case No. B212338

This is an appeal by HK from the granting of a Motion for Summary Judgment granted by the Hon. Terry A. Green in BC 355 92; the Notice of Appeal was filed on November 26, 2008.

The litigation matters above are also referred to as the “Actions.” The Actions are resolved as a result of this settlement. H-USA, Mr. Shen and the Rosen Parties are also referred to herein as “Plaintiffs.” HK and Dr. Han are also referred to herein as “Defendants.” Plaintiffs and Defendants and SCII are referred to individually, as appropriate, as “Party” and collectively as the “Parties.”

TERMS OF THE SETTLEMENT

NOW THEREFORE, in consideration of the mutual promises set forth herein and other valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows:

CONTINGENT ON CLOSE OF SCII-HK MERGER

This Agreement is contingent upon the close of the SCII-HK Merger and specifically, this Agreement is contingent that at the close of the SCII-HK Merger, SCII will acquire no less than 90% of the total fully diluted equity of HK and this settlement is also contingent upon, if HK merges with any entity prior to the close of the Merger with SCII, HK being the surviving entity. This Agreement is also contingent upon the terms of the HK-SCII merger not materially varying from those described in filings made with the SEC commencing in March 2008 to the date the last signatory executes this Agreement. These filings with the SEC include, but are not limited to, the Reorganization and Stock Purchase Agreement dated as of March 10, 2008 and all Amendments thereto (the “Merger”). The only material alterations to the terms of the Merger as described in SEC filings are described in detail in Exhibit A hereto (which shall be completed by Defendants and SCII within 15 days of the final execution of this Agreement).

A merger meeting all of these conditions described in the above paragraph shall be referred to as the Qualifying SCII-HK Merger, and the closing of such shall be referred to as a “Qualified Closing.” A Qualified Closing must take place within the time specified in one of the following (i) or (ii): (i) a Qualified Closing must occur by November 30, 2009 or such date thereafter as it may be extended by the Extension

 

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Option (as defined below); OR (ii) if, and only if, the shareholder vote on the HK-SCII merger is made by written consent and filing of an Information Statement with the SEC, a Qualified Closing has not occurred by October 31, 2009 or such date thereafter as it may be extended by the Extension Option (as defined below). The specific dates referenced in subsections (i) and (ii) in the immediately preceding sentence (November 30, 2009 and October 31, 2009, respectively) shall be automatically deemed extended by ninety (90) calendar days unless Robert Rosen, on behalf of all holders of these and the other Warrants issued pursuant to the Settlement Agreement the “Holders”), gives written notice to SCII that the extension is declined by the Holders (the Extension Option”).

If a Qualified Closing does not take place within the time as specified immediately above, then this Agreement shall be null and void and of no further force and effect. All cash, warrants and other consideration shall be returned by Plaintiffs and the Parties will continue with the Actions, except that all parties shall stipulate to the dismissal of SCII from any actions in which it is then a party. The remaining parties will then work together to set trial dates as soon as practical.

CONSIDERATION BY DEFENDANTS

CASH

Defendants shall pay $100,000 as follows: $33,333 upon the execution of this Agreement; $33,333 on September 4, 2010; and $33,334 on September 4, 2011. Payments shall be made to the Rosen and Associates, P.C. Trust Account.

To assure that Defendants comply with the second and third cash payment obligations, Defendants shall cause SCII to issue two stock certificates of SCII common shares, in the denomination of 200,000 shares each made out to “Histostem, Inc., a Delaware company” (the “Certificate” or “Certificates”). R&A shall hold in escrow the two Certificates. If Defendants fail to make the second $33,333 payment on or before September 4, 2010, Plaintiffs shall have the option to turn over to H-USA the first Certificate which shall be honored by Defendants and SCII, in all respects. If Defendants do make the second payment by September 4, 2010, R&A shall mark the Certificate cancelled and return it to Robert Ross. If Defendants fail to make the third $33,334 payment on or before September 4, 2011, Plaintiffs shall have the option to turn over to H-USA the second Certificate which shall be honored by Defendants and SCII in all respects. If Defendants do make the third payment by September 4, 2011, R&A shall mark the Certificate cancelled and return it to Robert Ross.

Plaintiffs shall have the further right to seek the Court’s enforcement pursuant to CCP Section 664.6 if Defendants fail to make one or both of the cash payments and Plaintiffs cannot have full use of either or both Certificates.

 

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If Plaintiffs receive any or all of the shares represented by the Certificates, such shares shall not be included in any calculations made pursuant to the Equity in SCII section below.

EQUITY IN SCII

Warrants . SCII estimates that the number of its fully diluted total outstanding shares of common stock as of the fifth trading day following the closing of the SCII-HK Merger will be One Hundred Twenty Three Million, Two Hundred Thirty Eight Thousand, Five Hundred Thirty Eight (123,238,538). It is an objective of this Settlement Agreement that Plaintiffs, including their designees, will receive warrants for shares representing seven-and-one-half percent of the fully diluted total outstanding shares of common stock as of the fifth trading day following the closing of the SCII-HK merger. This objective will be accomplished by the issuance of Initial Warrants, Adjustment Warrants, and True-Up Warrants, as described below.

LIST OF WARRANT RECIPIENTS . Plaintiffs shall provide to SCII the names of up to ten persons (which may include an entity or a trust or joint tenancy as a single title holder) to whom the Warrants shall be issued (“Recipients”) and for each Recipient, the number of shares to be received by such person upon exercise of the Warrants. The list will require SCII to issue not more than ten (10) Initial Warrants. Plaintiffs represent that Plaintiffs have disclosed, and will disclose, to each Recipient only such information about SCII as has been filed with the Securities and Exchange Commission, and have made no representations to Recipients about the future of SCII, its financial projections or the future value of its shares. Plaintiffs will provide to SCII an executed certificate, signed by each Recipient, containing the following language:

LIMITATION ON EXERCISE AND SALES . Each holder of this Warrant acknowledges that this Warrant and the Warrant Shares have not been registered under the Securities Act, as of the date of issuance hereof and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant, or any Warrant Shares issued upon its exercise, in the absence of (i) an effective registration statement under the Securities Act as to this Warrant or such Warrant Shares, as the case may be, under any applicable Blue Sky or state securities law then in effect or (ii) an opinion of counsel, satisfactory to the SCII, which shall be acted upon by SCII within five (5) business days upon receipt and shall not be unreasonably withheld, that such registration and qualification are not required.

SCII shall be under no obligation to issue the shares covered by such exercise unless and until the Warrant Holder shall have

 

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executed a representation and warranty that states that he will not transfer the Warrant Shares unless pursuant to an effective and current registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act and any other applicable restrictions, in which event the Warrant Holder shall be bound by the provisions of a legend or legends to such effect that shall be endorsed upon the certificate(s) representing the Warrant Shares issued pursuant to such exercise. In such event, the Warrant Shares issued upon exercise hereof shall be imprinted with a legend in substantially the following form:

This security has been acquired for investment and has not been registered under the Securities Act of 1933, as amended, or applicable state securities laws. This security may not be sold, pledged or otherwise transferred in the absence of such registration or pursuant to an exemption there from under said Act and such laws, supported by an opinion of counsel, reasonably satisfactory to the SCII and its counsel, that such registration is not required.”

INITIAL WARRANTS

Following execution of this Settlement Agreement and within five business days after SCII’s receipt of the List of Recipients from Plaintiffs described above, SCII will issue up to ten warrants in the form attached as Exhibit B hereto for the purchase by Recipients of a total of Nine Million, Two Hundred and Forty Two Thousand, Eight Hundred and Ninety (9,242,890) shares of common stock of SCII, par value $.001, at an exercise price of One-Tenth of One Cent ($.001) per share (the “Initial Warrants”). SCII shall deliver the Initial Warrants to Rosen & Associates.

ADJUSTMENT WARRANTS

Initial Warrant Adjustment Period . The time period beginning September 4, 2009 and ending on the date SCII issues the Initial Warrants described above shall be known as the “Initial Warrant Adjustment Period”.

Bases for Adjustment.

Adjustment Warrants will be issued by SCII to the Recipients, if, but only if, SCII shall do any of the following Bases for Adjustment during the Initial Warrant Adjustment Period:

(a) pay a dividend or make a distribution on its Common Stock in shares of Common Stock;

(b) subdivide its outstanding shares of Common Stock into a greater number of shares;

 

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(c) combine its outstanding shares of Common Stock into a smaller number of shares; or

(d) issue by reclassification of its outstanding shares of Common Stock any shares of its capital stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation).

Adjustment of Initial Warrants .

In the event a Basis for Adjustment occurs during the Initial Warrant Adjustment Period, as described above, SCII shall calculate an adjustment in the total number of shares of common stock of SCII subject to the Initial Warrants. The objective of the calculation is to reflect a fair allocation of the economic effects of the event that has occurred and is a Basis for Adjustment, so that the number of shares subject to Warrants after adjustment is seven-and-one-half percent (71/2%) of the fully diluted total outstanding number of shares of common stock of SCII following the event constituting the Basis for Adjustment.

For example if there occurred a three-for-one split of the common stock of SCII during the Initial Warrant Adjustment Period, then additional Warrants for three times the number of shares specified in the Initial Warrants would be issued; if there was a stock dividend of one share of common stock for every outstanding share, then the number of shares specified in the Initial Warrants would be doubled. Such adjustments shall be made successively whenever any event listed above shall occur.

Adjustments shall be made pro rata for each Recipient.

If the result of adjustment calculation is that warrants for additional shares of SCII common stock are appropriate, then SCII shall issue not more than ten warrants for the additional shares in the form attached as Exhibit B hereto; these shall be called “Additional Warrants.” SCII shall deliver the Additional Warrants, if any, to Rosen & Associates.

TRUE-UP CALCULATION ADJUSTMENT WARRANTS

The True-Up Calculations. Within ten (10) business days after the fifth trading day for SCII common stock following a Qualified Closing of the SCII-HK Merger, SCII shall perform a “true-up” calculation of the total number of fully diluted outstanding shares of SCII common stock, in accordance with the provisions below. SCII shall next multiply that total number by seven-and-one-half percent (71/2%); the resulting number of shares of SCII common stock will be known as the “True-Up Number.”

From the True-Up Number, SCII shall subtract the shares in the Initial Warrants, and shall also subtract the shares in the Additional Warrants. The resulting number of shares of SCII common stock, if greater than zero, will be known as the True-Up Adjustment Number.

 

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Provisions for making True-Up Calculations .

The total number of fully diluted outstanding shares of common stock of SCII shall be calculated using the Treasury Stock Method as defined by generally accepted accounting principle in the United States. In addition to shares of issued and outstanding common stock, it shall include all preferred stock, convertible preferred stock, options, warrants, convertible debt and all commitments to issue any of such, all as specified or limited below.

In making the calculation, it shall be assumed that :

(a) All conversions into common stock of all convertible preferred stock, options, warrants and convertible debt have been exercised.

(b) The exercise prices of all SCII convertible preferred stock, options, warrants and convertible debt shall be the prices pursuant to the terms of said convertible preferred stock, options, warrants and convertible debt.

(c) All arrangements and commitments, whether oral or written, to obtain SCII securities or convert to SCII securities shall be included in the calculation.

(d) All proceeds from the exercise of the convertible preferred stock, options, warrants and convertible debt shall be used to purchase common stock at the Weighted Average Closing Market Price for the five trading days following Qualified Closing of the Merger between HK and SCII.

Weighted Average Closing Market Price Example. Assume that the following are the closing market price and volume of shares traded on the 5 trading days following the Qualified close of the Merger between SCII and HK:

 

Therefore the Weighted Average Closing Market Price under the above example would be $540,000/520,000 or $1.038 Per share.

(e) Notwithstanding the foregoing, convertible preferred stock, options, warrants and convertible debt shall have a dilutive effect under the Treasury Stock Method (i.e. be counted) only when the Weighted Average Market Price of the common stock exceeds the exercise price of the convertible preferred stock, options, warrants and convertible debt (they are “in the money”).

 

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Issuance of True-Up Adjustment Warrants

Based upon the calculations described above, within ten business days after the close of the fifth trading day after a Qualified Closing of the Merger between HK and SCII, SCII will issue up to ten warrants, in the form attached as Exhibit B hereto, for the purchase of the same number of shares of SCII common Stock as the True-Up Adjustment Number. Such shares will have a par value of $.001, and an exercise price of One-Tenth of One Cent ($.001) per share. These Warrants shall be known as “True-Up Adjustment Warrants.”

The True Up Adjustment Warrants shall be issued in the names of the Recipients as previously provided by Plaintiffs and in the same percentage to each as the Initial Warrants were issued to each Recipient.

As a result of the True-Up Adjustment Warrants, the Recipients shall collectively have received, through the sum of the shares for purchase under the Initial Warrants, the Adjustment Warrants and the True-Up Adjustment Warrants a total number of shares amounting to seven-and-one-half percent (71/2%) of the total fully-diluted outstanding shares of common stock of SCII.

None of the Parties to this Agreement shall do anything, directly or indirectly, out of the ordinary to affect the Weighted Average Closing Market Price for the five trading days following the Qualified Close of the Merger between HK and SCII. Notwithstanding the above, SCII and HK, as it has done in the past for similar events, shall immediately, upon execution of this Agreement, issue a press release describing the terms of the Agreement; and, immediately following the Qualified Close of the Merger between HK and SCII, issue a press release describing the terms of the Merger and that SCII has acquired ninety percent (90%) of the equity of HK,

SCII shall convert all warrants for shares of stock in SCII when validly presented for conversion by Plaintiff or its designees.

 

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REPRESENTATIONS AND WARRANTIES OF DEFENDANTS AND SCII

Defendants and SCII represent and warrant that this Settlement Agreement and the Reorganization and Stock Exchange Agreement, as amended, do not violate any material provision of any corporate article, bylaw or resolution of their respective companies, or any law or regulation of the United States or the Republic of Korea.

SCII represents and warrants that this Settlement Agreement and the Reorganization and Stock Exchange Agreement, as amended, do not violate any provision of any material contract of SCII.

Defendants represents and warrants that this Settlement Agreement and the Reorganization and Stock Exchange Agreement, as amended, do not violate any provision of any material contract of SCII or HK.

Defendants represent and warrant that the shares of HK stock that has been or will be issued to SCII as part of the terms of the Merger are validly issued and authorized to be issued pursuant to: all requisite corporate powers including all articles, bylaws and shareholder and Board of Director resolutions; as well as all governmental laws, rules and regulations.

SCII represent and warrant that the Warrants to be issued under this Agreement and the Shares to be issued upon the conversion of the Warrants shall be validly issued and authorized pursuant to all requisite corporate powers including all articles, bylaws and shareholder and Board of Director resolutions; as well as all applicable United States and Nevada laws, rules and regulations.

Defendants and SCII represent and warrant that they plan to continue with their Merger in all material aspects and that no other merger or other activities will interfere with SCII obtaining ownership of ninety percent (90%) of the stock of HK if a Qualified Closing occurs.

Defendants and SCII represent and warrant that this Settlement Agreement has been reviewed and approved by all the members of HK’s Board of Directors and by all the members of SCII’s Board of Directors. Defendants and SCII represent and warrant that the persons executing this Agreement on behalf of HK and SCII have all the requisite corporate power to execute this Agreement.

Defendants and SCII represent and warrant that each and all of them have read this Agreement and have had the opportunity to consult with their own counsel about any questions they may have about this Agreement.

Defendants and SCII represent and warrant that Robert C. Rosen, Esq., and Rosen & Associates, P.C. do not represent any of the Defendants, have never represented any of the Defendants and do not represent any of the Defendants or SCII with respect to this Agreement.

 

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Defendants and SCII represent and warrant that neither they nor any other person, to their knowledge, on either their behalf and/or at their request and/or otherwise, has knowledge of any options, warrants or conversion rights concerning SCII other than as disclosed in SCII filings with the SEC or as identified herein.

Defendants represent and warrant that the representations and warranties of HK as contained in the Reorganization and Stock Purchase Agreement filed with the SEC in March 2008, particularly Paragraph 6(a) through (j)1-10 – with the exception of Paragraph 6(I) – are true accurate and complete.

REPRESENTATIONS AND WARRANTIES OF PLAINTIFFS

Plaintiffs represent and warrant that this Agreement has been reviewed and approved by all the members of H-USA’s Board of Directors. The person executing this Agreement on behalf of H-USA and R & A have all the requisite corporate power to execute this Agreement.

Plaintiffs warrant that each and all of them have read this Agreement and have had the opportunity to consult with their own counsel about any questions they may have about this Agreement.

CONSIDERATION BY PLAINTIFFS

Waiver of Claims. Effective upon the issuance by SCII of the True-Up Adjustment Warrants, Plaintiffs agree that all of their claims that have accrued or arisen as of that date, other than for enforcement of the provisions of this Settlement Agreement, shall be and hereby are waived and shall be time-barred. Plaintiffs agree they not pursue any such claims in arbitration or litigation in the future.

Mutual General Releases.

Plaintiffs . Effective upon the issuance by SCII of the True Up Adjustment Warrants, Plaintiffs, and each of them, on behalf of themselves and their successors, assigns, beneficiaries, administrators, employees, independent contractors, partners, associates, agents, representatives, principals, trusts, trustees and/or attorneys and/or all other persons acting through, under and/or in concert with them hereby voluntarily, knowingly and willingly release and discharge SCII and each of the Defendants, from any and all liabilities, claims, damages, causes of action,

 

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obligations, demands, equitable relief, injunctions, declaratory relief, rescission of any agreement, losses, compensation, wages, commissions, grievances, suits, proceedings, costs, fees and/or expenses of any kind and/or nature whatsoever, past and/or present, ascertained and/or unascertained, known and/or unknown, suspected and/or unsuspected, claimed and/or unclaimed which they have, and/or have ever had by virtue of any act, omission, reason, cause and/or thing relating to the Actions and/or which could have been asserted in the Actions, at any time whatsoever and/or for any reason whatsoever, and/or including, but not limited to the claims set forth in the Complaints, except for the enforcement of rights and obligations under this Settlement Agreement.

Defendants . Defendants and SCII, and each of them, on behalf of themselves and Defendants’ and SCII’s successors, assigns, beneficiaries, administrators, employees, independent contractors, partners, associates, agents, representatives, principals, trusts, trustees and/or attorneys and/or all other persons acting through, under and/or in concert with them, hereby voluntarily, knowingly and willingly releases and discharges each of the Plaintiffs from any and all liabilities, claims, damages, causes of action, obligations, demands, equitable relief, injunctions, declaratory relief, rescission of any agreement, losses, compensation, wages, commissions, grievances, suits, proceedings, costs, fees and/or expenses of any kind and/or nature whatsoever, past and/or present, ascertained and/or unascertained, known and/or unknown, suspected and/or unsuspected, claimed and/or unclaimed which they have, and/or have ever had by virtue of any act, omission, reason, cause and/or thing relating to the Actions and/or which could have been asserted in the Actions, at any time whatsoever and/or for any reason whatsoever, and/or including, but not limited to the claims set forth in the Cross-Complaints, except for the enforcement of rights and obligations under this Settlement Agreement.

Remised Claims . Remised Claims: The Parties hereto acknowledge that HK and Dr. Han obtained a common stock interest in H-USA at or after the time of its formation which interest has subsequently been relinquished and that Shen and Rosen obtained option rights to purchase equity interests in HK. All parties hereto further acknowledge and confirm that all such rights have been and hereby are remised and relinquished and neither HK nor Dr. Han have or claim any interest in H-USA and neither Shen nor Rosen have or claim any interest in HK.

Unknown Claims . It is the intention of the Parties to this Agreement that this Agreement shall be effective as a full mutual general release of each and every released matter set forth above pertaining to any and all actions, disputes and claims which exist between the Plaintiffs, Defendants and SCII at the time of executing this Agreement, including without limitation all claims which were and/or could have been raised by the Plaintiffs and Defendants against one another in the Actions.

 

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Familiarity with Section 1542 . In furtherance of this intention, the Parties acknowledge that they are familiar with and understand Section 1542 of the Civil Code of the State of California. Section 1542 of the California Civil Code provides as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

Waiver of Section 1542. The Plaintiffs, Defendants and SCII expressly waive and relinquish every claim, right and/or benefit which they may have subject to California Civil Code § 1542. to the fullest extent that the Plaintiffs, Defendants and SCII may lawfully waive such claim, right and/or benefit. In connection with such waiver and relinquishment, the Plaintiffs, Defendants and SCII acknowledge that they are each aware that she/he/it may hereafter discover facts in addition to and/or different from those which are known and/or believed to be true with respect to the subject matter of this Agreement, and that it is the intention of the Plaintiffs, Defendants and SCII hereby to fully, finally and forever settle and release all matters, disputes, differences, known and/or unknown, suspected and/or unsuspected, which may now exist and/or heretofore have existed by and among the Parties The release given herein shall be and remain in effect as a full and complete release, notwithstanding the discovery and/or existence of any such additional and/or different facts, except only that the release in this paragraph shall not apply to the enforcement of rights and obligations of each of the Parties under and pursuant to the terms of this Settlement Agreement.

COURT RETAINS JURISDICTION

CCP Section 664.6 provides in part: “if requested by the Parties, the Court may retain jurisdiction over the Parties to enforce the settlement until performance is full of the terms of the settlement.”

Pursuant to CCP Section 664.6 the Los Angeles Superior Court shall retain jurisdiction over the parties to Histostem Inc. v. Han, Case No. BC 355 927 to enforce the terms of this Settlement Agreement.

At the insistence of the parties and to accommodate them, SCII agrees to and shall move to intervene in the Histostem Inc. v. Han lawsuit for the limited purpose,

 

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and only to the extent, if any, that it may fail to honor the Certificates or to issue Warrants as provided in this Settlement Agreement, so that the Los Angeles Superior Court may require specific performance from SCII of these obligations under this Settlement Agreement and for no other purpose.

DISMISSAL

Within seven days after the later of:

(a) a Qualified Closing of the Merger between SCII and HK;

(b) the issuance by SCII of the True Up Adjustment Warrants;

(c) the payment by Defendants of the first cash installment of $33,333; and

(d) the delivery by SCII of two 200,000 share Certificates to Rosen & Associates, all as described hereinabove,

Plaintiffs and Defendants shall cause the Actions to be dismissed (with the exception of Histostem v. Han , which shall remain open for the sole purpose of enforcing the remaining terms of this Agreement pursuant to CCP Section 664.6) and shall serve such dismissal by fax and U.S. mail.

MISCELLANEOUS PROVISIONS

1. Attorneys’ Fees. Each of the parties to the Actions agree to bear all of their own respective costs and expenses of litigation, including court and arbitration costs, legal and/or attorneys’ fees, experts’ fees, expenses and filing fees.

2. Binding. This Settlement Agreement, together with the general release herein contained, shall be binding upon and inure to the benefit of all of the Parties.

3. Entire Agreement. Including the Reorganization and Stock Exchange Agreement, as amended, and its exhibits and schedules, and the exhibits hereto, this Settlement Agreement constitutes the entire agreement among the Parties. The Parties represent and warrant that all prior negotiations and understandings and agreements in principle by and amongst the Parties are superseded and replaced by this Agreement. The Parties further represent and warrant that none of them is relying upon any understanding(s), promise(s) and/or agreement(s) between and/or amongst them other than as expressly set forth herein. Each of the Parties acknowledge that none of the Parties, and no agent and/or counsel of a Party, has made any promise, representation and/or warranty whatsoever, express and/or implied, concerning the subject matter of this Agreement which is not contained in this Agreement, to induce execution of this Agreement. Each of the Parties acknowledge and warrant that he/she/it is not executing this Agreement in reliance on any promise, representation and/or warranty not contained herein.

 

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4. No Admission of Liability. The Parties acknowledge that this Agreement constitutes a complete settlement of all claims whatsoever, known and unknown, and that it is not an admission of liability on the part of any Party hereto and is not a concession by any party that any of the contentions of any adverse party are true and/or meritorious except as expressly set forth in this Agreement

5. Modification. This Agreement may only be changed and/or amended in writing, and only by an instrument in writing specifically stating that it is a supplement, modification and/or amendment of this Agreement and only by an instrument in writing which is signed by each of the Parties affected by such modification. This Agreement cannot be changed orally.

6. Governing Law. This Agreement shall be governed by the laws of the State of California, provided, however, that it shall not be construed against any Party as its drafter.

7. Severable. If, for any reason, any part of this Agreement is found by a court of law to be unenforceable, the remaining portions of the Agreement shall not be invalidated and shall remain in full force and effect provided that the entire Agreement still caries out the intent of the Parties. Warranties, agreements and representations of each Party contained in this Agreement shall survive its execution and performance.

8. Cooperation. The Parties shall fully cooperate with each other as may from time to time be necessary in connection with implementing the terms of this Agreement.

9. Enforcement of Agreement and Attorneys Fees. If there is litigation or a request that the Court enforce any of the terms of this Agreement, and/or performance hereunder, the prevailing Party shall recover reasonable attorneys’ fees and costs incurred in that litigation. The term “Prevailing Party” shall be as defined in California Civil Code Section 1717.

10. Own Counsel. Each of the Parties acknowledges that he/she/it has been represented by counsel of their own choice in connection with the preparation and execution of this Agreement, and that such counsel has fully and completely explained to them each, every and all of the terms and conditions of this Agreement. Each of the Parties acknowledges and represents that he/she/it has also read this Agreement in full and understands and voluntarily consents to each and every provision contained herein.

 

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11. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and any counterpart shall have the same effect as if all parties had executed the same counterparts. Facsimile signatures shall have the same force and effect as original signatures.

12. Language. All pronouns and any variations