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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
proxy statementProxy Statement Pursuant to Section 14(a)14(A) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement
|_| Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive proxy statement
|_| Definitive Additional Materials
Rule 14a-6(e)(2)
|_| Soliciting Material Under ss. 240.14a-12
QUANTRX BIOMEDICAL CORPORATION
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(Name of RegistrantsRegistrant as Specified in its Charter)
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(Names of Person(s) Filing proxy statement,Proxy Statement, if other thanOther Than the Registrant
Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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QUANTRX BIOMEDICAL CORPORATION
321 Norristown Road100 South Main Street, Suite 230
Ambler,300
Doylestown, Pennsylvania 19002
June 16, 200618901
May 31, 2007
Dear Stockholders:
On behalf of the board of directors and management of QuantRx
Biomedical Corporation (the "Company"), I cordially invite you to attend our
annual meeting of stockholders to be held on Monday, July 3, 2006Thursday, June 28, 2007 at 10:00
a.m. local time, at The Racquet Club of Philadelphia, 215 South 16th Street,
Philadelphia, PA 19102.
The matters to be acted upon at the annual meeting are fully described
in the enclosed Notice of the Annual Meeting of Stockholders and accompanying
proxy statement. The Company's board of directors recommends a vote "FOR" the
proposals listed as items 1, 2 and 23 in the Notice and described in the enclosed
proxy statement.
Your vote is important to us. Whether or not you plan to attend in
person, it is important that your shares be represented and voted at the annual
meeting. Therefore, after reading the enclosed proxy statement, please promptly
complete, sign, date, and return your proxy card in the enclosed envelope. Your
stock will be voted in accordance with the instructions you have given in your
proxy card. You may, of course, attend the annual meeting and vote in person
even if you have previously returned your proxy card.
We look forward to greeting you at the meeting.
Sincerely,
Walter Witoshkin
PresidentChairman and Chief Executive Officer
QUANTRX BIOMEDICAL CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on July 3, 2006June 28, 2007
To the Stockholders of QuantRx Biomedical Corporation:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Annual Meeting") of QuantRx Biomedical Corporation, a Nevada corporation (the
"Company"), will be held on Monday, July 3, 2006,Thursday, June 28, 2007, at 10:00 a.m. local time,
at The Racquet Club of Philadelphia, 215 South 16th Street, Philadelphia, PA
19102, for the following purposes:
(1) to elect threetwo Class 1 Directors, to hold office until the 20072009
annual meeting of stockholders or until their respective successors
have been duly elected, and ratify the appointment of one Class 2
Director who was appointed by the Company's board of directors in
September 2006 to hold office untilfill a vacancy;
(2) to approve the 2008 annual meeting of stockholders or until its successor has been
duly elected;
(2)Company's 2007 Incentive and Non-Qualified Stock
Option Plan;
(3) to ratify the appointment of Williams & Webster, P.S. as the
Company's independent public accountants for the fiscal year ending
December 31, 2006;2007; and
(3)(4) to transact such other business as may properly come before the
Annual Meeting or at any adjournments or postponements thereof.
QuantRx'QuantRx's board of directors has fixed at the close of business on June
13, 2006,May 9, 2007 as the record date
for determining stockholders entitled to notice of and to vote at the Annual
Meeting or any adjournment or postponement thereof.
A proxy statement explaining the matters to be acted upon at the Annual
Meeting is enclosed herewith. This proxy solicitation material is being mailed
to stockholders on or about June 16, 2006,May 31, 2007, and includes a copy of the Company's
20052006 Annual Report to Stockholders.
QuantRx'QuantRx's board of directors unanimously recommends you vote "FOR" the
proposals presented to you in this proxy statement.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD.,CARD REGARDLESS OF WHETHER YOU
PLAN TO ATTEND THE MEETING, AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE
ASSURED. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO REVOKE IT LATER
OR VOTE YOUR SHARES IN PERSON IN THE EVENT THAT YOU SHOULD ATTEND THE MEETING.
.
By Order of the Board of Directors,
Walter Witoshkin, PresidentChairman and Chief Executive Officer
Ambler,Doylestown, Pennsylvania
June 16, 2006May 31, 2007
QUANTRX BIOMEDICAL CORPORATION
321 Norristown Road,100 South Main Street, Suite 230
Ambler,300
Doylestown, Pennsylvania 1900218901
PROXY STATEMENT
GENERAL INFORMATION CONCERNING SOLICITATION AND VOTING
GENERALGeneral
This proxy statement is furnished to the stockholders of QuantRx Biomedical
Corporation, of record as of June 13, 2006May 9, 2007, in connection with the solicitation of
proxies by the Board of Directors (the "Board") of the Company for the Company's
Annual Meeting of Stockholders (the "Annual Meeting"), to be held on Monday, July 3, 2006,Thursday,
June 28, 2007, at 10:00 a.m. EDT, at The Racquet Club of Philadelphia;,Philadelphia, 215 South
16th Street;,Street, Philadelphia, PA 19102.
The approximate date for mailing of the Notice of Annual Meeting of
Stockholders, this proxy statement and the form of proxy is June 16, 2006.
RECORD DATE AND OUTSTANDING SHARESMay 31, 2007.
Record Date and Outstanding Shares
Only holders of record of the Company's common stock on June 13, 2006,May 9, 2007, or the
record date, are entitled to notice of and to vote at the Annual Meeting. As of
that date, there were 30,577,29440,910,580 shares of common stock outstanding and holders
are entitled to one vote per share ("the Outstanding Shares").
SOLICITATION OF PROXIESSolicitation of Proxies
The cost of preparing, printing and mailing this proxy statement and the proxy
solicited hereby has been or will be borne by the Company. In addition to this
mailing, proxies may be solicited by directors, officers and other employees of
the Company, without additional remuneration, in person or by telephone or
facsimile transmission. The Company will also request brokerage firms, bank
nominees, custodians, and fiduciaries to forward proxy materials to the
stockholders as of the record date and will provide reimbursement for the cost
of forwarding the proxy materials in accordance with customary practice. Your
cooperation in promptly completing, signing, dating and returning the enclosed
proxy card will help avoid additional expense.
QUORUM AND VOTINGQuorum and Voting
Each Outstanding Share entitles the holder thereof to one vote upon each matter
to be presented at the Annual Meeting. Stockholders are not entitled to
cumulative voting rights in the election of directors. A quorum, consisting of
one-third of the Outstanding Shares, must be present in person or by proxy for
the transaction of business.
If a quorum is present:
(i) nominees for election to the Board will beDirectors are elected (or ratified) by a plurality of the affirmative
votes properly cast by those shares present in person, or represented by proxy,
and entitled to vote at the Annual Meeting by
holdersMeeting. This means the nominees for
directors (and the appointee) receiving the highest number of
affirmative votes will be elected (or ratified). Abstentions and broker
non-votes will not affect the election (or ratification) of a candidate
who receives a plurality of votes.
(ii) Adoption of the Outstanding Shares;2007 Incentive and (ii)Non-Qualified Stock Option Plan
requires the approval of a majority of the outstanding shares of stock
represented in person or represented by proxy at the Annual Meeting.
Abstentions and broker non-votes will not be counted as having been
voted on the proposal and will have the effect of voting against the
proposal.
(iii) The appointment of Williams & Webster, P.S., will be ratified if such
proposal receives the affirmative vote of a majority of the Outstanding
Shares represented at the Annual Meeting. Abstentions and otherbroker
1
non-votes arewill not be counted as having been voted on the proposal and
will have the effect of voting against the proposal.
Abstentions and broker non-votes will be included in the determination of the
number of shares present at the Annual Meeting and for purposesthe purpose of
determining whether a quorum exists atis present, and each will be tabulated separately.
In determining whether a proposal has been approved, in most cases an abstention
or a broker or other non-vote will have the Annual Meeting, but havesame effect as a vote against the
proposal. In the election of directors, a broker non-vote has no effect on the determination
of whetherif a
plurality exists with respect toquorum is present and directors are elected by a given nominee.
- 1 -
Proxies and ballots will be received and tabulated by Computershare Investor
Services, the Company's transfer agent.plurality.
Each proxy returned to the Company will be voted in accordance with the
instructions indicated thereon. If no instructions are indicated, the shares
will be voted "FOR" the (i) election of the nominees forand the Boardratification of the
appointee named in this proxy statement;statement as directors, (ii) adoption of the 2007
Incentive and (ii)Non-Qualified Stock Option Plan, and (iii) ratification of the
appointment of Williams & Webster, P.S. as independent public accountants for
the fiscal year ending December 31, 2006.
REVOCABILITY OF PROXIES2007.
Stockholders holding shares in "street name" with a broker/dealer, financial
institution or other holder of record should review the information provided to
them by the holder of record. This information will describe the procedures to
be followed in instructing the holder of record how to vote the "street name"
shares and how to revoke previously given instructions.
Revocability of Proxies
Any proxy delivered pursuant to this solicitation is revocable at the option of
the person giving it at any time before it is exercised. A proxy may be revoked
prior to its exercise by delivering to the Company's Secretary a written notice
of revocation or a duly executed proxy card bearing a later date, or by
attending the Annual Meeting and voting in person. Attendance at the Annual
Meeting will not in and of itself constitute a revocation of a proxy.
2
CORPORATE GOVERNANCE
THE BOARD OF DIRECTORS
The Board of Directors
The Company's board of directors is currently comprised of four Directors.five directors. The
four Directorsfive directors are divided into two classes as follows:comprised of three Class 1 Directors
(Evan Levine,
William(William Fleming, Shalom Hirschman, and Shalom Hirschman),Evan Levine) and onetwo Class 2 DirectorDirectors
(Walter Witoshkin)Witoshkin and Arthur Hull Hayes, Jr.). Pursuant to the Company's Bylaws,bylaws,
the members of each class serve for a staggered two-year term and, at each
annual meeting of stockholders, a class of directors is elected for a two-year
term to succeed the directordirectors of the same class whose terms are expiring. The
current terms of the Class 1 Directors and Class 2 Directors are set to expire
at the annual meeting of stockholders held following the end of calendar years
2006 and 2007, respectively.
TheDuring the fiscal year ended December 31, 2006, the Board held foureight meetings
and took action by unanimous written consent six times. During this period,
Walter Witoshkin and William Fleming attended all eight meetings, Shalom
Hirschman attended seven meetings, and Evan Levine attended two meetings. Arthur
Hull Hayes, Jr. attended both meetings held during the last fiscal year. Each memberperiod he served on the
Board.
There are no family relationships among the Company's directors, executive
officers or persons nominated or chosen to become directors or executive
officers of the Company.
Board attended all four such meetings.
BOARD COMMITTEESCommittees
The Board has two standing committees: an audit committee which consists(the "Audit
Committee") and a compensation committee (the "Compensation Committee").
Audit Committee
The members of the Audit Committee are Shalom Hirschman and William Fleming.Fleming,
with Mr. Fleming chairing such committee. The Company does not yet have an
"audit committee financial expert," as defined by SEC rules adopted pursuant to
the Sarbanes-Oxley Act of 2002. In
addition,2002, as a result of its inability to recruit a
qualified candidate with the Company hasrequisite experience and financial literacy.
The Board recently adopted a written charter for the Audit Committee. As
described in the Audit Committee Charter, the purpose of the Audit Committee
includes, but is not yet established a compensation committee and a
nominating committee. It is anticipated that these committees will be
established followinglimited to: (1) overseeing the election of directors at the Annual Meeting.
The audit committee supervises and monitors the Company's accounting and financial
reporting practices and provides a channel of communication between
QuantRx' board of directors and the Company's independent auditors.
The audit committee reviews and makes recommendations to the Board regarding
services provided by the independent accountants, reviews with the independent
accountants the scope and results of their annual examinationprocesses of the Company'sCompany and audits of the financial statements of the
Company; and any recommendations they may have, and makes
recommendations(2) providing assistance to the Board with respect to its oversight
of (i) the engagement or dischargeintegrity of the independent accountants. The audit committee also reviewsCompany's financial statements, (ii) the Company's
procedurescompliance with respect to maintaining bookslegal and records,regulatory requirements, (iii) the - 2 -
adequacyindependent
auditor's qualifications and implementationindependence, and (iv) the performance of the
Company's internal auditing, accountingaudit function, if any, and financial
controls,independent auditor.
The Audit Committee's duties, which are specified in the Audit Committee
Charter, include but are not limited to:
o discussing with management and the independent auditor the Company's
earnings press releases (paying particular attention to the use of any
"pro forma" or "adjusted" non-GAAP information), as well as financial
information and earnings guidance provided to analysts and rating
agencies,
o appointing, retaining, compensating, evaluating and terminating any
accounting firm engaged by the Company for the purpose of preparing or
issuing an audit report or performing other audit, review or attest
services for the Company and, in its sole authority, approving all
audit engagement fees and terms as well as all non-audit engagements
with the accounting firm,
o requiring that the independent auditor, in conjunction with the Chief
Financial Officer, be responsible for seeking pre-approval for
providing services to the Company and that any request for
pre-approval must inform the Audit Committee about each service to be
provided and must provide detail as to the particular service being
provided, and
3
o informing each accounting firm engaged for the purpose of preparing or
issuing an audit report or to perform audit, review, or attest
services for the Company that such firm will report directly to the
Audit Committee.
A copy of the Audit Committee Charter is attached hereto as Exhibit A.
Compensation Committee
The members of the Compensation Committee are Arthur Hull Hayes, Jr. and Shalom
Hirschman. The Board recently adopted a written charter for the Compensation
Committee. As described in the Compensation Committee Charter, the purpose of
the Compensation Committee includes, but is not limited to, recommending to the
Board for determination the compensation for the Chief Executive Officer and all
other officers.
The compensation committee has numerous duties and responsibilities, including
but not limited to:
o establishing and reviewing the overall compensation philosophy of the
Company,
o establishing and periodically reviewing policies concerning financial reportingin the area of senior
management perquisites, and
business
practices.
2005 AUDIT COMMITTEE REPORTo considering policies and procedures pertaining to expense accounts of
senior executives.
A copy of the Compensation Committee Charter is attached hereto as Exhibit B.
Nominating Committee
The Company currently does not have a nominating committee, but intends to
formally constitute a nominating committee and adopt a charter for such
committee. The entire Board currently participates in the recruitment and
selection of director nominees.
4
2006 Audit Committee Report
We, the audit committee, oversee the Company's accounting and financial
reporting processes and assist the Board in its oversight of the qualifications,
independence and performance of the Company's independent auditors. In
fulfilling our oversight responsibilities, we discussed with the Company's
independent auditors, Williams & Webster, P.S., the overall scope and plans for
their audit. Upon completion of the audit, we discussed with Williams & Webster,
P.S. the matters required to be discussed by Statement on Auditing Standards No.
61.
We also reviewed and discussed the audited financial statements with management.
We discussed with management certain significant accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in those financial
statements.
We have also reviewed the written disclosures and the letter from the
independent accountants required by Independence Accounting Standards No. 1 and
discussed with the independent accountants the independent accountants'
independence from management and the Company. We determined that the services
provided by Williams & Webster, P.S. during fiscal year 20052006 are compatible with
maintaining such auditor's independence.
In reliance on the reviews and discussions referred to above, we recommended to
the Board (and the Board approved) that the audited financial statements be
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 20052006 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
William Fleming, Chairman
Shalom Hirschman, Member
5
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The board of directorsBoard proposes that at the Annual Meeting Evan Levine, William Fleming and Shalom Hirschman be elected as Class
1 Directors to hold office for a term of one yeartwo years (or until successors are
elected and qualified) and that Walter Witoshkin be electedthe Board's appointment of Arthur Hull Hayes,
Jr. as a Class 2 Director to hold office for a
term of two years (or until successors are elected and qualified.)be ratified. As noted above, each of these nomineesnominee and the
appointee is currently serving as a member of QuantRx' board
of directors. Commencing in 2007, and at each annual meeting of stockholders
thereafter, the successors to the class of directors whose terms expire at that
meeting will be elected to hold office for a term of two years, and each
director will serve for the term he or she was elected or until his or her
successor will have been elected or qualified or until his or her death,
resignation or removal from office. TheBoard. Each Class 1 and Class
2 DirectorsDirector must be elected (or ratified) by a plurality of the votes properly
cast at the Annual Meeting.
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RECOMMENDATION
- --------------Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES AND THE
RATIFICATION OF THE APPOINTEE LISTED ABOVE.
INFORMATION REGARDING NOMINEESDIRECTORS AND EXECUTIVE OFFICERS
The following biographical descriptions set forth certain information with
respect to the fourtwo nominees for election as Class 1 andDirectors, the appointee for
ratification as a Class 2 Director, the Directors who are not nominees for
election, and the other executive officers who are not directors.
DIRECTORS AND EXECUTIVE OFFICERS AGE POSITIONDirectors and Executive Officers Age Position
-------------------------------- --- --------
Evan Levine 40 DirectorWalter W. Witoshkin 62 Chairman and Chief Executive Officer
William H. Fleming, Ph.D. 5960 Chief Scientific Officer, Secretary, and Director
Arthur Hull Hayes, Jr., M.D. 73 Director
Shalom Hirschman, M.D. 6970 Director
Walter Witoshkin 61 President, ChiefEvan Levine 41 Director
Executive Officer, and Director
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORSOfficers Who are Not Directors
----------------------------------------
Cynthia Horton 41 Vice President, Diagnostics
Sasha Afanassiev 38 Treasurer,39 Chief Financial Officer, Treasurer, and Vice President of
Finance
Cynthia Horton 43 Vice President of Diagnostics
Class 1 Director Nominees - Term Expiring in 2007.
EVAN LEVINE2009
WILLIAM H. FLEMING, Ph.D. has served as a DirectorChief Scientific Officer of QuantRx
since September, 2005.
Mr. Levine is currently Vice Chairman, President and Chief Executive Officer of
ADVENTRX Pharmaceuticals, Inc. a publicly traded biotechnology company. Mr.
Levine is also the Managing Member of Mark Capital, LLC, a Venture Capital Fund.
Mr. Levine has over 18 years of investment banking, venture capital, arbitrage
and senior corporate management experience.
WILLIAM H. FLEMING, Ph.D., has served as Vice Chairman-Diagnostics of
QuantRx since August of 1997 andJuly 2005, as a Director and Secretary of QuantRx since February 1994.1994, as
Vice Chairman-Diagnostics of QuantRx from August 1997 through July 2005, and as
Acting CEO from 2003 until May 2005. From February 1994 tothrough August 1997, Dr.
Fleming served as President and Chief Operating Officer of QuantRx. He served asIn addition,
he was President, Chief Operating Officer and a directorDirector of ProFem from July
1993 until its merger with QuantRx in June 1994. From April 1992 tountil July
1993, Dr. Fleming served as an associate ofwith Sovereign Ventures, a healthcare
consulting firm; andconcurrently he served as a director of corporate development of
Antivirals, Inc., a biotechnology company operatinginvolved in the antisense technology field.technology. Dr.
Fleming is currently a director of ERC, a non-profit company.organization.
SHALOM HIRSCHMAN, M.D., has served as a Director of QuantRx since September 2005.
Dr. Hirschman was Professor of Medicine, Director of the Division of Infectious
Diseases and Vice-Chairman of the Department of Medicine at Mt. Sinai School of
Medicine and the Mount Sinai Hospital. He spent nearly three decades at Mt.
Sinai until his retirement. He also served as the CEO, President and Chief
Scientific Officer of Advanced Viral Research Corp., from which he retired in
2004.
Class 2 Director Nominee;Appointee - Term Expiring in 2008.
WALTER WITOSHKIN2008
ARTHUR HULL HAYES, JR., M.D. has served as a Director President and CEO of QuantRx since AprilSeptember
2006. Dr. Hayes served as Commissioner of the United States Food and Drug
Administration from 1981 to 1983. Dr. Hayes founded and was
6
President and Chief Operating Officer of MediScience Associates, Inc., a
consulting organization that works with pharmaceutical firms, biomedical
companies and foreign governments, from July 1991 to January 2006, and Clinical
Professor of Medicine and Pharmacology at the Pennsylvania State University
College of Medicine from 1981 to 2004. From 1986 to 1990, Dr. Hayes was
President and Chief Executive Officer of E.M. Pharmaceuticals, a North American
subsidiary of Germany's E. Merck AG.
Other Directors
WALTER W. WITOSHKIN is Chairman and Chief Executive Officer of QuantRx
Biomedical Corporation. A 40-year veteran of the pharmaceutical, healthcare and
biomedical industries, Mr. Witoshkin began serving as a Director and Chief
Executive Officer in May, 2005. He has held senior executive positions at
leading healthcare product and pharmaceutical companies, most recently
SmithKline Beecham, now Glaxo SmithKline, where he was a Vice President of
Business Development and Chief Financial Officer. In 1989, Mr. Witoshkin
established Menley & James Laboratories, Inc., after purchasing 32 SmithKline
Beecham over-the-counter pharmaceutical and toiletry product brands. Menley &
James had its initial public offering in 1992. He earlier held several senior
finance positions at American Cyanamid, which became American Home and then
Wyeth. Mr. Witoshkin joined QuantRx from Trident Group LLC, global operational
consultants to the pharmaceutical and related healthcare industries. As a
founding partner of Trident Group, Mr. Witoshkin specialized in alternative
sourcing for manufacturing and the acquisition of technologies and products.
Mr. Witoshkin also serves as a director of Sontra Medical Corporation and a
number of privately held companies. Mr. Witoshkin is a partner and founder of Trident Group, LLC,
a management consulting enterprise. Mr. WitoshkinClass 2 Director whose
term expires in 2008.
EVAN LEVINE has held various executive
positions in the pharmaceutical industry and served as a Director of QuantRx since September, 2005, but has
informed QuantRx of his intention not to stand for re-election to the Board;
therefore, his term will expire at the 2007 Annual Meeting of Stockholders. Mr.
Levine is currently Vice Chairman, President and Chief FinancialExecutive Officer for SmithKline Beechman.of
ADVENTRX Pharmaceuticals, Inc. a publicly traded biotechnology company. Mr.
Witoshkin currently maintains his interestLevine is also the Managing Member of Mark Capital, LLC, a Venture Capital Fund.
Mr. Levine has over 18 years of investment banking, venture capital, arbitrage
and senior corporate management experience. Mr. Levine is a Class 1 Director
whose term expires in Trident Group, LLC.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
- 4 -
CYNTHIA HORTON has served as the Company's Vice President of
Diagnostics since August 2005. Prior to this post, Mrs. Horton was the national
sales manager for Applied Biotech, Inc., an Inverness Medical Innovations
Company, and directed sales for Drugs of Abuse POC's, Professional POC's for
Women Health and branded OTC products for private label customers, at ABI, and
its predecessor Forefront Diagnostics.2007.
Executive Officers Who Are Not Directors
SASHA AFANASSIEV, CPA, has served as Company's CFO and Vice President-Finance of QuantRx
since September 2005. In addition, Mr. Afanassiev has served as Treasurer of the
Company since December 2005. Prior to this,Mr. Afanassiev has seventeen years of diversified
public accounting experience. Mr. Afanassiev was the principal and founder of an
accounting and tax consulting firm. Mr. Afanassiev currently maintains his interestfirm, established in 2001.
CYNTHIA HORTON has served as Vice President-Diagnostics of QuantRx since July
2005. Ms. Horton was the firm.national sales manager for Applied Biotech, Inc., an
Inverness Medical Innovations Company. Prior to that, she directed sales for
Drugs of Abuse POC's, Professional POC's for Women's Health and branded OTC
products for private label customers at ABI, and its predecessor Forefront
Diagnostics.
7
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLESummary Compensation Table
The following Summary Compensation Table sets forth summary information as to
compensation received by the Company's Chief Executive Officer and each of the
two other most highly compensated persons who were serving as executive officers
of the Company as of December 31, 2005.2006.
ANNUAL SECURITIES ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY UNDERLYING OPTIONS COMPENSATIONNon-equity
Stock Option Incentive Plan All Other
Name and Salary Bonus Awards Awards Compensation Compensation Total
Principal Position Year ($) ($) ($) ($) ($) ($) ($)
- ------------------------- ---- ------ ------------------ ------------
Walter W. Witoshkin 2003 - - -
CEO & President 2004 - - -
2005 112,500 1,000,000 -
William H. Fleming 2003 - - 12,472
Secretary & Chief Scientific Officer 2004 - - 31,815
2005 67,292 - 51,500
Sasha Afanassiev 2003 - - -
CFO, Treasurer & V.P. of Finance 2004 - - -
2005 19,250 - -
Cynthia Horton 2003 - - -
V.P. of Diagnostics 2004 - - -
2005 45,833 - 10,000
- 5 -
GRANT OF STOCK OPTIONS
The following table sets forth information regarding all options
granted in the year ended December 31, 2005.
PERCENT OF TOTAL
NUMBER OF OPTIONS GRANTED
SHARES OF TO EMPLOYEES IN
COMMON STOCK THE YEAR ENDED
UNDERLYING DECEMBER 31, EXERCISE EXPIRATION
OPTIONS GRANTED 2005 PRICE DATE FAIR VALUE OF GRANT
------------------ ----------------- -------- ---------- ---------------------------------------------------------------------------------------------------------------------------------------------
Walter W. Witoshkin, 1,000,000 100% 0.50 05/03/2015 298,9002006 240,000 10,000 - 66,454 - - 316,454
Chairman & CEO
2005 112,500 - - 143,836 - - 256,336
Cynthia Horton, 2006 150,000 6,250 - 23,850 - - 180,100
VP of Diagnostics
2005 45,833 - - - - 10,000 55,833
Sasha Afanassiev, 2006 110,167 6,250 - 125,325 - - 241,742
CFO, Treasurer & VP
of Finance
2005 19,250 - - - - - 19,250
Exercise of Stock OptionsThe amounts in the Option Awards column reflect the dollar amount recognized and
Year-End Option/Warrant Values
No executive officer exercised any options duringexpensed for financial statement reporting purposes for the yearfiscal years ended
December 31, 2005.
The following table provides information regarding the number2006 and 2005, in accordance with Statement of shares
covered by both exercisable and unexercisableFinancial Accounting
Standards No. 123(R) of awards of stock options held by the named
executive officers as of December 31, 2005, and thethus do not represent
aggregate fair value of "in-the-money"grants. The Company used the Black-Scholes option price
calculation to value the options which values representgranted in 2006 and 2005 using the positive spread between thefollowing
assumptions: risk-free rate of 4.93% and 3.78%; volatility of 1.70 and 1.85;
actual term and exercise price of any such options and the year-end value of the common stock of the Company.granted.
Outstanding Equity Awards At Fiscal Year-end
VALUE OF IN-THE-MONEY
NUMBER OF SECURITIES UNDERLYING UNEXERCISED
OPTIONS AT DECEMBER 31, 2005 OPTIONS AT DECEMBER 31, 2005
---------------------------------------- -----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------Option Awards
------------------------------------------------------------------------------------------------
Number of
Securities Number of Equity Incentive Plan
Underlying Securities Awards: Number of
Unexercised Underlying Securities Underlying
Options Unexercised Options Unexercised Unearned Option
(#) (#) Options Exercise Price Option Expiration
Name Exercisable Unexercisable (#) ($) Date
- ----------------------------------------------------------------------------------------------------------------------
Walter W. Witoshkin,
481,218 518,782 548,589 591,411Chairman & CEO (1) 703,545 - 296,455 $0.50 05/03/2015
Cynthia Horton,
VP of Diagnostics (2) - - 100,000 $1.60 04/03/2016
Sasha Afanassiev,
CFO, Treasurer & VP 25,000 - - $1.60 04/03/2016
of Finance (3)
- 75,000 - $1.15 07/25/2016
The value(1) Options granted 05/03/2005 vest as follows; 333,000 shares vested on May 3,
2005 and the remaining options will continue to vest with respect to 18,527
shares each monthly anniversary thereafter until fully-vested. Term of the
options is basedten years. Exercise price exceeded the closing stock price on
the closing pricedate of common stockgrant.
8
(2) Options granted 04/03/2006 vest upon meeting certain sales milestones which
have not yet been met. Term of the Companyoptions is ten years. Exercise price is
equal to the closing stock price on the date of $1.64grant.
(3) Options granted 04/03/2006 vested immediately. Options granted 07/25/2006
vested January 1, 2007. Terms of both options are ten years. Exercise
prices are equal to the closing stock price on December 31, 2005, less the option exercise price.
Employment Agreements
Asdate of grant.
There are no outstanding stock awards as of December 31, 2006.
The Company used the Black-Scholes option price calculation to value the options
granted in 2006 and 2005 QuantRx hasusing the following assumptions: risk-free rate of
4.93% and 3.78%; volatility of 1.70 and 1.85; actual term and exercise price of
options granted.
Employment Agreements
We have entered into an employment agreementcontract with Walter
Witoshkin, its President andour Chief Executive Officer.
- 6Officer
that provides for the continuation of salary if terminated for reasons other
than cause, as defined in those agreements. At December 31, 2006, the future
employment contract commitment for such key executive based on stated
termination clause was approximately $240,000. All other employees are "at-will"
employees and may be terminated at any time by the Company.
Director Compensation
The Board of Directors adopted a compensation policy in July 2006. QuantRx
compensates independent members of the Board of Directors with cash compensation
of $5,000 and 6,250 stock options per Board meeting attended in person; up to a
maximum of four meetings per year. All options are granted at year end and have
a term of five years and an exercise price equal to the closing stock price on
date of grant. QuantRx did not compensate members of the Board of Directors in
2006 and 2005 prior to the adoption of the Board compensation policy. It is
anticipated that the Board of Directors will update and revise Board
compensation at an upcoming meeting of the Board of Directors.
The following table summarizes Director Compensation for the year ended December
31, 2006. There was no Director Compensation for the year ended December 31,
2005.
Fees
Earned or Stock Option All Other
Paid in Awards Awards Compensation Total
Name Cash ($) ($) ($) ($) ($)
- -------------------------------------------------------------------------------------------------------
Walter W. Witoshkin - - - - -
William H. Fleming - - - - -
Evan Levine - - - - -
Shalom Hirschman (1) - - $6,938 $48,000 $54,938
Arthur Hull Hayes, Jr. (2) $5,000 - $6,938 - $11,398
(1) Dr. Shalom Hirschman received an option grant at December 29, 2006 for
6,250 common shares. Material terms are as follows: December 29, 2006 grant
date, exercise price of $1.17 and a five year term. Dr. Hirschman did not
receive cash compensation related to his directorship pursuant to a
consulting agreement in effect.
(2) Dr. Arthur Hull Hayes, Jr. received an option grant at December 29, 2006
for 6,250 common shares. Material terms are as follows: December 29, 2006
grant date, exercise price of $1.17 and a five year term.
9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTThe Company used the Black-Scholes option price calculation to value the options
granted in 2006 using the following assumptions: risk-free rate of 4.93%;
volatility of 1.70; actual term and exercise price of options granted.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of June 13, 2006,May 9, 2007 concerning
the ownership of common stock by (i) each stockholder of the Company known by
the Company to be the beneficial owner of more than 5% of the outstanding shares
of common stock, or preferred stock, (ii) each current member of the board of directors of the
Company and (iii) each executive officer of the Company named in the Summary
Compensation Table appearing under "Executive
Compensation""Compensation of Directors and Executive
Officers" above.
The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act and the information is
not necessarily indicative of beneficial ownership for any other purpose. Under
that rule, beneficial ownership includes any shares as to which the individual
or entity has voting power or investment power and any shares that the
individual has the right to acquire within 60 days through the exercise of any
stock option or other right. Unless otherwise indicated in the footnotes or
table, each person or entity has sole voting and investment power, or shares
such powers with his or her spouse, with respect to the shares shown as
beneficially owned.
The Company had only common stock outstanding at June 13, 2006;May 9, 2007; therefore the
following table refers to our common stock.
- 7 -
NAME AND ADDRESS OF BENEFICIAL AMOUNT AND NATURE OF BENEFICIAL PERCENTAGE OF CLASSAmount and Nature of
Beneficial Ownership as of
Name and Address of Beneficial Owner (1) May 9, 2007 Percentage of Class (2)
OWNER (1) OWNERSHIP AS OF JUNE 13, 2006- --------------------------------------------------------------------------------------------------------------
Walter W. Witoshkin 629,436 2.02%(3) 833,236 2.00%
William H. Fleming 492,034 1.61%1.20%
Arthur Hull Hayes, Jr. (4) 6,250 *
Shalom Hirschman 500,000 1.64%(5) 506,250 1.24%
Evan Levine(3)Levine (6) 3,970,220 9.67%
6725 Mesa Ridge Road, Suite 100
4,963,209 16.14%
San Diego, CA 92121
Sasha Afanassiev (7) 100,000 0.24%
Matthew Balk(4)Balk (8) 5,728,009 14.00%
570 Lexington Avenue 5,728,009 18.73%
New York, NY 10021
Cass Gunther Adelman(5) 570
Lexington Avenue 2,100,000 6.87%
New York, NY 10021
Mark Capital, LLC (9) 2,945,000 7.17%
6725 Mesa Ridge Road, Suite 100 3,938,009 12.80%
San Diego, CA 92121
Sherbrooke Partners, LLC 4,508,009 11.02%
570 Lexington Avenue 4,508,009 14.74%
New York, NY 10021
CGA Resources, LLC 570
Lexington Avenue 1,800,000 5.89%
New York, NY 10021
(1) Unless indicated otherwise, the address of each person listed in the table
is: c/o QuantRx Biomedical Corporation, 320 Norristown
Road,100 South Main Street, Suite 230, Ambler, PA 19002.300,
Doylestown, Pennsylvania 18901.
(2) The percentage of beneficial ownership of common stock is based on
30,577,29440,910,580 shares of common stock outstanding as of June 13, 2006May 9, 2007 and
excludes all shares of common stock issuable upon the exercise of
outstanding
10
options or warrants to purchase common stock or conversion of any common
stock equivalents, other than the shares of common stock issuable upon the
exercise of options or warrants to purchase common stock held by the named
person to the extent such options or warrants are exercisable within 60
days of June 13,
2006.May 9, 2007.
(3) Ownership is based upon 796,181 common stock options currently exercisable
and 37,055 common stock options exercisable within 60 days of May 9, 2007.
(4) Ownership is based on 6,250 currently exercisable common stock options.
(5) Ownership includes 6,250 currently exercisable common stock options.
(6) Includes 3,758,0092,765,000 shares of common stock and 180,000 warrants to
purchasea common stock warrant
currently exercisable for 180,000 common shares held by Mark Capital, LLC
of which Evan Levine is the managing member; 990,000 shares of common stock
held by Mr. Levine as custodian for his two children; and 35,20035,220 shares of
common stock held by Mr. Levine's retirement plan.
- 8 -
(4)(7) Ownership is based on 100,000 common stock options currently exercisable.
(8) Includes 4,508,009 shares of common stock held by Sherbrooke Partners, LLC,
of which Matthew Balk is the sole member; and 1,220,000 shares of common
stock held by Mr. Balk as custodian for his two children.
(5) Includes 1,800,000 shares of(9) Ownership includes 180,000 common stock held by CGA Resources,
LLC, of which Cass G. Adelman is the sole member; and 300,000
shares ofwarrants currently exercisable for
180,000 common stock held as custodian for her two children.shares.
*Less than .02%
SECTION 16(B)16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's Directors and officers,Officers, and persons who own more
than 10% of a registered class of the Company's equity securities ("Section 16
Persons"), to file with the SEC initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
Section 16 Persons are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports they file. Based on the Company's review of
the forms it has received, on other reports filed by Section 16 Persons with the
SEC and on the Company's records, the Company believes that during 2005,2006, (1)
Shalom HirschmanArthur Hull Hayes, Jr. did not timely file a Form 3 to report no beneficial
ownership of securities, (2) Cynthia Horton did not timely file a Form 3 to
report the beneficial ownership of 500,000 warrants to purchase 500,000 shares of100,000 common stock andoptions, (3) William
Fleming did not timely file a Form 4 forto report the acquisitiongrant of 500,000100,000 common shares upon the
exercise of those warrants, (2) Walter Witoshkinstock
options, (4) Sasha Afanassiev did not timely file a Form 34 to report the grant
of 1,000,00025,000 common stock options, (3)(5) Shalom Hirschman did not timely file a Form
4 to report the grant of 6,250 common stock options, (6) Arthur Hull Hayes, Jr.
did not timely file a Form 4 to report the grant of 6,250 common stock options,
(7) Evan Levine did not timely file a Form 3 to report the beneficial ownership
of our capital stock, and (4)(8) Matthew Balk did not timely file a Form 3, as a
more than 10% owner, to report the beneficial ownership of our capital stock.
- --------------------------------------------------------------------------------
PROPOSAL NO. 2 - APPROVAL OF THE QUANTRX 2007 INCENTIVE AND NON-QUALIFIED STOCK
OPTION PLAN
The 2007 Incentive and Non-Qualified Stock Option Plan is Attached Hereto as
Exhibit C. The description below of the 2007 Incentive and Non-Qualified Stock
Option Plan is qualified in its entirety by reference to the complete text of
the 2007 Incentive and Non-Qualified Stock Option Plan. Terms not defined herein
shall have the meanings set forth in the 2007 Incentive and Non-Qualified Stock
Option Plan.
The Board proposes that at the Annual Meeting the Stockholders approve the 2007
Incentive and Non-Qualified Stock Option Plan.
Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE 2007
INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN.
Description of 2007 Incentive and Non-Qualified Stock Option Plan
11
The purpose of this Plan is to advance the interests of the Company and its
Related Entities by providing an additional incentive to attract and retain
qualified and competent persons who provide services to the Company and its
Related Entities, and upon whose efforts and judgment the success of the Company
and its Related Entities is largely dependent, through the encouragement of
stock ownership in the Company by such persons.
The Plan will be administered by the Committee which will be composed of two or
more Directors. The membership of the Committee will be constituted so as to
comply at all times with the then applicable requirements for Outside Directors
of Rule 16b-3 promulgated under the Securities Exchange Act and Section 162(m)
of the Code. The Committee will serve at the pleasure of the Board and will have
the powers designated in the 2007 Incentive and Non-Qualified Stock Option Plan
and such other powers as the Board may from time to time confer upon it.
12
PROPOSAL NO. 3 - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS
The Board proposes that at the Annual Meeting the Stockholders ratify the
appointment of Williams & Webster, P.S. as independent public accountants of the
Company for the fiscal year ending December 31, 2006.2007.
RECOMMENDATION
- --------------
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF WILLIAMS & WEBSTER, LLPP.S. AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company engaged Williams & Webster, P.S. to serve as the Company's
independent public account duringaccountants for the fiscal year ended December 31, 2005.2006. A
representative of Williams & Webster, P.S. will be presentavailable at the Annualannual
Meeting, and will have an opportunity to make a statement if he or she desires
to do so and will be available to respond to appropriate questions from
stockholders.
- 9 -
Audit Fees
The aggregate fees billed for professional services rendered by Williams &
Webster, P.S. for the audit of the Company's annual financial statements and
review of financial statements included in the Company's Forms 10-QSB for years
20052006 and 20042005 are set forth in the table below.
2006 2005
2004---- ----
Williams & Webster, P.S,P.S. $39,749 $31,598
$27,624
AUDIT RELATED FEESAudit-Related Fees
During the years ended December 31, 20052006 and 2004,2005, no assurance or related
services were performed by Williams & Webster P.S. that were reasonably related
to the performance of the audit or review of the Company's financial statements.
TAX FEESTax Fees
During the years ended December 31, 2006 and 2005, $6,000 and 2004, no$0 in fees were
billed by Williams & Webster, P.S. for tax compliance, tax advice or tax
planning services.
ALL OTHER FEESAll Other Fees
During the years ended December 31, 20052006 and 2004,2005, no fees were billed by
Williams & Webster, P.S. other than the fees set forth under the caption "Audit
Fees" above.
PRE-APPROVAL POLICIES AND PROCEDURES OF THE AUDIT COMMITTEEPre-approval Policies and Procedures of the Audit Committee
The Audit Committee has the sole authority to appoint, terminate and replace ourthe
Company's independent auditor. The Audit Committee may not delegate these
responsibilities. The Audit Committee has the sole authority to approve the
scope, fees and terms of all audit engagements, as well as all permissible
non-audit engagements of ourthe Company's independent auditor. 100% of the services
provided by Williams & Webster, P.S. were pre-approved by the Audit Committee.
13
PROPOSALS OF STOCKHOLDERS
Any stockholder wishing to have a proposal considered for inclusion in the proxy
materials for the Company's 20062007 Annual Meeting of Stockholders must set forth
such proposal in writing and file it with the Secretary of the Company no later
than a reasonable time before the Company begins to print and mail its proxy
- 10 -
materials for the Company's 20062007 Annual Meeting of stockholders.Stockholders. In addition, if
the Company receives notice of a shareholder proposal later than a reasonable
time before the Company mails its proxy materials for the Company's 20062007 Annual
Meeting of Stockholders, the persons named as proxies in the proxy statement and
accompanying proxy will have discretionary authority to vote on that shareholder
proposal.
INCORPORATION BY REFERENCE
The Financial Statements and the Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in the Company's Annual
Report to Stockholders for the fiscal year ended December 31, 2005,2006, transmitted
with the proxy statement, are hereby incorporated by reference. No other
portions of the Annual Report shall be deemed incorporated herein.
You may obtain documents incorporated by reference from the Securities and
Exchange Commission's website, www.sec.gov, or directly from us, without charge,
by requesting them in writing or by telephone at:
QuantRx Biomedical Corporation
100 South Main Street, Suite 300
Doylestown, Pennsylvania 18901
(267) 880-1595
If you would like to request additional copies of this document or any of the
documents incorporated by reference, please do so at least five business days
before the date of the annual meeting in order to receive timely delivery of
such documents.
FINANCIAL INFORMATION
THE COMPANY'S 20052006 ANNUAL REPORT TO STOCKHOLDERS ACCOMPANIES THESE MATERIALS.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
DECEMBER 31, 20052006 MAY BE OBTAINED FROM THE COMPANY WITHOUT CHARGE UPON WRITTEN
REQUEST TO THE COMPANY. REQUESTS SHOULD BE DIRECTED TO THE CHIEF FINANCIAL
OFFICER, QUANTRX BIOMEDICAL CORPORATION, 321 NORRISTOWN ROAD,100 SOUTH MAIN STREET, SUITE 230, AMBLER,300,
DOYLESTOWN, PENNSYLVANIA 19002.18901.
By Order of the Board of Directors
/s/ Walter W. Witoshkin
----------------------------------------------------------------------------------------
Walter W. Witoshkin, PresidentChairman and
Chief Executive Officer
June 16, 2006
- 11 -May 31, 2007
14
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JULY 3, 2006JUNE 28, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Walter W. Witoshkin and William H. Fleming, and
each of them, as Proxies, with full power of substitution, and hereby authorizes
them to represent and to vote, as designed below, all the shares of Common Stock
of QuantRx Biomedical Corporation (the "Company") held of record by the
undersigned on December 31, 2005,2006, at the Annual Meeting of Stockholders to be
held on July 3, 2006June 28, 2007 or at any adjournment thereof.
1. ELECTION OF DIRECTORS.Election and Ratification of Directors.
Elections of the following threetwo nominees to serve as Class 1 directors for a
one-yeartwo-year term or until their successors are duly elected and qualified.
Evan Levine
Shalom Hirschman William Fleming
|_| FOR all nominees |_| WITHHOLD AUTHORITY
to vote for all nominees
|_| WITHHOLD AUTHORITY for the following only:
(write the name(s) of the nominee(s) in this space)
ElectionRatification of the following nomineeappointment to serve as a Class 2 director for athe
remainder of the two-year term or until their successorshis successor is duly elected and
qualified.
Walter WitoshkinArthur Hull Hayes, Jr.
|_| FOR all nomineesappointee |_| WITHHOLD AUTHORITY
to vote for all nominees
|_| WITHHOLD AUTHORITY for the following only:
(write the name(s) of the nominee(s) in this space)
- 1 -
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR ALL
NOMINEES.NOMINEES" AND "FOR APPOINTEE."
- --------------------------------------------------------------------------------
2. RATIFICATION OF 2007 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN. Ratify
the 2007 Incentive and Non-Qualified Stock Option Plan.
|_| FOR |_| AGAINST |_| ABSTAIN
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR THE
RATIFICATION OF 2007 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN."
15
3. RATIFICATION OF INDEPENDENT AUDITORS FOR FY2006.FY2007. Ratify the selection of
Williams & Webster, P.S. as the Company's independent auditors for the fiscal
year ending December 31, 2006.2007.
|_| FOR |_| AGAINST |_| ABSTAIN
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR THE
RATIFICATION OF WILLIAMS AND WEBSTER, P.S.".
Please sign below exactly as your name
appears on your stock certificate. When
shares are held jointly, each person
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. An authorized person should sign
on behalf of corporations,
partnerships, limited liabilitiesliability
companies and associations and give his
or her title.
Dated: --------------------------------, 2006
-------------------------------------------2007
------------------------------------
------------------------------------------------
Signature
-------------------------------------------------------------------------------------------
Signature if held jointly
YOUR VOTE IS IMPORTANT. PROMPT RETURN OF THIS PROXY CARD WILL HELP SAVE THE
EXPENSE OF ADDITIONAL SOLICITATION EFFORTS.
-16
EXHIBIT A
QUANTRX BIOMEDICAL CORPORATION (the "Company")
AUDIT COMMITTEE CHARTER
Adopted by the Board of Directors of QuantRx Biomedical Corporation
on April 26, 2007
Purpose
The purpose of the Audit Committee (the "Committee") shall be as follows:
1. To oversee the accounting and financial reporting processes of the
Company and audits of the financial statements of the Company.
2. To provide assistance to the Board of Directors with respect to its
oversight of the following:
(a) The integrity of the Company's financial statements.
(b) The Company's compliance with legal and regulatory requirements.
(c) The independent auditor's qualifications and independence.
(d) The performance of the Company's internal audit function, if any,
and independent auditor.
3. To prepare the report that SEC rules require be included in the
Company's annual proxy statement.
Composition
The Committee shall consist of two or more members of the Board of
Directors, each of whom is determined by the Board of Directors to be
"independent" under Rule 10A-3(b)(1) under the rules of a national securities
exchange or national securities association and the Securities Exchange Act of
1934 adopted pursuant to the Sarbanes-Oxley Act.
One director who is not independent as defined in the rules of a national
securities exchange or national securities association but who satisfies the
requirements of Rule 10A-3(b)(1) under the Securities Exchange Act of 1934 may
serve as a member of the Committee, in the following circumstances:
o the director, other than in his or her capacity as a member of the
Committee, the Board of Directors, or another Board committee, does
not accept directly or indirectly any consulting, advisory, or other
compensatory fee from the Company or any of its subsidiaries other
than the receipt of fixed amounts of compensation under a retirement
plan (including deferred compensation) for prior service with the
Company so long as such compensation is not contingent in any way on
continued service;
1
o the director is not an affiliated person of the Company or any of its
subsidiaries;
o the director is not a current officer or employee of the Company or an
immediate family member of a current officer or employee;
o the Board determines, under exceptional and limited circumstances,
that membership by the individual on the Committee is required by the
best interests of the Company and its shareholders;
o the Board of Directors discloses, in the Company's next annual meeting
proxy statement (or its next annual report on Form 10-K or its
equivalent if the Company does not file an annual proxy statement)
subsequent to such determination, the nature of the relationship and
the reason for that determination;
o no such person may serve as the Chairman of the Committee; and
o no such person may serve on the Committee for more than two years.
No member of the Committee shall receive directly or indirectly any
consulting, advisory, or other compensatory fees from the Company other than (1)
director's fees for service as a director of the Company, including reasonable
compensation for serving on Board committees and regular benefits that other
directors receive; and (2) a pension or similar compensation for past
performance, provided that such compensation is not conditioned on continued or
future service to the Company. In addition, no member of the Committee may be an
affiliate of the Company or any subsidiary of the Company whether by being an
officer or owning more than 10 percent of the Company's voting securities.
Qualifications
All members of the Committee shall be able to read and understand
fundamental financial statements (including a company's balance sheet, income
statement, and cash flow statement) and at least one member must either have
past employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or background,
which results in the individual's financial sophistication, including being or
having been a chief executive officer, chief financial officer, or other senior
officer with financial oversight responsibilities or be an "audit committee
financial expert" as defined by the SEC. Committee members may enhance their
familiarity with finance and accounting by participating in educational programs
conducted by the Company or by an outside organization.
Appointment and Removal
The members of the Committee shall be appointed by the Board of Directors.
A member shall serve until such member's successor is duly elected and qualified
or until such member's earlier resignation or removal. The members of the
Committee may be removed, with or without cause, by a majority vote of the Board
of Directors.
2
-
Chairman
Unless a Chairman is elected by the full Board of Directors, the members of
the Committee shall designate a Chairman by the majority vote of the full
Committee membership. The Chairman will chair all regular sessions of the
Committee and set the agendas for Committee meetings.
Delegation to Subcommittees
In fulfilling its responsibilities, the Committee shall be entitled to
delegate any or all of its responsibilities to a subcommittee of the Committee.
Meetings
The Committee shall meet as frequently as circumstances dictate, but at
least on a quarterly basis. The Chairman of the Committee or a majority of the
members of the Committee may call meetings of the Committee. Any one or more of
the members of the Committee may participate in a meeting of the Committee by
means of conference call or similar communication device by means of which all
persons participating in the meeting can hear each other.
All non-management directors who are not members of the Committee may
attend meetings of the Committee, but may not vote. In addition, the Committee
may invite to its meetings any director, member of management of the Company,
and such other persons as it deems appropriate in order to carry out its
responsibilities. The Committee may also exclude from its meetings any persons
it deems appropriate.
As part of its goal to foster open communication, the Committee shall
periodically meet separately with each of management, the director of the
internal auditing department, if any, and the independent auditor to discuss any
matters that the Committee or any of these groups believe would be appropriate
to discuss privately. In addition, the Committee should meet with the
independent auditor and management periodically to review the Company's
financial statements in a manner consistent with that outlined in this Charter.
Duties and Responsibilities
The Committee shall carry out the duties and responsibilities set forth
below. These functions should serve as a guide with the understanding that the
Committee may determine to carry out additional functions and adopt additional
policies and procedures as may be appropriate in light of changing business,
legislative, regulatory, legal, or other conditions. The Committee shall also
carry out any other duties and responsibilities delegated to it by the Board of
Directors from time to time related to the purposes of the Committee outlined in
this Charter. The Committee may perform any functions it deems appropriate under
applicable law, rules, or regulations, the Company's by-laws, and the
resolutions or other directives of the Board, including review of any
certification required to be reviewed in accordance with applicable law or
regulations of the SEC.
In discharging its oversight role, the Committee is empowered to study
or investigate any matter of interest or concern that the Committee deems
appropriate. In this regard and as it otherwise deems appropriate, the Committee
shall have the
3
authority, without seeking Board approval, to engage and obtain advice and
assistance from outside legal and other advisors as it deems necessary to carry
out its duties. The Committee also shall have the authority to receive
appropriate funding, as determined by the Committee, in its capacity as a
committee of the Board of Directors, from the Company for the payment of
compensation to any accounting firm engaged for the purpose of preparing or
issuing an audit report or performing other audit, review, or attest services
for the Company; to compensate any outside legal or other advisors engaged by
the Committee; and to pay the ordinary administrative expenses of the Committee
that are necessary or appropriate in carrying out its duties.
The Committee shall be given full access to the Company's internal audit
group, if any, Board of Directors, corporate executives, and independent auditor
as necessary to carry out these responsibilities. While acting within the scope
of its stated purpose, the Committee shall have all the authority of the Board
of Directors, except as otherwise limited by applicable law.
Notwithstanding the foregoing, the Committee is not responsible for
certifying the Company's financial statements or guaranteeing the independent
auditor's report. The fundamental responsibility for the Company's financial
statements and disclosures rests with management and the independent auditor. It
also is the job of the Chief Executive Officer and senior management, rather
than that of the Committee, to assess and manage the Company's exposure to risk.
Documents/Reports Review
1. Discuss with management and the independent auditor, prior to public
dissemination, the Company's annual audited financial statements and
quarterly financial statements, including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and discuss with the independent auditors the matters required
to be discussed by Statement of Auditing Standards No. 61.
2. Discuss with management and the independent auditor, prior to the Company's
filing of any quarterly or annual report, (a) whether any significant
deficiencies in the design or operation of internal control over financial
reporting exist that could adversely affect the Company's ability to
record, process, summarize, and report financial data; (b) the existence of
any material weaknesses in the Company's internal control over financial
reporting; and (c) the existence of any fraud, whether or not material,
that involves management or other employees who have a significant role in
the Company's internal control over financial reporting.
3. Discuss with management and the independent auditor the Company's earnings
press releases (paying particular attention to the use of any "pro forma"
or "adjusted" non-GAAP information), as well as financial information and
earnings guidance provided to analysts and rating agencies.
4. Discuss with management and the independent auditor the Company's major
financial risk exposures, the guidelines and policies by which risk
assessment and management is undertaken, and the steps management has taken
to monitor and control risk exposure.
4
Independent Auditors
5. Appoint, retain, compensate, evaluate, and terminate any accounting firm
engaged by the Company for the purpose of preparing or issuing an audit
report or performing other audit, review, or attest services for the
Company and, in its sole authority, approve all audit engagement fees and
terms as well as all non-audit engagements with the accounting firm.
6. Oversee the work of any accounting firm engaged by the Company for the
purpose of preparing or issuing an audit report or performing other audit,
review, or attest services for the Company, including the resolution of any
disagreements between management and the independent auditor regarding
financial reporting.
7. Pre-approve, or adopt procedures to pre-approve, all audit, audit-related,
tax and other services permitted by law or applicable SEC regulations
(including fee and cost ranges) to be performed by the independent auditor.
Any pre-approved services that will involve fees or costs exceeding
pre-approved levels will also require specific pre-approval by the
Committee. Unless otherwise specified by the Committee in pre-approving a
service, the pre-approval will be effective for the 12-month period
following pre-approval. The Committee will not approve any non-audit
services prohibited by applicable SEC regulations or any services in
connection with a transaction initially recommended by the independent
auditor, the purpose of which may be tax avoidance and the tax treatment of
which may not be supported by the Internal Revenue Code and related
regulations.
8. To the extent it deems it appropriate, delegate pre-approval authority to
the Chairman of the Committee or any one or more other members of the
Committee provided that any member of the Committee who has exercised such
delegation must report any such pre-approval decisions to the Committee at
its next scheduled meeting. The Committee will not delegate the
pre-approval of services to be performed by the independent auditor to
management.
9. Require that the independent auditor, in conjunction with the Chief
Financial Officer, be responsible for seeking pre-approval for providing
services to the Company and that any request for pre-approval must inform
the Committee about each service to be provided and must provide detail as
to the particular service to be provided.
10. Inform each accounting firm engaged for the purpose of preparing or issuing
an audit report or to perform audit, review, or attest services for the
Company that such firm shall report directly to the Committee.
11. Review, at least annually, the qualifications, performance, and
independence of the independent auditor. In conducting its review and
evaluation, the Committee should do the following:
(a) At least annually obtain and review a report by the Company's
independent auditor describing (i) the auditing firm's internal
quality-control procedures; (ii) any material issues raised by
the most recent internal quality-control review, or peer review,
of the auditing firm, or by any inquiry or investigation by
governmental or
5
professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the
auditing firm, and any steps taken to deal with any such issues;
and (iii) all relationships between the independent auditor and
the Company.
(b) Ensure the receipt from the independent auditor of a formal
written statement delineating all relationships between the
auditor and the Company, consistent with Independence Standards
Board Standard No. 1.
(c) Actively engage in a dialogue with the independent auditor with
respect to any disclosed relationships or services that may
impact the objectivity and independence of the auditor.
(d) Take, or recommend that the full Board of Directors take,
appropriate action to oversee the independence of the independent
auditor.
(e) Ensure the rotation of the lead audit (or coordinating) partner
at least every five years, and consider whether there should be
regular rotation of the audit firm itself.
(f) Confirm with the independent auditor that the lead (or
coordinating) audit partner, the concurring (or reviewing)
partner, and each other active audit engagement team partner
satisfies the rotation requirements of Rule 2-01(c)(6) of
Regulation S-X.
(g) Take into account the opinions of management and the Company's
internal auditor (or other personnel responsible for the internal
audit function), if any.
Financial Reporting Process
12. In consultation with the independent auditor, management, and the internal
auditor, if any, review the integrity of the Company's financial reporting
processes, both internal and external. In that connection, the Committee
should obtain and discuss with management and the independent auditor
reports from management and the independent auditor regarding (a) all
critical accounting policies and practices to be used by the Company and
the related disclosure of those critical accounting policies under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations"; (b) analyses prepared by management and/or the independent
auditor setting forth significant financial reporting issues and judgments
made in connection with the preparation of the financial statements,
including all alternative treatments of financial information within
generally accepted accounting principles that have been discussed with the
Company's management, the ramifications of the use of the alternative
disclosures and
6
treatments, and the treatment preferred by the independent auditor; (c) all
alternative treatments of financial statements within generally accepted
accounting principles that have been discussed with the Company's
management, the ramifications of the use of alternative disclosures and
treatments, and the treatment preferred by the independent auditor; (d)
major issues regarding accounting principles and financial statement
presentations, including any significant changes in the Company's selection
or application of accounting principles; (e) major issues as to the
adequacy of the Company's internal controls and any specific audit steps
adopted in light of material control deficiencies; (f) issues with respect
to the design and effectiveness of the Company's disclosure controls and
procedures, management's evaluation of those controls and procedures, and
any issues relating to such controls and procedures during the most recent
reporting period; (g) the effect of regulatory and accounting initiatives,
as well as off-balance sheet structures on the financial statements of the
Company; (h) any significant matters arising from any audit, including
audit problems and difficulties, whether raised by management, the internal
auditor, if any, and the independent auditor, relating to the Company's
financial statements; and (i) any other material written communications
between the independent auditor and the Company's management.
13. Review periodically the effect of regulatory and accounting initiatives, as
well as off-balance sheet structures, on the financial statements of the
Company.
14. Review with the independent auditor any audit problems or difficulties
encountered and management's response thereto. In this regard, the
Committee will regularly review with the independent auditor (a) any audit
problems or other difficulties encountered by the auditor in the course of
the audit work, including any restrictions on the scope of the independent
auditor's activities or on access to requested information, and any
significant disagreements with management and (b) management's responses to
such matters. Without excluding other possibilities, the Committee may
review with the independent auditor (i) any accounting adjustments that
were noted or proposed by the auditor but were "passed" (as immaterial or
otherwise), (ii) any communications between the audit team and the audit
firm's national office respecting auditing or accounting issues presented
by the engagement, and (iii) any "management" or "internal control" letter
issued, or proposed to be issued, by the independent auditor to the
Company.
15. Obtain from the independent auditor assurance that the audit of the
Company's financial statements was conducted in a manner consistent with
Section 10A of the Securities Exchange Act of 1934, which sets forth
procedures to be followed in any audit of financial statements required
under the Securities Exchange Act of 1934.
16. Discuss the scope of the annual audit and review the form of the opinion
the independent auditor proposes to issue.
17. Review and discuss with management and the independent auditor the
responsibilities, budget, and staffing of the Company's internal audit
function, if any.
Legal Compliance/General
18. Review periodically, with the Company's counsel, any legal matter that
could have a significant impact on the Company's financial statements.
7
19. Discuss with management and the independent auditor the Company's
guidelines and policies with respect to risk assessment and risk
management. The Committee will discuss the Company's major financial risk
exposures and the steps management has taken to monitor and control such
exposures.
20. Set clear hiring policies for employees or former employees of the
independent auditor. At a minimum, these policies should provide that any
accounting firm may not provide audit services to the Company if the Chief
Executive Officer, Chief Financial Officer, Chief Accounting Officer,
Controller, or any person serving in an equivalent position for the Company
was employed by the accounting firm and participated in any capacity in the
audit of the Company within one year of the initiation of the current
audit.
21. Establish procedures for (i) the receipt, retention, and treatment of
complaints received by the Company regarding accounting, internal
accounting controls, or auditing matters; and (ii) the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
22. Unless assigned to a comparable committee or group of independent
directors, review and approve all related party transactions as specified
in Item 404 of Regulation S-K.
23. Review and reassess the adequacy of this Charter on an annual basis.
Reports
24. Prepare all reports required to be included in the Company's proxy
statement pursuant to and in accordance with applicable rules and
regulations of the SEC.
25. Report regularly to the full Board of Directors. In this regard, the
Committee should review with the full Board any issues that arise with
respect to the quality or integrity of the Company's financial statements,
the Company's compliance with legal or regulatory requirements, the
performance and independence of the Company's independent auditor, and the
performance of the internal audit function, if any.
26. The Committee shall provide such recommendations as the Committee may deem
appropriate. The report to the Board of Directors may take the form of an
oral report by the Chairman or any other member of the Committee designated
by the Committee to make such report.
27. Maintain minutes or other records of meetings and activities of the
Committee.
Limitation of Audit Committee's Role
With respect to the foregoing responsibilities and processes, the Committee
recognizes that the Company's financial management, including the internal audit
staff, if any, as well as the independent auditor have more time, knowledge, and
detailed information regarding the Company than do Committee members.
Consequently, in discharging its oversight responsibilities, the Committee will
not provide or be deemed to
8
provide any expertise or special assurance as to the Company's financial
statements or any professional certification as to the independent auditors'
work.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements and disclosures are complete
and accurate and are in accordance with generally accepted accounting principles
and applicable rules and regulations. These are the responsibilities of
management and the independent auditor. It also is not the duty of the Committee
to conduct investigations or to assure compliance with laws and regulations and
the Company's internal policies and procedures.
9
EXHIBIT B
QUANTRX BIOMEDICAL CORPORATION (the "Company")
COMPENSATION COMMITTEE CHARTER
Adopted by the Board of Directors of QuantRx Biomedical Corporation
on April 26, 2007
Purpose
The purpose of the Compensation Committee (the "Committee") shall be as
follows:
1. To determine, or recommend to the Board of Directors for
determination, the compensation for the Chief Executive Officer (the
"CEO") of the Company.
2. To determine, or recommend to the Board of Directors for
determination, the compensation for all officers of the Company other
than the CEO.
3. To produce an annual report on executive compensation for inclusion in
the Company's annual proxy statement in accordance with applicable
rules and regulations of the Securities and Exchange Commission (the
"SEC") and other regulatory bodies.
Composition
The Committee shall consist of two or more members of the Board of
Directors, each of whom is determined by the Board of Directors to be
"independent" under the rules of a national securities exchange or national
securities association and the Sarbanes-Oxley Act.
To the extent the Committee consists of at least three members, one
director who is not independent may be appointed to the Committee, subject to
the following:
o the director is not a current officer or employee, or an immediate
family member of a current officer or employee, of the Company;
o the Board of Directors, under exceptional and limited circumstances,
determines that such individual's membership on the Committee is
required by the best interests of the Company and its stockholders;
o the Company discloses in the proxy statement for the next annual
meeting of stockholders subsequent to such determination (or in its
Form 10-K if the Company does not file a proxy statement), the nature
of the relationship and the reason for that determination; and
o such person does not serve under this exception on the Committee for
more than two years.
1
Appointment and Removal
The members of the Committee shall be appointed by the Board of Directors.
A member shall serve until such member's successor is duly elected and qualified
or until such member's earlier resignation or removal. The members of the
Committee may be removed, with or without cause, by a majority vote of the Board
of Directors.
Chairman
Unless a Chairman is elected by the full Board of Directors, the members of
the Committee shall designate a Chairman by majority vote of the full Committee
membership. The Chairman will chair all regular sessions of the Committee and
set the agendas for Committee meetings.
Delegation to Subcommittees
In fulfilling its responsibilities, the Committee shall be entitled to
delegate any or all of its responsibilities to a subcommittee of the Committee.
Meetings
The Committee shall meet as frequently as circumstances dictate. The
Chairman of the Committee or a majority of the members of the Committee may call
meetings of the Committee. Any one or more of the members of the Committee may
participate in a meeting of the Committee by means of conference call or similar
communication device by means of which all persons participating in the meeting
can hear each other.
All non-management directors who are not members of the Committee may
attend meetings of the Committee, but may not vote. In addition, the Committee
may invite to its meetings any director, member of management of the Company,
and such other persons as it deems appropriate in order to carry out its
responsibilities. The Committee may also exclude from its meetings any persons
it deems appropriate.
As part of its review and establishment of the performance criteria and
compensation of designated key executives, the Committee should meet separately
at least on an annual basis with the CEO and any other corporate officers as it
deems appropriate. However, the Committee should also meet from time to time
without such officers present, and in all cases, such officers shall not be
present at meetings at which their performance and compensation are being
discussed and determined.
Duties and Responsibilities
The Committee shall carry out the duties and responsibilities set forth
below. These functions should serve as a guide with the understanding that the
Committee may determine to carry out additional functions and adopt additional
policies and procedures as may be appropriate in light of changing business,
legislative, regulatory, legal, or other conditions. The Committee shall also
carry out any other responsibilities and duties delegated to it by the Board of
Directors from time to time related to the purposes of the Committee outlined in
this Charter.
2
In discharging its oversight role, the Committee is empowered to study or
investigate any matter of interest or concern that the Committee deems
appropriate and shall have the sole authority, without seeking Board approval,
to retain outside counsel or other advisors for this purpose, including the
authority to approve the fees payable to such counsel or advisors and any other
terms of retention.
Setting Compensation for Officers and Directors
1. Establish and review the overall compensation philosophy of the
Company.
2. Review and approve the Company's corporate goals and objectives
relevant to the compensation for the CEO and other officers, including
annual performance objectives.
3. Evaluate the performance of the CEO and other officers in light of
those goals and objectives and, based on such evaluation, approve, or
recommend to the full Board of Directors the approval of, the annual
salary, bonus, stock options, and other benefits, direct and indirect,
of the CEO and other executive officers.
4. In approving or recommending the long-term incentive component of
compensation for the CEO and other executive officers, the Committee
should consider the Company's performance and relative stockholder
return, the value of similar incentive awards to CEOs and other
executive officers at comparable companies, and the awards given to
the CEO and other executive officers in past years. The Committee is
not precluded from approving awards (with the ratification of the
Board of Directors) as may be required to comply with applicable tax
laws, such as Rule 162(m).
5. In connection with executive compensation programs, the Committee
should do the following:
(a) Review and recommend to the full Board of Directors, or approve,
new executive compensation programs;
(b) Review on a periodic basis the operations of the Company's
executive compensation programs to determine whether they are
properly coordinated and achieving their intended purposes;
(c) Establish and periodically review policies for the administration
of executive compensation programs; and
(d) Take steps to modify any executive compensation program that
yields payments and benefits that are not reasonably related to
executive and corporate performance.
6. Establish and periodically review policies in the area of senior
management perquisites.
3
7. Consider policies and procedures pertaining to expense accounts of
senior executives.
8. Review and recommend to the full Board of Directors compensation of
directors as well as directors' and officers' indemnification and
insurance matters.
9. Review and make recommendations to the full Board of Directors, or
approve, any contracts or other transactions with current or former
executive officers of the Company, including consulting arrangements,
employment contracts, change-in-control agreements, severance
agreements, or termination arrangements, and loans to employees made
or guaranteed by the Company.
Monitoring Incentive and Equity-Based Compensation Plans
10. Review and make recommendations to the Board of Directors with respect
to, or approve, the Company's incentive-compensation plans and
equity-based plans, and review the activities of the individuals
responsible for administering those plans.
11. Review and make recommendations to the full Board of Directors, or
approve, all equity compensation plans of the Company that are not
otherwise subject to the approval of the Company's shareholders.
12. Review and make recommendations to the full Board of Directors, or
approve, all awards of shares or share options pursuant to the
Company's equity-based plans.
13. Monitor compliance by executives with the rules and guidelines of the
Company's equity-based plans.
14. Review and monitor employee pension, profit sharing, and benefit plans.
15. Have the sole authority to select, retain, and/or replace, as needed,
any compensation or other outside consultant to be used to assist in
the evaluation of director, CEO, or senior executive compensation. In
the event such a compensation consultant is retained, the Committee
shall have the sole authority to approve such consultant's fees and
other retention terms.
Reports
16. Prepare an annual report on executive compensation for inclusion in
the Company's proxy statement in accordance with applicable rules and
regulations of the SEC, and other applicable regulatory bodies.
17. Report regularly to the Board of Directors with respect to matters
that are relevant to the Committee's discharge of its responsibilities
and with respect to such recommendations as the Committee may deem
appropriate. The report to the Board of Directors may take the form of
an
4
oral report by the Chairman or any other member of the Committee
designated by the Committee to make such report.
18. Maintain minutes or other records of meetings and activities of the
Committee.
5
EXHIBIT C
QUANTRX BIOMEDICAL CORPORATION
2007 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to advance the interests of
QuantRx, Biomedical Corporation, a Nevada corporation (the "Company"), and its
Related Entities by providing an additional incentive to attract and retain
qualified and competent persons who provide services to the Company and its
Related Entities, and upon whose efforts and judgment the success of the Company
and its Related Entities is largely dependent, through the encouragement of
stock ownership in the Company by such persons.
This Plan will become effective on the date of its adoption by the Board,
provided the Plan is approved by the stockholders of the Company (excluding
holders of shares of Stock issued by the Company pursuant to the exercise of
options granted under this Plan) within twelve months before or after the date.
If the Plan is not so approved by the stockholders of the Company, any options
granted under this Plan will be rescinded and will be void. This Plan will
remain in effect until it is terminated by the Board or the Committee (as
defined hereafter) under Section 9 hereof, except that no ISO (as defined
herein) will be granted after the tenth anniversary of the date of this Plan's
adoption by the Board. This Plan will be governed by, and construed in
accordance with, the laws of the State of Nevada.
2. Definitions. As used herein, the following terms shall have the meanings
indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall, with respect to any Optionee, have the equivalent
meaning (or the same meaning as "cause" or "for cause") set forth in any
employment agreement, consulting, or other agreement for the performance of
services between the Optionee, and the Company or a Related Entity or, in the
absence of any such agreement or any such definition in such agreement, such
term shall mean (i) the failure by the Optionee to perform, in a reasonable
manner, his or her duties as assigned by the Company or a Related Entity, (ii)
any violation or breach by the Optionee of his or her employment agreement,
consulting or other similar agreement with the Company or a Related Entity, if
any, (iii) any violation or breach by the Optionee of any non-competition,
non-solicitation, non-disclosure and/or other similar agreement with the Company
or a Related Entity, (iv) any act by the Optionee of dishonesty or bad faith
with respect to the Company (or a Related Entity), (v) use of alcohol, drugs or
other similar substances in a manner that adversely affects the Optionee's work
performance, or (vi) the commission by the Optionee of any act, misdemeanor, or
crime reflecting unfavorably upon the Optionee or the Company or any Related
Entity. The good faith determination by the Committee of whether the Optionee's
Continuous Service was terminated by the Company for "Cause" shall be final and
binding for all purposes hereunder.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(d) "Committee" means a committee designated by the Board to administer
the Plan; provided, however, that if the Board fails to designate a committee or
if there are no longer any members on the committee so designated by the Board,
then the Board shall serve as the Committee. Committee shall consist of at least
two directors, and each member of the Committee shall be (i) a "non-employee
director" within the meaning of Rule 16b-3 (or any successor rule) under the
Exchange Act, unless administration of the Plan by "non-employee directors" is
not then required in order for exemptions under Rule 16b-3 to apply to
transactions under the Plan, (ii) an "outside director" within the meaning of
Section 162(m) of the Code, and (iii) "Independent".
(e) "Common Stock" shall mean the Company's common stock, par value
$0.01 per share.
(f) "Company" shall mean QuantRx Biomedical Corporation, a Nevada
corporation.
(g) "Consultant" shall mean any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.
(h) "Continuous Service" shall mean the continuous service to the
Company or any Related Entity, without interruption or termination, in any
capacity of Employee, Director or Consultant. Continuous Service shall not be
considered interrupted in the case of (i) any approved leave of absence, (ii)
transfers among the Company, any Related Entity, or any successor, in any
capacity of Employee, Director or Consultant, or (iii) any change in status as
long as the individual remains in the service of the Company or any Related
Entity in any capacity of Employee, Director or Consultant (except as otherwise
provided in the Option Agreement). An approved leave of absence shall include
sick leave, military leave, or any other authorized personal leave.
(i) "Director" shall mean a member of the Board or the board of
directors of any Related Entity.
(j) "Disability" means a permanent and total disability (within the
meaning of Section 22(e) of the Code), as determined by a medical doctor
satisfactory to the Committee.
(k) "Effective Date" shall mean June 4, 2007.
(l) "Eligible Participants" means persons who, at a particular time,
are employees, officers, consultants, or directors of the Company or its
subsidiaries.
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(m) "Employee" shall mean any person, including an Officer or Director,
who is an employee of the Company or any Related Entity. The payment of a
Director's normal compensation and fee (as applicable to all Directors or
Committee members, as the case may be) by the Company or a Related Entity shall
not be sufficient to constitute "employment" by the Company.
(n) "Fair Market Value" of a Share on any date of reference shall mean
the "Closing Price" (as defined below) of the Common Stock on the business day
immediately preceding the date of reference, unless the Committee in its sole
discretion shall determine otherwise in a fair and uniform manner. For the
purpose of determining Fair Market Value, the "Closing Price" of the Common
Stock on any business day shall be (i) if the Common Stock is listed or admitted
for trading on any United States national securities exchange, or if actual
transactions are otherwise reported on a consolidated transaction reporting
system, the last reported sale price of Common Stock on such exchange or
reporting system, as reported in any newspaper of general circulation, (ii) if
the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices in common use, the last
reported sale price of Common Stock on such system or, if sales prices are not
reported, the mean between the closing high bid and low asked quotations for
such day of Common Stock on such system, as reported in any newspaper of general
circulation, or (iii) if neither clause (i) or (ii) is applicable, the mean
between the high bid and low asked quotations for the Common Stock as reported
by the National Quotation Bureau, Incorporated if at least two securities
dealers have inserted both bid and asked quotations for Common Stock on at least
five of the ten preceding days. If neither (i), (ii), or (iii) above is
applicable, then Fair Market Value shall be determined by the Committee in a
fair and uniform manner.
(o) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Internal Revenue Code.
(p) "Independent", when referring to either the Board or members of the
Committee, shall have the same meaning as used in the rules of the Nasdaq Stock
Market or any national securities exchange on which any securities of the
Company are listed for trading, and if not listed for trading, by the rules of
Nasdaq Stock Market.
(q) "Non-Qualified Stock Option" shall mean an Option that is not an
Incentive Stock Option.
(r) "Option" (when capitalized) shall mean any option granted under
this Plan.
(s) "Option Agreement" shall mean the agreement between the Company and
the Optionee for the grant of an option.
(t) "Optionee" shall mean a person to whom a stock option is granted
under this Plan or any person who succeeds to the rights of such person under
this Plan by reason of the death of such person.
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(u) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Securities Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a "group" as defined in Section 13(d) thereof.
(v) "Plan" shall mean this 2007 Stock Option Plan for the Company.
(w) "Related Entity" shall mean any Subsidiary, and any business,
corporation, partnership, limited liability company or other entity in which the
Company or a Subsidiary holds a substantial ownership interest, directly or
indirectly.
(x) "Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(y) "Share" shall mean a share of Common Stock.
(z) "Subsidiary" shall mean any corporation or other entity in which
the Company has a direct or indirect ownership interest of 50% or more of the
total combined voting power of the then outstanding securities or interests of
such corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.
3. Shares Available for Option Grants. The Committee may grant to Optionees
from time to time Options to purchase an aggregate of up to 8,000,000 Common
Shares from the Company's authorized and unissued Shares. If any Option granted
under the Plan shall terminate, expire, or be canceled or surrendered as to any
Shares, new Options may thereafter be granted covering such Shares.
4. Incentive and Non-Qualified Options.
(a) An Option granted hereunder shall be either an Incentive Stock
Option or a Non-Qualified Stock Option as determined by the Committee at the
time of grant of the Option and the Option Agreement relating to the Option
shall clearly state whether it is an Incentive Stock Option or a Non-Qualified
Stock Option. All Incentive Stock Options shall be granted within 10 years from
the Effective Date. Incentive Stock Options may not be granted to any person who
is not an Employee of the Company or a Related Entity.
(b) Options otherwise qualifying as Incentive Stock Options hereunder
will not be treated as Incentive Stock Options to the extent that the aggregate
fair market value (determined at the time the Option is granted) of the Shares
with respect to which Options meeting the requirements of Section 422(b) of the
Code are exercisable for the first time by any individual during any calendar
year (under all plans of the Company and its parent corporation or subsidiary
corporation, as those terms are defined in Sections 424(e) and (f) of the Code,
respectively, exceeds $100,000.
5. Conditions for Grant of Options.
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(a) Each Option shall be evidenced by an Option Agreement that may
contain any term deemed necessary or desirable by the Committee, provided such
terms are not inconsistent with this Plan or any applicable law. Optionees shall
be those persons who are selected by the Committee from the class of all
Employees, Directors and Consultants of the Company or any Related Entity.
(b) In granting Options, the Committee shall take into consideration
the contribution the person has made to the success of the Company or any
Related Entities and such other factors as the Committee shall determine. The
Committee shall also have the authority to consult with and receive
recommendations from officers and other personnel of the Company and its Related
Entities with regard to these matters. The Committee may from time to time in
granting Options under the Plan prescribe such other terms and conditions
concerning such Options as it deems appropriate, including, without limitation,
(i) prescribing the date or dates on which the Option becomes exercisable, (ii)
providing that the Option rights accrue or become exercisable in installments
over a period of years, or upon the attainment of stated goals or both, or (iii)
relating an Option to the Continuous Service or continued employment of the
Optionee for a specified period of time, provided that such terms and conditions
are not more favorable to an Optionee than those expressly permitted herein.
(c) The Options granted to Optionees under this Plan shall be in
addition to regular salaries, pension, life insurance or other benefits related
to their Continuous Service with the Company or its Related Entities. Neither
the Plan nor any Option granted under the Plan shall confer upon any person any
right to continuance of any Continuous Service by the Company or its Related
Entities.
(d) The Committee shall have the discretion to grant Options that are
exercisable for unvested Shares. Should the Optionee's Continuous Service cease
while holding such unvested Shares, the Company shall have the right to
repurchase, at the exercise price paid per share, any or all of those unvested
Shares. The terms upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by the Committee and set
forth in the Option Agreement for the relevant Option.
(e) Notwithstanding any other provision of this Plan, an Incentive
Stock Option shall not be granted to any person owning directly or indirectly
(through attribution under Section 424(d) of the Code) at the date of grant,
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company (or of any parent corporation or subsidiary corporation
of the Company (as those terms are defined in Sections 424(e) and 424(f) of the
Code, respectively) at the date of grant) unless the exercise price of such
Option is at least 110% of the Fair Market Value of the Shares subject to such
Option on the date the Option is granted, and such Option by its terms is not
exercisable after the expiration of five years from the date such Option is
granted.
(f) Notwithstanding any other provision of this Plan, and in addition
to any other requirements of this Plan, the aggregate number of Options granted
to any one Optionee may not exceed 2,000,000, subject to adjustment as provided
in Section 10 hereof.
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(g) Covenants of Optionee. At the discretion of the Committee the
person to whom an Option is granted hereunder, as a condition to the granting of
the Option, must execute and deliver to the Company a confidential information
agreement approved by the Committee. Nothing contained in this Plan, any Option
Agreement or in any other agreement executed in connection with the granting of
an Option under this Plan will confer upon any Optionee any right with respect
to the continuation of his or her status as an employee of, consultant or
independent contractor to, or director of, the Company or its subsidiaries.
(h) Vesting Periods. Except as otherwise provided herein, each option
Agreement may specify the period or periods of time within which each Option or
portion thereof will first become exercisable (the "Vesting Period") with
respect to the total number of shares of Option Stock called for thereunder (the
"Total Award Option Stock"). Such Vesting Periods will be fixed by the Committee
in its discretion, and may be accelerated or shortened by the Committee in its
discretion.
6. Exercise Price. The exercise price per Share of any Option shall be any
price determined by the Committee but shall not be less than the par value per
Share; provided, however, that in no event shall the exercise price per Share of
any Incentive Stock Option be less than the Fair Market Value of the Shares
underlying such Option on the date such Option is granted.
7. Exercise of Options.
(a) An Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the terms of the
Option, (ii) full payment of the aggregate exercise price of the Shares as to
which the Option is exercised has been made, and (iii) arrangements that are
satisfactory to the Committee in its sole discretion have been made for the
Optionee's payment to the Company of the amount that is necessary for the
Company or Related Entity employing the Optionee to withhold in accordance with
applicable Federal or state tax withholding requirements.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, as well as the method of payment of the exercise price
and of any withholding and employment taxes applicable thereto, shall be
determined by the Committee and may in the discretion of the Committee consist
of: (1) cash, (2) certified or official bank check, (3) money order, (4) Shares
that have been held by the Optionee for at least six (6) months (or such other
Shares as the Committee determines will not cause the Company to recognize for
financial accounting purposes a charge for compensation expense), (5) the
withholding of Shares issuable upon exercise of the Option, (6) pursuant to a
"cashless exercise" procedure, by delivery of a properly executed exercise
notice together with such other documentation, and subject to such guidelines,
as the Committee shall require to effect an exercise of the Option and delivery
to the Company by a licensed broker acceptable to the Company of proceeds from
the sale of Shares or a margin loan sufficient to pay the exercise price and any
applicable income or employment taxes, or (7) in such other consideration as the
Committee deems appropriate, or by a combination of the above. In the case of an
Incentive Stock Option, the permissible methods of payment shall be specified at
the time the Option is granted. The Committee in its sole discretion
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may accept a personal check in full or partial payment of any Shares. If the
exercise price is paid, and/or the Optionee's tax withholding obligation is
satisfied, in whole or in part with Shares, or through the withholding of Shares
issuable upon exercise of the Option, the value of the Shares surrendered or
withheld shall be their Fair Market Value on the date the Option is exercised.
(c) The Committee in its sole discretion may, on an individual basis or
pursuant to a general program established in connection with this Plan, cause
the Company to lend money to an Optionee, guarantee a loan to an Optionee, or
otherwise assist an Optionee to obtain the cash necessary to exercise all or a
portion of an Option granted hereunder or to pay any tax liability of the
Optionee attributable to such exercise; provided that such loan, loan guaranty,
or assistance in obtaining a loan is not in violation of the Sarbanes-Oxley Act
of 2002, or any rule or regulation adopted thereunder or any other applicable
law. If the exercise price is paid in whole or part with the Optionee's
promissory note, such note shall (i) provide for full recourse to the maker,
(ii) be collateralized by the pledge of the Shares that the Optionee purchases
upon exercise of the Option, (iii) bear interest at the prime rate of the
Company's principal lender, and (iv) contain such other terms as the Committee
in its sole discretion shall reasonably require.
(d) No Optionee shall be deemed to be a holder of any Shares subject to
an Option unless and until a stock certificate or certificates for those Shares
are issued to that person(s) under the terms of this Plan. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date the stock certificate is issued, except as expressly provided
in Section 10 hereof.
8. Exercisability of Options. Any Option shall become exercisable in such
amounts, at such intervals and upon such terms and/or conditions as the
Committee shall provide in the Option Agreement for that Option, except as
otherwise provided in this Section 8:
(a) The expiration date of an Option shall be determined by the
Committee at the time of grant, but in no event shall an Option be exercisable
after the expiration of 10 years from the date of grant of the Option.
(b) The Option Agreement relating to any Option may provide that the
Option shall become immediately fully exercisable in the event of a "Change in
Control" and/or shall become fully exercisable in the event that the Committee
exercises its discretion to provide a cancellation notice with respect to the
Option pursuant to Section 9(b) hereof. For this purpose, the term "Change in
Control" shall mean the occurrence of any of the following:
(i) The acquisition by any Person of Beneficial Ownership (as those
terms are defined in Section 3(a)(9) of the Securities Exchange Act, of twenty
percent (20%) or more of either (A) the then outstanding shares of common stock
of the Company (the "Outstanding Company Common Stock") or (B) the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Securities); provided, however, that for purposes of
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this Section 8(b), the following acquisitions shall not constitute a Change
of Control: (w) any acquisition directly from the Company; (x) any acquisition
by the Company; (y) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary; or (z) any
acquisition by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of subsection (iii) below; or
(ii) During any period of two (2) consecutive years (not including
any period prior to the Effective Date) individuals who constitute the Board on
the Effective Date (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or nomination for
election, by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
(iii) Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar corporate transaction involving the Company
or any of its Subsidiaries, a sale or other disposition of all or substantially
all of the assets of the Company, or the acquisition of assets or stock of
another entity by the Company or any of its Subsidiaries (each a "Business
Combination"), in each case, unless, following such Business Combination, (A)
all or substantially all of the individuals and entities who were the Beneficial
Owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than fifty percent (50%) of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, twenty percent (20%) or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (C) at least a majority of the members of
the Board of Directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
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(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(c) The Committee may in its sole discretion, accelerate the date on
which any Option may be exercised and may accelerate the vesting of any Shares
subject to any Option or previously acquired by the exercise of any Option.
9. Termination of Option Period.
(a) Unless otherwise provided in any Option Agreement, the unexercised
portion of any Option shall automatically and without notice terminate and
become null and void at the time of the earliest to occur of the following:
(i) three months after the date on which the Optionee's Continuous
Service is terminated other than by reason of (A) Cause, (B) a Disability of the
Optionee as determined by a medical doctor satisfactory to the Committee, or (C)
death of the Optionee;
(ii) immediately upon the termination of the Optionee's Continuous
Service for Cause;
(iii) twelve months after the date on which the Optionee's
Continuous Service is terminated by reason of a Disability as determined by a
medical doctor satisfactory to the Committee; or
(iv) (A) twelve months after the date of termination of the
Optionee's Continuous Service by reason of the death of the Optionee, or, if
later, (B) three months after the date on which the Optionee shall die if such
death shall occur during the one year period specified in Subsection 9(a)(iii)
hereof.
(b) To the extent not previously exercised, (i) each Option shall
terminate immediately in the event of (1) the liquidation or dissolution of the
Company, or (2) any reorganization, merger, consolidation or other form of
corporate transaction in which either the Company does not survive or the Shares
are exchanged for or converted into securities issued by another entity, unless
the successor or acquiring entity, or an affiliate thereof, assumes the Option
or substitutes an equivalent option or right pursuant to Section 10(c) hereof,
and (ii) the Committee in its sole discretion may by written notice
("cancellation notice") cancel, effective upon the consummation of any Business
Combination described in Subsection 8(b)(iii) hereof, any Option that remains
unexercised on the effective date of that Business Combination. The Committee
shall give written notice of any proposed transaction referred to in this
Section 9(b) a reasonable period of time prior to the closing date for such
transaction (which notice may be given either before or after approval of such
transaction), in order that Optionees may have a reasonable period of time prior
to the closing date of such transaction within which to exercise any Options
that then are exercisable (including any Options that may become exercisable
upon the closing date of such transaction). An Optionee may condition his
exercise of any Option upon the consummation of a transaction referred to in
this Section 9(b).
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10. Adjustment of Shares.
(a) If at any time while the Plan is in effect or unexercised Options
are outstanding, there shall be any increase or decrease in the number of issued
and outstanding Shares through the declaration of a stock dividend or through
any recapitalization resulting in a stock split-up, combination or exchange of
Shares, then and in that event, the Committee shall make:
(i) appropriate adjustment in the maximum number of Shares
available for grant under the Plan, or available for grant to any person under
the Plan, so that the same percentage of the Company's issued and outstanding
Shares shall continue to be subject to being so optioned; and
(ii) appropriate adjustment in the number of Shares and the
exercise price per Share thereof then subject to any outstanding Option, so that
the same percentage of the Company's issued and outstanding Shares shall remain
subject to purchase at the same aggregate exercise price.
(b) Unless otherwise provided in any Option Agreement, the Committee
may change the terms of Options outstanding under this Plan, with respect to the
exercise price or the number of Shares subject to the Options, or both, when, in
the sole discretion of the Committee, such adjustments become appropriate to
preserve benefits under the Plan.
(c) In the event of any proposed sale of all or substantially all of
the Company's assets or any reorganization, merger, consolidation, or other form
of corporate transaction in which the Company does not survive, or in which the
Shares are exchanged for or converted into securities issued by another entity,
the successor or acquiring entity or an affiliate thereof may, with the consent
of the Committee, assume each outstanding Option or substitute an equivalent
option or right. If the successor or acquiring entity or an affiliate thereof,
does not cause such an assumption or substitution of any Option, then that
Option shall terminate pursuant to Section 9(d) hereof upon consummation of the
sale, merger, consolidation, or other corporate transaction, with or without
consideration as determined by the Committee. The Committee shall give written
notice of any proposed transaction referred to in this Section 10(c) a
reasonable period of time prior to the closing date for such transaction (which
notice may be given either before or after the approval of such transaction), in
order that Participants may have a reasonable period of time prior to the
closing date of such transaction within which to exercise any Options that are
then exercisable (including any Options that may become exercisable upon the
closing date of such transaction). A Participant may condition his exercise of
any Options upon the consummation of the transaction.
(d) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with a direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason
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thereof shall be made to, the number of or exercise price for Shares then
subject to outstanding Options granted under the Plan.
(e) Without limiting the generality of the foregoing, the existence
of outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
11. Transferability. No Incentive Stock Option, and unless the prior
written consent of the Committee is obtained (which consent may be withheld for
any reason) and the transaction does not violate the requirements of Rule 16b-3
promulgated under the Securities Exchange Act no Non-Qualified Stock Option,
shall be subject to alienation, assignment, pledge, charge or other transfer
other than by the Optionee by will or the laws of descent and distribution, and
any attempt to make any such prohibited transfer shall be void. Each Option
shall be exercisable during the Optionee's lifetime only by the Optionee, or in
the case of a Non-Qualified Stock Option that has been assigned or transferred
with the prior written consent of the Committee, only by the permitted assignee.
12. No Shares acquired by an Officer or Director pursuant to the exercise
of an Option may be sold, assigned, pledged or otherwise transferred prior to
the expiration of the six-month period following the date on which the Option
was granted, unless the transaction does not violate the requirements of Rule
16b-3 promulgated under the Securities Exchange Act.
13. Issuance of Shares.
(a) Notwithstanding any other provision of this Plan, the Company shall
not be obligated to issue any Shares unless it is advised by counsel of its
selection that it may do so without violation of the applicable Federal and
State laws pertaining to the issuance of securities, and may require any stock
so issued to bear a legend, may give its transfer agent instructions, and may
take such other steps, as in its judgment are reasonably required to prevent any
such violation.
(b) As a condition to any sale or issuance of Shares upon exercise of
any Option, the Committee may require such agreements or undertakings as the
Committee may deem necessary or advisable to facilitate compliance with any
applicable law or regulation including, but not limited to, the following:
(i) a representation and warranty by the Optionee to the Company,
at the time any Option is exercised, that he is acquiring the Shares to be
issued to him for investment and not with a view to, or for sale in connection
with, the distribution of any such Shares; and
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(ii) a representation, warranty and/or agreement to be bound by any
legends endorsed upon the certificate(s) for the Shares that are, in the opinion
of the Committee, necessary or appropriate to facilitate compliance with the
provisions of any securities laws deemed by the Committee to be applicable to
the issuance and transfer of those Shares.
14. Administration of the Plan.
(a) The Plan shall be administered by the Committee which shall be
composed of two or more Directors. The membership of the Committee shall be
constituted so as to comply at all times with the then applicable requirements
for Outside Directors of Rule 16b-3 promulgated under the Securities Exchange
Act and Section 162(m) of the Code. The Committee shall serve at the pleasure of
the Board and shall have the powers designated herein and such other powers as
the Board may from time to time confer upon it.
(b) Any and all decisions or determinations of the Committee shall be
made either (i) by a majority vote of the members of the Committee at a meeting
or (ii) without a meeting by the unanimous written approval of the members of
the Committee.
(c) The Committee, from time to time, may adopt rules and regulations
for carrying out the purposes of the Plan.
(d) The determinations of the Committee, and its interpretation and
construction of any provision of the Plan or any Option Agreement, shall be
final and binding on all persons, unless determined otherwise by the Board.
15. Withholding or Deduction for Taxes. If at any time specified herein for
the making of any issuance or delivery of any Option or Shares to any Optionee,
any law or regulation of any governmental authority having jurisdiction in the
premises shall require the Company or a Related Entity to withhold, or to make
any deduction for, any taxes or to take any other action in connection with the
issuance or delivery then to be made, the issuance or delivery shall be deferred
until the withholding or deduction shall have been provided for by the Optionee
or beneficiary, or other appropriate action shall have been taken.
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16. Interpretation.
(a) As it is the intent of the Company that the Plan shall comply in
all respects with Rule 16b-3 promulgated under the Securities Exchange Act
("Rule 16b-3"), any ambiguities or inconsistencies in construction of the Plan
shall be interpreted to give effect to such intention, and if any provision of
the Plan is found not to be in compliance with Rule 16b-3, such provision shall
be deemed null and void to the extent required to permit the Plan to comply with
Rule 16b-3. The Committee may from time to time adopt rules and regulations
under, and amend, the Plan in furtherance of the intent of the foregoing.
(b) The Plan and any Option Agreements entered into pursuant to the
Plan shall be administered and interpreted so that all Incentive Stock Options
granted under the Plan will qualify as Incentive Stock Options under Section 422
of the Code. If any provision of the Plan or any Option Agreement relating to an
Incentive Stock Option should be held invalid for the granting of Incentive
Stock Options or illegal for any reason, that determination shall not affect the
remaining provisions hereof, but instead the Plan and the Option Agreement shall
be construed and enforced as if such provision had never been included in the
Plan or the Option Agreement.
(c) This Plan shall be governed by the laws of the State of Nevada,
without reference to the conflict of laws rules or principals thereof.
(d) Headings contained in this Plan are for convenience only and shall
in no manner be construed as part of this Plan.
(e) Any reference to the masculine, feminine, or neuter gender shall be
a reference to such other gender as is appropriate.
17. Amendment and Discontinuation of the Plan. The Committee may from time
to time amend, suspend or terminate the Plan or any Option; provided, however,
that, any amendment to the Plan shall be subject to the approval of the
Company's shareholders if such shareholder approval is required by any
applicable federal or state law or regulation (including, without limitation,
Rule 16b-3 or to comply with Section 162(m) of the Code) or the rules of any
stock exchange or automated quotation system on which the Common Stock may then
be listed or granted. Except to the extent provided in Sections 9 and 10 hereof,
no amendment, suspension or termination of the Plan or any Option issued
hereunder shall substantially impair the rights or benefits of any Optionee
pursuant to any Option previously granted without the consent of the Optionee.
18. Effective Date and Termination Date. The effective date of the Plan is
the Effective Date, and the Plan shall terminate on the 10th anniversary of the
Effective Date. This Plan shall be submitted to the shareholders of the Company
for their approval and adoption and Options hereunder may be granted prior to
such approval and adoption; provided, however, that any Incentive Stock Options
granted hereunder, and if but only to the extent otherwise required by law or
the rules of any stock exchange or automated quotation system on which the
Common
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Stock may be listed, any Non-Qualified Stock Options granted hereunder, prior to
such approval and adoption shall be contingent upon obtaining such approval and
adoption.
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