<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1998
[ ] Transition Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from To
----- -----
Commission File Number: 0-17119
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A-Fem Medical Corporation
-----------------------------------------------------------------
(exact name of small business issuer as specified in its charter)
Nevada 33-0202574
------------------------------- -----------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
10180 SW Nimbus Ave., Suite J5
Portland, OR 97223
--------------------------------------
(Address of principal executive
offices)
(503) 968-8800
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(Issuer's telephone number)
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 [ ]
As of October 31, 1998, the issuer had outstanding 9,471,875 shares of its $.01
par value Common Stock.
Transitional Small Business Disclosure Format: (Check one) Yes [ ] No [X]
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PART I - FINANCIAL INFORMATION
See "Basis of Presentation."
ITEM 1. FINANCIAL STATEMENTS
A-Fem Medical Corporation
BALANCE SHEETS
<TABLE>
<CAPTION>
As of
------------------------------------
September 30, December 31,
1998 1997
------------- -------------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 110,529 $ 525,767
Restricted cash -- 52,500
Accounts receivable 54,009 58,508
Inventory 102,501 172,963
Prepaids and other 225,369 213,402
------------- -------------
Total current assets 492,408 1,023,140
EQUIPMENT, FURNITURE and LEASEHOLDS, at cost 1,230,329 1,194,449
Less: accumulated depreciation (488,530) (371,401)
------------- -------------
741,799 823,048
PATENTS and LICENSES, net 60,266 60,971
LOANS RECEIVABLE - officers and directors 61,322 58,710
------------- -------------
Total assets $ 1,355,795 $ 1,965,869
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 33,934 $ 529,588
Note payable 470,833 --
Current portion of capital lease 216,889 262,772
Accrued expenses 14,502 59,368
Accrued salaries and related liabilities 82,163 162,174
------------- -------------
Total current liabilities 818,321 1,013,902
Long-term portion of capital lease 70,782 221,357
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Total liabilities 889,103 1,235,259
STOCKHOLDERS' EQUITY
Preferred Stock, $0.01 par value, authorized 10,000,000 shares; 49,664 --
4,966,405 shares issued and outstanding at 9/30/98
Common Stock, $0.01 par value, authorized 33,000,000 shares;
9,471,875 shares issued and outstanding at 9/30/98 and
12,798,694 issued and outstanding at 12/31/97 94,719 127,987
Additional paid-in capital 15,387,204 12,331,811
Accumulated deficit (15,064,895) (11,729,188)
------------- -------------
Total stockholders' equity 466,692 730,610
------------- -------------
Total liabilities and stockholders' equity $ 1,355,795 $ 1,965,869
============= =============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
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A-Fem Medical Corporation
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------------------ ------------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales, net $ 99,090 $ 2,374 $ 367,023 $ 33,474
Cost of sales 150,433 75,183 379,280 436,311
------------- ------------- ------------- -------------
Gross Margin (51,343) (72,809) (12,257) (402,837)
Operating expenses:
Regulatory affairs 82,149 29,006 118,554 89,955
Research and development 154,614 137,970 515,834 350,846
Marketing and selling 635,300 238,487 1,937,508 665,613
General and administrative 270,958 285,294 705,974 854,060
------------- ------------- ------------- -------------
Total operating expenses 1,143,021 690,757 3,277,870 1,960,474
------------- ------------- ------------- -------------
Net operating loss (1,194,364) (763,565) (3,290,127) (2,363,311)
------------- ------------- ------------- -------------
Other income (expense) (21,651) 16,973 (45,580) 2,027,756
------------- ------------- ------------- -------------
Net loss (1,216,215) (746,590) (3,335,707) (335,555)
============= ============= ============= =============
Basic and diluted net loss
per share $ (0.10) $ (0.06) $ (0.25) $ (0.03)
============= ============= ============= =============
Weighted average shares
outstanding 12,566,644 12,345,115 13,093,071 11,325,314
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
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A-Fem Medical Corporation
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash
(unaudited)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
-----------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss $ (3,335,707) $ (335,555)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 119,318 101,831
(Gain) loss on disposal of assets (134) 351
Changes in working capital:
Restricted cash 52,500 79,660
Accounts receivable 4,499 6,218
Inventory 70,462 88,990
Prepaids and other (12,372) (78,362)
Accounts payable (495,654) 179,888
Accrued salaries and related liabilities (80,011) (135,757)
Accrued expenses (44,866) (30,962)
------------- -------------
Net cash used in operating activities (3,721,965) (123,698)
Cash Flows From Investing Activities:
Purchases of equipment, furniture and leaseholds (37,175) (212,294)
Net proceeds from sale of equipment 350 1,650
------------- -------------
Net cash used in investing activities (36,825) (210,644)
Cash Flows From Financing Activities:
Additions to notes receivable, net of repayments (2,612) 66,253
Proceeds from note payable 470,833 --
Net (repayments of) proceeds from long-term obligations (196,458) 38,400
Proceeds from sale of common and preferred stock,
exercise of options and warrants 3,071,789 1,436,806
------------- -------------
Net cash provided by financing activities 3,343,552 1,541,459
Net Increase (Decrease) in Cash and Cash Equivalents (415,238) 1,207,117
Cash and Cash Equivalents, beginning of period 525,767 671,495
------------- -------------
Cash and Cash Equivalents, end of period $ 110,529 $ 1,878,612
============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
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A-Fem Medical Corporation
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
ORGANIZATION OF THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
The Company
A-Fem Medical Corporation ("A-Fem" or the "Company") is a women's health
care company. A-Fem has developed three core product technology platforms, one
based on its inSync(TM) miniform interlabial pad, another based on the
Rapid-Sense(TM) diagnostic products and a third based on the PadKit(TM)
collection device. These three technology platforms are in different stages of
marketing or development. Each of these core technology platforms has a variety
of product applications that the Company is developing for the short- and
long-term.
A-Fem's inSync miniform is the first generation of a technology which
introduces an entirely new segment within the $7 billion global feminine
protection market. The miniform is worn lengthwise between the labia where a
woman's body naturally and comfortably holds it in place. Unlike pads, the
miniform uses no adhesives and, unlike tampons, no insertion is necessary. The
miniform has received Food and Drug Administration ("FDA") clearance and was
launched in a market roll-out beginning in Oregon and Washington in January
1998.
A-Fem's innovative Rapid-Sense point-of-care diagnostic technology will
enable consumers and health care providers to obtain quantifiable test results
quickly, conveniently and inexpensively. Current diagnostic products utilize
either laboratory instrument-based tests, which provide quantifiable results but
are time consuming and costly, or point-of-use tests, such as current pregnancy
tests, which are inexpensive and convenient but give only a qualitative (yes/no)
result. The Company has completed development of this core technology and has
developed a prototype for an osteoporosis therapeutic monitoring test.
The Company's PadKit will contain a miniform used as a sample collection
device during the normal menstrual cycle. The miniform collects blood along with
numerous cells, vaginal mucous and discharge flushed out by the menstrual flow.
The PadKit's initial application will provide an alternative to the cervical
scrape for collecting samples for cervical cancer screening. It may also be used
as an alternative sample collection device to test for other cancers and
diseases.
Basis of Presentation
The interim financial data are unaudited; however, in the opinion of
management, the interim data include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for the
interim periods. The financial statements included herein have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
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financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures included herein
are adequate to make the information presented not misleading. Operating results
for the periods presented are not necessarily indicative of future results.
These financial statements should be read in conjunction with the financial
statements and notes to financial statements included in the Company's annual
report on Form 10-KSB for the year ended December 31, 1997.
Loss Per Share
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS
128). SFAS 128 changes the standards for computing and presenting earnings per
share (EPS) and supersedes Accounting Principles Board Opinion No. 15, "Earnings
Per Share." This Statement requires restatement of all prior-period EPS data
presented. The Company implemented SFAS 128 for its year ended December 31,
1997.
Basic earnings per common share is computed using the weighted
average number of shares of common stock outstanding for the period. Diluted
earnings per common share is computed using the weighted average number of
shares of common stock and dilutive common equivalent shares related to stock
options and warrants outstanding during the period.
As it relates to the Company, the principal differences between the
provisions of SFAS 128 and previous authoritative pronouncements are the
exclusion of common stock equivalents in the determination of basic earnings per
share and the market price at which common stock equivalents are calculated in
the determination of diluted earnings per share. The adoption of SFAS 128 had no
effect on previously reported loss per share calculations. A net loss was
reported for all periods presented, and accordingly, the denominator was
equal to the weighted average outstanding shares with no consideration for
outstanding options and warrants to purchase share of the Company's common
stock, because to do so would have been anti-dilutive. Stock options for the
purchase of 3,022,550 and 1,383,995 shares of common stock at September 30, 1998
and 1997, respectively, and warrants for the purchase of 2,520,006 and 2,691,416
shares of common stock at September 30, 1998 and 1997, respectively, were not
included in loss per share calculations, because to do so would have been
anti-dilutive.
New Accounting Pronouncements
In June 1997, the FASB issued Statement of Financial Accounting
standards No. 130 "Reporting Comprehensive Income" (SFAS 130). This statement
establishes standards for reporting and displaying comprehensive income and its
components in a full set of general purpose financial statements. The objective
of SFAS 130 is to report a measure of all changes in equity of an enterprise
that result from transactions and other economic events of the period other than
transactions with owners. The Company adopted SFAS 130 during the first quarter
of 1998. Comprehensive loss did not differ from currently reported net loss in
the periods presented.
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In June 1998, the Financial Accounting Standards Board issued SFAS No.
133 "Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for all derivative instruments.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999. The
Company currently has no derivative instruments and, therefore, the adoption of
SFAS 133 will have no impact on the Company's financial position or results of
operations.
Reclassifications
Certain amounts in prior period financial statements have been
reclassified to conform to current period presentation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
A-Fem Medical Corporation (the "Company" or "A-Fem") is a women's health
care company. A-Fem has developed three core product technology platforms, one
based on its miniform interlabial pad, another based on the Rapid-Sense
diagnostic technology and a third based on the PadKit collection device. The
miniform is a new type of feminine hygiene product that is worn interlabially.
A-Fem's first miniform application, the inSync miniform, has received Food and
Drug Administration ("FDA") clearance and was launched in a market roll-out in
Oregon and Washington in January 1998. The Company expects to use its
Rapid-Sense diagnostic technology to create rapid-response, low-cost,
point-of-use diagnostic tests that generate quantifiable results. The core
technology development for Rapid-Sense diagnostic products has been completed
and applications are under development. The PadKit contains a miniform to be
used during a woman's menstrual cycle to collect a sample for diagnostic
testing. The Company has completed a pilot study to confirm the PadKit's
feasibility, and currently is conducting a pre-clinical pilot study.
Overview
During the first nine months of 1998, the Company focused its efforts on
conducting the roll-out of the inSync miniform in Oregon and Washington. The
Company has supported the roll-out with an aggressive advertising, consumer
education and promotion plan to increase product awareness and trial and repeat
purchase rates. The product was distributed to the three largest grocery chains
and various drug store chains in Oregon and Washington during December 1997.
Repeat orders from all retailers and orders from additional store chains were
received during the first nine months of 1998.
The Company monitored this initial market closely during the first half
of 1998 in order to fine-tune its marketing plan and forecasting model before
continuing with its next regional roll-out. In the third quarter the company
continued its phased roll-out strategy with shipment of product to distribution
in all western states except for California. Advertising support for this next
phase roll-out in the western states began in October 1998.
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The Company believes that it has manufacturing capacity sufficient to
meet sales projections through market penetration of the western states.
The Company has experienced significant operating losses during the
three- and nine-month periods ended September 30, 1998, and anticipates that it
will continue to incur losses through the remainder of 1998 and 1999. The
Company expects that significant ongoing expenditures will be necessary to
successfully implement its business plan and develop, manufacture and market its
products. These circumstances raise substantial doubt about the Company's
ability to continue as a going concern. The Company's ability to continue as a
going concern will depend upon its acquiring additional financing in 1999.
Management plans to seek additional capital and to evaluate potential partnering
opportunities. The Company raised operating funds by selling shares of its
Common Stock for approximately $1.8 million dollars in 1997. Through November
1998, the Company has received an additional $4.6 million from various investors
from the sale of Common Stock and Series A Preferred Stock. The Company believes
that these funds will be sufficient to finance its operations during the
remainder of 1998.
The Company's efforts to raise additional funding or enter into a
strategic alliance may not be successful. If the Company is unable to obtain
adequate additional financing, enter into such strategic alliance or generate
sufficient sales revenues, management may be required to curtail the Company's
product development, marketing activities and other operations, and the Company
may be forced to cease operations.
Results of Operations
For the quarter ended September 30, 1998, the Company generated net
sales of approximately $99,090 compared to $2,374 in the quarter ended September
30, 1997. For the nine-month period ended September 30, 1998, net sales were
$367,023 compared with $33,474 for the same period in 1997. This increase in net
sales was directly related to the roll-out of the inSync miniform in Oregon and
Washington that began in December 1997.
Marketing and selling expense for the third quarter of 1998 was
approximately $635,000 compared to approximately $238,000 for the quarter ended
September 30, 1997. For the nine-month period ended September 30, 1998,
marketing and selling expense was approximately $1,938,000, compared to
approximately $666,000 for the same period in 1997. The increase in marketing
and selling expense resulted from increased expenditures for advertising,
marketing and sales consultants in support of the roll-out of the inSync
miniform in Oregon and Washington.
Research and development expense was approximately $155,000 for the
quarter ended September 30, 1998, compared to approximately $138,000 for the
same quarter of the prior year. For the nine-month period ended September 30,
1998, research and development expense was approximately $516,000 compared to
approximately $351,000 for the same period in 1997. Research and development
expense increased in comparison to the prior year as a result of costs
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associated with the pilot studies for the PadKit and other developmental
expenses related to the Company's proprietary Rapid-Sense diagnostic technology.
General and administrative expense was approximately $271,000 for the
quarter ended September 30, 1998, compared to approximately $285,000 for the
same period in the prior year. For the nine-month period ended September 30,
1998, general and administrative expense was approximately $706,000 compared to
$854,000 for the same period in 1997. The decrease in general and administrative
expense resulted from the Company's efforts to reduce such expense.
The Company's operating loss for the quarter ended September 30, 1998
was approximately $1,194,000, compared to a loss of approximately $764,000 for
the same quarter the previous year. For the nine-month period ended September
30, 1998, the operating loss was approximately $3,290,000 compared with an
operating loss of approximately $2,363,000 for the same period in 1997. The
increase in operating loss was primarily the result of marketing and selling
expense associated with the Company's inSync miniform roll-out in Oregon and
Washington.
The Company's net loss for the quarter ended September 30, 1998 was
approximately $1,216,000 compared to a net loss of approximately $747,000 for
the same quarter the previous year. For the nine-month period ended September
30, 1998 the Company's net loss was approximately $3,336,000 compared to a net
loss of approximately $336,000 for the same period in the prior year. The change
in net loss was the result of the Company's receipt in 1997 of $2,000,000
pursuant to an agreement to license certain technology to The Proctor & Gamble
Company.
Liquidity and Capital Resources
As of September 30, 1998, the Company had cash and cash equivalents of
$110,529. The Company's net cash position had been reduced by $415,238 between
December 31, 1997 and September 30, 1998 as a result of expenses related to the
Company's roll-out of its inSync miniform.
The Company expects to continue to incur losses through 1998 and 1999,
as the cost of marketing, research and development will continue to exceed
income from product sales. Exclusive of marketing costs, the Company has
approximately $149,000 per month of operating expenses. The Company believes
that it has raised sufficient funds to finance its operations during the
remainder of 1998. In order to carry out its marketing plan for the inSync
miniform and its development plans for Rapid-Sense and the PadKit, the Company
believes that it will need to raise additional capital in 1999. The Company does
not expect significant amounts of debt financing to be available to it in the
near term and that it will have to issue additional equity. The Company cannot
predict on what terms any such financing might be available, but any such
financing could involve issuance of equity below current market prices and
result in significant dilution of existing stockholders. The Company may not be
able to secure investment on terms
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favorable to the Company, or at all. Inability of the Company to obtain
financing will adversely affect the Company.
The Company's ability to continue as a going concern will depend upon
its acquiring additional financing in 1999. If the Company is unable to obtain
adequate additional financing, enter into a strategic alliance or generate
sufficient sales revenues, the Company may be forced to cease operations.
Certain statements in this Form 10-QSB constitute "forward-looking
statements" (as defined in Section 27A of the Securities Act of 1933, as
amended) and involve risks and uncertainties which could cause actual results to
differ materially from those predicted in the forward looking statements. Such
risks and uncertainties include, but are not limited to: the effect of economic
conditions generally and within the women's health care industry; lack of
revenues from products; need for additional financing; uncertainty associated
with product development; continuing operating losses; results of financing
efforts; availability and cost of raw materials and labor; potential need for
additional capital equipment; market acceptance risks; the impact of competitive
products and pricing; and the additional factors listed from time to time in the
Company's SEC reports, including but not limited to, the Company's report on
Form 10-KSB for the fiscal year ended December 31, 1997.
Year 2000
The Company has conducted an initial review of its computer systems
devices, applications and manufacturing equipment (collectively, "Computer
Systems") to identify those areas that could be affected by Year 2000
noncompliance. The Company intends to utilize internal and external resources to
identify, correct or reprogram and test its Computer Systems for Year 2000
compliance. The total cost associated with Year 2000 compliance is not
anticipated to be material to the Company's financial position or results of
operations in any given year. The Company has not communicated with many of its
suppliers, service providers, distributors, wholesalers and other entities with
which it has a business relationship (collectively, "Third Party Businesses")
regarding compliance with Year 2000 requirements although the Company does
intend to communicate with key Third Party Businesses. The Company at this time
is unable to predict the impact on its operations if Third Party Businesses fail
to comply with Year 2000 requirements.
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PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(b) Holders of shares of the Company's Series A Preferred Stock have dividend
and liquidation rights in preference to holders of shares of the Company's
Common Stock that materially limit or qualify the rights of the holders of the
Common Stock.
(c) 1. On September 2, 1998, the Company issued 4,966,405 shares of Series A
Preferred Stock, warrants to purchase a total of 130,000 shares of Series A
Preferred Stock at an exercise price of $1.92 per share and warrants to purchase
an additional 50,000 shares of Series A Preferred Stock at an exercise price of
$4.25 per share to one entity, acting as agent for individual investors, in
exchange for 4,316,405 shares of the Company Common Stock, a warrant to purchase
50,000 shares of the Company's Common Stock at an exercise price of $4.25 per
share and aggregate cash consideration of $1,248,000. This entity represented
that such entity and each individual represented by such entity was an
"accredited investor" within the meaning of Rule 501(a) of the Securities Act.
In issuing these securities, the Company relied upon an exemption from
registration pursuant to Section 4(2) of the Securities Act.
2. On October 9, 1998, the Company issued 286,000 shares of Series A
Preferred Stock and warrants to purchase a total of 200,000 shares of Series A
Preferred Stock at an exercise price of $.01 per share to one entity, acting as
an agent for individual investors, for aggregate cash consideration of $549,120.
This entity represented that such entity and each individual represented by such
entity was an "accredited investor" within the meaning of Rule 501(a) of the
Securities Act. In issuing these securities, the Company relied upon an
exemption from registration pursuant to Section 4(2) of the Securities Act.
3. On November 6, 1998, the Company issued 521,000 shares of Series A
Preferred Stock and warrants to purchase a total of 104,200 shares of Series A
Preferred Stock at an exercise price of $.01 per share to one entity, acting as
agent for individual investors, for aggregate cash consideration of $1,000,320.
This entity represented that such entity and each individual represented by such
entity was an "accredited investor" within the meaning of Rule 501(a) of the
Securities Act. In issuing these securities, the Company relied upon an
exemption from registration pursuant to Section 4(2) of the Securities Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
3.1 Articles of Incorporation, as amended
3.2 Amended and Restated Bylaws(1)
4.1 Amended and Restated Registration Rights Agreement
4.2 Form of Stock Purchase Warrant
4.3 Form of Series A Preferred Stock Certificate
11.1 Statement Re: computation of per share earnings
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27.1 Financial Data Schedule
b) Reports on Form 8-K
None._________________
(1) Incorporated by reference to the exhibits to the Company's Quarterly
Report on Form 10-QSB for the quarter ended June 30, 1997.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Company caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
A-Fem Medical Corporation
Date: November 13, 1998 /S/ J. PETER BURKE
------------------
J. Peter Burke
President, Chief Operating
Officer and Chief Financial
Officer (authorized officer and
principal financial and chief
accounting officer)
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
A-FEM MEDICAL CORPORATION
ARTICLE 1. NAME
The name of the Corporation is A-FEM MEDICAL CORPORATION.
ARTICLE 2. PRINCIPAL OFFICE AND REGISTERED AGENT
Its principal office in the State of Nevada is located at One East First
Street, Reno, Washoe County, Nevada 89501. The name and address of its resident
agent is The Corporation Trust Company of Nevada, One East First Street, Reno,
Nevada 89501.
ARTICLE 3. PURPOSE
The nature of the business, or objects or purposes to be transacted,
promoted or carried on by the corporation are:
To engage in any lawful activity and to manufacture, purchase or
otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer
or otherwise dispose of, trade, deal in and deal with goods, wares and
merchandise and personal property of every class and description.
To perform research and development services and to manufacture and
market health case devices, products and services.
To hold, purchase and convey real and personal estate and to mortgage or
lease any such real or personal estate with its franchises and to take the same
by devise or bequest.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the goodwill, rights, assets and property, and to undertake or assume
the whole or any part of the obligations or liabilities of any person, firm,
association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect
of, mortgage, or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trademarks and trade names, relating to
or useful in connection with any business of this corporation.
To guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge
or otherwise dispose of the shares of the capital stock of or any bonds,
securities or evidences of the indebtedness
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created by any other corporation or corporations of this state, or any other
state or government, and, while owner of such stock, bonds, securities or
evidence of indebtedness, to exercise all the rights, powers and privileges of
ownership, including the right to vote, if any.
To borrow money and contract debts when necessary for the transaction of
its business, or for the exercise of its corporate rights, privileges or
franchises, or for any other lawful purpose of its incorporation; to issue
bonds, promissory notes, bills of exchange, debentures, and other obligations
and evidences of indebtedness, payable at specified time or times, or payable
upon the happening of a specified event or events, whether secured by mortgage,
pledge or otherwise, or unsecured, for money borrowed, or in payment for
property purchased, or acquired, or for any other lawful objects.
To purchase, hold, sell and transfer shares of its own capital stock,
and use therefor its capital, capital surplus, surplus, or other property or
funds; provided it shall not use its funds or property for the purchase of its
own shares of capital stock when such use would cause any impairment of its
capital; and provided further, that shares of its own capital stock belonging to
it shall not be voted upon, directly or indirectly, nor counted as outstanding,
for the purpose of computing any stockholders' quorum or vote.
To conduct business, have one or more offices, and hold, purchase,
mortgage and convey real and personal property in this state, and in any of the
several states, territories, possessions and dependencies of the United States,
the District of Columbia, and in any foreign countries.
To do all and everything necessary and proper for the accomplishment of
the objects hereinbefore enumerated or necessary or incidental to the protection
and benefit of the corporation, and, in general, to carry on any lawful business
necessary or incidental to the attainment of the objects of the corporation,
whether or not such business is similar in nature to the objects hereinbefore
set forth.
The objects and purposes specified in the foregoing clauses will, except
where otherwise expressed, be in nowise limited or restricted by reference to,
or inference from, the terms of any other clause in these articles of
incorporation, but the objects and purposes specified in each of the foregoing
clauses of this article shall be regarded as independent objects and purposes.
ARTICLE 4. SHARES
4.1 AUTHORIZED CAPITAL
The corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares of stock that the corporation shall have authority to issue shall be
43,000,000, consisting of 33,000,000 shares of Common Stock with a par value of
$.01 per share, and 10,000,000 shares of Preferred Stock with a par value of
$.01 per share.
4.2 COMMON STOCK
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Subject to any preferential or other rights granted to any series of
Preferred Stock, the holders of shares of the Common Stock shall be entitled to
receive dividends out of funds of the corporation legally available therefor, at
the rate and at the time or times as may be provided by the Board of Directors
and shall be entitled to receive distributions legally payable to stockholders
on the liquidation of the corporation. The holders of shares of Common Stock, on
the basis of one vote per share, shall have the right to vote for the election
of members of the Board of Directors of the corporation and the right to vote on
all other matters, except where a separate class or series of the corporation's
stockholders vote by class or series. Holders of Common Stock shall not be
entitled to cumulate their votes for the election of directors.
4.3 PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in one or more
series, in any manner permitted by law, as determined from time to time by the
Board of Directors and stated in the resolution or resolutions providing the
issuance thereof, prior to the issuance of any shares thereof. The Board of
Directors shall have the authority to fix and determine the rights and
preferences of the shares of any series so establish.
4.4 NO PREEMPTIVE RIGHTS
Stockholders of the corporation do not have preemptive rights.
ARTICLE 5. BOARD OF DIRECTORS
The governing board of the corporation will be known as directors, and
the number of directors may from time to time be increased or decreased in such
manner as shall be provided by the bylaws of the corporation, provided that the
number of directors will not be reduced to less than three (3), except that in
cases where all the shares of the corporation are owned beneficially and of
record by either one or two stockholders, the number of directors may be less
than three (3) but not less than the number of stockholders.
ARTICLE 6. STOCKHOLDER LIABILITY
The capital stock, after the amount of the subscription price or par
value has been paid in, will not be subject to assessment to pay the debts of
the corporation.
ARTICLE 7. INCORPORATORS
(Omitted pursuant to NRS 78.403).
ARTICLE 8. DURATION
The corporation is to have perpetual existence.
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ARTICLE 9. AUTHORITY OF THE BOARD OF DIRECTORS
In furtherance, and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
Subject to the bylaws, if any adopted by the stockholders, to make,
alter, or amend the bylaws of the corporation.
To fix the amount to be reserved as working capital over and above its
capital stock paid in, to authorize and cause to be executed mortgages and liens
upon the real and personal property of the corporation.
By resolution passed by a majority of the whole board, to designate one
(1) or more committees, each committee to consist of one (1) or more of the
directors of the corporation, which, to the extent provided in the resolution or
in the bylaws of the corporation, will have and may exercise the powers of the
board of directors in the management of the business and affairs of the
corporation, and may authorized the seal of the corporation to be affixed to all
papers that may require it. Such committee or committees will have such name or
names as may be stated in the bylaws of the corporation or as may be determined
from time to time by resolution adopted by the board of directors.
When and as authorized by the affirmative vote of stockholders holding
stock entitling them to exercise at lease a majority of the voting power given
at a stockholders' meeting called for that purpose, or when authorized by the
written consent of the holders of at least a majority of the voting stock issued
and outstanding, the board of directors will have power and authority at any
meeting to sell, lease, or exchange all of the property and assets of the
corporation, including its good will and its corporate franchises, upon such
terms and conditions as its board of directors deem expedient and for the best
interests of the corporation.
ARTICLE 10. LOCATION OF MEETINGS AND BOOKS
Meetings of the stockholders may be held outside the State of Nevada, if
the bylaws so provide. The books of the corporation may be kept (subject to any
provision contained in the statutes) outside the State of Nevada at such place
or places as may be designated from time to time by the board of directors or in
the bylaws of the corporation.
ARTICLE 11. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal
any provision contained in these articles of incorporation, in the manner now or
hereafter prescribed by statute, or by these articles of incorporation, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
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ARTICLE 12. INDEMNIFICATION
The Bylaws of the corporation shall provide for the indemnification of
the corporation's directors, officers, employees and agents for expenses
incurred in connection with the defense of actions, suits or proceedings to the
fullest extent permitted by Nevada law.
ARTICLE 13. LIMITATION OF DIRECTOR AND OFFICER LIABILITY
No director or officer of the corporation shall be liable to the
corporation or to the stockholders for damages for any breach of fiduciary duty;
provided, however, that a director or officer shall be liable for damages that
result from any of the following:
(a) Acts or omissions that involve intentional misconduct, fraud or a
knowing violation of law;
(b) The willful or grossly negligent payment of any improper dividend or
distribution; or
(c) Acts or omissions that occurred prior to March 18, 1987.
These Amended and Restated Articles of Incorporation were adopted by the
Board of Directors on June 13, 1997 and by the stockholders on December 12,
1997.
IN WITNESS WHEREOF, A-Fem Medical Corporation has caused these Amended
and Restated Articles of Incorporation to be signed by its President and
Secretary this 19th day of August, 1998.
A-FEM MEDICAL CORPORATION
By /s/ J. Peter Burke
-------------------------------
J. Peter Burke, President
By /s/ William H. Fleming
-------------------------------
William H. Fleming, Secretary
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STATE OF OREGON )
) ss:
COUNTY OF WASHINGTON )
The foregoing instrument was acknowledged before me, a Notary Public, on
this 19th day of August, 1998, by J. Peter Burke, President, and William H.
Fleming, Secretary, of A-Fem Medical Corporation.
/s/ Steve Fleming
-------------------------------
Notary Public for Oregon
My commission expires October 1, 2000
[Notary Stamp or Seal]
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CERTIFICATE OF DESIGNATION
OF
PREFERENCES OF PREFERRED STOCK
OF
A-FEM MEDICAL CORPORATION
A NEVADA CORPORATION
1. The undersigned, J. Peter Burke and William H. Fleming, hereby
certify that:
2. They are the duly elected and acting President and Secretary,
respectively, of A-Fem Medical Corporation, a Nevada corporation (the
"Corporation").
Pursuant to authority given by the Corporation's Articles of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recitals and resolutions:
WHEREAS, the Board of Directors of the Corporation is authorized to
determine or alter the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued series of Preferred Stock, to fix the
number of shares constituting any such series and to determine the designation
thereof, or any of them, and
WHEREAS, the Corporation has not issued any shares of such Preferred
Stock and the Board of Directors of the Corporation desires, pursuant to its
authority as aforesaid, to determine and fix the rights, preferences, privileges
and restrictions relating to the initial series of said Preferred Stock and the
number of shares constituting and the designation of said series;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes
and determines the designation of, the number of shares constituting, and the
rights, preferences, privileges and restrictions relating to, said initial
series of Preferred Stock as follows:
SECTION 1. DESIGNATION AND NUMBER OF SHARES
1.1 DESIGNATION
The initial series of Preferred Stock shall be designated "Series A
Convertible Preferred Stock." The term "Series A Stock" as used herein refers to
the Series A Convertible Preferred Stock.
1.2 NUMBER OF SHARES
The number of shares constituting the Series A Stock shall be 4,500,000
shares.
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SECTION 2. DIVIDENDS AND DISTRIBUTIONS; LIQUIDATION RIGHTS
2.1 DIVIDENDS
The holders of shares of Common Stock and Series A Stock shall be
entitled to receive dividends, when, as and if declared by the Board of
Directors of the corporation, out of any assets legally available therefor;
provided, however, that no such dividend or distribution may be declared or paid
on any shares of Common Stock unless at the same time an equivalent dividend or
distribution is declared or paid on all outstanding shares of Series A Stock.
The dividend or distribution on shares of Series A Stock shall be payable based
upon the number of shares of Common Stock that the holder of shares of Series A
Stock would have held if such holder had converted such shares of Series A Stock
into Common Stock immediately prior to the record date of such dividend or
distribution.
2.2 LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of the Series A Stock
shall be entitled to receive, prior and in preference to any distribution of any
of the assets of the Corporation to the holders of the Common Stock, an amount
per share equal to $4.00, plus a further amount equal to any declared but unpaid
dividends thereon before any payment shall be made or any assets distributed to
the holders of Common Stock. If upon such liquidation, dissolution or winding up
of the Corporation, the assets thus distributed among the holders of the Series
A Stock shall be insufficient to permit the payment in full of the aforesaid
preferential amounts, the entire assets of the Corporation to be distributed
shall be distributed among the holders of the Series A Stock so that the holder
of each share of Series A Stock shall receive the same percentage of the stated
liquidation preferences of such share as is received by every other holder of
Series A Stock.
Following the completion of the distribution of the stated liquidation
preferences to be paid to the holders of the Series A Stock, any remaining
assets shall be distributed to the holders of the Common Stock of the
Corporation; provided, however, if no shares of Common Stock are outstanding at
the time of such distribution, the holders of the Series A Stock shall be
entitled to receive, ratably (assuming conversion of all shares of Series A
Stock to Common Stock), all assets of the Corporation remaining after the
payment of the stated liquidation preferences of the Series A Stock as set forth
herein.
SECTION 3. CONVERSION
3.1 CONVERSION RIGHTS
A holder of shares of Series A Stock shall be entitled, at any time, to
cause any or all of such shares to be converted into shares of Common Stock.
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3.1.1 CONVERSION RATE
The conversion rate for Series A Stock in effect at any time (the
"Conversion Rate") shall equal $3.84 divided by the Conversion Price, calculated
as provided in Section 3.1.2.
3.1.2 CONVERSION PRICE
The conversion price for the Series A Stock in effect from time to time,
except as adjusted in accordance with Section 3.2.2, shall be $3.84 (the
"Conversion Price").
3.2 CONVERSION PROCEDURE; ANTI-DILUTION ADJUSTMENTS
3.2.1 CONVERSION PROCEDURE
Before a holder of the Series A Stock shall be entitled to convert the
same into shares of Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed in blank or accompanied by proper
instruments of transfer, at the office of the Corporation or of any transfer
agent for the shares of the Series A Stock, and shall give written notice to the
Corporation at such office that such holder elects to convert the same and shall
state in writing therein the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver at the
address of the holder of the Series A Stock, or to the holder's nominee or
nominees, certificates for the number of full shares of Common Stock to which
the holder shall be entitled, as aforesaid, together with cash in lieu of any
fraction of a share as hereinafter provided in this Section 3.2. Such conversion
shall be deemed to have been made as of the date of such surrender of the shares
of the Series A Stock to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on said date.
3.2.2 ADJUSTMENTS TO APPLICABLE CONVERSION PRICE
(a) Extraordinary Common Stock Event. Upon the happening of an
Extraordinary Common Stock Event (as defined below) after the date of the
initial issuance of any shares of Series A Stock, the Conversion Price shall,
simultaneously with the happening of such Extraordinary Common Stock Event, be
adjusted by multiplying the then effective Conversion Price, by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such Extraordinary Common Stock Event and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after such Extraordinary Common Stock Event (with the number of shares issuable
with respect to Common Stock Equivalents (as defined below) determined in the
manner provided for deemed issuances in Section 3.2.2(b)(v)), and the product so
obtained shall thereafter be the Conversion Price. The Conversion Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive Extraordinary Common Stock Event or Events.
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"Extraordinary Common Stock Event" shall mean (i) the issuance of
additional shares of Common Stock, as a dividend or other distribution on
outstanding Common Stock of the corporation, or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock ("Common Stock Equivalents"), (ii)
a split or subdivision of outstanding shares of Common Stock into a greater
number of shares of Common Stock, or (iii) a combination of outstanding shares
of Common Stock into a smaller number of shares of Common Stock.
(b) Sale of Shares Below Applicable Conversion Price.
(i) If the corporation shall issue any Additional Stock
(as defined below) without consideration or for a consideration per share less
than the Conversion Price in effect immediately prior to the issuance of such
Additional Stock, the Conversion Price in effect immediately prior to issuance
of such Additional Stock (except as otherwise provided in this Section 3.2.2(b))
shall be adjusted down to a price equal to the quotient obtained by dividing the
total computed under clause (A) below by the total computed under clause (B)
below as follows:
(A) an amount equal to the sum of (1) the result obtained
by multiplying the number of shares of Common Stock deemed outstanding
immediately prior to such issuance (which shall include the actual
number of shares outstanding plus all shares issuable upon the
conversion or exercise of all outstanding convertible securities,
warrants and options other than shares excluded from the definition of
Additional Stock by Section 3.2.2(c)) by the Conversion Price then in
effect, and (2) the aggregate consideration, if any, received by the
corporation upon the issuance of such Additional Stock;
(B) the number of shares of Common Stock of the
corporation outstanding immediately after such issuance (including the
shares deemed outstanding as provided in clause (A) above).
(ii) No adjustment of the Conversion Price shall be made
in an amount less than one cent per share, provided, that any adjustments which
are not required to be made by reason of this sentence shall be carried forward
and shall be taken into account in any subsequent adjustment made to the
Conversion Price. Except as provided in Sections 3.2.2(b)(v)(C) and (D) below,
no adjustment of the Conversion Price shall have the effect of increasing the
Conversion Price above the Conversion Price in effect immediately prior to such
adjustment.
(iii) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor
before deducting any discounts, commissions or other expenses allowed, paid or
incurred by the corporation for any underwriting or otherwise in connection with
the issuance and sale thereof.
(iv) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair
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value thereof as determined in good faith by the Board of Directors irrespective
of any accounting treatment.
(v) In the case of the issuance of options or warrants to
purchase or rights to subscribe for Common Stock, securities by their terms
convertible into or exchangeable for Common Stock, or options or warrants to
purchase or rights to subscribe for such convertible or exchangeable securities,
the following provisions shall apply:
(A) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options or warrants to purchase or
rights to subscribe for Common Stock shall be deemed to have been issued
at the time such options, warrants, or rights were issued for a
consideration equal to the consideration (determined in the manner
provided in Sections 3.2.2(b)(iii) and (iv) above), if any, received by
the corporation upon the issuance of such options, warrants or rights
plus the minimum purchase price provided in such options, warrants or
rights for the Common Stock covered thereby, but no further adjustment
to the Conversion Price shall be made for the actual issuance of Common
Stock upon the exercise of such options, warrants or rights in
accordance with their terms;
(B) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible
or exchangeable securities or upon the exercise of options or warrants
to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall be deemed
to have been issued at the time such securities were issued or such
options, warrants or rights were issued for a consideration equal to the
consideration received, if any, by the corporation for any such
securities and any related options, warrants or rights, plus the minimum
additional consideration, if any, to be received by the corporation upon
the conversion or exchange of such securities or the exercise of any
related options, warrants or rights (the consideration in each case to
be determined in the manner provided in Sections 3.2.2(b)(iii) and (iv)
above), but no further adjustment to the Conversion Price shall be made
for the actual issuance of Common Stock upon the conversion or exchange
of such securities in accordance with their terms;
(C) if such options, warrants, rights or convertible or
exchangeable securities by their terms provide, with the passage of time
or otherwise, for any change in the consideration payable to the
corporation or in the number of shares of Common Stock issuable upon the
exercise, conversion or exchange thereof, including, without limitation,
a change resulting from the antidilution provisions thereof, the
Conversion Price computed upon the original issue thereof, and any
subsequent adjustments based thereon, shall, upon such change becoming
effective, be recomputed to reflect such change, but no further
adjustment to the Conversion Price shall be made for the actual issuance
of Common Stock upon the exercise of any such options, warrants or
rights or the conversion or exchange of such securities in accordance
with their terms; and
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(D) upon the expiration of any such options, warrants or
rights, the termination of any such rights to convert or exchange or the
expiration of any options, warrants or rights related to such
convertible or exchangeable securities, the Conversion Price shall
forthwith be readjusted to such Conversion Price as would have been
obtained had the adjustment which was made upon the issuance of such
options, warrants, rights or securities or options, warrants or rights
related to such securities been made upon the basis of the issuance of
only the number of shares of Common Stock (and convertible or
exchangeable securities which remain in effect) actually issued upon the
exercise of such options, warrants or rights, upon the conversion or
exchange of such securities or upon the exercise of the options,
warrants or rights related to such securities.
(c) "Additional Stock" shall mean any shares of Common Stock or
securities convertible into or exchangeable or exercisable for shares of Common
Stock issued (or deemed to have been issued pursuant to Section 3.2.2(b)(v)
above) by the corporation after the date of initial issuance of any Series A
Stock other than:
(i) Common Stock issued in connection with an
Extraordinary Common Stock Event; and
(ii) Common Stock issued or issuable upon conversion of
Series A Stock.
3.2.3 ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS
If the Corporation at any time after the Filing Date shall make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Corporation other than shares of Common Stock, then and in each such event
provision shall be made so that the holders of the Series A Stock shall receive
upon conversion thereof in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the Corporation which the
holders would have received had the holders' Series A Stock been converted into
Common Stock on the date of such event and had thereafter, during the period
from the date of such event to and including the conversion date, retained such
securities (together with any distributions payable thereon during such period)
receivable by them as aforesaid during such period, giving application to all
adjustments called for during such period under Section 3.2 with respect to the
rights of the holders of the Series A Stock.
3.2.4 ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE OR SUBSTITUTION
If the Common Stock issuable upon the conversion of the Series A Stock
shall be changed into the same or different number of shares of any class or
classes of stock, by capital reorganization, involving exchange, substitution,
reclassification or otherwise (other than a subdivision or combination of shares
or stock dividend provided for above, or a reorganization, merger, consolidation
or sale of assets provided for below), then the holders of the shares of Series
A Stock shall have the right thereafter to convert each such share into the same
kind and
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amount of shares of stock and other securities and property receivable upon such
exchange, reclassification or other change, as a holder of the number of shares
of Common Stock into which such shares of Series A Stock might have been
converted immediately prior to such substitution, reclassification or other
change, all subject to further adjustment as provided herein.
3.2.5 REORGANIZATION, MERGER, CONSOLIDATION OR SALE OF ASSETS
If at any time there shall be a capital reorganization of the Common
Stock (other than a subdivision, combination, reclassification or exchange of
shares provided for elsewhere in this Section 3.2) or a merger or consolidation
of the Corporation with or into another corporation, or the sale of all or
substantially all of the Corporation's properties and assets to any other
person, then, as a part of such reorganization, merger, consolidation or sale,
provision shall be made so that the holders of the Series A Stock shall
thereafter be entitled to receive upon conversion of such Series A Stock, the
number of shares of stock or other securities or property of the Corporation, or
of the successor corporation resulting from such reorganization, merger,
consolidation or sale, to which a holder of Common Stock deliverable upon
conversion would have been entitled upon such capital reorganization, merger,
consolidation or sale.
3.2.6 CERTIFICATE OF ADJUSTMENT
Upon the occurrence of each adjustment or readjustment of the Conversion
Rate of the Series A Stock pursuant to this Section 3.2, the Corporation shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to the holders of the Series A Stock, as
applicable, a certificate, signed by the Chairman of the Board, the President or
the Chief Financial Officer, setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
3.2.7 FRACTIONAL SHARES
The corporation shall not be obligated to deliver to holders of Series A
Stock any fractional share or shares of Common Stock issuable upon conversion of
such shares of Series A Stock, but in lieu thereof may make a cash payment in
respect thereof in any manner permitted by law.
3.2.8 RESERVATION OF STOCK ISSUABLE UPON CONVERSION
The Corporation shall at all times reserve and keep available, out of
its authorized but unissued Common Stock, solely for the purpose of effecting
the conversion of the Series A Stock, the full number of shares of Common Stock
deliverable upon the conversion of all shares of the Series A Stock from time to
time outstanding. The Corporation shall from time to time, in accordance with
the laws of the State of Nevada, use its best efforts to increase the authorized
amount of its Common Stock if at any time the authorized number of shares of
Common Stock remaining unissued shall not be sufficient to permit the conversion
of all of the shares of the Series A Stock at the time outstanding.
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SECTION 4. VOTING RIGHTS
4.1 VOTING RIGHTS OF SERIES A STOCK
4.1.1 VOTING WITH COMMON STOCK
The holders of Series A Stock shall be entitled to vote on all matters
submitted to a vote of the holders of Common Stock of the corporation, voting
together with the holders of Common Stock as one class except as otherwise
provided in this Section 4. Each share of the Series A Stock shall be entitled
to the number of votes equal to the number of shares of Common Stock into which
such share of Series A Stock could be converted on the record date for
determining the shareholders entitled to vote.
4.1.2 VOTING AS A SEPARATE VOTING GROUP
The holders of Series A Stock shall be entitled to vote as a separate
voting group with respect to (i) any of the transactions listed in Section 4.2
hereto, (ii) the creation of any senior or pari passu security, (iii) any
transaction constituting a deemed dividend under federal tax law or (iv) as
otherwise provided by law.
4.2 PROTECTIVE PROVISIONS OF SERIES A STOCK
So long as 400,000 shares or more of the Series A Stock are outstanding
after the Filing Date, the Corporation shall not, without the vote or written
consent of the majority of the holders of the Series A Stock, do any of the
following:
(a) authorize or issue any shares of stock with rights, including
liquidation preferences, superior to the Common Stock;
(b) effect any sale, lease, assignment, transfer, or other conveyance of
all or substantially all of the assets of the Corporation or the sale, transfer
or license of intellectual property other than in the ordinary course of
business;
(c) effect any consolidation or merger involving the Corporation;
(d) effect any voluntary dissolution, liquidation, recapitalization,
reclassification or reorganization of the Corporation;
(e) repurchase or redeem any equity securities, or pay any dividends or
other distributions on equity securities;
(f) engage in any business other than the business currently conducted;
(g) authorize or issue additional equity or options or warrants to
purchase additional equity to employees, consultants or directors;
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(h) amend the Articles of Incorporation or Bylaws;
(i) incur any indebtedness for borrowed money or enter into any capital
lease obligations which aggregate in excess of $25,000.
4.3 STATUS OF CONVERTED STOCK
In case any shares of Series A Stock shall be converted pursuant to
Section 3.2 hereof, the shares so converted shall assume the status of
authorized but undesignated and unissued shares of Series A Stock.
4.4 NOTICES
Any notice required herein except as otherwise specifically provided
herein, to be given to a holder of the Series A Stock shall be in writing and
may be delivered by personal service, sent by overnight professional courier
service, sent by telegraph or cable or sent by United States registered or
certified mail, return receipt requested, with postage thereon fully prepaid.
All such communications shall be addressed to such holder of record at its
address appearing on the books of the Corporation. If sent by telegraph or
cable, a confirmed copy of such telegraphic or cabled notice shall promptly be
sent by mail (in the manner provided above) to the holders. Service of any such
communication made only by mail shall be deemed complete on the date of actual
delivery as shown by the addressee's registry or certification receipt or at the
expiration of the third business day after the date of mailing, whichever is
earlier in time.
RESOLVED FURTHER, that the Chairman of the Board, the President or any
Vice President and the Secretary or any Assistant Secretary of the Corporation
are each authorized to execute, verify and file a certificate of designation of
preferences of preferred stock in accordance with the General Corporation Law of
the State of Nevada.
3. The authorized number of shares of preferred stock of the Corporation
is 10,000,000 shares, and the number of shares constituting Series A Convertible
Preferred Stock, none of which has been issued, is 4,500,000 shares.
[this space intentionally left blank]
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IN WITNESS WHEREOF, the undersigned has executed this Certificate on
August 26, 1998.
/s/ J. Peter Burke
-------------------------------
J. Peter Burke, President
/s/ William H. Fleming
-------------------------------
William H. Fleming, Secretary
State of Oregon )
) ss.
County of Multnomah )
On August 26, 1998, personally appeared before me, a Notary Public,
J. Peter Burke , who acknowledged
- ------------------------------------------------------------
Names of Persons Appearing and Signing Document
that he executed the above instrument.
/s/ Athona G. Williamson
-------------------------------
Signature of Notary
(NOTARY STAMP OR SEAL)
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<PAGE> 1
EXHIBIT 4.1
A-FEM MEDICAL CORPORATION
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This Amended and Restated Registration Rights Agreement is entered into
as of the 6th day of November, 1998, by and between A-Fem Medical Corporation, a
Nevada corporation ("A-Fem"), and Capital Consultants, Inc., an Oregon
corporation, as agent for certain investors it represents (in its capacity as
agent, Capital Consultants, Inc. is referred to herein as "CCI") and replaces
and supersedes those certain Registration Rights Agreements entered into by and
between A-Fem and CCI dated as of August 31, 1998, and October 8, 1998.
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 1933 Act and the declaration or ordering
of effectiveness of such registration statement or document.
1.3 The term "Registrable Securities" means the shares of the common
stock of A-Fem (the "Common Stock") to be issued upon conversion of the shares
of convertible preferred stock (the "Preferred Stock") to be issued pursuant to
(i) the Preferred Stock and Warrant Purchase Agreement dated as of August 31,
1998, (ii) the Plan and Agreement for Recapitalization dated as of September 1,
1998, (iii) the Stock Purchase Warrant (No. 98P-1) to purchase 130,000 shares of
Preferred Stock, (iv) the Preferred Stock and Warrant Purchase Agreement dated
as of October 8, 1998, (v) the Stock Purchase Warrant (No. 98P-3) to purchase
127,280 shares of Preferred Stock, (vi) the Stock Purchase Warrant (No. 98P-4)
to purchase 72,720 shares of Preferred Stock, (vii) the Preferred Stock and
Warrant Purchase Agreement dated as of November 6, 1998"), (viii) the Stock
Purchase Warrant (No. 98P-5) to purchase 102,065 shares of Preferred Stock, (ix)
the
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Stock Purchase Warrant (No. 98P-6) to purchase 1,583 shares of Preferred
Stock, and (x) the Stock Purchase Warrant (No. 98P-7) to purchase 552 shares of
Preferred Stock, and any Common Stock issued as a dividend or other distribution
with respect to, or any other securities issued 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 (i) CCI, provided that it holds any
Registrable Securities as agent for any investor it represents, (ii) each of the
investors for whom CCI holds the Registrable Securities and (iii) any assignee
in accordance with Section 9.
2. REGISTRATION RIGHTS
2.1 DEMAND REGISTRATION RIGHTS
(a) If the Company shall receive, at any time after the date
hereof, a written request from the Holders of at least 30% of the Registrable
Securities then outstanding (the "Initiating Holders") that the Company file a
registration statement under the Securities Act covering the registration of
such Initiating Holders' Registrable Securities, then the Company shall, within
five days after the receipt of such request, give written notice of such request
to all Holders and shall, subject to the limitations set forth below, use its
best efforts to file as soon as practicable, a registration statement under the
Securities Act of all Registrable Securities that the Holders request to be
registered in a written request to be given within five days of the mailing of
such notice by the Company, and shall use its best efforts to cause such
registration statement to be declared effective as soon as practicable.
(b) The Company is obligated to effect only two registrations
pursuant to this Section 2.1; provided, however, that if the Company is eligible
to register securities on Form S-3, then the Company is obligated to effect a
registration on such Form S-3 each time such registration is requested by the
Holders pursuant to this Section 2.1.
(c) Notwithstanding the foregoing, if the Company shall furnish
to the Holders requesting a registration pursuant to this Section 2.1 a
certificate signed by the President of the Company stating that, in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for such registration statement
to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for not more than 60 days after receipt of the request of the Initiating
Holders.
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(d) Subject to Section 2(c), if the Company fails to file a
registration statement within 20 business days after receipt of the request of
the Initiating Holders ("Deadline"), then the Company will grant to the Holders
requesting registration ten-year warrants, with an exercise price of $1.92 per
share, to purchase the number of shares of common stock of the Company
determined by the product of (1) number of days elapsed between the Deadline and
the date the registration statement is filed; and (2) 1% of the Registrable
Shares that the Holders requested to be registered. The warrants will contain
terms, conditions and adjustments similar to warrants previously issued to the
Holders, and the warrant will be issued within 30 days of the date the
registration statement is filed. No such warrant will be issued to any Holder
who fails to promptly supply information concerning such Holder to be included
in the Registration Statement.
2.2 INCIDENTAL REGISTRATION RIGHTS
(a) If at any time after the date hereof A-Fem proposes to
register any of its securities under the 1933 Act (except for registration of
shares solely in connection with an employee benefit plan or a merger or
consolidation) in any 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.
(b) 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), A-Fem will use its
best efforts to effect the registration under the 1933 Act and applicable state
securities laws of all Registrable Securities in connection therewith that A-Fem
has been so requested to register by Holder.
(c) If the managing underwriter for any underwritten offering in
a registration pursuant to this Section 2.2 shall inform in writing A-Fem 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 A-Fem will include in such registration the number that
A-Fem is so advised can be sold in (or during the time of) such offering, first,
all securities proposed by A-Fem to be sold for its own account, and second,
such Registrable Securities and other securities of A-Fem requested to be
included in such registration by persons 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.
3. OBLIGATIONS OF A-FEM
Whenever required under this Agreement to use its best efforts to effect
the registration of Registrable Securities, A-Fem shall, as expeditiously as
possible:
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3.1 Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its best efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby determined as provided hereafter.
3.2 Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all securities covered by such
registration statement.
3.3 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.
3.4 Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
all 50 states, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states.
3.5 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 and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the Registrable
Securities to be so included in the registration statement.
3.6 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 that may be required on account of such event and use its best
efforts to cause each such amendment and supplement to become effective.
3.7 Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to Section 2, on the date that such Registrable
Securities are delivered to the underwriters for sale in connection with a
registration pursuant to Section 2, if such securities are being sold
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through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
3.8 Otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as soon
as reasonably practicable, but not later than 18 months after the effective date
of the registration statement, an earnings statement covering the period of at
least 12 months beginning with the first full month after the effective date of
such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
3.9 Use its best efforts to list the Restricted Securities covered by
such registration statement with any securities exchange on which the Common
Stock of the Company is then listed.
For purposes of Sections 3.1 and 3.2, the period of distribution of
Registrable Securities in a firm commitment underwritten public offering shall
be deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable
Securities in any other registration shall be deemed to extend until the earlier
of the sale of all Registrable Securities covered thereby and one year after the
effective date thereof.
4. PREPARATION; INFORMATION; REASONABLE INVESTIGATION
4.1 FURNISH INFORMATION
It shall be a condition precedent to the obligations of A-Fem to take
any action pursuant to this Agreement that Holder shall furnish to A-Fem 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, A-Fem will give Holder
and Holder's counsel, accountants or underwriters the opportunity to participate
in the preparation of such
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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 A-Fem 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 and
transfer taxes, if any) 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, fees and disbursements of
counsel for A-Fem, and fees and disbursements of counsel to Holder, shall be
borne by A-Fem.
6. INDEMNIFICATION
If any Registrable Securities are included in a registration statement
under this Agreement:
6.1 A-FEM INDEMNIFICATION
To the extent permitted by law, A-Fem will indemnify and hold harmless
and defend 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 A-Fem 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.
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A-Fem will pay or 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 A-Fem (which consent shall not be unreasonably
withheld), nor shall A-Fem be liable to Holder in any such case for any such
loss, claim, damage, liability or action (a) to the extent that it arises solely
from or is based solely upon a Violation that 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 its 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.
6.2 HOLDER INDEMNIFICATION
To the extent permitted by law, Holder will indemnify and hold harmless
A-Fem, each of its directors, each of its officers who have signed the
registration statement, and each person, if any, who controls A-Fem within the
meaning of the 1933 Act, against any losses, claims, damages or liabilities
(joint or several) to which A-Fem or any such director, officer or controlling
person, 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 A-Fem or any such
director, officer 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 A-Fem
of its securities (including a sale of such securities through any underwriter
retained by A-Fem to engage in a distribution solely on behalf of A-Fem), shall
Holder be liable to A-Fem 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 A-Fem 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
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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 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 materially and adversely 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 CONTRIBUTION
If the indemnification provided for in this Section 6 is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall, to the extent permitted by applicable law, contribute to the amount paid
or payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party, on the one hand, and of the indemnified party, on the
other, in connection with the Violation(s) that resulted in such loss, claim,
damage or liability, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by a court of law by reference to, among other things, whether the
untrue or allegedly untrue statement of a material fact or the omission to state
a material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
6.5 SURVIVAL OF RIGHTS AND OBLIGATIONS
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The obligations of A-Fem 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 A-Fem to the public without
registration, A-Fem 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 A-Fem 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 A-Fem 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 A-Fem and such other
reports and documents so filed by A-Fem, and (iii) such other information as may
be reasonably requested in availing Holder of any rule or regulation of the SEC
that permits the selling of any such securities without registration or pursuant
to such form.
8. LOCK-UP AGREEMENT
Holder, if requested by A-Fem and an underwriter of A-Fem's securities
(in a firmly underwritten public offering), shall agree not to sell or otherwise
transfer or dispose of any Registrable Securities or other securities of A-Fem
held by Holder for a specified period of time (not to exceed 90 days) following
the effective date of a registration statement pursuant to which A-Fem proposes
to sell its securities to the public generally, provided, however, that holders
of at least five percent of A-Fem's Common Stock and all officers and directors
of A-Fem enter into similar agreements.
9. ASSIGNMENT OF REGISTRATION RIGHTS
The right to cause A-Fem to register Common Stock pursuant to this
Agreement may not be assigned or transferred without the prior written consent
of A-Fem, which consent will not be unreasonably withheld.
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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 consent of A-Fem 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
A-Fem.
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 or any bankruptcy court.
13. SUCCESSORS
Subject to Section 9 hereof, this Agreement shall bind and inure to the
benefit of the successors and assigns of A-Fem 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 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 A-Fem: 10180 S.W. Nimbus Avenue, Suite J-5
Portland, OR 97223
Attention: J. Peter Burke, President, Chief Operating
Officer and Chief Financial Officer
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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: Capital Consultants, Inc.
2300 SW First Avenue, Suite 200
Portland, OR 97201
Attention: Jeffrey L. Grayson
Telephone: (503) 241-1200
Facsimile: (503) 241-0207
with a copy to: Carmen M. Calzacorta
Schwabe, Williamson & Wyatt
1211 SW Fifth Avenue, Suite 1600-1800
Portland, OR 97204
Telephone: (503) 796-2994
Facsimile: (503) 796-2900
16. EVENT OF DEFAULT
An Event of Default shall have occurred under this Agreement if A-Fem
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. HEADINGS
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.
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19. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Oregon.
[this space intentionally left blank]
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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:
CAPITAL CONSULTANTS, INC., as agent
By: /s/ Barclay L. Grayson
-------------------------------
Its Vice President
-------------------------------
A-FEM:
A-FEM MEDICAL CORPORATION
By: /s/ Steven Frankel
-------------------------------
Its
-------------------------------
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EXHIBIT 4.2
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR APPLICABLE STATE LAW, AND NO INTEREST HEREIN MAY BE
SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
(i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES,
(ii) THIS CORPORATION RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF
THESE SECURITIES SATISFACTORY TO THIS CORPORATION STATING THAT SUCH TRANSACTION
IS EXEMPT FROM REGISTRATION, OR (iii) THIS CORPORATION OTHERWISE SATISFIES
ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.
No. 98P-__ WARRANT TO PURCHASE SHARES OF
CONVERTIBLE PREFERRED STOCK
STOCK PURCHASE WARRANT
TO PURCHASE SHARES OF
CONVERTIBLE PREFERRED STOCK OF
A-FEM MEDICAL CORPORATION
For value received as set forth in that certain Preferred Stock and
Warrant Purchase Agreement between certain investors (each an "Investor" and
collectively, the "Investors") acting through their agent, Capital Consultants,
Inc. ("CCI"), and A-Fem Medical Corporation, a Nevada corporation (the
"Company") dated _____________, 1998, the Company grants to Capital Consultants,
Inc. as Agent for Client No. ____, the Holder, as hereinafter defined, the
right, subject to the terms of this Warrant, to purchase ______ shares of the
Company's Series A Convertible Preferred Stock, par value $.01 per share, at
$____ per share, as adjusted (the "Exercise Price") .
SECTION 1 DEFINITIONS.
As used in this Warrant, unless the context otherwise requires:
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<PAGE> 2
"Exercise Date" means any date when this Warrant is exercised in the
manner indicated in Sections 2.1 and 2.2.
1.1. "Expiration Date" means 5:00 p.m. Pacific Time, ten years from the
date hereof.
1.2. "Holder" means (i) CCI, as agent for any Investor it represents and
(ii) each Investor.
1.3. "Securities Act" means the Securities Act of 1933, as amended from
time to time, and all rules and regulations promulgated thereunder, or any act,
rules or regulations that replace the Securities Act or any such rules and
regulations.
1.4. "Preferred Stock" means shares of the class designated as Series A
Convertible Preferred Stock, par value $.01 per share, of the Company.
1.5. "Common Stock" means shares of the class designated as Common
Stock, par value $.01 per share, of the Company.
1.6. "Warrant Shares" means any shares of Preferred Stock issued or
issuable upon exercise of this Warrant.
SECTION 2 DURATION AND EXERCISE OF WARRANT.
2.1 EXERCISE PERIOD
Subject to the provisions of Sections 2.4, 4 and 6 hereof, this Warrant
may be exercised, in whole or in part, during the period commencing on the date
two years after the date hereof and ending on the Expiration Date. After the
Expiration Date this Warrant shall become void, and all rights to purchase
Warrant Shares hereunder shall thereupon cease.
2.2 METHOD OF EXERCISE
This Warrant may be exercised by the Holder, in whole or in part, by (i)
surrendering this Warrant to the Secretary of the Company, (ii) tendering to the
Company payment in full by cash or by check acceptable to the Company of the
Exercise Price for the Warrant Shares for which exercise is made and (iii)
executing and delivering to the Secretary of the Company an Exercise Form, in
the form attached to this Warrant.
Upon exercise, the Holder shall be deemed to be the holder of record of
the Warrant Shares for which exercise is made, even though the transfer or
registrar books of the Company may then be closed or certificates representing
such Warrant Shares may not then be actually delivered to the Holder.
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<PAGE> 3
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant. In lieu of any fractional share to
which the Holder would otherwise be entitled, the Company shall round up or down
the number of shares to the nearest whole share.
2.3 CERTIFICATES
As soon as practicable after the exercise, at the Company's expense,
certificates for such Warrant Shares shall be delivered to the Holder and,
unless this Warrant has expired, a warrant representing the number of Warrant
Shares, if any, with respect to which this Warrant shall not have been exercised
shall be issued to the Holder.
2.4 SECURITIES ACT COMPLIANCE
Unless the transfer of the Warrant Shares shall have been registered
under the Securities Act, as a condition of the delivery of certificates for the
Warrant Shares, the Company may require the Holder to deliver to the Company, in
writing, representations regarding the Holder's sophistication, investment
intent, acquisition for Holder's own account and such other matters as are
reasonable and customary for purchasers of securities in an unregistered private
offering. The Company may place conspicuously upon each Warrant and upon each
certificate representing the Warrant Shares a legend substantially in the
following form, the terms of which are agreed to by the Holder:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE LAW, AND NO INTEREST
THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS COVERING
ANY SUCH TRANSACTION INVOLVING SAID SECURITIES, (ii) THIS CORPORATION
RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THESE SECURITIES
SATISFACTORY TO THIS CORPORATION STATING THAT SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION, OR (iii) THIS CORPORATION OTHERWISE SATISFIES ITSELF
THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION."
2.5 TAXES
The Company shall not be required to pay any tax that may be payable in
respect of any transfer of this Warrant.
SECTION 3 VALIDITY AND RESERVATION OF WARRANT SHARES.
The Company covenants that all shares of Preferred Stock issued upon
exercise of this Warrant, pursuant to the terms and conditions herein, will be
validly issued, fully paid,
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<PAGE> 4
nonassessable and free of preemptive rights. The Company agrees that, as long as
this Warrant may be exercised, the Company will reserve from its authorized and
unissued Preferred Stock a sufficient number of shares to provide for the
issuance of the Preferred Stock upon exercise of this Warrant (and shares of its
Common Stock for issuance on conversion of such Preferred Stock).
SECTION 4 LIMITED RIGHTS OF WARRANT HOLDER.
The Holder shall not, solely by virtue of being the Holder of this
Warrant, have any of the rights of a holder of Preferred Stock of the Company,
either at law or equity, until such Warrant shall have been exercised and the
Holder shall be deemed to be the holder of record of Warrant Shares as provided
in this Warrant, at which time the person or entity in whose name the
certificate for Warrant Shares being purchased is to be issued shall be deemed
the holder of record of such shares for all purposes.
SECTION 5 LOSS OF WARRANT.
Upon receipt by the Company of reasonably satisfactory evidence of the
loss, theft, destruction or mutilation of this Warrant and either (in the case
of loss, theft or destruction) reasonable indemnification and a bond
satisfactory to the Company if requested by the Company or (in the case of
mutilation) the surrender of this Warrant for cancellation, the Company will
execute and deliver to the Holder, without charge, a new Warrant of like tenor
and amount.
SECTION 6 ADJUSTMENTS.
The Exercise Price and the number of shares purchasable under this
Warrant are subject to adjustment from time to time as follows:
6.1 MERGER, SALE OF ASSETS, ETC.
If at any time while this Warrant, or any portion thereof, is
outstanding and unexpired there shall be a reorganization (other than a
combination, reclassification, exchange or subdivision of shares provided for
herein), merger or consolidation of the Company with or into another
corporation, or the sale or transfer of all or substantially all of the
Company's properties and assets to any other person, then, as a part of such
reorganization, merger, consolidation, transfer or sale, provision shall be made
so that the Holder of this Warrant shall thereafter be entitled to immediately
exercise this Warrant and to receive upon exercise of this Warrant, and upon
payment of the Exercise Price then in effect, the number of shares of stock or
other securities or property of the Company, or of the successor corporation
resulting from such reorganization, merger, consolidation, transfer or sale, to
which a holder of the shares deliverable upon exercise of this Warrant would
have been entitled to receive in such reorganization, merger, consolidation or
sale, all subject to adjustment as provided herein.
Page 4
<PAGE> 5
6.1 RECLASSIFICATION, ETC.
If the Company, at any time while this Warrant or any portion hereof,
remains outstanding and unexpired by reclassification of securities or
otherwise, shall change any of the securities as to which purchase rights under
this Warrant exist into the same or a different number of securities of any
other class or classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the securities that were subject to the
purchase rights under this Warrant immediately prior to such reclassification or
other change and the Exercise Price thereof shall be appropriately adjusted, all
subject to further adjustments as provided in this Section.
6.3 SPLIT, SUBDIVISION OR COMBINATION OF SHARES.
If the Company at any time while this Warrant, or any portion hereof,
remains outstanding and unexpired shall split, subdivide or combine the
securities as to which purchase rights under this Warrant exist, into a
different number of securities of the same class, the Exercise Price for such
securities shall be proportionately decreased in the case of a split or
subdivision or proportionately increased in the case of a combination.
6.4 ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR PROPERTY.
If while this Warrant, or any portion hereof, remains outstanding and
unexpired, the holders of the securities as to which purchase rights under this
Warrant exist at the time shall have received, or on or after the record date
for the determination of eligible shareholders, shall have become entitled to
receive, without payment therefore, other or additional stock or other
securities or property (other than cash) of the Company by way of dividend, then
and in each such case, this Warrant shall represent the right to acquire, in
addition to the number of shares of the security receivable upon exercise of
this Warrant, and without payment of any additional consideration therefor, the
amount of such other or additional stock or other securities or property (other
than cash) of the Company that such holder would hold on the date of such
exercise had it been the holder of record of the security receivable upon
exercise of this Warrant on the date hereof and had thereafter, during the
period from the date hereof to and including the date of such exercise, retained
such shares and/or all other additional stock available by it as aforesaid
during such period, giving effect to all adjustment called for during such
period by the provisions of this Section 6.
6.5 CERTIFICATE OF ADJUSTMENTS.
Upon the occurrence of each adjustment or readjustment pursuant to this
Section 6, the Company, at its expense, shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and furnish to the Holder of
this Warrant a certificate, signed by the Chairman of the Board, the President
or the Chief Financial Officer, setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The Company shall, upon the written request at any time of any such
Holder, furnish or cause to be furnished to such Holder a certificate setting
forth: (A) such adjustments and
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<PAGE> 6
readjustments, (B) the Exercise Price at the time in effect and (C) the number
of shares and the amount, if any, of other property that at the time would be
received upon the exercise of the Warrant.
6.6 NO IMPAIRMENT.
The Company will not, by any voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 6 and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holder of this Warrant against impairment.
SECTION 7 REGISTRATION RIGHTS.
Upon exercise of this Warrant, the Holder shall have and be entitled to
exercise, together with all other holders of Registrable Securities possessing
registration rights under that certain A-Fem Medical Corporation Registration
Rights Agreement, of even date herewith, between the Company and CCI
("Investors' Rights Agreement"), the rights of registration granted under the
Investors' Rights Agreement to Registrable Securities (with respect to the
shares of common stock issuable upon conversion of the Preferred Stock issuable
upon exercise of this Warrant). By its receipt of this Warrant, Holder agrees to
be bound by the Investors' Rights Agreement.
SECTION 8 MISCELLANEOUS.
8.1 SUCCESSORS AND ASSIGNS
All the covenants and provisions of this Warrant that are by or for the
benefit of the Company shall bind and inure to the benefit of its successors and
assigns hereunder.
8.2 NOTICE
Any notice or demand pursuant to this Warrant shall be given in writing
and shall be deemed effectively given upon personal delivery to the party to be
notified or three days following deposit with the United States Post Office,
postage prepaid, registered or certified with return receipt requested and
addressed to the party to be notified as provided below:
If to the Company: A-Fem Medical Corporation
Suite J-5
10180 S.W. Nimbus Avenue
Portland, OR 97223
(503) 968-8800
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<PAGE> 7
If to the Holder: Capital Consultants, Inc.
Suite 200
2300 SW First Ave.
Portland, OR 97201
Each party may specify a different address than set forth above by 10 days'
advance notice thereof given in the foregoing manner.
8.3 APPLICABLE LAW
The validity, interpretation and performance of this Warrant shall be
governed by the laws of the State of Oregon as applied to agreements among
Oregon residents entered into and to be performed entirely within the State of
Oregon.
8.4 HEADINGS
The Article headings herein are for convenience only and are not part of
this Warrant and shall not affect the interpretation thereof.
8.5 AMENDMENTS; WAIVER
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. No
waivers of, or exceptions to any term, condition or provision of this Warrant,
in any one or more instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such term, condition or provision.
[This space intentionally left blank.]
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<PAGE> 8
Dated: ______________, 1998
A-FEM MEDICAL CORPORATION
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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<PAGE> 9
EXERCISE FORM
(TO BE EXECUTED BY THE HOLDER
TO EXERCISE THE WARRANT IN WHOLE OR IN PART)
To: A-FEM MEDICAL CORPORATION
I, the undersigned, hereby irrevocably elect to exercise the right of
purchase represented by Warrant No. ____ for, and to purchase thereunder, ______
shares of Series A Convertible Preferred Stock for a purchase price of $____ per
share, as provided for therein.
I hereby tender payment herewith to the order of A-FEM MEDICAL
CORPORATION in the amount of $ _________.
I request that certificates for such shares of Series A Convertible
Preferred Stock be issued and delivered as stated below, and, if said number of
shares of Series A Convertible Preferred Stock shall not be all the shares of
Series A Convertible Preferred Stock purchasable thereunder, that a new Warrant
for the balance remaining of the shares of Series A Convertible Preferred Stock
purchasable under the within Warrant be registered and delivered to me, as
stated below:
Signature:
---------------------------------------------------------------------
Name:
--------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
Deliver to:
--------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
Note: Signature must correspond with the name as written upon the face
of the Warrant in every particular, without alteration or enlargement or any
change whatsoever.
Page 1
<PAGE> 1
Exhibit 4.3
SEE RESTRICTIONS ON REVERSE SIDE
NUMBER [LOGO] SHARES
A-FEM MEDICAL CORPORATION
ORGANIZED UNDER THE LAWS
OF THE STATE OF NEVADA
THIS CERTIFIES THAT is the registered holder
of Shares of the Series A
Convertible Preferred Stock, $.01 par value per share, transferable only on the
books of the Corporation by the holder hereof in person or by Attorney upon
surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
official this day of A.D.19
---------------------- [LOGO] -----------------------
President Secretary
<PAGE> 2
The securities evidenced by this Certificate have not been registered under the
Securities Act of 1933, as amended (the "Act"), or any applicable state law, and
no interest therein may be sold, distributed, assigned, offered, pledged or
otherwise transferred unless (a) there is an effective registration statement
under such Act and applicable state securities laws covering any such
transaction involving said securities or (b) this corporation receives an
opinion of legal counsel for the holder of these securities (concurred in by
legal counsel for this corporation) stating that such transaction is exempt from
registration or this corporation otherwise satisfies itself that such
transaction is exempt from registration. Neither the offering of the securities
nor any offering materials have been reviewed by an administrator under the Act
or any applicable state law.
Upon written request, the Corporation will furnish to any shareholder, without
charge, a full statement of the designation, preference, limitations, and
relative rights applicable to the shares of each class of stock authorized to
be issued and, with respect to any preferred or special class which the
Corporation is authorized to issue in series, the variations in rights,
preferences and limitations for shares of each such series, so far as the same
have been fixed and determined, and the authority of the Board of Directors to
fix and determine the relative rights and preferences of subsequent series.
[back of preferred stock certificate]
<PAGE> 1
EXHIBIT 11.1
A-FEM MEDICAL CORPORATION
CALCULATIONS OF NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30 SEPTEMBER 30,
------------------------------------ ------------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Actual weighted average
shares outstanding 12,566,644 12,345,115 13,093,071 11,325,314
Dilutive common stock,
options and warrants using the
treasury stock method(1) -- -- -- --
------------- ------------- ------------- -------------
Total shares used in per
share calculations 12,566,644 12,345,115 13,093,071 11,325,314
------------- ------------- ------------- -------------
Net loss $ (1,216,215) $ (746,588) $ (3,335,707) $ (335,555)
------------- ------------- ------------- -------------
Net loss per share $ (0.10) $ (0.06) $ (0.25) $ (0.03)
============= ============= ============= =============
</TABLE>
(1) Warrants and options outstanding are not included where the effect would be
anti-dilutive.
Page 1
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 110,529
<SECURITIES> 0
<RECEIVABLES> 54,009
<ALLOWANCES> 0
<INVENTORY> 102,501
<CURRENT-ASSETS> 492,408
<PP&E> 1,230,329
<DEPRECIATION> (488,530)
<TOTAL-ASSETS> 1,355,795
<CURRENT-LIABILITIES> 818,321
<BONDS> 0
0
49,664
<COMMON> 94,719
<OTHER-SE> 322,309
<TOTAL-LIABILITY-AND-EQUITY> 1,355,795
<SALES> 367,023
<TOTAL-REVENUES> 367,023
<CGS> 379,280
<TOTAL-COSTS> 379,280
<OTHER-EXPENSES> 3,256,699
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 66,751
<INCOME-PRETAX> (3,335,707)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,335,707)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,335,707)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
