===============================================================================
As filed with the Securities and Exchange Commission on May 13, 1999
SEC File No. 0-22720
- ------------------------------------------------------------------------------
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
------------------------
CYCLO3PSS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 87-0455642
---------- -------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3646 West 2100 South
Salt Lake City, Utah 84120
(Address of principal executive offices)
------------------------
Employment Agreement of William R. Stoddard, Employment Agreement Durand
Smith, Employee Stock Option Agreements with William R. Stoddard, Mondis Nkoy
and John M. Williams
Grant of Shares to William R. Stoddard in Lieu of Cash Wages
------------------------------------------------------------
(Full title of plans)
William R. Stoddard
Cyclo3pss Corporation
3646 West 2100 South
Salt Lake City, UT 84120
----------------------------
(Name and address of agent for service)
(801) 972-9090
(Telephone number of agent for service)
------------------------
with copies to:
A.O. Headman, Jr., Esq.
Cohne, Rappaport & Segal, P.C.
525 East First South, Fifth Floor
Salt Lake City, UT 84102
(801) 532-2666
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered(1) Offering Price Per Unit Aggregate Offering Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 815,000(2) $ .10 $ 81,500.00 $ 24.04
Common Stock 200,000(3) $ 1.07 $214,000.00 $ 63.13
Common Stock 180,000(4) $.175 $ 31,500.00 $ 9.29
=====================================================================================================================
TOTAL $327,000.00 $ 96.46
=====================================================================================================================
</TABLE>
(1) Pursuant to Rule 416, this Registration Statement also covers such
indeterminable number of additional shares as may become issuable pursuant
to terms designed to prevent dilution resulting from stock splits, stock
dividends or similar events.
1
<PAGE>
(2) Represents Shares issuable under Employee Stock Option Agreements to
William R. Stoddard, Durand Smith and Mondis Nkoy.
(3) Represents Shares issuable under Employee Stock Option Agreements to
William R. Stoddard and John M. Williams
(4) Represents shares issued to William R, Stoddard for wages. Estimated solely
for the purpose of calculating the registration fee in accordance with Rule
457(c) under the Securities Act and based on the average of the high and
low price per share of Cyclo3pss Corporation, Inc. Common Stock as quoted
on the OTC Bulletin Board on April 25, 1999.
2
<PAGE>
EXPLANATORY NOTE
Pursuant to Rule 428(b) (1) under the Securities Act of 1933, as amended
(the "Securities Act"), an Information Statement will be distributed to William
Stoddard, John Williams, Durand Smith and Mondis Nkoy under a written
compensatory agreement. The Information Statement and the documents incorporated
by reference in this Registration Statement pursuant to Item 3 of Part II of
this Form S-8, taken together, constitute a prospectus that meets the
requirements of the Securities Act.
------------------------------------
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information
Not required to be filed with this Registration Statement.
Item 2. Registrant Information and Employee Plan Annual Information
Not required to be filed with this Registration Statement
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents By Reference
The following documents filed by Cyclo3pss Corporation with the
Securities and Exchange Commission as of their respective dates are incorporated
by reference in this registration statement:
(a) Registrant's Annual Report on Form 10-KSB for the fiscal year
ending February 28, 1998, filed pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended.
(b) Registrant's quarterly report on Form 10-QSB for the fiscal
quarter ended November 30, 1998, and all other reports, if any, filed by
the Registrant pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 since the end of the fiscal year ended February 28,
1998.
(c) The description of Registrant's common stock contained in the
Registration Statement on Form 10-SB filed with the Commission on October
26, 1993, including any amendments or reports filed for the purpose of
updating such description.
3
<PAGE>
All documents filed by the Registrant pursuant to Sections 13(a), 13(c)
14 and 15(d) of the Securities Exchange Act of 1934 after the date of the
Prospectus which is a part of this Registration Statement and prior to the
termination of the offering of these shares of common stock offered thereby,
shall be deemed to be incorporated by reference and to be a part of the
Prospectus from the date of filing of such document. Any statement contained in
a document incorporated by reference herein or contained herein shall be deemed
to be modified or superseded to the extent that a statement herein, or in a
document subsequently incorporated by reference herein, shall modify or
supersede such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of the
Prospectus.
ITEM 4. Description of Securities
Not applicable; the class of securities to be offered is registered under
Section 12 of the Securities Exchange Act of 1934, as amended.
ITEM 5. Interests of Named Experts and Counsel
Not applicable.
ITEM 6. Indemnification of Directors and Officers
As permitted by sections 102 and 145 of the Delaware General Corporation
Law, the Registrant's Certificate of Incorporation eliminates a director's
personal liability for monetary damages to the Registrant and its stockholders
arising from a breach of alleged breach of a director's fiduciary duty except
for liability under section 174 of the Delaware General Corporation Law or
liability for any breach of the director's duty of loyalty to the Registrant or
its stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or for any transaction from
which the director derived an improper personal benefit. The effect of this
provision in the Certificate of Incorporation is to eliminate the rights of the
Registrant and its stockholders (through stockholders' derivative suits on
behalf of the Registrant) to recover monetary damages against a director for
breach of fiduciary duty as a director (including breaches resulting from
negligent or grossly negligent behavior) except in the situation described
above.
The Registrant's Certificate of Incorporation and Bylaws provide for
indemnification of officers, directors and employees, and the Company has
entered into an indemnification agreement with each officer and director of the
Registrant (an "Indemnitee"). Under the Bylaws and such indemnification
agreements, the Registrant must indemnify an Indemnitee to the fullest extent
permitted by Delaware law for losses and expenses incurred in connection with
actions in which the Indemnitee is involved by reason of having been a director
or employee of the Registrant. The Registrant is also obligated to advance
expenses an Indemnitee may incur in connection with such actions before any
resolution of the action, and the Indemnitee may sue to enforce his or her right
to indemnification or advancement of expenses.
There is no litigation pending, and neither the Registrant nor any of its
directors know of any threatened litigation, which might result in a claim for
indemnification by any director or officer.
4
<PAGE>
ITEM 7. Exemption From Registration Claimed
Not Applicable.
ITEM 8. Exhibits
The following exhibits are filed as part of this Registration Statement:
Exhibit
Number Description
4.1 Employee Stock Option Agreement- William R. Stoddard -August 31, 1996
4.2 Employee Stock Option Agreement- John M. Williams -August 31, 1996
4.3. Employment Agreement - William R. Stoddard - August 31, 1997
4.4. Employment Agreement - Durand Smith- March 1, 1998
4.5. Employee Stock Option Agreement - Mondis Nkoy - May 31, 1997
4.6. Agreement (Regarding Shares in Lieu of Cash Salrary)- William R. Stoddard -
April 15, 1999
5.1 Opinion Regarding Legality and Consent
23.1 Consent of Ernst & Young, LLP, independent auditors
25.1 Power of Attorney-Located on Signature Page
ITEM 9. Undertakings
(a) Rule 415. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement;
5
<PAGE>
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the Registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934, as amended (and, where applicable
each filing of an employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by a director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and shall
be governed by the final adjudication of such issue.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on FORM S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Salt Lake, State of Utah, on the 6th day of May,
1999.
CYCLO3PSS CORPORATION
By: /s/ William R. Stoddard By: /s/ Mondis Nkoy
---------------------------- -------------------------------
William R. Stoddard Mondis Nkoy
Chief Executive Officer Principal Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person who signature appears
below constitutes and appoints each of William R. Stoddard and Mondis Nkoy as
true and lawful attorney-in-fact and agent, each acting alone, with full powers
of substitution and restitution, for him and his name, place and stead, in any
and all capacities, to sign any and all amendments to this registration
statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, and to
make any and all state securities law or blue sky filings, granting unto said
attorney-in-fact and agents, each acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully for all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Date Title Signature
May 6, 1999 Chief Executive /s/ William R. Stoddard
Officer William R. Stoddard
May 6, 1999 Director /s/ Michael Lakis
Michael Lakis
April 27, 1999 Director /s/ Robert Dunn
Robert Dunn
April 26, 1999 Director /s/ Steve Sarich, Jr.
Steve Sarich, Jr.
April 28, 1999 Director /s/ Richard Nelson
Richard Nelson
7
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.1 Employee Stock Option Agreement- William R. Stoddard -August 31, 1996
4.2 Employee Stock Option Agreement- John M. Williams -August 31, 1996
4.3. Employment Agreement - William R. Stoddard - August 31, 1997
4.4. Employment Agreement - Durand Smith- March 1, 1998
4.5. Employee Stock Option Agreement - Mondis Nkoy - May 31, 1997
4.6. Agreement (Regarding Shares in Lieu of Cash Salrary)- William R. Stoddard -
April 15, 1999
5.1 Opinion Regarding Legality and Consent
23.1 Consent of Ernst & Young, LLP, independent auditors
25.1 Power of Attorney-Located on Signature Page
8
STOCK OPTION AGREEMENT FOR THE YEAR BEGINNING 9/1/96
PURSUANT TO AN EMPLOYMENT AGREEMENT BETWEEN
WILLIAM R. STODDARD AND CYCLO3PSS MEDICAL SYSTEMS, INC.
THIS AGREEMENT is effective as of the 31st day of August, 1996 (the "Grant
Date"), by and between CYCLO3PSS MEDICAL SYSTEMS, INC. (the "Company") and
William R. Stoddard (the "0ptionee");
WITNESSETH:
WHEREAS, 0ptionee is the Vice President and Secretary of the Company, and
the Company and its board of directors consider it desirrable and in its best
interests that Optionee be given an inducement to remain in the Company's employ
and to acquire a proprietary interest in the Company, and an added incentive to
advance the interests of the Company by possessing an option to purchase shares
of the Company's common stock (the "Stock"), and
WHEREAS, the compensation committee of the Board of Directors of the
Company (the "Committee" and the Board of Directors of the Company has
authorized the grant to Optionee of a stock option authorizing 0ptionee to
purchase shares of common stock of the Company (the "Common Stock"); and
WHEREAS, the Company and 0ptionee wish to further confirm and outline the
terms and conditions of the option;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, it is hereby agreed between the parties hereto as follows:
1. Grand of Option. Subject to the terms, restrictions, limitations and
conditions stated herein and in the prospectus and the registration statement to
be filed registering the shares underlying this option, the Company hereby
grants to the 0ptionee an option (the "Option") to purchase all or any part of
100,000 post-split shares (after the 1:5 reverse stock split approved on August
26, 1993 and effective September 8 1993) of common stock of the Company (the
"Shares" ).
2. Term and Exercise of Option. Subject to the provisions of this
Agreement: (a) This option may be exercised by the optionee at any
time during the 0ption
Period, as defined in Section 4 hereof which provides that none of the
Options granted herein will be exercisable until August 31 1997. At that
date, all of the options granted herein will then be exersisable unless
the ootionee's employment with the Company has terminated prior to' p
August 31, 1997, in which event the number of options exercisable will be
reduced by 8,333 shares for each month or part thereof between the date of
termination and August 31, 1997. However, the intervenin death of 0ptionee
before
9
<PAGE>
August 31, 1997 will remove this continued employment condition from all
options granted herein.
(b) Subject to Section 7 hereof, the Option may be exercised with
respect the exercisable portion thereof at any time after August 3 l, 1997
and prior to the expiration date by the delivery to the Company, at its
principal place of business, of:
(i) a written notice of exercise in substantially the form attached hereto
as Exhibit 1 , which shall be actually delivered to the Company no earlier
than thirty (30) days and no later than ten ( 10) days prior to the date
upon which Optionee desires to exercise all or a portion of 0ption;
(ii) payment to the Company of the Exercise Price, defined in Section 3
below,multiplied by the nurmber of shares being purchased (the "Purchase
Price") in the manner provided in Subsection (c) hereof; and
(iii) payment of all withholding tax obligations, if any, (whether
federal, state or local) imposed by reason of the exercise of the Option.
Upon receipt of such notice, receipt of payment in full of the Purchase
Price, and receipt of payment of any withholding tax obligations due, the
Company shall cause to be issued an unrestricted certificate representing
the Shares purchased.
(c) The Purchase Price and withholding tax obligations, if any,
shall be paid in full upon the exercise of an Option and no Shares shall
be issued or delivered until full payment therefor has been made. Payment
of the Purchase Price for Shares purchased pursuant to the exercise of an
Option and any tax withholding obligations shall be made:
(i) in cash or by certified check;or
(ii) by delivery to the Company of a number of shares of common stock of
the Company which have been owned by the optionee for at least six months
prior to the date of the Option's exercise and which have a fair market
value on the date of exercise, as determined by the Compensation Committee
in its sole discretion, which is either equal to or which in combination
with cash is equal to the purchase price; or
(iii) by receipt of the purchase price in cash from a broker, dealer or
other "creditor" as defined by Regulation "T" issued by the Board of
Governors of the Federal Reserve System following delivery by the optionee
to the committee of instructions regarding delivery to such broker, dealer
or other "creditor"of that number of shares of common stock with respect
to which the Option is exercised.
.
3. Exercise Price. The exercise price for each share of Common Stock for
which the 0ption is exercised shall be $ 1.07 per share subject to adjustment as
set forth in Section 7 hereof (the "Exercise Price"). Said Exercise Price is not
less than l00% of the fair market value of such stock as of the date of action
by the Compensation Committee.
10
<PAGE>
4. Term and Termination of 0ption. Except as otherwise provided herein,
the term of the option (the "Option Period") shall commence three years after
the Grant Date, provided that the Optionee continues to serve as an employee of
the Company for at least three (3) years after the Grant Date, and shall
terminate on the eighth anniversary of the Grant Date. Upon expiration of the
Option Period this Option, and all unexercised rights granted to Optionee
hereunder, shall terminate and thereafter be null and void.
5. Rights as Shareholders. Until the stock certificates reflecting the
Shares accruing to the Optionee upon exercise of the Option are issued to the
Optionee, the Optionee shall have no rights as a shareholder with respect to
such Shares. The Company shall make no adjustment for any dividends,
distributions or other rights on or with respect to Shares purchased pursuant to
the Option for which the record date is prior to the issuance of that stock
certificate.
6. Restriction on Transfer of Option. The Option evidenced hereby is
nontransferable other than by last will and testament or the laws of descent and
distribution, and, shall be exercisable during the lifetime of the Optionee only
by the Optionee (or in the event of his disability, by his personal
representative) and after his death, only by his personal representative.
7. Change in Capitalization, Change in Control, etc. If the number of
shares of the Common Stock of the Company shall be increased or reduced by a
stock split (other than the 1:5 reverse stock split approved on 8/26/93 and
effective 9/8/93 which has already been given effect herein), payment of a stock
dividend, a subdivision or combination of shares, reclassification, merger or
consolidation, or similar capital adjustment, an appropriate adjustment shall be
made by the Committee in the number and kind of shares as to which the Option,
or the portion thereof then unexercised, shall be or become exercisable, to the
end that the Optionee's proportionate interest shall be maintained as before the
change in the total price applicable to the unexercisable portion of the Option
and with a corresponding adjustment in the Exercise Price. All adjustments made
by the Committee under this Section shall be conclusive.
If the Company shall be the surviving corporation in any merger or
consolidation, recapitalization, reclassification of shares or similar
reorganization, an appropriate adjustment shall be made with respect to the
Shares so that the Optionee shall be entitled to purchase at the same times and
upon the same terms and conditions as are then provided by this Agreement, the
number and class of securities to which a holder of the number of Shares subject
to the Agreement at the time of the transaction would have been entitled to
receive as a result of such transaction, with any corresponding adjustment made
to the Exercise Price.
In the event of (a) a dissolution or liquidation of the Company; (b) a
merger of the Company into another corporation, or any consolidation, share
exchange, combination, reorganization, or like transaction in which the Company
is not the survivor; (c) a sale or transfer (other than as security for the
Company's obligations) of at least a majority if the assets of the Company; or
(d) a sale or transfer of 5O% or more of the issued and outstanding shares of
11
<PAGE>
Common Stock by the holders thereof in a single transaction or in a series of
related transactions, the 0ption shall become immediately exercisable as to all
Shares subject thereto to the extent it has not already become so. The Company
shall use its best efforts to provide Optionee with written notice of such
transaction at least thirty (30) days prior to the date of its consummation
8. Legend on Stock Certificates. Until and unless the registration
statement to be filed .which is intended to register the shares to be issued
pursuant to the exercise of the options granted herein is effective,
Certificates evidencing Common Stock to be distributed pursuant to the Agreement
and the Plan shall, to the extent appropriate at the time, have noted
conspicuously on the certificates an appropriate restrictive legend which is
intended to give all persons full notice of the existence of any conditions,
restrictions, rights and obligations related to the free transferability of the
shares issued.
9. Governing Laws. This Agreement shall be construed, administered and
enforced according to the laws of the State of Utah; provided, however, no
option may be exercised except in the reasonable judgment of the Board of
Directors, in compliance with exemptions under applicable state securities laws
of the state in which the Optionee resides, and/or any other applicable
securities laws.
10. Successors. This Agreement shall be binding upon and insure to the
benefits of the heirs, legal representatives, successors and permitted assigns
of the parties.
1l. Notice. Except as otherwise specified herein, all notices and other
communications under this Agreement shall be in writing and shall deemed to have
been given if personally delivered or if sent by registered or certified United
States mail, return receipt requested, postage prepaid, addressed to the
proposed recipient at the last known address of the recipient. Any party may
designate any other address to which notices shall be sent by giving notice of
the address to the other parties in the same manner as provided herein.
12. Severabitity. In the event that any one or more of the provisions or
portion thereof contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, the same shall not invalidate
or otherwise affect any other provisions of this Agreement, and this Agreement
shall be construed as if the invalid, illegal or unenforceable provision or
portion thereof had never been contained herein.
l3. Entire Agreement. Subject to the terms and conditions of the Plan, this
Agreement expresses the entire understanding and agreement of the parties. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
instruments.
14. Violation. Any transfer, pledge, sale, assignment, or hypothecation of
the Option or any portion thereof shall be a violation of the terms of this
Agreement and shall be void without effect.
l5. Headings. Paragraph headings used herein are for convenience of
reference only and shall not be considered in construing this Agreement.
12
<PAGE>
16. Specific Performance. In the event of any actual or threatened default
in, or breach of, any of the terms, conditions and provisions of this Agreement,
the party or parties who are thereby aggrieved shall have the right to specific
performance and injunction in addition to any and all other rights and remedies
at law or in equity, and all such rights and remedies shall be cumulative.
17. No Emplyment Rights Created. Neither the establishment of the Plan nor
the grant of the option hereunder shall be construed as giving the Optionee the
right to continued employment with the Company or a subsidiary.
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement on
the day and year first set forth above.
CYCLO3PSS MEDICAL SYSTEMS, INC.
/s/ John M. Williams
By: John M. Williams
Title: CEO, President & Chairman
OPTIONEE :
/s/ William R. Stoddard
William R. Stoddard
13
STOCK OPTION AGREEMENT FOR THE YEAR BEGINNING 9/1/96
PURSUANT TO AN EMPLOYMENT AGREEMENT BETWEEN
JOHN M. WILLIAMS AND CYCLO3PSS MEDICAL SYSTEMS, INC.
THIS AGREEMENT is effective as of the 31st day of August, 1996 (the "Grant
Date"), by and between CYCLO3PSS MEDICAL SYSTEMS, INC. (the "Company") and John
M.
Williams (the "0ptionee");
WITNESSETH:
WHEREAS, 0ptionee is the President and CEO of the Company, and the Company
and its board of directors consider it desirrable and in its best interests that
Optionee be given an inducement to remain in the Company's employ and to acquire
a proprietary interest in the Company, and an added incentive to advance the
interests of the Company by possessing an option to purchase shares of the
Company's common stock (the "Stock"), and
WHEREAS, the compensation committee of the Board of Directors of the
Company (the "Committee" and the Board of Directors of the Company has
authorized the grant to Optionee of a stock option authorizing 0ptionee to
purchase shares of common stock of the Company (the "Common Stock"); and
WHEREAS, the Company and 0ptionee wish to further confirm and outline the
terms and conditions of the option;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, it is hereby agreed between the parties hereto as follows:
1. Grand of Option. Subject to the terms, restrictions, limitations and
conditions stated herein and in the prospectus and the registration statement to
be filed registering the shares underlying this option, the Company hereby
grants to the 0ptionee an option (the "Option") to purchase all or any part of
100,000 post-split shares (after the 1:5 reverse stock split approved on August
26, 1993 and effective September 8 1993) of common stock of the Company (the
"Shares" ).
2. Term and Exercise of Option. Subject to the provisions of this
Agreement: (a) This option may be exercised by the optionee at any
time during the 0ption
Period, as defined in Section 4 hereof which provides that none of the
Options granted herein will be exercisable until August 31 1997. At that
date, all of the options granted herein will then be exersisable unless
the optionee's employment with the Company has terminated prior to' p
August 31, 1997, in which event the number of options exercisable will be
reduced by 8,333 shares for each month or part thereof between the date of
termination and August 31, 1997. However, the intervenin death of 0ptionee
before August 31, 1997 will remove this continued employment condition
from all options granted herein.
14
<PAGE>
(b) Subject to Section 7 hereof, the Option may be exercised with
respect the exercisable portion thereof at any time after August 3 l, 1997
and prior to the expiration date by the delivery to the Company, at its
principal place of business, of:
(i) a written notice of exercise in substantially the form attached hereto
as Exhibit 1 , which shall be actually delivered to the Company no earlier
than thirty (30) days and no later than ten ( 10) days prior to the date
upon which Optionee desires to exercise all or a portion of 0ption;
(ii) payment to the Company of the Exercise Price, defined in Section 3
below,multiplied by the nurmber of shares being purchased (the "Purchase
Price") in the manner provided in Subsection (c) hereof; and
(iii) payment of all withholding tax obligations, if any, (whether
federal, state or local) imposed by reason of the exercise of the Option.
Upon receipt of such notice, receipt of payment in full of the Purchase
Price, and receipt of payment of any withholding tax obligations due, the
Company shall cause to be issued an unrestricted certificate representing
the Shares purchased.
(c) The Purchase Price and withholding tax obligations, if any,
shall be paid in full upon the exercise of an Option and no Shares shall
be issued or delivered until full payment therefor has been made. Payment
of the Purchase Price for Shares purchased pursuant to the exercise of an
Option and any tax withholding obligations shall be made:
(i) in cash or by certified check;or
(ii) by delivery to the Company of a number of shares of common stock of
the Company which have been owned by the optionee for at least six months
prior to the date of the Option's exercise and which have a fair market
value on the date of exercise, as determined by the Compensation Committee
in its sole discretion, which is either equal to or which in combination
with cash is equal to the purchase price; or
(iii) by receipt of the purchase price in cash from a broker, dealer or
other "creditor" as defined by Regulation "T" issued by the Board of
Governors of the Federal Reserve System following delivery by the optionee
to the committee of instructions regarding delivery to such broker, dealer
or other "creditor"of that number of shares of common stock with respect
to which the Option is exercised.
.
3. Exercise Price. The exercise price for each share of Common Stock for
which the 0ption is exercised shall be $ 1.07 per share subject to adjustment as
set forth in Section 7 hereof
15
<PAGE>
(the "Exercise Price"). Said Exercise Price is not less than l00% of the
fair market value of such stock as of the date of action by the Compensation
Committee.
4. Term and Termination of 0ption. Except as otherwise provided herein,
the term of the option (the "Option Period") shall commence three years after
the Grant Date, provided that the Optionee continues to serve as an employee of
the Company for at least three (3) years after the Grant Date, and shall
terminate on the eighth anniversary of the Grant Date. Upon expiration of the
Option Period this Option, and all unexercised rights granted to Optionee
hereunder, shall terminate and thereafter be null and void.
5. Rights as Shareholders. Until the stock certificates reflecting the
Shares accruing to the Optionee upon exercise of the Option are issued to the
Optionee, the Optionee shall have no rights as a shareholder with respect to
such Shares. The Company shall make no adjustment for any dividends,
distributions or other rights on or with respect to Shares purchased pursuant to
the Option for which the record date is prior to the issuance of that stock
certificate.
6. Restriction on Transfer of Option. The Option evidenced hereby is
nontransferable other than by last will and testament or the laws of descent and
distribution, and, shall be exercisable during the lifetime of the Optionee only
by the Optionee (or in the event of his disability, by his personal
representative) and after his death, only by his personal representative.
7. Change in Capitalization, Change in Control, etc. If the number of
shares of the Common Stock of the Company shall be increased or reduced by a
stock split (other than the 1:5 reverse stock split approved on 8/26/93 and
effective 9/8/93 which has already been given effect herein), payment of a stock
dividend, a subdivision or combination of shares, reclassification, merger or
consolidation, or similar capital adjustment, an appropriate adjustment shall be
made by the Committee in the number and kind of shares as to which the Option,
or the portion thereof then unexercised, shall be or become exercisable, to the
end that the Optionee's proportionate interest shall be maintained as before the
change in the total price applicable to the unexercisable portion of the Option
and with a corresponding adjustment in the Exercise Price. All adjustments made
by the Committee under this Section shall be conclusive.
If the Company shall be the surviving corporation in any merger or
consolidation, recapitalization, reclassification of shares or similar
reorganization, an appropriate adjustment shall be made with respect to the
Shares so that the Optionee shall be entitled to purchase at the same times and
upon the same terms and conditions as are then provided by this Agreement, the
number and class of securities to which a holder of the number of Shares subject
to the Agreement at the time of the transaction would have been entitled to
receive as a result of such transaction, with any corresponding adjustment made
to the Exercise Price.
In the event of (a) a dissolution or liquidation of the Company; (b) a
merger of the Company into another corporation, or any consolidation, share
exchange, combination, reorganization, or like transaction in which the Company
is not the survivor; (c) a sale or transfer (other than as security for the
Company's obligations) of at least a majority if the assets of the Company; or
(d) a sale or transfer of 50% or more of the issued and outstanding shares of
Common Stock by the holders thereof in a single transaction or in a series of
related transactions,
16
<PAGE>
the 0ption shall become immediately exercisable as to all Shares subject thereto
to the extent it has not already become so. The Company shall use its best
efforts to provide Optionee with written notice of such transaction at least
thirty (30) days prior to the date of its consummation
8. Legend on Stock Certificates. Until and unless the registration
statement to be filed .which is intended to register the shares to be issued
pursuant to the exercise of the options granted herein is effective,
Certificates evidencing Common Stock to be distributed pursuant to the Agreement
and the Plan shall, to the extent appropriate at the time, have noted
conspicuously on the certificates an appropriate restrictive legend which is
intended to give all persons full notice of the existence of any conditions,
restrictions, rights and obligations related to the free transferability of the
shares issued.
9. Governing Laws. This Agreement shall be construed, administered and
enforced according to the laws of the State of Utah; provided, however, no
option may be exercised except in the reasonable judgment of the Board of
Directors, in compliance with exemptions under applicable state securities laws
of the state in which the Optionee resides, and/or any other applicable
securities laws.
10. Successors. This Agreement shall be binding upon and insure to the
benefits of the heirs, legal representatives, successors and permitted assigns
of the parties.
1l. Notice. Except as otherwise specified herein, all notices and other
communications under this Agreement shall be in writing and shall deemed to have
been given if personally delivered or if sent by registered or certified United
States mail, return receipt requested, postage prepaid, addressed to the
proposed recipient at the last known address of the recipient. Any party may
designate any other address to which notices shall be sent by giving notice of
the address to the other parties in the same manner as provided herein.
12. Severabitity. In the event that any one or more of the provisions or
portion thereof contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, the same shall not invalidate
or otherwise affect any other provisions of this Agreement, and this Agreement
shall be construed as if the invalid, illegal or unenforceable provision or
portion thereof had never been contained herein.
l3. Entire Agreement. Subject to the terms and conditions of the Plan, this
Agreement expresses the entire understanding and agreement of the parties. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
instruments.
14. Violation. Any transfer, pledge, sale, assignment, or hypothecation of
the Option or any portion thereof shall be a violation of the terms of this
Agreement and shall be void without effect.
l5. Headings. Paragraph headings used herein are for convenience of
reference only and shall not be considered in construing this Agreement.
17
<PAGE>
16. Specific Performance. In the event of any actual or threatened default
in, or breach of, any of the terms, conditions and provisions of this Agreement,
the party or parties who are thereby aggrieved shall have the right to specific
performance and injunction in addition to any and all other rights and remedies
at law or in equity, and all such rights and remedies shall be cumulative.
17. No Emplyment Rights Created. Neither the establishment of the Plan nor
the grant of the option hereunder shall be construed as giving the Optionee the
right to continued employment with the Company or a subsidiary.
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement on
the day and year first set forth above.
CYCLO3PSS MEDICAL SYSTEMS, INC.
/s/ William R. Stoddard
By: William R. Stoddard
Title: Vice President
OPTIONEE:
/s/ John M. Williams
John M. Williams
18
EMPLOYMENT CONTRACT
AN AGREEMENT made on August 31, 1997, between WILLIAM R. STODDARD residing
in Salt Lake City, Utah, herein referred to as "STODDARD" and CYCLO3PSS
CORPORATION, a Delaware Corporation, with business offices located at 3646 West
2100 South, Salt Lake City, Utah, herein referred to as "CYCLO3PSS".
In consideration of the mutual covenants and promises of the parties
hereto, CYCLO3PSS and STODDARD agree as follows:
SECTION ONE - EMPLOYMENT: CYCLO3PSS employs STODDARD to act as President,
Chief Executive Officer and Chairman of the board for CYCLO3PSS and its
subsidiary corporations, and STODDARD accepts such employment with CYCLO3PSS,
subject to the terms and conditions of this agreement.
SECTION TWO - TERM OF EMPLOYMENT: The effective term of this agreement and
the employment hereunder shall commence on September l, 1997, and continue until
August 31, 2000.
SECTION THREE - DUTIES OF STODDARD: STODDARD will serve
CYCLO3PSS to the best of his ability under the direction of the board of
directors of CYCLO3PSS. STODDARD shall devote such of his time and energy as is
necessary to timely complete the services and duties contemplated under this
agreement.
SECTION FOUR - REGULAR COMPENSATION: STODDARD' S salary shall be
at the rate of One Hundred and Fifty Thousand ($ 150,000.00) dollars per
calendar year, payable semi-monthly, during the life of this agreement.
SECTION FIVE - INCENTIVE STOCK OPTION: In addition to the compensation as
described above, and as a further incentive for STODDARD to continue his
employment throughout the period defined above, CYCLO3PSS agrees to, and hereby
grants to STODDA.RD, options for the purchase of FOUR HUNDRED AND FIFTY THOUSAND
SHA.RES (450,000) of newly issued restricted common stock in concert with the
execution of this Contract. These options are exercisable at a rate of ONE
HUNDRED AND FIFTY THOUSAND SHARES (l 50,000) per year, for each year of the
THREE YEAR (3yr) period of employment as defined in the Contract. The options
are considered earned monthly and are exercisable at the end of each employment
year and are conditioned only by section twelve of this Contract. The options
are non-transferable other than by will or the law of descent and distribution,
and expire upon the FIVE YEAR (5yr) anniversary of the date on which they become
exercisable.
SECTION SIX - PRICE AND VALUATION OF THE OPTIONED SHARES: The optioned
shares are deemed granted upon the execution of this Employment Contract. The
options are granted at the current fair market value of the Companys common
stock, which has been determined by Board of Directors of the Company to be 90
cents ($0.90) per share. Said
19
<PAGE>
excercise price is the average closing bid for such said stock during the last
five days of August, 1997.
SECTION SEVEN - HEALTH CARE INSURANCE BENEFITS: It is the intent of
CYCLO3PSS to provide STODDARD and his dependants with health insurance coverage
on a plan specific to key executive personnel. CYCLO3PSS shall have complete
descretion in choosing the type of health insurance plan provided STODDA.RD and
in choosing the insurance carrier and extent of insurance coverage, provided
that such health insurance plan will include hospital, maternity, major medical,
and dental coverage for STODDARD and his dependants. In the event it is
determined that establishing such an executive plan is inconsistent with federal
or state statutes. CYCLO3PSS will provide the same health insurance benefits to
STODDARD that are provided to other employees.
SECTION EIGHT - MOVING EXPENSES: In the event STODDARD is required by
CYCLO3PSS to move his residence outside of the State of Utah, STODDARD shall
receive towards any moving expenses the amount actually spent for moving vans,
storage of goods in transit, any sales commission on the sa.le of STODDARD' S
present residence, and all motel and hotel room expense.
SECTION NINE - REIMBURSEMENT FOR EXPENSES: STODDARD shall be
authorized to incur reasonable expenses on behalf of CYCLO3PSS including, but
not limited to, expenses for entertainment, travel, management seminars, related
travel and related use of the telephone. CYCLO3PSS shall reimburse STODDARD for
reasonable out-of pocket expenses which STODDARD may incur in connection with
his services for CYCLO3PSS contemplated herein, provided that STODDARD presents
appropriate vouchers evidencing any such expenses to CYCLO3PSS.
SECTION TEN - STODDARD'S SERVICE AS DIRECTOR: STODDARD hereby
consents to serve, if duly elected, as a director of CYCLO3PSS or any subsidiary
or corporation affiliated with CYCLO3PSS. However, STODDARD' S employment during
the employment period as defined above is not conditioned by, nor contingent
upon STODDARD'S participation as a member of the Board of Directors.
SECTION ELEVEN - INDEMNIFICATION OF STODDARD: CYCLO3PSS shall
indemnify STODDARD to the full extent permitted by law against all expenses,
attorney's fees, judgments, fines and amounts paid in settlement, actually and
reasonably incurred by STODDARD in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, incurred by STODDARD in connection with any act or omission by
STODDARD occasioned under this agreement, provided that he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interest of CYCLO3PSS and provided, with respect to any criminal action, that he
did not have reasonable cause to believe his conduct was unlawful.
SECTION TWELVE - TERMINATION: This agreement may be terminated by CYCLO3PSS
for cause only. Cause shall be defined as fraud, misappropriation or intentional
material damage to the property or business of CYCLO3PSS, or by board
determination of
20
<PAGE>
inadequate performance. STODDARD may cancel this agreement on Sixty (60) days
written notice for any reason. If CYCLO3PSS terminates this agreement without
cause, CYCLO3PSS shall pay to STODDARD, an amount equal to the remaining
compensation set forth in Section Four and Five hereof from the date of
termination to the expiration date of this agreement. If STODDARD terminates
this agreement, or if CYCLO3PSS terminates this Contract for cause, STODDARD
will receive only that compensation earned by him up to the point of his
termination including stock options and bonuses then due as set forth in
sections Four and Five, with the non-competition and non-disclosure provisions
of Section Thirteen remaining in effect notwithstanding the termination of this
agreement.
SECTION THIRTEEN - NON-COMPETITION AFTER TERMINATION:
STODDARD agrees that in addition to any other limitation, for a period of 24
months after the termination of his employment hereunder, and unless otherwise
specified herein, he will not directly or indirectly engage in, or in any manner
be connected with or employed by any person, firm or corporation in competition
with CYCLO3PSS or any of its subsidiaries, or engaged in providing similar
products and services as CYCLO3PSS or any of its subsidiaries, within the
territorial limits of the United States of America.
SECTION FOURTEEN - USE OF CONFIDENTIAL INFORMATION:
STODDARD recognizes and acknowledges that he will have access to certain
confidential information of CYCLO3PSS or other division or subsidiary of
CYCLO3PSS and that such information constitutes valuable, special and unique
property of CYCLO3PSS and such other entities. STODDARD agrees that in addition
to any other limitation, regardless of the circumstances of the termination of
employment, he will not communicate to any person, firm, or corporation any such
confidential information relating to any product, patent, patent pending, FDA
Certification, license, certificate, design, customer lists, prices, secrets,
advertising, or any confidential knowledge or secrets which he might from time
to time acquire with respect to the business of CYCLO3PSS or any of its
subsidiaries, for a period of five years after termination or whenever
information becomes available to the public, whichever comes first.
SECTION FIFTEEN - COMMUNICATIONS TO CYCLO3PSS: From the time this
agreement commences until the termination thereof, STODDARD shall communicate
and channel to CYCLO3PSS all knowledge, business and customer contracts and any
other matters of information which could concern or be in any way beneficial to
the business of CYCLO3PSS, whether acquired by STODDARD before or during the
terms of this agreement, provided, however, that nothing hereunder shall be
construed as requiring such communications where the information is lawfully
protected from disclosure as a trade secret of a third party. Any such
information communicated to CYCLO3PSS as aforesaid shall be and remain the
property of CYCLO3PSS, notwithstanding the subsequent termination of this
agreement.
SECTION SIXTEEN - BINDING EFFECT: This agreement shall be binding on and
shall insure to the benefit of CYCLO3PSS, or any successor (s) of CYCLO3PSS, and
the personal representatives of STODDA.RD. CYCLO3PSS may assign all of its
interest in this agreement, subject to all the obligations of CYCLO3PSS, to any
third-party interested in taking over the capital stock and property of
CYCLO3PSS, and STODDARD will fulfill for such corporation any and all
obligations required under this agreement. In the event any such third-party
taking
21
<PAGE>
over the capital stock and/or property of CYCLO3PSS terminates this employment
agreement for any reason other than cause as defined in Section Twelve hereof,
STODDARD shall be entitled to his full compensation hereunder remaining under
the THREE (3) year terms of this employment agreement, including all bene~ts
and/or rights set forth in Sections Four, Five, Seven, Eight and Nine hereof.
SECTION SEVENTEEN - LAW TO GOVERN CONTRACT: This agreement shall
be governed by the law of the State of Utah.
SECTION EIGHTEN - MISCELLANEOUS: In the event a provision of this
agreement shall be construed invalid or unenforceable by a court of competent
jurisdiction, this agreement shall be construed as if such invalid or
unenforceable provisions were omitted.
In Witness Whereof, the parties have executed this agreement the day and
year first above written.
/s/ William R. Stoddard
WILLIAM R. STODDARD
CYCLO3PSS CORPORATION
Under Authority of the Board of Directors ;
By: /s/ Steve Sarich, Jr.
Member of the Board and of
The Executive Compensation
Committee
Attest:
___________________
22
<PAGE>
AMENDMENT NO. 1 TO
EMPLOYMENT CONTRACT
The undersigned agree that Section Six of the Employment Contract is
hereby amended to reduce the exercise price of the option shares from $1.61 (One
Dollar and Sixty One Cents) per share to $.10 (Ten Cents) per share.
Dated: 4/22/99
/s/ William R. Stoddard
WILLIAM R. STODDARD
CYCLO3PSS CORPORATION
Under Authority of the Board of Directors
By: /s/ Steve Sarich, Jr.
Member of the Board and of
The Executive Compensation
Committee
23
EMPLOYMENT CONTRACT
AN AGREEMENT made on March 1, 1998, between DURAND SMITH residing in
Placitas, NM, herein referred to as "SMITH" and CYCLO3PSS CORPORATION, a
Delaware Corporation, with business offices located at 3646 West 2100 South,
Salt Lake City, Utah, herein referred to as "CYCLO3PSS".
In consideration of the mutual covenants and promises of the parties
hereto, CYCLO3PSS and STODDARD agree as follows:
SECTION ONE - EMPLOYMENT:CYCLO3PSS employs SMITH to act as Vice President
- - Research & Development for CYCLO3PSS Corporation, and SMITH accepts such
employment with CYCLO3PSS, subject to the terms and conditions of this
agreement.
SECTION TWO - TERM OF EMPLOYMENT: The effective term of this agreement and
the employment hereunder shall commence on March 23, 1998, and continue until
March 22, 2001.
SECTION THREE - DUTIES OF SMITH: SMITH will serve CYCLO3PSS to the best of
his ability under the direction of the board of directors of CYCLO3PSS.SMITH
shall devote such of his time and energy as is necessary to timely complete the
services and duties contemplated under this agreement.
SECTION FOUR - REGULAR COMPENSATION: SMITH' S salary shall be at the rate
of One Hundred and Twenty Thousand ($ 120,000.00) dollars per calendar year,
payable semi-monthly, during the life of this agreement.
SECTION FIVE - INCENTIVE STOCK OPTION: In addition to the compensation as
described above, and as a further incentive for SMITH to continue his employment
throughout the period defined above, CYCLO3PSS agrees to, and hereby grants to
SMITH, options for the purchase of THREE HUNDRED AND FIFTY THOUSAND SHA.RES
(350,000) of newly issued restricted common stock in concert with the execution
of this Contract. The options are granted at the beginning of each employment
year and and are exercisable at the end of each calender year and are
conditioned only by section twelve of this Contract. These options are
exercisable at a rate of ONE HUNDRED AND FIFTY THOUSAND SHARES (l50,000) first
year, ONE HUNDRED THOUSAND SHARES (l00,000) second year, ONE HUNDRED THOUSAND
SHARES (l00,000) third year. The options are non-transferable other than by will
or the law of descent and distribution, and expire upon the FIVE YEAR (5yr)
anniversary of the date on which they become exercisable.
SECTION SIX - PRICE AND VALUATION OF THE OPTIONED SHARES: The optioned
shares are deemed granted upon the execution of this Employment Contract. The
options are granted at the current fair market value of the Companys common
stock, which has been determined by Board of Directors of the Company to be
$1.61 (One Dollar and Sixty One Cents) per share. Said exercise price is the
average closing bid for such said stock during the last five days prior to
today, February 17, 1998.
24
<PAGE>
SECTION SEVEN - HEALTH CARE INSURANCE BENEFITS: It is the intent of
CYCLO3PSS to provide SMITH and his dependants with health insurance coverage on
a plan specific to key executive personnel. CYCLO3PSS shall have complete
discretion in choosing the type of health insurance plan provided SMITH and in
choosing the insurance carrier and extent of insurance coverage, provided that
such health insurance plan will include hospital, maternity, major medical, and
dental coverage for SMITH and his dependants. In the event it is determined that
establishing such an executive plan is inconsistent with federal or state
statutes. CYCLO3PSS will provide the same health insurance benefits to SMITH
that are provided to other employees.
SECTION EIGHT - MOVING EXPENSES: In the event SMITH is required by
CYCLO3PSS to move his residence outside of the State of New Mexico,SMITH shall
receive towards any moving expenses the amount actually spent for moving vans,
storage of goods in transit, any sales commission on the sale of SMITH' S
present residence, and all motel and hotel room expense.
SECTION NINE - REIMBURSEMENT FOR EXPENSES:SMITH shall be
authorized to incur reasonable expenses on behalf of CYCLO3PSS including, but
not limited to, expenses for entertainment, travel, management seminars, related
travel and related use of the telephone. CYCLO3PSS shall reimburse SMITH for
reasonable out-of pocket expenses which SMITH may incur in connection with his
services for CYCLO3PSS contemplated herein, provided that SMITH presents
appropriate vouchers evidencing any such expenses to CYCLO3PSS.
SECTION TEN - SMITH'S SERVICE AS DIRECTOR: SMITH hereby consents to
serve, if duly elected, as a director of CYCLO3PSS or any subsidiary or
corporation affiliated with CYCLO3PSS. However,SMITH' S employment during the
employment period as defined above is not conditioned by, nor contingent upon
SMITH'S participation as a member of the Board of Directors.
SECTION ELEVEN - INDEMNIFICATION OF SMITH: CYCLO3PSS shall
indemnify SMITH to the full extent permitted by law against all expenses,
attorney's fees, judgments, fines and amounts paid in settlement, actually and
reasonably incurred by SMITH in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, incurred by SMITH in connection with any act or omission by SMITH
occasioned under this agreement, provided that he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interest of
CYCLO3PSS and provided, with respect to any criminal action, that he did not
have reasonable cause to believe his conduct was unlawful.
SECTION TWELVE -TERMINATION: This agreement may be terminated by CYCLO3PSS
for cause only. Cause shall be defined as fraud, misappropriation or intentional
material damage to the property or business of CYCLO3PSS, or by board
determination of inadequate performance. SMITH may cancel this agreement on
Sixty (60) days written notice for any reason. If CYCLO3PSS terminates this
agreement without cause, CYCLO3PSS shall pay to SMITH, an amount equal to the
remaining compensation set forth in Section Four and Five
25
<PAGE>
hereof from the date of termination to the expiration date of this agreement. If
SMITH terminates this agreement, or if CYCLO3PSS terminates this Contract for
cause,SMITH will receive only that compensation earned by him up to the point of
his termination including stock options and bonuses then due as set forth in
sections Four and Five, with the non-competition and non- disclosure provisions
of Section Thirteen remaining in effect notwithstanding the termination of this
agreement.
SECTION THIRTEEN - NON-COMPETITION AFTER TERMINATION: SMITH
agrees that in addition to any other limitation, for a period of 24 months after
the termination of his employment hereunder, and unless otherwise specified
herein, he will not directly or indirectly engage in, or in any manner be
connected with or employed by any person, firm or corporation in competition
with CYCLO3PSS or any of its subsidiaries, or engaged in providing similar
products and services as CYCLO3PSS or any of its subsidiaries, within the
territorial limits of the United States of America.
SECTION FOURTEEN - USE OF CONFIDENTIAL INFORMATION: SMITH
recognizes and acknowledges that he will have access to certain confidential
information of CYCLO3PSS or other division or subsidiary of CYCLO3PSS and that
such information constitutes valuable, special and unique property of CYCLO3PSS
and such other entities. SMITH agrees that in addition to any other limitation,
regardless of the circumstances of the termination of employment, he will not
communicate to any person, firm, or corporation any such confidential
information relating to any product, patent, patent pending, FDA Certification,
license, certificate, design, customer lists, prices, secrets, advertising, or
any confidential knowledge or secrets which he might from time to time acquire
with respect to the business of CYCLO3PSS or any of its subsidiaries, for a
period of five years after termination or whenever information becomes available
to the public, whichever comes first.
SECTION FIFTEEN - COMMUNICATIONS TO CYCLO3PSS: From the time this
agreement commences until the termination thereof, SMITH shall communicate and
channel to CYCLO3PSS all knowledge, business and customer contracts and any
other matters of information which could concern or be in any way beneficial to
the business of CYCLO3PSS, whether acquired by SMITH before or during the terms
of this agreement, provided, however, that nothing hereunder shall be construed
as requiring such communications where the information is lawfully protected
from disclosure as a trade secret of a third party. Any such information
communicated to CYCLO3PSS as aforesaid shall be and remain the property of
CYCLO3PSS, notwithstanding the subsequent termination of this agreement.
SECTION SIXTEEN - BINDING EFFECT: This agreement shall be binding on and
shall insure to the benefit of CYCLO3PSS, or any successor (s) of CYCLO3PSS, and
the personal representatives of SMITH. CYCLO3PSS may assign all of its interest
in this agreement, subject to all the obligations of CYCLO3PSS, to any
third-party interested in taking over the capital stock and property of
CYCLO3PSS, and SMITH will fulfill for such corporation any and all obligations
required under this agreement. In the event any such third-party taking over the
capital stock and/or property of CYCLO3PSS terminates this employment agreement
for any reason other than cause as defined in Section Twelve hereof, STODDARD
shall be entitled to his full compensation hereunder remaining under the THREE
(3) year terms of this employment
26
<PAGE>
agreement, including all bene~ts and/or rights set forth in Sections Four, Five,
Seven, Eight and Nine hereof.
SECTION SEVENTEEN - LAW TO GOVERN CONTRACT: This agreement shall
be governed by the law of the State of Utah.
SECTION EIGHTEN - MISCELLANEOUS: In the event a provision of this
agreement shall be construed invalid or unenforceable by a court of competent
jurisdiction, this agreement shall be construed as if such invalid or
unenforceable provisions were omitted.
In Witness Whereof, the parties have executed this agreement the day and
year first above written.
/s/ Durand M. Smith
DURAND SMITH
CYCLO3PSS CORPORATION
Under Authority of the Board of Directors;
By: /s/ Steve Sarich, Jr.
Member of the Board and of
The Executive Compensation
Committee
Attest:
______________________
27
<PAGE>
AMENDMENT NO. 1 TO
EMPLOYMENT CONTRACT
The undersigned agree that Section Six of the Employment Contract is
hereby amended to reduce the exercise price of the option shares from $1.61 (One
Dollar and Sixty One Cents) per share to $.10 (Ten Cents) per share.
Dated: 4/23/99
/s/ Durand M. Smith
DURAND SMITH
CYCLO3PSS CORPORATION
Under Authority of the Board of Directors
By: /s/ Steve Sarich, Jr.
Member of the Board and of
The Executive Compensation
Committee
28
STOCK OPTION AGREEMENT FOR THE YEAR BEGINNING 6/1/97
PURSUANT TO AN EMPLOYMENT AGREEMENT BETWEEN
MONDIS NKOY AND CYCLO3PSS MEDICAL SYSTEMS, INC.
THIS AGREEMENT is effective as of the 31st day of May, 1997 (the "Grant
Date"), by and between CYCLO3PSS MEDICAL SYSTEMS, INC. (the "Company") and
Mondis Nkoy (the "0ptionee");
WITNESSETH:
WHEREAS, 0ptionee is the Corporate Secretary of the Company, and the
Company and its board of directors consider it desirrable and in its best
interests that Optionee be given an inducement to remain in the Company's employ
and to acquire a proprietary interest in the Company, and an added incentive to
advance the interests of the Company by possessing an option to purchase shares
of the Company's common stock (the "Stock"), and
WHEREAS, the compensation committee of the Board of Directors of the
Company (the "Committee" and the Board of Directors of the Company has
authorized the grant to Optionee of a stock option authorizing 0ptionee to
purchase shares of common stock of the Company (the "Common Stock"); and
WHEREAS, the Company and 0ptionee wish to further confirm and outline the
terms and conditions of the option;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, it is hereby agreed between the parties hereto as follows:
1. Grand of Option. Subject to the terms, restrictions, limitations and
conditions stated herein and in the prospectus and the registration statement to
be filed registering the shares underlying this option, the Company hereby
grants to the 0ptionee an option (the "Option") to purchase all or any part of
15,000 post-split shares (after the 1:5 reverse stock split approved on August
26, 1993 and effective September 8 1993) of common stock of the Company (the
"Shares" ).
2. Term and Exercise of Option. Subject to the provisions of this
Agreement:
(a) This option may be exercised by the optionee at any time during the
0ption Period, as defined in Section 4 hereof which provides that none of the
Options granted herein will be exercisable until May 31, 2000. At that date, all
of the options granted herein will then be exersisable unless the ootionee's
employment with the Company has terminated prior to May 31, 2000, in which event
the number of options exercisable will be reduced by 416 shares for each month
or part thereof between the date of termination and May 31, 2000. However, the
intervenin death of 0ptionee before May 31, 2000 will remove this continued
employment condition from all options granted herein.
29
<PAGE>
(b) Subject to Section 7 hereof, the Option may be exercised with
respect the exercisable portion thereof at any time after May 31, 2000 and
prior to the expiration date by the delivery to the Company, at its
principal place of business, of:
(i) a written notice of exercise in substantially the form attached hereto
as Exhibit 1 , which shall be actually delivered to the Company no earlier
than thirty (30) days and no later than ten ( 10) days prior to the date
upon which Optionee desires to exercise all or a portion of 0ption;
(ii) payment to the Company of the Exercise Price, defined in Section 3
below,multiplied by the nurmber of shares being purchased (the "Purchase
Price") in the manner provided in Subsection (c) hereof; and
(iii) payment of all withholding tax obligations, if any, (whether
federal, state or local) imposed by reason of the exercise of the Option.
Upon receipt of such notice, receipt of payment in full of the Purchase
Price, and receipt of payment of any withholding tax obligations due, the
Company shall cause to be issued an unrestricted certificate representing
the Shares purchased.
(c) The Purchase Price and withholding tax obligations, if any,
shall be paid in full upon the exercise of an Option and no Shares shall
be issued or delivered until full payment therefor has been made. Payment
of the Purchase Price for Shares purchased pursuant to the exercise of an
Option and any tax withholding obligations shall be made:
(i) in cash or by certified check;or
(ii) by delivery to the Company of a number of shares of common stock of
the Company which have been owned by the optionee for at least six months
prior to the date of the Option's exercise and which have a fair market
value on the date of exercise, as determined by the Compensation Committee
in its sole discretion, which is either equal to or which in combination
with cash is equal to the purchase price; or
(iii) by receipt of the purchase price in cash from a broker, dealer or
other "creditor" as defined by Regulation "T" issued by the Board of
Governors of the Federal Reserve System following delivery by the optionee
to the committee of instructions regarding delivery to such broker, dealer
or other "creditor"of that number of shares of common stock with respect
to which the Option is exercised.
3. Exercise Price. The exercise price for each share of Common Stock for
which the 0ption is exercised shall be 95 cents per share subject to adjustment
as set forth in Section 7 hereof (the "Exercise Price"). Said Exercise Price is
not less than l00% of the fair market value of such stock as of the date of
action by the Compensation Committee.
4. Term and Termination of 0ption. Except as otherwise provided herein,
the term of the option (the "Option Period") shall commence three years after
the Grant Date, provided that
30
<PAGE>
the Optionee continues to serve as an employee of the Company for at least three
(3) years after the Grant Date, and shall terminate on the eighth anniversary of
the Grant Date. Upon expiration of the Option Period this Option, and all
unexercised rights granted to Optionee hereunder, shall terminate and thereafter
be null and void.
5. Rights as Shareholders. Until the stock certificates reflecting the
Shares accruing to the Optionee upon exercise of the Option are issued to the
Optionee, the Optionee shall have no rights as a shareholder with respect to
such Shares. The Company shall make no adjustment for any dividends,
distributions or other rights on or with respect to Shares purchased pursuant to
the Option for which the record date is prior to the issuance of that stock
certificate.
6. Restriction on Transfer of Option. The Option evidenced hereby is
nontransferable other than by last will and testament or the laws of descent and
distribution, and, shall be exercisable during the lifetime of the Optionee only
by the Optionee (or in the event of his disability, by his personal
representative) and after his death, only by his personal representative.
7. Change in Capitalization, Change in Control, etc. If the number of
shares of the Common Stock of the Company shall be increased or reduced by a
stock split (other than the 1:5 reverse stock split approved on 8/26/93 and
effective 9/8/93 which has already been given effect herein), payment of a stock
dividend, a subdivision or combination of shares, reclassification, merger or
consolidation, or similar capital adjustment, an appropriate adjustment shall be
made by the Committee in the number and kind of shares as to which the Option,
or the portion thereof then unexercised, shall be or become exercisable, to the
end that the Optionee's proportionate interest shall be maintained as before the
change in the total price applicable to the unexercisable portion of the Option
and with a corresponding adjustment in the Exercise Price. All adjustments made
by the Committee under this Section shall be conclusive.
If the Company shall be the surviving corporation in any merger or
consolidation, recapitalization, reclassification of shares or similar
reorganization, an appropriate adjustment shall be made with respect to the
Shares so that the Optionee shall be entitled to purchase at the same times and
upon the same terms and conditions as are then provided by this Agreement, the
number and class of securities to which a holder of the number of Shares subject
to the Agreement at the time of the transaction would have been entitled to
receive as a result of such transaction, with any corresponding adjustment made
to the Exercise Price.
In the event of (a) a dissolution or liquidation of the Company; (b) a
merger of the Company into another corporation, or any consolidation, share
exchange, combination, reorganization, or like transaction in which the Company
is not the survivor; (c) a sale or transfer (other than as security for the
Company's obligations) of at least a majority if the assets of the Company; or
(d) a sale or transfer of 5O% or more of the issued and outstanding shares of
Common Stock by the holders thereof in a single transaction or in a series of
related transactions, the 0ption shall become immediately exercisable as to all
Shares subject thereto to the extent it has not already become so. The Company
shall use its best efforts to provide Optionee with written notice of such
transaction at least thirty (30) days prior to the date of its consummation
31
<PAGE>
8. Legend on Stock Certificates. Until and unless the registration
statement to be filed .which is intended to register the shares to be issued
pursuant to the exercise of the options granted herein is effective,
Certificates evidencing Common Stock to be distributed pursuant to the Agreement
and the Plan shall, to the extent appropriate at the time, have noted
conspicuously on the certificates an appropriate restrictive legend which is
intended to give all persons full notice of the existence of any conditions,
restrictions, rights and obligations related to the free transferability of the
shares issued.
9. Governing Laws. This Agreement shall be construed, administered and
enforced according to the laws of the State of Utah; provided, however, no
option may be exercised except in the reasonable judgment of the Board of
Directors, in compliance with exemptions under applicable state securities laws
of the state in which the Optionee resides, and/or any other applicable
securities laws.
10. Successors. This Agreement shall be binding upon and insure to the
benefits of the heirs, legal representatives, successors and permitted assigns
of the parties.
1l. Notice. Except as otherwise specified herein, all notices and other
communications under this Agreement shall be in writing and shall deemed to have
been given if personally delivered or if sent by registered or certified United
States mail, return receipt requested, postage prepaid, addressed to the
proposed recipient at the last known address of the recipient. Any party may
designate any other address to which notices shall be sent by giving notice of
the address to the other parties in the same manner as provided herein.
12. Severabitity. In the event that any one or more of the provisions or
portion thereof contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, the same shall not invalidate
or otherwise affect any other provisions of this Agreement, and this Agreement
shall be construed as if the invalid, illegal or unenforceable provision or
portion thereof had never been contained herein.
l3. Entire Agreement. Subject to the terms and conditions of the Plan, this
Agreement expresses the entire understanding and agreement of the parties. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
instruments.
14. Violation. Any transfer, pledge, sale, assignment, or hypothecation of
the Option or any portion thereof shall be a violation of the terms of this
Agreement and shall be void without effect.
l5. Headings. Paragraph headings used herein are for convenience of
reference only and shall not be considered in construing this Agreement.
16. Specific Performance. In the event of any actual or threatened default
in, or breach of, any of the terms, conditions and provisions of this Agreement,
the party or parties who are thereby aggrieved shall have the right to specific
performance and injunction in addition to any and all other rights and remedies
at law or in equity, and all such rights and remedies shall be cumulative.
17. No Emplyment Rights Created. Neither the establishment of the Plan nor
the grant of the option hereunder shall be construed as giving the Optionee the
right to continued employment with the Company or a subsidiary.
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement on
the day and year first set forth above.
32
<PAGE>
CYCLO3PSS MEDICAL SYSTEMS, INC.
/s/ John M. Williams
By: John M. Williams
Title: CEO, President & Chairman
OPTIONEE :
/s/ Mondis Nkoy
Mondis Nkoy
33
<PAGE>
AMENDMENT NO. 1 TO
STOCK OPTION AGREEMENT FOR THE YEAR BEGINNING 6/1/97
PURSUANT TO AN EMPLOYMENT AGREEMENT BETWEEN
MONDIS NKOY AND CYCLO3PSS MEDICAL SYSTEMS, INC.
The undersigned agree that Section Three of the Stock Option Agreement is
hereby amended to reduce the exercise price of the option shares from $.95
(Ninety-Five Cents) per share to $.10 (Ten Cents) per share.
Dated: 4/23/99
/s/ Mondis Nkoy
MONDIS NKOY
CYCLO3PSS CORPORATION
Under Authority of the Board of Directors
By: /s/ Steve Sarich, Jr.
Member of the Board and of
The Executive Compensation
Committee
34
AGREEMENT
THIS AGREEMENT is entered into the 15th day of April, 1999 (the "Agreement
Date"), by and between CYCLO3PSS CORPORATION, a Delaware Corporation (the
"Company"), and William R. Stoddard (the "Employee").
RECITALS
The Company owes Employee $18,000 for wages not paid.
The Company currently has limited cash flow and desires to pay such wages
by issuance of shares of Company stock.
The Employee agrees, on the terms and conditions set forth herein, to
accept 180,000 shares of CYCLO3PSS common stock as payment for $18,000 of wages
not paid.
1. Issuance of Stock. The Company will issue 180,000 shares of the
Company's common stock as payment in full of $18,000 of wages owed to William R.
Stoddard. The shares shall be issued at $.10 per share.
2. Acceptance of Stock. William R. Stoddard accepts 180,000 of the
Company's common stock as payment in full of $18,000 of wages not paid.
3. Registration of Shares. The Shares have not been registered with the
Securities and Exchange Commission. The Company shall use its best efforts to
register the shares on Form S-8 and keep such Registration in effect with the
Securities and Exchange Commission as soon as practical and not later than six
months from the date hereof.
4. Miscellaneous.
4.1 Amendments. The terms and conditions of this Agreement may be amended
at any time by mutual agreement of the parties, provided that before any
amendment shall be valid or effective it shall have been approved by the Board
of Directors of the Company, reduced to writing and signed by the Company and
the Employee.
4.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah.
4.3 Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
4.4 Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of the Agreement.
4.5 Savings Clause. If any provision of this Agreement, or the application
of such provision to any person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to persons or
circumstances other than those as to which it is held invalid, shall not be
affected thereby.
35
<PAGE>
4.6 Legal Fees and Expenses. The prevailing party in any proceeding
brought to enforce or interpret any provision of this Agreement shall be
entitled to recover its attorney's fees, costs and disbursements incurred in
connection with such proceeding, including, but not limited to the costs of
experts, accountants and consultants and all other costs and services reasonably
related to the proceeding, including those incurred in any bankruptcy or appeal,
from the non-prevailing party or parties.
36
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above-written.
CYCLO3PSS CORPORATION, Employee:
a Delaware Corporation:
By /s/ Mondis Nkoy By: /s/ William R. Stoddard
----------------------- --------------------------
Mondis Nkoy, Secretary William R. Stoddard
37
Exhibit 5.1
May 13, 1999
Cyclo3pss Corporation
3646 West 2100 South
Salt Lake City, Utah 84120
Re: Opinion Letter
Gentlemen:
You have requested our opinion as counsel for Cyclo3pss Corporation, a
Delaware corporation (the "Company"), in connection with the registration under
the Securities Act of 1933, as amended, and the Rules and Regulations
promulgated thereunder, and the public offering by the Company of the following
described shares: (1) up to 815,000 shares issuable at $.10 per share under the
terms of three Employee Stock Option Agreements; (ii) up to 200,000 shares
issuable at $1.07 per share under the terms of two Employee Stock Option
Agreements; and (iii) 180,000 shares issued as compensation in lieu of wages.
You have informed us that such shares were not and will not be issued for
capital raising services and under the terms of Form S-8, the Company is
entitled to register such shares on such Form.
We have examined the Company's Registration Statement on Form S-8 in the
form to be filed with the Securities and Exchange Commission or about May 7,
1999 (the "Registration Statement"). We further have examined the Amended and
Restated Certificate of Incorporation of the Company as certified by the
Secretary of State of the State of Delaware, the Bylaws and the minute books of
the Company as a basis for the opinion hereafter expressed.
Based on the foregoing examination, we are of the opinion that, upon
issuance and sale in the manner described in the Registration Statement, the
shares of Common Stock covered by the Registration Statement will be legally
issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
COHNE, RAPPAPORT & SEGAL, P.C.
/s/ Cohne, Rappaport & Segal
Cohne, Rappaport & Segal
38
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33- XXX) pertaining to the Employee Stock Option Agreement -
William R. Stoddard, Employee Stock Option Agreement - John M. Williams,
Employment Agreement - William R. Stoddard, Employment Agreement - Durand Smith,
Employee Stock Option Agreements - Mondis Nkoy, Agreement (Regarding Shares in
Lieu of Cash Salary) - William R. Stoddard in Lieu of Cash Wages of Cyclopss
Corporation of our report dated May 5, 1998, with respect to the consolidated
financial statements of Cyclopss Corporation included in its Annual Report (Form
10-KSB) for the year ended February 28, 1998, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young, LLP
Salt Lake City, UT
May 7, 1999
