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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
For the transition period from to
Commission File Number 0-17119
ATHENA MEDICAL CORPORATION
dba A-FEM MEDICAL CORPORATION
(Name of small business issuer in its charter)
Nevada 33-0202574
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10180 SW Nimbus Ave., Suite J-5
Portland, Oregon 97223
(Address of principal executive offices)
Issuer's telephone number, including area code: (503) 968-8800
Securities registered pursuant to Section 12(b) of the Exchange Act:
(Title of each class) (Name of each exchange on which registered)
None None
Securities registered pursuant to Section 12(g) of the Exchange Act:
(Title of Class)
Common Stock, par value $0.01 per share
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
-- --
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.[X]
Issuer's revenues for the fiscal year ended December 31, 1996: $192,682.
As of March 14, 1997, the aggregate market value of the voting stock held by
non-affiliates of the issuer was common stock, $0.01 par value: $23,976,148.
As of March 14, 1997, the issuer had outstanding 10,667,414 shares of the
Common Stock.
Transitional Small Business Disclosure Format: Yes No X
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PART I
ITEM 1: BUSINESS
ATHENA Medical Corporation dba A-FEM Medical Corporation (the "Company"
or "Registrant") was organized to develop, manufacture and market products
for women's health care. The Company was incorporated in Nevada on December
9, 1986 as Xtramedics, Inc. In June 1994, pursuant to the terms of a Share
Exchange Agreement, Xtramedics, Inc. acquired all the outstanding shares of
Athena Profem, Inc. ("Profem") in exchange for 80 percent of all voting stock
of Xtramedics, Inc. and changed its name to ATHENA Medical Corporation.
PRINCIPAL PRODUCTS
Prior to the merger with Profem, the Company devoted most of its efforts
and resources towards developing its feminine protection products and the
Padette-TM- interlabial pad (the "Padette"). As a result of the merger, the
Company acquired rights to a menstrual collection kit called the Tampette, an
early version of the PadKit-TM- collection device (the "PadKit"). In
addition, the Company's products include Affirm, a rapid one-step pregnancy
test ("Affirm"), Rapid-Sense-TM-("Rapid-Sense") and Antisense (probe)
diagnostics. The PadKit, Rapid-Sense and Antisense diagnostics products are
still in the developmental stage and require additional clinical studies.
These products cannot be marketed until FDA approval and comparable
regulatory approvals in other countries are obtained. The regulatory approval
process may be lengthy and expensive and may adversely affect the ability of
the Company to market these products.
The Padette is designed to provide a safe, comfortable and convenient
alternative to existing feminine protection products. The Padette is made of
sanitary absorbent material and is about the size and shape of a woman's little
finger. The Padette's tear-shaped design enables it to be held in place by a
woman's own anatomy, outside the vagina, without adhesives. The Padette provides
dependable protection on light menstrual flow days and back-up against leakage
on heavy menstrual flow days. In addition, the Padette is designed to protect
against slight urine loss in women and can be used by both men and women who
suffer from hemorrhoids, to absorb leakage or discharge.
The PadKit, which has now replaced the Tampette, is still under
development and clinical testing. The PadKit is designed to collect cells
from the cervix and endometrium (lining of the uterus) that are exfoliated
and appear in the menstrual blood flow. The PadKit is designed to replace the
cervical scrape, allowing convenient safe sample collection for cervical
cancer screening. While in place, the PadKit collects blood along with
millions of cells, vaginal mucous and discharge flushed out by the menstrual
flow. The PadKit is then removed, placed in a vial containing an affixative
and mailed in a pre-addressed mailer to a laboratory. The sample can be
stained in a
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manner similar to the conventional pap staining procedure or processed by
other methods suitable for the desired diagnostic test. The PadKit is a
simpler, private, more comfortable and convenient method of collecting cells
than other more traditional tests and can produce samples which provide
information about the status of cells in the uterus, ectocervix, endocervix
and vagina that would otherwise only be collected by invasive techniques.
The Affirm one step pregnancy test is a rapid visual test for the
qualitative detection of human Chorionic Gonadotropin in urine. Affirm is
greater than 99 percent accurate in the laboratory studies and can produce
results in 1-2 minutes. Affirm was introduced for sale in the fourth quarter
of 1996. Rapid-Sense, which is still in the developmental stage, is the
Company's proprietary rapid lateral flow semi-quantitative technology. The
Company anticipates using the Rapid-Sense technology to provide
cost-effective pregnancy and other diagnostics.
The Company's Antisense diagnostics, which are still undergoing clinical
testing and development, are designed to provide rapid, accurate,
semi-quantitative, and cost effective identification of pathogens, genetic tumor
markers, and pregnancy using samples provided by the PadKit or other body fluid
samples. The Antisense diagnostics are based on antisense or probe technology
which uses polymeric agents that bond to selected genetic sequences and thereby
allow identification of various diseases.
MARKET AND DISTRIBUTION
The Company has received Food and Drug Administration ("FDA") clearance
to market the Padette under a 501(k) application. The Padette was introduced
to markets in China during 1995 and test marketed in Florida in 1996. The
Company utilized a direct marketing approach in its test market of the
Padette in Florida and achieved distribution in the Walgreen chain of stores.
The Company plans a regional roll-out of the Padette in a major market in the
United States in early 1998. The Company believes this market launch will be
the first in a broad scale roll-out of the Padette.
Based upon analysts reports, the United States market for feminine
protection products is estimated to exceed $2 billion per year. The market
currently consists of two segments: internal products or tampons, which
represent approximately 40 percent of the total market, and external products,
such as napkins, mini/maxi pads and pantiliners, which represent the balance of
the market. The Padette represents a new category of product, which the Company
expects to compete with existing products as well as expand the market.
Outside the United States, analysts reports estimate the feminine protection
market to be $5 billion per year. The international markets vary by culture and
competition. Many products and manufacturers exist abroad that do not exist in
the domestic market. Many of these manufacturers are similar in size to the
Company, but have a local presence which provides them certain advantages in
these markets. The Company, however,
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believes that countries with large populations such as India and China will
find the Padette to be unique and particularly appealing culturally. Although
the Company has made a number of contacts with foreign distributors and has
explored certain foreign markets, it is not currently shipping products to
any foreign country nor does it have any present plans to do so.
The Company plans to use the PadKit to target the current United States
pap test market, initially offering the PadKit as a supplement to address
well-known inadequacies in the existing pap test, and eventually marketing
the PadKit as a replacement for the pap scraping procedure. Analyst reports
indicate that there are over 30 million pap tests performed annually in the
United States. The Company also intends to market the PadKit as a device to
collect other cells for diagnostic purposes.
The pregnancy test market is divided into two segments--home testing
(over-the-counter) and professional testing. The Affirm pregnancy test has
received FDA clearance and is available domestically and internationally for
both the over-the-counter and professional markets. The Company made an
initial sale of the Affirm product in South America during the first quarter
of 1997. The Rapid-Sense technology is also expected to have applications in
the pregnancy test market. Analyst reports predict that the U.S. market for
pregnancy tests will continue to grow at a rate of 9.4 percent per year
through the year 2000.
COMPETITION
The five major competitors in the feminine protection market are Johnson &
Johnson ("J&J"), Kimberly-Clark, Tambrands, Playtex and Procter & Gamble
("P&G"). Maxipads and tampons account for 80 percent of the market with J&J,
Kimberly-Clark and P&G being the main competitors in maxipads and Tambrands
and Playtex being the leaders in tampons. In the international market, local
competitors vary by region and tend to hold a large share by providing
low-cost alternatives. The Company believes that the Padette offers several
unique and proprietary features distinguishing it from pads and tampons and
from other products on the market that are known to be in development. The
features of the Padette which distinguish it competitively are its
versatility, convenience, comfort, safety and price. The Company believes the
Padette has a competitive advantage over traditional products in developing
markets where competition is less entrenched, and various religious,
cultural and climatic conditions may favor the Padette over other feminine
protection products.
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MATERIALS AND MANUFACTURING
Raw materials used for production of the Padette and the Company's
diagnostic systems are made and supplied in the United States. The Company's
current manufacturing needs are being met by its suppliers, although an
uninterrupted flow of raw materials cannot be guaranteed. The Company
currently purchases certain raw materials from one supplier. Although the
Company does not believe it would be difficult to replace this supplier, the
Company has not approved other suppliers for the sale of such raw materials
to the Company.
The Company's manufacturing line is capable of producing approximately
200 million Padettes per year. The Company anticipates increasing its current
production line from one to two production lines during 1997. With the
addition of another production line, and assuming the operation of three
shifts per line, the Company's maximum Padette production capacity is
anticipated to be approximately 400 million per year. These projected
production levels are expected to meet the current anticipated sales growth
of the Padette, if any, in 1997. The Company currently subcontracts
manufacturing of Affirm.
CUSTOMERS
The Company does not have a stable baseload of demand for its products
and cannot estimate the potential market for its products. The Padette is
carried by more than 350 Walgreen stores in Florida. The Company expects to
continue to do business with Walgreen. The Company has an agreement with a
distributor in China to which it has shipped one order totaling approximately
$160,000. In addition, the Company has sold 10,000 Affirm pregnancy tests to
a customer in South America. The Company has no reason to believe that
additional products will be ordered by any of these customers. There can be
no assurance that the Company will develop an effective marketing or
advertising program to support future sales of such products.
PATENTS AND TRADE SECRETS
The Company has rights to or owns three U.S. patents and additional
foreign patents in Canada and Japan covering the Padette. These patents cover
manufacturing methods, improved absorption and design of the manufacturing
apparatus. The Company has filed additional applications for the Padette
involving such areas as a 100 percent biodegradable pad and a diagnostic
collection device. The Company anticipates applying for additional patents
during 1997.
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The currently issued United States patents owned, assigned or licensed to
the Company are as follows:
<TABLE>
<CAPTION>
DATE OF
NUMBER ISSUE TITLE
<S> <C> <C>
4,142,476 (1) 03/06/79 Method of Making Feminine Protection Pads
4,175,561 11/27/79 Feminine Protection Pads with Improved Absorption
4,196,562 (2) 04/08/80 Method of Making Feminine Protection Pads
4,995,150 02/26/91 Method and Apparatus for Making Feminine Protection Pads
5,575,047 11/19/96 Method for Making Biodegradable Absorbent Pads
</TABLE>
- ------------------------
(1) Also issued in Canada and Japan.
(2) Also issued in Canada.
The term for patents issued on applications filed on or after June 8,
1995 is 20 years from the date of the application or if the application
contains a specific reference to an earlier filed application under 35 USC
Sections 120, 121 or 365(c), 20 years from the date on which the
earliest such application was filed. The term of patents issuing on
applications filed before June 8, 1995, is the greater of the 20-year term
described above or 17 years from grant, depending on the amount of time
between application and issuance.
The Company has U.S. trademarks for Fresh n'Fit-Registered Trademark-, a
female silhouette logo and a butterfly logo, and has applied for trademarks
for Padette, PadKit, Rapid-Sense and Tampette. The Company also relies on
trade secrets and other unpatented proprietary information in its development
activities. All of the Company's employees have entered into agreements
providing for confidentiality and the Company enters into nondisclosure
agreements to protect the confidential information delivered to third parties
in conjunction with possible corporate collaborations or other business
purposes.
Under a license agreement for the Company's Padette, the Company is
obligated to pay a royalty of 3 percent to 5 percent 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 of manufacturing the
Padette and thus reflected in the product's pricing.
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REGULATORY REQUIREMENTS
The Padette had received clearance, as a Class II device, for
over-the-counter marketing in the United States under 510(k) pre-market
notification submission to the FDA. The Company has also received export
clearance to market overseas. No further FDA requirements for clinical
evaluation are expected. Requests for regulatory approval for marketing have
been made in several foreign countries and completed in China. The Company is
unable, however, to predict when, if ever, other approvals may be received.
The Affirm pregnancy test has received FDA clearance for marketing to
both the over-the-counter and professional markets, and is licensed for
export. The PadKit and Rapid-Sense diagnostics are still under development,
and the Company has yet to complete clinical studies of these products.
Submission of data to the FDA for the PadKit and development of additional
applications of the Rapid-Sense diagnostics technology are expected in 1997.
FDA regulations and comparable regulations in other countries often involve
extensive testing and clinical trials to demonstrate safety, reliability and
efficacy. Testing and trial studies of the Company's products may be lengthy
and expensive. Delays in obtaining regulatory approvals could adversely
affect marketing of the Company's products.
RESEARCH AND DEVELOPMENT
The Company's research and development activities are primarily directed
at the commercialization of diagnostic women's health care products. The
Company spent approximately $250,000 in 1996 and $228,000 in 1995 on research
and development. The Company's research and development activities include
developing and clinical testing of the PadKit and Rapid-Sense technology.
EMPLOYEES
As of March 14, 1997, the Company had 14 full-time employees as well as
several paid consultants. The Company intends to contract with or hire
appropriate personnel as business demands require
ITEM 2: DESCRIPTION OF PROPERTY
In March 1996, the Company relocated its corporate office and product
development facilities to 7,100 square feet of leased space within the same
business park as its former office. The new Portland, Oregon facility is
significantly larger than its former facility. The Company also leases 7,300
square feet of manufacturing and warehouse space in proximity to is corporate
office.
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ITEM 3: LEGAL PROCEEDINGS
The Company was named as a defendant in a civil action brought in the
Circuit Court of Oregon for Washington County in December 1995 by Kassia
International Incorporated (the "Plaintiff"). The complaint alleged that the
Company breached its obligations to complete the purchase of the Plaintiff in
the spring of 1995 and sought damages of up to $6 million under various
theories. In December 1996, a tentative settlement agreement was reached. The
Company agreed to pay $90,000 of the Plaintiff's liabilities (of which
$50,000 is expected to be covered by insurance) and issue 100,000 shares of
the Company's common stock as consideration for certain proprietary assets of
the Plaintiff.
The Company has received notice from another company claiming that such
other company has the prior right to use the "Athena" name. The Company may
in the future be required to refrain from using the "Athena" name. To date,
the Company has not prominently featured the "Athena" name on its products
and therefore the Company believes that refraining from use of the name on
products in the future will not have a material adverse effect on the Company.
ITEM 4: SUBMISSION TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during 1996.
PART II
ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Trading of the common stock is being reported in the Pink Sheets of
the National Quotation Bureau. The following table sets forth the range of
completed sales prices for the common stock as reported in the Pink Sheets
for the period indicated.
<TABLE>
<CAPTION>
HIGH LOW
---------- ----------
<S> <C> <C>
1st Quarter 1995 $7.75 $3.88
2nd Quarter 1995 4.25 2.50
3rd Quarter 1995 5.25 3.00
4th Quarter 1995 4.25 2.75
1st Quarter 1996 3.94 2.94
2nd Quarter 1996 5.32 3.63
3rd Quarter 1996 3.94 2.32
4th Quarter 1996 4.63 1.50
1st Quarter 1997 4.88 3.44
(through March 20, 1997)
</TABLE>
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The foregoing prices reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions.
(b) On March 14, 1997, there were approximately 319 holders of record of
the Company's common stock.
(c) The Company has paid no dividends and does not expect to pay any
dividends in the foreseeable future, as the Company intends to retain
earnings, if any, to finance growth of its operations. The Company is
not under any contractual restrictions as to its present or future
ability to pay dividends.
RECENT SALES OF UNREGISTERED SECURITIES
1. On May 17, 1996, the Company issued 10,000 shares of common stock to
The Jack W. Frankel and Florence M. Frankel Trust pursuant to the exercise of
a warrant for an aggregate cash consideration of $12,500. The issuance of
these shares was exempt from registration under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act").
2. On May 31, 1996, the Company issued a warrant to Suzanne Kay-Pittman
to purchase 10,000 shares of common stock at an exercise price of $4.69 per
share in consideration of Ms. Kay-Pittman's services to the Company as a
media consultant. The issuance of the warrant was exempt from registration
under Rule 506 and Section 4(2) of the Securities Act).
3. On June 5, 1996, the Company issued a warrant to James E. Reinmuth, a
director of the Company, to purchase 150,000 shares of common stock at an
exercise price of $5.00 per share in consideration of Mr. Reinmuth's services
for the Company and a warrant to purchase 100,000 shares of common stock at
an exercise price of $5.00 per share, in consideration of Mr. Reinmuth's
assistance in developing a market for the Company's products in China and
southeast Asia. The Company believes Mr. Reinmuth was an "accredited
investor" within the meaning of Rule 501 under the Securities Act. The
issuance of the warrants was exempt from registration under Section 4(2) of
the Securities Act.
4. On June 7, 1996, the Company issued 20,000 shares of common stock to
William H. Fleming pursuant to the partial exercise of an option at a price
of $0.12 per share. The issuance of these shares was exempt from registration
under Rule 701 under Section 3(b) of the Securities Act.
5. On August 19, 1996, the Company issued 377,604 shares of common stock
to Capital Consultants, Inc., as agent for certain investors, for an aggregate
cash
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consideration of $750,000. Capital Consultants, Inc. represented that each
purchaser was an "accredited investor" within the meaning of Rule 501 under
the Securities Act. The issuance of these shares was exempt from registration
under to Rule 506 and Section 4(2) of the Securities Act.
6. On October 22, 1996, the Company issued a warrant to The Sass Group to
purchase up to 10,000 shares of common stock at an exercise price of $3.00
per share in consideration of efforts by The Sass Group to market the
Company's products. The issuance of the warrant was exempt from registration
under Section 4(2) of the Securities Act.
7. On December 6, 1996, the Company issued a total of 225,000 shares of
common stock to 15 investors for an aggregate cash consideration of $450,000.
Each purchaser represented that it was either (i) an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act or (ii)
represented by a purchaser representative who met the requirements of Rule
501(h) of the Securities Act, and together with such purchaser representative
had such knowledge and experience in financial and business matters that it
was capable of evaluating the merits and risks of the invesment. The issuance
of these shares were exempt from registration pursuant to Rule 506 and
Section 4(2) of the Securities Act.
8. On December 16, 1996, the Company issued 260,417 shares of common
stock to Capital Consultants, Inc., as agent for certain investors, for an
aggregate cash consideration of $500,000. Capital Consultants, Inc.
represented that each purchaser was an "accredited investor" within the
meaning of Rule 501 under the Securities Act. The issuance of these shares
was exempt from registration under Rule 506 and Section 4(2) of the
Securities Act.
9. On December 30, 1996, the Company issued 20,000 shares of common stock
to William H. Fleming pursuant to the partial exercise of an option at a
price of $0.12 per share. The issuance of these shares was exempt from
registration pursuant to Rule 701 under Section 3(b) of the Securities Act.
10. On December 30, 1996, the Company issued 10,000 shares of common
stock to Laura T. Schroeder for an aggregate cash consideration of $20,000.
Ms. Schroeder represented that she was an "accredited investor" within
the meaning of Rule 501 under the Securities Act. The issuance of these
shares was exempt from registration under Rule 506 and Section 4(2) of the
Securities Act.
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company has two distinctive business strategies. The first strategy
is the continuation of the expansion of its diagnostic research and
development activities aimed at the commercialization of healthcare products
for women. The second strategy is the production, marketing and sale of the
Company's retail consumer product lines, the first being the Padette
interlabial pad and the second being the Affirm one-step pregnancy test.
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The Company introduced the Padette into the United States retail distribution
market during 1996. The Company used a direct market approach to test market
the Padette in Florida and achieved distribution in over 350 Walgreen stores.
The Company also sold a bulk shipment of 3.2 million Padettes for
distribution into the Chinese market during the first quarter of 1996. The
Company, however, had no significant sales of the Padette in either 1996 or
1995.
In September 1996, the Company received FDA clearance to market its
Affirm one-step home pregnancy test and is currently involved in discussions
with strategic partners to market the product domestically and
internationally. During the first quarter of 1997, the Company made an
initial sale of 10,000 Affirm pregnancy tests to a customer in South America.
The Company has not generated any significant revenues from the initial sale
of the Affirm product to date.
In December 1996, the Company made the decision to relocate its Florida
operations to Oregon, and to reserve for contractual obligations related to
the Florida operations as of December 31, 1996.
During 1997, the Company intends to develop marketing and sales plans for
a regional roll out of the Padette in a major market in the United States
beginning in early 1998. The Company believes this market launch will be the
first in a broad scale roll-out of the Padette. In addition to the Company's
plans to market and sell the Padette under its own brand name, the Company is
also seeking strategic partnerships, domestically and internationally, to
license the Padette technology.
The Company's manufacturing line is currently capable of producing
approximately 200 million Padettes per year. The Company anticipates
increasing its current production line from one to two lines during 1997.
With the addition of another production line, and assuming the operation of
three shifts per line, the Company's maximum Padette production capacity is
anticipated to be approximately 400 million per year. The addition of another
production line should enable the Company to meet the anticipated sales
growth of the Padette, if any, for 1997.
During 1996, the Company began initial feasibility studies of the PadKit.
Cost for initial diagnostic products and associated development costs are not
expected to exceed $500,000 in 1997. Initial products are anticipated for
field testing by year-end. Marketing efforts and revenues are not expected
for the PadKit in 1997.
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At December 31, 1996, the Company had cash and cash equivalents of
$830,870 and working capital of $191,782. To date, the Company has financed
its growth and operations through numerous private placements of equity and
debt securities and capital leases. During 1996 the Company raised over $1.7
million in equity financing from various groups of private investors in
exchange for shares of the Company's common stock. Of the $1.7 million raised
in 1996, the Company agreed to put into escrow an allocated amount of the
proceeds in order for the Company to meet its obligation for the expected
salary and related benefits associated with the hiring of a Director of Sales
and Marketing. Under the terms of the financing, the proceeds will be held in
escrow and drawn periodically as required over a two-year period ending May
1998.
Subsequent to December 31, 1996, the Company has received additional
commitments from various groups of private investors for approximately $1.5
million in equity financing, of which approximately $1.1 million has already
been received, in exchange for shares of the Company's common stock. The
Company's current financing should satisfy the Company's anticipated cash
requirements through August 1997. The Company anticipates having to raise
additional capital in order to meet costs associated with marketing, research
and development and related administrative activities. If the Company is
unable to obtain adequate additional financing, enter into a successful
business alliance or generate sufficient profitable sales revenues,
management may be required to curtail product development, marketing
activities and other operations.
During 1996, the Company entered into a lease line of credit (the
"Commitment") from First Portland Corporation ("First Corp."). First Corp.
has agreed to lease the Company up to an aggregate of $500,000 of capital
equipment. The lease terms are for either 24 months or 36 months. At the
maturity of each lease term, the Company will have the option to purchase the
equipment at its fair market value, renew the lease annually at the fair
rental value at such time or return the equipment to First Corp. The Company
also received other smaller individual leasing commitments from other leasing
companies during 1996. Throughout 1996, the Company entered into various
capital lease obligations totaling $486,435 for new equipment used in the
production of the Padette and for the research and development of other
healthcare products for women. The underlying capital leases are
collateralized by the leased equipment, with interest rates ranging from 9.75
percent per annum to 18.09 percent per annum and with various maturities
ending in 1999. During 1997, the Company plans on leasing additional
production equipment designed to provide end-user retail packaging capability
for the Padette.
FACTORS AFFECTING FORWARD-LOOKING STATEMENTS
The statements contained in this report that are not statements of
historical fact may include forward-looking statements (as defined in Section
27A of the Securities Act of 1933, as amended) that involve a number of risks
and uncertainties. Moreover, from time to time the Company may issue other
forward-looking statements. The following factors
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are among the factors that could cause actual results to differ materially
from the forward-looking statements and should be considered in evaluating
any forward-looking statements.
LACK OF REVENUES FROM PRODUCTS; EARLY STAGE OF PRODUCT DEVELOPMENT. The
Padette, PadKit, Affirm, Rapid-Sense and Antisense diagnostics are in the
early stages of development or marketing. See "-- Government Regulation."
There have been no significant revenues from the Padette and Affirm and there
have been no revenues at all from the PadKit, Rapid-Sense or Antisense
diagnostics. The Company does not have a stable baseload of demand for its
products and cannot estimate the potential market for its products. Potential
investors should be aware of the problems, delays, expenses and difficulties
encountered by any company whose products are in an early stage of
development, many of which may be beyond the Company's control. These
include, but are not limited to, unanticipated developmental, testing,
regulatory compliance, manufacturing and marketing costs and competition. In
addition, the Company's products are subject to the risks inherent in new
products. These risks include the absence of any assurance that products in
development will be successfully developed, or that the Company's products,
once developed, can be successfully manufactured, advertised and marketed,
will be commercially successful or will not become obsolete within a short
time after their development. Moreover, the costs of research and development
and clinical trials for new products cannot be reliably forecast and may
substantially exceed the Company's expectations and financial resources.
OPERATING LOSSES. During the fiscal year ended December 31, 1996, the
Company incurred losses of $4.3 million. In 1997, the Company expects losses
to continue as the costs of marketing, research and development and related
administrative activities are expected to exceed income from product sales.
These losses are expected to be funded from the Company's revenues, cash
reserves and future financing, if any. See "--Need for Funds."
NEED FOR FUNDS. The Company expects to raise additional funds through
equity and/or debt financing for the development, manufacture and marketing
of its planned products. These funds may not be available or available on
terms favorable to the Company or its shareholders. The inability of the
Company to obtain such financing could adversely affect the Company.
MANUFACTURING RISKS. The Company currently manufactures the Padette. As a
manufacturer, the Company will continually face risks regarding the availability
and costs of raw materials and labor, the potential need for additional capital
equipment, increased maintenance costs, plant and equipment obsolescence,
quality control and excess capacity. A disruption in the Company's production or
distribution could have a material adverse effect on the Company's financial
results. The Company currently purchases certain raw materials from one
supplier. Although the Company does not believe it would be difficult
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to replace this supplier, the Company has not approved other suppliers for
the sale of such raw materials to the Company.
UNCERTAIN ABILITY TO MANAGE GROWTH. The Company anticipates that in
order to achieve success in its industry, the Company will be required to
increase rapidly its sales, production and employee base. The Company
anticipates these increases will place significant demands on the Company's
management, working capital and financial and management control systems. The
Company may not be able to meet the demands of future growth. Any
inadequacies in these areas could have a material adverse effect on the
Company's business, financial condition and results of operations.
RISKS OF INTERNATIONAL BUSINESS. The Company's business is and will be
subject to the risks generally associated with doing business
internationally, including changes in demand resulting from fluctuations in
exchange rates, foreign governmental regulation and changes in economic
conditions. These factors, among others, could influence the Company's
ability to sell its products in international markets. In addition, the
Company's business is subject to the risks associated with legislation and
regulation relating to imports, including quotas, duties or taxes and other
charges, restrictions and retaliatory actions on imports to other countries
in which the Company's products may be sold or manufactured.
COMPETITION. The Company's current products and products in development
will compete with products from other companies that have an established
market, more employees and substantially greater research, financial and
marketing resources than the Company. Many of these competitors also have the
resources to manufacture and market their own products, which in many cases
the Company may not be able to do.
PATENTS, TRADEMARKS AND PROPRIETARY INFORMATION. The Company has the
right to or owns three unexpired U.S. patents and additional foreign patents
in Canada and Japan covering the Padette. These patents involve manufacturing
methods, improved absorption, and design of the manufacturing apparatus. The
Company has filed additional applications for the Padette involving such
areas as a 100 percent biodegradable pad and a diagnostic collection device.
The term for patents issued on applications filed on or after June 8, 1995 is
20 years from the date of the application or if the application contains a
specific reference to an earlier filed application under 35 USC Sections 120,
121 or 365(c), 20 years from the date on which the earliest such application
was filed. The term of patents issuing on applications filed before June 8,
1995, is the greater of the 20-year term described above or 17 years from
grant, depending on the amount of time between application and issuance.
The issuance of patents to the Company or to a licensor is not conclusive
as to validity or as to the enforceable scope of claims therein. The validity
and enforceability of a patent can be challenged by litigation after its
issuance, and, if the outcome of such litigation is adverse to the owner of
the patent, the owner's rights could be diminished or withdrawn. The issuance
of patents covering any of the Company's products may be insufficient to
prevent competitors from essentially duplicating the product by designing
PAGE 13
<PAGE>
around the patented aspects. The patent laws of other countries may differ
from those of the United States as to the patentability of the Company's
products and processes. Moreover, the degree of protection afforded by
foreign patents may be different from that in the United States.
The technologies used by the Company may infringe upon the patents or
proprietary technology of others. The cost of enforcing the Company's patent
rights in lawsuits that the Company may bring against infringers or defending
itself against infringement charges by other patent holders may be high and
could adversely affect the Company. The Company has U.S. trademarks for Fresh
n'Fit, a female silhouette logo and a butterfly logo.
The Company has received notice from another company claiming that such
other company has the prior right to use the "Athena" name. The Company may
in the future be required to refrain from using the "Athena" name. To date,
the Company has not prominently featured the "Athena" name on its products
and therefore the Company believes that refraining from its use on products
in the future will not have a material adverse effect on the Company.
Trade secrets and confidential know-how are important to the Company's
scientific and commercial success. Although the Company seeks to protect its
proprietary information through confidentiality agreements and appropriate
contractual provisions, others may develop independently the same or similar
information or gain access to proprietary information of the Company.
GOVERNMENT REGULATION. Many of the Company's activities are subject to
regulation by various local, state and federal regulatory authorities in the
United States and by governmental authorities in foreign countries where its
products may be marketed. The Padette has received approval for
over-the-counter marketing in the United States under a 510(k) pre-market
notification submission to the FDA as a Class II device. No further FDA
requirements for clinical evaluation of the Padette are expected. Requests
for regulatory approval for marketing in several countries have been made and
regulatory approval has been obtained in China. The Company cannot predict
when or whether approvals in other countries will be obtained. The PadKit,
Rapid-Sense and Antisense diagnostics are still in the development stage and
will require FDA approval and approval from similar authorities in other
countries. See "--Lack of Revenues from Products; Early State of Product
Development." Obtaining such approvals may be a lengthy and expensive
proceeding often involving extensive testing and clinical trials to
demonstrate safety, reliability and efficacy. In addition, the process of
obtaining approvals may be subject to changes in regulations resulting in
unexpected costs and uncertainty. The Company may not be able to comply with
the applicable requirements and necessary approvals may not be granted.
Moreover, the extent and impact of future governmental regulations cannot be
predicted. Failure to comply with the regulatory requirements applicable to
the Company
PAGE 14
<PAGE>
may result in fines, injunctions, civil penalties, recall or product seizure,
among other penalties.
DEPENDENCE ON MANAGEMENT AND CONSULTANTS. The Company depends to a large
extent upon the abilities and continued participation of its current
directors, executive officers and consultants. The loss of any of these
people could have a serious adverse effect upon the Company's business. The
Company may not be able to attract and retain key personnel with the skills
and expertise necessary to manage its business. The Company does not have
key-man life insurance on the lives of any of its personnel. Competition for
management and scientific staff in the biotechnology, biomedical and health
care fields is intense. The Company may not be able to continue to employ
personnel and consultants with sufficient expertise to satisfy the Company's
needs.
PRODUCT LIABILITY. The Company could be subject to claims for personal
injuries or other damages resulting from its products. The Company carries
general liability insurance, including products liability insurance with an
aggregate limit of $2,000,000. While there have been no product liability
claims against the Company, any claims for amounts exceeding its insurance
coverage that were successful or protracted could have a material adverse
effect on the Company. The Company's insurance may not adequately protect the
Company against all such liabilities. The Company's insurance does not cover
actions brought in countries other than the United States. The Company's
current product is not intended for internal use and therefore the Company
does not consider claims relating to toxic shock syndrome to be a risk to the
Company. However, the Company cannot guarantee that the product will not be
used internally by persons misusing the product. Toxic shock syndrome is
excluded from the Company's insurance policy.
ITEM 7. FINANCIAL STATEMENTS
Financial Statements are listed under Item 13 of the Annual Report and
begin on page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PAGE 15
<PAGE>
PART III
ITEM 9: DIRECTORS AND EXECUTIVE OFFICERS
The Company's executive officers, directors and consultants are:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James E. Reinmuth, Ph.D. 56 Chairman, Chief Executive Officer
and Director
William H. Fleming, Ph.D. 50 President, Chief Operating Officer,
Secretary and Director
Carol A. Scott, Ph.D. 47 Director
RoseAnna Sevcik 33 Director
James R. Wilson 47 Director and Treasurer
Robert L. Buck, Ph.D. 45 Vice President Chief Technical Officer
Peter Burke 52 Financial Consultant
Paul Mueggler, Ph.D. 47 Clinical Consultant
</TABLE>
In September 1996, John F. Perry voluntarily and without disagreement
officially resigned as Chairman of the Board and Chief Executive Officer of
the Company. The Board immediately appointed James E. Reinmuth as his
replacement to the position of Chairman of the Board and Chief Executive
Officer. In September 1996, the Board also elected James R. Wilson as a new
member of the Board to fill an existing vacancy. Mr. Wilson was elected
Treasurer of the Company during the same meeting. Effective February 28,
1997, John F. Perry voluntarily and without disagreement resigned as a member
of the Board. His employment with the Company was terminated effective
February 28, 1997.
JAMES E. REINMUTH, Ph.D. has served as Chairman and Chief Executive
Officer of the Company since September 1996. Since May 1995, Mr. Reinmuth has
served as a director of the Company, and from May 1995 to September 1996, he
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., a pharmaceutical
company; W.E. Simon and Sons
PAGE 16
<PAGE>
Asia Ltd., a merchant bank in Hong Kong; Asia Capital Ltd., an investment
bank in Sri Lanka and Capital Consultants, Inc., an investment firm.
WILLIAM H. FLEMING, Ph.D. 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 ProFem from July 1993 until its
merger with the Company in June 1994. From April 1992 to July 1993, Mr.
Fleming served as an associate with Sovereign Ventures, a healthcare
consulting firm; concurrently he served as director of corporate development
of AntiVirals, Inc., a biotechnology company involved in antisense
technology. 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 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.
CAROL A. SCOTT, PH.D. has served as a director of the Company since
February 1995. Dr. 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. Dr. Scott is a frequent author and lecturer and has served on the
Editorial Board of the Journal of Consumer Research since 1980.
JAMES R. WILSON has served as a director of the Company since September
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 principal for Rubicon Asset Management
Corporation, an investment analysis company. Mr. Wilson has been a licensed
real estate agent since 1982.
ROBERT L. BUCK, PH.D. has served as Vice President Chief Technical
Officer of the Company since January 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
PAGE 17
<PAGE>
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, a Certified Management Consultant, was hired as a financial
consultant for the Company in December 1996. In 1987, 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 1982 to September 1996, Mr. Burke
served as chief executive officer and chief financial officer for Shaw
Surgical Company, a medical supply distribution company.
PAUL MUEGGLER, PH.D. was hired as a Clinical Diagnostics consultant in
February 1997. Dr. Mueggler has postdoctoral training in Clinical
Chemistry/Toxicology, a board-certified program. Dr. Mueggler has extensive
experience in clinical diagnostics. From July 1992 to July 1996, Dr. Mueggler
served as director of technical and clinical operations for OXIS
International, Inc. From 1977 to 1996, he has served in various departments
at Oregon Health Sciences University, Portland, Oregon. Dr. Mueggler has also
published several manuscripts in medical, physiology and scientific journals.
Directors hold office until the next annual meeting of stockholders or
until their successors are duly elected and qualified; officers hold office
at the discretion of the Board. 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 for their services.
At a December 1996 Board meeting, the Company created a Pricing Committee
of the Board of Directors comprised of William H. Fleming, James E. Reinmuth
and James R. Wilson. The Pricing Committee will have the authority to
consider and approve proposals for certain equity investments in the Company.
In March 1997, the Company formed a Medical Advisory Panel. This panel
currently consists of six members, two of whom are employees of the Company.
The outside members are all prominent Ph.D.'s and M.D.'s specializing in
public and/or women's health. This advisory Board is expected to provide
guidance to the Company on clinical validations for its planned products.
PAGE 18
<PAGE>
ITEM 10: 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 $100,000 in compensation (the "Named
Executive Officers") for each of the fiscal years ended December 31, 1996,
1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------- -----------------------
OTHER ANNUAL SECURITIES
NAME AND PRINCIPAL SALARY COMPENSATION UNDERLYING
POSITION YEAR ($) ($) OPTIONS/WARRANTS (#)
------------------ ------ --------- --------------- -----------------------
<S> <C> <C> <C> <C>
John F. Perry (1)............................ 1996 145,000 -- --
Chief Executive Officer 1995 145,000 10,000 --
1994 119,983 3,000 150,000
James E. Reinmuth (2)........................ 1996 7,500 -- 250,000
Chief Executive Officer 1995 -- -- 50,000
--
William H. Fleming........................... 1996 115,000 -- --
President, COO, Secretary and Director 1995 115,000 -- --
1994 102,775 5,904 150,000
</TABLE>
- ------------------------
(1) John F. Perry voluntarily resigned as Chief Executive Officer of the
Company in September 1996. Mr. Perry served as Chief Executive Officer
from February 1994 to September 1996.
(2) Mr. Reinmuth has served as Chief Executive Officer of the Company since
September 1996.
OPTION GRANTS
No Named Executive Officers were granted options during the fiscal year
ended December 31, 1996.
EXERCISE OF STOCK OPTIONS AND YEAR-END OPTION/WARRANT VALUES
The following table sets forth certain information regarding options and
warrants of the Named Executive Officers outstanding as of December 31, 1996.
PAGE 19
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1996
AND YEAR-END OPTION/WARRANT VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
VALUE OPTIONS/WARRANTS AT OPTIONS/WARRANTS AT
REALIZED DECEMBER 31, 1996 DECEMBER 31, 1996(5)
SHARES ACQUIRED ON (1) -------------------------- ---------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ------------------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
- ------------------------
(1) Calculated based on the difference between the option exercise price and the
closing price 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, all such shares will be exercisable pursuant to incentive
stock options at $5.13 per share.
(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 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. In the event of termination of employment by the
Company, pursuant to the terms of the Fleming Employment Agreement, Mr.
Fleming will be entitled to receive his 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 Fleming Employment Agreement
also contains language requiring Mr. Fleming to keep certain information of
the Company confidential.
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,
PAGE 20
<PAGE>
1997. Pursuant to the terms of the Perry Employment Agreement, Mr. Perry will
continue to receive his annual base salary 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) 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 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.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the Company's officers, 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 shareholders 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.
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership as of March 14, 1997 of the Company's common stock by (i) each
beneficial owner of more than 5 percent of the common stock, (ii) the Named
Executive Officers, (iii) each director and director 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.
PAGE 21
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND NATURE OF
ADDRESS OF BENEFICIAL BENEFICIAL
TITLE OF CLASS OWNER OWNERSHIP (1) PERCENT OF CLASS OUTSTANDING
- ------------------------------- ------------------------------- ------------------ -----------------------------
<S> <C> <C> <C>
Common Stock $0.01 par value William H. Fleming 788,925(2) 7.0%
10180 SW Nimbus Ave.,
Suite J-5
Portland, OR 97223
John F. Perry 848,210(3) 7.4%
2451 S. Ponte Vedra Blvd.
Ponte Vedra, FL 32082
James E. Reinmuth
5171 Solar Heights Drive
Eugene, OR 97405 487,000(4) 4.4%
Carol A. Scott 10,000(5) *
1834 Park Blvd.
Palo Alto, CA 94306
RoseAnna Sevcik 25,000(6) *
1736 Aidenn Lair.
Dresher, PA 19025
James R. Wilson 325,928(7) 3.0%
3198 Powder River Drive
Eugene, OR 97408
Robert L. Buck 225,000(8) 2.1%
10180 SW Nimbus Ave.,
Suite J-5
Portland, OR 97223
Capital Consultants, Inc. 3,660,021(9) 34.2%
2300 SW First Avenue,
Suite 200
Portland, OR 97201
Cort MacKenzie Securities, Inc. 1,307,835(10) 11.0%
5335 SW Meadows Road,
Suite 270
Lake Oswego, OR 97035
<PAGE>
Sovereign Ventures, LLC 762,135(11) 7.1%
One SW Columbia, Suite 1105
Portland, OR 97258
All directors and officers as a
group (6 persons) 1,861,853(12) 15.3%
</TABLE>
- ------------------------
* Less than 1%.
6
(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 shares subject to option exercisable within 60 days after
March 14, 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) Includes 729,640 shares subject to options exercisable within 60 days after
March 14, 1997.
(4) Includes 25,000 shares subject to options exercisable within 60 days after
March 14, 1997, 410,000 shares issuable within 60 days after March 14, 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) Includes 10,000 shares subject to options exercisable within 60 days after
March 14, 1997.
(6) Includes 25,000 shares subject to options exercisable within 60 days after
March 14, 1997.
<PAGE>
(7) Includes 12,500 shares subject to options exercisable within 60 days after
March 14, 1997 and 160,000 shares issuable within 60 days after March 14,
1997 upon exercise of a warrant to purchase common stock.
(8) Includes 225,000 shares subject to options exercisable within 60 days after
March 14, 1997.
(9) Includes 50,000 shares issuable within 60 days after March 14, 1997 upon
exercise of a warrant to purchase common stock and all shares with respect
to which Capital Consultants, Inc. acts as an agent.
(10) Includes 646,000 shares issuable after March 14, 1997 upon exercise of
warrants to purchase common stock, 308,750 shares and 270,000 shares
issuable after March 14, 1997 upon exercise of warrants held by Cort
MacKenzie & Thomas, Inc. and Thomas C. Stewart, respectively, to purchase
common stock.
(11) Sovereign Ventures, L.L.C. is an Oregon limited liability company. Dennis
R. Burger and Michael C. Hubbard, who were both directors of the Company
until February 1995, each owns a 50% interest in Sovereign. Mr. Hubbard
beneficially owns an additional 150,000 shares. Yamhill Valley Vineyards,
which is owned by Mr. Burger and his wife, beneficially owns an additional
75,000 shares.
(12) Includes 742,140 shares subject to options exercisable within 60 days after
March 14, 1997 and 795,000 shares issuable within 60 days after March 14,
1997 upon exercises of warrants to purchase common stock.
ITEM 12: 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 component of the cost to manufacture the Padette
interlabial pads and thus reflected in the product's pricing.
ITEM 13: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See Exhibit Index.
(b) Reports on Form 8-K filed during Last Quarter of Fiscal Year.
None.
<PAGE>
ATHENA MEDICAL CORPORATION
(dba A-FEM MEDICAL CORPORATION)
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996 AND 1995
TOGETHER WITH AUDITORS' REPORT
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
ATHENA Medical Corporation (dba AFEM Medical Corporation):
We have audited the accompanying balance sheets of ATHENA Medical
Corporation (dba AFEM Medical Corporation) (a Nevada corporation) as of
December 31, 1996 and 1995, and the related statements of operations, changes in
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ATHENA Medical Corporation
(dba AFEM Medical Corporation) as of December 31, 1996 and 1995, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has experienced recurring losses from
operations and has not generated significant revenues from product sales. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Portland, Oregon
March 3, 1997
F-1
<PAGE>
ATHENA MEDICAL CORPORATION
(dba AFEM Medical Corporation)
BALANCE SHEETS AS
OF DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................................... $ 671,495 $ 2,464,041
Restricted cash (Note 1).......................................... 159,375 --
Accounts receivable............................................... 30,772 2,065
Inventories (Note 3).............................................. 190,818 159,620
Prepaid expenses and other........................................ 155,941 258,489
------------ ------------
Total current assets.............................................. 1,208,401 2,884,215
EQUIPMENT, FURNITURE AND LEASEHOLD IMPROVEMENTS (Note 4).......... 857,159 544,279
Less- Accumulated depreciation and amortization................... (236,937) (95,726)
------------ ------------
620,222 448,553
PATENTS AND LICENSES, net......................................... 28,891 19,529
LOANS RECEIVABLE--Officers and directors.......................... 124,093 116,760
------------ ------------
Total assets...................................................... $ 1,981,607 $ 3,469,057
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.................................................. $ 249,472 $ 196,547
Current portion--capital lease obligations........................ 178,433 --
(Note 5)
Accrued expenses.................................................. 56,221 70,000
Accrued salaries and wages........................................ 292,493 15,720
Accrued settlement for litigation (Note 8)........................ 240,000 --
------------ ------------
Total current liabilities......................................... 1,016,619 282,267
LONG-TERM PORTION--CAPITAL LEASE OBLIGATIONS...................... 195,612 --
(Note 5)
------------ ------------
Total liabilities................................................. 1,212,231 282,267
COMMITMENTS AND CONTINGENCIES (Notes 2 and 8)
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value; authorized 33,000,000 shares; issued
10,127,914 shares and 8,948,243 shares at December 31, 1996 and
1995, respectively.............................................. 101,279 89,482
Additional paid-in capital........................................ 10,403,611 8,499,708
Accumulated deficit............................................... (9,735,514) (5,402,400)
------------ ------------
Total stockholders' equity........................................ 769,376 3,186,790
------------ ------------
Total liabilities and stockholders' equity........................ $ 1,981,607 $ 3,469,057
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-2
<PAGE>
ATHENA MEDICAL CORPORATION
(dba AFEM Medical Corporation)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
REVENUES:
Sales, net of discounts......................................... $ 192,682 $ 51,076
------------- -------------
Net sales....................................................... 192,682 51,076
COST OF SALES:
Cost of goods sold.............................................. 72,480 40,520
------------- -------------
Cost of goods sold.............................................. 72,480 40,520
------------- -------------
Gross margin.................................................... 120,202 10,556
GENERAL AND ADMINISTRATIVE EXPENSES............................. (4,464,604) (4,145,840)
------------- -------------
Operating loss.................................................. (4,344,402) (4,135,284)
------------- -------------
OTHER INCOME (EXPENSE):
Interest income................................................. 47,595 182,266
Interest expense................................................ (38,893) (266,467)
Miscellaneous income............................................ 2,586 23,376
------------- -------------
11,288 (60,825)
------------- -------------
Net loss........................................................ $ (4,333,114) $ (4,196,109)
------------- -------------
------------- -------------
NET LOSS PER SHARE.............................................. $ (.47) $ (.52)
------------- -------------
------------- -------------
WEIGHTED AVERAGE SHARES OUTSTANDING............................. 9,183,085 8,012,632
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
ATHENA MEDICAL CORPORATION
(dba AFEM Medical Corporation)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------------------ PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
------------ ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1994................ 6,914,743 $ 69,147 $ 3,587,415 $ (1,206,291) $2,450,271
Common Stock issued on options exercised
for cash, $0.12 per share............... 20,000 200 2,200 -- 2,400
Common Stock issued on options exercised
for cash, $1.75 per share............... 13,500 135 23,490 -- 23,625
Common Stock issued on conversion of
debentures, $2.00 per share............. 2,000,000 20,000 3,980,000 -- 4,000,000
Options and warrants issued in exchange
for services............................ -- -- 906,603 -- 906,603
Net loss................................. -- -- -- (4,196,109) (4,196,109)
------------ ---------- ------------- ------------- ------------
BALANCE, December 31, 1995................ 8,948,243 89,482 8,499,708 (5,402,400) 3,186,790
Common stock issued on options exercised
for cash, $0.12 per share............... 40,000 400 4,400 -- 4,800
Common stock issued on warrants exercised
for cash, $1.00 per share............... 256,650 2,567 254,083 -- 256,650
Common stock issued on warrants exercised
for cash, $1.25 per share............... 10,000 100 12,400 -- 12,500
Common stock issued for cash, $1.92 per
share, net of financing costs........... 638,021 6,380 1,202,719 -- 1,209,099
Common stock issued for cash, $2.00 per
share, net of financing costs........... 235,000 2,350 430,301 -- 432,651
Net loss................................. -- -- -- (4,333,114) (4,333,114)
------------ ---------- ------------- ------------- ------------
BALANCE, December 31, 1996................ 10,127,914 $ 101,279 $ 10,403,611 $ (9,735,514) $ 769,376
------------ ---------- ------------- ------------- ------------
------------ ---------- ------------- ------------- ------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
ATHENA MEDICAL CORPORATION
(dba AFEM Medical Corporation)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................................ $ (4,333,114) $ (4,196,109)
Adjustments to reconcile net loss to net cash flows used in
operating activities-
Depreciation and amortization.................................. 146,351 90,885
Amortization of deferred financing fee......................... -- 200,000
Loss on disposal of assets..................................... -- 9,300
Net loss on sales of securities................................ -- 27,563
Services received for options and warrants issued.............. -- 906,603
Changes in operating assets and liabilities:
Restricted Cash............................................... (159,375) --
Accounts receivable........................................... (28,707) (2,065)
Inventories................................................... (31,198) (115,532)
Prepaid expenses and other.................................... 102,548 (233,008)
Accounts payable.............................................. 52,925 12,103
Accrued salaries and wages.................................... 276,773 (30,338)
Accrued expenses.............................................. (13,779) 70,000
Accrued settlement for litigation............................. 240,000 --
------------- -------------
Net cash used in operating activities....................... (3,747,576) (3,260,598)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment, furniture and leasehold improvements... (312,880) (382,761)
Other assets................................................... (14,502) 62,849
------------- -------------
Net cash used in investing activities....................... (327,382) (319,912)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible debentures and notes................. -- 1,996,700
Additions to notes receivable, net of repayments............... (7,333) 3,240
Net proceeds from sale of Common Stock......................... 1,915,700 126,025
Net proceeds from capital lease obligations, net of
repayments.................................................... 374,045 --
------------- -------------
Net cash provided by financing activities................... 2,282,412 2,125,965
------------- -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS....................... (1,792,546) (1,454,545)
CASH AND CASH EQUIVALENTS, beginning of period.................. 2,464,041 3,918,586
------------- -------------
CASH AND CASH EQUIVALENTS, end of period........................ $ 671,495 $ 2,464,041
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
ATHENA MEDICAL CORPORATION
(dba AFEM Medical Corporation)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. ORGANIZATION OF THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
ATHENA Medical Corporation (dba AFEM Medical Corporation) (the Company) is
engaged in the development of health care products for women and has, as its
initial revenue-producing product, the PadetteTM interlabial pad (the PadetteTM)
which was designed to provide a safe, comfortable and convenient alternative to
existing feminine protection products. The Company received Food and Drug
Administration (FDA) clearance to market the PadetteTM in 1989 under a 510(k)
application. The Company holds an exclusive worldwide license to the initial
U.S. and foreign patents covering the PadetteTM and has additional patents of
its own on the PadetteTM. The Company introduced a second revenue-generating
product in 1996, the Affirm, a rapid one-step Pregnancy Test. This product is
available domestically and internationally for over-the-counter and professional
markets. Concurrently, the Company is engaged in expanding its diagnostic
research and development activities aimed at the commercialization of other
health care products for women.
During 1994, the Company entered into an agreement with a group of private
investors for the sale of units comprised of the Company's Common Stock and
convertible debentures totaling $6 million. As of December 31, 1994, the Company
had received $4 million as a result of this transaction. The balance of $2
million was received in April 1995 (see Note 9).
The Company has experienced significant operating losses during the years
ended December 31, 1996 and 1995 and has continued to incur losses into the
first quarter of 1997. Further, the Company has not generated significant
revenues from product sales, nor is there any assurance of future significant
revenues. The Company contemplates that significant ongoing expenditures will be
necessary to successfully implement its business plan, including developing,
manufacturing and marketing its proprietary products. These circumstances raise
substantial doubt about the Company's ability to continue as a going concern.
Execution of the Company's plans and its ability to continue as a going concern
depend upon its acquiring substantial additional financing. Management's plans
include efforts to obtain additional capital and to evaluate potential
partnering opportunities. The Company has demonstrated the ability to raise
operating funds in the past by securing investment in its Common Stock of
approximately $9.0 million through December 31, 1996; however, there can be no
assurance that the Company's efforts to raise additional funding or enter into a
business alliance will be successful. If the Company is unable to obtain
F-6
<PAGE>
adequate additional financing, enter into such business alliance or generate
sufficient profitable sales revenues, management may be required to curtail the
Company's product development, marketing activities and other operations.
FAIR VALUE
The carrying value of financial instruments approximates fair value, unless
otherwise disclosed.
CASH AND CASH EQUIVALENTS
The Company considers all instruments with maturities of three months or
less when purchased to be cash equivalents.
RESTRICTED CASH
Restricted cash represents cash required to satisfy the Company's contract
obligation for salary and related benefits associated with the hiring of the
Director of Sales and Marketing.
CONCENTRATION OF RISK
The Company currently purchases certain raw materials from a single
supplier. Management believes that other suppliers could supply these products,
but there is no assurance that such a change in supplier would not adversely
impact the terms currently received by the Company
INVENTORIES
Inventories are valued at the lower of cost or market with cost determined
on a first-in, first-out basis and market based on the lower of replacement cost
or estimated realizable value.
PROPERTY, EQUIPMENT AND FURNITURE
Property, equipment and furniture are recorded at cost, except for assets
acquired in the acquisition noted above which are recorded at estimated fair
value, and depreciated on a straight-line basis over useful lives ranging from 3
to 10 years. Leasehold improvements are amortized over the lives of the related
leases. Maintenance and repair costs are expensed as incurred; renewals and
betterments are capitalized.
RESEARCH AND DEVELOPMENT COSTS
Included in General and Administrative expenses are $249,612 and $228,435 of
research and development expenses in 1996 and 1995, respectively.
F-7
<PAGE>
PATENTS AND LICENSES
Patent costs are capitalized and amortized by the straight-line method over
a 17-year period beginning with the date the patent is granted. Costs are
amortized over the remaining useful lives ranging from 1 to 11 years. Licenses
are recorded at cost.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109). Under SFAS 109, deferred tax assets and liabilities are recorded based on
the tax effected difference between the tax bases of assets and liabilities and
their carrying amount for financial reporting purposes, referred to as
"temporary differences," using enacted marginal income tax rates.
PER SHARE DATA
Net loss per share is based on the weighted average shares outstanding
during each period. Stock options, warrants and convertible debentures have not
been included in the calculation of weighted average shares outstanding because
their effect would be antidilutive.
SUPPLEMENTAL CASH FLOW DISCLOSURE
Total cash paid for interest costs was $38,761 and $66,467 for the years
ended December 31, 1996 and 1995, respectively.
As described in Note 9, in June 1995, $4 million of convertible debentures
were converted to common stock.
USE OF ESTIMATES
The preparation of these financial statements required the use of certain
estimates by management in determining the recorded amounts of the Company's
assets, liabilities, revenues and expenses. Actual results may differ from these
estimates.
RECLASSIFICATION
Certain reclassifications have been made to prior year amounts to conform to
the current year presentation.
2. RELATED PARTY TRANSACTIONS:
Under terms of a licensing agreement, the Company assumed an obligation to
pay royalties to an investor (who is a noncontrolling stockholder) based on
varying percentages of up to 5 percent of net sales of the PadetteTM through
February 1998.
F-8
<PAGE>
On July 1, 1994, the Company entered into a three-year agreement with
Sovereign Ventures, LLC (Sovereign), an Oregon limited liability corporation
which is owned by two persons who were directors of the Company at the date of
the agreement. Both individuals voluntarily resigned from the Board of Directors
during 1995. The agreement called for Sovereign to provide assistance with
strategic and operational planning, market development, financing arrangements
and other consulting services. Under terms of the agreement, compensation for
those services totaled $352,000. The costs of services provided under the
agreement were expensed as the services were provided. Expenses incurred under
the agreement totaled $252,000 during 1995. The Company has no further
obligations under the agreement.
3. INVENTORIES:
Inventories consisted of the following components at December 31:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Raw materials......................................................... $ 46,422 $ 134,741
Work-in-process....................................................... 118,271 7,781
Finished goods........................................................ 26,125 17,098
---------- ----------
$ 190,818 $ 159,620
---------- ----------
---------- ----------
</TABLE>
4. EQUIPMENT, FURNITURE AND LEASEHOLD IMPROVEMENTS:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Equipment............................................................. $ 722,916 $ 452,363
Furniture and fixtures................................................ 30,469 18,705
Leasehold improvements................................................ 103,774 73,211
---------- ----------
857,159 544,279
Less- Accumulated depreciation and amortization....................... (236,937) (95,726)
---------- ----------
Net equipment, furniture and leasehold improvements................... $ 620,222 $ 448,553
---------- ----------
---------- ----------
</TABLE>
Included in the above table are amounts relating to assets utilized under
capital leases which had a net book value of $452,420 at December 31, 1996.
5. OBLIGATIONS UNDER CAPITAL LEASES:
Certain collateralized equipment is leased by the Company, which obligations
are reflected by the secured leases as noted below. These leases are used for
the research and development of new products and for the manufacturing and
production of the PadetteTM.
F-9
<PAGE>
Capital lease obligations consist of the following at December 31, 1996:
<TABLE>
<S> <C>
Secured lease at 13.33%, due 1998 $ 62,880
Secured lease at 9.75%, due 1998 9,058
Secured lease at 13.57%, due 1999 107,197
Secured lease at 14.73%, due 1999 42,566
Secured lease at 18.09%, due 1999 152,344
---------
374,045
Less- Current maturities (178,433)
---------
Total capital lease obligations $ 195,612
---------
---------
</TABLE>
Principal payment requirements on capital lease obligations for the years
ended December 31, are as follows:
<TABLE>
<S> <C>
1997..... $ 178,433
1998..... 142,009
1999..... 53,603
---------
$ 374,045
---------
---------
</TABLE>
6. COMMON STOCK OPTIONS AND WARRANTS:
During 1994, the Company adopted the 1994 Incentive and Non-Qualified
Stock Option Plan (the Incentive Plan), under which 3,300,000 shares of
Common Stock are reserved for issuance under qualified options, nonqualified
options, stock appreciation rights and other awards as set forth in the
Incentive Plan. The Incentive Plan provides for administration by a Committee
comprised of not less than two members of the Company's Board of Directors.
Such Committee (or the Board of Directors in its absence) determines the
number of shares, option price, duration and other terms of the options
granted under the Incentive Plan. Qualified options are available for
issuance to employees of the Company. Nonqualified options are available for
issuance to consultants, advisors and others having a relationship with the
Company, on terms as determined by the Committee.
F-10
<PAGE>
COMMON STOCK OPTIONS
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES SUBJECT EXERCISE PRICE
TO OPTIONS PER SHARE
-------------- ----------------
<S> <C> <C>
Balance at December 31, 1994............................ 1,984,030 $ 1.32
Options granted........................................ 306,000 3.08
Options exercised...................................... (33,500) 0.78
Options canceled....................................... (120,000) 1.75
-------------- ---------
Balance at December 31, 1995............................ 2,136,530 1.67
Options granted........................................ 175,000 3.96
Options exercised...................................... (40,000) .12
Options canceled....................................... (28,500) 2.48
-------------- ---------
Balance at December 31, 1996............................ 2,243,030 $ 1.77
-------------- ---------
-------------- ---------
</TABLE>
Of the outstanding options at December 31, 1996 and 1995, 2,030,280 and
1,973,780, respectively, were qualified stock options and 212,750 and 162,750,
respectively, were nonqualified stock options. The options are exercisable for
shares of the Company's Common Stock. Outstanding options and rights expire on
various dates through November 2006. The number of shares available for grant
under the Incentive Plan was 983,470 at December 31, 1996.
QUALIFIED STOCK OPTIONS
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
UNDER OPTION PER SHARE
------------- ----------------
<S> <C> <C>
Number exercisable at December 31, 1996 1,712,280 $ 1.25
Number exercisable thereafter 318,000 $ 3.84
</TABLE>
NONQUALIFIED STOCK OPTIONS
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
UNDER OPTION PER SHARE
------------- -----------------
<S> <C> <C>
Number exercisable at December 31, 1996 75,250 $2.91
Number exercisable thereafter 137,500 $2.86
</TABLE>
F-11
<PAGE>
During 1995, compensation expense in the amount of $28,800 was recorded
related to options granted for which the exercise price was less than the fair
market value of the stock at the date of grant.
COMMON STOCK WARRANTS
As of December 31, 1996, warrants for a total of 3,351,250 shares of Common
Stock had been awarded. The warrants may be exercised for shares of the
Company's Common Stock. During 1996, 266,650 warrants were exercised and 5,000
warrants were canceled. No warrants were exercised or canceled during 1995. The
following summarizes outstanding warrants for shares of the Company's Common
Stock:
<TABLE>
<CAPTION>
SHARES WEIGHTED AVERAGE
SUBJECT TO EXERCISE PRICE
WARRANTS PER SHARE
---------- -----------------
<S> <C> <C>
Balance at December 31, 1994................................... 2,305,750 $1.34
Warrants granted.............................................. 992,150 2.37
---------- -----
Balance at December 31, 1995................................... 3,297,900 1.65
Warrants granted.............................................. 325,000 4.45
Warrants exercised............................................ (266,650) 1.01
Warrants canceled............................................. (5,000) 4.00
---------- -----
Balance at December 31, 1996................................... 3,351,250 $1.96
---------- -----
---------- -----
Number exercisable at December 31, 1996........................ 3,307,916 $1.96
Number exercisable thereafter.................................. 43,334 2.91
</TABLE>
The Company recorded expense in the amount of $877,803 during 1995 related
to warrants issued for services rendered for which the exercise price was less
than the fair market value of the stock at the date of grant.
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 123
During 1995, the Financial Accounting Standards Board issued SFAS 123 which
defines a fair value based method of accounting for an employee stock option and
similar equity instruments and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans. However, it also
allows an entity to continue to measure compensation cost for those plans using
the method of accounting prescribed by APB 25. Entities electing to remain with
the accounting in APB 25 must make pro forma disclosures of net income and, if
presented, earnings per share, as if the fair value based method of accounting
defined in SFAS 123 had been adopted.
The Company has elected to account for its stock-based compensation plan
under APB 25; however, the Company has computed, for pro forma disclosure
F-12
<PAGE>
purposes, the value of all options granted during 1996 and 1995 using the
Black-Scholes option pricing model as prescribed by SFAS 123 using the following
weighted average assumptions for grants:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
Average risk-free interest rate............................................ 6.37% 6.07%
Expected dividend yield.................................................... -- --
Expected lives............................................................. 6 years 6 years
Expected volatility........................................................ 93.67% 95.91%
</TABLE>
Using the Black-Scholes methodology, the total value of options granted
during 1996 and 1995 was $550,750 and $718,300, respectively, which would be
amortized on a pro forma basis over the vesting period of the options (typically
four years). The weighted average fair value of options granted during 1996 and
1995 was $3.96 per share and $3.08 per share, respectively. If the Company had
accounted for its stock-based compensation plan in accordance with SFAS 123, the
Company's net loss and net loss per share would approximate the pro forma
disclosures below:
<TABLE>
<CAPTION>
1996 1995
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
AS REPORTED PRO FORMA AS REPORTED PRO FORMA
------------- ------------- ------------- -------------
Net loss.............................................. $ (4,333,114) $ (4,594,232) $ (4,196,109) $ (4,375,684)
Net loss per share.................................... (.47) (.50) (.52) (.55)
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts, SFAS 123 does not apply to awards prior to January
1, 1995 and additional awards are anticipated in future years.
7. INCOME TAXES:
As of December 31, 1996, the Company had federal net operating loss (NOL)
carryforwards of approximately $7.8 million. If not applied against future
taxable income, the federal NOL carryforwards will expire in the years 2001
through 2011. Changes in the Company's ownership have caused an annual
limitation on the amount of carryforwards that can be utilized and start-up
costs that can be amortized. As of December 31, 1996 and 1995, the Company had
net deferred tax assets of approximately $2.9 million and $1.4 million,
respectively, primarily resulting from deferred start-up costs and NOL
carryforwards. In accordance with SFAS 109, at December 31, 1996 and 1995 a
valuation allowance was recorded to reduce net deferred tax assets to zero.
F-13
<PAGE>
8. COMMITMENTS AND CONTINGENCIES:
EMPLOYMENT CONTRACT
The Company has an employment contract with its President and COO, who is
also a director of the Company. Under terms of the contract, as amended, the
Company committed to pay an annual salary for the five-year period ending
June 30, 1998. As of December 31, 1996, salary related to this contract
totaled approximately $115,000 and, under terms of the contract, may be
increased in the future.
OPERATING LEASES
As of March 1996, the Company relocated its corporate office and product
development facilities to 7,100 square feet of leased space within the same
business park as its former office. In addition, the Company leases its
warehouse and manufacturing facilities in the same business park. Other
leases have terms of one year or less. Future minimum lease payments for
office, warehouse and manufacturing facilities at December 31, 1996 totaled
$317,867 and are payable as follows:
<TABLE>
<S> <C>
1997..... $122,531
1998..... 122,876
1999..... 68,966
2000..... 3,494
</TABLE>
Rent expense was $127,338 and $96,250 for the years ended December 31, 1996
and 1995, respectively.
LITIGATION
During 1995, the Company was named as a defendant in a civil action brought
in the Circuit Court of Oregon for Washington County by Kassia International
Incorporated (the Plaintiff). The complaint alleges that the Company breached
its obligations to complete the purchase of the Plaintiff in the spring of 1995
and sought damages of up to $6 million under various theories. During 1996,
through a conference settlement, between representatives of the parties, a
tentative settlement agreement was reached. The Company agreed to pay
certain expenses of Plaintiff of $90,000, of which $50,000 is expected to be
covered by insurance, and to issue 100,000 shares of the Company's common stock
as consideration for certain proprietary assets of the Plaintiff. The fair
market value of the stock was $2.00 at the date of settlement.
9. FINANCING TRANSACTION:
During December 1994, the Company entered into a $6 million debt and equity
financing agreement with a group of private investors. Under terms of the
agreement, the Company issued 1 million units priced at $6 per unit. Each unit
was comprised of one share of the Company's Common Stock and $4 of convertible
F-14
<PAGE>
debenture.
At December 31, 1994, all of the stock and half of the convertible
debentures had been issued in exchange for $4 million. The remaining debentures
were issued for $2 million in April 1995.
Terms and conditions of the debentures required monthly interest payments at
the rate of 5% per annum.
In accordance with the financing agreement, as amended in March 1995 and
June 1995, the debentures automatically converted at the rate of one share for
each $2.00 of debentures, into shares of the Company's Common Stock in June
1995.
In connection with the financing, the Company issued 120,000 shares of its
Common Stock to one of the investors, whose president was subsequently appointed
to the Company's Board of Directors, and 480,000 warrants to certain other
parties, all for services provided in facilitating the transaction. The
investor's president resigned from the Board effective in December 1995. The
shares and warrants were valued consistent with shares issued in the
transaction. A portion of this value was attributed to the issuance of the
debentures. Accordingly, a portion of the value of the shares and warrants was
deferred as a financing fee and amortized over the term of the debentures.
10. SUBSEQUENT EVENTS:
FINANCING COMMITMENT
During the first quarter of 1997, in various transactions, the Company
issued 530,000 shares of the Company's Common Stock in exchange for $1,060,000
in cash from a group of private investors. The financing is intended to assist
in meeting the Company's operating needs while it pursues additional sources of
financing.
ISSUANCE OF WARRANTS AND TERMINATION OF OPTIONS
During February 1997, the Company granted warrants for 50,000 shares of the
Company's Common Stock to an investor in the Company. The warrants are
exercisable at a price of $2.00 per share and expire in January 2002.
Effective February 28, 1997, John F. Perry, the former Chief Executive
Officer, voluntarily and without disagreement resigned as member of the Board
and his employment with the Company was terminated. As a result of his
resignation, 37,500 options held by Mr. Perry were surrendered and are
available for future grant under the 1994 Incentive and Nonqualified
stock option plan.
F-15
<PAGE>
RELOCATION OF FLORIDA OPERATIONS
Subsequent to December 31, 1996, the Company relocated the Florida
operations to Oregon. The Company has reserved related expenses for
contractual obligations associated with the Florida operations at December
31, 1996.
F-16
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ATHENA MEDICAL CORPORATION
By: /s/ William H. Fleming
----------------------------
William H. Fleming
PRESIDENT, CHIEF OPERATING
OFFICER, SECRETARY AND
DIRECTOR
DATE: March 31, 1997
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
----------- ------- ------
<S> <C> <C>
/s/ Kimberly L. Mick Acting Chief Financial Officer March 31, 1997
- ----------------------------- (principal financial officer and
Kimberly L. Mick principal accounting officer)
/s/ James E. Reinmuth Chairman, Chief Executive March 31, 1997
---------------------------- Officer and Director
James E. Reinmuth (principal executive officer)
/s/ William H. Fleming
---------------------------- President, Chief Operating March 31, 1997
William H. Fleming Officer, Secretary and Director
/s/ James R. Wilson
--------------------------- Director and Treasurer March 31, 1997
James R. Wilson
/s/ Carol A. Scott
--------------------------- Director March 31, 1997
Carol A. Scott
/s/ RoseAnna Sevcik
--------------------------- Director March 31, 1997
RoseAnna Sevcik
</TABLE>
<PAGE>
EXHIBIT INDEX
FOR
ATHENA MEDICAL CORPORATION
FORM 10-KSB
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
3.1(1) Articles of Incorporation of Xtramedics, Inc. filed December 9, 1986. Certificate
of Amendment filed October 9, 1987 and Certificate of Amendment filed June 7, 1994.
3.2(1) Bylaws of ATHENA Medical Corporation adopted June 24, 1994.
3.3 Amendment to Bylaws effective May 18, 1995.
3.4 Amendment to Bylaws effective February 27, 1996.
10.1(2) License Agreement dated April 30, 1986 between Shalom Z. Hirschman, M.D., and
Marvin P. Loeb & Company.
10.2(2) Limited License & Option Agreement between Marvin Loeb & Company and the Company
dated December 30, 1986.
*10.3(4) Share Exchange Agreement among Xtramedics, Inc., Profem and ATHENA
shareholders dated February 17, 1994.
*10.4(4) Assumption of Employment Agreement between the Company and John F. Perry dated
February 17, 1994.
*10.5(4) Employment Agreement between Athena Medical Corporation (an
Oregon Corporation) and John F. Perry dated as of July 1, 1993.
*10.6(4) Assumption of Employment Agreement between the Company and William H. Fleming dated
February 17, 1994.
*10.7(4) Employment Agreement between Athena Medical Corporation (an
Oregon Corporation) and William H. Fleming dated as of July 1, 1993.
10.8 Amendment of Employment Contract between the Company and John F. Perry dated
September 6, 1996.
10.9 Amendment of Employment Contract between the Company and William H. Fleming dated
December 31, 1996.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.10(3) Business Park Lease between the Company, Petula Associates, Ltd. and Koll Portland
Associates dated March 1, 1996.
10.11(2) Registration Rights Agreement between Athena Medical Corporation and Capital
Consultants, Inc., dated December 29, 1994.
10.12(3) Registration Rights Agreement used for Mr. Waller, Esler, Stephens & Buckley and
Lane, Powell, Spears Lubersky.
10.13 Form of Registration Rights Agreement.
*10.14 ATHENA Medical Corporation's 1994 Incentive and Non-Qualified Stock Option Plan
dated as of June 7, 1994, as amended October 22, 1996.
*10.15 Form of Incentive Stock Option Agreement.
*10.16 Form of Non-Statutory Stock Option Agreement.
10.17 Form of Purchase Warrant Certificate.
10.18(3) Distribution Agreement between the Company and Meix Corporation dba Chinese
Business Services, dated December 30, 1995.
10.19(3) Commitment Letter between First Portland Leasing Corp. and the Company dated
January 9, 1996.
10.20(3) Amendment of Agreement between the Company and Beijing Kang Mei Biological
Products, Ltd. (a joint venture comprised of Cort MacKenzie & Thomas Inc., and
Fang-Hai Science and Technology).
10.21 Consultant Agreement between the Company and Paul Mueggler, Ph.D. dated February 3,
1997.
10.22 Consultant Agreement between the Company and Peter Burke dated December 16, 1996.
10.23 Employment Agreement between the Company and Sarah P. Van Dyck dated May 28, 1996.
10.24 Consultant Agreement between the Company and James R. Wilson dated as of December
1, 1996.
*10.25 Employment Agreement between the Company and James E. Reinmuth dated as of
September 6, 1996.
11.1 Statement Re: computation of per share earnings.
27.1 Financial Data Schedule
</TABLE>
<PAGE>
- ------------------------
(1) Incorporated by reference from the exhibit filing to the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1994.
(2) Incorporated by reference from the exhibit filing to the Company's
Registration Statement on Form S-2 (file no. 33-88230), filed with the
SEC on January 5, 1995.
(3) Incorporated by reference from the exhibit filing to the Company's
Registration Statement on Form S-2 (file no. 333-2053), filed with the
SEC on March 29, 1996.
(4) Incorporated by reference from the exhibit filing to the Company's
10-QSB/A for the period ended March 31, 1994.
* Indicates management contract or compensation plan.
<PAGE>
Exhibit 3.3
ATHENA MEDICAL CORPORATION
Amendment to Bylaws Effective May 18, 1995:
ARTICLE III
*****
[new] AUDIT COMMITTEE
Section 14. There shall be a standing committee of the Board of Directors
known as the Audit Committee. The Audit Committee shall be comprised of three
members of the Board of Directors, a majority of whom shall not be officers,
employees or consultants of the corporation or any subsidiary of it, and who do
not have any relationship with the corporation or its management which, in the
opinion of the Board of Directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of an Audit Committee
member.
The Audit Committee shall assist the Board of Directors in fulfilling its
responsibilities for the corporation's accounting and financial reporting
practices, and provide a channel of communication between the Board and the
corporation's independent auditors. To accomplish the foregoing purpose, the
Audit Committee shall:
(a) Recommend to the Board of Directors which firm to appoint as the
corporation's independent auditors, and whether to change such appointment or
relationship;
(b) Review the independent auditors' compensation and proposed terms of
engagement;
(c) Meet and review with the independent auditors, the corporation's chief
financial officer and other appropriate corporate officers, matters relating to
financial reporting and accounting procedures and policies, adequacy of
financial, accounting and operating controls, and the scope of the independent
auditors' audit;
(d) Review the results of the independent auditors' audit, including any
qualifications to the auditors' opinion, any management letters and management's
responses to recommendations by the independent auditors in connection with the
audit;
(e) Review with the independent auditors and management any registration
statement filed by the corporation in connection with the public offering or
other sale of its securities;
(f) Consider and recommend to the Board of Directors major changes and
questions of choice regarding the appropriate auditing and accounting principles
and practices to be followed when preparing the corporation's financial
statements;
(g) Report to the Board of Directors on the results of the Audit Committee's
activities, and make recommendations to the Board with respect to financial
reporting and accounting practices and policies, and financial, accounting and
operational controls and safeguards;
(h) Conduct, as the need arises, a review of all potential conflict of
interest situations and transactions involving the corporation and any director,
officer, employee, affiliate or other person; and
(i) Have such other powers and perform such other duties as the Board may
from time to time assign to it.
<PAGE>
Exhibit 3.4
Amendment to Bylaws Effective February 27, 1996:
ARTICLE III
*****
[new] NOMINATING COMMITTEE
Section 15. There shall be a standing committee of the Board of Directors
known as the Nominating Committee. The Nominating Committee shall be comprised
of three members of the Board of Directors, none of whom shall be an officer,
employee or consultant of the corporation or any subsidiary of it. The
Nominating Committee shall:
(a) Recommend to the Board of Directors the slate of nominees and
directors to be elected by the shareholders at each annual meeting of the
shareholders (and any other meeting of shareholders called for the purpose of
electing one or more directors);
(b) Recommend to the Board persons to fill vacancies in the Board of
Directors to be elected by the Board of Directors itself;
(c) Recommend to the Board existing Directors to be selected for
membership on the various committees of the Board of Directors; and
(d) Have such other powers and perform such other duties as the Board may
from time to time assign to it.
In pursuing its functions and making its recommendations, the Nominating
Committee shall consider input from the Chief Executive Officer and/or the Chief
Operating Officer as to potential Board candidates and qualifications for
Directors and committee members.
<PAGE>
Exhibit 10.8
AMENDMENT OF EMPLOYMENT CONTRACT
BETWEEN: ATHENA MEDICAL CORPORATION, a Nevada corporation ("ATHENA");
AND: JOHN F. PERRY ("Perry").
DATED: September 6, 1996.
ATHENA and Perry are parties to an Employment Contract (the "Agreement")
dated effective July 5, 1993, and assumed by ATHENA (fka Xtramedics, Inc.) under
Assumption of Employment Agreement dated February 17, 1994. For good and
valuable consideration received, the parties agree to amend and clarify the
Agreement as follows:
1. Effective as of the date first set forth above, Perry shall cease
serving as the Chairman and Chief Executive Officer of ATHENA, and commence
serving as General Manager of the Florida Division of ATHENA. Perry's
compensation shall remain at the annual rate now in effect. Perry agrees to
devote his full business time and attention to his duties as General Manager
of the Florida Division, shall report to the Chairman and Chief Executive
Officer of ATHENA, and shall consult with the President of ATHENA on a
regular basis.
2. Section 1 of the Agreement is amended and restated in its entirety to
read as follows:
"1. TERM. The term of this Agreement commenced June 15, 1993
and shall expire June 30, 1998, unless employment is terminated by Perry or
pursuant to Section 5 below prior to expiration of such term. Any
extension, renewal or modification of this Agreement requires the prior
written consent of both parties (ATHENA and Perry)."
3. Except as expressly amended by this Amendment, all terms, covenants
and conditions of the Agreement remain in full force and effect. The
Agreement (as amended by this Amendment) constitutes the final and conclusive
agreement of the parties with respect to Perry's employment relationship, and
supersedes all prior and contemporaneous understandings, promises and
representations, oral or written, except those set forth in a document signed
by the party sought to be bound.
EXECUTED in two counterparts, each of which will constitute an original, as
of the date first set forth above.
ATHENA MEDICAL CORPORATION
By ____________________________________
William H. Fleming, Its President
_______________________________________
John F. Perry
<PAGE>
Exhibit 10.9
AMENDMENT OF EMPLOYMENT CONTRACT
BETWEEN: ATHENA MEDICAL CORPORATION, a Nevada corporation ("ATHENA");
AND: WILLIAM H. FLEMING ("Fleming").
DATED: December 31, 1996.
ATHENA and Fleming are parties to an Employment Contract (the "Agreement")
dated effective July 5, 1993, and assumed by ATHENA (fka Xtramedics, Inc.) under
Assumption of Employment Agreement dated February 17, 1994. For good and
valuable consideration received, the parties agree to amend and clarify the
Agreement as follows:
1. Section 1 of the Agreement is amended and restated in its entirety to
read as follows: "
1. TERM. The term of this Agreement commenced June 15, 1993
and shall expire June 30, 1998, unless employment is terminated by
Fleming or pursuant to Section 5 below prior to expiration of such
term. Any extension, renewal or modification of this Agreement
requires the prior written consent of both parties (ATHENA and
Fleming)."
2. Except as expressly amended by this Amendment, all terms,
covenants and conditions of the Agreement remain in full force and
effect. Fleming's compensation shall remain at the annual rate now in
effect. The Agreement (as amended by this Amendment) constitutes the
final and conclusive agreement of the parties with respect to
Fleming's employment relationship, and supersedes all prior and
contemporaneous understandings, promises and representations, oral or
written, except those set forth in a document signed by the party
sought to be bound.
EXECUTED in two counterparts, each of which will constitute an
original, as of the date first set forth above.
ATHENA MEDICAL CORPORATION
By______________________________________
James E. Reinmuth, CEO
_______________________________________
William H. Fleming
<PAGE>
Exhibit 10.13
FORM OF
ATHENA MEDICAL CORPORATION
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is entered into as of the day of
, , by and between Athena Medical Corporation, a Nevada
corporation ("Athena"), and .
The parties agree as follows:
1. Definitions
1.1 The terms "Form S-1," " Form S-2" and "Form S-3" mean such respective
forms under the Securities Act of 1933, as amended ("the 1933 Act"), as in
effect on the date hereof or any successor registration forms to Form S-1,
Form S-2 and Form S-3, respectively, under the 1933 Act subsequently adopted
by the Securities and Exchange Commission or any other federal agency at the
time administering the 1933 Act (the "SEC").
1.2 The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended
(the "1933 Act"), and the declaration or ordering of effectiveness of such
registration statement or document by the SEC Securities and Exchange
Commission or any other federal agency at the time administering the 1933 Act
(the "SEC").
1.3 The term "Registrable Securities" means the shares of the common
stock of Athena (the "Common Stock") issued pursuant to the Athena Medical
Corporation Common Stock Subscription Agreement dated as of , 1996
(the "Subscription Agreement") and any Common Stock issued as a dividend or
other distribution with respect to, or in exchange for, or in replacement of,
such shares of Common Stock. As to any particular Registrable Securities, such
securities will cease to be Registrable Securities when (i) they have been
effectively registered under the 1933 Act and disposed of in accordance with
the registration statement covering them, or (ii) they may be sold by a Holder
without effective volume limitations pursuant to Rule 144 (or any similar
provision that is in force) under the 1933 Act.
1.4 The term "Holder" means_______________________________________
1
<PAGE>
2. Registration Rights
2.1 Incidental Registration Rights. If at any time within three (3)
years after the date hereof, Athena proposes to register any of its
securities under the 1933 Act by registration on Form S-1, S-2 or S-3 or any
successor or similar forms (except registrations on such forms solely for
registration of shares in connection with an employee benefit plan or a
merger or consolidation) in an underwritten public offering, whether or not
for sale for its own account, it will at such time give prompt written notice
to Holder of its intention to do so and of Holder's rights under this Section
2. Upon the written request of Holder made within 30 days after the receipt
of any such notice (which request shall specify the number of Registrable
Securities intended to be disposed of by Holder), Athena will use its best
efforts to effect the registration under the 1933 Act of all Registrable
Securities in connection therewith which Athena has been so requested to
to register by Holder. If the managing underwriter for any underwritten
offering in a registration pursuant to this Section 2.1 shall inform in writing
Athena and Holder of its belief that the number of securities requested to be
included in such registration would materially and adversely affect its ability
to effect such offering, then Athena will include in such registration the
number which Athena is so advised can be sold in (or during the time of) such
offering, first, all securities proposed by Athena to be sold for its own
account, and second, such Registrable Securities and other securities of Athena
requested to be included in such registration by persons (other than Holder)
exercising their incidental registration rights, pro rata on the basis of the
number of shares of such securities so proposed to be sold and so requested to
be included.
2.2 In addition to the rights set forth in Section 2.1, Athena shall file
a registration statement to include all Registrable Securities on or before
________ . It is understood that the registration statement may also include
shares of Common Stock held by other Athena shareholders and that the shares
registered thereunto will not be underwritten. Athena agrees to keep the
registration statement effective for a period of three years from its initial
effective date or until less than 100,000 Registrable Securities are
outstanding, whichever first occurs. In conjunction with the Registration,
Athena shall use its best efforts to qualify such Registrable Securities for
sale under the laws of Florida, Georgia, New Jersey, New York, Oregon and
Washington; provided that, if Athena should qualify shares of Common Stock in
other jurisdictions, it will use its best efforts to qualify such Registrable
Securities in such other jurisdictions in connection with such registration.
3. Obligation of Athena
Whenever required under this Agreement to use its best efforts to effect
the registration of Registrable Securities, Athena shall, as expeditiously as
possible:
3.1 Furnish to Holder such reasonable number of copies of a prospectus,
including any preliminary prospectus, in conformity with the requirements of
the 1933 Act, and any amendments or supplements thereto and such other
documents as Holder may reasonably request in order to facilitate the
disposition of Registrable Securities owned by Holder.
2
<PAGE>
3.2 In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Holder shall also enter
into and perform its obligations under such an agreement, including furnishing
any opinion of counsel or entering into a lock-up agreement reasonably
requested by the managing underwriter.
3.3 Notify Holder, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the 1933 Act,
of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing and promptly file such amendments and supplements
which may be required on account of such event and use its best efforts to
cause each such amendment and supplement to become effective.
4. Preparation; Information; Reasonable Investigation
4.1 Furnish Information
It shall be a condition precedent to the obligations of Athena to take
any action pursuant to this Agreement that Holder shall furnish to Athena
such information regarding Holder, the Registrable Securities held by Holder,
and the intended method of disposition of such securities as shall be
required to effect the registration of Holder's Registrable Securities.
4.2 Preparation; Reasonable Investigation
In connection with the preparation and filing of any registration
statement under the 1933 Act pursuant to this Agreement, Athena will give
Holder and Holder's counsel, accountants or underwriters the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the SEC, and each amendment thereof or
supplement thereto, and will give Holder such access to its books and records
and such opportunities to discuss the business of Athena with its officers and
the independent public accountants who have certified its financial statements
as shall be necessary, in the opinion of Holder's counsel, accountants or
underwriters, to conduct a reasonable investigation within the meaning of the
1933 Act.
5. Expenses of Registration
All expenses (other than underwriting discounts and commissions,
transfer taxes, if any, and fees and disbursements of counsel to Holder)
relating to Registrable Securities incurred in connection with the
registrations, filings or qualifications pursuant to this Agreement, including
without limitation all registration, filing and qualification fees, printing
and accounting fees, and fees and disbursements of counsel for Athena, shall be
borne by Athena.
3
<PAGE>
6. Indemnification
If any Registrable Securities are included in a registration statement
under this Agreement:;
6.1 Athena Indemnification
To the extent permitted by law, Athena will indemnify and hold harmless
Holder, the officers, directors, partners, agents and employees of Holder or
any underwriter (as defined in the 1933 Act), and each person, if any, who
controls Holder or underwriter within the meaning of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), against any
losses, claims, damages or liabilities (joint or several) to which they may
become subject under the 1933 Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (a "Violation"):
(i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto,
(ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or
(iii) any violation or alleged violation by Athena of the 1933 Act,
the 1934 Act, any state securities law or any rule or regulation promulgated
under the 1933 Act, the 1934 Act or any state securities law.
Athena will reimburse such Holder, officer, director, partner, agent,
employee, underwriter, or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action. The indemnity agreement
contained in this Section 6.1 shall not apply to amounts paid in settlement
of any loss, claim, damage, liability or action if such settlement is
effected without the consent of Athena (which consent shall not be
unreasonably withheld), nor shall Athena be liable to Holder in any such case
for any such loss, claim, damage, liability or action (a) to the extent that
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly for use in
connection with such registration by or on behalf of Holder or controlling
person, or (b) if such untrue statement or alleged untrue statement or omission
or alleged omission was contained in a preliminary prospectus and corrected in
a final or amended prospectus, and Holder failed to deliver a copy of the final
or amended prospectus at or prior to the confirmation of the sale of the
Registrable Securities to the person asserting any such loss, claim, damage
or liability in any case where such delivery is required by the 1933 Act.
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6.2 Holder Indemnification
To the extent permitted by law, Holder will indemnify and hold harmless
Athena, each of its directors, each of its officers who have signed the
registration statement, each person, if any, who controls Athena within the
meaning of the 1933 Act, each agent and any underwriter for Athena, and any
holder selling securities in such registration statement or any of its
directors, officers, partners, agents or employees or any person who controls
such holder or underwriter, against any losses, claims, damages or
liabilities (joint or several) to which Athena or any such director, officer,
controlling person, agent or underwriter or controlling person, or other such
holder or director, officer or controlling person, may become subject, under
the 1933 Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only
to the extent) that such Violation occurs in reliance upon and in conformity
with written information furnished by or on behalf of Holder expressly for
use in connection with such registration; and Holder will reimburse any legal
or other expenses reasonably incurred by Athena or any such director,
officer, controlling person, agent or underwriter or controlling person, or
other holder, officer, director, partner, agent, employee or controlling
person, in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 6.2 shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of Holder, which consent shall not be
unreasonably withheld, nor, in the case of a sale directly by Athena of its
securities (including a sale of such securities through any underwriter
retained by Athena to engage in a distribution solely on behalf of Athena),
shall Holder be liable to Athena in any case in which such untrue statement
or omission or alleged untrue statement or alleged omission was contained in
a preliminary prospectus and corrected in a final or amended prospectus, and
Athena failed to deliver a copy of the final or amended prospectus at or
prior to the confirmation of the sale of the securities to the person
asserting any such loss, claim, damage or liability in any case where such
delivery is required by the 1933 Act; and provided, further, that the
indemnification obligation of Holder shall be limited to the aggregate public
offering price of the Registrable Securities sold by Holder pursuant to such
registration.
6.3 Notice, Defense and Counsel
Promptly after receipt by an indemnified party under this Section 6 of
notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume and control the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and
expenses to be paid by the indemnifying party, if representation of such
5
<PAGE>
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party
of any liability to the indemnified party under this Section 6 to the extent of
such prejudice, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 6.
6.4 Survival of Rights and Obligations
The obligations of Athena and Holder under this Section 6 shall survive
the completion of any offering of Registrable Securities in a registration
statement whether under this Agreement or otherwise.
7. Reports Under the 1934 Act
With a view to making available to Holder benefits of Rule 144
promulgated under the 1933 Act and any other rule or regulation of the SEC
that may at any time permit Holder to sell securities of Athena to the public
without registration, Athena agrees to use its best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of Athena under the 1933 Act and the 1934 Act; and
(c) furnish to Holder, so long as Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by Athena that
it has complied with the reporting requirements of Rule 144, the 1933 Act
and the 1934 Act (at any and all times after it has become subject to such
reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-2 or S-3 (at any time after it
so qualifies), (ii) a copy of the most recent annual or quarterly report
of Athena and such other reports and documents so filed by Athena, and
(iii) such other information as may be reasonably requested in availing
Holder of any rule or regulation of the SEC which permits the selling of
any such securities without registration or pursuant to such form.
8. Lock-Up Agreement
Holder, if requested by Athena and an underwriter of Athena's
securities, shall agree not to sell or otherwise transfer or dispose of any
Registrable Securities or other securities of Athena held by Holder for a
specified period of time (not to exceed 90 days) following the
6
<PAGE>
effective date of a registration statement pursuant to which Athena proposes
to sell its securities to the public generally, provided, however, that holders
of at least five percent of Athena's Common Stock and all officers and
directors of Athena enter into similar agreements.
9. Assignment of Registration Rights
The right to cause Athena to register Common Stock pursuant to this
Agreement may not be assigned or transferred without the prior written
consent of Athena, which consent will not be unreasonably withheld.
10. AMENDMENT
Any provision of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consentof Athena and the
Holders of a majority of the Registrable Securities. Any amendment or waiver
effected in accordance with this Section shall be binding upon each Holder and
Athena.
11. Termination of Registration Rights
No Holder shall be entitled to exercise any right provided for in this
Agreement after five (5) years following the date hereof.
12. Attorneys' Fees
In the event any legal action is brought by any party to enforce the
terms of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and expenses in addition to any other relief
deemed appropriate by the trial court or any appellate court.
13. Successors
Subject to Section 9 hereof, this Agreement shall bind and inure to
the benefit of the successors and assigns of Athena and the Holders.
14. Entire Agreement
This Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior arrangements or
understandings.
15. Notices
All notices, requests, consents and other communications required or
provided for herein to any party shall be deemed to be sufficient if
contained in a written instrument, and shall be deemed to be given when: (a)
delivered in person; (b) sent by first-class registered or
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<PAGE>
certified mail with postage prepaid; (c) delivered by overnight receipted
courier service; or (d) sent by facsimile transmission with delivery confirmed
and followed by delivery pursuant to (b) hereof, which notice is addressed to
the party at the address set forth below, or such other address as may
hereafter be designated in writing by the party.
If to Athena: 10180 S.W. Nimbus Avenue, Suite J-5
Portland, OR 97223
Attention: William H. Fleming, President
Telephone: (503) 968-8800
Facsimile: (503) 639-3674
with a copy to: Patrick J. Simpson
Perkins Coie
1211 SW Fifth Avenue, Suite 1500
Portland, OR 97204-3715
Telephone: (503) 727-2000
Facsimile: (503) 727-2222
If to the Holder: __________________________
__________________________
__________________________
__________________________
with a copy to: ___________________________
___________________________
___________________________
___________________________
16 Event of Default
An Event of Default shall have occurred under this Agreement if Athena
shall fail to perform any obligation under this Agreement within thirty (30)
days after notice from any Holder specifying the nature of the failure of
default.
17. Counterparts
This Agreement may be executed in any number of counterparts, and
each such counterpart shall be deemed to be an original instrument. All such
counterparts together shall constitute one agreement.
18. Hedings
The headings of the various sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of
this Agreement.
8
<PAGE>
19. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Oregon.
IN WITNESS WHEREOF, the parties hereto have executed or caused their duly
authorized representative to execute this Agreement as of the date first
hereinabove written.
Holder by: __________________________
By:__________________________
Its ________________________
ATHENA
ATHENA MEDICAL CORPORATION
9
<PAGE>
EXHIBIT 10.14
ATHENA MEDICAL CORPORATION
(A NEVADA CORPORATION)
1994 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
June 7, 1994
rev. Oct. 22, 1996
Page 1 - 1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
<PAGE>
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.
a)
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. 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 June 7, 1994, 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"). Each member on the
Committee shall be a "non-employee director" within the meaning of Rule 16b-
3(b)(3) as promulgated under the Exchange Act. The Committee shall consist of
not fewer than two members of the Company's Board of Directors. The Board of
Directors may from time to time remove members from, or add members to, the
Committee. Vacancies on the Committee, howsoever caused, shall be filled by the
Board of Directors. The Committee shall select one of its members as Chairman,
and shall hold meetings at such times and places as it may determine. A
majority of the Committee may act at a meeting at which a quorum is present, or
acts reduced to or approved in writing by a majority of the members of the
Committee shall be the valid acts of the Committee. The Committee shall from
time to time at its discretion determine: (i) those Officers, Directors,
employees (including key and non-key), consultants and others who shall be
granted options; (ii) the number of shares of stock to be optioned to each; and
(iii) subject to the express provisions of the Plan, the terms of all options so
granted.
Page 2- 1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
<PAGE>
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 Internal
Revenue Code of 1986, as amended (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
Page 3- 1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
<PAGE>
so employed or have provided such service continuously since the
date such option was granted. Absence on leave or on account of
illness or disability under rules established by the Board of
Directors shall not, however, be deemed an interruption of
employment or service for this purpose. Unless otherwise
determined by the Board of Directors, if the optionee does not
exercise an option in any one year with respect to the full
number of shares to which the optionee is entitled in that year,
the optionee's rights shall be cumulative and the optionee may
purchase those shares in any subsequent year during the term of
the option.
(iii) NONTRANSFERABILITY. Each Incentive Stock Option and, unless
otherwise determined by the Board of Directors with respect to an
option granted to a person who is neither an Officer nor a
Director of the Company, each other option granted under the Plan
by its terms shall be nonassignable and nontransferable by the
optionee, either voluntarily or by 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.
Page 4- 1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
<PAGE>
(C) TERMINATION BECAUSE OF DEATH. Unless otherwise
determined by the Board of Directors, in the event of the
death of an optionee while employed by or providing
service to the Company or a subsidiary, the option may be
exercised at any time prior to the expiration date of the
option, but only if and to the extent the optionee was
entitled to exercise the option at the date of death and
only by the person or persons to whom such optionee's
rights under the option shall pass by the optionee's will
or by the laws of descent and distribution of the state
or country of domicile at the time of death.
(D) AMENDMENT OF EXERCISE PERIOD APPLICABLE TO TERMINATION.
The Board of Directors, at the time of grant or at any
time thereafter, may increase the portion of an option
that is exercisable, subject to such terms and conditions
as the Board of Directors may determine.
(E) FAILURE TO EXERCISE OPTION. To the extent that the
option of any deceased optionee or of any optionee whose
employment or service terminates is not exercised within
the applicable period, all further rights to purchase
shares pursuant to such option shall cease and terminate.
(v) PURCHASE OF SHARES. Unless the Board of Directors
determines otherwise, shares may be acquired pursuant to an
option granted under the Plan only upon receipt by the
Company of notice in writing from the optionee of the
optionee's intention to exercise, specifying the number of
shares as to which the optionee desires to exercise the
option and the date on which the optionee desires to
complete the transaction, and if required in order to comply
with the Securities Act of 1933, as amended, containing a
representation that it is the optionee's present intention
to acquire the shares for investment and not with a view to
distribution. Unless the Board of Directors determines
otherwise, on or before the date specified for completion of
the purchase of shares pursuant to an option, the optionee
must have paid the Company the full purchase price of such
shares in cash (including, with the consent of the Board of
Directors, cash that may be the proceeds of a loan from the
Company) or, with the consent of the Board of Directors, in
whole or in part, in Common Stock of the Company valued at
fair market value, restricted stock, performance units or
other contingent awards denominated in either stock or cash,
promissory notes and other forms of consideration.
No shares shall be issued until full payment for the
shares has been made. With the consent of the Board of
Directors, an optionee may request the Company to apply
automatically the shares to be received upon the exercise of
a portion of a stock option (even though stock certificates
have not yet been issued) to satisfy the purchase price for
additional 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
Page 5- 1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
<PAGE>
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 SHAREHOLDERS. An Incentive
Stock Option may be granted under the Plan to an employee
possessing more than 10 percent of the total combined voting
power of all classes of stock of the Company or of any parent or
subsidiary of the Company only if the option price is at least
110 percent of the fair market value of the Common Stock subject
to the option on the date it is granted, as described in
paragraph 6(b)(iv), and the option by its terms is not
exercisable after the expiration of five years from the date it
is granted.
(iii) DURATION OF OPTIONS. Subject to paragraphs 6(a)(ii) and
6(b)(ii), Incentive Stock Options granted under the Plan shall
continue in effect for the period fixed by the Board of
Directors, except that no Incentive Stock Option shall be
exercisable after the expiration of 10 years from the date it is
granted.
(iv) OPTION PRICE. The option price per share shall be determined by
the Board of Directors at the time of grant. Except as provided
in paragraph 6(b)(ii), the option price shall not be less than
100 percent of the fair market value of the Common Stock covered
by the Incentive Stock Option at the date the option is granted.
During such time as the Common Stock is not listed upon an
established stock exchange, the fair market value per share shall
be the mean between the closing "bid" and "ask" prices of the
Common Stock in the New York over-the-counter market on the day
the option is granted, as reported by the National Association of
Securities Dealers, Inc. If the stock is listed upon an
established stock exchange or exchanges, such fair market value
shall be deemed to be the highest closing price of the Common
Stock on such stock exchange or exchanges on the day the option
is granted or if no sale of the Company's Common Stock shall have
been made on any stock exchange that day, on the next preceding
day on which there was a sale of such stock. If there is no
established market for the stock, the fair market value shall be
determined by the most recent prior private sale price of the
Common Stock. Subject to the foregoing, the Board of Directors
in fixing the option price shall have full authority and
discretion so long as they shall act in good faith.
(v) LIMITATION ON TIME OF GRANT. No Incentive Stock Option shall be
granted on or after the tenth anniversary of the effective date
of the Plan.
Page 6- 1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
<PAGE>
(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. The
restrictions may include restrictions concerning transferability and forfeiture
of the shares awarded, together with such other restrictions as may be
determined by the Board of Directors. If shares are subject to forfeiture, all
dividends or other distributions paid by the Company with respect to the shares
shall be retained by the Company until the shares are no longer subject to
forfeiture, at which time all accumulated amounts shall be paid to the
recipient. The Board of Directors may require the recipient to sign an
agreement as a condition of the award, but may not require the recipient to pay
any monetary consideration other than amounts necessary to satisfy tax
withholding requirements. The agreement may contain any terms, conditions,
restrictions, representations and warranties required by the Board of Directors.
The certificates representing the shares awarded shall bear any legends required
by the Board of Directors. The Company may require any recipient of a stock
bonus to pay to the Company in cash upon demand amounts necessary to satisfy any
applicable federal, state or local tax withholding requirements. If the
recipient fails to pay the amount demanded, the Company may withhold that amount
from other amounts payable by the Company to the recipient, including salary or
fees for services, subject to applicable law. With the consent of the Board of
Directors, a recipient may deliver Common Stock to the Company to satisfy this
withholding obligation. Upon the issuance of a stock bonus, the number of
shares reserved for issuance under the Plan shall be reduced by the number of
shares issued.
8. RESTRICTED STOCK. The Board of Directors may issue shares under the Plan
for such consideration (including promissory notes and services) as determined
by the Board of Directors. Shares issued under the Plan shall be subject to the
terms, conditions and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability, repurchase by
the Company and forfeiture of the shares issued, together with such other
restrictions as may be determined by the Board of Directors. If shares are
subject to forfeiture or repurchase by the Company, all dividends or other
distributions paid by the Company with respect to the shares shall be retained
by the Company until the shares are no longer subject to forfeiture or
repurchase, at which time all accumulated amounts shall be paid to the
recipient. All Common Stock issued pursuant to this paragraph 8 shall be
subject to a purchase agreement, which shall be executed by the Company and the
prospective recipient of the shares prior to the delivery of certificates
representing such shares to the recipient. The purchase agreement may contain
any terms, conditions, restrictions, representations and warranties required by
the Board of Directors. The certificates representing the shares shall bear any
legends required by the Board of Directors. The Company may require any
purchaser of restricted stock to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the purchaser fails to pay the amount demanded, the Company
may withhold that amount from other amounts payable by the Company to the
purchaser, including salary, subject to the applicable law. With the consent of
the Board of Directors, a purchaser may deliver Common Stock to the
Page 7- 1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
<PAGE>
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
Page 8- 1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
<PAGE>
Company, each other stock appreciation right granted
under the Plan by its terms shall be nonassignable and
nontransferable by the holder, either voluntarily or by
operation of law, except by will or by the laws of
descent and distribution of the state or country of the
holder's domicile at the time of death, and each stock
appreciation right by its term shall be exercisable
during the holder's lifetime only by the holder;
provided, however, that a stock appreciation right not
granted in connection with an Incentive Stock Option
shall also be transferable pursuant to a qualified
domestic relations order as defined under the Code or
ERISA.
(vii) Each participant who has exercised a stock appreciation
right shall, upon notification of the amount due, pay
to the Company in cash amounts necessary to satisfy any
applicable federal, state or local tax withholding
requirements. If the participant fails to pay the
amount demanded, the Company may withhold that amount
from other amounts payable by the Company to the
participant including salary, subject to applicable
law. With the consent of the Board of Directors a
participant may satisfy this obligation, in whole or in
part, by having the Company withhold from any shares to
be issued upon the exercise that number of shares that
would satisfy the withholding amount due or by
delivering Common Stock to the satisfy the withholding
amount.
(viii) Upon the exercise of a stock appreciation right for
shares, the number of shares reserved for issuance
under the Plan shall be reduced by the number of shares
issued. Cash payments of stock appreciation rights
shall not reduce the number of shares of Common Stock
reserved for issuance under the Plan.
10. CASH BONUS RIGHTS.
(a) GRANT. The Board of Directors may grant cash bonus rights under the
Plan in connection with: (i) options granted or previously granted; (ii) stock
appreciation rights granted or previously granted; (iii) stock bonuses awarded
or previously awarded; and (iv) shares sold or previously sold under the Plan.
Cash bonus rights will be subject to rules, terms and conditions as the Board of
Directors may prescribe. Unless otherwise determined by the Board of Directors
with respect to a cash bonus right granted to a person who is neither an Officer
nor a Director of the Company, each cash bonus right granted under the Plan by
its terms shall be nonassignable and nontransferable by the holder, either
voluntarily or by 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
Page 9- 1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
<PAGE>
repurchased by the Company or forfeited by the holder, the cash bonus right
granted in connection with the stock bonus shall terminate and may not be
exercised. The amount and timing of payment of a cash bonus shall be determined
by the Board of Directors.
(d) CASH BONUS RIGHTS IN CONNECTION WITH STOCK PURCHASE. A cash bonus
right granted in connection with the purchase of stock pursuant to paragraph 8
will entitle the recipient to a cash bonus when the shares are purchased or when
restrictions, if any, to which the stock is subject lapse. Any cash bonus right
granted in connection with shares purchased pursuant to paragraph 8 shall
terminate and may not be exercised in the event the shares are repurchased by
the Company or forfeited by the holder pursuant to applicable restrictions. The
amount of any cash bonus to be awarded and timing of payment of a cash bonus
shall be determined by the Board of Directors.
(e) TAXES. The Company shall withhold from any cash bonus paid pursuant
to this paragraph 10 the amount necessary to satisfy any applicable federal,
state and local withholding requirements.
11. PERFORMANCE UNITS. The Board of Directors may grant performance units
consisting of monetary units which may be earned in whole or in part if the
Company achieves certain goals established by the Board of Directors over a
designated period of time, but not in any event more than 10 years. The goals
established by the Board of Directors may include earnings per share, return on
shareholders' 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. AWARDS TO COMMITTEE AND OTHER BOARD MEMBERS. The Board of Directors (or
the Committee) may in its discretion award Non-Statutory Stock Options or other
awards under the Plan (except Incentive Stock Options
Page 10- 1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
<PAGE>
to non-employee directors) to members of the Board of Directors ("Director
Options"), subject to: (i) restrictions under applicable state law; (ii) any
general policy as to number of options, option price, period of options, and/or
the time or times at which options may be exercised as the Board of Directors
may adopt; and (iii) any other terms, conditions and restrictions determined by
the Board of Directors. Members of the Committee shall be eligible to receive
Director Options by reason of being members of the Board of Directors (not by
reason of Committee membership alone), provided such awards are by the Board of
Directors and further provided receipt of a Director's Option will not cause the
Committee member to cease being a "non-employee director". A Director Option
granted to a Board member shall have an exercise price per share equal to not
less than the fair market value of a share of Common Stock on 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)(iv)(B)),
any Director 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 Director 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
Director 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 shareholders 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 shareholders 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
Page 11- 1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
<PAGE>
(ii) Any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company or the adoption of any plan or proposal for the
liquidation or dissolution of the Company; or
(b) A tender or exchange offer, other than one made by the Company, is made
for Common Stock (or securities convertible into Common stock) and such offer
results in a portion of those securities being purchased and the offeror after
the consummation of the offer is the beneficial owner (as determined pursuant to
Section 13(d) of the Exchange Act), directly or indirectly, of at least 20
percent of the outstanding Common Stock (an "Offer"); or
(c) The Company receives a report on Schedule 13D under the Exchange Act
reporting the beneficial ownership by any person of 20 percent or more of the
Company's outstanding Common Stock, except that if such receipt shall occur
during a tender offer or exchange offer by any person other than the Company or
a wholly owned subsidiary of the Company, acceleration of exercisability shall
not take place until the conclusion of such offer; or
(d) During any period of 12 months or less, individuals who at the
beginning of such period constituted a majority of the Board of Directors cease
for any reason to constitute a majority thereof unless the nomination or
election of such new Directors was approved by a vote of at least two-thirds of
the Directors then still in office who were Directors at the beginning of such
period.
All options and stock appreciation rights that are accelerated pursuant
to this paragraph 15 shall terminate upon the dissolution of the Company or upon
the consummation of any Merger pursuant to which Common Stock would be converted
to cash. The terms used in this paragraph 15 and not defined elsewhere in the
Plan shall have the same meanings as such terms have in the Exchange Act and the
rules and regulations adopted thereunder.
16. CORPORATE MERGERS, ACQUISITIONS, ETC. The Board of Directors may also
grant options, stock appreciation rights, performance units, stock bonuses and
cash bonuses, and issue restricted stock under the Plan having terms, conditions
and provisions that vary from those specified in this Plan provided that any
such awards are granted in substitution for, or in connection with the
assumption of, existing options, stock appreciation rights, stock bonuses, cash
bonuses, restricted stock and performance units granted, awarded or issued by
another corporation and assumed or otherwise agreed to be provided for by the
Company pursuant to or by reason of a transaction involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which the Company or a subsidiary is a party.
17. AMENDMENT OF PLAN. The Board of Directors may at any time, and from time to
time, modify or amend the Plan in such respects as it shall deem advisable
because of changes in the law while the Plan is in effect or for any other
reason. Except as provided in paragraphs 6(a) (iv), 9, 14 and 15, however, no
change in an award already granted shall be made without the written consent of
the holder of such award. Notwithstanding any of the foregoing, shareholder
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
Page 12- 1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
<PAGE>
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 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 SHAREHOLDER. The recipient of any award under the Plan shall
have no rights as a shareholder 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.
* * * * * * * * *
<PAGE>:
Exhibit 10.15
ISOP No.
--------
ATHENA MEDICAL CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement is between ATHENA MEDICAL CORPORATION,
a Nevada corporation (the "Company"), and (the "Optionee"),
----------------
pursuant to the Company's 1994 Incentive and Non-Qualified Stock Option
Plan, as amended (the "Plan"). The Company and the Optionee agree as follows:
1. Option Grant. The Company hereby grants to the Optionee on the terms and
conditions of this Agreement the right and option (the "Option") to purchase all
or any part of shares of the Company's common stock at a purchase
-------------
price of $ per share. The terms and conditions of this Option
---------------
set forth in the attached Exhibit A are hereby incorporated into and made a
part of this Agreement. This Option is intended to be an "incentive stock
option" as defined in Section 422 of the Internal Revenue Code of 1986, as
amended.
2. Grant Date; Expiration Date. The grant date for this Option is '
---------
199 . This Option shall continue in effect until , , which is 10
------- -------
years after such grant date (the "Expiration Date"), unless earlier terminated
as provided in paragraph 4, 8 or 9 of Exhibit A.
3. Time of Exercise. Until expiration or termination as provided in
paragraph 4, 8 or 9 of Exhibit A, this Option may be exercised from time to time
to purchase shares up to the following limits:
The minimum number of shares with respect to which this Option may be
exercised at any one time is 100 shares, unless an installment subject to
exercise is fewer than 100 shares.
4. Method of Exercise. Paragraph 5 of Exhibit A sets forth the method by
which this Option may be exercised. This Option is not transferrable except by
will or the laws of intestacy.
<TABLE>
<CAPTION>
ATHENA MEDICAL CORPORATION OPTIONEE
<S> <C>
By-------------------------- -------------------------
William H Flemming, President -------------------------
10180 SW Nimbus Dr., Ste. J-5 -------------------------
Portland, OR 97223 -------------------------
SSN:
---------------------
</TABLE>
1
<PAGE>
EXHIBIT A
TO INCENTIVE STOCK OPTION AGREEMENT
THE PLAN. The Incentive Stock Option Agreement is subject to all terms and
conditions of the Athena Medical Corporation 1994 Incentive and Non-Qualified
Stock Option Plan (the "Plan") adopted by the Company as of June 7, 1994, as it
may thereafter be amended. All provisions of the Plan are incorporated herein by
this reference. A copy of the Plan may be obtained upon request to the Company.
Nontransferability. The Option is 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. More particularly (but not in limitation of the
foregoing), the Option may not be sold, assigned, transferred (except as
provided above), pledged or encumbered in any way, and shall not be subject to
execution, attachment or similar process. Any attempted sale, assignment,
transfer, pledge, encumbrance or other disposition contrary to the Plan, or the
levy of any execution, attachment or similar process upon the Option, will be
void and without effect.
EXERCISE OF OPTION DURING EMPLOYMENT. Except as provided under paragraph 4
below, 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 of the Company will not, however, be deemed an interruption
of employment or service for this purpose. 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 will be cumulative and
the Optionee may purchase those shares in any subsequent year during the term of
the Option.
Termination of Employment or Service.
(a) General Rule. If the employment or service of the Optionee with the
Company or a subsidiary of it terminates for any reason other than because
of total disability or death, the Option must be exercised not more than
three months following termination of employment. However, the 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. In the event of the
termination of employment or service of the Optionee because of total
disability (which is defined in the Plan), the Option must be exercised not
more than one year after termination of employment. However, the Option may
be exercised only if and to the extent the Optionee was entitled to exercise
the Option at the date of such termination.
2
<PAGE>
(c) Termination Because of Death. In the event of the death of the
Optionee while employed by or providing service to the Company or a
subsidiary of it, 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 the Optionee's rights under the Option 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) Failure to Exercise Option. To the extent that the Option of any
deceased Optionee, totally disabled Optionee, or terminated 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 the
Option will automatically terminate.
METHOD OF EXERCISE OF OPTION. Subject to the other terms and conditions of
the Plan, the Option may be exercised by written notice to the Company at its
principal office in Portland, Oregon. A notice form for this purpose may be
obtained from the Company. The notice must: (a) state the election to exercise
the Option; (b) specify the number of shares in respect of which it is being
exercised; (c) give the date on which the Optionee desires to complete the
transaction; and (d) if required in order to comply with the Securities Act of
1933, as amended, contain a representation that it is the Optionee's present
intention to acquire the shares for investment and not with a view to
distribution. The notice must be signed by the Optionee.
Unless the Board of Directors of the Company determines otherwise, on or
before the date specified for completion of the purchase of shares the Optionee
must have paid the Company the full purchase price for the shares in cash. No
shares will 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 the
Option (even though stock certificates have not yet been issued) to satisfy the
purchase price for additional portions of the Option.
The Optionee must 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 must 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 shares that would satisfy
the withholding amount.
The certificate for the shares as to which the Option is exercised will be
registered in the name of the Optionee. If the Optionee has so requested in the
3
<PAGE>
notice exercising the Option, the certificate may be registered in the name of
the Optionee and another person jointly, with right of survivorship.
RESERVATION OF SHARES. The Company will, at all times during the term of
the Option, reserve and keep available such number of shares as will be
sufficient to satisfy the requirements of the Option, and will pay all original
issue and transfer taxes with respect to the issue and transfer of shares
pursuant to it, and all other fees and expenses necessarily incurred by the
Company in connection with it. The number of shares reserved for issuance under
the Plan will be reduced by the number of shares issued upon exercise of an
option.
NO REGISTRATION REQUIREMENTS. The Company will not be deemed by reason of
issuance of any shares under the Plan to have any obligation to register such
shares under the Securities Act of 1933, as amended, nor to maintain in effect
any registration of such shares. In addition, unless the shares have been so
registered, the Option granted under the Plan is on the condition that the
acquisition of shares under the Option will be for investment purposes only, and
the Optionee acquiring the shares must bear the economic risk of the investment
for an indefinite period of time, since the shares so acquired cannot be sold
unless they are subsequently registered or an exemption from such registration
is available. The Optionee agrees that a legend may be placed on the stock
certificates acknowledging the restrictions on subsequent sale or
distribution of the shares.
CHANGES IN CAPITAL STRUCTURE. If during the term of the Option the
outstanding common stock of the Company is 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 will be made by the Board of Directors of the Company in the number
and kind of shares available for awards under the Plan. In addition, except with
respect to transactions referred to in paragraph 9 below, the Board of Directors
will make appropriate adjustment in the number and kind of shares as to which
the Option, or portions of it then unexercised, will be exercisable, so that the
Optionee's proportionate interest before and after the occurrence of the event
is maintained. However, the Board of Directors will have no obligation to cause
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 will be conclusive.
If the shareholders of the Company receive capital stock from another
corporation ("Exchange Stock") in exchange for their shares of the Company in
any transaction involving a merger, consolidation or plan of exchange, the
Option will be converted into an option to purchase shares of Exchange Stock
(unless the Company and the corporation issuing the
4
<PAGE>
Exchange Stock, in their sole discretion, determine that any or all options
granted under the Plan 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,
consolidation or exchange.
In the event of dissolution of the Company or a merger, consolidation or
plan of exchange affecting the Company to which paragraph 9 below does not
apply, in lieu of providing for options pursuant to the above, the Board of
Directors may, in its sole discretion, provide a 30-day period prior to such
event during which the Optionee will have the right to exercise the Option in
whole or in part without any limitation on exercisability and upon the
expiration of which 30-day period the unexercised Option will immediately
terminate.
ACCELERATION IN CERTAIN EVENTS. Notwithstanding any other provisions above
or of the Plan, the Option will immediately become exercisable in full for the
remainder of its term at any time when any one of the following events has taken
place:
(a) The shareholders of the Company approve one of the following:
(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
in a series of related transactions) of all or substantially all
the assets of the Company or the adoption of any plan or proposal
for the liquidation or dissolution of the Company; or
(b) A tender or exchange offer, other than one made by the Company, is
made for common stock (or securities convertible into common
stock) and such offer results in a portion of those securities
being purchased and the offeror after the consummation of the
offer is the beneficial owner (as determined pursuant to
Section 13(d) of the Securities Exchange Act of 1934
(the "Exchange Act")), directly or indirectly, of at least 20%
of the outstanding common stock of the Company; or
(c) The Company receives a report on Schedule 13D under the Exchange
Act reporting the beneficial ownership by any person of 20% or
more of the Company's outstanding common stock, except that
if such receipt occurs 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 will 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 of the Company cease for any reason to constitute
a majority thereof unless the nomination or election of 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.
5
<PAGE>
All Options that are accelerated pursuant to this paragraph 9 will terminate
upon the dissolution of the Company or upon the consummation of any Merger
pursuant to which common stock of the Company would be converted to cash. The
terms used in this paragraph 9 and not defined elsewhere in the Plan have the
same meanings as such terms have in the Exchange Act of 1934 and the rules and
regulations adopted under it.
APPROVALS. The obligations of the Company under the Plan are subject to the
approval of state and federal authorities or agencies having jurisdiction. 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 Option and other grants under the Plan.
However, the Company will not be obligated to issue or deliver common stock to
the Optionee if such issuance or delivery would violate applicable state or
federal securities laws.
RIGHTS AS A SHAREHOLDER. The Optionee will have no rights as a shareholder
with respect to any common stock until the date of issue to the recipient of a
stock certificate for such shares. No adjustment will be made for dividend or
other rights for which the record date occurs prior to the date such stock
certificate is issued.
NO RIGHT TO EMPLOYMENT OR SERVICE. Nothing in the Incentive Stock Option
Agreement or the Plan will: (a) confer upon the Optionee any right to be
employed or to continue in the employment of or service to the Company or any
subsidiary of it; (b) interfere in any way with the right of the Company to
terminate the Optionee's employment or service with the Company at any time for
any reason, with or without cause, or to decrease or otherwise modify the
Optionee's compensation or benefits; or (c) confer upon the Optionee any right
to continuation, extension, renewal or modification of any compensation,
contract or arrangement with or by the Company.
NOTICES. Any notices under the Incentive Stock Option Agreement must be in
writing and will be effective when personally delivered or, if mailed, two days
after deposit in the United States Mail by certified mail, return receipt
requested, postage prepaid. Mail is to be directed to the addresses stated on
the face page of the Incentive Stock Option Agreement or to such other address
as a party may provide by notice given in the same manner.
6
<PAGE>
Exhibit 10.16
NQSOP No.______
ATHENA MEDICAL CORPORATION
NON-STATUTORY STOCK OPTION AGREEMENT
This Non-Statutory Stock Option Agreement is between ATHENA MEDICAL
CORPORATION, a Nevada corporation (the "Company"), and ____________________
(the "Optionee"), pursuant to the Company's 1994 Incentive and Non-Qualified
Stock Option Plan, as amended (the "Plan"). The Company and the Optionee
agree as follows:
1. Option Grant. The Company hereby grants to the Optionee on the terms
and conditions of this Agreement the right and option (the "Option")
to purchase all or any part of________ shares of the Company's common
stock at a purchase price of $_______ per share. The terms and
conditions of this Option set forth in the attached Exhibit A are
hereby incorporated into and made a part of this Agreement.
2. Grant Date; Expiration Date. The grant date for this Option is
________, 199__ . This Option shall continue in effect until ________,
_________, which is 10 years after such grant date (the "Expiration
Date"), unless earlier terminated as provided in paragraph 4, 8 or 9
of Exhibit A.
3. Time of Exercise. Until expiration or termination as provided in
paragraph 4, 8 or 9 of Exhibit A, this Option may be exercised from
time to time to purchase shares up to the following limits:
VESTING DATE Amount Exercisable
------------ ------------------
The minimum number of shares with respect to which this Option may be
exercised at any one time is 100 shares, unless an installment subject
to exercise is fewer than 100 shares.
4. Method of Exercise. Paragraph 5 of Exhibit A sets forth the method
by which this Option may be exercised. This Option is not
transferable except by will, the laws of intestacy or qualified
domestic relations order.
ATHENA MEDICAL CORPORATION OPTIONEE
By:________________________ ____________________________
William H. Fleming, President
_____________________________
10180 SW Nimbus Dr., Ste. J-5 _____________________________
Portland, OR 97223
SSN:________________________
Page 1
<PAGE>
EXHIBIT A
TO NON-STATUTORY STOCK OPTION AGREEMENT
THE PLAN. The Non-Statutory Stock Option Agreement is subject to all terms
and conditions of the Athena Medical Corporation 1994 Incentive and
Non-Qualified Stock Option Plan (the "Plan") adopted by the Company as of June
7, 1994, as it may thereafter be amended. All provisions of the Plan are
incorporated herein by this reference. A copy of the Plan may be obtained upon
request to the Company.
NONTRANSFERABILITY. The Option is nonassignable and nontransferable by the
Optionee, either voluntarily or by operation of law, except: (a) 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 (b) pursuant to a qualified domestic relations
order as defined under the Internal Revenue Code of 1986, as amended, or Title I
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
More particularly (but not in limitation of the foregoing), the Option may not
be sold, assigned, transferred (except as provided above), pledged or encumbered
in any way, and shall not be subject to execution, attachment or similar
process. Any attempted sale, assignment, transfer, pledge, encumbrance or other
disposition contrary to the Plan, or the levy of any execution, attachment or
similar process upon the Option, will be void and without effect.
CERTAIN RIGHTS AND OBLIGATIONS AFFECTING EXERCISE. 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 will be
cumulative and the Optionee may purchase those shares in any subsequent year
during the term of the Option.
Total Disability, Death or Cessation of Board Membership of Optionee.
(a) Total Disability. In the event of the total disability (as
defined in the Plan) of the Optionee, 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 occurrence of
total disability, and only by the Optionee or the Optionee's legal
representative.
(b) Death. In the event of the death of the Optionee, 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 the Optionee's
rights under the Option 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.
Page 2
<PAGE>
(c) Cessation of Board Membership. If the Optionee was awarded the
Option or a member of the Board of Directors of the Company and the Optionee
ceases to be a member of the Board of Directors for any reason other than
total disability or death, the Option must be exercised not more than three
months after such cessation of membership. However, the Option may be
exercised only if and to the extent the Optionee was entitled to exercise the
Option at the date of such cessation of membership.
METHOD OF EXERCISE OF OPTION. Subject to the other terms and conditions of
the Plan, the Option may be exercised by written notice to the Company at its
principal office in Portland, Oregon. A notice form for this purpose may be
obtained from the Company. The notice must: (a) state the election to exercise
the Option; (b) specify the number of shares in respect of which it is being
exercised; (c) give the date on which the Optionee desires to complete the
transaction; and (d) if required in order to comply with the Securities Act of
1933, as amended, contain a representation that it is the Optionee's present
intention to acquire the shares for investment and not with a view to
distribution. The notice must be signed by the Optionee.
Unless the Board of Directors of the Company determines otherwise, on or
before the date specified for completion of the purchase of shares the Optionee
must have paid the Company the full purchase price for the shares in cash. No
shares will 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 the
Option (even though stock certificates have not yet been issued) to satisfy the
purchase price for additional portions of the Option.
THE OPTIONEE ACKNOWLEDGES THAT EXERCISE OF THE OPTION MAY CREATE TAXABLE
INCOME TO THE OPTIONEE. THE INCOME TAX, INCLUDING PAYMENT OF ESTIMATED TAXES, IS
THE SOLE RESPONSIBILITY OF THE OPTIONEE. In addition, if the Optionee is or was
an employee of the Company, the Optionee may be required, upon notification of
the amount due, if any, to 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 must 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 shares
that would satisfy the withholding amount.
The certificate for the shares as to which the Option is exercised will be
registered in the name of the Optionee. If the Optionee has so requested in the
notice exercising the Option, the certificate may be registered in the name of
the Optionee and another person jointly, with right of survivorship.
Page 3
<PAGE>
RESERVATION OF SHARES. The Company will, at all times during the term of
the Option, reserve and keep available such number of shares as will be
sufficient to satisfy the requirements of the Option, and will pay all original
issue and transfer taxes with respect to the issue and transfer of shares
pursuant to it, and all other fees and expenses necessarily incurred by the
Company in connection with it. The number of shares reserved for issuance under
the Plan will be reduced by the number of shares issued upon exercise of an
option.
NO REGISTRATION REQUIREMENTS. The Company will not be deemed by reason of
issuance of any shares under the Plan to have any obligation to register such
shares under the Securities Act of 1933, as amended, nor to maintain in effect
any registration of such shares. In addition, unless the shares have been so
registered, the Option granted under the Plan is on the condition that the
acquisition of shares under the Option will be for investment purposes only, and
the Optionee acquiring the shares must bear the economic risk of the investment
for an indefinite period of time, since the shares so acquired cannot be sold
unless they are subsequently registered or an exemption from such registration
is available. The Optionee agrees that a legend may be placed on the stock
certificates acknowledging the restrictions on subsequent sale or distribution
of the shares.
CHANGES IN CAPITAL STRUCTURE. If during the term of the Option the
outstanding common stock of the Company is 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 will be made by the Board of Directors of
the Company in the number and kind of shares available for awards under the
Plan. In addition, except with respect to transactions referred to in
paragraph 9 below, the Board of Directors will make appropriate adjustment in
the number and kind of shares as to which the Option, or portions of it then
unexercised, will be exercisable, so that the Optionee's proportionate
interest before and after the occurrence of the event is maintained. However,
the Board of Directors will have no obligation to cause 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 will be conclusive.
If the shareholders of the Company receive capital stock from another
corporation ("Exchange Stock") in exchange for their shares of the Company in
any transaction involving a merger, consolidation or plan of exchange, the
Option will be converted into an option 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 options granted under the Plan are to
be treated as set forth in the following sentence) in the same proportion as
used for
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<PAGE>
determining the number of shares of Exchange Stock the holders of the
common stock receive in such merger, consolidation or exchange.
In the event of dissolution of the Company or a merger, consolidation or
plan of exchange affecting the Company to which paragraph 9 below does not
apply, in lieu of providing for options pursuant to the above, the Board of
Directors may, in its sole discretion, provide a 30-day period prior to such
event during which the Optionee will have the right to exercise the Option in
whole or in part without any limitation on exercisability and upon the
expiration of which 30-day period the unexercised Option will immediately
terminate.
ACCELERATION IN CERTAIN EVENTS. Notwithstanding any other provisions above
or of the Plan, the Option will immediately become exercisable in full for the
remainder of its term at any time when any one of the following events has taken
place:
(a) The shareholders of the Company approve one of the following:
(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 in a series of related transactions) of all or substantially all
the assets of the Company or the adoption of any plan or proposal
for the liquidation or dissolution of the Company; or
(b) A tender or exchange offer, other than one made by the Company, is
made for common stock (or securities convertible into common stock)
and such offer results in a portion of those securities being
purchased and the offeror after the consummation of the offer is
the beneficial owner (as determined pursuant to Section 13(d) of
the Securities Exchange Act of 1934 (the "Exchange Act")), directly
or indirectly, of at least 20% of the outstanding common stock of the
Company; or
(c) The Company receives a report on Schedule 13D under the Exchange
Act reporting the beneficial ownership by any person of 20% or more
of the Company's outstanding common stock, except that if such
receipt occurs 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 will 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 of the Company cease for any reason to constitute a
majority thereof unless the nomination or election of 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.
Page 5
<PAGE>
All Options that are accelerated pursuant to this paragraph
9 will terminate upon the dissolution of the Company or upon the
consummation of any Merger pursuant to which common stock of the Company
would be converted to cash. The terms used in this paragraph 9 and not
defined elsewhere in the Plan have the same meanings as such terms have
in the Exchange Act of 1934 and the rules and regulations adopted under
it.
APPROVALS. The obligations of the Company under the Plan are subject to the
approval of state and federal authorities or agencies having jurisdiction. 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 Option and other grants under the Plan.
However, the Company will not be obligated to issue or deliver common stock to
the Optionee if such issuance or delivery would violate applicable state or
federal securities laws.
RIGHTS AS A SHAREHOLDER. The Optionee will have no rights as a shareholder
with respect to any common stock until the date of issue to the recipient of a
stock certificate for such shares. No adjustment will be made for dividend or
other rights for which the record date occurs prior to the date such stock
certificate is issued.
NO RIGHT TO EMPLOYMENT OR SERVICE. Nothing in the Non-Statutory Stock
Option Agreement or the Plan will: (a) confer upon the Optionee any right to be
employed or to continue in the employment of or service to the Company or any
subsidiary of it; (b) interfere in any way with the right of the Company to
terminate the Optionee's employment or service with the Company, if any, at any
time for any reason, with or without cause, or to decrease or otherwise modify
the Optionee's compensation or benefits; or (c) confer upon the Optionee any
right to continuation, extension, renewal or modification of any compensation,
contract or arrangement with or by the Company.
NOTICES. Any notices under the Non-Statutory Stock Option Agreement must be
in writing and will be effective when personally delivered or, if mailed, two
days after deposit in the United States Mail by certified mail, return receipt
requested, postage prepaid. Mail is to be directed to the addresses stated on
the face page of the Non-Statutory Stock Option Agreement or to such other
address as a party may provide by notice given in the same manner.
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<PAGE>
Exhibit 10.17
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE
SECURITIES LAW, AND NO INTEREST IN IT MAY BE OFFERED,
SOLD, DISTRIBUTED, ASSIGNED, PLEDGED OR
OTHERWISE TRANSFERRED ABSENT SUCH REGISTRATION
(OR THE AVAILABILITY OF AN EXEMPTION THEREFROM) AND
COMPLIANCE WITH THE OTHER CONDITIONS OF THIS WARRANT
------------------------
PURCHASE WARRANT CERTIFICATE
Issued to:
------------------------
EXERCISABLE TO PURCHASE
______ Shares of Common Stock
of
ATHENA MEDICAL CORPORATION
Void after ____________, 2000
Page 1
<PAGE>
This Warrant Certificate certifies that, for value received and subject to
the terms and conditions set forth below, the Warrantholder is entitled to
purchase, and the Company agrees to sell and issue to the Warrantholder, at any
time on or before ___________, 200 ___, up to _________ Shares at the
Exercise Price.
This Warrant is issued subject to all the following terms and conditions:
1. Definitions of Certain Terms: Except as may be otherwise clearly required
by the context:
(a) Common Stock means the $0.01 par value common stock of the Company.
(b) Company means ATHENA Medical Corporation, a Nevada corporation.
(c) Exercise Price means the price at which the Warrantholder may purchase
one Share (or Securities obtainable in lieu of one Share) upon
exercise of this Warrant as determined from time to time pursuant
to the provisions hereof. The Exercise Price is _______ per Share.
(d) Securities means the Shares obtained or obtainable upon exercise of
this Warrant or securities obtained or obtainable upon exercise,
exchange or conversion of such Shares.
(e) Share shall mean one share of Common Stock for which this Warrant is
initially exercisable.
(f) Warrant Certificate means this certificate evidencing the Warrant.
(g) Warrantholder means the record holder of the Warrant or Securities. The
Warrantholder is _______________________________________.
(h) Warrant means the warrant evidenced by this certificate or any
certificate obtained upon permitted transfer or partial exercise of
the Warrant evidenced by any such certificate.
(i) Required Condition means this Warrant is valid as follows:
- the first _________ Shares are exercisable immediately.
- the last __________ Shares are exercisable (after)
, 199 .
2. Exercise of Warrant. Subject to the Required Condition, all or any part
of this Warrant may be exercised at any time on or before 5 p.m. Pacific
Time on _______________________, 200 by surrendering this Warrant
Certificate, together with appropriate instructions, duly executed by the
Warrantholder or by the Warrantholder's duly authorized attorney, at the
office of the Company, 10180 SW Nimbus, Suite J-5, Portland, Oregon 97223,
or at such other office or agency as the Company may designate. Upon
receipt of notice of exercise, the Company shall as promptly as
practicable instruct its transfer agent to prepare certificates for the
Securities to be received by the Warrantholder upon completion of the
exercise. When such certificates are prepared, the Company shall notify
the Warrantholder and deliver such certificates to the Warrantholder or
as per the
PAGE 2
<PAGE>
Warrantholder's instructions immediately upon payment in full by the
Warrantholder, in lawful money of the United States, of the Exercise Price
payable with respect to the Securities being purchased.
The Securities to be obtained on exercise of this Warrant will be deemed to
have been issued, and the Warrantholder will be deemed to have become a
holder of record of those Securities, as of the date of full payment of
the Exercise Price.
If fewer than all the Securities purchasable under this Warrant are
purchased, the Company will, upon such partial exercise, execute and
deliver to the Warrantholder a new Warrant Certificate (dated the date
hereof), in form and tenor similar to this Warrant Certificate, evidencing
that portion of this Warrant not exercised.
3. Termination upon Merger or Sale. If the Company proposes to merge with or
into another company (other than for the sole purpose of reincorporating
the Company in another jurisdiction), to otherwise reorganize, consolidate,
reclassify or make any other change in the Company's capital structure, to
partially or completely liquidate, or to sell all or substantially all the
Company's assets, the Company will give at least 30 days' prior written
notice thereof to the Warrantholder. To the extent the Warrantholder does
not fully exercise this Warrant within such 30 day period, then this
Warrant shall automatically terminate upon consummation of such merger,
change, liquidation or sale, and the Warrantholder will have no further
rights under this Warrant.
4. Adjustments in Certain Events. The number, class and price of Securities
for which this Warrant may be exercised are subject to adjustment from
time to time upon the occurrence of certain events as follows:
(a) If the outstanding shares of the Company's Common Stock are divided
into a greater number of shares, the number of shares of Common
Stock for which this Warrant is then exercisable will be
proportionately increased and the Exercise Price will
be proportionately reduced. Conversely, if the outstanding shares
of the Company's Common Stock are combined into a smaller number of
shares, the number of shares of Common Stock for which this Warrant
is then exercisable will be proportionately reduced and the Exercise
Price will be proportionately increased.
(b) If holders of the Company's outstanding shares of Common Stock
receive, or (on or after the record date fixed for determination
of eligible shareholders) become entitled to receive, without
payment or other consideration therefor, other or additional stock
of the Company by way of dividend, then the Warrantholder will, upon
exercise of this Warrant, be entitled to receive, without payment of
additional consideration therefor, the amount of such other or
additional Common Stock of
PAGE 3
<PAGE>
the Company which the Warrantholder would hold on the date of such
exercise had the Warrantholder been the record holder of such
exercised Common Stock on the date of receipt or entitlement to
receipt of the stock dividend, giving effect to any adjustments
prior to exercise as required by Section 4(a).
(c) When any adjustment is required to be made in the number of shares
of Common Stock purchasable upon exercise of this Warrant, the
Company will promptly determine the new number of such shares
purchasable upon exercise of this Warrant, and (i) prepare and
retain on file a statement describing in reasonable detail the
method used in arriving at the new number of such shares, and
(ii) cause a copy of such statement to be mailed to the
Warrantholder within 30 days after the date of the event giving
rise to the adjustment.
(d) No fractional shares of Common Stock or other Securities will be
issued in connection with exercise of this Warrant or in connection
with any adjustment pursuant to this Section 4. The number of full
shares issuable shall be determined by the Board of Directors of the
Company or by the terms of any assumption or substitution documents,
and any such determination shall be binding and conclusive.
5. Reservation of Shares. The Company agrees that the number of shares of
Common Stock or other Securities sufficient to provide for exercise of
this Warrant upon the basis set forth above will at all times during this
term of this Warrant be reserved for exercise.
6. No Rights as a Shareholder. Except as otherwise provided herein, the
Warrantholder will not, by virtue of ownership of this Warrant, be
entitled to any rights of a shareholder of the Company.
7. Transfer of Warrant. This is not a bearer warrant, and it may not be
sold, assigned, encumbered or otherwise transferred (except by will or the
laws of intestacy) without the prior written consent of the Company and
compliance with applicable securities laws in accordance with Section 8.
8. Compliance with Securities Laws. By accepting this Warrant, the
Warrantholder represents, acknowledges and agrees that:
(a) This Warrant, and the Securities if the Warrant is exercised, are
acquired only for investment, for the Warrantholder's own account,
and without any present intention to sell or distribute this Warrant
or the Securities. The Warrantholder further acknowledges that the
Securities will not be issued pursuant to any exercise of this
Warrant unless the exercise and the issuance and delivery of such
Securities shall comply with all relevant provisions of law,
including without limitation the Securities Act of 1933, as amended
(the "1933 Act"), and other federal and state
PAGE 4
<PAGE>
securities laws and regulations, and the requirements of any stock
exchange upon which the Securities may then be listed.
(b) This Warrant and the Securities have not been registered under the
1933 Act or any state securities law and accordingly will not be
transferable except as permitted under an exemption contained in the
1933 Act and applicable state law, or upon satisfaction of the
registration and prospectus delivery requirements of the 1933 Act.
Therefore, the Securities (and this Warrant, unless earlier
terminated) must be held indefinitely unless subsequently registered
under the 1933 Act and applicable state law or an exemption from
such registration is available. The Warrantholder understands that
the certificate(s) evidencing the Securities will be imprinted with
a legend which will prohibit the transfer thereof unless they
are registered or unless the Company receives an opinion of counsel
reasonably satisfactory to the Company that such registration is not
required.
9. Miscellaneous. No amendment, waiver, termination or other change to this
Warrant or any term of it will be effective unless set forth in a writing
signed by the party sought to be bound. The captions heading the Sections
of this Warrant are inserted for convenience of reference only, and are not
to be used to define, limit, construe or describe the scope or intent of
any term, provision or section of this Warrant. Any notices required or
permitted under this Warrant must be in writing and will be deemed to have
been given when personally delivered to a party or 48 hours after deposit
in the United States Mail, first class postage prepaid by both first class
and certified mail, return receipt requested, or 48 hours after delivery to
a recognized national overnight carrier, with overnight shipping charges
paid, and addressed to such party as follows:
If to the Company: ATHENA Medical Corporation
10180 SW Nimbus Ave., Suite J-5
Portland, OR 97223
Attn: William H. Fleming, President
If to the Warrantholder: ___________________________________
___________________________________
or such other address as a party may specify by a notice in writing, given in
the same manner.
10. Applicable Law. This Warrant will be governed by and construed in
accordance with the laws of the state of Oregon, without reference to
conflict of laws principles thereunder. All disputes relating to this
Warrant shall be tried before federal or state courts located in
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Multnomah County, Oregon, to the exclusion of all other courts that might
have jurisdiction.
DATED as of _________________________________, 199_.
ATHENA MEDICAL CORPORATION
By __________________________________________
William H. Fleming, President
PAGE 6
<PAGE>
Exhibit 10.21
CONSULTANT AGREEMENT
BETWEEN: ATHENA Medical Corporation, a Nevada corporation, dba "A-FEM
Medical Corporation" ("A-FEM");
AND: PAUL MUEGGLER, Ph.D. ("Consultant").
DATED: February 3, 1997.
1. Consultant agrees to serve as a consultant to A-FEM in scientific/medical
research and development. All such services shall be if and as requested by
A-FEM, but at such times and places as are determined by Consultant.
2. This Agreement may be terminated by either party, for any reason or no
reason, upon 30 days' prior written notice, which will be deemed given upon
personal delivery to the other party, or 24 hours after mailing (by certified
mail, return receipt requested) to the other party's address set forth below.
3. A-FEM shall pay to Consultant $4,000.00 for one month (at approximately
half time) of services provided to A-FEM, payable 15 days after receipt of
Consultant's monthly invoice. The parties anticipate that Consultant will not
be requested to perform services exceeding (on average) $4,000.00 per month.
The above-referenced fee is intended to include Consultant's normal travel
expenses (such as those between Consultant's home and A-FEM's principal
office) and incidental expenses. However, non-ordinary reasonable expenses
(such as out-of-state travel) incurred by Consultant may be reimbursed if
first approved in advance by an officer of A-FEM, and if evidenced by
receipts and vouchers substantiating each such expense.
4. Consultant is an independent contractor, and accepts sole responsibility
for payment of all income taxes, withholdings and contributions required by
federal, state and local law as to himself and any of his employees.
Consultant is not entitled to workers' compensation, unemployment, health,
retirement or any other contribution, insurance or benefit from A-FEM by
virtue of this Agreement.
5. Consultant agrees that any and all information relating to A-FEM's
products, proposals, methods, research, marketing or other business plans,
and other financial or business information, whether or not considered trade
secret or proprietary (collectively, "Information") disclosed to or obtained
by Consultant during the course of his relationship with A-FEM (whether
before or during the term of this Agreement) is the exclusive property of
A-FEM and will not at any time be disclosed, copied or summarized by
Consultant or any of his employees to any person or entity without the prior
written
<PAGE>
consent of A-FEM in each instance. The foregoing does not apply to any
Information which is publicly available or obtained by Consultant without
breach of any obligation of confidentiality. Consultant agrees to promptly
return to A-FEM upon request at any time all documents containing
Information, including notes, files, correspondence, memoranda, diskettes,
summaries, sketches and reports, without retaining any copies. Consultant
further agrees that violation of this Section 5 would cause irreparable
injury to A-FEM, and A-FEM will by reason thereof be entitled to preliminary
relief such as a temporary restraining order or preliminary injunction,
without posting bond therefor. In any action at law or in equity to enforce
or interpret this Section 5, the prevailing party will be entitled to
reasonable attorney fees and costs, as determined by the court.
6. Consultant agrees that all work and efforts by him pursuant to this
Agreement, including without limitation any research, testing, modeling,
analysis, design, fabrication, corporate programming or modeling, will
constitute work made for hire, all rights to which are and shall be owned by
A-FEM. Consultant hereby assigns to A-FEM all rights and interest (whether by
way of copyright, patent, trade secret or otherwise) in all such works, and
agrees to sign, acknowledge and deliver to A-FEM any separate assignment and
acknowledgment as A-FEM may reasonably require.
7. This Agreement may not be assigned, and the duties and rights under it
may not be subcontracted, by either party without the prior written consent
of the other. This Agreement shall be construed in accordance with the laws
of Oregon. This Agreement represents the final and conclusive agreement
between the parties, and supersedes all prior and contemporaneous letters,
discussions and understandings between them, oral or written. This Agreement
may only be amended or extended in a writing signed by both parties.
EXECUTED as of the date first set forth above.
ATHENA MEDICAL CORPORATION
By: ----------------------------- ---------------------------------
William H. Fleming, President Paul Mueggler, Ph.D.
10180 S.W. Nimbus Avenue, Suite J-5 ---------------------------------
Portland, OR 97223 ---------------------------------
---------------------------------
A-FEM Medical Corporation Consultant
<PAGE>
Exhibit 10.22
CONSULTANT AGREEMENT
BETWEEN: ATHENA Medical Corporation, a Nevada corporation, dba "A-FEM
Medical Corporation" ("A-FEM");
AND: PETER BURKE ("Consultant").
DATED: December 16, 1996.
1. Consultant agrees to serve as a consultant to A-FEM in finance
operations. All such services shall be if and as requested by A-FEM, but
at such times and places as are determined by Consultant.
2. This Agreement may be terminated by either party, for
any reason or no reason, upon 30 days' prior written notice, which will be
deemed given upon personal delivery to the other party, or 24 hours after
mailing (by certified mail, return receipt requested) to the other party's
address set forth below.
3. A-FEM shall pay to Consultant $600.00 per day for services rendered
to A-FEM. The above-referenced fee is intended to include Consultant's normal
travel expenses (such as those between Consultant's home and A-FEM's principal
office) and incidental expenses. However, non-ordinary reasonable expenses
(such as out-of-state travel) incurred by Consultant may be reimbursed if first
approved in advance by an officer of A-FEM, and if evidenced by receipts and
vouchers substantiating each such expense.
4. Consultant is an independent contractor, and accepts sole
responsibility for payment of all income taxes, withholdings and
contributions required by federal, state and local law as to himself and any
of his employees. Consultant is not entitled to workers' compensation,
unemployment, health, retirement or any other contribution, insurance or
benefit from A-FEM by virtue of this Agreement.
5. Consultant agrees that any and all information relating to A-FEM's
products, proposals, methods, research, marketing or other business plans,
and other financial or business information, whether or not considered trade
secret or proprietary (collectively, "Information") disclosed to or obtained
by Consultant during the course of his relationship with A-FEM (whether
before or during the term of this Agreement) is the exclusive property of
A-FEM and will not at any time be disclosed, copied or summarized by
Consultant or any of his employees to any person or entity without the prior
written consent of A-FEM in each instance. The foregoing does not apply to
any Information which is publicly available or obtained by Consultant without
breach of any obligation of confidentiality. Consultant agrees to promptly
return to A-FEM upon request at any time
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all documents containing Information, including notes, files, correspondence,
memoranda, diskettes, summaries, sketches and reports, without retaining any
copies. Consultant further agrees that violation of this Section 5 would
cause irreparable injury to A-FEM, and A-FEM will by reason thereof be
entitled to preliminary relief such as a temporary restraining order or
preliminary injunction, without posting bond therefor. In any action at law
or in equity to enforce or interpret this Section 5, the prevailing party
will be entitled to reasonable attorney fees and costs, as determined by the
court.
6. Consultant agrees that all work and efforts by him pursuant
to this Agreement, including without limitation any research, testing,
modeling, analysis, design, fabrication, corporate programming or modeling,
will constitute work made for hire, all rights to which are and shall be
owned by A-FEM. Consultant hereby assigns to A-FEM all rights and interest
(whether by way of copyright, patent, trade secret or otherwise) in all such
works, and agrees to sign, acknowledge and deliver to A-FEM any separate
assignment and acknowledgment as A-FEM may reasonably require.
7. This Agreement may not be assigned, and the duties and rights under it
may not be subcontracted, by either party without the prior written consent of
the other. This Agreement shall be construed in accordance with the laws of
Oregon. This Agreement represents the final and conclusive agreement between
the parties, and supersedes all prior and contemporaneous letters,
discussions and understandings between them, oral or written. This Agreement
may only be amended or extended in a writing signed by both parties.
EXECUTED as of the date first set forth above.
Athena Medical Corporation
By:-------------------------------- ---------------------------------
William H. Fleming, President Peter Burke
10180 S.W. Nimbus Avenue, Suite J-5 ---------------------------------
Portland, OR 97223 ---------------------------------
---------------------------------
A-FEM Medical Corporation Consultant
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Exhibit 10.23
EMPLOYMENT AGREEMENT
BETWEEN: ATHENA MEDICAL CORPORATION, a Nevada corporation ("Company");
AND: SARAH P. VANDYCK ("Employee")
DATED: May 28, 1996.
RECITAL:
The Company (dba A-FEM Medical Corporation) is engaged in the business of
developing and marketing feminine hygiene products and diagnostics world-wide.
The Company desires to employ and retain the unique experience, abilities and
services of Employee as its Director of International Sales and Marketing.
AGREEMENT:
In consideration of the foregoing Recital and the terms, conditions and
covenants set forth below, the parties agree as follows:
1. EMPLOYMENT
1 Term. The Company agrees to employ Employee as its Director of
International Sales and Marketing for a term commencing on May 28, 1996, and
continuing until termination in accordance with Section 5.
2 Duties. Employee accepts employment with the Company on the terms and
conditions set forth in this Agreement, and agrees to devote Employee's full
time and attention to the performance of Employee's duties under this
Agreement. Employee's general duties shall consist of developing and
implementing product export strategies and structures and supervision of the
Company's international sales and distribution efforts. Employee shall
perform such specific duties and shall exercise such specific authority as
may be assigned to Employee from time to time by the president of the
Company. In performing such duties, Employee shall be subject to the
direction and control of the president of the Company. Employee further
agrees that in all aspects of such employment, Employee shall comply with the
policies, standards, rules and regulations of the Company from time to time
established, and shall perform Employee's duties faithfully, intelligently,
to the best of Employee's ability and in the best interest of the Company.
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<PAGE>
The devotion of reasonable periods of time by Employee for personal
purposes, outside non-competitive business activities or charitable activities
shall not be deemed a breach of this Agreement, provided that such purposes or
activities do not materially interfere with the services required to be rendered
to or on behalf of the Company.
2. COVENANT NOT TO COMPETE; CONFIDENTIALITY
1 Noncompetition. During the term of this Agreement and for a period of one
year after termination of employment for any reason with the Company, Employee
shall not, anywhere in the world, directly or indirectly: (1) own (as a
proprietor, partner, member, stockholder, trustee or otherwise) an interest in;
(2) participate (as an officer, director, manager, or in any other capacity) in
the management, operation or control of; or (3) perform services as or act in
the capacity of an employee, independent contractor, consultant or agent of any
person engaged, directly or indirectly, in the business of the sale or
distribution of interlabial pads (i.e., the Company's Fresh 'N
Fit-Registered Trademark- Padette or any competing product of any other person
or entity) except with the prior written consent of the Company in each
instance.
2 Confidentiality. Employee acknowledges and agrees that all product
and equipment specifications, manufacturing methods, lists of the Company's
customers and suppliers, product planning information, and other Company
data related to its business ("Confidential Information") are valuable assets of
the Company. Except for disclosures reasonably made to advance the business of
the Company and information which is a matter of public record, Employee shall
not, during the term of this Agreement or after termination of employment with
the Company for any reason, disclose any Confidential Information to any person
or use any Confidential Information (regardless of whether same is considered
proprietary or a trade secret) for the benefit of Employee or any other person,
except with the prior written consent of the Company in each instance.
3 Return of Documents and Property. Employee acknowledges and agrees that
all originals and all copies of records, reports, files, correspondence,
lists, plans, drawings, memoranda, notes, sketches, summaries, schedules,
codes, tapes and other documentation and property related to the business of
the Company or containing any Confidential Information are and shall be the
sole and exclusive property of the Company, and shall be returned to the
Company upon termination of Employee's employment with the Company or upon
the written request of the Company at any time.
4 Related Company Policies. Employee further agrees to comply with all
policies, rules and regulations adopted by the Company from time to time with
respect to insider trading and other duties applicable to the employees of a
publicly-traded corporation. Employee also agrees to sign a separate
confidentiality agreement applicable to all employees. The terms of such
separate agreement will control over any conflicting term in this Agreement.
Page 2
<PAGE>
5 Injunction. Employee agrees that it would be difficult to measure damage to
the Company from any breach by Employee of Section 2.1, 2.2, 2.3 or 2.4 and
that monetary damages would be an inadequate remedy for any such breach.
Accordingly, Employee agrees that if Employee shall breach Section 2.1, 2.2,
2.3 or 2.4, the Company shall be entitled, in addition to any and all other
remedies it may have at law or in equity, to an injunction or other
appropriate order to restrain any such breach, without showing or proving any
actual damage sustained by the Company, and without posting bond or other
undertaking.
6 No Release. Employee agrees that termination of employment
with the Company or expiration of the term of this Agreement shall not
release Employee from any of Employee's obligations under Section 2.1, 2.2,
2.3 or 2.4.
3. COMPENSATION
1 Base Compensation; Bonus Compensation. In consideration of all services to
be rendered by Employee to the Company, the Company shall pay to Employee base
compensation of $95,000.00 per year, payable in equal monthly installments of
$7,916.66 each on the same dates as other management personnel are paid. As
further compensation, the Company may pay to Employee such bonus or bonuses as
may from time to time be awarded to Employee by the board of directors of the
Company, payable at such times and in such amounts as the board of directors may
determine in its sole discretion. However, this Agreement shall not be construed
to require the board of directors of the Company to award or pay any bonus to
Employee.
2 Withholding. Base compensation and any bonus compensation shall be
subject to the customary withholding of income taxes and to other employment
taxes required with respect to compensation paid by an employer to an employee.
3 Other Benefits. Base compensation and bonus compensation paid to Employee
shall be in addition to any contribution made by the Company for the benefit of
Employee to any qualified profit-sharing or retirement plan maintained by the
Company for the exclusive benefit of its employees. The Company shall provide to
Employee and Employee's spouse and dependents the same coverage and
participation that the Company may provide to other management personnel with
respect to accident and health insurance, life insurance and other employment
benefits, upon Employee meeting the respective eligibility conditions of each
such benefit.
4 Incentive Stock Option. Subject to approval by the Company's
Board of Directors, Employee may be awarded an option to purchase up to
100,000 shares of the Company's common stock, exercisable at the approximate
publicly-traded price of such stock on the date of award. The option will not be
exercisable until after at least 90 days' continuous employment, and thereafter
according to a vesting schedule and performance standards agreed upon by the
parties. Termination of employment for any reason or no reason will
automatically terminate the right to exercise the option as to any shares not
then
Page 3
<PAGE>
vested. The option will also be subject to other terms and conditions,
including restrictions on transfer of the option and the shares, required by the
Company on all employee options.
5 Income From Employee's Efforts. All income generated by Employee for
Employee's services to the Company, and all activities related to such
services, shall belong to the Company, whether paid directly to the Company
or to Employee. Employee agrees to, upon request by the Company from time to
time, render a detailed accounting of all transactions during the course of
Employee's employment.
4. EXPENSES
Employee shall be entitled to reimbursement from the Company for reasonable
expenses necessarily incurred by Employee in the performance of Employee's
duties under this Agreement, upon presentation of vouchers detailing the amount,
date and business purpose of each such expense. All expenses in excess of
$100.00 must be approved in advance by an officer of the Company, and all travel
and related expenses and reimbursements will be governed by the travel policies
and procedures adopted by the Company.
5. TERMINATION
1 Termination by Prior Notice or Agreement. The employment of Employee by
the Company may be terminated by either the Company or Employee upon the giving
of 20 days' prior written notice to the other party. This Agreement may be
terminated at any earlier time upon the mutual written agreement of the Company
and Employee.
2 Immediate Termination. The employment of Employee by the Company
may be terminated immediately in the sole discretion of the board of directors
or the president of the Company upon the occurrence of any one of the following
events:
1. If Employee shall willfully and continuously fail or refuse
to comply with any of the policies, standards, rules and regulations of the
Company from time to time established.
2. If Employee shall be guilty of fraud, dishonesty or any
other act of misconduct in the performance of Employee's duties on behalf of
the Company.
3. If Employee shall fail or refuse to perform any provision
of this Agreement to be performed by Employee.
4. Upon the sale, transfer or other disposition of all or
substantially all the assets of the Company, the distribution of the
Company's assets to its stockholders in liquidation, or the discontinuance of
the Company's conduct of the business described in the Recital.
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5. If Employee shall suffer a permanent disability. For
purposes of this Agreement, "permanent disability" shall be defined in
accordance with the terms of any disability income policy insuring Employee
which may be purchased by the Company, as determined by the company issuing
such policy. But if such a policy is not in force, "permanent disability"
shall be defined as Employee's inability due to physical or mental illness,
or other cause, to perform the majority of Employee's usual duties for a
period of three months or more, as determined by a physician licensed to
practice medicine in Oregon and chosen by the Company.
3 Death. In the event Employee dies during the term of this
Agreement, this Agreement shall automatically terminate, and the Company
shall pay to Employee's estate the compensation which would be otherwise
payable to Employee through the last day of the month in which Employee's
death occurs.
4 Proration of Base Compensation. Except as otherwise
provided in Section 5.3, upon termination of employment, the base
compensation payable to Employee pursuant to Section 3.1 shall be prorated to
the date of such termination and shall be payable on the first day of the
month following such termination date.
5 At-Will Employment. The employment by Employee by the
Company is "at-will". Employee may terminate employment at any time, for any
reason or for no reason. Correspondingly, the Company may terminate
Employee's employment at any time, for any reason or for no reason. In
addition, the existence of any fund or commitment by or for the benefit of
the Company (represented by an escrowed account or otherwise) respecting
Employee's salary shall not be construed as creating an express or implied
agreement to employ Employee for any specific period of time. The Company's
obligation to pay Employee for her services under this Agreement is an
unfunded one payable out of the Company's general funds, and expires upon
termination of this Agreement as set forth in this Section 5.
6. VACATION; SICK LEAVE
Subject to the approval of time by the president of the Company, Employee
shall be entitled to 30 working days per calendar year (prorated for a short
year) of combined vacation/sick days. Accrual of same and other permitted leaves
shall be as provided in the Company's employee manual.
7. REPRESENTATIONS OF EMPLOYEE
Employee represents and warrants to the Company that there is no employment
contract or any other contractual obligation to which Employee is subject which
prevents Employee from entering into this Agreement or from performing fully
Employee's duties under this Agreement.
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<PAGE>
8. RELATIONSHIP OF PARTIES
The relationship between Employee and the Company is that of employee and
employer. Employee shall have no authority to enter into any contracts or
agreements binding upon the Company, except as shall be specifically authorized
by the board of directors or the president of the Company. Employee shall have
no interest in the Company's tangible or intangible assets or in the stock of
the Company except as may be provided by other written documents executed by the
Company.
9. WORK MADE FOR HIRE
All techniques, processes, products, manuals, documents, materials, ideas
and Confidential Information developed by Employee while employed by the Company
shall be considered work made for hire and shall, unless specifically otherwise
agreed upon in writing by the Company prior to such development, become the sole
and exclusive property of the Company.
10. MISCELLANEOUS
1 Notices. Any notice or consent required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been given when
personally delivered to a party or 24 hours after deposit in the United States
Mail, first class postage prepaid by both first class and certified mail, return
receipt requested, or 24 hours after delivery to a recognized national overnight
carrier, with overnight shipping charges paid, and addressed to such party as
follows:
<TABLE>
<S> <C>
If to Employee: Sarah P. Van Dyck
636 NW Albemarle Terrace
Portland, OR 97210
If to the Company: Athena Medical Corporation
10180 SW Nimbus Avenue, Suite J-5
Portland, OR 97223
Attn: President
</TABLE>
or such other address as a party may specify by a notice in writing, given in
the same manner.
2 Attorneys' Fees. If any action or other proceeding shall be
instituted relating to any term or condition of this Agreement or relating to
any of the rights, duties or obligations arising under it (including without
limitation a proceeding for injunction as provided by Section 2.4), the
prevailing party shall be entitled to recover from the other party, and the
other party agrees to pay to the prevailing party, whether or not the matter
proceeds to final judgment or decree, in addition to costs and disbursements
allowed by law, such sum as the trial and each appellate court may adjudge
reasonable as attorneys' fees in such action or other proceeding, and in any
appeal of it.
Page 6
<PAGE>
3 Waiver of Breach. The waiver by either party of a breach of any
term or provision of this Agreement shall not be construed as a waiver of any
subsequent breach of the same or any other term or provision by either party.
4 Time of the Essence; Days. Time is of the essence of this Agreement
in all particulars. The term "days" means calendar days.
5 Modification. This Agreement may not be amended or modified except by
written agreement executed by the parties.
6 Captions. The captions heading the sections and subsections of this
Agreement are inserted for convenience of reference only, and are not to be
used to define, limit, construe or describe the scope or intent of any term,
provision or section of this Agreement.
7 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original but all of which taken together
shall constitute one and the same instrument.
8 Integration. THIS AGREEMENT CONTAINS THE FINAL AND CONCLUSIVE
AGREEMENT AND UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER
OF IT, AND SUPERSEDES ALL PRIOR AND CONTEMPORANEOUS AGREEMENTS, ORAL OR
WRITTEN. EXCEPT AS SET FORTH IN THIS AGREEMENT, THERE ARE NO PROMISES,
REPRESENTATIONS, AGREEMENTS OR UNDERSTANDINGS, ORAL OR WRITTEN, BETWEEN THE
PARTIES RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT.
EXECUTED as of the date first set forth above.
Athena Medical Corporation
_________________________ By __________________________
Sarah P. Van Dyck Its President
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<PAGE>
Exhibit 10.24
CONSULTANT AGREEMENT
BETWEEN: ATHENA MEDICAL CORPORATION, a Nevada corporation, dba "AFEM
Medical Corporation" ("AFEM");
AND: JAMES R. WILSON ("Consultant").
DATED: Effective December 1, 1996.
1 Consultant agrees to serve as a consultant to AFEM in
manufacturing, distributing, marketing and financing. The parties anticipate
that Consultant shall devote approximately one to two days of each week in
performing such services, as requested by AFEM but at such times and places
as are determined by Consultant.
2 This Agreement may be terminated by either party, for any reason or
no reason, upon 30 days' prior written notice, which will be deemed given
upon personal delivery to the other party, or 24 hours after mailing (by
certified mail, return receipt requested) to the other party's address set
forth below.
3 AFEM shall pay to Consultant $2,500.00 per month, commencing on the
effective date of this Agreement and payable 15 days after receipt of
Consultant's invoice. Such fee is intended to compensate Consultant for
normal travel expenses (such as those between Consultant's home and AFEM's
principal office) and incidental expenses. However, non-ordinary reasonable
expenses (such as out-of-state travel) incurred by Consultant may be
reimbursed if first approved in advance by an officer of AFEM, and if
evidenced by receipts and vouchers substantiating each such expense.
4 Consultant is an independent contractor, and accepts sole
responsibility for payment of all income taxes, withholdings and
contributions required by federal, state and local law as to himself and any
of his employees. Neither Consultant nor any of his employees is entitled to
workers' compensation, unemployment, health, retirement or any other
contribution, insurance or benefit from AFEM by virtue of this Agreement.
5 Consultant agrees that any and all information relating to AFEM's
products, proposals, methods, research, marketing or other business plans,
and other financial or business information, whether or not considered trade
secret or proprietary (collectively, "Information") disclosed to or
obtained by Consultant during the course of his relationship with AFEM
(whether before or during the term of this Agreement) is the exclusive
property of AFEM and will not at any time be disclosed, copied or summarized
by Consultant or any of his employees to any person or entity without the
prior written consent of AFEM in each instance. The foregoing does not apply
to any Information
<PAGE>
which is publicly available or obtained by Consultant without breach of any
obligation of confidentiality. Consultant agrees to promptly return to AFEM
upon request at any time all documents containing Information, including
notes, files, correspondence, memoranda, diskettes, summaries, sketches and
reports, without retaining any copies. Consultant further agrees that
violation of this Section 5 would cause irreparable injury to AFEM, and AFEM
will by reason thereof be entitled to preliminary relief such as a temporary
restraining order or preliminary injunction, without posting bond therefor.
In any action at law or in equity to enforce or interpret this Section 5, the
prevailing party will be entitled to reasonable attorney fees and costs, as
determined by the court.
6 This Agreement may not be assigned, and the duties and rights under
it may not be subcontracted, by either party without the prior written
consent of the other. This Agreement shall be construed in accordance with
the laws of Oregon. This Agreement represents the final and conclusive
agreement between the parties, and supersedes all prior and contemporaneous
letters, discussions and understandings between them, oral or written. This
Agreement may only be amended or extended in a writing signed by both parties.
EXECUTED as of the date first set forth above.
Athena Medical Corporation
By:______________________________
James E. Reinmuth,
Chief Executive Officer
By:______________________________
William H. Fleming, President
10180 SW Nimbus Avenue, Suite J-5
Portland, OR 97223
________________________
James R. Wilson
3198 Powder River Drive
Eugene, OR 97408
<PAGE>
Exhibit 10.25
EMPLOYMENT AGREEMENT
BETWEEN: ATHENA MEDICAL CORPORATION, a Nevada corporation ("Company");
AND: JAMES E. REINMUTH ("Employee").
DATED: Effective September 6, 1996.
RECITAL:
The Company (dba AFEM Medical Corporation) is engaged in the business of
developing and marketing feminine hygiene products and diagnostics world-wide.
Employee is a member of the Company's Board of Directors and was appointed by
the Board of Directors as the Company's Chairman and Chief Executive Officer on
September 6, 1996. The parties desire to set forth their agreement as to
Employee's services as such.
AGREEMENT:
In consideration of the foregoing Recital and the terms, conditions and
covenants set forth below, the parties agree as follows:
1. EMPLOYMENT
The Company agrees to employ Employee as its Chairman and Chief Executive
Officer for a term commencing on September 6, 1996, and continuing until
termination in accordance with Section 5. Employee accepts employment with the
Company on the terms and conditions set forth in this Agreement, and agrees to
perform the duties of the Company's Chairman and Chief Executive Officer as
provided in the Company's Bylaws. Employee further agrees to perform any
specific duties assigned to Employee by the Company's Board of Directors. The
parties anticipate that Employee will be required to devote approximately one to
two days of each week on behalf of the Company.
Employee agrees that in all aspects of his employment, Employee shall comply
with the policies, standards, rules and regulations of the Company from time to
time established, and shall perform Employee's duties faithfully, intelligently,
to the best of Employee's ability and in the best interest of the Company. The
devotion of reasonable periods of time by Employee for personal purposes,
outside non-competitive business activities or charitable activities shall not
be deemed a breach of this Agreement, provided that such purposes or activities
do not materially interfere with the services required to be rendered to or on
behalf of the Company.
2. CONFIDENTIALITY
1 CONFIDENTIAL INFORMATION. Employee acknowledges and agrees that all
research, product and equipment specifications, manufacturing methods, lists
of the
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Company's customers and suppliers, marketing and product planning
information, and other Company data related to its business ("Confidential
Information"), are valuable assets of the Company. Except for disclosures
reasonably made to advance the business of the Company and information which is
a matter of public record, Employee shall not, during the term of this Agreement
or after termination of employment with the Company for any reason, disclose any
Confidential Information to any person or use any Confidential Information
(regardless of whether same is considered proprietary or a trade secret) for the
benefit of Employee or any other person, except with the prior written consent
of the Company in each instance.
2 RETURN OF DOCUMENTS AND PROPERTY. Employee acknowledges and agrees that
all originals and all copies of records, reports, files, correspondence,
lists, plans, drawings, memoranda, notes, sketches, summaries, schedules,
codes, tapes and other documentation and property related to the business of
the Company or containing any Confidential Information are and shall be the
sole and exclusive property of the Company, and shall be returned to the
Company upon termination of Employee's employment with the Company or upon
the written request of an authorized representative of the Company at any
time.
3 RELATED COMPANY POLICIES. Employee further agrees to comply with
all policies, rules and regulations adopted by the Company's Board of
Directors or shareholders from time to time with respect to insider trading
and other duties applicable to the employees of a publicly-traded
corporation. Employee also agrees, if requested, to sign a separate
confidentiality agreement applicable to all employees. The terms of such
separate agreement will control over any conflicting term in this Agreement.
4 INJUNCTION. Employee agrees that it would be difficult to measure
damage to the Company from any breach by Employee of Section 2.1, 2.2 or 2.3
and that monetary damages would be an inadequate remedy for any such breach.
Accordingly, Employee agrees that if Employee shall breach Section 2.1, 2.2
or 2.3, the Company shall be entitled, in addition to any and all other
remedies it may have at law or in equity, to an injunction or other
appropriate order to restrain any such breach, without showing or proving any
actual damage sustained by the Company, and without posting bond or other
undertaking.
5 NO RELEASE. Employee agrees that termination of employment
with the Company shall not release Employee from any of Employee's
obligations under Section 2.1, 2.2 or 2.3.
3. COMPENSATION
1 AMOUNT. In consideration of all services to be rendered by Employee
to the Company under this Agreement, the Company shall pay to Employee
compensation of $2,500.00 per month for a period commencing October 1, 1996,
payable monthly in arrears or on the same dates as other management personnel
are paid. Compensation shall
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<PAGE>
be subject to the customary withholding of income taxes and
to other employment taxes required with respect to compensation paid by an
employer to an employee.
2 OTHER BENEFITS. Employee's services will be as a part-time employee.
Accordingly, neither Employee or Employee's spouse and dependents are or will
be entitled to coverage and participation with respect to profit-sharing
plan, retirement plan, accident and health insurance, life insurance or other
employment benefits, unless Employee meets the respective eligibility
conditions (including minimum hours-of-service) of each such benefit.
3 INCOME FROM EMPLOYEE'S EFFORTS. All income generated by Employee for
Employee's services to the Company, and all activities related to such
services, shall belong to the Company, whether paid directly to the Company
or to Employee. Employee agrees to, upon request by the Company from time to
time, render a detailed accounting of all transactions during the course of
Employee's employment.
3.4 WORK MADE FOR HIRE. All techniques, processes, products, manuals,
documents, materials, ideas and Confidential Information developed by Employee
while employed by the Company shall be considered work made for hire and shall,
unless specifically otherwise agreed in writing by the Company prior to such
development, become the sole and exclusive property of the Company.
4. EXPENSES
The compensation provided under Section 3.1 above is intended to
compensate Employee for normal travel expenses (such as those between
Employer's home or office and the Company's principal office) and incidental
expenses. However, Employee shall be entitled to reimbursement from the
Company for other non-ordinary reasonable expenses necessarily incurred by
Employee in the performance of Employee's duties under this Agreement (such
as out-of-state travel), upon presentation of vouchers detailing the amount,
date and business purpose of each such expense. All expenses in excess of
$200.00 must be approved in advance by another officer of the Company, and
all travel and related expenses and reimbursements will be governed by the
travel policies and procedures adopted by the Company.
5. TERMINATION
1 TERMINATION BY PRIOR NOTICE OR AGREEMENT. The employment of Employee by
the Company may be terminated by either the Company or Employee upon the giving
of 30 days' prior written notice to the other party. This Agreement may be
terminated at any earlier time upon the mutual written agreement of the Company
and Employee.
2 IMMEDIATE TERMINATION. The employment of Employee by the Company
may be terminated immediately in the sole discretion of the Board of Directors
of the Company upon the occurrence of any one of the following events:
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<PAGE>
1. If Employee shall willfully and continuously fail or refuse to comply
with any of the policies, standards, rules and regulations established by the
Company's Board of Directors or shareholders from time to time.
2. If Employee shall be guilty of fraud, dishonesty or any other act of
misconduct in the performance of Employee's duties on behalf of the Company.
3. If Employee shall fail or refuse to perform any provision of this
Agreement to be performed by Employee.
4. Upon the sale, transfer or other disposition of all or substantially
all the assets of the Company, the distribution of the Company's assets to
its shareholders in liquidation, or the discontinuance of the Company's
conduct of the business described in the Recital.
5. If Employee shall suffer a permanent disability. For purposes of this
Agreement, "permanent disability" shall be defined in accordance with the
terms of any disability income policy insuring Employee which may be
purchased by the Company, as determined by the company issuing such policy.
But if such a policy is not in force, "permanent disability" shall be
defined as Employee's inability due to physical or mental illness, or other
cause, to perform the majority of Employee's usual duties for a period of
three months or more, as determined by a physician licensed to practice
medicine in Oregon and chosen by the Company.
3 DEATH. In the event Employee dies during the term of this Agreement,
this Agreement shall automatically terminate, and the Company shall pay to
Employee's estate the compensation which would be otherwise payable to
Employee through the last day of the month in which Employee's death occurs.
4 PRORATION OF COMPENSATION. Except as otherwise provided in Section
5.3, upon termination of employment, the compensation payable to Employee
pursuant to Section 3.1 shall be prorated to the date of such termination and
shall be payable on the first day of the month following such termination
date.
5 AT-WILL EMPLOYMENT. The employment by Employee by the Company is
"at-will". Employee may terminate employment at any time, for any reason or
for no reason. Correspondingly, the Company may terminate Employee's
employment at any time, for any reason or for no reason.
6. MISCELLANEOUS
1 REPRESENTATION BY EMPLOYEE. Employee represents and warrants to the
Company that there is no employment contract or any other contractual obligation
to which Employee is subject which prevents Employee from entering into this
Agreement or from performing fully Employee's duties under this Agreement.
Page 4
<PAGE>
2 NOTICES. Any notice or consent required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been
given when personally delivered to a party or 24 hours after deposit in the
United States Mail, first class postage prepaid by both first class and
certified mail, return receipt requested, or 24 hours after delivery to a
recognized national overnight carrier, with overnight shipping charges paid,
and addressed to such party as follows:
<TABLE>
<S> <C>
If to Employee: James E. Reinmuth
5171 Solar Heights Drive
Eugene, OR 97405
If to the Company: Athena Medical Corporation
10180 SW Nimbus Avenue, Suite J-5
Portland, OR 97223
Attn: President
</TABLE>
or such other address as a party may specify by a notice in writing, given in
the same manner.
3 ATTORNEY'S FEES. If any action or other proceeding shall be
instituted relating to any term or condition of this Agreement or relating to
any of the rights, duties or obligations arising under it (including without
limitation a proceeding for injunction as provided by Section 2.4), the
prevailing party shall be entitled to recover from the other party, and the
other party agrees to pay to the prevailing party, whether or not the matter
proceeds to final judgment or decree, in addition to costs and disbursements
allowed by law, such sum as the trial and each appellate court may adjudge
reasonable as attorneys' fees in such action or other proceeding, and in any
appeal of it.
4 INTERPRETATION. The waiver by either party of a breach of any
term or provision of this Agreement shall not be construed as a waiver of any
subsequent breach of the same or any other term or provision by either party.
Time is of the essence of this Agreement in all particulars. The term "days"
means calendar days. This Agreement may not be amended or modified except by
written agreement executed by the parties. The captions heading the sections and
subsections of this Agreement are inserted for convenience of reference only,
and are not to be used to define, limit, construe or describe the scope or
intent of any term, provision or section of this Agreement. This Agreement may
be executed in several counterparts, each of which shall be deemed an original
but all of which taken together shall constitute one and the same instrument.
Page 5
<PAGE>
5 INTEGRATION. This Agreement has been approved by the Company's Board of
Directors pursuant to Nevada Revised Statutes 78.140(3) and Article III, Section
13 of the Company's Bylaws. THIS AGREEMENT CONTAINS THE FINAL AND CONCLUSIVE
AGREEMENT AND UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER OF
IT, AND SUPERSEDES ALL PRIOR AND CONTEMPORANEOUS AGREEMENTS, ORAL OR WRITTEN.
EXCEPT AS SET FORTH IN THIS AGREEMENT, THERE ARE NO PROMISES, REPRESENTATIONS,
AGREEMENTS OR UNDERSTANDINGS, ORAL OR WRITTEN, BETWEEN THE PARTIES RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT.
EXECUTED as of the date first set forth above.
ATHENA MEDICAL CORPORATION
By
- -------------------------------- ----------------------------------
James E. Reinmuth Its President
Page 6
<PAGE>
EXHIBIT 11.1
ATHENA MEDICAL CORPORATION
(dba AFEM Medical Corporation)
CALCULATION OF NET LOSS PER SHARE
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
------------ ------------
Actual weighted average shares outstanding for the
period 9,183,085 8,102,632
Dilutive common stock options and warrants using the
treasury stock method -- --
------------ ------------
Total shares used in per share calculations 9,183,085 8,012,632
------------ ------------
------------ ------------
NET LOSS $(4,333,114) $(4,196,109)
NET LOSS PER SHARES (1) $(.47) $(.52)
------------ ------------
------------ ------------
(1) Fully diluted earnings per share is not disclosed on the statement of
operations for all periods presented, since it is not more than 3% different
from primary earnings per share.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Part I -
Financial Information and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
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0
0
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