SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20509
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
March 10, 1999
Date of Report
(Date of Earliest Event Reported)
BISHOP EQUITIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada 33-44567-NY 13-3632859
(State or other juris- (Commission File No.) (IRS Employer
diction of incorporation) I.D.No.)
7825 Fay Avenue, Suite 200
La Jolla, California 92037
(Address of Principal Executive Offices)
(619) 456-5777
Registrant's Telephone Number
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
(a) On March 10, 1999, the Registrant executed an Agreement and Plan of
Reorganization for the Acquisition of All of the Outstanding Stock (the "Aethlon
Agreement") of Aethlon, Inc., a California corporation ("Aethlon") whereby the
Registrant acquired approximately 92% of the outstanding shares of common stock
of Aethlon in exchange for shares of Common Stock of the Registrant (the "Bishop
Shares"). Pursuant to the Aethlon Agreement, Aethlon became a majority owned
subsidiary of the Registrant.
Also on March 10, 1999, the Registrant executed an Agreement and Plan of
Reorganization for the Acquisition of All of the Outstanding Stock (the "Hemex
Agreement") of Hemex, Inc., a Delaware corporation ("Hemex") whereby the
Registrant acquired approximately 83% of the outstanding shares of common stock
of Hemex in exchange for Bishop Shares. Pursuant to the Hemex Agreement, Hemex
became a majority owned subsidiary of the Registrant.
The Registrant issued a total of 675,000 Bishop Shares to the former
shareholders of Aethlon and 1,123,211 Bishop Shares to the former shareholders
of Hemex as of March 10, 1999.
The Aethlon Agreement provides that the Registrant may issue an additional
58,500 Bishop Shares to acquire the remaining 8% of Aethlon. The Hemex Agreement
provides that the Registrant may issue an additional 243,000 Bishop Shares to
acquire the remaining 17% of Hemex. It is the intention of the Registrant's
management ("Management") to continue to attempt to acquire 100% of the
outstanding shares of Aethlon and Hemex on the same terms and conditions
afforded the Aethlon and Hemex shareholders who have already become parties to
the Hemex Agreement and the Aethlon Agreement, respectively (the Hemex Agreement
and the Aethlon Agreement are collectively referred to as the "Plan").
As of March 10, 1999, shareholders representing 1,798,211 of the 2,083,500
shares to be issued under the Plan (approximately 86% of the Registrant's
shareholders as of March 10, 1999) had executed and delivered the Plan. Taking
into account the 1,798,211 shares of "restricted securities" of the Registrant
issued under the Plan on March 10, 1999, there are currently 2,309,711 shares of
common stock of the Registrant issued and outstanding. Assuming that all of the
shareholders of Aethlon and Hemex enter into the Plan, there will be a total of
2,595,000 shares of Registrant outstanding.
The Plan was approved by the Board of Directors of the Company on
February 22, 1999.
The former principal shareholders of the Registrant and their percentage
of ownership of the outstanding voting securities of the Registrant prior to
the completion of the Plan were: Deborah A. Salerno, former President and
Director, owned 425,000 shares of the Registrant (83%), and Maureen Abato,
former Secretary/Treasurer and Director owned 75,000 shares of the Registrant
(15%).
The source of the consideration used by the Aethlon and Hemex shareholders
to acquire their respective interests in the Registrant was the
exchange of their outstanding shares of common stock of Aethlon and Hemex
pursuant to the Plan.
The basis of the "control" by the Aethlon and Hemex shareholders is
Stock ownership or positions held. Pursuant to the Plan, the then members of
The Board of Directors and executive officers resigned, in seriatim, and the
persons named in paragraph (b) below were designated to serve as directors and
executive officers of the Registrant, until the next respective annual
meetings of the shareholders and directors of the Registrant or until their
prior resignations or terminations.
The new members of the Board of Directors have adopted a resolution to
amend the Registrants Articles of Incorporation to change the name of the
Registrant to "Aethlon Medical, Inc." subject to shareholder approval.
(b) To the knowledge of Management and based upon a review of the
stock ledger maintained by the Registrant's transfer agent and registrar, the
following table sets forth the beneficial ownership of persons who own more
than five percent of the Registrant's common stock as of the date hereof, and
the share holdings of new Management:
Percent
Number of
Name Title of Shares(1) Class
James A. Joyce Chairman, Secretary, 675,400 29.2%
and Director
Franklyn S. Barry, Jr. President/Chief Executive 418,593 (2) 15.4% (2)
Officer, Interim Chief Financial
Officer, and Director
Edward G. Broenniman Director 255,874 (3) 11.1%
Clara Ambrus Chief Scientific Officer and 450,279 19.5%
Director of Hemex
Deborah Salerno Shareholder 425,000 18.4%
Thomas Wolf Shareholder 131,820 5.7%
All directors and executive 1,349,867 (4) 49.6% (4)
officers of Registrant as a group
(3 persons)
(1) Assumes 2,309,711 shares outstanding.
(2) Includes 412,500 shares issuable upon the exercise of presently-exercisable
incentive stock options. The percentage ownership is based on 2,722,211
shares outstanding, assuming the exercise of the 412,500 options.
(3) Includes 201,989 shares owned of record by Linda Broenniman, Mr.
Broenniman's wife.
(4) Includes 412,500 shares issuable upon the exercise of presently-exercisable
incentive stock options held by Mr. Barry. The percentage ownership is
based on 2,722,211 shares outstanding, assuming the exercise of the 412,500
options.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
See Item 1 of this Report. The consideration exchanged under the
Plan was negotiated at "arms length" between the directors and executive
officers of the Registrant and Aethlon and Hemex, respectively. The members of
the Board of Directors of the Registrant used criteria utilized in similar
proposals involving the Registrant in the past, including the relative value of
the assets of the Registrant; its present and past business operations; the
future potential of Aethlon and Hemex; its management; and the potential
benefit to the shareholders of the Registrant. The members of the Board of
Directors determined in good faith that the consideration for the exchange was
reasonable, under these circumstances.
No director, executive officer or person who may be deemed to be an
affiliate of the Registrant had any direct or indirect interest in either
Aethlon or Hemex prior to the completion of the Plan.
Business
Aethlon, incorporated in July 1998 under the laws of the State of
California, was formed for the purpose of acquiring proprietary medical device
technologies that it believes can be successfully developed and commercialized
on an international basis. Prior to entering into the Plan, Aethlon had entered
into an agreement with Hemex to provide interim funding and to acquire Hemex in
accordance with the Plan.
Hemex was incorporated in 1995 under the laws of the State of Delaware to
develop and commercialize proprietary medical devices capable of removing
harmful metal intoxicants and other contaminants from human blood. The
commercialization of the Hemex HemopurifierTM, which removes targeted metal
intoxicants in an extracorporeal (outside the body) fashion, will be the initial
focus of the Registrant.
Management of Registrant
Names Title or Position Age
James A. Joyce Chairman, Secretary, and Director 37
Franklyn S. Barry, jr. President/Chief Executive Officer, 59
Interim Chief Financial Officer,
and Director
Edward G. Broenniman Director 63
Resumes
James A. Joyce, Chairman, Secretary, and Director
Mr. Joyce is the founder of Aethlon, Inc. Since 1993, Mr. Joyce has served
as the Chief Executive Officer of James Joyce & Associates, a management
consulting and investment banking organization that specializes in the structure
and placement of private and public equity offerings. Most recently, he advised
in the structure and placement of over $20 million in private equity on behalf
of a publicly-traded computer distribution company, and served as a board member
and advisor in the initial public offering of a biomedical company. Previously,
Mr. Joyce was Chief Executive Officer of Mission Labs, Inc., and a principal in
charge of U.S. operations for London Zurich Securities, Ltd. Mr. Joyce received
a B.A. degree from the University of Maryland.
Franklyn S. Barry, Jr., President, Chief Executive Officer, Interim Chief
Financial Officer, and Director
Mr. Barry has over 25 years of experience in managing and building
companies. He has been the President and Chief Executive Officer of Hemex since
April 1997. From 1994 to April 1997, Mr. Barry's was a private consultant.
Included among his prior experiences are tenures as President of Fisher-Price
and as co-founder and CEO of Software Distribution Services, which today
operates as Ingram Micro-D, an international distributor of personal computer
products. Mr. Barry serves on the Board of Directors of both publicly-traded
and privately-owned businesses in several different industries. Mr. Barry
received a B.A. from Harvard College and an M.B.A. from Harvard Graduate School
of Business Administration.
Edward G. Broenniman, Director
Mr. Broenniman has 30 years of management and executive experience with
high-tech, privately-held growth firms where he has served as a CEO, COO, or
corporate advisor, using his expertise to focus management on increasing
profitability and stockholder value. Mr. Broenniman recently served on the
Board of Directors of publicly-traded QuesTech (acquired by CACI International),
and currently serves on the Boards of four privately-held firms, the Dingham
Center for Entrepreneurship's Board of Advisors at the University of Maryland,
and the Board of the Association for Corporate Growth. Mr. Broenniman holds a
B.A. degree from Yale University and a M.B.A. degree from Stanford University
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
None; not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
None; not applicable.
ITEM 5. OTHER EVENTS.
None; not applicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
None; not applicable.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Financial Statements of Business Acquired.
Financial statements for the years ended March 31, 1999 (audited) will be
filed on or before May 24, 1999, which is 75 days after the closing of the Plan
on March 24, 1999.
(b) Pro Forma Financial Information.
Pro forma financial statements are being prepared and will be filed on or
before May 24, 1999, which is 75 days after the closing of the Plan on March 24,
1999.
(c) Exhibits.
10.1 AGREEMENT AND PLAN OF REORGANIZATION BETWEEN THE REGISTRANT AND
AETHLON
Exhibit "A" - List of Aethlon Shareholders
Exhibit "B" - Aethlon Letter of Intent
Exhibit "C" - Hemex Letter of Intent
Exhibit "D" - Resolutions of Bishop
Exhibit "E-1" - Indemnification of Barry
Exhibit "E-2" - Indemnification of Joyce
Exhibit "E-3" - Indemnification of Broenniman
Exhibit "F" - Copies of Shares or Lost Certificate Affidavits
Exhibit "G" - Power of Attorney to Shareholder Representative
Exhibit "H" - Legal Opinion of Bishop Counsel
Exhibit "I" - Schedule of Exceptions of Aethlon
Exhibit "J" - Financial Statements of Aethlon
Exhibit "K" - List of Aethlon Bank Accounts and Signatories
Therefor
Exhibit "L" - Schedule of Exceptions of Bishop
Exhibit "M" - Financial Statements of Bishop**
Exhibit "N" - List of Bishop Bank Accounts and Signatories
Therefor
10.2 AGREEMENT AND PLAN OF REORGANIZATION BETWEEN THE REGISTRANT AND
HEMEX
Exhibit "A" - List of Hemex Shareholders
Exhibit "B" - Hemex Letter of Intent
Exhibit "C" - Bishop Letter of Intent
Exhibit "D" - Resolutions of Bishop
Exhibit "E-1" - Indemnification of Barry
Exhibit "E-2" - Indemnification of Joyce
Exhibit "E-3" - Indemnification of Broenniman
Exhibit "F" - Copies of Shares or Lost Certificate Affidavits
Exhibit "G" - Power of Attorney to Shareholder Representative
Exhibit "H" - Legal Opinion of Bishop Counsel
Exhibit "I" - Schedule of Exceptions of Hemex
Exhibit "J" - Financial Statements of Hemex
Exhibit "K" - Legal Descriptions of Real Property of Hemex
Exhibit "L" - List of Personal Property of Hemex
Exhibit "M" - Patents, Trademarks, Service Marks of Hemex
Exhibit "N" - List of Insurance Policies of Hemex
Exhibit "O" - List of Hemex Bank Accounts and Signatories Therefor
Exhibit "P" - Schedule of Exceptions of Bishop
Exhibit "Q" - Financial Statements of Bishop**
Exhibit "R" - List of Bishop Bank Accounts and Signatories
Therefor
**Filed with Registrant's Annual Report on Form 10-K for the year ended
March 31, 1998 and incorporated herein by this reference.
ITEM 8. CHANGE IN FISCAL YEAR.
None; not applicable.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
BISHOP EQUITIES, INC.
Date: March 25, 1999 By:/s/James A. Joyce
------------------------------------------------
James A. Joyce, Chairman, Secretary and Director
<PAGE>
EXHIBIT "A"
Aethlon, Inc.
Shareholders' Names Number of Shares Issuable
James A. Joyce 675,000
John Orkish 1,700
Frank Lowthers & Angelica Camargo 10,000
John P. Bell, Jr. 15,000
Philip A. & Margaret A. Ward 7,500
Jeffrey Lee Dalton 8,000
Dana H. & Susan B. Lee 3,300
Edward C. Brookins Trust 3,000
Bruce A. & Rhoda P. Shear 5,000
Mario C. & Judith J. Drago 2,500
John Gaidmore 2,500
<PAGE>
AETHLON, INC.
7825 Fay Avenue
Suite 200
La Jolla, California 92037
Phone: (619) 456-5777
Fax: (619) 456-4690
July 28, 1998
Mr. Franklyn S. Barry, Jr.
President and Chief Executive Officer
Hemex, Inc.
143 Windsor Avenue
Buffalo, New York 14209
Re: Aethlon, Inc. Letter of Intent
Dear Mr. Barry:
In accordance with our various discussions, this letter is written to
evidence our mutual intention to enter into this binding Letter of Intent (the
"Letter of Intent") pursuant to which Aethlon, Inc., a California corporation
("Aethlon") will secure the acquisition of Hemex, Inc., a Delaware corporation
("Hemex"), by Bishop Equities, Inc., a Nevada corporation ("Bishop"), through a
tax-free exchange of stock pursuant to Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended (hereinafter referred to as the "Hemex
Reorganization"). For purposes of this Letter of Intent, Aethlon, Hemex and
Bishop are hereinafter collectively referred to as the "Consolidated Companies."
Prior to entering into this Letter of Intent, Aethlon has also entered
into another, separate letter of intent with Bishop, pursuant to which Aethlon
will also be acquired by Bishop through a tax-free exchange of stock pursuant to
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the
"Aethlon Reorganization") immediately prior to the closing of the Hemex
Reorganization. The acquisition of Aethlon and Hemex by Bishop as contemplated
hereby are hereinafter collectively referred to as the "Acquisitions."
Aethlon and Hemex agree that execution of this Letter of Intent is
subject to the following terms and conditions:
1. Aethlon will use its best efforts to raise at least $400,000.00
through a private placement of shares of Aethlon Common Stock (hereinafter
referred to as the "Aethlon Offering") and through contributions of capital to
Aethlon by its founder. The shares issued pursuant to the Aethlon Offering will
not be registered under federal or state securities laws, but
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 2
will be issued pursuant to one or more exemptions from the registration
requirements of applicable state and/or federal securities laws. The Aethlon
Reorganization will occur as soon as practicable following the closing of the
Aethlon Offering. The parties hereto agree that Aethlon and Bishop (following
the Aethlon Reorganization) will use the proceeds from the Aethlona 0ffering, as
provided in Appendix I, to provide working capital and to prepare for and
complete an anticipated $3,000,000.00 private placement to be conducted by
Bishop after the Acquisitions. If Aethlon fails to raise at least $400,000.00 in
the Aethlon Offering and close the Aethlon Reorganization within sixty (60) days
of the Securities Registration Compliance Date, Hemex will-be entitled to
terminate this Letter of Intent without being in breach. (For purposes of this
Letter of Intent, the "Securities Registration Compliance Date" shall be the
date upon which both the Private Placement Memorandum is completed and all
necessary Blue Sky registration requirements and/or exemptions thereto are
complied with for the Aethlon Offering . At anytime after this Letter of Intent
is executed by Hemex and prior to the Hemex Reorganization, Hemex, will be able
to request that Aethlon make advances to Hemex from Aethlon's available funds
(such advances to Hemex are hereinafter referred to as "Interim Advances").
However, once Hemex requests and receives from Aethlon any Interim Advances,
Hemex will no longer be able to terminate this Letter of Intent based on
Aethlon's failure to complete the Aethlon Offering. If this Letter of Intent is
terminated for any reason, then in addition to such other remedies as the
parties may have, Aethlon may elect to convert the Interim Advances to a loan
bearing interest at ten percent (10%) per annum from the date such funds were
advanced, which loan shall immediately be due and payable to Aethlon.
2. Immediately prior to the Acquisitions, Bishop will have
outstanding no more than 511,500 shares of its Common Stock. Upon completion of
the Aethlon Offering and the Aethlon Reorganization, or at anytime after
receiving Interim Advances and being so instructed by Aethlon, Hemex will be
obligated to close the Hemex Reorganization, whereby Hemex will transfer all
outstanding shares of Hemex stock to Bishop in return for 1,350,000 shares of
Common Stock of Bishop. Prior to the Hemex Reorganization, Aethlon and Bishop
will close the Aethlon Reorganization whereby Aethlon's shareholders will
transfer all outstanding shares of Aethlon stock to Bishop in return for 825,000
shares of Common Stock of Bishop. Immediately following the Acquisitions, the
total number of outstanding shares of Common Stock of Bishop will be 2,686,500,
and the former shareholders of Hemex will collectively own approximately 50.25%
of the outstanding shares of Bishop, the former shareholders of Aethlon will own
approximately 30.71% of the outstanding shares of Bishop, and the original
shareholders of Bishop will own approximately 19.04% of the outstanding shares
of Bishop.
3. Upon completion of the Acquisitions, management of the
Consolidated Companies shall use its best efforts to raise $3,000,000.00 for the
Consolidated Companies through a private placement of Bishop stock (hereinafter
referred to as the "Bishop Offering."), and the proceeds shall be used as
reflected in Appendix II. The terms and conditions of the proposed Bishop
Offering will be agreed upon and approved by the board of directors of Bishop
(hereinafter referred to as the "Board"). Prior to completion of the Bishop
Offering, a majority
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 3
of the Board shall be appointed by Hemex. In the event the Board is comprised of
three (3) members, one member shall be James A. Joyce and the other two (2)
shall be Franklyn S. Barry, Jr. plus one additional member appointed by Hemex.
4. In the event that Bishop does not conclude both the Aethlon
Reorganization and the Hemex Reorganization within ninety (90) days following
execution of this Letter of Intent by Hemex, then Aethlon will have the right,
for a period of ninety (90) additional days, to either assume the rights and
responsibilities of Bishop set forth herein, or to replace Bishop with another
"public shell" which shall assume the rights and responsibilities of Bishop set
forth herein to enable Aethlon and Hemex to complete the intents and purposes of
this Letter of Intent. Aethlon's rights pursuant to this Letter of Intent shall
be assignable by Aethlon; however, during the period between the execution of
this Letter of Intent and the closing of the Hemex Reorganization, such right is
subject to the approval of Hemex. Furthermore, upon the termination or
expiration of this Letter of Intent, Hemex may not enter into any financial or
business relationship, for a period of twenty-four (24) months from the date of
termination or expiration, with any party exposed to the transactions proposed
herein without the prior written consent of Aethlon. This covenant shall survive
the termination or expiration of this Letter of Intent. In addition to any other
rights and remedies Aethlon may have in the event of a breach of this Letter of
Intent, Hemex agrees that Aethlon shall also have the right to injunctive relief
to enforce this provision.
5. Prior to the Hemex Reorganization, Hemex will cause all
Shareholders Loans and one (1) year 14% Convertible Notes, including any and all
accrued interest incurred thereon, to be converted to common stock of Hemex.
Furthermore, prior to the Hemex Reorganization, Hemex will reduce the total of
all liabilities, including both short-term and long-term liabilities, to no more
than Five Hundred Thousand Dollars ($500,000.00).
6. As a condition to the closing of the Hemex Reorganization, the
Hemex Shareholders and the Aethlon founder will enter into an agreement with
Bishop pursuant to which the Hemex Shareholders and the Aethlon founder will
agree that they will not, without prior written approval of Bishop, offer for
sale, sell, pledge, hypothecate or otherwise dispose of, directly or indirectly,
any of the shares of Bishop stock which they may own legally or beneficially in
any manner whatsoever, whether pursuant to Rule 144 of the Securities Act of
1933 or otherwise, for a period of eighteen (18) months from the date of receipt
of the Bishop shares. As a further condition to the closing of the Hemex
Reorganization, Hemex and all of its shareholders approving the transaction and
the Aethlon founder will further agree and authorize Bishop to take any actions
(including, but not limited to, notification of Bishop's transfer agent
regarding any such restrictions) necessary to enforce this provision and
restrict the sale or transfer of the Bishop shares as provided herein.
7. As a condition to the closing of the Hemex Reorganization,
Bishop, on behalf of itself and the Consolidated Companies, shall execute and
enter into separate employment contracts with (i) Dr. Clara M. Ambrus, Chairman
of the Board of Directors and
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 4
Chief Scientific Officer of Hemex; (ii) Franklyn S. Barry, Jr., President and
Chief Executive Officer of Hemex; and (iii) James A. Joyce, President of
Aethlon. The exact terms of each of the employment contracts will be negotiated
in good faith in the future (prior to the closing of the Hemex Reorganization)
by the parties referenced above. However, in the event that one or more of the
parties is/are unable to reach agreement on the terms of their respective
employment contract(s), then the respective terms and conditions listed in
Appendix III, attached hereto and incorporated herein, shall constitute a
binding employment contract, to be interpreted as necessary by the Compensation
Committee of the Board.
8. Each party shall pay for those legal and accounting fees
which it incurs in the course of the transactions contemplated herein from the
funds provided for in the Aethlon Offering, as set forth in Appendix I to this
Letter of Intent.
9. In the event one or more audits are required of Bishop, Hemex,
Aethlon or the Consolidated Companies as a prerequisite to any transaction
contemplated herein, and such audit or audits cannot be completed within the
time frames set forth herein, then each such deadline shall automatically be
extended to a date sixty (60) days after such audited financial statements are
issued.
10. Until consummation or termination of the Hemex Reorganization,
Hemex will conduct its business only in the ordinary course and none of the
assets or properties of Hemex shall be sold or disposed of except in the
ordinary course of business or with the consent of Aethlon. Hemex further agrees
not to enter into any agreements regarding the sale, exchange, issuance, or
other disposition of its stock, whether such stock be outstanding, treasury,
and/or authorized but not issued, to any other person or persons, whether
individual or corporate, without the prior written consent of Aethlon.
11. Aethlon makes the following representations and warranties to
Hemex, which shall be incorporated into the parties' formal agreements and which
shall survive the closing of the Acquisitions:
(a) Aethlon is a corporation duly organized, validly existing
and in good standing under the laws of California, has the corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which its ownership or leasing
of its properties or the conduct of its business requires such qualification.
(b) Aethlon has the requisite corporate power and authority to
enter into this Letter of Intent and to carry out its obligations under this
Letter of Intent. The execution and delivery of this Letter of Intent and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Aethlon, and no other corporate
proceedings on the part of Aethlon are necessary to authorize the Letter of
Intent and the transactions contemplated by the Letter of Intent.
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 5
(c) The execution and delivery of the Letter of Intent, the
consummation of the transactions contemplated by the Letter of Intent and
compliance with their terms will not, as of the closing of the Acquisitions (i)
conflict with, or result in any violation of any provision of, the Articles of
Incorporation or Bylaws of Aethlon, (ii) violate or conflict with, or result in
a breach or termination of or default under, any agreement, instrument, license,
judgment, order, decree, statute, law or regulation applicable to Aethlon, or
(iii) result in the creation or imposition of any lien on any asset of Aethlon.
12. Hemex makes the following representations and warranties to
Aethlon, which shall survive the closing of the Acquisitions:
(a) Hemex is a corporation duly organized, validly existing and
in good standing under the laws of Delaware, has the corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which its ownership or leasing
of its properties or the conduct of its business requires such qualification.
(b) Hemex has the requisite corporate power and authority to
enter into this Letter of Intent and to carry out its obligations under this
Letter of Intent. The execution and delivery of this Letter of Intent and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Hemex.
(c) The execution and delivery of the Letter of Intent and the
consummation of the transactions contemplated by the Letter of Intent and
compliance with their terms will not, as of the closing of the Acquisitions (i)
conflict with, or result in any violation of any provision of, the articles of
incorporation or bylaws of Hemex, (ii) violate or conflict with, or result in a
breach or termination of or default under, any agreement, instrument, license,
judgment, order, decree, statute, law or regulation applicable to Hemex, or
(iii) result in the creation or imposition of any lien on any asset of Hemex.
As soon as practicable following the execution of this Letter of
Intent, the parties shall commence the preparation of one or more formal
agreements which shall incorporate the terms and provisions set forth in this
Letter of Intent as well as such other terms and conditions as are customarily
included in such transaction documents. Each party agrees to negotiate in good
faith such additional terms and conditions. However, in the event that the
parties are unable to agree on such additional terms and conditions, this Letter
of Intent and such additional terms and conditions as the parties may agree upon
shall constitute the binding agreement of the parties and shall be fully
enforceable in the event of a breach.
<PAGE>
Mr. Franklyn S. ]Barry, Jr.
July 28, 1998
Page 6
If the foregoing is in accordance with your intentions and our
understanding regarding the items set forth, please so indicate by signing below
and returning a signed original of this letter to me. A duplicate original is
provided for your records.
Very truly yours,
AETHLON, INC.
/s/ James A. Joyce
---------------------------
By: James A. Joyce
Its: President
AGREED AND ACCEPTED
Hemex, Inc., a Delaware corporation
/s/ Franklyn S. Barry
By: ---------------------------------
President and CEO
Its: ---------------------------------
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 7
APPENDLX I
CONTEMPLATED USE OF PROCEEDS OF THE AETHLON OFFERING
The contemplated use of proceeds from the Aethlon Offering shall be as follows:
Aethlon transaction and administrative expenses: $ 95,000.00
Hemex transaction and administrative expenses
including the reduction of accounts payable: $205,000.00
Hemex Phase II Clinical Trial preparation: $100,000.00
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 8
APPENDIX II
CONTEMPLATED USE OF PROCEEDS OF THE BISHOP OFFERING
The contemplated use of proceeds from the Bishop Offering shall be as follows:
Bishop Offering expenses: $ 350,000.00
Working capital for the Consolidated Companies: $1,800,000.00
Reduction of accrued debt and expenses: $ 500,000.00
Offering expenses related to future follow-on raise: $ 350,000.00
In the event that the Bishop Offering for the Consolidated Companies is
on a minimum-maximum basis that allows for the Consolidated Companies to break
escrow and obtain proceeds prior to the sale of the entire offering, then the
use of proceeds shall be applied first to Offering Expenses and second to
working capital and the reduction of accrued debt and expenses. Of those funds
released from escrow, funds applied to the reduction of accrued debts and
expenses will not exceed five percent (5%) of any amount up to Two Million
Dollars ($2,000,000.00), and will not exceed ten percent (10%) of any amount up
to Two Million Five Hundred Thousand Dollars ($2,500,000.00).
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 9
APPENDIX III
TERMS AND CONDITIONS OF EMPLOYMENT CONTRACTS
In the event that Dr. Clara Ambrus, Franklyn S. Barry, Jr., and/or James
A. Joyce (collectively, the "Employees" and individually an "Employee") fail to
reach agreement with Bishop (the "Company") on the exact terms and conditions of
their respective employment agreements, then the following respective terms and
conditions shall constitute a binding employment contract for the Employee who
so fails to reach agreement, to be interpreted as
necessary by the Compensation Committee of the Board.
Term of Contract: Two (2) years, with automatic renewal for one
(1)year periods unless notice is given prior
to the expiration of the initial term (or
such subsequent renewal term, if applicable).
Termination of Contract: Either party can terminate the contract upon
sixty (60) days written notice; or the
company may terminate immediately with or
without cause.
Severance Package: If the employment contract is terminated by
the Employee, or (ii) the Company for cause,
then the Employee is not entitled to any
severance pay; if the employment contract is
terminated by the Company without cause, then
the Company shall pay the Employee one (1)year
of salary from the date of termination.
Non-Compete Provision: The Employee shall not compete, directly or
indirectly, with any of the Consolidated
Companies (i.e., Hemex, Aethlon or Bishop and
any future acquired company) during the term
of their employment.
Non-Disclosure Provision: The Employees shall not disclose any
Confidential information to any third
parties, at any time.
Disability Provision: After one hundred eighty (180) days of
Complete disability, defined as inability to
Substantially perform the duties required of
such Employee prior to the disability, the
Company can terminate the
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 10
Employee with no further salary obligation
and no further severance obligation.
Incentive Compensation: A pool created by twenty percent (20%) of net
income over approved plan in any year is
divided in proportion to each officer's salary
as a percentage of all salaries of officers
participating in the plan.
Stock Option Plan: A properly approved Incentive Stock Option
Plan (the "Plan"), administered by a
Compensation Committee of the Board of
Directors, shall be in place within ninety
(90) days of the completion of the
Acquisitions. The Plan shall provide for
Franklyn S. Barry, Jr. to be issued Options
To purchase 412,500 shares of stock in the
Consolidated Companies at the same price
Offered to investors in the Aethlon Offering.
The Option may be exercised at any time for
five (5) years after the applicable lock-up
period.
Miscellaneous: The Consolidated Companies shall promptly
reimburse all reason~61e expenses incurred
by the Employee related to the performance of
their duties as an Employee; the Consolidated
Companies shall provide health insurance and
long-term disability insurance to the
Employee; and the Employee shall be entitled
to four (4) weeks of paid vacation and
reasonable time for personal matters.
Position/Title: Dr. Clara M. Ambrus shall be the Chief
Scientific Officer of Hemex and Aethlon;
Franklyn S. Barry, Jr., shall be a member of
the board of directors, President, and Chief
Executive Officer of Hemex and Aethlon; and
James A. Joyce shall be the Chairman of the
Board of Directors of Aethlon.
Salary: The salaries for 1998 shall be as follows:
Dr. Clara Ambrus - $80,000.00; Franklyn S.
Barry, Jr. $120,000.00; James A. Joyce
$108,000.00. The salaries shall be subject to
adjustment at the end of each calendar year.
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 11
/s/ Clara M. Ambrus
--------------------------------------------
Clara M. Ambrus
/s/ Franklyn S. Barry, Jr.
--------------------------------------------
Franklyn S. Barry, Jr.
/s/ James A. Joyce
-------------------------------------------
James A. Joyce
<PAGE>
AETHLON, INC.
7825 Fay Avenue
Suite 200
La Jolla, California 92037
Phone: (619) 456-5777
Fax: (619) 456-4690
July 15, 1998
Ms. Deborah Salerno
President
Bishop Equities, Inc.
355 Southend Avenue
Apartment 22B
New York, New York 10280
Re: Aethlon, Inc. Letter of Intent
Dear Ms. Salerno:
In accordance with our various discussions, this letter is written to
evidence our mutual intention to enter into this non-binding Letter of Intent
(the "Letter of Intent") pursuant to which Bishop Equities, Inc., a Nevada
corporation ("Bishop"), will acquire both Aethlon, Inc., a California
corporation ("Aethlon"), and Hemex, Inc., a Delaware corporation ("Hemex").
Bishop will acquire Aethlon through a tax-free exchange of stock pursuant to
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended
(hereinafter referred to as the "Aethlon Reorganization). Bishhop will also
acquire Hemex through a separate tax-free exchange of stock pursuant to Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (hereinafter
referred to as the "Hemex Reorganization". For purposes of this Letter of
Intent, Aethlon, Hemex, and Bishop are hereinafter collectively referred to as
the "Consolidated Companies."
As soon as is practicable after entering into this Letter of Intent,
Aethlon will also enter into another, separate letter of intent with Hemex
(substantially in accordance with the Letter of Intent dated July 15, 1998, a
copy of which is attached hereto as Exhibit "I"), pursuant to which Aethlon will
secure the right for Bishop to complete the Hemex Reorganization immediately
after the closing of the Aethlon Reorganization. The acquisition of Aethlon and
Hemex by Bishop as contemplated hereby are hereinafter collectively referred to
as the "Acquisitions."
Aethlon and Bishop agree that execution of this Letter of Intent is subject
to the following terms and conditions:
<PAGE>
Ms. Deborah Salerno
July 15, 1998
Page 2
1 . Immediately prior to the Acquisitions, Bishop will have outstanding
no more than 511,500 shares of its Common Stock. Within ninety (90) days
following execution of the Aethlon-Hemex Letter of Intent by Hemex, Bishop will
close the Aethlon Reorganization, whereby Aethlon's shareholders will transfer
all outstanding shares of Aethlon stock to Bishop in return for 825,000 shares
of Common Stock of Bishop. As soon as practicable after the close of the Aethlon
Reorganization (but within ninety (90) days following execution of the Aethlon
Hemex Letter of Intent by Hemex), Bishop will close the Hemex Reorganization,
whereby Hemex' shareholders will transfer all outstanding shares of Hemex stock
to Bishop in return for 1,350,000 shares of Common Stock of Bishop. Immediately
following the Acquisitions, the total number of outstanding shares of Common
Stock of Bishop will be 2,686,500, and the former shareholders of Hemex will
collectively own approximately 50.25% of the outstanding shares of Bishop, the
former shareholders of Aethlon will own approximately 30.71% of the outstanding
shares of Bishop, and the original shareholders of Bishop will own approximately
19.04% of the outstanding shares of Bishop.
2. Upon completion of the Acquisitions, all of the Directors on
Bishop's Board will immediately resign and shall be replaced by a slate of
directors to be named by Aethlon's Board of Directors, a majority of which shall
be approved by Hemex. In the event Bishop's Board is comprised of three (3)
members, one (1) member shall be James A. Joyce, one (1) member shall be
Franklyn S. Barry, Jr., and one (1) member shall be appointed by Hemex.
3. Bishop must acquire both Hemex and Aethlon, pursuant . to this Letter of
Intent and the Aethlon-Hemex Letter of Intent, and Bishop shall not have the
right to acquire only one of the corporations without also acquiring the other.
In the event that Bishop does not conclude both the Aethlon Reorganization and
the Hemex Reorganization within ninety (90) days following execution of the
Aethlon-Hemex Letter of Intent by Hemex, then both Aethlon and Bishop shall have
the right to terminate this Letter of Latent, without obligation, by giving
written notice of termination to the other party. Additionally, during the due
diligence review period, either party may terminate this Letter of Intent,
without obligation, by giving written notice of termination to the. other party.
4. As a condition to the closing of the Hemex Reorganization and the
Aethlon Reorganization, the original shareholders of Bishop will enter into an
agreement with Aethlon pursuant to which the original shareholders of Bishop
will agree that they will not, without prior written approval of Aethlon, offer
for sale, sell, pledge, hypothecate or otherwise dispose of, directly or
indirectly, any of the shares of Bishop stock which they may own legally or
beneficially in any manner whatsoever, whether pursuant to Rule 144 of the
Securities Act of 1933 or otherwise, for a period of time, to be negotiated in
good faith prior to closing the Aethlon Reorganization by Aethlon and Bishop,
from the date of the closing of the Acquisitions. As a further condition to the
closing of the Hemex Reorganization and the Aethlon Reorganization, Bishop and
all of its original shareholders will further agree and authorize Aethlon to
take any actions (including, but not limited to, notification of Bishop's
transfer agent
<PAGE>
Ms. Deborah Salerno
July 15, 1998
Page 3
regarding any such restrictions) necessary to enforce this provision and
restrict the sale or transfer of the Bishop shares as provided herein.
5. Each party shall pay for its own legal and accounting fees to
consummate the Acquisitions.
6. Until consummation or termination of the Hemex Reorganization and
Aethlon Reorganization, Bishop will conduct its business only in the ordinary
course and none of the assets or properties of Bishop shall be sold or disposed
of except in the ordinary course of business or with the consent of Aethlon.
Bishop further agrees not to enter into any agreements regarding the sale,
exchange, issuance, or other disposition of its stock, whether such stock be
outstanding, treasury, and/or authorized but not issued, to any other person or
persons, whether individual or corporate. Bishop further agrees not to take any
actions that may lead to or result in Bishop being de-listed by the National
Association of Stock Dealers Automated Quotations ("Nasdaq") OTC Bulletin Board
(Nasdaq symbol: BSEQ).
7. In the event one or more audits are required of Bishop, Hemex,
Aethlon or the Consolidated Companies as a prerequisite to any transaction
contemplated herein, and such audit or audits cannot be completed within the
time frames set forth herein, then each such deadline shall automatically be
extended to a date sixty (60) days after such audited financial statements are
issued.
8. Aethlon makes the following representations and warranties to
Bishop, which shall be incorporated into the parties' formal agreements and
which shall survive the closing of the Acquisitions:
(a) Aethlon is a corporation duly organized, validly existing and in
good standing under the laws of California, has the corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which its ownership or leasing
of its properties or the conduct of its business requires such qualification.
(b) Aethlon has the requisite corporate power and authority to enter
into this Letter of Intent and to carry out its obligations under this Letter of
Intent. The execution and delivery of this Letter of Intent and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Aethlon, and no other corporate proceedings on the
part of Aethlon are necessary to authorize the Letter of Intent and the
transactions contemplated by this Letter of Intent.
(c) The execution and delivery of the Letter of Intent, the consummation
of the transactions contemplated by this Letter of Intent and compliance with
their terms will not, as of the closing of the Acquisitions (i)conflict with, or
result in any violation of any provision of, the Articles of Incorporation or
Bylaws of Aethlon, (ii) violate or conflict with,
<PAGE>
Ms. Deborah Salerno
July 15, 1998
Page 4
or result in a breach or termination of or default under, any agreement,
instrument, license, judgment, order, decree, statute, law or regulation
applicable to Aethlon, or (iii) result in the creation or imposition of any lien
on any asset of Aethlon.
9. Bishop makes the following representations and warranties to
Aethlon, which shall survive the closing of the Acquisitions:
(a) Bishop is a corporation duly organized, validly existing and in
good standing under the laws of Nevada, has the corporate power and authority to
own, lease and operate its properties and assets and to carry on its business as
it is now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which its ownership or leasing of its
properties or the conduct of its business requires such qualification.
(b) Bishop is a public corporation that is listed on the Nasdaq OTC
Bulletin Board, is governed by the Securities Exchange Act of 1934, and is
subject to regulation by the National Association of Stock Dealers ("NASD") and
the Securities and Exchange Commission, and is currently in good standing with
all governmental authorities, is current with all of its required regulatory
filings, and is, to the best of its knowledge, not under investigation by any
governmental authority.
(c) Bishop has the requisite corporate power and authority to enter
into this Letter of Intent and to carry out its obligations under this Letter of
Intent. The execution and delivery of this Letter of Intent and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Bishop and no other corporate proceedings on the part
of Bishop are necessary to authorize the Letter of Intent and the transactions
contemplated by this Letter of Intent.
(d The execution and delivery of the Letter of Intent, the consummation
of the transactions 'contemplated by the Letter of Intent and compliance with
their terms will not, as of the closing of the Acquisitions (i) conflict with,
or result in any violation of any provision of, the articles of incorporation or
bylaws of Bishop, (ii) violate or conflict with, or result in a breach or
termination of or default under, any agreement, instrument, license, judgment,
order, decree, statute, law or regulation applicable to Bishop, or (iii) result
in the creation or imposition of any lien on any asset of Bishop.
(e) The Common Stock of Bishop that Bishop will issue to the former
shareholders of Aethlon and Hemex hereunder, when issued and delivered in
accordance with the terms of this Letter of Intent, will be duly and validly
issued, fully paid, and nonassessable, and will be free of restrictions on
transfer other than restrictions (i) under this Letter of Intent, (ii) under the
letter of intent between Hemex and Aethlon, and (iii) under applicable state and
federal securities laws.
<PAGE>
<PAGE>
Ms. Deborah Salerno
July 15, 1998
Page 4
or result in a breach or termination of or default under, any agreement,
instrument, license, judgment, order, decree, statute, law or regulation
applicable to Aethlon, or (iii) result in the creation or imposition of any lien
on any asset of Aethlon.
9. Bishop makes the following representations and warranties to
Aethlon, which shall survive the closing of the Acquisitions:
(a) Bishop is a corporation duly organized, validly existing and in
good standing under the laws of Nevada, has the corporate power and authority to
own, lease and operate its properties and assets and to carry on its business as
it is now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which its ownership or leasing of its
properties or the conduct of its business requires such qualification.
(b) Bishop is a public corporation that is listed on the Nasdaq OTC
Bulletin Board, is governed by the Securities Exchange Act of 1934, and is
subject to regulation by the National Association of Stock Dealers C`NASD'~ and
the Securities and Exchange Commission, and is currently in good standing with
all governmental authorities, is current with all of its required regulatory
filings, and is, to the best of its knowledge, not under investigation by any
governmental authority.
(c) Bishop has the requisite corporate power and authority to enter
into this Letter of Intent and to carry out its obligations under this Letter of
Intent. The execution and delivery of this Letter of Intent and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Bishop and no other corporate proceedings on the part
of Bishop are necessary to authorize the Letter of Intent and the transactions
contemplated by this Letter of Intent.
(d) The execution and delivery of the Letter of Intent, the
consummation of the transactions 'Contemplated by the Letter of Intent and
compliance with their terms will not, as of the closing of the Acquisitions (i)
conflict with, or result in any violation of any provision of, the articles of
incorporation or bylaws of Bishop, (ii) violate or conflict with, or result in a
breach or termination of or default under, any agreement, instrument, license,
judgment, order, decree, statute, law or regulation applicable to Bishop, or
(iii) result in the creation or imposition of any lien on any asset of Bishop.
(e) The Common Stock of Bishop that Bishop will issue to the former
shareholders of Aethlon and Hemex hereunder, when issued and delivered in
accordance with the terms of this Letter of Intent, will be duly and validly
issued, fully paid, and nonassessable, and will be free of restrictions on
transfer other than restrictions (i) under this Letter of Intent,(ii) under the
letter of intent between Hemex and Aethlon, and (iii)under applicable state and
federal securities laws.
<PAGE>
Ms. Deborah Salerno
July 15, 1998
Page 5
As soon practicable following the execution of this Letter of Intent, the
parties shall commence the preparation on one or more formal agreements which
shall incorporate the terms and provisions set forth in this Letter of Intent as
well as such other terms and conditions as are customarily included in such
transaction documents. Each party agrees to negotiate in good faith such
additional terms and conditions. Except as provided above, neither Aethlon nor
Bishop will be under any legal obligation to the other until such time as formal
agreement(s) have been executed.
If the foregoing is in, accordance with your intentions and our understanding
regarding the items set forth, please so indicate by signing below and returning
a signed original of this letter to me. A duplicate original is provided for
your records.
Very truly yours,
AETHLON, INC
/s/ James A. Joyce
------------------------------------
By: James A. Joyce
Its President
AGREED AND ACCEPTED
Bishop Equities, Inc., a Nevada corporation
/s/ Deborah Salerno
By: --------------------------------------------------
Deborah Salerno
Its: President
<PAGE>
UNANIMOUS CONSENT IN LIEU OF
SPECIAL MEETING OF THE BOARD OF DIRECTORS
OF BISHOP EQUITIES, INC.
The undersigned, constituting the entire Board of Directors of Bishop
Equities, Inc. (the "Company") hereby ratifies and approves the following
resolutions with the same formality as if the matters had been put to a vote of
the Directors at a meeting held upon notice:
RESOLVED, that the officers may take all actions necessary in connection
with the execution and delivery and performance in accordance with the Agreement
and Plan of Reorganization for the Acquisition of All of the Outstanding Shares
of Common Stock of Hemex, Inc., by Bishop Equities, Inc.; and it is further
RESOLVED, that the officers may take all actions necessary in connection
with the execution and delivery and performance in accordance with the Agreement
and Plan of Reorganization for the Acquisition of All of the Outstanding Shares
of Common Stock of Aethlon, Inc., by Bishop Equities, Inc.; and it is further
RESOLVED, that the following persons are hereby elected and appointed to
serve as members of the Board of Directors of the Company, effective as of the
closing date of the Reorganization:
Franklyn S. Barry, Jr.
James A. Joyce
Edward G. Broenniman
and it is further
RESOLVED, that the Company accepts the resignations of its officers,
Deborah Salerno and Maureen Abato, effective as of the closing date of the
Reorganization.
-----------------------------
Deborah Salerno
-----------------------------
Maureen Abato
Dated: As of February 22, 1999
<PAGE>
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT, dated as of February 12, 1999, is made and
entered into by and between BISHOP EQUITIES, INC., a Nevada corporation (the
"Company"), and FRANKLYN S. BARRY, JR. ("BARRY").
WHEREAS, BARRY is currently serving as a director of the Company;
WHEREAS, the Articles of Incorporation (the "Charter") of the Company
provides that the Company will indemnify, in the manner and to the fullest
extent permitted by the Nevada Revised Statutes (the "NRS"), certain persons
against specified expenses arising out of certain threatened, pending or
completed actions, suits or proceedings; and
WHEREAS, in order to induce BARRY to continue to serve the Company in his
present capacity, and to provide BARRY with specific contractual assurance that
the protection authorized by the Charter will be available to BARRY, the Company
wishes to enter into this Agreement.
NOW THEREFORE, the Company and BARRY hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have the
following meanings.
(a) "Suit" shall mean any claim, demand, action, suit, lawsuit,
arbitration, mediation, hearing, or proceeding.
(b) "Covered Claim" shall mean any threatened, pending or completed
Suit, whether civil, criminal, administrative or investigative, by reason of the
fact that BARRY is or was a director of the Company.
(c) "Determination" shall mean a determination, based upon the facts
known at the time, made by:
(i) the Board of Directors of the Company, by the vote of a
majority of the directors who are not parties to the Suit in question, even
though less than a quorum;
(ii) if there are no such disinterested directors, or if such
disinterested directors so direct, by independent legal counsel in a written
opinion;
(iii) the stockholders of the Company; or
(iv) a court or arbitrator of competent jurisdiction in a final,
nonappealable adjudication.
In the event that there are conflicting determinations, the determination shall
be given effect in the following order of precedence: First, by a court or
arbitrator of competent jurisdiction in a final, nonappealable adjudication;
second, to the stockholders of the Company; third, to the independent legal
counsel in a written opinion; and last, to the Board of Directors of the
Company.
(d) "Payment" shall mean all costs and expenses (including attorneys')
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by BARRY in connection with or relating to a Covered Claim.
2. Indemnification. The Company shall indemnify and hold harmless BARRY
against and from any and all Payments to the extent that:
(a) the Company shall not have advanced expenses to BARRY pursuant to
the provisions of the Charter or otherwise and no Determination shall have been
made pursuant to such Charter provision or the NRS that BARRY is not entitled to
indemnification;
(b) BARRY shall not already have received payment on account of such
Payments from any third party, including, without limitation, pursuant to one or
more valid and collectible insurance policies; and
(c) such indemnification by the Company is not unlawful.
Notwithstanding anything contained in this Agreement to the contrary, except for
proceedings to enforce rights to indemnification or advancement of expenses
pursuant to Section 4 hereof , the Company shall have no obligation to indemnify
BARRY in connection with a proceeding (or part thereof) initiated by BARRY
unless such proceeding (or part thereof) was authorized or consented to by the
Board of Directors of the Company. Further, the Company shall have no
obligation to indemnify BARRY under this Agreement for any amounts paid in a
settlement of any Suit effected without the Company's prior written consent,
which consent shall not be unreasonably withheld. The Company shall not settle
any Suit in any manner that would impose any obligation on BARRY (regardless of
whether BARRY would be entitled to indemnification for obligations) without
BARRY's prior written consent, which consent shall not be unreasonably withheld.
3. Indemnification Procedure; Advancements of Expenses.
(a) If at the time of receipt of any notice pursuant to Section 9
hereof the Company has directors' and officers' liability insurance in effect,
the Company shall give prompt notice of the commencement of such Suit to the
insurers in accordance with the procedures set forth in the respective policies
in favor of BARRY. The Company shall thereafter take all necessary or desirable
action to cause such insurers to pay, on behalf of BARRY, all Payments payable
as a result of such Suit in accordance with the terms of such policies.
(b) All expenses, including attorneys' fees, incurred by BARRY in
defending any Covered Claim shall be paid by the Company in advance of the final
disposition of such Covered Claim upon an undertaking by or on behalf of BARRY
to repay such amount if it shall ultimately be determined by a court or
arbitrator of competent jurisdiction in a final, nonappealable adjudication that
he is not entitled to be indemnified by the Company as authorized herein. BARRY
hereby undertakes to and agrees that he will repay the Company for any expenses
advanced by or on behalf of the Company pursuant to this Section 3(b) if it
shall ultimately be determined by a court of competent jurisdiction in a final,
nonappealable adjudication that BARRY is not entitled to indemnification under
this Agreement.
(c) If the Company shall advance the expenses of any such Suit pursuant
to Section (b) hereof, it shall be entitled to assume the defense of such Suit,
if appropriate, with counsel reasonably satisfactory to BARRY, upon delivery to
BARRY of written notice of its election so to do. After delivery of such
notice, the Company shall not be liable to BARRY under this Agreement for any
expenses subsequently incurred by BARRY in connection with such defense other
than reasonable expenses of investigation; provided, however, that:
(i) BARRY shall have the right to employ separate counsel in any such Suit
provided that the fees and expenses of such counsel incurred after delivery of
notice by the Company of its assumption of such defense shall be at BARRY's own
expense; and
(ii) the fees and expenses of counsel employed by BARRY shall be at the
expense of the Company if (x) the employment of counsel by BARRY has previously
been authorized by the Company, (y) BARRY shall have reasonably concluded that
there may be a conflict of interest between the Company and BARRY in the conduct
of any such defense (provided, that the Company shall not be required to pay for
more than one counsel to represent two or more indemnitees where such
indemnitees have reasonably concluded that there is no conflict of interest
among them in the conduct of such defense) or (z) the Company shall not, in
fact, have employed counsel reasonably satisfactory to BARRY to assume the
defense of such Suit.
(d) All payments on account of the Company's advancement obligations
under Section (b) hereof shall be made within 20 days of BARRY's written request
therefor. All other payments on account of the Company's obligations under this
Agreement shall be made within 60 days of BARRY's written request therefor,
unless a Determination is made that the claims giving rise to BARRY's request
are not payable under this Agreement. Each request for payment hereunder shall
be accompanied by evidence reasonably satisfactory to the Company of BARRY's
incurrence of the expenses for which such payment is sought.
4. Enforcement of Indemnification; Burden of Proof. If a claim for
indemnification or advancement of expenses under this Agreement is not paid in
full by or on behalf of the Company within the time period specified in Section
3(d) hereof, BARRY may at any time thereafter bring suit against the Company to
recover the unpaid amount of such clam. In any such action the Company shall
have the burden of proving that indemnification is not required under this
Agreement.
5. Partial Indemnification. If BARRY is entitled under any provision of
this Agreement to indemnification by the Company for some portion of any
Payments, but not, however, for the total amount thereof, the Company shall
nevertheless indemnify BARRY for the portion of any such Payments to which BARRY
is entitled.
6. Right Not Exclusive. The rights to indemnification and advancement of
expenses provided hereunder shall not be deemed exclusive of any other rights to
which BARRY may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise as to action in BARRY's official capacity
or as to action in another capacity while holding such office.
7. Subrogation. In the event of payment under this Agreement by or on
behalf of the Company, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of BARRY, who shall execute all papers
that may be required and shall do all things that may be necessary to secure
such rights, including, without limitation, the execution of such documents as
may be necessary to enable the Company effectively to bring suit to enforce such
rights.
8. Notice of Claim. Promptly after receipt by BARRY of notice of the
commencement or threat of commencement of any civil, criminal, administrative or
investigative Suit, BARRY shall, if indemnification with respect thereto may be
sought from the Company under this Agreement, notify the Company thereof in
writing at its principal office and directed to the Corporate Secretary (or such
other address as the Company shall designate in writing to BARRY); notice shall
be deemed received if sent by prepaid mail properly addressed, the date of such
notice being the date postmarked. In addition, BARRY shall give the Company
such information and cooperation as it may reasonably require and as shall be
within BARRY's power.
9. Choice of Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada, without giving
effect to the principals of conflict of laws thereunder.
10. Jurisdiction. The Company and BARRY hereby irrevocably consent to the
jurisdiction of the courts of the State of Nevada for all purposes in connection
with any Suit that arises out of or relates to this Agreement, and agree that
any action instituted under this Agreement shall be brought only in the state
courts of the State of Nevada.
11. Coverage. The provisions of this Agreement shall apply to BARRY's
service as a director, officer, employee or agent of the Company or at the
Company's request, as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise with respect to all periods of such service prior to and after the
date of this Agreement, even though BARRY may have ceased such service at the
time of indemnification hereunder.
12. Attorneys' Fees. If any Suit is commenced in connection with or related
to this Agreement, the prevailing party shall be entitled to have its costs and
expenses, including, without limitation, reasonable attorneys' fees and
reasonable expenses of investigation, paid by the losing party.
13. Severability. In the event that any provision of this Agreement is
determined by a court to require the Company to do or to fail to do an act that
is in violation of any applicable law, such provision shall be limited or
modified in its application to the minimum extent necessary to avoid a violation
of law, and, as so limited or modified, such provision and the balance of this
Agreement shall be enforceable in accordance with their terms.
14. Successors and Assigns. The Agreement shall be binding upon all
successors and assigns of the Company, including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law, and shall be binding upon and inure to the benefit of the
heirs, executors and administrators of BARRY.
15. Descriptive Headings. The descriptive headings in this Agreement are
included for the convenience of the parties only and shall not affect the
construction of this Agreement.
16. Counterparts. This Agreement may be executed in two counterparts, both
of which taken together shall constitute one document.
17. Amendment. No amendment, modification, termination or cancellation of
this Agreement shall be effective unless made in writing and signed by each of
the parties hereto.
IN WITNESS WHEREOF, the Company and BARRY have executed this Agreement as
of the date first written above.
The Company: BISHOP EQUITIES, INC.
a Nevada corporation
By: ------------------------------
Its Duly Authorized Officer
BARRY:
------------------------------
FRANKLYN S. BARRY, JR.
<PAGE>
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT, dated as of February 12, 1999, is made and
entered into by and between BISHOP EQUITIES, INC., a Nevada corporation (the
"Company"), and JAMES A. JOYCE ("JOYCE").
WHEREAS, JOYCE is currently serving as a director of the Company;
WHEREAS, the Articles of Incorporation (the "Charter") of the Company
provides that the Company will indemnify, in the manner and to the fullest
extent permitted by the Nevada Revised Statutes (the "NRS"), certain persons
against specified expenses arising out of certain threatened, pending or
completed actions, suits or proceedings; and
WHEREAS, in order to induce JOYCE to continue to serve the Company in his
present capacity, and to provide JOYCE with specific contractual assurance that
the protection authorized by the Charter will be available to JOYCE, the Company
wishes to enter into this Agreement.
NOW THEREFORE, the Company and JOYCE hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have the
following meanings.
(a) "Suit" shall mean any claim, demand, action, suit, lawsuit,
arbitration, mediation, hearing, or proceeding.
(b) "Covered Claim" shall mean any threatened, pending or completed
Suit, whether civil, criminal, administrative or investigative, by reason of the
fact that JOYCE is or was a director of the Company.
(c) "Determination" shall mean a determination, based upon the facts
known at the time, made by:
(i) the Board of Directors of the Company, by the vote of a
majority of the directors who are not parties to the Suit in question, even
though less than a quorum;
(ii) if there are no such disinterested directors, or if such
disinterested directors so direct, by independent legal counsel in a written
opinion;
(iii) the stockholders of the Company; or
(iv) a court or arbitrator of competent jurisdiction in a final,
nonappealable adjudication.
In the event that there are conflicting determinations, the determination shall
be given effect in the following order of precedence: First, by a court or
arbitrator of competent jurisdiction in a final, nonappealable adjudication;
second, to the stockholders of the Company; third, to the independent legal
counsel in a written opinion; and last, to the Board of Directors of the
Company.
(d) "Payment" shall mean all costs and expenses (including attorneys')
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by JOYCE in connection with or relating to a Covered Claim.
2. Indemnification. The Company shall indemnify and hold harmless JOYCE
against and from any and all Payments to the extent that:
(a) the Company shall not have advanced expenses to JOYCE pursuant to
the provisions of the Charter or otherwise and no Determination shall have been
made pursuant to such Charter provision or the NRS that JOYCE is not entitled to
indemnification;
(b) JOYCE shall not already have received payment on account of such
Payments from any third party, including, without limitation, pursuant to one or
more valid and collectible insurance policies; and
(c) such indemnification by the Company is not unlawful.
Notwithstanding anything contained in this Agreement to the contrary, except for
proceedings to enforce rights to indemnification or advancement of expenses
pursuant to Section 4 hereof , the Company shall have no obligation to indemnify
JOYCE in connection with a proceeding (or part thereof) initiated by JOYCE
unless such proceeding (or part thereof) was authorized or consented to by the
Board of Directors of the Company. Further, the Company shall have no
obligation to indemnify JOYCE under this Agreement for any amounts paid in a
settlement of any Suit effected without the Company's prior written consent,
which consent shall not be unreasonably withheld. The Company shall not settle
any Suit in any manner that would impose any obligation on JOYCE (regardless of
whether JOYCE would be entitled to indemnification for obligations) without
JOYCE's prior written consent, which consent shall not be unreasonably withheld.
3. Indemnification Procedure; Advancements of Expenses.
(a) If at the time of receipt of any notice pursuant to Section 9
hereof the Company has directors' and officers' liability insurance in effect,
the Company shall give prompt notice of the commencement of such Suit to the
insurers in accordance with the procedures set forth in the respective policies
in favor of JOYCE. The Company shall thereafter take all necessary or desirable
action to cause such insurers to pay, on behalf of JOYCE, all Payments payable
as a result of such Suit in accordance with the terms of such policies.
(b) All expenses, including attorneys' fees, incurred by JOYCE in
defending any Covered Claim shall be paid by the Company in advance of the final
disposition of such Covered Claim upon an undertaking by or on behalf of JOYCE
to repay such amount if it shall ultimately be determined by a court or
arbitrator of competent jurisdiction in a final, nonappealable adjudication that
he is not entitled to be indemnified by the Company as authorized herein. JOYCE
hereby undertakes to and agrees that he will repay the Company for any expenses
advanced by or on behalf of the Company pursuant to this Section 3(b) if it
shall ultimately be determined by a court of competent jurisdiction in a final,
nonappealable adjudication that JOYCE is not entitled to indemnification under
this Agreement.
(c) If the Company shall advance the expenses of any such Suit pursuant
to Section (b) hereof, it shall be entitled to assume the defense of such Suit,
if appropriate, with counsel reasonably satisfactory to JOYCE, upon delivery to
JOYCE of written notice of its election so to do. After delivery of such
notice, the Company shall not be liable to JOYCE under this Agreement for any
expenses subsequently incurred by JOYCE in connection with such defense other
than reasonable expenses of investigation; provided, however, that:
(i) JOYCE shall have the right to employ separate counsel in any such Suit
provided that the fees and expenses of such counsel incurred after delivery of
notice by the Company of its assumption of such defense shall be at JOYCE's own
expense; and
(ii) the fees and expenses of counsel employed by JOYCE shall be at the
expense of the Company if (x) the employment of counsel by JOYCE has previously
been authorized by the Company, (y) JOYCE shall have reasonably concluded that
there may be a conflict of interest between the Company and JOYCE in the conduct
of any such defense (provided, that the Company shall not be required to pay for
more than one counsel to represent two or more indemnitees where such
indemnitees have reasonably concluded that there is no conflict of interest
among them in the conduct of such defense) or (z) the Company shall not, in
fact, have employed counsel reasonably satisfactory to JOYCE to assume the
defense of such Suit.
(d) All payments on account of the Company's advancement obligations
under Section (b) hereof shall be made within 20 days of JOYCE's written request
therefor. All other payments on account of the Company's obligations under this
Agreement shall be made within 60 days of JOYCE's written request therefor,
unless a Determination is made that the claims giving rise to JOYCE's request
are not payable under this Agreement. Each request for payment hereunder shall
be accompanied by evidence reasonably satisfactory to the Company of JOYCE's
incurrence of the expenses for which such payment is sought.
4. Enforcement of Indemnification; Burden of Proof. If a claim for
indemnification or advancement of expenses under this Agreement is not paid in
full by or on behalf of the Company within the time period specified in Section
3(d) hereof, JOYCE may at any time thereafter bring suit against the Company to
recover the unpaid amount of such clam. In any such action the Company shall
have the burden of proving that indemnification is not required under this
Agreement.
5. Partial Indemnification. If JOYCE is entitled under any provision of
this Agreement to indemnification by the Company for some portion of any
Payments, but not, however, for the total amount thereof, the Company shall
nevertheless indemnify JOYCE for the portion of any such Payments to which JOYCE
is entitled.
6. Right Not Exclusive. The rights to indemnification and advancement of
expenses provided hereunder shall not be deemed exclusive of any other rights to
which JOYCE may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise as to action in JOYCE's official capacity
or as to action in another capacity while holding such office.
7. Subrogation. In the event of payment under this Agreement by or on
behalf of the Company, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of JOYCE, who shall execute all papers
that may be required and shall do all things that may be necessary to secure
such rights, including, without limitation, the execution of such documents as
may be necessary to enable the Company effectively to bring suit to enforce such
rights.
8. Notice of Claim. Promptly after receipt by JOYCE of notice of the
commencement or threat of commencement of any civil, criminal, administrative or
investigative Suit, JOYCE shall, if indemnification with respect thereto may be
sought from the Company under this Agreement, notify the Company thereof in
writing at its principal office and directed to the Corporate Secretary (or such
other address as the Company shall designate in writing to JOYCE); notice shall
be deemed received if sent by prepaid mail properly addressed, the date of such
notice being the date postmarked. In addition, JOYCE shall give the Company
such information and cooperation as it may reasonably require and as shall be
within JOYCE's power.
9. Choice of Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada, without giving
effect to the principals of conflict of laws thereunder.
10. Jurisdiction. The Company and JOYCE hereby irrevocably consent to the
jurisdiction of the courts of the State of Nevada for all purposes in connection
with any Suit that arises out of or relates to this Agreement, and agree that
any action instituted under this Agreement shall be brought only in the state
courts of the State of Nevada.
11. Coverage. The provisions of this Agreement shall apply to JOYCE's
service as a director, officer, employee or agent of the Company or at the
Company's request, as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise with respect to all periods of such service prior to and after the
date of this Agreement, even though JOYCE may have ceased such service at the
time of indemnification hereunder.
12. Attorneys' Fees. If any Suit is commenced in connection with or related
to this Agreement, the prevailing party shall be entitled to have its costs and
expenses, including, without limitation, reasonable attorneys' fees and
reasonable expenses of investigation, paid by the losing party.
13. Severability. In the event that any provision of this Agreement is
determined by a court to require the Company to do or to fail to do an act that
is in violation of any applicable law, such provision shall be limited or
modified in its application to the minimum extent necessary to avoid a violation
of law, and, as so limited or modified, such provision and the balance of this
Agreement shall be enforceable in accordance with their terms.
14. Successors and Assigns. The Agreement shall be binding upon all
successors and assigns of the Company, including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law, and shall be binding upon and inure to the benefit of the
heirs, executors and administrators of JOYCE.
15. Descriptive Headings. The descriptive headings in this Agreement are
included for the convenience of the parties only and shall not affect the
construction of this Agreement.
16. Counterparts. This Agreement may be executed in two counterparts, both
of which taken together shall constitute one document.
17. Amendment. No amendment, modification, termination or cancellation of
this Agreement shall be effective unless made in writing and signed by each of
the parties hereto.
IN WITNESS WHEREOF, the Company and JOYCE have executed this Agreement as
of the date first written above.
The Company: BISHOP EQUITIES, INC.
a Nevada corporation
By: --------------------------------
Its Duly Authorized Officer
JOYCE:
---------------------------------
JAMES A. JOYCE
<PAGE>
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT, dated as of February 12, 1999, is made and
entered into by and between BISHOP EQUITIES, INC., a Nevada corporation (the
"Company"), and EDWARD G. BROENNIMAN ("BROENNIMAN").
WHEREAS, BROENNIMAN is currently serving as a director of the Company;
WHEREAS, the Articles of Incorporation (the "Charter") of the Company
provides that the Company will indemnify, in the manner and to the fullest
extent permitted by the Nevada Revised Statutes (the "NRS"), certain persons
against specified expenses arising out of certain threatened, pending or
completed actions, suits or proceedings; and
WHEREAS, in order to induce BROENNIMAN to continue to serve the Company in
his present capacity, and to provide BROENNIMAN with specific contractual
assurance that the protection authorized by the Charter will be available to
BROENNIMAN, the Company wishes to enter into this Agreement.
NOW THEREFORE, the Company and BROENNIMAN hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have the
following meanings.
(a) "Suit" shall mean any claim, demand, action, suit, lawsuit,
arbitration, mediation, hearing, or proceeding.
(b) "Covered Claim" shall mean any threatened, pending or completed
Suit, whether civil, criminal, administrative or investigative, by reason of the
fact that BROENNIMAN is or was a director of the Company.
(c) "Determination" shall mean a determination, based upon the facts
known at the time, made by:
(i) the Board of Directors of the Company, by the vote of a
majority of the directors who are not parties to the Suit in question, even
though less than a quorum;
(ii) if there are no such disinterested directors, or if such
disinterested directors so direct, by independent legal counsel in a written
opinion;
(iii) the stockholders of the Company; or
(iv) a court or arbitrator of competent jurisdiction in a final,
nonappealable adjudication.
In the event that there are conflicting determinations, the determination shall
be given effect in the following order of precedence: First, by a court or
arbitrator of competent jurisdiction in a final, nonappealable adjudication;
second, to the stockholders of the Company; third, to the independent legal
counsel in a written opinion; and last, to the Board of Directors of the
Company.
(d) "Payment" shall mean all costs and expenses (including attorneys')
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by BROENNIMAN in connection with or relating to a Covered Claim.
2. Indemnification. The Company shall indemnify and hold harmless
BROENNIMAN against and from any and all Payments to the extent that:
(a) the Company shall not have advanced expenses to BROENNIMAN pursuant
to the provisions of the Charter or otherwise and no Determination shall have
been made pursuant to such Charter provision or the NRS that BROENNIMAN is not
entitled to indemnification;
(b) BROENNIMAN shall not already have received payment on account of
such Payments from any third party, including, without limitation, pursuant to
one or more valid and collectible insurance policies; and
(c) such indemnification by the Company is not unlawful.
Notwithstanding anything contained in this Agreement to the contrary, except for
proceedings to enforce rights to indemnification or advancement of expenses
pursuant to Section 4 hereof , the Company shall have no obligation to indemnify
BROENNIMAN in connection with a proceeding (or part thereof) initiated by
BROENNIMAN unless such proceeding (or part thereof) was authorized or consented
to by the Board of Directors of the Company. Further, the Company shall have no
obligation to indemnify BROENNIMAN under this Agreement for any amounts paid in
a settlement of any Suit effected without the Company's prior written consent,
which consent shall not be unreasonably withheld. The Company shall not settle
any Suit in any manner that would impose any obligation on BROENNIMAN
(regardless of whether BROENNIMAN would be entitled to indemnification for
obligations) without BROENNIMAN's prior written consent, which consent shall not
be unreasonably withheld.
3. Indemnification Procedure; Advancements of Expenses.
(a) If at the time of receipt of any notice pursuant to Section 9
hereof the Company has directors' and officers' liability insurance in effect,
the Company shall give prompt notice of the commencement of such Suit to the
insurers in accordance with the procedures set forth in the respective policies
in favor of BROENNIMAN. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of BROENNIMAN, all
Payments payable as a result of such Suit in accordance with the terms of such
policies.
(b) All expenses, including attorneys' fees, incurred by BROENNIMAN in
defending any Covered Claim shall be paid by the Company in advance of the final
disposition of such Covered Claim upon an undertaking by or on behalf of
BROENNIMAN to repay such amount if it shall ultimately be determined by a court
or arbitrator of competent jurisdiction in a final, nonappealable adjudication
that he is not entitled to be indemnified by the Company as authorized herein.
BROENNIMAN hereby undertakes to and agrees that he will repay the Company for
any expenses advanced by or on behalf of the Company pursuant to this Section
3(b) if it shall ultimately be determined by a court of competent jurisdiction
in a final, nonappealable adjudication that BROENNIMAN is not entitled to
indemnification under this Agreement.
(c) If the Company shall advance the expenses of any such Suit pursuant
to Section (b) hereof, it shall be entitled to assume the defense of such Suit,
if appropriate, with counsel reasonably satisfactory to BROENNIMAN, upon
delivery to BROENNIMAN of written notice of its election so to do. After
delivery of such notice, the Company shall not be liable to BROENNIMAN under
this Agreement for any expenses subsequently incurred by BROENNIMAN in
connection with such defense other than reasonable expenses of investigation;
provided, however, that:
(i) BROENNIMAN shall have the right to employ separate counsel in any such
Suit provided that the fees and expenses of such counsel incurred after
delivery of notice by the Company of its assumption of such defense shall be at
BROENNIMAN's own expense; and
(ii) the fees and expenses of counsel employed by BROENNIMAN shall be at the
expense of the Company if (x) the employment of counsel by BROENNIMAN has
previously been authorized by the Company, (y) BROENNIMAN shall have reasonably
concluded that there may be a conflict of interest between the Company and
BROENNIMAN in the conduct of any such defense (provided, that the Company shall
not be required to pay for more than one counsel to represent two or more
indemnitees where such indemnitees have reasonably concluded that there is no
conflict of interest among them in the conduct of such defense) or (z) the
Company shall not, in fact, have employed counsel reasonably satisfactory to
BROENNIMAN to assume the defense of such Suit.
(d) All payments on account of the Company's advancement obligations
under Section (b) hereof shall be made within 20 days of BROENNIMAN's written
request therefor. All other payments on account of the Company's obligations
under this Agreement shall be made within 60 days of BROENNIMAN's written
request therefor, unless a Determination is made that the claims giving rise to
BROENNIMAN's request are not payable under this Agreement. Each request for
payment hereunder shall be accompanied by evidence reasonably satisfactory to
the Company of BROENNIMAN's incurrence of the expenses for which such payment is
sought.
4. Enforcement of Indemnification; Burden of Proof. If a claim for
indemnification or advancement of expenses under this Agreement is not paid in
full by or on behalf of the Company within the time period specified in Section
3(d) hereof, BROENNIMAN may at any time thereafter bring suit against the
Company to recover the unpaid amount of such clam. In any such action the
Company shall have the burden of proving that indemnification is not required
under this Agreement.
5. Partial Indemnification. If BROENNIMAN is entitled under any provision
of this Agreement to indemnification by the Company for some portion of any
Payments, but not, however, for the total amount thereof, the Company shall
nevertheless indemnify BROENNIMAN for the portion of any such Payments to which
BROENNIMAN is entitled.
6. Right Not Exclusive. The rights to indemnification and advancement of
expenses provided hereunder shall not be deemed exclusive of any other rights to
which BROENNIMAN may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise as to action in
BROENNIMAN's official capacity or as to action in another capacity while holding
such office.
7. Subrogation. In the event of payment under this Agreement by or on
behalf of the Company, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of BROENNIMAN, who shall execute all
papers that may be required and shall do all things that may be necessary to
secure such rights, including, without limitation, the execution of such
documents as may be necessary to enable the Company effectively to bring suit to
enforce such rights.
8. Notice of Claim. Promptly after receipt by BROENNIMAN of notice of the
commencement or threat of commencement of any civil, criminal, administrative or
investigative Suit, BROENNIMAN shall, if indemnification with respect thereto
may be sought from the Company under this Agreement, notify the Company thereof
in writing at its principal office and directed to the Corporate Secretary (or
such other address as the Company shall designate in writing to BROENNIMAN);
notice shall be deemed received if sent by prepaid mail properly addressed, the
date of such notice being the date postmarked. In addition, BROENNIMAN shall
give the Company such information and cooperation as it may reasonably require
and as shall be within BROENNIMAN's power.
9. Choice of Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada, without giving
effect to the principals of conflict of laws thereunder.
10. Jurisdiction. The Company and BROENNIMAN hereby irrevocably consent to
the jurisdiction of the courts of the State of Nevada for all purposes in
connection with any Suit that arises out of or relates to this Agreement, and
agree that any action instituted under this Agreement shall be brought only in
the state courts of the State of Nevada.
11. Coverage. The provisions of this Agreement shall apply to BROENNIMAN's
service as a director, officer, employee or agent of the Company or at the
Company's request, as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise with respect to all periods of such service prior to and after the
date of this Agreement, even though BROENNIMAN may have ceased such service at
the time of indemnification hereunder.
12. Attorneys' Fees. If any Suit is commenced in connection with or related
to this Agreement, the prevailing party shall be entitled to have its costs and
expenses, including, without limitation, reasonable attorneys' fees and
reasonable expenses of investigation, paid by the losing party.
13. Severability. In the event that any provision of this Agreement is
determined by a court to require the Company to do or to fail to do an act that
is in violation of any applicable law, such provision shall be limited or
modified in its application to the minimum extent necessary to avoid a violation
of law, and, as so limited or modified, such provision and the balance of this
Agreement shall be enforceable in accordance with their terms.
14. Successors and Assigns. The Agreement shall be binding upon all
successors and assigns of the Company, including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law, and shall be binding upon and inure to the benefit of the
heirs, executors and administrators of BROENNIMAN.
15. Descriptive Headings. The descriptive headings in this Agreement are
included for the convenience of the parties only and shall not affect the
construction of this Agreement.
16. Counterparts. This Agreement may be executed in two counterparts, both
of which taken together shall constitute one document.
17. Amendment. No amendment, modification, termination or cancellation of
this Agreement shall be effective unless made in writing and signed by each of
the parties hereto.
IN WITNESS WHEREOF, the Company and BROENNIMAN have executed this Agreement
as of the date first written above.
The Company: BISHOP EQUITIES, INC.
a Nevada corporation
By: -------------------------------
Its Duly Authorized Officer
BROENNIMAN:
--------------------------------
EDWARD G. BROENNIMAN
<PAGE>
EXHIBIT "F"
COPIES OF EXCHANGED SHARES OR
LOST CERTIFICATE AFFIDAVITS
NONE
<PAGE>
POWER OF ATTORNEY
THE UNDERSIGNED SHAREHOLDER (the "Shareholder") of AETHLON, INC.
("AETHLON") does hereby:
(i) sells, assigns and transfers unto BISHOP EQUITIES, INC., a Nevada
corporation ("BISHOP"), the number of shares of AETHLON set forth opposite his
name in Exhibit "A" (the "Shares") to that certain Agreement and Plan of
Reorganization for the Acquisition of All of the Outstanding Shares of Common
Stock of AETHLON, INC. by BISHOP EQUITIES, INC. dated February 12, 1999 (the
"Agreement");
(ii) irrevocably constitutes and appoints JAMES A. JOYCE ("JOYCE") as
attorney-in-fact to transfer the Shares on the books of AETHLON to BISHOP as set
forth in the Agreement, with full power of substitution in the premises;
(iii) constitutes and appoints JOYCE as his true and lawful
attorney-in-fact- and agent, with full power of substitution, for him and in his
name, place, and stead, in any and all capacities (until revoked in writing) to
act on behalf of such Shareholder in connection with the Agreement and the
exchange of the Shares for the BISHOP shares; and
(iv) grants unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises as fully to accomplish all intents and
purposes of the Agreement as such Shareholder might or could do in person,
hereby ratifying and confirming all that the attorney-in-fact, or his
substitute, may lawfully do or cause to be done by virtue of this power of
attorney.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this -- day of February, 1999.
- --------------------------- ------------------------------
(Signature of Shareholder) (Printed Name of Shareholder)
<PAGE>
MAUREEN ABATO
ATTORNEY AT LAW
330 EAST 39th STREET - #36-C
New York, NY 10016
Tel: (212) 883-0878; Fax: (212) 883-0877
--------, 1999
To the Shareholders of Aethlon, Inc.
Ladies and Gentlemen:
I have acted as counsel to Bishop Equities, Inc., a Nevada corporation (the
"Company") in connection with the Agreement and Plan of Reorganization for the
Acquisition of all of the outstanding shares of common stock of Aethlon, Inc.
("Aethlon") by the Company ("the Plan"). This opinion is furnished to you
pursuant to Section 1.3.6 of the Plan.
I have participated in the preparation of and have examined the proceedings
of the Company in connection with the approval thereof and the authorization of
the transactions contemplated thereby, and have further examined such corporate
records and documents of the Company and certificates of officers of the
Company, and public officials, as I have deemed relevant and necessary to enable
me to render this opinion. I have relied on the accuracy of certain
representations and warranties of the Company and Aethlon contained in the Plan
and have relied upon such records, documents and certificates with respect to
the accuracy of certain factual matters, without independent verification of the
matters covered thereby. In my examination of such records, documents and
certificates, I have assumed the authenticity of all documents submitted to me
as originals, the conformity to original documents of all documents submitted to
me as certified or photostatic copies of original documents, the authenticity of
the originals of such latter documents, and the accuracy of the statements
contained in such certificates.
Based upon and in reliance upon the foregoing, I am of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada and has all requisite
corporate power and authority to own and lease its properties and to conduct its
business as presently conducted.
2. The authorized capital stock of the Company consists of 25,000,000
common shares, par value $.001 per share, of which 511,500 are issued and
outstanding; and all of the issued and outstanding shares of capital stock have
been duly and validly authorized and issued and are fully paid and
nonassessable, and to the best of my knowledge have not been issued in violation
of any preemptive right, co-sale right, registration right, right of first
refusal or other similar right, and such shares are free and clear of any liens
or other encumbrances.
<PAGE>
Shareholders of Aethlon, Inc.
Page Two.
3. The Company has the corporate power and authority to authorize the
issuance of the common stock under the Plan, and the Board of Directors of the
Company has consented to and approved the issuance of the shares pursuant to the
Plan.
4. The delivery of the shares of common stock to the Aethlon stockholders
pursuant to the Plan has been duly authorized by all necessary corporate action
on the part of the Company. The 728,500 common shares to be issued to the
Aethlon shareholders, as and when delivered to the Aethlon shareholders pursuant
to the Plan, are validly issued and outstanding, fully paid and nonassessable,
and are not subject to any preemptive or similar right.
5. The Plan has been duly authorized, executed and delivered by the
Company and, assuming the execution and delivery thereof by Aethlon, constitutes
a valid and legally binding obligation of the Company, enforceable in accordance
with its terms, except as the enforceability thereof may be limited by any
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or affecting the enforcement of creditors' rights generally and by general
equitable principles, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
6. The execution, delivery and performance of the Plan by the Company, and
the delivery by the Company to Aethlon of the shares of common stock pursuant to
the terms of the Plan, will not result in a breach or violation of, or
constitute a default under, the Company's Articles of Incorporation or Bylaws,
or any statute, law, rule or regulation applicable to the Company or any of its
properties, provided that the required "blue sky" filings are made as will be
provided in the closing minutes.
7. The execution, delivery and performance of the Plan by the Company and
the delivery by the Company to Aethlon of the shares of common stock pursuant to
the terms of the Plan will not violate or conflict with or result in a breach of
or constitute (or event which might, with the passage of time or the giving of
notice, or both, constitute a default) under, or result in the creation or
imposition of any claim, lien, security interest, mortgage, pledge, charge or
other encumbrance of any nature upon any of the properties or assets of the
Company pursuant to the terms of any indenture, mortgage, agreement, contract,
deed of trust, promissory note, or other agreement or instrument to which the
Company is subject.
8. No consent, approval, authorization or order of, or registration or
qualification with, any court or governmental agency or body or national
securities exchange is required to be obtained by the Company for the delivery
of the shares of common stock to Aethlon shareholders pursuant to the Plan,
which has not been made or obtained by the Company.
<PAGE>
Shareholders of Aethlon, Inc.
Page Three.
9. To the best of my knowledge after due inquiry, except as disclosed in
the Plan, there are no actions, suits, investigations or proceedings pending to
which the Company is a party, before or by any court or governmental agency or
body which in my opinion would result, individually or in the aggregate, in any
material adverse change in the prospects, financial condition or results of
operations of the Company or which would materially and adversely affect the
properties or assets thereof, taken as a whole, or which seeks to restrain or
prohibit the transactions contemplated by the Plan; and, to the best of my
knowledge after due inquiry, no such actions, suits, investigations or
proceedings are threatened by any person, corporation or governmental agency or
body.
This opinion is rendered solely for the benefit of Aethlon with respect to
the shares of common stock to be delivered under the Plan, and is not to be
used, circulated, quoted or referred to, or otherwise relied upon by any person,
without my prior written consent.
Sincerely,
Maureen Abato
<PAGE>
EXHIBIT "I"
SCHEDULE OF EXCEPTIONS OF AETHLON
NONE
<PAGE>
Aethlon, Inc.
Balance Sheet
(unaudited)
Assets February 19, 1999
Current assets:
Cash 9,052
Noncurrent assets:
Advances to Hemex 109,300
Other Assets:
Organizational expense-net 31,500
--------
Total assets 149,852
--------
Liabilities and stockholders' equity
Current liabilities:
Accounts payable 450
Stockholders' equity:
Common stock-authorized: 10,000,000 shares
Par Value: 0
Outstanding:728,500 common shares
Paid in capital
Retained earnings (deficit) 220,500
Total stockholders' equity 149,402
--------
Total liabilities and stockholder's equity 149,852
--------
<PAGE>
Aethlon, Inc.
Statement of Stockholders' Equity
(unaudited)
February 19, 1999
Date Common stock Paid in capital Accumulated Deficit
Common Stock issued at $0 $60,000
Incorporation:
675,000 shares at $0 par value
53,500 shares placed privately
9/29/98-2/19/99 0 160,500
Retained Earnings (deficit) June 24, (71,098)
1998 to February 19, 1999
------ -------- --------
February 19, 1999 $0 $220,500 ($71,098)
<PAGE>
Aethlon, Inc.
Statement of Operations
(unaudited)
June 24, 1998 - February 19, 1999
Income
Interest Income $57
Expenses
Professional expense 56,750
Office expense 10,904
Organization expense 3,500
-----------
Total expenses 71,154
Net operating loss ($71,098)
-----------
<PAGE>
Aethlon, Inc.
Statement of Cash Flows
(unaudited)
June 24, 1998 - February 19, 1999
Cash flows from operating activities
Net loss ($71,098)
Adjustments to reconcile net loss to
Cash flows from operating activities:
Organizational expense 3,500
Increases (Decreases) in:
Accounts payable 450
--------
Cash flows from investing activities:
Advances to Hemex 109,300
Organizational Cost 35,000
--------
Cash used by investing activities: 144,300
Cash flows from financing activities
Issuance of common stock 220,500
Net increase (decrease) in cash 9,052
Cash-beginning 0
Cash-end $9,052
-------
<PAGE>
EXHIBIT "K"
AETHLON, INC. BANK ACCOUNTS
Money Market Account:
Pacific National Bank
Account Number 105170954
Signatory James A. Joyce
Operating Account:
Pacific National Bank
Account Number 1005419201
Signatory James A. Joyce
<PAGE>
EXHIBIT "L"
SCHEDULE OF EXCEPTIONS OF BISHOP
NONE
<PAGE>
EXHIBIT "N"
BISHOP EQUITIES, INC. BANK ACCOUNTS
Operating Account:
Citibank
Account Number: 092 36255
Signatory: Deborah Salerno
<PAGE>
EXHIBIT "A"
Aethlon, Inc.
Shareholders' Names Number of Shares Issuable
James A. Joyce 675,000
John Orkish 1,700
Frank Lowthers & Angelica Camargo 10,000
John P. Bell, Jr. 15,000
Philip A. & Margaret A. Ward 7,500
Jeffrey Lee Dalton 8,000
Dana H. & Susan B. Lee 3,300
Edward C. Brookins Trust 3,000
Bruce A. & Rhoda P. Shear 5,000
Mario C. & Judith J. Drago 2,500
John Gaidmore 2,500
<PAGE>
AETHLON, INC.
7825 Fay Avenue
Suite 200
La Jolla, California 92037
Phone: (619) 456-5777
Fax: (619) 456-4690
July 28, 1998
Mr. Franklyn S. Barry, Jr.
President and Chief Executive Officer
Hemex, Inc.
143 Windsor Avenue
Buffalo, New York 14209
Re: Aethlon, Inc. Letter of Intent
Dear Mr. Barry:
In accordance with our various discussions, this letter is written to
evidence our mutual intention to enter into this binding Letter of Intent (the
"Letter of Intent") pursuant to which Aethlon, Inc., a California corporation
("Aethlon") will secure the acquisition of Hemex, Inc., a Delaware corporation
("Hemex"), by Bishop Equities, Inc., a Nevada corporation ("Bishop"), through a
tax-free exchange of stock pursuant to Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended (hereinafter referred to as the "Hemex
Reorganization"). For purposes of this Letter of Intent, Aethlon, Hemex and
Bishop are hereinafter collectively referred to as the "Consolidated Companies."
Prior to entering into this Letter of Intent, Aethlon has also entered
into another, separate letter of intent with Bishop, pursuant to which Aethlon
will also be acquired by Bishop through a tax-free exchange of stock pursuant to
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the
"Aethlon Reorganization") immediately prior to the closing of the Hemex
Reorganization. The acquisition of Aethlon and Hemex by Bishop as contemplated
hereby are hereinafter collectively referred to as the "Acquisitions."
Aethlon and Hemex agree that execution of this Letter of Intent is
subject to the following terms and conditions:
1. Aethlon will use its best efforts to raise at least $400,000.00
through a private placement of shares of Aethlon Common Stock (hereinafter
referred to as the "Aethlon Offering") and through contributions of capital to
Aethlon by its founder. The shares issued pursuant to the Aethlon Offering will
not be registered under federal or state securities laws, but
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 2
will be issued pursuant to one or more exemptions from the registration
requirements of applicable state and/or federal securities laws. The Aethlon
Reorganization will occur as soon as practicable following the closing of the
Aethlon Offering. The parties hereto agree that Aethlon and Bishop (following
the Aethlon Reorganization) will use the proceeds from the Aethlona 0ffering, as
provided in Appendix I, to provide working capital and to prepare for and
complete an anticipated $3,000,000.00 private placement to be conducted by
Bishop after the Acquisitions. If Aethlon fails to raise at least $400,000.00 in
the Aethlon Offering and close the Aethlon Reorganization within sixty (60) days
of the Securities Registration Compliance Date, Hemex will-be entitled to
terminate this Letter of Intent without being in breach. (For purposes of this
Letter of Intent, the "Securities Registration Compliance Date" shall be the
date upon which both the Private Placement Memorandum is completed and all
necessary Blue Sky registration requirements and/or exemptions thereto are
complied with for the Aethlon Offering . At anytime after this Letter of Intent
is executed by Hemex and prior to the Hemex Reorganization, Hemex, will be able
to request that Aethlon make advances to Hemex from Aethlon's available funds
(such advances to Hemex are hereinafter referred to as "Interim Advances").
However, once Hemex requests and receives from Aethlon any Interim Advances,
Hemex will no longer be able to terminate this Letter of Intent based on
Aethlon's failure to complete the Aethlon Offering. If this Letter of Intent is
terminated for any reason, then in addition to such other remedies as the
parties may have, Aethlon may elect to convert the Interim Advances to a loan
bearing interest at ten percent (10%) per annum from the date such funds were
advanced, which loan shall immediately be due and payable to Aethlon.
2. Immediately prior to the Acquisitions, Bishop will have
outstanding no more than 511,500 shares of its Common Stock. Upon completion of
the Aethlon Offering and the Aethlon Reorganization, or at anytime after
receiving Interim Advances and being so instructed by Aethlon, Hemex will be
obligated to close the Hemex Reorganization, whereby Hemex will transfer all
outstanding shares of Hemex stock to Bishop in return for 1,350,000 shares of
Common Stock of Bishop. Prior to the Hemex Reorganization, Aethlon and Bishop
will close the Aethlon Reorganization whereby Aethlon's shareholders will
transfer all outstanding shares of Aethlon stock to Bishop in return for 825,000
shares of Common Stock of Bishop. Immediately following the Acquisitions, the
total number of outstanding shares of Common Stock of Bishop will be 2,686,500,
and the former shareholders of Hemex will collectively own approximately 50.25%
of the outstanding shares of Bishop, the former shareholders of Aethlon will own
approximately 30.71% of the outstanding shares of Bishop, and the original
shareholders of Bishop will own approximately 19.04% of the outstanding shares
of Bishop.
3. Upon completion of the Acquisitions, management of the
Consolidated Companies shall use its best efforts to raise $3,000,000.00 for the
Consolidated Companies through a private placement of Bishop stock (hereinafter
referred to as the "Bishop Offering."), and the proceeds shall be used as
reflected in Appendix II. The terms and conditions of the proposed Bishop
Offering will be agreed upon and approved by the board of directors of Bishop
(hereinafter referred to as the "Board"). Prior to completion of the Bishop
Offering, a majority
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 3
of the Board shall be appointed by Hemex. In the event the Board is comprised of
three (3) members, one member shall be James A. Joyce and the other two (2)
shall be Franklyn S. Barry, Jr. plus one additional member appointed by Hemex.
4. In the event that Bishop does not conclude both the Aethlon
Reorganization and the Hemex Reorganization within ninety (90) days following
execution of this Letter of Intent by Hemex, then Aethlon will have the right,
for a period of ninety (90) additional days, to either assume the rights and
responsibilities of Bishop set forth herein, or to replace Bishop with another
"public shell" which shall assume the rights and responsibilities of Bishop set
forth herein to enable Aethlon and Hemex to complete the intents and purposes of
this Letter of Intent. Aethlon's rights pursuant to this Letter of Intent shall
be assignable by Aethlon; however, during the period between the execution of
this Letter of Intent and the closing of the Hemex Reorganization, such right is
subject to the approval of Hemex. Furthermore, upon the termination or
expiration of this Letter of Intent, Hemex may not enter into any financial or
business relationship, for a period of twenty-four (24) months from the date of
termination or expiration, with any party exposed to the transactions proposed
herein without the prior written consent of Aethlon. This covenant shall survive
the termination or expiration of this Letter of Intent. In addition to any other
rights and remedies Aethlon may have in the event of a breach of this Letter of
Intent, Hemex agrees that Aethlon shall also have the right to injunctive relief
to enforce this provision.
5. Prior to the Hemex Reorganization, Hemex will cause all
Shareholders Loans and one (1) year 14% Convertible Notes, including any and all
accrued interest incurred thereon, to be converted to common stock of Hemex.
Furthermore, prior to the Hemex Reorganization, Hemex will reduce the total of
all liabilities, including both short-term and long-term liabilities, to no more
than Five Hundred Thousand Dollars ($500,000.00).
6. As a condition to the closing of the Hemex Reorganization, the
Hemex Shareholders and the Aethlon founder will enter into an agreement with
Bishop pursuant to which the Hemex Shareholders and the Aethlon founder will
agree that they will not, without prior written approval of Bishop, offer for
sale, sell, pledge, hypothecate or otherwise dispose of, directly or indirectly,
any of the shares of Bishop stock which they may own legally or beneficially in
any manner whatsoever, whether pursuant to Rule 144 of the Securities Act of
1933 or otherwise, for a period of eighteen (18) months from the date of receipt
of the Bishop shares. As a further condition to the closing of the Hemex
Reorganization, Hemex and all of its shareholders approving the transaction and
the Aethlon founder will further agree and authorize Bishop to take any actions
(including, but not limited to, notification of Bishop's transfer agent
regarding any such restrictions) necessary to enforce this provision and
restrict the sale or transfer of the Bishop shares as provided herein.
7. As a condition to the closing of the Hemex Reorganization,
Bishop, on behalf of itself and the Consolidated Companies, shall execute and
enter into separate employment contracts with (i) Dr. Clara M. Ambrus, Chairman
of the Board of Directors and
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 4
Chief Scientific Officer of Hemex; (ii) Franklyn S. Barry, Jr., President and
Chief Executive Officer of Hemex; and (iii) James A. Joyce, President of
Aethlon. The exact terms of each of the employment contracts will be negotiated
in good faith in the future (prior to the closing of the Hemex Reorganization)
by the parties referenced above. However, in the event that one or more of the
parties is/are unable to reach agreement on the terms of their respective
employment contract(s), then the respective terms and conditions listed in
Appendix III, attached hereto and incorporated herein, shall constitute a
binding employment contract, to be interpreted as necessary by the Compensation
Committee of the Board.
8. Each party shall pay for those legal and accounting fees
which it incurs in the course of the transactions contemplated herein from the
funds provided for in the Aethlon Offering, as set forth in Appendix I to this
Letter of Intent.
9. In the event one or more audits are required of Bishop, Hemex,
Aethlon or the Consolidated Companies as a prerequisite to any transaction
contemplated herein, and such audit or audits cannot be completed within the
time frames set forth herein, then each such deadline shall automatically be
extended to a date sixty (60) days after such audited financial statements are
issued.
10. Until consummation or termination of the Hemex Reorganization,
Hemex will conduct its business only in the ordinary course and none of the
assets or properties of Hemex shall be sold or disposed of except in the
ordinary course of business or with the consent of Aethlon. Hemex further agrees
not to enter into any agreements regarding the sale, exchange, issuance, or
other disposition of its stock, whether such stock be outstanding, treasury,
and/or authorized but not issued, to any other person or persons, whether
individual or corporate, without the prior written consent of Aethlon.
11. Aethlon makes the following representations and warranties to
Hemex, which shall be incorporated into the parties' formal agreements and which
shall survive the closing of the Acquisitions:
(a) Aethlon is a corporation duly organized, validly existing
and in good standing under the laws of California, has the corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which its ownership or leasing
of its properties or the conduct of its business requires such qualification.
(b) Aethlon has the requisite corporate power and authority to
enter into this Letter of Intent and to carry out its obligations under this
Letter of Intent. The execution and delivery of this Letter of Intent and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Aethlon, and no other corporate
proceedings on the part of Aethlon are necessary to authorize the Letter of
Intent and the transactions contemplated by the Letter of Intent.
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 5
(c) The execution and delivery of the Letter of Intent, the
consummation of the transactions contemplated by the Letter of Intent and
compliance with their terms will not, as of the closing of the Acquisitions (i)
conflict with, or result in any violation of any provision of, the Articles of
Incorporation or Bylaws of Aethlon, (ii) violate or conflict with, or result in
a breach or termination of or default under, any agreement, instrument, license,
judgment, order, decree, statute, law or regulation applicable to Aethlon, or
(iii) result in the creation or imposition of any lien on any asset of Aethlon.
12. Hemex makes the following representations and warranties to
Aethlon, which shall survive the closing of the Acquisitions:
(a) Hemex is a corporation duly organized, validly existing and
in good standing under the laws of Delaware, has the corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which its ownership or leasing
of its properties or the conduct of its business requires such qualification.
(b) Hemex has the requisite corporate power and authority to
enter into this Letter of Intent and to carry out its obligations under this
Letter of Intent. The execution and delivery of this Letter of Intent and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Hemex.
(c) The execution and delivery of the Letter of Intent and the
consummation of the transactions contemplated by the Letter of Intent and
compliance with their terms will not, as of the closing of the Acquisitions (i)
conflict with, or result in any violation of any provision of, the articles of
incorporation or bylaws of Hemex, (ii) violate or conflict with, or result in a
breach or termination of or default under, any agreement, instrument, license,
judgment, order, decree, statute, law or regulation applicable to Hemex, or
(iii) result in the creation or imposition of any lien on any asset of Hemex.
As soon as practicable following the execution of this Letter of
Intent, the parties shall commence the preparation of one or more formal
agreements which shall incorporate the terms and provisions set forth in this
Letter of Intent as well as such other terms and conditions as are customarily
included in such transaction documents. Each party agrees to negotiate in good
faith such additional terms and conditions. However, in the event that the
parties are unable to agree on such additional terms and conditions, this Letter
of Intent and such additional terms and conditions as the parties may agree upon
shall constitute the binding agreement of the parties and shall be fully
enforceable in the event of a breach.
<PAGE>
Mr. Franklyn S. ]Barry, Jr.
July 28, 1998
Page 6
If the foregoing is in accordance with your intentions and our
understanding regarding the items set forth, please so indicate by signing below
and returning a signed original of this letter to me. A duplicate original is
provided for your records.
Very truly yours,
AETHLON, INC.
/s/ James A. Joyce
---------------------------
By: James A. Joyce
Its: President
AGREED AND ACCEPTED
Hemex, Inc., a Delaware corporation
/s/ Franklyn S. Barry
By: ---------------------------------
President and CEO
Its: ---------------------------------
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 7
APPENDLX I
CONTEMPLATED USE OF PROCEEDS OF THE AETHLON OFFERING
The contemplated use of proceeds from the Aethlon Offering shall be as follows:
Aethlon transaction and administrative expenses: $ 95,000.00
Hemex transaction and administrative expenses
including the reduction of accounts payable: $205,000.00
Hemex Phase II Clinical Trial preparation: $100,000.00
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 8
APPENDIX II
CONTEMPLATED USE OF PROCEEDS OF THE BISHOP OFFERING
The contemplated use of proceeds from the Bishop Offering shall be as follows:
Bishop Offering expenses: $ 350,000.00
Working capital for the Consolidated Companies: $1,800,000.00
Reduction of accrued debt and expenses: $ 500,000.00
Offering expenses related to future follow-on raise: $ 350,000.00
In the event that the Bishop Offering for the Consolidated Companies is
on a minimum-maximum basis that allows for the Consolidated Companies to break
escrow and obtain proceeds prior to the sale of the entire offering, then the
use of proceeds shall be applied first to Offering Expenses and second to
working capital and the reduction of accrued debt and expenses. Of those funds
released from escrow, funds applied to the reduction of accrued debts and
expenses will not exceed five percent (5%) of any amount up to Two Million
Dollars ($2,000,000.00), and will not exceed ten percent (10%) of any amount up
to Two Million Five Hundred Thousand Dollars ($2,500,000.00).
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 9
APPENDIX III
TERMS AND CONDITIONS OF EMPLOYMENT CONTRACTS
In the event that Dr. Clara Ambrus, Franklyn S. Barry, Jr., and/or James
A. Joyce (collectively, the "Employees" and individually an "Employee") fail to
reach agreement with Bishop (the "Company") on the exact terms and conditions of
their respective employment agreements, then the following respective terms and
conditions shall constitute a binding employment contract for the Employee who
so fails to reach agreement, to be interpreted as
necessary by the Compensation Committee of the Board.
Term of Contract: Two (2) years, with automatic renewal for one
(1)year periods unless notice is given prior
to the expiration of the initial term (or
such subsequent renewal term, if applicable).
Termination of Contract: Either party can terminate the contract upon
sixty (60) days written notice; or the
company may terminate immediately with or
without cause.
Severance Package: If the employment contract is terminated by
the Employee, or (ii) the Company for cause,
then the Employee is not entitled to any
severance pay; if the employment contract is
terminated by the Company without cause, then
the Company shall pay the Employee one (1)year
of salary from the date of termination.
Non-Compete Provision: The Employee shall not compete, directly or
indirectly, with any of the Consolidated
Companies (i.e., Hemex, Aethlon or Bishop and
any future acquired company) during the term
of their employment.
Non-Disclosure Provision: The Employees shall not disclose any
Confidential information to any third
parties, at any time.
Disability Provision: After one hundred eighty (180) days of
Complete disability, defined as inability to
Substantially perform the duties required of
such Employee prior to the disability, the
Company can terminate the
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 10
Employee with no further salary obligation
and no further severance obligation.
Incentive Compensation: A pool created by twenty percent (20%) of net
income over approved plan in any year is
divided in proportion to each officer's salary
as a percentage of all salaries of officers
participating in the plan.
Stock Option Plan: A properly approved Incentive Stock Option
Plan (the "Plan"), administered by a
Compensation Committee of the Board of
Directors, shall be in place within ninety
(90) days of the completion of the
Acquisitions. The Plan shall provide for
Franklyn S. Barry, Jr. to be issued Options
To purchase 412,500 shares of stock in the
Consolidated Companies at the same price
Offered to investors in the Aethlon Offering.
The Option may be exercised at any time for
five (5) years after the applicable lock-up
period.
Miscellaneous: The Consolidated Companies shall promptly
reimburse all reason~61e expenses incurred
by the Employee related to the performance of
their duties as an Employee; the Consolidated
Companies shall provide health insurance and
long-term disability insurance to the
Employee; and the Employee shall be entitled
to four (4) weeks of paid vacation and
reasonable time for personal matters.
Position/Title: Dr. Clara M. Ambrus shall be the Chief
Scientific Officer of Hemex and Aethlon;
Franklyn S. Barry, Jr., shall be a member of
the board of directors, President, and Chief
Executive Officer of Hemex and Aethlon; and
James A. Joyce shall be the Chairman of the
Board of Directors of Aethlon.
Salary: The salaries for 1998 shall be as follows:
Dr. Clara Ambrus - $80,000.00; Franklyn S.
Barry, Jr. $120,000.00; James A. Joyce
$108,000.00. The salaries shall be subject to
adjustment at the end of each calendar year.
<PAGE>
Mr. Franklyn S. Barry, Jr.
July 28, 1998
Page 11
/s/ Clara M. Ambrus
--------------------------------------------
/s/ Franklin S. Barry, Jr.
- --------------------------------------------------------------------
--------------------------------------------
/s/ James A. Joyce
-------------------------------------------
<PAGE>
AETHLON, INC.
7825 Fay Avenue
Suite 200
La Jolla, California 92037
Phone: (619) 456-5777
Fax: (619) 456-4690
July 15, 1998
Ms. Deborah Salerno
President
Bishop Equities, Inc.
355 Southend Avenue
Apartment 22B
New York, New York 10280
Re: Aethlon, Inc. Letter of Intent
Dear Ms. Salerno:
In accordance with our various discussions, this letter is written to
evidence our mutual intention to enter into this non-binding Letter of Intent
(the "Letter of Intent") pursuant to which Bishop Equities, Inc., a Nevada
corporation ("Bishop"), will acquire both Aethlon, Inc., a California
corporation ("Aethlon"), and Hemex, Inc., a Delaware corporation ("Hemex").
Bishop will acquire Aethlon through a tax-free exchange of stock pursuant to
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended
(hereinafter referred to as the "Aethlon Reorganization). Bishhop will also
acquire Hemex through a separate tax-free exchange of stock pursuant to Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (hereinafter
referred to as the "Hemex Reorganization". For purposes of this Letter of
Intent, Aethlon, Hemex, and Bishop are hereinafter collectively referred to as
the "Consolidated Companies."
As soon as is practicable after entering into this Letter of Intent,
Aethlon will also enter into another, separate letter of intent with Hemex
(substantially in accordance with the Letter of Intent dated July 15, 1998, a
copy of which is attached hereto as Exhibit "I"), pursuant to which Aethlon will
secure the right for Bishop to complete the Hemex Reorganization immediately
after the closing of the Aethlon Reorganization. The acquisition of Aethlon and
Hemex by Bishop as contemplated hereby are hereinafter collectively referred to
as the "Acquisitions."
Aethlon and Bishop agree that execution of this Letter of Intent is subject
to the following terms and conditions:
<PAGE>
Ms. Deborah Salerno
July 15, 1998
Page 2
1 . Immediately prior to the Acquisitions, Bishop will have outstanding
no more than 511,500 shares of its Common Stock. Within ninety (90) days
following execution of the Aethlon-Hemex Letter of Intent by Hemex, Bishop will
close the Aethlon Reorganization, whereby Aethlon's shareholders will transfer
all outstanding shares of Aethlon stock to Bishop in return for 825,000 shares
of Common Stock of Bishop. As soon as practicable after the close of the Aethlon
Reorganization (but within ninety (90) days following execution of the Aethlon
Hemex Letter of Intent by Hemex), Bishop will close the Hemex Reorganization,
whereby Hemex' shareholders will transfer all outstanding shares of Hemex stock
to Bishop in return for 1,350,000 shares of Common Stock of Bishop. Immediately
following the Acquisitions, the total number of outstanding shares of Common
Stock of Bishop will be 2,686,500, and the former shareholders of Hemex will
collectively own approximately 50.25% of the outstanding shares of Bishop, the
former shareholders of Aethlon will own approximately 30.71% of the outstanding
shares of Bishop, and the original shareholders of Bishop will own approximately
19.04% of the outstanding shares of Bishop.
2. Upon completion of the Acquisitions, all of the Directors on
Bishop's Board will immediately resign and shall be replaced by a slate of
directors to be named by Aethlon's Board of Directors, a majority of which shall
be approved by Hemex. In the event Bishop's Board is comprised of three (3)
members, one (1) member shall be James A. Joyce, one (1) member shall be
Franklyn S. Barry, Jr., and one (1) member shall be appointed by Hemex.
3. Bishop must acquire both Hemex and Aethlon, pursuant . to this Letter of
Intent and the Aethlon-Hemex Letter of Intent, and Bishop shall not have the
right to acquire only one of the corporations without also acquiring the other.
In the event that Bishop does not conclude both the Aethlon Reorganization and
the Hemex Reorganization within ninety (90) days following execution of the
Aethlon-Hemex Letter of Intent by Hemex, then both Aethlon and Bishop shall have
the right to terminate this Letter of Latent, without obligation, by giving
written notice of termination to the other party. Additionally, during the due
diligence review period, either party may terminate this Letter of Intent,
without obligation, by giving written notice of termination to the. other party.
4. As a condition to the closing of the Hemex Reorganization and the
Aethlon Reorganization, the original shareholders of Bishop will enter into an
agreement with Aethlon pursuant to which the original shareholders of Bishop
will agree that they will not, without prior written approval of Aethlon, offer
for sale, sell, pledge, hypothecate or otherwise dispose of, directly or
indirectly, any of the shares of Bishop stock which they may own legally or
beneficially in any manner whatsoever, whether pursuant to Rule 144 of the
Securities Act of 1933 or otherwise, for a period of time, to be negotiated in
good faith prior to closing the Aethlon Reorganization by Aethlon and Bishop,
from the date of the closing of the Acquisitions. As a further condition to the
closing of the Hemex Reorganization and the Aethlon Reorganization, Bishop and
all of its original shareholders will further agree and authorize Aethlon to
take any actions (including, but not limited to, notification of Bishop's
transfer agent
<PAGE>
Ms. Deborah Salerno
July 15, 1998
Page 3
regarding any such restrictions) necessary to enforce this provision and
restrict the sale or transfer of the Bishop shares as provided herein.
5. Each party shall pay for its own legal and accounting fees to
consummate the Acquisitions.
6. Until consummation or termination of the Hemex Reorganization and
Aethlon Reorganization, Bishop will conduct its business only in the ordinary
course and none of the assets or properties of Bishop shall be sold or disposed
of except in the ordinary course of business or with the consent of Aethlon.
Bishop further agrees not to enter into any agreements regarding the sale,
exchange, issuance, or other disposition of its stock, whether such stock be
outstanding, treasury, and/or authorized but not issued, to any other person or
persons, whether individual or corporate. Bishop further agrees not to take any
actions that may lead to or result in Bishop being de-listed by the National
Association of Stock Dealers Automated Quotations ("Nasdaq") OTC Bulletin Board
(Nasdaq symbol: BSEQ).
7. In the event one or more audits are required of Bishop, Hemex,
Aethlon or the Consolidated Companies as a prerequisite to any transaction
contemplated herein, and such audit or audits cannot be completed within the
time frames set forth herein, then each such deadline shall automatically be
extended to a date sixty (60) days after such audited financial statements are
issued.
8. Aethlon makes the following representations and warranties to
Bishop, which shall be incorporated into the parties' formal agreements and
which shall survive the closing of the Acquisitions:
(a) Aethlon is a corporation duly organized, validly existing and in
good standing under the laws of California, has the corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which its ownership or leasing
of its properties or the conduct of its business requires such qualification.
(b) Aethlon has the requisite corporate power and authority to enter
into this Letter of Intent and to carry out its obligations under this Letter of
Intent. The execution and delivery of this Letter of Intent and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Aethlon, and no other corporate proceedings on the
part of Aethlon are necessary to authorize the Letter of Intent and the
transactions contemplated by this Letter of Intent.
(c) The execution and delivery of the Letter of Intent, the consummation
of the transactions contemplated by this Letter of Intent and compliance with
their terms will not, as of the closing of the Acquisitions (i)conflict with, or
result in any violation of any provision of, the Articles of Incorporation or
Bylaws of Aethlon, (ii) violate or conflict with,
<PAGE>
Ms. Deborah Salerno
July 15, 1998
Page 4
or result in a breach or termination of or default under, any agreement,
instrument, license, judgment, order, decree, statute, law or regulation
applicable to Aethlon, or (iii) result in the creation or imposition of any lien
on any asset of Aethlon.
9. Bishop makes the following representations and warranties to
Aethlon, which shall survive the closing of the Acquisitions:
(a) Bishop is a corporation duly organized, validly existing and in
good standing under the laws of Nevada, has the corporate power and authority to
own, lease and operate its properties and assets and to carry on its business as
it is now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which its ownership or leasing of its
properties or the conduct of its business requires such qualification.
(b) Bishop is a public corporation that is listed on the Nasdaq OTC
Bulletin Board, is governed by the Securities Exchange Act of 1934, and is
subject to regulation by the National Association of Stock Dealers ("NASD") and
the Securities and Exchange Commission, and is currently in good standing with
all governmental authorities, is current with all of its required regulatory
filings, and is, to the best of its knowledge, not under investigation by any
governmental authority.
(c) Bishop has the requisite corporate power and authority to enter
into this Letter of Intent and to carry out its obligations under this Letter of
Intent. The execution and delivery of this Letter of Intent and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Bishop and no other corporate proceedings on the part
of Bishop are necessary to authorize the Letter of Intent and the transactions
contemplated by this Letter of Intent.
(d The execution and delivery of the Letter of Intent, the consummation
of the transactions 'contemplated by the Letter of Intent and compliance with
their terms will not, as of the closing of the Acquisitions (i) conflict with,
or result in any violation of any provision of, the articles of incorporation or
bylaws of Bishop, (ii) violate or conflict with, or result in a breach or
termination of or default under, any agreement, instrument, license, judgment,
order, decree, statute, law or regulation applicable to Bishop, or (iii) result
in the creation or imposition of any lien on any asset of Bishop.
(e) The Common Stock of Bishop that Bishop will issue to the former
shareholders of Aethlon and Hemex hereunder, when issued and delivered in
accordance with the terms of this Letter of Intent, will be duly and validly
issued, fully paid, and nonassessable, and will be free of restrictions on
transfer other than restrictions (i)under this Letter of Intent, (ii)under the
letter of intent between Hemex and Aethlon, and (iii) under applicable state and
federal securities laws.
<PAGE>
Ms. Deborah Salerno
July 15, 1998
Page 4
or result in a breach or termination of or default under, any agreement,
instrument, license, judgment, order, decree, statute, law or regulation
applicable to Aethlon, or (iii) result in the creation or imposition of any lien
on any asset of Aethlon.
9. Bishop makes the following representations and warranties to
Aethlon, which shall survive the closing of the Acquisitions:
(a) Bishop is a corporation duly organized, validly existing and in
good standing under the laws of Nevada, has the corporate power and authority to
own, lease and operate its properties and assets and to carry on its business as
it is now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which its ownership or leasing of its
properties or the conduct of its business requires such qualification.
(b) Bishop is a public corporation that is listed on the Nasdaq OTC
Bulletin Board, is governed by the Securities Exchange Act of 1934, and is
subject to regulation by the National Association of Stock Dealers C`NASD'~ and
the Securities and Exchange Commission, and is currently in good standing with
all governmental authorities, is current with all of its required regulatory
filings, and is, to the best of its knowledge, not under investigation by any
governmental authority.
(c) Bishop has the requisite corporate power and authority to enter
into this Letter of Intent and to carry out its obligations under this Letter of
Intent. The execution and delivery of this Letter of Intent and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Bishop and no other corporate proceedings on the part
of Bishop are necessary to authorize the Letter of Intent and the transactions
contemplated by this Letter of Intent.
(d) The execution and delivery of the Letter of Intent, the
consummation of the transactions 'Contemplated by the Letter of Intent and
compliance with their terms will not, as of the closing of the Acquisitions (i)
conflict with, or result in any violation of any provision of, the articles of
incorporation or bylaws of Bishop, (ii) violate or conflict with, or result in a
breach or termination of or default under, any agreement, instrument, license,
judgment, order, decree, statute, law or regulation applicable to Bishop, or
(iii) result in the creation or imposition of any lien on any asset of Bishop.
(e) The Common Stock of Bishop that Bishop will issue to the former
shareholders of Aethlon and Hemex hereunder, when issued and delivered in
accordance with the terms of this Letter of Intent, will be duly and validly
issued, fully paid, and nonassessable, and will be free of restrictions on
transfer other than restrictions (i) under this Letter of Intent, (ii) under the
letter of intent between Hemex and Aethlon, and (iii) under applicable state and
federal securities laws.
<PAGE>
Ms. Deborah Salerno
July 15, 1998
Page 5
As soon practicable following the execution of this Letter of Intent, the
parties shall commence the preparation on one or more formal agreements which
shall incorporate the terms and provisions set forth in this Letter of Intent as
well as such other terms and conditions as are customarily included in such
transaction documents. Each party agrees to negotiate in good faith such
additional terms and conditions. Except as provided above, neither Aethlon nor
Bishop will be under any legal obligation to the other until such time as formal
agreement(s) have been executed.
If the foregoing is in, accordance with your intentions and our understanding
regarding the items set forth, please so indicate by signing below and returning
a signed original of this letter to me. A duplicate original is provided for
your records.
Very truly yours,
AETHLON, INC
/s/ James A. Joyce
------------------------------------
By: James A. Joyce
Its President
AGREED AND ACCEPTED
Bishop Equities, Inc., a Nevada corporation
/s/ Deborah Salerno
By: --------------------------------------------------
Deborah Salerno
Its: President
<PAGE>
UNANIMOUS CONSENT IN LIEU OF
SPECIAL MEETING OF THE BOARD OF DIRECTORS
OF BISHOP EQUITIES, INC.
The undersigned, constituting the entire Board of Directors of Bishop
Equities, Inc. (the "Company") hereby ratifies and approves the following
resolutions with the same formality as if the matters had been put to a vote of
the Directors at a meeting held upon notice:
RESOLVED, that the officers may take all actions necessary in connection
with the execution and delivery and performance in accordance with the Agreement
and Plan of Reorganization for the Acquisition of All of the Outstanding Shares
of Common Stock of Hemex, Inc., by Bishop Equities, Inc.; and it is further
RESOLVED, that the officers may take all actions necessary in connection
with the execution and delivery and performance in accordance with the Agreement
and Plan of Reorganization for the Acquisition of All of the Outstanding Shares
of Common Stock of Aethlon, Inc., by Bishop Equities, Inc.; and it is further
RESOLVED, that the following persons are hereby elected and appointed to
serve as members of the Board of Directors of the Company, effective as of the
closing date of the Reorganization:
Franklyn S. Barry, Jr.
James A. Joyce
Edward G. Broenniman
and it is further
RESOLVED, that the Company accepts the resignations of its officers,
Deborah Salerno and Maureen Abato, effective as of the closing date of the
Reorganization.
-----------------------------
Deborah Salerno
-----------------------------
Maureen Abato
Dated: As of February 22, 1999
<PAGE>
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT, dated as of February 12, 1999, is made and
entered into by and between BISHOP EQUITIES, INC., a Nevada corporation (the
"Company"), and FRANKLYN S. BARRY, JR. ("BARRY").
WHEREAS, BARRY is currently serving as a director of the Company;
WHEREAS, the Articles of Incorporation (the "Charter") of the Company
provides that the Company will indemnify, in the manner and to the fullest
extent permitted by the Nevada Revised Statutes (the "NRS"), certain persons
against specified expenses arising out of certain threatened, pending or
completed actions, suits or proceedings; and
WHEREAS, in order to induce BARRY to continue to serve the Company in his
present capacity, and to provide BARRY with specific contractual assurance that
the protection authorized by the Charter will be available to BARRY, the Company
wishes to enter into this Agreement.
NOW THEREFORE, the Company and BARRY hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have the
following meanings.
(a) "Suit" shall mean any claim, demand, action, suit, lawsuit,
arbitration, mediation, hearing, or proceeding.
(b) "Covered Claim" shall mean any threatened, pending or completed
Suit, whether civil, criminal, administrative or investigative, by reason of the
fact that BARRY is or was a director of the Company.
(c) "Determination" shall mean a determination, based upon the facts
known at the time, made by:
(i) the Board of Directors of the Company, by the vote of a
majority of the directors who are not parties to the Suit in question, even
though less than a quorum;
(ii) if there are no such disinterested directors, or if such
disinterested directors so direct, by independent legal counsel in a written
opinion;
(iii) the stockholders of the Company; or
(iv) a court or arbitrator of competent jurisdiction in a final,
nonappealable adjudication.
In the event that there are conflicting determinations, the determination shall
be given effect in the following order of precedence: First, by a court or
arbitrator of competent jurisdiction in a final, nonappealable adjudication;
second, to the stockholders of the Company; third, to the independent legal
counsel in a written opinion; and last, to the Board of Directors of the
Company.
(d) "Payment" shall mean all costs and expenses (including attorneys')
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by BARRY in connection with or relating to a Covered Claim.
2. Indemnification. The Company shall indemnify and hold harmless BARRY
against and from any and all Payments to the extent that:
(a) the Company shall not have advanced expenses to BARRY pursuant to
the provisions of the Charter or otherwise and no Determination shall have been
made pursuant to such Charter provision or the NRS that BARRY is not entitled to
indemnification;
(b) BARRY shall not already have received payment on account of such
Payments from any third party, including, without limitation, pursuant to one or
more valid and collectible insurance policies; and
(c) such indemnification by the Company is not unlawful.
Notwithstanding anything contained in this Agreement to the contrary, except for
proceedings to enforce rights to indemnification or advancement of expenses
pursuant to Section 4 hereof , the Company shall have no obligation to indemnify
BARRY in connection with a proceeding (or part thereof) initiated by BARRY
unless such proceeding (or part thereof) was authorized or consented to by the
Board of Directors of the Company. Further, the Company shall have no
obligation to indemnify BARRY under this Agreement for any amounts paid in a
settlement of any Suit effected without the Company's prior written consent,
which consent shall not be unreasonably withheld. The Company shall not settle
any Suit in any manner that would impose any obligation on BARRY (regardless of
whether BARRY would be entitled to indemnification for obligations) without
BARRY's prior written consent, which consent shall not be unreasonably withheld.
3. Indemnification Procedure; Advancements of Expenses.
(a) If at the time of receipt of any notice pursuant to Section 9
hereof the Company has directors' and officers' liability insurance in effect,
the Company shall give prompt notice of the commencement of such Suit to the
insurers in accordance with the procedures set forth in the respective policies
in favor of BARRY. The Company shall thereafter take all necessary or desirable
action to cause such insurers to pay, on behalf of BARRY, all Payments payable
as a result of such Suit in accordance with the terms of such policies.
(b) All expenses, including attorneys' fees, incurred by BARRY in
defending any Covered Claim shall be paid by the Company in advance of the final
disposition of such Covered Claim upon an undertaking by or on behalf of BARRY
to repay such amount if it shall ultimately be determined by a court or
arbitrator of competent jurisdiction in a final, nonappealable adjudication that
he is not entitled to be indemnified by the Company as authorized herein. BARRY
hereby undertakes to and agrees that he will repay the Company for any expenses
advanced by or on behalf of the Company pursuant to this Section 3(b) if it
shall ultimately be determined by a court of competent jurisdiction in a final,
nonappealable adjudication that BARRY is not entitled to indemnification under
this Agreement.
(c) If the Company shall advance the expenses of any such Suit pursuant
to Section (b) hereof, it shall be entitled to assume the defense of such Suit,
if appropriate, with counsel reasonably satisfactory to BARRY, upon delivery to
BARRY of written notice of its election so to do. After delivery of such
notice, the Company shall not be liable to BARRY under this Agreement for any
expenses subsequently incurred by BARRY in connection with such defense other
than reasonable expenses of investigation; provided, however, that:
(i) BARRY shall have the right to employ separate counsel in any such Suit
provided that the fees and expenses of such counsel incurred after delivery of
notice by the Company of its assumption of such defense shall be at BARRY's own
expense; and
(ii) the fees and expenses of counsel employed by BARRY shall be at the
expense of the Company if (x) the employment of counsel by BARRY has previously
been authorized by the Company, (y) BARRY shall have reasonably concluded that
there may be a conflict of interest between the Company and BARRY in the conduct
of any such defense (provided, that the Company shall not be required to pay for
more than one counsel to represent two or more indemnitees where such
indemnitees have reasonably concluded that there is no conflict of interest
among them in the conduct of such defense) or (z) the Company shall not, in
fact, have employed counsel reasonably satisfactory to BARRY to assume the
defense of such Suit.
(d) All payments on account of the Company's advancement obligations
under Section (b) hereof shall be made within 20 days of BARRY's written request
therefor. All other payments on account of the Company's obligations under this
Agreement shall be made within 60 days of BARRY's written request therefor,
unless a Determination is made that the claims giving rise to BARRY's request
are not payable under this Agreement. Each request for payment hereunder shall
be accompanied by evidence reasonably satisfactory to the Company of BARRY's
incurrence of the expenses for which such payment is sought.
4. Enforcement of Indemnification; Burden of Proof. If a claim for
indemnification or advancement of expenses under this Agreement is not paid in
full by or on behalf of the Company within the time period specified in Section
3(d) hereof, BARRY may at any time thereafter bring suit against the Company to
recover the unpaid amount of such clam. In any such action the Company shall
have the burden of proving that indemnification is not required under this
Agreement.
5. Partial Indemnification. If BARRY is entitled under any provision of
this Agreement to indemnification by the Company for some portion of any
Payments, but not, however, for the total amount thereof, the Company shall
nevertheless indemnify BARRY for the portion of any such Payments to which BARRY
is entitled.
6. Right Not Exclusive. The rights to indemnification and advancement of
expenses provided hereunder shall not be deemed exclusive of any other rights to
which BARRY may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise as to action in BARRY's official capacity
or as to action in another capacity while holding such office.
7. Subrogation. In the event of payment under this Agreement by or on
behalf of the Company, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of BARRY, who shall execute all papers
that may be required and shall do all things that may be necessary to secure
such rights, including, without limitation, the execution of such documents as
may be necessary to enable the Company effectively to bring suit to enforce such
rights.
8. Notice of Claim. Promptly after receipt by BARRY of notice of the
commencement or threat of commencement of any civil, criminal, administrative or
investigative Suit, BARRY shall, if indemnification with respect thereto may be
sought from the Company under this Agreement, notify the Company thereof in
writing at its principal office and directed to the Corporate Secretary (or such
other address as the Company shall designate in writing to BARRY); notice shall
be deemed received if sent by prepaid mail properly addressed, the date of such
notice being the date postmarked. In addition, BARRY shall give the Company
such information and cooperation as it may reasonably require and as shall be
within BARRY's power.
9. Choice of Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada, without giving
effect to the principals of conflict of laws thereunder.
10. Jurisdiction. The Company and BARRY hereby irrevocably consent to the
jurisdiction of the courts of the State of Nevada for all purposes in connection
with any Suit that arises out of or relates to this Agreement, and agree that
any action instituted under this Agreement shall be brought only in the state
courts of the State of Nevada.
11. Coverage. The provisions of this Agreement shall apply to BARRY's
service as a director, officer, employee or agent of the Company or at the
Company's request, as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise with respect to all periods of such service prior to and after the
date of this Agreement, even though BARRY may have ceased such service at the
time of indemnification hereunder.
12. Attorneys' Fees. If any Suit is commenced in connection with or related
to this Agreement, the prevailing party shall be entitled to have its costs and
expenses, including, without limitation, reasonable attorneys' fees and
reasonable expenses of investigation, paid by the losing party.
13. Severability. In the event that any provision of this Agreement is
determined by a court to require the Company to do or to fail to do an act that
is in violation of any applicable law, such provision shall be limited or
modified in its application to the minimum extent necessary to avoid a violation
of law, and, as so limited or modified, such provision and the balance of this
Agreement shall be enforceable in accordance with their terms.
14. Successors and Assigns. The Agreement shall be binding upon all
successors and assigns of the Company, including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law, and shall be binding upon and inure to the benefit of the
heirs, executors and administrators of BARRY.
15. Descriptive Headings. The descriptive headings in this Agreement are
included for the convenience of the parties only and shall not affect the
construction of this Agreement.
16. Counterparts. This Agreement may be executed in two counterparts, both
of which taken together shall constitute one document.
17. Amendment. No amendment, modification, termination or cancellation of
this Agreement shall be effective unless made in writing and signed by each of
the parties hereto.
IN WITNESS WHEREOF, the Company and BARRY have executed this Agreement as
of the date first written above.
The Company: BISHOP EQUITIES, INC.
a Nevada corporation
By: ------------------------------
Its Duly Authorized Officer
BARRY:
------------------------------
FRANKLYN S. BARRY, JR.
<PAGE>
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT, dated as of February 12, 1999, is made and
entered into by and between BISHOP EQUITIES, INC., a Nevada corporation (the
"Company"), and JAMES A. JOYCE ("JOYCE").
WHEREAS, JOYCE is currently serving as a director of the Company;
WHEREAS, the Articles of Incorporation (the "Charter") of the Company
provides that the Company will indemnify, in the manner and to the fullest
extent permitted by the Nevada Revised Statutes (the "NRS"), certain persons
against specified expenses arising out of certain threatened, pending or
completed actions, suits or proceedings; and
WHEREAS, in order to induce JOYCE to continue to serve the Company in his
present capacity, and to provide JOYCE with specific contractual assurance that
the protection authorized by the Charter will be available to JOYCE, the Company
wishes to enter into this Agreement.
NOW THEREFORE, the Company and JOYCE hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have the
following meanings.
(a) "Suit" shall mean any claim, demand, action, suit, lawsuit,
arbitration, mediation, hearing, or proceeding.
(b) "Covered Claim" shall mean any threatened, pending or completed
Suit, whether civil, criminal, administrative or investigative, by reason of the
fact that JOYCE is or was a director of the Company.
(c) "Determination" shall mean a determination, based upon the facts
known at the time, made by:
(i) the Board of Directors of the Company, by the vote of a
majority of the directors who are not parties to the Suit in question, even
though less than a quorum;
(ii) if there are no such disinterested directors, or if such
disinterested directors so direct, by independent legal counsel in a written
opinion;
(iii) the stockholders of the Company; or
(iv) a court or arbitrator of competent jurisdiction in a final,
nonappealable adjudication.
In the event that there are conflicting determinations, the determination shall
be given effect in the following order of precedence: First, by a court or
arbitrator of competent jurisdiction in a final, nonappealable adjudication;
second, to the stockholders of the Company; third, to the independent legal
counsel in a written opinion; and last, to the Board of Directors of the
Company.
(d) "Payment" shall mean all costs and expenses (including attorneys')
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by JOYCE in connection with or relating to a Covered Claim.
2. Indemnification. The Company shall indemnify and hold harmless JOYCE
against and from any and all Payments to the extent that:
(a) the Company shall not have advanced expenses to JOYCE pursuant to
the provisions of the Charter or otherwise and no Determination shall have been
made pursuant to such Charter provision or the NRS that JOYCE is not entitled to
indemnification;
(b) JOYCE shall not already have received payment on account of such
Payments from any third party, including, without limitation, pursuant to one or
more valid and collectible insurance policies; and
(c) such indemnification by the Company is not unlawful.
Notwithstanding anything contained in this Agreement to the contrary, except for
proceedings to enforce rights to indemnification or advancement of expenses
pursuant to Section 4 hereof , the Company shall have no obligation to indemnify
JOYCE in connection with a proceeding (or part thereof) initiated by JOYCE
unless such proceeding (or part thereof) was authorized or consented to by the
Board of Directors of the Company. Further, the Company shall have no
obligation to indemnify JOYCE under this Agreement for any amounts paid in a
settlement of any Suit effected without the Company's prior written consent,
which consent shall not be unreasonably withheld. The Company shall not settle
any Suit in any manner that would impose any obligation on JOYCE (regardless of
whether JOYCE would be entitled to indemnification for obligations) without
JOYCE's prior written consent, which consent shall not be unreasonably withheld.
3. Indemnification Procedure; Advancements of Expenses.
(a) If at the time of receipt of any notice pursuant to Section 9
hereof the Company has directors' and officers' liability insurance in effect,
the Company shall give prompt notice of the commencement of such Suit to the
insurers in accordance with the procedures set forth in the respective policies
in favor of JOYCE. The Company shall thereafter take all necessary or desirable
action to cause such insurers to pay, on behalf of JOYCE, all Payments payable
as a result of such Suit in accordance with the terms of such policies.
(b) All expenses, including attorneys' fees, incurred by JOYCE in
defending any Covered Claim shall be paid by the Company in advance of the final
disposition of such Covered Claim upon an undertaking by or on behalf of JOYCE
to repay such amount if it shall ultimately be determined by a court or
arbitrator of competent jurisdiction in a final, nonappealable adjudication that
he is not entitled to be indemnified by the Company as authorized herein. JOYCE
hereby undertakes to and agrees that he will repay the Company for any expenses
advanced by or on behalf of the Company pursuant to this Section 3(b) if it
shall ultimately be determined by a court of competent jurisdiction in a final,
nonappealable adjudication that JOYCE is not entitled to indemnification under
this Agreement.
(c) If the Company shall advance the expenses of any such Suit pursuant
to Section (b) hereof, it shall be entitled to assume the defense of such Suit,
if appropriate, with counsel reasonably satisfactory to JOYCE, upon delivery to
JOYCE of written notice of its election so to do. After delivery of such
notice, the Company shall not be liable to JOYCE under this Agreement for any
expenses subsequently incurred by JOYCE in connection with such defense other
than reasonable expenses of investigation; provided, however, that:
(i) JOYCE shall have the right to employ separate counsel in any such Suit
provided that the fees and expenses of such counsel incurred after delivery of
notice by the Company of its assumption of such defense shall be at JOYCE's own
expense; and
(ii) the fees and expenses of counsel employed by JOYCE shall be at the
expense of the Company if (x) the employment of counsel by JOYCE has previously
been authorized by the Company, (y) JOYCE shall have reasonably concluded that
there may be a conflict of interest between the Company and JOYCE in the conduct
of any such defense (provided, that the Company shall not be required to pay for
more than one counsel to represent two or more indemnitees where such
indemnitees have reasonably concluded that there is no conflict of interest
among them in the conduct of such defense) or (z) the Company shall not, in
fact, have employed counsel reasonably satisfactory to JOYCE to assume the
defense of such Suit.
(d) All payments on account of the Company's advancement obligations
under Section (b) hereof shall be made within 20 days of JOYCE's written request
therefor. All other payments on account of the Company's obligations under this
Agreement shall be made within 60 days of JOYCE's written request therefor,
unless a Determination is made that the claims giving rise to JOYCE's request
are not payable under this Agreement. Each request for payment hereunder shall
be accompanied by evidence reasonably satisfactory to the Company of JOYCE's
incurrence of the expenses for which such payment is sought.
4. Enforcement of Indemnification; Burden of Proof. If a claim for
indemnification or advancement of expenses under this Agreement is not paid in
full by or on behalf of the Company within the time period specified in Section
3(d) hereof, JOYCE may at any time thereafter bring suit against the Company to
recover the unpaid amount of such clam. In any such action the Company shall
have the burden of proving that indemnification is not required under this
Agreement.
5. Partial Indemnification. If JOYCE is entitled under any provision of
this Agreement to indemnification by the Company for some portion of any
Payments, but not, however, for the total amount thereof, the Company shall
nevertheless indemnify JOYCE for the portion of any such Payments to which JOYCE
is entitled.
6. Right Not Exclusive. The rights to indemnification and advancement of
expenses provided hereunder shall not be deemed exclusive of any other rights to
which JOYCE may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise as to action in JOYCE's official capacity
or as to action in another capacity while holding such office.
7. Subrogation. In the event of payment under this Agreement by or on
behalf of the Company, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of JOYCE, who shall execute all papers
that may be required and shall do all things that may be necessary to secure
such rights, including, without limitation, the execution of such documents as
may be necessary to enable the Company effectively to bring suit to enforce such
rights.
8. Notice of Claim. Promptly after receipt by JOYCE of notice of the
commencement or threat of commencement of any civil, criminal, administrative or
investigative Suit, JOYCE shall, if indemnification with respect thereto may be
sought from the Company under this Agreement, notify the Company thereof in
writing at its principal office and directed to the Corporate Secretary (or such
other address as the Company shall designate in writing to JOYCE); notice shall
be deemed received if sent by prepaid mail properly addressed, the date of such
notice being the date postmarked. In addition, JOYCE shall give the Company
such information and cooperation as it may reasonably require and as shall be
within JOYCE's power.
9. Choice of Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada, without giving
effect to the principals of conflict of laws thereunder.
10. Jurisdiction. The Company and JOYCE hereby irrevocably consent to the
jurisdiction of the courts of the State of Nevada for all purposes in connection
with any Suit that arises out of or relates to this Agreement, and agree that
any action instituted under this Agreement shall be brought only in the state
courts of the State of Nevada.
11. Coverage. The provisions of this Agreement shall apply to JOYCE's
service as a director, officer, employee or agent of the Company or at the
Company's request, as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise with respect to all periods of such service prior to and after the
date of this Agreement, even though JOYCE may have ceased such service at the
time of indemnification hereunder.
12. Attorneys' Fees. If any Suit is commenced in connection with or related
to this Agreement, the prevailing party shall be entitled to have its costs and
expenses, including, without limitation, reasonable attorneys' fees and
reasonable expenses of investigation, paid by the losing party.
13. Severability. In the event that any provision of this Agreement is
determined by a court to require the Company to do or to fail to do an act that
is in violation of any applicable law, such provision shall be limited or
modified in its application to the minimum extent necessary to avoid a violation
of law, and, as so limited or modified, such provision and the balance of this
Agreement shall be enforceable in accordance with their terms.
14. Successors and Assigns. The Agreement shall be binding upon all
successors and assigns of the Company, including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law, and shall be binding upon and inure to the benefit of the
heirs, executors and administrators of JOYCE.
15. Descriptive Headings. The descriptive headings in this Agreement are
included for the convenience of the parties only and shall not affect the
construction of this Agreement.
16. Counterparts. This Agreement may be executed in two counterparts, both
of which taken together shall constitute one document.
17. Amendment. No amendment, modification, termination or cancellation of
this Agreement shall be effective unless made in writing and signed by each of
the parties hereto.
IN WITNESS WHEREOF, the Company and JOYCE have executed this Agreement as
of the date first written above.
The Company: BISHOP EQUITIES, INC.
a Nevada corporation
By: --------------------------------
Its Duly Authorized Officer
JOYCE:
---------------------------------
JAMES A. JOYCE
<PAGE>
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT, dated as of February 12, 1999, is made and
entered into by and between BISHOP EQUITIES, INC., a Nevada corporation (the
"Company"), and EDWARD G. BROENNIMAN ("BROENNIMAN").
WHEREAS, BROENNIMAN is currently serving as a director of the Company;
WHEREAS, the Articles of Incorporation (the "Charter") of the Company
provides that the Company will indemnify, in the manner and to the fullest
extent permitted by the Nevada Revised Statutes (the "NRS"), certain persons
against specified expenses arising out of certain threatened, pending or
completed actions, suits or proceedings; and
WHEREAS, in order to induce BROENNIMAN to continue to serve the Company in
his present capacity, and to provide BROENNIMAN with specific contractual
assurance that the protection authorized by the Charter will be available to
BROENNIMAN, the Company wishes to enter into this Agreement.
NOW THEREFORE, the Company and BROENNIMAN hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have the
following meanings.
(a) "Suit" shall mean any claim, demand, action, suit, lawsuit,
arbitration, mediation, hearing, or proceeding.
(b) "Covered Claim" shall mean any threatened, pending or completed
Suit, whether civil, criminal, administrative or investigative, by reason of the
fact that BROENNIMAN is or was a director of the Company.
(c) "Determination" shall mean a determination, based upon the facts
known at the time, made by:
(i) the Board of Directors of the Company, by the vote of a
majority of the directors who are not parties to the Suit in question, even
though less than a quorum;
(ii) if there are no such disinterested directors, or if such
disinterested directors so direct, by independent legal counsel in a written
opinion;
(iii) the stockholders of the Company; or
(iv) a court or arbitrator of competent jurisdiction in a final,
nonappealable adjudication.
In the event that there are conflicting determinations, the determination shall
be given effect in the following order of precedence: First, by a court or
arbitrator of competent jurisdiction in a final, nonappealable adjudication;
second, to the stockholders of the Company; third, to the independent legal
counsel in a written opinion; and last, to the Board of Directors of the
Company.
(d) "Payment" shall mean all costs and expenses (including attorneys')
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by BROENNIMAN in connection with or relating to a Covered Claim.
2. Indemnification. The Company shall indemnify and hold harmless
BROENNIMAN against and from any and all Payments to the extent that:
(a) the Company shall not have advanced expenses to BROENNIMAN pursuant
to the provisions of the Charter or otherwise and no Determination shall have
been made pursuant to such Charter provision or the NRS that BROENNIMAN is not
entitled to indemnification;
(b) BROENNIMAN shall not already have received payment on account of
such Payments from any third party, including, without limitation, pursuant to
one or more valid and collectible insurance policies; and
(c) such indemnification by the Company is not unlawful.
Notwithstanding anything contained in this Agreement to the contrary, except for
proceedings to enforce rights to indemnification or advancement of expenses
pursuant to Section 4 hereof , the Company shall have no obligation to indemnify
BROENNIMAN in connection with a proceeding (or part thereof) initiated by
BROENNIMAN unless such proceeding (or part thereof) was authorized or consented
to by the Board of Directors of the Company. Further, the Company shall have no
obligation to indemnify BROENNIMAN under this Agreement for any amounts paid in
a settlement of any Suit effected without the Company's prior written consent,
which consent shall not be unreasonably withheld. The Company shall not settle
any Suit in any manner that would impose any obligation on BROENNIMAN
(regardless of whether BROENNIMAN would be entitled to indemnification for
obligations) without BROENNIMAN's prior written consent, which consent shall not
be unreasonably withheld.
3. Indemnification Procedure; Advancements of Expenses.
(a) If at the time of receipt of any notice pursuant to Section 9
hereof the Company has directors' and officers' liability insurance in effect,
the Company shall give prompt notice of the commencement of such Suit to the
insurers in accordance with the procedures set forth in the respective policies
in favor of BROENNIMAN. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of BROENNIMAN, all
Payments payable as a result of such Suit in accordance with the terms of such
policies.
(b) All expenses, including attorneys' fees, incurred by BROENNIMAN in
defending any Covered Claim shall be paid by the Company in advance of the final
disposition of such Covered Claim upon an undertaking by or on behalf of
BROENNIMAN to repay such amount if it shall ultimately be determined by a court
or arbitrator of competent jurisdiction in a final, nonappealable adjudication
that he is not entitled to be indemnified by the Company as authorized herein.
BROENNIMAN hereby undertakes to and agrees that he will repay the Company for
any expenses advanced by or on behalf of the Company pursuant to this Section
3(b) if it shall ultimately be determined by a court of competent jurisdiction
in a final, nonappealable adjudication that BROENNIMAN is not entitled to
indemnification under this Agreement.
(c) If the Company shall advance the expenses of any such Suit pursuant
to Section (b) hereof, it shall be entitled to assume the defense of such Suit,
if appropriate, with counsel reasonably satisfactory to BROENNIMAN, upon
delivery to BROENNIMAN of written notice of its election so to do. After
delivery of such notice, the Company shall not be liable to BROENNIMAN under
this Agreement for any expenses subsequently incurred by BROENNIMAN in
connection with such defense other than reasonable expenses of investigation;
provided, however, that:
(i) BROENNIMAN shall have the right to employ separate counsel in any such
Suit provided that the fees and expenses of such counsel incurred after
delivery of notice by the Company of its assumption of such defense shall be at
BROENNIMAN's own expense; and
(ii) the fees and expenses of counsel employed by BROENNIMAN shall be at the
expense of the Company if (x) the employment of counsel by BROENNIMAN has
previously been authorized by the Company, (y) BROENNIMAN shall have reasonably
concluded that there may be a conflict of interest between the Company and
BROENNIMAN in the conduct of any such defense (provided, that the Company shall
not be required to pay for more than one counsel to represent two or more
indemnitees where such indemnitees have reasonably concluded that there is no
conflict of interest among them in the conduct of such defense) or (z) the
Company shall not, in fact, have employed counsel reasonably satisfactory to
BROENNIMAN to assume the defense of such Suit.
(d) All payments on account of the Company's advancement obligations
under Section (b) hereof shall be made within 20 days of BROENNIMAN's written
request therefor. All other payments on account of the Company's obligations
under this Agreement shall be made within 60 days of BROENNIMAN's written
request therefor, unless a Determination is made that the claims giving rise to
BROENNIMAN's request are not payable under this Agreement. Each request for
payment hereunder shall be accompanied by evidence reasonably satisfactory to
the Company of BROENNIMAN's incurrence of the expenses for which such payment is
sought.
4. Enforcement of Indemnification; Burden of Proof. If a claim for
indemnification or advancement of expenses under this Agreement is not paid in
full by or on behalf of the Company within the time period specified in Section
3(d) hereof, BROENNIMAN may at any time thereafter bring suit against the
Company to recover the unpaid amount of such clam. In any such action the
Company shall have the burden of proving that indemnification is not required
under this Agreement.
5. Partial Indemnification. If BROENNIMAN is entitled under any provision
of this Agreement to indemnification by the Company for some portion of any
Payments, but not, however, for the total amount thereof, the Company shall
nevertheless indemnify BROENNIMAN for the portion of any such Payments to which
BROENNIMAN is entitled.
6. Right Not Exclusive. The rights to indemnification and advancement of
expenses provided hereunder shall not be deemed exclusive of any other rights to
which BROENNIMAN may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise as to action in
BROENNIMAN's official capacity or as to action in another capacity while holding
such office.
7. Subrogation. In the event of payment under this Agreement by or on
behalf of the Company, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of BROENNIMAN, who shall execute all
papers that may be required and shall do all things that may be necessary to
secure such rights, including, without limitation, the execution of such
documents as may be necessary to enable the Company effectively to bring suit to
enforce such rights.
8. Notice of Claim. Promptly after receipt by BROENNIMAN of notice of the
commencement or threat of commencement of any civil, criminal, administrative or
investigative Suit, BROENNIMAN shall, if indemnification with respect thereto
may be sought from the Company under this Agreement, notify the Company thereof
in writing at its principal office and directed to the Corporate Secretary (or
such other address as the Company shall designate in writing to BROENNIMAN);
notice shall be deemed received if sent by prepaid mail properly addressed, the
date of such notice being the date postmarked. In addition, BROENNIMAN shall
give the Company such information and cooperation as it may reasonably require
and as shall be within BROENNIMAN's power.
9. Choice of Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada, without giving
effect to the principals of conflict of laws thereunder.
10. Jurisdiction. The Company and BROENNIMAN hereby irrevocably consent to
the jurisdiction of the courts of the State of Nevada for all purposes in
connection with any Suit that arises out of or relates to this Agreement, and
agree that any action instituted under this Agreement shall be brought only in
the state courts of the State of Nevada.
11. Coverage. The provisions of this Agreement shall apply to BROENNIMAN's
service as a director, officer, employee or agent of the Company or at the
Company's request, as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise with respect to all periods of such service prior to and after the
date of this Agreement, even though BROENNIMAN may have ceased such service at
the time of indemnification hereunder.
12. Attorneys' Fees. If any Suit is commenced in connection with or related
to this Agreement, the prevailing party shall be entitled to have its costs and
expenses, including, without limitation, reasonable attorneys' fees and
reasonable expenses of investigation, paid by the losing party.
13. Severability. In the event that any provision of this Agreement is
determined by a court to require the Company to do or to fail to do an act that
is in violation of any applicable law, such provision shall be limited or
modified in its application to the minimum extent necessary to avoid a violation
of law, and, as so limited or modified, such provision and the balance of this
Agreement shall be enforceable in accordance with their terms.
14. Successors and Assigns. The Agreement shall be binding upon all
successors and assigns of the Company, including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law, and shall be binding upon and inure to the benefit of the
heirs, executors and administrators of BROENNIMAN.
15. Descriptive Headings. The descriptive headings in this Agreement are
included for the convenience of the parties only and shall not affect the
construction of this Agreement.
16. Counterparts. This Agreement may be executed in two counterparts, both
of which taken together shall constitute one document.
17. Amendment. No amendment, modification, termination or cancellation of
this Agreement shall be effective unless made in writing and signed by each of
the parties hereto.
IN WITNESS WHEREOF, the Company and BROENNIMAN have executed this Agreement
as of the date first written above.
The Company: BISHOP EQUITIES, INC.
a Nevada corporation
By: -------------------------------
Its Duly Authorized Officer
BROENNIMAN:
--------------------------------
EDWARD G. BROENNIMAN
<PAGE>
EXHIBIT "F"
COPIES OF EXCHANGED SHARES OR
LOST CERTIFICATE AFFIDAVITS
NONE
<PAGE>
POWER OF ATTORNEY
THE UNDERSIGNED SHAREHOLDER (the "Shareholder") of HEMEX, INC. ("HEMEX")
does hereby:
(i) sells, assigns and transfers unto BISHOP EQUITIES, INC., a Nevada
corporation ("BISHOP"), the number of shares of HEMEX set forth opposite his
name in Exhibit "A" (the "Shares") to that certain Agreement and Plan of
Reorganization for the Acquisition of All of the Outstanding Shares of Common
Stock of HEMEX, INC. by BISHOP EQUITIES, INC. dated February 12, 1999 (the
"Agreement");
(ii) irrevocably constitutes and appoints FRANKLYN S. BARRY, JR.
("BARRY") as attorney-in-fact to transfer the Shares on the books of HEMEX to
BISHOP as set forth in the Agreement, with full power of substitution in the
premises;
(iii) constitutes and appoints BARRY as his true and lawful
attorney-in-fact- and agent, with full power of substitution, for him and in his
name, place, and stead, in any and all capacities (until revoked in writing) to
act on behalf of such Shareholder in connection with the Agreement and the
exchange of the Shares for the BISHOP shares; and
(iv) grants unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises as fully to accomplish all intents and
purposes of the Agreement as such Shareholder might or could do in person,
hereby ratifying and confirming all that the attorney-in-fact, or his
substitute, may lawfully do or cause to be done by virtue of this power of
attorney.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this -- day of February, 1999.
- ------------------------------- ---------------------------------
(Signature of Shareholder) (Printed Name of Shareholder)
<PAGE>
MAUREEN ABATO
ATTORNEY AT LAW
330 EAST 39th STREET - #36-C
New York, NY 10016
Tel: (212) 883-0878; Fax: (212) 883-0877
--------, 1999
To the Shareholders of Aethlon, Inc.
Ladies and Gentlemen:
I have acted as counsel to Bishop Equities, Inc., a Nevada corporation (the
"Company") in connection with the Agreement and Plan of Reorganization for the
Acquisition of all of the outstanding shares of common stock of Aethlon, Inc.
("Aethlon") by the Company ("the Plan"). This opinion is furnished to you
pursuant to Section 1.3.6 of the Plan.
I have participated in the preparation of and have examined the proceedings
of the Company in connection with the approval thereof and the authorization of
the transactions contemplated thereby, and have further examined such corporate
records and documents of the Company and certificates of officers of the
Company, and public officials, as I have deemed relevant and necessary to enable
me to render this opinion. I have relied on the accuracy of certain
representations and warranties of the Company and Aethlon contained in the Plan
and have relied upon such records, documents and certificates with respect to
the accuracy of certain factual matters, without independent verification of the
matters covered thereby. In my examination of such records, documents and
certificates, I have assumed the authenticity of all documents submitted to me
as originals, the conformity to original documents of all documents submitted to
me as certified or photostatic copies of original documents, the authenticity of
the originals of such latter documents, and the accuracy of the statements
contained in such certificates.
Based upon and in reliance upon the foregoing, I am of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada and has all requisite
corporate power and authority to own and lease its properties and to conduct its
business as presently conducted.
2. The authorized capital stock of the Company consists of 25,000,000
common shares, par value $.001 per share, of which 511,500 are issued and
outstanding; and all of the issued and outstanding shares of capital stock have
been duly and validly authorized and issued and are fully paid and
nonassessable, and to the best of my knowledge have not been issued in violation
of any preemptive right, co-sale right, registration right, right of first
refusal or other similar right, and such shares are free and clear of any liens
or other encumbrances.
<PAGE>
Shareholders of Aethlon, Inc.
Page Two.
3. The Company has the corporate power and authority to authorize the
issuance of the common stock under the Plan, and the Board of Directors of the
Company has consented to and approved the issuance of the shares pursuant to the
Plan.
4. The delivery of the shares of common stock to the Aethlon stockholders
pursuant to the Plan has been duly authorized by all necessary corporate action
on the part of the Company. The 728,500 common shares to be issued to the
Aethlon shareholders, as and when delivered to the Aethlon shareholders pursuant
to the Plan, are validly issued and outstanding, fully paid and nonassessable,
and are not subject to any preemptive or similar right.
5. The Plan has been duly authorized, executed and delivered by the
Company and, assuming the execution and delivery thereof by Aethlon, constitutes
a valid and legally binding obligation of the Company, enforceable in accordance
with its terms, except as the enforceability thereof may be limited by any
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or affecting the enforcement of creditors' rights generally and by general
equitable principles, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
6. The execution, delivery and performance of the Plan by the Company, and
the delivery by the Company to Aethlon of the shares of common stock pursuant to
the terms of the Plan, will not result in a breach or violation of, or
constitute a default under, the Company's Articles of Incorporation or Bylaws,
or any statute, law, rule or regulation applicable to the Company or any of its
properties, provided that the required "blue sky" filings are made as will be
provided in the closing minutes.
7. The execution, delivery and performance of the Plan by the Company and
the delivery by the Company to Aethlon of the shares of common stock pursuant to
the terms of the Plan will not violate or conflict with or result in a breach of
or constitute (or event which might, with the passage of time or the giving of
notice, or both, constitute a default) under, or result in the creation or
imposition of any claim, lien, security interest, mortgage, pledge, charge or
other encumbrance of any nature upon any of the properties or assets of the
Company pursuant to the terms of any indenture, mortgage, agreement, contract,
deed of trust, promissory note, or other agreement or instrument to which the
Company is subject.
8. No consent, approval, authorization or order of, or registration or
qualification with, any court or governmental agency or body or national
securities exchange is required to be obtained by the Company for the delivery
of the shares of common stock to Aethlon shareholders pursuant to the Plan,
which has not been made or obtained by the Company.
<PAGE>
Shareholders of Aethlon, Inc.
Page Three.
9. To the best of my knowledge after due inquiry, except as disclosed in
the Plan, there are no actions, suits, investigations or proceedings pending to
which the Company is a party, before or by any court or governmental agency or
body which in my opinion would result, individually or in the aggregate, in any
material adverse change in the prospects, financial condition or results of
operations of the Company or which would materially and adversely affect the
properties or assets thereof, taken as a whole, or which seeks to restrain or
prohibit the transactions contemplated by the Plan; and, to the best of my
knowledge after due inquiry, no such actions, suits, investigations or
proceedings are threatened by any person, corporation or governmental agency or
body.
This opinion is rendered solely for the benefit of Aethlon with respect to
the shares of common stock to be delivered under the Plan, and is not to be
used, circulated, quoted or referred to, or otherwise relied upon by any person,
without my prior written consent.
Sincerely,
Maureen Abato
<PAGE>
EXHIBIT I
HEMEX SCHEDULE OF EXCEPTIONS
Section 3.6 Financial Statements
1. Hemex Financial Statements for December 31, 1997 and September 30, 1998
have been prepared internally, and have not been subject to audit or
review. While management believes that these statements represent in
all material respects the financial condition of Hemex on these dates,
they have not applied generally accepted accounting principals in a
manner consistent with the audited statements for the year ended
December 31, 1996 in the following respects:
Generally accepted accounting principals require that a deferred
compensation liability be discounted from its face value, to the
extent of the time between the statement date and the point in the
future when such deferred compensation is likely to be paid, usually
when the company expects to sell its product. The face value of
deferred compensation has been used in internal statements.
Generally accepted accounting principals require that Hemex, as a
Development Stage Enterprise, present cumulative results from
inception of the company as well as results for the period. This
format is used in the audited statements for the year ended
December 31, 1996, but not in the internal statements.
Section 3.16 Contracts and Commitments
1. Hemex is party to an Employment Agreement dated April 1, 1997 with its
President and CEO, Franklyn S. Barry, Jr. This agreement requires,
among other provisions, payment of salary of $9,000 per month and
contribution to health insurance of $350 per month. Upon completion of
the reorganization between Bishop and Hemex, Barry will become an employee
of Bishop and this Agreement will cease. Through September 30, 1998,
Barry had received no payments of salary or contribution to health
insurance under this Agreement.
Section 3.19 Arrangements with Employees
1. Although there is no formal deferred compensation plan between Hemex and
its former and current officers, the Board of Directors of Hemex has
directed that all unpaid salary of officers be accrued as a liability of
the company. Four officers have the following deferred compensation
accrued at September 30, 1998:
Clara M. Ambrus Chairman of the Board $189,744
Franklyn S. Barry, Jr. President and CEO $162,000
Linda A. Broenniman Former President and CEO $ 65,770
Edward M. Broenniman Former Chief Operating Officer $132,212
<PAGE>
HEMEX, INC. Feb-22-98
BALANCE SHEET DECEMBER 31, 1997
ASSETS
Cash $ 110
Prepaid Insurance 1200
-----------
TOTAL CURRENT ASSETS $ 1,310
Equipment $ 157,428
Less: Accumulated Depreciation $ 103,585
-----------
NET FIXED ASSETS $ 53,843
Patents, Net of Amortization $ 55,267
TOTAL ASSETS $ 110,780
-----------
LIABILITIES & SHAREHOLDERS EQUITY
Accounts Payable $ 373,043
Accrued Payroll Taxes 1,250
Accrued Interest 42,415
Accrued Wages 1,022
Accrued Income Taxes 3,191
Accrued Expenses - Other -
-----------
TOTAL CURRENT LIABILITIES $ 420,191
Loans Payable - Stockholders $ 291,732
Loans Payable - Others $ 50,000
Deferred Compensation $ 402,059
-----------
TOTAL LONG-TERM LIABILITIES $ 743,791
STOCKHOLDERS EQUITY $ (1,053,932)
TOTAL LIABILITIES & STOCKHOLDERS EQUITY $ 110,780
-----------
<PAGE>
HEMEX, INC. Feb-22-98
PROFIT & LOSS STATEMENT 1997
RECEIPTS $ -
EXPENDITURES
Salaries Wages and Payroll Taxes $ 359,169
Fringe Benefits 10,684
-----------
Subtotal - Personnel $ 369,853
Consulting Services $ 34,409
Legal and Accounting Services 48,645
Production & Engineering 540
R & D Services & Supplies 18,684
G & A Services & Supplies 7,471
Rent 35,292
Travel & Other Reimburseables 44,295
Insurance 3,111
Patent Fees 8,770
Depreciation & Amortization 22,349
-----------
Subtotal - Operations $ 223,566
LOSS FROM OPERATIONS $ 593,419
Interest Expense $ 28,118
Provision for Income Taxes $ 3,191
NET LOSS $ 624,728
-----------
<PAGE>
HEMEX, INC. Nov 1 1998
BALANCE SHEET SEPTEMBER 30, 1998
ASSETS
Cash $ 181
Prepaid Insurance -
-----------
TOTAL CURRENT ASSETS $ 181
Equipment $ 157,428
Less: Accumulated Depreciation $ 117,585
-----------
NET FIXED ASSETS $ 39,843
Patents, Net of Amortization $ 52,562
TOTAL ASSETS $ 92,586
-----------
LIABILITIES & SHAREHOLDERS EQUITY
Accounts Payable $ 401,986
Accrued Payroll Taxes -
Accrued Interest 60,987
Accrued Wages -
Accrued Income Taxes 2,393
Accrued Expenses - Other -
-----------
TOTAL CURRENT LIABILITIES $ 465,366
Loans Payable - Stockholders $ 291,732
Loans Payable - Others $ 77,000
Deferred Compensation $ 543,059
-----------
TOTAL LONG-TERM LIABILITIES $ 911,791
STOCKHOLDERS EQUITY $ (1,284,571)
TOTAL LIABILITIES & STOCKHOLDERS EQUITY $ 92,586
-----------
<PAGE>
HEMEX, INC. 1-Nov-98
PROFIT & LOSS STATEMENT 9 MONTHS 1998
RECEIPTS $ -
EXPENDITURES
Salaries Wages and Payroll Taxes $ 149,040
Fringe Benefits 880
-----------
Subtotal - Personnel $ 149,920
Consulting Services $ -
Legal and Accounting Services 33,110
Production & Engineering -
R & D Services & Supplies 1,322
G & A Services & Supplies 1,639
Rent 22,696
Travel & Other Reimburseables 2,661
Insurance (2,771)
Patent Fees 10,145
Depreciation & Amortization 16,762
Miscellaneous Taxes 320
-----------
Subtotal - Operations $ 85,884
LOSS FROM OPERATIONS $ 235,804
Interest Expense $ 18,572
Provision for Income Taxes $ 2,393
NET LOSS $ 256,769
-----------
<PAGE>
EXHIBIT K
REAL PROPERTY OF HEMEX
Hemex occupies three laboratories at the University at Buffalo Foundation
Incubator, Baird Research park, 1576 Sweet Home Road, Amherst, NY 14228.
Occupancy is on a month to month basis under the terms of a Revocable
Permit dated November 12, 1993, with 30 days notice required to vacate the
Premises. Monthly rent is $2,640.17 as of February 1, 1999.
<PAGE>
EXHIBIT L
LIST OF PERSONAL PROPERTY OF HEMEX
DESCRIPTION ORIGINAL COST ACQUIRED
Perkin Elmer Atomic Absorbtion Spectrophotometer $48,033 1989
Sigma Centrifuge 4,100 1990
Perkin Elmer HPLC System 21,425 1990
Perkin Elmer Infrared Spectrophotometer 7,800 1991
Baker Sterilgard Hood 7,000 1991
Environmental Equipment Low Temperature Freezer 3,250 1991
Corning Mega-Pure System 2,356 1991
SWECO Grinding Mill 9,111 1992
Sorval Refrigerated Centrifuge 25,400 1993
Cary UV-VIS Spectrophotometer 9,995 1993
Mettler Balance 4,100 1993
ISCO Fraction Collector & Control 3,193 1993
Precision Shaking Water Bath 3,295 1993
Hemochrome HE 401C 3,688 1996
Ferro Chem II 5,500 1996
Bio-Rad Econo-Pump Column Pump 2,678 1996
Schmadzu UV Spectrophotometer 7,140 1996
Note: All other fixed assets, with original cost under $2,000, have an
Aggregate cost of $27,934
<PAGE>
EXHIBIT M
HEMEX PATENTS, TRADEMARKS, AND SERVICE MARKS
Hemex owns the following patents:
USA:No.4,612,122 Removing Heavy Metal Ions From Blood Issued September 16, 1986
USA:No.4,714,556 Blood Purification Issued December 22, 1987
USA:No.4,787,974 Blood Purification Issued November 29, 1988
Hemex has applied for assignment of the following foreign patents from
Dr. Clara Ambrus:
EEC:No.0,073,888 Removing Heavy Metal Ions From Blood Issued April 23, 1986
Japan:No.110,047/82 Removing Heavy Metal Ions From Blood Issued June 7, 1994
Hemex has applied for the following patent:
USA:No.09/123,029 Process For Immobilizing a Chelator Applied For July 27, 1998
On Silica, Device Containing
Immobilized Chelator, and Use
Thereof
<PAGE>
EXHIBIT N
HEMEX INSURANCE POLICIES
Hemex has the following Insurance Policies in effect:
POLICY UNDERWRITER TERMS
Worker's Compensation and The Hartford NY State Required WC Coverage
Employer's Liability $100M/accident, $500M/disease
New York Disability Zurich Insurance NY State Required DBL Coverage
<PAGE>
EXHIBIT O
HEMEX BANK ACCOUNTS
AND
BANKING AUTHORITY
Hemex has one bank account:
Checking Account: Marine Midland Bank, NA
529 Elmwood Avenue
Buffalo, New York 14222
Acct No: D773799443
Authorized Signatures:
Dr. Clara Ambrus, Chairman of the Board
Franklyn S. Barry, Jr., President and CEO
Banking Authority:
Checks to $5,000 Ambrus or Barry
Checks over $5,000 Ambrus and Barry
Borrowings to $10,000 Ambrus or Barry
Borrowings over $10,000 Ambrus and Barry
Commitment Authority:
Purchase Orders to $5,000 Ambrus or Barry
Purchase Orders over $5,000 Ambrus and Barry
Any Project over $25,000 Board of Directors
<PAGE>
EXHIBIT "P"
SCHEDULE OF EXCEPTIONS OF BISHOP
NONE
<PAGE>
EXHIBIT "R"
BISHOP EQUITIES, INC. BANK ACCOUNTS
Operating Account:
Citibank
Account Number: 092 36255
Signatory: Deborah Salerno
