Jerome J. and Ann T. Klawitter - Page 4

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               While on the faculty of Tulane, petitioner designed an                 
          artificial heart valve constructed from carbon-based materials.             
          In 1978, petitioner’s work brought him into contact with Dr. Russ           
          Chambers (Dr. Chambers).  Shortly after they met, petitioner and            
          Dr. Chambers organized Hemex, Inc. (Hemex), for the purpose of              
          producing artificial heart valves.  In 1980, petitioner resigned            
          from Tulane to become president of Hemex.  Dr. Chambers was                 
          chairman of the board.  Hemex developed an all-carbon heart                 
          valve replacement that was approved by the Food and Drug                    
          Administration.  On December 16, 1986, the assets of Hemex were             
          acquired by Baxter Healthcare Corp. (Baxter), a company involved            
          in the production and marketing of artificial heart valves.                 
               On December 27, 1986, petitioner and Tellurogenic, an                  
          entity created and controlled by Dr. Chambers, formed and                   
          became general partners in Archimedes Partnership (Archimedes).             
          Initially, Tellurogenic served as managing general partner of               
          Archimedes.  The original capital structure of Archimedes                   
          consisted of petitioner’s contribution of $3.065 million in                 
          cash and Tellurogenic’s contribution of 75,000 shares of Dews               
          Laboratories, Inc.1  According to Archimedes’s amended articles             






               1 The value of this stock at the time of its contribution              
          cannot be determined from the record.                                       




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