<PAGE> 1
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
HyperBaric Systems
(Name of Small Business Issuer in its charter)
California 77-0481056
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1127 Harker Avenue, Palo Alto, CA 94301
(Address of principal executive offices)
650-323-0943
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
NONE
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of Class)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PRELIMINARY STATEMENT........................................................................1
PART 1.......................................................................................1
ITEM 1. DESCRIPTION OF BUSINESS..............................................................1
Business Development.....................................................................1
(1) Form and year of organization....................................................1
(2) Any bankruptcy, receivership or similar proceeding...............................2
(3) Status of any publicly announced new product or service..........................2
(4) Competitive business conditions..................................................2
(5) Sources and availability of raw materials........................................3
(6) Dependence on one or a few major customers.......................................3
(7) Patents and trademarks...........................................................3
(8) Need for any government approval.................................................3
(9) Effect of existing or probable governmental regulations on the business..........4
(10) Estimate of the amount spent on research and development activities..............4
(11) Costs and effects of compliance with environmental laws..........................4
(12) Employees........................................................................4
Reports to Securities Holders............................................................4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION............................4
Overview.................................................................................4
Liquidity and capital resources..........................................................5
Going Concern............................................................................5
Development plan.........................................................................6
Intellectual property....................................................................7
Plant and Significant Equipment Requirements:............................................7
Changes in the Number of Employees.......................................................7
ITEM 3. DESCRIPTION OF PROPERTY.............................................................7
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......................7
Security ownership of certain beneficial owners..........................................8
Security ownership of management.........................................................9
ITEM 5: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS........................10
ITEM 6: EXECUTIVE COMPENSATION..............................................................12
ITEM 7: CERTAIN TRANSACTIONS AND RELATED TRANSACTIONS.......................................13
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Transactions between the Company and management.........................................13
ITEM 8: DESCRIPTION OF SECURITIES...........................................................17
Common Stock............................................................................17
The Warrants............................................................................17
Cumulative Voting.......................................................................17
Dividends...............................................................................17
Transfer Agent..........................................................................18
PART II.....................................................................................18
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.................................................................18
ITEM 2. LEGAL PROCEEDINGS...................................................................19
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.......................................19
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.............................................19
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS...........................................22
PART F/S....................................................................................23
ITEM 1. FINANCIAL STATEMENTS...............................................................23
ITEM 2. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.........................................................................23
PART III....................................................................................46
ITEM 1. EXHIBIT INDEX......................................................................46
</TABLE>
ii
<PAGE> 4
PRELIMINARY STATEMENT
HyperBaric Systems (the "Company") is filing this registration statement
on a voluntary basis under Section 12(g) of the Securities Exchange Act of 1934.
Our common stock trades in the over-the-counter market and is quoted by NASD
market makers on the OTC Bulletin Board. A recent rule change requires that all
companies whose securities are approved for quotation on the OTC Bulletin Board
must file periodic financial reports with governmental authorities such as the
Securities and Exchange Commission. The effectiveness of this registration
statement subjects the Company to the periodic reporting requirements imposed by
Section 13(a) of the Securities Exchange Act.
PART 1
ITEM 1. DESCRIPTION OF BUSINESS
Certain statements in this Form 10-SB, particularly under Items 1 and 2,
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
involve known and unknown risks, uncertainties, and other factors that may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements, expressed or
implied by the forward-looking statements.
BUSINESS DEVELOPMENT
(1) Form and year of organization
The Company was incorporated on February 26, 1998, in the State of
California, by the filing of Articles of Incorporation. The articles of the
Company authorized the issuance of fifty million (50,000,000) shares of common
stock.
We established a branch office in Krasnoyarsk, Russia with approval from
the Russian Federation, on August 25, 1998. Initial non-clinical tests and other
research and development activities are being conducted and production of the
prototype and pre-production units is under sub-contract at our branch located
there. Krasnoyarsk is where the inventor currently resides.
We are a developmental stage company whose principal business objective
is to develop and provide economical, non-toxic methods of biological material
preservation to the market place. We have not realized any operating revenues.
We have been entirely dependent upon cash flow from private placements.
1
<PAGE> 5
(2) Any bankruptcy, receivership or similar proceeding
We are not and never have been in bankruptcy, receivership or any other
similar proceedings.
(3) Status of any publicly announced new product or service
We are in development of our PlexLife System, which is a proprietary
technology for preserving platelets (a blood component), heart valves, tissues
and organs such as kidneys, hearts, livers, and lungs. We believe that our
technology represents a breakthrough in the storage and preservation of living
biological materials that promises to reduce the waste inherent in current
technologies, while simultaneously increasing the worldwide availability of
precious biological materials needed to save human lives. If the technology is
proven through further testing and granted Federal Drug Administration approval,
it should be considered unique and revolutionary in its ability to extend and
maintain functionality of these materials for much longer periods of time than
is currently possible. We are targeting blood banks, hospitals and tissue and
organ banks as our main customers in the worldwide markets.
On September 1, 1998, we entered into a purchase agreement with Paul
Okimoto, an officer and director of the Company, acquiring all rights to a
disposable venereal disease test device called Phemtest, for which Mr. Okimoto
owned the patents.
(4) Competitive business conditions
As a development stage company, we are entering the biological material
preservation market presently dominated by large companies. We have limited
funds with which to develop methodologies in comparison to a number of
established entities. These entities are active in research and development of
biological material preservation, and we do not know the current status of their
development efforts. Nearly all such entities have significantly greater
financial resources, technical expertise and managerial capabilities than we
and, consequently, we will be at a competitive disadvantage.
Since our approach to biological material preservation is non-toxic and
inexpensive we believe it will provide us with a competitive advantage. It is
our plan to market our products through well-established distribution channels
currently supplying the market.
2
<PAGE> 6
(5) Sources and availability of raw materials
As we are in the development stage of operations, our products have not
been developed to a level where raw materials and suppliers can be identified.
We are constantly reviewing the materials used in the development process, with
particular attention to availability and future cost. We cannot currently
anticipate what the availability of materials and suppliers will be at the time
our products enter production.
(6) Dependence on one or a few major customers
As we are in the development stage of operations, we currently have no
customers and dependency on particular customers cannot be anticipated at this
time.
(7) Patents and trademarks
On June 1, 1998, we were assigned the entire worldwide right, title and
interest in a preservation technology applicable to, but not limited to
platelets (a blood component), red blood cells, heart valves, tissue and organs.
This technology concerned all of the discoveries, concepts and ideas whether
patentable or not, invented and developed by Messrs. Leonid Babak and Vladimir
Serebrennikov, and was in exchange for 877,500 shares of common stock issued to
each. Messrs. Babak and Serebrennikov are employees of our branch operation and
stockholders of the Company. We applied for an U.S. Patent on October 31, 1998,
which covers the hardware design of the container, preservation methodologies
and processes. A continuation-in-part (CIP) was filed in February of 1999
covering our solutions and other preservation methodologies. We have filed an
international application with the Patent Cooperation Treaty based on our U.S.
patent application, designating all countries and regions. It is management's
and counsel's beliefs that the patent and its extensions will protect the
current core technology and provide the Company with a long-term competitive
advantage in the market.
We purchased the patents for a product titled Phemtest from Paul
Okimoto, an officer and director, on September 1, 1998. The patents "VENEREAL
TESTING APPLICATOR AND METHOD", Patent Number 4,784,158, was issued November 15,
1988, and "BODY CAVITY SPECIMEN COLLECTING AND TESTING APPARATUS", Patent Number
4,945,921, was issued August 7, 1990.
(8) Need for any government approval
The Food and Drug Administration ("FDA") and the European Union ("EU")
have regulations for the marketability of medical solutions and equipment. We
have not developed our products to the level where these approval processes can
be started.
3
<PAGE> 7
(9) Effect of existing or probable governmental regulations on the business
The FDA additionally, has established regulations on the operations of
companies offering products or services in the medical market place. Therefore,
there may be additional significant operating expenses for entering and
establishing an operation in the medical market place.
(10) Estimate of the amount spent on research and development activities
From inception through September 31, 1999, our accumulated deficit is
$709,700, of which $240,200 has been a spent on research and development
activity
(11) Costs and effects of compliance with environmental laws
We have not incurred any costs in connection with compliance with
environmental laws. We are unable to anticipate future costs or effects, as the
Company is early in its development stage.
(12) Employees
The Company presently has seventeen (17) full time employees, 6 in the
U.S. and 11 in Russia. The Company's employees are currently not represented by
a collective bargaining agreement, and the Company believes that its relations
with its employees are good.
REPORTS TO SECURITIES HOLDERS
We intend to (i) send an annual report, including audited financial
statements to each holder of shares of our common stock, and (ii) file regular
annual and quarterly reports with the Securities and Exchange Commission.
Additionally, you can read and copy any and all such reports at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site at "www.sec.gov" that
contains reports, proxy and information statements, and other information
regarding us and other issuers.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
We have a very limited operating history and have no revenue to date.
Our prospects must be considered in light of the risks and uncertainties
encountered by
4
<PAGE> 8
companies in an early stage of development involving new technologies and
overcoming regulatory approval process requirements before any revenue is
possible.
We have experienced operating losses since our inception. These losses
resulted from the significant costs incurred in the development of the
technology and the establishment of our research and development facility.
Expenditures will increase in all areas in order to execute our business plan,
particularly in research and development and in gaining regulatory approval to
market our products in the U.S. and abroad.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have financed our operations through financing
from the founders and private investors, a public offering under Regulation D,
Rule 504 and private placements under Regulation D, Rule 506.
We anticipate a significant growth in operations and that operating
expenses and capital expenditures will constitute a material use of our cash
resources. The success of the company is dependent on funding from private
placements. We believe that the net proceeds of a private placement currently in
process will be sufficient to meet anticipated cash requirements for working
capital and capital expenditures for 9 months if the full amount of the offering
is raised, although there is no assurance that the full amount will, in fact, be
received. Following the completion of this offering we may seek additional funds
through other offerings of debt or equity securities, which could result in
additional dilution to stockholders.
GOING CONCERN
We are in the second year of research and development, with an accumulated loss
during the development stage of $709,700. As of September 30, 1999 we are
uncertain as to the completion date or if a product will be completed at all.
We may not be able to secure funding, in the future, necessary to complete the
research and development of the medical technology.
If we lose key personnel or are unable to attract and retain additional
qualified personnel we may not be able to successfully manage the business and
achieve our objectives.
These conditions give rise to substantial doubt about our ability to continue as
a going concern. Our continuation as a going concern is dependent upon our
ability to obtain additional financing or sale of our common stock as may be
required and ultimately to attain profitability.
The Report of Independent Certified Public Accountants contains an emphasis
paragraph regarding the Company's ability to continue as a going concern.
5
<PAGE> 9
DEVELOPMENT PLAN
We have engaged Quintiles, Inc., an international regulatory consulting
firm, to assist with planning and managing the regulatory approval process. This
firm specializes in the design and implementation of regulatory strategies
including experiment design and monitoring.
As an overall strategy, we intend to limit the system claims and to
progressively expand them as FDA and/or EU approval is granted for each
succeeding claim. We believe that this should provide a shorter time to market.
Development Phases
We have developed a 3-phase development strategy that considers FDA and
international approval processes.
- Phase 1 Platelet Preservation - Solution Only The plan starts
with a platelet preservation product using the PlexLife solution
by itself. A solution development process is underway with the
planned outcome of platelets that can be stored under
refrigeration for a period greater than 7 days. These platelets
are to be strong viable platelets with little or no bacterial
growth. Currently the industry stores platelets at ambient
temperature for a maximum of 5 days, a FDA imposed limit due to
historic bacterial infection of the platelets.
- Phase 2 Platelet Preservation - Complete PlexLife System This
phase of development is to result in longer storage times for
platelets. The development will combine the use of solutions,
sub-zero temperature and high pressure. It is our goal to
develop a storage method that will preserve the viability of
platelets with little or no bacterial growth for a period
greater than 13 days. This will provide the medical community
with a new and economical method for long-term platelet storage
thereby reducing the current loss of product.
- Phase 3 Organs and Heart Valves The third phase will incorporate
storage of organs and heart valves. This development will
involve experiments with animal organs to demonstrate our
ability to harvest, store and transplant organs. The goal is to
achieve a level of physical condition and viability of these
organs that is equal to or superior to present storage methods
and storage times. The development process includes the
development of solutions, chambers and cooling methods. As the
development experiments are proven to be successful, higher life
forms will be involved, until the goal of human organ and heart
valve preservation is obtained.
Governmental approval for human testing will be required for each of these three
phases of development. Our plan is to obtain the necessary approvals for each
stage.
6
<PAGE> 10
INTELLECTUAL PROPERTY
We consider our intellectual property a key cornerstone and asset of our
business. As such, the intellectual property, which consists of applied-for
patents, trade secrets, copyrights and know-how will be both developed and
protected as a primary goal of the company. We plan to gain wide protection for
our intellectual property worldwide by patent and trademark filings in major
foreign markets as well as the careful protection of trade secrets through
contract and procedure.
We applied for a U.S. Patent on October 31, 1998, which covers the
hardware design of the container, preservation methodologies and processes. A
continuation-in-part (CIP) was filed in February of 1999 covering our solutions
and other preservation methodologies. It is management's, and counsel's belief
that the patent and its extensions will protect the current core technology and
provide the company with a long-term competitive advantage in the market.
We filed the patent internationally, and additional patents will be
filed as technology improvements are developed.
PLANT AND SIGNIFICANT EQUIPMENT REQUIREMENTS:
We do not expect to purchase any plant or significant equipment. Our
plan is to rent or lease facilities and any significant equipment necessary
during our development stage.
CHANGES IN THE NUMBER OF EMPLOYEES
We anticipate hat the growth of the company will require the addition of
several employees. We anticipate the number of employees will grow from our
present level of 17 employees to as many as 90 employees by the end of the year
2000. The addition of employees will be made on an as required basis.
ITEM 3. DESCRIPTION OF PROPERTY
The Company owns no real property and has no interest in any real property. We
have not yet entered into a lease on facilities in the United States. Our
principal address as reported herein is the residence of one of our employees.
Although the real estate leasehold market in California is highly competitive,
we believe that, as we require facilities in California we will be able to find
such available facilities at a reasonable cost.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
7
<PAGE> 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the outstanding shares of common stock of
the Company owned of record or beneficially by each person who owned of record,
or was known by the Company to own beneficially, more than 5% of the Company's
common stock on September 30, 1999. All of the per share numbers are calculated
to include the effect of a split of 1 share into 4 shares, effective July 21,
1998 (the "Split"). The company is in the process of a private placement
offering and has included the current effect of such offering on ownership in
the following tables.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
PERCENT ASSUMING
PRINCIPAL SHAREHOLDER'S NAME AND NUMBER OF SHARES PERCENT PRIOR TO ALL SHARES OFFERED
ADDRESS OWNED(1) OFFERING(2) ARE SOLD(2)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Harry Masuda(3) 920,300(5) 12.8% 10.0%
1127 Harker Avenue
Palo Alto, CA 94301
YN Faarkaghyn Shiaght Lorne 917,500 12.8% 10.0%
House Trust Limited(4)
669 35th Street
Richmond, CA 94805
Leonid Babak
31 Apt. 16 Novaja Zarja St. 877,500 12.2% 9.6%
Krasnoyarsk, Russia 66028
Vladimir Serebrennikov 877,500 12.2% 9.6%
1A Apt 53 Academgorodok
Krasnoyarsk, Russia 66036
Max C. Tanner 600,000 8.3% 6.5%
2950 E. Flamingo Rd., Suite G
Las Vegas, NV 89121
- --------------------------------------------------------------------------------------------
</TABLE>
(1) Restricted stock. Reflects July 1998 one to four stock split.
(2) Assumes exercise of options to purchase an aggregate of
1,052,500 shares of restricted common stock at prices ranging
from $0.01 to $0.50 per share, expiring on dates ranging from
5/9/03 to 7/5/04. Does not assume the exercise of warrants to
purchase an aggregate of 100,000 shares of restricted common
stock at $0.375 per share, expiring on dates ranging
8
<PAGE> 12
from 3/24/00 to 6/15/00, nor the warrants issuable in connection
with the September 1999 to present offering.
(3) An officer and/or director of the Company.
(4) Paul Okimoto, an officer and director of the Company, is Trustee
for YN Faarkaghyn Shiaght Lorne House Trust Limited, for the
benefit of Mark Tameichi Okimoto, Michael Akira Okimoto, Eric
Yoshiro Okimoto, Daryl Takashi Okimoto, Mary T. Hernandez and
Betty Yamaguchi.
(5) Includes Mr. Masuda's purchase of 2,800 shares on September 8,
1998.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the outstanding shares of common stock of
the Company owned of record or beneficially by each officer and director of the
Company on September 30, 1999 and by all officers and directors as a group.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
PERCENT ASSUMING
PRINCIPAL SHAREHOLDER'S NAME AND NUMBER OF SHARES PERCENT PRIOR TO ALL SHARES OFFERED
ADDRESS OWNED(1) OFFERING(2) ARE SOLD
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Harry Masuda(3) 920,300(6) 12.8% 10.0%
1127 Harker Avenue
Palo Alto, CA 94301
YN Faarkaghyn Shiaght Lorne(4) 917,500 12.8% 10.0%
House Trust Limited
669 35th Street
Richmond, CA 94805
George Tsukuda(3) 173,600(5) 2.4% 1.9%
3729 McBeth Drive
San Jose, CA 95127
Leonid Babak 877,500 12.2% 9.6%
31 Apt. 16 Novaja Zarja St
Krasnoyarsk, Russia 66028
Vladimir Serebrennikov 877,500 12.2% 9.6%
1A Apt 53 Academgorodok
Krasnoyarsk, Russia 66036
</TABLE>
9
<PAGE> 13
<TABLE>
<S> <C> <C> <C>
Victor Ivashin 320,000 4.5% 3.5%
3645 Midway Drive
Santa Rosa, CA 95405
All Officers and Directors
as a Group (4 persons) 2,008,600(6) 28.0% 21.9%
- --------------------------------------------------------------------------------------------
</TABLE>
(1) Restricted stock, reflects the July 1998 one to four stock
split.
(2) Assumes exercise of options to purchase an aggregate of
1,052,500 shares of restricted common stock at prices ranging
from $0.01 to $0.50 per share, expiring on dates ranging from
5/9/03 to 7/5/04. Does not assume the exercise of warrants to
purchase an aggregate of 100,000 shares of restricted common
stock at $0.375 per share, expiring on dates ranging from
3/24/00 to 6/15/00, nor the Warrants issuable in connection with
this Offering.
(3) An officer and/or director of the Company.
(4) Paul Okimoto, an officer and director of the Company, is Trustee
for YN Faarkaghyn Shiaght Lorne House Trust Limited, for the
benefit of Mark Tameichi Okimoto, Michael Akira Okimoto, Eric
Yoshiro Okimoto, Daryl Takashi Okimoto, Mary T. Hernandez and
Betty Yamaguchi.
(5) Assumes the exercise of options to purchase 20,000 shares of
restricted common stock at $.025 per share, expiring on 7/9/03.
Does not assume the exercise of warrants to purchase 50,000
shares of restricted common stock at $0.375 per share, expiring
on 3/24/00.
(6) Includes Mr. Masuda's purchase of 2,800 shares on September 8,
1998.
ITEM 5: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The names, addresses, ages and respective positions of the current
Directors and Officers of HyperBaric Systems are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Name AGE POSITION
- -------------------------------------------------------------------------------
<S> <C> <C>
Harry Masuda 55 President, Chief Executive
Officer, and a Director
Paul Okimoto 64 Chairman of the Board and
Executive Vice President
</TABLE>
10
<PAGE> 14
<TABLE>
<S> <C> <C>
Ardeth Sealy 52 Chief Financial Officer,
Secretary
Rocky Umar 60 Vice President, Marketing
Larry Bryant 55 Vice President, Business
Development
Dr. David Lucas 57 Scientific Director
George Tsukuda 55 Director
</TABLE>
HARRY MASUDA, age 55, joined the Company on February 26 1998, as the
Chief Executive Officer, President, and a Director of the Company. Mr. Masuda is
the former president of several high tech companies including Piiceon, Inc., a
manufacturer of computer peripheral products for microcomputers. Mr. Masuda
also founded HK Microwave; a manufacturer of high frequency phase locked
oscillators used in cellular telephone base stations, later acquired by Dynatech
Corporation. Mr. Masuda received his BSEE and MSEE from San Jose State
University.
PAUL OKIMOTO, age 64, joined the Company on February 26 1998, as
Executive Vice President and a director of the Company. Mr. Okimoto has received
several patents related to medical devices.
ARDETH SEALY, age 52, joined the Company on January 1 1999, as the Chief
Financial Officer and Secretary of the Company. Mr. Sealy was formerly the Vice
President of Finance and Administration for several Dynatech Corporation
subsidiaries and for Capsco Sales, an electronic component distributor.
ROCKY UMAR, age 60, joined the Company on May 10, 1998, as Vice
President of Marketing of the Company. Mr. Umar served as Senior Executive for
Product Management, Marketing and Sales at Cogar Corporation, and was
responsible for acquisitions, marketing and sales, and planning for Singer
Company, Business Machines Division. Mr. Umar was also CEO of Witek, Inc. a
wireless technology company.
LARRY BRYANT, age 55, joined the Company on August 9, 1999, as Vice
President, Business Development. Mr. Bryant was Chief Strategic Officer of
Surgica, a medical device company, and served as Chief Strategic Officer and
Director of Investor Relations for Intracom.
DR. DAVID LUCAS, Ph.D., age 57, joined the Company on January 1, 1999,
as Scientific Director, obtained BA and Ph.D. degrees at Duke University and did
11
<PAGE> 15
postdoctoral work at Harvard Medical Center. His doctoral degree is in
Microbiology and Immunology. He was a faculty member at the University of
Arizona for 16 years where he taught medical students and graduate students.
Previous industry positions were as Director of Research for American Qualex, an
immunochemicals company; Vice President of Protein Technology, where he
developed veterinary biologic products; Vice President for Research and
Technology Transfer at Children's Hospital Oakland; and President of PediaPharm
Corporation, a development stage pharmaceutical products company.
GEORGE TSUKUDA, age 55, joined the Company on February 26 1998, a
director of the Company. Mr. Tsukuda was self-employed as a psychotherapist
working primarily with children doing play therapy. Since terminating his
practice, he has worked full-time on completing his doctoral dissertation in
clinical social work through Smith College School of Social Work in
Northhampton, Massachusetts. Mr. Tsukuda received his Ph.D. in August of 1998.
The members of the executive staff have not been in bankruptcies, had criminal
convictions, had securities bars, nor have they been barred from business
activities by a court.
ITEM 6: EXECUTIVE COMPENSATION
Our first year of operation ended December 31, 1998. As a start-up
company, executive compensation has been limited. No executive officer has
received compensation in an amount equal to or in excess of $100,000. Executive
officers did not receive any bonus amounts. All non-employee directors of the
Company do not receive compensation, but are reimbursed for direct expenses
related to their duties.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------
Long Term Compensation
- ------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ------------------------------------------------------------------------------------------------
Other Restricted Securities
Name and Annual Stock Underlying LTIP All Other
Principal Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. Masuda 1998 $28,000 $0 $0 N/A N/A N/A N/A
CEO, Pres.
- ------------------------------------------------------------------------------------------------
R. Umar 1998 $21,000 $0 $0 N/A 200,000 N/A N/A
VP Mkt'g
- ------------------------------------------------------------------------------------------------
A. Sealy 1998 $ 0 $0 $0 N/A 90,000 N/A N/A
CFO, Secty
- ------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 16
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- ------------------------------------------------------------------------------------------------
Individual Grants
- ------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
- ------------------------------------------------------------------------------------------------
Name Number of Securities % of Total Options/SARs Exercise or Expiration
Underlying Options/SARs Granted to Employees in Fiscal Base Price Date
Granted (#) Year ($/Sh)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CEO 0 0 0 N/A
- ------------------------------------------------------------------------------------------------
R. Umar 200,000 19 % $0.025 5/9/03
VP Mkt'g
- ------------------------------------------------------------------------------------------------
A. Sealy 40,000 3.8% $0.025 6/15/03
CFO, Secty
- ------------------------------------------------------------------------------------------------
A. Sealy 50,000 4.8% $0.25 11/06/03
CFO, Secty
- ------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
- -------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------------------------------------
Number of Securities Underlying Value of Unexercised In-the
Shares Value Unexercised Options/SARs at Money Options/SARs at FY-End
Acquired on Realized FY-End (#) ($)
Name Exercise(#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NO EXERCISES
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------------------------
Estimated Future Payouts Under
Non-Stock Priced-Based Plans
- -------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
- -------------------------------------------------------------------------------------------------
Number of Shares,
Units or Other Performance or Other Period Threshold Target Maximum
Name Rights (#) Until Maturation or Payout ($ or #) ($ or #) ($ or #)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NO AWARDS
- -------------------------------------------------------------------------------------------------
</TABLE>
ITEM 7: CERTAIN TRANSACTIONS AND RELATED TRANSACTIONS
TRANSACTIONS BETWEEN THE COMPANY AND MANAGEMENT
Certain initial shareholders of the Company were issued an aggregate of
4,371,600 shares of restricted common stock, valued at an aggregate of $78,645.
These initial shares of restricted common stock were issued as follows:
13
<PAGE> 17
<TABLE>
<CAPTION>
SHAREHOLDER SHARES
- ----------- -------
<S> <C>
Harry Masuda(1) 917,500
YN Faarkaghyn Shiaght Lorne House Trust Limited(2) 917,500
George Tsukuda(3) 153,600
Leonid Babak(4) 877,500
Vladimir Serebrennikov(5) 877,500
Victor Ivashin(6) 320,000
Natalia Lazouto(7) 88,000
John Webley(8) 80,000
</TABLE>
(1) Mr. Masuda, an officer and director of the Company, was issued 877,500
shares, valued at $0.0025 per share, for services rendered, February 26,
1998. Mr. Masuda paid $0.25 per share for additional 40,000 shares, July
18, 1998.
(2) Paul Okimoto, an officer and director of the Company, is Trustee for YN
Faarkaghyn Shiaght Lorne House Trust Limited, for the benefit of Mark
Tameichi Okimoto, Michael Akira Okimoto, Eric Yoshiro Okimoto, Daryl
Takashi Okimoto, Mary T. Hernandez and Betty Yamaguchi, was issued
877,500 shares, valued at $0.0025 per share, for services rendered,
which shares are held in this trust, February 26, 1998. Mary T.
Hernandez, and Betty Yamaguchi, were each issued 20,000 shares, valued
at $0.0025 per share, for services rendered, which shares are held in
this trust, February 26, 1998, a transfer to the trust was made in
September 1998.
(3) Mr. Tsukuda, a director of the Company, was issued 60,000 shares, valued
at $0.0025 per share, for services rendered, February 26, 1998. Mr.
Tsukuda paid $.25 per share for an additional 60,000 shares, April 6,
1998. For his investment of $15,000, Mr. Tsukuda was issued a warrant to
purchase 50,000 shares of restricted common stock of the Company at
$0.375 per share, expiring March 24, 2000. He purchased 9,600 shares at
a price of $0.25 per share on July 17, 1998 and 64,000 at $0.25 on July
18, 1998.
(3) Mr. Babak was issued 877,500 shares, valued at $0.0025 per share, for
services rendered, February 26, 1998.
(5) Mr. Serebrennikov was issued 877,500 shares, valued at $0.0025 per
share, for services rendered, February 26, 1998.
(4) Mr. Ivashin was issued 320,000 shares, valued at $0.0025 per share, for
services rendered, February 26, 1998.
14
<PAGE> 18
(7) Ms. Lazouto was issued 88,000 shares, valued at $0.0025 per share, for
services rendered, February 26, 1998.
(8) Mr. Webley was issued 80,000 shares, valued at $0.0025 per share, for
services rendered.
The Company issued the following options to purchase an aggregate of
1,052,500 shares of restricted common stock at an exercise price of $0.01 to
$.50 per share, market value at date of grant, to the following individuals.
<TABLE>
<CAPTION>
OPTION HOLDER NUMBER OF SHARES GRANT DATE EXPIRATION DATE
- ------------- ---------------- ---------- ---------------
<S> <C> <C> <C>
Rocky Umar (1) 200,000 7/21/98 5/09/03
Luis Toledo(2) 200,000 7/21/98 5/27/03
Ardeth Sealy (1) 40,000 7/21/98 6/15/03
50,000 11/27/98 11/26/03
60,000 6/25/99 6/24/04
David Lucas 75,000 1/1/99 12/31/03
75,000 6/25/99 6/24/04
Eric Slayton 40,000 7/21/98 6/23/03
Vince Yalon 40,000 7/21/98 6/24/03
Mike Strong 40,000 10/1/98 9/30/03
Group of 13 Individuals 232,500 7/21/98 to 7/21/03 to
7/5/99 7/5/04
</TABLE>
(1) An officer and/or director of the Company.
(2) Dr. Toledo is an internationally recognized authority on organ
transplantation and preservation. He is currently a director of the
Michigan Transplant Institute and sits on BioPreserve's Advisory Board
as well as the Company's Advisory Board.
On July 21, 1998, we completed a one into four stock split.
On July 21, 1998, we issued to Max C. Tanner, counsel to the Company,
600,000 shares at $0.25 per share for services rendered and cash for an
aggregate amount of $150,000.
On June 1, 1998, we entered into an Employment Agreement with Vladimir
Serebrennikov, an affiliate of the Company, whereby Mr. Serebrennikov is
employed as the Technical Director of Preservation Systems for a minimum
one-year term. The Company pays Mr. Serebrennikov $400 per month, which salary
may be adjusted, with a bonus of $25,000 upon the successful completion of
project milestones according to the Employment Agreement. On June 1, 1998, the
Company also entered into an Agreement of Assignment of Patent and Technology
with Mr. Serebrennikov. Mr. Serebrennikov assigned to the Company the entire
worldwide right, title and interest in and to Mr. Serebrennikov's invention of
technology for preserving and transporting biologic and
15
<PAGE> 19
non-biologic material and in and to all of the discoveries, concepts and ideas
whether patentable or not. Pursuant to this Agreement on Assignment of Patent
and Technology, Mr. Serebrennikov received 877,500 shares of the Company's
restricted common stock, as stated above.
On May 28, 1998, we entered into a Consultant Agreement with Dr. Luis
Toledo, whereby Dr. Toledo was appointed to the Company's advisory board and is
a consultant for a minimum term of one year. Also pursuant to the Agreement, the
Company pays Dr. Toledo a commission equal to 5% of all sales within the organ
transplant market for a five-year period from the date of the agreement, so long
as Dr. Toledo remains a consultant and advisory board member. Such commission is
limited to a total of $1,000,000. Further, Dr. Toledo has been granted options
to purchase 200,000 shares of restricted common stock of the Company at $.025
per share pursuant to a Stock Option Plan. Further, Dr. Toledo is eligible for a
bonus of up to $5,000 after the first year as a consultant and advisory board
member up to the expiration of the stock options for the sole purpose of
exercising the stock options.
On June 24, 1998, we invited Eric Slayton, President of Global
Healthcare, to be a member of the advisory board. The Company has granted to Mr.
Slayton an option to purchase 40,000 shares of restricted common stock of the
Company at $.025 per share pursuant to a Non-Statutory Incentive Stock Option
Plan.
On September 1, 1998 we entered into a purchase agreement with Paul
Okimoto, an officer and director of the Company, acquiring all rights to a
disposable venereal disease test device called Phemtest, for which Mr. Okimoto
owned the patent. The Company paid to the law firm of Flehr, Hohbach, Test and
Herbert, $1,375 for the patent maintenance fee, and has also agreed to pay Mr.
Okimoto a royalty payment of 5% of gross sales of Phemtest for the next five
years. Mr. Okimoto has directed the Company to pay the law firm of Flehr,
Hohbach, Test and Herbert the first $16,000, his personal liability, of
royalties earned. Mr. Okimoto has agreed to subordinate his royalty payments
until we pay the law firm this amount in full on his behalf out of royalty funds
earned.
September 8, 1998, we sold 1,000,000 common shares, raising $239,400
under Regulation D, Section 504, a public offering. On September 17, 1998, we
filed information to conform to Rule 15c2-11(a)(5) of the Securities Exchange
Act of 1934, as amended.
From August 1 through October 6, 1999, Mr. Masuda loaned the company
$24,200. Mr. Tsukuda has loaned the Company $5,000 during the same period. The
loans are due during November 1999, and are scheduled to be re-paid with a 10%
annual interest rate. Mr. Tsukuda received a warrant to purchase 2,500 shares of
common stock at a price of $1.50; the warrant expires August 31, 2001.
16
<PAGE> 20
ITEM 8: DESCRIPTION OF SECURITIES
COMMON STOCK
The authorized capital stock of the Company consists of 50,000,000
shares of common stock, no par value per share. The holders of common stock (i)
have equal ratable rights to dividends from funds legally available therefore,
when, as and if declared by the Board of Directors of the Company; (ii) are
entitled to share ratably in all of the assets of the Company available for
distribution or winding up of the affairs of the Company; (iii) do not have
preemptive subscription or conversion rights and there are no redemption rights
applicable thereto; and (iv) are entitled to cumulative voting on all matters
which shareholders may vote on at all meetings of shareholders.
THE WARRANTS
We have issued warrants to purchase common stock in exchange for
services, in connections with loan agreements or under terms of sale of common
stock. Individuals purchased common shares and received warrants priced at
$0.375 per share that expire on or before July 15, 2000. We issued warrants to
provide incentives to a service provider and to received favorable payment terms
which is exercisable at $1.50 per share and that expires on September 21, 2004.
Under the terms of our current offering, for every two shares of common stock
purchased by an investor, the investor will receive a warrant to purchase one
share of common stock exercisable at $2.50 per share until January 1, 2002.
CUMULATIVE VOTING
The holders of shares of common stock of the Company have cumulative
voting rights pursuant to California General Corporation Law. Upon the effective
election of cumulative voting by any shareholder, each shareholder entitled to
vote at any election of directors may cumulate such shareholder votes and give
one candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which the shareholder's shares are normally
entitled, or distribute the shareholder's votes on the same principle among as
many candidates as the shareholder sees fit.
DIVIDENDS
To date we have not paid or declared any dividends and we have no
intention of declaring or paying any dividends in the foreseeable future. If we
decide to pay dividends, that decision will be made by our Board of Directors,
which will likely consider, among other things, our earnings, our capital
requirements and our financial condition, as well as other relevant factors.
17
<PAGE> 21
TRANSFER AGENT
The Company has engaged the services of Silver State Registrar and
Transfer Agent, 3541 Summer Estates Circle, Salt Lake City, UT 84121, as
transfer agent and registrar.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
Since May 18, 1999, the Company's common stock has been traded on the
OTC Bulletin Board under the symbol "HYRB". The following table sets forth, for
the periods indicated, the high and low bid prices for the common stock as
reported by the OTC Bulletin Board. The following quotations should not be
construed to imply that an established trading market exists for the common
stock; trading to date has been sporadic.
<TABLE>
<CAPTION>
1999 HIGH LOW
---- ---- ---
<S> <C> <C>
3rd Quarter 2.28 0.59
2nd Quarter 1.00 0.25
</TABLE>
The market price for the Company's common stock has historically been
volatile. Significant volatility in the market price of shares of the Company's
common stock may arise in the future due to factors such as the Company's
developing business, historic losses and relatively low price per share. In
addition, future announcements concerning the Company or its competitors may
have a significant impact on the market price of the common stock. Such
announcements might include financial results, the results of testing,
technological innovations, new commercial products, changes to government
regulations, developments concerning proprietary rights, or litigation. As long
as there is only a limited public market for the common stock, the sale of a
significant number of shares of common stock at any particular time could be
difficult to achieve at the market prices prevailing immediately before such
shares are offered, and the offering of a significant number of shares of common
stock at one time could cause a severe decline in the price of the common stock.
There are currently approximately 958,200 shares of our common stock
which are freely tradable and which are held of record by approximately 70
people. The remaining 5,314,800 shares will become freely tradable in accordance
with the requirements of Rule 144, including the shares included in the table
below concerning certain recent private placements or sales of restricted
securities. Any shares held by "affiliates" of the Company, which would
otherwise be freely tradable, will be subject to the resale limitations under
Rule 144. In general, under Rule 144, as currently in effect, a person, or
persons whose shares are aggregated, who has beneficially owned shares for at
least one year would be entitled to sell, within any three month period, that
number of shares that does not exceed the greater of one percent (1%) of the
then-outstanding shares of common stock and the average weekly trading volume in
the common stock during the
18
<PAGE> 22
four calendar weeks immediately preceding the date on which the notice of sale
is filed with the Securities and Exchange Commission, provided certain manner of
sale and notice requirements and public information requirements are satisfied.
In addition, affiliates of the Company must comply with the restrictions and
requirements of Rule 144, other than the one-year holding period requirement, in
order to sell shares of common stock. As defined in Rule 144, an "affiliate" of
an issuer is a person who, directly or indirectly, through the use of one or
more intermediaries controls, or is controlled by, or is under common control
with, he issuer. Under Rule 144(k), a holder of "restricted securities" who is
not deemed an affiliate of the issuer and who has beneficially owned shares for
at least two years would be entitled to sell shares under Rule 144(k) without
regard to the limitations described in this paragraph.
ITEM 2. LEGAL PROCEEDINGS
To the best knowledge of the Company's management, there is no legal
proceeding pending to which the Company is a party or to which the Company's
property is subject.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not applicable
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The Company has conducted private placements of equity securities in the
past nineteen months pursuant to certain exemptions from registration provided
by the Securities Act of 1933.
We have made several sales of the Company's common stock by private
placements. The following table sets forth the prices for these sales.
19
<PAGE> 23
<TABLE>
<CAPTION>
EVENT PRE STOCK SPLIT PRICE POST STOCK SPLIT PRICE
----- --------------------- ----------------------
<S> <C> <C>
Founders Stock $0.01 $0.0025
February 26, 1998
Private Sales $1.00 $ 0.25
April 6, 1998 to
July 19, 1998
Private Sale N/A $ 0.25
September 2, 1998
Regulation D, Rule 504 N/A $ 0.25
September 4, 1998
Private Sale N/A $ 0.50
December 28, 1998
Private Sales N/A $ 1.50
February 4, 1999 to
May 13, 1999
Regulation D, Rule 506 N/A $ 1.50
September 22, 1999 to
Present
</TABLE>
On February 26, 1998, the Company issued an aggregate of 1,014,500
shares of common stock to 8 investors for services previously rendered to the
Company. The issuance of these shares was exempt from the registration
requirements of the Securities Act pursuant to Sections 4(2) and 3(b) of the
Securities Act of 1933, as amended (the "Act") and Regulation D promulgated
under the Act, and Rule 504 thereof. At the time of the issuance, the Company
was not subject to the reporting requirements of the Securities Exchange Act of
1934, and the value of the securities issued did not exceed $1,000,000 (at the
date of issuance, the shares had an aggregate value of $10,145). The shares were
issued for bona fide services previously provided to the Company, and were not
in connection with a capital-raising transaction.
On April 6, 1998, the Company closed a private placement of 15,000
shares of its common stock for an aggregate amount of $15,000. The issuance and
sale of these shares was exempt from the registration requirements of the Act
pursuant to Sections 4(2) and 3(b) thereof and Regulation D promulgated under
the Act, and Rule 504 thereof as a transaction by an issuer not involving a
public offering. All of the purchasers represented to the Company that they were
acquiring the shares for their own accounts and not for the account or benefit
of another person; that the shares were being acquired for investment and not
with a view to the distribution thereof; and that the purchasers did not intend
to sell or otherwise dispose of all or any part of the shares at the time of
purchase or upon the occurrence or nonoccurrence of any predetermined event.
Each purchaser also agreed that he or she would offer or resell shares only if
the shares were registered under the Securities Act or an exemption from such
registration was available. No advertising or public solicitation was used in
the placement. The Company placed a restrictive legend on the certificates
representing the shares and placed "stop transfer" instructions with the
transfer agent.
20
<PAGE> 24
Between July 1 and July 18, 1998, the Company closed a private placement
of 63,400 shares of its common stock, or an aggregate amount of $53,500. The
issuance and sale of these shares was exempt from the registration requirements
of the Securities Act pursuant to Sections 4(2) and 3(b) thereof and Regulation
D promulgated under the Act, and Rule 504 thereof as a transaction by an issuer
not involving a public offerings. All of the purchasers represented to the
Company that they were acquiring the shares for their own accounts and not for
the account or benefit of another person; that the shares were being acquired
for investment and not with a view to the distribution thereof; and that the
purchasers did not intend to sell or otherwise dispose of all or any part of the
shares at the time of purchase or upon the occurrence or nonoccurrence of any
predetermined event. Each purchaser also agreed that he or she would offer or
resell shares only if the shares were registered under the Securities Act or an
exemption from such registration was available. No advertising or public
solicitation was used in the placement. The Company placed a restrictive legend
on the certificates representing the shares and placed "stop transfer"
instructions with its transfer agent.
On September 2, 1998, the Company closed a private placement of 600,000
shares of its common stock, for services rendered and cash for an aggregate
amount of $150,000. The issuance and sale of these shares was exempt from the
registration requirements of the Securities Act pursuant to Sections 4(2) and
3(b) thereof and Regulation D promulgated under the Act, and Rule 504 thereof as
a transaction by an issuer not involving a public offering. All of the
purchasers represented to the Company that they were acquiring the shares for
their own accord and not for the account or benefit of another person; that the
shares were being acquired for investment and not with a view to the
distribution thereof; and that the purchasers did not intend to sell or
otherwise dispose of all or any part of the shares at the time of purchase or
upon the occurrence or nonoccurrence of any predetermined event. Each purchaser
also agreed that he or she would offer or resell shares only if the shares were
registered under the Securities Act or an exemption from such registration was
available. No advertising or public solicitation was used in the placement. The
Company placed a restrictive legend on the certificates representing the shares
and placed "stop transfer" instructions with its transfer agent.
On September 4, 1998, the Company consummated an offering of 1,000,000
shares of its common stock pursuant to Sections 4(2) and 3(b) and Regulation D
promulgated under the Act, and Rule 504 thereof. An aggregate of $250,000 was
received in this offering ; all purchasers represented to the Company that they
were "accredited investors" as defined in the Securities Act.
On December 28, 1998, the Company closed a private placement of 100,000
shares of its common stock, for aggregate proceeds of $50,000. The issuance and
sale of these shares was exempt from the registration requirements of the
Securities Act pursuant to Sections 4(2) and 3(b) thereof and Regulation D
promulgated under the Act, and Rule 504 thereof as a transaction by an issuer
not involving a public offering. All of the purchasers represented to the
Company that they were acquiring the shares for their own accord and not for the
account or benefit of another person; that the shares were being
21
<PAGE> 25
acquired for investment and not with a view to the distribution thereof; and
that the purchasers did not intend to sell or otherwise dispose of all or any
part of the shares at the time of purchase or upon the occurrence or
nonoccurrence of any predetermined event. Each purchaser also agreed that he or
she would offer or resell shares only if the shares were registered under the
Securities Act or an exemption from such registration was available. No
advertising or public solicitation was used in the placement. The Company placed
a restrictive legend on the certificates representing the shares and placed
"stop transfer" instructions with its transfer agent.
Between February 4 and May 31, 1999, the Company closed a private
placement of 66,734 shares of common stock, for an aggregate amount of $ 99,101.
The issuance and sale of these shares was exempt from the registration
requirements of the Securities Act pursuant to Sections 4(2) and 3(b) thereof
and Regulation D promulgated under the Act, and Rule 504 thereof as a
transaction by an issuer not involving a public offering. All of the purchasers
represented to the Company that they were acquiring the shares for their own
accord and not for the account or benefit of another person; that the shares
were being acquired for investment and not with a view to the distribution
thereof; and that the purchasers did not intend to sell or otherwise dispose of
all or any part of the shares at the time of purchase or upon the occurrence or
nonoccurrence of any predetermined event. Each purchaser also agreed that he or
she would offer or resell shares only if the shares were registered under the
Securities Act or an exemption from such registration was available. No
advertising or public solicitation was used in the placement. The Company placed
a restrictive legend on the certificates representing the shares and placed
"stop transfer" instructions with its agent.
On September 22, 1999, the Company began an offering of 3,000,000 shares
of its common stock pursuant to Section 4(2) of he Act and Rule 506 of
Regulation D promulgated under the Act. As of November 1, 1999, the Company has
consummated sales of 142,666 shares of common stock, for an aggregate amount of
$ 194,499; all purchasers represented to the Company that they were "accredited
investors" as defined in the Securities Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Incorporation and By-laws provide for indemnification of
the officers and directors of the Company to the fullest extent permissible
under California law. Additionally, the Company has entered into Indemnification
Agreements with each of its officers and therefore, purchasers of these
securities may have a more limited right of action than they would have except
for this limitation in the Articles of Incorporation and By-laws. In the opinion
of the Securities and Exchange Commission, indemnification for liabilities
arising under the Securities Act of 1933 is contrary to public policy and,
therefore, unenforceable.
22
<PAGE> 26
PART F/S
ITEM 1. FINANCIAL STATEMENTS
The following documents are filed as part of this report:
HyperBaric Systems Financial Statements
Report of BDO Seidman, LLP
Balance sheets as of December 31, 1998 and September 30, 1999.
Statements of operations and deficit accumulated during the
development stage for the period from February 26, 1998, date of
inception, through December 31, 1998, and nine months ended
September 30, 1999 and 1998.
Statements of stockholder's deficit for the period from February
26, 1998, date of inception, through December 31, 1998, and nine
months ended September 30, 1999.
Statements of cash flows for the period from February 26, 1998,
date of inception, through December 31, 1998, and nine months
ended September 30, 1999 and 1998.
Notes to financial statements
ITEM 2. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None -- Not Applicable
23
<PAGE> 27
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants 25
FINANCIAL STATEMENTS
Balance sheets 26
Statements of operations and deficit accumulated during the
development stage 27
Statements of shareholders' deficit 28
Statements of cash flows 29
Notes to financial statements 30 - 45
</TABLE>
24
<PAGE> 28
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders of HyperBaric Systems
We have audited the accompanying balance sheet of HyperBaric Systems (a
development stage company), as of December 31, 1998 and the related statements
of operations and deficit accumulated during the development stage,
shareholders' deficit, and cash flows for the period February 26, 1998 (date of
inception) to December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform our audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HyperBaric Systems as of
December, 31, 1998, and the results of its operations and its cash flows for the
period from February 26, 1998 (date of inception) to December 31, 1998 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. as shown in the accompanying financial
statements, the Company is a development stage Company with a significant loss
to date. These conditions raise substantial doubts about the ability of the
Company to continue as a going concern. Management's plans with regard to these
matters are also described in Note 1. The financial statements do not include
any adjustments relating to the recoverability and classification of reported
asset amounts or the amount and classification of liabilities that might result
from the outcome of this uncertainty.
BDO Seidman, LLP
San Jose, California
October 12, 1999
25
<PAGE> 29
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
================================================================================================
SEPTEMBER 30, December 31,
1999 1998
- ------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 8) $ 22,600 $ 125,800
Other receivable 2,000 --
Prepaid expenses and other assets -- 1,000
- ------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 24,600 126,800
PROPERTY AND EQUIPMENT, net (Note 2) 3,300 1,000
- ------------------------------------------------------------------------------------------------
$ 27,900 $ 127,800
================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable - current $ 64,200 $ --
Accounts payable - trade 49,200 11,500
Accounts payable - related party 3,600
Accrued expenses - trade (Notes 3) 123,700 19,700
- ------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 240,700 31,200
COMMITMENTS AND CONTINGENCIES (Notes 4 and 8)
SHAREHOLDERS' DEFICIT (Notes 4, 5, 8 and 9):
Common stock, no par value; 50,000,000 shares authorized;
6,154,334 and 6,071,600 shares issued and
outstanding as of September 30,
1999 and December 31, 1998, respectively 337,200 224,600
Paid in capital (Note 4) 159,700 144,000
Deficit accumulated during the development stage (709,700) (272,000)
- ------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' DEFICIT (212,800) 96,600
- ------------------------------------------------------------------------------------------------
$ 27,900 $ 127,800
================================================================================================
</TABLE>
See accompanying notes to financial statements.
26
<PAGE> 30
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE
<TABLE>
<CAPTION>
====================================================================================================================
Period from February 26, 1998
Nine Months Ended September 30, (Date of Inception) to
------------------------------- ---------------------------------
September 30, December 31,
1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------------
(UNAUDITED) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
OPERATING EXPENSES:
Sales and marketing $ 32,100 $ 11,400 $ 52,900 $ 88,300
Research and development 151,900 41,700 240,200 163,400
General and administrative 243,700 97,500 407,200 20,900
- --------------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS 427,700 150,600 700,300 272,600
OTHER INCOME:
Interest income (600) (500) (2,000) (1,400)
Interest expenses 9,000 -- 9,000 --
- --------------------------------------------------------------------------------------------------------------------
TOTAL OTHER INCOME 8,400 (500) 7,000 (1,400)
- --------------------------------------------------------------------------------------------------------------------
LOSS BEFORE INCOME TAXES 436,100 150,100 707,300 271,200
INCOME TAX EXPENSE 1,600 -- 2,400 800
- --------------------------------------------------------------------------------------------------------------------
NET LOSS $ 437,700 $ 150,100 $ 709,700 $ 272,000
====================================================================================================================
BASIC AND DILUTED LOSS PER SHARE $ 0.08 $ 0.03 $ 0.13 $ 0.06
====================================================================================================================
BASIC AND DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 5,480,375 4,448,571 5,480,375 4,905,480
====================================================================================================================
</TABLE>
See accompanying notes to financial statements.
27
<PAGE> 31
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF SHAREHOLDERS' DEFICIT
<TABLE>
<CAPTION>
=============================================================================================================================
Deficit
Accumulated
Common Stock During
Period from February 26, 1998 (date of ------------------------ Paid in Development
inception) to September 30, 1999 Shares Amount Capital Stage Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCES, February 26, 1998 (date of inception) -- $ -- $ -- $ -- $ --
Issuance of common stock for founders' services 4,098,000 10,200 -- 10,200
Issuance of common stock for cash 373,600 118,400 -- 118,400
Issuance of common stock, in REG D offering
net of offering cost and services
$154,600 (Notes 4 and 9) 1,000,000 95,400 144,000 -- 239,400
Issuance of common stock for cash paid and
services, (Note 4) 600,000 600 -- 600
Net loss -- -- (272,000) (272,000)
- -----------------------------------------------------------------------------------------------------------------------------
BALANCES, December 31, 1998 6,071,600 224,600 144,000 (272,000) 96,600
Issuance of common stock for service (unaudited) 5,000 7,500 -- 7,500
Issuance of common stock for cash (unaudited) 77,734 105,100 7,200 -- 112,300
Warrants issued in connection with debt
securities (Note 6) 8,500 8,500
Net loss (unaudited) -- -- (437,700) (437,700)
- -----------------------------------------------------------------------------------------------------------------------------
BALANCES, September 30, 1999 (unaudited) 6,154,334 $ 337,200 $ 159,700 $(709,700) $(212,800)
==============================================================================================================================
</TABLE>
See accompanying notes to financial statements.
28
<PAGE> 32
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
==================================================================================================================
For the Period From
Nine Months Ended February 26, 1998
September 30, (Date of Inception) to
--------------------------- ----------------------------
September 30 December 31,
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------
(UNAUDITED) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $(437,700) $(150,100) $(709,700) $(272,000)
Adjustments to reconcile net loss to
net cash used in operating activities:
Professional services rendered in
exchange for stock 7,500 10,200 17,700 10,200
Depreciation 400 -- 400 --
Interest Expense on debt securities 8,500 8,500
Changes in current assets and liabilities:
Other receivable (2,000) -- (2,000) --
Prepaid expenses and other assets 1,000 -- -- (1,000)
Accounts payable - trade 37,700 3,600 49,200 11,500
Accounts payable - related party 3,600 -- 3,600 --
Accrued expenses 104,000 23,700 123,700 19,700
- ------------------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (277,000) (112,600) (508,600) (231,600)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (2,700) -- (3,700) (1,000)
- ------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (2,700) -- (3,700) (1,000)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 112,300 308,500 470,700 358,400
Proceeds from borrowing on note payable 64,200 -- 64,200 --
- ------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 176,500 308,500 534,900 358,400
- ------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS (103,200) 195,900 22,600 125,800
CASH AND CASH EQUIVALENTS, beginning of period 125,800 -- -- --
- ------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, ending of period $ 22,600 $ 195,900 $ 22,600 $ 125,800
==================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income tax $ 1,600 $ - $ 1,600 $ -
Professional services rendered in
exchange for stock $ 7,500 $ 10,200 $ 17,700 $ 10,200
Interest expense related to debt
securities issued with detachable
warrants $ 8,500 $ - $ 8,500 $ -
==================================================================================================================
</TABLE>
See accompanying notes to financial statements.
29
<PAGE> 33
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
1. SUMMARY OF
ACCOUNTING The Company
POLICIES HyperBaric Systems (a development stage Company referred
to as the "Company") was incorporated on February 26,
1998 under the laws of the state of California. The
business purpose of the Company is to develop the
technology for preservation of certain biologic
material, including platelets (a blood component), red
blood cells, heart valves, tissue and organs. The
Company is in the second year of its research and
development activities. The Company's goal is to develop
the technology to extend and maintain functionality of
these materials for much longer periods of time than is
currently possible. The Company's research facility is
located in Krasnoyarsk, Russia.
Unaudited Interim Results
The interim financial statements as of and for the nine
months ended September 30, 1999 and 1998, together with
the financial data and other information for those
periods disclosed in these notes to the financial
statements, are unaudited. In the opinion of management,
the interim financial statements have been prepared on
the same basis as the audited financial statements and
reflect all adjustments, consisting only of normal
recurring adjustments, necessary for the fair
presentation of the results of interim periods. The
results of operations for the interim periods are not
necessarily indicative of the results to be expected for
any future periods.
Basis of Presentation
The accompanying financial statements have been prepared
on a going concern basis, which contemplates the
realization of assets and the satisfaction of
liabilities in the normal course of business. The
Company is in the development stage and has no operating
revenue and an accumulated deficit of approximately
$272,000 as of December 31, 1998. The Company is in the
second year of research and development, with an
accumulated loss during the development stage of
$709,700. As of September 30, 1999, management is
uncertain as to the completion date or if the product
will be completed at all.
30
<PAGE> 34
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
These conditions give rise to substantial doubt about
the Company's ability to continue as a going concern.
These financial statements do not include adjustments
relating to the recoverability and classification of
reported asset amounts or the amount and classification
of liabilities that might be necessary should the
Company be unable to continue as a going concern. The
Company's continuation as a going concern is dependent
upon its ability to obtain additional financing or sale
of its common stock as may be required and ultimately to
attain profitability.
Management's plan, in this regard, is to complete a
private placement of 2,000,000 shares of common stock at
$1.50 per share. Each two shares will have a warrant to
purchase an additional share of common stock at $2.50
per share. The anticipated proceeds to the Company will
be $2,640,000. Management believes this amount will be
sufficient to finance the continuing research for the
upcoming year.
Stock Split
On July 21, 1998, the Company completed a four for one
stock split. All shares and per share data have been
restated to reflect the stock split.
Use of Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the
date of the balance sheet. Actual results could differ
from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with
original maturities of three months or less to be cash
equivalents. The Company
31
<PAGE> 35
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
places its cash and cash equivalents with high quality
institutions. At times, such funds may be in excess of
the Federal Deposit Insurance Corporation limit of
$100,000.
Equipment
Equipment is stated at cost, net of accumulated
depreciation. Depreciation is provided on the
straight-line method over five years.
Research and Development Costs
Research and development expenditures are charged to
expense, as incurred.
Income Taxes
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards (SFAS No.
109). Under SFAS No. 109, deferred tax liabilities or
assets at the end of each period are determined using
the tax rate expected to be in effect when taxes are
actually paid or recovered. Valuation allowances are
established when necessary to reduce deferred tax assets
to the amount expected to be realized.
New Accounting Pronouncements
Comprehensive Income
The Company complies with the provisions of SFAS No.
130, Reporting Comprehensive Income. SFAS No. 130
establishes standards for reporting comprehensive income
and its components in financial statements.
Comprehensive income, as defined, includes all changes
in equity (net assets) during a period from non-owner
sources. During the period from Inception through
December 31, 1998 and the nine months ended September
30, 1999 and 1998, the Company has had no transactions
that would be required to be reported in comprehensive
income.
32
<PAGE> 36
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
In February 1998, the Financial Accounting Standards
Board (FASB) issued SFAS No. 132, Employer's Disclosure
about Pensions and Other Postretirement Benefits, which
standardizes the disclosure requirements for pension and
other postretirement benefits. The adoption of SFAS No.
132 had no impact on the Company's current disclosures.
In April 1998, the AICPA issued SOP 98-5 Reporting on
the Costs of Start-Up Activities. Start-up activities
are defined broadly as those one-time activities related
to opening a new facility, introducing a new product or
service, commencing some new operation or organizing a
new entity. Under SOP 98-5, the cost of start-up
activities should be expensed as incurred. The Company
adopted the provisions of SOP 98-5 at inception
(February 26, 1998), and does not expect the adoption to
have a material effect on the Company's results of
operations, financial position and cash flows.
In June 1998, the FASB issued SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities. SFAS
No. 133 requires companies to recognize all derivatives
contracts as either assets or liabilities in the balance
sheet and to measure them at fair value. If certain
conditions are met, a derivative may be specifically
designated as a hedge, the objective of which is to
match the timing of gain or loss recognition on the
hedging derivative with the recognition of (i) the
changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk or
(ii) the earnings effect of the hedged forecasted
transaction. For a derivative not designated as a
hedging instrument, the gain or loss is recognized in
income in the period of change. SFAS No. 133 is
effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. The Company will adopt
SFAS 133 in its quarter ending June 30, 2000 and does
not expect such adoption to have an impact on the
Company's results of operations, financial position or
cash flows.
In 1998, the Company had not entered into derivatives
contracts either to hedge existing risks or for
speculative purposes. Accordingly, the Company does not
expect adoption of the new standard on January 1, 2000
to affect its financial statements.
33
<PAGE> 37
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
Stock Based Compensation
The Company applies Accounting Principles Board (APB)
No. 25, Accounting for Stock Issued to Employees, and
Related Interpretations in accounting for stock options
issued to employees. Under APB Opinion No. 25, employee
compensation cost is recognized when the estimated fair
value of the underlying stock on date of grant exceeds
the exercise price of the stock option. For stock
options issued to non-employees, the Company applies
SFAS No. 123, Accounting for Stock-Based Compensation,
which requires the recognition of compensation cost
based upon the fair value of stock options at the grant
date using the Black-Scholes option pricing model.
Fair Values of Financial Instruments
The following methods and assumptions were used by the
Company in estimating its fair value disclosures for
financial instruments:
Cash and cash equivalents:
The carrying amount reported in the balance sheet for
cash and cash equivalents approximates fair value.
Short term debt:
The fair value of short-term debt approximates cost
because of the short period of time to maturity.
Net Loss Per Common Share
The Company computes net loss per share in accordance
with SFAS No. 128, Earnings per Share. ("SFAS No. 128")
and SEC Staff Accounting Bulletin No. 98 ("SAB 98").
Under the provisions of SFAS No. 128 and SAB 98, basic
net loss per share is computed by dividing the net loss
available to common shareholders for the period by the
weighted average number of shares of common stock
outstanding during the period. The calculation of
diluted net loss per share gives effect to common stock
equivalents, however, potential common shares are
excluded if their effect is antidilutive. Potential
common shares are excluded to repurchase rights and
incremental shares of common stock issuable upon the
exercise of stock options and warrants. For the year
ended December 31, 1998, options to purchase 40,000 and
65,000 shares of common stock,
34
<PAGE> 38
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
respectively, were excluded from the computation of
diluted earnings per share since their effect would be
antidilutive.
2. PROPERTY AND A summary of property and equipment follows:
EQUIPMENT
<TABLE>
<CAPTION>
SEPTEMBER 30, December
1999 31, 1998
-------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Equipment $3,700 $1,000
Less: accumulated depreciation 400 -
-------------------------------------------------------------------------
$3,300 $1,000
-------------------------------------------------------------------------
</TABLE>
3. ACCRUED A summary of accrued expenses follows:
EXPENSES
<TABLE>
<CAPTION>
SEPTEMBER 30, December
1999 31, 1998
--------------------------------------------------------
(Unaudited)
<S> <C> <C>
Wages payable $115,900 $ 16,500
Accrued expenses 7,000 2,400
Income tax payable 800 800
--------------------------------------------------------
$123,700 $ 19,700
--------------------------------------------------------
</TABLE>
4. RELATED PARTY The Company has entered into various stock purchase
TRANSACTIONS agreements and employment contracts with shareholders of
the Company. As of July 31, 1999, the following
transactions and/or agreements have been consummated.
On July 21, 1998, the Company issued 600,000 shares of
common stock to its legal counsel at their fair market
value of $0.25 per share for services rendered in
connection with a private placement (Note 5) and $600
cash for an aggregate value of $150,000. Since the
services related to the offering, the cost has been
charged against common stock and presented as paid in
capital. There was no effect on operations.
On May 10, 1998, the Company entered into an Employment
Agreement with Rocky Umar, as the Vice President of
Marketing for a minimum term of one year and whereby he
receives a salary ranging from $2,000 per month to
$10,000 per month, depending upon performance and the
possibility of a commission equal to 1% of sales under
Mr. Umar's management that exceeds $1,500,000 for a
consecutive six-month period, not to
35
<PAGE> 39
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
exceed a $100,000 commission per 12-month period. Mr.
Umar has been granted an option to purchase 200,000
shares of common stock at $0.025 per share pursuant to a
Stock Option Plan. Further, Mr. Umar is eligible for a
bonus of up to $5,000 after the first year of employment
up to the expiration of the stock options.
On June 1, 1998, the Company entered into an Agreement
of Assignment of Patent and Technology with Leonid Babak
and Vladimir Serebrennikov whereby these individuals
assigned to the Company the entire worldwide right,
title and interest in and to their invention of
technology for preserving and transporting biologic and
non-biologic material and in and to all of the
discoveries, concepts and ideas whether patentable or
not. Pursuant to this Agreement on Assignment of Patent
and Technology, each individual received 877,500 shares
of the Company's common stock with an ascribed value of
$2,190, which has been expensed as research and
development.
On June 1, 1998, the Company entered an Employment
Agreement with Leonid Babak, a shareholder, whereby Mr.
Babak is employed as the Branch Chief of Russian
Operations for an indefinite term and receives base
compensation of $400 a month, which salary may be
adjusted and be eligible for a performance based bonus
of $5,000 per year.
On June 1, 1998, the Company also entered into a
separate Employment Agreement with Vladimir
Serebrennikov, a shareholder, whereby Mr. Serebrennikov
is employed as the Technical Director of Preservation
Systems for an indefinite term and the Company pays Mr.
Serebrennikov $400 per month, which salary may be
adjusted, with a bonus of $25,000 upon the successful
completion of the Phase I within the agreed upon time
frame.
On May 28, 1998, the Company entered into a Consulting
Agreement whereby Dr. Luis Toledo was appointed to the
Company's advisory board. Under the Consulting Agreement
the Company pays Dr. Toledo a commission equal to 5% of
all sales within the organ transplant market for the
lessor of a five year period from the date of the
agreement, or as long as Dr. Toledo remains a consultant
and advisory board member. Such commission is limited to
a total of $1,000,000. Further, Dr. Toledo, a
participant in a Non-Statutory Option Plan, has been
granted options to purchase 200,000 shares of common
stock of the Company at $0.025 per share pursuant to a
36
<PAGE> 40
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
Stock Option Plan. In addition, Dr. Toledo is eligible
for a bonus of up to $5,000 after the first year as a
consultant and advisory board member.
On June 24, 1998, the Company hired Eric Slayton,
President of Global Healthcare, to be a member of the
advisory board. The Company granted to Mr. Slayton an
option to purchase 40,000 shares of common stock of the
Company at $0.025 per share pursuant to a Non-Statutory
Incentive Stock Option Plan.
On September 1, 1998, The Company entered into a
purchase agreement with Paul Okimoto, an officer and
director of the Company, acquiring all rights to a
disposable venereal disease test device called Phemtest,
for which Mr. Okimoto owned the patent. The Company paid
to the law firm of Flehr, Hohbach, Test and Herbert,
$1,375 for the patent maintenance fee, and has also
agreed to pay Mr. Okimoto a royalty payment of 5% of
gross sales of Phemtest for the next five years.
5. COMMON STOCK The Company undertook a public offering, under
Regulation D, Rule 504 pursuant to which it sold
1,000,000 shares of common stock at $0.25 per share to
raise $250,000 via an Offering Memorandum dated August
15, 1998 (the "Offering"). The Offering commenced on
August 15, 1998 and terminated on September 4, 1998. The
transfer of 42,800 of the 1,000,000 shares is limited
under the provisions of Rule 144(e) because these shares
were issued to affiliates or control persons and are
therefore control stock. The remaining 957,200 of the
1,000,000 shares were issued to non-affiliates and are
therefore free trading. (Note 4)
All of the 1,000,000 shares were issued in reliance on
the Federal exemption from registration under Rule 504
of Regulation D and A form d relating to these shares
was filed with the U.S. Securities Exchange Commission
(the "SEC") on September 9, 1998.
6. STOCK OPTION PLANS The Company adopted the following plans during 1998:
Statutory Incentive Stock Option Plan
The purpose of this plan is to strengthen the Company,
by providing incentive stock options as a means to
attract, retain and motivate corporate personnel. The
options may not be granted to employees who own stock
possessing more than 10% of the total combined
37
<PAGE> 41
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
Voting power of the stock of the Company. As of December
31, 1998, 600,000 options have been authorized.
A summary of the status of this plan as of December 31,
1998, and changes during the year ended is presented in
the following table:
<TABLE>
<CAPTION>
Options Outstanding
---------------------
Weighted
Average
Exercise
Shares Price
-------- --------
<S> <C> <C>
Authorized, February 26, 1998 (date of inception) 600,000 $
Granted (250,000) $0.07
--------
Ending, December 31, 1998 350,000 $0.07
=======
Exercisable at year-end 40,000
Weighted-average fair value of options granted
during the year $0.04
</TABLE>
The following table summarizes information about stock
options outstanding as of December 31, 1998, follows
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------- ----------------------
Weighted
Number Average Weighted Number Weighted
Range of Outstanding Remaining Average Exercisable Average
Exercise as of Contractual Exercise as of Exercise
Prices 12/31/98 Life Price 12/31/98 Price
------------ ----------- ---------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
$0.025-$0.25 250,000 10 years $ 0.07 40,000 $ 0.03
---------- ----------- --------- --------
250,000 $ 0.07 40,000 $ 0.03
========== =========
</TABLE>
38
<PAGE> 42
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
Employees may exercise their options to purchase his or
her shares according to the following schedule:
<TABLE>
<CAPTION>
Rocky Umar All others
---------- ----------
<S> <C> <C>
at inception 20% --
after 1st year 24% 30%
after 2nd year 32% 30%
after 3rd year 24% 40%
</TABLE>
Non-Statutory Incentive Stock Option Plan
The purpose of this plan is to promote the interest of
the Company by providing a method whereby non-employees,
advisory board members, members of the board of
directors, consultants and independent contractors, who
provide valuable services to the Company, may be offered
incentives as rewards which will encourage them to
acquire a proprietary interest in the Company.
As of December 31, 1998, 2,000,000 options have been
authorized.
A summary of the status of this plan as of December 31,
1998, and changes during the year ended is presented in
the following table:
<TABLE>
<CAPTION>
Options Outstanding
December 31, 1998
------------------------
Weighted
Average
Exercise
Shares Price
---------- ---------
<S> <C> <C>
Authorized, February 26, 1998,
(date of inception) 2,000,000 $ --
Granted (800,000) $0.24
--------- -----
Ending, December 31, 1998 1,200,000 $0.24
========= =====
Exercisable at year-end 65,000
Weighted-average fair value of options granted
during the year $0.13
</TABLE>
39
<PAGE> 43
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
The following table summarizes information about stock
options outstanding as of December 31, 1998, follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
Weighted
Number Average Weighted Number Weighted
Range of Outstanding Remaining Average Exercisable Average
Exercise as of Contractual Exercise as of Exercise
Prices 12/31/98 Life Price 12/31/98 Price
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$0.01-$0.25 800,000 10 years $ 0.24 65,000 $ 0.02
-------- -------- -------
800,000 $ 0.24 65,000 $ 0.02
======== ========
</TABLE>
Stock Purchase Warrants
As of December 31, 1998, the following common stock
warrants were issued and outstanding:
<TABLE>
<CAPTION>
Shares
Subject to Exercise Expiration
Issued with Respect to: Warrant Price Date
--------------------------------------------------------------------------
<S> <C> <C> <C>
Non-employee Compensation 50,000 $ 0.375 March 24, 2000
Non-employee Compensation 50,000 $ 0.375 June 15, 2000
--------------------------------------------------------------------------
100,000
==============
</TABLE>
40
<PAGE> 44
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
Proforma Information
The Company estimates the fair value of warrants at the
grant date by using the Black-Scholes option
pricing-model with the following weighted-average
assumptions used for grants in 1999 and 1998. Detailed
below is a summary of the Black-Scholes information
related to warrants:
<TABLE>
<CAPTION>
Risk Free Fair Value
Grant Number of Dividend Expected Interest Expected of
Month Warrants Yield Volatility Rate Life Warrants
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
May, 1998 100,000 0 121.6% 4.52% 2 Years 0
August, 1999 7,500 0 121.6% 4.86% 2 Years 6,710
September, 1999 30,500 0 112.14% 4.70% 2 Years 1,625
October, 1999 64,833 0 116.72% 4.98% 2 Years 0
</TABLE>
SFAS No. 123 requires the Company to provide pro forma
information regarding net loss and loss per share as if
compensation cost for the Company's stock option plans
had been determined in accordance with the fair market
value based method prescribed in SFAS No. 123. The
company estimates the fair market value of stock options
at the grant date by using the Black-Scholes option
pricing-model with the following weighted average
assumptions used for grants in 1999 and 1998,
respectively.
41
<PAGE> 45
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
Under the accounting provisions of SFAS No. 123, the
Company's net loss and loss per share would have been
increased to the pro forma amounts as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
Periods ended 1999 1998
-------------------------------------------------------------------------
<S> <C> <C>
Net loss:
As reported $ (437,700) $ (272,000)
=========================================================================
Pro forma $ (440,000) $ (272,000)
=========================================================================
Basic and diluted loss per share:
As reported $ (0.08) $ (0.06)
=========================================================================
Pro forma $ (0.08) $ (0.06)
=========================================================================
</TABLE>
On June 21, 1999, the shareholders approved an increase
in the authorized number of shares of common stock from
10,000,000 to 50,000,000 shares. As of this date, the
Company issued options to purchase an aggregate of
1,052,500 shares of common stock at an exercise price of
$0.01 to $0.50 per share with various expiration dates
through July 2009.
7. INCOME TAXES Income tax expenses for the period ended December 31,
1998, comprise:
<TABLE>
<CAPTION>
1998 Current Deferred Total
-------------------------------------------------------------------
<S> <C> <C> <C>
Federal $ -- $-- $ --
State 800 -- 800
---- --- ----
$800 $-- $800
==== === ====
</TABLE>
42
<PAGE> 46
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
The following summarizes the difference between the
income tax (benefit) expense and the amount computed by
applying the federal income tax 34% and the state tax
rate of 8.84% (5.83%, net of federal tax benefit) in
1998 to loss before income taxes:
<TABLE>
<CAPTION>
1998
=========================================================================
<S> <C>
Federal income tax at statutory rate $ (92,500)
State income tax, net of federal tax benefit (15,900)
Tax benefit from losses not recognized 109,200
-------------------------------------------------------------------------
</TABLE>
<TABLE>
-------------------------------------------------------------------------
<S> <C>
INCOME TAX EXPENSE $ 800
=========================================================================
</TABLE>
As of December 31, 1998, the Company had net operating
loss carryforwards of $266,700 for federal and state
income tax purposes, respectively to offset future
taxable income, if any through the year 2018. In
addition, the Company has tax credits of approximately
$2,000 and $1,500 for federal and state income tax
purposes, respectively.
Deferred income taxes result primarily from differences
in the treatment of depreciation, state income taxes,
and net operating loss carryforwards, for book and tax
purposes. As of December 31, 1998, a 100% valuation
allowance was provided for the gross deferred tax asset
as management could not determine whether its
realization was more likely than not.
43
<PAGE> 47
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
Deferred tax assets comprise the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1999 1998
-----------------------------------------------------------------------------
<S> <C> <C>
Tax benefit from NOL carryforwards $ 276,300 $ 106,200
Research & Development credit 11,000 3,500
--------- ---------
Gross deferred tax assets 287,300 109,700
Valuation allowances (287,300) (109,700)
--------- ---------
NET DEFERRED TAX ASSETS $ -- $ --
========= =========
</TABLE>
For the period ended September 30, 1999 and the year
ended December 31, 1998, the Company's valuation
allowance on deferred tax assets increased $177,600 and
$109,700, respectively.
8. CONCENTRATION OF Financial instruments, which potentially subject the
CREDIT RISK Company to concentration of credit risk, consist
principally of cash and cash equivalents. The Company
places its cash and cash equivalents with high quality
financial institutions.
9. SUBSEQUENT EVENTS The Company entered into an employment agreement with
David Lucas on January 1, 1999, whereby Mr. Lucas as
Scientific Director oversees the research and
development efforts of the Company. The Company pays Mr.
Lucas $3,000 per month.
During August 1999, the primary shareholder advanced
$24,200 to the Company. These transactions are evidenced
by two unsecured notes bearing interest at 10% per
annum, due on or before November, 1999. (Unaudited)
Also during August 1999, two shareholders and an
individual unrelated to the Company, advanced a total of
$15,000 to the Company. These loans are evidenced by
three unsecured notes bearing interest at 10% per annum,
due on or before November, 1999. These lenders were also
granted warrants to purchase a total of 7,500 shares of
the Company's common stock at $1.50 per share and are
void after August 31, 2001. (Unaudited)
During September 1999, an unrelated party advanced a
total of $25,000 to the Company. These loans are
evidenced by two unsecured notes bearing interest at 10%
per annum. The lender was also granted warrants to
purchase a total of 12,500 shares of the Company's
common stock at $1.50 per share and are void after
September 21, 2001. (Unaudited)
During October, 1999, the Company issued 115,666 shares
of common stock to shareholders for cash consideration
of $165,999. Additionally, the Company issued warrants,
in connection with stock sales to related parties. For
their investment they
44
<PAGE> 48
HYPERBARIC SYSTEMS
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER, 1999 AND 1998 IS UNAUDITED)
================================================================================
received 64,833 warrants. These warrants shall be
exercisable to purchase 1 share of common stock for each
warrant at a price equal to $2.50/share. The warrants
will expire after January 1, 2002. (Unaudited)
During November, 1999 the Company issued 3,000 shares of
common stock to shareholders for cash consideration of
$4,500. (Unaudited)
45
<PAGE> 49
PART III
ITEM 1. EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL NO.
<S> <C>
(2) ARTICLES OF INCORPORATION AND BYLAWS
2.1 Articles of Incorporation and Amendments thereto
2.1.1 Articles of Incorporation
2.1.2 Action By Incorporator Of HyperBaric Systems
2.1.3 Amended and Restated Articles of Incorporation, July 20, 1998
2.1.4 Amended and Restated Articles Of Incorporation, June 18, 1999
2.2. Bylaws
(3) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS
3.1 Stock Purchase Agreement For Founders (Common Stock) February 26, 1998
3.2 Representation Letter for Founders
3.3 Stock Purchase Agreement - Private Placement
3.4 Subscription Agreement, Regulation D, Rule 504
3.5 Subscription Agreement, Regulation D, Rule 506
(5) VOTING TRUST AGREEMENT
(6) MATERIAL CONTRACTS
6.1 Assignment of Phemtest Patent and Technology
6.2 Phemtest Patents
US 4,945,921
US 4,784,158
6.3 Assignment of Patent and Technology - Vladimir Serebrennikov
6.4 Assignment of Patent and Technology - Leonid Babak
6.5 Consultant Agreement with Dr. Luis Toledo
6.6 Employment contract R. Umar
6.7 Employment contract L. Bryant
6.8 Non-Statutory Incentive Stock Option Plan
6.9 Statutory Incentive Stock Option Plan
6.10 Statutory Incentive Stock Option Grant - R. Umar, 5/10/98
6.11 Non- Statutory Incentive Stock Option Grant - A. Sealy, 7/21/98
6.12 Statutory Incentive Stock Option Grant - A. Sealy, 11/27/98
6.13 Statutory Incentive Stock Option Grant - A. Sealy, 6/25/99
6.14 Indemnification Agreement - H. Masuda
6.15 Indemnification Agreement - P. Okimoto
6.16 Indemnification Agreement - G. Tsukuda
6.17 Indemnification Agreement - R. Umar
6.18 Indemnification Agreement - A. Sealy
6.19 Indemnification Agreement - L. Bryant
</TABLE>
46
<PAGE> 1
EXHIBIT 2.1.1
(2) ARTICLES OF INCORPORATION AND BYLAWS
2.1 ARTICLES OF INCORPORATION AND AMENDMENTS THERETO
2.1.1 Articles of Incorporation
ARTICLES OF INCORPORATION
OF
HYPERBARIC SYSTEMS
One: The name of this corporation is:
HyperBaric Systems
Two: The purpose of this corporation is to engage in any
lawful act or activity for which a corporation may be organized under the
General Corporation Law of California other than the banking business, the trust
company business or the practice of a profession permitted to be incorporated by
the California Corporations Code.
Three: The name and address in the State of California of this
corporation's initial agent for service of process is:
Mary T. Hernandez
1683 - 41st Avenue
San Francisco, California 94122
Four: The corporation is authorized to issue only one class of
shares of stock; and the total number of shares which this corporation is
authorized to issue is five million.
Five: The liability of the directors of the corporation for
monetary damages shall be eliminated to the fullest extent permissible under
California law.
Six: The corporation is authorized to indemnify the directors
and officers of the corporation to the fullest extent permissible under
California law.
DATE: February 26, 1998
----------------------------------------
Mary Hernandez, Incorporator
<PAGE> 1
EXHIBIT 2.1.2
2.1.2 Action By Incorporator Of HyperBaric Systems
ACTION BY INCORPORATOR OF
HYPERBARIC SYSTEMS,
a California Corporation
The undersigned, being the Incorporator of this corporation,
acting in accordance with Section 210 of the California Corporations Code,
desiring to take the following action, hereby adopts the following resolutions:
ADOPTION OF BYLAWS
WHEREAS, it is deemed to be in the best interest of this
Corporation that Bylaws be adopted,
NOW, THEREFORE, BE IT RESOLVED, that the form of Bylaws attached
hereto as Exhibit "A" be, and they hereby are, adopted as the Bylaws of the
Corporation;
RESOLVED FURTHER, that the Secretary of the Corporation be, and
hereby is, authorized and directed to execute a certificate as to the adoption
of the Bylaws by these resolutions, to affix such certificate, immediately
following the last page thereof, to an original copy of said Bylaws adopted
hereby, and to cause said Bylaws, together with such certificate, to be placed
in the Book of Minutes of the Corporation;
RESOLVED FURTHER, that, pursuant to Section 213 of the
California General Corporation Law, the Secretary of the Corporation be, and
hereby is, authorized and directed to cause a true and complete copy of said
Bylaws, as amended from time to time, as now or hereafter in effect, similarly
certified, to be kept at the principal executive office of the Corporation in
California, which Bylaws shall be open to inspection by the shareholders of the
Corporation at all reasonable times during office hours.
<PAGE> 2
ELECTION OF OFFICERS
The following persons are hereby elected to the offices indicated
until such persons resign or are terminated or replaced by a duly authorized
action of the Board:
1. Chairman of the Board Paul Okimoto
2. President and CEO Harry Masuda
3. Executive Vice President Paul Okimoto
4. Chief Financial Officer Harry Masuda
5. Secretary Mary T. Hernandez
ELECTION OF DIRECTORS
The following persons shall serve as the initial directors to
serve until successors are elected by the shareholders in the manner set forth
in the Bylaws of this Corporation:
Paul Okimoto
Harry Masuda
George Tsukuda
WITNESS my signature this 26th day of February 1998.
----------------------------------------
Incorporator
<PAGE> 1
2.1.3 Amended And Restated Articles Of Incorporation, July 20, 1998
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF HYPERBARIC SYSTEMS,
A CALIFORNIA CORPORATION
The undersigned, Harry Masuda, hereby certifies that:
ONE: He is the duly elected and acting President and Chief
Financial Officer of this Corporation.
TWO: The Articles of Incorporation of this Corporation are
amended and restated to read in full as follows:
ARTICLE I
The name of the corporation is HyperBaric Systems,
ARTICLE II
The purpose of the Corporation is to engage in any lawful act or
activity for which A corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code,
ARTICLE III
This corporation is authorized to issue one class of stock to be
designated "Common Stock." The total number of shares of Common Stock which the
corporation is authorized to issue is Ten Million (10,000,000). Upon the Filing
of these Amended and Restated Articles of Incorporation each outstanding share
of Common Stock shall be split into and reconstituted as four (4) shares of
Common Stock.
ARTICLE IV
(A) The liability of the directors of this Corporation for
monetary damages shall be eliminated to the fullest extent permissible under
California law.
(B) This Corporation is authorized to indemnify agents of
this Corporation, including without limitation, directors and officers, whether
by bylaw, agreement or otherwise, to the fullest extent permissible under
California Law and in excess of that expressly permitted by Section 317 of the
California General Corporation Law.
<PAGE> 2
THREE: The foregoing amendment has been approved by the Board
of Directors of this Corporation.
FOUR: The foregoing amendment was approved by the holders of
the requisite number of shares of this Corporation in accordance with Sections
902 and 903 of the California General Corporation Law; the total number of
outstanding shares of each class entitled to vote with respect to the foregoing
amendment was 1,064,500 shares of Common Stock, The number of shares voting in
favor of the foregoing amendment equaled or exceeded the vote required, such
required vote being a majority of the outstanding shares of Common Stock.
IN WITNESS WHEREOF, the undersigned has executed this
certificate on July 20, 1998.
----------------------------------------
Harry Masuda President and
Chief Financial Officer
The undersigned certifies under penalty of perjury that he has
read the foregoing Amended and Restated Articles of Incorporation and knows the
contents thereof, and that the statements therein are true,
Executed at Burlingame, California on July 20, 1998,
----------------------------------------
Harry Masuda President and
Chief Financial Officer
<PAGE> 1
EXHIBIT 2.1.4
2.1.4 Amended and Restated Articles Of Incorporation, June 18,
1999
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF HYPERBARIC SYSTEMS,
A CALIFORNIA CORPORATION
The undersigned, Harry Masuda and Ardeth Sealy, hereby certifies
that:
ONE: They are the duly elected and acting President and Chief
Financial Officer respectfully of this Corporation.
TWO: The Articles of Incorporation of this Corporation are
amended and restated to read in full as follows:
ARTICLE I
The name of the corporation is HyperBaric Systems.
ARTICLE II
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
This corporation is authorized to issue one class of stock to be
designated "Common Stock." The total number of shares of Common Stock which the
corporation is authorized to issue is Fifty Million (50,000,000).
ARTICLE IV
(A) The liability of the directors of this Corporation for
monetary damages shall be eliminated to the fullest
extent permissible under California law.
(B) This Corporation is authorized to indemnify agents of
this Corporation, including without limitation,
directors and officers, whether by bylaw, agreement or
otherwise, to the fullest extent permissible under
California Law, and in excess of that expressly
permitted by Section 317 of the California Corporation
Law.
THREE: The foregoing amendment has been approved by the Board of
Directors of this Corporation.
<PAGE> 2
FOUR: The foregoing amendment was approved by the holders of the
requisite number of share of this Corporation in accordance with sections 902
and 903 of the California General Corporation Law, the total number of
Outstanding shares of each class entitled to vote with respect to the foregoing
amendment was 6,064,667 shares of Common Stock. The number of shares voting in
favor of the foregoing amendment equal or exceeded the vote required, such
required vote being a majority of the outstanding shares of Common Stock.
IN WITNESS WHEREOF, the undersigned has executed this certificate on
June 18, 1999.
- ------------------------------------ ----------------------------------------
Harry Masuda, President Ardeth Sealy, Chief Financial Officer
The undersigned certifies under penalty of perjury that he has read the
foregoing Amended and Restated Articles of Incorporation and knows the contents
thereof, and that the statements therein are true.
Executed at Palo Alto, California June 18, 1999.
- ------------------------------------ ----------------------------------------
Harry Masuda, President Ardeth Sealy, Chief Financial Officer
(2)
<PAGE> 1
EXHIBIT 2.2
2.2. BYLAWS
BYLAWS FOR THE REGULATION OF
HYPERBARIC SYSTEMS
a California Corporation
ARTICLE I
Principal Executive Office
The principal executive office of the corporation shall be: 1127 Harker Avenue,
Palo Alto, California 94301. The board of directors shall have full power and
authority to, and to authorize appropriate officers of the corporation to,
change the location of the principal executive office and to establish other
offices of the corporation.
ARTICLE II
Meeting of Shareholders
Section 2.01 Annual Meetings. The annual meeting of shareholders shall
be held on the 26th day of February in each year (or, should such day fall upon
a legal holiday, then on the first day thereafter which is not a legal holiday)
at 2:00 o'clock P.M., or at such other time and on such other date as the board
of directors shall determine. At each annual meeting, directors shall be elected
and any other proper business may be transacted. [Section 600(b)]
Section 2.02 Special Meetings. Special meetings of shareholders may be
called by the board of directors, the chairman of the board (if there be such an
officer), the president, or the holders of shares entitled to cast not less than
ten percent (10%) of the votes at such meeting. [Section 600(d)] Each special
meeting shall be held at such date and time as is requested by the person or
persons calling the meeting within the limits fixed by law. [Section 601(c)]
<PAGE> 2
Section 2.03 Place of Meetings. Each annual or special meeting of
shareholders shall be held at such location as may be determined by the board of
directors, or if no such determination is made, at such place as may be
determined by the chief executive officer, or by any other officer authorized by
the board of directors or the chief executive officer to make such
determination. If no location is so determined, any annual or special meeting
shall be held at the principal executive office of the corporation. [Section
600(a)]
Section 2.04 Notice of Meetings. Notice of each annual or special
meeting of shareholders shall contain such information, and shall be given to
such persons at such time, and in such manner, as the board of directors shall
determine, or if no such determination is made, as the chief executive officer,
or any other officer so authorized by the board of directors or the chief
executive officer, shall determine, subject to the requirements of applicable
law. [Section 601]
Section 2.05 Conduct of Meetings. Subject to the requirements of
applicable law, all annual and special meetings of shareholders shall be
conducted in accordance with such rules and procedures as the board of directors
may determine and, as to matters not governed by such rules and procedures, as
the chairman of such meeting shall determine. The chairman of any annual or
special meeting of shareholders shall be designated by the board of directors
and, in the absence of any such designation, shall be the chief executive
officer of the corporation. [Section 212(b)(2)]
ARTICLE III
Directors
Section 3.01 Number. The number of directors of the corporation shall be
not less than three (3) nor more than five (5), until changed in accordance with
applicable law. The exact number of directors shall be fixed from time to time,
within the limits specified, by resolution of the board of directors or the
shareholders. Subject to the foregoing provisions for changing the exact number
of directors, the number of directors of this corporation shall be three (3).
[Section 212(a); Section 301.5(b)]
Section 3.02 Meetings of the Board. Each regular and special meeting of
the board shall be held at a location determined as follows: The board of
directors may designate
<PAGE> 3
any place, within or without the State of California, for the holding of any
meeting. If no such designation is made, (i) any meeting called by a majority of
the directors shall be held at such location, within the county of the
corporation's principal executive office, as the directors calling the meeting
shall designate; and (ii) any other meeting shall be held at such location,
within the county of the corporations principal executive office, as the chief
executive officer may designate, or in the absence of such designation, at the
corporation's principal executive office. [Section 307(a)(5)] Subject to the
requirements of applicable law, all regular and special meetings of the board of
directors shall be conducted in accordance with such rules and procedures as the
board of directors may approve and, as to matters not governed by such rules and
procedures, as the chairman of such meeting shall determine. The chairman of any
regular or special meeting shall be designated by the directors and, in the
absence of any such designation, shall be the chief executive officer of the
corporation. [Section 212(b)(2)]
Members of the board of directors (or any committee appointed by the
board) may participate in a meeting by means of conference telephone or similar
communications equipment whereby all persons participating in the meeting can
hear each other, and participation in such meeting in such manner shall
constitute presence in person at such meeting. [Section 307(a)(6)]
ARTICLE IV
Indemnification of Directors,
Officers, and Other Corporate Agents
Section 4.01 Indemnification. This corporation shall indemnify and hold
harmless any person who is or was a director, officer, employee or other agent
of this corporation, or is or was serving at the request of the Board of
Directors of this Corporation as a director, officer, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise (an "Agent"), from and against any expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with any "proceeding" (as defined in Section 317(a)) to the fullest extent
permitted by applicable law. [Section 317(a), (b)] The corporation shall advance
to its Agents expenses incurred in defending any
<PAGE> 4
proceeding (as defined in Section 317(a)) prior to the final disposition thereof
to the fullest extent and in the manner permitted by applicable law. [Section
317(f)]
Section 4.02 Right to Indemnification. This section shall create a right
of indemnification for each person referred to in Section 4.01, whether or not
the proceeding to which the indemnification relates arose in whole or in part
prior to adoption of such section and in the event of death such right shall
extend to such person's legal representatives. The right of indemnification
hereby given shall not be exclusive of any other rights such person may have
whether by law or under any agreement, insurance policy, vote of directors or
shareholders, or otherwise. [Section 317(g)]
Section 4.03 Insurance. The corporation shall have power to purchase and
maintain insurance on behalf of any agent of the corporation against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such whether or not the corporation would have the
power to indemnify the agent against such liability. [Section 317(i)]
ARTICLE V
Officers
Section 5.01 Officers. The corporation shall have a president, a chief
financial officer, a secretary, and such other officers, including a chairman of
the board, as may be designated by the board. Unless the board of directors
shall otherwise determine, the president shall be the chief executive officer of
the corporation. Officers shall have such powers and duties as may be specified
by, or in accordance with, resolutions of the board of directors. In the absence
of any contrary determination by the board of directors, the chief executive
officer shall, subject to the power and authority of the board of directors,
have general supervision, direction, and control of the officers, employees,
business, and affairs of the corporation. [Section 312(a)]
Section 5.02 Limited Authority of Officers. No officer of the
corporation shall have any power or authority outside the normal day-to-day
business of the corporation to bind the corporation by any contract or
engagement or to pledge its credit or to render it liable in connection with any
transaction unless so authorized by the board of directors.
<PAGE> 5
ARTICLE VI
Waiver of Annual Reports
So long as the corporation has less than 100 holders of record of its
shares (determined as provided in Section 605 of the California General
Corporation Law), no annual report to shareholders shall be required, and the
requirement to the contrary of Section 1501 of the California General
Corporation Law is hereby expressly waived. [Section 1501(a)]
ARTICLE VII
Amendments
New Bylaws may be adopted or these Bylaws may be amended or repealed by
the shareholders or, except for Section 3.01, by the directors. [Section 21 1]
<PAGE> 6
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
I. That I am the duly elected and acting secretary of HyperBaric
Systems, a California corporation; and
2. That the foregoing Bylaws, comprising five (5) pages, constitute
the Bylaws of said corporation as duly adopted by action of the Incorporator of
the corporation duly taken on February 26, 1998.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of said corporation this 30th day of June, 1998.
----------------------------------------
Mary Hernandez, Secretary
Seal
<PAGE> 1
EXHIBIT 3.1
(3) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS
3.1 STOCK PURCHASE AGREEMENT FOR FOUNDERS
(COMMON STOCK)
FEBRUARY 26, 1998
HyperBaric Systems
c/o 1127 Harker Avenue
Palo Alto, CA 94301
Gentlemen:
The undersigned (herein referred to as the "Investor") hereby agrees to
purchase _____________ shares of the common stock (the "Shares") of HyperBaric
Systems, a California corporation (the "Company"), at the time and upon the
terms and conditions as set forth herein.
Section 1 Investment in Common Stock.
The Investor acknowledges his/her understanding that the Company has
only recently been organized and that it is in the early development stage,
presently has no revenues and may never be able to implement its business plan.
Investor recognizes and acknowledges that the Company will probably incur losses
during its first years of operation.
Section 2 Purchase of Common Stock.
Investor agrees to purchase an aggregate of _______ shares of common
stock at a purchase price of $____ or $.01 per share. The purchase price for the
Shares has been paid by the Investor by pre-incorporation services rendered to
the Company prior to the date hereof (the "Services"). [The Services included,
among other things, the development and preparation of the Company's business
plan, the efforts involved in obtaining funding for the Company and _______.]
The Company acknowledges that such Services have been so rendered. The Board of
Directors of the Company has determined that the value of such Services equals
the purchase price for the Shares and Investor agrees that the Shares are
sufficient to repay him/her in full for the Services.
Section 3 Investment Representations of Investor.
At the time of the issuance of the Shares purchased by the Investor, the
Investor shall deliver to the Company an investment letter in the form of
Exhibit 1 to this Agreement.
Section 4 Voting Agreement.
At the time of the issuance of the Shares purchased by the Investor, the
Investor shall deliver to the Company an executed Voting Agreement in the form
of Exhibit 2 to this Agreement.
<PAGE> 2
Section 5 Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents, made and to be performed entirely within the State
of California.
(b) Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors, and administrators of
the parties hereto.
(c) Entire Agreement. This Agreement and any other document
delivered pursuant hereto constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof and no party
shall be liable or bound to any other party in any manner by any
representations, warranties, covenants, or agreements except as specifically set
forth herein or therein.
(d) Modification. This Agreement may be modified, amended or
waived only by a writing executed by the parties hereto.
(e) Notices. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, return receipt requested, postage prepaid, or otherwise
delivered by hand, messenger or facsimile transmission, to the addresses which
appear on the signature page of this Agreement. Any party may change the address
at which it is to receive notices and communications by so notifying the other
parties to this Agreement in the manner set forth in this Section 5(e).
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first written above.
Name of Investor:
-----------------------
Address:
----------------------------------------
----------------------------------------
HYPERBARIC SYSTEMS
----------------------------------------
By:
-------------------------------------
Title:
----------------------------------
Address:
--------------------------------
<PAGE> 1
EXHIBIT 3.2
3.2 REPRESENTATION LETTER FOR FOUNDERS
DATE
HYPERBARIC SYSTEMS
c/o 1127 Harker Avenue
Palo Alto, CA 94301
Gentlemen:
Simultaneously with the delivery of this letter, the undersigned is
acquiring _______ shares (the "Shares") of common stock of HyperBaric Systems, a
California corporation (the "Corporation"), from the Corporation. The
undersigned makes the following representations and warranties to, and covenants
with, the Corporation in connection with such acquisition as follows:
1. The undersigned understands that the Shares are being issued
without registration under the Securities Act of 1933, as amended (the "1933
Act"), pursuant to an exemption from the registration requirements of the 1933
Act, and without qualification under the California Corporate Securities Law of
1968, as amended (the "California Act"), pursuant to an exemption from the
qualification requirements of the California Act. (The 1933 Act and the
California Act are referred to herein collectively as the "Acts.") Such
exemptions only exempt the issuance of the Shares to the undersigned and not any
sale or other disposition of the Shares or any interest therein by the
undersigned. The undersigned understands that the Shares are unregistered and
unqualified under the Acts and that, as such, the Shares cannot be sold or
otherwise disposed of without the undersigned first complying fully with the
provisions of the Acts, unless applicable exemptions therefrom are available.
The undersigned understands that the stock certificate evidencing the Shares
will bear a legend to that effect. The undersigned hereby agrees not to make any
sales or dispositions without first complying fully with the provisions of the
Acts, unless applicable exemptions therefrom are available.
2. The Shares are being acquired and will be taken and received for
investment for the account of the undersigned. The undersigned has no present
intention of selling or distributing such Shares or any interest therein to
others. The undersigned has no contract, undertaking, agreement or arrangement
with any person to sell, transfer or otherwise distribute to such person or to
have such person sell, transfer or otherwise distribute on the undersigned's
behalf any of the Shares or any interest therein, and the undersigned is
presently not engaged, nor does the undersigned plan to engage within the
presently foreseeable future, in any discussion with any person relative to such
sale, transfer or other distribution of any of the Shares or any interest
therein.
<PAGE> 2
3. As described in Section 25102(f)(2) of the California Act and
Section 260.102.12(d) of the California Code of Regulations, the undersigned has
a preexisting personal or business relationship with the Corporation or its
officers, directors or controlling persons as follows:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OR
By reason of the undersigned's business or financial experience [or the
business or financial experience of the undersigned's professional advisor, as
defined in Section 260.102.12 (g) of the California Code of Regulations], the
undersigned can protect the undersigned's interests in connection with the
acquisition of the Shares. [The undersigned's professional advisor in connection
with the acquisition is ________________________________________ and such
advisor is unaffiliated, as defined in Sections 260.102.12(h) of the California
Code of Regulations, with the Corporation and is not being compensation,
directly or indirectly, by the Corporation or any affiliate or selling agent of
the Corporation.]
4. The undersigned hereby agrees to indemnify the Corporation, each
of its directors and officers and any controlling persons, and to hold the
Corporation and them harmless, from and against any and all liabilities,
damages, claims, debts, costs and expenses suffered or incurred by the
Corporation or them (including costs of investigation and defense and attorneys'
fees) arising out of any breach of the agreements or any inaccuracy of the
representations made herein.
Very truly yours
by:
--------------------------------------
name:
<PAGE> 1
EXHIBIT 3.3
3.3 STOCK PURCHASE AGREEMENT - PRIVATE PLACEMENT
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the _______ day of
_______ 19__, by and between HYPERBARIC SYSTEMS, a California corporation (the
"Company"), and the purchasers set forth on Attachment 1 hereto (the
"Purchasers," or each individually a "Purchaser," which term includes such
Purchaser's successors and assigns).
WHEREAS, the Purchasers desires to purchase shares of Common
Stock of the Company and the Company desires to sell shares of its Common Stock
to the Purchasers;
NOW THEREFORE, it is hereby agreed as follows:
1. Sale of Stock. The Company shall sell to each Purchaser and each
Purchaser shall purchase, jointly but not severally, from the Company that
number of Shares of Common Stock of the Company as is set forth on Attachment 1
hereto opposite each such Purchaser's name, at a price of $____ per share (the
"Purchase Price"). The Shares of Common Stock purchased by the Purchasers
pursuant to this Agreement shall hereinafter be referred to as the "Stock."
2. Payment of Purchase Price. Each Purchaser shall pay the Purchase Price
for the Shares of Common Stock they are purchasing in cash or cash equivalent.
3. Issuance of Shares. As soon as practicable after the execution of this
Agreement and payment for the Stock, the Company shall issue a duly executed
certificate in the name of each Purchaser evidencing the Stock purchased by each
such Purchaser.
4. "Market Stand-Off" Agreement. Each Purchaser hereby agrees that, during
that period of duration specified by the Company and an underwriter of common
stock (or other securities) of the Company, following the effective date of a
registration statement of the Company filed under the Act, Purchaser shall not,
to the extent requested by the Company and such underwriter, directly or
indirectly, offer to sell, contract to sell (including, without limitation, any
short sale), grant any option to purchase or otherwise transfer or dispose of
(other than to donees who agree to be similarly bound) any common stock (or such
other securities) of the Company held by Purchaser at any time during such
period except common stock (or other securities) included in such registration,
provided, however, that (a) such agreement shall be applicable only to the first
such registration statement of the Company which covers common stock (or other
securities) to be sold on its behalf to the public in an underwritten offering,
and (b) all officers and directors of the Company and all persons with
registration rights with respect to securities of the Company enter into similar
agreements.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to such stock held by Purchaser until
the end of such period.
<PAGE> 2
5. Representations and Warranties of Purchaser.
(a) Investment Intent. This Agreement is made with each Purchaser in
reliance upon such Purchaser's representation to the Company, which by
Purchaser's acceptance hereof he confirms, that the shares of the Stock have
been acquired with Purchaser's own funds, for investment purposes only, for
Purchaser's own account, not as a nominee or agent, and not with a view to the
sale or distribution of any part thereof, and that he or she has no present
intention of selling, granting participation in, or otherwise distributing such
stock. By executing this Agreement, Purchaser further represents that he or she
does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer, or grant participations, to such person or to any
third person, with respect to any of such Stock.
(b) Restricted Securities. Each Purchaser understands that the Stock has not
been and will not be registered under the Act on the ground that the sales
provided for is this Agreement are exempt pursuant to section 4(2) of the Act,
and that the Company's reliance on such exemption is predicated on the
Purchaser's representations set forth herein.
Each Purchaser understands that if the Company does not register with
the Securities and Exchange Commission pursuant to sections 12 or 15 of the
Securities Exchange Act of 1934 or if a registration statement covering the
Stock (or a filing pursuant to the exemption from registration under Regulation
A of the Act) under the Act is not in effect when Purchaser desires to sell the
Stock, Purchaser may be required to hold the Stock for an indeterminate period.
The Purchaser also acknowledges that he or she understands that any sale of the
Stock that might be made in reliance upon Rule 144 under the Act may be made
only in limited amounts in accordance with the terms and conditions of Rule 144
and that Purchaser may not be able to sell the Stock at the time or in the
amount it desires. Purchaser is familiar with Rule 144 and understands that the
Stock constitutes "restricted securities" within the meaning of that Rule.
(c) Investment Experience. In connection with his investment representations
made herein, each Purchaser represents that he is able to fend for himself in
the transactions contemplated by this Agreement, has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of the investment, has the ability to bear the economic risks
of its investment and has been furnished with and has had access to such
information as would be made available in the form of a registration statement
together with such additional information as is necessary to verify the accuracy
of the information supplied and to have all of his or her questions answered by
the Company.
(d) Limitations on Disposition. Each Purchaser agrees that in no event will
he make a disposition of any of the Stock unless and until (a) he shall have
notified the Company of the proposed disposition and shall have furnished the
Company with a statement of the circumstances surrounding the proposed
disposition, and (b) shall have furnished the Company with an opinion of counsel
satisfactory to the Company and its counsel to the effect that (i) such
disposition will not require registration of such Stock under the Act, or (ii)
that appropriate action necessary for compliance with the Act has been taken, or
(c) the Company shall have waived, expressly and in writing, its rights under
clauses (a) and (b) of this subsection 5(d).
The Company shall not be required (i) to transfer on its books any
shares of Stock of the Company that shall have been sold or transferred in
violation of any of the provisions set forth in
<PAGE> 3
this Agreement, or (ii) to treat as owner of such shares or to accord the right
to vote as such owner or to pay dividends to any transferee to whom such shares
shall have been so transferred.
(e) Legends. All certificates representing any shares of Stock of the
Company subject to the provisions of this Agreement shall have endorsed thereon
the following legends:
(i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A CERTAIN STOCK PURCHASE AGREEMENT THAT INCLUDES A
MARKET STAND-OFF AGREEMENT. COPIES OF THE AGREEMENT MAY BE OBTAINED UPON WRITTEN
REQUEST MADE TO THE SECRETARY OF THE CORPORATION.
(ii) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW
TO DISTRIBUTION OR RESALE, AND MAY NOT BE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE ACT, OR PURSUANT TO RULE 144
UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT."
(iii) Any legend required to be placed thereon by applicable state
securities laws.
6. Miscellaneous.
(a) Further Instruments and Actions. The parties agree to execute such
further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement.
(b) Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, sent first class with postage and fees
prepaid, addressed to the other party hereto at its address hereinafter shown
below its signature or at such other address as such party may designate by ten
(10) days' advance written notice to the other party hereto.
(c) Governing Law. This Agreement is governed by the substantive laws of
California without regard to choice of law rules and shall inure to the benefit
of the successors and assigns of the Company and, subject to the restrictions on
transfer herein set forth, be binding upon Purchaser, his or her heirs,
executors, administrators, guardians, successors and assigns.
(d) Amendments and Waivers. This Agreement represents the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all previous understandings, written or oral. This Agreement may only
be amended with the written consent of the parties hereto and the Company's
authorized assignees, or the successors or assigns of the foregoing, and no oral
waiver or amendment shall be effective under any circumstances whatsoever.
<PAGE> 4
7. California Commissioner of Corporations. THE SALE OF THE SECURITIES THAT
IS THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA, AND IN THE ABSENCE OF AN EXEMPTION FROM
SUCH QUALIFICATION REQUIREMENT, THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT
OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION
FROM SUCH QUALIFICATION BEING APPLICABLE.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
HYPERBARIC SYSTEMS,
A CALIFORNIA CORPORATION
BY:
----------------------------------------
HARRY MASUDA, CHIEF EXECUTIVE OFFICER
ADDRESS: 1127 HARKER AVENUE
PALO ALTO, CA 94301
PURCHASER
BY:
----------------------------------------
----------------------------------------
ADDRESS:
----------------------------------------
----------------------------------------
<PAGE> 5
PURCHASER
----------------------------------------
ADDRESS:
----------------------------------------
----------------------------------------
PURCHASER
----------------------------------------
ADDRESS:
----------------------------------------
----------------------------------------
PURCHASER
----------------------------------------
ADDRESS:
----------------------------------------
----------------------------------------
PURCHASER
----------------------------------------
ADDRESS:
----------------------------------------
----------------------------------------
<PAGE> 6
ATTACHMENT 1
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
NAME NO. SHARES PURCHASED INVESTMENT
- ---------------------------------------------------------------------
<S> <C> <C>
- --------------------------- ------------------ $ -------------
- --------------------------- ------------------ $ -------------
- --------------------------- ------------------ $ -------------
- --------------------------- ------------------ $ -------------
- --------------------------- ------------------ $ -------------
- --------------------------- ------------------ $ -------------
- --------------------------- ------------------ $ -------------
</TABLE>
<PAGE> 1
EXHIBIT 3.4
3.4 SUBSCRIPTION AGREEMENT, REGULATION D, RULE 504
SUBSCRIPTION AGREEMENT
HyperBaric Systems
1127 Harker Avenue
Palo Alto, CA 94301
Gentlemen:
1. SUBSCRIPTION. The undersigned hereby applies to subscribe to
__________ Shares of the Common Stock of HyperBaric Systems, a California
corporation (the "Corporation"), no par value (the "Shares'), in consideration
for Twenty Five Cents ($.25) per Share. Enclosed with this Application is a
check payable to "HyperBaric Systems" as tender of the total purchase price of
the Shares subscribed for in the total sum of ___________________ Dollars ($
___________), in accordance with the terms and conditions of the Offering
Memorandum dated August 15, 1998 (the "Memorandum").
THE UNDERSIGNED ACKNOWLEDGES THAT THE SHARES BEING SUBSCRIBED FOR
HEREUNDER ARE OFFERED SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH IN
THE MEMORANDUM, A COPY OF WHICH THE UNDERSIGNED HAS BEEN FURNISHED. THE
UNDERSIGNED ALSO ACKNOWLEDGES THAT THIS SUBSCRIPTION AGREEMENT IS SUBJECT TO THE
UNCONDITIONAL RIGHT OF THE CORPORATION TO ACCEPT OR REJECT THE SAME IN WHOLE OR
IN PART.
2. REPRESENTATIONS BY UNDERSIGNED. The undersigned represents and
warrants as follows:
A. The undersigned has received and read the Memorandum,
relating to the Offering of the Shares, and has relied only on the
information contained therein;
----------------------------------------
(initial)
B. The undersigned is purchasing Shares in the Corporation
without being furnished any Offering literature or prospectus other than
the Memorandum and the undersigned understands that this transaction and
the Memorandum may not have been scrutinized by the Securities and
Exchange Commission or the securities authorities of any state.
----------------------------------------
(initial)
<PAGE> 2
C. The undersigned (and the undersigned's purchaser
representative(s), if any), has (have) such knowledge and experience in
financial and business matters as to be capable of evaluating the merits
and risks of this investment; and the undersigned is aware that this
investment represents A SUBSTANTIAL RISK OF LOSS. The undersigned
represents and warrants that: (1) the undersigned has adequate means of
providing for the undersigned's current needs and possible personal
contingencies, (2) the undersigned has no need for liquidity with
respect to this investment, (3) the undersigned has no reason to
anticipate any change in the undersigned's personal circumstances,
financial or otherwise, which may cause or require any sale or
distribution of the undersigned's Shares, and (4) the undersigned is
able to bear the economic risk of ties investment -- specifically, the
undersigned is able to bear the COMPLETE LOSS OF THIS INVESTMENT (i.e.,
the full purchase price of the undersigned's Shares and any additional
capital contributions.)
----------------------------------------
(initial)
D. The undersigned (and the undersigned's purchaser
representative(s), if any) has (have) been given: (1) a copy of the
Memorandum, (2) any additional information requested, and (3) the
opportunity to communicate directly with the Officers and Directors of
the Corporation, in order to verify the accuracy of, or amplify upon,
the information in the Memorandum.
----------------------------------------
(initial)
E. The undersigned is aware that the Shares are not being
registered under the Securities Act of 1933 (the "1933 Act"). The
undersigned understands that the Shares are being offered and sold in
reliance on the exemption from registration provided by Sections 3(b) of
the 1933 Act and Regulation D, Rule 504 promulgated thereunder. The
undersigned represents and warrants that: (1) the Shares are being
acquired solely for the undersigned's own account, for investment
purposes only, and are not being purchased with a view to or in
connection with, any resale, distribution, subdivision or
fractionalization thereof, and (2) the undersigned has no agreement or
other arrangement, formal or informal, with any person to sell, transfer
or pledge any of the Shares' or which would guarantee to the undersigned
any profit, or protect the undersigned against any loss with respect to
the Securities, and the undersigned has no plans to enter into any such
agreement or arrangement. The undersigned understands that the
undersigned may be required to bear the economic risk of this investment
for an indefinite period of time because there is currently no trading
market for the Shares and the Shares cannot be resold or otherwise
transferred unless applicable state securities laws are complied with
(which the Corporation is not obligated to do) or exemptions therefrom
are available.
----------------------------------------
(initial)
<PAGE> 3
F. The undersigned understands that the Shares cannot be
sold or assigned without the registration and/or qualification under any
applicable state securities laws or exemptions from such laws.
----------------------------------------
(initial)
G. The undersigned understands that the Corporation has no
obligation to register the Shares under the 1933 Act or to register or
qualify the Shares for sale under any state securities laws, or to take
any other action, through the establishment of exemption(s) or
otherwise, to permit the transfer thereof.
----------------------------------------
(initial)
H. As a condition of the right to subscribe for the capital
stock referred to herein, the undersigned acknowledges that the Shares
are offered solely by the Memorandum dated August 15, 1998 and on the
terms and conditions described therein. IF ANY REPRESENTATIONS HAVE BEEN
MADE OTHER THAN THOSE MADE IN THE MEMORANDUM, SUCH REPRESENTATIONS MUST
NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE CORPORATION.
----------------------------------------
(initial)
I. All information which the undersigned has provided to
the Corporation concerning himself or herself is correct and complete as
of the date set forth at the end hereof
----------------------------------------
(initial)
J. I will hold title to my Shares as follows:
______Community Property _____Tenants in Common
______Joint Tenants, with _____Separate Property
Right of Survivorship
______Other (Corporation, Single Person, Trust, etc. Please indicate.)
<PAGE> 4
DATED: , 1998
------------ ----------------------------------------
Name of Entity, if any
- ------------------------------------ ----------------------------------------
Signature (Individual) *Signature with Title
- ------------------------------------
Signature (all record holders should sign)
- ------------------------------------ ----------------------------------------
Name(s) Typed or Printed Name Typed or Printed
- ------------------------------------ ----------------------------------------
Address to Which Correspondence Address to Which Correspondence
should be Directed should be Directed
- ------------------------------------ ----------------------------------------
- ------------------------------------ ----------------------------------------
City, State and Zip Code City, State and Zip Code
- ------------------------------------ ----------------------------------------
Tax Identification or Tax Identification or Social
Social Security Number Security Number
- ------------------------------------ ----------------------------------------
Telephone Number Telephone Number
If the Securities are being subscribed for by an entity, the Certificate of
Signatory which follows must also be completed.
WHEN COMPLETED AND SIGNED THIS SUBSCRIPTION AGREEMENT AND THE SUBSCRIBER'S CHECK
(PAYABLE TO - HYPERBARIC SYSTEMS") WILL BE DELIVERED TO HARRY MASUDA, TREASURER
OF THE COMPANY, AT 1127 HARKER AVENUE, PALO ALTO, CA 94301.
<PAGE> 5
CERTIFICATE OF SIGNATORY
(TO BE COMPLETED IF SECURITIES ARE BEING SUBSCRIBED FOR BY AN ENTITY)
I, __________________________am the ___________________________________
of _____________________________________(the "Entity").
I certify that I am empowered and duly authorized by the Entity to
execute and carry out the terms of the Subscription Agreement and to purchase
and hold the Securities, and certify further that the Subscription Agreement has
been duly and validly executed on behalf of the Entity and constitutes A legal
and binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this _________ day of ___________
1998.
- ---------------------------------------
Signature
<PAGE> 1
EXHIBIT 3.5
3.5 SUBSCRIPTION AGREEMENT, REGULATION D, RULE 506
SUBSCRIPTION AGREEMENT
HYPERBARIC SYSTEMS
A CALIFORNIA CORPORATION
THE COMMON STOCK (THE STOCK) REFERRED TO HEREIN HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), OR QUALIFIED
UNDER THE CORPORATE SECURITIES LAWS OF THE STATE OF CALIFORNIA OR ANY OTHER
STATE OR JURISDICTION. THE STOCK IS SOMETIMES REFERRED TO HEREIN AS THE
"SECURITIES". THE SECURITIES MUST BE ACQUIRED FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION OF SUCH SECURITIES
UNDER THE ACT UNLESS AN EXEMPTION FROM APPLICABLE FEDERAL AND STATE SECURITIES
LAWS IS OR BECOMES AVAILABLE AND THE HOLDER OF THE SECURITIES PROVIDES TO
HYPERBARIC SYSTEMS, PRIOR TO SUCH TRANSFER, AN OPINION OF COUNSEL, SATISFACTORY
TO HYPERBARIC SYSTEMS AND ITS COUNSEL, THAT THE TRANSFER OF THE SECURITIES DOES
NOT VIOLATE ANY APPLICABLE FEDERAL OR STATE SECURITIES LAWS.
This Subscription Agreement is made by and between HyperBaric
Systems, a California corporation (the "Company") and the undersigned
prospective purchaser who is subscribing hereby for the Securities.
In consideration of the Company's agreement to accept the
undersigned as a holder of Stock upon the terms and conditions set forth herein,
the undersigned agrees and represents as follows:
A. SUBSCRIPTION
1. By executing this Subscription Agreement ("Agreement"),
the undersigned agrees to purchase that number of shares of Stock as is set
forth on the signature page hereof, upon acceptance of this offer by the
Company, and tenders payment in full herewith for such Securities (the
"Payment").
2. The Payment will be returned promptly, without interest,
in the event that for any reason the purchase and sale of the Securities
subscribed for hereby is not consummated within 30 days following the date this
Subscription Agreement is duly executed and delivered by the undersigned (such
date is hereinafter referred to as the Closing Date) or in the event that the
undersigned's subscription is rejected.
B. GENERAL REPRESENTATIONS AND WARRANTIES
1. The undersigned hereby represents and warrants to, and
agrees with the Company, as follows:
<PAGE> 2
(a) The Securities are being purchased for his own
account, for investment purposes only, and not for the account of any other
person, and not with a view to distribution, assignment or resale to others or
to fractionalization in whole or in part. The Securities are offered pursuant to
exemptions provided by the Act and by exemptions set forth in certain state
securities laws and certain rules and regulations promulgated pursuant thereto.
In furtherance thereof, the undersigned represents, warrants, and agrees as
follows: (i) no other person has or will have a direct or indirect beneficial
interest in such Securities and the undersigned will not sell, hypothecate or
otherwise transfer the Securities except in accordance with the Act and
applicable state securities laws or unless, in the opinion of counsel for the
Company, an exemption from the registration requirements of the Act and such
laws is available; and (ii) the Company is under no obligation to register the
Securities on behalf of the undersigned or to assist him in complying with any
exemption from registration.
(b) The undersigned has been furnished with and has
carefully read and fully understands the contents of the Company's Offering
Memorandum (the "Memorandum") and has read and fully understands the terms of
this Agreement and any other agreement delivered in connection herewith, and
acknowledges that any questions he may have had regarding the statements
contained in the Memorandum or the terms of this Agreement have been fully
answered to his satisfaction.
(c) In evaluating the suitability of an investment
in the Company, the undersigned has not relied upon any representations or other
information (whether oral or written) from the Company, or any of its agents
other than as set forth in the Memorandum and, if applicable, written
information from the Company provided in response to questions or requests for
additional information and has not relied on any other representations,
warranties or information (whether oral or otherwise) and no oral or written
representations or warranties have been made or oral or written information
furnished to the undersigned or his advisors, if any, in connection with the
offering of the Securities which were in any way inconsistent with the
Memorandum.
(d) The undersigned has been given the opportunity
to ask questions of the Company and to obtain any additional information from
the Company which the undersigned and his purchaser representative, if any,
deemed pertinent to this investment; any questions that were asked have been
fully answered, and any information that was requested has been provided.
(e) The undersigned recognizes the Company has only
recently been organized and that it has limited financial or operating history
and that investment in the Company involves substantial risks, and he has taken
full cognizance of and understands all of the risk factors related to the
purchase of the Securities. Accordingly, the undersigned represents that he
fully understands that this is a highly speculative investment and that there
are substantial risks that the undersigned will suffer a complete loss of his
investment in the Securities.
(f) The undersigned has carefully considered and
has, to the extent he believes such discussion necessary, discussed with his
professional legal, tax and financial advisers the suitability of an investment
in the Company for his particular tax and financial situation and he has
determined that the Securities are a suitable investment for him.
(g) All information which the undersigned has
previously provided to the Company concerning himself and his financial position
and knowledge of financial, business and
<PAGE> 3
investment matters is correct and complete as of the date of the date hereof,
and if there has been or is any change in such information prior to the
acceptance of this subscription, he has or will immediately provide such
information to the Company and will promptly send confirmation of such
information to the Company.
(h) The undersigned understands that the offering of
the Securities has not been and will not be registered under the Act in reliance
on the exemption for offerings provided by Section 4(2) of the Act and Rule 505
and certain other regulations promulgated thereunder and that the undersigned
has no right to require such registration. The undersigned further understands
that the offering of the Securities has not been and will not be qualified or
registered under state securities laws in reliance upon exemptions under such
laws for non-public offerings, and, in part, in reliance upon the
representations made and information furnished by the undersigned herein; and
that neither the offering of the Securities, nor the Memorandum have been
reviewed by the Securities and Exchange Commission or any state securities
authorities.
(i) The undersigned, or if the undersigned is an
entity, the person making the investment decision on behalf of the entity, has
the capacity, by reason of the undersigned's or such person's business or
financial experience (or that of the undersigned's purchaser representative) to
evaluate the merits and risks of an investment in the Securities and to protect
the undersigned's own interests in connection with such investment and the
undersigned is able to bear the economic risk of such investment.
2. The foregoing representations and warranties are true
and accurate as of the date hereof, shall be true and accurate as of the date of
the acceptance hereof by the Company and shall survive thereafter. If such
representations and warranties shall not be true and accurate in any respect,
the undersigned will, prior to such acceptance, give written notice of such fact
to the Company specifying which representations and warranties are not true and
accurate and the reasons therefor.
3. The undersigned shall indemnify and hold harmless the
Company and any of its shareholders, officers, directors, employees, partners,
counsel or agents who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of or arising from any
actual or alleged misrepresentation or misstatement of facts or omission to
represent or state facts made by the undersigned to the Company concerning
himself or his financial position in connection with the offering or sale of the
Securities which is not remedied by timely notice to the Company as provided
above, against losses, liabilities and expenses for which the Company or any of
its shareholders, officers, directors, employees, counsel or agents have not
otherwise been reimbursed (including attorneys fees, judgments, fines and
amounts paid in settlement) as actually and reasonably incurred by such person
or entity in connection with such action, suit or proceeding.
C. INVESTOR INFORMATION
The undersigned (if the undersigned is a natural person) or the
individual making the investment decision for the undersigned (if the
undersigned is a partnership, corporation, trust or other entity, (the
"Subscribing Person") represents that the undersigned is an Accredited Investor
within the definition in Rule 501 of Regulation D as promulgated under the
Securities
<PAGE> 4
Act of 1933, as amended, and as set forth in the Private Placement Memorandum.
The undersigned also represents that the undersigned has no need for liquidity
of the amount invested and the investment does not represent more than 10% of
the undersigned's liquid net worth.
In furnishing and, if necessary, updating the information
provided to the Company, I acknowledge that the Company will be relying thereon
in determining, among other things, whether there are reasonable grounds to
believe that I qualify as a purchaser under exemptions provided by the Act and
by certain state securities laws and certain rules and regulations promulgated
pursuant thereto.
D. UNDERSTANDINGS
1. The undersigned understands, acknowledges and agrees
with the Company as follows:
(a) This Subscription may be rejected, in whole or
in part, by the Company in its sole discretion, at any time prior to the
execution and delivery hereof by the Company, notwithstanding prior receipt by
the undersigned of notice of acceptance of the undersigned's subscription.
(b) This Subscription is and shall be irrevocable,
except that the undersigned shall have no obligations hereunder in the event
that: (i) this subscription is rejected for any reason or (ii) the purchase and
sale of the Securities subscribed for hereby are not consummated.
(c) No federal or state agency has made any finding
or determination as to the fairness of this offering for investment, nor any
recommendation or endorsement of the Securities.
(d) There is no public market for the Securities or
any other securities which the Company may offer and there is no certainty that
such a market will ever develop. There can be no assurance that the undersigned
will be able to sell or dispose of the Securities. Moreover, no assignment,
sale, transfer, exchange or other disposition of the Securities can be made
other than in accordance with all applicable securities laws. It is understood
that in order not to jeopardize the offering's exempt status under the Act and
under certain state securities laws, the transferee may at a minimum be required
to fulfill investor suitability requirements.
(e) The undersigned acknowledges that any financial
illustrations, projections or forecasts provided to the undersigned in
connection with this investment do not constitute predictions regarding future
financial results of the Company or a return on an investment in the Securities,
are based on a number of assumptions as to future events that may not occur or
may occur differently than assumed, and that actual results will in all
probability differ from the results illustrated and that such differences could
be material.
(f) The undersigned acknowledges that the
information contained in the Memorandum is confidential and non-public and
agrees that all such information shall be kept in confidence by him and neither
used by him to his personal benefit nor disclosed to any third party for any
reason (other than in connection with his subscription for the Securities);
provided, that this obligation shall not apply to any such information which:
(i) is part of the public
<PAGE> 5
knowledge or literature and readily accessible at the date hereof; (ii) becomes
part of the public knowledge or literature and readily accessible by publication
(except as a result of a breach of these provisions); or (iii) is received from
third parties (except third parties who disclose such information in violation
of any confidentiality agreements including, without limitation, any
Subscription Agreement they may have with the Company).
(g) The undersigned has had prior personal or
business relationships with the Company or its officers or directors or General
Partners, or officers or directors or General Partners of the Company, or by
reason of his business or financial experience, has the capacity to protect his
own interest in connection with this transaction.
2. The representations, warranties, understandings,
acknowledgments and agreements in this Agreement are true and accurate as of the
date hereof, shall be true and accurate as of the date of the acceptance hereof
by the Company and shall survive thereafter.
E. MISCELLANEOUS
1. All pronouns and any variations thereof used herein
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the person or persons may require.
2. Neither this Subscription Agreement nor any provisions
hereof shall be waived, modified, changed, discharged, terminated, revoked or
canceled except by an instrument in writing signed by the party against whom any
such waiver, modification, change, discharge, termination, revocation or
cancellation is sought.
3. Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be sufficiently given when personally
delivered or sent by registered mail, return receipt requested, addressed to the
other party at the address of such party set forth herein, or to such other
address furnished by notice given in accordance with this Article E.
4. Failure of the Company to exercise any right or remedy
under this Subscription Agreement or any other agreement between the Company and
the undersigned, or otherwise, or delay by the Company in exercising such right
or remedy, shall not operate as a waiver thereof. No waiver by the Company shall
be effective unless and until it is in writing and signed by the Company.
5. This Subscription Agreement shall be enforced, governed
and construed in all respects in accordance with the laws of the State of
California, as such laws are applied by California courts to agreements entered
into and to be performed in California by and between residents of California,
and shall be binding upon the undersigned, his heirs, estate, legal
representatives, successors and assigns and shall inure to the benefit of the
Company and its successors and assigns.
6. In the event that any provision of this Subscription
Agreement is declared invalid or unenforceable by a court of competent
jurisdiction under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any
<PAGE> 6
provision hereof which may prove invalid or unenforceable under any law shall
not affect the validity or enforceability of any other provision hereof.
7. This Subscription Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes any and all prior or contemporaneous representations, warranties,
agreements and understandings in connection therewith. This Subscription
Agreement may be amended only by a writing executed by all parties hereto:
8. Title to the Securities shall be taken as follows:
(check one):
( ) Husband and wife, as community property;
( ) Joint Tenants;
( ) Tenants in common;
( ) Separate property;
( ) Living Trust;
( ) Corporation (Attach copy of resolution authorizing
this investment);
( ) Partnership (Attach copy of partnership agreement);
( ) Custodian, Trustee (Attach copy of agreement);
( ) Other:
----------------------------------------
<PAGE> 7
HYPERBARIC SYSTEMS
SUBSCRIPTION AGREEMENT
SIGNATURE PAGE
This page constitutes the signature Page for the Subscription
Agreement. The undersigned represents to you that (a) the information contained
herein is complete and accurate on the date hereof and may be relied upon by you
and (b) the undersigned will notify you immediately of any change in any of such
information occurring prior to the acceptance of the subscription and will
promptly send you written confirmation of such change. The undersigned hereby
certifies that he has read and understands the Memorandum and this Subscription
Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this ______day of _____________, 1999.
$
- ----------------------------- ----------------------------------------
Number of Shares of Total Purchase Price
Common Stock
----------------------------------------
NAME OF PURCHASER
----------------------------------------
Signature
----------------------------------------
Title of Authorized Signature if
Purchaser is a corporation, partnership
or other entity
----------------------------------------
Signature of Spouse or Co-Owner
<PAGE> 1
EXHIBIT 5
(5) VOTING TRUST AGREEMENT
VOTING AGREEMENT -- FOUNDERS
This Voting Agreement (this "Agreement") is made and entered into as of February
27, 1998 among HyperBaric Systems, a California corporation (the "Company") and
the holders of Common Stock of the Company who are signatories hereto
(collectively the "Founders"), listed on Exhibit A hereto, which Exhibit may be
updated from time to time to reflect changes, deletions or additions made in
accordance with the terms herein.
RECITALS
A. The Founders desire to insure the long-term
effectiveness of management in attaining the goals of all of the shareholders.
B. The Founders desire to maintain a three-member Board of
Directors and to nominate and elect certain Directors to serve on the Board, in
accordance with the terms and conditions set forth below.
AGREEMENT
NOW, THEREFORE, the parties hereto hereby agree as follows:
l. Shares Subject To Agreement. The Founders, as the
holders of Common Stock of the Company each agree on behalf of themselves, and
any transferee or assignee of any such shares of Common Stock during the term of
this Agreement and any extensions thereof, to hold all of such shares of Common
Stock held in their respective names (or held in trust under their control), and
any other shares of stock of the Company acquired by any of them in the future
(the "Founders' Shares") subject to, and to vote the Founders' Shares in
accordance with, the provisions of this Agreement.
The Company agrees that it shall not issue additional shares of
its Common Stock unless and until the person to whom such security is to be
issued becomes a party to this Agreement and agrees to be bound by all the
provisions hereof. The parties hereto agree that any such additional purchaser
may become a party hereto without further consent of the parties by signing this
Agreement and being added to the list of parties on Exhibit A hereto.
Notwithstanding the foregoing, the Board may approve the issuance of Common
Stock to persons who are not bound by the provisions of this Agreement up to and
including the aggregate amount of 500,000 shares.
3. Nomination and Election Of Directors. The Company's
Bylaws shall at all times authorize a three (3) member Board of Directors. Each
of the undersigned hereby agrees to nominate and to vote all of their shares of
Common Stock of the Company to elect Paul Okimoto, Harry Masuda and George
Tsukuda as members of the Company's Board of Directors. Notwithstanding the
above, if at any time any of the Directors named above is no longer a
shareholder of the Company, then the remaining Founders may agree to nominate
and elect a replacement for such Director(s). Furthermore, any two Directors may
vote to remove and replace the third Director without cause at any time.
<PAGE> 2
4. Termination Of This Agreement. This Agreement shall
terminate upon the earlier of (a) the closing of the sale of the Company's
Common Stock in a public offering; or (b) February 27, 2008.
5. Successors In Interest.
(a) The provisions of this Agreement shall be
binding upon the successors in interest to any of the Founders' Shares. So long
as this Agreement is in effect, the Company shall not permit the transfer of any
of the Founders' Shares on its books or issue one or more new certificates for
common stock unless and until the person or entity to whom such security is to
be transferred shall have executed a written agreement, substantially in the
form of this Agreement, pursuant to which such person becomes a party to this
Agreement and agrees to be bound by all the provisions hereof as if such person
were an original party to this Agreement.
(b) Each certificate representing any of the
Founders' Shares shall be marked by the Company with a legend reading
substantially as follows:
"The shares evidenced hereby are subject to a Voting Agreement
dated February 27, 1998 (a copy of which may be obtained from
the issuer), and by accepting any interest in such shares the
person accepting such interest shall be deemed to agree to and
shall become bound by all the provisions of said Voting
Agreement."
6. Remedies. Each holder of Founders' Shares will be
entitled to enforce its rights under this Agreement specifically, to recover
damages by reason of any breach of any provision hereof, and to exercise all
other rights existing in its favor. Each holder of Founders' Shares agrees and
acknowledges that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that each holder may, in its sole
discretion, apply to any court of law or equity of competent jurisdiction for
specific performance in addition to injunctive relief in order to enforce or
prevent any violation of the provisions of this Agreement.
7. Amendment And Waiver. No provision or term of this
Agreement may be amended or waived without the written consent of all of the
parties hereto.
8. Severability. Each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law, (a) such provision shall be effective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement, and (b) the
parties shall, to the extent permissible by applicable law, amend this Agreement
so as to make effective and enforceable the intent of such prohibited or
invalidated provision.
9. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to contracts
between California residents entered into and to be performed entirely within
the State of California.
<PAGE> 3
10. Counterparts. The Agreement may be executed in two or
more counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
----------------------------------------
Investor Signature
Name
Address
City, State Zip
<PAGE> 4
EXHIBIT A
FOUNDERS
Paul Okimoto
Harry Masuda
Leonid Babak
Vladimir L. Serebrennikov
Vic Ivashin
Natalia Lazouto
John Webley
George Tsukuda
Betty Yamaguchi
Mary T. Hernandez
<PAGE> 1
EXHIBIT 6.1
(6) MATERIAL CONTRACTS
6.1 ASSIGNMENT OF PHEMTEST PATENT AND TECHNOLOGY
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is made and entered into as of
September 1, 1998 by and between Paul Okimoto ("Seller"), and HyperBaric
Systems, a California corporation ("Purchaser").
RECITALS
A. Seller owns the rights to certain proprietary information and technology
in connection with a certain disposable venereal disease medical test device
called Phemtest, covered by Patent No.4,945,921 and Patent No.4,784,158 (the
"Patent"). All of Seller's proprietary information and technology relating to
Phemtest, including the Patent, and any and all improvements and enhancements
thereto now existing are referred to hereinafter as the "Technology".
B. Purchaser desires to purchase all of Seller's interest in the
Technology, and Seller is willing to sell all such rights to Purchaser, on the
terms and conditions as set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and agreements contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Purchase and Sale. Seller hereby sells, transfers, and assigns,
deliver to Purchaser all of Seller's rights, title and interest in and to the
Technology, free and clear of all liens, mortgages, pledges, encumbrances and
charges of every kind.
Section 1.2 The Purchase Price.
(a) Payment of Maintenance Fee. Purchaser agrees to immediately
pay a maintenance fee for the Patent in the amount of $1,375 to Flehr,Hohbach,
Test, Albritton & Herbert LLP.
(b) Percentage Royalty Payments. Purchaser agrees to pay Seller
a royalty in the amount of five (5%) percent of quarterly net sales of any
products utilizing the Technology ("Products") for the next five (5) years (the
"Payment Period"), commencing from the date of this Agreement. The term "net
sales" shall mean the gross invoice selling price of Products sold by Purchaser,
less sales tax (if any), all trade and cash discounts, the amount of returns and
any premium included in the selling price which represents credit terms. In the
event Purchaser shall make any sale to any affiliate or parent or subsidiary
company at a price less than its usual wholesale price, such sale shall be
deemed to have been made at such usual wholesale price. If Purchaser licenses
Technology to unaffiliated third parties, then Seller will receive five percent
(5%) of any payment received by Purchaser in connection with such licenses.
<PAGE> 2
(c) Manner of Payment of Royalties. Purchaser shall pay all
amounts due to Seller in connection with net sales revenue received by Purchaser
for Products during each calendar quarter within thirty (30) days after the
completion of each calendar quarter in the following manner. Purchaser shall pay
the first $16,000 of royalty payments due to Seller in cash directly to
attorneys specified by Seller. Purchaser shall pay the next $75,000 worth of
royalty payments to Seller in common stock of Purchaser at $2.00 per share.
Thereafter, all royalties shall be paid to Seller in cash.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Title to Technology. Seller represents and warrants that he has all
right, title and interest in and good and marketable title to and unrestricted
use of the Technology, and that such Technology is free and clear of all liens,
claims, pledges, charges, security interests, restrictions, prior assignments
and encumbrances of any kind whatsoever.
ARTICLE III
COVENANTS
Section 3.1 Retention of Records. During the Payment Period, Purchaser shall
maintain at all times complete and accurate books and records with reference to
the type of all Products which it manufactures or sells, the number of units of
each Product sold by Purchaser and the sales prices thereof. During the Payment
Period, Purchaser shall render to Seller quarterly statements setting forth the
foregoing information and all other information (including a statement in United
States dollars of sales volume and net sales of all Products, computed at the
foreign exchange selling rate among banks in effect in New York City at the
close of the last banking day for the applicable quarter, as reported by The
Wall Street Journal or, if not so reported, as reported by The New York Times
or, if not so reported, as quoted by any major commercial bank located in New
York City selected by Seller) necessary to compute the percentage royalty
payment, which statements shall be furnished within thirty (30) days after the
end of the quarter covered. All records relating to the information contained in
such statements shall be available to Seller, its agents, servants or employees,
for a period of two years after any sale of a Product is made. Seller shall have
the right to have the books and records of the Purchaser and all other documents
or materials pertaining to the Products or this Agreement audited or examined by
its representatives. If any audit or examination by Seller discloses a
deficiency of U.S. $1,000 or more in payments owing to Seller by Purchaser, then
the cost of such examination shall be borne by Purchaser.
Section 3.2 Further Assurances. Seller agrees to execute and deliver such
further documents and instruments and to do such other acts and things as
Purchaser may reasonably request in order to effectuate the transfer of the
Technology.
ARTICLE IV
GENERAL PROVISIONS
Section 4.1 Amendment and Waiver. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance, either retroactively or prospectively, and either for
a specified period of time or indefinitely), only by the written consent of both
parties hereto. Any agreement on the part of a
<PAGE> 3
party to any such extension or waiver shall only be valid if set forth in an
instrument in writing signed on behalf of such party. Any such waiver or
extension shall not operate as waiver or extension of any other or subsequent
condition or obligation.
Section 4.2 Notices. All notices, instructions and other communications required
or permitted to be given hereunder or necessary or convenient in connection
herewith (each a "Notice") shall be in writing and may be personally served or
may be deposited with the appropriate postal authorities, registered or
certified, return receipt requested, postage prepaid, addressed as follows:
If to Seller: Paul Okimoto
669 35th Street
Richmond, CA 94805
If to Purchaser: Harry Masuda
HyperBaric Systems
1127 Harker Avenue
Palo Alto, CA 94301
or such other address as either party shall designate in writing and deliver to
the other party. Notices mailed as provided herein shall be deemed given on the
fifth day following the date so mailed or on the date of actual receipt,
whichever is earlier.
Section 4.3 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
Section 4.4 Governing Law; Venue. The validity of this Agreement, its
construction, interpretation and enforcement, and the rights of the parties
hereto, shall be determined under, governed by, construed and enforced in
accordance with the internal laws of the State of California, without regard to
principles of conflicts of law.
Section 4.5 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and shall not be
modified except by writing signed by each of the parties hereto.
Section 4.6 Successor and Assigns. This Agreement and the provisions hereof
shall be binding upon each of the parties, their heirs, successors and assigns.
Section 4.7 Partial Invalidity. If any provision of this Agreement is found to
be invalid by any court, the invalidity of such provision shall not affect the
validity of the remaining provisions hereof.
Section 4.8 Attorneys' Fees. In the event of arbitration or litigation
concerning this Agreement, the prevailing party in such arbitration or
litigation shall be entitled to reimbursement from the other party opposing of
all reasonable attorneys' fees and costs incurred in such arbitration or
litigation.
<PAGE> 4
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date first written above.
SELLER - PAUL OKIMOTO
----------------------------------------
PURCHASER - HYPERBARIC SYSTEMS
By:
-------------------------------------
Its: President
<PAGE> 1
EXHIBIT 6.2
6.2 PHEMTEST PATENTS
US 4,945,921
UNITED STATES PATENT 4,945,921
OKIMOTO AUGUST 7, 1990
Body cavity specimen collecting and testing apparatus
ABSTRACT
A self-testing apparatus (21) and method for collecting and testing a specimen
from a body cavity, and particularly the vagina. The apparatus (21) includes a
collecting instrument (22, 61, 81) formed with a hollow body (27, 62, 88) and a
reciprocally mounted plunger (31, 63, 82) inside the body (27, 62, 88) that is
spring biased to a retracted position inside the body. Mounted on the end of the
plunger (31, 63, 82) is a material (44, 67, 84) capable of absorbing bodily
fluids. The self-testing kit (21) further includes an independent testing
assembly (23), which is used, after the collecting assembly (22, 61, 81)
collects the specimen. The collected specimen can be wiped across a treated
paper (51) with the reaction compared to a color chart (52) mounted proximate
the treated paper (51).
Inventors: OKIMOTO; PAUL M. (638 Cornell, Albany, CA 94706)
Appl.
No.: 139621
Filed: DECEMBER 30, 1987
U.S. CLASS: 128/759; 128/771
INTERN'L CLASS: A61B 010/00
FIELD OF SEARCH: 128/749-759 206/569
REFERENCES CITED
U.S. PATENT DOCUMENTS
<TABLE>
<S> <C> <C> <C>
2664879 Jan., 1954 Hardy.
2945491 Jul., 1960 Gibbs.
3017879 Jan., 1962 Sapit et al..
3037495 Jun., 1962 Naz 128/759.
3037496 Jun., 1962 Melges.
3117569 Jan., 1964 Wegner.
3272319 Sep., 1966 Brewer.
3507269 Apr., 1970 Berry.
3552929 Jan., 1971 Fields et al..
3572997 Mar., 1971 Burk.
3800781 Apr., 1974 Zalucki 128/749.
3990850 Nov., 1976 Friedman et al..
- ------- May., 1977 Gaskell 128/759.
4157709 Jun., 1979 Schuster et al. 128/759.
- -------
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
4628941 Dec., 1986 Kosasky 128/759.
- -------
</TABLE>
Primary Examiner: Hindenburg; Max
Attorney, Agent or Firm: Flehr, Hohbach, Test, Albritton & Herbert
PARENT CASE TEXT
RELATED APPLICATION
The present application is a continuation-in-part application based upon
co-pending application Ser. No. 87,807 filed Aug. 21, 1987, for VAGINAL TESTING
APPLICATOR AND METHOD, now U.S. Pat. No. 4,784,158.
CLAIMS
1. In a body cavity specimen collecting apparatus including an elongated hollow
body dimensioned for insertion into a body cavity and having an open front end
and an open opposite end, plunger means mounted for reciprocation in said body
with a first end proximate said open front end and a manually engageable second
end extending outwardly of said opposite end, and specimen contacting means
mounted proximate said open end and having a portion of said specimen contacting
means dimensioned to pass through said open front end, said plunger means being
mounted for reciprocation between an advanced position displacing said portion
of said specimen contacting means beyond said open front end and a retracted
position with said specimen contacting means retracted inside said body inwardly
of said open front end, wherein the improvement in said collecting apparatus
comprises:
said specimen contacting means being formed of a sponge material which is
resilient prior to contact with said bodily fluids and which is suitable for
collecting and retaining a sufficient quantity of bodily fluids from said body
cavity to enable transfer of a specimen of said bodily fluids to a separate
specimen testing means after said collecting apparatus is removed from said body
cavity and said contacting means is brought into contact with said bodily
fluids, said sponge material resiliently biasing said plunger means to said
retracted position to automatically shield said specimen contacting means from
contamination by bodily fluids upon release of said manually engageable end
during insertion and removal of said collecting apparatus to and from said body
cavity.
2. The specimen collecting apparatus as defined in claim 1 wherein,
said specimen contacting means is a material which absorbs said bodily fluids to
effect collection and retention of the same.
3. The specimen collecting apparatus as defined in claim 1 wherein,
said sponge is formed with a central portion dimensioned for passage through
said open front
<PAGE> 3
end for sampling of said bodily fluids and a peripheral portion
mounted for compressive loading between an interior surface of said body
proximate said open front end and said plunger means when said plunger means is
reciprocated to said advanced position.
4. The specimen collecting apparatus as defined in claim 3 wherein,
said central portion is a cylindrical portion, said peripheral portion is an
annular portion coaxial with and surrounding said central portion, and said
sponge further includes a common base portion connecting said central portion
and said peripheral portion.
5. A specimen collecting apparatus as defined in claim 1, and
specimen testing means forming a collection and testing kit with said specimen
collecting apparatus, said collecting apparatus being manipulatable
independently of said specimen testing apparatus and said kit, and said specimen
testing means having a test section treated with a compound which is reactive to
contact with bodily fluids.
6. A specimen collecting apparatus as defined in claim 5 wherein,
said specimen testing means further includes comparison means having visually
perceptible indicia mounted immediately proximate said test section for visual
comparison of the effect of said bodily fluids on said test section to said
comparison means.
DESCRIPTION
TECHNICAL FIELD
The present invention relates, in general, to an apparatus and method for
collecting and testing a fluid specimen taken from a body cavity to determine
the condition of such fluid, and more particularly, the invention relates to a
self-testing apparatus and method for determining the acidity level of the human
vagina.
BACKGROUND ART
Typically, the vagina of a healthy human female has a pH of less than 4.5. It is
well known that an elevated pH occurs among women with a variety of bacterial
infections. Determining the pH level of the vagina is usually done by a doctor
or clinician in a doctor's office because false readings are easily obtained if
the procedure is not carried out properly, e.g., if the pH paper used comes in
contact with outer vaginal secretions, cervical secretions or urine. Such
contact can yield false pH readings in the high range, possibly provoking an
unnecessary visit to a doctor's office, or in the low range, urine contamination
which could yield a false negative response and a delay in treatment with
potentially serious consequences.
There are few, if any, self-testing devices presently in use as a result of this
contamination problem. Accordingly, it would be advantageous to provide a
reusable vaginal testing applicator assembly which would minimize the hazard of
obtaining false readings through contact with
<PAGE> 4
contaminating substances.
The patent literature includes body cavity testing apparatus in which a treated
or test paper, such as pH paper, has been employed to determine fertility and/or
ovulation. Thus, U.S. Pat. Nos. 2,945,491, 3,017,897, 3,037,496 and 3,117,569
are all examples of applicator or test apparatus which has been used to test for
fertility or ovulation. In each of these patents, an instrument is provided for
insertion of the test paper into the body cavity, in this case, the vagina, so
that the paper can be contacted with bodily fluids to conduct a test of the
condition of the fluids in the vagina.
In U.S. Pat. Nos. 2,945,491 and 3,117,569, the testing paper is affixed to the
end of the applicator or instrument body and is not capable of being shielded
during insertion or removal from the vagina. In U.S. Pat. Nos. 3,017,879 and
3,037,496, the treated papers or testing members can be retracted into the
housing of the applicator bodies so as to shield the same during insertion and
removal from the vagina. Thus, the test paper tends not to become contaminated
by vaginal secretions or urine during the insertion and removal processes.
One problem which has been encountered in connection with such vaginal secretion
testing apparatus is that the test paper or treated test material can become
overwhelmed by the bodily fluids. This is particularly true when bacterial
infections are present. The test paper or material, therefore, can loose its
mechanical integrity and/or yield false readings as a result of the excess
fluids. Moreover, while trained physicians can develop and perfect their testing
techniques was to try to minimize the possibility of contamination, unskilled
users when attempting self-testing may not fully retract the test paper during
insertion and removal.
U.S. Pat. No. 2,664,879 discloses a similar body testing apparatus in which pH
paper can be inserted into a body cavity, such as the vagina, and the test paper
compared to a color chart once a specimen has been contacted with the paper.
Again, the primary problem with such apparatus is that there is no shielding of
the test paper, and the paper can be easily overwhelmed by bodily fluids.
The use of comparison charts or test strips in connection with medical
diagnostic apparatus is broadly known in the prior art. Thus, U.S. Pat. Nos.
3,272,319, 3,507,269, 3,552,929, 3,572,997 and 3,990,850 are all examples of
biological testing apparatus in which the effect of a test specimen on a test
material is compared to a known chart or strip. Such comparison allows a match
between the unknown test sample and the known chart colors to enable a diagnosis
to be made.
Accordingly, it is an object of the present invention to provide a body cavity
specimen collecting and testing apparatus and method which can be easily used by
untrained personnel for self-testing of the condition of fluids in a body
cavity.
Another object of the present invention is to provide a body cavity specimen
collecting and testing apparatus and method which has improved reliability and
will not be overwhelmed by an excess of bodily fluids.
Still further an object of the present invention is to provide a vaginal
specimen collecting and testing apparatus which is simple and inexpensive to
construct and is easy to use.
<PAGE> 5
The body cavity specimen collecting and testing apparatus of the present
invention has other objects and features of advantage which will become apparent
from or are set forth in more detail in the following description of the best
mode of carrying out the invention and the accompanying drawing.
DISCLOSURE OF THE INVENTION
The body cavity specimen collecting and testing apparatus of the present
invention includes an elongated hollow body dimensioned for insertion into a
body cavity, which hollow body has an open front end and an open opposite end.
Mounted for reciprocation in the hollow body is a plunger with a first end
proximate the open front end of the body and a manually engageable second end
extending outwardly of the opposite end of the body. A specimen contacting
member is carried by the first end of the plunger and is dimensioned to pass
through the open front end of the body, and the plunger is mounted for
reciprocation between an extended position with the specimen contacting member
extending beyond the open front end and a retracted position with the specimen
contacting member retracted inside the hollow body.
The improvement in the specimen collecting and testing apparatus of the present
invention comprises, briefly, the specimen contacting member being formed of a
material suitable for collecting a sufficient quantity of bodily fluids from the
body cavity to enable transfer of a specimen of such fluids to a separate
specimen testing assembly after contact of the specimen contact member with the
body fluids and removal of the testing apparatus from the body cavity; and a
biasing member resiliently biasing the plunger to a retracted position to
automatically shield the specimen contacting member from contamination by bodily
fluids during insertion and removal of the apparatus upon release of the manual
engageable end of the plunger.
In one embodiment of the invention a resilient sponge material is employed as
both the specimen contacting and collecting member and the spring biasing
member. In another embodiment, a continuous elastic band is used as a spring
biasing member and an absorbent cotton material is used as the specimen
contacting member. Finally, a concentrically mounted coil spring is employed as
the biasing member around an absorbent cotton collecting member.
The body cavity specimen collecting and testing apparatus of the present
invention further includes a specimen testing assembly in which there is a strip
of treated test paper or material mounted proximate a color chart. After
collecting the specimen, the specimen contacting member can be extended from the
hollow body and wiped across the testing strip to contact the testing strip with
the fluids to be tested. Thereafter, the testing strip and the color chart can
be compared to diagnose the condition of the body cavity.
The method of testing the condition of a fluid in a body cavity of the present
invention comprises, briefly, the steps of inserting a shielded fluid absorbing
member into the body cavity, contacting the absorbing member with fluids in the
cavity, withdrawing the member while shielded, and after withdrawal, contacting
the absorbing member with a treated test strip.
BRIEF DESCRIPTION OF THE DRAWING
FIG. 1 is a top plan view of a body cavity specimen collecting and testing kit
constructed in
<PAGE> 6
accordance with the present invention.
FIG. 2 is an enlarged, side elevation view, in cross section, of a specimen
collecting apparatus from the kit of FIG. 1.
FIG. 3 is a side elevation view corresponding to FIG. 2 of a modified form of
the specimen collecting apparatus of the present invention.
FIG. 4 is a perspective view of the plunger assembly from the specimen
collecting apparatus of FIG. 3.
FIG. 5 is a side elevation view corresponding to FIG. 2 of a further modified
form of the specimen collecting apparatus of the present invention.
BEST MODE OF CARRYING OUT THE INVENTION
Apparatus for the testing of the condition of bodily fluids have previously been
based upon simply contacting the test material, such as pH paper, with the fluid
to be tested. The apparatus of the present invention is used, by contrast, by
first collecting a specimen of the bodily fluid in a manner which shields the
specimen from contamination and thereafter and outside the body, contacting the
fluid specimen with a test material or paper to effect testing.
Referring to FIG. 1, a kit, generally designated 21, is shown in which there is
a specimen collecting apparatus, generally designated 22, and a specimen testing
means, generally designated 23. Collecting apparatus 22 is removably mounted to
a cardboard or plastic mounting base 24, which also carries the testing assembly
23 and which also has a set of directions 26 as to the use of the kit printed on
card 24.
In order to prevent contamination of kit 21, card 24 is further preferably
enclosed by a water impervious envelope (not shown). Specimen testing apparatus
23 is preferably fixedly secured to card 24, while specimen collecting apparatus
22 can be removably secured to card 24 by a pressure sensitive adhesive or, for
example, by vacuum sealing the water impervious envelope to the card. As will
also be understood, the specimen collecting apparatus and specimen testing means
or assembly 23 can be provided as separate assemblies which are separately
packaged or placed in the same package, as a matter of choice and convenience.
In order to prevent overwhelming of the test materials, the apparatus of the
present invention preferably includes a specimen collecting apparatus instead of
an apparatus to insert or apply the test paper to the fluids in the body cavity.
The collecting apparatus of FIG. 2, for example, includes an elongated hollow
body 27 having a diameter dimensioned for insertion into a canal or track
leading to or comprising a body cavity. Most preferably, the diameter of hollow
body 27 is dimensioned for insertion into the vagina of a human. Body 27 has an
open front end 28 and an open opposite end 29. Mounted for reciprocation inside
the hollow body 27 is plunger means 31 which has a first end 32 positioned
proximate open end 28 of the hollow collector body and a second manually
engageable end 33 extending outwardly of opposite end 29 of the hollow body.
Guided reciprocation of plunger means 31 is advantageously accomplished by
providing guide means or blocks 36 and 37 fixedly mounted inside the hollow
body. Each of blocks 36 and 37 has a central bore 38 dimensioned for sliding
receipt of plunger 31. Additionally, the hollow
<PAGE> 7
body preferably has an annular flange 39, or a similarly outwardly protruding
structure, which enables manual gripping of the body between two fingers 41 and
42 while the thumb 43 of the user engages second end 33 of the plunger.
Additionally, flange 39 extends radially to a sufficient distance to prevent
inadvertent insertion of the collection apparatus too far into the vagina of the
user.
Mounted proximate open end 28 of body 27 is a specimen contacting means,
generally designated 44, which has a central cylindrical portion 46 dimensioned
to pass through open front end 28. Plunger 31 cooperates with contacting means
44 so that reciprocation of the plunger to an advanced position from that shown
in FIG. 2 displaces central portion 46 of the specimen contacting means beyond
the front end 28 of the body to the phantom line position shown in FIG. 2.
Moreover, the plunger is also mounted for movement to the retracted position
shown in solid lines in FIG. 2 in which the portion 46 of the contacting means
is retracted inside body 27.
As thus far described, the components of the apparatus of the present invention
are broadly known in the prior art. Thus, hollow bodies with reciprocally
mounted plungers and specimen contacting members had been proposed as assemblies
for self-testing devices to determine the condition of fluids in body cavities,
and particularly in the vagina.
In the improved apparatus of the present invention, however, specimen collecting
means 44 is formed of a material suitable for collecting a sufficient quantity
of bodily fluids from a cavity to enable transfer of a specimen of the fluids to
a separate specimen testing assembly after the collecting means is removed from
the body cavity. Moreover, the apparatus of the present invention further
includes biasing means resiliently biasing plunger 31 to the retracted position
to automatically shield the specimen contacting means from contamination from
bodily fluids upon release of manually engageable end 33 of the plunger during
insertion and removal of the apparatus from the body cavity.
In the form of the invention shown in FIG. 2, specimen contacting means 44 is
formed of a material which absorbs bodily fluids to effect collection and
retention of the same. More particularly, specimen collecting means 44 is
preferably formed as a resilient sponge, such as, an open cell, polyurethane
foam.
Instead of mounting a treated pH paper or other treated material to apparatus 22
for direct contact with fluid specimens in the body cavity, the apparatus of the
present invention preferably includes specimen contacting means in the form of a
material capable of absorbing the bodily fluids to be tested. Cotton, sponge,
paper and other fibers which will absorb or trap sufficient fluids to enable the
transfer of a representative specimen are suitable for use with the apparatus of
the present invention.
The use of a resilient sponge, however, is particularly advantageous in that the
specimen absorbing member 44 has the double function of also providing an
automatic retraction or biasing means. Thus, member 44 is preferably formed with
an annular slot 45 which defines central cylindrical portion 46 and coaxial
surrounding annular peripheral portion 50. Slot 45 does not extend through the
full depth of member 44 so that the central and peripheral portions are joined
by a common base 55.
Upon displacement of plunger 31 from the solid line retracted position to the
phantom line
<PAGE> 8
advanced position, first end 32 of the plunger presses into base 55 and
displaces cylindrical portion 46 outwardly of end 28 of the collector body.
Additionally, base 55 compresses peripheral annular sponge portion 50 between
the plunger and interior surface or annular shoulder 60 on the collector body
proximate opening 28. The compressed periphery 50 then acts as a spring to urge
the central portion 46 back into the collector body 26 when plunger end 33 is
released.
The apparatus of FIG. 2 is particularly well suited for self-testing because of
the combination of absorption means 44 and spring biasing of the absorption
means to the retracted position. If the user simply does not press end 33 of
plunger 31, specimen contacting portion 46 of absorption means 44 will be
automatically retracted inside body 27. During insertion of the apparatus into
the body cavity, therefore, the user can simply use the enlarged end 39 to
manipulate the body during insertion until the desired depth has been reached.
At that point, the plunger end 33 can be engaged and pressed forward to the
phantom line position to cause contact of plunger portion 46 with bodily fluids.
After pressing the plunger in, the end 33 can then be released, and absorption
portion 46 will automatically retract inside body 27. The user can then withdraw
or remove the specimen collecting apparatus 22 by pulling outwardly on flange
39. During both the insertion and removal process, therefore, the collection
portion 46 of the apparatus is shielded inside the hollow body from contact with
fluids in the vaginal canal prior to reaching the desired test depth. The length
of body 27 is selected to position open end 28 for most users in the area of at
about one-half the distance between the entry to the vaginal canal and the
cervix, taking into account the thickness of the users fingers on flange 39.
If a surplus of body fluids is present in the body cavity, absorption means 44,
such as a sponge or cotton, will not be overwhelmed by such excess. The
absorption means will simply saturate, but it will not lose its mechanical
integrity, nor will any chemicals be present in absorption means 44 which could
be overwhelmed by the excess fluids.
Once removed from the body cavity, the user can again press plunger end 33 to
extend portion 46 outside open end 28 of the collecting apparatus body. The
extended end 46 can then be contacted with specimen testing means 23. More
particularly, a treated chemical section or strip 51 can be mounted to card 24,
and portion 46 wiped gently across strip 51 to contact strip 51 with a
relatively controlled amount of the specimen. Mounted proximate to test strip 51
is comparison means or a color chart 52 for comparison to strip 51. Comparison
means 52 includes a plurality of colored areas 53, 54 and 55 representing
possible colors which strip 51 may turn or remain as a result of contact with
the specimen. Color chart 52 is inert to the body fluids being tested, and is
preferably mounted closely proximate strip 51 so that an accurate comparison of
the color resulting on strip 51 with predetermined known colors in the chart 52
can be made.
In the preferred form, the apparatus of the present invention is used as a
vaginal testing apparatus, and strip 51 is a strip of pH paper. The colors 53,
54 and 55 correspond to various pH levels which allow the user to make a
comparison that would enable the user to know whether or not the pH level of her
bodily fluids are normal or above or below the levels which would be regarded as
healthy and safe.
An alternate form of the specimen collecting apparatus of the present invention
is shown in FIGS. 3 and 4. Specimen collector 61 can be seen to have a hollow
tubular body 62 inside of which plunger assembly, generally designated 63, is
reciprocally mounted. Tubular member 62
<PAGE> 9
has a nose or tip 64 formed with a bore or open end 66 through which specimen
collecting or absorbing member 67 can be extended. Plunger assembly 63 has a
first end 68 which carries the specimen absorbing material 67 and a second end
69 which extends out through a bore 71 in end cap 72. Cap 72 and nose 64 can be
adhesively secured in tubular body 62.
In order to resiliently bias the absorption member 67 to the retracted position
shown in solid lines in FIG. 3, collector apparatus 61 further includes an
endless elastic band member 73 having a portion 74 looped around plunger 63 in a
groove 76 formed in the plunger. An opposite portion 77 of band 73 extends
around a slot or groove 78 in end cap 72. The body 65 of plunger assembly 63 is
formed with a longitudinally extending groove 75 which extends from groove 76
rearwardly along body 65 to the end 69 in order that the rubber band 73 can pass
from groove 76 to end cap 72.
Assembly of the rubber band around the plunger and end cap is accomplished by
looping a portion of the band in groove 76, running both sides of the band down
groove 75, and inserting the band into bore 71 of the end cap and laterally
outwardly in the slots or grooves 78 so as to hook the portion 77 of the rubber
band to the end cap. Thereafter end 69 of the plunger is inserted into end cap
bore 71. With the plunger assembly and end cap held together by band 73, the
entire assembly can then be placed into hollow body 62. Thus, band 73 tends to
pull the plunger toward end cap 72 to thereby retract absorption member 67. As
shown in FIG. 3, absorption member 67 is a cotton or fibrous member dimensioned
to pass through or to be in sliding engagement with bore 66 of nose 64.
The specimen collecting apparatus of FIGS. 3 and 4 is used in a manner analogous
to the apparatus of FIGS. 1 and 2. More particularly, the user grasps the
collecting apparatus body 62 proximate end cap 72, without depressing end 79 of
plunger assembly 63. The collector body is then inserted to the desired depth in
the canal leading to the body cavity. Once at the desired depth, end 79 of the
plunger is depressed to the phantom line position in FIG. 3, which displaces
absorption or contact member 67 to the phantom line position shown in FIG. 3.
This produces contact of the absorption media with the bodily fluids in the
cavity, and the plunger can then be released. The apparatus is then withdrawn
with the collected specimen. Thereafter, plunger end 79 is again engaged and
advanced to project the absorption media 67 beyond noses 64, and with the media
exposed, it is wiped across a test strip, such as strip 51 in FIG. 1. The
resulting reaction of the test strip to the bodily fluids can then be compared
to color chart 52 in order to enable a diagnosis to be made.
Another form of specimen collecting apparatus is shown in FIG. 5. The collecting
assembly, generally designated 81, includes a plunger assembly, generally
designated 82, with a first or front end 83 having specimen absorbing member 84
mounted thereto. Absorbing member 84 is dimensioned to pass through bore 86 in
nose member 87 which is mounted on the front end of hollow collecting member
body 88. The opposite end of body 88 is provided with manually engageable
flanges 89 and a bore 91 out of which extends an end 92 of plunger 82. The body
93 of plunger 82 is cruciform in shape. When the end 94 is depressed, the
plunger moves to the phantom line position, and a compressive coil spring 96
bearing upon a shoulder 97 on nose member 87 and a second shoulder 98 on plunger
body 82 urges the plunger back to the solid line position of FIG. 5. The spring
96 can be seen to be concentrically mounted with respect to the absorption
member 84 and end 83 of the plunger.
<PAGE> 10
Use of the collecting apparatus 81 of FIG. 5 is identical to that described in
connection with the apparatus of FIGS. 1 and 2 and FIGS. 3 and 4. It also will
be understood that it is intended for such collecting apparatus 81 to be used in
association with a testing apparatus such as the test strip 51 and color chart
52.
It is intended that the various collecting apparatus 22, 61 and 81 be formed of
relatively inexpensive materials such as plastics (injection molded polystyrene)
or even paper so that they can be made disposable. It is contemplated that each
of the kits be used only once and then thrown away. Thus, a single test strip 51
is provided and the entire kit is preferably enclosed in an envelope after
sterilizing the specimen collecting apparatus. The inherent simple construction
of the collecting apparatus allows the entire kit to be priced at a level which
will permit the user to conduct the self-testing procedure and thereafter
dispose of the entire kit.
In the form of the collecting apparatus of FIG. 2, sponge material 44 is
adhesively secured proximate the open end 28 of body 27, and it is preferably
formed as an open cell polyurethane foam having a density in the range of about
2 to about 3.5 pounds per cubic feet. The ILD hardness of the foam can be in the
range of about 50 to about 100. This foam will provide sufficient resiliency,
both when dry and when wet, to provide the necessary retraction mechanism.
Additionally, such a foam will absorb sufficient bodily fluids to enable
transfer of the same to test paper 51.
Most preferably outer portion 50 is heat sealed at slot 45 to close the pores
and enhance sliding of center cylinder 46 with respect to portion 50. Sponge
means 44 also can be formed of two independent sponge portions which are mounted
together to a common base to enable the center to have maximum absorption and
the periphery maximum resiliency and minimum sliding friction.
In the form of the invention shown in FIGS. 3-5, the absorption media is
preferably a compressed cellulose acetate cylinder which can be adhesively or
mechanically secured to the plunger. Cellulose acetate of the type used for
biomedical filter applications is usable in the collecting apparatus of FIGS.
3-5. American Filtrona of Richmond, VA, for example, produces cellulose acetate
filters under the trademark TRANSORB, and particularly filter material R-2261,
which is suitable for use as the absorptive media of the present invention.
In the preferred form, the kit of the present invention is used to determine the
pH of vaginal fluids. Accordingly, strip 51 is a strip of pH paper, and color
chart 52 may be a chart in which there are three color areas, namely, area 53
which is red, area 54 which is pink and area 55 which is blue, a color
indicating that the pH is over 4.5. Alternatively, a two area color chart can be
used with one color (e.g., yellow) indicating healthy pH levels and the other
color (e.g., brown) indicating unhealthy levels. The color selection obviously
depends upon the pH paper employed as strip 51.
<PAGE> 11
US 4,784,158
UNITED STATES PATENT 4,784,158
OKIMOTO NOVEMBER 15, 1988
Vaginal testing applicator and method
ABSTRACT
An applicator assembly and method for self-testing a body cavity to determine
the condition therein is disclosed. The assembly includes a reusable, applicator
body, formed with a probe having a tip end formed and positioned for movement
between a retracted position and an extended position. Removably mounted thereon
is a flexible sheath, which carries a sensor proximate the end of the sheath.
Upon movement of the probe to the retracted position, the sensor and sheath are
drawn into the applicator body to protect the sensor from contamination before
testing. The assembly is then inserted into the cavity, the probe is extended
for testing and retracted for removal of the assembly from the cavity. To
observe the test results, the probe is again extended. The sheath is removable
and a new sheath can be mounted over the applicator body for repeated testing. A
method of self-testing, using the assembly of the present invention is also
provided.
Inventors: OKIMOTO; PAUL M. (638 Cornell, Albany, CA 94706)
Appl. No.: 087807
Filed: AUGUST 21, 1987
U.S. CLASS: 128/771; 128/759; 604/16; 604/55; 604/271
INTERN'L CLASS: A61B 005/00
FIELD OF SEARCH: 128/632,636,736,738,759,769,771
604/1,12,15,16,18,54,55,171,181,271
REFERENCES CITED
U.S. PATENT DOCUMENTS
<TABLE>
<S> <C> <C> <C>
3037496 Jun., 1962 Melges 128/636.
3589356 Jun., 1971 Silverman 604/54.
3598533 Aug., 1971 Tomioka et al. 128/636.
4164212 Aug., 1979 Schuster 128/759.
- -------
4324262 Apr., 1982 Hall 128/759.
- -------
4344439 Aug., 1982 Jacebellis 128/771.
- -------
4496341 Jan., 1985 Brucks 604/15.
- -------
4586604 May., 1986 Alter 128/759.
- -------
4619271 Oct., 1986 Buyer et al. 128/736.
- -------
FOREIGN PATENT DOCUMENTS
142903 Jul., 1903 DE 604/15.
</TABLE>
Primary Examiner: Hindenburg; Max
Attorney, Agent or Firm: Flehr, Hohbach, Test, Albritton & Herbert
<PAGE> 12
CLAIMS
1. An applicator assembly for self-testing of a body cavity for the detection of
a condition in said cavity including an elongated applicator body dimensioned to
be received within said body cavity and having an open front and a length
sufficient for positioning of said open front end of said applicator within said
cavity beyond the external walls thereof; probe means having a tip end, said
probe means being formed and positioned within said applicator body for movement
of said tip end between a retracted position within said applicator body and an
extended position outward of said open front end of said applicator body;
flexible sheath means having a closed end and removably mounted and extending
over said open front end of said applicator body to prevent the entry of
contaminates in said front end, wherein the improvement in said applicator
assembly comprises
said sheath means extending across said tip end and being removably attached to
said tip end for movement therewith between said extended position and said
retracted position; and
sensor means to detect a condition within said body cavity and carried by said
sheath means for movement therewith on an exterior side of said sheath means
proximate attachment of said sheath means to said tip end and said sensor means
being dimensioned for retraction inside said applicator body through said open
front end.
2. The applicator assembly as defined in claim 1 wherein,
said probe means includes spring means formed to bias said tip end in said
retracted position, locking means formed for releasable securement of said tip
end in said extended position, and said probe means and said sheath means being
cooperatively formed for removably mounting of said sheath means to said tip end
for adherence of said sheath means to said tip end.
3. The applicator assembly as defined in claim 2 wherein,
said locking means includes a longitudinal projection on said probe means and a
mating, slotted opening in said applicator body formed for receipt and passage
of said projection beyond said opening upon movement of said tip end to said
extended position to enable releasably locking of said probe means upon rotation
of said probe means about the longitudinal axis of said applicator.
4. The applicator assembly as defined in claim 1 wherein,
said sensor means is a strip of litmus paper.
5. The applicator assembly as defined in claim 1, wherein,
said probe means includes locking means formed to enable selective locking of
said probe means in said extended position.
6. The applicator assembly as defined in claim 1 wherein,
<PAGE> 13
said tip end is formed with a head portion and a neck portion at a distal end
thereof, and
said sheath means is resiliently deformed over said distal end and said neck to
attach said sheath means to said tip end.
7. The applicator assembly as defined in claim 6 wherein,
said sheath means is formed to define a pocket dimensioned to mate with and be
resiliently deformed over said distal end.
8. A sheath for use with an applicator having a body to enable periodic
self-testing of a body cavity for the detection of pathogens or the like
comprising:
a tubular member having an internal diameter dimension for sliding engagement
over at least a portion of said applicator body and having a closed end, said
end being sufficiently flexible to permit said end to be inverted and pulled
down inside said tubular member; and
sensor means attached to an exterior side proximate said closed end of said
tubular member dimensioned to be positioned inside said tubular member when said
tubular member is inverted and formed for detection of a condition in said body
cavity.
9. A sheath as defined in claim 8 wherein,
said sensor means is litmus paper.
10. A sheath as defined in claim 8, and
a plurality of sheaths each formed in the same manner as the first named sheath
and each being removably secured to a carrier means.
11. A self-testing kit for the measurement of the acidity of the human vagina
comprising:
an elonged applicator body having an open front end and dimensioned for
insertion into said vagina and having a length sufficient to position said open
front end thereof proximate the center one-third of the vagina;
a plurality of sheath means formed for removably mounting over said open front
end of said applicator, said sheath means having a closed end thereof
dimensioned to extend across said open front end; and
a strip of litmus paper carried by each of said sheath means at said closed end
on an exterior side of said sheath means.
12. The kit as defined in claim 11 wherein,
said elongated applicator includes probe means having a tip end and being formed
and positioned within said applicator body for movement of said tip end between
a retracted position within said applicator body and an extended position
outward of said applicator body,
<PAGE> 14
said sheath means being formed for releasably attachment to said tip end for
movement therewith, and
said open front end dimensioned for receipt of said sheath means and said litmus
paper inside said applicator body in said retracted position.
13. A method of self-testing of a body cavity for the detection of pathogens or
the like including the steps of inserting an applicator assembly including an
applicator body, a retractable probe means mounted in said body and sensor means
carried by said probe means into said cavity, and extending the retractable
probe means beyond the front end of said applicator body to contact the cavity
wall with said sensor means, wherein the improvememnt in said method comprises
the steps of:
prior to said step of inserting said applicator body into said cavity, inserting
said applicator body into a flexible tubular sheath means having a closed end
and said sensor means carried by an exterior surface of said sheath means
proximate said closed end, said sheath means having a length extending over
substantially the entire length of said applicator body,
securing said sheath means to an end of said retractable probe means for
movement therewith, and
retracting said probe means with said sheath means secured thereto until said
sensor means is inside said applicator body prior to insertion into said cavity.
DESCRIPTION
BACKGROUND OF THE INVENTION
This invention relates to a method and apparatus for testing a body cavity to
determine the condition therein. More particularly, this invention provides a
method and apparatus for determining the acidity level of the vagina.
Typically, the vagina of a healthy human female has a pH of less than 4.5. It is
well known that an elevated pH occurs among women with a variety of bacterial
infections. Determining the pH level of the vagina is usually done by a doctor
or clinician in a doctor's office because false readings are easily obtained if
the procedure is not carried out properly, e.g., if the pH paper used comes in
contact with cervial secretions or urine. Such contact can yield false pH
readings in the high range, possible provoking an unnecessary visit to a
doctor's office, or in the low range, yielding a false negative response which
could result in a delay in treatment with serious consequences.
There are no self-testing devices presently used as a result of this
contamination problem. Accordingly, it would be advantageous to provide a
reusable vaginal testing applicator assembly which would minimize the hazard of
obtaining false readings through contact with contaminating substances.
<PAGE> 15
One prior attempt to provide a vaginal testing applicator including an
applicator body having an element retractably mounted therein to which pH paper
was mounted. The paper was retracted inside the body of the applicator during
insertion and removal from the vagina so that the paper would not be contacted
by urine or cervical fluids. When inserted the element would be extended to
contact the pH paper with fluids in the center one-third of the vagina so that a
pH level could be determined. While operable, this prior art device has the
disadvantage that it must be carefully cleaned after each use, making self-use
by clinically untrained personnel unreliable and potentially hazardous.
SUMMARY OF THE INVENTION
The assembly of applicant's invention permits self-testing of the vaginal pH
level by untrained personnel, and it is reusable, thereby providing an
economically advantageous alternative to other devices and methods known to
applicant. The applicator assembly includes an elongated applicator body
dimensioned to be received within a body cavity and having a length sufficient
for positioning the front end of the applicator body within the cavity beyond
the external walls thereof with the opposite end proximate the entrance to the
cavity. The applicator body is further formed with a probe element having a tip
end, the probe being formed and positioned within the applicator body for
movement of the tip end between a retracted position within the applicator body
and an extended position outward of the applicator body.
Removably mounted over the front end of the applicator body and formed for
embracement of the tip end of the probe in an extended position and for
adherence to the tip end upon movement of the probe to the retracted position,
is a flexible sheath. A sensor to detect a condition within the body cavity is
carried by the sheath proximate securement of the sheath to the tip end of the
probe.
In one embodiment of the invention, the applicator body is dimensioned for
insertion into the human vagina and has a length sufficient to position the
front end of the applicator body proximate the center one-third of the vagina.
In this embodiment the flexible sheath is formed with a closed end embracing the
tip end of the probe and adhering thereto upon movement of the probe from the
extended position to the retracted position, and the sensor used to detect the
condition of the vagina is a strip of litmus paper.
Prior to the insertion of the applicator assembly into the body cavity, the
applicator body is inserted into the flexible tubular sheath and the sheath is
secured to the end of the retractable probe by extending the tip end of the
probe out into a resiliently deformable pocket in the end of the sheath. The
probe is retracted with the sheath frictionally secured thereto until the sensor
is inside the applicator body, thereby protecting the sensor from contact with
objects and substances that could give false readings. The assembly may be
inserted into the cavity, and the probe is extended beyond the front end of the
applicator body to expose the sensor to the interior of the cavity, and to
contact the sensor with a cavity wall or fluids in the cavity. After contact the
probe is retracted into the applicator body, which is withdrawn from the cavity,
again without contacting the sensor with the passageway to the cavity. The probe
is then placed in the extended position to observe the sensor and determine the
condition of the cavity. After use of the applicator assembly, the sheath and
sensor can be stripped from the applicator body, which has not been exposed to
or contaminated by contact with the cavity or passageway to the cavity. The
applicator can be washed with soap and water, and a new sheath thereafter can be
mounted over
<PAGE> 16
the applicator body and secured to the retractable probe.
Accordingly, it is an object of the present invention to provide a body cavity
self-testing device that is accurate, can be used by relatively untrained users,
and is reusable.
It is another object of the present invention to provide a vaginal testing
applicator which is simple and inexpensive to construct and use.
It is also an object to provide a vaginal self-testing device and method that
minimizes the possibility of false sensor readings due to improper contact of
the sensor with contaminants.
BRIEF DESCRIPTION OF THE DRAWINGS
FIG. 1 is a longitudinal view in cross-section of the applicator body of a
cavity testing applicator assembly constructed in accordance with the present
invention with the probe in a retracted position.
FIG. 2 is a longitudinal view in cross-section of the assembly of the present
invention with the probe in an extended position for mounting of a sheath, shown
in phantom, thereon.
FIG. 3 is a view corresponding to FIG. 2, with the probe in the retracted
position.
FIG. 4 is a view corresponding to FIG. 2 with the probe in an extended position
for contact with a cavity wall.
FIG. 5 is a reduced, plan view of a self-testing applicator kit constructed in
accordance with the present invention.
FIG. 6 is a cross-sectional view taken substantially along the plane of line
6--6 in FIG. 2.
DETAILED DESCRIPTION OF THE INVENTION
Referring to the drawings, there is shown the applicator assembly of the present
invention including applicator body 10, probe means, generally designated 15,
sheath means, generally designated 25, and sensor means 30 (see FIG. 2).
Applicator body 10 is elongated and tubular in construction, having a narrowed,
cone-shaped front end 11 and a flanged opposite end 12. Flanged end 12 enables
gripping of body 10 between the index and middle fingers and operation of probe
means 15 by engaging the end 17 of the probe with the user's thumb or a finger
on the other hand. When used as a vaginal self-testing applicator, body 10 has a
length and diameter slightly larger than a typical ball point pen. More
particularly, body 10 has a length sufficient for positioning front end 11
within the cavity to be tested with opposite end 12 proximate and preferably
outside the entrance to the passageway to the body cavity. As best may be seen
in FIG. 6, body 10 preferably is formed with oval shaped cross-section to
enhance manual manipulation of the applicator assembly.
In order to permit shielding of sensor means 30 within body 10, a recess or
cavity 13 is formed in the front end 11 of the body which is dimensioned to
receive probe means 15 with sheath means
<PAGE> 17
25 and sensor 30 mounted thereon, as will be fully described below.
Elongated probe means 15 is movably positioned within body 10 and includes tip
end, generally designated 16, positioned near front end 11 of the body. Tip end
16 is formed with distal end or head portion 18 at the outermost end of probe
means 15 and neck portion 19 immediately behind head portion 18 and terminates
in a manually engageable opposite end 17. Probe 15 is slidably mounted in bores
31, 31 and 33 in transverse walls 35, 36 and 37, respectively, in applicator
body 10. This configuration enables the probe element to be moved between a
retracted position within body 10, such that tip end 16 is contained within
recess 13 (FIGS. 1 and 3), and an extended position, such that tip end 16 is
extended outward of body 10 beyond front end 11 (FIGS. 2 and 4).
The vaginal applicator assembly of the present invention includes a probe
extension and retraction mechanism. More particularly, spring means 21 may be
concentrically mounted to probe 15 between transverse wall 35 of the applicator
body and a collar or shoulder 24 on probe 15. Since spring 21 is most preferably
a compression spring, the spring will bias probe 15 to the retracted position of
FIGS. 1 and 3, and collar 24 will be urged against wall 36.
In order to enable locking of probe 15 in the extended position of FIG. 2
against the spring biasing force of spring 21, the extension and retraction
mechanism further preferably includes locking means, generally designated 22.
Locking means 22 advantageously includes a longitudinally extending projection
or fin 23 (most preferably a fin 23 on each side of probe 15) which slidably
mates with slots 38 in wall 36 (see FIGS. 2 and 6). Fins or projections 23 and
slots 38 in wall 36 are positioned so that upon movement of the probe to the
extended position by pressing on end 17 of the probe, projections 23 pass beyond
slotted wall 36 while end 17 is still outwardly of flanged end 12 of the
applicator body. Knurling 39 on end 17 of the probe can then be used to rotate
the probe so that the ends 41 of projections 23 bear against wall 36 and lock
the probe in the extended position of FIG. 2 against compression spring 21.
To release probe means 15 from the extended position, the user turns end 17 so
that projections 23 line up with slots 38 in bore 32. Spring means 21 then urges
projections 23 through slotted bore to thereby move probe means 15 to the
retracted position.
As thus far described in detail, the applicator assembly includes structure
which is broadly known in the prior art. Such prior art cavity testing apparatus
have not, however, provided a self-testing system which is easily reusable. In
order to provide a hygienically acceptable reusable applicator, the present
applicator includes sheath means 25 which is formed and dimensioned for mounting
over applicator body 10. Mounted to the exterior of sheath or sleeve 25
proximate an end thereof is sensor means 30, which in the case of a vaginal
self-testing applicator may advantageously be a small strip of litmus or pH
paper which is adhesively secured to the sheath.
In order to secure sheath 25 to the applicator, probe 15 is locked in the
extended position of FIG. 2 and then the tip end 16 of the probe is jammed or
forced into the closed end of the sheath. Since the sheath is preferably formed
of a thin, deformable plastic, tip end 16 and particularly head portion 18 can
be urged into the plastic sheath which will deform and then resiliently contract
down against neck portion 19 of the probe to frictionally secure the sheath to
the prove. This process of securing the sheath to the probe is enhanced if
sheath 25 includes a preformed pocket 28 dimensioned to be slightly smaller than
head portion 18 so that pocket 28 can be urged
<PAGE> 18
over head 18 and will resiliently contract slightly in the area of neck 19 to
secure the sheath to the probe and applicator assembly.
As will be seen, sheath 25 preferably has a length dimension which extends over
the full length of body 10 so as to shield the applicator body against contact
with the body of the user. Thus, sheath 25 maintains the hygienic integrity of
the applicator assembly and allows the applicator body to be reused with other
sheaths without the need for special cleaning of the applicator, although
washing with soap and water after use is recommended.
As can be seen in FIG. 2, the sheath is preferably formed so that where it is
urged over tip end 16, there is some extra material left just in front of
conical end 11 of the applicator body. Thus, a plurality of folds 42 are shown
in FIG. 2 to permit further manipulation of the sheath as described below.
Upon securement of sheath 25 to probe 15, the probe is moved to the retracted
position, which movement causes pocket 28 of sheath means 25 and sensor means 30
to be retracted into recess 13, as shown in FIG. 3. Folds 42 in FIG. 2 can be
seen to have provided sufficient material to permit retraction of the pocket and
sensor into cavity 13 without pulling the sheath off the probe. The assembly
then may be inserted into the body cavity to be tested, for example, the vagina,
and the probe again is moved to an extended position, as shown in FIG. 4. In a
particular embodiment illustrated, it envisages that the level of acidity in the
human vagina is to be tested. In this embodiment, therefore, applicator body 10
has a length sufficient to position front end 11 proximate the middle one-third
of the vagina, and sensor means 30 comprises a strip of litmus paper. Upon
movement of the probe means to the extended position of FIG. 4, litmus paper 30
will extend outward of front end 11 and contact an interior wall of the vagina.
As will be noted by comparing FIGS. 2 and 4, end 17 of the probe is depressed in
FIG. 4 until knurled portion 39 reaches end wall 37. In this position ends 41 of
fins 23 have not passed beyond slotted wall 36 so that the probe is not locked
in the extended position.
After contact of litmus paper 30 with a vaginal wall and/or fluids, probe means
15 is retracted by releasing the pressure one end 17 of the probe, and the
applicator assembly is removed from the vagina. As will be seen, therefore,
during insertion of the applicator assembly into the vagina, retraction of the
sheath and litmus paper into recess or cavity 13 shields the litmus paper from
contact with cervical fluids and urine which could produce false test results.
Similarly, after contacting the vaginal walls, the litmus paper is retracted
into cavity 13 before withdrawing the applicator so that the litmus paper is
shielded again from contact with the cervix.
Once the applicator is removed from the vagina, probe 15 can be moved to either
of the extended positions shown in FIGS. 2 and 4, and the acidity of the vagina
determined by observing the litmus paper. Once the test is complete sheath 25
can be stripped from the applicator by pulling the sheath off of the head of the
probe to permit the applicator to be reused, usually after washing with soap and
water.
Sheath means 25 is preferably formed of resiliently deformable plastic or
rubber-based material, such as polyethylene or latex-based material. The sheath
is preferably relatively thin walled to enhance flexibility and adherence to tip
end 16. As will be understood, however, the sheath can be secured to probe 15 in
other manners, and flexibility need only be sufficient to enable the sheath to
be pulled down inside the applicator body cavity 13.
<PAGE> 19
Sensor means 30 is most preferably litmus or pH paper. As will be understood,
however, other sensors can be employed. In a doctor-employed version of the
applicator assembly, for example, sensor 30 can be electrical sensing apparatus,
such as a pair of contacts, which can be used to read-out pH to a metering
device. The contacts would be mounted to the exterior of a disposable sleeve or
sheath and would be retracted inside the applicator body during the insertion
process. Retraction during removal would not be as critical since a reading
could be taken before removal. Moreover, for testing of conditions within a body
cavity other than acidity, sensor 30 would take a form appropriate to the test
being conducted.
The present invention also includes a kit (FIG. 5) comprising applicator and a
plurality of sheath means 25 each having sensors 30 mounted thereto, for
repeated self-testing of a body cavity. The sleeves advantageously may be
removably secured to a card or other carrier 43 and they have preferably been
sterilized and packaged with a covering sheet, not shown, which will resist
contamination.
Because only sheath means 25 and sensor means 30 must be discarded after use,
the assembly of the present invention provides an economical, body cavity
testing applicator assembly which is hygienic and reliable.
* * * * *
<PAGE> 1
EXHIBIT 6.3
6.3 ASSIGNMENT OF PATENT AND TECHNOLOGY - VLADIMIR SEREBRENNIKOV
Palo Alto, CA
USA
June 1, 1998
AGREEMENT ON ASSIGNMENT OF PATENT AND TECHNOLOGY
IN CONSIDERATION OF RECEIVING 219,375 COMMON STOCK SHARES ISSUED ON
FEBRUARY 26, 1998 and other good and valuable consideration, the receipt of
which is hereby acknowledged, I hereby assign to HYPERBARIC SYSTEMS, a
California corporation, whose address is 1127 Harker Avenue, Palo Alto,
California 94301, its attorneys, successors, legal representatives and assigns,
and to the extent permitted under Russian Law, the entire worldwide right, title
and interest in and to my invention of technology for preserving and
transporting biologic and non-biologic material including but not limited to
platelets (a blood component), red blood cells, heart valves, tissue and organs
and in and to all of the discoveries, concepts and ideas whether patentable or
not, as products, techniques, processes, methods, designs, product ideas or
designs, formulas, drawings, data and improvements thereof and know-how related
thereto ("Technology"), and in and to any continuation, continuation-in-part,
divisional and substitution application related thereto, and in and to any
application for said Technology which may be filed in any other country, and in
and to any Letters Patent that may be granted upon such applications, and any
reissue or extension thereof, and all rights under the International Convention
for the protection of Intellectual Property or any other treaty.
I hereby agree upon the request of HYPERBARIC SYSTEMS, its successors,
legal representatives and assigns, as deemed by it as necessary or expedient,
and at no expense to myself to do the following in connection with any rights
above assigned:
1. Execute any additional or supplementary assignment or
assignments, to take all rightful oaths, and to execute
any and all of the aforesaid applications for said
Technology and any and all documents that shall be
required to be executed in connection therewith,
including without limitation the prosecution thereof,
and to vest title in said applications and Letters
Patent in HYPERBARIC SYSTEMS, its successors, legal
representatives and assigns.
2. In the event any of the aforesaid applications or
Letters Patent issued thereon (or any reissue of
application for reissue thereof) becomes involved in
interference, to cooperate to the best of my ability in
the matters of preparing and executing the preliminary
statement and giving and producing evidence in support
thereof; and
3. To perform any and all lawful affirmative acts to obtain
said Letters Patent and vest all rights therein in
HYPERBARIC SYSTEMS, its successors, legal
representatives and assigns, as fully and entirely as
the same would have been held and enjoyed by me if this
Assignment had not been made.
<PAGE> 2
This document is executed in 2 originals, in English (one original for
each party). Both originals shall have equal validity and force.
SIGNED:
- ---------------------------------- ----------------------------------------
HARRY MASUDA, PRESIDENT VLADIMIR SEREBRENNIKOV
HYPERBARIC SYSTEMS Academgorodok 1a, Apt. 53
1127 Harker Avenue Krasnoyarsk, Russia 660036
<PAGE> 1
EXHIBIT 6.4
6.4 ASSIGNMENT OF PATENT AND TECHNOLOGY - LEONID BABAK
Palo Alto, CA
USA
June 1, 1998
AGREEMENT ON ASSIGNMENT OF PATENT AND TECHNOLOGY
IN CONSIDERATION OF RECEIVING 219,375 COMMON STOCK SHARES ISSUED ON
FEBRUARY 26, 1998 and other good and valuable consideration, the receipt of
which is hereby acknowledged, I hereby assign to HYPERBARIC SYSTEMS, a
California corporation, whose address is 1127 Harker Avenue, Palo Alto,
California 94301, its attorneys, successors, legal representatives and assigns,
and to the extent permitted under Russian Law, the entire worldwide right, title
and interest in and to my invention of technology for preserving and
transporting biologic and non-biologic material including but not limited to
platelets (a blood component), red blood cells, heart valves, tissue and organs
and in and to all of the discoveries, concepts and ideas whether patentable or
not, as products, techniques, processes, methods, designs, product ideas or
designs, formulas, drawings, data and improvements thereof and know-how related
thereto ("Technology"), and in and to any continuation, continuation-in-part,
divisional and substitution application related thereto, and in and to any
application for said Technology which may be filed in any other country, and in
and to any Letters Patent that may be granted upon such applications, and any
reissue or extension thereof, and all rights under the International Convention
for the protection of Intellectual Property or any other treaty.
I hereby agree upon the request of HYPERBARIC SYSTEMS, its successors,
legal representatives and assigns, as deemed by it as necessary or expedient,
and at no expense to myself to do the following in connection with any rights
above assigned:
1. Execute any additional or supplementary assignment or
assignments, to take all rightful oaths, and to execute any and
all of the aforesaid applications for said Technology and any
and all documents that shall be required to be executed in
connection therewith, including without limitation the
prosecution thereof, and to vest title in said applications and
Letters Patent in HYPERBARIC SYSTEMS, its successors, legal
representatives and assigns.
2. In the event any of the aforesaid applications or Letters Patent
issued thereon (or any reissue of application for reissue
thereof) becomes involved in interference, to cooperate to the
best of my ability in the matters of preparing and executing the
preliminary statement and giving and producing evidence in
support thereof; and
3. To perform any and all lawful affirmative acts to obtain said
Letters Patent and vest all rights therein in HYPERBARIC
SYSTEMS, its successors, legal representatives and assigns, as
fully and entirely as the same would have been held and enjoyed
by me if this Assignment had not been made.
This document is executed in 2 originals, in English (one original for
each party). Both originals shall have equal validity and force.
<PAGE> 2
SIGNED:
- ---------------------------------- ----------------------------------------
HARRY MASUDA, PRESIDENT LEONID BABAK
HYPERBARIC SYSTEMS 31 Novaya Zarja street, Apt 16
1127 Harker Avenue Krasnoyarsk, Russia 660028
6.5 CONSULTANT AGREEMENT WITH DR. LUIS TOLEDO
CONSULTANT AGREEMENT
THIS AGREEMENT is made effective on May 28, 1998 between HYPERBARIC
SYSTEMS, whose address is 1127 Harker Avenue, Palo Alto, CA 94301, incorporated
under the laws of the State of California, hereinafter called "COMPANY" and Luis
Toledo, MD, Ph.D. whose address is 3598 Whistling Lane, Portage, MI 49024,
hereinafter called "CONSULTANT".
WITNESSETH:
1. PURPOSE OF AGREEMENT. HYPERBARIC SYSTEMS is a duly
established California corporation engaged in the business of designing,
manufacturing and marketing products for the medical, food and semiconductor
industries, and CONSULTANT represents that he has expertise in the area of Organ
transplantation, and preservation technology including the human heart, kidney
and liver. This agreement between COMPANY and CONSULTANT is entered into for the
purpose of defining the relationship, responsibilities, and agreement between
COMPANY and CONSULTANT.
2. CONSULTANT AND ADVISORY BOARD MEMBER: COMPANY hereby
appoints Luis Toledo as a consultant and advisory board member to the COMPANY.
3. CONSULTANT AND ADVISORY BOARD DUTIES AND
RESPONSIBILITIES: CONSULTANT shall be engaged as a Consultant and Advisory Board
member with the following tasks:
<PAGE> 3
a. Advise and recommend applications of the Company's
Technology in the organ transplant, preservation and
transportation market.
b. Advise the Company in the design and specifications
of the container used to preserve and transport organs.
c. Advise the Company in establishing organizational
contacts for marketing the Company's products.
d. Advise the Company in securing test sites for
securing FDA approval.
e. Advise the Company in establishing a credible beta
test facility after FDA approval is granted.
f. Advise the Company in securing international market
and test site contacts.
4. CONSULTANT'S PERFORMANCE. CONSULTANT agrees to devote a
reasonable amount of time to meet the objectives outlined in Paragraph 3 above.
The Company acknowledges that Consultant is not an employee of the Company.
5. TERM. The term of this Agreement shall be effective for
a minimum term of one year from the date of this Agreement and continue until
thirty days' written notice of termination by either party. It is the intent of
the parties that this contract shall continue indefinitely until terminated by
either party.
6. COMPENSATION. For the services rendered by CONSULTANT
hereunder, CONSULTANT shall be compensated at an amount to be determined by the
following formula, but may be adjusted as agreed to by the parties.
a. 5% of all sales within the organ transplant
market for the next three years as long as CONSULTANT is a member of the
Advisory Board and Consultant to the COMPANY. This commission is limited to a
total of $1,000,000.
<PAGE> 4
7. STOCK OPTION. For the purpose of further motivating
CONSULTANT, the following NON-STATUTORY STOCK OPTIONS are hereby granted under
the Non-Statutory Stock Option Plan of the Company, and issued under the Notice
of Grant of Non-Statutory Stock Option, and the Non-Statutory Stock Option
Agreement, which are included as part of this Agreement. The Stock Option Plan
is pending and subject to approval by the Board of Directors.
a. 50,000 shares @$0.10 per share, vested over
three years, exercisable yearly at the rate of 30%, 30% and 40% respectively.
8. BONUS. After the first year of tenure as CONSULTANT and
Advisory Board Member of the COMPANY, and up to the expiration of the options,
COMPANY agrees to grant a bonus of up to $5,000 to CONSULTANT for the sole
purpose of exercising any vested stock options that CONSULTANT elects to
exercise.
9. TERMINATION UPON BREACH. This Agreement shall be
terminated upon material breach of any of the provisions herein, or breach of
the material provisions of any and all supplemental agreements which the
CONSULTANT and COMPANY may mutually execute.
10. CONFIDENTIALITY AGREEMENT. CONSULTANT agrees that all
information made available to CONSULTANT regarding the products, clients and
software systems of COMPANY are confidential and require a high degree of
confidentiality so as not to violate the rights of others and to prevent the use
thereof for purposes detrimental to the interests of COMPANY and its clients.
Such information in any form shall be hereinafter referred to as "INFORMATION."
For purposes of this Agreement:
a. CONFIDENTIAL INFORMATION means INFORMATION
disclosed to or acquired by CONSULTANT while employed by COMPANY, and includes
but is
<PAGE> 5
not limited to, INVENTIONS, Patent Applications, TRADE SECRETS, any other
information of value relating to the business and/or field of interest of
COMPANY including information with respect to which COMPANY is under an
obligation of confidentiality with any third party. CONFIDENTIAL INFORMATION
does not include information that is generally known in the relevant trade or
industry or any information known to and freely usable by CONSULTANT before
CONSULTANT'S association with COMPANY, provided, however, information for
purposes of this Agreement shall be considered CONFIDENTIAL INFORMATION if not
known by the trade generally, even though such information has been disclosed to
one or more third parties pursuant to distribution agreements, joint research
agreements, or other agreements entered into by COMPANY;
b. TRADE SECRET(S) means all information, know-how,
concepts, data, knowledge, ideas and materials however embodied, relating to the
business of COMPANY'S customers which have not been released publicly by an
authorized representative of COMPANY or have not otherwise lawfully entered the
public domain. TRADE SECRETS shall include but are not limited to information,
know-how, concepts, data, knowledge, computer programs, ideas and materials
relating to COMPANY'S existing and future products, processes, research and
development, technology, production costs, contract forms, drawings, designs,
plans, proposals, marketing and sales plans and strategies, cost or pricing
information, financial information, promotional methods, volume of sales, names
or classes of customers and vendors, management procedures, organization charts,
and CONSULTANT directories.
11. PROPRIETARY INFORMATION OF OTHERS. CONSULTANT shall not
use or disclose to COMPANY, or induce COMPANY to use, any information, know-how,
concepts, data, knowledge, computer programs, ideas or materials, however
embodied, with respect to which CONSULTANT is under an obligation of
confidentiality to any third party
<PAGE> 6
imposed, by law or agreement prior to the date hereof. COMPANY represents and
covenants that it will not require CONSULTANT to violate any obligation to, or
confidence with, another.
12. SECRECY AGREEMENT. CONSULTANT acknowledges that he
understands the requirement for CONFIDENTIAL INFORMATION to be kept secret and
used only as authorized herein. CONSULTANT shall at all times during the period
of his association with COMPANY under this agreement and thereafter keep in
confidence and trust all CONFIDENTIAL INFORMATION. CONSULTANT shall use
CONFIDENTIAL INFORMATION only in the course of performing duties as Consultant
and Advisory Board Member for the Company and other duties as assigned by the
Company President, and not for unrelated personal gain. CONSULTANT shall not,
directly or indirectly, disclose any CONFIDENTIAL INFORMATION to any person,
organization or entity, except in the course of performing duties as a
CONSULTANT of COMPANY and only in the manner prescribed by COMPANY. CONSULTANT
shall abide by those COMPANY policies and regulations established from time to
time for the protection of CONFIDENTIAL INFORMATION. During CONSULTANT'S
association with COMPANY under this Agreement, and after termination thereof,
CONSULTANT shall not directly, or indirectly, either as an CONSULTANT, COMPANY,
agent, principal, partner, stockholder, corporate officer, director, or in any
other individual or representative capacity, engage or participate in any
activity of any nature whatsoever, the performance of which would have a
reasonable likelihood of placing CONSULTANT in conflict with the obligations of
confidence and trust regarding CONFIDENTIAL INFORMATION imposed herein.
13. RETURN OF DOCUMENTS AND MATERIALS. CONSULTANT agrees
that all documents, reports, drawings, materials, designs, plans, computer
programs, proposals, marketing and sales plans, reproductions, and other
documents or things made by
<PAGE> 7
CONSULTANT or that come into CONSULTANT'S possession in the course of employment
with COMPANY are the property of COMPANY and will not be used by CONSULTANT for
any purpose other than the business of COMPANY. CONSULTANT will not deliver,
reproduce or in any way allow such documents or things to be delivered or be
used by any third parties without specific direction or consent of COMPANY. Upon
termination of this Agreement, CONSULTANT will promptly deliver to COMPANY the
above documents and materials together with any copies thereof.
14. NO DISCLOSURE. CONSULTANT agrees not to divulge,
disclose, convey or make known to others or any other entity, any such
information without the express written consent of the President of HyperBaric
Systems first obtained. CONSULTANT further agrees to take all necessary steps to
safeguard such information to prevent the unauthorized disclosure thereof.
15. INJUNCTION. Recognizing that irreparable damage will
result to the business of COMPANY in the event of the breach of any of these
covenants and assurances by CONSULTANT, the parties hereto agree that if
CONSULTANT shall violate the terms of this Agreement, COMPANY shall be entitled
to an injunction to be issued by any court of competent jurisdiction enjoining
and restraining CONSULTANT and each and every person, firm, association,
partnership, company, or corporation concerned therewith, from the continuance
of such violation of the terms of this Agreement, and in addition thereto,
CONSULTANT shall pay to COMPANY all damages, including reasonable attorneys'
fees sustained by COMPANY by reason of the violation of this Agreement.
16. NO ASSIGNMENT. Neither the CONSULTANT nor COMPANY may
transfer or assign this Agreement, or any right or obligation hereunder, without
the prior written consent of the other party. No right or obligation under this
Agreement may be
<PAGE> 8
waived, modified, or in any respect altered except by written agreement of the
parties executed in writing by both parties.
17. SUCCESSORS AND ASSIGNS. This agreement shall be binding
on the heirs, executors, successors and assigns of the parties.
18. ATTORNEYS FEES. If any action is brought to enforce any
obligation created under this Agreement, the Court shall award to the prevailing
party, such reasonable fees, costs, and expenses as may have been incurred by
such party in enforcing its rights under this Agreement, including without
limitation, the fees, costs, and expenses of its attorney for services both
before or after litigation is instituted.
19. ENTIRE AGREEMENT. This Agreement may not be changed
except in writing signed by the President of the Company and the CONSULTANT. The
validity, performance, construction, and effect of this Agreement shall be
governed by the laws of the State of California
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
"COMPANY" "CONSULTANT"
HYPERBARIC SYSTEMS. LUIS TOLEDO
1127 Harker Avenue 3598 Whistling Lane
Palo Alto, California 94301 Portage, MI 49024
By:
-------------------------------- ----------------------------------------
HARRY MASUDA, PRESIDENT LUIS TOLEDO, MD, Ph.D.
<PAGE> 1
EXHIBIT 6.6
6.6 EMPLOYMENT CONTRACT R. UMAR
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective on May 10, 1998 between HYPERBARIC
SYSTEMS, whose address is 1127 Harker Avenue, Palo Alto, CA 94301, incorporated
under the laws of the State of California, hereinafter called "EMPLOYER", or
("COMPANY") and Rocky Umar, whose address is 24650 Diamond Ridge Dr., Hayward,
CA 94544, hereinafter called "EMPLOYEE".
WITNESSETH:
1. PURPOSE OF AGREEMENT. HYPERBARIC SYSTEMS is a duly
established California corporation engaged in the business of designing,
manufacturing and marketing products for the medical, food and semiconductor
industries, and EMPLOYEE represents that he has experience in the area of
strategic marketing and sales for high technology companies. This agreement
between EMPLOYER and EMPLOYEE is entered into for the purpose of defining the
relationship, responsibilities, and agreement between EMPLOYER and EMPLOYEE.
2. EMPLOYMENT: EMPLOYER hereby employs ROCKY UMAR as the
Company's Vice President of Marketing.
3. EMPLOYEE DUTIES AND RESPONSIBILITIES. EMPLOYEE shall be
employed as Vice :President of Marketing with the following duties and
responsibilities:
a. Define and recommend to the President a strategic
marketing plan for the Platelet, Blood, Stem Cell, Organ
and other medical and non medical markets for the
COMPANY'S technology.
b. Identify key accounts and obtain commitments from
them.
<PAGE> 2
c. Determine pricing policy for the defined markets of
entry
d. Coordinate the preparation and production of data
sheets, brochures, and advertising, as required.
e. Manage the marketing department and carry out the
marketing plan.
e. Perform tasks and become involved in projects as
directed by the President.
4. EMPLOYEE'S PERFORMANCE. EMPLOYEE shall work as agreed
upon by the parties. Employee agrees to devote his best efforts to the
Corporation's business and devote his efforts to the Corporation for the
performance of his duties as Vice President of Marketing, and perform other
duties and responsibilities as directed by the President.
5. TERM. The term of this Agreement shall be effective for
a minimum term of one year from the date of this Agreement and continue until
thirty days' written notice of termination by either party. It is the intent of
the parties that this contract shall continue indefinitely until terminated by
either party.
6. COMPENSATION. For the services rendered by EMPLOYEE
hereunder, EMPLOYEE shall be compensated at an amount to be determined by the
following formula, but may be adjusted as agreed to by the parties.
a. $2,000 per month accrued from the effective date
of this agreement.
b. $3,000 per month when $300,000 in funds are
raised by the
COMPANY.
c. $4,000 per month when $400,000 in funds are
raised by the
COMPANY.
d. $5,000 per month when sales under EMPLOYEE'S
management per trailing quarter exceed $100,000.
<PAGE> 3
e. $6,000 per month when sales under EMPLOYEE'S
management for the trailing 6 months exceed $500,000
f. $10.000 per month when sales under EMPLOYEE'S
management for the trailing 6 months exceed $1,500,000.
g. 1% of all sales under EMPLOYEE'S management that
exceed $1,500,000 for the trailing 6 months. This commission is limited to a
total of $100,000 for a given 12 month period.
7. STOCK OPTION. For the purpose of further motivating
EMPLOYEE, the following STATUTORY INCENTIVE STOCK OPTIONS are hereby granted
under the Statutory Incentive Stock Option Plan of the Company, and issued under
the Notice of Grant of Statutory Stock Option, and the Statutory Stock Option
Agreement, which are included as part of this Agreement and listed as Exhibit A.
The Stock Option Plan is pending and subject to approval by the Board of
Directors.
a. 40,000 shares @$0.10 per share, vested over
three years, exercisable yearly at the rate of 30%, 30% and 40% respectively.
b. 10,000 shares @$0.10 per share exercisable
immediately upon execution of this Agreement and upon approval of the Stock
Option Plan by the Board of Directors.
8. BONUS After the first year of employment and up to the
expiration of the options, Employer agrees to grant a bonus of up to $5,000 to
EMPLOYEE for the sole purpose of exercising any vested stock options that
EMPLOYEE elects to exercise.
9. VACATION, HOLIDAYS AND ABSENCE. EMPLOYEE shall be
entitled to annual paid vacations of ten days per year plus such holidays as
adopted by the Company as paid holidays.
<PAGE> 4
10. TERMINATION UPON BREACH. This Agreement shall be
terminated upon material breach of any of the provisions herein, or breach of
the material provisions of any and all supplemental agreements which the
EMPLOYEE and EMPLOYER may mutually execute.
11. CONFIDENTIALITY AGREEMENT. EMPLOYEE agrees that all
information made available to EMPLOYEE regarding the products, clients and
software systems of EMPLOYER are confidential and require a high degree of
confidentiality so as not to violate the rights of others and to prevent the use
thereof for purposes detrimental to the interests of EMPLOYER and its clients.
Such information in any form shall be hereinafter referred to as "INFORMATION."
For purposes of this Agreement:
a. CONFIDENTIAL INFORMATION means INFORMATION
disclosed to or acquired by EMPLOYEE while employed by EMPLOYER, and includes
but is not limited to, INVENTIONS, Patent Applications, TRADE SECRETS, any other
information of value relating to the business and/or field of interest of
EMPLOYER including information with respect to which EMPLOYER is under an
obligation of confidentiality with any third party. CONFIDENTIAL INFORMATION
does not include information that is generally known in the relevant trade or
industry or any information known to and freely usable by EMPLOYEE before
EMPLOYEE's association with EMPLOYER, provided, however, information for
purposes of this Agreement shall be considered CONFIDENTIAL INFORMATION if not
known by the trade generally, even though such information has been disclosed to
one or more third parties pursuant to distribution agreements, joint research
agreements, or other agreements entered into by EMPLOYER;
b. TRADE SECRET(S) means all information, know-how,
concepts, data, knowledge, ideas and materials however embodied, relating to the
business of
<PAGE> 5
EMPLOYER's customers which have not been released publicly by an authorized
representative of EMPLOYER or have not otherwise lawfully entered the public
domain. TRADE SECRETS shall include but are not limited to information,
know-how, concepts, data, knowledge, computer programs, ideas and materials
relating to EMPLOYER's existing and future products, processes, research and
development, technology, production costs, contract forms, drawings, designs,
plans, proposals, marketing and sales plans and strategies, cost or pricing
information, financial information, promotional methods, volume of sales, names
or classes of customers and vendors, management procedures, organization charts,
and employee directories.
12. PROPRIETARY INFORMATION OF OTHERS. EMPLOYEE shall not
use or disclose to EMPLOYER, or induce EMPLOYER to use, any information,
know-how, concepts, data, knowledge, computer programs, ideas or materials,
however embodied, with respect to which EMPLOYEE is under an obligation of
confidentiality to any third party imposed, by law or agreement prior to the
date hereof. EMPLOYER represents and covenants that it will not require EMPLOYEE
to violate any obligation to, or confidence with, another.
13. SECRECY AGREEMENT. EMPLOYEE acknowledges that he
understands the requirement for CONFIDENTIAL INFORMATION to be kept secret and
used only as authorized herein. EMPLOYEE shall at all times during the period of
his association with EMPLOYER under this agreement and thereafter keep in
confidence and trust all CONFIDENTIAL INFORMATION. EMPLOYEE shall use
CONFIDENTIAL INFORMATION only in the course of performing duties as Director of
Product Marketing for the Company and other duties as assigned by the Company
President, and not for unrelated personal gain. EMPLOYEE shall not, directly or
indirectly, disclose any CONFIDENTIAL INFORMATION to any person, organization or
entity, except in the course of performing duties as a EMPLOYEE of EMPLOYER and
only in the manner prescribed by EMPLOYER.
<PAGE> 6
Employee shall abide by those EMPLOYER policies and regulations established from
time to time for the protection of CONFIDENTIAL INFORMATION. During EMPLOYEE's
association with EMPLOYER under this Agreement, and after termination thereof,
EMPLOYEE shall not directly, or indirectly, either as an employee, employer,
agent, principal, partner, stockholder, corporate officer, director, or in any
other individual or representative capacity, engage or participate in any
activity of any nature whatsoever, the performance of which would have a
reasonable likelihood of placing EMPLOYEE in conflict with the obligations of
confidence and trust regarding CONFIDENTIAL INFORMATION imposed herein.
14. RETURN OF DOCUMENTS AND MATERIALS. EMPLOYEE agrees that
all documents, reports, drawings, materials, designs, plans, computer programs,
proposals, marketing and sales plans, reproductions, and other documents or
things made by EMPLOYEE or that come into EMPLOYEE's possession in the course of
employment with EMPLOYER are the property of EMPLOYER and will not be used by
EMPLOYEE for any purpose other than the business of EMPLOYER. EMPLOYEE will not
deliver, reproduce or in any way allow such documents or things to be delivered
or be used by any third parties without specific direction or consent of
EMPLOYER. Upon termination of this Agreement , EMPLOYEE will promptly deliver to
EMPLOYER the above documents and materials together with any copies thereof.
15. NO DISCLOSURE. EMPLOYEE agrees not to divulge, disclose,
convey or make known to others or any other entity, any such information without
the express written consent of the President of HyperBaric Systems first
obtained. EMPLOYEE further agrees to take all necessary steps to safeguard such
information to prevent the unauthorized disclosure thereof.
<PAGE> 7
16. INJUNCTION. Recognizing that irreparable damage will
result to the business of EMPLOYER in the event of the breach of any of these
covenants and assurances by EMPLOYEE, the parties hereto agree that if EMPLOYEE
shall violate the terms of this Agreement, EMPLOYER shall be entitled to an
injunction to be issued by any court of competent jurisdiction enjoining and
restraining EMPLOYEE and each and every person, firm, association, partnership,
company, or corporation concerned therewith, from the continuance of such
violation of the terms of this Agreement, and in addition thereto, EMPLOYEE
shall pay to EMPLOYER all damages, including reasonable attorneys' fees
sustained by EMPLOYER by reason of the violation of this Agreement.
17. NO ASSIGNMENT. Neither the EMPLOYEE nor EMPLOYER may
transfer or assign this Agreement, or any right or obligation hereunder, without
the prior written consent of the other party. No right or obligation under this
Agreement may be waived, modified, or in any respect altered except by written
agreement of the parties executed in writing by both parties.
18. SUCCESSORS AND ASSIGNS. This agreement shall be binding
on the heirs, executors, successors and assigns of the parties.
19. ATTORNEYS FEES. If any action is brought to enforce any
obligation created under this Agreement, the Court shall award to the prevailing
party, such reasonable fees, costs, and expenses as may have been incurred by
such party in enforcing its rights under this Agreement, including without
limitation, the fees, costs, and expenses of its attorney for services both
before or after litigation is instituted.
20. ENTIRE AGREEMENT. This Agreement may not be changed
except in writing signed by the President of the Company and the EMPLOYEE. The
<PAGE> 8
validity, performance, construction, and effect of this Agreement shall be
governed by the laws of the State of California
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
"EMPLOYER" "EMPLOYEE"
HYPERBARIC SYSTEMS ROCKY UMAR
1127 Harker Avenue 24650 Diamond Ridge Drive
Palo Alto, California 94301 Hayward, CA 94544
By:
-------------------------------
-------------------------------
HARRY MASUDA, PRESIDENT ROCKY UMAR
<PAGE> 1
EXHIBIT 6.7
6.7 EMPLOYMENT CONTRACT L. BRYANT
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective on August 9, 1999 between HYPERBARIC
SYSTEMS, whose address is 1127 Harker Avenue, Palo Alto, CA 94301, incorporated
under the laws of the State of California, hereinafter called "EMPLOYER", or
"COMPANY" and Larry Bryant, whose address is 3004 Deodar Avenue #C, Costa Mesa,
CA 92626, hereinafter called "EMPLOYEE".
WITNESSETH:
1. PURPOSE OF AGREEMENT. HYPERBARIC SYSTEMS is a duly
established California corporation engaged in the business of designing,
manufacturing and marketing products for the medical, food and semiconductor
industries, and EMPLOYEE represents that he has experience in the area of
business development and fund raising for high technology companies. This
agreement between EMPLOYER and EMPLOYEE is entered into for the purpose of
defining the relationship, responsibilities, and agreement between EMPLOYER and
EMPLOYEE.
2. EMPLOYMENT: EMPLOYER hereby employs LARRY BRYANT as the
Company's Vice President of Business Development.
3. EMPLOYEE DUTIES AND RESPONSIBILITIES. EMPLOYEE shall be
employed as Vice :President of Business Development with the following duties
and responsibilities:
a. Define and recommend to the President a strategic
plan for raising funds to meet the COMPANY'S cash
requirements.
<PAGE> 2
b. Coordinate and participate in raising funds through
accredited investors as defined in the PPM to be issued.
c. Make recommendations to the President regarding best
ways to raise funds.
d. Meet the COMPANY'S goal to raise $10 million in
equity.
e. Perform tasks and become involved in projects as
directed by the President.
4. EMPLOYEE'S PERFORMANCE. EMPLOYEE shall work as agreed
upon by the parties. Employee agrees to devote his best efforts to the
Corporation's business and devote his efforts to the Corporation for the
performance of his duties as Vice President of Business Development, and perform
other duties and responsibilities as directed by the President.
5. TERM. The term of this Agreement shall be effective for
a minimum period of 90 days from the date of this Agreement and continue until
thirty days' written notice of termination by either party.
6. COMPENSATION. For the services rendered by EMPLOYEE
hereunder, EMPLOYEE shall be compensated by EMPLOYER as follows, but may be
adjusted as agreed to by the parties.
a. Salary Payments - $1,800 per week.
b. Commission Payments - In addition to salary
payments indicated in 6.a. above, EMPLOYER shall make commission
compensation to EMPLOYEE based on fund raising performance of EMPLOYEE,
relative to the Private Placement Memorandum. EMPLOYER shall maintain
records in sufficient detail for purposes of determining the amount of
commission due, and shall provide EMPLOYEE with a
<PAGE> 3
written accounting that sets for the manner in which the commission
compensation was calculated. Further, EMPLOYEE or his representative
shall have the right to inspect the COMPANY'S records for the limited
purpose of verifying the calculation of the commission compensation,
subject to such restrictions as COMPANY may reasonably impose to protect
the confidentiality of the records. Such inspections shall be made
during reasonable business hours as may be set by COMPANY.
c. Expense Reimbursement - COMPANY shall reimburse
EMPLOYEE for out of pocket expenses that are approved in advance by the
COMPANY.
7. VACATION, HOLIDAYS AND ABSENCE. EMPLOYEE shall be
entitled to annual paid vacations of ten days per year plus such holidays as
adopted by the Company as paid holidays.
8. TERMINATION UPON BREACH. This Agreement shall be
terminated upon material breach of any of the provisions herein, or breach of
the material provisions of any and all supplemental agreements which the
EMPLOYEE and EMPLOYER may mutually execute.
9. CONFIDENTIALITY AGREEMENT. EMPLOYEE agrees that all
information made available to EMPLOYEE regarding the products, clients and
software systems of EMPLOYER are confidential and require a high degree of
confidentiality so as not to violate the rights of others and to prevent the use
thereof for purposes detrimental to the interests of EMPLOYER and its clients.
Such information in any form shall be hereinafter referred to as "INFORMATION."
For purposes of this Agreement:
a. CONFIDENTIAL INFORMATION means INFORMATION
disclosed to or acquired by EMPLOYEE while employed by EMPLOYER, and includes
but is not limited to, INVENTIONS, Patent Applications, TRADE SECRETS, any other
information of
<PAGE> 4
value relating to the business and/or field of interest of EMPLOYER including
information with respect to which EMPLOYER is under an obligation of
confidentiality with any third party. CONFIDENTIAL INFORMATION does not include
information that is generally known in the relevant trade or industry or any
information known to and freely usable by EMPLOYEE before EMPLOYEE's association
with EMPLOYER, provided, however, information for purposes of this Agreement
shall be considered CONFIDENTIAL INFORMATION if not known by the trade
generally, even though such information has been disclosed to one or more third
parties pursuant to distribution agreements, joint research agreements, or other
agreements entered into by EMPLOYER;
b. TRADE SECRET(S) means all information, know-how,
concepts, data, knowledge, ideas and materials however embodied, relating to the
business of EMPLOYER?s customers which have not been released publicly by an
authorized representative of EMPLOYER or have not otherwise lawfully entered the
public domain. TRADE SECRETS shall include but are not limited to information,
know-how, concepts, data, knowledge, computer programs, ideas and materials
relating to EMPLOYER's existing and future products, processes, research and
development, technology, production costs, contract forms, drawings, designs,
plans, proposals, marketing and sales plans and strategies, cost or pricing
information, financial information, promotional methods, volume of sales, names
or classes of customers and vendors, management procedures, organization charts,
and employee directories.
10. PROPRIETARY INFORMATION OF OTHERS. EMPLOYEE shall not
use or disclose to EMPLOYER, or induce EMPLOYER to use, any information,
know-how, concepts, data, knowledge, computer programs, ideas or materials,
however embodied, with respect to which EMPLOYEE is under an obligation of
confidentiality to any third party
<PAGE> 5
imposed, by law or agreement prior to the date hereof. EMPLOYER represents and
covenants that it will not require EMPLOYEE to violate any obligation to, or
confidence with, another.
11. SECRECY AGREEMENT. EMPLOYEE acknowledges that he
understands the requirement for CONFIDENTIAL INFORMATION to be kept secret and
used only as authorized herein. EMPLOYEE shall at all times during the period of
his association with EMPLOYER under this agreement and thereafter keep in
confidence and trust all CONFIDENTIAL INFORMATION. EMPLOYEE shall use
CONFIDENTIAL INFORMATION only in the course of performing duties as Director of
Product Marketing for the Company and other duties as assigned by the Company
President, and not for unrelated personal gain. EMPLOYEE shall not, directly or
indirectly, disclose any CONFIDENTIAL INFORMATION to any person, organization or
entity, except in the course of performing duties as a EMPLOYEE of EMPLOYER and
only in the manner prescribed by EMPLOYER. Employee shall abide by those
EMPLOYER policies and regulations established from time to time for the
protection of CONFIDENTIAL INFORMATION. During EMPLOYEE's association with
EMPLOYER under this Agreement, and after termination thereof, EMPLOYEE shall not
directly, or indirectly, either as an employee, employer, agent, principal,
partner, stockholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any activity of any nature
whatsoever, the performance of which would have a reasonable likelihood of
placing EMPLOYEE in conflict with the obligations of confidence and trust
regarding CONFIDENTIAL INFORMATION imposed herein.
12. RETURN OF DOCUMENTS AND MATERIALS. EMPLOYEE agrees that
all documents, reports, drawings, materials, designs, plans, computer programs,
proposals, marketing and sales plans, reproductions, and other documents or
things made by EMPLOYEE
<PAGE> 6
or that come into EMPLOYEE's possession in the course of employment with
EMPLOYER are the property of EMPLOYER and will not be used by EMPLOYEE for any
purpose other than the business of EMPLOYER. EMPLOYEE will not deliver,
reproduce or in any way allow such documents or things to be delivered or be
used by any third parties without specific direction or consent of EMPLOYER.
Upon termination of this Agreement , EMPLOYEE will promptly deliver to EMPLOYER
the above documents and materials together with any copies thereof.
13. NO DISCLOSURE. EMPLOYEE agrees not to divulge, disclose,
convey or make known to others or any other entity, any such information without
the express written consent of the President of HyperBaric Systems first
obtained. EMPLOYEE further agrees to take all necessary steps to safeguard such
information to prevent the unauthorized disclosure thereof.
14. INJUNCTION. Recognizing that irreparable damage will
result to the business of EMPLOYER in the event of the breach of any of these
covenants and assurances by EMPLOYEE, the parties hereto agree that if EMPLOYEE
shall violate the terms of this Agreement, EMPLOYER shall be entitled to an
injunction to be issued by any court of competent jurisdiction enjoining and
restraining EMPLOYEE and each and every person, firm, association, partnership,
company, or corporation concerned therewith, from the continuance of such
violation of the terms of this Agreement, and in addition thereto, EMPLOYEE
shall pay to EMPLOYER all damages, including reasonable attorneys' fees
sustained by EMPLOYER by reason of the violation of this Agreement.
15. NO ASSIGNMENT. Neither the EMPLOYEE nor EMPLOYER may
transfer or assign this Agreement, or any right or obligation hereunder, without
the prior written consent of the other party. No right or obligation under this
Agreement may be waived,
<PAGE> 7
modified, or in any respect altered except by written agreement of the parties
executed in writing by both parties.
16. SUCCESSORS AND ASSIGNS. This agreement shall be binding
on the heirs, executors, successors and assigns of the parties.
17. ATTORNEYS FEES. If any action is brought to enforce any
obligation created under this Agreement, the Court shall award to the prevailing
party, such reasonable fees, costs, and expenses as may have been incurred by
such party in enforcing its rights under this Agreement, including without
limitation, the fees, costs, and expenses of its attorney for services both
before or after litigation is instituted.
18. ENTIRE AGREEMENT. This Agreement may not be changed
except in writing signed by the President of the Company and the EMPLOYEE. The
validity, performance, construction, and effect of this Agreement shall be
governed by the laws of the State of California
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
"EMPLOYER" "EMPLOYEE"
HYPERBARIC SYSTEMS. LARRY BRYANT
1127 Harker Avenue 3004 Deodar Avenue #C
Palo Alto, California 94301 Costa Mesa, CA 92626
By:
-----------------------------------
-----------------------------------
HARRY MASUDA, PRESIDENT LARRY BRYANT
<PAGE> 1
EXHIBIT 6.8
6.8 NON-STATUTORY INCENTIVE STOCK OPTION PLAN
NON-STATUTORY
INCENTIVE STOCK OPTION PLAN
OF
HYPERBARIC SYSTEMS
A California Corporation
PURPOSE OF PLAN
1. The purpose of this Plan is to promote the interests of HYPERBARIC
SYSTEMS, (hereinafter "Corporation") by providing a method whereby non-employee,
advisory board members, members of the Board of Directors, consultants and
independent contractors who provide valuable services to the Corporation (or its
parent or subsidiary corporations) may be offered incentives and rewards which
will encourage them to acquire a proprietary interest, or otherwise increase
their propriety interest in the Corporation and continue to render services to
the Corporation.
ADMINISTRATION OF THE PLAN
2.(a) This plan shall be administered by a committee composed of two (2)
or more members selected by, and serving at the pleasure of, the Board of
Directors. Members of the Committee shall serve for such period of time as the
Board may determine and shall be subject to removal by the Board at any time.
(b) The Committee, as Plan Administrator, shall have the power to make
all determinations necessary for the administration of the Plan, subject to the
restrictions on committee powers as set forth in Corporations Code Section 311.
Decisions of the Plan Administrator shall be final and binding on all parties
with an interest in the Plan or any outstanding option thereunder.
ELIGIBILITY AND EXERCISE OF OPTION GRANTS
3(a) The persons eligible to participate in this non-statutory plan
shall be employees, non-employee advisory board members, members of the Board of
Directors and those consultants and/or independent contractors who provide
valuable services to the Corporation.
(b) The Plan Administrator shall have full authority to determine which
eligible individuals are to receive option grants under the Plan, the number of
shares to be covered by each grant, the time or times at which such option is to
become exercisable, and the maximum term for which the option is to be
outstanding.
(c) Each option granted under this Plan shall be exercisable at such
time or times, during such period, and for such number of shares as shall be
determined by the Plan Administrator and set forth in the instrument evidencing
such option. No such option, however, shall have a maximum term in excess of ten
(10) years from the grant date.
<PAGE> 2
STOCK SUBJECT TO PLAN
4.(a) The aggregate number of shares that may be issued pursuant to
options granted under this Plan shall be 500,000 shares of the Corporations'
voting common stock which has been authorized but is unissued, or reacquired
common stock. The number of shares issuable under the Plan shall be subject to
adjustment from time to time in accordance with the provisions of this Paragraph
4 and the provisions of Paragraph 11 of this Plan.
(b) In the case the expiration or termination of an option for any
reason prior to exercise in full, the shares subject to the portion of the
option not so exercised shall be available for subsequent option grants under
this Plan.
OPTION PRICE
5. The price for a share of stock subject to an option granted pursuant
to this Plan shall be determined by the Plan Administrator in its sole
discretion and may be less than, equal to, or greater than the fair market value
of such Common Stock on the grant date.
ALLOWABLE CONSIDERATION
6.(a) Upon the exercise of the option by the Optionee in accordance with
this Plan, the Optionee shall provide payment in full to the Plan Administrator
for such shares and for such price as determined by the Plan Administrator at
the time of the granting of such option. Payment may be made by cash, check or
other payment in full in any other form which the Compensation Committee who
administers the Plan, may, in its discretion, approve at the time of the
exercise.
(b) The Plan Administrator may assist any optionee in the exercise of
one or more outstanding options under this Plan by (i) authorizing the extension
of a loan to such optionee from the Corporation or (ii) permitting the optionee
to pay the option price for the purchased Common Stock in installments over a
period of years. The terms of any loan or installment method of payment
(including the interest rate and terms of repayment) will be established by the
Committee as the Plan Administrator in its sole discretion. Loans and
installment payments may be granted without security or collateral.
OPTIONS NONTRANSFERABLE
7. The terms of any option granted under this Plan shall make the option
nontransferable by the optionee except by will or the laws of descent and
distribution, and exercisable only by the optionee during his or her lifetime.
EXTENSION OF EXERCISE PERIOD
8. The Committee as Plan Administrator shall have the full power and
authority to extend the period of time for which any option granted under this
Plan is to remain exercisable following the optionee's cessation of Employment
or death from the limited period set forth in
<PAGE> 3
the Option Agreement to such greater period of time as the Committee shall deem
appropriate; provided, however, that in no event shall such option be
exercisable after the specified expiration date of the option term.
STOCK SUBJECT TO OPTION
9.(a) The Corporation shall at all times during the term of this Plan
reserve the number of shares of the voting common stock of the Corporation
required to meet the requirements of this Plan, and shall pay all fees and
expenses necessarily incurred by the Corporation in connection with the exercise
of options under this Plan.
(b) In the event of a stock split, reverse stock split, stock dividend,
combination, or reclassification of the Corporation's stock, an appropriate and
proportionate adjustment shall be made in the number of shares to which stock
options may be granted. A corresponding change shall be made to the number and
kind of shares, and the exercise price per share, of unexercised options.
TERMINATION OF SERVICE
10.(a) An optionee's option shall expire three months after termination
of that optionee's services to the Corporation, unless the reason for the
cessation of services results from death or disability, subject to earlier
termination pursuant to Paragraph 4 of this Plan. An optionee's option shall
expire 12 months after termination of employment due to permanent and total
disability, as defined in Internal Revenue Code Section 22(e)(3), subject to
earlier termination pursuant to Paragraph 4 of this Plan. If an optionee should
die while providing services, as defined herein, by the Corporation, or its
parent, subsidiary, or successor as defined in Section 424 of the Internal
Revenue Code, or within the three-month period after termination of services,
the person to whom the optionee's rights pass by will or the laws of descent and
distribution may exercise the option for any of the shares not previously
exercised during Optionee's lifetime, within one year after the optionee's
death, subject to earlier termination pursuant to Paragraph 4 of this Plan.
(b) For the purposes of the foregoing provisions of this Section 10 and
for all purposes under this Plan, the Optionee shall be deemed to remain in the
"Service" of the Corporation for so long as such individual renders services on
a periodic basis to the Corporation, or any parent or subsidiary corporation, in
the capacity as an independent contractor, consultant or advisory Board member.
Additionally, the Optionee shall be deemed to remain in the "Service" of the
Corporation for so long as such individual has render services to fullness of
contract or agreement between the Corporation, or any parent or subsidiary
corporation.
MERGER, CONSOLIDATION OR DISSOLUTION OF THE CORPORATION
11.(a) Following the merger of one or more corporations into the
Corporation, or any consolidation of the Corporation with one or more
corporations in which the Corporation is the surviving corporation, the exercise
of options under this Plan shall apply to the shares of the surviving
corporation.
<PAGE> 4
(b) Notwithstanding any other provision of this Plan, all options under
Plan shall terminate on the dissolution or liquidation of the Corporation, or on
any merger or consolidation in which the Corporation is not the surviving
corporation.
OTHER OPTION TERMS
12. Any option granted pursuant to this Plan shall contain any other
terms that the Board of Directors, the Corporation's legal counsel, or the Plan
Administrator deems necessary.
STOCKHOLDER RIGHTS
13. An optionee shall have none of the rights of a stockholder with
respect to any shares covered by the option until such individual shall have
exercised the option, paid the option price, and receives the Certificate of
shares.
AMENDMENTS TO PLAN
14. The Board of Directors of the Corporation shall have complete and
exclusive power and authority to amend or modify the Plan in any or all respects
whatsoever; provided, however, that no such amendment or modification shall,
without the consent of the holders, adversely affect rights and obligations with
respect to options at the time outstanding under the Plan. In addition, the
Board shall not, without the approval of the Corporation's stockholders, (a)
increase the maximum number of shares issuable under the Plan, except for
permissible adjustments under Paragraph 13 herein; (b) materially modify the
eligibility requirements for the grant of options under the Plan; or (c)
otherwise materially increase the benefits accruing to participants under the
Plan.
USE OF PROCEEDS
15. Any cash proceeds received by the Corporation from the sale of
shares pursuant to options granted under this Plan shall be used by the
Corporation for general corporate purposes.
REGULATORY APPROVALS
16. The implementation of this Plan, the granting of any options
hereunder, and the issuance of stock upon the exercise or surrender of any such
option shall be subject to the procurement by the Corporation of all approvals
and permits that may be required by regulatory authorities having jurisdiction
over the Plan, the options granted under it and the stock issued pursuant to it.
EFFECTIVE DATE OF PLAN
17. This Plan shall be effective on approval by the outstanding shares
or unanimous written consent of the shareholders of the Corporation.
<PAGE> 1
EXHIBIT 6.9
6.9 STATUTORY INCENTIVE STOCK OPTION PLAN
STATUTORY INCENTIVE STOCK OPTION PLAN
OF
HYPERBARIC SYSTEMS
A California Corporation
PURPOSE OF PLAN
1. The purpose of this Plan is to strengthen HYPERBARIC SYSTEMS,
(hereinafter "Corporation") by providing incentive stock options as a means to
attract, retain and motivate corporate personnel.
ADMINISTRATION OF THE PLAN
2.(a) This plan shall be administered by a committee (hereinafter
"Committee") composed of two (2) or more members selected by, and serving at the
pleasure of, the Board of Directors. Members of the Committee shall serve for
such period of time as the Board may determine and shall be subject to removal
by the Board at any time.
(b) The Committee, as Plan Administrator, shall have the power to make
all determinations necessary for the administration of the Plan, subject to the
restrictions on committee powers as set forth in Corporations Code Section 311.
Decisions of the Plan Administrator shall be final and binding on all parties
with an interest in the Plan or any outstanding option thereunder.
GRANT OF OPTIONS
3.(a) HYPERBARIC SYSTEMS is hereby authorized to grant incentive stock
options as defined in Internal Revenue Code Section 422 to any full time
employee of the corporation. Options may not be granted to employees who own
stock possessing more than 10 percent (10%) of the total combined voting power
of all classes of stock of the corporation, or of its parent or subsidiary,
except pursuant to the restrictions set forth in Paragraphs 7 and 8. Any option
granted under this Plan shall be granted within 10 years from the date this Plan
is adopted, or the date this Plan is approved by the shareholders pursuant to
Paragraph 21, whichever is earlier.
(b) For the purposes of this Plan, the optionee shall be considered to
be an Employee for so long as such individual remains in the employ of the
Corporation or one or more of its parent or subsidiary corporations, subject to
the control and direction of the Corporation, not only as to the work to be
performed but also as to the manner and method of performance.
ELIGIBILITY FOR OPTION GRANTS
4.(a) The persons eligible to participate in the Plan shall be limited
to the Officers and other key employees of the Company who render services which
contribute to the success and
<PAGE> 2
growth of the company, (or its parent or subsidiary corporations) or which may
reasonably be anticipated to contribute to the future success and growth of the
Company.
(b) Members of the Committee while serving as such shall not be eligible
to participate in the Plan or in an other stock option, stock purchase, stock
bonuses or other stock plan of the Company.
(c) The Plan Administrator shall have full authority to determine which
eligible individuals are to receive option grants under the Plan, the number of
shares to be covered by each grant, the time or times at which such option is to
become exercisable, and the maximum term for which the option is to be
outstanding. However, no option granted under this Plan by the Administrator
shall be exercisable by its terms after the expiration of ten (10) years from
the grant of the option, and no option granted to a person who owns stock
possessing more than 10 percent of the total combined voting power of all
classes of the Corporation's stock shall be exercisable by its terms after the
expiration of five (5) years from the date of the grant. The option may be
subject to earlier termination as provided in Paragraph 11.
STOCK SUBJECT TO PLAN
5.(a) The aggregate number of shares that may be issued pursuant to
options granted under this Plan shall be 150,000 shares of the Corporations'
voting common stock which has been authorized but is unissued, or reacquired
common stock. The number of shares issuable under the Plan shall be subject to
adjustment from time to time in accordance with the provisions of this Paragraph
4 and the provisions of Paragraph 10 of this Plan.
(b) In the case the expiration or termination of an option for any
reason prior to exercise in full, the shares subject to the portion of the
option not so exercised shall be available for subsequent option grants under
this Plan.
AGGREGATE FAIR MARKET VALUE
6. The aggregate fair market value of the stock, as determined in good
faith by the Committee at the time the option is granted, with respect to which
incentive stock options are exercisable for the first time by an employee during
any calendar year (under all incentive stock option plans of the Corporation and
its parent and subsidiary corporations) shall not exceed $100,000.
EXERCISE OF OPTION
7.(a) Any option granted pursuant to this Plan shall contain provisions,
established by the Plan Administrator, setting forth the manner of exercising
the option and in accordance with the provisions of Paragraph (4) above.
(b) The optionee shall have the right to receive property at the time of
exercising the option, so long as the property is subject to inclusion in income
under Internal Revenue Code Section 83.
<PAGE> 3
OPTION PRICE
8. The price for a share of stock subject to an option granted pursuant
to this Plan shall not be less than the fair market value for the stock at the
time the option is granted, as determined in good faith by the Administrator at
the time the option is granted. However, when an option is granted to a person
who owns stock possessing more than 10 percent of the total combined voting
power of all classes of the Corporation's stock, the purchase price per share of
the stock subject to the option shall not be less than 110% (One Hundred ten
percent ) of the fair market value of the stock at the time the option is
granted, as determined by the Plan Administrator in good faith at the time the
option is granted.
ALLOWABLE CONSIDERATION
9.(a) Upon the exercise of the option by the Employee in accordance with
this Plan, the Employee shall provide payment in full to the Plan Administrator
for such shares and for such price as determined by the Plan Administrator at
the time of the granting of such option. Payment may be made by cash, check or
other payment in full in any other form which the Compensation Committee who
administers the Plan, may, in its discretion, approve at the time of the
exercise.
(b) The Plan Administrator may assist any optionee in the exercise of
one or more outstanding options under this Plan by (i) authorizing the extension
of a loan to such optionee from the Corporation or (ii) permitting the optionee
to pay the option price for the purchased Common Stock in installments over a
period of years. The terms of any loan or installment method of payment
(including the interest rate and terms of repayment) will be established by the
Committee as the Plan Administrator in its sole discretion. Loans and
installment payments may be granted without security or collateral.
OPTIONS NONTRANSFERABLE
10. The terms of any option granted under this Plan shall make the
option nontransferable by the optionee except by will or the laws of descent and
distribution, and exercisable only by the optionee during his or her lifetime.
TERMINATION OF EMPLOYMENT
11. An optionee's option shall expire three months after termination of
employment for reasons other than death or disability, subject to earlier
termination pursuant to Paragraph 4 of this Plan. An optionee's option shall
expire 12 months after termination of employment due to permanent and total
disability, as defined in Internal Revenue Code Section 22(e)(3), subject to
earlier termination pursuant to Paragraph 4 of this Plan. If an optionee should
die while employed by the Corporation, or its parent, subsidiary, or successor
as defined in Section 424 of the Internal Revenue Code, or within the
three-month period after termination of employment, the person to whom the
optionee's rights pass by will or the laws of descent and distribution may
exercise the option for any of the shares not previously exercised during
Employee's lifetime, within one year after the optionee's death, subject to
earlier termination pursuant to Paragraph 4 of this Plan.
<PAGE> 4
EXTENSION OF EXERCISE PERIOD
12. The Committee as Plan Administrator shall have the full power and
authority to extend the period of time for which any option granted under this
Plan is to remain exercisable following the optionee's cessation of Employment
or death from the limited period set forth in the Option Agreement to such
greater period of time as the Committee shall deem appropriate; provided,
however, that in no event shall such option be exercisable after the specified
expiration date of the option term.
NO EMPLOYMENT RIGHTS
13. Neither the action of the Corporation in establishing or restating
this Plan, nor any action taken by the Committee hereunder, nor any provision of
any restated Plan shall be construed so as to grant any individual the right to
remain in the employment of the Corporation (or any parent or subsidiary
corporation) for any period of specific duration, and the Corporation (or any
parent or subsidiary corporation employing such individual) may terminate such
individual's employment at any time and for any reason, with or without cause.
STOCK SUBJECT TO OPTION
14.(a) The Corporation shall at all times during the term of this Plan
reserve the number of shares of the voting common stock of the Corporation
required to meet the requirements of this Plan, and shall pay all fees and
expenses necessarily incurred by the Corporation in connection with the exercise
of options under this Plan.
(b) In the event of a stock split, reverse stock split, stock dividend,
combination, or reclassification of the Corporation's stock, an appropriate and
proportionate adjustment shall be made in the number of shares to which stock
options may be granted. A corresponding change shall be made to the number and
kind of shares, and the exercise price per share, of unexercised options.
MERGER, CONSOLIDATION OR DISSOLUTION OF THE CORPORATION
15.(a) Following the merger of one or more corporations into the
Corporation, or any consolidation of the Corporation with one or more
corporations in which the Corporation is the surviving corporation, the exercise
of options under this Plan shall apply to the shares of the surviving
corporation.
(b) Notwithstanding any other provision of this Plan, all options under
Plan shall terminate on the dissolution or liquidation of the Corporation, or on
any merger or consolidation in which the Corporation is not the surviving
corporation.
<PAGE> 5
OTHER OPTION TERMS
16. Any option granted pursuant to this Plan shall contain any other
terms that the Board of Directors, the Corporation's legal counsel, or the Plan
Administrator deems necessary.
STOCKHOLDER RIGHTS
17. An Employee optionee shall have none of the rights of a stockholder
with respect to any shares covered by the option until such individual shall
have exercised the option, paid the option price, and receives the Certificate
of shares.
AMENDMENTS TO PLAN
18. The Board of Directors of the Corporation shall have complete and
exclusive power and authority to amend or modify the Plan in any or all respects
whatsoever; provided, however, that no such amendment or modification shall,
without the consent of the holders, adversely affect rights and obligations with
respect to options at the time outstanding under the Plan. In addition, the
Board shall not, without the approval of the Corporation's stockholders, (a)
increase the maximum number of shares issuable under the Plan, except for
permissible adjustments under Paragraph 13 herein; (b) materially modify the
eligibility requirements for the grant of options under the Plan; or (c)
otherwise materially increase the benefits accruing to participants under the
Plan.
USE OF PROCEEDS
19. Any cash proceeds received by the Corporation from the sale of
shares pursuant to options granted under this Plan shall be used by the
Corporation for general corporate purposes.
REGULATORY APPROVALS
20. The implementation of this Plan, the granting of any options
hereunder, and the issuance of stock upon the exercise or surrender of any such
option shall be subject to the procurement by the Corporation of all approvals
and permits that may be required by regulatory authorities having jurisdiction
over the Plan, the options granted under it and the stock issued pursuant to it.
EFFECTIVE DATE OF PLAN
21. This Plan shall be effective on approval by the outstanding shares
or unanimous written consent of the shareholders of the Corporation.
<PAGE> 1
EXHIBIT 6.10
6.10 STATUTORY INCENTIVE STOCK OPTION GRANT - R. UMAR, 5/10/98
HYPERBARIC SYSTEMS
NOTICE OF GRANT OF STATUTORY STOCK OPTION
NOTICE is hereby given of the following stock option grant (the
"Option") to purchase shares of the Common Stock of HYPERBARIC SYSTEMS (the
"Company"):
<TABLE>
<S> <C>
EMPLOYEE OPTIONEE : ROCKY UMAR
GRANT DATE : MAY 10/ 1998
OPTION PRICE : $0.10 PER SHARE
NUMBER OF OPTIONED
SHARES : 50,000
EXPIRATION DATE : 5/09/03
TYPE OF OPTION : EMPLOYEE INCENTIVE STOCK OPTION
EXERCISE SCHEDULE : 20% VESTED AS OF 5/10/98
24% AFTER FIRST YEAR, 5/10/99
32% AFTER SECOND YEAR, 5/10/00
24% AFTER THIRD YEAR, 5/10/01
</TABLE>
Employee/Optionee understands that the Option is granted subject to and
in accordance with the express terms and conditions of the HYPERBARIC SYSTEMS,
1998 Statutory Stock Option Plan (The "Plan"). Employee/Optionee agrees to be
bound by the terms and conditions of the Plan and the terms and conditions of
the Option as set forth in the Statutory Incentive Stock Option Agreement
attached hereto as Exhibit A.
Optionee hereby acknowledges receipt of a copy of the Plan in the form
attached hereto as Exhibit B.
Dated: May 10, 1998 HYPERBARIC SYSTEMS
----------------------
By
----------------------------
Harry Masuda, President and
Chief Executive Officer
"EMPLOYEE/OPTIONEE"
<PAGE> 2
------------------------------
(Signature)
Rocky Umar
------------------------------
(Type Name)
2465 Diamond Ridge Drive
Hayward, CA 94544
------------------------------
(Address)
<PAGE> 3
STATUTORY INCENTIVE STOCK
OPTION AGREEMENT
This AGREEMENT is made between HYPERBARIC SYSTEMS, having a principal
place of business at 1127 Harker Avenue, Palo Alto, CA 94301, hereafter referred
to as "Employer," and Rocky Umar, hereinafter referred to as "Employee."
OPTION GRANTED
1. Employer hereby grants Employee an option to purchase 50,000 shares
of common stock at a purchase price of $0.10 per share.
TIME OF EXERCISE OF OPTION
2. Employee may exercise this option to purchase his or her shares
according to the following schedule:
<TABLE>
<S> <C>
20% vested as of 5/10/98
24% After 1st year, 5/10/99
32% After 2nd year, 5/10/00
24% After 3rd year, 5/10/01
</TABLE>
until termination of the option as provided in Paragraph 7, below, so long as at
all times, beginning with the date of the grant of this option and ending three
months prior to the date of exercise, or 12 months prior to the date of exercise
if the employee is disabled within the meaning of Internal Revenue Code Section
22(e)(3), Employee remains employed. For purposes of this Agreement,
"employment" means that Employee is employed by Employer, a parent or subsidiary
corporation of such a corporation issuing or assuming a stock option in a
transaction to which Internal Revenue Code Section 424(a) applies.
METHOD OF EXERCISE
3. This option shall be exercised by Employee, or in the case of the
exercise after Employee's death, the Employee's executor, administrator, heir or
legatee, as the case may be, by written notice delivered to Employer at its
principal place of business, stating the number of shares for which the option
is being exercised. The notice must be accompanied by a check or other payment
in full in any other form which the Committee who administers the Plan, may, in
its discretion, approve at the time of the exercise in accordance with Paragraph
4 of this Agreement.
In the case of the exercise of an Employee's option after death, the
person or persons exercising on behalf of the deceased Employee shall provide
appropriate documentation establishing their right to act on behalf of the
decedent.
<PAGE> 4
LOANS
4. The Committee acting as plan administrator may, in its absolute
discretion and without any obligation to do so, assist the Employee in the
exercise of this option by (1) authorizing the extension of a loan to the
Employee from the Company or (ii) permitting the Employee to pay the option
price for the purchased shares of stock in installments over a period of years.
The terms of the loan or installment method of payment (including the interest
rate, the collateral requirements and terms of repayment) shall be established
by the Committee as plan administrator, in its sole discretion.
CAPITAL ADJUSTMENTS
5.(a) The existence of this option shall not affect in any way the right
or power of Employer or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, or other changes in Employer's
capital structure or its business, or any merger or consolidation of Employer or
any issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting the common stock or the rights thereof, or the issuance of any
securities convertible into any common stock or of any rights, options, or
warrants to purchase any common stock, or the dissolution or liquidation of
Employer, any sale or transfer of all or any part of its assets or business, or
any other corporate act or proceedings of Employer, whether of a similar
character or otherwise.
(b) The shares with respect to which this option is granted are shares
of the common voting stock of HYPERBARIC SYSTEMS as presently constituted, but
if and whenever, prior to the delivery by Employer of all the shares of the
stock with respect to which this option is granted, Employer shall effect a
subdivision or consolidation of shares or other capital readjustment, the
payment of a stock dividend, or other increase or reduction of the number of
shares of the stock outstanding without receiving compensation therefor in
money, services, or property, the number of shares of stock then remaining
subject to this option shall (a) in the event of an increase in the number of
outstanding shares, be proportionately increased, and the cash consideration
payable per share shall be proportionately reduced; and (b) in the event of a
reduction in the number of outstanding shares, be proportionately reduced, and
the cash consideration payable per share shall be proportionately increased.
MERGER AND CONSOLIDATION
6.(a) Following the merger of one or more corporations into Employer or
any consolidation of Employer and one or more corporations in which Employer is
the surviving corporation, the exercise of these options shall apply to the
shares of the surviving corporation.
(b) Notwithstanding any other provision of this Agreement, this option
shall terminate on the dissolution or liquidation of Employer, or on any merger
or consolidation in which Employer is not the surviving corporation.
TRANSFER OF OPTION
7. During Employee's lifetime, this option shall be exercisable only by
Employee. This option shall not be transferable by Employee other than by the
laws of the descent and distribution upon Employee's death. In the event of
Employee's death during employment or during the applicable period after
termination of employment specified in Paragraph 2 above,
<PAGE> 5
Employee's personal representatives may exercise any portion of this option that
remains unexercised at the time of Employee's death, provided that any such
exercise must be made, if at all, during the period within one year after
Employee's death, and subject to the option termination date specified in
Paragraph 8(c) below.
TERMINATION OF OPTION
8. This option shall terminate on the earliest of the following
dates:
a. The expiration of three months from the date of Employee's
termination of employment, as defined in Paragraph 2, above, except for
termination due to death or permanent and total disability.
b. The expiration of twelve months from the date on which
Employee's employment, as defined in Paragraph 2 above, is terminated due to
permanent and total disability, as defined in Internal Revenue Code Section
22(e)(3); or,
c. Five years from the date of the granting of this option.
RIGHTS AS SHAREHOLDER
9. Employee will not be deemed to be a holder of any shares pursuant to
the exercise of this option until Employee pays the option price and a stock
certificate is delivered to Employee for those shares. No adjustments shall be
made for dividends or other rights for which the record date is prior to the
date the stock certificate is delivered.
CONSTRUCTION
10. This Agreement and the option evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the
express terms and provision of the Plan. All decisions of the Plan Administrator
and/or Compensation Committee with respect to any question shall be conclusive
and binding on all persons having an interest in this option.
GOVERNING LAW
11. The interpretation, performance, and enforcement of this Agreement
shall be governed by the laws of the State of California.
<PAGE> 6
EFFECTIVE DATE OF THIS AGREEMENT
12. The effective date of this Agreement and granting of option to the
Employee shall be the date this agreement is signed and written hereinbelow.
EXECUTED THIS 10TH DAY OF MAY, 1998, AT PALO ALTO, CALIFORNIA.
"EMPLOYER" "EMPLOYEE"
HYPERBARIC SYSTEMS
BY:
---------------------------- --------------------------------
HARRY MASUDA, PRESIDENT AND (Signature)
CHIEF EXECUTIVE OFFICER
Rocky Umar
------------------------
(Type Name)
2465 Diamond Ridge Drive
Hayward, CA 94544
------------------------
(Type Address)
<PAGE> 1
EXHIBIT 6.11
6.11 NON-STATUTORY INCENTIVE STOCK OPTION GRANT - A. SEALY, 7/21/98
HYPERBARIC SYSTEMS
NOTICE OF GRANT OF NON-STATUTORY STOCK OPTION
NOTICE is hereby given of the following stock option grant (the
"Option") to purchase shares of the Common Stock of HYPERBARIC SYSTEMS (the
"Company"):
<TABLE>
<S> <C>
OPTIONEE : ARDETH N. SEALY
GRANT DATE : 7/21/1998
OPTION PRICE : $0.10 PER SHARE
NUMBER OF OPTIONED
SHARES : 10,000
EXPIRATION DATE : 7/20/2003
TYPE OF OPTION: NON-STATUTORY STOCK OPTION
EXERCISE SCHEDULE : Upon Grant
</TABLE>
Optionee understands that the Option is granted subject to and in
accordance with the express terms and conditions of the HYPERBARIC SYSTEMS, 1998
Non-Statutory Stock Option Plan (The "Plan"). Optionee agrees to be bound by the
terms and conditions of the Plan and the terms and conditions of the Option as
set forth in the Non-Statutory Incentive Stock Option Agreement attached hereto
as Exhibit A.
Optionee hereby acknowledges receipt of a copy of the Plan in the form
attached hereto as Exhibit B.
Dated: July 21, 1998 HYPERBARIC SYSTEMS
-----------------------
By
-----------------------------
Harry Masuda, President and
Chief Executive Officer
"OPTIONEE"
-----------------------------
(Signature)
<PAGE> 2
Ardeth N. Sealy
--------------------
(Type Name)
902 Santa Rosa Court
Roseville, CA 95661
--------------------
(Address)
<PAGE> 3
NON-STATUTORY
INCENTIVE STOCK OPTION AGREEMENT
This AGREEMENT is made between HYPERBARIC SYSTEMS, having a principal
place of business at 1127 Harker Avenue, Palo Alto, CA 94301, hereafter referred
to as "Optionor," and Ardeth N. Sealy, hereinafter referred to as "Optionee."
OPTION GRANTED
1. Optionor hereby grants Optionee an option to purchase 10,000 shares
of common stock at a purchase price of $0.10 per share.
TIME OF EXERCISE OF OPTION
2. Optionee may exercise this option to purchase his or her shares
according to the following schedule:
100% Upon Issue
until termination of the option as provided in Paragraph 8, below, so long as at
all times, beginning with the date of the grant of this option and ending three
months prior to the date of exercise, or 12 months prior to the date of exercise
if the optionee is disabled within the meaning of Internal Revenue Code Section
22(e)(3), Optionee continues to provide services periodically to the
Corporation/Optionor. For the purposes of this Agreement, the Optionee shall be
deemed to remain in the "Service" of the Corporation for so long as such
individual renders services on a periodic basis to the Corporation, or any
parent or subsidiary corporation, in the capacity as an independent contractor,
consultant, and non employee members of the Advisory Board, and members of the
Board of Directors.
METHOD OF EXERCISE
3. This option shall be exercised by Optionee, or in the case of the
exercise after Optionee's death, the Optionee's executor, administrator, heir or
legatee, as the case may be, by written notice delivered to Employer at its
principal place of business, stating the number of shares for which the option
is being exercised. The notice must be accompanied by a check or other payment
in full in any other form which the Committee who administers the Plan, may, in
its discretion, approve at the time of the exercise in accordance with Paragraph
4 of this Agreement.
In the case of the exercise of an Optionee's option after death, the
person or persons exercising on behalf of the deceased Optionee shall provide
appropriate documentation establishing their right to act on behalf of the
decedent.
LOANS
4. The Committee acting as plan administrator may, in its absolute
discretion and without any obligation to do so, assist the Optionee in the
exercise of this option by (1)
<PAGE> 4
authorizing the extension of a loan to the Optionee from the Company or (ii)
permitting the Optionee to pay the option price for the purchased shares of
stock in installments over a period of years. The terms of the loan or
installment method of payment (including the interest rate, the collateral
requirements and terms of repayment) shall be established by the Committee as
plan administrator, in its sole discretion.
CAPITAL ADJUSTMENTS
5.(a) The existence of this option shall not affect in any way the right
or power of Employer or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, or other changes in Optionor's
capital structure or its business, or any merger or consolidation of the
Optionor or any issue of bonds, debentures, preferred or prior preference stocks
ahead of or affecting the common stock or the rights thereof, or the issuance of
any securities convertible into any common stock or of any rights, options, or
warrants to purchase any common stock, or the dissolution or liquidation of the
Optionor, any sale or transfer of all or any part of its assets or business, or
any other corporate act or proceedings of the Optionor, whether of a similar
character or otherwise.
(b) The shares with respect to which this option is granted are shares
of the common voting stock of HYPERBARIC SYSTEMS as presently constituted, but
if and whenever, prior to the delivery by Optionor of all the shares of the
stock with respect to which this option is granted, Optionor shall effect a
subdivision or consolidation of shares or other capital readjustment, the
payment of a stock dividend, or other increase or reduction of the number of
shares of the stock outstanding without receiving compensation therefor in
money, services, or property, the number of shares of stock then remaining
subject to this option shall (a) in the event of an increase in the number of
outstanding shares, be proportionately increased, and the cash consideration
payable per share shall be proportionately reduced; and (b) in the event of a
reduction in the number of outstanding shares, be proportionately reduced, and
the cash consideration payable per share shall be proportionately increased.
MERGER AND CONSOLIDATION
6.(a) Following the merger of one or more corporations into Optionor or
any consolidation of Optionor and one or more corporations in which Optionor is
the surviving corporation, the exercise of these options shall apply to the
shares of the surviving corporation.
(b) Notwithstanding any other provision of this Agreement, this option
shall terminate on the dissolution or liquidation of Optionor, or on any merger
or consolidation in which Optionor is not the surviving corporation.
TRANSFER OF OPTION
7. During Optionee's lifetime, this option shall be exercisable only by
Optionee. This option shall not be transferable by Optionee other than by the
laws of the descent and distribution upon Optionee's death. In the event of
Optionee's death during employment or during the applicable period after
termination of employment specified in Paragraph 2 above, Optionee's personal
representatives may exercise any portion of this option that remains unexercised
at the time of Optionee's death, provided that any such exercise must be made,
if at
<PAGE> 5
all, during the period within one year after Optionee's death, and subject to
the option termination date specified in Paragraph 8(a) below.
TERMINATION OF OPTION
8. This option shall terminate on the earliest of the following
dates:
a. Five years from the date of the granting of this option.
RIGHTS AS SHAREHOLDER
9. Optionee will not be deemed to be a holder of any shares pursuant to
the exercise of this option until Optionee pays the option price and a stock
certificate is delivered to Optionee for those shares. No adjustments shall be
made for dividends or other rights for which the record date is prior to the
date the stock certificate is delivered.
CONSTRUCTION
10. This Agreement and the option evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the
express terms and provision of the Plan. All decisions of the Plan Administrator
and/or Compensation Committee with respect to any question shall be conclusive
and binding on all persons having an interest in this option.
GOVERNING LAW
11. The interpretation, performance, and enforcement of this Agreement
shall be governed by the laws of the State of California.
<PAGE> 6
EFFECTIVE DATE OF THIS AGREEMENT
12. The effective date of this Agreement and granting of option to the
Optionee shall be the date this agreement is signed and written herein below.
EXECUTED THIS 21 DAY OF JULY, 1998, AT PALO ALTO, CALIFORNIA.
"OPTIONOR" "OPTIONEE"
HYPERBARIC SYSTEMS
BY:
----------------------------
HARRY MASUDA, PRESIDENT (Signature)
Ardeth N. Sealy
-------------------------
(Type Name)
902 Santa Rosa Court
Roseville, CA 95661
---------------------------
(Type Address)
<PAGE> 1
EXHIBIT 6.12
6.12 STATUTORY INCENTIVE STOCK OPTION GRANT - A. SEALY, 11/27/98
HYPERBARIC SYSTEMS
NOTICE OF GRANT OF STATUTORY STOCK OPTION
NOTICE is hereby given of the following stock option grant (the
"Option") to purchase shares of the Common Stock of HYPERBARIC SYSTEMS (the
"Company"):
<TABLE>
<S> <C>
EMPLOYEE OPTIONEE : ARDETH N. SEALY
GRANT DATE : 11/27/98
OPTION PRICE : $0.25 PER SHARE
NUMBER OF OPTIONED
SHARES : 50,000
EXPIRATION DATE : 11/27/03
TYPE OF OPTION: EMPLOYEE INCENTIVE STOCK OPTION
EXERCISE SCHEDULE : 30% AFTER FIRST YEAR 11/27/99
30% AFTER SECOND YEAR 11/27/00
40% AFTER THIRD YEAR 11/27/01
</TABLE>
Employee/Optionee understands that the Option is granted subject to and
in accordance with the express terms and conditions of the HYPERBARIC SYSTEMS,
1998 Statutory Stock Option Plan (The "Plan"). Employee/Optionee agrees to be
bound by the terms and conditions of the Plan and the terms and conditions of
the Option as set forth in the Statutory Incentive Stock Option Agreement
attached hereto as Exhibit A.
Optionee hereby acknowledges receipt of a copy of the Plan in the form
attached hereto as Exhibit B.
Dated: HYPERBARIC SYSTEMS
--------------------
By
----------------------------------
HARRY MASUDA, President
"EMPLOYEE/OPTIONEE"
----------------------------------
(Signature)
<PAGE> 2
Ardeth N. Sealy
(Type Name)
902 Santa Rosa Court
Roseville, CA 95661
(Address)
<PAGE> 3
STATUTORY INCENTIVE STOCK
OPTION AGREEMENT
This AGREEMENT is made between HYPERBARIC SYSTEMS, having a principal
place of business at 1127 Harker Avenue, Palo Alto, CA 94301, hereafter referred
to as "Employer," and Ardeth N. Sealy, hereinafter referred to as "Employee."
OPTION GRANTED
1. Employer hereby grants Employee an option to purchase 50,000 shares
of common stock at a purchase price of $0.25 per share.
TIME OF EXERCISE OF OPTION
2. Employee may exercise this option to purchase his or her shares
according to the following schedule:
<TABLE>
<S> <C>
30% After 1st year 11/27/99
30% After 2nd year 11/27/00
40% After 3rd year 11/27/01
</TABLE>
until termination of the option as provided in Paragraph 7, below, so long as at
all times, beginning with the date of the grant of this option and ending three
months prior to the date of exercise, or 12 months prior to the date of exercise
if the employee is disabled within the meaning of Internal Revenue Code Section
22(e)(3), Employee remains employed. For purposes of this Agreement,
"employment" means that Employee is employed by Employer, a parent or subsidiary
corporation of such a corporation issuing or assuming a stock option in a
transaction to which Internal Revenue Code Section 424(a) applies.
METHOD OF EXERCISE
3. This option shall be exercised by Employee, or in the case of the
exercise after Employee's death, the Employee's executor, administrator, heir or
legatee, as the case may be, by written notice delivered to Employer at its
principal place of business, stating the number of shares for which the option
is being exercised. The notice must be accompanied by a check or other payment
in full in any other form which the Committee who administers the Plan, may, in
its discretion, approve at the time of the exercise in accordance with Paragraph
4 of this Agreement.
In the case of the exercise of an Employee's option after death, the
person or persons exercising on behalf of the deceased Employee shall provide
appropriate documentation establishing their right to act on behalf of the
decedent.
LOANS
4. The Committee acting as plan administrator may, in its absolute
discretion and without any obligation to do so, assist the Employee in the
exercise of this option by (1)
<PAGE> 4
authorizing the extension of a loan to the Employee from the Company or (ii)
permitting the Employee to pay the option price for the purchased shares of
stock in installments over a period of years. The terms of the loan or
installment method of payment (including the interest rate, the collateral
requirements and terms of repayment) shall be established by the Committee as
plan administrator, in its sole discretion.
CAPITAL ADJUSTMENTS
5.(a) The existence of this option shall not affect in any way the right
or power of Employer or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, or other changes in Employer's
capital structure or its business, or any merger or consolidation of Employer or
any issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting the common stock or the rights thereof, or the issuance of any
securities convertible into any common stock or of any rights, options, or
warrants to purchase any common stock, or the dissolution or liquidation of
Employer, any sale or transfer of all or any part of its assets or business, or
any other corporate act or proceedings of Employer, whether of a similar
character or otherwise.
(b) The shares with respect to which this option is granted are shares
of the common voting stock of HYPERBARIC SYSTEMS as presently constituted, but
if and whenever, prior to the delivery by Employer of all the shares of the
stock with respect to which this option is granted, Employer shall effect a
subdivision or consolidation of shares or other capital readjustment, the
payment of a stock dividend, or other increase or reduction of the number of
shares of the stock outstanding without receiving compensation therefor in
money, services, or property, the number of shares of stock then remaining
subject to this option shall (a) in the event of an increase in the number of
outstanding shares, be proportionately increased, and the cash consideration
payable per share shall be proportionately reduced; and (b) in the event of a
reduction in the number of outstanding shares, be proportionately reduced, and
the cash consideration payable per share shall be proportionately increased.
MERGER AND CONSOLIDATION
6.(a) Following the merger of one or more corporations into Employer or
any consolidation of Employer and one or more corporations in which Employer is
the surviving corporation, the exercise of these options shall apply to the
shares of the surviving corporation.
(b) Notwithstanding any other provision of this Agreement, this option
shall terminate on the dissolution or liquidation of Employer, or on any merger
or consolidation in which Employer is not the surviving corporation.
TRANSFER OF OPTION
7. During Employee's lifetime, this option shall be exercisable only by
Employee. This option shall not be transferable by Employee other than by the
laws of the descent and distribution upon Employee's death. In the event of
Employee's death during employment or during the applicable period after
termination of employment specified in Paragraph 2 above, Employee's personal
representatives may exercise any portion of this option that remains unexercised
at the time of Employee's death, provided that any such exercise must be made,
if at
<PAGE> 5
all, during the period within one year after Employee's death, and subject
to the option termination date specified in Paragraph 8(c) below.
TERMINATION OF OPTION
8. This option shall terminate on the earliest of the following
dates:
a. The expiration of three months from the date of Employee's
termination of employment, as defined in Paragraph 2, above, except for
termination due to death or permanent and total disability.
b. The expiration of twelve months from the date on which
Employee's employment, as defined in Paragraph 2 above, is terminated due to
permanent and total disability, as defined in Internal Revenue Code Section
22(e)(3); or,
c. Five years from the date of the granting of this option.
RIGHTS AS SHAREHOLDER
9. Employee will not be deemed to be a holder of any shares pursuant to
the exercise of this option until Employee pays the option price and a stock
certificate is delivered to Employee for those shares. No adjustments shall be
made for dividends or other rights for which the record date is prior to the
date the stock certificate is delivered.
CONSTRUCTION
10. This Agreement and the option evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the
express terms and provision of the Plan. All decisions of the Plan Administrator
and/or Compensation Committee with respect to any question shall be conclusive
and binding on all persons having an interest in this option.
GOVERNING LAW
11. The interpretation, performance, and enforcement of this Agreement
shall be governed by the laws of the State of California.
<PAGE> 6
EFFECTIVE DATE OF THIS AGREEMENT
12. The effective date of this Agreement and granting of option to the
Employee shall be the date this agreement is signed and written hereinbelow.
EXECUTED THIS 11 DAY OF NOVEMBER, 1998, AT PALO ALTO, CALIFORNIA.
"EMPLOYER" "EMPLOYEE"
HYPERBARIC SYSTEMS
BY:
----------------------------
HARRY MASUDA, PRESIDENT (Signature)
Ardeth N. Sealy
(Type Name)
902 Santa Rosa Court
Roseville, CA 95661
(Type Address)
<PAGE> 1
EXHIBIT 6.13
6.13 STATUTORY INCENTIVE STOCK OPTION GRANT - A. SEALY, 6/25/99
HYPERBARIC SYSTEMS
NOTICE OF GRANT OF STATUTORY STOCK OPTION
NOTICE is hereby given of the following stock option grant (the
"Option") to purchase shares of the Common Stock of HYPERBARIC SYSTEMS (the
"Company"):
<TABLE>
<S> <C>
EMPLOYEE OPTIONEE : ARDETH N. SEALY
GRANT DATE : 6/25/99
OPTION PRICE : $0.50 PER SHARE
NUMBER OF OPTIONED
SHARES : 60,000
EXPIRATION DATE : 6/25/04
TYPE OF OPTION: EMPLOYEE INCENTIVE STOCK OPTION
EXERCISE SCHEDULE : 30% AFTER FIRST YEAR 6/25/00
30% AFTER SECOND YEAR 6/25/01
40% AFTER THIRD YEAR 6/25/02
</TABLE>
Employee/Optionee understands that the Option is granted subject to and
in accordance with the express terms and conditions of the HYPERBARIC SYSTEMS,
1998 Statutory Stock Option Plan (The "Plan"). Employee/Optionee agrees to be
bound by the terms and conditions of the Plan and the terms and conditions of
the Option as set forth in the Statutory Incentive Stock Option Agreement
attached hereto as Exhibit A.
<PAGE> 2
Optionee hereby acknowledges receipt of a copy of the Plan in the form
attached hereto as Exhibit B.
Dated: HYPERBARIC SYSTEMS
---------------------
By
HARRY MASUDA, President
"EMPLOYEE/OPTIONEE"
------------------------------
(Signature)
Ardeth N. Sealy
(Type Name)
902 Santa Rosa Court
Roseville, CA 95661
(Address)
<PAGE> 3
STATUTORY INCENTIVE STOCK
OPTION AGREEMENT
This AGREEMENT is made between HYPERBARIC SYSTEMS, having a principal
place of business at 1127 Harker Avenue, Palo Alto, CA 94301, hereafter referred
to as "Employer," and Ardeth N. Sealy, hereinafter referred to as "Employee."
OPTION GRANTED
1. Employer hereby grants Employee an option to purchase 60,000 shares
of common stock at a purchase price of $0.50 per share.
TIME OF EXERCISE OF OPTION
2. Employee may exercise this option to purchase his or her shares
according to the following schedule:
<TABLE>
<S> <C>
30% After 1st year 6/25/00
30% After 2nd year 6/25/01
40% After 3rd year 6/25/02
</TABLE>
until termination of the option as provided in Paragraph 7, below, so long as at
all times, beginning with the date of the grant of this option and ending three
months prior to the date of exercise, or 12 months prior to the date of exercise
if the employee is disabled within the meaning of Internal Revenue Code Section
22(e)(3), Employee remains employed. For purposes of this Agreement,
"employment" means that Employee is employed by Employer, a parent or subsidiary
corporation of such a corporation issuing or assuming a stock option in a
transaction to which Internal Revenue Code Section 424(a) applies.
METHOD OF EXERCISE
3. This option shall be exercised by Employee, or in the case of the
exercise after Employee's death, the Employee's executor, administrator, heir or
legatee, as the case may be, by written notice delivered to Employer at its
principal place of business, stating the number of shares for which the option
is being exercised. The notice must be accompanied by a check or other payment
in full in any other form which the Committee who administers the Plan, may, in
its discretion, approve at the time of the exercise in accordance with Paragraph
4 of this Agreement.
In the case of the exercise of an Employee's option after death, the
person or persons exercising on behalf of the deceased Employee shall provide
appropriate documentation establishing their right to act on behalf of the
decedent.
LOANS
4. The Committee acting as plan administrator may, in its absolute
discretion and without any obligation to do so, assist the Employee in the
exercise of this option by (1)
<PAGE> 4
authorizing the extension of a loan to the Employee from the Company or (ii)
permitting the Employee to pay the option price for the purchased shares of
stock in installments over a period of years. The terms of the loan or
installment method of payment (including the interest rate, the collateral
requirements and terms of repayment) shall be established by the Committee as
plan administrator, in its sole discretion.
CAPITAL ADJUSTMENTS
5.(a) The existence of this option shall not affect in any way the right
or power of Employer or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, or other changes in Employer's
capital structure or its business, or any merger or consolidation of Employer or
any issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting the common stock or the rights thereof, or the issuance of any
securities convertible into any common stock or of any rights, options, or
warrants to purchase any common stock, or the dissolution or liquidation of
Employer, any sale or transfer of all or any part of its assets or business, or
any other corporate act or proceedings of Employer, whether of a similar
character or otherwise.
(b) The shares with respect to which this option is granted are shares
of the common voting stock of HYPERBARIC SYSTEMS as presently constituted, but
if and whenever, prior to the delivery by Employer of all the shares of the
stock with respect to which this option is granted, Employer shall effect a
subdivision or consolidation of shares or other capital readjustment, the
payment of a stock dividend, or other increase or reduction of the number of
shares of the stock outstanding without receiving compensation therefor in
money, services, or property, the number of shares of stock then remaining
subject to this option shall (a) in the event of an increase in the number of
outstanding shares, be proportionately increased, and the cash consideration
payable per share shall be proportionately reduced; and (b) in the event of a
reduction in the number of outstanding shares, be proportionately reduced, and
the cash consideration payable per share shall be proportionately increased.
MERGER AND CONSOLIDATION
6.(a) Following the merger of one or more corporations into Employer or
any consolidation of Employer and one or more corporations in which Employer is
the surviving corporation, the exercise of these options shall apply to the
shares of the surviving corporation.
(b) Notwithstanding any other provision of this Agreement, this option
shall terminate on the dissolution or liquidation of Employer, or on any merger
or consolidation in which Employer is not the surviving corporation.
TRANSFER OF OPTION
7. During Employee's lifetime, this option shall be exercisable only by
Employee. This option shall not be transferable by Employee other than by the
laws of the descent and distribution upon Employee's death. In the event of
Employee's death during employment or during the applicable period after
termination of employment specified in Paragraph 2 above, Employee's personal
representatives may exercise any portion of this option that remains unexercised
at the time of Employee's death, provided that any such exercise must be made,
if at
<PAGE> 5
all, during the period within one year after Employee's death, and subject to
the option termination date specified in Paragraph 8(c) below.
TERMINATION OF OPTION
8. This option shall terminate on the earliest of the following
dates:
a. The expiration of three months from the date of Employee's
termination of employment, as defined in Paragraph 2, above, except for
termination due to death or permanent and total disability.
b. The expiration of twelve months from the date on which
Employee's employment, as defined in Paragraph 2 above, is terminated due to
permanent and total disability, as defined in Internal Revenue Code Section
22(e)(3); or,
c. Five years from the date of the granting of this option.
RIGHTS AS SHAREHOLDER
9. Employee will not be deemed to be a holder of any shares pursuant to
the exercise of this option until Employee pays the option price and a stock
certificate is delivered to Employee for those shares. No adjustments shall be
made for dividends or other rights for which the record date is prior to the
date the stock certificate is delivered.
CONSTRUCTION
10. This Agreement and the option evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the
express terms and provision of the Plan. All decisions of the Plan Administrator
and/or Compensation Committee with respect to any question shall be conclusive
and binding on all persons having an interest in this option.
GOVERNING LAW
11. The interpretation, performance, and enforcement of this Agreement
shall be governed by the laws of the State of California.
<PAGE> 6
EFFECTIVE DATE OF THIS AGREEMENT
12. The effective date of this Agreement and granting of option to the
Employee shall be the date this agreement is signed and written hereinbelow.
EXECUTED THIS 25 DAY OF JUNE, 199, AT PALO ALTO, CALIFORNIA.
"EMPLOYER" "EMPLOYEE"
HYPERBARIC SYSTEMS
BY:
------------------------------
HARRY MASUDA, PRESIDENT
Ardeth N. Sealy
(Type Name)
902 Santa Rosa Court
Roseville, CA 95661
(Type Address)
<PAGE> 1
EXHIBIT 6.14
6.14 INDEMNIFICATION AGREEMENT - H. MASUDA
INDEMNIFICATION AGREEMENT
THIS AGREEMENT, is made and entered into this 2ND day of
SEPTEMBER, 1999 between HYPERBARIC SYSTEMS, a California corporation
("CORPORATION"), and HARRY MASUDA ("DIRECTOR").
WITNESSETH THAT:
WHEREAS, Director, a member of the Board of Directors of the
Corporation, performs a valuable service in such capacity for Corporation; and
WHEREAS, the Articles of Incorporation and Section 4 of the
Bylaws of the Corporation authorize and permit contracts between Corporation and
the members of its Board of Directors providing for indemnification, among other
things, of such directors; and
WHEREAS, in accordance with the authorization as provided by the
California General Corporation Law, as amended ("Code"), Corporation may
purchase and maintain a policy or policies of Directors and Officers Liability
Insurance ("D & O Insurance"), covering certain liabilities which may be
incurred by its directors and officers in the performance as directors of
Corporation; and
WHEREAS, as a result of recent developments affecting the terms,
scope and availability of D & O Insurance there exists general uncertainty as to
the extent of protection afforded members of the Board of Directors by such D &
O Insurance and by statutory and bylaw indemnification provisions; and
WHEREAS, in order to induce Director to serve or continue to
serve as the case may be, as a member of the Board of Directors of Corporation,
Corporation has determined that it is in its best interests to enter into this
contract with Director;
NOW, THEREFORE, in consideration of Director's continued service
as a director after the date hereof, the parties hereto agree as follows:
1. INDEMNITY OF DIRECTOR. Corporation hereby agrees to hold
harmless and indemnify Director to the full extent authorized by the provisions
of the Code, as it may be amended from time to time.
2. ADDITIONAL INDEMNITY. Subject only to the limitations set
forth in Section 3 hereof, Corporation hereby further agrees to hold harmless
and indemnify Director:
(a) against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Director in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of Corporation) to which Director is,
was or at any time becomes a party, or is reasonably thought to be threatened to
be made a party, by reason of the fact that Director is, was or at any time
becomes a director,
<PAGE> 2
officer, employee or agent of Corporation, or is or was serving or at any time
serves at the request of Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise;
and
(b) otherwise to the fullest extent as may be provided to
Director by Corporation under the non-exclusive provisions of the Articles of
Incorporation of Corporation and the Code.
3. LIMITATIONS ON ADDITIONAL INDEMNITY.
(a) No indemnity pursuant to Section 2 hereof shall be paid by
Corporation for any of the following:
(i) to the extent the aggregate of losses to be
indemnified exceeds the sum of (A) such losses for which the Director is
indemnified pursuant to Section 1 hereof and (B) any settlement pursuant to any
D & O Insurance purchased and maintained by Corporation;
(ii) in respect to remuneration paid to Director if it
shall be determined by a final judgment without right of appeal, or other final
adjudication that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is rendered
against Director for an accounting of profits made from the purchase or sale by
Director of securities of Corporation pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law;
(iv) on account of Director's acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law;
(v) on account of any proceeding (other than a proceeding
referred to in Section 8(b) hereof) initiated by the Director unless such
proceeding was authorized by the uninterested directors of the Corporation; or
(vi) if a final decision without right of appeal by a
Court having jurisdiction in the matter shall determine that such
indemnification is not lawful;
(b) In addition to those limitations set forth above in paragraph
(a) of this Section 3, no indemnity pursuant to Section 2 hereof in an action by
or in the right of Corporation shall be paid by Corporation for any of the
following:
(i) on account of acts or omissions that Director believed
or believes to be contrary to the best interests of the Corporation or its
shareholders or that involve the absence of good faith on the part of Director;
(ii) with respect to any transaction from which Director
derived an improper personal benefit;
<PAGE> 3
(iii) on account of acts or omissions that show a reckless
disregard for Director's duties to the corporation or its shareholders in
circumstances in which Director was aware, or should have been aware, in the
ordinary course of performing a Director's duties, of a risk of serious injury
to Corporation or its shareholders;
(iv) on account of acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of Director's
duties to the Corporation or its shareholders;
(v) to the extent prohibited by Section 310 of the
California Corporations Code, entitled "Contracts in Which Director Has Material
Financial Interest;"
(vi) to the extent prohibited by Section 316 of the
California Corporations Code, entitled "Corporate Actions Subjecting Directors
To Joint And Several Liability" (generally for prohibited distributions, loans
and guarantees);
(vii) in respect of any claim, issue or matter as to which
Director shall have been adjudged to be liable to Corporation in the performance
of Director's duties to Corporation and its shareholders, unless and only to the
extent that the court in which such proceeding is or was pending shall determine
upon application that, in view of all the circumstances of the case, Director is
fairly and reasonably entitled to indemnity for expenses and then only to the
extent that such court shall determine;
(viii) of amounts paid in settling or otherwise disposing
of a pending action without court approval; and
(ix) of expenses incurred in defending a pending action
which is settled or otherwise disposed of without court approval.
4. CONTRIBUTION. If the indemnification provided in Sections 1
and 2 is unavailable and may not be paid to Director for any reason other than
those set forth in Section 3 (excluding subsections 3(b)(viii) and (ix)), then
in respect of any threatened, pending or completed action, suit or proceeding in
which Corporation is jointly liable with Director (or would be if joined in such
action, suit or proceeding), Corporation shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Director in
such proportion as is appropriate to reflect (i) the relative benefits received
by Corporation on the one hand and Director on the other hand from the
transaction from which such action, suit or proceeding arose, and (ii) the
relative fault of Corporation on the one hand and of Director on the other in
connection with the events which resulted in such expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable considerations. The
relative fault of Corporation on the one hand and of Director on the other shall
be determined by reference to, among other things, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent the
circumstances resulting in such expenses, judgments, fines or settlement
amounts. Corporation agrees that it would not be just and equitable if
contribution pursuant to this Section 4 were determined by pro rata allocation
or any other method of allocation which does not take account of the foregoing
equitable considerations.
<PAGE> 4
5. CONTINUATION OF OBLIGATIONS. All agreements and obligations of
Corporation contained herein shall continue during the period Director is a
director, officer, employee or agent of Corporation (or is or was serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Director shall be subject to any possible claim
or threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Director
was a director of Corporation or serving in any other capacity referred to
herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
Director of notice of the commencement of any action, suit or proceeding,
Director will, if a claim in respect thereof is to be made against Corporation
under this Agreement, notify Corporation of the commencement thereof; but the
omission so to notify Corporation will not relieve it from any liability which
it may have to Director otherwise than under this Agreement. With respect to any
such action, suit or proceeding as to which Director notifies Corporation of the
commencement thereof:
(a) Corporation will be entitled to participate therein at its
own expense;
(b) Except as otherwise provided below, to the extent that it may
wish, Corporation jointly with any other indemnifying party similarly notified
will be entitled to assume the defense thereof, with counsel satisfactory to
Director. After notice from Corporation to Director of its election so as to
assume the defense thereof, Corporation will not be liable to Director under
this Agreement for any legal or other expenses subsequently incurred by Director
in connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Director shall have the right to
employ its counsel in such action, suit or proceeding but the fees and expenses
of such counsel incurred after notice from Corporation of its assumption of the
defense thereof shall be at the expense of Director unless (i) the employment of
counsel by Director has been authorized by Corporation, (ii) Director shall have
reasonably concluded that there may be a conflict of interest between
Corporation and Director in the conduct of the defense of such action or (iii)
Corporation shall not in fact have employed counsel to assume the defense of
such action, in each of which case the fees and expenses of counsel shall be at
the expense of Corporation. Corporation shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf of
Corporation, which is against or involves Director, or as to which Director
shall have made the conclusion provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Director under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. Corporation shall not settle any action or
claim in any manner which would impose any penalty or limitation on Director
without Director's written consent. Neither Corporation nor Director will
unreasonably withhold its consent to any proposed settlement.
<PAGE> 5
7. ADVANCEMENT AND REPAYMENT OF EXPENSES.
(a) In the event that Director employs his own counsel pursuant
to Section 6(b)(i) through (iii) above, Corporation shall advance to Director,
prior to any final disposition of any threatened or pending action, suit or
proceeding, whether civil, criminal, administrative or investigative, any and
all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (10)
days after receiving copies of invoices presented to Director for such expenses.
(b) Director agrees that Director will reimburse Corporation for
all reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Director in the event and only to the extent
it shall be ultimately determined by a final judicial decision (from which there
is no right of appeal) that Director is not entitled, under applicable law, the
Bylaws, this Agreement or otherwise, to be indemnified by Corporation for such
expenses.
8. ENFORCEMENT.
(a) Corporation expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on Corporation hereby in
order to induce Director to become or continue as a director of Corporation, and
acknowledges that Director is relying upon this Agreement in continuing in such
capacity.
(b) In the event Director is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, Corporation shall reimburse Director for all of Director's
reasonable fees and expenses in bringing and pursuing such action.
9. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. GOVERNING LAW. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of California.
11. BINDING EFFECT. This Agreement shall be binding upon Director
and upon Corporation, its successors and assigns, and shall inure to the benefit
of Director, his heirs, personal representatives and assigns and to the benefit
of Corporation, its successors and assigns.
12. AMENDMENT AND TERMINATION. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
HYPERBARIC SYSTEMS,
A CALIFORNIA CORPORATION
BY:
HARRY MASUDA, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
ADDRESS: 1127 HARKER AVENUE
PALO ALTO, CALIFORNIA 94301
BY:
HARRY MASUDA
ADDRESS: 1127 HARKER AVENUE
PALO ALTO, CALIFORNIA 94301
<PAGE> 1
EXHIBIT 6.15
6.15 INDEMNIFICATION AGREEMENT - P. OKIMOTO
INDEMNIFICATION AGREEMENT
THIS AGREEMENT, is made and entered into this 2ND day of
SEPTEMBER, 1999 between HYPERBARIC SYSTEMS, a California corporation
("CORPORATION"), and PAUL OKIMOTO ("DIRECTOR").
WITNESSETH THAT:
WHEREAS, Director, a member of the Board of Directors of the
Corporation, performs a valuable service in such capacity for Corporation; and
WHEREAS, the Articles of Incorporation and Section 4 of the
Bylaws of the Corporation authorize and permit contracts between Corporation and
the members of its Board of Directors providing for indemnification, among other
things, of such directors; and
WHEREAS, in accordance with the authorization as provided by the
California General Corporation Law, as amended ("Code"), Corporation may
purchase and maintain a policy or policies of Directors and Officers Liability
Insurance ("D & O Insurance"), covering certain liabilities which may be
incurred by its directors and officers in the performance as directors of
Corporation; and
WHEREAS, as a result of recent developments affecting the terms,
scope and availability of D & O Insurance there exists general uncertainty as to
the extent of protection afforded members of the Board of Directors by such D &
O Insurance and by statutory and bylaw indemnification provisions; and
WHEREAS, in order to induce Director to serve or continue to
serve as the case may be, as a member of the Board of Directors of Corporation,
Corporation has determined that it is in its best interests to enter into this
contract with Director;
NOW, THEREFORE, in consideration of Director's continued service
as a director after the date hereof, the parties hereto agree as follows:
1. INDEMNITY OF DIRECTOR. Corporation hereby agrees to hold
harmless and indemnify Director to the full extent authorized by the provisions
of the Code, as it may be amended from time to time.
2. ADDITIONAL INDEMNITY. Subject only to the limitations set
forth in Section 3 hereof, Corporation hereby further agrees to hold harmless
and indemnify Director:
(a) against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Director in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of Corporation) to which Director is,
was or at any time becomes a party, or is reasonably thought to be threatened to
be
<PAGE> 2
made a party, by reason of the fact that Director is, was or at any time becomes
a director, officer, employee or agent of Corporation, or is or was serving or
at any time serves at the request of Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise; and
(b) otherwise to the fullest extent as may be provided to
Director by Corporation under the non-exclusive provisions of the Articles of
Incorporation of Corporation and the Code.
3. LIMITATIONS ON ADDITIONAL INDEMNITY.
(a) No indemnity pursuant to Section 2 hereof shall be paid by
Corporation for any of the following:
(i) to the extent the aggregate of losses to be
indemnified exceeds the sum of (A) such losses for which the Director is
indemnified pursuant to Section 1 hereof and (B) any settlement pursuant to any
D & O Insurance purchased and maintained by Corporation;
(ii) in respect to remuneration paid to Director if it
shall be determined by a final judgment without right of appeal, or other final
adjudication that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is rendered
against Director for an accounting of profits made from the purchase or sale by
Director of securities of Corporation pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law;
(iv) on account of Director's acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law;
(v) on account of any proceeding (other than a proceeding
referred to in Section 8(b) hereof) initiated by the Director unless such
proceeding was authorized by the uninterested directors of the Corporation; or
(vi) if a final decision without right of appeal by a
Court having jurisdiction in the matter shall determine that such
indemnification is not lawful;
(b) In addition to those limitations set forth above in paragraph
(a) of this Section 3, no indemnity pursuant to Section 2 hereof in an action by
or in the right of Corporation shall be paid by Corporation for any of the
following:
(i) on account of acts or omissions that Director believed
or believes to be contrary to the best interests of the Corporation or its
shareholders or that involve the absence of good faith on the part of Director;
(ii) with respect to any transaction from which Director
derived an improper personal benefit;
<PAGE> 3
(iii) on account of acts or omissions that show a reckless
disregard for Director's duties to the corporation or its shareholders in
circumstances in which Director was aware, or should have been aware, in the
ordinary course of performing a Director's duties, of a risk of serious injury
to Corporation or its shareholders;
(iv) on account of acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of Director's
duties to the Corporation or its shareholders;
(v) to the extent prohibited by Section 310 of the
California Corporations Code, entitled "Contracts in Which Director Has Material
Financial Interest;"
(vi) to the extent prohibited by Section 316 of the
California Corporations Code, entitled "Corporate Actions Subjecting Directors
To Joint And Several Liability" (generally for prohibited distributions, loans
and guarantees);
(vii) in respect of any claim, issue or matter as to which
Director shall have been adjudged to be liable to Corporation in the performance
of Director's duties to Corporation and its shareholders, unless and only to the
extent that the court in which such proceeding is or was pending shall determine
upon application that, in view of all the circumstances of the case, Director is
fairly and reasonably entitled to indemnity for expenses and then only to the
extent that such court shall determine;
(viii) of amounts paid in settling or otherwise disposing
of a pending action without court approval; and
(ix) of expenses incurred in defending a pending action
which is settled or otherwise disposed of without court approval.
4. CONTRIBUTION. If the indemnification provided in Sections 1
and 2 is unavailable and may not be paid to Director for any reason other than
those set forth in Section 3 (excluding subsections 3(b)(viii) and (ix)), then
in respect of any threatened, pending or completed action, suit or proceeding in
which Corporation is jointly liable with Director (or would be if joined in such
action, suit or proceeding), Corporation shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Director in
such proportion as is appropriate to reflect (i) the relative benefits received
by Corporation on the one hand and Director on the other hand from the
transaction from which such action, suit or proceeding arose, and (ii) the
relative fault of Corporation on the one hand and of Director on the other in
connection with the events which resulted in such expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable considerations. The
relative fault of Corporation on the one hand and of Director on the other shall
be determined by reference to, among other things, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent the
circumstances resulting in such expenses, judgments, fines or settlement
amounts. Corporation agrees that it would not be just and equitable if
contribution pursuant to this Section 4 were determined by pro rata allocation
or any other method of allocation which does not take account of the foregoing
equitable considerations.
<PAGE> 4
5. CONTINUATION OF OBLIGATIONS. All agreements and obligations of
Corporation contained herein shall continue during the period Director is a
director, officer, employee or agent of Corporation (or is or was serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Director shall be subject to any possible claim
or threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Director
was a director of Corporation or serving in any other capacity referred to
herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
Director of notice of the commencement of any action, suit or proceeding,
Director will, if a claim in respect thereof is to be made against Corporation
under this Agreement, notify Corporation of the commencement thereof; but the
omission so to notify Corporation will not relieve it from any liability which
it may have to Director otherwise than under this Agreement. With respect to any
such action, suit or proceeding as to which Director notifies Corporation of the
commencement thereof:
(a) Corporation will be entitled to participate therein at its
own expense;
(b) Except as otherwise provided below, to the extent that it may
wish, Corporation jointly with any other indemnifying party similarly notified
will be entitled to assume the defense thereof, with counsel satisfactory to
Director. After notice from Corporation to Director of its election so as to
assume the defense thereof, Corporation will not be liable to Director under
this Agreement for any legal or other expenses subsequently incurred by Director
in connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Director shall have the right to
employ its counsel in such action, suit or proceeding but the fees and expenses
of such counsel incurred after notice from Corporation of its assumption of the
defense thereof shall be at the expense of Director unless (i) the employment of
counsel by Director has been authorized by Corporation, (ii) Director shall have
reasonably concluded that there may be a conflict of interest between
Corporation and Director in the conduct of the defense of such action or (iii)
Corporation shall not in fact have employed counsel to assume the defense of
such action, in each of which case the fees and expenses of counsel shall be at
the expense of Corporation. Corporation shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf of
Corporation, which is against or involves Director, or as to which Director
shall have made the conclusion provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Director under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. Corporation shall not settle any action or
claim in any manner which would impose any penalty or limitation on Director
without Director's written consent. Neither Corporation nor Director will
unreasonably withhold its consent to any proposed settlement.
<PAGE> 5
7. ADVANCEMENT AND REPAYMENT OF EXPENSES.
(a) In the event that Director employs his own counsel pursuant
to Section 6(b)(i) through (iii) above, Corporation shall advance to Director,
prior to any final disposition of any threatened or pending action, suit or
proceeding, whether civil, criminal, administrative or investigative, any and
all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (10)
days after receiving copies of invoices presented to Director for such expenses.
(b) Director agrees that Director will reimburse Corporation for
all reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Director in the event and only to the extent
it shall be ultimately determined by a final judicial decision (from which there
is no right of appeal) that Director is not entitled, under applicable law, the
Bylaws, this Agreement or otherwise, to be indemnified by Corporation for such
expenses.
8. ENFORCEMENT.
(a) Corporation expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on Corporation hereby in
order to induce Director to become or continue as a director of Corporation, and
acknowledges that Director is relying upon this Agreement in continuing in such
capacity.
(b) In the event Director is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, Corporation shall reimburse Director for all of Director's
reasonable fees and expenses in bringing and pursuing such action.
9. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. GOVERNING LAW. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of California.
11. BINDING EFFECT. This Agreement shall be binding upon Director
and upon Corporation, its successors and assigns, and shall inure to the benefit
of Director, his heirs, personal representatives and assigns and to the benefit
of Corporation, its successors and assigns.
12. AMENDMENT AND TERMINATION. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
HYPERBARIC SYSTEMS,
A CALIFORNIA CORPORATION
BY:
HARRY MASUDA, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
ADDRESS: 1127 HARKER AVENUE
PALO ALTO, CALIFORNIA 94301
BY:
PAUL OKIMOTO
ADDRESS: 669 35TH STREET
RICHMOND, CALIFORNIA 94805
<PAGE> 1
6.16 INDEMNIFICATION AGREEMENT - G. TSUKUDA EXHIBIT 6.16
INDEMNIFICATION AGREEMENT
THIS AGREEMENT, is made and entered into this 2ND day of
SEPTEMBER, 1999 between HYPERBARIC SYSTEMS, a California corporation
("CORPORATION"), and George Tsukuda ("DIRECTOR").
WITNESSETH THAT:
WHEREAS, Director, a member of the Board of Directors of the
Corporation, performs a valuable service in such capacity for Corporation; and
WHEREAS, the Articles of Incorporation and Section 4 of the
Bylaws of the Corporation authorize and permit contracts between Corporation and
the members of its Board of Directors providing for indemnification, among other
things, of such directors; and
WHEREAS, in accordance with the authorization as provided by the
California General Corporation Law, as amended ("Code"), Corporation may
purchase and maintain a policy or policies of Directors and Officers Liability
Insurance ("D & O Insurance"), covering certain liabilities which may be
incurred by its directors and officers in the performance as directors of
Corporation; and
WHEREAS, as a result of recent developments affecting the terms,
scope and availability of D & O Insurance there exists general uncertainty as to
the extent of protection afforded members of the Board of Directors by such D &
O Insurance and by statutory and bylaw indemnification provisions; and
WHEREAS, in order to induce Director to serve or continue to
serve as the case may be, as a member of the Board of Directors of Corporation,
Corporation has determined that it is in its best interests to enter into this
contract with Director;
NOW, THEREFORE, in consideration of Director's continued service
as a director after the date hereof, the parties hereto agree as follows:
1. INDEMNITY OF DIRECTOR. Corporation hereby agrees to hold
harmless and indemnify Director to the full extent authorized by the provisions
of the Code, as it may be amended from time to time.
2. ADDITIONAL INDEMNITY. Subject only to the limitations set
forth in Section 3 hereof, Corporation hereby further agrees to hold harmless
and indemnify Director:
(a) against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Director in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of Corporation) to which Director is,
was or at any time becomes a party, or is reasonably thought to be threatened to
be
<PAGE> 2
made a party, by reason of the fact that Director is, was or at any time
becomes a director, officer, employee or agent of Corporation, or is or was
serving or at any time serves at the request of Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise; and
(b) otherwise to the fullest extent as may be provided to
Director by Corporation under the non-exclusive provisions of the Articles of
Incorporation of Corporation and the Code.
3. LIMITATIONS ON ADDITIONAL INDEMNITY.
(a) No indemnity pursuant to Section 2 hereof shall be paid by
Corporation for any of the following:
(i) to the extent the aggregate of losses to be indemnified
exceeds the sum of (A) such losses for which the Director is indemnified
pursuant to Section 1 hereof and (B) any settlement pursuant to any D & O
Insurance purchased and maintained by Corporation;
(ii) in respect to remuneration paid to Director if it shall
be determined by a final judgment without right of appeal, or other final
adjudication that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is rendered
against Director for an accounting of profits made from the purchase or sale by
Director of securities of Corporation pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law;
(iv) on account of Director's acts or omissions that involve
intentional misconduct or a knowing and culpable violation of law;
(v) on account of any proceeding (other than a proceeding
referred to in Section 8(b) hereof) initiated by the Director unless such
proceeding was authorized by the uninterested directors of the Corporation; or
(vi) if a final decision without right of appeal by a Court
having jurisdiction in the matter shall determine that such indemnification is
not lawful;
(b) In addition to those limitations set forth above in paragraph
(a) of this Section 3, no indemnity pursuant to Section 2 hereof in an action by
or in the right of Corporation shall be paid by Corporation for any of the
following:
(i) on account of acts or omissions that Director believed or
believes to be contrary to the best interests of the Corporation or its
shareholders or that involve the absence of good faith on the part of Director;
(ii) with respect to any transaction from which Director
derived an improper personal benefit;
<PAGE> 3
(iii) on account of acts or omissions that show a reckless
disregard for Director's duties to the corporation or its shareholders in
circumstances in which Director was aware, or should have been aware, in the
ordinary course of performing a Director's duties, of a risk of serious injury
to Corporation or its shareholders;
(iv) on account of acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of Director's
duties to the Corporation or its shareholders;
(v) to the extent prohibited by Section 310 of the California
Corporations Code, entitled "Contracts in Which Director Has Material Financial
Interest;"
(vi) to the extent prohibited by Section 316 of the California
Corporations Code, entitled "Corporate Actions Subjecting Directors To Joint And
Several Liability" (generally for prohibited distributions, loans and
guarantees);
(vii) in respect of any claim, issue or matter as to which
Director shall have been adjudged to be liable to Corporation in the performance
of Director's duties to Corporation and its shareholders, unless and only to the
extent that the court in which such proceeding is or was pending shall determine
upon application that, in view of all the circumstances of the case, Director is
fairly and reasonably entitled to indemnity for expenses and then only to the
extent that such court shall determine;
(viii) of amounts paid in settling or otherwise disposing of a
pending action without court approval; and
(ix) of expenses incurred in defending a pending action which
is settled or otherwise disposed of without court approval.
4. CONTRIBUTION. If the indemnification provided in Sections 1
and 2 is unavailable and may not be paid to Director for any reason other than
those set forth in Section 3 (excluding subsections 3(b)(viii) and (ix)), then
in respect of any threatened, pending or completed action, suit or proceeding in
which Corporation is jointly liable with Director (or would be if joined in such
action, suit or proceeding), Corporation shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Director in
such proportion as is appropriate to reflect (i) the relative benefits received
by Corporation on the one hand and Director on the other hand from the
transaction from which such action, suit or proceeding arose, and (ii) the
relative fault of Corporation on the one hand and of Director on the other in
connection with the events which resulted in such expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable considerations. The
relative fault of Corporation on the one hand and of Director on the other shall
be determined by reference to, among other things, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent the
circumstances resulting in such expenses, judgments, fines or settlement
amounts. Corporation agrees that it would not be just and equitable if
contribution pursuant to this Section 4 were determined by pro rata allocation
or any other method of allocation which does not take account of the foregoing
equitable considerations.
<PAGE> 4
5. CONTINUATION OF OBLIGATIONS. All agreements and obligations of
Corporation contained herein shall continue during the period Director is a
director, officer, employee or agent of Corporation (or is or was serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Director shall be subject to any possible claim
or threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Director
was a director of Corporation or serving in any other capacity referred to
herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
Director of notice of the commencement of any action, suit or proceeding,
Director will, if a claim in respect thereof is to be made against Corporation
under this Agreement, notify Corporation of the commencement thereof; but the
omission so to notify Corporation will not relieve it from any liability which
it may have to Director otherwise than under this Agreement. With respect to any
such action, suit or proceeding as to which Director notifies Corporation of the
commencement thereof:
(a) Corporation will be entitled to participate therein at its
own expense;
(b) Except as otherwise provided below, to the extent that it may
wish, Corporation jointly with any other indemnifying party similarly notified
will be entitled to assume the defense thereof, with counsel satisfactory to
Director. After notice from Corporation to Director of its election so as to
assume the defense thereof, Corporation will not be liable to Director under
this Agreement for any legal or other expenses subsequently incurred by Director
in connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Director shall have the right to
employ its counsel in such action, suit or proceeding but the fees and expenses
of such counsel incurred after notice from Corporation of its assumption of the
defense thereof shall be at the expense of Director unless (i) the employment of
counsel by Director has been authorized by Corporation, (ii) Director shall have
reasonably concluded that there may be a conflict of interest between
Corporation and Director in the conduct of the defense of such action or (iii)
Corporation shall not in fact have employed counsel to assume the defense of
such action, in each of which case the fees and expenses of counsel shall be at
the expense of Corporation. Corporation shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf of
Corporation, which is against or involves Director, or as to which Director
shall have made the conclusion provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Director under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. Corporation shall not settle any action or
claim in any manner which would impose any penalty or limitation on Director
without Director's written consent. Neither Corporation nor Director will
unreasonably withhold its consent to any proposed settlement.
<PAGE> 5
7. ADVANCEMENT AND REPAYMENT OF EXPENSES.
(a) In the event that Director employs his own counsel pursuant
to Section 6(b)(i) through (iii) above, Corporation shall advance to Director,
prior to any final disposition of any threatened or pending action, suit or
proceeding, whether civil, criminal, administrative or investigative, any and
all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (10)
days after receiving copies of invoices presented to Director for such expenses.
(b) Director agrees that Director will reimburse Corporation for
all reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Director in the event and only to the extent
it shall be ultimately determined by a final judicial decision (from which there
is no right of appeal) that Director is not entitled, under applicable law, the
Bylaws, this Agreement or otherwise, to be indemnified by Corporation for such
expenses.
8. ENFORCEMENT.
(a) Corporation expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on Corporation hereby in
order to induce Director to become or continue as a director of Corporation, and
acknowledges that Director is relying upon this Agreement in continuing in such
capacity.
(b) In the event Director is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, Corporation shall reimburse Director for all of Director's
reasonable fees and expenses in bringing and pursuing such action.
9. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. GOVERNING LAW. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of California.
11. BINDING EFFECT. This Agreement shall be binding upon Director
and upon Corporation, its successors and assigns, and shall inure to the benefit
of Director, his heirs, personal representatives and assigns and to the benefit
of Corporation, its successors and assigns.
12. AMENDMENT AND TERMINATION. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
HYPERBARIC SYSTEMS,
A CALIFORNIA CORPORATION
BY:
HARRY MASUDA, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
ADDRESS: 1127 HARKER AVENUE
PALO ALTO, CALIFORNIA 94301
BY:
GEORGE TSUKUDA
ADDRESS: 3729 MCBETH DRIVE
SAN JOSE, CA 95127
December 6, 1999
<PAGE> 1
6.17 INDEMNIFICATION AGREEMENT - R. UMAR EXHIBIT 6.17
INDEMNIFICATION AGREEMENT
THIS AGREEMENT, is made and entered into this 2nd day of
SEPTEMBER, 1999 between HYPERBARIC SYSTEMS, a California corporation
("CORPORATION"), and ROCKY UMAR ("OFFICER").
RECITALS
WHEREAS, Officer, an executive officer of the Corporation,
performs a valuable service in such capacity for Corporation; and
WHEREAS, the Articles of Incorporation of the Corporation
authorize and permit contracts between Corporation and the members of its Board
of Directors and Officers providing for indemnification, among other things, of
such directors and officers; and
WHEREAS, in accordance with the authorization as provided by the
California General Corporation Law, as amended ("Code"), Corporation may
purchase and maintain a policy or policies of Directors and Officers Liability
Insurance ("D & O Insurance"), covering certain liabilities which may be
incurred by its directors and officers in the performance as directors of
Corporation; and
WHEREAS, as a result of recent developments affecting the terms,
scope and availability of D & O Insurance there exists general uncertainty as to
the extent of protection afforded members of the Board of Directors and officers
by such D & O Insurance and by statutory and bylaw indemnification provisions;
and
WHEREAS, in order to induce Officer to serve or continue to serve
as the case may be, as an executive officer of Corporation, Corporation has
determined that it is in its best interests to enter into this contract with
Officer;
NOW, THEREFORE, in consideration of Officer's continued service
as an executive officer after the date hereof, the parties hereto agree as
follows:
1. INDEMNITY OF OFFICER. Corporation hereby agrees to hold
harmless and indemnify Officer to the full extent authorized by the provisions
of the Code, as it may be amended from time to time.
2. ADDITIONAL INDEMNITY. Subject only to the limitations set
forth in Section 3 hereof, Corporation hereby further agrees to hold harmless
and indemnify Officer:
(a) against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Officer in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of Corporation) to which Officer is, was
or at any time becomes a party, or is reasonably thought to be threatened to be
made a party, by reason of the fact that Officer is, was or at any time becomes
a director,
<PAGE> 2
officer, employee or agent of Corporation, or is or was serving or at any time
serves at the request of Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise;
and
(b) otherwise to the fullest extent as may be provided to
Officer by Corporation under the non-exclusive provisions of the Articles of
Incorporation of Corporation and the Code.
3. LIMITATIONS ON ADDITIONAL INDEMNITY.
(a) No indemnity pursuant to Section 2 hereof shall be paid by
Corporation for any of the following:
(i) to the extent the aggregate of losses to be
indemnified exceeds the sum of (A) such losses for which the Officer is
indemnified pursuant to Section I hereof and (B) any settlement pursuant to any
D & O Insurance purchased and maintained by Corporation;
(ii) in respect to remuneration paid to Officer if it
shall be determined by a final judgment without right of appeal, or other final
adjudication that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is rendered
against Officer for an accounting of profits made from the purchase or sale by
Officer of securities of Corporation pursuant to the provisions of Section 16(b)
of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law;
(iv) on account of Officer's acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law,
(v) on account of any proceeding (other than a proceeding
referred to in Section 8(b) hereof) initiated by the Officer unless such
proceeding was authorized by the uninterested directors of the Corporation; or
(vi) if a final decision without right of appeal by a
Court having jurisdiction in the matter shall determine that such
indemnification is not lawful;
(b) In addition to those limitations set forth above in
paragraph (a) of this Section 3, no indemnity pursuant to Section 2 hereof in an
action by or in the right of Corporation shall be paid by Corporation for any of
the following:
(i) on account of acts or omissions that Officer believed
or believes to be contrary to the best interests of the Corporation or its
shareholders or that involve the absence of good faith on the part of Officer;
(ii) with respect to any transaction from which Officer
derived an improper personal benefit;
<PAGE> 3
(iii) on account of acts or omissions that show a reckless
disregard for Officer's duties to the corporation or its shareholders in
circumstances in which Officer was aware, or should have been aware, in the
ordinary course of performing a Officer's duties, of a risk of serious injury to
Corporation or its shareholders;
(iv) on account of acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of Officer's
duties to the Corporation or its shareholders;
(v) to the extent prohibited by Section 310 of the
California Corporations Code, entitled "Contracts in Which Director Has Material
Financial Interest;"
(vi) to the extent prohibited by Section 316 of the
California Corporations Code, entitled "Corporate Actions Subjecting Directors
To Joint And Several Liability" (generally for prohibited distributions, loans
and guarantees);
(vii) in respect of any claim, issue or matter as to which
Officer shall have been adjudged to be liable to Corporation in the performance
of Officer's duties to Corporation and its shareholders, unless and only to the
extent that the court in which such proceeding is or was pending shall determine
upon application that, in view of all the circumstances of the case, Officer is
fairly and reasonably entitled to indemnity for expenses and then only to the
extent that such court shall determine;
(viii) of amounts paid in settling or otherwise disposing
of a pending action without court approval; and
(ix) of expenses incurred in defending a pending action
which is settled or otherwise disposed of without court approval.
4. CONTRIBUTION. If the indemnification provided in Sections 1
and 2 is unavailable and may not be paid to Officer for any reason other than
those set forth in Section 3 (excluding subsections 3(b)(viii) and (ix)), then
in respect of any threatened, pending or completed action, suit or proceeding in
which Corporation is jointly liable with Officer (or would be if joined in such
action, suit or proceeding), Corporation shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Officer in
such proportion as is appropriate to reflect (i) the relative benefits received
by Corporation on the one hand and Officer on the other hand from the
transaction from which such action, suit or proceeding arose, and (ii) the
relative fault of Corporation on the one hand and of Officer on the other in
connection with the events which resulted in such expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable considerations. The
relative fault of Corporation on the one hand and of Officer on the other shall
be determined by reference to, among other things, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent the
circumstances resulting in such expenses, judgments, fines or settlement
amounts. Corporation agrees that it would not be just and equitable if
contribution pursuant to this Section 4 were determined by pro rata allocation
or any other method of allocation which does not take account of the foregoing
equitable considerations.
<PAGE> 4
5. CONTINUATION OF OBLIGATIONS. All agreements and obligations
of Corporation contained herein shall continue during the period Officer is a
director, officer, employee or agent of Corporation (or is or was serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Officer shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Officer
was an officer of Corporation or serving in any other capacity referred to
herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt
by Officer of notice of the commencement of any action, suit or proceeding,
Officer will, if a claim in respect thereof is to be made against Corporation
under this Agreement, notify Corporation of the commencement thereof, but the
omission so to notify Corporation will not relieve it from any liability which
it may have to Officer otherwise than under this Agreement. With respect to any
such action, suit or proceeding as to which Officer notifies Corporation of the
commencement thereof.
(a) Corporation will be entitled to participate therein at its
own expense;
(b) Except as otherwise provided below, to the extent that it
may wish, Corporation jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel
satisfactory to Officer. After notice from Corporation to Officer of its
election so as to assume the defense thereof, Corporation will not be liable to
Officer under this Agreement for any legal or other expenses subsequently
incurred by Officer in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Officer shall have the
right to employ its counsel in such action, suit or proceeding but the fees and
expenses of such counsel incurred after notice from Corporation of its
assumption of the defense thereof shall be at the expense of Officer unless (i)
the employment of counsel by Officer has been authorized by Corporation, (ii)
Officer shall have reasonably concluded that there may be a conflict of interest
between Corporation and Officer in the conduct of the defense of such action or
(iii) Corporation shall not in fact have employed counsel to assume the defense
of such action, in each of which case the fees and expenses of counsel shall be
at the expense of Corporation. Corporation shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf of
Corporation, which is against or involves Officer, or as to which Officer shall
have made the conclusion provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Officer under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. Corporation shall not settle any action or
claim in any manner which would impose any penalty or limitation on Officer
without Officer's written consent. Neither Corporation nor Officer will
unreasonably withhold its consent to any proposed settlement.
7. ADVANCEMENT AND REPAYMENT OF EXPENSES.
(a) In the event that Officer employs his own counsel pursuant
to Section 6(b)(i) through (iii) above, Corporation shall advance to Officer,
prior to any final disposition of
<PAGE> 5
any threatened or pending action, suit or proceeding, whether civil, criminal,
administrative or investigative, any and all reasonable expenses (including
legal fees and expenses) incurred in investigating or defending any such action,
suit or proceeding within ten (1 0) days after receiving copies of invoices
presented to Officer for such expenses.
(b) Officer agrees that Officer will reimburse Corporation for
all reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Officer in the event and only to the extent
it shall be ultimately determined by a final judicial decision (from which there
is no right of appeal) that Officer is not entitled, under applicable law, the
Bylaws, this Agreement or otherwise, to be indemnified by Corporation for such
expenses.
8. ENFORCEMENT.
(a) Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on Corporation
hereby in order to induce Officer to become or continue as an officer of
Corporation, and acknowledges that Officer is relying upon this Agreement in
continuing in such capacity.
(b) In the event Officer is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, Corporation shall reimburse Officer for all of Officer's
reasonable fees and expenses in bringing and pursuing such action.
9. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. GOVERNING LAW. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of California.
11. BINDING EFFECT. This Agreement shall be binding upon
Officer and upon Corporation, its successors and assigns, and shall inure to the
benefit of Officer, his heirs, personal representatives and assigns and to the
benefit of Corporation, its successors and assigns.
<PAGE> 6
12. AMENDMENT AND TERMINATION. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
HYPERBARIC SYSTEMS,
A CALIFORNIA CORPORATION
BY: HARRY MASUDA, PRESIDENT
ADDRESS: 1127 HARKER AVENUE
PALO ALTO, CA 94301
BY:
ROCKY UMAR
ADDRESS: 1127 HARKER AVENUE
PALO ALTO, CA 94301
<PAGE> 1
EXHIBIT 6.18
6.18 INDEMNIFICATION AGREEMENT - A. SEALY
INDEMNIFICATION AGREEMENT
THIS AGREEMENT, is made and entered into this 2nd day of
SEPTEMBER, 1999 between HYPERBARIC SYSTEMS, a California corporation
("CORPORATION"), and ARDETH SEALY ("OFFICER").
RECITALS
WHEREAS, Officer, an executive officer of the Corporation,
performs a valuable service in such capacity for Corporation; and
WHEREAS, the Articles of Incorporation of the Corporation
authorize and permit contracts between Corporation and the members of its Board
of Directors and Officers providing for indemnification, among other things, of
such directors and officers; and
WHEREAS, in accordance with the authorization as provided by the
California General Corporation Law, as amended ("Code"), Corporation may
purchase and maintain a policy or policies of Directors and Officers Liability
Insurance ("D & O Insurance"), covering certain liabilities which may be
incurred by its directors and officers in the performance as directors of
Corporation; and
WHEREAS, as a result of recent developments affecting the terms,
scope and availability of D & O Insurance there exists general uncertainty as to
the extent of protection afforded members of the Board of Directors and officers
by such D & O Insurance and by statutory and bylaw indemnification provisions;
and
WHEREAS, in order to induce Officer to serve or continue to serve
as the case may be, as an executive officer of Corporation, Corporation has
determined that it is in its best interests to enter into this contract with
Officer;
NOW, THEREFORE, in consideration of Officer's continued service
as an executive officer after the date hereof, the parties hereto agree as
follows:
1. INDEMNITY OF OFFICER. Corporation hereby agrees to hold
harmless and indemnify Officer to the full extent authorized by the provisions
of the Code, as it may be amended from time to time.
2. ADDITIONAL INDEMNITY. Subject only to the limitations set
forth in Section 3 hereof, Corporation hereby further agrees to hold harmless
and indemnify Officer:
(a) against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Officer in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of Corporation) to which Officer is, was
or at any time becomes a party, or is reasonably thought to be threatened to be
made a party, by reason of the fact that Officer is, was or at any time becomes
a director,
<PAGE> 2
officer, employee or agent of Corporation, or is or was serving or at any time
serves at the request of Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise;
and
(b) otherwise to the fullest extent as may be provided to
Officer by Corporation under the non-exclusive provisions of the Articles of
Incorporation of Corporation and the Code.
3. LIMITATIONS ON ADDITIONAL INDEMNITY.
(a) No indemnity pursuant to Section 2 hereof shall be paid by
Corporation for any of the following:
(i) to the extent the aggregate of losses to be
indemnified exceeds the sum of (A) such losses for which the Officer is
indemnified pursuant to Section I hereof and (B) any settlement pursuant to any
D & O Insurance purchased and maintained by Corporation;
(ii) in respect to remuneration paid to Officer if it
shall be determined by a final judgment without right of appeal, or other final
adjudication that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is rendered
against Officer for an accounting of profits made from the purchase or sale by
Officer of securities of Corporation pursuant to the provisions of Section 16(b)
of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law;
(iv) on account of Officer's acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law,
(v) on account of any proceeding (other than a proceeding
referred to in Section 8(b) hereof) initiated by the Officer unless such
proceeding was authorized by the uninterested directors of the Corporation; or
(vi) if a final decision without right of appeal by a
Court having jurisdiction in the matter shall determine that such
indemnification is not lawful;
(b) In addition to those limitations set forth above in
paragraph (a) of this Section 3, no indemnity pursuant to Section 2 hereof in an
action by or in the right of Corporation shall be paid by Corporation for any of
the following:
(i) on account of acts or omissions that Officer believed
or believes to be contrary to the best interests of the Corporation or its
shareholders or that involve the absence of good faith on the part of Officer;
(ii) with respect to any transaction from which Officer
derived an improper personal benefit;
<PAGE> 3
(iii) on account of acts or omissions that show a reckless
disregard for Officer's duties to the corporation or its shareholders in
circumstances in which Officer was aware, or should have been aware, in the
ordinary course of performing a Officer's duties, of a risk of serious injury to
Corporation or its shareholders;
(iv) on account of acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of Officer's
duties to the Corporation or its shareholders;
(v) to the extent prohibited by Section 310 of the
California Corporations Code, entitled "Contracts in Which Director Has Material
Financial Interest;"
(vi) to the extent prohibited by Section 316 of the
California Corporations Code, entitled "Corporate Actions Subjecting Directors
To Joint And Several Liability" (generally for prohibited distributions, loans
and guarantees);
(vii) in respect of any claim, issue or matter as to which
Officer shall have been adjudged to be liable to Corporation in the performance
of Officer's duties to Corporation and its shareholders, unless and only to the
extent that the court in which such proceeding is or was pending shall determine
upon application that, in view of all the circumstances of the case, Officer is
fairly and reasonably entitled to indemnity for expenses and then only to the
extent that such court shall determine;
(viii) of amounts paid in settling or otherwise disposing
of a pending action without court approval; and
(ix) of expenses incurred in defending a pending action
which is settled or otherwise disposed of without court approval.
4. CONTRIBUTION. If the indemnification provided in Sections 1
and 2 is unavailable and may not be paid to Officer for any reason other than
those set forth in Section 3 (excluding subsections 3(b)(viii) and (ix)), then
in respect of any threatened, pending or completed action, suit or proceeding in
which Corporation is jointly liable with Officer (or would be if joined in such
action, suit or proceeding), Corporation shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Officer in
such proportion as is appropriate to reflect (i) the relative benefits received
by Corporation on the one hand and Officer on the other hand from the
transaction from which such action, suit or proceeding arose, and (ii) the
relative fault of Corporation on the one hand and of Officer on the other in
connection with the events which resulted in such expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable considerations. The
relative fault of Corporation on the one hand and of Officer on the other shall
be determined by reference to, among other things, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent the
circumstances resulting in such expenses, judgments, fines or settlement
amounts. Corporation agrees that it would not be just and equitable if
contribution pursuant to this Section 4 were determined by pro rata allocation
or any other method of allocation which does not take account of the foregoing
equitable considerations.
<PAGE> 4
5. CONTINUATION OF OBLIGATIONS. All agreements and obligations of
Corporation contained herein shall continue during the period Officer is a
director, officer, employee or agent of Corporation (or is or was serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Officer shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Officer
was an officer of Corporation or serving in any other capacity referred to
herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
Officer of notice of the commencement of any action, suit or proceeding, Officer
will, if a claim in respect thereof is to be made against Corporation under this
Agreement, notify Corporation of the commencement thereof, but the omission so
to notify Corporation will not relieve it from any liability which it may have
to Officer otherwise than under this Agreement. With respect to any such action,
suit or proceeding as to which Officer notifies Corporation of the commencement
thereof.
(a) Corporation will be entitled to participate therein at its
own expense;
(b) Except as otherwise provided below, to the extent that it may
wish, Corporation jointly with any other indemnifying party similarly notified
will be entitled to assume the defense thereof, with counsel satisfactory to
Officer. After notice from Corporation to Officer of its election so as to
assume the defense thereof, Corporation will not be liable to Officer under this
Agreement for any legal or other expenses subsequently incurred by Officer in
connection with the defense thereof other than reasonable costs of investigation
or as otherwise provided below. Officer shall have the right to employ its
counsel in such action, suit or proceeding but the fees and expenses of such
counsel incurred after notice from Corporation of its assumption of the defense
thereof shall be at the expense of Officer unless (i) the employment of counsel
by Officer has been authorized by Corporation, (ii) Officer shall have
reasonably concluded that there may be a conflict of interest between
Corporation and Officer in the conduct of the defense of such action or (iii)
Corporation shall not in fact have employed counsel to assume the defense of
such action, in each of which case the fees and expenses of counsel shall be at
the expense of Corporation. Corporation shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf of
Corporation, which is against or involves Officer, or as to which Officer shall
have made the conclusion provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Officer under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. Corporation shall not settle any action or
claim in any manner which would impose any penalty or limitation on Officer
without Officer's written consent. Neither Corporation nor Officer will
unreasonably withhold its consent to any proposed settlement.
<PAGE> 5
7. ADVANCEMENT AND REPAYMENT OF EXPENSES.
(a) In the event that Officer employs his own counsel pursuant to
Section 6(b)(i) through (iii) above, Corporation shall advance to Officer, prior
to any final disposition of any threatened or pending action, suit or
proceeding, whether civil, criminal, administrative or investigative, any and
all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (1 0)
days after receiving copies of invoices presented to Officer for such expenses.
(b) Officer agrees that Officer will reimburse Corporation for
all reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Officer in the event and only to the extent
it shall be ultimately determined by a final judicial decision (from which there
is no right of appeal) that Officer is not entitled, under applicable law, the
Bylaws, this Agreement or otherwise, to be indemnified by Corporation for such
expenses.
8. ENFORCEMENT.
(a) Corporation expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on Corporation hereby in
order to induce Officer to become or continue as an officer of Corporation, and
acknowledges that Officer is relying upon this Agreement in continuing in such
capacity.
(b) In the event Officer is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, Corporation shall reimburse Officer for all of Officer's
reasonable fees and expenses in bringing and pursuing such action.
9. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. GOVERNING LAW. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of California.
11. BINDING EFFECT. This Agreement shall be binding upon Officer
and upon Corporation, its successors and assigns, and shall inure to the benefit
of Officer, his heirs, personal representatives and assigns and to the benefit
of Corporation, its successors and assigns.
<PAGE> 6
12. AMENDMENT AND TERMINATION. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
HYPERBARIC SYSTEMS,
A CALIFORNIA CORPORATION
BY: HARRY MASUDA, PRESIDENT
ADDRESS: 1127 HARKER AVENUE
PALO ALTO, CA 94301
BY:
ARDETH SEALY
ADDRESS: 1127 HARKER AVENUE
PALO ALTO, CA 94301
<PAGE> 1
EXHIBIT 6.19
6.19 INDEMNIFICATION AGREEMENT - L. BRYANT
INDEMNIFICATION AGREEMENT
THIS AGREEMENT, is made and entered into this 2nd day of
SEPTEMBER, 1999 between HYPERBARIC SYSTEMS, a California corporation
("CORPORATION"), and LARRY BRYANT ("OFFICER").
RECITALS
WHEREAS, Officer, an executive officer of the Corporation,
performs a valuable service in such capacity for Corporation; and
WHEREAS, the Articles of Incorporation of the Corporation
authorize and permit contracts between Corporation and the members of its Board
of Directors and Officers providing for indemnification, among other things, of
such directors and officers; and
WHEREAS, in accordance with the authorization as provided by the
California General Corporation Law, as amended ("Code"), Corporation may
purchase and maintain a policy or policies of Directors and Officers Liability
Insurance ("D & O Insurance"), covering certain liabilities which may be
incurred by its directors and officers in the performance as directors of
Corporation; and
WHEREAS, as a result of recent developments affecting the terms,
scope and availability of D & O Insurance there exists general uncertainty as to
the extent of protection afforded members of the Board of Directors and officers
by such D & O Insurance and by statutory and bylaw indemnification provisions;
and
WHEREAS, in order to induce Officer to serve or continue to serve
as the case may be, as an executive officer of Corporation, Corporation has
determined that it is in its best interests to enter into this contract with
Officer;
NOW, THEREFORE, in consideration of Officer's continued service
as an executive officer after the date hereof, the parties hereto agree as
follows:
1. INDEMNITY OF OFFICER. Corporation hereby agrees to hold
harmless and indemnify Officer to the full extent authorized by the provisions
of the Code, as it may be amended from time to time.
2. ADDITIONAL INDEMNITY. Subject only to the limitations set
forth in Section 3 hereof, Corporation hereby further agrees to hold harmless
and indemnify Officer:
(a) against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Officer in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of Corporation) to which Officer is, was
or at any time becomes a party, or is reasonably thought to be threatened to
<PAGE> 2
be made a party, by reason of the fact that Officer is, was or at any time
becomes a director, officer, employee or agent of Corporation, or is or was
serving or at any time serves at the request of Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise; and
(b) otherwise to the fullest extent as may be provided to
Officer by Corporation under the non-exclusive provisions of the Articles of
Incorporation of Corporation and the Code.
3. LIMITATIONS ON ADDITIONAL INDEMNITY.
(a) No indemnity pursuant to Section 2 hereof shall be paid by
Corporation for any of the following:
(i) to the extent the aggregate of losses to be
indemnified exceeds the sum of (A) such losses for which the Officer is
indemnified pursuant to Section I hereof and (B) any settlement pursuant to any
D & O Insurance purchased and maintained by Corporation;
(ii) in respect to remuneration paid to Officer if it
shall be determined by a final judgment without right of appeal, or other final
adjudication that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is rendered
against Officer for an accounting of profits made from the purchase or sale by
Officer of securities of Corporation pursuant to the provisions of Section 16(b)
of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law;
(iv) on account of Officer's acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law,
(v) on account of any proceeding (other than a proceeding
referred to in Section 8(b) hereof) initiated by the Officer unless such
proceeding was authorized by the uninterested directors of the Corporation; or
(vi) if a final decision without right of appeal by a
Court having jurisdiction in the matter shall determine that such
indemnification is not lawful;
(b) In addition to those limitations set forth above in
paragraph (a) of this Section 3, no indemnity pursuant to Section 2 hereof in an
action by or in the right of Corporation shall be paid by Corporation for any of
the following:
(i) on account of acts or omissions that Officer believed
or believes to be contrary to the best interests of the Corporation or its
shareholders or that involve the absence of good faith on the part of Officer;
(ii) with respect to any transaction from which Officer
derived an improper personal benefit;
<PAGE> 3
(iii) on account of acts or omissions that show a reckless
disregard for Officer's duties to the corporation or its shareholders in
circumstances in which Officer was aware, or should have been aware, in the
ordinary course of performing a Officer's duties, of a risk of serious injury to
Corporation or its shareholders;
(iv) on account of acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of Officer's
duties to the Corporation or its shareholders;
(v) to the extent prohibited by Section 310 of the
California Corporations Code, entitled "Contracts in Which Director Has Material
Financial Interest;"
(vi) to the extent prohibited by Section 316 of the
California Corporations Code, entitled "Corporate Actions Subjecting Directors
To Joint And Several Liability" (generally for prohibited distributions, loans
and guarantees);
(vii) in respect of any claim, issue or matter as to which
Officer shall have been adjudged to be liable to Corporation in the performance
of Officer's duties to Corporation and its shareholders, unless and only to the
extent that the court in which such proceeding is or was pending shall determine
upon application that, in view of all the circumstances of the case, Officer is
fairly and reasonably entitled to indemnity for expenses and then only to the
extent that such court shall determine;
(viii) of amounts paid in settling or otherwise disposing
of a pending action without court approval; and
(ix) of expenses incurred in defending a pending action
which is settled or otherwise disposed of without court approval.
4. CONTRIBUTION. If the indemnification provided in Sections 1
and 2 is unavailable and may not be paid to Officer for any reason other than
those set forth in Section 3 (excluding subsections 3(b)(viii) and (ix)), then
in respect of any threatened, pending or completed action, suit or proceeding in
which Corporation is jointly liable with Officer (or would be if joined in such
action, suit or proceeding), Corporation shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Officer in
such proportion as is appropriate to reflect (i) the relative benefits received
by Corporation on the one hand and Officer on the other hand from the
transaction from which such action, suit or proceeding arose, and (ii) the
relative fault of Corporation on the one hand and of Officer on the other in
connection with the events which resulted in such expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable considerations. The
relative fault of Corporation on the one hand and of Officer on the other shall
be determined by reference to, among other things, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent the
circumstances resulting in such expenses, judgments, fines or settlement
amounts. Corporation agrees that it would not be just and equitable if
contribution pursuant to this Section 4 were determined by pro rata allocation
or any other method of allocation which does not take account of the foregoing
equitable considerations.
<PAGE> 4
5. CONTINUATION OF OBLIGATIONS. All agreements and obligations
of Corporation contained herein shall continue during the period Officer is a
director, officer, employee or agent of Corporation (or is or was serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Officer shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Officer
was an officer of Corporation or serving in any other capacity referred to
herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt
by Officer of notice of the commencement of any action, suit or proceeding,
Officer will, if a claim in respect thereof is to be made against Corporation
under this Agreement, notify Corporation of the commencement thereof, but the
omission so to notify Corporation will not relieve it from any liability which
it may have to Officer otherwise than under this Agreement. With respect to any
such action, suit or proceeding as to which Officer notifies Corporation of the
commencement thereof.
(a) Corporation will be entitled to participate therein at its
own expense;
(b) Except as otherwise provided below, to the extent that it
may wish, Corporation jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel
satisfactory to Officer. After notice from Corporation to Officer of its
election so as to assume the defense thereof, Corporation will not be liable to
Officer under this Agreement for any legal or other expenses subsequently
incurred by Officer in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Officer shall have the
right to employ its counsel in such action, suit or proceeding but the fees and
expenses of such counsel incurred after notice from Corporation of its
assumption of the defense thereof shall be at the expense of Officer unless (i)
the employment of counsel by Officer has been authorized by Corporation, (ii)
Officer shall have reasonably concluded that there may be a conflict of interest
between Corporation and Officer in the conduct of the defense of such action or
(iii) Corporation shall not in fact have employed counsel to assume the defense
of such action, in each of which case the fees and expenses of counsel shall be
at the expense of Corporation. Corporation shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf of
Corporation, which is against or involves Officer, or as to which Officer shall
have made the conclusion provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Officer under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. Corporation shall not settle any action or
claim in any manner which would impose any penalty or limitation on Officer
without Officer's written consent. Neither Corporation nor Officer will
unreasonably withhold its consent to any proposed settlement.
<PAGE> 5
7. ADVANCEMENT AND REPAYMENT OF EXPENSES.
(a) In the event that Officer employs his own counsel pursuant
to Section 6(b)(i) through (iii) above, Corporation shall advance to Officer,
prior to any final disposition of any threatened or pending action, suit or
proceeding, whether civil, criminal, administrative or investigative, any and
all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (1 0)
days after receiving copies of invoices presented to Officer for such expenses.
(b) Officer agrees that Officer will reimburse Corporation for
all reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Officer in the event and only to the extent
it shall be ultimately determined by a final judicial decision (from which there
is no right of appeal) that Officer is not entitled, under applicable law, the
Bylaws, this Agreement or otherwise, to be indemnified by Corporation for such
expenses.
8. ENFORCEMENT.
(a) Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on Corporation
hereby in order to induce Officer to become or continue as an officer of
Corporation, and acknowledges that Officer is relying upon this Agreement in
continuing in such capacity.
(b) In the event Officer is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, Corporation shall reimburse Officer for all of Officer's
reasonable fees and expenses in bringing and pursuing such action.
9. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. GOVERNING LAW. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of California.
11. BINDING EFFECT. This Agreement shall be binding upon
Officer and upon Corporation, its successors and assigns, and shall inure to the
benefit of Officer, his heirs, personal representatives and assigns and to the
benefit of Corporation, its successors and assigns.
<PAGE> 6
12. AMENDMENT AND TERMINATION. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
HYPERBARIC SYSTEMS,
A CALIFORNIA CORPORATION
BY: HARRY MASUDA, PRESIDENT
ADDRESS: 1127 HARKER AVENUE
PALO ALTO, CA 94301
BY:
LARRY BRYANT
ADDRESS: 1127 HARKER AVENUE
PALO ALTO, CA 94301
<PAGE> 7
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 12 OF THE SECURITIES EXCHANGE ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
---------------------------------------
(REGISTRANT)
