AGREEMENT AND PLAN OF REORGANIZATION
FOR THE ACQUISITION OF ALL OF THE OUTSTANDING SHARES OF
COMMON STOCK OF SYNGEN RESEARCH, INC.
BY XXXXXX EQUITIES, INC. DBA AETHLON MEDICAL, INC.
TABLE OF CONTENTS
PAGE
RECITALS ................................................................. 1
ARTICLE I - THE REORGANIZATION ........................................... 2
ARTICLE II - EXCHANGE OF SHARES .......................................... 4
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SYNGEN ................... 5
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF AETHLON ................... 14
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS ............... 23
ARTICLE VI - MISCELLANEOUS ............................................... 24
EXHIBITS:
List of SYNGEN Shareholders ..................................... "A"
AETHLON Letter of Intent ........................................ "B"
Resolutions of AETHLON .......................................... "C"
Indemnification of XXXXXX ....................................... "D"
Copies of Shares or Lost Certificate Affidavits ................. "E"
Legal Opinion of AETHLON Counsel ................................ "F"
Schedule of Exceptions of SYNGEN ................................ "G"
Financial Statements of SYNGEN .................................. "H"
Legal Descriptions of Real Property of SYNGEN ................... "I"
List of Personal Property of SYNGEN ............................. "J"
Patents, Trademarks, Service Marks of SYNGEN .................... "K"
List of SYNGEN Bank Accounts and Signatories Therefor ........... "L"
Schedule of Exceptions of AETHLON ............................... "M"
Financial Statements of AETHLON ................................. "N"
Legal Descriptions of Real Property of AETHLON .................. "O"
List of Personal Property of AETHLON ............................ "P"
Patents, Trademarks, Service Marks of AETHLON ................... "Q"
List of all AETHLON Insurance Policies .......................... "R"
List of AETHLON Bank Accounts and Signatories Therefor .......... "S"
AGREEMENT AND PLAN OF REORGANIZATION
FOR THE ACQUISITION OF ALL OF THE OUTSTANDING SHARES OF
COMMON STOCK OF SYNGEN RESEARCH, INC.
BY XXXXXX EQUITIES, INC. DBA AETHLON MEDICAL, INC.
THIS AGREEMENT AND PLAN OF REORGANIZATION, dated this 10th day of January,
2000, by XXXXXXX X. XXXXXX, the sole shareholder of SYNGEN RESEARCH, INC.,
("Shareholder"), SYNGEN RESEARCH, INC. ("SYNGEN"), a California corporation, and
XXXXXX EQUITIES, INC. dba AETHLON MEDICAL, INC. ("AETHLON"), a Nevada
corporation.
RECITALS:
A. WHEREAS, Shareholder owns, beneficially and of record, the issued and
outstanding shares of the common stock of SYNGEN (hereinafter the shares of
common stock are referred to as the "Exchanged Shares") as set forth in the
schedule attached hereto and incorporated herein by this reference as Exhibit
"A;" and
B. WHEREAS, AETHLON desires to purchase from Shareholder all of the
outstanding Exchanged Shares owned by him solely in exchange for an aggregate of
65,000 shares (the "AETHLON Shares") of the common stock of AETHLON, par value
$.001, and Shareholder desires to exchange his Exchanged Shares for the AETHLON
Shares, the number of the Exchanged Shares being surrendered and the number of
AETHLON Shares being received by Shareholder is as set forth in Exhibit "A"
hereto; and
C. WHEREAS, AETHLON, acting through XXXXX X. XXXXX ("XXXXX"), its Chairman,
as authorized by the Board of Directors, and Shareholder have heretofore entered
into a letter of intent as set forth in the letter from XXXXX, the Chairman of
AETHLON, to SYNGEN, a copy of which is attached hereto as Exhibit "B" (the
"AETHLON Letter of Intent"), providing for the acquisition by AETHLON from
Shareholder of all of the Exchanged Shares in exchange for the AETHLON Shares
and on certain additional terms and conditions specified therein; and
D. WHEREAS, the parties hereto desire to set forth the definitive terms and
conditions upon which Shareholder shall sell to AETHLON, and AETHLON
Page 1
shall purchase from Shareholder, all of the Stock of SYNGEN owned by
Shareholder, as contemplated by and in furtherance of the AETHLON Letter of
Intent; and
E. WHEREAS, it is intended that SYNGEN, AETHLON, and their respective
shareholders will recognize no gain or loss for U.S. federal income tax purposes
under Section 368 (a)(1)(B) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations promulgated thereunder as a result of the
Reorganization; and
F. WHEREAS, the parties hereto have entered into additional agreements
(including an employment agreement and a buy-back agreement) simultaneously with
the execution of this Agreement which are not intended to influence the tax-free
result of exchange of the Exchanged Shares for the AETHLON Shares;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants and agreements contained herein, and in
accordance with the applicable provisions of state law, the parties hereto
covenant and agree as follows:
ARTICLE I
THE REORGANIZATION
1.1 THE REORGANIZATION. On and as of the Closing (as defined in Section 1.2
below) of this Agreement, Shareholder shall surrender all of the Exchanged
Shares in exchange for the AETHLON Shares in the amounts set forth in Exhibit
"A." The transactions contemplated hereby are intended to qualify as a tax-free
reorganization under ss.368(a)(1)(B) of the Code and the regulations promulgated
thereunder and the parties hereto agree to report them as such.
1.2 CLOSING. The closing of the Reorganization (the "Closing") shall take
place (i) at the offices of Xxxxxx, Xxxxxxx & Xxxxxxx, counsel to AETHLON, at 0
Xxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000 at 10:00 a.m., local time, on
January 10, 2000; or (ii) at such other time and place and on such other date as
Shareholder,
Page 2
SYNGEN, and AETHLON agree (the "Closing Date"). The Closing Date shall be the
effective date of the Reorganization.
1.3 TAKING OF NECESSARY ACTIONS. Shareholder, SYNGEN, and AETHLON shall
each take all such actions as may be reasonably necessary or appropriate in
order to effectuate the transactions contemplated hereby and to make the
Reorganization effective as of the Effective Date. If at any time after the
Effective Date any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest AETHLON with full title to all of the
Exchanged Shares, Shareholder and the officers and directors of SYNGEN and
AETHLON, at the expense of the AETHLON, shall take all such necessary or
appropriate action. To effect the intents and purposes of this Agreement, the
following actions shall be taken at the Closing, shall be deemed to occur
simultaneously, and the accomplishment of which actions by the parties whose
duty it is to perform such actions is duly acknowledged by the execution of this
Agreement by the parties hereto:
1.3.1 ELECTION OF DIRECTOR. AETHLON shall deliver to Shareholder a
Certificate of Secretary of AETHLON, a copy of which is attached hereto as
Exhibit "C," evidencing the adoption by the Board of Directors of AETHLON of
resolutions (i) electing and appointing Shareholder as a member of the Board of
Directors of AETHLON, (ii) providing for indemnification of the members of the
Board of Directors of AETHLON reasonably satisfactory to counsel to Shareholder,
and (iii) approving the execution of an indemnification agreement, a copy of
which is attached hereto as Exhibit "D" in favor of Shareholder by the Chief
Executive Officer of AETHLON (the "Indemnification Agreement").
1.3.2 EXECUTION AND DELIVERY OF INDEMNIFICATION AGREEMENTS. The
Chairman of AETHLON shall execute and deliver two copies of the Indemnification
Agreement in the form attached hereto as Exhibit "D" to Shareholder who shall
countersign the Indemnification Agreement and deliver an executed copy to
AETHLON.
1.3.3 NEGOTIATION OF EMPLOYMENT AGREEMENTS. As soon as practicable
after the Closing, but in no event longer than 60 days after the Closing Date,
AETHLON and SYNGEN agree to negotiate in good faith with respect to entering
Page 3
into an employment agreement, to be approved by the Board of Directors of
AETHLON, and entered into by and between AETHLON, as employer, and Shareholder,
who is currently employed by SYNGEN. The terms of the employment agreement shall
be consistent with the terms for such employment set forth in the AETHLON Letter
of Intent.
1.3.4 DELIVERY OF EXCHANGED SHARES TO AETHLON; DELIVERY OF THE AETHLON
SHARES TO Shareholder. In consideration of the tender by Shareholder of their
Exchanged Shares, or lost certificate affidavits in form acceptable to AETHLON,
copies of which are attached hereto as Exhibit "E," AETHLON shall deliver the
AETHLON Shares to Shareholder in the amount set forth in Exhibit "A."
1.3.5 LEGAL OPINION. Counsel to AETHLON shall deliver to Shareholder
an opinion of counsel, in the form of Exhibit "F," a copy of which is attached
hereto, addressed to Shareholder.
ARTICLE II
EXCHANGE OF SHARES
2.1 EXCHANGE OF SHARES. Subject to the terms and conditions of this
Agreement, on the Closing Date, by virtue of the Reorganization and without any
further action on the part of Shareholder, SYNGEN, or AETHLON, all of the
Exchanged Shares shall be exchanged for the AETHLON Shares in the amounts set
forth in Exhibit "A." Each share of the AETHLON Shares shall be validly issued,
duly authorized, fully paid, and nonassessable shares of the Common Stock of
AETHLON as of the Closing Date. The AETHLON Shares shall carry piggyback
registration rights in the next succeeding registration statement. The AETHLON
Shares issued to SYNGEN shall be subject to an 18-month lockup period.
2.2 EXCHANGE OF CERTIFICATES. At the Closing, AETHLON shall present and
deliver to Shareholder the stock certificates representing all of the AETHLON
Shares. Upon delivery thereof, Shareholder shall present and deliver to AETHLON
all of the certificates representing the Exchanged Shares, or lost certificate
affidavits in form acceptable to AETHLON.
Page 4
2.3 NO FURTHER RIGHTS. From and after the Closing Date, holders of
certificates formerly evidencing the Exchanged Shares shall cease to have any
rights as shareholders of SYNGEN, except as provided herein or by law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SYNGEN
Except as set forth in the Schedule of Exceptions attached hereto and
incorporated herein by reference as Exhibit "G," SYNGEN represents and warrants
to, and covenants with, AETHLON, as of the date hereof and as of the Closing
Date, as follows:
3.1 ORGANIZATION AND CORPORATE POWER. SYNGEN is a corporation duly
organized, in good standing, and validly existing under the laws of California.
SYNGEN has all requisite corporate power and authority to conduct its business
as now being conducted and to own and lease the properties which it now owns and
leases. The charter documents of SYNGEN as amended to date, the Bylaws of SYNGEN
as amended to date, and the resolutions of SYNGEN's shareholders (if necessary)
and directors authorizing the execution, delivery, and performance of this
Agreement, all certified by the President and the Secretary, which have
previously been provided to AETHLON by SYNGEN, are true and complete copies
thereof as currently in effect.
3.2 AUTHORIZATION. SYNGEN has full corporate power, legal capacity, and
authority to enter into this Agreement, to execute all attendant documents and
instruments contemplated hereby, and to perform all of its obligations
hereunder. This Agreement, and each and every other agreement, document and
instrument to be executed by SYNGEN in connection herewith, has been effectively
authorized by all necessary action on the part of SYNGEN, including without
limitation the approvals of SYNGEN's Board of Directors (and Shareholder if
necessary), which authorizations remain in full force and effect, have been duly
executed and delivered by SYNGEN. No other authorizations or proceedings on the
part of
Page 5
SYNGEN or Shareholder, or otherwise, are required to authorize this Agreement
and/or the transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligation of SYNGEN and Shareholder and is enforceable
against each of them in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, priority or other laws or
court decisions relating to or affecting generally the enforcement of creditors'
rights or affecting generally the availability of equitable remedies.
3.3. NO CONFLICTS; NO CONSENTS. Other than that set forth in the Schedule
of Exceptions, neither the execution and delivery of this Agreement, nor the
consummation by SYNGEN or Shareholder of any of the transactions contemplated
hereby, or compliance with any of the provisions hereof, will (i) conflict with
or result in a material breach of, violation of, or default under, any of the
terms, conditions or provisions of any material note, bond, mortgage, indenture,
license, lease, credit agreement or other agreement, document, instrument,
permit, authorization, or obligation (including, without limitation, any of its
charter documents) to which SYNGEN is a party or by which it or any of its
assets or properties may be bound, or (ii) violate any judgment, order,
injunction, decree, statute, rule or regulation applicable to SYNGEN or its
assets or properties, the violation of which would have a material adverse
effect upon the business, properties, or assets, or in the condition (financial
or otherwise) of SYNGEN. No authorization, consent or approval of any public
body or authority was or is necessary for the consummation by SYNGEN or
Shareholder of the transactions contemplated by this Agreement.
3.4 CAPITALIZATION. The authorized capital stock of SYNGEN consists of
1,000 shares of common stock, no par value. As of the date hereof, there are 100
shares of common stock issued and outstanding. There are no outstanding
contracts or other rights to subscribe for or purchase, or contracts or
obligations to issue or grant any rights to acquire any equity security of
SYNGEN. SYNGEN does not have any contracts or obligations to redeem, repurchase,
or otherwise reacquire any equity security of SYNGEN. All of the Exchanged
Shares are duly authorized, validly issued and outstanding, fully paid, and
nonassessable and have been issued in conformity with all applicable laws.
Page 6
3.5 NO PENDING MATERIAL LITIGATION OR PROCEEDINGS. There are no actions,
suits or proceedings pending or, to the best knowledge of SYNGEN, threatened
against or affecting SYNGEN affecting Shareholder's rights in the Exchanged
Shares (including actions, suits or proceedings where liabilities may be
adequately covered by insurance) at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, court,
board, bureau, agency or instrumentality, domestic or foreign, or affecting any
of the officers, directors of SYNGEN or Shareholder in connection with the
business, operations or affairs of either of them, which might reasonably be
expected to result in any material adverse change in the business, properties or
assets, or in the condition (financial or otherwise) of SYNGEN, or which
question or challenge the Reorganization. SYNGEN is not subject to any voluntary
or involuntary proceeding under federal bankruptcy laws and has not made an
assignment for the benefit of creditors.
3.6 FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED LIABILITIES AND CERTAIN
DEVELOPMENTS. Attached hereto as Exhibit "H" are the audited profit and loss
statements of Syngen Research, a sole proprietorship ("SR"), the predecessor
company to SYNGEN, for the period from January to September 1999; the audited
balance sheet of SR as of October 8, 1999 (the "Balance Sheet"); and the
respective notes thereto. SYNGEN was incorporated on or about October 14, 1999
and took over the assets and liabilities of SR at that time. Such financial
statements (and the notes related thereto) are herein sometimes collectively
referred to as the "SYNGEN Financial Statements." The SYNGEN Financial
Statements (i) are derived from the books and records of SR, which books and
records have been consistently maintained in a manner which reflects, and such
books and records do fairly and accurately reflect, the assets and liabilities
of SYNGEN, as the successor to SR, (ii) fairly present in all material respects
the financial condition of SR on the date of such statements and the results of
its operations for the periods indicated, except as may be disclosed in the
notes thereto, and (iii) have been prepared in all material respects in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved. Except as and to the extent reflected or
reserved against in the Balance Sheet, and as to matters arising in the ordinary
course of its business since the respective date of the Balance Sheet, SYNGEN,
as the successor to SR, has no liability or obligation of a type required by
generally accepted accounting principles to be reflected in the Balance Sheet
(whether accrued, to become due, contingent or otherwise) which individually or
in the aggregate could
Page 7
have a materially adverse effect on the business, assets, condition (financial
or otherwise) or prospects of SYNGEN. Except as set forth in Exhibit "H," since
October 8, 1999, there has been (a) no declaration, setting aside or payment of
any dividend or other distribution with respect to the Exchanged Shares or
redemption, purchase or other acquisition of any of the Exchanges Shares or any
split-up or other recapitalization relative to any of the Exchanged Shares or
any action authorizing or obligating SYNGEN to do any of the foregoing, (b) no
material loss, destruction or damage to any material property or asset of SYNGEN
whether or not insured, (c) no acquisition or disposition of assets (or any
contract or arrangement therefor), or any other transaction by SYNGEN otherwise
than for fair value and in the ordinary course of business, (d) no discharge or
satisfaction by SYNGEN of any lien or encumbrance or payment of any obligation
or liability (absolute or contingent) other than current liabilities shown on
the Balance Sheet, or current liabilities incurred since the date thereof in the
ordinary course of business, (e) no sale, assignment or transfer by SYNGEN of
any of its tangible or intangible assets except in the ordinary course of
business, cancellation by SYNGEN of any debts, claims or obligations, or
mortgage, pledge, subjection of any assets to any lien, charge, security
interest or other encumbrance, or waiver by SYNGEN of any rights of value which,
in any such case, is material to the business of SYNGEN, (f) no payment of any
bonus to or change in the compensation of any director, officer or employee,
whether directly or by means of any bonus, pension plan, contract or commitment,
(g) no write-off or material reduction in the carrying value of any asset which
is material to the business of SYNGEN, (h) no disposition or lapse of rights as
to any intangible property which is material to the business of SYNGEN, (i)
except for ordinary travel advances, no loans or extensions of credit to
shareholders, officers, directors or employees of SYNGEN, (j) no agreement to do
any of the things described in this Section 3.6, and (k) no material adverse
change in the condition (financial or otherwise) of SYNGEN or in its assets,
liabilities, properties, business, or prospects.
3.7 APPLICABLE PERMITS; COMPLIANCE WITH LAWS. SYNGEN (i) holds all
licenses, franchises, permits, and authorizations necessary for the lawful
conduct of its business as presently conducted and which the failure to so hold
would have a material adverse effect upon the business, properties, or assets,
or the condition (financial or otherwise) of SYNGEN, and (ii) has complied with
all applicable statutes, laws, ordinances, rules, and regulations of all
governmental bodies, agencies and subdivisions having, asserting or claiming
jurisdiction over it, which
Page 8
the failure to comply with would have a material adverse effect upon the
business, properties, or assets, or the condition (financial or otherwise) of
SYNGEN.
3.8 DISCLOSURE. Neither this Agreement, nor any material certificate,
exhibit, or other written document or statement, furnished to AETHLON by or on
behalf of SYNGEN or, to its knowledge, Shareholder in connection with the
transactions contemplated by this Agreement contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary to be stated in order to make the statements contained herein or
therein, when taken as a whole, not misleading. Neither SYNGEN nor, to its
knowledge, Shareholder has any knowledge of any fact which has not been
disclosed in writing to AETHLON which may reasonably be expected to materially
and adversely affect the business, properties, or assets, or the condition
(financial or otherwise) of SYNGEN or title of Shareholder to the Exchanged
Shares or his ability to perform all of the obligations to be performed by him
under this Agreement and/or any other agreement between SYNGEN, Shareholder, and
AETHLON to be entered into pursuant to any provision of this Agreement.
3.9 OWNERSHIP OF SYNGEN. SYNGEN issued Shareholder that number of Shares
set forth opposite Shareholder's name on Exhibit "A," which shares together
constitute all of the issued and outstanding shares of the capital stock, common
and preferred, of SYNGEN. The Shares are duly authorized, validly issued and
outstanding, fully paid and nonassessable and were issued by SYNGEN in
conformity with all applicable laws.
3.10 SUBSIDIARIES. SYNGEN has no subsidiaries and no investments, directly
or indirectly, or other financial interest in any other corporation or business
organization, joint venture or partnership of any kind whatsoever except as
reflected in the SYNGEN Financial Statements.
3.11 REAL PROPERTY. Exhibit "I," attached hereto and incorporated herein by
this reference, contains a complete and accurate legal description of each
parcel of real property owned by or leased to and occupied or subleased by
SYNGEN, and SYNGEN neither owns or leases, nor occupies, any other real
property. The building and all fixtures and improvements located on such real
property are in good operating condition, ordinary wear and tear excepted. To
the best of its
Page 9
knowledge, SYNGEN is not in violation of any material zoning, building or safety
ordinance, regulation or requirement, or other law or regulation applicable to
the operation of owned or leased properties, and SYNGEN has not received any
notice of violation with which its has not complied. All leases of real property
to which SYNGEN is a party and which are material to the business of SYNGEN are
fully effective in accordance with their respective terms and afford SYNGEN
peaceful and undisturbed possession of the subject matter of the lease, and, to
the best knowledge of SYNGEN, there exists no default on the part of SYNGEN or
termination thereof.
3.12 TANGIBLE PERSONAL PROPERTY. Exhibit "J" attached hereto sets forth a
complete list of all items of tangible personal property owned or leased and
used by SYNGEN in the current conduct of its business, where the original cost
was in excess of $2,000. SYNGEN has good and marketable title to, or in the case
of leased equipment a valid leasehold interest in, and is in possession of, all
such items of personal property owned or leased by it, free and clear of all
title defects, mortgages, pledges, security interests conditional sales
agreements, liens, restrictions or encumbrances, the presence of which would
result in a material adverse change in the business, properties, or assets, or
the condition (financial or otherwise) of SYNGEN. Included in Exhibit "J" is a
list of all outstanding equipment leases and maintenance agreements to which
SYNGEN is a party as lessee and which individually provide for future lease
payments in excess of $1,000 per month, with the identities of the other parties
to all such leases and agreements shown thereon. All leases of tangible personal
property to which SYNGEN is a party and which are material to the business of
SYNGEN are fully effective in accordance with their respective terms, and, to
the best knowledge of SYNGEN, there exists no default on the part of SYNGEN or
termination thereof, the presence of which would result in a material adverse
change in the business, properties, or assets, or the condition (financial or
otherwise) of SYNGEN. Each item of capital equipment reflected in the Balance
Sheets which is used in the current conduct of SYNGEN's business is in good
operating and usable condition and repair, ordinary wear and tear excepted, and
is and will be suitable for use in the ordinary course of SYNGEN's business and
fit for its intended purposes.
3.13 TAX MATTERS. SYNGEN has, since its inception, duly filed all material
federal, state, municipal, local, and other tax returns required to have been
filed by it in those jurisdictions where the nature or conduct of its business
requires such
Page 10
filing and where the failure to so file would be materially adverse to SYNGEN.
Copies of all such tax returns have been made available for inspection by
AETHLON prior to the execution hereof. All federal, state, municipal, local, and
other taxes shown to be due on such returns have been paid or will be paid prior
to the time they become delinquent. The amounts reflected in the Balance Sheet
as liabilities or reserves for taxes which are due but not yet payable are
sufficient for the payment of all accrued and unpaid taxes of the types referred
to hereinabove and SYNGEN has no knowledge of any proposed liability for taxes
to be imposed upon its properties or assets for which there is not adequate
reserve reflected in the SYNGEN Financial Statements.
3.14 ACCOUNTS RECEIVABLE. The accounts receivable reflected in the Balance
Sheets constituted all accounts receivable of SYNGEN as of the respective dates
thereof, other than accounts receivable fully written off as uncollectible as of
such date in accordance with consistently applied prior practice. All such
accounts receivable arose from valid sales, were recorded in the ordinary course
of business, and are not subject to any set-off or counter claim. Such accounts
receivable have been collected in full since the dates of the Balance Sheets or
are collectible at their full respective amounts (net of allowance for doubtful
accounts established in accordance with consistently applied prior practice).
The accounts receivable of SYNGEN existing as of the close of business on the
Closing Date will be fully collectible within one year from the Closing Date.
3.15 INVENTORY. SYNGEN has no inventories of raw materials,
work-in-process, or finished goods.
3.16 CONTRACTS AND COMMITMENTS. SYNGEN has no contract, agreement,
obligation or commitment, written or oral, expressed or implied, which involves
a commitment or liability of SYNGEN in excess of $10,000 (other than obligations
which are included in accounts payable), and no union contracts, employee or
consulting contracts, financing agreements, debtor or creditor arrangements,
licenses, franchise, manufacturing, distributorship or dealership agreements,
leases, or bonus, health or stock option plans, except as described in Exhibits
"G" and "H." True and complete copies of all such contracts and other agreements
listed in Exhibits "G" and "H" which involve a commitment or liability of SYNGEN
in excess of $10,000 have been made available to AETHLON prior to the execution
Page 11
hereof. As of the date hereof, to the best of their knowledge, there exist no
circumstances which would affect the validity or enforceability of any of such
contracts and other agreements in accordance with their respective terms. SYNGEN
has performed and complied in all material respects with all obligations
required to be performed by it to date under, and is not in default (without
giving effect to any required notice or grace period) under, or in breach of,
the terms, conditions or provisions of any of such contracts and other
agreements. The validity and enforceability of any contract or other agreement
described herein has not been and shall not be materially and adversely affected
by the execution and delivery of this Agreement without any further action.
SYNGEN has no contract, agreement, obligation or commitment which to the best
knowledge of SYNGEN requires or will require future expenditures (including
internal costs and overhead) in excess of reasonably anticipated receipts, nor
which is likely to be materially adverse to SYNGEN's business, assets, condition
(financial and otherwise), or prospects.
3.17 PROPRIETARY INFORMATION. SYNGEN does not have any patents,
applications for patents, trademarks, applications for trademarks, trade names,
licenses or service marks relating to the business of SYNGEN, nor does any
present or former shareholder, officer, director or employee of SYNGEN own any
patent rights relating to any products manufactured, rented or sold by SYNGEN
except as disclosed in Exhibit "K." To the best knowledge of SYNGEN, SYNGEN has
the unrestricted right to use, free and clear of any claims or rights of others,
all trade secrets, customer lists, and manufacturing and secret processes
reasonably necessary to the manufacture and marketing of all products made or
proposed to be made by SYNGEN, except for any rights the presence of which would
not result in a material adverse change in the business, properties, or assets,
or the condition (financial or otherwise) of SYNGEN, and, to the best knowledge
of SYNGEN, the continued use thereof by AETHLON following the Closing will not
conflict with, infringe upon, or otherwise violate any rights of others. SYNGEN
has not used and is not making use of any confidential information or trade
secrets of any present or past employee of SYNGEN.
3.18 INSURANCE. SYNGEN maintains no insurance policies.
3.19 ARRANGEMENTS WITH EMPLOYEES; LABOR RELATIONS. No stockholder,
director, officer or employee of SYNGEN is presently a party to any transaction
with
Page 12
SYNGEN, including without limitation any contract, loan or other agreement or
arrangement providing for the furnishing of services by, the rental of real or
personal property from or to, or otherwise requiring loans or payments to, any
such stockholder, director, officer or employee, or to any member of the family
of any of the foregoing, or to any corporation, partnership, trust or other
entity in which any stockholder, director, officer or employee or any member of
the family of any of them has a substantial interest or is an officer, director,
trustee, partner or employee. There are no bonus, pension, profit sharing,
commission, deferred compensation or other plans or arrangements in effect as of
the date of this Agreement. SYNGEN has no obligations under any collective
bargaining agreement or other contract with a labor union, under any employment
contract or consulting agreement, or under any executive's compensation plan,
agreement or arrangement, nor is any union, labor organization or group of
employees of SYNGEN presently seeking the right to enter into collective
bargaining with SYNGEN on behalf of any of its employees. SYNGEN has furnished
AETHLON with a copy of all written personnel policies, including without
limitation vacation, severance, bonus, pension, profit sharing, and commissions
policies applicable to any of SYNGEN's employees.
3.20 BANK ACCOUNTS. All bank and savings accounts, and other accounts at
similar financial institutions, of SYNGEN existing at date of Closing are listed
on Exhibit "L." Exhibit "L" contains a list of the name of each person or entity
authorized to sign on the bank accounts, borrow money, or incur or guarantee
indebtedness on behalf of SYNGEN.
3.21 POWERS OF ATTORNEY. Other than that set forth in the Schedule of
Exceptions of SYNGEN, no valid powers of attorney from SYNGEN to any person or
entity exist as of the date of this Agreement.
3.22 ABSENCE OF QUESTIONABLE PAYMENTS. To the best of its knowledge,
neither SYNGEN nor any shareholder, director, officer, agent, employee,
consultant or other person associated with or acting on behalf of any of them,
has (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any direct or indirect unlawful payments to governmental officials or
others from corporate funds, engaged in any payments or activity which would be
deemed a violation of the Foreign Corrupt
Page 13
Practices Act or rules or regulations promulgated thereunder, or (iii)
established or maintained any unlawful or unrecorded accounts.
3.23 RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS. No present substantial
customer or substantial supplier to SYNGEN has indicated an intention to
terminate or materially and adversely alter its existing business relationship
therewith, and, to the best knowledge of SYNGEN, none of the present customers
of or substantial suppliers to SYNGEN intends to do so.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF AETHLON
Except as set forth in the Schedule of Exceptions attached hereto and
incorporated herein by this reference as Exhibit "M," AETHLON hereby represents
and warrants to, and covenants with, Shareholder and SYNGEN as follows:
4.1 ORGANIZATION AND CORPORATE POWER. AETHLON is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, and is duly qualified and in good standing to do business as a foreign
corporation in each jurisdiction in which such qualification is required and
where the failure to be so qualified would have a materially adverse effect upon
AETHLON. AETHLON has all requisite corporate power and authority to conduct its
business as now being conducted and to own and lease the properties which it now
owns and leases. The Articles of Incorporation as amended to date, certified by
the Secretary of State of Nevada, the Bylaws of AETHLON as amended to date, and
the resolutions of AETHLON's shareholders and directors authorizing the
execution, delivery, and performance of this Agreement, all certified by the
President and the Secretary of AETHLON, which have previously been provided to
SYNGEN by AETHLON, are true and complete copies thereof as currently in effect.
4.2 AUTHORIZATION. AETHLON has full corporate power, legal capacity and
corporate authority to enter into this Agreement, to execute all attendant
documents and instruments contemplated hereby, to enter into this
Reorganization, and to perform all of its obligations hereunder. This Agreement,
and each and every other
Page 14
agreement, document and instrument to be executed by AETHLON in connection
herewith, has been effectively authorized by all necessary action on the part of
AETHLON, including without limitation the approvals of AETHLON's Board of
Directors (and shareholders, if necessary) which authorizations remain in full
force and effect, have been duly executed and delivered by AETHLON, and no other
authorizations or proceedings on the part of AETHLON, or otherwise, are required
to authorize this Agreement and/or the transactions contemplated hereby. This
Agreement constitutes the legal, valid, and binding obligation of AETHLON and is
enforceable against AETHLON in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, priority or other laws
or court decisions relating to or affecting generally the enforcement of
creditors' rights or affecting generally the availability of equitable remedies.
4.3. NO CONFLICTS; NO CONSENTS. Neither the execution and delivery of this
Agreement, nor the consummation by AETHLON of any of the transactions
contemplated hereby, or compliance with any of the provisions hereof, will (i)
conflict with or result in a material breach of, violation of, or default under,
any of the terms, conditions or provisions of any material note, bond, mortgage,
indenture, license, lease, credit agreement or other agreement, document,
instrument or obligation (including, without limitation, any of its charter
documents) to which AETHLON is a party or by which it or any of its assets or
properties may be bound, or (ii) violate any judgment, order, injunction,
decree, statute, rule or regulation applicable to AETHLON or its assets or
properties, the violation of which would have a material adverse effect upon the
business, properties, or assets, or in the condition (financial or otherwise) of
AETHLON. No authorization, consent or approval of any public body or authority
was or is necessary for the consummation by AETHLON of the transactions
contemplated by this Agreement.
4.4 CAPITALIZATION. The authorized capital stock of AETHLON consists of
25,000,000 shares of common stock, par value $.001. As of the date hereof, there
are 2,595,000 shares of common stock issued and outstanding. All of the shares
of common stock issued and outstanding are validly issued, fully paid, and
nonassessable. Except as disclosed in Exhibit "M," there are no outstanding
contracts or other rights to subscribe for or purchase, or contracts or
obligations to issue or grant any rights to acquire any equity security of
AETHLON. AETHLON does not have any contracts or obligations to redeem,
repurchase or otherwise reacquire any
Page 15
equity security of AETHLON. All of the AETHLON Shares, when issued to
Shareholder, will be duly authorized, validly issued and outstanding, fully paid
and nonassessable and were issued in conformity with all applicable laws.
4.5 FINANCIAL STATEMENTS OF AETHLON; ABSENCE OF UNDISCLOSED LIABILITIES; NO
ADVERSE CHANGES. Attached hereto as Exhibit "N" are the audited financial
statements of AETHLON for the years ended March 31, 1999, and the unaudited
financial statements for the period ended September 30, 1999 consisting of
AETHLON's balance sheet as of such date (the "Balance Sheet"), the related
statements of profit or loss for the periods then ended, and the respective
notes thereto. Such financial statements (and the notes related thereto) are
herein sometimes collectively referred to as the "AETHLON Financial Statements."
The AETHLON Financial Statements (i) are derived from the books and records of
AETHLON, which books and records have been consistently maintained in a manner
which reflects, and such books and records do fairly and accurately reflect, the
assets and liabilities of AETHLON, (ii) fairly and accurately present the
financial condition of AETHLON on the date of such statements and the results of
its operations for the periods indicated, except as may be disclosed in the
notes thereto, and (iii) have been prepared in all material respects in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise disclosed in the notes
thereto). Except as and to the extent reflected or reserved against in the
Balance Sheet, and as to matters arising in the ordinary course of its business
since the respective dates of the Balance Sheet, AETHLON has no liability or
obligation (whether accrued, to become due, contingent or otherwise) which
individually or in the aggregate could have a materially adverse effect on the
business, assets, condition (financial or otherwise) or prospects of AETHLON.
Except as set forth in Exhibit "N," since the dates of the respective Balance
Sheets, there has been (a) no declaration, setting aside or payment of any
dividend or other distribution with respect to the common stock of AETHLON or
redemption, purchase or other acquisition of any of the common stock of AETHLON
or any split-up or other recapitalization relative to any of the common stock of
AETHLON or any action authorizing or obligating AETHLON to do any of the
foregoing, (b) no loss, destruction or damage to any material property or asset
of AETHLON, whether or not insured, (c) no acquisition or disposition of assets
(or any contract or arrangement therefor), or any other transaction by AETHLON
otherwise than for fair value and in the ordinary course of business, (d)
Page 16
no discharge or satisfaction by AETHLON of any lien or encumbrance or payment of
any obligation or liability (absolute or contingent) other than current
liabilities shown on the Balance Sheet, or current liabilities incurred since
the date thereof in the ordinary course of business, (e) no sale, assignment or
transfer by AETHLON of any of its tangible or intangible assets except in the
ordinary course of business, cancellation by AETHLON of any debts, claims or
obligations, or mortgage, pledge, subjection of any assets to any lien, charge,
security interest or other encumbrance, or waiver by AETHLON of any rights of
value which, in any such case, is material to the business of AETHLON, (f) no
payment of any material bonus to or material change in the compensation of any
director, officer or employee, whether directly or by means of any bonus,
pension plan, contract or commitment, (g) no write-off or material reduction in
the carrying value of any asset which is material to the business of AETHLON,
(h) no disposition or lapse of rights as to any intangible property which is
material to the business of AETHLON, (i) except for ordinary travel advances, no
loans or extensions of credit to shareholders, officers, directors or employees
of AETHLON, (j) no agreement to do any of the things described in this Section
4.5, and (k) no material adverse change in the condition (financial or
otherwise) of AETHLON or in its assets, liabilities, properties, business, or
prospects.
4.6 TAX MATTERS. AETHLON has, since its inception, accurately prepared and
duly filed all federal, state, county and local tax returns required to have
been filed by it in those jurisdictions where the nature or conduct of its
business requires such filing and where the failure to so file would be
materially adverse to AETHLON. Copies of all such tax returns have been made
available for inspection by SYNGEN and Shareholder prior to the execution
hereof. All federal, state, county and local taxes, including but not limited to
those taxes due with respect to AETHLON's properties, income, gross receipts,
excise, occupation, franchise, permit, licenses, sales, payroll, and inventory
due and payable as of the date of the Closing by AETHLON have been paid or will
be paid prior to the time they become delinquent. The amount reflected in the
Balance Sheet of AETHLON as liabilities or reserves for taxes which are due but
not yet payable is sufficient for the payment of all accrued and unpaid taxes of
the types referred to hereinabove.
4.7 NO PENDING MATERIAL LITIGATION OR PROCEEDINGS. There are no actions,
suits or proceedings pending or, to the best knowledge of AETHLON, threatened
against or affecting AETHLON (including actions, suits or proceedings where
Page 17
liabilities may be adequately covered by insurance) at law or in equity or
before or by any federal, state, municipal or other governmental department,
commission, court, board, bureau, agency or instrumentality, domestic or
foreign, or affecting any of the shareholders, officers or directors of AETHLON
in connection with the business, operations or affairs of AETHLON, which might
result in any material adverse change in the business, properties or assets, or
in the condition (financial or otherwise) of AETHLON, or which question or
challenge the Reorganization. AETHLON is not subject to any voluntary or
involuntary proceeding under applicable bankruptcy laws and has not made an
assignment for the benefit of creditors.
4.8 COMPLIANCE WITH LAWS. AETHLON (i) holds all licenses, franchises,
permits and authorizations necessary for the lawful conduct of its business as
presently conducted and which the failure to so hold would have a material
adverse effect upon the business, properties, or assets, or the condition
(financial or otherwise) of AETHLON, and (ii) has complied with all applicable
statutes, laws, ordinances, rules and regulations of all governmental bodies,
agencies and subdivisions having, asserting or claiming jurisdiction over it,
which the failure to comply with would have a material adverse effect upon the
business, properties, or assets, or the condition (financial or otherwise) of
AETHLON.
4.9 DISCLOSURE. Neither this Agreement, nor any certificate, exhibit, or
other written document or statement, furnished to SYNGEN or Shareholder by or on
behalf of AETHLON in connection with the transactions contemplated by this
Agreement contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to be stated in order to
make the statements contained herein or therein, when taken as a whole, not
misleading. AETHLON has no knowledge of any fact which has not been disclosed in
writing to SYNGEN or Shareholder which may reasonably be expected to materially
and adversely affect the business, properties, operations, and/or prospects of
AETHLON or the ability of AETHLON to perform all of the obligations to be
performed by AETHLON under this Agreement and/or any other agreement between
SYNGEN and AETHLON to be entered into pursuant to any provision of this
Agreement.
4.10 SUBSIDIARIES. AETHLON has no subsidiaries and no investments, directly
or indirectly, or other financial interest in any other corporation or business
Page 18
organization, joint venture or partnership of any kind whatsoever except as
reflected in the AETHLON Financial Statements.
4.11 OFFERING. Subject to the accuracy of Shareholder's representations in
Section 5.4 hereof, the offer, sale, and issuance of the AETHLON Shares to be
issued in conformity with the terms of this Agreement and the transactions
contemplated hereby, constitute transactions exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as amended, and from
all applicable state registration or qualification requirements.
4.12 REAL PROPERTY. Exhibit "O," attached hereto and incorporated herein by
this reference, contains a complete and accurate legal description of each
parcel of real property owned by or leased to and occupied or subleased by
AETHLON, and AETHLON neither owns or leases, nor occupies, any other real
property. The building and all fixtures and improvements located on such real
property are in good operating condition, ordinary wear and tear excepted. To
the best of its knowledge, AETHLON is not in violation of any material zoning,
building or safety ordinance, regulation or requirement, or other law or
regulation applicable to the operation of owned or leased properties, and
AETHLON has not received any notice of violation with which its has not
complied. All leases of real property to which AETHLON is a party and which are
material to the business of AETHLON are fully effective in accordance with their
respective terms and afford AETHLON peaceful and undisturbed possession of the
subject matter of the lease, and, to the best knowledge of AETHLON, there exists
no default on the part of AETHLON or termination thereof.
4.13 TANGIBLE PERSONAL PROPERTY. Exhibit "P" attached hereto sets forth a
complete list of all items of tangible personal property owned or leased and
used by AETHLON in the current conduct of its business, where the original cost
was in excess of $10,000. AETHLON has good and marketable title to, or in the
case of leased equipment a valid leasehold interest in, and is in possession of,
all such items of personal property owned or leased by it, free and clear of all
title defects, mortgages, pledges, security interests conditional sales
agreements, liens, restrictions or encumbrances, the presence of which would
result in a material adverse change in the business, properties, or assets, or
the condition (financial or otherwise) of AETHLON. Included in Exhibit "P" is a
list of all outstanding equipment leases and
Page 19
maintenance agreements to which AETHLON is a party as lessee and which
individually provide for future lease payments in excess of $1,000 per month,
with the identities of the other parties to all such leases and agreements shown
thereon. All leases of tangible personal property to which AETHLON is a party
and which are material to the business of AETHLON are fully effective in
accordance with their respective terms, and, to the best knowledge of AETHLON,
there exists no default on the part of AETHLON or termination thereof, the
presence of which would result in a material adverse change in the business,
properties, or assets, or the condition (financial or otherwise) of AETHLON.
Each item of capital equipment reflected in the Balance Sheets which is used in
the current conduct of AETHLON's business is in good operating and usable
condition and repair, ordinary wear and tear excepted, and is and will be
suitable for use in the ordinary course of AETHLON's business and fit for its
intended purposes.
4.14 ACCOUNTS RECEIVABLE. The accounts receivable reflected in the Balance
Sheets constituted all accounts receivable of AETHLON as of the respective dates
thereof, other than accounts receivable fully written off as uncollectible as of
such date in accordance with consistently applied prior practice. All such
accounts receivable arose from valid sales, were recorded in the ordinary course
of business, and are not subject to any set-off or counter claim. Such accounts
receivable have been collected in full since the dates of the Balance Sheets or
are collectible at their full respective amounts (net of allowance for doubtful
accounts established in accordance with consistently applied prior practice).
Based upon the prior experience of AETHLON, the "allowance for doubtful
accounts" shown on the Balance Sheets is sufficient to cover all doubtful
accounts. The accounts receivable of AETHLON existing as of the close of
business on the Closing Date will be fully collectible within one year from the
Closing Date.
4.15 INVENTORY. AETHLON has good and marketable title to all of its
inventories of raw materials, work-in-process, and finished goods, including
models and samples, free and clear of all security interests, liens, claims and
encumbrances, the presence of which would result in a material adverse change in
the business, properties, or assets, or the condition (financial or otherwise)
of AETHLON. All such inventories consist of items that are usable and salable in
the ordinary course of business of AETHLON for an amount at least equal to the
book value thereto, plus the costs of disposition thereof.
Page 20
4.16 CONTRACTS AND COMMITMENTS. AETHLON has no contract, agreement,
obligation or commitment, written or oral, expressed or implied, which involves
a commitment or liability of AETHLON in excess of $10,000, and no union
contracts, employee or consulting contracts, financing agreements, debtor or
creditor arrangements, licenses, franchise, manufacturing, distributorship or
dealership agreements, leases, or bonus, health or stock option plans, except as
described in Exhibit "M." True and complete copies of all such contracts and
other agreements listed in Exhibit "M" have been made available to AETHLON prior
to the execution hereof. AETHLON has performed and complied in all material
respects with all obligations required to be performed by it to date under, and
is not in default (without giving effect to any required notice or grace period)
under, or in breach of, the terms, conditions or provisions of any of such
contracts and other agreements. The validity and enforceability of any contract
or other agreement described herein has not been and shall not be materially and
adversely affected by the execution and delivery of this Agreement without any
further action. AETHLON has no contract, agreement, obligation or commitment
which requires or will require future expenditures (including internal costs and
overhead) in excess of reasonably anticipated receipts, nor which is likely to
be materially adverse to AETHLON's business, assets, condition (financial and
otherwise), or prospects.
4.17 PROPRIETARY INFORMATION. AETHLON does not have any patents,
applications for patents, trademarks, applications for trademarks, trade names,
licenses or service marks relating to the business of AETHLON, nor does any
present or former shareholder, officer, director or employee of AETHLON own any
patent rights relating to any products manufactured, rented or sold by AETHLON
except as disclosed in Exhibit "Q." To the best knowledge of AETHLON, AETHLON
has the unrestricted right to use, free and clear of any claims or rights of
others, all trade secrets, customer lists, and manufacturing and secret
processes reasonably necessary to the manufacture and marketing of all products
made or proposed to be made by AETHLON, except for any rights the presence of
which would not result in a material adverse change in the business, properties,
or assets, or the condition (financial or otherwise) of AETHLON, and, to the
best knowledge of AETHLON, the continued use thereof by AETHLON following the
Closing will not conflict with, infringe upon, or otherwise violate any rights
of others. AETHLON has not used
Page 21
and is not making use of any confidential information or trade secrets of any
present or past employee of AETHLON.
4.18 INSURANCE. AETHLON maintains workers' compensation, disability and
directors' and officers' insurance with reputable insurance companies as are
usually insured by companies similarly situated and to the extent customarily
insured. A true and complete listing and general description of each of
AETHLON's insurance policies as currently in force is set forth in Exhibit "R"
attached hereto. All such insurance policies currently are in full force and
effect.
4.19 ARRANGEMENTS WITH EMPLOYEES; LABOR RELATIONS. No stockholder,
director, officer or employee of AETHLON is presently a party to any transaction
with AETHLON, including without limitation any contract, loan or other agreement
or arrangement providing for the furnishing of services by, the rental of real
or personal property from or to, or otherwise requiring loans or payments to,
any such stockholder, director, officer or employee, or to any member of the
family of any of the foregoing, or to any corporation, partnership, trust or
other entity in which any stockholder, director, officer or employee or any
member of the family of any of them has a substantial interest or is an officer,
director, trustee, partner or employee. There are no bonus, pension, profit
sharing, commission, deferred compensation or other plans or arrangements in
effect as of the date of this Agreement. AETHLON has no obligations under any
collective bargaining agreement or other contract with a labor union, under any
employment contract or consulting agreement, or under any executive's
compensation plan, agreement or arrangement, nor is any union, labor
organization or group of employees of AETHLON presently seeking the right to
enter into collective bargaining with AETHLON on behalf of any of its employees.
AETHLON has furnished AETHLON with a copy of all written personnel policies,
including without limitation vacation, severance, bonus, pension, profit
sharing, and commissions policies applicable to any of AETHLON's employees.
4.20 BANK ACCOUNTS. All bank and savings accounts, and other accounts at
similar financial institutions, of AETHLON existing at date of Closing are
listed on Exhibit "S." Exhibit "S" contains a list of the name of each person or
entity authorized to sign on the bank accounts, borrow money, or incur or
guarantee indebtedness on behalf of AETHLON.
Page 22
4.21 POWERS OF ATTORNEY. Other than that set forth in the Schedule of
Exceptions of AETHLON, no valid powers of attorney from AETHLON to any person or
entity exist as of the date of this Agreement.
4.22 ABSENCE OF QUESTIONABLE PAYMENTS. To the best of its knowledge,
neither AETHLON nor any shareholder, director, officer, agent, employee,
consultant or other person associated with or acting on behalf of any of them,
has (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any direct or indirect unlawful payments to governmental officials or
others from corporate funds, engaged in any payments or activity which would be
deemed a violation of the Foreign Corrupt Practices Act or rules or regulations
promulgated thereunder, or (iii) established or maintained any unlawful or
unrecorded accounts.
4.23 REPORTING REQUIREMENTS. AETHLON has complied with and will maintain
its compliance with all of the reporting requirements under the Act and the
Securities Exchange Act of 1934, as amended, through the Closing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER
Shareholder represents and warrants to and covenants with AETHLON, as of
the date hereof, as follows:
5.1 AUTHORITY. Shareholder has full rights, power, and authority to enter
into this Agreement; the execution, delivery, and performance of this Agreement
by Shareholder and the consummation by Shareholder of the transactions
contemplated hereby will not conflict with or result in a breach of any
agreement to which Shareholder is a party and which a conflict or breach thereof
would have a material adverse effect upon Shareholder or Shareholder's
properties or assets.
5.2 TITLE. Shareholder has valid and marketable title to the number of
Shares set forth opposite Shareholder's name on Exhibit "A," free and clear of
any pledge, lien, security interest, or encumbrance other than pursuant to this
Page 23
Agreement. As of the Closing Date there is no lien, charge, mortgage, pledge,
conditional sale agreement, or other encumbrance of any kind or nature recorded
in the book of registry of shareholders of AETHLON with respect to any of the
Exchanged Shares owned by Shareholder and the Exchanged Shares set forth in
Exhibit "A" are duly registered in the name of Shareholder as set forth in
Exhibit "A."
5.3 RESTRICTED STOCK. Shareholder acknowledges that the Exchanged Shares
being issued to Shareholder hereunder will be issued by AETHLON without
registration or qualification or other filings being made under the Act, or the
securities or "blue sky" laws of any state, in reliance upon specific exemptions
therefrom, and in furtherance thereof Shareholder represents that he is
acquiring and will hold the shares to be delivered hereunder for his own
account, for investment only, and not for distribution within the meaning of the
U.S. federal securities laws. Shareholder acknowledges that a legend,
substantially in the following form, shall be placed upon the face of each
certificate representing any of AETHLON Shares being delivered to Shareholder
hereunder:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), ARE RESTRICTED SECURITIES, AND NO
OFFER, SALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE OR THE SECURITIES REPRESENTED HEREBY, OR OF ANY
INTEREST HEREIN, MAY BE MADE WITHOUT SUCH REGISTRATION
UNLESS, IN THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY,
AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE.
ARTICLE VI
MISCELLANEOUS
6.1 TAXES AND EXPENSES.
6.1.1 Except as otherwise expressly provided in 6.1.2 immediately
below, each of AETHLON and SYNGEN shall pay all of their own respective taxes
Page 24
due prior to the Closing, attorneys' fees and other costs and expenses payable
in connection with or as a result of the transactions contemplated hereby and
the performance and compliance with all agreements and conditions contained in
this Agreement respectively to be performed or observed by each of them. The
parties represent and warrant that no brokerage, finders' or other similar fees
are being paid by any of the parties in connection with this Agreement.
6.1.2 The representations and warranties of SYNGEN, Shareholder, and
AETHLON contained herein and in any other document or instrument delivered by or
on behalf of SYNGEN and/or Shareholder or on behalf of AETHLON pursuant hereto,
as such may be qualified in Exhibits "G" or "J," respectively, shall survive the
Closing and any investigations made by or on behalf of AETHLON made prior to the
Closing, and shall remain in full force and effect for a period of two full
years from the date of the Closing the ("Warranty Period"), and thereupon
expire.
6.2 OTHER DOCUMENTS. Each of the parties hereto shall execute and deliver
such other and further documents and instruments, and take such other and
further actions, as may be reasonably requested of them for the implementation
and consummation of this Agreement and the transactions herein contemplated.
6.3 PARTIES IN INTEREST. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, the heirs, personal representatives,
successors and assigns of AETHLON, Shareholder, and SYNGEN, but shall not
confer, expressly or by implication, any rights or remedies upon any other
party.
6.4 GOVERNING LAW. This Agreement is made and shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware.
6.5 NOTICES. Any notice or the delivery of any item to be delivered by a
party hereto shall be delivered personally, by U.S. mail, return receipt
requested, or by Federal Express, next-day delivery. Any personal delivery made
shall be deemed to have been made upon the execution of a receipt for the item
to be delivered by the party to whom delivery is made. Delivery by U.S. mail or
Federal Express shall be deemed to have been made when delivered by Federal
Express to the party to
Page 25
whom addressed. All such deliveries shall be made to the following addresses, or
such other addresses as the parties may have instructed the others in accordance
with the provisions of this Paragraph:
(a) If to AETHLON: XXXXXX EQUITIES, INC. DBA AETHLON
MEDICAL
0000 Xxx Xxxxxx, Xxxxx 000
Xx Xxxxx, XX 00000
With copies to: Xxxxx X. Xxxxxxx, Esq.
Xxxxxx, Xxxxxxx & Xxxxxxx
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
(b) If to SYNGEN
or Shareholder: SYNGEN RESEARCH, INC.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 0X
Xxx Xxxxx, XX 00000
Attention: President
With copies to: Xxxxxxx X. Xxxxxxxxxx, Esq.
Fox, O'Neil & Xxxxxxx
000 X. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Any party hereto may change its address by written notice to the other party
given in accordance with this Section 6.5.
6.6 ENTIRE AGREEMENT. This Agreement and the exhibits attached hereto
contains the entire agreement between the parties and supersede all prior
agreements, understandings and writings between the parties with respect to the
subject matter hereof and thereof. Each party hereto acknowledges that no
representations, inducements, promises or agreements, oral or otherwise, have
been made by any party, or anyone acting with authority on behalf of any party,
which are not embodied herein or in an exhibit hereto, and that no other
agreement, statement or promise may be relied upon or shall be valid or binding.
Neither this Agreement nor any term hereof may be changed, waived, discharged or
terminated orally. This Agreement may be amended or any term hereof may be
changed, waived, discharged or terminated by an agreement in writing signed by
AETHLON, SYNGEN, and Shareholder.
Page 26
6.7 SEVERABILITY. If any provision of this Agreement is determined to be
invalid, illegal or unenforceable by any court, department, official, political
subdivision, agency or other instrumentality of any government, whether state,
local or federal, the remaining provisions of this Agreement to the extent
permitted by law shall remain in full force and effect. To the extent permitted
by law, the parties hereto waive any provision of law that renders any provision
hereof invalid or unenforceable in any respect.
6.8 HEADINGS. The captions and headings used herein are for convenience
only and shall not be construed as a part of this Agreement.
6.9 ATTORNEYS' FEES. In the event of any litigation between AETHLON and
SYNGEN, the non-prevailing party shall pay the reasonable expenses, including
the attorneys' fees, of the prevailing party in connection therewith.
6.10 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which taken together shall
constitute but one and the same document.
6.11 GENDER. Whenever the content of this Agreement requires, the masculine
gender shall include the feminine or neuter, and the singular number shall
include the plural.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
XXXXXX EQUITIES, INC. SYNGEN RESEARCH, INC.
DBA AETHLON MEDICAL a California corporation
a Nevada corporation
By: By:
------------------------------ ------------------------------
XXXXX X. XXXXX, XXXXXXX X. XXXXXX, President
Chairman of the Board
SHAREHOLDER:
---------------------------------
XXXXXXX X. XXXXXX
Page 27
