<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
(Amendment No. 1)
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS UNDER
SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
EYE DYNAMICS, INC.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in its charter)
Nevada 88-0249812
- ------------------------------- -------------------
(State or other jurisdiction of IRS Employer
incorporation or organization) Identification No.)
2301 West 205th Street, Torrance, CA 90501
- ---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (310) 328-0477
- -------------------------------------------------------------
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 N/A
- ---------------------------------- -----------------------------
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
- -----------------------------------------------------------------------------
(Title of class)
<PAGE>
PART 1
- ------
ITEM 1. DESCRIPTION OF BUSINESS
- ------- -----------------------
1. THE COMPANY
- --------------
The Company was formed under the laws of Nevada in 1989 under the name
Petro Plex, Inc., and changed its name to Drug Detection Systems, Inc. in 1991
upon the acquisition of OculoKinetics, Inc., a private corporation which
initially developed the Company's products. Prior to the acquisition of
OculoKinetics, Inc., the Company had no operations. In May 1993, the Company
changed its name to Eye Dynamics, Inc. to better describe the Company's
operating and marketing focus. The Company has not been involved in any
bankruptcy, receivership or similar proceedings since it was formed in August
1989.
The Company markets and distributes diagnostic equipment that utilizes
the Company's proprietary technology and computer software to test individuals
for impaired performance resulting from the influences of alcohol, drugs,
illness, stress and other factors that affect eye and pupil performance. The
Company also markets a medical diagnostic product that tracks and measures eye
movements during a series of standardized tests. The result of these tests is
used by physicians and clinicians to aid them in diagnosing problems of the
vestibular (balance) system and other balance disorders. Testing of patients for
irregular eye movements has been a standard medical procedure for several
decades and the Company's products have gained a significant share of this
highly specialized market.
The underlying technology used in all of the Company's products is
similar, yet differs in its application and use. The Company's products utilize
infrared sensitive video cameras to monitor, video tape and analyze eye
performance and movement. Medical research conducted over the past 50 years has
furnished evidence demonstrating a relationship between irregular eye movement
and abnormal central nervous system physiology. The causes of these conditions
are numerous, and include the influences of alcohol, drugs, illness, stress,
extreme fatigue and other neurological conditions. Generally, product
development has followed two paths - that of performance evaluation and that of
data gathering for medical diagnostic purposes.
2. THE PRODUCTS
- ---------------
All the products share in a modular concept for efficiency in
manufacturing. The products are PC Computer based with specialized and
proprietary hardware and embedded firmware. The common element of the three is
the viewport, where the individual being tested peers into a dark environment.
The medical product is more complex because it includes a goggle assembly that
the patient wears. It is lightweight and uses microminiature video cameras. The
goggle is an essential instrument because certain of the Electronystagmographic
("ENG") tests require the patients to move their heads and often to recline on
an examining table.
2
<PAGE>
Common to operation of all the products is the use of infrared
sensitive Charge Coupled Device ("CCD") video cameras that provide a bright
video image even though the person being tested sees nothing but a small
stimulus or tracking light amid complete darkness.
A. MEDICAL PRODUCT
- ------------------
For the medical market, The House InfraRed/Video ENG System is the
first major technological improvement in over 40 years for this standard medical
testing method. Eletronystagmographic (ENG) testing is a standard medical
procedure used in assessing problems of the balance system of patients. This
method provides enhanced diagnostic information for the medical practitioner to
use for his final diagnosis of the patient's problem. The FDA granted approval
in 1994 to market this product.
Irregular eye movements and conditions are analyzed by medical
specialists as an aid in diagnosing problems with the human balance system and
other neurological conditions. Heretofore, all competitive products have used
'electrodes' that are taped to the skin around the periphery of the patient's
eyes and a very small electrical signal from the corneoretinal potential of the
eyes drives a pen recorder. The pen recorder provides a graphical depiction of
the eye movements under different test conditions. These graphs then are
interpreted by the medical diagnostician.
The Company's Infrared/Video ENG System was the first to replace the
electrodes with infrared sensitive video cameras and with computer digital
processing that follow the movement of the eyes and graphically portrays the
movements much like the pen recorder. The Company believes the accuracy and
display of the IR/Video ENG System is much improved over other existing testing
methods. In addition, the use of video by the IR/Video ENG System allows the
test administrator or medical practitioner to observe the eye movements directly
and provides a videotape record of the test for later playback and additional
analysis. The Company believes that this is a large improvement over prior
technology. This product was first marketed in 1994, after gaining FDA approval
to market. Since then most every competitor has changed from electrodes and is
embracing video data acquisition as a superior technology.
Clinical evaluation and development of the system was done in
conjunction with the prestigious House Ear Institute in Los Angeles, California.
The House Ear Institute has given the Company permission to use "The House" name
when describing the product and in promotional materials.
MARKETING OF THE MEDICAL PRODUCT. Marketing of the IR/Video ENG System is done
through a network of independently owned special instrument dealers ("SID's").
These independently owned businesses are distributors of not only the IR/Video
ENG System, but of a variety of allied and related products for the audiometric
and otolaryngology ("ENT") markets. These distributors are across the United
States and operate in territories that are assigned exclusively to them by the
Company. In addition, there are several foreign distributors that are
merchandising the product in countries such as Egypt, Turkey, Thailand, Taiwan
and Korea. The Company is not yet selling in the european common market
countries due to lack of the 'CE' mark of approval that must be acquired.
3
<PAGE>
COMPETITION. The Company knows of several companies in the medical market making
ENG testing equipment, including Micromedical Technologies, Inc. of Chatham,
Illinois, ICS Medical Corporation of Schaumberg, Illinois and Nicolet
Instruments of Madison, Wisconsin. The market for the ENG type products is
mature and represents only annual growth estimated at 5%, but because of the
advancement of technology spurred by the Company's introduction of video data
acquisition methods in 1994, the market for replacement products has been robust
and will continue to be so for the foreseeable future.
B. PERFORMANCE TESTING
- ----------------------
Impaired worker performance can result from many factors. While
substance abuse receives the most attention, it has been reported that billions
of dollars are lost annually due to worker impairment caused by other factors,
such as prescription and/or over-the-counter medications, stress, extreme
fatigue and illness. Costs are substantial for businesses with impaired workers
and are reflected in low productivity, accidents, higher workers compensation
costs, equipment and merchandise damage, as well as rising insurance premiums.
Over the past decade, different types of performance tests have evolved
based on extensive scientific studies validating the relationship between test
results and the impaired performance of an individual. They assess an
individual's motor and cognitive skills at the time of the test.
The Company's performance evaluation product consists of the EPS-100
Performance System. The EPS-100 is based on methods developed by the federal
government and used by law enforcement over the past 25 years. The EPS-100 is a
simple computer system that evaluates the ability of an individual's eyes to
follow a moving light and react to a dim and bright light stimulus. The EPS-100
is non-diagnostic and non-judgmental. It evaluates performance of the individual
for safety and productivity purposes. The initial price for the product was
$15,000, but with redesign and improved components and modest sales volume the
product is being repriced to $8,000, which the Company believes is competitive
with the price of professional desktop breath testing analyzers commonly used by
law enforcement for assessment of blood alcohol content ("BAC") levels in
individuals.
A second model, the EM/1 is designed for use by law enforcement
agencies for forensic purposes and assists in evaluation of individuals
suspected of driving or being under the influence of intoxicants.
In most states, law enforcement agencies use a six point evaluation of
people thought to be intoxicated. This is referred to as the Standardized Field
Sobriety Test ("SFST"). The SFST includes three tests for balance and three
tests involving eye performance. Thus, the Company believes there is a need for
a product that can be utilized, not only in the jail or precinct house, but in
the field by traffic patrol cars. This product must ultimately be in a 'hand
held' configuration.
Hardware for the EM/1 is similar to the EPS-100, but different
operating software requires that a person trained and certified in SFST and Drug
Recognition and Evaluation operate the equipment and evaluate eye performance.
>From the EM/1 test results and other test information, the evaluator draws an
opinion as to whether the individual is impaired and under the influence of
4
<PAGE>
intoxicants or not, or possibly should be medically treated. The video tape made
of the test is then used as evidence to support the conclusion of the law
enforcement officer and , depending on the jurisdiction, may be admissible as
evidence in court proceedings. The EM/1 is also priced at $8,000 per unit.
MARKETING OF THE EPS-100 AND EM/1.
- ----------------------------------
The Company has been test marketing the EPS-100 and has sold a number
of units in various locales. Currently, independent sales representatives are
being recruited to achieve geographic distribution coverage over the United
States. However, implementation of a full marketing plan is contingent on
receipt of additional working capital.
Also, modification of current government testing regulations must be
achieved in order for the EPS-100 to be totally accepted by the corporate
sector. Current regulations are all written around urine based testing;
modifications of these regulations to allow for performance based testing
methods in lieu of urine based screening tests will be necessary to gain market
acceptance for the EPS-100.
COMPETITION.
- ------------
Competition for the EPS-100 is from companies that have developed tests
and devices that evaluate motor and cognitive skills. These take the form of
hand-eye coordination tests, divided attention tests and other behavioral tests
or series of tests administered either in series or selectively. The Company has
identified three such competitors that are actively marketing their products,
including Performance Factors, Inc. located in Golden, Colorado, Essex
Corporation of Columbia, Maryland and Pulse Medical Instruments of Rockville,
Maryland.
The Company knows of only one other company, Pulse Medical Instruments
of Rockville, Maryland that is developing a product to be directly competitive
with the Company's products. The Pulse Medical product does not use video
sensors and its results are displayed in graphic form on a computer monitor for
the qualified expert to interpret. The Company believes that such competitive
product is much more expensive than the EPS-100 and is still being developed and
validated as a useful device.
The EPS-100 differs from its competitors' tests because the EPS-100
test evaluates changes in eye performance which are involuntary responses and
not under the control of the individual. For this reason, these responses cannot
be changed, improved upon or learned. All the other competitive forms of
performance tests can be learned and over time the individual being tested can
improve his skills. The Company feels that this difference is an important
competitive advantage over other forms of performance tests.
5
<PAGE>
3. ENGINEERING & MANUFACTURING.
- -------------------------------
The Company has performed all its own design and engineering of
products and has developed all software and validation of software algorithms
that are used in the analysis portion of the proprietary software.
Manufacturing of the products is primarily done through subcontracting
with various suppliers. The Company does not rely on a single supplier for the
major manufacturing of items. Various companies build and test product modules
on an OEM contract basis. Final system integration and testing is completed by
the Company prior to shipment of devices to end customers.
Manufactured or fabricated modules include the molded eye piece, the
goggle assembly, the viewport assembly and proprietary printed circuit boards.
As a majority of the components in the Company's products are readily available,
the Company does not anticipate undertaking internal manufacturing of any
components. Manufacturing operations consist of only assembly, testing and
packaging functions.
4. PATENTS & PROPRIETARY PROTECTION.
- ------------------------------------
Ronald A. Waldorf, Chairman of the Board of Directors of the Company
and founder of OculoKinetics, holds a patent granted in 1989 for technology
utilized in the Company's products. In November 1989 the Company and Mr. Waldorf
entered into an Exclusive License Agreement for the technology used in the
Company's performance evaluation product. The Exclusive License Agreement is for
the term of the patent, but may be terminated on one year's notice by the
Company, or by either party upon default by the other. Mr. Waldorf is entitled
to an annual $100 royalty fee.
The Company is the owner of a patent issued in August 1992, covering
specifically the EPS-100 and EM/1 models. The existence of patents may be
important to the Company's future operations but there is no assurance that
additional patents will be issued. For both of the above named patents, eleven
foreign patents have been issued and or are pending in several foreign
countries.
Proprietary information and trade secrets relate to a number of items,
but essentially covers the method of obtaining data regarding eye performance.
5. EMPLOYEES.
- -------------
The Company currently employs three employees full time, including its
President, a development engineer and a marketing manager. Other part time
consulting and commissioned personnel are also utilized. The Company's employees
are not parties to any collective bargaining agreement, and the Company believes
that its employee relations are satisfactory.
6
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS.
- ------ -----------------------------------------------------------
The Company has invested substantial funds in the last several years
developing and validating it's products. Successful marketing of the
Infrared/Video ENG System has been achieved, but this is a niche type market and
because of this, revenue growth will be limited. Production of this system on a
profitable basis has been achieved for this product as well as securing a
contract to supply key portions of the product on a private label basis. Almost
all of the Company's current revenues come from sale of this product.
The EPS-100 Performance System has been sold to a few locales and the
beta marketing has been successful. For large scale sale of this product the
Company needs to have federal drug testing regulations modified. This is a
significant project requiring a coordinated effort with potential users,
government officials and the help of legislative bodies. Therefore, additional
investment capital is required to launch the marketing of the EPS-100 product. A
large scale marketing/lobbying effort will be necessary for this product to
succeed.
The Company is in the midst of soliciting capital investment for this
project. Until such capital is available, the EPS-100 marketing launch is being
delayed and revenues from sale of the medical product will continue to sustain
the Company, as it has the past year. Operating expenses are low and in keeping
with current revenue levels. There are no planned capital equipment expenditures
for the foreseeable future.
RESULTS OF OPERATIONS.
- ----------------------
FISCAL YEAR ENDED SEPTEMBER 30, 1998 COMPARED TO YEAR ENDED SEPTEMBER 30, 1999.
- -------------------------------------------------------------------------------
Revenues from sale of products increased by 62% from $371,000 in 1998
to $602,000 in 1999. This increase is due to an increase in unit volume of
medical products, but was also largely influenced by the change in distribution
policy that was implemented in July of 1998. The distribution change eliminated
the Company's exclusive distributor of the medical products as the Company began
selling directly to end users through a Special Instrument Dealer network. This
change increased the average selling price per unit by approximately 50% which
contributed to the increase in revenues.
The distributor change also increased the Company's marketing expense
because the distributor was no longer in place to absorb these expenses. In
spite of the increased marketing expense, the Company managed to reduce the year
to date losses from $(94,000) in 1998 to $(74,000) in 1999. Further, cost of
sales for 1999 period was 46% of revenues compared to 55% in the 1998 period.
This again, partially reflects the change in distribution policy, but also
contributing was decreased product costs because of the increased units number
of units being produced.
7
<PAGE>
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1998.
- ----------------------------------------------------------------------
Sales revenues rose from $436,000 in 1997 to $680,000 in 1998 for an
increase of 56%. This was the result of overall increased sale of medical
products, the addition of a private label medical product customer and securing
of a government contract ($36,000) to study effects of pupil reactions and eye
movements when a subject is not telling the truth (lie detection). This study
was done in conjunction with the University of Utah in Salt Lake City, Utah.
Cost of sales increased in 1998 to 58% of revenues as compared to 52%
in 1997. this increase was a result of higher prices for video cameras and has
since been alleviated by redesigning the product to utilize less expensive video
cameras.
Net income for the calendar year 1998 was a modest loss of $(35,000) as
compared to a profit of $3,000 in 1997. The loss was attributed to start up and
trial operation of a "Telemedicine" service product. After a one year trial that
was unsuccessful, the Telemedicine service unit was discontinued in February
1999.
YEAR 2000
- ---------
Concerns regarding Year 2000 effect on operations and products have
been taken into consideration. First, products manufactured subsequent to July
1997 have utilized computer components that are Y2K compliant. Also, product
software was reviewed and brought to Y2K compliance in December 1997. Also, the
Company was required to certify to Federal Drug Administration (FDA) in early
1998 that its products were either in compliance or to state when they would be
in compliance.
Also, the Company provided free upgrades of its proprietary software to
all users so that they would have the latest version of Y2K compliant software.
Older computers are not possible of becoming compliant, so many of the Company's
customers elected to purchase new computers from the Company that could be
certified as Y2K compliant.
Internally used computers have been assessed and non-compliant products
are being replaced by December, 1999.
ITEM 3 DESCRIPTION OF PROPERTY
- ------ -----------------------
The Company owns no real estate. Company offices are leased in an
industrial complex at 2301 W. 205th St., #106, Torrance, CA 90501. The offices
are 960 square feet in size and the lease expires April 30, 2001. Various
subcontractor facilities are utilized for manufacturing of the products.
8
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT
- ------- ------------------------------------------------------------
The following table sets forth certain information regarding the beneficial
ownership of the shares of Common Stock of the Company as of September 30, 1999,
by (i) each person who is known by the Company to be the beneficial owner of
more than five percent (5%) of the issued and outstanding shares of common
stock, (ii) each of the Company's directors and executive officers, and (iii)
all directors and executive officers and others as a group. The Company has only
a single class of shares - Common Stock.
NAME & ADDRESS NUMBER OF SHARES PERCENTAGE OWNED
- -------------- ---------------- ----------------
Charles E. Phillips 2,374,989 (1) 25.6 (1)
2301 W. 205th St., #106
Torrance, CA 90501
Ronald A. Waldorf 1,888,815 (2) 20.4 (2)
2301 W. 205th St., #106
Torrance, Ca 90501
Arnold D. Kay 308,816 (3) 3.3 (3)
2301 W. 205th St., #106
Torrance, CA 90501
Barbara J. Mauch 1,292,594 14.0
2301 W. 205th St., #106
Torrance, CA 90501
All directors, executive 5,865,214 63.3
officers & principal
stockholder as a group
(4 persons)
- --------------------------------------
(1) Includes 12,500 shares covered by options exercisable within 60 days
(2) Includes 112,500 shares covered by options exercisable within 60 days
(3) Includes 2,500 shares covered by options exercisable within 60 days
9
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
- ------- -------------------------------------------------------------
NAME AGE POSITION
- ---- --- --------
Charles E. Phillips 64 President, Treasurer & Director
Ronald A. Waldorf 51 Vice President, Secretary & Director
Arnold D. Kay 64 Director
Barbara J. Mauch 54 Chief Product Development Engineer
The directors are elected annually at the Annual Shareholders Meeting and the
term of office is nominally one year.
Charles E. Phillips and Ronald A. Waldorf have been directors of the Company
since 1991 and Arnold D. Kay was elected a director in September 1999.
RONALD A. WALDORF has been Chairman of the Board of Directors of the Company
since 1991 and is active in overall policy formation and strategic planning for
the Company. He is the inventor of the IR/Video ENG System, EPS-100 and EM/1
products. He also owns a patent covering closely related technology that has
been licensed exclusively to the Company. Since 1969 Waldorf has been active in
the field of otolaryngology, primarily in an academic research environment at
the University of Florida, College of Medicine and at the University of
California (Irvine), Department of Surgery. He has published numerous articles
on vestibular and optokinetic research in international scientific and medical
journals and was the principal investigator in a research grant funded by the
National Institute of Health/National Institute on Alcohol Abuse and Alcoholism
(NIH/NIAAA). Since 1981 he has acted as a consultant to clinics and hospitals in
the Los Angeles area, including the House Ear Clinic. He has also consulted to a
Japanese company developing new technologies for eye movement detection.
Waldorf earned an M.S. in 1972 from Department of Physiology, College
of Medicine, University of Florida, Gainesville, Florida.
CHARLES E. PHILLIPS has been President and a Director of the Company and
predecessor since its inception in 1988. Prior to forming OculoKinetics, Inc. -
later Eye Dynamics, Inc. Mr. Phillips operated Charles E. Phillips, Inc., a
management and marketing consulting firm. His work has included assignments in
marketing, operations and the initiation of start-up ventures. He has over 35
years of management experience in both large and small firms. From 1974 to 1985,
Mr. Phillips was Executive Vice President and Director of Akai America, Ltd., a
consumer electronics company. His management background has encompassed
marketing, new product planning, sales, advertising, finance, accounting,
manufacturing, quality assurance and distribution.
Phillips was granted a B.A. in 1956 from Pepperdine College, Los
Angeles, California with emphasis on Business and Speech Education.
10
<PAGE>
ARNOLD D. KAY was elected a Director in September 1999. He has more than 30
years experience in finance, sales and administration. Mr. Kay was an employee
of the Company from 1991 to 1994. He currently is co-owner and General Manager
of Lomita Blueprint/CADWEST of Lomita, California, a software and computer
imaging business focusing in design, graphics and distribution of CAD software
and systems.
Granted B.S. in Business Administration/Finance from California State
University, Northridge, California in 1961.
BARBARA J. MAUCH is the primary product development engineer for the Company.
She has been with the Company since 1989 and is responsible for product
engineering and software development. Her background encompasses computer
systems design and software development for access control of buildings and
other properties. She served as a Director of the Company from 1991 to 1996.
Ms. Mauch earned a B.S. in Mathematics from Northern Colorado
University, Greeley, Colorado in 1971 and at UCLA, Los Angeles, California
completed the Master's program in computer science.
11
<PAGE>
ITEM 6 EXECUTIVE COMPENSATION
- ------ ----------------------
The following table summarizes all compensation accrued and paid by us in each
of the last two fiscal years to the chief executive officer and each other
executive officer serving as executive officers whose annual compensation
exceeded $100,000.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Compensation Awards
Name and Securities
Principal Restricted Underlying All Other
Position Year Salary Bonus Other Stock Options Compensation
- -------- ---- ------ ----- ----- ----- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles E. 1997 $35,000 0 0 $417 0 0
Phillips, 1998 $48,000 0 0 $280 0 0
CEO
</TABLE>
ITEM 7 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ------ ----------------------------------------------
Since Inception, the Company has borrowed funds from Mr. Charles E. Phillips,
its president and CEO and from employee Barbara Mauch under various promissory
notes. These notes bear interest at 10% per annum and are unsecured. As of
December 31, 1998, the balance of the notes was $23,470, and the unpaid accrued
interest totaled $49,475.
The Company has employment agreements with its CEO and an employee that provide
for aggregate annual compensation of $150,000. The agreements are automatically
renewed year to year. The agreements may be terminated by the Company or the
officers with notice 60 days prior to any expiration date.
ITEM 8 DESCRIPTION OF SECURITIES
- ------ -------------------------
The Company is authorized to issue 50,000,000 shares of Common Stock, $0.001 par
value, of which, as of December 31, 1998, 8,300,627 shares issued and
outstanding and held of record by 95 shareholders. The Company has no other
classes of securities authorized.
Holders of shares of common stock are entitled to one vote per share on all
matters to be voted by the stockholders generally. The approval of proposals
submitted to stockholders at a meeting other than for the election of directors
requires the favorable vote of a majority of the shares voting, in accordance
with the Company By-laws and the laws of the State of Nevada. Stockholders are
entitled to receive such dividends as may be declared from time to time by the
Board of Directors out of funds legally available therefrom, and in the event of
liquidation, dissolution or winding up of the Company to share ratably in all
assets remaining after payment of liabilities. The holders of shares of Common
Stock have no preemptive, conversion, subscription or cumulative voting rights.
12
<PAGE>
PART II
ITEM 1 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
- ------ --------------------------------------------------------
EQUITY AND OTHER SHAREHOLDER MATTERS.
-------------------------------------
A. MARKET INFORMATION
- ---------------------
As of September 30,1999
Traded on: OTC/Bulletin Board Symbol: EYDY
Authorized Shares: 50,000,000 Common Issued & Outstanding: 9,139,460
Price Range of Common Stock:
The following table sets forth the quarterly high and low closing bid and ask
prices for the Common Stock, as reported on the OTC/Bulletin Board, since
January 1, 1997.
<TABLE>
<CAPTION>
CLOSING BID CLOSING ASK
----------- -----------
FISCAL 1997 LOW HIGH LOW HIGH
- ----------- --- ----- --- -----
<S> <C> <C> <C> <C>
First Quarter .02 .04 .20 .25
Second Quarter .04 .05 .20 .25
Third Quarter .05 .06 .20 .25
Fourth Quarter .02 .06 .20 .25
FISCAL 1998
- -----------
First Quarter .02 .02 .25 .25
Second Quarter .02 .05 .25 .25
Third Quarter .03125 .03125 .25 .25
Fourth Quarter .02 .77 .20 .81
FISCAL 1999
- -----------
First Quarter .14 .46 .16 .51
Second Quarter .13 1.30 .14 1.33
Third Quarter .37 .87 .42 .98
</TABLE>
B. HOLDERS: As of September 30, 1999, the Company's Common Stock was held of
record by approximately 100 holders. Registered ownership includes nominees who
may hold securities on behalf of multiple beneficial owners.
C. DIVIDENDS: The Company has paid no cash dividends on its Common Stock and has
no present intention of paying cash dividends in the foreseeable future. Payment
of cash dividends in the future will depend, among other things, on the
Company's future earnings, requirements for capital improvements, the operating
and financial conditions of the Company and other factors deemed relevant by the
Board of Directors.
13
<PAGE>
ITEM 2 LEGAL PROCEEDINGS
- ------ -----------------
There are no pending legal proceedings to which the Company is a party or to
which the property interests of the Company are subject.
ITEM 3 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- ------ ---------------------------------------------
None
14
<PAGE>
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES
- ------ ---------------------------------------
Following table lists all transactions involving issuance of unregistered
securities for the past three years, from November 1996 to date of this filing.
<TABLE>
<CAPTION>
PURCHASER OR CONSIDERATION
DATE TYPE SHARES NO. SHARES RECIPIENT COMPANY RECEIVED EXEMPTION
- ---- ----------- ---------- --------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
11/22/96 Common 413,333 Ronald A. Waldorf Deferred Salary Rule 701
of $62,000
11/22/96 Common 413,333 Charles E. Phillips Deferred Salary Rule 701
of $62,000
11/22/96 Common 250,000 Barbara J. Mauch Deferred Salary Rule 701
of $37,500
8/20/97 Common 72,000 Scott Sand Consulting Work Rule 701
of $21,000
11/20/97 Common 54,000 Scott Sand Consulting Work Rule 701
of $15,750
12/18/97 Common 50,000 Ronald A. Waldorf Deferred Salary Rule 701
of $7,500
12/18/97 Common 416,667 Charles E. Phillips Deferred Salary Rule 701
of $62,500
12/18/97 Common 236,667 Barbara J. Mauch Deferred Salary Rule 701
of $35,500
1/30/98 Common 54,000 Scott Sand Consulting Work Rule 701
of $15,750
1/30/98 Common 1,000 Nonna McCullers Sales Bonus Rule 701
of $150
1/30/98 Common 1,000 Donna Pepper Sales Bonus Rule 701
of $150
6/19/98 Common 70,000 Scott Sand Consulting Work Rule 701
of $20,417
11/4/98 Common 45,433 Scott Sand Consulting Work Rule 701
of $6,800
11/17/98 Common 150,000 Barry Sytner Business Advice Rule 701
of $7,500
11/19/98 Common 250,000 Xcel Associates Option Exercise Rule 504
for $31,250
11/30/98 Common 280,000 Charles E. Phillips Deferred Salary Rule 701
of $42,000
11/30/98 Common 120,000 Barbara J. Mauch Deferred Salary Rule 701
of $18,000
2/4/99 Common 250,000 Xcel Associates Option Exercise Rule 504
for $31,250
3/3/99 Common 250,000 Xcel Associates Option Exercise Rule 504
for $31,250
3/4/99 Common 250,000 Xcel Associates Option Exercise Rule 504
for $31,250
3/9/99 Common 45,333 Scott Sand Consulting Work Rule 701
of $6,800
7/20/99 Common 43,500 Scott Sand Consulting Work Rule 701
of $6525
</TABLE>
15
<PAGE>
ITEM 5 INDEMNIFICATION OF DIRECTORS AND OFFICERS
- ------ -----------------------------------------
The Bylaws of the Company include the following provision for indemnification of
Officers and Directors:
"ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Except as hereinafter stated otherwise, the Corporation shall indemnify
all of its officers and directors, past, present and future, against any and all
expenses incurred by them, and each of them including but not limited to legal
fees, judgments and penalties which may be incurred, rendered or levied in any
legal action brought against any or all of them for or on account of any act or
omission alleged to have been committed while acting within the scope of their
duties as officers or directors of this Corporation."
In addition, the Nevada Corporation Code provides for indemnification of
officers and directors.
16
<PAGE>
SIGNATURES
- ----------
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
EYE DYNAMICS, INC.
------------------
(Registrant)
Date: October 28, 1999 BY: /S/ CHARLES E. PHILLIPS
----------------------------
CHARLES E. PHILLIPS, PRESIDENT
<PAGE>
PART F/S
- --------
EYE DYNAMICS, INC. AND SUBSIDIARY
AUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
INDEX TO FINANCIAL STATEMENTS
INDEPENDENT AUDITOR'S REPORT.................................................F1
CONSOLIDATED BALANCE SHEETS...............................................F2-F3
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT................F4
COST OF SALES ...........................................................F5
OPERATING EXPENSES...........................................................F6
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY...................F7
CONSOLIDATED STATEMENTS OF CASH FLOWS........................................F8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...............................F9-F15
<PAGE>
HAROLD Y. SPECTOR
(888)584-5577 CERTIFIED PUBLIC ACCOUNTANTS 80 SOUTH LAKE AVENUE
FAX(626)584-6447 SUITE 723
[email protected] PASADENA, CA 91101
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and stockholders
of Eye Dynamics, Inc.
I have audited the accompanying consolidated balance sheets of Eye Dynamics,
Inc. (a Nevada corporation) and its subsidiary, Oculokinetics, Inc.(a California
corporation), as of December 31, 1998 and 1997, and the related consolidated
statements of operations and accumulated deficit, and cash flows for the years
then ended. These consolidated financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion on these
consolidated financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated 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. I believe that my audits have a reasonable basis for my
opinion.
In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial positions of Eye Dynamics, Inc.
and its subsidiary as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 12 to
the consolidated financial statements, the Company's deficit in stockholders'
equity and working capital raise substantial doubt about its ability to continue
as a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/S/ Harold Y. Spector
Pasadena, CA
February 12, 1999
F2
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(AUDITED)
December 31, 1998 and 1997
ASSETS
1998 1997
------------ ------------
Current Assets
Cash $ 36,452 $ 4,361
Account Receivables (Note 2) 128,870 32,708
Inventories (Note 2 & 3) 111,513 91,934
------------ ------------
Total Current Assets 276,835 129,003
------------ ------------
Property and Equipment (Note 2)
Furniture and Fixtures 1,432 1,432
Equipment - Telemed 12,632 10,729
------------ ------------
14,064 12,161
Less: Accumulated Depreciation (5,015) (2,679)
------------ ------------
Total Property and Equipment 9,049 9,482
------------ ------------
Other Assets
Organizational Costs, net of accumulated
amortization of $4,858 0 0
Deposits 6,141 659
------------ ------------
Total Other Assets 6,141 659
------------ ------------
TOTAL ASSETS $ 292,025 $ 139,144
============ ============
F3
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(AUDITED)
December 31, 1998 and 1997
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
1998 1997
------------ ------------
Current Liabilities
Accounts Payable $ 92,528 $ 63,019
Accrued Expenses 255,601 173,629
Consigned Inventory (Note 6) 61,500 61,500
Line of Credit (Note 4) 45,013 0
Notes Payable, current Portion (Note 5) 430,191 80,274
------------ ------------
Total Current Liabilities 884,833 378,422
------------ ------------
Long-Term Liabilities
Long-term debt (Note 5) 0 350,000
------------ ------------
Total Liabilities 884,833 728,422
------------ ------------
Stockholders' Equity (Deficit)
Common Stock, $.001 par value, 50,000,000
shares authorized; 8,300,627 shares issued
and outstanding in 1998, and 7,329,194 in
1997 8,300 7,329
Paid-in Capital 2,333,027 2,302,027
Accumulated Deficit (2,934,135) (2,898,634)
------------ ------------
Total Stockholders' Equity (Deficit) (592,808) (589,278)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 292,025 $ 139,144
============ ============
See accompanying notes and independent auditor's report
F4
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(AUDITED)
Years ended December 31, 1998 and 1997
1998 1997
------------ ------------
SALES $ 679,540 $ 436,270
COST OF SALES - SCHEDULE A 392,303 228,487
------------ ------------
GROSS PROFIT 287,237 207,783
OPERATING EXPENSES - SCHEDULE B 184,146 123,219
------------ ------------
INCOME (LOSS) FROM OPERATIONS 103,091 84,564
------------ ------------
OTHER INCOME (EXPENSES)
Interest Income - 3
Cash Discounts (7,839) (6,137)
Depreciation (2,336) (1,247)
Late Charges and Penalties (132) (140)
Officer's Salaries (90,400) (35,417)
Interest Expenses (36,285) (36,633)
------------ ------------
Total Other Income (Expenses) (136,992) (79,571)
------------ ------------
NET INCOME (LOSS) BEFORE TAXES (33,901) 4,993
PROVISION FOR INCOME TAXES 1,600 1,600
------------ ------------
NET INCOME (LOSS) (35,501) 3,393
ACCUMULATED DEFICITS
Beginning Balance (2,898,634) (2,910,187)
Prior Year Adjustment (Note 11) - 8,160
------------ ------------
Ending Balance (Deficit) $(2,934,135) $(2,898,634)
============ ============
See accompanying notes and independent auditor's report
F5
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
COST OF SALES
(AUDITED)
Years ended December 31, 1998 and 1997
SCHEDULE A
COST OF SALES 1998 1997
------------ ------------
Beginning Inventory $ 91,934 $ 91,266
Purchases 320,919 214,246
Labors & Commissions 86,972 12,215
Other Overhead Costs 3,991 2,694
------------ ------------
503,816 320,421
Less: Ending Inventory 111,513 91,934
------------ ------------
Total Cost of Sales $ 392,303 $ 228,487
============ ============
See accompanying notes and independent auditor's report
F6
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
OPERATING EXPENSES
(AUDITED)
Years ended December 31, 1998 and 1997
SCHEDULE B
OPERATING EXPENSES 1998 1997
------------ ------------
Accounting $ 6,300 $ 6,500
Advertising - 378
Answering Service - 198
Automobile 4,200 4,200
Bad Debts 3,568 1,450
Bank Charge 407 3
Billing Service 1,006 -
Commissions 21,848 2,400
Contract Services - 12,817
Dues and Subscriptions 390 339
Equipment Lease and Rental 1,320 1,412
Freight 12,205 613
Insurance 4,649 7,993
Legal and Professional 24,921 22,008
Licenses & Regulatory Fees 1,983 1,866
Meals and Entertainment 44 -
Miscellaneous 21 401
Office Supplies 11,888 6,510
Payroll Taxes 10,815 5,633
Postage and Stationeries 4,045 2,313
Printing and Collateral 3,721 4,474
Rent 10,416 7,278
Repair and Maintenance 208 369
Royalty 1,000 -
Sales Promotion & Public Relations 475 1,681
Salaries and Wages 10,963 17,521
Shows and Exhibits 6,500 -
Subcontractor and Outside Services - 5,353
Supplies 7,626 3,987
Taxes - Other 168 21
Telephone 9,134 2,293
Travel 23,457 2,349
Utilities 868 859
------------ ------------
Total Operating Expenses $ 184,146 $ 123,219
============ ============
See accompanying notes and independent auditor's report
F7
<PAGE>
<TABLE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(AUDITED)
Years ended December 31, 1998 and 1997
<CAPTION>
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 6,498,860 $ 6,499 $2,282,077 $(2,910,187) $(621,611)
Prior year adjustment 8,160 8,160
-----------------------------------------------------------
Adjusted balance 6,498,860 $ 6,499 $2,282,077 $(2,902,027) $(613,451)
Issuance stock for salaries 703,334 703 19,950 20,653
Issuance stock for
Professional Fees 127,000 127 127
Net Income 3,393 3,393
-----------------------------------------------------------
Balance at December 31, 1997 7,329,194 $ 7,329 $2,302,027 $(2,898,634) $(589,278)
Issuance stock for salaries 400,000 400 400
Issuance stock for consulting 321,433 321 321
Issuance stock for cash 250,000 250 31,000 31,250
Net Loss (35,501) (35,501)
-----------------------------------------------------------
Balance at December 31, 1998 8,300,627 $8,300 $2,333,027 $(2,934,135) $(592,808)
===========================================================
</TABLE>
See accompanying notes and independent auditor's report
F8
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AUDITED)
Years ended December 31, 1998 and 1997
1998 1997
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (35,501) $ 3,393
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation 2,336 1,247
Prior year adjustments - 8,160
Issuance Stocks for Salaries 400 20,653
Issuance Stocks for Professional Fees - 127
Issuance Stocks for Consulting Fees 321 -
(Increase) Decrease in:
Accounts Receivable (96,162) (31,474)
Inventories (19,579) (668)
Deposits (5,482) -
Increase (Decrease) in:
Accounts Payable 29,509 2,720
Accrued Expenses 81,972 25,314
Consigned Inventory - (20,500)
------------ ------------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES (42,186) 8,972
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (1,903) (10,729)
------------ ------------
NET CASH (USED) BY INVESTING ACTIVITIES (1,903) (10,729)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuing common stock 31,250 -
Proceeds from Line of Credit 45,013 -
Payments to Officers' Loans (83) (137)
------------ ------------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES 76,180 (137)
------------ ------------
NET INCREASE (DECREASE) IN CASH 32,091 (1,894)
BEGINNING OF YEAR 4,361 6,255
------------ ------------
END OF YEAR $ 36,452 $ 4,361
============ ============
SUPPLEMENTAL DISCLOSURES:
Cash Paid During the Year for:
Interest $ 0 $ 0
============ ============
Income Tax $ 1,600 $ 1,600
============ ============
See accompanying notes and independent auditor's report
F9
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED)
Years ended December 31, 1998 and 1997
NOTE 1 - GENERAL
Eye Dynamics, Inc. ("the Company") was formed under the laws of Nevada on August
7, 1989 under the name Petro Plex, Inc. and adopted later as Drug Detection
Systems, Inc. The Company changed its name to Eye Dynamics, Inc. and became a
California foreign corporation on November 2, 1992.
Eye Dynamics, Inc. is a medical technology and information services company
engaged in research, development and marketing of non-invasive medical data
analysis, software, and medical information services of disease risk assessment
and patient management.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company uses the accrual basis of accounting in accordance with generally
accepted accounting principles.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Oculokinetics, Inc. (a California
corporation), after elimination of all material intercompany accounts and
transactions.
Use of estimates
The preparation of the accompanying consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make certain estimates and assumptions that directly affect the results of
reported assets, liabilities, revenue, and expenses. Actual results may differ
from these estimates.
Cash Equivalents
The Company considers all highly liquid debt instruments with an original
maturity of three months or less to be cash equivalents. As of December 31, 1998
and 1997, there were no cash equivalents.
The Company prepares its consolidated statements of cash flows using the
indirect method as defined under Financial Accounting Standards Board Statement
No. 95.
F10
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED)
Years ended December 31, 1998 and 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable
The Company has not established an allowance for doubtful accounts and does not
use reserve method for recognizing bad debts. Bad debts are treated as direct
write-offs in the period management determines that collection is not probable.
Bad debt expense totalled $3,568 and $1,450 for years ended December 31, 1998
and 1997, respectively.
Inventories
Costs incurred for materials, technology and shipping are capitalized as
inventories and charged to cost of sales when revenue is recognized.
Inventories consist of finished goods and are stated at the lower of cost or
market, using the first-in, first-out method.
Property and Equipment
Property and Equipment are valued at cost. Maintenance and repair costs are
charged to expenses as incurred. Depreciation is computed on the straight-line
method based on the estimated useful lives of the assets. Depreciation expense
was $2,336 and $1,247 for 1998 and 1997, respectively.
Research and Development
Research and development costs are expensed as incurred.
Income Taxes
The Company accounts income taxes in accordance with Financial Accounting
standards Board Statement No. 109.
Reclassification
Certain reclassification have been made to the 1997 consolidated financial
statements to conform with the 1998 consolidated financial statement
presentation. Such reclassification had no effect on net loss as previously
reported.
F11
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED)
Years ended December 31, 1998 and 1997
NOTE 3 - INVENTORIES
As of December 31, 1998 and 1997, inventories consisted of the following:
1998 1997
------------ -----------
Finished Goods $ 60,263 $ 30,434
Consigned for TESA (See Note 5) 51,250 61,500
------------ -----------
Total $ 111,513 $ 91,934
============ ===========
NOTE 4 - LINE OF CREDIT
In 1998, the Company established a $65,000 operating line of credit with Wells
Fargo Bank at the bank's prime rate plus 2.75%. This line of credit is payable
on demand and is secured by all assets of the Company. As of December 31, 1998,
the balance due was $45,013.
NOTE 5 - NOTES PAYABLE
1998 1997
------------ -----------
a.)Notes to Officers, interest at 10%,
accrued semi-monthly; due 60 days
after dates of notes; unsecured $ 23,470 $ 23,553
b.)Notes to Others, interest at 12%,
due on demand, unsecured 10,000 10,000
c.)Note to TESA Corporation, interest
at 7% payable on maturity date,
December 31, 1999; maturing 11% of
gross revenues, collateralized by
accounts receivable, inventories,
patents and a licensing agreement 396,721 396,721
------------ -----------
Total 430,191 430,274
Less current maturities 430,191 80,274
------------ -----------
Long-term debt, net $ 0 $ 350,000
============ ===========
F12
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED)
Years ended December 31, 1998 and 1997
NOTE 6 - SETTLEMENT AGREEMENT AND MUTUAL RELEASE
On December 29, 1993, the Company entered into a settlement agreement and mutual
release with TESA Corporation, a former distributor. The agreement provided a
payment of $400,000 with simple interest at 7% per annum, payable on or before
December 31, 1999. The note principal is payable in monthly installments of 11%
of gross revenue on the sales(See Note 5). As of December 31, 1998 and 1997,
interest of $139,991 and $111,995 was accrued and no principal payments were
made, respectively.
The agreement also provides a payment of $10,250 for each of the first nine
product units sold after the agreement as compensations for repurchased units.
The balance of these consigned inventory was $51,250 in 1998 and $61,500 in
1997.
NOTE 7 - INCOME TAXES
The Company files separate federal and state income tax returns with its
subsidiary.
Provision for income taxes in the consolidated statements of operations for
years ended December 31, 1998 and 1997 consist of $1,600 minimum state income
taxes in each year, $800 for each corporation.
The Company has net operating loss carryforwards of $461,761 to reduce future
taxable income. The subsidiary has NOL carryforwards of $1,479,644. To the
extent not utilized, both carryforwards will begin to expire through 2012.
NOTE 8 - STOCKS OPTIONS
In December, 1996, the Company granted 300,000 shares of stock purchase options
to principals of Impairment Detection Services, Ltd., as compensation for
rescission of Distributor and Preferred Manufacturer Agreements dated on March
8, 1996. The options are exercisable at $0.20 per share and expire on December
20, 1999.
In addition, the Company had 3,250,000 outstanding stock options at various
exercise prices and expiration dates. A summary of options outstanding as of
December 31, 1998 is shown as follows:
F13
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED)
Years ended December 31, 1998 and 1997
NOTE 8 - STOCKS OPTIONS (Continued)
Exercise No. of shares Expiration
PRICE OUTSTANDING DATE
-------- ------------- ----------
$.20 300,000 12/1999
$.10 400,000 1/2000
$.125 750,000 11/2001
$.25 1,000,000 11/2001
$.375 1,000,000 11/2001
$.001 100,000 11/2001
---------
3,550,000
=========
NOTE 9 - RELATED PARTY TRANSACTIONS
In 1998, the Company issued 721,433 shares of stock at par value for officers'
salaries and consulting fees.
In 1997, the Company converted $105,500 salaries into equity, by issuing 703,334
shares of stocks at $0.15 per share, for full consideration of such debt. In
addition, 127,000 shares of stock were issued at par value, totalled of $127,
for professional fees.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Distribution Agreement
In 1992, the Company entered into a three year distribution agreement with
JEDMED Instrument Company. The three year time period commenced ninety days
after FDA approval to market the House InfraRed/Video ENG System ("Product") was
received. Under the agreement, JEDMED has exclusive rights to market the Product
worldwide.
In July 1998, the Company invoked its privilege and terminated the agreement
with JEDMED. Subsequent to July, 1998, the Company has been selling the products
directly to end users and through Special Instrument Dealers throughout the
United States.
Employment Agreements
The Company has employment agreements with two officers that provide for
aggregate annual compensation of $160,000 in 1998. The agreements are
automatically renewed year to year. The agreements may be terminated by the
Company or the officers with notice 60 days prior to any expiration date.
F14
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED)
Years ended December 31, 1998 and 1997
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Continued)
Lease Commitments
The Company leases its office facilities for $710 per month. The lease expires
April 1999. Rent expense totaled $10,416 and $7,278 for 1998 and 1997,
respectively.
The Company leases various office equipments at $141 per month which commence to
expire in 1999.
As of December 31, 1998, the minimum commitments under these leases
are $2,950.
NOTE 11 - PRIOR YEARS ADJUSTMENT
The Company had a credit of its legal fees of $8,160 in 1997. This adjustment
resulted in an increase of previously reported Retained Earnings for year ended
December 31, 1996. This error has no effect on years of 1998 nor 1997.
NOTE 12 - GOING CONCERN
The accompanying consolidated financial statements are presented on the basis
that the Companies are going concerns. Going concern contemplates the
realization of assets and the satisfication of liabilities in the normal course
of business over a reasonable length of time. As shown in the accompanying
consolidated financial statements, As of December 31, 1998, the Company has
accumulated deficit of $2,934,135, a stockholders' deficit of $592,808 and its
current liabilities exceed current assets by $607,998.
Management is currently involved in active negotiations to obtain additional
financing and actively increasing marketing efforts to increase revenues. The
Company continued existence depends on its ability to meet its financing
requirements and the success of its future operations. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
NOTE 13 - YEAR 2000
The Company believes that it has identified each of its computer systems that
will require modifications to enable it to perform satisfactorily on and after
January 1, 2000. The financial impact of making such modifications to the
Company's systems is not expected to be material to the Company's financial
position or results of operations. In addition, the Company is currently
corresponding with vendors that provide products and systems to the Company in
order to determine if such products and systems will be required to be upgraded
or replaced. Although management believes the Company has an adequate program in
place to address the year 2000 issue, the costs of upgrades to, or replacements
of, its purchased products or systems has not been determined and there can be
no assurance that the program will ultimately be successful.
F15
<PAGE>
EYE DYNAMICS, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
INDEX TO FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS............................................F16 - F17
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT................F18
COST OF SALES................................................................F19
OPERATING EXPENSES...........................................................F20
CONSOLIDATED STATEMENTS OF CASH FLOWS........................................F21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.............................F22 - F26
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
September 30,
1999 1998
----------- -----------
Current Assets
Cash $ 51,949 $ 5,595
Account Receivables 98,790 39,987
Inventories 105,701 110,933
----------- -----------
Total Current Assets 256,440 156,515
----------- -----------
Property and Equipment
Furniture and Fixtures 1,432 1,432
Equipment - Telemed 12,632 12,632
----------- -----------
14,064 14,064
Less: Accumulated Depreciation (6,910) (4,431)
----------- -----------
Total Property and Equipment 7,154 9,633
----------- -----------
Other Assets
Organizational Costs, net of accumulated
amortization of $4,858 0 0
Deposits 11,072 4,700
----------- -----------
Total Other Assets 11,072 4,700
----------- -----------
TOTAL ASSETS $ 274,666 $ 170,848
=========== ===========
F16
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
September 30,
1999 1998
----------- -----------
Current Liabilities
Accounts Payable $ 64,145 $ 76,146
Accrued Expenses 250,688 281,745
Consigned Inventory 61,500 61,500
Deposit from Shareholders 7,758 -
Line of Credit 12 -
Notes Payable, current Portion 430,191 85,274
----------- -----------
Total Current Liabilities 814,294 504,665
----------- -----------
Long-Term Liabilities
Long-term debt 0 350,000
----------- -----------
Total Liabilities 814,294 854,665
----------- -----------
Stockholders' Equity (Deficit)
Common Stock, $.001 par value, 50,000,000
shares authorized; 9,139,460 shares
issued and outstanding in 1999, and
7,455,194, in 1998 9,139 7,455
Paid-in Capital 2,459,063 2,302,027
Accumulated Deficit (3,007,830) (2,993,299)
----------- -----------
Total Stockholders' Equity (Deficit) (539,628) (683,817)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 274,666 $ 170,848
=========== ===========
F17
<PAGE>
<TABLE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
<CAPTION>
Three Months ended Nine Months ended
September 30, September 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
SALES $ 260,723 $ 166,034 $ 601,928 $ 370,777
COST OF SALES - SCHEDULE A 114,196 95,233 279,491 203,784
------------ ------------ ------------ ------------
GROSS PROFIT 146,527 70,801 322,437 166,993
OPERATING EXPENSES - SCHEDULE B 89,016 65,067 280,579 156,510
------------ ------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS 57,511 5,734 41,858 10,483
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSES)
Cash Discounts (977) (1,534) (1,853) (7,171)
Depreciation (631) (584) (1,895) (1,752)
Late Charges and Penalties - - (94) (132)
Officer's Salaries (27,000) (22,500) (81,000) (67,500)
Interest Expenses (9,327) (9,021) (29,111) (26,993)
------------ ------------ ------------ ------------
Total Other Income (Expenses) (37,935) (33,639) (113,953) (103,548)
------------ ------------ ------------ ------------
NET INCOME (LOSS) BEFORE TAXES 19,576 (27,905) (72,095) (93,065)
PROVISION FOR INCOME TAXES - - 1,600 1,600
------------ ------------ ------------ ------------
NET INCOME (LOSS) 19,576 (27,905) (73,695) (94,665)
ACCUMULATED DEFICIT
Beginning Balance (3,027,406) (2,965,394) (2,934,135) (2,898,634)
------------ ------------ ------------ ------------
Ending Balance $(3,007,830) $(2,993,299) $(3,007,830) $(2,993,299)
============ ============ ============ ============
Earnings (Loss) per share $ 0.0021 $ (0.0038) $ (0.0083) $ (0.0128)
============ ============ ============ ============
Weighted Average Shares
Outstanding 9,128,585 7,366,994 8,890,877 7,366,994
============ ============ ============ ============
</TABLE>
F18
<PAGE>
<TABLE>
EYE DYNAMICS, INC. & SUBSIDIARY
COST OF SALES
(Unaudited)
SCHEDULE A
Three Months ended Nine Months ended
September 30, September 30,
COST OF SALES 1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Beginning Inventory $ 115,169 $ 87,226 $ 111,513 $ 91,934
Purchases 64,043 105,294 192,459 197,408
Labors & Commissions 40,135 13,332 79,955 22,839
Other Overhead Costs 550 314 1,265 2,536
------------ ------------ ------------ ------------
219,897 206,166 385,192 314,717
Less: Ending Inventory 105,701 110,933 105,701 110,933
------------ ------------ ------------ ------------
Total Cost of Sales $ 114,196 $ 95,233 $ 279,491 $ 203,784
============ ============ ============ ============
</TABLE>
F19
<PAGE>
<TABLE>
EYE DYNAMICS, INC. & SUBSIDIARY
OPERATING EXPENSES
(Unaudited)
<CAPTION>
SCHEDULE B
Three Months ended Nine Months ended
September 30, September 30,
OPERATING EXPENSES 1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Accounting $ 6,000 $ - $ 11,200 $ 6,300
Advertising - - 1,004 -
Automobile 1,050 1,050 4,477 3,150
Bad Debts - - - 375
Bank Charge 670 336 837 336
Billing Service - 144 - 820
Consulting 3,542 3,340 57,875 6,340
Dues and Subscriptions 65 98 246 224
Education - - 1,000 -
Employee Benefits 775 - 775 -
Freight 5,181 2,306 14,649 7,122
Insurance 2,950 1,163 10,559 3,487
Legal and Professional 2,751 3,404 12,365 10,167
Licenses & Regulatory Fees 3,484 1,416 4,026 1,723
Meals and Entertainment 50 - 1,710 44
Office Supplies 333 1,621 2,077 8,850
Other Expense - 21 - 21
Payroll Taxes 3,521 2,715 10,936 7,642
Postage and Stationeries 3,168 523 7,567 2,679
Printing and Collateral 3,759 1,144 11,129 2,212
Rent and Lease 3,026 3,210 8,899 8,438
Repairs 55 - 55 -
Sales Promotion & P.R. 930 - 8,080 -
Salaries, Wages and Commissions 15,091 28,230 43,102 62,338
Shows and Exhibits 797 4,257 4,852 4,950
Supplies 1,503 2,682 2,527 5,124
Taxes - Other - - 21 168
Telephone 2,295 2,065 6,859 4,931
Temporary Labor 200 - 200 -
Travel 27,573 5,002 52,940 8,442
Utilities 247 340 612 627
------------ ------------ ------------ ------------
Total Operating Expenses $ 89,016 $ 65,067 $ 280,579 $ 156,510
============ ============ ============ ============
</TABLE>
F20
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30, 1999 and 1998
1999 1998
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (73,695) $ (94,665)
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation 1,895 1,752
Issuance stock for consulting fee 33,125 126
(Increase) Decrease in:
Accounts Receivable 30,080 (7,279)
Inventories 5,812 (18,999)
Deposits (4,931) (4,041)
Increase (Decrease) in:
Accounts Payable (28,383) 13,127
Accrued Expenses (4,913) 108,116
---------- ----------
NET CASH (USED) BY OPERATING ACTIVITIES (41,010) (1,863)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment - (1,903)
---------- ----------
NET CASH (USED) BY INVESTING ACTIVITIES - (1,903)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Officers - 5,000
Proceeds from issuing common stock 93,750 -
Deposits from Stockholders 7,758 -
Payments to Line of Credit (45,001) -
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 56,507 5,000
---------- ----------
NET INCREASE (DECREASE) IN CASH 15,497 1,234
BEGINNING OF PERIOD 36,452 4,361
---------- ----------
END OF PERIOD $ 51,949 $ 5,595
========== ==========
SUPPLEMENTAL DISCLOSURES:
Cash Paid During the Period for:
Interest $ 1,560 $ 0
========== ==========
Income Tax $ 1,600 $ 0
========== ==========
Noncash investing and financing activities:
Issued common stock for consulting fee $ 33,125 $ 126
========== ==========
F21
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Presentation of Interim Information
In the Opinion of the management of Eye Dynamics, Inc. & Subsidiary (the
Company), the accompanying unaudited consolidated financial statements include
all normal adjustments considered necessary to present fairly the financial
positions as of September 30, 1999 and 1998, and the results of operations for
the three months and nine months ended September 30, 1999 and 1998, and cash
flows for the nine months ended September 30, 1999 and 1998. Interim results are
not necessarily indicative of results for a full year.
The consolidated financial statements and notes are presented as permitted by
Form 10-Q, and do not contain certain information included in the Company's
audited consolidated financial statements and notes for the fiscal year ended
December 31, 1998.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Oculokinetics, Inc. (a California
corporation), after elimination of all material intercompany accounts and
transactions.
Use of estimates
The preparation of the accompanying consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make certain estimates and assumptions that directly affect the results of
reported assets, liabilities, revenue, and expenses. Actual results may differ
from these estimates.
Cash Equivalents
The Company considers all highly liquid debt instruments with an original
maturity of three months or less to be cash equivalents. As of September 30,
1999 and 1998, there were no cash equivalents.
The Company prepares its consolidated statements of cash flows using the
indirect method as defined under Financial Accounting Standards Board Statement
No. 95.
F22
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable
The Company has not established an allowance for doubtful accounts and does not
use reserve method for recognizing bad debts. Bad debts are treated as direct
write-offs in the period management determines that collection is not probable.
Bad debt expense totalled $0 and $375 for nine months ended September 30, 1999
and 1998, respectively.
Inventories
Costs incurred for materials, technology and shipping are capitalized as
inventories and charged to cost of sales when revenue is recognized.
Inventories consist of finished goods and are stated at the lower of cost or
market, using the first-in, first-out method.
Property and Equipment
Property and Equipment are valued at cost. Maintenance and repair costs are
charged to expenses as incurred. Depreciation is computed on the straight-line
method based on the estimated useful lives of the assets. Depreciation expense
was $1,895 and $1,752 for 1999 and 1998, respectively.
Research and Development
Research and development costs are expensed as incurred.
Income Taxes
The Company accounts income taxes in accordance with Financial Accounting
standards Board Statement No. 109.
NOTE 2 - INVENTORIES
Inventories consisted of the following:
September 30,
1999 1998
----------- -----------
Finished Goods $ 53,451 $ 49,433
Consigned for TESA 51,250 61,500
----------- -----------
Total $ 105,701 $ 110,933
=========== ===========
F23
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - LINE OF CREDIT
In October, 1998, the Company established a $65,000 operating line of credit
with Wells Fargo Bank at the bank's prime rate plus 2.75%. This line of credit
is payable on demand and is personally guaranteed by the Company's president. As
of September 30, 1999, the balance due was $12. There was no line of credit
established as of September 30, 1998.
NOTE 4 - NOTES PAYABLE
September 30,
1999 1998
---------- ----------
a.)Notes to Officers, interest at 10%,
accrued semi-monthly; due 60 days
after dates of notes; unsecured $ 23,470 $ 28,553
b.)Notes to Others, interest at 12%,
due on demand, unsecured 10,000 10,000
c.)Note to TESA Corporation, interest
at 7% payable on maturity date,
December 29, 1999; maturing 11% of
gross revenues, collateralized by
accounts receivable, inventories,
patents and a licensing agreement 396,721 396,721
---------- ----------
Total 430,191 435,274
Less current maturities 430,191 85,274
---------- ----------
Long-term debt, net $ 0 $ 350,000
========== ==========
NOTE 5 - INCOME TAXES
The Company files separate federal and state income tax returns with its
subsidiary.
Provision for income taxes in the consolidated statements of operations for nine
months ended September 30, 1999 and 1998 consist of $1,600 minimum state income
taxes in each year, $800 for each corporation.
The Company has net operating loss carryforwards of $461,761 to reduce future
taxable income. The subsidiary has NOL carryforwards of $1,479,644. To the
extent not utilized, both carryforwards will begin to expire through 2012.
F24
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - COMMON STOCK TRANSACTIONS
In 1999, the Company issued 88,833 shares of its common stock to a consultant,
in the amount of $33,125, for his service rendered.
NOTE 7 - STOCKS OPTIONS
In December, 1996, the Company granted 300,000 shares of stock purchase options
to principals of Impairment Detection Services, Ltd., as compensation for
rescission of Distributor and Preferred Manufacturer Agreements dated on March
8, 1996. The options are exercisable at $0.20 per share and expire on December
20, 1999.
In addition, the Company had 3,250,000 stock options at various exercise prices
and expiration dates. In 1999, there were 750,000 stock options exercised.
In 1999, the Company granted 60,000 non-qualified stock options to directors at
fifty-four cents ($.54) through September 2001.
A summary of options outstanding as of September 30, 1999 is shown as follows:
Exercise No. of shares Expiration
Price Outstanding Date
-------- ------------- ----------
$.20 300,000 12/1999
$.10 400,000 1/2000
$.54 60,000 9/2001
$.25 1,000,000 11/2001
$.375 1,000,000 11/2001
$.001 100,000 11/2001
----------
2,860,000
==========
NOTE 8 - EARNINGS (LOSS) PER SHARE
Earnings per share is based on the weighted average number of shares of common
stock and common stock outstanding during the period. Earnings per share is
computed using the treasury stock method. Had the Stock Options (See Note 6)
been issued as of September 30, 1999, the Company's earnings (loss) per share
would have been $0.0016 and ($.0063) for three and nine months ended September
30, 1999, respectively.
F25
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - LEASE COMMITMENTS
The Company leases its office facilities for $768 per month. The lease expires
April 2001. Rent expense totaled $6,912 and $7,599 for 1999 and 1998,
respectively.
The Company leases various office equipments at $185 per month which commence to
expire in 1999.
As of September 30, 1999, the minimum commitments under these leases are as
follows:
December 31, Amounts
------------ --------
1999 $ 2,304
2000 9,216
2001 3,072
---------
Total $ 14,592
=========
NOTE 10 - GOING CONCERN
The accompanying consolidated financial statements are presented on the basis
that the Companies are going concerns. Going concern contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business over a reasonable length of time. As shown in the accompanying
consolidated financial statements, the Company incurred net losses of $73,695
for nine months ended September 30, 1999, and as of that date, the Company had
accumulated deficit of $3,007,830, a working capital deficiency of $557,854 and
a deficit in net worth of $539,628.
Management is currently involved in active negotiations to obtain additional
financing and actively increasing marketing efforts to increase revenues. The
Company continued existence depends on its ability to meet its financing
requirements and the success of its future operations. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
NOTE 11 - YEAR 2000
The Year 2000 issue is the result of shortcomings in many electronic data
processing systems and other electronic equipment that may adversely affect the
Company's operations as early as fiscal year 1999.
The Company had assessed its various types of electronic equipment and does not
believe the Year 2000 issue will pose significant operational problems.
F26
<PAGE>
PART III
- --------
ITEM 1 INDEX TO EXHIBITS
- ------ -----------------
See Description of Exhibits below
ITEM 2 DESCRIPTION OF EXHIBITS
- ------ -----------------------
The following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION
----------- -----------
3(i) Articles of Incorporation, as amended
3(ii) Bylaws
4 Specimen Stock Certificate
Material Contracts:
10.1 Employment Agreement, dated April 1, 1989
with Charles E. Phillips
10.2 Employment Agreement, dated December 1, 1989
with Barbara J. Mauch
10.3 Exclusive Licensing Agreement, dated November
1, 1989 with Ronald A. Waldorf
27 Financial Data Schedule
EXHIBIT-3(i)
- ------------
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG 07 1989
FRANKIE SUE DEL PAPA SECRETARY OF STATE
/s/ Frankie Sue Del Papa
No. 6845-89
-------
ARTICLES OF INCORPORATION
of
PETRO PLEX, INC.
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated
ourselves together for the purpose of forming a corporation under and pursuant
to the laws of the State of Nevada, and we do hereby certify that:
Article I - NAME
The exact name of this corporation is:
PETRO PLEX, INC.
Article II - PRINCIPAL OFFICE AND REGISTERED AGENT
The principal office and place of business in the State of Nevada of
this corporation shall be located at 345 Jorge Way, Henderson, Nevada. The
resident agent of the corporation is CLARK, GREENE & ASSOCIATES, LTD., whose
address is 5606 So. Eastern Avenue, Las Vegas, Nevada.
Article III - DURATION
The Corporation shall have perpetual existence.
<PAGE>
Article IV - PURPOSES
The purpose, object and nature of the business for which this
corporation is organized are:
(a) To engage in any lawful activity, (b) To carry on such
business as may be necessary, convenient, or desirable to accomplish
the above purposes, and to do all other things incidental thereto
which are not forbidden by law or by these Articles of Incorporation.
Article V - POWERS
The powers of the Corporation shall be those powers granted by 78.060
and 78.070 of the Nevada Revised Statutes under which this corporation is
formed. In addition, the corporation shall have the following specific powers:
(a) To elect or appoint officers and agents of the corporation
and to fix their compensation; (b) To act as an agent for any
individual, association, partnership, corporation or other legal
entity; (c) To receive, acquire, hold, exercise rights arising out of
the ownership or possession thereof, sell, or otherwise dispose of,
shares or other interests in, or obligations of, individuals,
association, partnerships, corporations, or governments; (d) To
receive, acquire, hold, pledge, transfer, or otherwise dispose of
shares of the corporation, but such shares may only be purchased,
directly or indirectly, out of earned surplus;
2
<PAGE>
(e) To make gifts or contributions for the public welfare or for
charitable, scientific or educational purposes.
Article VI - CAPITAL STOCK
Section 1. AUTHORIZED SHARES. The total number of shares which
this corporation is authorized to issue is 50,000,000 shares of Common
Stock of $.00l par value.
Section 2. VOTING RIGHTS OF STOCKHOLDERS. Each holder of the
Common Stock shall be entitled to one vote for each share of stock
standing in his name on the books of the corporation.
Section 3. CONSIDERATION FOR SHARES. The Common Stock shall be
issued for such consideration, as shall be fixed from time to time by
the Board of Directors. In the absence of fraud, the judgment of the
Directors as to the value of any property or services received in full
or partial payment for shares shall be conclusive. When shares are
issued upon payment of the consideration fixed by the Board of
Directors, such shares shall be taken to be fully paid stock and shall
be non-assessable. The Articles shall not be amended in this
particular.
Section 4. STOCK RIGHTS AND OPTIONS. The corporation shall
have the power to create and issue rights, warrants, or options
entitling the holders thereof to purchase from the corporation any
shares of its capital stock of any class or classes, upon such terms
and conditions and at such times
3
<PAGE>
and prices as the Board of Directors may provide, which terms and
conditions shall be incorporated in an instrument or instruments
evidencing such rights. In the absence of fraud, the judgment of the
Directors as to the adequacy of consideration for the issuance of such
rights or options and the sufficiency thereof shall be conclusive.
Article VII - MANAGEMENT
For the management of the business, and for the conduct of the affairs
of the corporation, and for the future definition, limitation, and regulation of
the powers of the corporation and its directors and stockholders, it is further
provided:
Section 1. SIZE OF BOARD. The initial number of the Board of
Directors shall be three (3). Thereafter, the number of directors
shall be as specified in the Bylaws of the corporation, and such
number may from time to time be increased or decreased in such manner
as prescribed by the Bylaws. Directors need not be stockholders.
Section 2. POWERS OF BOARD. In furtherance and not in
limitation of the powers conferred by the laws of the State of Nevada,
the Board of Directors is expressly authorized and empowered:
(a) To make, alter, amend, and repeal the Bylaws subject to
the power of the stockholders to alter or repeal the Bylaws made by
the Board of Directors;
(b) Subject to the applicable provisions of the Bylaws
4
<PAGE>
then in effect, to determine, from time to time, whether and to what
extent, and at what times and places, and under what conditions and
regulations, the accounts and books of the corporation, or any of
them, shall be open to stockholder inspection. No stockholder shall
have any right to inspect any of the accounts, books or documents of
the corporation, except as permitted by law, unless and until
authorized to do so by resolution of the Board of Directors or of the
stockholders of the Corporation;
(c) To authorize and issue, without stockholder consent,
obligations of the Corporation, secured and unsecured, under such
terms and conditions as the Board, in its sole discretion, may
determine, and to pledge or mortgage, as security therefore, any real
or personal property of the corporation, including after-acquired
property;
(d) To determine whether any and, if so, what part of the
earned surplus of the corporation shall be paid in dividends to the
stockholders, and to direct and determine other use and disposition of
any such earned surplus;
(e) To fix, from time to time, the amount of the profits of
the corporation to be reserved as working capital or for any other
lawful purpose;
(f) To establish bonus, profit-sharing, stock option, or
other types of incentive compensation plans for the employees,
including officers and directors, of the
5
<PAGE>
corporation, and to fix the amount of profits to be shared or
distributed, and to determine the persons to participate in any such
plans and the amount of their respective participations.
(g) To designate, by resolution or resolutions passed by a
majority of the whole Board, one or more committees, each consisting
of two or more directors, which, to the extent permitted by law and
authorized by the resolution or the Bylaws, shall have and may
exercise the powers of the Board;
(h) To provide for the reasonable compensation of its own
members by Bylaw, and to fix the terms and conditions upon which such
compensation will be paid;
(i) In addition to the powers and authority hereinbefore, or
by statute, expressly conferred upon it, the Board of Directors may
exercise all such powers and do all such acts and things as may be
exercised or done by the corporation, subject, nevertheless, to the
provisions of the laws of the State of Nevada, of these Articles of
Incorporation, and of the Bylaws of the corporation.
Section 3. INTERESTED DIRECTORS. No contract or transaction
between this corporation and any of its directors, or between this
corporation and any other corporation, firm, association, or other
legal entity shall be invalidated by reason of the fact that the
director of the corporation has a direct or indirect interest,
pecuniary
6
<PAGE>
or otherwise, in such corporation, firm, association, or legal entity,
or because the interested director was present at the meeting of the
Board of Directors which acted upon or in reference to such contract
or transaction, or because he participated in such action, provided
that: (1) the interest of each such director shall have been disclosed
to or known by the Board and a disinterested majority of the Board
shall have, nonetheless, ratified and approved such contract or
transaction (such interested director or directors may be counted in
determining whether a quorum is present for the meeting at which such
ratification or approval is given); or (2) the conditions of N.R.S.
78.140 are met.
Section 4. NAMES AND RESIDENT ADDRESSES. The names and post
office addresses of the first Board of Directors which shall consist
of three (3) persons, and who shall hold office until their successors
are duly elected and qualified, are as follows:
NAME RESIDENT ADDRESS
Robert W. Gallman 1646 Gold Dust Drive
Sparks, Nevada 89436
Dennis Evans 6357 Vicuna
Las Vegas, Nevada 89102
Stanley K. Stilwell 345 Jorge Way
Henderson, Nevada 89104
Section 5. STOCKHOLDERS. There shall be as many directors as
stockholders unless there are more than three (3) stockholders. If
7
<PAGE>
there are more than three (3) stockholders, then the number of
directors shall be as provided in the Bylaws.
Article VIII - PLACE OF MEETING; CORPORATE BOOKS
Subject to the laws of the State of Nevada, the stockholders and the
directors shall have power to hold their meetings, and the directors shall have
power to have an office or offices and to maintain the books of the Corporation
outside the State of Nevada, at such place or places as may from time to time be
designated in the Bylaws or by appropriate resolution.
Article IX - AMENDMENT OF ARTICLES
The provisions of these Articles of Incorporation may be amended,
altered or repealed from time to time to the extent and in the manner prescribed
by the laws of the State of Nevada, and additional provisions authorized by such
laws as are then in force may be added. All rights herein conferred on the
directors, officers and stockholders are granted subject to this reservation.
Article X - INCORPORATOR
The name and address of the incorporator signing these Articles of
Incorporation is as follows:
NAME POST OFFICE ADDRESS
Steven K.K. Lum 5606 S. Eastern Avenue
Las Vegas, Nevada 89119
8
<PAGE>
Article XI - LIMITED LIABILITY OF OFFICERS AND DIRECTORS
Except as hereinafter provided, the officers and directors of the
corporation shall not be personally liable to the corporation or its
stockholders for damages for breach of fiduciary duty as a director or officer.
This limitation on personal liability shall not apply to acts or omissions which
involve intentional misconduct, fraud, knowing violation of law, or unlawful
payments of dividends prohibited by Nevada Revised Statutes Section 78.300.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 4th day of August, 1989.
/s/ Steven K. K. Lum
----------------------------------
STEVEN K.K. LUM
STATE OF NEVADA )
) ss:
COUNTY OF CLARK )
On August 4, 1989, personally appeared before me, a Notary Public,
Steven K.K. Lum, who acknowledged to me that he executed the foregoing Articles
of Incorporation for PETRO PLEX, INC.
[NOTARY STAMP HERE] /s/ Patricia L. Groom
----------------------------------
NOTARY PUBLIC
9
<PAGE>
FILING FEE: $75.00 TS/IES C72245
CLARK, GREENE & ASSOC.
5606 S. EASTERN AVENUE LAS VEGAS, NV
FILED 89119
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA ATTN: DEBBIE AMIGONE
DEC 31 1990
Petro Plex, Inc.
---------------------------------------
Name of Corporation
We the undersigned Ed Mueller and
---------------------------------------
President or Vice President
Katrina Booth of Petro Plex, Inc.
- --------------------------------------- -------------------------------
Secretary or Assistant Secretary Name of Corporation
do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened and held on the 7 day of November, 1990, adopted a resolution
to amend the original articles as follows: Article I is hereby amended
to read as follows:
Drug Detection Systems, Inc.
The number of shares of the corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation are 2,700,000; that the said
change(s) and amendment has been consented to and approved by a majority vote of
the stockholders holding at least a majority of each class of stock outstanding
and entitled to vote thereon.
/s/ Ed Mueller
--------------------------------
President or Vice President
/s/ Katrina H. Booth
--------------------------------
Secretary or Assistant Secretary
Province British Columbia )
) ss.
County of Vancouver Canada )
On 22 November 1990, personally appeared before me, a Notary Public, Ed Mueller
who acknowledged that he executed the above instrument.
/s/ signature
---------------------------
Signature of Notary
[DEC 31 1990 date stamp]
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
SEP 23 1991
CHERYL A LAU SECRETARY OF STATE
/s/ Cheryl A Lau
NO. 6845-89
-------
CERTIFICATE OF
AMENDMENT TO ARTICLES OF INCORPORATION
AND
CERTIFICATE OF REDUCTION OF CAPITAL
OF
DRUG DETECTION SYSTEMS, INC.
[FILED STAMP]
CHARLES E. PHILLIPS and RONALD A. WALDORF certify:
(a) That on September 19, 1991, by Unanimous Written Consent,
the Board of Directors of said corporation adopted a resolution to
amend the original Articles as follows:
Article VI, Section 1 is hereby amended to read as follows:
Section 1. Authorized Shares.
The total number of shares this corporation is authorized to
issue is 10,000,000 shares of Common Stock of $0.OO1 par value.
Upon the filing of this Certificate of Amendment to the
Articles of Incorporation and Certificate of Reduction of Capital, each
outstanding share of the $0.0Ol par value Common Stock is combined and
converted into 0.1428571 shares of $0.00l par value Common Stock.
(b) That on September 19, 1991, the Board of Directors of said
corporation, by Unanimous Written Consent also adopted the following
resolution:
RESOLVED, that the capital of this Corporation shall be
reduced by $11,201.14, being the par value of the shares being
eliminated in the reverse stock split.
(c) The number of shares of the corporation outstanding and
entitled to vote in an amendment to the Articles of Incorporation and
Reduction in Capital are 13,068,000, that such changes, amendments and
reduction in capital have been consented to and approved by a majority
vote of the stockholders holding at least a majority of each class of
outstanding stock entitled to vote thereon pursuant to Section 78.320,
-1-
<PAGE>
78.390 and 78.415 of the Nevada General Corporation Law and pursuant to
such Section 78.320, notice was given pursuant to Section 78.320(5).
/s/ Charles E. Phillips
----------------------------------
CHARLES E. PHILLIPS
President
/s/ Ronald A. Waldorf
----------------------------------
RONALD A. WALDORF
Secretary
-2-
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JUL 14 1993
CHERYL A LAU SECRETARY OF STATE
/s/ Cheryl A Lau
6845-89
-------
CERTIFICATE OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
DRUG DETECTION SYSTEMS, INC.
THE UNDERSIGNED, being the President and Secretary of DRUG DETECTION
SYSTEMS, INC., hereby certify that by the unanimous consent of the Directors of
the Corporation (by a Resolution in Lieu of a Directors Meeting dated the 21st
day of May, 1993), and by the unanimous consent of the Shareholders of all of
the issued and outstanding shares of the corporation (by a Resolution of a
Shareholders Meeting, dated the 21st day of May, 1993) Article I of the
Corporation's Articles of Incorporation has been deleted and the following
Amendment to the Corporation's Articles of Incorporation has been approved as
the new Article I of said Articles:
The name of the corporation is:
EYE DYNAMICS, INC.
DATED: June 18, 1993.
/s/ Charles Phillips
----------------------------------
CHARLES PHILLIPS, President
/s/ Ron Waldorf
----------------------------------
RON WALDORF, Secretary
<PAGE>
CERTIFICATE OF
AMENDMENT TO ARTICLES OF INCORPORATION
OF
EYE DYNAMICS, INC.
CHARLES E. PHILLIPS, President, certifies:
(a) That on October 22, 1997, the Shareholders adopted a resolution
previously approved by the Board of Directors, to amend the Articles as follows:
Article VI, Section 1 is hereby amended to read as follows:
Section 1. Authorized Shares.
The total number of shares this corporation is authorized to
issue is 50,000,000 shares of Common Stock of $0.001 par value.
(b) The number of shares of the corporation outstanding and entitled
to vote in an amendment to the Articles of Incorporation are 6,570,860, and that
such amendment has been consented to and approved by a majority vote of the
stockholders holding at least a majority of the outstanding stock entitled to
vote thereon pursuant to Section 78.320, 78.390 and 78.415 of the Nevada General
Corporation Law and pursuant to such Section 78.320, notice was given pursuant
to Section 78.320 (5)
/s/ Charles E. Phillips
----------------------------------
CHARLES E. PHILLIPS
President
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Dean Heller STATE OF NEVADA Telephone 702.687.5203
Secretary of State OFFICE OF THE SECRETARY OF STATE Fax 702.687.3471
[FILED STAMP] 101 N. CARSON ST., STE. 3 Web site http://sos.state.nv.us
CARSON CITY, NEVADA 89701-4786 Filing Fee:
</TABLE>
Certificate of Amendment to Articles of Incorporation
-----------------------------------------------------
For Profit Nevada Corporations
------------------------------
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
- Remit in Duplicate -
1. Name of corporation: EYE DYNAMICS, INC. # 6845-89
--------------------------------------------------------
2301 W. 205th St., #106 Torrance, CA 90501
- --------------------------------------------------------------------------------
2. The articles have been amended as follows (provide article numbers,
if available):
Article VI, Section 1 Authorized Shares Amended as follows:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The total number of shares this corporation
- --------------------------------------------------------------------------------
is authorized to issue is 50,000,000 shares
- --------------------------------------------------------------------------------
of Common Stock of $0.001 par value.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a vote
by classes or series, or as may be required by the provisions of the articles of
incorporation have voted in favor of the amendment is: a majority.
-----------
4. Signatures:
/s/ Charles E. Phillips /s/ R. Waldorf
- ---------------------------------- ----------------------------------
President or Vice President Secretary or Asst. Secretary
(acknowledgment required) (acknowledgment not required)
CHARLES E. PHILLIPS RONALD A. WALDORF
State of: CALIFORNIA
------------------------
County of: LOS ANGELES
------------------------
This instrument was acknowledged before me on
November 24, 1998, by
- -----------------
Charles E. Phillips (Name of Person)
- -------------------
as President
-------------------------------
as designated to sign this certificate
of
-------------------------------
(name on behalf of whom instrument was executed)
/s/ Brainard A. Takiguchi
- ---------------------------------- [NOTARY STAMP]
Notary Public Signature
*If any proposed amendment would alter or change any preference or any relative
or other right given to any class or series of outstanding shares, then the
amendment must be approved by the vote, in addition to the affirmative vote
otherwise required, of the holders of shares representing a majority of the
voting power of each class or series affected by the amendment regardless of
limitations or restrictions on the voting power thereof.
IMPORTANT - Failure to include any of the above information and remit the proper
fees may cause this filing to ...
EXHIBIT-3(ii)
- -------------
BYLAWS
OF
PETRO PLEX, INC.
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of the
Corporation shall be located in the City of Las Vegas, County of Clark, Nevada.
SECTION 2. OTHER OFFICES. In addition to the principal office
at 345 Jorge Way, Las Vegas, Nevada, other offices may also be maintained at
such other place or places, either within or without the State of Nevada, as may
be designated from time to time by the Board of Directors, where any and all
business of the Corporation may be transacted, and where meetings of the
stockholders and of the Directors may be held with the same effect as though
done or held at said principal office.
ARTICLE II
MEETING OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. The annual meeting of the
stockholders, commencing with the year 1990, shall be held at the principal
office of the Corporation at 5606 South Eastern Avenue, Las Vegas, Nevada or at
such other place as may be specified or fixed in the notice of such meetings on
<PAGE>
the 15th day of January of each and every year at 10:00 o'clock a.m., for the
election of directors and for the transaction of such other business as may
properly come before said meeting. If the day fixed for the annual meeting shall
be a legal holiday, such meeting shall be held on the next succeeding business
day. If the election of directors shall not be held on the day designated herein
for any annual meeting, or at the adjournment thereof, the Board of Directors
shall cause the election to be held at a meeting of the stockholders as soon
thereafter as may conveniently be had.
SECTION 2. NOTICE OF ANNUAL MEETINGS. The Secretary shall
mail, in the manner provided in Section 5 of Article II OF these Bylaws, or
deliver a written or printed notice of each annual meeting to each stockholder
of record, entitled to vote thereat, or may notify by telegram, as least ten and
not more than sixty (60) days before the date of such meeting.
SECTION 3. PLACE OF MEETINGS. The Board of Directors may
designate any place either within or without the State of Nevada as the place of
meeting for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all stockholders may designate any place
either within or without the State of Nevada, as the place for the holding of
such meeting. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the Corporation in
the State of Nevada, except as otherwise provided in Section 6, Article II of
these Bylaws, entitled "Meeting of All Stockholders".
SECTION 4. SPECIAL MEETINGS. Special meetings of the
stockholders shall be held at the principal office of the Corporation or at such
other place as shall be specified or fixed in a
2
<PAGE>
notice thereof. Such meetings of the stockholders may be called at any time by
the President or Secretary, or by a majority of the Board of Directors then in
office, and shall be called by the President with or without Board approval on
the written request of the holders of record of at least fifty percent (50%) of
the number of shares of the Corporation then outstanding and entitled to vote,
which written request shall state the object of such meeting.
SECTION 5. NOTICE OF MEETING. Written or printed notice
stating the place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten (10) nor more than sixty (60) days before the date
of the meeting, either personally or by mail, by or at the direction of the
President or the Secretary to each stockholder of record entitled to vote at
such meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the stockholder at his address
as it appears on the records of the Corporation, with postage prepaid.
Any stockholder may at any time, by a duly signed statement in
writing to that effect, waive any statutory or other notice of any meeting,
whether such statement be signed before or after such meeting.
SECTION 6. MEETING OF ALL STOCKHOLDERS. If all the
stockholders shall meet at any time and place, either within or without the
State of Nevada, and consent to the holding of the
3
<PAGE>
meeting at such time and place, such meeting shall be valid without call or
notice and at such meeting any corporate action may be taken.
SECTION 7. QUORUM. At all stockholder's meetings, the presence
in person or by proxy of the holders of a majority of the outstanding stock
entitled to vote shall be necessary to constitute a quorum for the transaction
of business, but a lesser number may adjourn to some future time not less than
seven (7) nor more than twenty--one (21) days later, and the Secretary shall
thereupon give at least three (3) days' notice by mail to each stockholder
entitled to vote who is absent from such meeting.
SECTION 8. MODE OF VOTING. At all meetings of the stockholders
the voting may be voice vote, but any qualified voter may demand a stock vote
whereupon such stock vote shall be taken by ballot, each of which shall state
the name of the stockholder voting and the number of shares voted by him and, IF
such ballot be cast by proxy, it shall also state the name of such proxy;
provided, however, that the mode of voting prescribed by statute for any
particular case shall be in such case followed.
SECTION 9. PROXIES. At any meeting of the stockholders, any
stockholder may be represented and vote by a proxy or proxies appointed by an
instrument in writing. In the event any such instrument in writing shall
designate two or more persons to act as proxies, a majority of such persons
present at the meeting, or, if only one shall be present, then that one shall
have and may exercise all of the powers conferred by such written instrument
4
<PAGE>
upon all of the persons so designated unless the instrument shall otherwise
provide. No such proxy shall be valid after the expiration of six months from
the date of its execution, unless coupled with an interest, or unless the person
executing it specified therein the length of time for which it is to continue in
force, which in no case shall exceed seven years from the date of its execution.
Subject to the above, any proxy duly executed is not revoked and continues in
full force and effect until an instrument revoking it or a duly executed proxy
bearing a later date is filed with the secretary of the Corporation. At no time
shall any proxy be valid which shall be filed less than ten (10) hours before
the commencement of the meeting.
SECTION 10. VOTING LISTS. The officer or agent in charge of
the transfer books for shares of the corporation shall make, at least three days
before each meeting of stockholders, a complete list of the stockholders
entitled to vote at such meeting, arranged in alphabetical order with the number
of shares held by each, which list for a period of two days prior to such
meeting shall be kept on file at the registered office of the corporation and
shall be subject to inspection by any stockholder at any time during the whole
time of the meeting. The original share ledger or transfer book, or duplicate
thereof, kept in this state, shall be prima facie evidence as to who are the
stockholders entitled to examine such list or share ledger or transfer book or
to vote at any meeting of stockholders.
5
<PAGE>
SECTION 11. CLOSING TRANSFER BOOKS OR FIXING OF RECORD
DATE. For the purpose of determining stockholders entitled to notice or to vote
for any meeting of stockholders, the Board of Directors of the Corporation may
provide that the stock transfer books be closed for a stated period but not to
exceed in any case sixty (60) days before such determination. If the stock
transfer books be closed for the purpose of determining stockholders entitled to
notice of a meeting of stockholders, such books shall be closed for at least
fifteen days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date in any case to
be not more than sixty (60) days, nor less than ten (10) days prior to the date
on which the particular action, requiring such determination of stockholders, is
to be taken. If the stock transfer books are not closed and no record date is
fixed for determination of stockholders entitled to notice of a meeting of
stockholders, or stockholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determinations of shareholders.
SECTION 12. VOTING OF SHARES BY CERTAIN HOLDERS.
Shares standing in the name of another corporation, domestic or foreign, may be
voted by such officer, agent or proxy as the Bylaws of such corporation may
prescribe, or, in the absence of such provisions, as the Board of Directors of
such corporation may determine.
6
<PAGE>
Shares standing in the name of a deceased person may be voted
by his administrator or executor, either in person or by proxy. Shares standing
in the name of a guardian, conservator or trustee may be voted by such fiduciary
either in person or by proxy, but no guardian, conservator, or trustee shall be
entitled, as such fiduciary, to vote shares held by him without a transfer of
such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court at which such receiver was
appointed.
A stockholder whose shares are pledged shall be entitled to
vote such shares until shares have been transferred into the name of the
pledgee, and thereafter the pledgee shall be entitled to vote the shares so
transferred.
Shares of its own stock belonging to this corporation shall
not be voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any time, but shares of
its own stock held by it in a fiduciary capacity may be voted and shall be
counted in determining the total number of outstanding shares at any given time.
7
<PAGE>
SECTION 13. INFORMAL ACTION BY STOCKHOLDERS. Any action
required to be taken at a meeting of the stockholders or any other action which
may be taken at a meeting of the stockholders except the election of directors
may be taken without a meeting if a consent in writing setting forth the action
so taken shall be signed by all of the stockholders entitled to vote with
respect to the subject matter thereof.
SECTION 14. VOTING OF SHARES. Each outstanding share entitled
to vote shall be entitled to one vote upon each matter submitted to vote at a
meeting of stockholders.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The Board of Directors shall have
the control and general management of the affairs and business of the
Corporation. Such directors shall in all cases act as a Board, regularly
convened, by a majority, and they may adopt such rules and regulations for the
conduct of their meetings and the management of the Corporation, as they may
deem proper, not inconsistent with these Bylaws, the Articles of Incorporation
and the laws of the State of Nevada. The Board of Directors shall further have
the right to delegate certain other powers to the Executive Committee as
provided in these Bylaws.
SECTION 2. NUMBER OF DIRECTORS. The affairs and business of
this Corporation shall be managed by a Board of Directors consisting of three
(3) full-age members, until changed by amendment of the Articles of
8
<PAGE>
Incorporation or by an amendment to these Bylaws adopted by the shareholders
amending this Section 2, Article III, and except as authorized by the Nevada
Revised Statutes, there shall in no event be less than one (1) Director.
SECTION 3. ELECTION. The Directors of the Corporation shall be
elected at the annual meeting of the stockholders, except as hereinafter
otherwise provided for the filling of vacancies. Each director shall hold office
for a term of one year and until his successor shall have been duly chosen and
shall have qualified, or until his death, or until he shall resign or shall have
been removed in the manner hereinafter provided.
SECTION 4. VACANCIES IN THE BOARD. Any vacancy in the Board of
Directors occurring during the year through death, resignation, removal or other
cause, including vacancies caused by an increase in the number of directors,
shall be filled for the unexpired portion they constitute a quorum, at any
special meeting of the Board called for that purpose, or at any regular meeting
thereof; provided, however, that in the event the remaining directors do not
represent a quorum of the number set forth in Section 2 hereof, a majority of
such remaining directors may elect directors to fill any vacancies then
existing.
SECTION 5. DIRECTORS MEETINGS. Annual meeting of the Board of
Directors shall be held each year immediately following the annual meeting of
the stockholders. Other regular meetings of the Board of Directors shall from
9
<PAGE>
time to time by resolution be prescribed. No further notice of such annual or
regular meeting of the Board of Directors need be given.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of the President or any director.
The person or persons authorized to call special meetings of the Board of
Directors may fix any place, either within or without the State of Nevada, as
the place for holding any special meeting of the Board of Directors called by
them.
SECTION 7. NOTICE. Notice of any special meeting shall be
given at least twenty--four hours previous thereto by written notice if
personally delivered, or five days previous thereto if mailed to each director
at his business address, or by telegram. If mailed, such notice shall be deemed
to have been delivered when deposited in the United States mail so addressed,
with postage thereon prepaid. If notice is given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to the telegraph
company. Any director may waive notice of any meeting. The attendance of a
director at any meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened.
SECTION 8. CHAIRMAN. At all meetings of the Board of
Directors, the President shall serve as Chairman, or in the absence of the
President, the directors present shall choose by majority vote a director to
preside as Chairman.
10
<PAGE>
SECTION 9. QUORUM AND MANNER OF ACTING. A majority of the
directors, whose number is designated in Section 2 herein, shall constitute a
quorum for the transaction of business at any meeting and the act of a majority
of the directors present at any meeting at which a quorum is present shall be
the act of the Board of Directors. In the absence of a quorum, the majority of
the directors present may adjourn any meeting from time to time until a quorum
be had. Notice of any adjourned meeting need not be given. The directors shall
act only as a Board and the individual directors shall have no power as such.
SECTION 10. REMOVAL OF DIRECTORS. Any one or more of the
directors may be removed either with or without cause at any time by the vote or
written consent of the stockholders representing not less than two-thirds (2/3)
of the issued and outstanding capital stock entitled to voting power.
SECTION 11. VOTING. At all meetings of the Board of Directors,
each director is to have one vote, irrespective of the number of shares of stock
that he may hold.
SECTION 12. COMPENSATION. By resolution of the Board of
Directors, the directors may be paid their expenses, if any of attendance at
each meeting of the Board, and may be paid a fixed sum for attendance at
meetings or a stated salary of directors. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation there for.
11
<PAGE>
SECTION 13. PRESUMPTION OF ASSENT. A director of the
Corporation who is present at a meeting of the Board of Directors at which
action on any corporate matter is taken, shall be conclusively presumed to have
assented to the action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by certified or registered mail to the Secretary
of the corporation immediately after the adjournment of the meeting. Such right
to dissent shall not apply to a director who voted in favor of such action.
ARTICLE IV
EXECUTIVE COMMITTEE
SECTION 1. NUMBER AND ELECTION. The Board of Directors may, in
its discretion, appoint from its membership an Executive Committee of one or
more directors, each to serve at the pleasure of the Board of Directors.
SECTION 2. AUTHORITY. The Executive Committee is authorized to
take any action which the Board of Directors could take, except that the
Executive Committee shall not have the power either to issue or authorize the
issuance of shares of capital stock, to amend the Bylaws, or to take any action
specifically prohibited by the Bylaws, or a resolution of the Board of
Directors. Any authorized action taken by the Executive Committee shall be as
effective as if it had been taken by the full Board of Directors.
12
<PAGE>
SECTION 3. REGULAR MEETINGS. Regular meetings of the Executive
Committee may be held within or without the State of Nevada at such time and
place as the Executive Committee may provide from time to time.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Executive
Committee may be called by or at the request of the President or any member of
the Executive Committee.
SECTION 5. NOTICE. Notice of any special meeting shall be
given at least one day previous thereto by written notice, telephone, telegram
or in person. Neither the business to be transacted, nor the purpose of a
regular or special meeting of the Executive Committee need be specified in the
notice or waiver of notice of such meeting. A member may waive notice of any
meeting of the Executive Committee. The attendance of a member at any meeting
shall constitute a waiver of notice of such meeting, except where a member
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened.
SECTION 6. QUORUM. A majority of the members of the Executive
Committee shall constitute a quorum for the transaction of business at any
meeting of the Executive Committee; provided that if fewer than a majority of
the members are present at said meeting a majority of the members present may
adjourn the meeting from time to time without further notice.
13
<PAGE>
SECTION 7. MANNER OF ACTING. The act of the majority of the
members present at a meeting at which a quorum is present shall be the act of
the Executive Committee, and said Committee shall keep regular minutes of its
proceedings which shall at all times be open for inspection by the Board of
Directors.
SECTION 8. PRESUMPTION OF ASSENT. A member of the Executive
Committee who is present at a meeting of the Executive Committee at which action
on any corporate matter is taken, shall be conclusively presumed to have
assented to the action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the person acting as secretary of the meeting before the adjournment thereof, or
shall forward such dissent by certified or registered mail to the Secretary of
the Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a member of the Executive Committee who voted in
favor of such action.
ARTICLE V
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be a
President, a Vice President, a Treasurer and a Secretary and such other or
subordinate officers as the Board of Directors may from time to time elect. One
person may hold the off ice and perform the duties of one or more of said
officers. No officer need be a member of the Board of Directors.
14
<PAGE>
SECTION 2. ELECTION, TERM OF OFFICE, QUALIFICATIONS. The
officers of the Corporation shall be chosen by the Board of Directors and they
shall be elected annually at the meeting of the Board of Directors held
immediately after each annual meeting of the stockholders except as hereinafter
otherwise provided for filling vacancies. Each officer shall hold his office
until his successor has been duly chosen and has qualified, or until his death,
or until he resigns or has been removed in the manner hereinafter provided.
SECTION 3. REMOVALS. Any officer or agent elected or appointed
by the Board of Directors may be removed by the Board of Directors at any time
whenever in its judgment the best interests of the Corporation would be served
thereby, and such removal shall be without prejudice to the contract rights, if
any, of the person so removed.
SECTION 4. VACANCIES. All vacancies in any office shall be
filled by the Board of Directors without undue delay, at any regular meeting, or
at a meeting specially called for that purpose.
SECTION 5. PRESIDENT. The President shall be the chief
executive officer of the corporation and shall have general supervision over the
business of the corporation and over its several officers, subject, however, to
the control of the Board of Directors. He may sign, with the Treasurer or with
the Secretary or any other proper officer of the Corporation thereunto
authorized by the Board of Directors, certificates for shares of the capital
15
<PAGE>
stock of the Corporation; may sign and execute in the name of the Corporation
deeds, mortgages, bonds, contracts or other instruments authorized by the Board
of Directors, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these Bylaws to some other
officer or agent of the Corporation; and in general shall perform all duties
incident to the duties of the President, and such other duties as from time to
time may be assigned to him by the Board of Directors.
SECTION 6. VICE PRESIDENT. The Vice President shall in the
absence or incapacity of the President, or as ordered by the Board of Directors,
perform the duties of the President, or such other duties or functions as may be
given to him by the Board of Directors from time to time.
SECTION 7. TREASURER. The Treasurer shall have the care and
custody of all the funds and securities of the Corporation and deposit the same
in the name of the Corporation in such bank or trust company as the Board of
Directors may designate; he may sign or countersign all checks, drafts and
orders for the payment of money and may pay out and dispose of same under the
direction of the Board of Directors, and may sign or countersign all notes or
other obligations of indebtedness of the Corporation; he may sign with the
President or Vice President, certificates for shares of stock of the
Corporation; he shall at all reasonable times exhibit the books and accounts to
any director or stockholder of the Corporation under application at the office
16
<PAGE>
of the company during business hours; and he shall, in general, perform all
duties as from time to time may be assigned to him by the President or by the
Board of Directors. The Board of Directors may at its discretion require that
each officer authorized to disburse the funds of the Corporation be bonded in
such amount as it may deem adequate.
SECTION 8. SECRETARY. The Secretary shall keep the minutes of
the meetings of the Board of Directors and also the minutes of the meetings of
the stockholders; he shall attend to the giving and serving of all notices of
the Corporation and shall affix the seal of the Corporation to all certificates
of stock, when signed and countersigned by the duly authorized officers; he may
sign certificates for shares of stock of the Corporation; he may sign or
countersign all checks, drafts and orders for the payment of money; he shall
have charge of the certificate book and such other books and papers as the Board
may direct; he shall keep a stock book containing the names, alphabetically
arranged, of all persons who are stockholders of the Corporation, showing their
places of residence, the number of shares of stock held by them respectively,
the time when they respectively became the owners thereof, and the amount paid
thereof; and he shall, in general, perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
17
<PAGE>
SECTION 9. OTHER OFFICERS. The Board of Directors may
authorize and empower other persons or other officers appointed by it to perform
the duties and functions of the officers specifically designated above by
special resolution in each case.
SECTION 10. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES.
The Assistant Treasurers shall respectively, as may be required by the Board of
Directors, give bonds for the faithful discharge of their duties, in such sums
and with such sureties as the Board of Directors shall determine. The Assistant
Secretaries as thereunto authorized by the Board of Directors may sign with the
President or Vice President certificates for shares of the capital stock of the
Corporation, the issue of which shall have been authorized by resolution of the
Board of Directors. The Assistant Treasurers and Assistant Secretaries shall, in
general, perform such duties as may be assigned to them by the Treasurer or the
Secretary respectively, or by the President or by the Board of Directors.
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Except as hereinafter stated otherwise, the Corporation shall
indemnify all of its officers and directors, past, present and future, against
any and all expenses incurred by them, and each of them including but not
limited to legal fees, judgments and penalties which may be incurred, rendered
or levied in any legal action brought against any or all of them for or on
account of any act or omission alleged to have been committed while acting
within the scope of their duties as officers or directors of this Corporation.
18
<PAGE>
ARTICLE VII
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of
the Corporation and no evidence of indebtedness shall be issued in its name
unless authorized by the Board of Directors or approved by a loan committee
appointed by the Board of Directors and charged with the duty of supervising
investments. Such authority may be general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other
orders for payment of money, notes or other evidences of indebtedness issued in
the name of the Corporation shall be signed by such officer or officers, agent
or agents of the Corporation and in such manner as shall from time to time be
determined by resolutions of the Board of Directors.
SECTION 4. DEPOSITS. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositories as the Board of
Directors may select.
19
<PAGE>
ARTICLE VIII
CAPITAL STOCK
SECTION 1. CERTIFICATES FOR SHARES. Certificates for shares of
stock of the Corporation shall be in such form as shall be approved by the
incorporators or by the Board of Directors. The certificates shall be numbered
in the order of their issue, shall be signed by the President or the Vice
President and by the Secretary or the Treasurer, or by such other person or
officer as may be designated by the Board of Directors; and the seal of the
Corporation shall be affixed thereto, which said signatures of the said duly
designated officers and of the seal of the Corporation. Every certificate
authenticated by a facsimile of such signatures and seal must be countersigned
by a Transfer Agent to be appointed by the Board of Directors, before issuance.
SECTION 2. TRANSFER OF STOCK. Shares of the stock of the
Corporation may be transferred by the delivery of the certificate accompanied
either by an assignment in writing on the back of the certificate or by written
power of attorney to sell, assign, and transfer the same on the books of the
Corporation, signed by the person appearing by the certificate to the owner of
the shares represented thereby, together with all necessary federal and state
transfer tax stamps affixed and shall be transferable on the books of the
Corporation upon surrender thereof so signed or endorsed. The person registered
on the books of the Corporation as the owner of any shares of stock shall be
entitled to all the rights of ownership with respect to such shares.
20
<PAGE>
SECTION 3. REGULATIONS. The Board of Directors may make such
rules and regulations as it may deem expedient not inconsistent with the Bylaws
or with the Articles of Incorporation, concerning the issue, transfer and
registration of certificates for shares of stock of the Corporation. It may
appoint a transfer agent or a registrar of transfers, or both, and it may
require all certificates to bear the signature of either or both.
SECTION 4. LOST CERTIFICATES. The Board of Directors may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost or destroyed.
21
<PAGE>
ARTICLE IX
DIVIDENDS
SECTION 1. The Corporation shall be entitled to treat the
holder of any share or shares of stock as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as expressly provided by the laws
of Nevada.
SECTION 2. Dividends on the capital stock of the Corporation,
subject to the provisions of the Articles of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law.
SECTION 3. The Board of Directors may close the transfer books
in its discretion for a period not exceeding fifteen days preceding the date
fixed for holding any meeting, annual or special of the stockholders, or the day
appointed for the payment of a dividend.
SECTION 4. Before payment of any dividend or making any
distribution of profits, there may be set aside out of funds of the Corporation
available for dividends, such sum or sums as the directors may from time to
time, in their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for any such other purpose as the directors
shall think conducive to the interest of the Corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
22
<PAGE>
ARTICLE X
SEAL
The Board of Directors shall provide a Corporate seal which
shall be in the form of a Circle and shall bear the full name of the
Corporation, the year of its incorporation and the words "Corporate Seal, State
of Nevada".
ARTICLE XI
FISCAL YEAR
The fiscal year of the Corporation shall end on the 31st day
of December of each year.
ARTICLE XII
WAIVER OF NOTICE
Whenever any notice whatever is required to be given under the
provisions of these Bylaws, or under the laws of the State of Nevada, or under
the provisions of the Articles of Incorporation, a waiver in writing signed by
the person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE XIII
AMENDMENTS
These Bylaws may be altered, amended or repealed and new
Bylaws may be adopted at any regular or special meeting of the Stockholders by a
vote of the stockholders owning a majority of the shares and entitled to vote
23
<PAGE>
thereat. These Bylaws may also be altered, amended or repealed and new Bylaws
may be adopted at any regular or special meeting of the Board of Directors of
the Corporation (if notice of such alteration or repeal be contained in the
notice of such special meeting) by a majority vote of the directors present at
the meeting at which a quorum is present, but any such amendment shall not be
inconsistent with or contrary to the provision of any amendment adopted by the
stockholders.
KNOW ALL MEN BY THESE PRESENTS that the undersigned, being the
Secretary of PETRO PLEX, INC., a Nevada corporation hereby acknowledges that the
above and foregoing Bylaws were duly adopted as the Bylaws of said Corporation
on August 9, 1989.
IN WITNESS WHEREOF, I hereunto subscribed my name this 9th day of
August, 1989.
/S/ Stanley K. Stillwell
--------------------------------
STANLEY K. STILLWELL, Secretary
and Director
/S/ Robert W. Gallman
--------------------------------
ROBERT W. GALLMAN, Director
/S/ Dennis Evans
--------------------------------
DENNIS EVANS, Director
24
EXHIBIT-4 SPECIMEN STOCK CERTIFICATE
- --------- --------------------------
EYE DYNAMICS, INC.
Incorporated Under the Laws of the State of Nevada
50,000,000 Shares Common Stock Authorized, $.001
NUMBER SHARES
CUSIP NO. 30229D 103
THIS CERTIFIES THAT
IS THE OWNER OF
Fully Paid and Non-assessable Shares of Common Stock of
EYE DYNAMICS, INC.
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This certificate
is not valid unless countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile
signature of its duly authorized officers.
DATED
/s/ R. Waldorf /s/ Charles E. Phillips
Secretary President
COUNTERSIGNED
PACIFIC STOCK TRANSFER COMPANY
P.O. Box 93385
Las Vegas, NV 89193
BY:
-------------------------
Authorized Signature
EXHIBIT-10.1
- ------------
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (this "Agreement") is made and entered
into as of the 1st day of April, 1989, by and between OCULOKINETICS, INC., a
California corporation, (the "Company") and Charles E. Phillips, an
individual and an employee of the Company (the "Employee").
RECITALS
--------
A. The Company is a corporation organized and existing under the
laws of the State of California with its principal place of business at 2311
W. 205th Street, Suite 104, Torrance, California 90501.
B. The Employee has served the Company in an executive capacity for
a number of months. The Employee and the Company desire to enter into an
employment agreement to recognize fully the contributions of the Employee to
the Company. The parties desire that this Agreement supersede the prior
employment agreement between the Company and the Employee (the "Prior
Agreement").
C. The Employee desires to continue to be employed by the Company on
the terms and subject to the conditions of this Agreement.
1
<PAGE>
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, conditions and agreements hereinafter set forth, the parties
hereby agree as follows:
1. EMPLOYMENT. The Company hereby hires and employs the Employee, and
the Employee hereby agrees to serve the Company, under and subject to all of the
terms, conditions and provisions hereof, as President and Treasurer of the
Company and in such other executive capacity or capacities as the Board of
Directors of the Company may from time to time designate. The Employee's duties
shall be subject to such policies and directions as may be established or given
by the Board of Directors of the Company from time to time. The Employee further
agrees to serve the Company well and faithfully in the executive capacities to
which Employee is appointed.
2. TERM OF EMPLOYMENT. The term of employment of the Employee shall
commence on the date hereof and shall continue for a period of five (5) years
hereafter (the "Term of Employment") unless sooner terminated as provided
herein. This Agreement supersedes the Prior Agreement, and the Prior Agreement
is terminated effective as of the date hereof.
The term of this Agreement shall be automatically renewed on a year to
year basis unless one of the parties gives the other party notice, at least
sixty (60) days prior to any expiration date, that such party elects not to
renew this Agreement.
3. PLACE OF EMPLOYMENT. During the term of this Agreement, Employee
will not be required to undertake any duties or responsibilities that would make
2
<PAGE>
it necessary or desirable to Employee to move Employee's residence outside of
the Los Angeles area without Employee's prior written consent.
4. COMPENSATION.
(a) For all services rendered by the Employee under this
Agreement, the Employee shall be paid as compensation:
(i) A base salary at the initial rate of Ninety
Thousand Dollars ($90,000.00) per annum payable in equal semimonthly
installments, subject to any deductions or withholdings required by law (the
"Base Salary"). Within thirty (30) days after the close of each fiscal year of
the Company during the Term of Employment, commencing with the fiscal year
ending December 31, 1989, the Base Salary shall be increased by an amount
mutually agreed upon by the Board of Directors of the Company and the Employee
after an evaluation of the Employee's performance during such fiscal year.
(ii) In addition to the Base Salary provided above,
commencing with the fiscal year ending December 31, 1989, the Company shall pay
the Employee, within thirty (30) days after the publication of the audited
financial statements of each fiscal year of the Company, a discretionary cash
bonus in an amount mutually agreed upon by the Board of Directors of the Company
and the Employee after an evaluation of the Employee's performance during such
fiscal year.
3
<PAGE>
5. EMPLOYEE BENEFITS. The Employee shall also receive the following
benefits:
(a) The Employee shall be entitled to a minimum paid vacation
of three (3) weeks for each twelve (12) month period of employment. The employee
shall have the right to take such vacation days during the twelve (12) month
period immediately succeeding the year in which they accrued; provided, however,
that in the event the Employee is unable for any reason to take the total amount
of vacation time to which Employee is entitled during any year, Employee may
accrue such time and add it to the vacation time for any following year.
(b) BUSINESS EXPENSES. The Employee is authorized to incur
reasonable expenses for the Company's business purposes, including, but not
limited to, expenses for entertainment, travel, lodging, management seminars and
telephone use. The Company shall promptly reimburse the Employee for all
expenses incurred on behalf or for the benefit of the Company upon the
submission by the Employee of a request for reimbursement and adequate
supporting documentation.
(c) The Employee shall receive an automobile allowance in the
amount of Four Hundred Fifty Dollars ($450.00) per month for each month of
Employee's employment hereunder. Such allowance shall be paid on the first day
of each month during the Term of Employment.
(d) The Company shall furnish the Employee with office space,
stenographic assistance, secretarial and word processing assistance, telephone,
4
<PAGE>
postage and such other supplies, equipment, facilities and services as shall be
suitable and customary to the Employee's position and adequate for the
performance of Employer's duties pursuant to this Agreement.
(e) The Company shall maintain in full force and effect during
the term of the Employee's employment hereunder a comprehensive policy of
medical and dental insurance covering the Employee and Employee's spouse.
(f) In the event of the termination of the Employee's
employment by reason of Employee's Disability (as defined in Section 8(a)
hereof), the Company shall continue to pay the Employee (1) Employee's full Base
Salary for each of the first six (6) months after termination, and (2) one-half
(1/2) of Employee's full Base Salary for each of the seventh through twelfth
months after such termination. In addition the Company shall pay to Employee all
amounts of Deferred Salary and or Management Fees, if any, and Promissory Notes
payable to Employee plus accrued interest on such notes, if any, and other
benefits earned or accrued through the date of termination.
(g) In addition to the foregoing benefits, the Employee shall
be entitled to participate in or receive insurance coverage, sick leave and
other fringe benefits under any employee benefit plans or arrangements made
available by the Company in the future to its executives and key management
employees, subject to, and on a basis consistent with, the terms, conditions
5
<PAGE>
and overall administration of such plans presently in effect or made available
in the future.
6. LIFE INSURANCE. Company may, subject to its discretion, at any time
apply for and procure, at its own expense as owner and for its own benefit,
insurance on the life of Employee in such amounts and in such form as Company
deems appropriate. At the request of Company, Employee shall submit to such
medical examinations(s), supply such information and execute such documents as
may be required by the insurer. Employee shall have no interest in any such
policy.
7. TERMINATION BY THE COMPANY. The Employee's employment hereunder may
be terminated by the Company without any breach of this Agreement only under the
circumstances described below:
(a) DEATH. The Employee's employment hereunder shall terminate
upon Employee's death. In event of the death of the Employee during the Term of
Employment, the date of termination shall be on the date of death.
(b) DISABILITY. If, as a result of the Employee's incapacity
due to physical or mental illness, the Employee shall have been absent from its
duties hereunder for a period of one hundred fifty (150) consecutive days, and,
within thirty (30) days after written notice of the Company's intention to
exercise its rights under this Section 7 is given (which may not be given prior
to the expiration of such one hundred fifty (150) day period) shall not have
returned to the performance of its duties hereunder on a full time basis
("Employee's Disability"), the Company may terminate the Employee's employment
6
<PAGE>
employment hereunder by giving written notice to such effect to the Employee. In
the event of the termination of the Employee's employment hereunder pursuant to
this Section 7, the date of termination shall be the date on which notice of
termination is received by the Employee or Employee's personal representative.
(c) FOR CAUSE. The Company may terminate the Employee's
employment under this Agreement at any time for cause. For purposes of this
Agreement, the term "cause" shall be limited to the following: (i) acts by
Employee involving moral turpitude which reflect materially and adversely on the
Company, its reputation, or its assets; (ii) gross and continued neglect by the
Employee of Employee's duties as Vice President of the Company, which neglect
continues for more than thirty (30) days after written notice specifying the
nature thereof is received by the Employee; (iii) conviction of a crime
involving moral turpitude, including, without limitation, theft or embezzlement;
(iv) continuing alcohol or drug abuse; or (v) a material breach of this
Agreement which breach remains uncured for a period of thirty (30) days after
written notice specifying the nature of such breach to the Employee; provided,
however, that if the nature of such breach is such that more than thirty (30)
days are reasonably required for its cure, then the Company shall not have the
right to terminate this Agreement if the Employee commences such cure within
such thirty (30) day period and thereafter diligently prosecutes such cure to
7
<PAGE>
completion. Termination pursuant to this Section 7 shall be written notice to
the Employee which notice shall specify the cause for termination.
(d) WITHOUT CAUSE. The Company may, at any time upon the vote
of a majority of the Directors of the Company then in office, terminate the
Employee without cause upon ninety (90) days' prior written notice to the
Employee setting forth the reasons, if any, for the termination. For the
purposes of this Agreement, the term "without cause" shall mean termination for
grounds other than those specified in Subsections (a), (b) or (c) of this
Section 7. In the event that the Employee is terminated without cause, the
Employee shall be entitled to the payments provided in Section 9 of this
Agreement.
8. TERMINATION BY THE EMPLOYEE. The Employee may terminate its
employment hereunder by written notice to the Company upon the occurrence of
either of the following events:
(a) Substantial physical or mental disability which renders or
will render the day-to-day performance of Employee's duties impossible or
hazardous to perform for a period of at least one hundred fifty (150)
consecutive days, provided that the Employee shall have furnished the Company
with a written statement from a qualified doctor to such effect; or
(b) The Company's failure to comply with any of the terms and
conditions of this Agreement, which failure is not cured within thirty (30) days
after the Company's receipt of written notice specifying the nature of such
noncompliance.
8
<PAGE>
9. COMPENSATION UPON TERMINATION OR DISABILITY.
(a) DEATH. If the Employee's employment is terminated by
Employee's death, the Company shall pay the Employee's full Base Salary, all
Deferred Salary and or Management Fees, if any, and Promissory Notes payable to
Employee with accrued interest on such notes, if any, and any other accrued
benefits through the date of Employee's death. In addition, the Company shall
reimburse the Estate of the Employee for any expenses incurred by the Employee
in performing its duties under this Agreement. Such payments shall be made to
the Employee's surviving spouse, or if there is no spouse surviving, to the
Employee's estate.
(b) DISABILITY. During any period that the Employee fails to
perform its duties hereunder as a result of incapacity due to physical or mental
illness (the "Disability Period") the Employee shall continue to receive
Employee's full Base Salary, bonuses and other benefits at the rate in effect
for such period until Employee's employment is terminated by the Company for
Employee's Disability pursuant to Section 7(b) hereof, provided that payments so
made to the Employee during the Disability Period shall be reduced by the sum of
the amounts, if any, which were paid to the Employee at or prior to the time of
any such payment under disability benefit plans of the Company and which were
not previously applied to reduce any such payment. If the Employee's employment
is terminated by the Company pursuant to Employee's Disability as defined in
Section 7(b) hereof, the Company shall pay to the Employee the amounts set forth
9
<PAGE>
in Section 5(f) hereof. If the Employee shall terminate its employment under
Section 8(a) hereof, the Company shall pay the Employee its full Base Salary,
all Deferred Salary and or Management Fees, if any, and Promissory Notes payable
to Employee plus accrued interest on such notes, if any, and other benefits
earned or accrued through the date of termination at the rate in effect on the
date on which the notice of termination is received.
(c) FOR CAUSE BY THE COMPANY. If the Employee's employment
shall be terminated for cause by the Company pursuant to Section 7(c) hereof,
the Company shall pay the Employee its full Base Salary, all Deferred Salary and
or Management Fees, if any, and Promissory Notes payable to Employee plus
accrued interest on such notes, if any, and other benefits earned or accrued
through the date of termination at the rate in effect on the date on which
notice of termination is received, whereby the Company shall have no further
obligations to the Employee under this Agreement.
(d) WITHOUT CAUSE. If the Employee's employment is terminated
by the Company without cause pursuant to Section 7(d) hereof or the Employee
terminates its employment hereunder pursuant to Section 8 hereof, then the
Company shall pay to the Employee, on or before the effective date of
termination, an amount equal to the sum of (i) that portion of the Employee's
Base Salary and benefits earned or accrued through the effective date of
10
<PAGE>
termination and (ii), the greater of (1) the full Base Salary which would have
otherwise been paid to the Employee for the remainder of the Term of Employment
in the event that such termination occurs at least one (1) year prior to the
expiration of the Term of Employment; or (2) an amount equal to one year's Base
Salary at the rate in effect on the effective date of termination in the event
that such termination occurs within one (1) year prior to the expiration of the
Term of Employment. In addition, Employer shall pay all Deferred Salary and or
Management Fees, if any, Notes Payable to Employee with accrued interest, if
any, and any other benefits earned or accrued through the date of termination.
In the event that, other than by mutual agreement of the Company and the
Employee (which agreement shall be in writing signed by the Company and the
Employee), the Company fails or refuses to extend the Term of Employment upon
the expiration thereof pursuant to this Agreement, or upon the expiration of any
subsequent extension thereof, the Company shall pay to the Employee, on or
before the expiration date of the Term of Employment, or any extension thereof,
as the case may be, a sum equal to the Base Salary payable to the Employee
during the year preceding the expiration date of the Term of Employment or any
extension thereof, as the case may be. In no event shall any payments owing to
the Employee by the Company pursuant to this Section be reduced by any amounts
earned by the Employee subsequent to the termination of its employment by the
Company.
11
<PAGE>
(f) TERMINATION BY THE EMPLOYEE. If Employee's employment is
terminated by the Employee pursuant to Section 8 hereof, the Company shall pay
to the Employee, on or before the effective date of termination, Employee's full
Base Salary earned through date of termination, and all Deferred Salary and or
Management Fees, if any, and Promissory Notes payable to Employee, with accrued
interest on such notes, if any, and other benefits earned or accrued through the
date of termination.
(f) PRORATION OF BONUSES. Any bonuses payable under this
Section 9 shall be prorated for any period of employment not covering an entire
fiscal year.
10. INDEMNIFICATION OF THE EMPLOYEE. The Company will obtain and
maintain in full force and effect during the Term of Employment, a directors'
and officers' liability insurance policy with coverage limits in United States
Dollars in an amount convertible into not less than One Million Dollars
($l,000,000.00) to indemnify and defend the Employee from and against any
losses, liabilities, suits, claims, demands, damages, fees, costs and expenses,
including without limitation, interest, penalties, reasonable attorneys' and
accountants' fees and expenses, and court costs arising out of or relating to
the office held by the Employee pursuant to this Agreement or the performance by
the Employee of its duties under this Agreement so long as the Employee acted in
good faith and in a manner Employee reasonably believed to be in the best
interests of the Company.
12
<PAGE>
11. CONFIDENTIAL INFORMATION. Employee agrees that, at all times, both
during Employee's employment and after its termination, Employee will keep in
confidence and trust any information of a confidential or secret nature (a)
applicable to the business of Company, or (b) applicable to the business of any
customer of Company, which may be made known to Employee by Company or by any
customer of Company or learned by Employee during the period and in the course
of Employee's employment by Company ("Proprietary Information"). Employee
further agrees not, without Company's prior express written consent, to use,
disclose, lecture on or publish articles concerning any of such Proprietary
Information except as may be necessary in the ordinary course of performing its
duties as an employee of Company.
12. SURRENDER OF BOOKS AND REPORTS. The Employee agrees that upon
termination of its employment for any reason, Employee will immediately
surrender to the Company all lists, books and records in Employee's possession
relating to the business of the Company or any of its affiliates, and all other
properties belonging to the Company or any of its affiliates, it being
distinctly understood that all such lists, books, records and other documents or
properties are and shall remain the property of the Company or such affiliates.
13. GENERAL RELATIONSHIP. The Employee shall be considered an employee
of the Company within the meaning of all federal, state and local laws and
regulations, including, but not limited to, laws and regulations governing
13
<PAGE>
unemployment insurance, worker's compensation, industrial accident, labor and
taxes.
14. CERTIFICATION OF EMPLOYABILITY. Employee certifies that its
performance (a) of all the terms of this Agreement, and (b) as an employee of
Company, does not and will not breach any agreement to keep in confidence
proprietary information acquired by Employee in confidence or in trust prior to
Employee's employment with Company. Employee represents further that such
performance does not and will not breach any agreement with others to assign
patents, inventions or research and development products, whether or not
patentable, made or conceived or first reduced to practice or learned by
Employee either alone or jointly with others. Employee will not disclose to
Company, or induce Company to use, any proprietary information belonging to
others. Employee agrees not to enter into any agreement, either written or oral,
in conflict with this Section.
15. MISCELLANEOUS.
(a) All notices which are required or permitted to be given
pursuant to this Agreement shall be in writing and shall be sufficient in all
respects if given in writing and delivered personally or by telegraph or by
registered or certified airmail, postage prepaid, addressed as follows:
If to the Company:
OculoKinetics, Inc.
2311 W. 205th Street
Suite 104
Torrance, California 90501
Attention: Ronald A. Waldorf, Vice President
14
<PAGE>
With Copy to:
Samuel H. Anker, Esq.
Anker, Alpert & Hymes
16311 Ventura Boulevard
Suite 1200
Encino, California 91436--2144
If to the Employee:
Charles E. Phillips
4304 Rousseau Lane
Palos Verdes Peninsula, California 90274
Notice shall be deemed to have been given upon receipt thereof as to
communications which are personally delivered or telegraphed and five (5) days
after deposit of the same in any United States mail post office box in the state
of which the notice is addressed, or seven (7) days after deposit of same in any
such post office box other than in the state to which the notice is addressed,
postage prepaid, addressed as set forth above. Notice shall not be deemed given
under the preceding sentence unless and until notice shall be given to all
addresses above other than the sender. The addresses and addressees for the
purpose of this Section 15 may be changed by giving written notice of such
change in the manner provided herein for giving notice. Unless and until such
written notice is given, the addresses and addressees as stated by prior written
notice, or as provided herein if no written notice of change has been given,
shall be deemed to continue in effect for all purposes hereunder.
(b) SEVERABILITY. In case any one or more of the provisions
contained in the Agreement shall, for any reason, be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
15
<PAGE>
shall not affect any other provisions of this Agreement, which shall be
construed as if such provisions had never been part of this Agreement.
(c) ENTIRE AGREEMENT. This Agreement and any Exhibits hereto
constitute the entire agreement of the parties relating to its subject matter,
and the parties agree that this Agreement supersedes all prior written or oral
agreements, representations and warranties relating to its subject matter. No
modification of this Agreement shall be valid unless made in writing and signed
by the parties.
(d) LITIGATION AND ATTORNEY'S FEES. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, default or breach in connection
with any of the provisions of this Agreement, the successful or prevailing party
or parties shall be entitled to recover reasonable attorney's fees, expenses and
other costs incurred in that action or proceeding in addition to any other
relief to which prevailing party may be entitled. The right to such attorney's
fees, expenses, and costs shall be deemed to have accrued upon commencement of
such action and shall be enforceable whether or not such action is prosecuted to
judgment.
(e) APPLICABLE LAW. This Agreement is being delivered and is
intended to be performed in the State of California and shall be construed and
enforced in accordance with and governed by the laws of the State of California
other than and without giving effect to the laws of the State of California
16
<PAGE>
relating to choice of law.
(f) JURISDICTION. The parties hereto agree that any action, at
law or in equity, arising under this Agreement shall be filed and conducted in
and only in the Superior Court of the State of California for the County of Los
Angeles or the United States District Court for the Central District of
California. The parties hereby submit to the IN PERSONAM jurisdiction and venue
of such courts in the State of California for the purposes of litigating any
such action.
(g) ASSIGNMENT. Except as expressly provided herein, neither
the Agreement nor any of the rights or obligations of the Employee hereunder
shall be assignable or delegable by the Employee. Neither this Agreement nor any
other rights or obligations of the Company hereunder shall be assignable by the
Company; provided, however, that this Agreement shall be assignable to and shall
be binding upon and inure to the benefit of any successor of the Company,
including, without limitation, any corporation or corporations acquiring,
directly or indirectly, all or substantially all of the assets of the Company
whether by merger, consolidation, sale or otherwise (and such successor shall
thereafter be deemed "the Company" for the purposes of this Agreement), but
shall not otherwise be assignable by the Company. Except as otherwise provided
herein, Employee's right to receive payments pursuant to this Agreement shall be
nonassignable.
17
<PAGE>
(h) MODIFICATION. This Agreement shall not be modified or
amended except by another written instrument executed by the parties hereto.
(i) PARAGRAPH HEADING. The headings of the several paragraphs
of this Agreement are inserted solely for the convenience of reference and are
not a party of and are not intended to govern, limit or aid in the construction
of any term or provision hereof.
(j) WAIVER. Failure of either party at any time to require
performance by the other of any provision of this Agreement shall in no way
affect such non-requiring party's rights thereafter to enforce the same, nor
shall the waiver by either party of any breach of any provision hereof be held
to be a waiver of any succeeding breach of any provision or a waiver of the
provision itself.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
"Company"
OCULOKINETICS, INC.
By: /s/ R Waldorf
------------------------------------
Ronald A. Waldorf
Vice President
"Employee"
By: /s/ Charles E. Phillips
------------------------------------
Charles E. Phillips
18
EXHIBIT-10.2
- -------------
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (this "Agreement") is made and entered
into as of the 1st day of December, 1989, by and between OCULOKINETICS, INC., a
California corporation, (the "Company") and Barbara J. Mauch, an individual and
an employee of the Company (the "Employee").
RECITALS
--------
A. The Company is a corporation organized and existing under the
laws of the State of California with its principal place of business at 2291 W.
205th Street, Suite 203, Torrance, California 90501.
B. The Employee has served the Company in a technical development
capacity for a number of months. The Employee and the Company desire to enter
into an employment agreement to recognize fully the contributions of the
Employee to the Company.
C. The Employee desires to be employed by the Company on the terms
and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and of
the mutual covenants, conditions and agreements hereinafter set forth, the
parties hereby agree as follows:
1
<PAGE>
1. EMPLOYMENT. The Company hereby hires and employs the Employee, and
the Employee hereby agrees to serve the Company, under and subject to all of the
terms, conditions and provisions hereof, as Director of Product Development of
the Company and in such other capacity or capacities as the Chief Executive
Officer of the Company may from time to time designate. The Employee's duties
shall be subject to such policies and directions as may be established or given
by the Chief Executive Officer of the Company from time to time. The Employee
further agrees to serve the Company well and faithfully in the capacities to
which Employee is appointed.
2. TERM OF EMPLOYMENT. The term of employment of the Employee shall
commence on the date hereof and shall continue for a period of three (3) years
hereafter (the "Term of Employment") unless sooner terminated as provided
herein. This Agreement supersedes any prior agreement, and any prior agreement
is terminated effective as of the date hereof.
The term of this Agreement shall be automatically renewed on a month
to month basis unless one of the parties gives the other party notice, at least
thirty (30) days prior to any expiration date, that such party elects not to
renew this Agreement.
3. PLACE OF EMPLOYMENT. During the term of this Agreement, Employee
will not be required to undertake any duties or responsibilities that would make
it necessary or desirable for the Employee to move Employee's residence outside
of the Los Angeles area without Employee's prior written consent.
2
<PAGE>
4. COMPENSATION.
For all services rendered by the Employee under this Agreement,
the Employee shall be paid as compensation:
A salary at the initial rate of Fifty Four Thousand Dollars
($54,000.00) per annum payable in equal semi-monthly installments, subject to
any deductions or withholdings required by law (the "Base Salary"). Within
thirty (30) days after the close of each fiscal year of the Company during the
Term of Employment, commencing with the fiscal year ending December 31, 1990,
the Base Salary shall be increased by an amount recommended by the Chief
Executive Officer and approved by the Board of Directors of the Company and the
Employee after an evaluation of the Employee's performance during such fiscal
year.
5. EMPLOYEE BENEFITS. The Employee shall also receive the following
benefits:
(a) The Employee shall be entitled to a minimum paid vacation
of two (2) weeks for each twelve (12) month period of employment. The employee
shall have the right to take such vacation days during the twelve (12) month
period immediately succeeding the year in which they accrued; provided, however,
that in the event the Employee is unable for any reason to take the total amount
of vacation time to which Employee is entitled during any year, Employee may
accrue such time and add it to the vacation time for any following year. During
the first year of employment, the Employee shall be entitled to two (2) weeks
paid vacation time as if the Employee had worked for the prior year.
3
<PAGE>
(b) BUSINESS EXPENSES. The Employee is authorized to incur
reasonable expenses for the Company's business purposes, including, but not
limited to, expenses for entertainment, travel, lodging, and telephone use. The
Company shall promptly reimburse the Employee for all expenses incurred on
behalf of or for the benefit of the Company upon the submission by the Employee
of a request for reimbursement and adequate supporting documentation.
(c) The Company shall furnish the Employee with office space,
technical equipment and space for same, secretarial and word processing
assistance, telephone, postage and such other supplies, equipment, facilities
and services as shall be suitable and customary to the Employee's position and
adequate for the performance of Employees duties pursuant to this Agreement.
(d) In addition to the foregoing benefits, the Employee shall
be entitled to participate in or receive insurance coverage, sick leave and
other fringe benefits under any employee benefit plans or arrangements made
available by the Company in the future to its key management employees, subject
to, and on a basis consistent with, the terms, conditions and overall
administration of such plans presently in effect or made available in the
future.
6. TERMINATION BY THE COMPANY. The Employee's employment hereunder
may be terminated by the Company without any breach of this Agreement only under
the circumstances described below:
(a) DEATH. The Employee's employment hereunder shall
4
<PAGE>
terminate upon Employees death. In event of the death of the Employee during the
Term of Employment, the date of termination shall be on the date of death.
(b) DISABILITY. If, as a result of the Employee's incapacity
due to physical or mental illness, the Employee shall have been absent from its
duties hereunder for a period of thirty (30) consecutive days over and above the
time that may be allowed by use of vacation and sick days, and, within thirty
(30) days after written notice of the Company's intention to exercise its rights
under this Section 6 is given (which may not be given prior to the expiration of
such thirty (30) day period) the Employee shall not have returned to the
performance of its duties hereunder on a full time basis ("Employee's
Disability"), the Company may terminate the Employee's employment hereunder by
giving written notice to such effect to the Employee. In the event of the
termination of the Employee's employment hereunder pursuant to this Section 6,
the date of termination shall be the date on which notice of termination is
received by the Employee or Employee's personal representative.
(c) FOR CAUSE. The Company may terminate the Employee's
employment under this Agreement at any time for cause. For purposes of this
Agreement, the term "cause" shall be limited to the following: (i) acts by
Employee involving moral turpitude which reflect materially and adversely on the
Company, its reputation, or its assets; (ii) gross and continued neglect by the
Employee of Employee's duties as Director of Product Development, which neglect
5
<PAGE>
continues for more than thirty (30) days after written notice specifying the
nature thereof is received by the Employee; (iii) conviction of a crime
involving moral turpitude, including, without limitation, theft or embezzlement;
(iv) continuing alcohol or drug abuse; or (v) a material breach of this
Agreement which breach remains uncured for a period of thirty (30) days after
written notice specifying the nature of such breach to the Employee; provided,
however, that if the nature of such breach is such that more than thirty (30)
days are reasonably required for its cure, then the Company shall not have the
right to terminate this Agreement if the Employee commences such cure within
such thirty (30) day period and thereafter diligently prosecutes such cure to
completion. Termination pursuant to this Section 6 shall be by written notice to
the Employee which notice shall specify the cause for termination.
(d) WITHOUT CAUSE. The Company may, at any time upon the vote
of a majority of the Directors of the Company then in office, terminate the
Employee without cause upon ninety (90) days' prior written notice to the
Employee setting forth the reasons, if any, for the termination. For the
purposes of this Agreement, the term "without cause" shall mean termination for
grounds other than those specified in Subsections (a), (b) or (c) of this
Section 6. In the event that the Employee is terminated without cause, the
Employee shall be entitled to the payments provided in Section 8 of this
Agreement.
6
<PAGE>
7. TERMINATION BY THE EMPLOYEE. The Employee may terminate its
employment hereunder by written notice to the Company upon the occurrence of
either of the following events:
(a) Substantial physical or mental disability which renders
or will render the day-to-day performance of Employee's duties impossible or
hazardous to perform for a period of at least thirty (30) consecutive days,
provided that the Employee shall have furnished the Company with a written
statement from a qualified doctor to such effect; or
(b) The Company's failure to comply with any of the terms and
conditions of this Agreement, which failure is not cured within thirty (30) days
after the Company's receipt of written notice specifying the nature of such
noncompliance.
8. COMPENSATION UPON TERMINATION OR DISABILITY.
(a) DEATH. If the Employee's employment is terminated by
Employee's death, the Company shall pay the Employee's full Base Salary and
Promissory Notes payable to Employee plus accrued interest, if any, and any
accrued benefits through the date of Employee's death. In addition, the Company
shall reimburse the Estate of the Employee for any expenses incurred by reason
of the Employee in performing its duties under this Agreement. This shall
include the cost of returning the Employee's remains to Los Angeles if death
occurs more than fifty (50) miles from the usual place of employment while on
company business. Such payments shall be made to the Employee's surviving
7
<PAGE>
spouse, or if there is no spouse surviving, to the Employee's estate.
(b) DISABILITY. During any period that the Employee fails to
perform its duties hereunder as a result of incapacity due to physical or mental
illness (the "Disability Period") the Employee shall continue to receive
Employee's full Base Salary, bonuses and other benefits at the rate in effect
for such period until Employee's employment is terminated by the Company for
Employee's Disability pursuant to Section 6(b) hereof, provided that payments so
made to the Employee during the Disability Period shall be reduced by the sum of
the amounts, if any, which were paid to the Employee at or prior to the time of
any such payment under disability benefit plans of the Company and which were
not previously applied to reduce any such payment. If the Employee's employment
is terminated by the Company pursuant to Employee's Disability as defined in
Section 6(b) hereof, or if the Employee shall terminate its employment under
Section 7(a) hereof, the Company shall pay the Employee its full Base Salary and
Promissory Notes payable to Employee plus accrued interest, if any, and other
benefits earned or accrued through the date of termination at the rate in effect
on the date on which the notice of termination is received.
(c) FOR CAUSE BY THE COMPANY. If the Employee's employment
shall be terminated for cause by the Company pursuant to Section 6(c) hereof,
the Company shall pay the Employee its full Base Salary and Promissory Notes
payable to Employee plus accrued interest, if any, and other benefits earned or
8
<PAGE>
or accrued through the date of termination at the rate in effect on the date on
which notice of termination is received, whereby the Company shall have no
further obligations to the Employee under this Agreement.
(d) WITHOUT CAUSE. If the Employee's employment is terminated
by the Company without cause pursuant to Section 6(d) hereof or if the Employee
terminates its employment hereunder pursuant to Section 7 hereof, then the
Company shall pay to the Employee, on or before the effective date of
termination, the Employee's full Base Salary and Promissory Notes payable to
Employee plus accrued interest, if any, and other benefits earned or accrued
through the date of termination at the rate in effect on the date on which
notice of termination is received.
9. CONFIDENTIAL INFORMATION. Employee agrees that, at all times,
both during Employee's employment and after its termination, Employee will keep
in confidence and trust any information of a confidential or secret nature (a)
applicable to the business of Company, or (b) applicable to the business of any
customer of Company, which may be made known to Employee by Company or by any
customer of Company or learned by Employee during the period and in the course
of Employee's employment by Company ("Proprietary Information"). Employee
further agrees not, without Company's prior express written consent, to use,
disclose, lecture on or publish articles concerning any of such Proprietary
Information except as may be necessary in the ordinary course of performing its
9
<PAGE>
duties as an employee of Company.
10. SURRENDER OF BOOKS AND REPORTS. The Employee agrees that upon
termination of its employment for any reason, Employee will immediately
surrender to the Company all lists, books and records in Employee's possession
relating to the business of the Company or any of its affiliates, and all other
properties belonging to the Company or any of its affiliates, it being
distinctly understood that all such lists, books, records and other documents or
properties are and shall remain the property of the Company or such affiliates.
11. GENERAL RELATIONSHIP. The Employee shall be considered an
employee of the Company within the meaning of all federal, state and local laws
and regulations, including, but not limited to, laws and regulations governing
unemployment insurance, worker's compensation, industrial accident, labor and
taxes.
12. CERTIFICATION OF EMPLOYABILITY. Employee certifies that its
performance (a) of all the terms of this Agreement, and (b) as an employee of
Company, does not and will not breach any agreement to keep in confidence
proprietary information acquired by Employee in confidence or in trust prior to
Employee's employment with Company. Employee represents further that such
performance does not and will not breach any agreement with others to assign
patents, inventions or research and development products, whether or not
patentable, made or conceived or first reduced to practice or learned by
Employee either alone or jointly with others. Employee will not knowingly
10
<PAGE>
disclose to Company, or induce Company to use, any proprietary information
belonging to others without fully informing the Company of the proprietary
nature and source of such information. Employee agrees not to enter into any
agreement, either written or oral, in conflict with this Section.
13. MISCELLANEOUS.
(a) All notices which are required or permitted to be given
pursuant to this Agreement shall be in writing and shall be sufficient in all
respects if given in writing and delivered personally or by telegraph or by
registered or certified airmail, postage prepaid, addressed as follows:
If to the Company:
OculoKinetics, Inc.
2291 W. 205th Street
Suite 203
Torrance, California 90501
Attention: Charles E. Phillips, President
With Copy to:
Samuel H. Anker, Esq.
Anker, Alpert & Hymes
16311 Ventura Boulevard
Suite 1200
Encino, California 91436-2144
If to the Employee:
Barbara J. Mauch
5500 W. 119th Place
Inglewood, CA 90304
Notice shall be deemed to have been given upon receipt thereof as to
11
<PAGE>
communications which are personally delivered or telegraphed and five (5) days
after deposit of the same in any United States mail post office box in the state
of which the notice is addressed, or seven (7) days after deposit of same in any
such post office box other than in the state to which the notice is addressed,
postage prepaid, addressed as set forth above. Notice shall not be deemed given
under the preceding sentence unless and until notice shall be given to all
addresses above other than the sender. The addresses and addressees for the
purpose of this Section 13 may be changed by giving written notice of such
change in the manner provided herein for giving notice. Unless and until such
written notice is given, the addresses and addressees as stated by prior written
notice, or as provided herein if no written notice of change has been given,
shall be deemed to continue in effect for all purposes hereunder.
(b) SEVERABILITY. In case any one or more of the provisions
contained in the Agreement shall, for any reason, be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, which shall be
construed as if such provisions had never been part of this Agreement.
(c) ENTIRE AGREEMENT. This Agreement and any Exhibits hereto
constitute the entire agreement of the parties relating to its subject matter,
and the parties agree that this Agreement supersedes all prior written or oral
agreements, representations and warranties relating to its subject matter. No
modification of this Agreement shall be valid unless made in writing and signed
12
<PAGE>
by the parties.
(d) APPLICABLE LAW. This Agreement is being delivered and is
intended to be performed in the State of California and shall be construed and
enforced in accordance with and governed by the laws of the State of California
other than and without giving effect to the laws of the State of California
relating to choice of law.
(e) JURISDICTION. The parties hereto agree that any action,
at law or in equity, arising under this Agreement shall be filed and conducted
in and only in the Superior Court of the State of California for the County of
Los Angeles or the United States District Court for the Central District of
California. The parties hereby submit to the IN PERSONAM jurisdiction and venue
of such courts in the State of California for the purposes of litigating any
such action.
(f) ASSIGNMENT. Except as expressly provided herein, neither
the Agreement nor any of the rights or obligations of the Employee hereunder
shall be assignable or delegable by the Employee. Neither this Agreement nor any
other rights or obligations of the Company hereunder shall be assignable by the
Company; provided, however, that this Agreement shall be assignable to and shall
be binding upon and inure to the benefit of any successor of the Company,
including, without limitation, any corporation or corporations acquiring,
directly or indirectly, all or substantially all of the assets of the Company
13
<PAGE>
whether by merger, consolidation, sale or otherwise (and such successor shall
thereafter be deemed "the Company" for the purposes of this Agreement), but
shall not otherwise be assignable by the Company. Except as otherwise provided
herein, Employee's right to receive payments pursuant to this Agreement shall be
nonassignable.
(g) MODIFICATION. This Agreement shall not be modified or
amended except by another written instrument executed by the parties hereto.
(h) PARAGRAPH HEADING. The headings of the several paragraphs
of this Agreement are inserted solely for the convenience of reference and are
not a party of and are not intended to govern, limit or aid in the construction
of any term or provision hereof.
(i) WAIVER. Failure of either party at any time to require
performance by the other of any provision of this Agreement shall in no way
affect such non-requiring party's rights thereafter to enforce the same, nor
shall the waiver by either party of any breach of any provision hereof be held
to be a waiver of any succeeding breach of any provision or a waiver of the
provision itself.
14
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
"Company"
OCULOKINETICS, INC.
By: /s/Charles E. Phillips
------------------------------
CHARLES E. PHILLIPS
President
"Employee"
By: /s/ Barbara J. Mauch
------------------------------
BARBARA J. MAUCH
15
EXHIBIT-10.3
- ------------
EXCLUSIVE LICENSE AGREEMENT
---------------------------
Agreement made as of this 1st day of November, 1989, by and between
RONALD A. WALDORF (hereinafter "Licensor") and OCULOKINETICS, INC., a California
corporation, having its principal place of business located at 2291 W. 205th
Street, Suite 203, Torrance, California 90501 (hereinafter "Licensee").
WITNESSETH:
WHEREAS, Licensor is the owner of the "Alcohol & Drug Impairment
Analyzer", the product to be licensed, a computer-based system for the accurate
and objective measure of eye movements and pupil size which has a number of
uses, and is the subject of United States Patent No. 4,815,839, dated March 28,
1989, a copy of which is attached hereto, and Patent Applications filed in
Japan, South Korea, Taiwan, Canada, United Kingdom, France and West Germany. The
license granted herein is specifically limited to the knowhow and application of
the product to alcohol and drug impairment analysis and for no other use and is
hereinafter referred to as "Licensed Product", and
WHEREAS, Licensee desires to acquire an exclusive worldwide license to
make, use and sell the Licensed Product, and Licensor is willing to grant the
same under the conditions hereinafter set forth;
1
<PAGE>
NOW, THEREFORE, the parties agree as follows:
1. EXCLUSIVE LICENSE. The Licensor hereby grants to the Licensee the
exclusive worldwide right and license to enjoy. commercialize, and exploit the
Licensed Product to make, assemble and use apparatus, machinery, auxiliaries and
all devices for carrying the Licensed Product into practice; and all Trademarks
used in connection with the sale and offering for sale of the Licensed Product.
2. APPLICATIONS. Licensor shall provide all necessary information,
drawings, blue prints and all other necessary data and execute all necessary
papers, documents and instruments, to cause to be prepared, filed and
prosecuted, through patent counsel of its choosing, all patent and trademark
applications, whether pending or not, and, insofar as is reasonably possible, on
all improvements hereafter made by the Licensor. Licensee shall promptly
reimburse Licensor for all attorneys fees and costs incurred by Licensor
pursuant to this paragraph. In connection with such applications for the United
States or foreign countries, the Licensor, shall, at the request of the
Licensee, do all acts necessary for obtaining, sustaining, reissuing,
disclaiming or extending said applications.
3. OWNERSHIP OF PATENTS.
a. All patents obtained for the Licensed Product used in
connection therewith shall be the exclusive property of the Licensor, subject to
the exclusive license hereby granted. The Licensor shall, upon demand, execute
and deliver to the Licensee
2
<PAGE>
such documents as may be deemed necessary or advisable by counsel for the
Licensee for filing in the appropriate patent and trademark offices to evidence
the granting of the exclusive license hereby given.
b. If during the term of this license, Licensor makes any
further improvements in such Licensed Product or the mode of using them, or
becomes the owner of any such improvements either through patents or otherwise,
then it shall communicate such improvements to the Licensee and give Licensee
full information regarding the mode of using them and the Licensee shall be
entitled to use the same with all rights which are hereby granted to the
Licensee with respect to the Licensed Product.
c. If during the term of this license, Licensee, without
assistance or contribution by Licensor, makes any further improvements in such
Licensed Product or the mode of using them, or becomes the owner of any such
improvements either through patents or otherwise, at its sole expense, then
Licensee shall be the owner thereof.
d. If, during the term of the license, Licensee and Licensor
together make any further improvements in such Licensed Product or the mode of
using them, then they shall be joint owners of any such improvements either
through patents or otherwise.
4. TERM. This agreement shall continue through the life of the U.S.
patent and any pending letters, if granted subject to the following:
3
<PAGE>
(a) The Licensee may, upon (1) year written notice to the
Licensor, terminate this Agreement.
(b) If the Licensee defaults in performing any of the terms of
the Agreement and continues in default for a period of ten (10) days after
written notice thereof; or if the licensee is adjudicated, bankrupt or
insolvent, ceases to do business, or enters into a composition with its
creditors or if a receiver is appointed for it; then the Licensor shall have the
right to terminate this Agreement upon giving notice to the Licensee at least 30
days before the time when such termination is to take effect and thereupon the
agreement shall become void without prejudice to any rights of the Licensor.
(c) Upon termination under subdivisions (a) or (b) of this
paragraph, the Licensee shall duly account to the Licensor and transfer to it
all rights it may have to the patents, inventions, processes and apparatus.
5. PRODUCT DEVELOPMENT. Licensee has presented to Licensor a written
Corporate Business Plan of Licensee, Volume I and Volume II, dated September,
1989, plus Financial Schedule Addendum dated October, 1989. which sets forth
estimates and financial projections for the development, manufacture and sale of
the Licensed Product. Also, Licensor is further aware that alternate courses of
business transactions may be suitable, such as sublicensing, joint ventures,
corporate partnerships, or other business arrangements. And, that Licensee shall
pursue such other courses of business transactions as aforementioned and is
4
<PAGE>
empowered to enter into any such transaction that Licensor and Licensee jointly
agree is satisfactory. Licensee warrants to Licensor that it will use its best
efforts to meet or exceed all estimates and financial projections set forth
therein.
8. ROYALTY. In consideration of the exclusive license granted herein,
Licensee shall pay to Licensor the following amounts during the term of this
Agreement:
a. License shall pay Licensor within thirty (30) days
subsequent to the end of Licensee's fiscal year, an annual royalty of One
Hundred Dollars ($100.00) in the currency of the United States for each fiscal
year during the life of this Agreement beginning with the fiscal year of 1990.
b. All royalties due shall be paid to Licensor at 1206 South
Bedford Street, #1, Los Angeles, California 90035, in United States dollars
without deductions of any kind.
7. INDEMNIFICATION AND DEFENSE OF INFRINGEMENT CLAIMS.
a. With respect to the exclusive license and rights granted to
Licensee by Licensor, Licensee shall immediately give written notice to Licensor
of any notice of infringement received by Licensee including any existing
products or developments which infringe on the Licensed Product or any patented
or patent pending technology which is known to Licensee as of the date of
execution of this Agreement, or of any claim of infringement, or' of any suit or
suits threatened or brought against it for infringement for any rights licensed
hereunder.
5
<PAGE>
b. Licensee and Licensor shall mutually cooperate with respect
to any claim of infringement brought against Licensee and/or Licensor with
respect to the rights granted herein. However, notwithstanding the foregoing,
Licensor may refuse to participate in the defense of any claim brought against
Licensee and/or Licensor with respect to the rights granted herein upon advice
of counsel of its own choosing.
8. PROSECUTION OF INFRINGEMENT CLAIMS.
a. In the event that any of the rights granted to Licensee by
Licensor hereunder are infringed by any third party, Licensee shall have the
right, but not the obligation, through counsel of its own choosing, to institute
such suits for patent infringement, trademark infringement, unfair competition,
or an~ other causes of action which may be applicable. Licensee shall control
such action, and pay the attorneys fees and expenses associated with such
action. Licensee shall keep Licensor advised of the status of such action and
Licensor shall have the right to be represented therein by counsel of its own
choosing at Licensor s own expense. Licensor shall have the right to institute
such action if Licensee does not institute such action within thirty (30) days
after written notice from Licensee that it does not intend to pursue the
infringement action.
b. If the party instituting such suit finds it necessary or
desirable to have any other party to this Agreement join the action, such other
party agrees to such joinder. In the event of any recovery in such action,
Licensor and Licensee
6
<PAGE>
shall, after recovery of all attorneys fees and costs expended by Licensee
and/or Licensor, retain fifty percent (50%) each.
c. In conjunction with such suits, the parties agree to
execute all papers necessary or desirable, and to testify in any suit whenever
requested to do so. The party bringing the action shall reimburse the other
party for any costs associated with providing such assistance.
9. PATENT OFFICE ACTION. Licensor shall have the right, but not the
obligation, to bear the sole cost and expense of prosecuting and/or defending
any claims instituted in any patent office to maintain and protect the rights
granted herein.
10. INDEMNITY AND INSURANCE.
a. Subject to the provisions of subparagraph `b' of this
section, Licensee shall indemnify and hold Licensor harmless against and from
any and all personal injury or property claims by or on behalf of any person,
firm, or corporation arising from the manufacture, labelling, sale, use,
distribution or other disposition of the Licensed Product in any and all
actions, causes of actions in connection therewith or related thereto, or
arising from any accidental injuries sustained by any person, firm or
corporation and from and against all costs, including without limitation,
attorneys' fees, expenses, and liabilities incurred in or about any such claim
or action or proceeding brought against Licensor by reason of any such claim.
Licensee, upon written notice from Licensor, shall resist or defend any such
action or proceeding by counsel reasonably satisfactory to
7
<PAGE>
Licensor. Licensor shall not be liable to Licensee for any matter as to which
licensee so indemnified Licensor.
b. If licensee itself manufactures, distributes, or sells the
Licensed Product, Licensee shall immediately obtain and maintain in force,
insuring Licensor, at Licensee s sole expense, a policy of insurance providing
product liability, personal injury, and property damage coverage. Said policy
shall name Licensor as named insured and have a minimum aggregate coverage limit
of One Million dollars ($1,000,000.00). License shall, prior to its own
manufacture, distribution or sale of the Licensed Product, provide Licensor with
a certificate of insurance reflecting full compliance with the terms hereof. The
policy obtained shall provide that it may not be cancelled without thirty (30)
days prior written notice to Licensor. Licensee shall immediately provide to
Licensor a copy of any notice of cancellation and immediately obtain substitute
coverage upon like terms within thirty (30) days. If Licensee fails to comply
with this provision at any time during the term of this Agreement, said failure
shall be deemed an event of default of this Agreement.
11. TERMINATION. Unless sooner terminated in accordance with its
terms, this Agreement shall continue until the expiration of the United States
Patent No. 4,815,839, dated March 28, 1989 or any extensions, reissues or
renewals of the same; provided, however, that Licensee shall have the right,
exercisable at the said date of expiration to continue this
8
<PAGE>
Agreement in full force and effect under either the foreign patents or the
improvement patents which are the subject of this Agreement for such period as
Licensee chooses, subject, however,, to the terms and conditions of this
Agreement. As to the claim of patents which may be expired or as to any claims
held invalid by a court having jurisdiction in a decision which has become
final, unappealable and unreviewable, then, if none of the methods, systems or
apparatus used thereafter by Licensee is covered by other claims of patents
licensed hereunder, Licensee's obligations with respect thereto shall cease.
Licensee shall also cease to exploit any patent or trademark for which a license
has been granted under this Agreement upon termination.
12. DISPOSAL OF INVENTORY AND EQUIPMENT. In the event of the
termination by Licensor pursuant to the provisions of paragraph 4 or 5 hereof,
Licensor shall, if it so elects, have the right to purchase any or all of the
Licensed Products manufactured by the Licensee which are unsold at the time of
the Licensee's receipt of such notice of termination. The price to Licensor
shall be the Licensee's costs without any profit to the Licensee. Licensor may
also in such event buy at depreciated cost, and without profit to the Licensee,
all special equipment applicable to the Licensed Products.
13. SURRENDER OF RIGHTS AND KNOW-HOW. On the termination of the
Agreement, for any reason whatsoever, Licensee shall deliver to Licensor, all
books, notes, drawings, writings and other documents, samples and models
relating to any improvements
9
<PAGE>
or intentions which are the subject matter of this Agreement; and Licensee shall
also cease to exploit any patent or trademark for which a license has been
granted under this Agreement.
14. NO COMPETITIVE PRODUCTS. Until either party shall give to the
other notice of termination of this Agreement as herein provided, Licensee shall
not directly or indirectly undertake to manufacture, sell or offer for sale
anywhere in the world any equipment or parts competitive with the Licensed
Product.
15. TECHNICAL ASSISTANCE COMMITMENT. Licensor shall assist, consult
and cooperate with Licensee's personnel in the assembly design, engineering,
manufacturing, inspection and servicing of the Licensed Product and components
in the selection of the necessary plant layout, machinery, tools, equipment and
production flow for the economical manufacture of the Licensed Product with all
expenses incurred by Licensor to be paid by Licensee.
16. ASSIGNMENT AND SUBLICENSING. The license herein granted is
non-divisible, non-transferable, non--assignable and without the right to grant
sublicenses except with the written consent of the Licensor, which shall not be
unreasonably withheld. Any such attempt shall be void and of no effect. Licensor
may assign its interest in this Exclusive License Agreement upon ten (10) days
prior written notice to Licensee, provided that any such assignment shall not
relieve Licensor of its obligations hereunder.
10
<PAGE>
17. EXERCISE OF RIGHTS. Licensee shall abide by all patent and
trademark laws of the countries wherein the Licensed Product is sold and/or
offered for sale.
18. INTERPRETATIONS. The preamble recitals are incorporated in and
made a part of this Agreement. Titles of articles and paragraphs are used for
convenience only and are not a part of the text. All terms used in any one
number or gender shall be construed to include any other number or gender as the
context may require.
19. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties and supersedes and integrates all prior negotiations,
commitments, representations and undertakings (written or oral) of the parties
with respect to the subject matter hereof.
20. NON--WAIVER. The failure of Licensor to exercise any right, power
or option given to it hereunder, or to insist upon strict compliance with the
terms hereof by Licensee shall not constitute a waiver of the terms and
conditions of this Agreement with respect to any other or subsequent breach
thereof, nor a waiver by Licensor of its rights at any time thereafter to
require exact and strict compliance with all the terms hereof. The rights or
remedies hereunder are cumulative to any other rights or remedies which may be
granted by law or equity.
22. GOVERNING LAW. This Agreement shall be governed and construed
under and in accordance with the laws of the State of California. Licensee
hereby consents that any disputes between
11
<PAGE>
it and Licensor shall be adjudicated in the United States District Court for the
Central District of California or the Superior Court of the State of California,
County of Los Angeles, and that said court shall have jurisdiction over
Licensee.
22. COMPLIANCE WITH GOVERNMENT REGULATIONS. Anything herein to the
contrary notwithstanding, Licensee shall conduct its business in a lawful
manner, and shall faithfully comply with all applicable laws or regulations of
all duly constituted public bodies having jurisdiction over the conduct of its
business hereunder. Licensee, at its own cost and expense, shall obtain all
necessary permits from governmental bodies necessary for the conduct of its
business hereunder.
23. SEVERABILITY. If any clause, provisions or paragraph of this
Agreement is held invalid by arbitration or court decree, such findings shall
not invalidate the remainder of this Agreement.
24. NOTICES.
a. All notices to Licensor shall be in writing and shall be
delivered or sent by facsimile, telex or cable, all charges prepaid (with copy
thereof to immediately follow by registered or certified mail, postage fully
prepaid), addressed to Licensor at:
Ronald A. Waldorf
c/o Anker, Alpert & Hymes
16311 Ventura Boulevard
Suite 1200
Encino, California 91436
Attention: Larry S. Hymes, Esq.
12
<PAGE>
b. All notices to Licensee shall be in writing and shall be
sent by facsimile, telex or cable, all charges prepaid (with a copy thereof to
immediately follow by registered or certified mail, postage prepaid) addressed
to Licensee at:
OculoKinetics, Inc.
2291 W. 205th Street
Suite 203
Torrance, California 90501
25. MODIFICATION. This Agreement may only be modified or amended by a
written instrument signed or acknowledged by Licensor and a duly authorized
officer of Licensee.
26. ATTORNEY'S FEES. If an action is brought to enforce the provisions
of this Agreement, the prevailing party shall recover his costs and reasonable
attorney's fees from the losing party.
27. EXECUTION OF DOCUMENTS. This Agreement shall be binding upon and
inure to the benefit of the parties, their heirs, executors, personal
representatives, directors, officers, shareholders, successors and assigns.
Licensor and Licensee agree to execute any and all documents necessary and/or
reasonable to effectuate the covenants, terms and obligations on its part to be
performed.
IN WITNESS WHEREOF, this Agreement is entered into as of the day and
year first above written.
"Licensee" "Licensor"
OCULOKINETICS, INC.
By: /s/ Charles E. Phillips By: /s/ Ronald A. Waldorf
--------------------------- --------------------------
CHARLES E. PHILLIPS, PRES. RONALD A. WALDORF
13
<PAGE>
AMENDMENT TO EXCLUSIVE LICENSE AGREEMENT
----------------------------------------
Amendment made as of this 15th day of January, 1992, by and between
RONALD A. WALDORF (hereinafter `Licensor") and OCULOKINETICS, INC., a California
corporation, having its principal place of business located at 2291 W. 205th
street, Suite 203, Torrance, California 90501 (hereinafter "Licensee").
WITNESSETH:
WHEREAS, Licensor entered into an EXCLUSIVE LICENSE AGREEMENT with
Licensee on November 1, 1989 with respect to stated rights for knowhow,
application and use of product which is the subject of U.S. Patent No.
4,815,839, dated March 26, 1989, and;
WHEREAS, Licensor and Licensee both desire to amend such Exclusive
License Agreement as of the date first set forth above;
NOW, THEREFORE, the parties agree as follows:
1. To amend the Exclusive License Agreement of November 1, 1989 by
granting to Licensee exclusive worldwide rights to all knowhow, and unlimited
applications and use of U.S. Patent No. 4,815,839, and;
2. By this amendment to remove all restrictions and limitations for
use of technology and knowhow imposed by the Exclusive License Agreement of
November 1, 1989, and;
1
<PAGE>
3. Agree that all other terms and conditions of the Exclusive License
Agreement shall remain unchanged and in force, notwithstanding this Amendment.
IN WITNESS WHEREOF, this Amendment to the Exclusive License Agreement
is entered into as of the day and year first above written.
"Licensee" "Licensor"
OCULOKINETICS, INC.
By: /s/ Charles E. Phillips By: /s/ Ronald A. Waldorf
--------------------------- --------------------------
CHARLES E. PHILLIPS, PRES. RONALD A. WALDORF
2
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 51,949
<SECURITIES> 0
<RECEIVABLES> 98,790
<ALLOWANCES> 0
<INVENTORY> 105,701
<CURRENT-ASSETS> 256,440
<PP&E> 14,064
<DEPRECIATION> 6,910
<TOTAL-ASSETS> 274,666
<CURRENT-LIABILITIES> 814,294
<BONDS> 0
0
0
<COMMON> 9,139
<OTHER-SE> (548,767)
<TOTAL-LIABILITY-AND-EQUITY> 274,666
<SALES> 601,928
<TOTAL-REVENUES> 601,928
<CGS> 279,491
<TOTAL-COSTS> 560,070
<OTHER-EXPENSES> 84,842
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,111
<INCOME-PRETAX> (72,095)
<INCOME-TAX> 1,600
<INCOME-CONTINUING> (73,695)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (73,695)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
