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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/[X]
Filed by a Party other than the Registrant / /[ ]
Check the appropriate box:
/X/[X] Preliminary Proxy Statement
/ /[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/ /[ ] Definitive Proxy Statement
/ /[ ] Definitive Additional Materials
/ /[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
ATHENAA-FEM MEDICAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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ATHENA2
A-FEM MEDICAL CORPORATION
(dba A-FEM Medical Corporation)
10180 S.W. NIMBUS AVENUE, SUITE J-5
PORTLAND, OREGON 97223
JUNE [16]NOVEMBER , 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annuala Special Meeting of Stockholders (the
"Annual"Special Meeting") of ATHENA Medical Corporation, dba A-FEM Medical Corporation (the "Company").
Place: The University Club
1225 SW SixthGovernor Hotel
611 S.W. 10th Avenue
Portland, Oregon 9720497205
Date: Thursday, July 10,December 12, 1997
Time: 2:00 p.m. local time
The Notice of the AnnualSpecial Meeting and Proxy Statement accompany this
letter. The Proxy Statement describes the business to be transacted at the meeting and
provides other information concerning the Company. The principal business to be transacted at the AnnualSpecial Meeting will be
(i) election of directors,
(ii)to consider and take action on an amendment ofto the Articles of Incorporation to
authorize a class of Preferred Stock to be designated by the Board of Directors, (iii) amendment of
the Articles of Incorporation to change the name of the Company to A-FEM Medical
Corporation, (iv) amendment of the Company's 1994 Incentive and Non-Qualified
Stock Option Plan (the "1994 Plan") to amend certain provisions of the 1994 Plan
to comply with the requirements of Section 16 of the Securities Exchange Act of
1934, as amended, Section 162(m) of the Internal Revenue Code of 1986, as
amended, and Nevada state law regarding interested director transactions and
(v) ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending December 31, 1997.Directors.
The Board of Directors recommends that stockholders vote for election of the nominated directors, amendment of the Articles of Incorporation to authorize a
class of Preferred Stock, amendment of the Articles of Incorporation to change
the name of the Company, amendment of the 1994 Plan and ratification of Arthur
Andersen LLP as the Company's independent public accountants.amendment.
We know that many of our stockholders will be unable to attend the AnnualSpecial
Meeting. Proxies are therefore solicited so that each stockholder has an
opportunity to vote on all matters that are scheduled to come before the
meeting.vote. Whether or not you plan to attend the AnnualSpecial Meeting, we
hope that you will have your stock represented by marking, signing, dating and
returning your proxy card in the enclosed envelope as soon as possible. Your
stock will be voted in accordance with the instructions you have given in your
proxy card. You may, of course, attend the AnnualSpecial Meeting and vote in person
even if you have previously returned your proxy card.
Sincerely,
William H. FlemingJ. Peter Burke
President, Chief Operating Officer
and SecretaryChief Financial Officer
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IMPORTANT
A proxy card is enclosed herewith. All stockholders are urged to complete
and mail the proxy card promptly. The enclosed envelope for return of the
proxy card requires no postage. Any stockholder attending the AnnualSpecial
Meeting may personally vote on all matters that are considered, in which
event the signed proxy will be revoked.
IT IS IMPORTANT THAT YOUR STOCK BE VOTED
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ATHENA3
A-FEM MEDICAL CORPORATION
(dba A-FEM Medical Corporation)
NOTICE OF ANNUALSPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 10,DECEMBER 12, 1997
NOTICE IS HEREBY GIVEN that the AnnualSpecial Meeting of Stockholders (the
"Annual"Special Meeting") of ATHENA Medical Corporation dba A-FEM Medical Corporation, a Nevada corporation (the
"Company"), will be held on Thursday, July 10,December 12, 1997, at 2:00 p.m. local time, at the University Club at 1225 SW SixthThe
Governor Hotel, 611 S.W. 10th Avenue, Portland, Oregon, for the following purposes:
1. To elect five directors to the Company's Board of Directors.
2. Toconsider and take
action on a proposal to amend the Company's Articles of Incorporation to
authorize a class of Preferred Stock to be designated by the Board of Directors.
3. To amend the Company's Articles of Incorporation to change the name of
the Company to A-FEM Medical Corporation.
4. To amend the Company's 1994 Incentive and Non-Qualified Plan (the "1994
Plan") to amend certain provisions of the 1994 Plan to comply with the
requirements of Section 16 of Securities Exchange Act of 1934, as amended,
Section 162(m) of the Internal Revenue Code of 1986, as amended, and Nevada
state law regarding interested director transactions.
5. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for the fiscal year ending December 31, 1997.
6. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on June 11,November 7, 1997,
will be entitled to notice of and to vote at the AnnualSpecial Meeting or any
adjournment thereof.
The Company's Proxy Statement is submitted herewith.
Financial and other
information concerning the Company is contained in the enclosed Annual Report.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUALSPECIAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUALSPECIAL MEETING, PLEASE COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE
ASSURED. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO REVOKE IT LATER
OR VOTE YOUR SHARES IN PERSON IN THE EVENT THAT YOU SHOULD ATTEND THE ANNUALSPECIAL
MEETING.
By Order of the Board of Directors
William H. Fleming,J. Peter Burke, President, Chief
Operating Officer and
SecretaryChief Financial Officer
Portland, Oregon
June [16]November , 1997
PRELIMINARY PROXY STATEMENT
ATHENA4
A-FEM MEDICAL CORPORATION
(dba A-FEM Medical Corporation)
10180 S.W. NIMBUS, SUITE J-5
PORTLAND, OREGON 97223
PROXY STATEMENT
FOR ANNUALSPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JULY 10,DECEMBER 12, 1997
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy Statement is furnished by the Board of Directors of ATHENAA-FEM
Medical Corporation, (dba A-FEM Medical Corporation), a Nevada corporation (the "Company"), to the holders of
common stock, par value $.01 per share, of the Company (the "Common Stock") in
connection with the solicitation of proxies by the Board of Directors for use at
the Company's AnnualSpecial Meeting of Stockholders (the "Annual"Special Meeting") to be held
at 2:00 p.m. local time, on Thursday, July 10,December 12, 1997, at the University Club, 1225 SW SixthThe Governor Hotel, 611 S.W.
10th Avenue, Portland, Oregon.
This Proxy Statement and the enclosed form of proxy are being mailed to
stockholders on or about [June 16]November , 1997.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of the Company's Common Stock at the close of
business on June 11,November 7, 1997, are entitled to notice of and to vote at the
AnnualSpecial Meeting. On that date, _________ shares of the Company's Common Stock
were outstanding (the "Outstanding Shares").
SOLICITATION OF PROXIES
The cost of preparing, printing and mailing this Proxy Statement and the
proxy solicited hereby has been or will be borne by the Company. In addition to
the use of the mails, proxies may be solicited by directors, officers and other
employees of the Company, without additional remuneration, in person or by
telephone or facsimile transmission. The Company will also request brokerage
firms, bank nominees, custodians and fiduciaries to forward proxy materials to
the beneficial owners of the Common Stock as of the record date and will provide
reimbursement for the cost of forwarding the proxy materials in accordance with
customary practice. Your cooperation in promptly completing, signing, dating and
returning the enclosed proxy card will help avoid additional expense.
QUORUM AND VOTING
Each Outstanding Share entitles the holder thereof to one vote uponon each matter to be
presented at the AnnualSpecial Meeting. Stockholders of the Common Stock
are not entitled to cumulative voting rights in the election of directors. A quorum, consisting of one-third of the
Outstanding Shares, must be present in person or by proxy for the transaction of
business. If a quorum is present:
(i) a nominee for electionThe amendment to the Board of Directors will be elected
by a plurality of the votes cast at the Annual Meeting by holders of the
Outstanding Shares;
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(ii) the amendment of the Articles of Incorporation, as previously amended
(the "Articles"), to authorize a class of Preferred Stock to be designated by
the Board of Directors will be approved if it receives the
affirmative vote of a majority of the Outstanding Shares;
(iii) the amendment of the Articles to change the name of the Company
to A-FEM Medical Corporation will be approved if it receives the affirmative
vote of a majority of the Outstanding Shares;
(iv) the amendment of the Company's 1994 Incentive and Non-Qualified
Stock Option Plan (the "1994 Plan") to amend certain provisions of the 1994 Plan
in order to comply with the requirements of Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") and Nevada state law
requirements regarding interested director transactions will be approved if it
receives the affirmative vote of a majority of the Outstanding Shares
represented at the Annual Meeting; and
(v) the appointment of Arthur Andersen, LLP, will be ratified if the proposal receives the affirmative
vote of a majority of the Outstanding Shares
represented at the Annual Meeting.Shares.
Abstentions and other non-votes are counted for purposes of determining whether
a quorum exists at the Annual Meeting, but have no effect on the determination
of whether a plurality exists with respect to a given nominee.Special Meeting. An abstention or other non-vote has the
effect of a vote against athe proposal. Proxies and ballots will be received and
tabulated by American Stock Transfer & Trust Company, the Company's transfer
agent.
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5
REVOCABILITY OF PROXIES
Any proxy delivered pursuant to this solicitation is revocable at the
option of the person giving it at any time before it is exercised. A proxy may
be revoked prior to its exercise by delivering to the Company's Secretary a
written notice of revocation or a duly executed proxy card bearing a later date,
or by attending the AnnualSpecial Meeting and voting in person. Attendance at the
Annual Meeting will not in and of itself constitute a revocation of a proxy.
Each proxy returned to the Company will be voted in accordance with the
instructions indicated thereon.given. If no instructions are indicated,given, the shares will be voted "FOR"
(i) election of the nominees for the Board of Directors
named in this Proxy Statement; (ii) amendment ofto the Articles to authorize a class of Preferred Stock to be
designated by the Board of Directors;
(iii) amendment of the Articles to change the name of the Company to A-FEM
Medical Corporation; (iv) amendment of the 1994 Plan; and (v) ratification of
the appointment of Arthur Andersen LLP as independent public accountants for the
fiscal year ending December 31, 1997.Directors. While the Board of Directors knows of no
other matters to be presented at the AnnualSpecial Meeting or any adjournment thereof,
all proxies returned to the Company will be voted on any such matter in
accordance with the judgment of the proxy holders.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The business and affairs of the Company are managed under the direction of
its Board of Directors. The Company's Bylaws provide that the Board of
Directors shall consist of not less than five nor more than nine members. The
Company recently amended its Bylaws to provide for a staggered board. Pursuant
to the amended Bylaws of the Company, the Board of Directors is divided into two
classes, with such classes to be as equal in number as the total number of
directors constituting the entire Board permits. After the Annual Meeting, the
Company's Board of Directors will consist of five members, with two members in
Class 1, and three members in Class 2. At the expiration of each class' term,
directors are to be elected to serve for a term of two years or until their
respective successors have been elected and qualified or until their death,
resignation or removal from office. A director elected to fill a vacancy on the
Board of Directors will be elected for the unexpired term of his or her
predecessor in office. The term of office of Class 1 and Class 2 directors are
scheduled to expire at the 1998 and
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1999 annual meetings of stockholders, respectively. Prior to the amendment to
the Bylaws, directors served for one year terms.
At the Annual Meeting, stockholders will elect two Class 1 directors to
serve until the 1998 annual meeting of stockholders or until successors are
elected and qualified and three Class 2 directors to serve until the 1999 annual
meeting of stockholders or until successors are elected and qualified. Unless
otherwise directed, the persons named in the proxy intend to cast all proxies in
favor of James E. Reinmuth and James R. Wilson to serve as Class 1 directors of
the Company and William H. Fleming, Carol A. Scott and RoseAnna Sevcik to serve
as Class 2 directors of the Company. In the event that Mr. Reinmuth, Mr.
Wilson, Mr. Fleming, Ms. Scott or Ms. Sevick should become unavailable for
election to the Board of Directors for any reason, the persons named in the
proxy have discretionary authority to vote the proxies for the election of other
nominees to be designated to fill each such vacancy by the Board of Directors of
the Company.
INFORMATION ABOUT THE NOMINEES
CLASS 1 DIRECTORS; TERM EXPIRES AT THE 1998 ANNUAL MEETING
JAMES E. REINMUTH, Ph.D., 56, has served as a director of the Company since
May 1995. Mr. Reinmuth has served as Chairman and Chief Executive Officer of
the Company since September 1996. From May 1995 to September 1996, Mr. Reinmuth
served as Treasurer of the Company. Since July 1994, Mr. Reinmuth has served as
the Charles H. Lundquist Distinguished Professor of Business at the University
of Oregon. From June 1976 until July 1994, Mr. Reinmuth served as Dean of the
College of Business at the University of Oregon. Since 1988, Mr. Reinmuth has
also served in several administrative positions within the University of Oregon.
Mr. Reinmuth also serves as president and chief executive officer of Fuji
Advanced Filtration, an industrial filter manufacturer. Mr. Reinmuth serves as
a director with the following companies: Antivirals, Inc., an Oregon-based
biotechnology company; W.E. Simon and Sons Asia Ltd., a merchant bank in Hong
Kong; Asia Capital Ltd., an investment bank in Sri Lanka; and Capital
Consultants, Inc., an investment firm.
JAMES R. WILSON, 47, has served as a director of the Company since
September 1996. Mr. Wilson has served as Treasurer of the Company since October
1996. Mr. Wilson has served as general manager of Century Building Products,
Inc., a manufacturing company since August 1995. From January 1985 to August
1995, Mr. Wilson served as sales manager and corporate treasurer in various
divisions of Speed Cut, Inc., a manufacturing company. From June 1982 to
January 1995, Mr. Wilson served as a principal of Rubicon Asset Management
Corporation, an investment analysis company. Mr. Wilson has been a licensed
real estate agent since 1982.
CLASS 2 DIRECTORS; TERM EXPIRES AT THE 1999 ANNUAL MEETING
WILLIAM H. FLEMING, Ph.D., 50, has served as a director of the Company
since June 1994. Mr. Fleming has served as the President, Chief Operating
Officer and Secretary of the Company since February 1994. He was president,
chief operating officer and a director of Athena Profem, Inc. from July 1993
until its merger with the Company in June 1994. From April 1992 to July 1993,
Mr. Fleming served as director of corporate development of AntiVirals, Inc., a
biotechnology company involved in antisense technology. From September 1987 to
April 1992, Mr. Fleming served as director of marketing, new business and
director of manufacturing for Epitope, Inc., an Oregon-based biotechnology
company. From June 1980 to December 1987, Mr. Fleming was president, CEO and
founder of Life Science Instrumentation, Inc., a developer and manufacturer of
cardiovascular devices.
ROSEANNA SEVCIK, Ph.D., 33, has served as a director of the Company since
May 1995. Ms. Sevcik has served as vice president/senior portfolio manager of
Penn Mutual, a life insurance company, since May 1996. From February 1993 to
March 1996, Ms. Sevcik served as vice president/senior portfolio manager and as
a director on the pension plans board of The Life Insurance Company of the
Southwest. From February 1990 to February 1993, Ms. Sevcik served as senior
portfolio manager/securities analyst at Securities Management and Research, an
investment management services company.
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CAROL A. SCOTT, Ph.D., 47, has served as a director of the Company since
February 1995. Ms. Scott has served as Chairman of the Faculty, Department
(School) of Management, at UCLA since 1990 and has been a professor at UCLA
since 1977. Ms. Scott is a frequent author and lecturer and has served on the
Editorial Board of the Journal of Consumer Research since 1980. Ms. Scott also
serves on the boards of Levi Strauss, Baskin Robbins, Prime Computer and
Kentucky Fried Chicken.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES.
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BOARD OF DIRECTORS COMMITTEES AND MEETINGS
The Board of Directors has established an Audit Committee, a Nominating
Committee, and a Stock Option Committee.
The Audit Committee oversees actions with respect to the Company's
accounting and financial reporting practices and provides a channel of
communication between the Board and the Company's independent auditors. The
Audit Committee consists of Carol A. Scott and [RoseAnna Sevcik]. The Audit
Committee held no meetings in 1996.
The Nominating Committee recommends nominees to be elected by the
stockholders at each annual meeting of the stockholders to the Board of
Directors, recommends individuals to fill vacancies in the Board of Directors
and recommends directors for selection to the various committees of the
Board. The Nominating Committee also considers nominees recommended by
security holders. Security holders wishing to recommend nominees for
election to the Board must submit such nominations in writing to the
Secretary of the Company within the time period set forth in the section
entitled "Proposals to Stockholders." The Nominating Committee consists of
Carol A. Scott and RoseAnna Sevcik. The Nominating Committee held no
meetings in 1996.
The Stock Option Committee administers the 1994 Plan. The Stock Option
Committee consists of RoseAnna Sevcik and Carol A. Scott. The Stock Option
Committee held two meetings in 1996.
The Board of Directors held nine meetings during 1996. Each incumbent
director serving on the Board of Directors during 1996 was present for more than
75 percent of the aggregate number of (i) all meetings of the Board of Directors
held during the year while he or she was a director and (ii) all meetings of
committees on which he or she served.
COMPENSATION OF DIRECTORS
Directors are reimbursed for expenses incurred in attending meetings of the
Board of Directors. In the past, certain directors have received options or
warrants to purchase shares of the Company's Common Stock in consideration of
their services. See "Security Ownership of Certain Beneficial Owners and
Management."
MANAGEMENT INFORMATION
EXECUTIVE OFFICERS
The following discussion sets forth information about the executive
officers of the Company who are not directors.
ROBERT L. BUCK, Ph.D., 45, has served as Vice President - Technical
Operations of the Company since June 1994. Dr. Buck is a Major in the U.S. Army
Reserves and serves as a company commander in the 104th Training Division. From
August 1992 to January 1994, Dr. Buck served as vice president of Research and
Development for CELx, a subsidiary of IMRE Corporation, a cancer diagnostic
company. From April 1986 to August 1992, he served as director of research and
development for International BioClinical, a medical diagnostic company and from
April 1984 to April 1986, he served as vice president of research and
development for Modern Diagnostics, a medical diagnostic company. Dr. Buck has
been involved in the development of over 40 diagnostic products that have been
introduced into the market, and has published several manuscripts in medical and
scientific journals.
PETER BURKE, 52, has served as Chief Financial Officer and Executive Vice
President of the Company since May 19, 1997. Mr. Burke was hired as a financial
consultant for the Company in December 1996. In 1984, Mr. Burke formed New
England Management Company (NEMCO), a management consulting firm which
specializes in strategic planning, operations, marketing and finance.
Concurrently, from April 1986 to August 1990, Mr. Burke served as executive vice
president and chief financial officer for Northwest Pipe & Casing Company, a
manufacturing company. From July 1981 to May 1984, Mr. Burke served as chief
executive officer and chief financial officer for Shaw Surgical Company, a
medical supply distribution company.
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EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth certain information regarding the
compensation paid to the Chief Executive Officer and any other corporate
officers who received in excess of $100,000 in compensation in the fiscal
year ended December 31, 1996 (the "Named Executive Officers") for each of the
fiscal years ended December 31, 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
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OTHER ANNUAL SECURITIES
NAME AND PRINCIPAL SALARY COMPENSATION UNDERLYING
POSITION YEAR ($) ($) OPTIONS/WARRANTS (#)
------------------------ ---------- ------------ ----------------- ---------------------
John F. Perry (1).................. 1996 145,000 -- --
Chief Executive Officer 1995 145,000 10,000 --
1994 119,983 3,000 150,000
James E. Reinmuth (2).............. 1996 7,500 -- 250,000
Chief Executive Officer 1995 -- -- 50,000
William H. Fleming................. 1996 115,000 -- --
President, COO and Secretary 1995 115,000 -- --
1994 102,775 5,904 150,000
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(1) Mr. Perry resigned as Chief Executive Officer of the Company in
September 1996. Mr. Perry served as Chief Executive Officer from February
1994 to September 1996.
(2) Mr. Reinmuth has served as Chief Executive Officer of the Company since
September 1996.
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GRANT OF STOCK OPTIONS/WARRANTS
The following table sets forth certain information regarding
options/warrants granted to the Named Executive Officers during the fiscal year
ended December 31, 1996.
OPTION/WARRANT GRANTS IN FISCAL 1996
INDIVIDUAL GRANTS
--------------------------------------------------------------------- POTENTIAL REALIZABLE
VALUE AT ASSURED
PERCENT OF ANNUAL RATES
NUMBER OF TOTAL OPTIONS/ OF STOCK PRICE
SHARES WARRANTS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION/WARRANT TERM(1)
OPTION GRANTS/ EMPLOYEES PRICE EXPIRATION ------------------------------------
NAME WARRANTS (#) IN FISCAL YEAR ($/SHARE) DATE 0%($) 5%($) 10%($)
------------- ----------------- -------------------- ------------- ---------------- ----------- ---------- -----------
James E. Reinmuth 250,000 57.5% 5.00 6/5/01 $31,250 $385,000 $812,500
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(1) Based on the fair market value of the Common Stock of $5.125 per share at
June 5, 1996.
EXERCISE OF STOCK OPTIONS AND YEAR-END OPTION/WARRANT VALUES
The following table sets forth certain information regarding options and
warrants of the Named Executive Officers outstanding as of December 31, 1996.
AGGREGATED OPTION EXERCISES IN 1996
AND YEAR-END OPTION/WARRANT VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
VALUE OPTIONS/WARRANTS AT OPTIONS/WARRANTS AT
SHARES REALIZED DECEMBER 31, 1996 DECEMBER 31, 1996(5)
ACQUIRED ON (1) ----------------------------------- ------------------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------ ----------------- ------------ ----------------- ----------------- ---------------- -------------------
John F. Perry -- -- 729,640(2) 37,500(2) $2,433,074 0
James E. Reinmuth -- -- 275,000(3) 25,000(3) $23,313 $23,313
William H. Fleming 40,000 $176,450 669,640(4) 37,500(4) $2,196,524 0
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(1) Calculated based on the difference between the option exercise price and
the fair market value of the Common Stock on June 7, 1996 ($5.25 per share)
and December 23, 1996 ($3.8125).
(2) Of the 729,640 exercisable options, 617,140 option shares were exercisable
pursuant to incentive stock options at an exercise price of $.12 per share
and 112,500 option shares were exercisable pursuant to incentive stock
options at an exercise price of $5.13 per share. Of the 37,500
unexercisable option shares, none of these shares will be exercisable due
to termination of Mr. Perry's employment.
(3) Of the 275,000 exercisable options/warrants, 25,000 option shares were
exercisable pursuant to nonqualified stock options at an exercise price of
$3.13 per share and 250,000 shares were exercisable pursuant to warrants to
purchase Common Stock issued to Mr. Reinmuth June 1996, at an exercise
price of $5.00 per share. Of the 25,000 unexercisable option shares, all
such shares will be exercisable pursuant to nonqualified stock options at
an exercise price of $3.13 per share.
(4) Of the 669,640 exercisable options, 557,140 option shares were exercisable
pursuant to incentive stock options at an exercise price of $.12 per share
and 112,500 option shares were exercisable pursuant to incentive stock
options at an
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exercise price of $5.13 per share. Of the 37,500 unexercisable option
shares, all such shares will be exercisable pursuant to incentive stock
options at $5.13 per share.
(5) Based on the fair market value of the Common Stock of $4.0625 per share at
December 31, 1996.
EMPLOYMENT AGREEMENTS
The Company's predecessor entered into an employment agreement with
William H. Fleming on July 5, 1993, as amended December 31, 1996 (the "Fleming
Employment Agreement"). The term of the Fleming Employment Agreement expires
June 30, 1998. The Company may terminate Mr. Fleming's employment with or
without cause. Pursuant to the terms of the Fleming Employment Agreement, in
the event of termination of employment by the Company, Mr. Fleming will be
entitled to receive his then current annual base salary until the end of the
term of this agreement. Mr. Fleming may terminate employment with the Company
upon one month's written notice.
The Company's predecessor entered into an employment agreement with John F.
Perry on July 5, 1993, as amended September 6, 1996 (the "Perry Employment
Agreement"). The terms of the Perry Employment Agreement are substantially
identical to the Fleming Employment Agreement except for the starting base
salary. Mr. Perry's employment was terminated February 28, 1997. Pursuant to
the terms of the Perry Employment Agreement, Mr. Perry will continue to receive
his annual base salary of $145,000 until June 1998.
The Company entered into an employment agreement with James E. Reinmuth
dated effective September 6, 1996 (the "Reinmuth Employment Agreement") with
respect to Mr. Reinmuth's services as Chairman of the Company's Board and Chief
Executive Officer. The Reinmuth Employment Agreement provides for a salary of
$2,500 per month. The Reinmuth Employment Agreement terminates on (i) 30 days
prior notice by either party, (ii) the sale, transfer or disposition of all or
substantially all of the assets of the Company, (iii) Mr. Reinmuth's failure to
comply with the Board's directions, (iv) commission of fraud by Mr. Reinmuth
with respect to his duties to the Company, (iv) failure or refusal by
Mr. Reinmuth to perform any provision of the Reinmuth Employment Agreement,
(iv) Mr. Reinmuth's permanent disability or (vii) Mr. Reinmuth's death.
The Company entered into an employment agreement with James R. Wilson dated
effective May 1, 1997 (the "Wilson Employment Agreement") with respect to
Mr. Wilson's services as the Company's Treasurer. Mr. Wilson will be a
part-time employee of the Company and will receive a salary of $5,000 per month
pursuant to the terms of the Wilson Employment Agreement. The termination
provisions of the Wilson Employment Agreement are identical to those set forth
in the Reinmuth Employment Agreement.
The Company entered into an employment agreement with J. Peter Burke
dated effective April 28, 1997 (the "Burke Employment Agreement") with
respect to Mr. Burke's services as the Company's Executive Vice President and
Chief Financial Officer. Pursuant to the terms of the Burke Employment
Agreement, Mr. Burke will receive an annual salary $125,000. The termination
provisions of the Burke Employment Agreement are identical to those set forth
in the Reinmuth Employment Agreement, except that in the event Mr. Burke is
terminated, other than for cause or due to permanent disability or death, he
will be entitled to receive an amount equal to 50% of his then-current annual
salary.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership as of May 30, 1997[November 7, 1997] of the Company's Common Stock by (i) each
beneficial owner of more than 5 percent of the Common Stock, (ii) the NamedCompany's
Senior Executive Officers, (iii) each director and director nominee of the Company and (iv) all
directors and executive officers as a group. Each person named in the table has
sole investment and voting power with respect to the shares set forth opposite
his or her name, except as otherwise noted.
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NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF CLASS
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OUTSTANDING
---------------- -------------------- -----------
William H. Fleming 788,925 (2) 6.5%
10180 SW Nimbus Ave.,
Suite J-5
Portland, OR 97223
John F. Perry 735,710 (3) 6.4%
2451 S. Ponte Vedra
Blvd.
Ponte Vedra, FL 32082
James E. Reinmuth 499, 500 4.2%
5171 Solar Heights Drive
Eugene, OR 97405
Carol A. Scott 20,000 (5) *
1834 Park Blvd.
Palo Alto, CA 94306
RoseAnna Sevcik 37,500 (6) *
1736 Aidenn Lair
Dresher, PA 19025
James R. Wilson 325,928 (7) 2.8%
3198 Powder River Drive
Eugene, OR 97408
Robert L. Buck 278,125 (8) 2.4%
10180 SW Nimbus Ave.,
Suite J-5
Portland, OR 97223
Capital Consultants, Inc. 3,849,652 (9)
AMOUNT AND NATURE OF PERCENT OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OUTSTANDING
---------------------------------------- ----------------------- ----------------
William H. Fleming...................... [788,925(2)] [6.5%]
10180 SW Nimbus Ave., Suite J-5
Portland, OR 97223
Vice Chairman
James E. Reinmuth....................... [499,500(3)] [4.2%]
5171 Solar Heights Drive
Eugene, OR 97405
Chairman and Chief Executive Officer
Carol A. Scott.......................... [20,000(4)] *
1834 Park Blvd.
Palo Alto, CA 94306
Director
RoseAnna Sevcik......................... [37,500(5)] *
1736 Aidenn Lair
Dresher, PA 19025
Director
James R. Wilson......................... [325,928(6)] [2.8%]
3198 Powder River Drive
Eugene, OR 97408
[Vice President and Director]
Robert L. Buck.......................... [278,125(7)] [2.4%]
10180 SW Nimbus Ave., Suite J-5
Portland, OR 97223
Vice President
J. Peter Burke.......................... [30,000(8)]
10180 SW Nimbus Avenue, Suite J-5
Portland, OR 97223
President, Chief Operating Officer and
Chief Financial Officer
Capital Consultants, Inc................ [3,849,652(9)] [33.5%]
2300 SW First Avenue, Suite 200
Portland, OR 97201
Cort MacKenzie Securities, Inc.......... [1,304,085(10)] [10.3%] 33.5%
2300 SW First Avenue,
Suite 200
Portland, OR 97201
Cort MacKenzie 1,304,085 (10) 10.5%
Securities, Inc.
5335 SW Meadows Road, Suite 270
Lake Oswego, OR 97035
-2-
6
AMOUNT AND NATURE OF PERCENT OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OUTSTANDING
---------------------------------------- ------------ ------
John F. Perry........................... [735,710] [6.4%]
2451 S. Ponte Vedra Blvd.
Ponte Vedra, FL 32082
All directors and officers 1,974,978 (11) 15.1% as a group
(7 persons)........................... [1,974,978(11)] [15.1%]
- ----------------------------------
* Less than 1%.
-9-
(1) "Beneficial Ownership" is defined pursuant to Rule 13d-3 of the Exchange
Act, and generally means any person who directly or indirectly has or
shares voting or investment power with respect to a security. A person
shall be deemed to be the beneficial owner of a security if that person has
the right to acquire beneficial ownership of such security within 60 days,
including, but not limited to, any right to acquire such security through
the exercise of any option or warrant or through the conversion of a
security. Any securities not outstanding that are subject to such options
or warrants shall be deemed to be outstanding for the purpose of computing
the percentage of outstanding securities of the class owned by such person,
but shall not be deemed to be outstanding for the purpose of computing the
percentage of the class owned by any other person.
(2) Includes 669,640[669,640] shares subject to option exercisable within 60 days
after MaySeptember 30, 1997 and shares beneficially owned by various members
of William H. Fleming's family including 10,000 owned by his son, 10,000
owned by his daughter and 1,000 owned by his father. Mr. Fleming disclaims
the beneficial ownership of the shares held by his son, daughter and
father.
(3) Mr. Perry resigned as a director in February 1997.
(4) Includes 37,500[37,500] shares subject to options exercisable within 60 days
after MaySeptember 30, 1997, 410,000 shares issuable within 60 days after
MaySeptember 30, 1997 upon the exercise of warrants to purchase Common Stock and 5,000 shares
owned by James E. Reinmuth's brother. Mr. Reinmuth disclaims beneficial
ownership of the shares held by his brother.
(5)Stock.
(4) Includes 20,000[20,000] shares subject to options exercisable within 60 days
after MaySeptember 30, 1997.
(6)(5) Includes 37,500[37,500] shares subject to options exercisable within 60 days
after MaySeptember 30, 1997.
(7)(6) Includes 12,500[12,500] shares subject to options exercisable within 60 days
after MaySeptember 30, 1997 and 160,000 shares issuable within 60 days after
MaySeptember 30, 1997 upon exercise of a warrant to purchase Common Stock.
(8)(7) Includes 278,125[278,125] shares subject to options exercisable within 60 days
after MaySeptember 30, 1997.
(8) Includes [25,000] shares subject to options exercisable within 60 days of
September 30, 1997.
(9) Includes 50,000[50,000] shares issuable within 60 days after MaySeptember 30, 1997
upon exercise of a warrant to purchase Common Stock and all shares with
respect to which Capital Consultants, Inc. acts as an agent. Capital
Consultants, Inc. is an investment advisor registered under Section 203 of
the Investment Advisors Act of 1940 and has on behalf of certain of its
clients sole voting power and sole investment power with respect to these
shares.
(10) Includes 642,250[642,250] shares issuable after MaySeptember 30, 1997 upon exercise
of warrants to purchase Common Stock, 308,750[308,750] shares and 270,000[270,000] shares
issuable after MaySeptember 30, 1997 upon exercise of warrants held by Cort
MacKenzie & Thomas, Inc. and Thomas C. Stewart, respectively, to purchase
Common Stock.
(11) Includes 1,080,265 shares subject to options exercisable within 60 days
after MaySeptember 30, 1997 and 570,000[570,000] shares issuable within 60 days after
MaySeptember 30, 1997 upon exercises of warrants to purchase Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that the Company's officers,
directors and persons who own more than 10 percent of the Common Stock file with
the Securities and Exchange Commission (the "SEC") initial reports of beneficial
ownership on Form 3 and reports of changes in beneficial ownership of Common
Stock and other equity securities of the Company on Form 4. Officers,
directors, and greater than 10 percent stockholders of the Company are required
by SEC regulations to furnish to the Company copies of all Section 16(a) reports
that they file. To the Company's knowledge, based solely on reviews of such
reports furnished to the Company and written representations that no other
reports are required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10 percent beneficial owners were complied
with during the fiscal year ended December 31, 1996.
-10--3-
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Under a license agreement for the Company's Padette, the Company is
obligated to pay a royalty of 3% to 5% to Dr. Shalom Hirschman, a developer of
the Padette and a stockholder of the Company, on sales of the Padette, until the
expiration of his patents, at various dates through February 1998. The royalty
percentage decreases as sales increase. All royalty fees payable will be
calculated as a component of the cost to manufacture the Padette interlabial
pads and thus reflected in the product's pricing.7
PROPOSAL NO. 2 -1 -- APPROVAL OF AMENDMENT TO THE ARTICLES TO AUTHORIZE A
CLASS OF PREFERRED STOCK TO BE DESIGNATED BY THE BOARD OF DIRECTORS
The Company's Articles currently authorizesauthorize issuance of 33,000,000 shares of
Common Stock. The Board of Directors has adopted a resolution to amend the
Articles to authorize a class of 10,000,000 shares of Preferred Stock, $.01 par
value, to be issued from time to time in one or more series, in any manner
permitted by law, as determined from time to time by the Board of Directors. The
text of the Amendment to the Articles is set forth as Appendix 1 to this Proxy Statement.proxy
statement.
Publicly held companies, such as the Company, often have a capital
structure which includes Preferred Stock which may be issued from time to time
in order to respond to financing needs. The Company has no plans to issue
preferred stock at this time. However, the Company is seeking to raise
approximately $7,000,000 to fund the roll-out of its inSync miniform in the
Northwest Region of the United States. Although the Company does not currently
have definitive arrangements to secure this financing, the Company believes that
the ability to issue preferred stock may make it easier to raise those funds.
The terms of the Preferred Stock cannot be stated or estimated at this
time
because no offering of the Preferred Stock is contemplated in the proximate
future.time. The Board of Directors will have the authority to fix and determine the
rights and preferences of the shares of any series of Preferred Stock which is
established, including dividends, conversion prices, voting rights, redemption
prices, maturity dates and similar matters without further action by the
stockholders. Publicly held companies, such as the Company, often have a capital
structure which includes Preferred Stock which may be issued from time to time
in order to respond to financing needs. The Board of Directors believebelieves that it is in the Company's best
interest to havecreate a varietyclass of financing alternatives available to
allow the Company to address its capital requirements in rapidly changing
capital markets.Preferred Stock.
The potential issuance of Preferred Stock may have the effect of delaying, deferring
or preventing a change in control of the Company, may discourage bids for the
Common Stock at a premium over the market price of the Common Stock and may
adversely affect the market price of, and the voting and other rights of the
holders of Common Stock. The Company has no current plans to issue shares of
Preferred Stock.
The Company is governed by Nevada law, including the provisions of Chapter
78 of Nevada Revised Statutes. In general, Section 78.438 prohibits a resident
domestic Nevada corporation from engaging in a "combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the combination is
approved in a prescribed manner. "Combination" includes mergers, asset sales and
other transactions resulting in a financial benefit to the interested
stockholder. An "interested stockholder" is a person who is the beneficial
owner, directly or indirectly, of 10% or more of the corporation's voting stock
or who is an affiliate or associate of the corporation and at any time within
three years prior to the date in question was the beneficial owner, directly or
indirectly, of 10% or more of the corporation's voting stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE ARTICLES TO AUTHORIZE A CLASS OF PREFERRED STOCK TO BE DESIGNATED BY THE
BOARD OF DIRECTORS
PROPOSAL NO. 3 - APPROVAL OF AMENDMENT TO THE ARTICLES TO CHANGE THE NAME
OF THE COMPANY TO A-FEM MEDICAL CORPORATION
The Company's Articles state the Company's name as ATHENA MEDICAL
CORPORATION. The Board of Directors has adopted a resolution to change the
Company's name to A-FEM Medical Corporation because the Company has received
notice from another company that such other company has the prior right to use
the "ATHENA" name. The Company has recently been doing business under the name
A-FEM Medical
-11-
Corporation. The change of the Company's name requires an amendment to the
Articles, which amendment must be approved by the Company's stockholders. The
Company does not believe the name change will have a material impact on the
Company because, to date, the Company has not prominently featured the "Athena"
name on its products.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE ARTICLES TO CHANGE THE NAME OF THE COMPANY TO A-FEM MEDICAL CORPORATION
PROPOSAL NO. 4 - APPROVAL OF AMENDMENTS TO THE COMPANY'S
1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
DESCRIPTION OF PLAN
The 1994 Plan is being amended to add certain provisions with respect to
the administration of the 1994 Plan by "nonemployee directors" as required by
Rule 16b-3 under the Exchange Act and "outside directors" as contemplated by
Section 162(m) of the Code. Grants to individual participants under the 1994
Plan are being limited to the extent required under Section 162(m) to 500,000
shares of Common Stock in any one fiscal year. In addition, the Company is
reinstating certain formula awards to members of the Committee which administers
the 1994 Plan.
Under the 1994 Plan, the Company may grant incentive stock options (ISOs),
nonqualified stock options (NSOs), stock bonuses, restricted stock, stock
appreciation rights, cash bonus rights, performance units, foreign qualified
grants and formula awards, separately or in combination.
An aggregate of 3,300,000 shares (subject to adjustment by reason of any
reorganization, merger, consolidation, plan of exchange, recapitalization,
reclassification, stock split-up, combination of shares or dividends payable in
shares of the Company's Common Stock) is currently reserved for issuance
pursuant to awards under the 1994 Plan. As of May 30, 1997, an aggregate of
2,763,628 shares were subject to outstanding stock options and 536,372 shares
were available for grant. The exercise prices for currently outstanding stock
options range from $.12 to $5.13 per share. Options for 690,640 shares have
been exercised under the 1994 Plan. No grants of stock bonuses, restricted
stock, stock appreciation rights, cash bonus rights, performance units, foreign
qualified grants or formula awards have been made under the 1994 Plan.
ELIGIBILITY
Awards may be granted under the 1994 Plan to selected employees, officers,
directors, nonemployee agents, consultants, advisors, persons involved in the
sale or distribution of the Company's products and independent contractors of
the Company; provided, however, that only employees of the Company may be
awarded ISOs. As of December 31, 1996, approximately 20 persons were eligible
to receive awards under the 1994 Plan. Since awards under the 1994 Plan are
discretionary, awards thereunder for the current fiscal year are not presently
determinable. In the fiscal year ended December 31, 1996, options to purchase
an aggregate of 50,000 shares of Common Stock were granted to James R. Wilson, a
director of the Company, and options to purchase an aggregate of 125,000 shares
of Common Stock were granted to certain other employees of the Company, at
exercise prices ranging from $2.13 to $4.69. No executive officers received any
awards under the 1994 Plan for the fiscal year ended December 31, 1996.
Mr. Reinmuth and Mr. Wilson were granted warrants outside the plan to purchase
410,000 shares of Common Stock and 160,000 shares of Common Stock, respectively,
in 1995 and 1996.
ADMINISTRATION
The 1994 Plan may be administered by the Company's Board of Directors or a
Committee approved by the Board of Directors (the "Plan Administrator"). The
1994 Plan is currently administered by a Committee of the
-12-
Board of Directors, which has the sole authority, subject to the provisions of
the 1994 Plan, to determine the persons to whom awards will be made and the size
and terms of the awards.
TERMS AND CONDITIONS OF OPTIONS
Options granted under the 1994 Plan may be ISOs or NSOs. The Plan
Administrator determines the number of shares subject to the option, the option
price, the period of the option, the exercise time and whether an option is an
ISO or NSO; provided, however, that with regard to ISOs, the aggregate fair
market value of shares (determined at the time the ISO is granted) with respect
to which ISOs are exercisable for the first time by an employee during any
calendar year may not exceed $100,000. With regard to ISOs, the exercise price
cannot be less than the fair market value of the Common Stock on the date of
grant or 110 percent of such fair market value in the case of ISOs granted to
individuals who hold 10 percent or more of the Common Stock on the date of
grant. Upon exercise of any option, payment for shares as to which an option is
being exercised may be made in cash, or with the consent of the Board, in shares
of the Company's Common Stock valued at fair market value, restricted stock,
performance or other contingent awards denominated in either stock or cash,
promissory notes and other forms of consideration.
No option will be exercisable more than 10 years from the date on which it
is granted and an ISO granted to any individual who holds 10 percent or more of
the Common Stock on the date of grant will not be exercisable more than five
years from the date on which it is granted.
Options granted under the 1994 Plan are non-transferable by any optionee
other than by will or the laws of descent and distribution or with respect to
NSOs, as otherwise determined by the Plan Administrator or pursuant to a
qualified domestic relations order as defined in the Code or ERISA.
STOCK BONUSES
The Plan Administrator is authorized to award shares to participants on
such terms and conditions and subject to such restrictions, if any (whether
based on period of service or performance goals), as the Plan Administrator may
determine. Restrictions may include restrictions concerning transferability and
forfeiture of the shares awarded. The Plan Administrator may require the
recipient to sign an agreement as a condition of the award, but may not require
monetary consideration other than amounts necessary to satisfy any tax
withholding requirements.
RESTRICTED STOCK
The Plan Administrator may issue shares of restricted stock under the 1994
Plan for such consideration (including promissory notes and services) as
determined by the Plan Administrator. All restricted stock issued will be
subject to a purchase agreement which will be executed by the Company and the
prospective recipient of the shares and may contain any terms, conditions,
restrictions, representations and warranties required by the Plan Administrator.
The restrictions may include limitations concerning transferability, repurchase
by the Company and forfeiture of the shares issued.
STOCK APPRECIATION RIGHTS
A stock appreciation right gives its holder the right to receive, upon
exercise, an amount equal in value to the excess of the fair market value on the
date of exercise of one share of Common Stock over its fair market value on the
date of grant, multiplied by the number of shares covered by the stock
appreciation right that is surrendered. The appreciation distribution may be
paid in Common Stock valued at fair market value, in cash, or partly in Common
Stock and partly in cash, as determined by the Plan Administrator. The Plan
Administrator may withdraw any stock appreciation right granted under the 1994
Plan at any time and may impose any conditions upon the exercise of the stock
appreciation right. The provisions of the 1994 Plan regarding
nontransferability of options applies equally to stock appreciation rights.
-13-
CASH BONUS RIGHTS
Cash bonus rights may be granted under the 1994 Plan in connection with
options, stock appreciation rights, stock bonuses and shares sold under the 1994
Plan. Cash bonus rights will be subject to rules, terms and conditions as the
Plan Administrator may prescribe. A cash bonus right granted in connection with
an option will entitle an optionee to a cash bonus when the related option is
exercised in whole or in part. A cash bonus right granted in connection with a
stock bonus or stock purchase will entitle the recipient to a cash bonus payable
when the stock bonus is awarded or when shares are purchased, respectively, or
when restrictions, if any, to which the stock is subject lapse.
PERFORMANCE UNITS
The Plan Administrator may grant performance units consisting of monetary
units which may be earned in whole or in part if the Company achieves certain
goals established by the Plan Administrator over a designated period of time not
to exceed 10 years. The goals established by the Plan Administrator may include
earnings per share, return on stockholders' equity, return on invested capital
and such other goals as may be established by the Plan Administrator. Payment
of an award earned may be in cash or in Common Stock or a combination of both,
and may be made when earned, or vested and deferred, as the Plan Administrator
determines. The provisions of the 1994 Plan regarding nontransferability of
options applies equally to performance units.
FOREIGN QUALIFIED GRANTS
Awards under the 1994 Plan may be awarded to qualified persons residing in
foreign jurisdictions as the Plan Administrator may determine from time to time.
The Plan Administrator may adopt such supplements to the 1994 Plan as may be
necessary to comply with the applicable laws of such foreign jurisdictions and
to afford participants favorable treatment under such laws.
FORMULA AWARDS
Each director appointed to the Committee will be granted NSOs for
30,000 shares of Common Stock ("Formula Options") on the date such director is
appointed and further grants of NSOs for 30,000 shares of Common Stock on the
third anniversary of the grant of such member's most recent grant; provided,
however, that the grant to a newly appointed member will be reduced on an option
for option basis by the amount of any option grants accepted by such appointee
from the Company within the prior 24-month period. The Formula Options shall
have an exercise price per share equal to the fair market value of Common Stock
on the date of grant and will vest in three equal installments on each of the
first three anniversaries of the date of grant.
AMENDMENT AND ACCELERATION
The 1994 Plan may be amended at any time by the Plan Administrator, subject
to approval by stockholders of any amendment that (i) materially increases the
total number of shares subject to the 1994 Plan; (ii) materially modifies the
class of eligible employees under the 1994 Plan or (iii) effects a change
relating to ISOs which is inconsistent with the Code, ERISA, or the rules and
regulations adopted thereunder. All options and stock appreciation rights
outstanding under the 1994 Plan will become exercisable in full for the
remainder of their terms upon certain events, including a consolidation, merger
or plan of exchange involving the Company pursuant to which Common Stock is
converted into cash; any sale, lease, exchange or other transfer of all or
substantially all the assets of the Company; any tender or exchange offer other
than by the Company in which at least 20 percent of the outstanding Common Stock
is purchased and certain changes in the equity ownership of the Company or
composition of the Board of Directors.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material federal income tax
consequences of participation in the 1994 Plan. The discussion is general in
nature and does not address issues related to the tax circumstances of
-14-
any particular participant in the 1994 Plan. The discussion is based on federal
income tax laws in effect on the date hereof and is, therefore, subject to
possible future changes in law. The discussion does not address state, local or
foreign tax consequences. Under present law and regulations, no income will be
recognized by a participant upon the grant of stock options, stock appreciation
rights, and other stock-based awards or performance awards under the 1994 Plan.
NON-QUALIFIED STOCK OPTIONS. Upon the exercise of an NSO, an optionee
recognizes taxable ordinary income equal to the difference between the exercise
price for the shares and the fair market value of the shares on the date of
exercise.
INCENTIVE STOCK OPTIONS. An optionee does not recognize income upon the
exercise of an ISO, except that the excess of the fair market value of the
shares at the time of exercise over the option price will be income for purposes
of calculating the optionee's alternative minimum tax, if any. An option loses
its status as an ISO if the optionee exercises the ISO (i) more than three
months after the optionee terminates employment or retires for reasons other
than death or disability or (ii) more than one year after the optionee
terminates employment because of disability. If an optionee does not make a
"disqualifying disposition" (defined below) of an ISO, the gain, if any, upon a
subsequent sale (i.e., the excess of the proceeds received over the option
price) will be long-term capital gain.
For shares acquired through exercise of an ISO, a "disqualifying
disposition" is a transfer of the shares (i) within two years after the grant of
the ISO or (ii) within one year after the transfer of the shares to the optionee
pursuant to the ISO's exercise. If the optionee makes a disqualifying
disposition, the optionee generally will recognize income in the year of the
disqualifying disposition equal to the excess of the amount received for the
shares over the option price. Of that income, the portion equal to the excess
of the fair market value of the shares at the time the ISO was exercised over
the option price will be ordinary income and the balance, if any, will be
long-term or short-term capital gain, depending on whether the shares were sold
more than one year after the ISO was exercised. If, however, the optionee sells
the shares to an unrelated party at a price that is below the fair market value
of the shares at the time the ISO was exercised and the sale is a disqualifying
disposition, the amount of ordinary income will be limited to the amount
realized on the sale over the option price.
RESTRICTED STOCK AWARDS. A participant who receives an award of restricted
stock under the 1994 Plan generally will recognize ordinary income at the time
at which the restrictions on such shares (the "Restrictions") lapse, in an
amount equal to the excess of (i) the fair market value of such shares at the
time the Restrictions lapse, over (ii) the price, if any, paid for such shares.
If the participant makes an election with respect to such shares under Section
83(b) of the Code not later than 30 days after the date shares are transferred
to the participant pursuant to such award, the participant will recognize
ordinary income at the time of transfer in an amount equal to the excess of
(i) the fair market value of the shares covered by the award (determined without
regard to any restriction other than a restriction which by its terms will never
lapse) at the time of such transfer over (ii) the price, if any, paid for such
shares.
A participant's tax basis in shares received pursuant to a restricted stock
award granted under the 1994 Plan will be equal to the sum of the price paid for
such shares, if any, and the amount of ordinary income recognized by such
participant with respect to the transfer of such shares or the lapse of the
Restrictions thereon. The participant's holding period for such shares for
purposes of determining gain or loss on a subsequent sale will begin immediately
after the transfer of such shares to the participant, if a Section 83(b)
election is made with respect to such shares, or immediately after the
Restrictions on such shares lapse, if no Section 83(b) election is made.
If, subsequent to the lapse of Restrictions on his or her shares, the
participant sells such shares, the difference, if any, between the amount
realized from such sale and the tax basis of such shares to the holder will be
taxed as long-term or short-term capital gain or loss, depending on whether the
participant's holding period for such shares exceeds the applicable holding
period at the time of sale and provided that the participant holds such shares
as a capital asset at such time.
-15-
If a Section 83(b) election is made and, before the Restrictions on the
shares lapse, the shares which are subject to such election are resold to the
Company or are forfeited, (i) no deduction would be allowed to such participant
for the amount included in the income of such participant by reason of such
Section 83(b) election, and (ii) the participant would realize a loss in an
amount equal to the excess, if any, of the amount paid for such shares over the
amount received by the participant upon such resale or forfeiture (which loss
would be a capital loss if the shares are held as a capital asset at such time).
In such event, the Company would be required to include in its income the amount
of any deduction previously allowable to it in connection with the transfer of
such shares.
OTHER AWARDS. Upon payment to a participant in settlement of a stock
option or pursuant to the exercise of stock appreciation rights or pursuant to
other stock-based awards or a performance award, the participant will recognize
taxable ordinary income in an amount equal to the cash and/or fair market value
of the Common Stock received.
Special rules apply to a director or officer subject to liability under
Section 16(b) of the Exchange Act.
In all the foregoing cases the Company will be entitled to a deduction at
the same time and in the same amount as the participant recognizes ordinary
income, subject to the following limitations. Under Section 162(m) of the Code,
certain compensation payments in excess of $1 million are subject to a
limitation on deductibility of the Company. The limitation on deductibility
applies with respect to that portion of a compensation payment for a taxable
year in excess of $1 million to either the Company's Chief Executive Officer or
any one of the other four most highly compensated executive officers. Certain
performance-based compensation is not subject to the limitation on
deductibility. Options and stock appreciation rights can qualify for this
performance-based exception, but only if they are granted at fair market value,
the total number of shares that can be granted to an executive for any period is
stated, and stockholder and Board approval is obtained. Restricted stock does
not satisfy the definition of performance-based compensation unless the lapse of
the restriction period is based on the attainment of specified performance goals
approved by the Company's stockholders. The option, stock appreciation right
and performance award portions of the 1994 Incentive Plan have been drafted to
allow compliance with those performance-based criteria.
As of ___________________, 1997, the last reported sale price per share of
Common Stock on the Pink Sheets of the National Quotation Bureau was $_______.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDED AND
RESTATED 1994 PLAN TO AMEND CERTAIN PROVISIONS OF THE 1994 PLAN TO COMPLY WITH
THE REQUIREMENTS OF SECTION 16 OF THE EXCHANGE ACT, SECTION 162(m) OF THE CODE
AND NEVADA STATE LAW REGARDING INTERESTED DIRECTOR TRANSACTIONS.
PROPOSAL NO. 5 - RATIFICATION OF THE
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors will request that the stockholders ratify the
appointment of Arthur Andersen LLP as independent public accountants to examine
the financial statements of the Company for the fiscal year ending December 31,
1997. A representative of Arthur Andersen LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if he or she desires to do
so, and will be available to respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE
COMPANY.
-16-
PROPOSALS OF STOCKHOLDERS
Any stockholder wishing to have a proposal considered for inclusion in the
proxy materials for the Company's 1998 Annual Meeting of Stockholders must set
forth such proposal in writing and file it with the Secretary of the Company no
later than February 13, 1998.
OTHER BUSINESS
At the date of this Proxy Statement, management knows of no other business
that may properly come before the AnnualSpecial Meeting. However, if any other matters
properly come before the meeting, the persons named in the enclosed form of
proxy will vote the proxies received in response to this solicitation in
accordance with their best judgment on such matters.
FINANCIAL INFORMATION
THE COMPANY'S 1997 ANNUAL REPORT TO STOCKHOLDERS ACCOMPANIES THESE
MATERIALS. COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB, AS AMENDED,
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 MAY BE OBTAINED FROM THE COMPANY
WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY. REQUESTS SHOULD BE DIRECTED
TO THE SECRETARY, ATHENA MEDICAL CORPORATION, 10180 S.W. NIMBUS AVENUE, SUITE
J-5, PORTLAND, OREGON 97223.
By Order of the Board of Directors
-------------------------------------------------------
William H. Fleming,J. Peter Burke
President, Chief Operating Officer
and Secretary
June [16]Chief Financial Officer
November , 1997
-17--4-
8
APPENDIX 1
AMENDMENT TO THE ARTICLES OF INCORPORATION
OF ATHENA MEDICAL CORPORATION
Article First of the Articles of Incorporation shall be deleted in its
entirety and the following substituted therefor.
FIRST. The name of the corporation is A-FEM Medical Corporation.
Article Fourth of the Articles of Incorporation shall be deleted in its
entirety and the following substituted therefor.
FOURTH. The corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares of stock which the corporation shall have authority to issue shall be
43,000,000, consisting of 33,000,000 shares of Common Stock with a par value of
$.01 per share, and 10,000,000 shares of Preferred Stock with a par value of
$.01 per share.
COMMON STOCK.Common Stock. Subject to any preferential or other rights granted to any
series of Preferred Stock, the holders of shares of the Common Stock shall be
entitled to receive dividends out of funds of the corporation legally available
therefor, at the rate and at the time or times as may be provided by the Board
of Directors and shall be entitled to receive distributions legally payable to
stockholders on the liquidation of the corporation. The holders of shares of
Common Stock, on the basis of one vote per share, shall have the right to vote
for the election of members of the Board of Directors of the corporation and the
right to vote on all other matters, except where a separate class or series of
the corporation's stockholders vote by class or series. Holders of Common Stock
shall not be entitled to cumulate their votes for the election of directors.
PREFERRED STOCK.Preferred Stock. Shares of Preferred Stock may be issued from time to time
in one or more series, in any manner permitted by law, as determined from time
to time by the Board of Directors and stated in the resolution or resolutions
providing the issuance thereof, prior to the issuance of any shares thereof. The
Board of Directors shall have the authority to fix and determine the rights and
preferences of the shares of any series so established
NO PREEMPTIVE RIGHTS.No Preemptive Rights. No holder of outstanding shares of the corporation
shall be entitled as of right to subscribe for, purchase or otherwise acquire
any of the shares of any class of the corporation that the corporation proposes
to issue or any of the rights or options that the corporation proposes to grant
for the purchase of shares of any class of the corporation or for the purchase
of shares, bonds, securities or obligations of the corporation that are
convertible into, exchangeable for or that carry rights to subscribe for,
purchase or otherwise acquire shares of any class of the corporation, and all
such shares, bonds, securities or obligations of the corporation, whether now or
hereafter authorized or created, may be issued, or may be reissued or
transferred if the same have been reacquired and have treasury status, and all
such rights and options may be granted by the corporation's Board of Directors
to such persons, firms, corporations, companies and associations, and for such
lawful consideration, and on such terms as the corporation's Board of Directors
in its discretion may determine, without first offering the same or any thereof
to any such holder. This provision shall be interpreted to deny preemptive or
preferential rights to the maximum extent permitted under Nevada law.
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APPENDIX 2
ATHENA MEDICAL CORPORATION
1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
1. PURPOSE. The purpose of this Incentive and Non-Qualified Stock Option Plan
(the "Plan") is to enable ATHENA Medical Corporation (the "Company") to attract
and retain the services of: (i) selected employees, officers and directors of
the Company or of any subsidiary of the Company; and (ii) selected nonemployee
agents, consultants, advisors, persons involved in the sale or distribution of
the Company's products and independent contractors of the Company or any
subsidiary.
2. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided below and in
paragraph 14, the shares to be offered under the Plan shall consist of Common
Stock of the Company, and the total number of shares of Common Stock that may be
issued under the Plan shall not exceed 3,300,000 shares. Subject to adjustment
from time to time as provided in Paragraph 14, not more than 500,000 shares of
Common Stock may be made subject to awards under the Plan to any individual
participant in the aggregate in any one fiscal year of the Company, such
limitation to be applied in a manner consistent with the requirements of, and
only to the extent required for compliance with, the exclusion from the
limitation on deductibility of compensation under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). The shares issued under the Plan
may be authorized and unissued shares or reacquired shares. If an option, stock
appreciation right or performance unit granted under the Plan expires,
terminates or is canceled, the unissued shares subject to such option, stock
appreciation right or performance unit shall again be available under the Plan.
If shares sold or awarded as a bonus under the Plan are forfeited to the Company
or repurchased by the Company, the number of shares forfeited or repurchased
shall again be available under the Plan.
3. EFFECTIVE DATE AND DURATION OF PLAN.
(a) EFFECTIVE DATE. This restatement of the Plan shall be effective as of
July 10, 1997, the date as of which the Plan was approved by the vote of the
holders of a majority of the shares of the Common Stock of the Company.
(b) DURATION. The Plan shall continue in effect until all shares
available for issuance under the Plan have been issued and all restrictions on
such shares have lapsed. The Board of Directors may suspend or terminate the
Plan at any time except with respect to options, performance units and shares
subject to restrictions then outstanding under the Plan. Termination shall not
affect any outstanding options, any right of the Company to repurchase shares or
the forfeitability of shares issued under the Plan.
4. ADMINISTRATION. The Plan shall be administered by a committee
appointed by the Board of Directors of the Company (the "Committee"). If and so
long as the Common Stock is registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Board of
Directors shall consider in selecting members of the Committee, the provisions
regarding (a) "outside directors" as contemplated by Section 162(m) of the Code
and (b) "nonemployee directors" as contemplated by Rule 16b-3 under the Exchange
Act. The Committee shall consist of not fewer than two members of the Company's
Board of Directors. The Board of Directors may from time to time remove members
from, or add members to, the Committee. Vacancies on the Committee, howsoever
caused, shall be filled by the Board of Directors. The Committee shall select
one of its members as Chairman, and shall hold meetings at such times and places
as it may determine. A majority of the Committee may act at a meeting at which
a quorum is present, or acts reduced to or approved in writing by a majority of
the members of the Committee shall be the valid acts of the Committee. The
Committee shall from time to time at its discretion determine: (i) those
Officers, Directors, employees (including key and non-key), consultants and
others who shall be granted options; (ii) the number of shares of
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stock to be optioned to each; and (iii) subject to the express provisions of the
Plan, the terms of all options so granted. Other than "Formula Awards" granted
pursuant to paragraph 13, no Director while a member of the Committee shall be
eligible to receive an option under the Plan.
The interpretation and construction by the Committee of any provision of
the Plan or of any option granted under it shall be final unless otherwise
determined by the Board of Directors. No member of the Board of Directors or
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.
If at any time the Committee shall not be in office, or has fewer than two
members, the Board of Directors shall perform the functions of the Committee.
If authority is delegated to the Committee, all references to the Board of
Directors in the Plan shall mean and relate to the Committee except: (i) as
otherwise provided by the Board of Directors; and (ii) only the Board of
Directors may amend or terminate the Plan as provided in paragraphs 3 and 17.
5. TYPES OF AWARDS; ELIGIBILITY. The Board of Directors may, from time to
time, take the following actions, separately or in combination, under the Plan:
(i) grant Incentive Stock Options, as defined in Section 422 of the Code, as
provided in paragraphs 6(a) and 6(b); (ii) grant options other than Incentive
Stock Options ("Non-Statutory Stock Options") as provided in paragraphs 6(a) and
6(c); (iii) award stock bonuses as provided in paragraph 7; (iv) sell shares
subject to restrictions as provided in paragraph 8; (v) grant stock appreciation
rights as provided in paragraph 9; (vi) grant cash bonus rights as provided in
paragraph 10; (vii) grant performance units as provided in paragraph 11; and
(viii) grant foreign qualified awards as provided in paragraph 12. The persons
who shall be eligible to receive Incentive Stock Options shall be such
Officer-employees and other employees (whether or not they are Directors) of the
Company or its subsidiaries as the Committee or if there is no Committee, the
Board of Directors, shall select from time to time. Directors who are not
employees, consultants and others, who have a relationship with the Company or
its subsidiaries may only receive Non-Statutory Stock Options. Officers and
employees may also receive Non-Statutory Stock Options. An optionee may hold
more than one option, but only on the terms and subject to the restrictions
hereafter set forth. Members of the Committee, and members of the Board of
Directors if there is no Committee, shall only be eligible to receive grants
under the Plan pursuant to paragraph 13.
At the discretion of the Board of Directors or the Committee, if appointed,
an individual may be given an election to surrender an award in exchange for the
grant of a new award.
6. OPTION GRANTS.
(a) General Rules Relating to Options.
(i) TERMS OF GRANT. The Board of Directors may grant options under
the Plan. With respect to each option grant, the Board of Directors shall
determine the number of shares subject to the option, the option price, the
period of the option, the time or times at which the option may be exercised and
whether the option is an Incentive Stock Option or a Non-Statutory Stock Option.
At the time of the grant of an option or at any time thereafter, the Board of
Directors may provide that an optionee who exercised an option with Common Stock
of the Company shall automatically receive a new option to purchase additional
shares equal to the number of shares surrendered and may specify the terms and
conditions of such new options.
(ii) EXERCISE OF OPTIONS. Except as provided in paragraph 6(a)(iv) or
as determined by the Board of Directors, no option granted under the Plan may be
exercised unless at the time of such exercise the optionee is employed by or is
in the service of the Company or any subsidiary of the Company and shall have
been so employed or have provided such service continuously since the date such
option was granted. Absence on leave or on account of illness or disability
under rules established by the Board of Directors shall not,
-2-
however, be deemed an interruption of employment or service for this purpose.
Unless otherwise determined by the Board of Directors, if the optionee does not
exercise an option in any one year with respect to the full number of shares to
which the optionee is entitled in that year, the optionee's rights shall be
cumulative and the optionee may purchase those shares in any subsequent year
during the term of the option.
(iii) NONTRANSFERABILITY. Each Incentive Stock Option and, unless
otherwise determined by the Board of Directors with respect to an option granted
to a person who is neither an Officer nor a Director of the Company, each other
option granted under the Plan by its terms shall be nonassignable and
nontransferable by the optionee, either voluntarily or by operation of law,
except by will or by the laws of descent and distribution of the state or
country of the optionee's domicile at the time of death or, for options other
than Incentive Stock Options, pursuant to a qualified domestic relations order
as defined under the Code or Title I of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
(iv) TERMINATION OF EMPLOYMENT OR SERVICE.
(A) GENERAL RULE. Unless otherwise determined by the Board of
Directors, in the event the employment or service of the optionee with the
Company or subsidiary terminates for any reason other than because of physical
disability or death as provided in subparagraphs 6(a)(iv)(B) and (C), the option
may be exercised at any time prior to the expiration date of the option, but if
the option is an Incentive Stock Option, it may not be exercised more than three
months following termination of employment. Any option may be exercised only if
and to the extent the optionee was entitled to exercise the option at the date
of such termination.
(B) TERMINATION BECAUSE OF TOTAL DISABILITY. Unless otherwise
determined by the Board of Directors, in the event of the termination of
employment or service because of total disability, the option may be exercised
at any time prior to the expiration date of the option but if the option is an
Incentive Stock Option, it must be exercised not more than one year after
termination of employment. The term "total disability" means a mental or
physical impairment which is expected to result in death or which has lasted or
is expected to last for a continuous period of 12 months or more and which
causes the optionee to be unable, in the opinion of the Company and two
independent physicians, to perform his or her duties as an employee, Director,
Officer or consultant of the Company and to be engaged in any substantial
gainful activity. Total disability shall be deemed to have occurred on the
first day after the Company and the two independent physicians have furnished
their opinion of total disability to the Company.
(C) TERMINATION BECAUSE OF DEATH. Unless otherwise determined
by the Board of Directors, in the event of the death of an optionee while
employed by or providing service to the Company or a subsidiary, the option may
be exercised at any time prior to the expiration date of the option, but only if
and to the extent the optionee was entitled to exercise the option at the date
of death and only by the person or persons to whom such optionee's rights under
the option shall pass by the optionee's will or by the laws of descent and
distribution of the state or country of domicile at the time of death.
(D) AMENDMENT OF EXERCISE PERIOD APPLICABLE TO TERMINATION. The
Board of Directors, at the time of grant or at any time thereafter, may increase
the portion of an option that is exercisable, subject to such terms and
conditions as the Board of Directors may determine.
(E) FAILURE TO EXERCISE OPTION. To the extent that the option
of any deceased optionee or of any optionee whose employment or service
terminates is not exercised within the applicable period, all further rights to
purchase shares pursuant to such option shall cease and terminate.
(v) PURCHASE OF SHARES. Unless the Board of Directors determines
otherwise, shares may be acquired pursuant to an option granted under the Plan
only upon receipt by the Company of notice in writing from the optionee of the
optionee's intention to exercise, specifying the number of shares as to which
the optionee desires to exercise the option and the date on which the optionee
desires to complete the transaction, and if
-3-
required in order to comply with the Securities Act of 1933, as amended,
containing a representation that it is the optionee's present intention to
acquire the shares for investment and not with a view to distribution. Unless
the Board of Directors determines otherwise, on or before the date specified for
completion of the purchase of shares pursuant to an option, the optionee must
have paid the Company the full purchase price of such shares in cash (including,
with the consent of the Board of Directors, cash that may be the proceeds of a
loan from the Company) or, with the consent of the Board of Directors, in whole
or in part, in Common Stock of the Company valued at fair market value,
restricted stock, performance units or other contingent awards denominated in
either stock or cash, promissory notes and other forms of consideration.
No shares shall be issued until full payment for the shares has been made.
With the consent of the Board of Directors, an optionee may request the Company
to apply automatically the shares to be received upon the exercise of a portion
of a stock option (even though stock certificates have not yet been issued) to
satisfy the purchase price for additional portions of the option. Each optionee
who has exercised an option shall immediately upon notification of the amount
due, if any, pay to the Company in cash amounts necessary to satisfy any
applicable federal, state and local tax withholding requirements. If additional
withholding is or becomes required beyond any amount deposited before delivery
of the certificates, the optionee shall pay such amount to the Company on
demand. If the optionee fails to pay the amount demanded, the Company may
withhold that amount from other amounts payable by the Company to the optionee,
including salary, subject to applicable law. With the consent of the Board of
Directors an optionee may satisfy this obligation, in whole or in part, by
having the Company withhold amounts due or by delivering to the Company Common
Stock shares that would satisfy the withholding amount. Upon the exercise of an
option, the number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued upon exercise of the option.
(b) INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be subject to
the following additional terms and conditions:
(i) LIMITATION OF AMOUNT OF GRANTS. No employee may be granted
Incentive Stock Options under the Plan if the aggregate fair market value, on
the date of grant, of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by the employee during any calendar
year under the Plan and under any other incentive stock option plan (within the
meaning of Section 422 of the Code) of the Company or any parent or subsidiary
of the Company exceeds $100,000.
(ii) LIMITATION ON GRANTS TO 10 PERCENT STOCKHOLDERS. An Incentive
Stock Option may be granted under the Plan to an employee possessing more than
10 percent of the total combined voting power of all classes of stock of the
Company or of any parent or subsidiary of the Company only if the option price
is at least 110 percent of the fair market value of the Common Stock subject to
the option on the date it is granted, as described in paragraph 6(b)(iv), and
the option by its terms is not exercisable after the expiration of five years
from the date it is granted.
(iii) DURATION OF OPTIONS. Subject to paragraphs 6(a)(ii) and
6(b)(ii), Incentive Stock Options granted under the Plan shall continue in
effect for the period fixed by the Board of Directors, except that no Incentive
Stock Option shall be exercisable after the expiration of 10 years from the date
it is granted.
(iv) OPTION PRICE. The option price per share shall be determined
by the Board of Directors at the time of grant. Except as provided in paragraph
6(b)(ii), the option price shall not be less than 100 percent of the fair market
value of the Common Stock covered by the Incentive Stock Option at the date the
option is granted. During such time as the Common Stock is not listed upon an
established stock exchange, the fair market value per share shall be the mean
between the closing "bid" and "ask" prices of the Common Stock in the New York
over-the-counter market on the day the option is granted, as reported by the
National Association of Securities Dealers, Inc. If the stock is listed upon an
established stock exchange or exchanges, such fair market value shall be deemed
to be the highest closing price of the Common Stock on such stock exchange or
exchanges on the day the option is granted or if no sale of the Company's Common
Stock shall have been made
-4-
on any stock exchange that day, on the next preceding day on which there was a
sale of such stock. If there is no established market for the stock, the fair
market value shall be determined by the most recent prior private sale price of
the Common Stock. Subject to the foregoing, the Board of Directors in fixing
the option price shall have full authority and discretion so long as they shall
act in good faith.
(v) LIMITATION ON TIME OF GRANT. No Incentive Stock Option shall
be granted on or after the tenth anniversary of the effective date of the Plan.
(vi) CONVERSION OF INCENTIVE STOCK OPTIONS. The Board of Directors
may at any time without the consent of the optionee convert an Incentive Stock
Option to a Non-Statutory Stock Option.
(c) NON-STATUTORY STOCK OPTIONS. Non-Statutory Stock Options shall be
subject to the following terms and conditions in addition to those set forth in
paragraph 6(a) above:
(i) OPTION PRICE. The option price for Non-Statutory Stock Options
shall be determined by the Board of Directors at the time of grant and may be
any amount determined by the Board of Directors.
(ii) DURATION OF OPTIONS. Non-Statutory Stock Options granted under
the Plan shall continue in effect for the period fixed by the Board of
Directors.
7. STOCK BONUSES. The Board of Directors may award shares under the Plan as
stock bonuses. Shares awarded as a bonus shall be subject to the terms,
conditions and restrictions determined by the Board of Directors (which may be
based on continuous service with the Company or the achievement of performance
goals related to profits, profit growth, profit-related return ratios, cash flow
or total stockholder return, where such goals may be stated in absolute terms or
relative to comparison companies), as the Committee shall determine in its sole
discretion, which terms, conditions and restrictions shall be set forth in the
instrument evidencing the award. The restrictions may include restrictions
concerning transferability and forfeiture of the shares awarded, together with
such other restrictions as may be determined by the Board of Directors. If
shares are subject to forfeiture, all dividends or other distributions paid by
the Company with respect to the shares shall be retained by the Company until
the shares are no longer subject to forfeiture, at which time all accumulated
amounts shall be paid to the recipient. The Board of Directors may require the
recipient to sign an agreement as a condition of the award, but may not require
the recipient to pay any monetary consideration other than amounts necessary to
satisfy tax withholding requirements. The agreement may contain any terms,
conditions, restrictions, representations and warranties required by the Board
of Directors. The certificates representing the shares awarded shall bear any
legends required by the Board of Directors. The Company may require any
recipient of a stock bonus to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the recipient fails to pay the amount demanded, the Company
may withhold that amount from other amounts payable by the Company to the
recipient, including salary or fees for services, subject to applicable law.
With the consent of the Board of Directors, a recipient may deliver Common Stock
to the Company to satisfy this withholding obligation. Upon the issuance of a
stock bonus, the number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued.
8. RESTRICTED STOCK. The Board of Directors may issue shares under the Plan
for such consideration (including promissory notes and services) as determined
by the Board of Directors. Shares issued under the Plan shall be subject to the
terms, conditions and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability, repurchase by
the Company and forfeiture of the shares issued, together with such other
restrictions as may be determined by the Board of Directors. If shares are
subject to forfeiture or repurchase by the Company, all dividends or other
distributions paid by the Company with respect to the shares shall be retained
by the Company until the shares are no longer subject to forfeiture or
repurchase, at which time all accumulated amounts shall be paid to the
recipient. All Common Stock issued pursuant to this paragraph 8 shall be
subject to a purchase agreement, which shall be executed by the Company and the
prospective recipient of the shares prior to the delivery of certificates
representing such shares to the recipient.
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The purchase agreement may contain any terms, conditions, restrictions,
representations and warranties required by the Board of Directors. The
certificates representing the shares shall bear any legends required by the
Board of Directors. The Company may require any purchaser of restricted stock
to pay to the Company in cash upon demand amounts necessary to satisfy any
applicable federal, state or local tax withholding requirements. If the
purchaser fails to pay the amount demanded, the Company may withhold that amount
from other amounts payable by the Company to the purchaser, including salary,
subject to the applicable law. With the consent of the Board of Directors, a
purchaser may deliver Common Stock to the Company to satisfy this withholding
obligation. Upon the issuance of restricted stock, the number of shares
reserved for issuance under the Plan shall be reduced by the number of shares
issued.
9. STOCK APPRECIATION RIGHTS.
(a) GRANT. Stock appreciation rights may be granted under the Plan by the
Board of Directors, subject to such rules, terms and conditions as the Board of
Directors prescribes.
(b) EXERCISE.
(i) Each stock appreciation right shall entitle the holder, upon
exercise, to receive from the Company in exchange therefor an amount equal in
value to the excess of the fair market value on the date of exercise of one
share of Common Stock of the Company over its fair market value on the date of
grant (or, in the case of a stock appreciation right granted in connection with
an option, the excess of the fair market value of one share of Common Stock of
the Company over the option price per share under the option to which the stock
appreciation right relates), multiplied by the number of shares covered by the
stock appreciation right or the option, or portion thereof, that is surrendered.
No stock appreciation right shall be exercisable at a time that the amount
determined under this subparagraph is negative. Payment by the Company upon
exercise of a stock appreciation right may be made in Common Stock valued at
fair market value, in cash, or partly in Common Stock and partly in cash, all as
determined by the Board of Directors.
(ii) A stock appreciation right shall be exercisable only at the
time or times established by the Board of Directors. If a stock appreciation
right is granted in connection with an option, the following rules shall apply:
(1) the stock appreciation right shall be exercisable only to the extent and on
the same conditions that the related option could be exercised; (2) upon
exercise of the stock appreciation right, the option or portion thereof to which
the stock appreciation right relates terminates; and (3) upon exercise of the
option, the related stock appreciation right or portion thereof terminates.
(iii) The Board of Directors may withdraw any stock appreciation
right granted under the Plan at any time and may impose any conditions upon the
exercise of a stock appreciation right or adopt rules and regulations from time
to time affecting the rights of holders of stock appreciation rights. Such
rules and regulations may govern the right to exercise stock appreciation rights
granted prior to adoption or amendment of such rules and regulations as well as
stock appreciation rights granted thereafter.
(iv) For purposes of this paragraph 9 the fair market value of the
Common Stock shall be determined as of the date the stock appreciation right is
exercised, under the methods set forth in paragraph 6(b)(iv).
(v) No fractional shares shall be issued upon exercise of a stock
appreciation right. In lieu thereof, cash may be paid in an amount equal to the
value of the fraction or, if the Board of Directors shall determine, the number
of shares may be rounded downward to the next whole share.
(vi) Each stock appreciation right granted in connection with an
Incentive Stock Option, and unless otherwise determined by the Board of
Directors with respect to a stock appreciation right granted to a person who is
neither an Officer nor a Director of the Company, each other stock appreciation
right granted
-6-
under the Plan by its terms shall be nonassignable and nontransferable by the
holder, either voluntarily or by operation of law, except by will or by the laws
of descent and distribution of the state or country of the holder's domicile at
the time of death, and each stock appreciation right by its term shall be
exercisable during the holder's lifetime only by the holder; provided, however,
that a stock appreciation right not granted in connection with an Incentive
Stock Option shall also be transferable pursuant to a qualified domestic
relations order as defined under the Code or ERISA.
(vii) Each participant who has exercised a stock appreciation right
shall, upon notification of the amount due, pay to the Company in cash amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the participant fails to pay the amount demanded, the Company
may withhold that amount from other amounts payable by the Company to the
participant including salary, subject to applicable law. With the consent of
the Board of Directors a participant may satisfy this obligation, in whole or in
part, by having the Company withhold from any shares to be issued upon the
exercise that number of shares that would satisfy the withholding amount due or
by delivering Common Stock to the satisfy the withholding amount.
(viii) Upon the exercise of a stock appreciation right for shares, the
number of shares reserved for issuance under the Plan shall be reduced by the
number of shares issued. Cash payments of stock appreciation rights shall not
reduce the number of shares of Common Stock reserved for issuance under the
Plan.
10. CASH BONUS RIGHTS.
(a) GRANT. The Board of Directors may grant cash bonus rights under the
Plan in connection with: (i) options granted or previously granted; (ii) stock
appreciation rights granted or previously granted; (iii) stock bonuses awarded
or previously awarded; and (iv) shares sold or previously sold under the Plan.
Cash bonus rights will be subject to rules, terms and conditions as the Board of
Directors may prescribe. Unless otherwise determined by the Board of Directors
with respect to a cash bonus right granted to a person who is neither an Officer
nor a Director of the Company, each cash bonus right granted under the Plan by
its terms shall be nonassignable and nontransferable by the holder, either
voluntarily or by operation of law, except by will or by the laws of descent and
distribution of the state or country of the holder's domicile at the time of
death or pursuant to a qualified domestic relations order as defined under the
Code or ERISA. The payment of a cash bonus shall not reduce the number of
shares of Common Stock reserved for issuance under the Plan.
(b) CASH BONUS RIGHTS IN CONNECTION WITH OPTION. A cash bonus right
granted in connection with an option will entitle an optionee to a cash bonus
when the related option is exercised (or terminates in connection with the
exercise of a stock appreciation right related to the option) in whole or in
part. If an optionee purchases shares upon exercise of an option and does not
exercise a related stock appreciation right, the amount of the bonus shall be
determined by multiplying the excess of the total fair market value of the
shares to be acquired upon the exercise over the total option price for the
shares by the applicable bonus percentage. If the optionee exercises a related
stock appreciation right in connection with the termination of an option, the
amount of the bonus shall be determined by multiplying the total fair market
value of the shares and cash received pursuant to the exercise of the stock
appreciation right by the applicable bonus percentage. The bonus percentage
applicable to a bonus right shall be determined from time to time by the Board
of Directors but shall in no event exceed 75 percent.
(c) CASH BONUS RIGHTS IN CONNECTION WITH STOCK BONUS. A cash bonus right
granted in connection with a stock bonus will entitle the recipient to a cash
bonus payable when the stock bonus is awarded or when restrictions, if any, to
which the stock is subject lapse. If bonus stock awarded is subject to
restrictions and is repurchased by the Company or forfeited by the holder, the
cash bonus right granted in connection with the stock bonus shall terminate and
may not be exercised. The amount and timing of payment of a cash bonus shall be
determined by the Board of Directors.
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(d) CASH BONUS RIGHTS IN CONNECTION WITH STOCK PURCHASE. A cash bonus
right granted in connection with the purchase of stock pursuant to paragraph 8
will entitle the recipient to a cash bonus when the shares are purchased or when
restrictions, if any, to which the stock is subject lapse. Any cash bonus right
granted in connection with shares purchased pursuant to paragraph 8 shall
terminate and may not be exercised in the event the shares are repurchased by
the Company or forfeited by the holder pursuant to applicable restrictions. The
amount of any cash bonus to be awarded and timing of payment of a cash bonus
shall be determined by the Board of Directors.
(e) TAXES. The Company shall withhold from any cash bonus paid pursuant
to this paragraph 10 the amount necessary to satisfy any applicable federal,
state and local withholding requirements.
11. PERFORMANCE UNITS. The Board of Directors may grant performance units
consisting of monetary units which may be earned in whole or in part if the
Company achieves certain goals established by the Board of Directors over a
designated period of time, but not in any event more than 10 years. The goals
established by the Board of Directors may include earnings per share, return on
stockholders' equity, return on invested capital, and such other goals as may be
established by the Boards of Directors. In the event that the minimum
performance goal established by the Board of Directors is not achieved at the
conclusion of a period, no payment shall be made to the participants. In the
event the maximum corporate goal is achieved, 100 percent of the monetary value
of the performance units shall be paid to or vested in the participants.
Partial achievement of the maximum goal may result in a payment or vesting
corresponding to the degree of achievement as determined by the Board of
Directors. Payment of an award earned may be in cash or in Common Stock or in a
combination of both, and may be made when earned, or vested and deferred, as the
Board of Directors determines. Deferred awards shall earn interest on the terms
and at a rate determined by the Board of Directors. Unless otherwise determined
by the Board of Directors with respect to a performance unit granted to a person
who is neither an Officer nor a Director of the Company, each performance unit
granted under the Plan by its terms shall be nonassignable and nontransferable
by the holder, either voluntarily or by operation of law, except by will or by
the laws of descent and distribution of the state or country of the holder's
domicile at the time of death or pursuant to a qualified domestic relations
order as defined under the Code or ERISA. Each participant who has been awarded
a performance unit shall, upon notification of the amount due, pay to the
Company in cash amounts necessary to satisfy any applicable federal, state and
local tax withholding requirements. If the participant fails to pay the amount
demanded, the Company may withhold that amount from other amounts payable by the
Company to the participant, including salary or fees for services, subject to
applicable law. With the consent of the Board of Directors a participant may
satisfy this obligation, in whole or in part, by having the Company withhold
from any shares to be issued that number of shares that would satisfy the
withholding amount due or by delivering Common Stock to the Company to satisfy
the withholding amount. The payment of a performance unit in cash shall not
reduce the number of shares of Common Stock reserved for issuance under the
Plan. The number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued upon payment of an award.
12. FOREIGN QUALIFIED GRANTS. Awards under the Plan may be granted to such
Officers and employees of the Company and its subsidiaries and such other
persons described in paragraph 1 residing in foreign jurisdictions as the Board
of Directors may determine from time to time. The Board of Directors may adopt
such supplements to the Plan as may be necessary to comply with the applicable
laws of such foreign jurisdictions and to afford participants favorable
treatment under such laws; provided, however, that no award shall be granted
under any such supplement with terms which are more beneficial to the
participants than the terms permitted by the Plan.
13. FORMULA AWARDS TO COMMITTEE MEMBERS. Each Director appointed to the
Committee shall be granted Non-Statutory Stock Options for 30,000 shares of
Common Stock on the day such Committee member is so appointed and thereafter
further grants of Non-Statutory Stock Options for 30,000 shares of Common Stock
on the third anniversary of the grant of such Committee member's most prior
grant under this paragraph 13; provided, however, that the aggregate grant to
newly appointed Committee members shall be reduced on an
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option for option basis by the amount of any option grants accepted by such
appointee from the Company within the prior 24-month period (the "Formula
Options"). The Formula Options granted to such Committee member shall have an
exercise price per share equal to the fair market value of Common Stock on the
date of grant. Each Formula Option granted under this paragraph 13 shall become
exercisable in three equal installments on each of the first three anniversaries
of the date of grant. Each portion of each Formula Option granted under this
paragraph 13 shall be exercisable for 10 years after the date of grant. Upon
termination of a Director's membership on the Board other than due to such
Director's death or "total disability" (as defined in paragraph 6(a)(4)(B)), any
Formula Options which are then exercisable may be exercised by such Director at
any time prior to the expiration of such option's term or within three months
following such cessation of membership, whichever period is shorter. The
exercise price for each Formula Option granted pursuant to this paragraph 13 is
payable in the manner prescribed in paragraph 6(a)(v). The terms and provisions
of this Plan shall also apply to the grant and exercise of Formula Options, to
the extent such other provisions do not contradict the express provisions of
this paragraph 13.
14. CHANGES IN CAPITAL STRUCTURE. If the outstanding Common Stock of the
Company is hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company or of
another corporation by reason of any reorganization, merger, consolidation, plan
of exchange, recapitalization, reclassification, stock split-up, combination of
shares or dividend payable in shares, appropriate adjustment shall be made by
the Board of Directors in the number and kind of shares available for awards
under the Plan. In addition, except with respect to transactions referred to in
paragraph 15, the Board of Directors shall make appropriate adjustment in the
number and kind of shares as to which outstanding options and stock appreciation
rights, or portions thereof then unexercised, shall be exercisable, so that the
optionee's proportionate interest before and after the occurrence of the event
is maintained. Notwithstanding the foregoing, the Board of Directors shall have
no obligation to effect any adjustment that would or might result in the
issuance of fractional shares, and any fractional shares resulting from any
adjustment may be disregarded or provided for in any manner determined by the
Board of Directors. Any such adjustments made by the Board of Directors shall
be conclusive. If the stockholders of the Company receive capital stock from
another corporation ("Exchange Stock") in exchange for their shares of Common
Stock in any transaction involving a merger, consolidation or plan of exchange,
all options granted hereunder shall be converted into options to purchase shares
of Exchange Stock (unless the Company and the corporation issuing the Exchange
Stock, in their sole discretion, determine that any or all such options granted
hereunder are to be treated as set forth in the following sentence) in the same
proportion as used for determining the number of shares of Exchange Stock the
holders of the Common Stock receive in such merger. In the event of dissolution
of the Company or a merger, consolidation or plan of exchange affecting the
Company to which paragraph 15 does not apply, in lieu of providing for options
and stock appreciation rights as provided above in this paragraph 14, the Board
of Directors may, in its sole discretion, provide 30-day period prior to such
event during which optionees shall have the right to exercise options and stock
appreciation rights in whole or in part without any limitation on exercisability
and upon the expiration of which 30-day period all unexercised options and stock
appreciation rights shall immediately terminate.
15. ACCELERATION IN CERTAIN EVENTS. Notwithstanding any other provisions of
the Plan, all options and stock appreciation rights outstanding under the Plan
shall immediately become exercisable in full for the remainder of their terms at
any time when any one of the following events has taken place:
(a) The stockholders of the Company approve one of the following
("Approved Transactions"):
(i) Any consolidation, merger or plan of exchange, involving the
Company ("Merger") pursuant to which Common Stock would be converted into cash;
or
(ii) Any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all of the assets
of the Company or the adoption of any plan or proposal for the liquidation or
dissolution of the Company; or
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(b) A tender or exchange offer, other than one made by the Company, is
made for Common Stock (or securities convertible into Common stock) and such
offer results in a portion of those securities being purchased and the offeror
after the consummation of the offer is the beneficial owner (as determined
pursuant to Section 13(d) of the Exchange Act), directly or indirectly, of at
least 20 percent of the outstanding Common Stock (an "Offer"); or
(c) The Company receives a report on Schedule 13D under the Exchange Act
reporting the beneficial ownership by any person of 20 percent or more of the
Company's outstanding Common Stock, except that if such receipt shall occur
during a tender offer or exchange offer by any person other than the Company or
a wholly owned subsidiary of the Company, acceleration of exercisability shall
not take place until the conclusion of such offer; or
(d) During any period of 12 months or less, individuals who at the
beginning of such period constituted a majority of the Board of Directors cease
for any reason to constitute a majority thereof unless the nomination or
election of such new Directors was approved by a vote of at least two-thirds of
the Directors then still in office who were Directors at the beginning of such
period.
All options and stock appreciation rights that are accelerated pursuant to
this paragraph 15 shall terminate upon the dissolution of the Company or upon
the consummation of any Merger pursuant to which Common Stock would be converted
to cash. The terms used in this paragraph 15 and not defined elsewhere in the
Plan shall have the same meanings as such terms have in the Exchange Act and the
rules and regulations adopted thereunder.
16. CORPORATE MERGERS, ACQUISITIONS, ETC. The Board of Directors may also
grant options, stock appreciation rights, performance units, stock bonuses and
cash bonuses, and issue restricted stock under the Plan having terms, conditions
and provisions that vary from those specified in this Plan provided that any
such awards are granted in substitution for, or in connection with the
assumption of, existing options, stock appreciation rights, stock bonuses, cash
bonuses, restricted stock and performance units granted, awarded or issued by
another corporation and assumed or otherwise agreed to be provided for by the
Company pursuant to or by reason of a transaction involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which the Company or a subsidiary is a party.
17. AMENDMENT OF PLAN. The Board of Directors may at any time, and from time to
time, modify or amend the Plan in such respects as it shall deem advisable
because of changes in the law while the Plan is in effect or for any other
reason. Except as provided in paragraphs 6(a) (iv), 9, 14 and 15, however, no
change in an award already granted shall be made without the written consent of
the holder of such award. Notwithstanding any of the foregoing, stockholder
approval (sufficient under applicable state law) is required for any Plan
amendment which: (a) materially increases the total number of shares subject to
the Plan (except as provided in paragraph 14); (b) materially modifies the class
of eligible employees under the Plan; or (c) effects a change relating to
Incentive Stock Options which is inconsistent with the Code, ERISA, or rules and
regulations adopted thereunder.
18. APPROVALS. The obligations of the Company under the Plan are subject to
the approval of state and federal authorities or agencies with jurisdiction in
the matter. The Company will use its best efforts to take steps required by
state or federal law or applicable regulations, including rules and regulations
of the Securities and Exchange Commission and any stock exchange on which the
Company's shares may then be listed, in connection with the grants under the
Plan. The foregoing notwithstanding, the Company shall not be obligated to
issue or deliver Common Stock under the Plan if such issuance or delivery would
violate applicable state or federal securities laws.
19. EMPLOYMENT AND SERVICE RIGHTS. Nothing in the Plan, or any award pursuant
to the Plan, shall: (i) confer upon any employee any right to be continued in
the employment of the Company or any subsidiary or
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interfere in any way with the right of the Company or any subsidiary by whom
such employee is employed to terminate such employee's employment at any time,
for any reason, with or without cause, or to decrease such employee's
compensation or benefits; or (ii) confer upon any person engaged by the Company
any right to be retained or employed by the Company or to the continuation,
extension, renewal or modification of any compensation, contract or arrangement
with or by the Company.
20. RIGHTS AS A STOCKHOLDER. The recipient of any award under the Plan shall
have no rights as a stockholder with respect to any Common Stock until the date
of issue to the recipient of a stock certificate for such shares. Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividend or other rights for which the record date occurs prior to the date such
stock certificate is issued.
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PROXY FOR THE ANNUALSPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 10,DECEMBER 12, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James E. Reinmuth and William H. Fleming,J. Peter Burke, and
each of them, as Proxies, with full power of substitution, and hereby authorizes
them to represent and to vote, as designed below, all the shares of Common Stock
of ATHENAA-FEM Medical Corporation (the "Company") held of record by the undersigned
on June 11,November 7, 1997, at the AnnualSpecial Meeting of Stockholders to be held on
July 10,December 12, 1997 or at any adjournment thereof.
1. ELECTION OF DIRECTORS.
Election of the following three nominees to serve as Class 1 directors for
a one-year term or until their successors are duly elected and qualified.
JAMES E. REINMUTH JAMES R. WILSON
/ / FOR all nominees / / WITHHOLD AUTHORITY to vote for all
nominees
/ / WITHHOLD AUTHORITY for the following only:
(write the name(s) of the nominee(s) in this space)
Election of the following three nominees to serve as Class 2 directors for
a two-year term or until their successors are duly elected and qualified
WILLIAM H. FLEMING ROSEANNA SEVCIK CAROL A. SCOTT
/ / FOR all nominees / / WITHHOLD AUTHORITY to vote for all
nominees
/ / WITHHOLD AUTHORITY for the following only:
(write the name(s) of the nominee(s) in this space)
- --------------------------------------------------------------------------------
2. AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION TO AUTHORIZE A CLASS
OF PREFERRED STOCK. Amend the Company's Articles of Incorporation to authorize a
class of Preferred Stock to be designated by the Board of Directors.
/ /[ ] FOR / /[ ] AGAINST / / ABSTAIN
- --------------------------------------------------------------------------------
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3. AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION TO CHANGE THE
NAME. Amend the Company's Articles of Incorporation to change the name of the
Company to A-FEM Medical Corporation.
/ / FOR / / AGAINST / / ABSTAIN
- --------------------------------------------------------------------------------
4. AMENDMENT OF THE ATHENA MEDICAL CORPORATION 1994 INCENTIVE AND
NON-QUALIFIED STOCK OPTION PLAN. Amend the ATHENA Medical Corporation 1994
Incentive and Non-Qualified Stock Option Plan (the "1994 Plan") to amend certain
provisions of the 1994 Plan to comply with the requirements of Section 16 of the
Securities Exchange Act of 1934, as amended, Section 162(m) of the Internal
Revenue Code of 1986, as amended, and Nevada state law regarding interested
director transactions.
/ / FOR / / AGAINST / / ABSTAIN
- --------------------------------------------------------------------------------
5. RATIFICATION OF INDEPENDENT AUDITIONS FOR 1997. Ratify the selection
of Arthur Andersen LLP as the Company's independent auditors for the fiscal year
ending December 31, 1997.
/ / FOR / / AGAINST / /[ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy, when properly
executed, will be voted in the manner directed herein by the undersigned. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR THE NOMINEES" IN"FOR" ITEM 1 AND
"FOR" ITEMS 2, 3, 4 AND 5.1.
10
Please sign below exactly
as your name appears on
your stock certificate.
When shares are held
jointly, each person
should sign. When signing
as attorney, executor,
administrator, trustee or
guardian, please give
full title as such. An
authorized person should
sign on behalf of
corporations,
partnerships, limited
liabilities companies and
associations and give his
or her title.
Dated: , 1997
-----------------------------------
-----------------------------------------
Signature
-----------------------------------------
Signature if held jointlySIGNATURE
SIGNATURE IF HELD JOINTLY
YOUR VOTE IS IMPORTANT. PROMPT RETURN OF THIS PROXY CARD WILL HELP
SAVE THE EXPENSE OF ADDITIONAL SOLICITATION EFFORTS
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