SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X| Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_|Preliminary Proxy Statement
|_|Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X|Definitive Proxy Statement
|_|Definitive Additional Materials
|_|Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Corgenix Medical Corporation
- -------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other 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 of Schedule and the date of its filing.
(1)Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF CORGENIX MEDICAL CORPORATION
To be held December 14, 2005
--------------------
TO THE STOCKHOLDERS OF
CORGENIX MEDICAL CORPORATION:
Notice is hereby given that an annual meeting ("the Annual Meeting") of
stockholders of Corgenix Medical Corporation ("Corgenix" or the "Company") will
be held at our corporate offices located at 12061 Tejon Street, Westminster,
Colorado, 80234, on Wednesday, December 14, 2005 at 9:00 a.m. Mountain Standard
Time for the following purposes:
1. To elect four (4) directors to serve until the 2006 annual meeting of
stockholders and until their successors have been duly elected and
qualified;
2. To approve the Company's 2005 Incentive Compensation Plan.
3. To ratify the appointment of Hein & Associates LLP, as our
independent public accountants for the fiscal year ending June 30,
2006.
4. To consider and act upon such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on November 8, 2005 as
the record date for determination of the stockholders entitled to notice of and
to vote at the Annual Meeting or any adjournment thereof. Only holders of common
stock of record at the close of business on November 8, 2005 will be entitled to
notice of and to vote at the meeting or at any adjournment or adjournments
thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD. YOU ARE INVITED TO ATTEND THE MEETING IN PERSON, BUT
WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. IF YOU DO ATTEND THE MEETING, YOU
MAY, IF YOU PREFER, REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
CORGENIX MEDICAL CORPORATION
12061 Tejon Street
Westminster, CO 80234
(303) 457-4345
-----------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 14, 2005
GENERAL INFORMATION
This Proxy Statement is being furnished to you as a holder of outstanding shares
of Corgenix common stock, par value $.001 per share, in connection with the
solicitation of proxies by the Board of Directors of Corgenix Medical
Corporation, for use at the Annual Meeting of Stockholders to be held at our
corporate offices located at 12061 Tejon Street, Westminster, Colorado, USA,
80234, on Wednesday, December 14, 2005 at 9:00 a.m. Accompanying this Proxy
Statement is the Board of Directors' Proxy for the Annual Meeting, which you may
use to indicate your vote as to the proposals described in this Proxy Statement.
Our Annual Report on Form 10-K for the year ended June 30, 2005 also accompanies
this proxy statement, but does not constitute part of these proxy soliciting
materials. It is anticipated that this proxy statement and the accompanying
proxy will be mailed to our stockholders on or about November 11, 2005.
All Proxies which are properly completed, signed and returned to us prior to the
Annual Meeting, and which have not been revoked, will be voted in favor of the
proposals described in this Proxy Statement unless otherwise directed. You may
revoke a Proxy given to us at any time before it is voted either by filing a
written notice of revocation or a duly executed proxy bearing a later date with
the Secretary of Corgenix at our executive offices, or by attending the Annual
Meeting and expressing a desire to vote your shares in person.
The close of business on November 8, 2005 has been fixed as the record date for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting or any adjournments of the Annual Meeting. As of the record date,
we had outstanding 8,557,390 shares of common stock, par value $.001 per share,
the only outstanding voting security of Corgenix. As of the record date, we had
approximately 173 stockholders of record. A stockholder is entitled to cast one
vote for each share held on the record date on all matters to be considered at
the Annual Meeting.
Our principal executive offices are located at 12061 Tejon Street, Westminster,
Colorado 80234. This Proxy Statement and the accompanying proxy will be mailed
to our stockholders on or about November 11, 2005.
At the Annual Meeting, the stockholders will consider and vote upon the
following proposals:
o Election of Directors: Directors are elected by a plurality of the votes of
the shares of common stock entitled to vote on the election and present, in
person or by properly executed proxy, at the Annual Meeting. Withheld votes,
abstentions, and broker non-votes for Proposal One will be counted as shares
present and entitled to vote for purposes of determining the presence of a
quorum and in tabulating votes cast. Consequently, a withheld vote or abstention
is a vote against any director for which the vote is withheld.
o Approval of the 2005 Incentive Compensation Plan: The affirmative vote of a
majority of the shares of common stock entitled to vote and present, in person
or by properly executed proxy, at the Annual Meeting is required for the
approval of the 2005 Incentive Compensation Plan. Withheld votes, broker
non-votes, and abstentions for Proposal Two will be counted as shares present
and entitled to vote for purposes of determining the presence of a quorum and in
tabulating votes cast. Consequently, abstentions and withheld votes will each
have the same effect as a vote against Proposal Two.
o Ratification of the appointment of Hein & Associates LLP as our independent
public accountants for the fiscal year ending June 30, 2006: To be approved,
this matter must receive the affirmative vote of a majority of the shares
entitled to vote and present, in person or by properly executed proxy, at the
Annual Meeting. Withheld votes, broker non-votes and abstentions for Proposal
Two will be counted as shares present and entitled to vote for purposes of
determining the presence of a quorum and in tabulating votes cast. Consequently,
abstentions and withheld votes will each have the same effect as a vote against
Proposal Three.
By order of the Board of Directors
CORGENIX MEDICAL CORPORATION
Douglass T. Simpson,
President and Chief Executive Officer
November 11, 2005
YOU MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROXY STATEMENT. CORGENIX
HAS NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED
IN THIS PROXY STATEMENT. THE DELIVERY OF THIS PROXY STATEMENT DOES NOT MEAN THAT
INFORMATION CONTAINED IN THIS PROXY STATEMENT IS CORRECT AFTER THE DATE OF THIS
PROXY STATEMENT. THIS PROXY STATEMENT IS NOT AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH THE OFFER OR
SOLICITATION IS UNLAWFUL.
TABLE OF CONTENTS
PAGE
Questions and Answers............................ 1
Proposals You May Vote On........................ 5
General Information.............................. 7
PROPOSAL NO. 1: Election of Directors........... 8
Board and Committees............................. 10
Management of the Company........................ 13
Executive Compensation........................... 15
Beneficial Ownership of Common Stock............. 18
Common Stock Performance......................... 18
Certain Relationships and Related Transactions... 20
PROPOSAL NO. 2: Approve 2005 Incentive
Compensation Plan................................ 21
PROPOSAL NO. 3: Ratification of Independent
Public Accountants............................... 28
Stockholder Proposals............................ 29
Attachment A: Corgenix 2005 Incentive
Compensation Plan................................ A-1
QUESTIONS AND ANSWERS
1. Q: What may I vote on?
A: You may vote on each of the following three proposals:
Abstentions or votes withheld on any of the following proposals
will be treated as present at the meeting for purposes of
determining a quorum, but will not be counted as votes cast.
1. ELECTION OF DIRECTORS
There are four nominees for election this year. Detailed
information on each nominee is provided on pages 6 and 7. If any
director is unable to stand for re-election, the Board may
reduce its size or designate a substitute. If a substitute is
designated, proxies voting on the original director candidate
will be cast for the substituted candidate.
Your Board unanimously recommends a vote FOR each of these
nominees for directors.
2. AUTHORIZATION TO APPROVE THE 2005 INCENTIVE COMPENSATION PLAN
The 2005 Incentive Compensation Plan is intended to encourage
ownership of shares of Corgenix by its employees, directors and
consultants by providing an additional incentive to promote the
success of the business. 1,500,000 shares of Corgenix common
stock are reserved for issuance under this plan.
Your Board unanimously recommends a vote FOR the approval of the
2005 Incentive Compensation Plan.
3. RATIFICATION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors recommended and
the Board of Directors has selected, subject to ratification by
a majority vote of the stockholders in person or by proxy at the
Annual Meeting, the firm of Hein & Associates LLP to continue as
our independent public accountant for the current fiscal year
ending June 30, 2006.
Your Board unanimously recommends that stockholders vote FOR
ratifying the appointment of Hein & Associates LLP as the
Company's independent auditors.
2. Q: Who is entitled to vote?
A: Stockholders as of the close of business on November 8, 2005 are
entitled to vote at the Annual Meeting.
3. Q: How do I vote?
A: Sign and date the proxy card you receive and return it in the
prepaid envelope. If you return your signed proxy card but do
not mark the boxes showing how you wish to vote, your shares
will be voted FOR the three proposals. You have the right to
revoke your proxy at any time before the meeting by:
(a) notifying our Corporate Secretary; (b) voting in person; or
(c) returning a later-dated proxy card.
4. Q: How does discretionary authority apply?
A: If you sign your proxy card, but do not make any selections, you
give authority to Douglass T. Simpson, President and Chief
Executive Officer, to vote on the proposals and any other matter
that may arise at the meeting.
5. Q: Is my vote confidential?
A: Proxy cards, ballots and voting tabulations that identify
individual stockholders are mailed or returned directly to the
Company's transfer agent, Computershare Investor Services, and
handled in a manner that protects your voting privacy. Your vote
will not be disclosed except:
(a) as needed to permit Computershare Investor Services to
tabulate and certify the vote;
(b) as required by law; or
(c) in limited circumstances such as a proxy contest in
opposition to the Board.
Additionally, all comments written on the proxy card or
elsewhere will be forwarded to management, but your identity
will be kept confidential unless you ask that your name be
disclosed.
6. Q: What does it mean if I get more than one proxy card?
A: If your shares are registered differently and are in more than
one account, you will receive more than one proxy card. Sign and
return all proxy cards to ensure that all of your shares are
voted. We encourage you to have all accounts registered in the
same name and address (whenever possible). You can accomplish
this by contacting our transfer agent, Computershare Investor
Services at (303) 235-5300.
7. Q: How many shares can vote?
A: As of the close of business on November 8, 2005, 8,557,390
shares of common stock were issued and outstanding. Every holder
of common stock as of the close of business on November 8, 2005,
the record date, is entitled to one vote for each share held.
8. Q: What is a "quorum?"
A: The presence of the holders of a majority of the outstanding
shares of common stock entitled to vote at the annual meeting,
whether in person or by proxy, constitutes a "quorum" at the
annual meeting. There must be a quorum for the meeting to be
held, and proposals two and three must receive more than 50%
of the shares voting to be adopted. If you submit a properly
executed proxy card, even if you abstain from voting, then you
will be considered to be part of the quorum. Abstentions,
withheld votes, and broker non-votes will be treated as shares
that are present and entitled to vote for purposes of
determining whether a quorum exists, but will not be counted
as a vote in favor of proposals two and three.
A broker non-vote occurs when a nominee holding shares of common
stock for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting
power with respect to that item and has not received
instructions from the beneficial owner.
9. Q: Who can attend the Annual Meeting?
A: All stockholders that held shares of Corgenix on November 8,
2005 can attend.
10. Q: How will voting on any other business be conducted?
A: Although we do not know of any business to be considered at the
2005 Annual Meeting other than the proposals described in this
Proxy Statement, if any other business is presented at the
Annual Meeting, your signed proxy card gives authority to
Douglass T. Simpson, President and Chief Executive Officer, to
vote on such matters at his discretion.
11. Q: Can a stockholder nominate someone to be a director of
Corgenix?
A: As a stockholder, you may recommend any person as a nominee for
director of Corgenix by writing to the Board of Directors, c/o
Corgenix Corporation, 12061Tejon Street, Westminster, Colorado
80234.
We must receive any recommendations by August 16, 2006, for the
2006 annual meeting and said recommendations should include:
o the name, residence and business address of the nominating
stockholder;
o a representation that the nominating stockholder is a
record holder of Corgenix stock or holds Corgenix stock
through a broker and the number and class of shares held;
o a representation that the nominating stockholder intends
to appear in person or by proxy at the meeting of the
stockholders to nominate the individual(s) if the
nominations are to be made at a stockholder meeting;
o information regarding each nominee that would be required
to be included in a proxy statement;
o a description of any arrangement or understanding
between and among the nominating stockholder and each and
every nominee; and
o the written consent of each nominee to serve as a
director, if elected.
12.Q: Who is soliciting proxies?
A. The enclosed proxy is being solicited by the Board of
Directors of Corgenix on behalf of Corgenix. The cost of the
solicitationshall be borne by Corgenix. It is
anticipated that solicitations of proxies for the meeting
will be made only by use of the mails; however, we may use
the services of our directors, officers and employees
to solicit proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses,
custodians, nominees and fiduciaries will be requested
to forward the proxy soliciting materials to the
beneficial owners of our shares held of record by such
persons, and we will reimburse such persons for their
reasonable out-of-pocket expenses incurred
by them in the performance of that task.
13. Q: How much did this proxy solicitation cost?
A: The total cost is estimated to be $15,000, which includes
estimated out-of-pocket expenses.
GENERAL INFORMATION
Corgenix Medical Corporation, a Nevada corporation, is a diagnostic
biotechnology company whose principal focus has been the discovery and
development of diagnostic markers for the detection and management of important
immunological disorders. Until May 22, 1998, our business was conducted by and
under the name of REAADS Medical Products, Inc., a Delaware corporation
("REAADS"). On May 22, 1998, REAADS became a subsidiary of Corgenix, and its
name was changed to Corgenix, Inc. when its wholly owned subsidiary merged with
and into REAADS (the "Merger").
Our principal offices are located at 12061 Tejon Street, Westminster, Colorado
80234, and our telephone number is (303) 457-4345.
AVAILABLE INFORMATION
We file reports, proxy materials and other information with the Securities and
Exchange Commission (the "Commission"). These reports, proxy materials and other
information concerning Corgenix can be inspected and copied at the Public
Reference Section maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. Copies can be obtained by mail
from the Commission at prescribed rates from the Public Reference Section of the
Commission at its principal office in Washington D.C. The Commission also
maintains a site on the World Wide Web (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants (including Corgenix) that file electronically with the Commission.
PROPOSAL 1
ELECTION OF THE BOARD OF DIRECTORS
Introduction
Four individuals have been nominated to be elected at the Annual Meeting to
serve as directors until the next annual meeting of the stockholders or until
their successors have been elected and qualified. Information about each nominee
is given below.
Nominees
LUIS R. LOPEZ, M.D.
Age: 57
Director since 1998
Dr. Lopez has served as the Chief Executive Officer and Chairman of the Board of
Directors of Corgenix from May 1998 until April 2005 when his title was changed
to Chief Medical Officer. From 1987 to 1990, Dr. Lopez was Vice President of
Clinical Affairs at BioStar Medical Products, Inc., a Boulder, Colorado
diagnostic firm. From 1986 to 1987 he served as Research Associate with the
Rheumatology Division of the University of Colorado Health Sciences Center,
Denver, Colorado. From 1980 to 1986 he was Professor of Immunology at Cayetano
Heredia University School of Medicine in Lima, Peru, during which time he also
maintained a medical practice with the Allergy and Clinical Immunology group at
Clinica Ricardo Palma in Lima. From 1978 to 1980 Dr. Lopez held a fellowship in
Clinical Immunology at the University of Colorado Health Sciences Center. He
received his M.D. degree in 1974 from Cayetano Heredia University School of
Medicine in Lima, Peru. He is a clinical member of the American College of
Rheumatology, and a corresponding member of the American Academy of Allergy,
Asthma and Immunology. Dr. Lopez is licensed to practice medicine in Colorado,
and is widely published in the areas of immunology and autoimmune disease.
DOUGLASS T. SIMPSON
Age: 57
Director since 1998
Mr. Simpson has been the President of Corgenix since May 1998 and was elected a
director in May 1998. Mr. Simpson joined Corgenix's operating subsidiary as Vice
President of Business Development in 1992, was promoted to Vice President,
General Manager in 1995, to Executive Vice President in 1996, to President in
February 1998 and then to Chief Executive Officer in April 2005. Prior to
joining Corgenix's operating subsidiary, he was a Managing Partner at Venture
Marketing Group in Austin, Texas, a health care and biotechnology marketing
firm, and in that capacity, served as a consultant to REAADS from 1990 until
1992. From 1984 to 1990 Mr. Simpson was employed by Kallestad Diagnostics, Inc.
(now part of BioRad Laboratories, Inc.), one of the largest diagnostic companies
in the world, where he served as Vice President of Marketing, in charge of all
marketing and business development. Mr. Simpson holds B.S. and M.S. degrees in
Biology and Chemistry from Lamar University in Beaumont, Texas.
JUN SASAKI
Age: 52
Director since December 2002
Mr. Sasaki was elected as a director in December 2002. Mr. Sasaki has been the
Division Officer and General Manager of the International Diagnostic Reagents
Division of Medical & Biological Laboratories Co., Ltd. (MBL) since June 1999.
From 1993 to 1999, Mr. Sasaki was the General Manager of MBL's Sales and
Marketing Department. From 1992 to 1993, he was located in Boston, Massachusetts
and was engaged in the establishment of MBL International Corporation, a sales
subsidiary of MBL. He joined MBL in 1976 and has been instrumental in the
development of a series of autoimmune products. Mr. Sasaki received a B.E.
degree from Yamanashi University in Yamanashi prefecture, Japan.
ROBERT TUTAG
Age: 64
Director since September 2005
Mr. Tutag was appointed to the Board in September 2005. Mr. Tutag is currently
and since 1990 has been President of Unisource, Inc., a privately held Boulder,
Colorado company which identifies and develops niche pharmaceutical products for
generic and brand name pharmaceutical companies. From 1964 through 1982, Mr.
Tutag was President and Chief Operating Officer of Tutag Corporation. In that
capacity, he developed and managed operations of Cord Laboratories, one of the
original generic pharmaceutical manufacturing companies, in addition to founding
and overseeing Geneva Generics, a generic sales and distribution company, which
developed into one of the country's premier companies in its industry. Both Cord
Laboratories and Geneva Generics were acquired by Ciba-Geigy Corporation. During
that time period, Mr. Tutag also served as a Director of Geneva Generics and as
Vice President of Sales and a Director of Tutag Pharmaceuticals, a branded
distribution company. From 1983 through 1989, Mr. Tutag was President and Chief
Executive Officer of NBR Financial, Inc., a multi-bank holding company in
Boulder, Colorado. Since 1977 until the present, Mr. Tutag has also been editor
of GMP Trends, Inc., Boulder, Colorado, an informational newsletter that reviews
FDA and GMP inspection reports (483's) for the pharmaceutical and medical device
industries. Mr. Tutag also served as interim president from 1999-2000 and was a
director from 1997-2001 of the Bank of Cherry Creek in Boulder, Colorado. He
received a BBA and an MBA from the University of Michigan.
Votes Required to Elect Directors; Board Recommendation
Directors are elected by a plurality of the votes of the shares entitled to vote
in the election and present, in person or by proxy, at the Annual Meeting.
Withheld votes, broker non-votes, and abstentions for Proposal One will be
counted as shares present and entitled to vote for purposes of determining the
presence of a quorum and in tabulating votes cast. Consequently, a withheld
vote, broker non-vote, or abstention is a vote against any director for which
the vote is withheld. It is anticipated that proxies will be voted for the
nominees and the Board has no reason to believe that any of the nominees will be
unwilling or unable to serve as directors, if elected. In the event that any
nominee is unable to serve, the proxy holder named in the proxies will vote for
the election of such substitute or additional nominees as the Board may propose.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF LUIS R. LOPEZ, DOUGLASS T. SIMPSON, JUN SASAKI, AND ROBERT TUTAG.
BOARD AND COMMITTEES
Structure and Operation of the Board of Directors: You should know the following
information about the structure of the Board of Directors (the "Board") and its
operations:
o Each director serves for a term of one year or until the director's
successor is duly elected, appointed or seated.
o The Board currently consists of two outside directors (the "Outside
Directors"), the President and Chief Executive Officer (the Chief
Operating Officer) and the Chief Medical Officer. At the 2005 Annual
Meeting, stockholders are considering the election of four directors,
after which the Board will also consist of two Outside Directors.
o None of the directors has a consulting arrangement with Corgenix.
o The Board usually meets in scheduled meetings and conference
telephone calls. In Corgenix's 2005 fiscal year, the Board met and/or
took action by unanimous consent on xx occasions. No board member,
other than Mr. Sasaki, attended fewer than 75% of the meetings of the
Board or a committee in the last fiscal year.
Structure and Operation of the Committees: The full Board considers all major
decisions of Corgenix. The Board has established a standing audit committee and
compensation committee, both of which are chaired by outside director, Mr.
Robert Tutag. The Board has not established a nominating committee; however, the
Board does not believe such a committee is necessary given the small number of
Board members, and the fact that the Company has two independent, outside
directors. The entire Board participates in the consideration of director
nominees. You should know the following information about the operations of the
two committees of the Board: The Audit Committee currently consists of one of
the Outside Directors, Mr. Robert Tutag, and Mr. Simpson in addition to a
non-director, Mr. William Critchfield, the Senior Vice President and Chief
Financial Officer, and its functions include:
o making recommendations to the Board regarding the selection of
independent auditors,
o reviewing the results and scope of the audit and other services provided
by Corgenix's independent auditors, and
o reviewing and evaluating Corgenix's audit and control functions.
Four Audit Committee meetings were held during the last fiscal year.
o The Compensation Committee currently consists of an outside director,
Mr. Tutag, along with Messrs. Lopez and Simpson, and its functions
include:
o reviewing and recommending for Board approval compensation for
executive officers, and
o making policy decisions concerning salaries and incentive
compensation for employees and consultants of Corgenix.
Two Compensation Committee meetings were held during the last fiscal year.
Audit Committee Report
The Audit Committee assists the Board in fulfilling its responsibility for
oversight of the quality and integrity of the accounting, auditing and financial
reporting practices of the Company. Because the Company's common stock is traded
on the Over the Counter Bulletin Board, the Company is not subject to the
listing requirements of any securities exchange or Nasdaq regarding the
membership of the Company's Audit Committee. However, one of the members of the
audit committee is independent as defined in Rule 4200(a)(15) of listing
standards for the Nasdaq Stock Market. The Audit Committee does not have a
written charter.
In discharging its responsibility for oversight of the audit process, the Audit
Committee obtained from the Company's independent auditors, Hein & Associates
LLP, a formal written statement describing any relationships between the
auditors and the Company that might bear on the auditors' independence
consistent with the Independent Standards Board Standard No. 1, "Independence
Discussions with Audit Committees," discussed with the auditors any
relationships that might impact the auditors' objectivity and independence and
satisfied itself as to the auditors' independence.
The Audit Committee of the Board of Directors of the Company reported the
following:
(1) The Audit Committee has reviewed and discussed the audited financial
statements as of and for the fiscal year ended June 30, 2005, with
management and the independent auditors. Management has the responsibility
for preparation of the Company's financial statements and the independent
auditors have the responsibility for auditing those statements.
(2) The Audit Committee has discussed with the independent auditors the
matters required to be discussed by SAS 61, as may be modified or
supplemented.
(3) The Audit Committee has received the written disclosures and the letter
from the independent accountants required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees), as may be modified or supplemented,
and has discussed with the independent accountant the independent
accountant's independence; and
(4) Based on the review and discussion referred to in paragraphs (1) through
(3) above, the Audit Committee recommended to the Board that the audited
financial statements be included in the Company's Annual Report on Form
10-KSB for the fiscal year ended June 30, 2005.
Audit Committee of Corgenix Medical Corporation
Robert Tutag
Yusuke Kobe
Luis R. Lopez, M.D.
Douglass T. Simpson
Board Compensation Committee Report on Executive Compensation The Company's
executive compensation program is administered by the Compensation Committee of
the Board. One of its members and its chairman, Mr. Robert Tutag, is a
non-employee director. The Committee recommends the compensation of all
executive officers of the Company to the Board. In reviewing the compensation of
individual executive officers, the Committee takes under consideration the
recommendations of management, published compensation surveys and current market
conditions.
Compensation Programs. The Company's compensation programs are aimed at enabling
it to attract and retain the best possible executive talent and rewarding those
executives commensurate with their ability and performance. The Company's
compensation programs consist primarily of base salary, bonus plan, payment of
group health insurance, automobile allowance and stock option plan.
Base Salary. Base salaries for executive officers are determined in the same
manner as that of other salaried employees. Salary guidelines are established by
comparing the responsibilities of the individual's position in relation to
similar positions in other medical related companies. Individual salaries were
determined this year by considering respective levels of responsibility,
position and regional comparables, etc.
Bonus Plan. Bonuses for executive officers are determined based on achievement
of pre-established goals related to corporate sales and earnings in addition to
specific goals related to the executive's respective areas of responsibility.
Incentive Stock Option Plan. The 2005 Incentive Compensation Plan is intended to
encourage ownership of shares of the Company by employees, directors and
consultants of the Company, thereby providing additional incentives for such
employees, directors and consultants to promote the success of the business.
Options granted to executive officers under the 2005 plan would be either
incentive stock options or nonstatutory stock options, and shares may be sold or
granted at the discretion of the Board and as reflected in the terms of a
written stock option agreement. Restricted stock may also be awarded under the
plan.
Director Compensation: One of the Outside Directors, Mr. Robert Tutag, currently
receives an annual stock grant in addition to a cash payment of $500 per meeting
for service on the Board. Mr. Tutag also may be reimbursed for certain expenses
in connection with attendance at Board and committee meetings. For fiscal year
2005, Mr. Tutag received no stock options, nor received any cash compensation
for Board services, as he was not yet appointed to the Board. In addition, no
compensation was paid to Mr. Kobe for his service on the Board.
Compensation Committee of Corgenix Medical Corporation
Robert Tutag
Yusuke Kobe
Luis R. Lopez, M.D.
Douglass T. Simpson
MANAGEMENT
Directors and Executive Officers.
The following table sets forth certain information with respect to the directors
and executive officers of Corgenix as of June 30, 2005:
- ---------------------------------------------------------------------
Director/Officer of
Name Age Position the Company** Since
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Douglass T. Simpson 57 President and Chief 1992
Executive
Officer, Director
Luis R. Lopez, M.D. 57 1990
Chief Medical
Officer and
Chairman
William H. 59 Senior Vice
Critchfield President, Finance 2000
and Administration
and Chief
Financial Officer
Ann L. Steinbarger 52 Senior Vice
President Operations 1996
Taryn G. Reynolds 46 Vice President 1992
Facilities and IT
Jun Sasaki 52 Director 2002
Robert Tutag 65 Director 2005
**Includes
predecessor
Company--REAADS
Medical Products,
Inc.
- ---------------------------------------------------------------------
Douglass T. Simpson, Mr. Simpson's biographical information is on page 6 of
this Proxy Statement.
Luis R. Lopez, M.D., Dr. Lopez's biographical information is on page 6 of
this Proxy Statement.
William H. Critchfield, has been Senior Vice President Finance and
Administration and Chief Financial Officer of the Company since April 2005
and was Vice President and Chief Financial Officer from December 2000 to
April 2005. Prior to joining Corgenix, Mr. Critchfield was Executive Vice
President and Chief Financial Officer of U.S. Medical, Inc., a Denver,
Colorado based privately held distributor of new and used capital medical
equipment. From May of 1994 through July of 1999, he served as President and
Chief Financial Officer of W.L.C. Enterprises, Inc., a retail business
holding company. From November 1991 to May 1994, Mr. Critchfield served as
Executive Vice President and Chief Financial Officer of Air Methods
Corporation, a publicly traded company which is the leading U.S. company in
the air medical transportation industry and is the successor company to Cell
Technology, Inc., a publicly traded biotechnology company, where he served in
a similar capacity from 1987-1991. From 1986 through September 1987 he
served as Vice President of Finance and Administration for Biostar Medical
Products, Inc., a developer and manufacturer of diagnostic immunoassays. In
the past, Mr. Critchfield also served as Vice President of Finance for
Nuclear Pharmacy, Inc., formerly a publicly traded company and the world's
largest chain of centralized radiopharmacies. Mr. Critchfield is a certified
public accountant in Colorado. He graduated magna cum laude from California
State University-Northridge with a Bachelor of Science degree in Business
Administration and Accounting.
Ann L. Steinbarger, has been the Senior Vice President, Operations of Corgenix
since April 2005 and was the Vice President of Sales and Marketing from May 1998
to April 2005. Ms. Steinbarger joined Corgenix's operating subsidiary in January
1996 as Vice President, Sales and Marketing with responsibility for its
worldwide marketing and distribution strategies. Prior to joining Corgenix, Ms.
Steinbarger was with Boehringer Mannheim Corporation, Indianapolis, Indiana, a
$200 million IVD company. At Boehringer from 1976 to 1996, she served in a
series of increasingly important sales management positions. Ms. Steinbarger
holds a B.S. degree in Microbiology from Purdue University in West Lafayette,
Indiana.
Taryn G. Reynolds, has been a Vice President of Corgenix since May 1998. Mr.
Reynolds joined Corgenix's operating subsidiary in 1992, serving first as
Director of Administration, then as Managing Director, U.S. Operations. He
has served as Vice President, Operations and in 1999, became Vice President,
Facilities and Information Technology. Prior to joining Corgenix, Mr.
Reynolds held executive positions at Brinker International, MJAR Corporation
and M&S Incorporated, all Colorado-based property, operational and financial
management firms.
Jun Sasaki, Mr. Sasaki's biographical information is on page 7 of this Proxy
Statement.
Robert Tutag, Mr. Tutag's biographical information is on page 7 of this Proxy
Statement.
COMPLIANCE WITH SECTION 16 (a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16 (a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers, as well as persons beneficially
owning more than 10% of the Company's outstanding Common Stock, to file reports
of ownership and changes in ownership with the Commission within specified time
periods. Such officers, directors and stockholders are also required to furnish
the Company with copies of all Section 16 (a) forms they file.
Based solely on its review of such forms received by it, or written
representations from certain reporting persons, the Company believes that all
Section 16 (a) filing requirements applicable to its officers, directors and 10%
stockholders were complied with during the fiscal year ended June 30, 2005.
EXECUTIVE COMPENSATION
The following table shows how much compensation was paid by Corgenix for
the last three fiscal years to Corgenix's Chief Executive Officer and each other
executive officer whose total annual salary and bonus exceeded $100,000 for
services rendered to the subsidiaries during such fiscal years (collectively,
the "Named Executive Officers").
Summary Compensation Table
Annual
Cash Long-Term
Compensation Compensation
-----------------------
Options
Salary Granted
Name and Principal Fiscal and Bonus (#of Shares)
Position Year
-----------------------------------------------------
Douglass T. Simpson 2005 $157,826 205,000
President, Chief 2004 $148,386 -
Executive Officer 2003 $152,250 59,072
Dr. Luis R. Lopez 2004 $180,372 100,000
Chairman and Chief 2003 $169,583 -
Medical Officer 2002 $174,000 41,900
William H. 2004 $140,916 125,000
Critchfield 2003 $132,487 -
Senior Vice 2002 $135,937 34,119
President Finance
and Administration
and Chief Financial
Officer
Ann L. Steinbarger 2004 $140,916 100,000
Senior Vice 2003 $132,487 -
President, 2002 $135,937 41,519
Operations
Taryn G. Reynolds... 2004 $117,733 70,000
Vice President, 2003 $105,991 -
Facilities and 2002 $108,750 35,695
Information
Technology
Long-Term Incentive Compensation
Issuances of stock under the Stock Compensation Plan to the Named Executive
Officers during the fiscal year ended June 30, 2005 were as follows:
- -----------------------------------------------------------
Officer Issuances of Stock Under Stock
Compensation Plan in Fiscal 2005
- -----------------------------------------------------------
- -----------------------------------------------------------
Douglass T. Simpson 0
- -----------------------------------------------------------
- -----------------------------------------------------------
Dr. Luis R. Lopez 0
- -----------------------------------------------------------
- -----------------------------------------------------------
William H. Critchfield 0
- -----------------------------------------------------------
- -----------------------------------------------------------
Ann L. Steinbarger 0
- -----------------------------------------------------------
- -----------------------------------------------------------
Taryn G. Reynolds 0
- -----------------------------------------------------------
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth information concerning option exercises by the
Named Executive Officers during the fiscal year ended June 30, 2005 and
outstanding options held by the Named Executive Officers as of June 30, 2005:
Name Number Value Number of Shares Value of
of d Underlying In-the-Money
Shares Unexercised Options at
Acquired Options at FY-End ($)
on Realize FY-End Exercisable/Unexercisable(1)
Exercise ($) Exercisable/Unexercisable
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Douglass T. 0 0 63,723/222,557 0/65,600
Simpson
Dr. Luis R. 0 0 32,347/111,833 0/32,000
Lopez
William H. 0 0 44,627/136,373 0/40,000
Critchfield
Ann L. 0 0 47,774/111,706 0/32,000
Steinbarger
Taryn G. 0 0 40,715/79,765 0/22,400
Reynolds
(i) Based on the price of the Company's common stock at June 30, 2005 of $0.25
per share. As of October 21, 2005, the price of the Company's common stock was
$.51.
Employment and Consulting Agreements
Corgenix has entered into employment agreements with the following officers as
of the respective dates and for the minimum annual salaries as noted opposite
each of their names:
---------------------------------------
Officer Minimum Annual Salary
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
Douglass T. $180,000, dated July 1, 2005
Simpson
---------------------------------------
---------------------------------------
Dr. Luis R. $184,573, dated July 1, 2005
Lopez
---------------------------------------
---------------------------------------
William H. $165,000, dated July 1, 2005
Critchfield
---------------------------------------
---------------------------------------
Ann L. $150,000, dated July 1, 2005
Steinbarger
---------------------------------------
---------------------------------------
Taryn G. $115,358, dated July 1, 2005
Reynolds
---------------------------------------
Each of the above employment agreements is for continuously renewable terms of
three years, provides for severance payments equal to eighteen month's salary
and benefits if the employment of the officer is terminated without cause (as
defined in the respective agreements), and an automobile expense reimbursement
of $400 per month.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of Corgenix is currently composed of Mr. Tutag,
Dr. Lopez and Mr. Simpson with Mr. Tutag serving as Chairman. No
interlocking relationship exists between any member of the Board or
Compensation Committee and any member of the board of directors or
compensation committee of any other company, nor has any such interlocking
relationship existed in the past.
BENEFICIAL OWNERSHIP OF CORGENIX MEDICAL STOCK
The following table sets forth as of September 30, 2005, certain
information regarding the ownership of Corgenix's common stock by (i) each
person known by Corgenix to be the beneficial owner of more than 5% of the
outstanding shares of common stock, (ii) each of Corgenix's directors, (iii)
each Named Executive Officer and (iv) all of Corgenix's executive officers and
directors as a group. Unless otherwise indicated, the address of each person
shown is c/o Corgenix, 12061 Tejon Street, Westminster, CO 80234. Beneficial
ownership, for purposes of this table, includes convertible debt convertible
into common stock and options and warrants to purchase common stock that are
either currently exercisable or convertible or will be exercisable or
convertible within 60 days of September 30, 2005. Other than Dr. Lopez and Mr.
Reynolds, no other director or executive officer beneficially owned more than 5%
of the common stock. Directors and executive officers as a group beneficially
owned 16.0% of the common stock.
- ----------------------------------------------------------
Shares Beneficially
Owned
- -------------------------------- -----------------------
- -------------------------------- -----------------------
Percent
Name of Beneficial Owner of
Number Total
Beneficial
- -------------------------------- ---------- ---------
CAMOFI Master LDC..................4,665,057 26.33%
Truk Opportunity Fund.............2,239,979 12.64%
Medical & Biological
Laboratories Co. Ltd..............1,760,564 9.94%
Taryn G. Reynolds(1)..............1,250,487 7.06%
Ascendiant Securities, LLC....... 1,003,438 5.66%
Ascendiant Capital Group, LLC...... 942,096 5.32%
Luis R. Lopez, M.D.(1)............. 807,848 4.56%
Douglass T. Simpson (1)............ 260,228 1.47%
Ann L. Steinbarger(1)................71,089 0.40%
William H. Critchfield(1)............54,627 0.31%
All current directors and
current executive officers as
a group (5 persons)................2,444,279 13.80%
COMMON STOCK PERFORMANCE
Our Common Stock is traded on the OTC Bulletin Board (R) under the symbol
"CONX". On October 24, 2005, the last bid price of our Common Stock on the OTC
Bulletin Board (R) as reported by the OTC Bulletin Board (R) was $0.54.
The following table sets forth, for the periods indicated, the high and
low bid prices of our Common Stock as reported on the OTC Bulletin Board (R).
The following quotations reflect inter-dealer prices, without retail mark-up,
markdown or commissions, and may not represent actual transactions.
Stock Price Dates Stock Price Ranges
High Low
Fiscal Year 2005
Quarter Ended:
September 30, 2004 $1.00 $0.40
December 31, 2004 $0.58 $0.36
March 31, 2005 $0.55 $0.21
June 30, 2005 $0.34 $0.21
Fiscal Year 2004
Quarter Ended:
September 30, 2003 $1.29 $0.70
December 31, 2003 $1.35 $0.85
March 31, 2004 $1.05 $0.70
June 30, 2004 $0.90 $0.28
On September 30, 2005 there were approximately 182 holders of record of
our Common Stock.
To date, we have not paid any dividends on our Common Stock, and the Board of
Directors of the Company does not currently intend to declare cash dividends on
our Common Stock. We instead intend to retain earnings, if any, to support the
growth of the Company's business. Any future cash dividends would depend on
future earnings, capital requirements and the Company's financial condition and
other factors deemed relevant by the Board of Directors
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
Except for the debt conversion described below, there have not been any
transactions since the beginning of the Company's last fiscal year, or any
currently proposed transaction to which the Company or any of its subsidiaries
was or is to be a party, in which the amount involved exceeds $60,000 and in
which any director or executive officer of the Company, nominee for election as
a director, any five percent security holder or any member of the immediate
family of any of the foregoing persons had, or will have, a direct or indirect
material interest. On May 22, 1998 and March 1, 1999, three executive officers
loaned the Company a total of $57,225, which loans, as of June 7, 2005, had been
in default for a considerable time period. On June 7, 2005, the Company and the
three executive officers of the Company agreed to a transaction whereby the
Company issued shares of the Company's common stock and warrants to acquire
additional shares of common stock in exchange for the respective executive
officer's agreement to accept the Shares and Warrants in full satisfaction of
all amounts owed by the Company to them pursuant to the terms of their
respective promissory notes. The Shares and Warrants exchanged for the debt
owing to the executive officers were as follows:
- -----------------------------------------------------------
Executive Principal and Shares Warrants
Officer Interest Owed Exchanged Exchanged
to Officer
- -----------------------------------------------------------
- -----------------------------------------------------------
Dr. Luis R. $42,269 169,076 169,076
Lopez
- -----------------------------------------------------------
- -----------------------------------------------------------
Douglass T. $17,159 68,636 68,636
Simpson
- -----------------------------------------------------------
- -----------------------------------------------------------
Taryn G. $190,357 797,428 797,428
Reynolds
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
Totals $199,357 797,428 797,428
- -----------------------------------------------------------
PROPOSAL 2
APPROVAL OF THE 2005 INCENTIVE COMPENSATION PLAN
Introduction
In April 2005, the Board approved the 2005 Incentive Compensation Plan (the "
Plan"), subject to stockholder approval. The Company is proposing to authorize
the issuance of 1,500,000 shares under the Plan.
Purpose
The purpose of the Plan is to attract and retain directors, officers,
consultants and employees and to motivate such persons by relating incentive
compensation to increases in stockholder value.
SUMMARY OF THE 2005 INCENTIVE COMPENSATION PLAN
The full text of the 2005 Incentive Compensation Plan is set forth as Attachment
A to this proxy statement. The following summary Plan is qualified by reference
to that text.
Shares Subject to the 2005 Incentive Compensation Plan
Initially, 1,500,000 Shares are authorized for issuance under the Plan in
accordance with the provisions of the Plan and subject to such restrictions or
other provisions as the Compensation Committee (the "Committee") may from time
to time deem necessary. The Shares may be divided among the various Plan
components as the Committee shall determine, and all of them shall be available
for the grant of Incentive Stock Options under the Plan. Shares which may be
issued upon the exercise of Options shall be applied to reduce the maximum
number of Shares remaining available for use under the Plan. The Company shall
at all times during the term of the Plan and while any Options are outstanding
retain as authorized and unissued Stock, or as treasury Stock, at least the
number of Shares from time to time required under the provisions of the Plan, or
otherwise assure itself of its ability to perform its obligations hereunder. Any
Shares that are subject to an Award under this Plan which are not used because
the terms and conditions of the Award are not met, including any Shares that are
subject to an Option which expires or is terminated for any reason, any Shares
which are used for full or partial payment of the purchase price of Shares with
respect to which an Option is exercised and any Shares retained by the Company
pursuant to Section 13.2 shall automatically become available for use under the
Plan. Notwithstanding the foregoing, any Shares used for full or partial payment
of the purchase price of the Shares with respect to which an Option is exercised
and any Shares retained by the Company that were originally Incentive Stock
Option Shares must still be considered as having been granted for purposes of
determining whether the limitation on Incentive Stock Option grants has been
reached.
<page>
Administration
The Plan shall be administered by the Committee. In accordance with the
provisions of the Plan, the Committee shall, in its sole discretion, select
Participants from among the Eligible Employees to whom Awards will be granted,
the form of each Award, the amount of each Award and any other terms and
conditions of each Award as the Committee may deem necessary or desirable and
consistent with the terms of the Plan. The Committee shall determine the form or
forms of the agreements with Participants which shall evidence the particular
provisions, terms, conditions, rights and duties of the Company and the
Participants with respect to Awards granted pursuant to the Plan, which
provisions need not be identical except as may be provided herein. The Committee
may from time to time adopt such rules and regulations for carrying out the
purposes of the Plan as it may deem proper and in the best interests of the
Company. The Committee may correct any defect, supply any omission or reconcile
any inconsistency in the Plan or in any agreement entered into hereunder in the
manner and to the extent it shall deem expedient and it shall be the sole and
final judge of such expediency. No member of the Committee shall be liable for
any action or determination made in good faith, and all members of the Committee
shall, in addition to their rights as directors, be fully protected by the
Company with respect to any such action, determination or interpretation. The
determination, interpretations and other actions of the Committee pursuant to
the provisions of the Plan shall be binding and conclusive for all purposes and
on all persons.
Participation
Participants in the Plan shall be those Participants who, in the judgment of the
Committee, are performing, or during the term of their employment will perform,
important services in the management, operation and development of the Company,
and significantly contribute, or are expected to significantly contribute, to
the achievement of long-term corporate economic objectives. Participants may be
granted from time to time one or more Awards; provided, however, that the grant
of each such Award shall be separately approved by the Committee, and receipt of
one such Award shall not result in automatic receipt of any other Award. Written
notice shall be given to such person, specifying the terms, conditions, rights
and duties related thereto. Each Participant shall enter into an agreement with
the Company, in such form as the Committee shall determine and which is
consistent with the provisions of the Plan, specifying such terms, conditions,
rights and duties. Awards shall be deemed to be granted as of the date specified
in the grant resolution of the Committee, which date shall be the date of any
related agreement with the Participant. In the event of any inconsistency
between the provisions of the Plan and any such agreement entered into
hereunder, the provisions of the Plan shall govern.
<page>
Grant of Options
Coincident with the following designation for participation in the Plan, a
Participant may be granted one or more Options. The Committee in its sole
discretion shall designate whether an Option is to be considered an Incentive
Stock Option or a Non-Statutory Option. The Committee may grant both an
Incentive Stock Option and a Non-Statutory Option to the same Participant at the
same time or at different times. Incentive Stock Options and Non-Statutory
Options, whether granted at the same or different times, shall be deemed to have
been awarded in separate grants, shall be clearly identified, and in no event
shall the exercise of one Option affect the right to exercise any other Option
or affect the number of Shares for which any other Option may be exercised.
Price
The price at which each Share covered by an Option may be purchased shall be
determined in each case by the Committee and set forth in the stock option
agreement, but in no event shall the Option Price for each Share covered by an
Incentive Stock Option be less than the Fair Market Value of the Stock on the
date the Option is granted; provided that the Option Price for each Share
covered by a Non-Statutory Option may be granted at any price less than Fair
Market Value, in the sole discretion of the Committee. In addition, the Option
Price for each Share covered by an Incentive Stock Option granted to an Eligible
Employee who then owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any parent or subsidiary
corporation of the Company must be at least 110% of the Fair Market Value of the
Stock subject to the Incentive Stock Option on the date the Option is granted.
Duration of Options
Each stock option agreement shall state the period of time, determined by the
Compensation Committee, within which the Option may be exercised by the Option
Holder (the "Option Period"). The Option Period must expire, in all cases, not
more than seven years from the date an Option is granted. Each stock option
agreement shall also state the periods of time, if any, as determined by the
Compensation Committee, when incremental portions of each Option shall vest.
With certain exceptions, no portion of any Option shall vest earlier than one
year after the date of grant of the Option.
Termination of Employment
If the employment of the Option Holder by the Company is terminated (which for
this purpose means that the Option Holder is no longer employed by the Company
or by an Affiliate) within the Option Period for any reason other than cause,
disability or the Option Holder's death, the Option may be exercised by the
Option Holder within 30 days following the date of such termination (provided
that such exercise must occur within the Option Period), but not thereafter. In
any such case, the Option may be exercised only as to the Shares as to which the
Option had become exercisable on or before the date of termination of
employment.
<page>
Non-Transferability
Each stock option agreement applicable to an Incentive Stock Option shall
provide that the Option granted therein is not transferable by the Option Holder
except by will or pursuant to the laws of descent and distribution, and that
such Option is exercisable during the Option Holder's lifetime only by him or
her, or in the event of disability or incapacity, by his or her guardian or
legal representative. The Committee shall determine the extent, if any, to which
Non-Statutory Options shall be subject to transferability and exercisability
restrictions.
Disability of an Optionee
If the Option Holder dies, or if the Option Holder becomes disabled (within the
meaning of Section 22(e) of the Internal Revenue Code), during the Option Period
while still employed, or within the 30 day period referred to in (iii) below,
the Option may be exercised by those entitled to do so under the Option Holder's
will or by the laws of descent and distribution within twelve months following
the Option Holder's death or disability, but not thereafter. In any such case,
the Option may be exercised only as to the Shares as to which the Option had
become exercisable on or before the date of the Option Holder's death or
disability.
Adjustments Upon Changes in Capitalization
If the Company shall at any time increase or decrease the number of its
outstanding Shares or change in any way the rights and privileges of such Shares
by means of the payment of a stock dividend or any other distribution upon such
Shares payable in Stock, or through a stock split, subdivision, consolidation,
combination, reclassification or recapitalization involving the Stock, then in
relation to the Stock that is affected by one or more of the above events, the
numbers, rights and privileges of the following shall be increased, decreased or
changed in like manner as if they had been issued and outstanding, fully paid
and nonassessable at the time of such occurrence: (i) the Shares as to which
Awards may be granted under the Plan; and (ii) the Shares of Stock then included
in each outstanding Option granted hereunder.
Option Exercise and Payment
Each stock option agreement shall provide that the method for exercising the
Option granted therein shall be by delivery to the Corporate Secretary of the
Company of written notice specifying the number of Shares with respect to which
such Option is exercised (which must be in an amount evenly divisible by 100)
and payment of the Option Price. Such notice shall be in a form satisfactory to
the Committee and shall specify the particular Option (or portion thereof) which
is being exercised and the number of Shares with respect to which the Option is
being exercised. The exercise of the Option shall be deemed effective upon
receipt of such notice by the Corporate Secretary and payment to the Company.
The purchase price of the Stock shall be paid in full or by a combination of
cash, by cashier's check payable to the order of the Company; delivery to the
Company of certificates representing the number of Shares then owned by the
Option Holder, the Fair Market Value of which equals the Option Price, properly
endorsed for transfer to the Company; provided however, that Shares used for
this purpose must have been held by the Option Holder for such minimum period of
time as may be established from time to time by the Committee. For purposes of
this Plan, the Fair Market Value of any Shares delivered in payment of the
Option Price shall be the Fair Market Value as of the exercise date. The
exercise date shall be the delivery day of the certificates for the Stock used
as payment of the Option Price or if the Stock is publicly traded, by delivery
to the Company of a properly executed notice of exercise together with
irrevocable instructions to a broker to deliver to the Company promptly the
amount of the proceeds of the sale of all or a portion of the Stock necessary to
pay the Option Price. A properly executed certificate or certificates
representing the Stock shall be issued by the Company and delivered to the
Option Holder. If certificates representing Stock are used to pay all or part of
the Option Price, separate certificates for the same number of Shares shall be
issued by the Company and delivered to the Option Holder representing each
certificate used to pay the Option Price, and an additional certificate shall be
issued by the Company and delivered to the Option Holder representing the
additional Shares, in excess of the Option Price, to which the Option Holder is
entitled as a result of the exercise of the Option.
<page>
Withholding Taxes
Corgenix may take such steps as it may deem necessary or appropriate for the
withholding of any taxes which Corgenix is required by law or regulation of any
governmental authority, whether federal, state or local, domestic or foreign, to
withhold in connection with any option. This step may include requiring the
optionee to pay such tax at the time of exercise or the withholding of issuance
of shares of stock to be issued upon the exercise of any option until the
optionee reimburses Corgenix for the amount Corgenix is required to withhold
with respect to such taxes. Corgenix has the sole discretion to allow such taxes
to be satisfied by withholding optioned shares.
Restricted Stock Program
Awards Granted. Coincident with or following designation for participation in
the Plan, a Participant may be granted one or more Restricted Stock Awards
consisting of Shares. The number of Shares granted as a Restricted Stock Award
shall be determined by the Committee. Each Restricted Stock Award shall be
evidenced by a written equity award agreement that shall be entered into by the
Company and the Participant to whom the Award is granted.
Restrictions. A Participant's right to retain a Restricted Stock Award granted
to such Participant shall be subject to such restrictions set forth in the
equity award agreement, including but not limited to his or her continuous
employment by the Company for a restriction period specified by the Committee or
the attainment of specified performance goals and objectives, as may be
established by the Committee with respect to such Award. The Committee may in
its sole discretion require different periods of employment or different
performance goals and objectives with respect to different Participants, to
different Restricted Stock Awards or to separate, designated portions of the
Shares constituting a Restricted Stock Award.
Privileges of a Stockholder. Transferability. A Participant shall have all
voting, dividend, liquidation and other rights with respect to Shares in
accordance with its terms received by him or her as a Restricted Stock Award of
such Shares. Awards under this Plan may not be sold, pledged, assigned, or
transferred in any manner other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order ("QDRO"),
unless and until such Awards have been exercised, or the Shares underlying such
Awards have been issued, and all restrictions applicable to such Shares have
lapsed.
<page>
Plan Amendment, Modification, and Termination
The Committee may at any time terminate, and from time-to-time may amend or
modify, the Plan; provided, however, that no amendment or modification may
become effective without approval of the amendment or modification by the
stockholders if stockholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that either stockholder and/or Board approval is
otherwise necessary or desirable.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Awards theretofore granted under the Plan, without the
consent of the Participant holding such Awards.
Brokerage Arrangements
The Committee, in its discretion, may enter into arrangements with one or more
banks, brokers or other financial institutions to facilitate the disposition of
shares acquired upon exercise of Stock Options, including, without limitation,
arrangements for the simultaneous exercise of Stock Options and sale of the
Shares acquired upon such exercise.
Non Exclusivity of the Plan
Neither the adoption of the Plan by the Board nor the submission of the Plan to
stockholders of the Company for approval shall be construed as creating any
limitations on the power or authority of the Board to adopt such other or
additional incentive or other compensation arrangements of whatever nature as
the Board may deem necessary or desirable or preclude or limit the continuation
of any other plan, practice or arrangement for the payment of compensation or
fringe benefits to employees generally, or to any class or group of employees,
which the Company now has lawfully put into effect, including, without
limitation, any retirement, pension, savings and stock purchase plan, insurance,
death and disability benefits and executive short-term Compensations.
Change in Control
In the event of a change in control of the Company, then the Committee shall
have the power and discretion to prescribe the terms and conditions for the
exercise of, or modification of, any outstanding Awards granted hereunder. In
essence, the Committee may provide for the complete or partial acceleration of
the dates of exercise of the Options, or may provide that such Options will be
exchanged or converted into options to acquire securities of the surviving or
acquiring corporation, or may provide for a payment or distribution in respect
of outstanding Options (or the portion thereof that is currently exercisable) in
cancellation thereof. The Committee may modify the performance requirements for
any other Awards. The Committee may provide that Awards granted hereunder must
be exercised in connection with the closing of such transaction, and that if not
so exercised such Awards will expire. Any such determinations by the Committee
may be made generally with respect to all Participants, or may be made on a
case-by-case basis with respect to particular Participants.
For purposes of the Plan, a "change in control" shall be deemed to have occurred
if (a) any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the 1934 Act), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or the current
beneficial owners or their Affiliates are or become the "beneficial owner" (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of more than
one-half of the voting power of the then outstanding voting stock of the
Company; or (b) the stockholders of the Company approve a merger or
<page>
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least a majority of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
SUMMARY OF STOCK OPTION INFORMATION
The following table sets forth as of June 30, 2005, the options to purchase
common stock granted (New Plan Benefits) under the 2005 Incentive Compensation
Plan to certain executive officers of the Company, to all executive officers as
a group, and to all other employees.
Luis R. Douglass T. William H. Ann L. Taryn G. All Non
Lopez Simpson Critchfield Steinbarger Reynolds Officers Exec.
CMO CEO SVP/CFO SVP VP (5 in Officer
group) Group
----------------------------------------------------------------------
----------------------------------------------------------------------
Options
Granted
Number of 100,00 205,000 125,000 100,000 70,000 102,249 65,000
shares
Average
Exercise $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30
price per
share
Grant Dates 5/19/05 5/19/05 5/19/05 5/19/05 5/19/05 6/05,7/05
Expiration 5/19/12 5/19/12 5/19/12 5/19/12 5/19/12 6/12,7/12
Dates
Market Value $65,000 $133,250 $81,250 $65,000 $45,500 $390,000 $42,250
of Options
as of 9/30/05
Options
Exercised
Number 0 0 0 0 0 0 0
of
shares
Net value 0 0 0 0 0 0 0
realized
Vote Required to Approve 2005 Incentive Compensation Plan; Board
Recommendation
The affirmative vote of holders of a majority of the outstanding shares of
common stock of the Company entitled to vote at the Annual Meeting is required
for approval of Proposal Two. As a result, an abstention, broker non-vote, or
withheld vote with respect to approval of Proposal Two shall be considered to be
a negative vote with respect to Proposal Two.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE "FOR" APPROVAL OF THE 2005 INCENTIVE COMPENSATION PLAN
PROPOSAL 3
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company's principal outside accountant who serves as the Company's auditor
and the Company's principal outside accountant for preparation of the Company's
Federal and State income tax returns is Hein & Associates LLP. In fiscal 2004,
KPMG LLP served as the Company's auditor and Hein & Associates LLP was the
principal outside accountant for preparation of the Company's Federal and State
income tax returns.
KPMG LLP was previously the principal accountant for Corgenix Medical
Corporation. On March 8, 2005, that firm was dismissed by Corgenix as principal
accountant and Hein & Associates LLP was engaged as principal accountant. The
decision to change accountants was approved by the audit committee of the board
of directors. In connection with the audits of the two fiscal years ended June
30, 2004, and the subsequent interim period through March 8, 2005, there were no
disagreements with KPMG LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements if not resolved to their satisfaction would have caused them to
make reference in connection with their opinion to the subject matter of the
disagreement.
The audit reports of KPMG LLP on the consolidated financial statements of
Corgenix Medical Corporation and subsidiaries as of and for the years ended June
30, 2004 and 2003 did not contain any adverse opinion or disclaimer of opinion,
nor were they qualified or modified as to uncertainty, audit scope, or
accounting principles, except as follows:
KPMG LLP's report on the consolidated financial statements of Corgenix Medical
Corporation and subsidiaries as of and for the years ended June 30, 2004 and
2003, contained a separate paragraph stating "as discussed in note 1 (g) to the
consolidated financial statements, effective July 1, 2002, the Company changed
its method of accounting for goodwill as prescribed by Statement of Financial
Accounting Standards No. 142."
The aggregate fees billed by such firms for each of the last two fiscal years
for professional services rendered by the Company's principal accountants are as
follows:
- -----------------------------------------------------------
Audit Fees Audit-Related Tax Fees All Other
(Includes Fees Fees
Form QSB
Reviews &
Consents)
- -----------------------------------------------------------
- -----------------------------------------------------------
2005-Hein $53,800 -- $8,500 --
- -----------------------------------------------------------
- -----------------------------------------------------------
2005-KPMG $38,950 -- -- --
- -----------------------------------------------------------
- -----------------------------------------------------------
2004-Hein -- -- $8,500 --
- -----------------------------------------------------------
- -----------------------------------------------------------
2004-KPMG $77,250 -- -- --
- -----------------------------------------------------------
The Company's Audit Committee (the "Committee") is responsible for the
appointment, compensation, retention and oversight of the work of the registered
public accounting firm (including resolution of disagreements between management
and the independent auditor regarding financial reporting) for the purpose of
preparing or issuing an audit report or performing other audit, review or attest
services for the Company. The Committee pre-approves all permissible non-audit
services and all audit, review or attest engagements required under the
securities laws (including the fees and terms thereof) to be performed for the
Company by its registered public accounting firm, provided, however, that
de-minimus non-audit services may instead be approved in accordance with
applicable SEC rules.
The Audit Committee of the Board of Directors recommended, and the Board has
selected, subject to ratification by a majority vote of the stockholders in
person or by proxy at the Annual Meeting, the firm of Hein & Associates LLP to
continue as the Company's independent public accountant for the current fiscal
year ending June 30, 2006. Hein & Associates LLP served as the principal
independent public accounting firm utilized by us for the fiscal quarter ended
March 31, 2005 and for the year ended June 30, 2005. We anticipate that a
representative of Hein & Associates LLP will attend the Annual Meeting for the
purpose of responding to appropriate questions. At the Annual Meeting, a
representative of Hein & Asociates LLP will be afforded an opportunity to make a
statement if desired, and will be available to respond to appropriate questions.
Votes Required to Ratify Accountants; Board Recommendation
Ratification of Hein & Associates LLP's appointment requires the affirmative
vote of the holders of a majority of the shares of common stock present at the
Annual Meeting, in person or by properly executed proxy, and entitled to vote.
As a result, an abstention, broker non-vote, or withheld vote with respect to
approval of Proposal Three will be considered to be a negative vote with respect
to Proposal Three.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFYING THE APPOINTMENT OF HEIN & ASSOCIATES LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSALS
No stockholder proposals were received by Corgenix for inclusion in this year's
Proxy Statement. If a stockholder wishes to present a proposal to be included in
the proxy statement for the next annual meeting of stockholders, the proposal
must be submitted in writing and received by the Corporate Secretary of Corgenix
at its corporate offices located at 12061 Tejon Street, Westminster, Colorado
80234, no later than August 16, 2006.
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN
YOUR PROXY CARD
IN THE ENVELOPE PROVIDED
AS SOON AS POSSIBLE
Attachment A
CORGENIX MEDICAL CORPORATION
2005 INCENTIVE COMPENSATION PLAN
SECTION 1
INTRODUCTION
1.1 Establishment. Corgenix Medical Corporation, a Nevada corporation
(hereinafter referred to as the "Company" except where the context otherwise
requires), hereby establishes the 2005 Corgenix Incentive Compensation Plan
(the "Plan").
1.2 Purpose. The purpose of the Plan is to attract and retain directors,
officers, consultants and employees and to motivate such persons by relating
incentive compensation to increases in stockholder value.
SECTION 2
DEFINITIONS
2.1 Definitions. The following terms shall have the meanings set forth
below:
(a) "Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under direct or indirect common
control with such Person. A Person shall be deemed to control another Person
for purposes of this definition if such Person possesses, directly or
indirectly, the power (i) to vote the securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors of
a corporation or other Persons performing similar functions for any other
type of Person, or (ii) to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting
securities, by contract, as general partner, as trustee or otherwise.
(b) "Award" means a grant made under this Plan in the form of Non-Statutory
Options, Incentive Stock Options and/or Restricted Stock Awards.
(c) "Board" means the Board of Directors of the Company.
(d) "Committee" shall mean the Board, or if one has been appointed, the
Compensation Committee.
(e) "Compensation Committee" means a committee consisting of at least two
Non-Employee Directors (as defined in Rule 16b-3(i) under the 1934 act who
are empowered hereunder to take actions in the administration of the Plan. If
the Stock is publicly traded, the Compensation Committee shall be so
constituted at all times as to permit the Plan to comply with Rule 16b-3 or
any successor rule promulgated under the Securities Exchange Act of 1934 (the
"1934 Act") as well ss.162(m) of the Internal Revenue Code of 1986, as it may
be amended from time to time ("Code"). Members of the Compensation Committee
shall be appointed from time to time by the Board, shall serve at the
pleasure of the Board, and may resign at any time upon written notice to the
Board.
(f) "Effective Date" means the effective date of the Plan, April 21, 2005.
(g) "Eligible Employees" means key employees (including, without limitation,
officers and directors who are also employees) of the Company or any division
thereof, upon whose judgment, initiative and efforts the Company is, or will
be, important to the successful conduct of its business.
(h) "Fair Market Value" means, if the Stock is not publicly traded, the value of
the Stock as determined in good faith by the Committee after such
consultation with outside legal, accounting and other experts as the
Committee may deem advisable. The Committee shall maintain a written record
of its method of determining such value. If the Stock is publicly traded,
Fair Market Value means the officially quoted closing price of the Stock on
the national exchange on which the Stock is traded on a particular date. If
there are no Stock transactions on such date, the Fair Market Value shall be
determined as of the immediately preceding date on which there were Stock
transactions. If no such prices are reported on the national exchange on
which the Stock is traded, then Fair Market Value shall mean the most recent
ten day average of the high and low sale prices for the Stock (or if no sales
prices are reported, the average of the preceding ten day high and low bid
prices) as reported by the principal regional stock exchange, or if not so
reported, as reported by a quotation system of general circulation to brokers
and dealers.
(i) "Incentive Stock Option" means any Option designated as such and granted in
accordance with the requirements of ss. 422 of the Code.
(j) "Non-Statutory Option" means any Option other than an Incentive Stock
Option.
(k) "Option" means a right to purchase Stock at a stated price for a specified
period of time.
(l) "Option Price" means the price at which shares of Stock subject to an Option
may be purchased, determined in accordance with subsection 6.2(b).
(m) "Participant" means an Eligible Employee, consultant or other independent
advisor of the Company designated by the Committee from time to time during
the term of the Plan to receive one or more Awards under the Plan.
(n) "Person" means any individual, partnership, joint venture, firm, company,
corporation, association, trust or other enterprise or any government or
political subdivision or any agent, department or instrumentality thereof.
(o) "Plan Year" means each 12-month period coinciding the Company's fiscal year
except that for the first year of the Plan it shall begin on the Effective
Date and extend to the end of the fiscal year of Company following the
Effective Date.
(p) "QDRO" shall mean a qualified domestic relations order as defined by the
Internal Revenue Code or Title I of the Employee Retirement Income Security
Act of 1934, as amended, or the rules thereunder.
(q) "Restricted Stock" shall mean shares of Stock granted under Section 7 that
are subject to restrictions imposed pursuant to such Section.
(r) "Share" means a share of Stock.
(s) "Stock" means the common stock of the Company.
2.2 Gender and Number. Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definition
of any term herein in the singular shall also include the plural
SECTION 3
PLAN ADMINISTRATION
The Plan shall be administered by the Committee. In accordance with the
provisions of the Plan, the Committee shall, in its sole discretion, select
Participants from among the Eligible Employees to whom Awards will be granted,
the form of each Award, the amount of each Award and any other terms and
conditions of each Award as the Committee may deem necessary or desirable and
consistent with the terms of the Plan. The Committee shall determine the form or
forms of the agreements with Participants which shall evidence the particular
provisions, terms, conditions, rights and duties of the Company and the
Participants with respect to Awards granted pursuant to the Plan, which
provisions need not be identical except as may be provided herein. The Committee
may from time to time adopt such rules and regulations for carrying out the
purposes of the Plan as it may deem proper and in the best interests of the
Company. The Committee may correct any defect, supply any omission or reconcile
any inconsistency in the Plan or in any agreement entered into hereunder in the
manner and to the extent it shall deem expedient and it shall be the sole and
final judge of such expediency. No member of the Committee shall be liable for
any action or determination made in good faith, and all members of the Committee
shall, in addition to their rights as directors, be fully protected by the
Company with respect to any such action, determination or interpretation. The
determination, interpretations and other actions of the Committee pursuant to
the provisions of the Plan shall be binding and conclusive for all purposes and
on all persons.
SECTION 4
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. Initially, 1,500,000 Shares are authorized for issuance
under the Plan in accordance with the provisions of the Plan and subject to
such restrictions or other provisions as the Committee may from time to time
deem necessary. The Shares may be divided among the various Plan components
as the Committee shall determine, and all of them shall be available for the
grant of Incentive Stock Options under the Plan. Shares which may be issued
upon the exercise of Options shall be applied to reduce the maximum number of
Shares remaining available for use under the Plan. The Company shall at all
times during the term of the Plan and while any Options are outstanding
retain as authorized and unissued Stock, or as treasury Stock, at least the
number of Shares from time to time required under the provisions of the Plan,
or otherwise assure itself of its ability to perform its obligations
hereunder.
4.2 Unused and Forfeited Stock. Any Shares that are subject to an Award under
this Plan which are not used because the terms and conditions of the Award
are not met, including any Shares that are subject to an Option which expires
or is terminated for any reason, any Shares which are used for full or
partial payment of the purchase price of Shares with respect to which an
Option is exercised and any Shares retained by the Company pursuant to
Section 13.2 shall automatically become available for use under the Plan.
Notwithstanding the foregoing, any Shares used for full or partial payment of
the purchase price of the Shares with respect to which an Option is exercised
and any Shares retained by the Company pursuant to Section 13.2 that were
originally Incentive Stock Option Shares must still be considered as having
been granted for purposes of deter-mining whether the limitation on Incentive
Stock Option grants provided for in Section 4.1 has been reached.
4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the Company shall at
any time increase or decrease the number of its outstanding Shares or change
in any way the rights and privileges of such Shares by means of the payment
of a stock dividend or any other distribution upon such Shares payable in
Stock, or through a stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, then in relation to
the Stock that is affected by one or more of the above events, the numbers,
rights and privileges of the following shall be increased, decreased or
changed in like manner as if they had been issued and outstanding, fully paid
and nonassessable at the time of such occurrence: (i) the Shares as to which
Awards may be granted under the Plan; and (ii) the Shares of Stock then
included in each outstanding Option granted hereunder.
4.4 Other Changes in Stock. In the event there shall be any change, other than
as specified in Section 4.3, in the number or kind of outstanding Shares or
of any stock or other securities into which the Stock shall be changed or for
which it shall have been exchanged, and if the Committee shall in its
discretion determine that such change equitably requires an adjustment in the
number or kind of Shares subject to outstanding Awards or which have been
reserved for issuance pursuant to the Plan but are not then subject to an
Award, then such adjustments shall be made by the Committee and shall be
effective for all purposes of the Plan and on each outstanding Award that
involves the particular type of stock for which a change was effected.
4.5 General Adjustment Rules. If any adjustment or substitution provided for in
this Section 4 shall result in the creation of a fractional Share under any
Award, the Company shall, in lieu of selling or otherwise issuing such
fractional Share, pay to the Participant a cash sum in an amount equal to the
product of such fraction multiplied by the Fair Market Value of a Share on
the date the fractional Share would otherwise have been issued. In the case
of any such substitution or adjustment affecting an Option, the total Option
Price for the Shares then subject to an Option shall remain unchanged but the
Option Price per share under each such Option shall be equitably adjusted by
the Committee to reflect the greater or lesser number of Shares or other
securities into which the Stock subject to the Option may have been changed.
4.6 Determination by Committee, Etc. Adjustments under this Section 4 shall be
made by the Committee, whose determinations with regard thereto shall be
final and binding upon all parties thereto.
SECTION 5
PARTICIPATION
Participants in the Plan shall be those Participants who, in the judgment of the
Committee, are performing, or during the term of their employment will perform,
important services in the management, operation and development of the Company,
and significantly contribute, or are expected to significantly contribute, to
the achievement of long-term corporate economic objectives. Participants may be
granted from time to time one or more Awards; provided, however, that the grant
of each such Award shall be separately approved by the Committee, and receipt of
one such Award shall not result in automatic receipt of any other Award. Written
notice shall be given to such person, specifying the terms, conditions, rights
and duties related thereto. Each Participant shall enter into an agreement with
the Company, in such form as the Committee shall determine and which is
consistent with the provisions of the Plan, specifying such terms, conditions,
rights and duties. Awards shall be deemed to be granted as of the date specified
in the grant resolution of the Committee, which date shall be the date of any
related agreement with the Participant. In the event of any inconsistency
between the provisions of the Plan and any such agreement entered into
hereunder, the provisions of the Plan shall govern.
SECTION 6
STOCK OPTIONS
6.1 Grant of Options. Coincident with the following designation for
participation in the Plan, a Participant may be granted one or more Options.
The Committee in its sole discretion shall designate whether an Option is to
be considered an Incentive Stock Option or a Non-Statutory Option. The
Committee may grant both an Incentive Stock Option and a Non-Statutory Option
to the same Participant at the same time or at different times. Incentive
Stock Options and Non-Statutory Options, whether granted at the same or
different times, shall be deemed to have been awarded in separate grants,
shall be clearly identified, and in no event shall the exercise of one Option
affect the right to exercise any other Option or affect the number of Shares
for which any other Option may be exercised.
6.2 Option Agreements. Each Option granted under the Plan shall be evidenced by
a written stock option agreement which shall be entered into by the Company
and the Participant to whom the Option is granted (the "Option Holder"), and
which shall contain the following terms and conditions, as well as such other
terms and conditions not inconsistent therewith, as the Committee may
consider appropriate in each case.
(a) Number of Shares. Each stock option agreement shall state that it covers a
specified number of Shares, as determined by the Committee. Notwithstanding
any other provision of the Plan, the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by an Option Holder in any calendar year, under the Plan or
otherwise, shall not exceed $100,000. For this purpose, the Fair Market Value
of the Shares shall be determined as of the time an Option is granted.
(b) Price. The price at which each Share covered by an Option may be purchased
shall be determined in each case by the Committee and set forth in the stock
option agreement, but in no event shall the Option Price for each Share
covered by an Incentive Stock Option be less than the Fair Market Value of
the Stock on the date the Option is granted; provided that the Option Price
for each Share covered by a Non-Statutory Option may be granted at any price
less than Fair Market Value, in the sole discretion of the Committee. In
addition, the Option Price for each Share covered by an Incentive Stock
Option granted to an Eligible Employee who then owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary corporation of the Company must be at
least 110% of the Fair Market Value of the Stock subject to the Incentive
Stock Option on the date the Option is granted.
(c) Duration of Options. Each stock option agreement shall state the period of
time, determined by the Compensation Committee, within which the Option may
be exercised by the Option Holder (the "Option Period"). The Option Period
must expire, in all cases, not more than seven years from the date an Option
is granted. Each stock option agreement shall also state the periods of time,
if any, as determined by the Compensation Committee, when incremental
portions of each Option shall vest. Except as provided in Section 7, no
portion of any Option shall vest earlier than one year after the date of
grant of the Option.
(d) Termination of Employment, Death, Disability, Etc. Except as otherwise
determined by the Committee, each stock option agreement shall provide as
follows with respect to the exercise of the Option upon termination of the
employment or the death of the Option Holder:
(i) If the employment of the Option Holder is terminated within the Option
Period for cause, as determined by the Company, the Option shall thereafter
be void for all purposes. As used in this subsection 6.2(d), "cause" shall
mean willful dishonesty towards, fraud upon or deliberate injury or attempted
deliberate injury to the Company, misrepresentation or concealment of a
material fact or circumstance for the purpose of or otherwise in connection
with securing employment with the Company, breach of any limitations on the
use or disclosure of confidential information or materials, conviction for a
felony or a material breach of the Option Holder's employment agreement with
the Company. The effect of this subsection 6.2(d)(i) shall be limited to
determining the consequences of a termination, and nothing in this subsection
6.2(d)(i) shall restrict or otherwise interfere with the Company's discretion
with respect to the termination of any employee.
(ii) If the Option Holder dies, or if the Option Holder becomes disabled (within
the meaning of Section 22(e) of the Internal Revenue Code), during the Option
Period while still employed, or within the 30 day period referred to in (iii)
below, the Option may be exercised by those entitled to do so under the
Option Holder's will or by the laws of descent and distribution within twelve
months following the Option Holder's death or disability, but not thereafter.
In any such case, the Option may be exercised only as to the Shares as to
which the Option had become exercisable on or before the date of the Option
Holder's death or disability.
(iii) If the employment of the Option Holder by the Company is terminated (which
for this purpose means that the Option Holder is no longer employed by the
Company or by an Affiliate) within the Option Period for any reason other
than cause, disability or the Option Holder's death, the Option may be
exercised by the Option Holder within 30 days following the date of such
termination (provided that such exercise must occur within the Option
Period), but not thereafter. In any such case, the Option may be exercised
only as to the Shares as to which the Option had become exercisable on or
before the date of termination of employment.
(e) Transferability. Each stock option agreement applicable to an Incentive
Stock Option shall provide that the Option granted therein is not
transferable by the Option Holder except by will or pursuant to the laws of
descent and distribution, and that such Option is exercisable during the
Option Holder's lifetime only by him or her, or in the event of disability or
incapacity, by his or her guardian or legal representative. The Committee
shall determine the extent, if any, to which Non-Statutory Options shall be
subject to transferability and exercisability restrictions.
(f) Exercise, Payments, Etc.
(i) Each stock option agreement shall provide that the method for exercising the
Option granted therein shall be by delivery to the Corporate Secretary of the
Company of written notice specifying the number of Shares with respect to
which such Option is exercised (which must be in an amount evenly divisible
by 100) and payment of the Option Price. Such notice shall be in a form
satisfactory to the Committee and shall specify the particular Option (or
portion thereof) which is being exercised and the number of Shares with
respect to which the Option is being exercised. The exercise of the Option
shall be deemed effective upon receipt of such notice by the Corporate
Secretary and payment to the Company. The purchase of such Stock shall take
place at the principal offices of the Company upon delivery of such notice,
at which time the purchase price of the Stock shall be paid in full by any of
the methods or any combination of the methods set forth in (ii) below. A
properly executed certificate or certificates representing the Stock shall be
issued by the Company and delivered to the Option Holder. If certificates
representing Stock are used to pay all or part of the Option Price, separate
certificates for the same number of Shares shall be issued by the Company and
delivered to the Option Holder representing each certificate used to pay the
Option Price, and an additional certificate shall be issued by the Company
and delivered to the Option Holder representing the additional Shares, in
excess of the Option Price, to which the Option Holder is entitled as a
result of the exercise of the Option.
(ii) The Option Price shall be paid by any of the following methods or any
combination of the following methods:
(A) In cash;
(B) By cashier's check payable to the order of the Company;
(C) By delivery to the Company of certificates representing the number of Shares
then owned by the Option Holder, the Fair Market Value of which equals the
Option Price, properly endorsed for transfer to the Company; provided
however, that Shares used for this purpose must have been held by the Option
Holder for such minimum period of time as may be established from time to
time by the Committee; For purposes of this Plan, the Fair Market Value of
any Shares delivered in payment of the Option Price shall be the Fair Market
Value as of the exercise date. The exercise date shall be the delivery day of
the certificates for the Stock used as payment of the Option Price; or
(D) If the Stock is publicly traded, by delivery to the Company of a properly
executed notice of exercise together with irrevocable instructions to a
broker to deliver to the Company promptly the amount of the proceeds of the
sale of all or a portion of the Stock necessary to pay the Option Price.
(g) Withholding.
(i) Non-Statutory Options. Each stock option agreement covering Non-Statutory
Options shall provide that, upon exercise of the Option, the Option Holder
shall make appropriate arrangements with the Company to provide for the
amount of additional withholding required by applicable federal and state
income tax laws, including payment of such taxes through delivery of Stock or
by withholding Stock to be issued under the Option, as provided in Section
13.
(ii) Incentive Stock Options. In the event that a Participant makes a
disposition (as defined in Section 424(c) of the Code) of any Stock acquired
pursuant to the exercise of an Incentive Stock Option prior to the expiration
of two years from the date on which the Incentive Stock Option was granted or
prior to the expiration of one year from the date on which the Option was
exercised, the Participant shall send written notice to the Company at its
principal office (Attention: Corporate Secretary) of the date of such
disposition, the number of Shares disposed of, the amount of proceeds
received from such disposition, and any other information relating to such
disposition as the Company may reasonably request. The Participant shall, in
the event of such a disposition, make appropriate arrangements with the
Company to provide for the amount of additional withholding, if any, required
by applicable federal and state income tax laws.
(h) Adjustment of Options. Subject to the limitations contained in Section 6 and
Section 9, the Committee may make any adjustment to the Option Price, the
number of Shares subject to, or the terms of, an outstanding Option and a
subsequent granting of an Option by amendment or by substitution of an
outstanding Option. Such amendment, substitution, reduction, or re-grant may
result in terms and conditions (including Option Price, number of shares
covered, vesting schedule or Option Period) that differ from the terms and
conditions of the original Option. The Committee may not, however, adversely
affect the rights of any Participant to previously granted Options without
the consent of such Participant. If such action is affected by amendment, the
effective date of such amendment shall be the date of the original grant.
6.3 Stockholder Privileges. No Option Holder shall have any rights as a
stockholder with respect to any Shares covered by an Option until the Option
Holder becomes the holder of record of such Stock, and no adjustments shall
be made for dividends or other distributions or other rights as to which
there is a record date preceding the date such Option Holder becomes the
holder of record of such Stock, except as provided in Section 4.
SECTION 7
RESTRICTED STOCK PROGRAM
7.1 Awards Granted. Coincident with or following designation for participation
in the Plan, a Participant may be granted one or more Restricted Stock Awards
consisting of Shares. The number of Shares granted as a Restricted Stock
Award shall be determined by the Committee. Each Restricted Stock Award shall
be evidenced by a written equity award agreement that shall be entered into
by the Company and the Participant to whom the Award is granted.
7.2 Restrictions. A Participant's right to retain a Restricted Stock Award
granted to such Participant under Section 0 shall be subject to such
restrictions set forth in the equity award agreement, including but not
limited to his or her continuous employment by the Company for a restriction
period specified by the Committee or the attainment of specified performance
goals and objectives, as may be established by the Committee with respect to
such Award. The Committee may in its sole discretion require different
periods of employment or different performance goals and objectives with
respect to different Participants, to different Restricted Stock Awards or to
separate, designated portions of the Shares constituting a Restricted Stock
Award.
7.3 Privileges of a Stockholder. Transferability. A Participant shall have all
voting, dividend, liquidation and other rights with respect to Shares in
accordance with its terms received by him or her as a Restricted Stock Award
under this Section 7 upon his or her becoming the holder of record of such
Shares; provided, however, that the Participant's right to sell, encumber or
otherwise transfer such Shares shall be subject to the limitations of Section
9.2 hereof.
SECTION 8
CHANGE IN CONTROL
8.1 Options. In the event of a change in control of the Company as defined in
Section 8.2, then the Committee shall have the power and discretion to
prescribe the terms and conditions for the exercise of, or modification of,
any outstanding Awards granted hereunder. By way of illustration, and not by
way of limitation, the Committee may provide for the complete or partial
acceleration of the dates of exercise of the Options, or may provide that
such Options will be exchanged or converted into options to acquire
securities of the surviving or acquiring corporation, or may provide for a
payment or distribution in respect of outstanding Options (or the portion
thereof that is currently exercisable) in cancellation thereof. The Committee
may modify the performance requirements for any other Awards. The Committee
may provide that Awards granted hereunder must be exercised in connection
with the closing of such transaction, and that if not so exercised such
Awards will expire. Any such determinations by the Committee may be made
generally with respect to all Participants, or may be made on a case-by-case
basis with respect to particular Participants.
8.2 Definition. For purposes of the Plan, a "change in control" shall be deemed
to have occurred if (a) any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the 1934 Act), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
the current beneficial owners or their Affiliates are or become the
"beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, of more than one-half of the voting power of the then outstanding
voting stock of the Company; or (b) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) at least a majority of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets.
SECTION 9
RIGHTS OF EMPLOYEES; PARTICIPANTS
9.1 Employment. Nothing contained in the Plan or in any Award granted under the
Plan shall confer upon any Participant any right with respect to the
continuation of his or her employment by the Company, or interfere in any way
with the right of the Company, subject to the terms of any separate
employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the Participant
from the rate in existence at the time of the grant of an Award.
9.2 Nontransferability. Awards under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of
descent and distribution or pursuant to a QDRO, unless and until such Awards
have been exercised, or the Shares underlying such Awards have been issued,
and all restrictions applicable to such Shares have lapsed.
During the lifetime of the Participant, only he may exercise an Award (or any
portion thereof) granted to him under the Plan, unless it has been disposed of
pursuant to a QDRO. After the death of the Participant, any exercisable portion
of an Award may, prior to the time when such portion becomes unexercisable under
the Plan or the applicable agreement, be exercised by his personal
representative or by any person empowered to do so under the deceased
Participant's will or under the then applicable laws of descent and
distribution.
SECTION 10
GENERAL RESTRICTIONS
10.1 Investment Representations. The Company may require any person to whom an
Option or other Award is granted, as a condition of exercising such Option or
receiving Stock under the Award, to give written assurances in substance and
form satisfactory to the Company and its counsel to the effect that such
person is acquiring the Stock subject to the Option or the Award for his own
account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company
deems necessary or appropriate in order to comply with federal and applicable
state securities laws. Legends evidencing such restrictions may be placed on
the certificates evidencing the Stock.
10.2 Compliance with Securities Laws. Each Award shall be subject to the
requirement that, if at any time counsel to the Company shall determine that
the listing, registration or qualification of the Shares subject to such
Award upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is necessary as a
condition of, or in connection with, the issuance or purchase of Shares
thereunder, such Award may not be accepted or exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained on conditions acceptable to the Committee.
Nothing herein shall be deemed to require the Company to apply for or to
obtain such listing, registration or qualification.
10.3 Stock Restriction Agreement. The Committee may provide that Shares issuable
upon the exercise of an Option or grant of any Award shall, under certain
conditions, be subject to restrictions whereby the Company has a right to
prohibit the transfer of such Shares, a right of first refusal with respect
to such Shares and/or a right or obligation to repurchase all or a portion of
such Shares, which restrictions may survive a Participant's term of
employment with the Company.
SECTION 11
OTHER EMPLOYEE BENEFITS
The amount of any compensation deemed to be received by a Participant as a
result of the exercise of an Option or the grant or vesting of any other Award
shall not constitute "earnings" with respect to which any other employee
benefits of such employee are determined, including without limitation benefits
under any pension, profit sharing, life insurance or salary continuation plan.
SECTION 12
PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Committee may at any time terminate, and from time-to-time may amend or
modify, the Plan; provided, however, that no amendment or modification may
become effective without approval of the amendment or modification by the
stockholders if stockholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that either stockholder and/or Board approval is
otherwise necessary or desirable.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Awards theretofore granted under the Plan, without the
consent of the Participant holding such Awards.
SECTION 13
WITHHOLDING
13.1 Withholding Requirement. The Company's obligations to deliver Shares upon
the exercise of an Option, or upon the vesting of any other Award, shall be
subject to the Participant's satisfaction of all applicable federal, state
and local income and other tax withholding requirements.
13.2 Withholding With Stock. At the time the Committee grants an Award, it may,
in its sole discretion, grant the Participant an election to pay all amounts
of tax withholding, or any part thereof, by electing to transfer to the
Company, or to have the Company withhold from Shares otherwise issuable to
the Participant, Shares having a value equal to the amount required to be
withheld or such lesser amount as may be elected by the Participant. All
elections shall be subject to the approval or disapproval of the Committee.
The value of Shares to be withheld shall be based on the Fair Market Value of
the Stock on the date that the amount of tax to be withheld is to be
determined (the "Tax Date"). Any such elections by Participants to have
Shares withheld for this purpose will be subject to the following
restrictions:
(a) All elections must be made prior to the Tax Date.
(b) All elections shall be irrevocable.
(c) If the Participant is an officer or director of the Company within the
meaning of Section 16 of the Securities Exchange Act of 1934 ("Section 16"),
the Participant must satisfy the requirements of such Section 16 and any
applicable rules thereunder with respect to the use of Stock to satisfy such
tax withholding obligation.
SECTION 14
BROKERAGE ARRANGEMENTS
The Committee, in its discretion, may enter into arrangements with one or more
banks, brokers or other financial institutions to facilitate the disposition of
shares acquired upon exercise of Stock Options, including, without limitation,
arrangements for the simultaneous exercise of Stock Options and sale of the
Shares acquired upon such exercise.
SECTION 15
NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the submission of the Plan to
stockholders of the Company for approval shall be construed as creating any
limitations on the power or authority of the Board to adopt such other or
additional incentive or other compensation arrangements of whatever nature as
the Board may deem necessary or desirable or preclude or limit the continuation
of any other plan, practice or arrangement for the payment of compensation or
fringe benefits to employees generally, or to any class or group of employees,
which the Company now has lawfully put into effect, including, without
limitation, any retirement, pension, savings and stock purchase plan, insurance,
death and disability benefits and executive short-term Compensations.
SECTION 16
REQUIREMENTS OF LAW
16.1 Requirements of Law. The issuance of Stock and the payment of cash pursuant
to the Plan shall be subject to all applicable laws, rules and regulations.
16.2 Federal Securities Law Requirements. If, and to the extent, required by
law, if a Participant is an officer or director of the Company within the
meaning of Section 16 of the 1934 Act, Awards granted hereunder shall be
subject to all conditions required under Rule 16b-3, or any successor rule
promulgated under the 1934 Act, to qualify the Award for any exception from
the provisions of Section 16(b) of the 1934 Act available under that Rule.
Such conditions are hereby incorporated herein by reference and shall be set
forth in the agreement with the Participant which describes the Award.
16.3 Governing Law. The Plan and all agreements hereunder shall be construed in
accordance with and governed by the laws of the State of Colorado.
SECTION 17
DURATION OF THE PLAN
The Plan shall terminate at such time as may be determined by the Board of
Directors, and no Award shall be granted after such termination. If not sooner
terminated under the preceding sentence, the Plan shall fully cease and expire
at midnight on that date which is the date immediately preceding the fifth
anniversary of the date of adoption of the Plan. Awards outstanding at the time
of the Plan termination may continue to be exercised or earned in accordance
with their terms.
SECTION 18
CONFLICT IN TERMS
In the event that there is a conflict between the terms of this Plan and any
Stock Option granted pursuant to this Plan and/or any Repurchase Agreement
executed in connection with this Plan, the terms of this Plan shall control.