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A-FEM MEDICAL CORPORATION
NON-QUALIFIED STOCK OPTION LETTER AGREEMENT
To: Xxxxxx Xxxxxxx
The Board of Directors of A-Fem Medical Corporation (the "Company") has
awarded you stock options for the purchase of 1,700,000 shares of the Company's
common stock at an exercise price of $2.06 per share subject to the vesting
schedule set forth below.
1. TERM: The term of the option is ten years from date of grant, unless sooner
terminated.
2. EXERCISE: During your lifetime only you can exercise the option: The personal
representative of your estate or the beneficiary thereof may exercise the option
following your death. To exercise your option, you must deliver to the Company
written notice of your intention to exercise, specifying the number of shares as
to which you desire to exercise the option and the date on which you desire to
complete the transaction, and if required in order to comply with the Securities
Act of 1933, as amended, such written notice must contain a representation that
it is your present intention to acquire the shares for investment and not with a
view to distribution. Unless the Board of Directors determines otherwise, on or
before the date specified for completion of the purchase of shares pursuant to
your option, you must have paid the Company the full purchase price of such
shares in cash (including, with the consent of the Board of Directors, cash that
may be the proceeds of a loan from the Company) or, with the consent of Board of
Directors, in whole or in part, in Common Stock of the Company valued at fair
market value, registered stock, performance units or other contingent awards
nominated in either stock or cash, promissory notes and other forms of
consideration. No shares shall be issued until full payment for the shares has
been made. With the consent of the Board of Directors, you may request the
Company to apply automatically the shares to be received upon the exercise of a
portion of stock option (even though stock certificates have not yet been
issued) to satisfy the purchase price for additional portions of the option.
After exercise of your option, immediately upon notification of the amount due,
if any, you shall pay to the Company in cash amounts necessary to satisfy any
applicable federal, state and local tax withholding requirements. If additional
withholding is or becomes required beyond any amount deposited before delivery
of the certificates, you shall pay such amount to the Company on demand. If you
fail to pay the amount demanded, the Company may withhold that amount from other
amounts payable by the Company to you, including salary, subject to applicable
law. With the consent of the Board of Directors, you may satisfy this
obligation, in whole or in part, by having the Company withhold amounts due or
by delivering to the Company Common Stock shares
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that would satisfy the withholding amount. You may use the Notice of Exercise of
Stock Option in the form attached to this Agreement when you exercise the
option.
3. PAYMENT FOR SHARES: Unless the Board of Directors at any time determines
otherwise, the option may be exercised by the delivery of cash, personal check,
bank certified or cashier's check.
4. TERMINATION: In the event the employment or service of the Optionee with the
Company or a subsidiary terminates for any reason other than because of death,
the option may be exercised at any time prior to the expiration of three years
from the date of termination of the option. Any option may be exercised only if
and to the extent the Optionee was entitled to exercise the option at the date
of such termination. In the event of the termination of employment or service
because of total disability or death, the option may be exercised at any time
prior to the expiration of one year from the date of termination of employment.
To the extent that the option of any deceased Optionee or of any Optionee whose
employment or service terminates is not exercised within the applicable period,
all further rights to purchase shares pursuant to such option shall cease and
terminate.
5. TRANSFER OF OPTION: The option is not transferable except by will or by the
applicable laws of descent and distribution of the state or county of the
optionee's domicile at the time of death or pursuant to a qualified domestic
relations order as defined under the Internal Revenue Code or Title I of the
Employee Income Security Act of 1974, as amended.
6. VESTING: All options shall vest on the 10th anniversary of the grant date. In
addition, vesting shall accelerate and the option shall vest and become
exercisable earlier according to the following schedule:
NUMBER OF SHARES
DATE ON AND AFTER WHICH FOR WHICH OPTION
OPTIONS ARE EXERCISABLE IS EXERCISABLE
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Upon appointment as a Director (May 14, 1998) ...................................................... 12,500
Upon the first anniversary of appointment (May 14, 1999) ........................................... 12,500
Upon the second anniversary of appointment (May 14, 2000) .......................................... 12,500
Upon the third anniversary of appointment (May 14, 2001) ........................................... 12,500
Upon appointment as Chief Executive Officer ........................................................ 450,000
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Upon completion of raising $6 million or more in equity capital at $2.00 per share or greater ...... 25,000
Upon gaining listing on a major trading market (NYSE, AMEX, NASDAQ) ................................ 25,000
Upon the signing of an agreement with a strategic partner for the Rapid-Sense
diagnostic that agrees to distribute the product, invest in A-Fem, or fund product development ..... 300,000
Upon signing a strategic partnership for the inSync miniform that
provides A-Fem revenue through manufacturing, or a royalty, or an
association to complete the national roll-out of the miniform, or A-Fem
achieves 65% or more of the U.S. ACV ............................................................... 600,000
Upon gaining FDA clearance for the PadKit, or if prior to FDA approval,
gaining a strategic partnership for the PadKit which provides a $1
million investment in A-Fem ........................................................................ 25,000
Upon achieving a share closing price of $4.00 per share for at least 30 consecutive market days .... 150,000
Upon achieving a share closing price of $6.00 per share for at least 30 consecutive market days .... 25,000
Upon achieving a share closing price of $8.00 per share for at least 30 consecutive market days .... 25,000
Upon achieving a share closing price of $10.00 per share for at least 30 consecutive market days ... 25,000
7. HOLDING PERIODS
7.1 SECURITIES AND EXCHANGE ACT SECTION 16
Shares of Common Stock obtained upon the exercise of a stock option may
not be sold by a person subject to Section 16 of the Exchange Act until six
months after the date the option was granted.
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7.2 TAXATION OF STOCK OPTIONS
Tax advice should be obtained when exercising any option and prior to
the disposition of the shares issued upon the exercise of any option.
8. DATE OF GRANT: The date of grant of the option is April 17, 1998.
9. ACCELERATION IN CERTAIN EVENTS: Notwithstanding any other provisions of this
Agreement, all options outstanding under this Agreement shall immediately become
exercisable in full for the remainder of their terms at any time when any one of
the following events has taken place after the date hereof:
(a) The stockholders of the Company approve one of the following
("Approved Transactions"):
(i) Any consolidation, merger or plan of exchange, involving the
Company ("Merger") pursuant to which Common Stock would be converted
into cash; or
(ii) Any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially
all of the assets of the Company or the adoption of any plan or proposal
for the liquidation or dissolution of the Company; or
(b) A tender or exchange offer, other than one made by the Company, is
made for Common Stock (or securities convertible into Common Stock) and such
offer results in a portion of those securities being purchased and the offeror
after the consummation of the offer is the beneficial owner (as determined
pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended),
directly or indirectly, of at least 20 percent of the outstanding Common Stock
(an "Offer"); or
(c) The Company receives a report on Schedule 13D under the Securities
Exchange Act of 1934, as amended, reporting the beneficial ownership by any
person of 20 percent or more of the Company's outstanding Common Stock, except
that if such receipt shall occur during a tender offer or exchange offer by any
person other than the Company or a wholly owned subsidiary of the Company,
acceleration of exercisability shall not take place until the conclusion of such
offer; or
(d) During any period of 12 months or less, individuals who at the
beginning of such period constituted a majority of the Board of Directors cease
for any reason to constitute a majority thereof unless the nomination or
election of such new Directors was approved by a vote of at least 2/3 of the
Directors then still in office who were Directors at the beginning of such
period.
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All options that are accelerated pursuant to this Paragraph 9 shall
terminate upon the dissolution of the Company or upon the consummation of any
Merger pursuant to which Common Stock would be converted to cash. The terms used
in this Paragraph 9 and not defined elsewhere in the Agreement shall have the
same meanings as such terms have in the Exchange Act and the rules and
regulations adopted thereunder.
10. APPROVALS: The obligations of the Company under this Agreement are subject
to the approval of state and federal authorities or agencies with jurisdiction
in the matter. The Company will use its best efforts to take steps required by
state or federal law or applicable regulations, including rules and regulations
of the Securities and Exchange Commission and any stock exchange on which the
Company's shares may then be listed, in connection with the grant of options
pursuant to this Agreement. The foregoing notwithstanding, the Company shall not
be obligated to issue or deliver Common Stock pursuant to this Agreement if such
issuance or delivery would violate applicable state or federal securities laws.
11. EMPLOYMENT AND SERVICE RIGHTS: Nothing in this Agreement shall:
(i) Confer upon any employee the right to be continued in the
employment of the Company or any subsidiary or interfere in any way with
the right of the Company or any subsidiary by whom such employee is
employed to terminate such employee's employment at any time, for any
reason, with or without cause, or to decrease such employee's
compensation or benefits; or
(ii) Confer upon any person engaged by the Company any right to
be retained or employed by the Company or to the continuation,
extension, renewal or modification of any compensation, contract or
arrangement with or by the Company.
12. RIGHTS AS A STOCKHOLDER: As a holder of an option issued pursuant to this
Agreement, you have no rights as a stockholder with respect to any Common Stock
until the date of issue to you of a stock certificate for such shares. Except as
otherwise expressly provided herein, no adjustment shall be made for dividend or
other rights for which the record date occurs prior to the date such stock
certificate is issued.
THE COMPANY HAS NO OBLIGATION TO REGISTER THE SHARES THAT WOULD BE
ISSUED UPON THE EXERCISE OF YOUR OPTION, AND IF IT NEVER REGISTERS THE SHARES,
YOU WILL NOT BE ABLE TO EXERCISE THE OPTION UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. AT THE PRESENT TIME, EXEMPTIONS FROM REGISTRATION
UNDER FEDERAL AND STATE SECURITIES LAWS ARE VERY LIMITED AND MIGHT BE
UNAVAILABLE TO YOU PRIOR TO THE EXPIRATION OF THE OPTION. CONSEQUENTLY, YOU
MIGHT HAVE NO OPPORTUNITY TO
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EXERCISE THE OPTION AND TO RECEIVE SHARES UPON SUCH EXERCISE.
Please execute the Acceptance and Acknowledgment set forth below on the
enclosed copy of this Agreement and return it to the undersigned.
Very truly yours,
A-FEM MEDICAL CORPORATION
By:
Name:
Its:
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ACCEPTANCE AND ACKNOWLEDGMENT
I, a resident of the State of ____________, accept the stock option
described above, and acknowledge receipt of a copy of this Agreement. I have
read and understand this Agreement. I acknowledge that, except as set forth in
this Agreement, the Company has no obligation to sell or otherwise issue to me
any stock or other equity or ownership interest in the Company.
Dated: _______________
______________________________ _______________________________
Taxpayer I.D. Number Xxxxxx Xxxxxxx
Address:
By his or her signature below, the spouse of the Optionee, if such
Optionee is legally married as of the date of his or her execution of this
Agreement, acknowledges that he or she has read this Agreement and is familiar
with the terms and provisions thereof, and agrees to be bound by all the terms
and conditions of this Agreement.
Dated: _______________
_______________________________
Spouse's Signature
_______________________________
Printed Name
By his or her signature below, the Optionee represents that he or she is
not legally married as of the date of execution of this Agreement.
Dated: _______________
_______________________________
Optionee's Signature
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NOTICE OF EXERCISE OF STOCK OPTION
To: A-Fem Medical Corporation Board of Directors
I, a resident of the State of _______________, hereby exercise my stock
option granted by A-Fem Medical Corporation (the "Company") on April 17, 1998,
subject to all the terms and provisions thereof, and notify the Company of my
desire to purchase _______ shares of Common Stock of the Company (the
"Securities") at the exercise price of $2.06 per share which were offered to me
pursuant to said option.
I hereby represent and warrant that (1) I have been furnished with a
copy of all information which I deem necessary to evaluate the merits and risks
of the purchase of the Securities; (2) I have had the opportunity to ask
questions and receive answers concerning the information received about the
Securities and the Company; and (3) I have been given the opportunity to obtain
any additional information I deem necessary to verify the accuracy of any
information obtained concerning the Securities and the Company.
I am aware that the Securities have not been registered under the
Federal Securities Act of 1933, as amended (the "Act") or any state securities
laws, pursuant to exemption(s) from registration. I understand that the reliance
by the Company on such exemption(s) is predicated in part upon the truth and
accuracy of the statements by me in this Notice of Exercise.
I hereby represent and warrant that I am purchasing the Securities for
my own personal account for investment and not with a view to the sale or
distribution of all or any part of the Securities.
I understand that because the Securities have not been registered under
the Act, I must continue to bear the economic risk of the investment for an
indefinite time and the Securities cannot be sold unless the Securities are
subsequently registered or an exemption from registration is available.
I agree that I will in no event sell or distribute all or any part of
the Securities unless (1) there is an effective registration statement under the
Act and applicable state securities laws covering any such transaction involving
the Securities or (2) the Company receives an opinion of my legal counsel
(concurred in by legal counsel for the Company) stating that such transaction is
exempt from registration or the Company otherwise satisfies itself that such
transaction is exempt from registration.
I consent to the placing of a legend on my certificate(s) for the
Securities stating that the Securities have not been registered and setting
forth the restriction on transfer contemplated hereby and to the placing of a
stop transfer order on the books of the
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Company and with any transfer agents against the Securities until the Securities
may be legally resold or distributed.
I understand that at the present time Rule 144 of the Securities and
Exchange Commission ("SEC") may not be relied on for the resale or distribution
of the Securities by me. I understand that the Company has no obligation to me
to register the Securities with the SEC and has not represented to me that it
will register the Securities.
I AM ADVISED, PRIOR TO MY PURCHASE OF THE SECURITIES, THAT NEITHER THE
OFFERING OF THE SECURITIES NOR ANY OFFERING MATERIALS HAVE BEEN REVIEWED BY ANY
ADMINISTRATOR UNDER THE SECURITIES ACT OF 1933, THE OREGON SECURITIES LAW OR ANY
OTHER APPLICABLE SECURITIES ACT (THE "ACTS") AND THAT THE SECURITIES HAVE NOT
BEEN REGISTERED UNDER ANY OF THE ACTS AND THEREFORE CANNOT BE RESOLD UNLESS THEY
ARE REGISTERED UNDER THE ACTS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
Dated: _______________
______________________________ _______________________________
Taxpayer I.D. Number Xxxxxx Xxxxxxx
Address
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RECEIPT
A-Fem Medical Corporation hereby acknowledges receipt from Xxxxxx
Xxxxxxx in payment for ________ shares of Common Stock of A-Fem Medical
Corporation, a Nevada corporation, of $___________________ in the form of
______ Cash
______
______ Check (personal, cashier's or bank certified)
A-FEM MEDICAL CORPORATION
Date:____________________ For:_______________________________
