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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)14(A) of the Securities
Exchange Act of 1934
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Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
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|X||_| Preliminary Proxy Statementproxy statement
|_| Confidential, forFor Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|_||X| Definitive Proxy Statementproxy statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant toUnder ss. 240.14a-11(c) or240.14a-12
QUANTRX BIOMEDICAL CORPORATION
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A-FEM MEDICAL CORPORATION
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(Name of Registrant as Specified in Itsits Charter)
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(Name- --------------------------------------------------------------------------------
(Names of Person(s) Filing Proxy Statement, if other thanOther Than the 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:
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A-FEM MEDICALQUANTRX BIOMEDICAL CORPORATION
10180 S.W. Nimbus Avenue,100 South Main Street, Suite J-5
Portland, Oregon 97223
February 9, 2001300
Doylestown, Pennsylvania 18901
May 31, 2007
Dear Stockholder:
You areStockholders:
On behalf of the board of directors and management of QuantRx
Biomedical Corporation (the "Company"), I cordially invitedinvite you to attend a Specialour
annual meeting of stockholders to be held on Thursday, 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 (the "Special Meeting")and accompanying
proxy statement. The Company's board of A-Fem Medical Corporation (the "Company").
Place: A-Fem Medical Corporation
10180 SW Nimbus Avenue, Suite J-5
Portland, Oregon
Date: Thursday, March 8, 2001
Time: 9:30 a.m. local time
Thedirectors recommends a vote "FOR" the
proposals listed as items 1, 2 and 3 in the Notice ofand described in the Special Meeting and Proxy Statement accompany this
letter. The Proxy Statement describes the businessenclosed
proxy statement.
Your vote is important to be transacted at the
meeting and provides other information concerning the Company.
The principal business to be transacted at the Special Meeting will be
(i) election of directors; (ii) amendment of the Articles of Incorporation to
increase the authorized number of shares of the Company's common stock ("Common
Stock") and preferred stock ("Preferred Stock"); (iii) amendment of the
Company's Amended and Restated 1994 Incentive and Non-Qualified Stock Option
Plan (the "1994 Plan") to increase the number of shares of Common Stock reserved
for issuance under the 1994 Plan; and (iv) ratification of the appointment of
Arthur Andersen LLP as the Company's independent public accountants for the
fiscal year ending December 31, 2001. The Board of Directors recommends that
stockholders vote for election of the nominated directors, amendment of the
Articles of Incorporation to increase authorized number of shares of Common
Stock and Preferred Stock, amendment of the 1994 Plan and ratification of Arthur
Andersen LLP as the Company's independent public accountants.
We know that many of our stockholders will be unable to attend the
Special Meeting. Proxies are therefore solicited so that each stockholder has an
opportunity to vote on all matters that are scheduled to come before the
meeting.us. Whether or not you plan to attend in
person, it is important that your shares be represented and voted at the Special Meeting, we hope that you
will have your stock represented by marking, signing, datingannual
meeting. Therefore, after reading the enclosed proxy statement, please promptly
complete, sign, date, and returningreturn your proxy card in the enclosed envelope as soon as possible.envelope. Your
stock will be voted in accordance with the instructions you have given in your
proxy card. You may, of course, attend the Special Meetingannual meeting and vote in person
even if you have previously returned your proxy card.
We look forward to greeting you at the meeting.
Sincerely,
Steven T. Frankel
PresidentWalter Witoshkin
Chairman and Chief Executive Officer
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IMPORTANT
A proxy card is enclosed herewith. All stockholders are urged to complete and
mail the proxy card promptly. The enclosed envelope for return of the proxy card
requires no postage. Any stockholder attending the Special Meeting may
personally vote on all matters that are considered, in which event the signed
proxy will be revoked.
IT IS IMPORTANT THAT YOUR STOCK BE VOTED.
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A-FEM MEDICALQUANTRX BIOMEDICAL CORPORATION
NOTICE OF SPECIALANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 8, 2001To be Held on June 28, 2007
To the Stockholders of QuantRx Biomedical Corporation:
NOTICE IS HEREBY GIVEN that the Special Meetingannual meeting of Stockholdersstockholders (the
"Special"Annual Meeting") of A-Fem MedicalQuantRx Biomedical Corporation, a Nevada corporation (the
"Company"), will be held on Thursday, March 8, 2001,June 28, 2007, at 9:3010:00 a.m. local time,
at the Company's offices at 10180 SW Nimbus Avenue, Suite J-5, Portland, Oregon,The Racquet Club of Philadelphia, 215 South 16th Street, Philadelphia, PA
19102, for the following purposes:
1. To(1) to elect seven directorstwo Class 1 Directors, to hold office until the Company's Board2009
annual meeting of Directors.
2. To amend the Company's Articles of Incorporation to increase the
authorized number of shares of the Company's Common Stockstockholders or until their respective successors
have been duly elected, and Preferred Stock.
3. To amend the Company's Amended and Restated 1994 Incentive and
Non-Qualified Plan (the "1994 Plan") to increase the number of shares of the
Company's Common Stock reserved for issuance under the 1994 Plan.
4. To ratify the appointment of Arthur Andersen LLPone Class 2
Director who was appointed by the Company's board of directors in
September 2006 to fill a vacancy;
(2) to approve the 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, 2001.
Only2007; and
(4) to transact such other business as may properly come before the
Annual Meeting or at any adjournments or postponements thereof.
QuantRx's board of directors has fixed May 9, 2007 as the record date
for determining stockholders of record at the close of business on January 30,
2001, will be entitled to notice of and to vote at the SpecialAnnual
Meeting or any adjournment or postponement thereof.
TheA 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 May 31, 2007, and includes a copy of the Company's
Proxy Statement is submitted herewith. Financial and
other information concerning2006 Annual Report to Stockholders.
QuantRx's board of directors unanimously recommends you vote "FOR" the
Company is containedproposals presented to you in the enclosed Annual
Report.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTENDthis proxy statement.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIALANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING,
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY 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 SPECIAL
MEETING.
By Order of the Board of Directors,
Steven T. Frankel, PresidentWalter Witoshkin, Chairman and Chief Executive Officer
Portland, Oregon
February 9, 2001Doylestown, Pennsylvania
May 31, 2007
A-FEM MEDICALQUANTRX BIOMEDICAL CORPORATION
10180 S.W. Nimbus,100 South Main Street, Suite J-5
Portland, Oregon 97223300
Doylestown, Pennsylvania 18901
PROXY STATEMENT
FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MARCH 8, 2001GENERAL INFORMATION CONCERNING SOLICITATION AND VOTING
General
This Proxy Statementproxy statement is furnished by the Board of Directors of A-Fem
Medical Corporation, a Nevada corporation (the "Company"), to the holdersstockholders of common stock, par value $.01 per share,QuantRx Biomedical
Corporation, of the Company (the "Common Stock") and
the holdersrecord as of the Series A Convertible Preferred Stock, $.01 par value (the
"Series A Stock")May 9, 2007, in connection with the solicitation of
proxies by the Board of Directors (the "Board") of the Company for use at the Company's
SpecialAnnual Meeting of Stockholders in lieu of an
annual meeting (the "Special"Annual Meeting"), to be held at 9:30 a.m. local time, on Thursday,
March 8, 2001,June 28, 2007, at 10:00 a.m. EDT, at The Racquet Club of Philadelphia, 215 South
16th Street, Philadelphia, PA 19102.
The approximate date for mailing of the Company's offices at 10180 SW Nimbus Avenue,
Suite J-5, Portland, Oregon.
This Proxy StatementNotice of Annual Meeting of
Stockholders, this proxy statement and the enclosed form of proxy were mailed to
stockholders on or about February 9, 2001.is May 31, 2007.
Record Date and Outstanding Shares
Only holders of record of the Company's Common Stock and Series A Stock
atcommon stock on May 9, 2007, or the
close of business on January 30, 2001,record date, are entitled to notice of and to vote at the SpecialAnnual Meeting. OnAs of
that date, 9,596,558there were 40,910,580 shares of Common Stockcommon stock outstanding and 7,492,135 shares of Series A Stock were outstanding (together, holders
are entitled to one vote per share ("the "OutstandingOutstanding Shares").
Solicitation of Proxies
The cost of preparing, printing and mailing this Proxy Statementproxy statement and the proxy
solicited hereby has been or will be borne by the Company. In addition to the use of the mails,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
beneficial owners of the Common Stockstockholders 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 Voting
Each Outstanding Share entitles the holder thereof to one vote upon each matter
to be presented at the SpecialAnnual Meeting. Holders of the Common Stock
and Series A StockStockholders 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) a nominee for election to the Board of Directors will beare elected (or ratified) by a plurality of the affirmative
votes cast by those shares present in person, or represented by proxy,
and entitled to vote at the Special Meeting by holdersAnnual Meeting. 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;
(ii)2007 Incentive and Non-Qualified Stock Option Plan
requires the amendment of the Articles of Incorporation, as
previously amended and restated (the "Articles"), to increase the authorized
number of shares of the Common Stock and the Company's preferred stock (the
"Preferred Stock") will be approved if it receives the affirmative vote of a
majority of the Outstanding Shares and the affirmative voteapproval of a majority of the outstanding Series A Stock;
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(iii) the amendment of the Company's Amended and Restated 1994
Incentive and Non-Qualified Stock Option Plan (the "1994 Plan") to increase the
number of shares of Common Stock reserved for issuance under the 1994 Plan will
be approved if it receives the affirmative vote of a majority of the Outstanding
Sharesstock
represented in person or represented by proxy at the Special MeetingAnnual Meeting.
Abstentions and broker non-votes will not be counted as having been
voted on the affirmative voteproposal and will have the effect of a majority
ofvoting against the
outstanding Series A Stock; and
(iv) theproposal.
(iii) The appointment of Arthur Andersen, LLP,Williams & Webster, P.S., will be ratified if thesuch
proposal receives the affirmative vote of a majority of the Outstanding
Shares represented at the SpecialAnnual 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 at the Special Meeting, but have no effect on the determination
ofis present, and each will be tabulated separately.
In determining whether a plurality exists with respect toproposal has been approved, in most cases an abstention
or a given nominee. An abstentionbroker or other non-vote haswill have the same effect ofas a vote against the
proposal. In the election of directors, a proposal. Proxiesbroker non-vote has no effect if a
quorum is present and ballotsdirectors are elected by a plurality.
Each proxy returned to the Company will be receivedvoted in accordance with the
instructions indicated thereon. If no instructions are indicated, the shares
will be voted "FOR" the (i) election of the nominees and tabulatedthe ratification of the
appointee named in this proxy statement as directors, (ii) adoption of the 2007
Incentive and 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, 2007.
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 Computershare Investor Services, the Company's
transfer agent.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 SpecialAnnual Meeting and voting in person. Attendance at the SpecialAnnual
Meeting will not in and of itself constitute a revocation of a proxy.
Each proxy returned2
CORPORATE GOVERNANCE
The Board of Directors
The Company's board of directors is currently comprised of five directors. The
five directors are divided into two classes comprised of three Class 1 Directors
(William Fleming, Shalom Hirschman, and Evan Levine) and two Class 2 Directors
(Walter Witoshkin and Arthur Hull Hayes, Jr.). Pursuant to the Company's 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 directors 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.
During the fiscal year ended December 31, 2006, the Board held eight 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 period 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 Committees
The Board has two standing committees: an audit committee (the "Audit
Committee") and a compensation committee (the "Compensation Committee").
Audit Committee
The members of the Audit Committee are Shalom Hirschman and William 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, as a result of its inability to recruit a
qualified candidate with the requisite 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 limited to: (1) overseeing the accounting and financial
reporting processes of the Company and audits of the financial statements of the
Company; and (2) providing assistance to the Board with respect to its oversight
of (i) the integrity of the Company's financial statements, (ii) the Company's
compliance with legal and regulatory requirements, (iii) the independent
auditor's qualifications and independence, and (iv) the performance of the
Company's internal audit function, if any, and 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
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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 be votedreport 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 accordancethe 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 in the area of senior
management perquisites, and
o 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.
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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 instructions indicated thereon. If no instructions are indicated,Company's
independent auditors, Williams & Webster, P.S., the shares
will be voted "FOR" (i) electionoverall scope and plans for
their audit. Upon completion of the nomineesaudit, 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 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 2006 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 Board of Directors
named in this Proxy Statement; (ii) amendment of the Articles to increase the
authorized number of shares of Common Stock and Preferred Stock; (iii) amendment
of the 1994 Plan; and (iv) ratification of the appointment of Arthur Andersen
LLP as independent public accountants for the fiscal year endingended
December 31, 2001.2006 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
William Fleming, Chairman
Shalom Hirschman, Member
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PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Election of Directors
The businessBoard proposes that William Fleming and affairs of the Company are managed under the
direction of its Board of Directors. The Company's Bylaws provide that the Board
of Directors shall consist of not less than five nor more than nine members. The
Company's Bylaws provide for a staggered board. Pursuant to the Bylaws of the
Company, the Board of Directors is divided into two classes, with such classes
toShalom Hirschman be elected as equal in number as the total number of directors constituting the
entire Board permits. After the Special Meeting, the Company's Board of
Directors will consist of seven members, with three members in Class
1 whose
terms will expire in one year or when their respective successors have been
elected and qualified or until their death, resignation or removal fromDirectors to hold office
and four members in Class 2, whose terms will expire in two years or when their
respective successors have been elected and qualified or until their death,
resignation or removal from office. At the expiration of each class's term,
directors are to be elected to serve for a term of two years or until their
respective successors have been elected and qualified or until their death,
resignation or removal from office. A director elected to fill a vacancy on the
Board of Directors will be elected for the unexpired term of his or her
predecessor in office.
At the Special Meeting, stockholders will elect three Class 1 directors
to serve for one year or(or until successors are
elected and qualifiedqualified) and fourthat the Board's appointment of Arthur Hull Hayes,
Jr. as a Class 2 directorsDirector be ratified. As noted above, each nominee and the
appointee is currently serving as a member of the Board. Each Class 1 and Class
2 Director must be elected (or ratified) by a plurality of the votes properly
cast at the Annual Meeting.
Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES AND THE
RATIFICATION OF THE APPOINTEE LISTED ABOVE.
INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS
The following biographical descriptions set forth certain information with
respect to servethe two nominees for two years or until successors are elected and
qualified. Unless otherwise directed, the persons named in the proxy intend to
cast all proxies in favor of Merry Disney, James E. Reinmuth and RoseAnna Sevcik
to serveelection as Class 1 directors ofDirectors, the Company and William H. Fleming, Steven T.
Frankel, Carol A. Scott, and James R. Wilson to serveappointee for
ratification as a Class 2 directors ofDirector, the Company. In the event that Ms. Disney, Mr. Fleming, Mr. Frankel, Mr.
Reinmuth, Ms. Scott, Ms. Sevcik or Mr. Wilson should become unavailableDirectors who are not nominees for
election, toand the Board of Directors for any reason, the persons named in the
proxy have discretionary authority to vote the proxies for the election of other nominees to be designated to fill each such vacancy by the Board of Directors of
the Company.
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Information about the Nominees and Managementexecutive officers who are not directors.
Directors and Executive Officers Age Position
-------------------------------- --- --------
Merry L. Disney 54 DirectorWalter W. Witoshkin 62 Chairman and Chief Executive Officer
William H. Fleming, Ph.D. 54 Vice Chairman-Diagnostics,60 Chief Scientific Officer, Secretary, and Director
Steven T. Frankel 58Arthur Hull Hayes, Jr., M.D. 73 Director
Shalom Hirschman, M.D. 70 Director
Evan Levine 41 Director
Executive Officers Who are Not Directors
----------------------------------------
Sasha Afanassiev 39 Chief ExecutiveFinancial Officer, PresidentTreasurer, and Director
James E. Reinmuth, Ph.D. 60 Chairman and Director
Carol A. Scott, Ph.D. 51 Director
RoseAnna Sevcik 37 Director
James Wilson 51 Treasurer, Director of Business Development and
Director
Key Employees
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Martin Harvey 59 Controller
Paul Mueggler, Ph.D. 50 Vice President Clinical and Regulatory Affairsof
Finance
Cynthia Horton 43 Vice President of Diagnostics
Class 1 Director Nominees; terms expireNominees - Term Expiring in one year.
Merry L. Disney has been president and chief executive officer of
Disney West operations since 1985. From 1986 to 1988, she was president of
Bridaldale Development Corporation and served as a director from 1979 to 1986.
Ms. Disney worked as an Academic Instructor of Children with Reading
Disabilities from 1982 until 1991 and currently is active in major real estate
developments and acquisitions.
James E. Reinmuth,2009
WILLIAM H. FLEMING, Ph.D. has served as Chairman of A-Fem since
September 1996, and has been a Director of A-Fem since May 1995. From September
1996 to April 1998, Dr. Reinmuth served as Chief ExecutiveScientific Officer of A-Fem.
From May 1995 to September 1996, Dr. Reinmuth served as Treasurer of A-Fem.
Since July 1994, Dr. Reinmuth has served as the Charles H. Lundquist
Distinguished Professor of Business at the University of Oregon. From June 1976
until July 1994, Dr. Reinmuth served as Dean of the College of Business at the
University of Oregon. Since 1988, Dr. Reinmuth has also served in several
administrative positions within the University of Oregon.
RoseAnna Sevcik has served as a Director of A-Fem since May 1995. Ms.
Sevcik has been serving as Director of Mortgage Backed Securities for SunAmerica
InvestmentsQuantRx
since July of 1999. From March 1996 to May 1999, Ms. Sevcik served
as vice president/senior portfolio manager of Penn Mutual. From February 1993 to
March 1996, Ms. Sevcik was vice president/senior portfolio manager and served as
a director on the pension plans board of the Life Insurance Company of the
Southwest. From February 1990 to February 1993, Ms. Sevcik was senior portfolio
manager/securities analyst at Securities Management and Research, an investment
management services company.
Class 2 Director Nominees; terms expire in two years.
William H. Fleming, Ph.D., has served as Vice Chairman-Diagnostics of
A-Fem since August of 1997, and2005, as a Director and Secretary of A-FemQuantRx 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 through August 1997, Dr.
Fleming served as President and Chief Operating Officer of A-Fem. HeQuantRx. In addition,
he was president, chief
operating officerPresident, Chief Operating Officer and a directorDirector of ProFem from July
1993 until its merger with A-FemQuantRx in June 1994. From April 1992 until July
1993, Dr. Fleming served as an associate with Sovereign Ventures, a healthcare
consulting firm; concurrently he served as director of corporate development of
Antivirals, Inc., a biotechnology company involved in antisense technology. Dr.
Fleming is a director of ERC, a non-profit company.
Steven T. Frankelorganization.
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 Appointee - Term Expiring in 2008
ARTHUR HULL HAYES, JR., M.D. has served as a Director of QuantRx since September
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 of A-Fem since April 1998, and asChief
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
A-Fem since November 1998. From
May 1992Business 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 March 1998,the pharmaceutical and related healthcare industries. As a
founding partner of Trident Group, Mr. Frankel was presidentWitoshkin specialized in alternative
sourcing for manufacturing and chief executive officerthe acquisition of Quidel Corporation, a manufacturer of physicians' office diagnostic test kits.
From January 1983 to May 1992,technologies and products.
Mr. Frankel was president of various
international and domestic divisions of Becton, Dickinson and Company, a
diagnostic
-3-
and medical device manufacturer. From 1979 to 1983, Mr. Frankel was vice
president and general manager of the Becton Dickinson Home Health Care unit. Mr.
FrankelWitoshkin also serves as a director of HIDA Educational Foundation, Washington,
D.C.
Carol A. Scott, Ph.D.,Sontra Medical Corporation and a
number of privately held companies. Mr. Witoshkin is a Class 2 Director whose
term expires in 2008.
EVAN LEVINE has served as a Director of A-FemQuantRx since February
1995. Dr. ScottSeptember, 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 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. Mr. Levine is a professor of marketing and the chairman of the marketing
faculty at The John E. Anderson Graduate School of Management at the University
of California, Los Angeles. Dr. Scott has been on the faculty at UCLA since
1977, and served the schoolClass 1 Director
whose term expires in a variety of administrative positions from 1986
through 1994, including as chairman of the faculty and associate dean for
academic affairs. She was also a visiting associate professor at the Harvard
Business School in 1985, and was on the faculty at Ohio State University for
three years prior to joining UCLA in 1977. Dr. Scott is a frequent author and
lecturer and2007.
Executive Officers Who Are Not Directors
SASHA AFANASSIEV, CPA, has served on the Editorial Boardas CFO and Vice President-Finance of the Journal of Consumer
ResearchQuantRx
since 1980. Dr. Scott also serves on the board of directors of Sizzler
International.
James R. WilsonSeptember 2005. In addition, Mr. Afanassiev has served as Treasurer of the
Company since December 2005. Mr. Afanassiev has seventeen years of diversified
public accounting experience. Mr. Afanassiev was the principal and a Directorfounder of A-Fem since
September 1996an
accounting and as Director of Business Development since July 1997. In
addition, since August 1995 Mr. Wilson has been a private financial consultant
to firmstax consulting firm, established in both manufacturing and service industries. From August 1992 to
August 1995, Mr. Wilson was a sales manager for Advanced Equipment Systems, Inc.
From January 1985 to August 1992, Mr. Wilson was treasurer and director of
marketing in various divisions of Production Technologies, Inc. Mr. Wilson also
serves as a director of Design Pacific/Oregon Dome, Inc.
Key Employees
Martin Harvey has served as the Company's Controller since June 1998.
From 1993 to 1998, Mr. Harvey held several other controller positions with a
variety of manufacturing companies. From August 1987 to June 1993, Mr. Harvey
was division controller for Spacelabs Medical, Inc., a manufacturer of critical
care medical monitors. From January 1980 to August 1987, Mr. Harvey was division
controller for the Medical Systems Division of Control Data, Inc.
Paul Mueggler, Ph.D.2001.
CYNTHIA HORTON has served as Vice President, ClinicalPresident-Diagnostics of QuantRx since July
2005. Ms. Horton was the 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 Regulatory Affairsbranded OTC
products for private label customers at ABI, and its predecessor Forefront
Diagnostics.
7
COMPENSATION OF EXECUTIVE OFFICERS
Summary 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 since July 2000. Prior to this date, Dr.
Mueggler served as Director of Clinical AffairsDecember 31, 2006.
Non-equity
Stock Option Incentive Plan All Other
Name and Salary Bonus Awards Awards Compensation Compensation Total
Principal Position Year ($) ($) ($) ($) ($) ($) ($)
- --------------------------------------------------------------------------------------------------------------------------
Walter W. Witoshkin, 2006 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
The amounts in the Option Awards column reflect the dollar amount recognized and
expensed for financial statement reporting purposes for the fiscal years ended
December 31, 2006 and 2005, in accordance with Statement of Financial Accounting
Standards No. 123(R) of awards of stock options and thus do not represent
aggregate fair value of grants. The Company since Aprilused the Black-Scholes option price
calculation to value the options granted in 2006 and 2005 using the following
assumptions: risk-free rate of 1997. From August 19894.93% and 3.78%; volatility of 1.70 and 1.85;
actual term and exercise price of options granted.
Outstanding Equity Awards At Fiscal Year-end
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,
Chairman & 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
(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 ten years. Exercise price exceeded the closing stock price on
the date of grant.
8
(2) Options granted 04/03/2006 vest upon meeting certain sales milestones which
have not yet been met. Term of the options is ten years. Exercise price is
equal to the closing stock price on the date of grant.
(3) Options granted 04/03/2006 vested immediately. Options granted 07/25/2006
vested January 1994, Dr. Mueggler served1, 2007. Terms of both options are ten years. Exercise
prices are equal to the closing stock price on date of grant.
There are no outstanding stock awards as director of clinicalDecember 31, 2006.
The Company used the Black-Scholes option price calculation to value the options
granted in 2006 and technical operations for OXIS Corporation, a diagnostic company.
From April 1984 to August 1989, he served as assistant professor2005 using the following assumptions: risk-free rate of
4.93% and chief,
toxicology section3.78%; volatility of 1.70 and 1.85; actual term and exercise price of
options granted.
Employment Agreements
We have entered into an employment contract with our Chief Executive Officer
that provides for the Departmentcontinuation of Clinical Pathology ofsalary if terminated for reasons other
than cause, as defined in those agreements. At December 31, 2006, the School of
Medicinefuture
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 Oregon Health Sciences University.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES.
Board of Directors Meetings and Committees andany time by the Company.
Director Compensation of Directors
The Board of Directors has established an Audit Committee and
Compensation Committee, but no Nominating Committee.
The Audit Committee oversees actions with respect to the Company's
accounting and financial reporting practices and providesadopted a channel of
communication between the Board and the Company'scompensation policy in July 2006. QuantRx
compensates independent auditors. The
Audit Committee consists of Carol A. Scott, Chair, and RoseAnna Sevcik. The
Audit Committee held one meeting in 1999. Both members of the Audit CommitteeBoard 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 independent directors as defined by NASD Rule 4200(a)(15).
The Audit Committee reviewsgranted at year end and makes recommendationshave
a term of five years and an exercise price equal to the Board
regarding services provided by the independent accountants, reviews with the
independent accountants the scope and resultsclosing stock price on
date of their annual examinationgrant. QuantRx did not compensate members of the Company's consolidated financial statementsBoard of Directors in
2006 and any recommendations they may
have, and makes recommendations2005 prior to the Board with respect to the engagement or
dischargeadoption of the independent accountants. The Audit Committee also reviews the
Company's procedures with respect to maintaining books and records, the adequacy
and implementation of internal auditing, accounting and financial controls, and
the Company's policies concerning financial reporting and business practices.
The Audit Committee: reviewed and discussed the audited financial statements
with management; discussed with the independent auditors the matters required to
be discussed under SAS 61; 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; and, based on such review and
-4-
discussions, recommendedBoard compensation policy. It is
anticipated that the audited financial statements be included inBoard of Directors will update and revise Board
compensation at an upcoming meeting of the Company's Annual Report on Form 10-KSBBoard of Directors.
The following table summarizes Director Compensation for the year ended December
31, 1999.
The Board of Directors has adopted a written charter2006. There was no Director Compensation for the Audit Committee, a
copy of which is attached to the Proxy Statement as Appendix 1.
The Compensation Committee administers the 1994 Plan. The Compensation
Committee currently consists of RoseAnna Sevcik, Chair, Carol A. Scott and Merry
Disney, who was appointed to the Compensation Committee when she became a member
of the Board of Directors. For the year ended December 31,
1999, the
Compensation Committee consisted2005.
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 Ms. Scott$1.17 and Ms. Sevcik and held one
meeting.
The Board of Directors held eight meetings during 1999. Each incumbent
director serving on the Board of Directors during 1999 was present for more than
75 percent of the aggregate number of (i) all meetings of the Board of Directors
held during thea five year while he or she was a director and (ii) all meetings of
committees on which he or she served.
Directors of A-Fem who are also employed by A-Fem doterm. Dr. Hirschman did not
receive additionalcash 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 their services6,250 common shares. Material terms are as directors. Non-employee directorsfollows: December 29, 2006
grant date, exercise price of A-Fem receive compensation$1.17 and a five year term.
9
The Company used the Black-Scholes option price calculation to value the options
granted in 2006 using the formfollowing assumptions: risk-free rate of 4.93%;
volatility of 1.70; actual term and exercise price of options to purchase A-Fem's common
stock. Directors who serve on the committee that administers A-Fem's Amendedgranted.
Security Ownership of Certain Beneficial Owners and Restated 1994 Incentive and Non-Qualified Stock Option Plan receive options
pursuant to paragraph 13 of the 1994 Plan.
James E. Reinmuth, A-Fem's Chairman of the Board receives fees of
$30,000 per year for consulting services provided to the Company.
MANAGEMENT INFORMATION
Executive Compensation
Compensation SummaryManagement
The following table sets forth certain information regarding the
compensation paid to the Chief Executive Officer and any other corporate
officers who received in excess of $100,000 in compensation in the fiscal year
ended December 31, 1999 (the "Named Executive Officers") for each of the fiscal
years ended December 31, 1999, 1998 and 1997.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
----------------------- -----------------------
Other Annual Securities Underlying
Name and Principal Salary Compensation Options/Warrants
Position Year ($) ($) (#)
- ------------------------------- ------ ---------- ------------ -----------------------
James E. Reinmuth (1) 1999 30,000 - -
Chief Executive Officer, 1998 45,025 - 150,000
Chairman and Director 1997 40,000 - 26,667
Steven T. Frankel (2) 1999 300,769 - -
Chief Executive Officer, 1998 103,863 - 1,700,000
President and Director 1997 - - -
William H. Fleming 1999 115,000 - -
Vice Chairman-Diagnostics, 1998 119,449 - 150,000
Secretary and Director 1997 115,000 - 26,667
- -------------------
(1) James E. Reinmuth served as Chief Executive Officer of A-Fem until
April 1998.
(2) Steven T. Frankel became Chief Executive Officer of A-Fem in April 1998
and President of A-Fem in November 1998. Mr. Frankel's 1999 salary
includes $60,769 in deferred salary from 1998.
-5-
Grant of Stock Options
No options were granted to Named Executive Officers during the fiscal
year ended December 31, 1999.
Exercise of Stock Options and Year-End Option/Warrant Values
There were no exercises of stock options by the Named Executive
Officers during the fiscal year ended December 31, 1999. The following table
sets forth certain information regarding options and warrants of the Named
Executive Officers outstanding as of December 31, 1999.
Aggregated Option Exercises in 1999
and Year-End Option/Warrant Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/Warrants at Options/Warrants at
December 31, 1999 December 31, 1999 (2)
--------------------------------- --------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------- -------------- ----------------- ----------- -------------
James E. Reinmuth 326,667 150,000(1) -0- -0-
Steven T. Frankel 475,000 1,225,000(1) -0- -0-
William H. Fleming 176,667 150,000(1) -0- -0-
- -------------------
(1) These options are subject to performance-based conditions.
(2) Based on a fair market valueMay 9, 2007 concerning
the ownership of $.72 per share, the price per share of
A-Fem's common stock on December 31, 1999.
Employment Agreements
A-Fem entered into a consulting agreement with James E. Reinmuth dated
effective December 1, 1998 (the "Reinmuth Consulting Agreement"), with respect
to Mr. Reinmuth's services as Chairman of the Board. The Reinmuth Consulting
Agreement provides for a fee of $2,500 per month. Either party may terminate the
Reinmuth Consulting Agreement on 30 days' prior notice.
A-Fem entered into an employment agreement with James R. Wilson dated
effective May 1, 1997 (the "Wilson Employment Agreement"), with respect to Mr.
Wilson's services as A-Fem's Treasurer. The Wilson Employment Agreement provides
for a salary of $5,000 per month. Either party may terminate the Wilson
Employment Agreement on 30 days' prior notice.
A-Fem entered into an employment agreement with Steven T. Frankel dated
effective April 25, 1998 (the "Frankel Employment Agreement"), with respect to
Mr. Frankel's services as A-Fem's Chief Executive Officer. The Frankel
Employment Agreement provides for a salary of $20,000 per month. Either party
may terminate the Frankel Employment Agreement on 30 days' prior notice.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership as of December 31, 2000 of the Company's Common Stock by (i) each beneficial owner of more than 5 percent of the Common Stock, (ii) the
Named Executive Officers, (iii) each director and director nomineestockholder of the Company and (iv) all directors and executive officers as a group. Each person
named inknown by
the table has sole investment and voting power with respect to the
shares set forth opposite his or her name, except as otherwise noted.
-6-
Name and Address of Amount and Nature of Percent of Class
Beneficial Owner Beneficial Ownership (1) Outstanding
- ------------------------------------------- ------------------------ ----------------
Capital Consultants, LLC 7,976,335 (2) 45.4%
2300 SW First Avenue, Suite 200
Portland, OR 97201
Merry Disney 10,000 (3) *
c/o Pacific Group
100 Atlantic Avenue, Suite 409
Long Beach, CA 90802
Director
William H. Fleming 791,367 (4) 8.1%
Suite J-5
10180 SW Nimbus Avenue
Portland, OR 97223-4341
Vice-Chairman, Secretary and Director
Steven T. Frankel 487,500 (5) 4.8%
Suite J-5
10180 SW Nimbus Avenue
Portland, OR 97223-4341
Chief Executive Officer, President and
Director
James E. Reinmuth 540,667 (6) 5.5%
5171 Solar Heights Drive
Eugene, OR 97405
Chairman and Director
Richard T. Schroeder 539,000 (7) 5.5%
3840 SW 75th Ave.
Portland, OR 97225
Carol A. Scott 60,000 (8) *
1834 Park Blvd.
Palo Alto, CA 94306
Director
RoseAnna Sevcik 60,000 (9) *
3843 Cottonwood Grove Terrace
Calabasas, CA 91301
Director
James R. Wilson 410,095 (10) 4.2%
2968 Matt Drive
Eugene, OR 97408
Treasurer and Director
All directors and officers 2,359,629 (11) 21.8%
as a group (8 persons)
- -----------------------
* Less than 1%.
-7-
(1) "Beneficial Ownership" is defined pursuant to Rule 13d-3 of the Exchange
Act, and generally means any person who directly or indirectly has or
shares voting or investment power with respect to a security. A person
shall be deemedCompany to be the beneficial owner of a security ifmore than 5% of the outstanding shares
of common 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 "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 personrule, 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 beneficial ownership of such security within 60 days including, but not limited to, any right to acquire such security through the exercise of any
stock option or warrantother right. Unless otherwise indicated in the footnotes or
throughtable, each person or entity has sole voting and investment power, or shares
such powers with his or her spouse, with respect to the conversionshares shown as
beneficially owned.
The Company had only common stock outstanding at May 9, 2007; therefore the
following table refers to our common stock.
Amount and Nature of
Beneficial Ownership as of
Name and Address of Beneficial Owner (1) May 9, 2007 Percentage of Class (2)
- --------------------------------------------------------------------------------------------------------------
Walter W. Witoshkin (3) 833,236 2.00%
William H. Fleming 492,034 1.20%
Arthur Hull Hayes, Jr. (4) 6,250 *
Shalom Hirschman (5) 506,250 1.24%
Evan Levine (6) 3,970,220 9.67%
6725 Mesa Ridge Road, Suite 100
San Diego, CA 92121
Sasha Afanassiev (7) 100,000 0.24%
Matthew Balk (8) 5,728,009 14.00%
570 Lexington Avenue
New York, NY 10021
Mark Capital, LLC (9) 2,945,000 7.17%
6725 Mesa Ridge Road, Suite 100
San Diego, CA 92121
Sherbrooke Partners, LLC 4,508,009 11.02%
570 Lexington Avenue
New York, NY 10021
(1) Unless indicated otherwise, the address of a security. Any securities noteach person listed in the table
is: c/o QuantRx Biomedical Corporation, 100 South Main Street, Suite 300,
Doylestown, Pennsylvania 18901.
(2) The percentage of beneficial ownership of common stock is based on
40,910,580 shares of common stock outstanding that are subject to suchas of May 9, 2007 and
excludes all shares of common stock issuable upon the exercise of
outstanding
10
options or warrants shall be deemed to be outstanding for the purpose of
computing the percentage of outstanding securities of the class owned by
such person, but shall not be deemed to be outstanding for the purpose of
computing the percentage of the class owned by any other person.
(2) Includes 7,492,135 shares issuable uponpurchase common stock or conversion of any common
stock equivalents, other than the shares of Series A
Stock, and an additional 484,200 shares issuable upon conversion of
shares issuable upon exercise of warrants to purchase Series A Stock.
Capital Consultants LLC acts as an agent for individual investors with
respect to all shares beneficially owned by it. Capital Consultants LLC
is an investment advisor registered under Section 203 of the Investment
Advisors Act of 1940 and has, on behalf of certain of its clients, sole
voting power and sole investment power with respect to certain of these
shares.
(3) Consists of 10,000 shares issuable upon exercise of options to purchase
Common Stock.
(4) Includes 176,667 sharescommon stock issuable upon the
exercise of options or warrants to purchase Common Stock.common stock held by the named
person to the extent such options or warrants are exercisable within 60
days of 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) Consists of 487,500 shares issuable upon the exercise of options to
purchase Common Stock.Ownership includes 6,250 currently exercisable common stock options.
(6) Includes 23,0002,765,000 shares of common stock and a 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 the Reinmuth Family Trust,
23,000Mr. Levine as custodian for his two children; and 35,220 shares held by Terry A. Reinmuth, 4,000 shares held by Hilary J.
Reinmuth, 4,000 shares held by Jennifer C. Reinmuth, 250,000 shares
issuable upon exercise of
a warrant to purchase Common Stock and 76,667
shares issuable upon exercise of options to purchase Common Stock.
(7) Includes 200,000 shares issuable upon the exercise of warrants to
purchase Common Stock, 30,000 sharescommon stock held by Mr. Schroeder's spouse, and
29,000Levine's retirement plan.
(7) Ownership is based on 100,000 common stock options currently exercisable.
(8) Includes 4,508,009 shares of common stock held by their children. Mr. Schroeder disclaims beneficial
ownershipSherbrooke Partners, LLC,
of which Matthew Balk is the 29,000sole member; and 1,220,000 shares of common
stock held by Mr. Balk as custodian for his two children.
(8) Includes 60,000 shares issuable upon the exercise of options to purchase
Common Stock.
(9) Includes 60,000 shares issuable upon the exercise of options to purchase
Common Stock.
(10) Includes 160,000 shares of Common Stock held jointly with Mr. Wilson's
spouse, 153,428 shares with respect to which Mr. Wilson shares voting
power with his spouse, and 96,667 shares issuable upon the exercise of
options to purchase Common Stock.
(11) Includes 967,501 shares issuable upon the exercise of options to purchase
Common Stock and 250,000 shares issuable upon exercises ofOwnership includes 180,000 common stock warrants to
purchase Common Stock.
Section 16(a) Beneficial Ownership Reporting Compliancecurrently exercisable for
180,000 common shares.
*Less than .02%
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires that the Company's officers,
directorsDirectors and Officers, and persons who own more
than 10 percent10% of a registered class of the Common StockCompany's equity securities ("Section 16
Persons"), to file with the Securities and Exchange Commission (the "SEC")SEC initial reports of beneficial
ownership on Form 3 and reports of
changes in beneficial ownership of Common
Stockcommon stock and other equity securities of the Company on Form 4. Officers, directors,
and greater than 10 percent stockholders of the CompanyCompany.
Section 16 Persons are required by SEC regulationsregulation to furnish to the Company with
copies of all Section 16(a) reports that
they file. ForBased on the year ended December 31, 1999,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 2006, (1)
Arthur 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 100,000 common stock options, (3) William H.
Fleming did not timely report three transactions and failed to file a Form 5 for such year. Mr.
Fleming has reported these delinquencies on4 to report the grant of 100,000 common stock
options, (4) Sasha Afanassiev did not timely file a Form 4 he filed for June 2000.
Toto report the Company's knowledge, based solely on reviewsgrant
of such reports furnished25,000 common stock options, (5) Shalom Hirschman did not timely file a Form
4 to report the Companygrant 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 written representations that no other reports are required, all
other Section 16(a) filing requirements applicable(8) Matthew Balk did not timely file a Form 3, as a
more than 10% owner, to its officers, directors
and greater than 10 percentreport the beneficial owners were complied with on a timely
basis for fiscal year ended December 31, 1999.
Certain Relationships and Related Transactions
Asownership of December 31, 1999, William H. Fleming, A-Fem's Vice-Chairman of
the Board and Secretary, had an outstanding balance of approximately $66,000 on
a loan from A-Fem. This loan was made on November 18, 1994, and the
-8-
original principal balance was $52,000. Interest accrues at a rate of 6.24
percent and is capitalized. Mr. Fleming used the proceeds from this loan to
purchase shares of A-Fem's Common Stock upon exercise of a stock option. Mr.
Fleming and the Company have agreed that the outstanding balance on this loan
shall become due and payable on July 1, 2001, and that Mr. Fleming may make such
payment by transferring to the Company shares of the Company's Common Stock that
he owns with a value equal to such outstanding balance on the date of repayment.our capital stock.
PROPOSAL NO. 2 - APPROVAL OF AMENDMENT TO THE ARTICLES TO INCREASE THE
AUTHORIZED NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK AND PREFERRED
STOCK
The Company's Articles currently authorize issuance of 43,000,000
shares of capital stock, consisting of 33,000,000 shares of Common Stock and
10,000,000 shares of Preferred Stock. The Board of Directors has adopted a
resolution to amend the Articles to increase the authorized capital stock of the
Company to 100,000,000 shares by increasing the number of authorized shares of
Common Stock to 75,000,000 shares and increasing the number of authorized shares
of Preferred Stock to 25,000,000. The text of the Amendment to the Articles is
set forth as Appendix 1 to the Proxy Statement.
The additional authorized shares of Common Stock and Preferred Stock
will not have preemptive rights.
The other terms of the additional authorized shares of Preferred Stock
cannot be stated or estimated at this time because no offering of the Preferred
Stock is contemplated in the proximate future. The Board of Directors will have
the authority to fix and determine the rights and preferences of the shares of
any series of Preferred Stock which is established, including dividends,
conversion prices, voting rights, redemption prices, maturity dates and similar
matters, without further action by the stockholders. The Company must obtain the
approval of the holders of a majority of the outstanding shares of Series A
Stock to issue additional shares of Preferred Stock.
Publicly held companies, such as the Company, need to have a sufficient
number of authorized shares of Common Stock and Preferred Stock available to be
issued from time to time in order to respond to financing needs. The Board of
Directors believe it is in the Company's interest to have a variety of financing
alternatives available to allow the Company to address its capital requirements
in rapidly changing capital markets.
The potential issuance of Preferred Stock may have the effect of
delaying, deferring or preventing a change in control of the Company, may
discourage bids for the Common Stock at a premium over the market price of the
Common Stock and may adversely affect the market price of, and the voting and
other rights of the holders of, Common Stock. The Company has no current plans
to issue additional shares of Preferred Stock.
The Company is governed by Nevada law, including the provisions of
Chapter 78 of Nevada Revised Statutes. In general, Section 78.438 prohibits a
resident domestic Nevada corporation from engaging in a "combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
combination is approved in a prescribed manner. "Combination" includes mergers,
asset sales and other transactions resulting in a financial benefit to the
interested stockholder. An "interested stockholder" is a person who is the
beneficial owner, directly or indirectly, of 10 percent or more of the
corporation's voting stock or who is an affiliate or associate of the
corporation and at any time within three years prior to the date in question was
the beneficial owner, directly or indirectly, of 10 percent or more of the
corporation's voting stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT
TO THE ARTICLES TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF THE COMPANY'S
COMMON STOCK AND PREFERRED STOCK.
-9-
PROPOSAL NO. 3 - APPROVAL OF AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED 1994QUANTRX 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 Boardpurpose of Directors has adopted a resolution amendingthis Plan is to advance the 1994 Plan
to increase the number of shares of Common Stock reserved for issuance under the
1994 Plan to 5,100,000 shares, subject to stockholder approval. A copy of the
1994 Plan, as amended to incorporate the proposed amendment, is attached to this
Proxy Statement as Appendix 3.
Before this increase, an aggregate of 3,300,000 shares (subject to
adjustment by reason of any reorganization, merger, consolidation, plan of
recapitalization, reclassification, stock split-up, combination of shares or
dividends payable in shares of the Company's Common Stock) was reserved for
issuance pursuant to awards under the 1994 Plan. As of December 31, 2000, an
aggregate of 1,530,090 shares were subject to outstanding stock options and
522,130 shares were available for grant. The exercise prices for currently
outstanding stock options range from $0.78 to $5.13 per share. Options for
1,247,780 shares have been exercised under the 1994 Plan.
Under the 1994 Plan, the Company may grant incentive stock options
(ISOs), nonqualified stock options (NSOs), stock bonuses, restricted stock,
stock appreciation rights, cash bonus rights, performance units, foreign
qualified grants and formula awards, separately or in combination. No grants of
stock bonuses, restricted stock, stock appreciation rights, cash bonus rights,
performance units, foreign qualified grants or formula awards have been made
under the 1994 Plan.
Eligibility
Awards may be granted under the 1994 Plan to selected employees,
officers, directors, nonemployee agents, consultants, advisors, persons involved
in the sale or distribution of the Company's products and independent
contractors of the Company; provided, however, that only employees of the
Company may be awarded ISOs. As of December 31, 2000, approximately 11 persons
were eligible to receive awards under the 1994 Plan. Since awards under the 1994
Plan are discretionary, awards thereunder for the 2001 fiscal year are not
currently determinable. In the fiscal year ended December 31, 2000, options to
purchase an aggregate of 30,000 shares at an exercise price of $1.00 per share
and 10,000 shares at an exercise price of $3.13 per share of Common Stock were
granted to Merry Disney and Rose Anna Sevcik respectively, each a directorinterests of the Company and optionsits
Related Entities by providing an additional incentive to purchase an aggregate of 362,500 shares of Common
Stock were grantedattract and retain
qualified and competent persons who provide services to employeesthe Company and its
Related Entities, and upon whose efforts and judgment the success of the Company
at an exercise priceand its Related Entities is largely dependent, through the encouragement of
$0.78 per
share.
Administrationstock ownership in the Company by such persons.
The 1994 Plan maywill be administered by the Company's Board of Directors
or the Compensation Committee approved by the Board of Directors (the "Plan
Administrator"). The 1994 Plan is currently administered by a Committee of the
Board of Directors, which has the authority, subject to the provisions of the
1994 Plan, to determine the persons to whom awards will be made and the size and
terms of the awards.
Terms and Conditions of Options
Options granted under the 1994 Plan may be ISOs or NSOs. The Plan
Administrator determines the number of shares subject to the option, the option
price, the period of the option, the exercise time and whether an option is an
ISO or NSO; provided, however, that with regard to ISOs, the aggregate fair
market value of shares (determined at the time the ISO is granted) with respect
to which ISOs are exercisable for the first time by an employee during any
calendar year may not exceed $100,000. With regard to ISOs, the exercise price
cannot be less than the fair market value of the Common Stock on the date of
grant or 110 percent of such fair market value in the case of ISOs granted to
individuals who hold 10 percent or more of the Common Stock on the date of
grant. Upon exercise of any option, payment for shares as to which an option is
being exercised may be made in cash, or with the consent of the Board, in shares
of the Company's Common Stock valued at fair market value, restricted stock,
performance or other contingent awards denominated in either stock or cash,
promissory notes and other forms of consideration.
-10-
No option will be exercisable more than 10 years from the date on which
it is granted and an ISO granted to any individual who holds 10 percent or more
of the Common Stock on the date of grant will not be exercisable more than five
years from the date on which it is granted.
Options granted under the 1994 Plan are non-transferable by any
optionee other than by will or the laws of descent and distribution or, with
respect to NSOs, as otherwise determined by the Plan Administrator or pursuant
to a qualified domestic relations order as defined in the U.S. Internal Revenue
Code (the "Code") or the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
Stock Bonuses
The Plan Administrator is authorized to award shares to participants on
such terms and conditions and subject to such restrictions, if any (whether
based on period of service or performance goals), as the Plan Administrator may
determine. Restrictions may include restrictions concerning transferability and
forfeiture of the shares awarded. The Plan Administrator may require the
recipient to sign an agreement as a condition of the award, but may not require
monetary consideration other than amounts necessary to satisfy any tax
withholding requirements.
Restricted Stock
The Plan Administrator may issue shares of restricted stock under the
1994 Plan for such consideration (including promissory notes and services) as
determined by the Plan Administrator. All restricted stock issued will be
subject to a purchase agreement which will be executed by the Company and the
prospective recipientcomposed of the shares and may contain any terms, conditions,
restrictions, representations and warranties required by the Plan Administrator.two or
more Directors. The restrictions may include limitations concerning transferability, repurchase
by the Company and forfeituremembership of the shares issued.
Stock Appreciation Rights
A stock appreciation right gives its holder the right to receive, upon
exercise, an amount equal in value to the excess of the fair market value on the
date of exercise of one share of Common Stock over its fair market value on the
date of grant, multiplied by the number of shares covered by the stock
appreciation right that is surrendered. The appreciation distribution may be
paid in Common Stock valued at fair market value, in cash, or partly in Common
Stock and partly in cash, as determined by the Plan Administrator. The Plan
Administrator may withdraw any stock appreciation right granted under the 1994
Plan at any time and may impose any conditions upon the exercise of the stock
appreciation right. The provisions of the 1994 Plan regarding nontransferability
of options apply equally to stock appreciation rights.
Cash Bonus Rights
Cash bonus rights may be granted under the 1994 Plan in connection with
options, stock appreciation rights, stock bonuses and shares sold under the 1994
Plan. Cash bonus rights will be subject to rules, terms and conditions as the
Plan Administrator may prescribe. A cash bonus right granted in connection with
an option will entitle an optionee to a cash bonus when the related option is
exercised in whole or in part. A cash bonus right granted in connection with a
stock bonus or stock purchase will entitle the recipient to a cash bonus payable
when the stock bonus is awarded or when shares are purchased, respectively, or
when restrictions, if any, to which the stock is subject lapse.
Performance Units
The Plan Administrator may grant performance units consisting of
monetary units which may be earned in whole or in part if the Company achieves
certain goals established by the Plan Administrator over a designated period of
time not to exceed 10 years. The goals established by the Plan Administrator may
include earnings per share, return on stockholders' equity, return on invested
capital and such other goals as may be established by the Plan Administrator.
Payment of an award earned may be in cash or in Common Stock or a combination of
both, and may be made when earned, or vested and deferred, as the Plan
Administrator determines. The provisions of the 1994 Plan regarding
nontransferability of options applies equally to performance units.
-11-
Foreign Qualified Grants
Awards under the 1994 Plan may be awarded to qualified persons residing
in foreign jurisdictions as the Plan Administrator may determine from time to
time. The Plan Administrator may adopt such supplements to the 1994 Plan as may
be necessary to comply with the applicable laws of such foreign jurisdictions
and to afford participants favorable treatment under such laws.
Formula Awards
Each director appointed to the Committee will be granted NSOsconstituted so as to
comply at all times with the then applicable requirements for 30,000 sharesOutside Directors
of Common Stock ("Formula Options") on the date such director is
appointed and further grants of NSOs for 30,000 shares of Common Stock on the
third anniversary of the grant of such member's most recent grant; provided,
however, that the grant to a newly appointed member will be reduced on an
option-for-option basis by the amount of any option grants accepted by such
appointee from the Company within the prior 24-month period. The Formula Options
will have an exercise price per share equal to the fair market value of Common
Stock on the date of grant and will vest in three equal installments on each of
the first three anniversaries of the date of grant.
Amendment and Acceleration
The 1994 Plan may be amended at any time by the Plan Administrator,
subject to approval by stockholders of any amendment that (i) materially
increases the total number of shares subject to the 1994 Plan; (ii) materially
modifies the class of eligible employeesRule 16b-3 promulgated under the 1994 Plan; or (iii) effects a
change relating to ISOs that is inconsistent with the Code, ERISA, or the rulesSecurities Exchange Act and regulations adopted thereunder. All options and stock appreciation rights
outstanding under the 1994 Plan will become exercisable in full for the
remainder of their terms upon certain events, including a consolidation, merger
or plan of exchange involving the Company pursuant to which Common Stock is
converted into cash; any sale, lease, exchange or other transfer of all or
substantially all the assets of the Company; any tender or exchange offer other
than by the Company in which at least 20 percent of the outstanding Common Stock
is purchased; and certain changes in the equity ownership of the Company or
composition of the Board of Directors.
Federal Income Tax Consequences
The following discussion summarizes the material federal income tax
consequences of participation in the 1994 Plan. The discussion is general in
nature and does not address issues related to the tax circumstances of any
particular participant in the 1994 Plan. The discussion is based on federal
income tax laws in effect on the date hereof and is, therefore, subject to
possible future changes in law. The discussion does not address state, local or
foreign tax consequences. Under present law and regulations, no income will be
recognized by a participant upon the grant of stock options, stock appreciation
rights, and other stock-based awards or performance awards under the 1994 Plan.
Non-Qualified Stock Options. Upon the exercise of an NSO, an optionee
recognizes taxable ordinary income equal to the difference between the exercise
price for the shares and the fair market value of the shares on the date of
exercise.
Incentive Stock Options. An optionee does not recognize income upon the
exercise of an ISO, except that the excess of the fair market value of the
shares at the time of exercise over the option price will be income for purposes
of calculating the optionee's alternative minimum tax, if any. An option loses
its status as an ISO if the optionee exercises the ISO (i) more than three
months after the optionee terminates employment or retires for reasons other
than death or disability or (ii) more than one year after the optionee
terminates employment because of disability. If an optionee does not make a
"disqualifying disposition" (defined below) of an ISO, the gain, if any, upon a
subsequent sale (i.e., the excess of the proceeds received over the option
price) will be long-term capital gain.
For shares acquired through exercise of an ISO, a "disqualifying
disposition" is a transfer of the shares (i) within two years after the grant of
the ISO or (ii) within one year after the transfer of the shares to the optionee
pursuant to the ISO's exercise. If the optionee makes a disqualifying
disposition, the optionee generally will recognize income in the year of the
disqualifying disposition equal to the excess of the amount received for the
shares over the option price. Of that income, the portion equal to the excess of
the fair market value of the shares at the time the ISO was exercised over the
option price will
-12-
be ordinary income and the balance, if any, will be long-term or short-term
capital gain, depending on whether the shares were sold more than one year after
the ISO was exercised. If, however, the optionee sells the shares to an
unrelated party at a price that is below the fair market value of the shares at
the time the ISO was exercised and the sale is a disqualifying disposition, the
amount of ordinary income will be limited to the amount realized on the sale
over the option price.
Restricted Stock Awards. A participant who receives an award of
restricted stock under the 1994 Plan generally will recognize ordinary income at
the time at which the restrictions on such shares (the "Restrictions") lapse, in
an amount equal to the excess of (i) the fair market value of such shares at the
time the Restrictions lapse, over (ii) the price, if any, paid for such shares.
If the participant makes an election with respect to such shares under Section
83(b) of the Code not later than 30 days after the date shares are transferred
to the participant pursuant to such award, the participant will recognize
ordinary income at the time of transfer in an amount equal to the excess of (i)
the fair market value of the shares covered by the award (determined without
regard to any restriction other than a restriction which by its terms will never
lapse) at the time of such transfer over (ii) the price, if any, paid for such
shares.
A participant's tax basis in shares received pursuant to a restricted
stock award granted under the 1994 Plan will be equal to the sum of the price
paid for such shares, if any, and the amount of ordinary income recognized by
such participant with respect to the transfer of such shares or the lapse of the
Restrictions thereon. The participant's holding period for such shares for
purposes of determining gain or loss on a subsequent sale will begin immediately
after the transfer of such shares to the participant, if a Section 83(b)
election is made with respect to such shares, or immediately after the
Restrictions on such shares lapse, if no Section 83(b) election is made.
If, subsequent to the lapse of Restrictions on his or her shares, the
participant sells such shares, the difference, if any, between the amount
realized from such sale and the tax basis of such shares to the holder will be
taxed as long-term or short-term capital gain or loss, depending on whether the
participant's holding period for such shares exceeds the applicable holding
period at the time of sale and provided that the participant holds such shares
as a capital asset at such time.
If a Section 83(b) election is made and, before the Restrictions on the
shares lapse, the shares that are subject to such election are resold to the
Company or are forfeited, (i) no deduction would be allowed to such participant
for the amount included in the income of such participant by reason of such
Section 83(b) election and (ii) the participant would realize a loss in an
amount equal to the excess, if any, of the amount paid for such shares over the
amount received by the participant upon such resale or forfeiture (which loss
would be a capital loss if the shares are held as a capital asset at such time).
In such event, the Company would be required to include in its income the amount
of any deduction previously allowable to it in connection with the transfer of
such shares.
Other Awards. Upon payment to a participant in settlement of a stock
option or pursuant to the exercise of stock appreciation rights or pursuant to
other stock-based awards or a performance award, the participant will recognize
taxable ordinary income in an amount equal to the cash and/or fair market value
of the Common Stock received.
Special rules apply to a director or officer subject to liability under
Section 16(b) of the Exchange Act.
In all the foregoing cases the Company will be entitled to a deduction
at the same time and in the same amount as the participant recognizes ordinary
income, subject to the following limitations. Under Section 162(m)
of the Code,
certain compensation payments in excess of $1 million are subject to a
limitation on deductibilityCode. The Committee will serve at the pleasure of the Company. The limitation on deductibility
applies with respectBoard 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 that portion of a compensation payment for a taxable
year in excess of $1 million to either the Company's Chief Executive Officer or
any one of the other four most highly compensated executive officers. Certain
performance-based compensation is not subject to the limitation on
deductibility. Options and stock appreciation rights can qualify for this
performance-based exception, but only if they are granted at fair market value,
the total number of shares that can be granted to an executive for any period is
stated, and stockholder and Board approval is obtained. Restricted stock does
not satisfy the definition of performance-based compensation unless the lapse of
the restriction period is based on the attainment of specified performance goals
approved by the Company's stockholders. The option, stock appreciation right and
performance award portions of the 1994 Plan have been drafted to allow
compliance with those performance-based criteria.
As of January 16, 2001, the last reported sales price per share of
Common Stock as reported on the OTC Bulletin Board was $1.00.
-13-time confer upon it.
12
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDED
AND RESTATED 1994 PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED
FOR ISSUANCE UNDER THE 1994 PLAN.
PROPOSAL NO. 43 - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS
The Board of Directors will requestproposes that at the stockholdersAnnual Meeting the Stockholders ratify the
appointment of Arthur Andersen LLPWilliams & Webster, P.S. as independent public accountants to examine
the financial statements of the
Company for the fiscal year ending December 31, 2001.2007.
RECOMMENDATION
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF WILLIAMS & WEBSTER, P.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 accountants for the fiscal year ended December 31, 2006. A
representative of Arthur Andersen LLPWilliams & Webster, P.S. will be presentavailable at the Specialannual
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.
Audit Fees.Fees
The aggregate fees billed for professional services rendered by Williams &
Webster, P.S. for the audit of the Company's annual and quarterly financial statements and
review of financial statements included in the Company's Forms 10-QSB for years
2006 and 2005 are set forth in the yeartable below.
2006 2005
---- ----
Williams & Webster, P.S. $39,749 $31,598
Audit-Related Fees
During the years ended December 31, 19992006 and 2005, no assurance or related
services were $26,000.
All Other Fees. The aggregate fees billed for services renderedperformed by Arthur Andersen LLP forWilliams & Webster P.S. that were reasonably related
to the yearperformance of the audit or review of the Company's financial statements.
Tax Fees
During the years ended December 31, 1999,2006 and 2005, $6,000 and $0 in fees were
billed by Williams & Webster, P.S. for tax compliance, tax advice or tax
planning services.
All Other Fees
During the years ended December 31, 2006 and 2005, no fees were billed by
Williams & Webster, P.S. other than the audit
fees disclosed above, were $5,750.
Forset forth under the year ended December 31, 1999,caption "Audit
Fees" above.
Pre-approval Policies and Procedures of the Audit Committee
The Audit Committee has the sole authority to appoint, terminate and replace the
Company's independent auditor. The Audit Committee didmay not consider whetherdelegate these
responsibilities. The Audit Committee has the provisionsole authority to approve the
scope, fees and terms of all audit engagements, as well as all permissible
non-audit engagements of the Company's independent auditor. 100% of the services
unrelated toprovided by Williams & Webster, P.S. were pre-approved by the audit was
compatible with maintaining the principal accountant's independence.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE
COMPANY.Audit Committee.
13
PROPOSALS OF STOCKHOLDERS
Any stockholder wishing to have a proposal considered for inclusion in the proxy
materials for the Company's 2001 annual meeting2007 Annual Meeting of stockholdersStockholders 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
materials for the Company's 2001 annual meeting2007 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 2001 annual meeting2007 Annual
Meeting of stockholders,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, 1999,2006, transmitted
with the Proxy Statement,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 19992006 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, 19992006 MAY BE OBTAINED FROM THE COMPANY WITHOUT CHARGE UPON WRITTEN
REQUEST TO THE COMPANY. REQUESTS SHOULD BE DIRECTED TO THE CONTROLLER, A-FEM MEDICALCHIEF FINANCIAL
OFFICER, QUANTRX BIOMEDICAL CORPORATION, 10180 S.W. NIMBUS AVENUE,100 SOUTH MAIN STREET, SUITE J-5,
PORTLAND, OREGON 97223.300,
DOYLESTOWN, PENNSYLVANIA 18901.
By Order of the Board of Directors
/s/ Steven T. Frankel
--------------------------------------------------------
Steven T. Frankel, PresidentWalter W. Witoshkin
------------------------------------------------
Walter W. Witoshkin, Chairman and
Chief Executive Officer
February 9, 2001
-14-
APPENDIX 1
A-FEM MEDICAL CORPORATION
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
Adopted August 4, 2000
I. Overall Purpose
The primary purpose of the Audit Committee is to assist the Board of
Directors in achieving its oversight responsibilities in the following areas:
|X| Overseeing that management has maintained the reliability and integrity of
the accounting policies and
financial reporting and disclosure practices of the Company;
|X| Overseeing that management has established and maintained processes to
assure that an adequate system of internal control over key business risks
is functioning within the Company;
|X| Overseeing that management has established and maintained processes to
assure compliance by the Company with all applicable laws, regulations and
Company policies.
II. Composition
The Audit Committee shall be comprised of two or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Committee.
All members of the Committee shall have a working familiarity with basic finance
and accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise.
The members of the Committee shall be elected by the Board at the
annual organizational meeting of the Board and will serve until their successors
shall be duly elected and qualified. Unless a Chair is elected by the full
Board, the members of the Committee may designate a Chair by majority vote of
the full Committee membership.
III. Meetings
The Committee shall meet at least quarterly, prior to the Company's
release of earnings for the preceding quarter. In addition to the Committee
members, Company management and the independent accountants will attend these
quarterly meetings. The agenda for the quarterly meetings shall include, at a
minimum, a review of the Company's financial results and an executive session
with the independent accountants. The Committee will include other agenda topics
which, in its opinion, are necessary to executing its responsibilities under
this charter. The Committee may meet more frequently as circumstances dictate.
IV. Activities
In fulfilling its overall purpose, the audit committee shall annually schedule
and carry out the following activities. The five broad areas of activities
include:
|X| General
|X| Reporting
|X| Independent Accountants
|X| Key Risks and Controls
|X| Ethical and Legal Standards
Activities
Area: GENERAL
1. Determine that each Committee member is independent and free from any
relationships that would interfere with the exercise of his or her judgment
as a member of the Committee. Definition of independence would exclude
directors who:
Have been employed by the corporation during the past three years,
o Accept compensation in excess of $60,000 from the Company, or any of
its affiliates during the previous fiscal year other than for board
service, benefits under a tax-qualified retirement plan, or
non-discretionary compensation,
o Are members of the immediate family of any executive officer employed
during the past three years,
o Are executives of other corporations where any of the corporations
executives serves on the compensation committee
o Is a partner in, a controlling shareholder or executive officer of any
for-profit business organization to which the corporation made or
received payments in any of the past three years that exceed 5% of the
company's or business organizations consolidated gross revenues for
that year, or $200,000, whichever is greater. Payments resulting
solely from investments in the company's securities need not be
considered for this purpose.
2. Determine that all Committee members are "financially literate" and at
least one member has financial management experience, as defined by the
full board.
3. Review and update this Charter periodically, at least annually, as
conditions dictate. Full board approval is required for adoption and
significant changes to the charter.
4. Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each meeting with the full Board of Directors.
5. The audit committee shall have the power to conduct or authorize
investigations into any matters within the committee's scope of
responsibilities. The committee shall be empowered to retain independent
counsel, accountants, or others to assist it in the conduct of any
investigation.
Area: REPORTING
1. Review the Company's annual financial statements and any reports or other
financial information submitted to any governmental body, or the public,
including any certification, report, opinion, or review rendered by the
independent accountants.
2. Review with management and the Company's independent public accountants the
applicability and impact of any new pronouncements issued by FASB or other
applicable regulatory agencies.
3. Disclose in the annual proxy statement whether the Committee has satisfied
its responsibilities in compliance with this charter. Specifically, the
report would require audit committees to state that they have reviewed and
discussed the financial statements with management, discussed the items
required by SAS 61 (including the quality of reporting) with independent
auditors, and indicate that the audit committee has received the written
report from auditors required by ISB 1 regarding auditors' independence.
Finally, the report would require audit committee's to recommend to the
Board of Directors that the audited financial statements be included in the
Annual Report on Form 10-K for filing with the Commission.
4. Publish the written charter in the annual report at least every three years
or in the next proxy statement after a significant amendment.
2
5. Meet with (telephonic or in person) financial management and the
independent accountants following the completion of the independent
accountants SAS #71 interim financial review and prior to the form 10Q
filing/release of earnings.
Area: INDEPENDENT ACCOUNTANTS
1. Review and approve the selection of the independent accountants. It should
be clear to the independent accountants that they are ultimately
accountable to the board of directors and the audit committee as
representatives of the shareholders
2. Review with the independent accountants the scope of their examinations of
the books and records of the Company and its subsidiaries and direct the
special attention of the auditors to specific matters or areas deemed by
the Committee or the auditors to be of special significance; and
authorizing the auditors to perform such supplemental reviews or audits as
the Committee may deem desirable.
3. On an annual basis, receive a formal written statement from the independent
auditors as to all significant relationships the accountants have with the
Company to determine the accountants' independence.
4. Review with management and the independent auditor their qualitative
judgments about the appropriateness, not just the acceptability, of
accounting principles and financial disclosure practices used or proposed
and, particularly, about the degree of aggressiveness or conservatism of
its accounting principles and underlying estimates.
3
5. Review with management and the independent accountants at the completion of
their audit:
o The existence of any fraud or illegal acts that the auditor may have
become aware of;
o Any significant deficiencies in the design or operation of internal
controls noted during the audit;
o Selection of and changes in significant accounting policies or their
application;
o Process used by management in making significant accounting judgments
or estimates
o Significant audit adjustments
o Review by the auditors of other information in the audited financial
statements.
o Disagreements with management
o Consultation, if any, with other auditors on significant accounting
matters
Serious difficulties encountered during the audit
6. Consider recommendations from the independent accountants and internal
auditors regarding internal controls, information technology controls and
security and other matters relating to the Company and its subsidiaries and
reviewing the correction of controls or processes deemed to be needing
improvement.
7. Provide sufficient opportunity for the independent auditors to meet with
the members of the audit committee without members of management present.
Among the items to be discussed in these meetings are the independent
auditors' evaluation of the Company's financial, accounting, and auditing
personnel, and the cooperation that the independent auditors received
during the course of the audit.
Area: KEY RISKS AND CONTROLS
1. Inquire of management, the independent auditors about significant risks or
exposures and assess the steps management has taken to minimize such risks.
2. Review accounting and financial human resources and succession planning.
Area: ETHICAL AND LEGAL STANDARDS
1. Review, with the Company's counsel, legal compliance matters including
corporate securities trading policies.
2. Perform any other activities consistent with this Charter, the Company's
By-laws and governing law, as the Committee or the Board deems necessary or
appropriate.
3. Review and approve updates periodically to the Corporations Code of Conduct
and ensure that management has established a system to enforce this Code.
4. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
4
APPENDIX 2
AMENDMENT TO THE ARTICLES OF INCORPORATION
OF A-FEM MEDICAL CORPORATION
Section 4.1 of the Articles of Incorporation shall be deleted in its
entirety and the following substituted therefor:
"4.1 Authorized Capital
The corporation is authorized to issue two classes of
stock to be designated, respectively, "Common Stock" and
"Preferred Stock." The total number of shares of stock that
the corporation shall have authority to issue shall be
100,000,000, consisting of 75,000,000 shares of Common Stock
with a par value of $.01 per share, and 25,000,000 shares of
Preferred Stock with a par value of $.01 per share."
1
APPENDIX 3
A-FEM MEDICAL CORPORATION
AMENDED AND RESTATED
1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
1. Purpose. The purpose of this Incentive and Non-Qualified Stock Option Plan
(the "Plan") is to enable A-Fem Medical Corporation (the "Company") to attract
and retain the services of: (i) selected employees, officers and directors of
the Company or of any subsidiary of the Company; and (ii) selected nonemployee
agents, consultants, advisors, persons involved in the sale or distribution of
the Company's products and independent contractors of the Company or any
subsidiary.
2. Shares Subject to the Plan. Subject to adjustment as provided below and in
paragraphMay 31, 2007
14 the shares to be offered under the Plan shall consist of Common
Stock of the Company, and the total number of shares of Common Stock that may be
issued under the Plan shall not exceed 5,100,000 shares. Subject to adjustment
from time to time as provided in paragraph 14, not more than 500,000 shares of
Common Stock may be made subject to awards under the Plan to any individual
participant in the aggregate in any one fiscal year of the Company, such
limitation to be applied in a manner consistent with the requirements of, and
only to the extent required for compliance with, the exclusion from the
limitation on deductibility of compensation under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). The shares issued under the Plan
may be authorized and unissued shares or reacquired shares. If an option, stock
appreciation right or performance unit granted under the Plan expires,
terminates or is canceled, the unissued shares subject to such option, stock
appreciation right or performance unit shall again be available under the Plan.
If shares sold or awarded as a bonus under the Plan are forfeited to the Company
or repurchased by the Company, the number of shares forfeited or repurchased
shall again be available under the Plan.
3. Effective Date and Duration of Plan.
(a) Effective Date. This restatement of the Plan shall be effective as
of July 10, 1997, the date as of which the Plan was approved by the vote of the
holders of a majority of the shares of the Common Stock of the Company.
(b) Duration. The Plan shall continue in effect until all shares
available for issuance under the Plan have been issued and all restrictions on
such shares have lapsed. The Board of Directors may suspend or terminate the
Plan at any time except with respect to options, performance units and shares
subject to restrictions then outstanding under the Plan. Termination shall not
affect any outstanding options, any right of the Company to repurchase shares or
the forfeitability of shares issued under the Plan.
4. Administration. The Plan shall be administered by a committee appointed by
the Board of Directors of the Company (the "Committee"). If and so long as the
Common Stock is registered under Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Board of Directors
shall consider in selecting members of the Committee, the provisions regarding
(a) "outside directors" as contemplated by Section 162(m) of the Code and (b)
"nonemployee directors" as contemplated by Rule 16b-3 under the Exchange Act.
The Committee shall consist of not fewer than two members of the Company's Board
of Directors. The Board of Directors may from time to time remove members from,
or add members to, the Committee. Vacancies on the Committee, howsoever caused,
shall be filled by the Board of Directors. The Committee shall select one of its
members as Chairman, and shall hold meetings at such times and places as it may
determine. A majority of the Committee may act at a meeting at which a quorum is
present, or acts reduced to or approved in writing by a majority of the members
of the Committee shall be the valid acts of the Committee. The Committee shall
from time to time at its discretion determine: (i) those Officers, Directors,
employees (including key and non-key), consultants and others who shall be
granted options; (ii) the number of shares of stock to be optioned to each; and
(iii) subject to the express provisions of the Plan, the terms of all options so
granted. Other than "Formula Awards" granted pursuant to paragraph 13, no
Director while a member of the Committee shall be eligible to receive an option
under the Plan.
1
The interpretation and construction by the Committee of any provision
of the Plan or of any option granted under it shall be final unless otherwise
determined by the Board of Directors. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.
If at any time the Committee shall not be in office, or has fewer than
two members, the Board of Directors shall perform the functions of the
Committee.
If authority is delegated to the Committee, all references to the Board
of Directors in the Plan shall mean and relate to the Committee except: (i) as
otherwise provided by the Board of Directors; and (ii) only the Board of
Directors may amend or terminate the Plan as provided in paragraphs 3 and 17.
5. Types of Awards; Eligibility. The Board of Directors may, from time to time,
take the following actions, separately or in combination, under the Plan: (i)
grant Incentive Stock Options, as defined in Section 422 of the Code, as
provided in paragraphs 6(a) and 6(b); (ii) grant options other than Incentive
Stock Options ("Non-Statutory Stock Options") as provided in paragraphs 6(a) and
6(c); (iii) award stock bonuses as provided in paragraph 7; (iv) sell shares
subject to restrictions as provided in paragraph 8; (v) grant stock appreciation
rights as provided in paragraph 9; (vi) grant cash bonus rights as provided in
paragraph 10; (vii) grant performance units as provided in paragraph 11; and
(viii) grant foreign qualified awards as provided in paragraph 12. The persons
who shall be eligible to receive Incentive Stock Options shall be such
Officer-employees and other employees (whether or not they are Directors) of the
Company or its subsidiaries as the Committee or, if there is no Committee, the
Board of Directors, shall select from time to time. Directors who are not
employees, consultants and others, who have a relationship with the Company or
its subsidiaries, may only receive Non-Statutory Stock Options. Officers and
employees may also receive Non-Statutory Stock Options. An optionee may hold
more than one option, but only on the terms and subject to the restrictions
hereafter set forth. Members of the Committee, and members of the Board of
Directors if there is no Committee, shall only be eligible to receive grants
under the Plan pursuant to paragraph 13.
At the discretion of the Board of Directors or the Committee, if
appointed, an individual may be given an election to surrender an award in
exchange for the grant of a new award.
6. Option Grants.
(a) General Rules Relating to Options.
(i) Terms of Grant. The Board of Directors may grant options
under the Plan. With respect to each option grant, the Board of Directors shall
determine the number of shares subject to the option, the option price, the
period of the option, the time or times at which the option may be exercised and
whether the option is an Incentive Stock Option or a Non-Statutory Stock Option.
At the time of the grant of an option or at any time thereafter, the Board of
Directors may provide that an optionee who exercised an option with Common Stock
of the Company shall automatically receive a new option to purchase additional
shares equal to the number of shares surrendered and may specify the terms and
conditions of such new options.
(ii) Exercise of Options. Except as provided in paragraph
6(a)(iv) or as determined by the Board of Directors, no option granted under the
Plan may be exercised unless at the time of such exercise the optionee is
employed by or is in the service of the Company or any subsidiary of the Company
and shall have been so employed or have provided such service continuously since
the date such option was granted. Absence on leave or on account of illness or
disability under rules established by the Board of Directors shall not, however,
be deemed an interruption of employment or service for this purpose. Unless
otherwise determined by the Board of Directors, if the optionee does not
exercise an option in any one year with respect to the full number of shares to
which the optionee is entitled in that year, the optionee's rights shall be
cumulative and the optionee may purchase those shares in any subsequent year
during the term of the option.
(iii) Nontransferability. Each Incentive Stock Option and,
unless otherwise determined by the Board of Directors with respect to an option
granted to a person who is neither an Officer nor a Director of the Company,
each other option granted under the Plan by its terms shall be nonassignable and
nontransferable by the optionee, either voluntarily or by
2
operation of law, except by will or by the laws of descent and distribution of
the state or country of the optionee's domicile at the time of death or, for
options other than Incentive Stock Options, pursuant to a qualified domestic
relations order as defined under the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
(iv) Termination of Employment or Service.
(A) General Rule. Unless otherwise determined by the
Board of Directors, in the event the employment or service of the optionee with
the Company or subsidiary terminates for any reason other than because of
physical disability or death as provided in subparagraphs 6(a)(iv)(B) and (C),
the option may be exercised at any time prior to the expiration date of the
option, but if the option is an Incentive Stock Option, it may not be exercised
more than three months following termination of employment. Any option may be
exercised only if and to the extent the optionee was entitled to exercise the
option at the date of such termination.
(B) Termination Because of Total Disability. Unless
otherwise determined by the Board of Directors, in the event of the termination
of employment or service of the optionee with the Company or a subsidiary
because of total disability, the option may be exercised at any time prior to
the expiration date of the option, but if the option is an Incentive Stock
Option, it must be exercised not more than one year after termination of
employment. The term "total disability" means a mental or physical impairment
that is expected to result in death or that has lasted or is expected to last
for a continuous period of 12 months or more and that causes the optionee to be
unable, in the opinion of the Company and two independent physicians, to perform
his or her duties as an employee, Director, Officer or consultant of the Company
and to be engaged in any substantial gainful activity. Total disability shall be
deemed to have occurred on the first day after the Company and the two
independent physicians have furnished their opinions of total disability to the
Company.
(C) Termination Because of Death. Unless otherwise
determined by the Board of Directors, in the event of the death of an optionee
while employed by or providing service to the Company or a subsidiary, the
option may be exercised at any time prior to the expiration date of the option,
but only if and to the extent the optionee was entitled to exercise the option
at the date of death and only by the person or persons to whom such optionee's
rights under the option shall pass by the optionee's will or by the laws of
descent and distribution of the state or country of domicile at the time of
death.
(D) Amendment of Exercise Period Applicable to
Termination. The Board of Directors, at the time of grant or at any time
thereafter, may increase the portion of an option that is exercisable, subject
to such terms and conditions as the Board of Directors may determine.
(E) Failure to Exercise Option. To the extent that
the option of any deceased optionee or of any optionee whose employment or
service terminates is not exercised within the applicable period, all further
rights to purchase shares pursuant to such option shall cease and terminate.
(v) Purchase of Shares. Unless the Board of Directors
determines otherwise, shares may be acquired pursuant to an option granted under
the Plan only upon receipt by the Company of notice in writing from the optionee
of the optionee's intention to exercise, specifying the number of shares as to
which the optionee desires to exercise the option and the date on which the
optionee desires to complete the transaction, and if required in order to comply
with the Securities Act of 1933, as amended, containing a representation that it
is the optionee's present intention to acquire the shares for investment and not
with a view to distribution. Unless the Board of Directors determines otherwise,
on or before the date specified for completion of the purchase of shares
pursuant to an option, the optionee must have paid the Company the full purchase
price of such shares in cash (including, with the consent of the Board of
Directors, cash that may be the proceeds of a loan from the Company) or, with
the consent of the Board of Directors, in whole or in part, in Common Stock of
the Company valued at fair market value, restricted stock, performance units or
other contingent awards denominated in either stock or cash, promissory notes
and other forms of consideration.
No shares shall be issued until full payment for the shares has been
made. With the consent of the Board of Directors, an optionee may request the
Company to apply automatically the shares to be received upon the exercise of a
portion of a stock option (even though stock certificates have not yet been
issued) to satisfy the purchase price for additional
3
portions of the option. Each optionee who has exercised an option shall
immediately upon notification of the amount due, if any, pay to the Company in
cash amounts necessary to satisfy any applicable federal, state and local tax
withholding requirements. If additional withholding is or becomes required
beyond any amount deposited before delivery of the certificates, the optionee
shall pay such amount to the Company on demand. If the optionee fails to pay the
amount demanded, the Company may withhold that amount from other amounts payable
by the Company to the optionee, including salary, subject to applicable law.
With the consent of the Board of Directors, an optionee may satisfy this
obligation, in whole or in part, by having the Company withhold amounts due or
by delivering to the Company Common Stock shares that would satisfy the
withholding amount. Upon the exercise of an option, the number of shares
reserved for issuance under the Plan shall be reduced by the number of shares
issued upon exercise of the option.
(b) Incentive Stock Options. Incentive Stock Options shall be
subject to the following additional terms and conditions:
(i) Limitation of Amount of Grants. No employee may be granted
Incentive Stock Options under the Plan if the aggregate fair market value, on
the date of grant, of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by the employee during any calendar
year under the Plan and under any other incentive stock option plan (within the
meaning of Section 422 of the Code) of the Company or any parent or subsidiary
of the Company exceeds $100,000.
(ii) Limitation on Grants to 10 Percent Stockholders. An
Incentive Stock Option may be granted under the Plan to an employee possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Company or of any parent or subsidiary of the Company only if the option
price is at least 110 percent of the fair market value of the Common Stock
subject to the option on the date it is granted, as described in paragraph
6(b)(iv), and the option by its terms is not exercisable after the expiration of
five years from the date it is granted.
(iii) Duration of Options. Subject to paragraphs 6(a)(ii) and
6(b)(ii), Incentive Stock Options granted under the Plan shall continue in
effect for the period fixed by the Board of Directors, except that no Incentive
Stock Option shall be exercisable after the expiration of 10 years from the date
it is granted.
(iv) Option Price. The option price per share shall be
determined by the Board of Directors at the time of grant. Except as provided in
paragraph 6(b)(ii), the option price shall not be less than 100 percent of the
fair market value of the Common Stock covered by the Incentive Stock Option at
the date the option is granted. During such time as the Common Stock is not
listed upon an established stock exchange, the fair market value per share shall
be the mean between the closing "bid" and "ask" prices of the Common Stock in
the New York over-the-counter market on the day the option is granted, as
reported by the National Association of Securities Dealers, Inc. If the stock is
listed upon an established stock exchange or exchanges, such fair market value
shall be deemed to be the highest closing price of the Common Stock on such
stock exchange or exchanges on the day the option is granted or if no sale of
the Company's Common Stock shall have been made on any stock exchange that day,
on the next preceding day on which there was a sale of such stock. If there is
no established market for the stock, the fair market value shall be determined
by the most recent prior private sale price of the Common Stock. Subject to the
foregoing, the Board of Directors in fixing the option price shall have full
authority and discretion so long as they shall act in good faith.
(v) Limitation on Time of Grant. No Incentive Stock Option
shall be granted on or after the tenth anniversary of the effective date of the
Plan.
(vi) Conversion of Incentive Stock Options. The Board of
Directors may at any time without the consent of the optionee convert an
Incentive Stock Option to a Non-Statutory Stock Option.
(c) Non-Statutory Stock Options. Non-Statutory Stock Options shall
be subject to the following terms and conditions in addition to those set forth
in paragraph 6(a) above:
(i) Option Price. The option price for Non-Statutory Stock
Options shall be determined by the Board of Directors at the time of grant and
may be any amount determined by the Board of Directors.
4
(ii) Duration of Options. Non-Statutory Stock Options granted
under the Plan shall continue in effect for the period fixed by the Board of
Directors.
7. Stock Bonuses. The Board of Directors may award shares under the Plan as
stock bonuses. Shares awarded as a bonus shall be subject to the terms,
conditions and restrictions determined by the Board of Directors (which may be
based on continuous service with the Company or the achievement of performance
goals related to profits, profit growth, profit-related return ratios, cash flow
or total stockholder return, where such goals may be stated in absolute terms or
relative to comparison companies), as the Committee shall determine in its sole
discretion, which terms, conditions and restrictions shall be set forth in the
instrument evidencing the award. The restrictions may include restrictions
concerning transferability and forfeiture of the shares awarded, together with
such other restrictions as may be determined by the Board of Directors. If
shares are subject to forfeiture, all dividends or other distributions paid by
the Company with respect to the shares shall be retained by the Company until
the shares are no longer subject to forfeiture, at which time all accumulated
amounts shall be paid to the recipient. The Board of Directors may require the
recipient to sign an agreement as a condition of the award, but may not require
the recipient to pay any monetary consideration other than amounts necessary to
satisfy tax withholding requirements. The agreement may contain any terms,
conditions, restrictions, representations and warranties required by the Board
of Directors. The certificates representing the shares awarded shall bear any
legends required by the Board of Directors. The Company may require any
recipient of a stock bonus to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the recipient fails to pay the amount demanded, the Company may
withhold that amount from other amounts payable by the Company to the recipient,
including salary or fees for services, subject to applicable law. With the
consent of the Board of Directors, a recipient may deliver Common Stock to the
Company to satisfy this withholding obligation. Upon the issuance of a stock
bonus, the number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued.
8. Restricted Stock. The Board of Directors may issue shares under the Plan for
such consideration (including promissory notes and services) as determined by
the Board of Directors. Shares issued under the Plan shall be subject to the
terms, conditions and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability, repurchase by
the Company and forfeiture of the shares issued, together with such other
restrictions as may be determined by the Board of Directors. If shares are
subject to forfeiture or repurchase by the Company, all dividends or other
distributions paid by the Company with respect to the shares shall be retained
by the Company until the shares are no longer subject to forfeiture or
repurchase, at which time all accumulated amounts shall be paid to the
recipient. All Common Stock issued pursuant to this paragraph 8 shall be subject
to a purchase agreement, which shall be executed by the Company and the
prospective recipient of the shares prior to the delivery of certificates
representing such shares to the recipient. The purchase agreement may contain
any terms, conditions, restrictions, representations and warranties required by
the Board of Directors. The certificates representing the shares shall bear any
legends required by the Board of Directors. The Company may require any
purchaser of restricted stock to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the purchaser fails to pay the amount demanded, the Company may
withhold that amount from other amounts payable by the Company to the purchaser,
including salary, subject to the applicable law. With the consent of the Board
of Directors, a purchaser may deliver Common Stock to the Company to satisfy
this withholding obligation. Upon the issuance of restricted stock, the number
of shares reserved for issuance under the Plan shall be reduced by the number of
shares issued.
9. Stock Appreciation Rights.
(a) Grant. Stock appreciation rights may be granted under the Plan by
the Board of Directors, subject to such rules, terms and conditions as the Board
of Directors prescribes.
(b) Exercise.
(i) Each stock appreciation right shall entitle the holder,
upon exercise, to receive from the Company in exchange therefor an amount equal
in value to the excess of the fair market value on the date of exercise of one
share of Common Stock of the Company over its fair market value on the date of
grant (or, in the case of a stock appreciation right granted in connection with
an option, the excess of the fair market value of one share of Common Stock of
the Company over the option price per share under the option to which the stock
appreciation right relates), multiplied by the number of
5
shares covered by the stock appreciation right or the option, or portion
thereof, that is surrendered. No stock appreciation right shall be exercisable
at a time that the amount determined under this subparagraph is negative.
Payment by the Company upon exercise of a stock appreciation right may be made
in Common Stock valued at fair market value, in cash, or partly in Common Stock
and partly in cash, all as determined by the Board of Directors.
(ii) A stock appreciation right shall be exercisable only at
the time or times established by the Board of Directors. If a stock appreciation
right is granted in connection with an option, the following rules shall apply:
(1) the stock appreciation right shall be exercisable only to the extent and on
the same conditions that the related option could be exercised; (2) upon
exercise of the stock appreciation right, the option or portion thereof to which
the stock appreciation right relates terminates; and (3) upon exercise of the
option, the related stock appreciation right or portion thereof terminates.
(iii) The Board of Directors may withdraw any stock
appreciation right granted under the Plan at any time and may impose any
conditions upon the exercise of a stock appreciation right or adopt rules and
regulations from time to time affecting the rights of holders of stock
appreciation rights. Such rules and regulations may govern the right to exercise
stock appreciation rights granted prior to adoption or amendment of such rules
and regulations as well as stock appreciation rights granted thereafter.
(iv) For purposes of this paragraph 9, the fair market value
of the Common Stock shall be determined as of the date the stock appreciation
right is exercised, under the methods set forth in paragraph 6(b)(iv).
(v) No fractional shares shall be issued upon exercise of a
stock appreciation right. In lieu thereof, cash may be paid in an amount equal
to the value of the fraction or, if the Board of Directors shall determine, the
number of shares may be rounded downward to the next whole share.
(vi) Each stock appreciation right granted in connection with
an Incentive Stock Option, and unless otherwise determined by the Board of
Directors with respect to a stock appreciation right granted to a person who is
neither an Officer nor a Director of the Company, each other stock appreciation
right granted under the Plan by its terms shall be nonassignable and
nontransferable by the holder, either voluntarily or by operation of law, except
by will or by the laws of descent and distribution of the state or country of
the holder's domicile at the time of death, and each stock appreciation right by
its term shall be exercisable during the holder's lifetime only by the holder;
provided, however, that a stock appreciation right not granted in connection
with an Incentive Stock Option shall also be transferable pursuant to a
qualified domestic relations order as defined under the Code or ERISA.
(vii) Each participant who has exercised a stock appreciation
right shall, upon notification of the amount due, pay to the Company in cash
amounts necessary to satisfy any applicable federal, state or local tax
withholding requirements. If the participant fails to pay the amount demanded,
the Company may withhold that amount from other amounts payable by the Company
to the participant including salary, subject to applicable law. With the consent
of the Board of Directors a participant may satisfy this obligation, in whole or
in part, by having the Company withhold from any shares to be issued upon the
exercise that number of shares that would satisfy the withholding amount due or
by delivering Common Stock to the satisfy the withholding amount.
(viii) Upon the exercise of a stock appreciation right for
shares, the number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued. Cash payments of stock appreciation
rights shall not reduce the number of shares of Common Stock reserved for
issuance under the Plan.
10. Cash Bonus Rights.
(a) Grant. The Board of Directors may grant cash bonus rights under the
Plan in connection with: (i) options granted or previously granted; (ii) stock
appreciation rights granted or previously granted; (iii) stock bonuses awarded
or previously awarded; and (iv) shares sold or previously sold under the Plan.
Cash bonus rights will be subject to rules, terms and conditions as the Board of
Directors may prescribe. Unless otherwise determined by the Board of Directors
with respect to a cash bonus right granted to a person who is neither an Officer
nor a Director of the Company, each cash bonus right granted under the Plan by
its terms shall be nonassignable and nontransferable by the holder, either
voluntarily or by
6
operation of law, except by will or by the laws of descent and distribution of
the state or country of the holder's domicile at the time of death or pursuant
to a qualified domestic relations order as defined under the Code or ERISA. The
payment of a cash bonus shall not reduce the number of shares of Common Stock
reserved for issuance under the Plan.
(b) Cash Bonus Rights in Connection With Option. A cash bonus right
granted in connection with an option will entitle an optionee to a cash bonus
when the related option is exercised (or terminates in connection with the
exercise of a stock appreciation right related to the option) in whole or in
part. If an optionee purchases shares upon exercise of an option and does not
exercise a related stock appreciation right, the amount of the bonus shall be
determined by multiplying the excess of the total fair market value of the
shares to be acquired upon the exercise over the total option price for the
shares by the applicable bonus percentage. If the optionee exercises a related
stock appreciation right in connection with the termination of an option, the
amount of the bonus shall be determined by multiplying the total fair market
value of the shares and cash received pursuant to the exercise of the stock
appreciation right by the applicable bonus percentage. The bonus percentage
applicable to a bonus right shall be determined from time to time by the Board
of Directors but shall in no event exceed 75 percent.
(c) Cash Bonus Rights in Connection With Stock Bonus. A cash bonus
right granted in connection with a stock bonus will entitle the recipient to a
cash bonus payable when the stock bonus is awarded or when restrictions, if any,
to which the stock is subject lapse. If bonus stock awarded is subject to
restrictions and is repurchased by the Company or forfeited by the holder, the
cash bonus right granted in connection with the stock bonus shall terminate and
may not be exercised. The amount and timing of payment of a cash bonus shall be
determined by the Board of Directors.
(d) Cash Bonus Rights in Connection With Stock Purchase. A cash bonus
right granted in connection with the purchase of stock pursuant to paragraph 8
will entitle the recipient to a cash bonus when the shares are purchased or when
restrictions, if any, to which the stock is subject lapse. Any cash bonus right
granted in connection with shares purchased pursuant to paragraph 8 shall
terminate and may not be exercised in the event the shares are repurchased by
the Company or forfeited by the holder pursuant to applicable restrictions. The
amount of any cash bonus to be awarded and timing of payment of a cash bonus
shall be determined by the Board of Directors.
(e) Taxes. The Company shall withhold from any cash bonus paid pursuant
to this paragraph 10 the amount necessary to satisfy any applicable federal,
state and local withholding requirements.
11. Performance Units. The Board of Directors may grant performance units
consisting of monetary units which may be earned in whole or in part if the
Company achieves certain goals established by the Board of Directors over a
designated period of time, but not in any event more than 10 years. The goals
established by the Board of Directors may include earnings per share, return on
stockholders' equity, return on invested capital, and such other goals as may be
established by the Boards of Directors. In the event that the minimum
performance goal established by the Board of Directors is not achieved at the
conclusion of a period, no payment shall be made to the participants. In the
event the maximum corporate goal is achieved, 100 percent of the monetary value
of the performance units shall be paid to or vested in the participants. Partial
achievement of the maximum goal may result in a payment or vesting corresponding
to the degree of achievement as determined by the Board of Directors. Payment of
an award earned may be in cash or in Common Stock or in a combination of both,
and may be made when earned, or vested and deferred, as the Board of Directors
determines. Deferred awards shall earn interest on the terms and at a rate
determined by the Board of Directors. Unless otherwise determined by the Board
of Directors with respect to a performance unit granted to a person who is
neither an Officer nor a Director of the Company, each performance unit granted
under the Plan by its terms shall be nonassignable and nontransferable by the
holder, either voluntarily or by operation of law, except by will or by the laws
of descent and distribution of the state or country of the holder's domicile at
the time of death or pursuant to a qualified domestic relations order as defined
under the Code or ERISA. Each participant who has been awarded a performance
unit shall, upon notification of the amount due, pay to the Company in cash
amounts necessary to satisfy any applicable federal, state and local tax
withholding requirements. If the participant fails to pay the amount demanded,
the Company may withhold that amount from other amounts payable by the Company
to the participant, including salary or fees for services, subject to applicable
law. With the consent of the Board of Directors a participant may satisfy this
obligation, in whole or in part, by having the Company withhold from any shares
to be issued that number of shares that would satisfy the withholding amount due
or by delivering Common Stock to the Company to satisfy the withholding amount.
The payment of a performance unit in cash shall not reduce the number of shares
of Common Stock
7
reserved for issuance under the Plan. The number of shares reserved for issuance
under the Plan shall be reduced by the number of shares issued upon payment of
an award.
12. Foreign Qualified Grants. Awards under the Plan may be granted to such
Officers and employees of the Company and its subsidiaries and such other
persons described in paragraph 1 residing in foreign jurisdictions as the Board
of Directors may determine from time to time. The Board of Directors may adopt
such supplements to the Plan as may be necessary to comply with the applicable
laws of such foreign jurisdictions and to afford participants favorable
treatment under such laws; provided, however, that no award shall be granted
under any such supplement with terms which are more beneficial to the
participants than the terms permitted by the Plan.
13. Formula Awards to Committee Members. Each Director appointed to the
Committee shall be granted Non-Statutory Stock Options for 30,000 shares of
Common Stock on the day such Committee member is so appointed and thereafter
further grants of Non-Statutory Stock Options for 30,000 shares of Common Stock
on the third anniversary of the grant of such Committee member's most prior
grant under this paragraph 13; provided, however, that the aggregate grant to
newly appointed Committee members shall be reduced on an option for option basis
by the amount of any option grants accepted by such appointee from the Company
within the prior 24-month period (the "Formula Options"). The Formula Options
granted to such Committee member shall have an exercise price per share equal to
the fair market value of Common Stock on the date of grant. Each Formula Option
granted under this paragraph 13 shall become exercisable in three equal
installments on each of the first three anniversaries of the date of grant. Each
portion of each Formula Option granted under this paragraph 13 shall be
exercisable for 10 years after the date of grant. Upon termination of a
Director's membership on the Board other than due to such Director's death or
"total disability" (as defined in paragraph 6(a)(4)(B)), any Formula Options
which are then exercisable may be exercised by such Director at any time prior
to the expiration of such option's term or within three months following such
cessation of membership, whichever period is shorter. The exercise price for
each Formula Option granted pursuant to this paragraph 13 is payable in the
manner prescribed in paragraph 6(a)(v). The terms and provisions of this Plan
shall also apply to the grant and exercise of Formula Options, to the extent
such other provisions do not contradict the express provisions of this paragraph
13.
14. Changes in Capital Structure. If the outstanding Common Stock of the Company
is hereafter increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Company or of another
corporation by reason of any reorganization, merger, consolidation, plan of
exchange, recapitalization, reclassification, stock split-up, combination of
shares or dividend payable in shares, appropriate adjustment shall be made by
the Board of Directors in the number and kind of shares available for awards
under the Plan. In addition, except with respect to transactions referred to in
paragraph 15, the Board of Directors shall make appropriate adjustment in the
number and kind of shares as to which outstanding options and stock appreciation
rights, or portions thereof then unexercised, shall be exercisable, so that the
optionee's proportionate interest before and after the occurrence of the event
is maintained. Notwithstanding the foregoing, the Board of Directors shall have
no obligation to effect any adjustment that would or might result in the
issuance of fractional shares, and any fractional shares resulting from any
adjustment may be disregarded or provided for in any manner determined by the
Board of Directors. Any such adjustments made by the Board of Directors shall be
conclusive. If the stockholders of the Company receive capital stock from
another corporation ("Exchange Stock") in exchange for their shares of Common
Stock in any transaction involving a merger, consolidation or plan of exchange,
all options granted hereunder shall be converted into options to purchase shares
of Exchange Stock (unless the Company and the corporation issuing the Exchange
Stock, in their sole discretion, determine that any or all such options granted
hereunder are to be treated as set forth in the following sentence) in the same
proportion as used for determining the number of shares of Exchange Stock the
holders of the Common Stock receive in such merger. In the event of dissolution
of the Company or a merger, consolidation or plan of exchange affecting the
Company to which paragraph 15 does not apply, in lieu of providing for options
and stock appreciation rights as provided above in this paragraph 14, the Board
of Directors may, in its sole discretion, provide 30-day period prior to such
event during which optionees shall have the right to exercise options and stock
appreciation rights in whole or in part without any limitation on exercisability
and upon the expiration of which 30-day period all unexercised options and stock
appreciation rights shall immediately terminate.
15. Acceleration in Certain Events. Notwithstanding any other provisions of the
Plan, all options and stock appreciation rights outstanding under the Plan shall
immediately become exercisable in full for the remainder of their terms at any
time when any one of the following events has taken place:
8
(a) The stockholders of the Company approve one of the following
("Approved Transactions"):
(i) Any consolidation, merger or plan of exchange, involving
the Company ("Merger") pursuant to which Common Stock would be converted into
cash; or
(ii) Any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company or the adoption of any plan or proposal for the
liquidation or dissolution of the Company; or
(b) A tender or exchange offer, other than one made by the Company, is
made for Common Stock (or securities convertible into Common stock) and such
offer results in a portion of those securities being purchased and the offeror
after the consummation of the offer is the beneficial owner (as determined
pursuant to Section 13(d) of the Exchange Act), directly or indirectly, of at
least 20 percent of the outstanding Common Stock (an "Offer"); or
(c) The Company receives a report on Schedule 13D under the Exchange
Act reporting the beneficial ownership by any person of 20 percent or more of
the Company's outstanding Common Stock, except that if such receipt shall occur
during a tender offer or exchange offer by any person other than the Company or
a wholly owned subsidiary of the Company, acceleration of exercisability shall
not take place until the conclusion of such offer; or
(d) During any period of 12 months or less, individuals who at the
beginning of such period constituted a majority of the Board of Directors cease
for any reason to constitute a majority thereof unless the nomination or
election of such new Directors was approved by a vote of at least two-thirds of
the Directors then still in office who were Directors at the beginning of such
period.
All options and stock appreciation rights that are accelerated pursuant
to this paragraph 15 shall terminate upon the dissolution of the Company or upon
the consummation of any Merger pursuant to which Common Stock would be converted
to cash. The terms used in this paragraph 15 and not defined elsewhere in the
Plan shall have the same meanings as such terms have in the Exchange Act and the
rules and regulations adopted thereunder.
16. Corporate Mergers, Acquisitions, etc. The Board of Directors may also grant
options, stock appreciation rights, performance units, stock bonuses and cash
bonuses, and issue restricted stock under the Plan having terms, conditions and
provisions that vary from those specified in this Plan provided that any such
awards are granted in substitution for, or in connection with the assumption of,
existing options, stock appreciation rights, stock bonuses, cash bonuses,
restricted stock and performance units granted, awarded or issued by another
corporation and assumed or otherwise agreed to be provided for by the Company
pursuant to or by reason of a transaction involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which the Company or a subsidiary is a party.
17. Amendment of Plan. The Board of Directors may at any time, and from time to
time, modify or amend the Plan in such respects as it shall deem advisable
because of changes in the law while the Plan is in effect or for any other
reason. Except as provided in paragraphs 6(a) (iv), 9, 14 and 15, however, no
change in an award already granted shall be made without the written consent of
the holder of such award. Notwithstanding any of the foregoing, stockholder
approval (sufficient under applicable state law) is required for any Plan
amendment which: (a) materially increases the total number of shares subject to
the Plan (except as provided in paragraph 14); (b) materially modifies the class
of eligible employees under the Plan; or (c) effects a change relating to
Incentive Stock Options which is inconsistent with the Code, ERISA, or rules and
regulations adopted thereunder.
18. Approvals. The obligations of the Company under the Plan are subject to the
approval of state and federal authorities or agencies with jurisdiction in the
matter. The Company will use its best efforts to take steps required by state or
federal law or applicable regulations, including rules and regulations of the
Securities and Exchange Commission and any stock exchange on which the Company's
shares may then be listed, in connection with the grants under the Plan. The
foregoing notwithstanding, the Company shall not be obligated to issue or
deliver Common Stock under the Plan if such issuance or delivery would violate
applicable state or federal securities laws.
9
19. Employment and Service Rights. Nothing in the Plan, or any award pursuant to
the Plan, shall: (i) confer upon any employee any right to be continued in the
employment of the Company or any subsidiary or interfere in any way with the
right of the Company or any subsidiary by whom such employee is employed to
terminate such employee's employment at any time, for any reason, with or
without cause, or to decrease such employee's compensation or benefits; or (ii)
confer upon any person engaged by the Company any right to be retained or
employed by the Company or to the continuation, extension, renewal or
modification of any compensation, contract or arrangement with or by the
Company.
20. Rights as a Stockholder. The recipient of any award under the Plan shall
have no rights as a stockholder with respect to any Common Stock until the date
of issue to the recipient of a stock certificate for such shares. Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividend or other rights for which the record date occurs prior to the date such
stock certificate is issued.
10
PROXY FOR THE SPECIALANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 8, 2001JUNE 28, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Steven T. FrankelWalter 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 A-Fem MedicalQuantRx Biomedical Corporation (the "Company") held of record by the
undersigned on January 30, 2001,December 31, 2006, at the SpecialAnnual Meeting of Stockholders to be
held on March 8, 2001June 28, 2007 or at any adjournment thereof.
1. Election and Ratification of Directors.
ElectionElections 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.
Merry Disney James E. Reinmuth RoseAnna SevcikShalom 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 four nomineesappointment to serve as a Class 2 directorsdirector for athe
remainder of the two-year term or until their successors arehis successor is duly elected and
qualified.
William H. Fleming Steven T. Frankel Carol A. Scott James R. WilsonArthur Hull Hayes, Jr.
|_| FOR all nomineesappointee |_| WITHHOLD AUTHORITY
to vote for all nominees
|_| WITHHOLD AUTHORITY forThis proxy, when properly executed, will be voted in the following only:
(writemanner directed herein
by the name(s) ofundersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR ALL
NOMINEES" AND "FOR APPOINTEE."
2. RATIFICATION OF 2007 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN. Ratify
the nominee(s) in this space)
- --------------------------------------------------------------------------------
2. Amendment of the Company's Articles of Incorporation to Increase the
Authorized Number of Shares of the Company's Common Stock and Preferred Stock.
Amend the Company's Articles of Incorporation to increase the authorized number
of shares of the Company's Common Stock and Preferred Stock.
|_| FOR |_| AGAINST |_| ABSTAIN
- --------------------------------------------------------------------------------
-1-
3. Amendment of the A-Fem Medical Corporation 19942007 Incentive and Non-Qualified Stock Option Plan. Amend the A-Fem Medical Corporation 1994
Incentive and Non-Qualified Stock Option Plan (the "1994 Plan") to increase the
number of shares of the Company's Common Stock reserved for issuance under the
1994 Plan.
|_| FOR |_| AGAINST |_| ABSTAIN
- --------------------------------------------------------------------------------
4. Ratification of Independent Auditors for 2001. Ratify the selection
of Arthur Andersen LLP as the Company's independent auditors for the fiscal year
ending December 31, 2001.
|_| 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
NOMINEES" IN ITEM 1RATIFICATION OF 2007 INCENTIVE AND "FOR" ITEMS 2, 3NON-QUALIFIED STOCK OPTION PLAN."
15
3. RATIFICATION OF INDEPENDENT AUDITORS FOR FY2007. Ratify the selection of
Williams & Webster, P.S. as the Company's independent auditors for the fiscal
year ending December 31, 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 4.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: , 2001
-----------------------------------
-----------------------------------------------
-----------------------------------------------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.
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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.
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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
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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
-6-
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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