(RULE
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed
by the Registrant x
Filed
by a Party other than the Registrant o
Check
the
appropriate box:
o
Preliminary Proxy
Statement
o
Confidential, For Use
of
the
Commission Only
(As
Permitted by Rule 14a-6(e)(2))
x
Definitive Proxy
Statement
o
Definitive Additional Materials
o
Soliciting Material Pursuant to Rule
14a-11(c) or Rule 14a-12
Xenomics,
Inc.
(Name
of
Registrant as Specified In Its Charter)
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
x
No fee required
o
Fee computed on table below per Exchange
Act Rules 14a-6(i)(1) and 0-11.
(1)
Title
of each class of securities to which transaction applies:
(2)
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(3)
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Check box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
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which the offsetting fee was paid previously. Identify the previous filing
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registration statement number, or the form or schedule and the date of its
filing.
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Date
Filed:
XENOMICS,
INC.
AND
PROXY
STATEMENT
April
4,
2006
at
11:00
a.m.
Grand
Hyatt, Park Avenue at Grand Central, New York, New York 10017
XENOMICS,
INC.
420
LEXINGTON AVENUE, SUITE 1701
NEW
YORK, NEW YORK 10170
February
28, 2006
Dear
Stockholder:
You
are
cordially invited to attend the 2005 Annual Meeting of Stockholders (the
"Meeting") of Xenomics, Inc., which will be held at the Grand Hyatt, Park Avenue
at Grand Central, New York, New York 10017 on Tuesday, April 4, 2006, at 11:00
am Eastern Daylight Time. Details of the business to be conducted at the Meeting
are provided in the attached Notice of Annual Meeting and Proxy Statement.
Whether
or not you plan to attend the Meeting, it is important that your shares be
represented and voted at the Meeting. Therefore, I urge you to vote your shares
as soon as possible. Instructions in the proxy card will tell you how to vote
over the Internet, by telephone, or by returning your proxy card by mail. The
proxy statement explains more about proxy voting. Please read it carefully.
I
look
forward to meeting those of you who will be able to attend the Meeting, and
I
appreciate your continued support of our company.
| Sincerely, | ||
|
L.
David Tomei
Co-Chairman
of the Board of Directors, Chief Executive Officer and
President
|
||
1
XENOMICS,
INC.
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON APRIL 4, 2006
To
our Stockholders:
The
2005
Annual Meeting of Stockholders (the "Annual Meeting") of Xenomics, Inc. (the
"Company") will be held at the Grand Hyatt, Park Avenue at Grand Central, New
York, New York 10017, on Monday, April 4, 2006, beginning at 11:00 a.m. Eastern
Daylight Time, to consider the following proposals:
|
1.
|
To
elect five directors to the Company’s Board of Directors to serve for
the ensuing year or until their successors are duly elected and qualified
or until their earlier resignation or removal (Proposal No. 1);
|
|
2.
|
To
amend the Company’s 2004 Stock Option Plan (the
“Plan”) to increase the number of shares of common stock of the Company
which are reserved for issuance under the Plan from 5,000,000 shares
to
12,000,000 shares (Proposal No. 2);
|
|
3.
|
To
adopt the Company’s 2005 Directors Stock Option Plan (Proposal No. 3); and
|
|
4.
|
To
consider and transact such other business as may properly come before
the
Annual Meeting and any adjournment or postponement thereof.
|
BECAUSE
OF THE SIGNIFICANCE OF THESE PROPOSALS TO THE COMPANY AND ITS SHAREHOLDERS,
IT
IS VITAL THAT EVERY SHAREHOLDER VOTES AT THE ANNUAL MEETING IN PERSON OR BY
PROXY.
These
proposals are fully set forth in the accompanying Proxy Statement, which you
are
urged to read thoroughly. For the reasons set forth in the Proxy Statement,
your
Board of Directors recommends a vote "FOR" each of the proposals. The Company
intends to mail the Annual Report, Proxy Statement and Proxy enclosed with
this
notice on or about February 28, 2006, to all stockholders entitled to vote
at
the Annual Meeting. If you were a stockholder of record of the Company’s common
stock (XNOM: OTCBB) on February 7, 2006, the record date for the Annual Meeting,
you are entitled to vote at the meeting and any postponements or adjournments
of
the meeting. Stockholders are cordially invited to attend the Annual Meeting.
However, whether or not you plan to attend the meeting in person, your shares
should be represented and voted. After reading the enclosed Proxy Statement,
please sign, date, and return promptly the enclosed proxy in the accompanying
postpaid envelope we have provided for your convenience to ensure that your
shares will be represented. Alternatively, you may wish to provide your response
by telephone or electronically through the Internet by following the
instructions set out on the enclosed Proxy card. If you do attend the meeting
and wish to vote your shares personally, you may revoke your Proxy.
We
thank
you for your cooperation in returning your proxy as promptly as possible.
| By Order of the Board of Directors | |
|
L.
David Tomei
|
|
| Co-Chairman of the Board of Directors, Chief Executive Officer and President |
New
York,
New York
February
28, 2006
2
IMPORTANT
The
return of your signed proxy as promptly as possible will greatly facilitate
arrangements for the Annual Meeting. No postage is required if the proxy is
returned in the envelope enclosed for your convenience and mailed in the United
States. If you received a proxy card with a website address and voting codes,
we
urge you to vote on the Internet at www.votestock.com or telephonically
toll-free at 1-866-626-4508 to ensure that your vote is recorded without mail
delays. If you vote by telephone or the Internet you do not need to return
the
proxy card.
Please
SIGN, DATE, and RETURN the enclosed proxy or submit your proxy by telephone
or
the Internet immediately whether or not you plan to attend the Annual Meeting.
A
return envelope, which requires no postage if mailed in the United States,
is
enclosed for your convenience.
PROXY
STATEMENT
This
Proxy Statement is furnished in connection with the solicitation of proxies
by
the Board of Directors of Xenomics, Inc. ( the "Company") to be voted at the
Annual Meeting of stockholders which will be held at the Grand Hyatt, Park
Avenue at Grand Central, New York, New York 10017, on Tuesday, April 4, 2006
beginning at 11:00 a.m. Eastern Daylight Time, and at any postponements or
adjournments thereof on.
INFORMATION
ABOUT THE ANNUAL MEETING AND VOTING
| Q: | What is the purpose of the Annual Meeting? |
|
A:
|
At the
Annual Meeting, stockholders will act upon the matters outlined in
the
Notice of Annual Meeting on the cover page of this Proxy Statement,
including the election of directors, approval of an amendment to
the
Company’s 2004 Stock Option Plan (the “Plan”) increasing the number of
shares which are reserved for issuance under the Plan and adopting
the
Company’s 2005 Directors Stock Option Plan. In addition, management will
report on the performance of the Company during fiscal year 2005
and
respond to questions from stockholders.
|
| Q: | Who is entitled to vote at the meeting? |
| A: | Stockholders of record at the close of business on February 7, 2006, the record date for the meeting, are entitled to receive notice of and to participate in the Annual Meeting. As of that record date, the Company had outstanding and entitled to vote 18,604,300 shares of common stock. The common stock is the only class of stock of the Company that is outstanding and entitled to vote at the Annual Meeting. If you were a stockholder of record of common stock on that record date, you will be entitled to vote all of the shares that you held on that date at the meeting, or any postponements or adjournments of the meeting. Each outstanding share of the Company’s common stock will be entitled to one vote on each matter. Stockholders who own shares registered in different names or at different addresses will receive more than one proxy card. You must sign and return each of the proxy cards received to ensure that all of the shares owned by you are represented at the Annual Meeting. |
| Q: | Who can attend the meeting? |
| A: | Only stockholders as of the record date, or their duly appointed proxies, may attend the meeting, and each may be accompanied by one guest. Seating, however, is limited. Admission to the meeting will be on a first-come, first-served basis. Registration will begin at 10:00 a.m., and seating will begin at 10:30 a.m. Cameras, recording devices and other electronic devices will not be permitted at the meeting. |
| Q: | Why is the Company soliciting proxies? |
|
A:
|
Because many of the Company's stockholders are unable to personally attend the Annual Meeting, the Board of Directors of the Company (the "Board" or the "Board of Directors") solicits the enclosed proxy so that each stockholder is given an opportunity to vote. This proxy enables each stockholder to vote on all matters which are scheduled to come before the meeting. When the Proxy is returned properly executed, the stockholder's shares will be voted according to the stockholder's directions. Stockholders are urged to specify their choices by marking the appropriate boxes on the enclosed proxy card. |
| Q: | What constitutes a quorum? |
| A: | The presence at the meeting, in person or by proxy, of the holders of a majority of the number of shares of common stock issued and on the record date will constitute a quorum permitting the meeting to conduct its business. As noted above, as of the record date, 18,604,300 shares of the Company’s common stock, representing the same number of votes, were outstanding. Thus, the presence of the holders of common stock representing at least 9,302,150 votes will be required to establish a quorum. If you submit a properly executed proxy card, even if you abstain from voting or if you withhold your vote with respect to any proposal, you will be considered present for purposes of a quorum and for purposes of determining voting power present. If a broker indicates on a proxy that it does not have discretionary authority as to certain shares to vote on a particular matter (“broker non-votes”), those shares will be considered present for purposes of a |
3
| quorum but will not be considered present for purposes of determining voting power on that matter. | |
| Q: | How do I vote? |
| A: | The Company is offering you four methods of voting. |
|
·
|
You
may indicate your vote on the enclosed proxy card, sign and date
the card,
and return the card in the enclosed prepaid envelope.
|
|
·
|
You
may vote by telephone by calling the toll free number that appears
on the
enclosed proxy card and following the instructions given.
|
|
·
|
You
may vote via the Internet by following the instructions provided
on the
enclosed proxy card.
|
|
·
|
You
may attend the meeting and vote in person.
|
| All shares entitled to vote and represented by a properly completed and executed proxy received before the meeting and not revoked will be voted at the meeting as you instruct in a proxy delivered before the meeting. If you do not indicate how your shares should be voted on a matter, the shares represented by your properly completed and executed proxy will be voted as the Board of Directors recommends on each of the enumerated proposals and with regard to any other matters that may be properly presented at the meeting and all matters incident to the conduct of the meeting. If you are a registered stockholder and attend the meeting, you may deliver your completed Proxy card in person. "Street name" stockholders who wish to vote at the meeting will need to obtain a proxy form from the institution that holds their shares. All votes will be tabulated by the inspector of election appointed for the meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes. | |
| Q: | Can I vote by telephone or electronically? |
| A: |
If
you are a registered stockholder (that is, if you hold your stock
in
certificate form), you may vote by telephone, or electronically through
the Internet, by following the instructions included with your proxy
card.
If your shares are held in "street name," please check your Proxy
card or
contact your broker or nominee to determine whether you will be able
to
vote by telephone or electronically. Please follow the voting instructions
on the enclosed proxy card.
|
| The deadline for voting by telephone or electronically is 5:00 p.m. (Eastern Daylight Time) on April 3, 2006. | |
| Q: | Can I change my vote after I return my proxy card? |
| A: | A proxy may be revoked by giving the Secretary of the Company written notice of revocation at any time before the voting of the shares represented by the proxy. A stockholder who attends the meeting may revoke a proxy at the meeting. Attendance at the meeting will not, by itself, revoke a proxy. |
| Q: | What are the Board's recommendations? |
| A: | Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the Board of Directors. The Board's recommendation is set forth together with the description of each item in this Proxy Statement. In summary, the Board recommends a vote: |
|
·
|
for
election of the nominated slate of directors (see page 5);
|
|
·
|
for
approval of an amendment of the Company’s 2004 Stock Option Plan
increasing the number of shares reserved for issuance under the Plan
from
5,000,000 to 12,000,000 (see page 8);
and
|
|
·
|
for
adoption of the Company’s 2005 Directors Stock Option Plan (see page
10).
|
| With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, in their own discretion. | |
| Q: | What vote is required to approve each item? |
| A: | The election of the directors of the Company requires the affirmative vote of a plurality of the votes cast by stockholders at the Annual Meeting. A properly executed proxy marked "WITHHOLD AUTHORITY" with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be counted for the purposes of determining whether there is a quorum. Approving the increase in the number of shares reserved for issuance under the Company’s 2004 Stock Option Plan and adopting the Company’s 2005 Directors Stock Option Plan will require the affirmative vote of the holders of at least a majority of the shares of common stock present in person or represented by proxy and entitled to vote at the Annual Meeting. |
4
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
At
the
Annual Meeting, the stockholders will elect five directors to serve until
the 2006 Annual Meeting of Stockholders or until their successors are elected
and qualified. In the event the nominees are unable or unwilling to serve as
directors at the time of the Annual Meeting, the proxies will be voted for
any
substitute nominees designated by the present Board or the proxy holders to
fill
such vacancy, or for the balance of the nominees named without nomination of
a
substitute, or the size of the Board will be reduced in accordance with the
Bylaws of the Company. The Board has no reason to believe that the persons
named
below will be unable or unwilling to serve as nominees or as directors if
elected.
Assuming
a quorum is present, the five nominees receiving the highest number of
affirmative votes of shares entitled to be voted for such persons will be
elected as directors of the Company for the ensuing year. Unless marked
otherwise, proxies received will be voted "FOR" the election of the nominees
named below. In the event that additional persons are nominated for election
as
directors, the proxy holders intend to vote all proxies received by them in
such
a manner as will ensure the election of the nominees listed below, and, in
such
event, the specific nominees to be voted for will be determined by the proxy
holders. Mr. Christoph Bruening, a current director, has informed the Company
that he will not stand for re-election to the Board. Dr. V. Randy White, the
Company’s former Chief Executive Officer and a current director, has not been
re-nominated and is not a director nominee.
Information
With Respect to Director Nominees
Listed
below are the nominees for directors, with information showing the principal
occupation or employment of the nominees for director, the principal business
of
the corporation or other organization in which such occupation or employment
is
carried on, and such nominees' business experience during the past five years.
Such information has been furnished to the Company by the director nominees:
|
Name
|
Age
|
Positions
|
|
Gabriele
M. Cerrone
|
33
|
Co-Chairman
of the Board
|
|
L.
David Tomei, Ph.D.
|
60
|
Co-Chairman
of the Board, Chief Executive Officer, President and President,
SpaXen Italia, srl
|
|
Samuil
Umansky, M.D., Ph.D.
|
63
|
Chief
Scientific Officer and Director
|
|
John
P. Brancaccio.
|
57
|
Director
|
|
Donald
H. Picker, Ph.D
|
59
|
Director
|
Gabriele
M. Cerrone
Mr.
Cerrone has served as Co-Chairman of the Board of Directors since July 8, 2005
and a consultant since June 2005. Subsequent to July 2004 and prior to becoming
a consultant, Mr. Cerrone, without
compensation, assisted the Board in recruiting management, acted as an
intermediary between the Company and the Spallanzani National Institute for
Infectious Diseases in connection with the establishment of the SpaXen joint
venture, assisted the Company in establishing its lab facilities in the U.S.
and
Italy, attended Board meetings as an observer at the invitation of the Board
and
introduced the Company to various parties with whom the Company may enter into
strategic relationships with in the future. From
March 1999 to January 2005, Mr. Cerrone served as a Senior Vice President of
Investments of Oppenheimer & Co. Inc., a financial services firm. Prior to
such affiliation, Mr. Cerrone held the position of Managing Director of
Investments at Barrington Capital, L.P., a merchant bank, between March 1998
and
March 1999. Between May 2001 and May 2003, Mr. Cerrone served on the board
of
directors of SIGA Technologies, Inc. Mr. Cerrone currently serves as Chairman
of
the Board and a consultant to Callisto Pharmaceuticals, Inc., a biotechnology
company. Mr. Cerrone was appointed Chairman of the Board of FermaVir
Pharmaceuticals, Inc. in August 2005, a company whose common stock is quoted
on
the OTCBB, and serves as a consultant. FermaVir (formerly Venus Beauty Supply,
Inc.) acquired FermaVir Research, Inc. in August 2005 and, through FermaVir
Research, is engaged in the research and development of anti-viral compounds
targeting shingles and other viral infections. Mr. Cerrone is the sole managing
partner of Panetta Partners Ltd., a Colorado limited partnership, that is a
private investor in real estate and public and private companies engaged in
biotechnology and other areas. Panetta Partners owns more than 5% of the
Company’s outstanding common stock, and also beneficially owns approximately
17.49% of the outstanding stock of FermaVir Pharmaceuticals, Inc. as of February
24, 2006.
L.
David Tomei, Ph.D. Dr.
Tomei, one of the Company’s founders, has served as Co-Chairman of the Board of
Directors since July 2, 2004 and was appointed Chief Executive Officer and
President on February 23, 2006. In 1998, Dr. Tomei co-founded Xenomics, a
California corporation (previously known as Diagen, Inc.) and was its Chairman
until its acquisition by us on July 2, 2004. From August 1998 to January 1999,
Dr. Tomei lectured as a Visiting Professor at the University of Rome, Italy.
From September 1992 until April 1998, Dr. Tomei served in various
capacities with LXR Biotechnology, Inc., a company of which he was one of
the founders, including Chief Executive Officer from November 1995 until April
1998 and Chairman of the Board of Directors from August 1997 to April 1998.
Dr.
Tomei graduated from Canisius College (1968) and received his Master's of
Science (1971) in Biochemistry, and Doctorate in Molecular Pharmacology (1974)
from the Roswell Park Cancer Institute Division of SUNY. From 1973 to 1975,
he
headed the FMD virus vaccine R&D laboratory at the Plum Island Animal
Disease Laboratory (USDA, ARS). Dr. Tomei was a scientist at Roswell Park and
The Ohio State University Cancer Center through 1992. Dr. Tomei has published
over 140 scientific papers, two books (Cold Spring Harbor Laboratory Press),
and
holds 16 U.S. patents in the fields of biotechnology and optical design and
engineering. He organized the first International Conference on Apoptosis held
at Cold Spring Harbor,
5
1991,
and, together with Luc Montagnier, organized the First International Conference
on Apoptosis and AIDS held in Paris, 1994.
Samuil
R. Umansky, M.D., Ph.D.
Dr.
Umansky, one of the Company’s founders, has served as Chief Scientific Officer
and Director of the Company since July 2, 2004, and
President from July 2, 2004 to February 23, 2006. Dr. Umansky co-founded
Xenomics with Dr. Tomei in 1998. From August 1997 to August 1999, Dr. Umansky
was the Chief Scientific Officer of LXR Biotechnology, Inc. From January 1996
to
1997 he was LXR’s Vice President of Molecular Pharmacology and prior thereto, he
was LXR’s Director of Cell Biology. Dr. Umansky graduated from Kiev Medical
School (USSR) in 1964. In 1968 he received a Ph.D. and in 1975 a Dr.Sci. in
radiobiology from IBP. From 1968 to 1993 Dr. Umansky was a professor at IBP.
He
was among the very first scientists to begin studies of apoptosis, or programmed
cell death. He performed pioneering studies on DNA degradation in dying cells
and proposed a hypothesis on the existence of a genetic cell death program,
its
evolutionary origin and role in carcinogenesis, concepts that more recently
have
become widely accepted. In 1987, for achievements on the investigation of
radiation induced cell death, Dr. Umansky was awarded the Soviet State Prize,
the highest scientific honor awarded to a scientist in the Soviet Union. He
is a
co-founder of the USSR Radiobiological Society.
John
P. Brancaccio. Mr.
Brancaccio was appointed a director of the Company on December 1, 2005.
Since April 2004, Mr. Brancaccio has been the Chief Financial Officer of
Accelerated Technologies, Inc., an accelerator for the development of medical
device companies. From May 2002 until March 2004, Mr. Brancaccio was the Chief
Financial Officer of Memory Pharmaceuticals Corp., a biotechnology company.
From
2000 to 2002, Mr. Brancaccio was the Chief Financial Officer/Chief Operating
Officer of Eline Group, an entertainment and media company. Mr. Brancaccio
is
currently a director of Alfacell Corporation, Callisto Pharmaceuticals, Inc.
and
FermaVir Pharmaceuticals, Inc.
Donald
H. Picker, Ph.D. Dr.
Picker was appointed a director of the Company on July 2, 2004. He has served
as
Executive Vice President, R&D of Callisto Pharmaceuticals, Inc. since April
2004. From May 2003 until April 2004, Dr. Picker served as Senior Vice
President, Drug Development of Callisto. Dr. Picker was Chief Executive Officer
and President of Synergy Pharmaceuticals Inc. and a member of its board of
directors from 1998 to April 2003. From 1996 to 1998, Dr. Picker was President
and Chief Operating Officer of LXR Biotechnology Inc. From 1991 to 1996, he
was
Senior Vice President of Research and Development at Genta Inc.
Recommendation
of the Board of Directors
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES
LISTED ABOVE.
CORPORATE
GOVERNANCE AND BOARD OF DIRECTORS MATTERS
The
Board
of Directors oversees the Company’s business and affairs and monitors the
performance of management. In accordance with corporate governance principles,
the Board does not involve itself in day-to-day operations. The directors keep
themselves informed through discussions with the Chief Executive Officer, other
key executives and by reading the reports and other materials that the Company
sends them and by participating in Board and committee meetings.
During
fiscal year 2005, the Board of Directors held 2 meetings. The Board also
approved certain actions by unanimous written consent.
The
Board
of Directors has standing Audit and Compensation Committees. Information
concerning the membership and function of each committee is as follows:
|
Name
|
Audit
Committee
|
Compensation
Committee
|
|
Gabriele
M. Cerrone
|
||
|
L.
David Tomei, Ph.D
|
||
| V. Randy White, Ph.D. | ||
|
Samuil
Umansky, M.D., Ph.D.
|
||
|
Christoph
Bruening
|
||
|
John
P. Brancaccio
|
*
|
*
|
|
Donald
H. Picker, Ph.D
|
*
|
*
|
Audit
Committee.
The
Audit Committee's responsibilities include: (i) reviewing the independence,
qualifications, services, fees, and performance of the independent auditors,
(ii) appointing, replacing and discharging the independent auditors, (iii)
pre-approving the
6
professional
services provided by the independent auditors, (iv) reviewing the scope of
the
annual audit and reports and recommendations submitted by the independent
auditors, and (v) reviewing our financial reporting and accounting policies,
including any significant changes, with management and the independent auditors.
The audit committee currently consists of John Brancaccio and Donald Picker.
Our
Board has determined that each of Mr. Brancaccio and Mr. Picker is "independent"
as that term is defined under applicable SEC rules. Mr. Brancaccio has
been identified by the Board as the
audit
committee financial expert. During fiscal 2005, the Audit Committee held 1
meeting primarily because the Company only acquired Xenomics, a California
corporation in July 2004 and the Audit Committee was constituted in October
2004. The Audit Committee Charter is posted on the Company’s web site at
www.xenomics.com
and is
included as Appendix A to this Proxy Statement.
Compensation
Committee.
The
Company has a compensation committee consisting of John Brancaccio and Donald
Picker. The compensation committee reviews, and makes recommendations to the
Board of Directors regarding, the compensation and benefits of the Company’s
Chief Executive Officer and other executive officers. The compensation committee
also administers the issuance of stock options and other awards under our stock
plan and establishes and reviews policies relating to the compensation and
benefits of our employees. During fiscal 2005, the Compensation Committee held
1
meeting primarily because the Company only acquired Xenomics, a California
corporation in July 2004 and the Compensation Committee was constituted in
October 2004. The Compensation Committee Charter is posted on the Company’s web
site at www.xenomics.com.
On
December 1, 2005, Dr. Thomas Adams resigned from the Board for personal reasons.
Dr. Adams was a member of the Audit and Compensation Committees.
Nomination
of Directors
Qualifications
for consideration as a director nominee may vary according to the particular
areas of expertise being sought as a complement to the existing composition
of
the Board of Directors. However, at a minimum, candidates for director must
possess:
| · | high personal and professional ethics and integrity; | |
| · | the ability to exercise sound judgment; | |
| · | the ability to make independent analytical inquiries; | |
| · | a willingness and ability to devote adequate time and resources to diligently perform Board and committee duties; and | |
| · | the appropriate and relevant business experience and acumen. |
In
addition to these minimum qualifications, the Board of Directors also takes
into
account when considering whether to nominate a potential director candidate
the
following factors:
| · | whether the person possesses specific industry expertise and familiarity with general issues affecting our business; | |
| · |
whether
the person would qualify as an "independent" director under the under
the
Rules and Regulations of the Securities and Exchange Commission,
as in
effect at that time;
|
|
| · |
the
importance of continuity of the existing composition of the Board
of
Directors to provide long term stability and experienced oversight;
and
|
|
| · |
the
importance of diversified Board membership, in terms of both the
individuals involved and their various experiences and areas of expertise.
|
The
Board
of Directors will consider director candidates recommended by any stockholder
provided such recommendations are submitted in accordance with the procedures
set forth below.
In
order
to provide for an orderly and informed review and selection process for director
candidates, the Board of Directors has determined that stockholders who wish
to
recommend director candidates for consideration must comply with the following:
| · |
the
recommendation must be made in writing to the Corporate Secretary,
Xenomics, Inc., 420 Lexington Avenue, Suite 1701, New York, New York
10170;
|
|
|
·
|
the
recommendation must include the candidate's name, home and business
contact information, detailed biographical data and qualifications,
information regarding any relationships between the candidate and
the
Company within the last three years and evidence of the recommending
person's ownership of the Company's common stock;
|
|
|
·
|
the
recommendation shall also contain a statement from the recommending
stockholder in support of the candidate; professional
|
7
|
·
|
references,
particularly within the context of those relevant to board membership,
including issues of character, judgment, diversity, age, independence,
expertise, corporate experience, length of service, other commitments
and
the like; and personal references; and
|
|
|
·
|
a statement from the stockholder nominee indicating that such nominee wants to serve on the Board and could be considered "independent" under the Rules and Regulations of the Securities and Exchange Commission, as in effect at that time. |
All
candidates submitted by stockholders will be evaluated according to the criteria
discussed above and in the same manner as all other director candidates.
Directors
Compensation
All
of
our non-employee and non-consultant directors were granted 60,000 non-qualified
stock options each with an exercise price of $1.80 per share vesting over a
period of 3 years. In December 2005, the Board approved a directors compensation
schedule pursuant to which each of our non-employee and non-consultant
directors, upon re-election to the Board, will receive an annual grant of 12,000
options vesting over three years having an exercise price equal to the fair
market value of the common stock on the date of grant. In addition, non-employee
and non-consultant directors will receive an annual grant of options with an
exercise price equal to the fair market value of the common stock on the date
of
grant for serving on Board committees which will vest in one year. Chairpersons
of each of the Audit Committee, Compensation Committee and Corporate
Governance/Nominating Committee receive 10,000, 5,000 and 3,000 stock options,
respectively, and members of such committees receive 6,000, 3,000 and 1,500
stock options, respectively.
Non-employee
and non-consultant directors also receive an annual cash fee of $10,000 as
well
as cash compensation for serving on board committees. Chairpersons of each
of
the Audit Committee, Compensation Committee and Corporate Governance/Nominating
Committee receive $10,000, $4,000 and $3,000, respectively, and members of
such
committees receive $7,000, $3,000 and $1,500, respectively.
Proposal
No. 3 relates to the approval of a 2005 Directors Stock Option Plan for
non-employee and non-consultant directors.
Code
of Business Conduct and Ethics
The
Company has adopted a formal Code of Business Conduct and Ethics applicable
to
all Board members, executive officers and employees. A copy of the Code of
Business Conduct and Ethics can be found as Exhibit 14 to the Company’s Form
10-KSB filed on May 17, 2005.
Stockholder
Communication with the Board of Directors
Communications
to the Board of Directors, the non-management directors or any individual
director may be sent to the Corporate Secretary, c/o Xenomics, Inc., 420
Lexington Avenue, Suite 1701, New York, New York 10170.
Section
16(a) Beneficial Ownership Reporting Compliance
During
fiscal 2005, the Company’s common stock was not registered under Section 12 of
the Securities Exchange Act of 1934, as amended, and therefore its executive
officers, directors and ten percent or more beneficial holders of its common
stock were not subject to Section 16(a).
PROPOSAL
NO. 2
APPROVAL
OF AN AMENDMENT TO THE XENOMICS, INC. 2004 STOCK OPTION PLAN (THE “PLAN”) TO
INCREASE
THE
NUMBER OF SHARES OF COMMON STOCK OF THE COMPANY WHICH ARE RESERVED FOR
ISSUANCE UNDER THE PLAN
FROM
5,000,000 SHARES TO 12,000,000 SHARES
In
June
2004 the Company adopted the Xenomics, Inc. 2004 Stock Option Plan, as amended
(the "Plan"). The Company relies on incentive compensation in the form of stock
options to retain and motivate directors, executive officers, employees and
consultants. Incentive compensation in the form of stock options is designed
to
provide long-term incentives to directors, executive officers employees and
consultants, to encourage them to remain with us and to enable them to develop
and maintain an ownership position in its common stock.
A
total
of 5,000,000 shares have been reserved for issuance under the Plan. As of
January 31, 2006, options for 6,655,000 shares were outstanding under the Plan.
1,655,000 of such options have been granted subject to the approval of the
Company’s stockholders of an increase in the number of shares that can be
granted under the Plan. The Board of Directors believes that an increase in
the
number of shares reserved for issuance under the Plan from 5,000,000 shares
to
12,000,000 shares will provide the Company with greater flexibility to provide
long-term incentives to directors, executive officers and other employees.
The
Board of Directors approved this amendment on January 16, 2006 and directed
that
such amendment be submitted for the approval of the stockholders at the annual
meeting.
8
New
Plan Benefits
Set
forth
below is information on option grants under the Plan to the Named Executive
Officers, all current executive officers as a group, all current directors
who
are not executive officers as a group, and all employees who are not executive
officers as a group. Such options have been granted subject to stockholder
approval of an increase in the number of shares that can be granted under the
Plan.
2004
Stock Option Plan
|
Name
and Position
|
Number
of Options
|
|
L.
David Tomei, Co-Chairman, Chief Executive Officer and
President
|
255,000
|
|
Gabriele
M. Cerrone, Co-Chairman
|
240,000
|
| V. Randy White, former Chief Executive Officer and Director |
175,000
|
|
Samuil
Umansky, Chief Scientific Officer and Director
|
225,000
|
|
Hovsep
Melkonyan, Vice President, Research
|
75,000
|
|
Executive
Officers as a Group
|
895,000
|
|
Non-Executive
Officer Directors as a Group
|
454,000
|
|
Non-Executive
Officer Employees as a Group
|
181,000
|
Recommendation
of the Board of Directors
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE INCREASE IN THE
NUMBER OF SHARES RESERVED FOR ISSUANCE PURSUANT TO THE XENOMICS, INC. 2004
STOCK
OPTION PLAN.
9
PROPOSAL
NO. 3
APPROVAL
OF THE 2005 DIRECTORS STOCK OPTION PLAN
At
the
Annual Meeting, the Company's stockholders are being asked to approve the 2005
Directors Stock Option Plan ("2005 Directors Plan"). The Board has unanimously
approved the 2005 Directors Plan and has directed that it be submitted for
the
approval of the stockholders at the annual meeting. The 2005 Directors Plan
will
become effective on the date of shareholder approval (the "Effective Date").
The
purpose of the 2005 Directors Plan is to enhance the Company’s ability to
attract and retain highly qualified directors who are not employees or
consultants of the Company or any of parent, subsidiary or affiliate of the
Company (an “Outside Director”) through the use of equity incentives. The Board
believes that adoption of the new 2005 Directors Plan is in the best interests
of the Company because it believes that the 2005 Directors Plan will help enable
the Company to provide equity participation to attract and retain Outside
Directors of outstanding ability. In this regard the Company notes that recent
legislation, stock exchange requirements and case law have increased the
importance to the Company of having qualified independent directors. However,
these changes have also increased the obligations, risks and time commitment
of
directors of public companies such as the Company, making it even more important
for the Company to be able to offer equity incentives to attract and retain
qualified Outside Directors.
The
following description of the 2005 Directors Plan is only a summary of the
important provisions of the 2005 Directors Plan and does not contain all of
the
terms and conditions of the 2005 Directors Plan. A copy of the 2005 Directors
Plan is attached to this Proxy Statement as Appendix B.
What
Is the Purpose of the 2005 Directors Plan?
The
purpose of the 2005 Directors Plan is to help the Company attract and retain
directors. In addition, the Company expects to benefit from the added
interest that the awardees will have in the Company's welfare as a
result of their ownership or increased ownership of the Common Stock. For
the foregoing reasons, the Board of Directors has unanimously approved the
2005
Directors Plan and has directed that such plan be submitted for the approval
of
the stockholders at the annual meeting.
What
Types of Awards Can be Granted Under the 2005 Directors Plan?
Awards
authorized under the 2005 Directors Plan shall consist of options to purchase
shares of the common stock. Such awards may be subject to forfeiture in the
event of premature termination of engagement, failure to meet certain
performance objectives, or other conditions, as may be determined by the Board
of Directors.
Each
award described above is sometimes referred to in this Proxy Statement as an
"Award", and all such awards are sometime collectively referred to in this
Proxy
Statement as "Awards" and individuals receiving Awards are sometimes referred
to
as "Awardees".
How
Will the 2005 Directors Plan Be Administered?
The
2005
Directors Plan will be administered by the Compensation Committee. Subject
to
the express terms and conditions of the 2005 Directors Plan, the Compensation
Committee will have full power to make Awards, to construe or interpret the
2005
Directors Plan, to prescribe, amend and rescind rules and regulations relating
to it and to make all other determinations necessary or advisable for its
administration. Except as otherwise provided in the 2005 Directors Plan, the
Compensation Committee may also determine which persons shall be granted Awards,
the nature of the Awards granted, the number of shares subject to Awards and
the
time at which Awards shall be made. Such determinations will be final and
binding.
How
Much Stock Will Be Available Under the 2005 Directors Plan?
The
only
class of stock subject to an Award is Common Stock. The maximum number of shares
of Common Stock issuable upon exercise of options with respect to which Awards
may be granted is 1,000,000 shares; however, this number is subject to
adjustment in the event of a recapitalization, reorganization or similar event.
Shares
shall consist, in whole or in part, of authorized and unissued shares or
treasury shares. Any shares represented by Awards that are cancelled, forfeited,
terminated or expired will again be available for grants and issuance under
the
2005 Directors Plan.
Who
Is Eligible to Participate in the 2005 Directors Plan?
Persons
eligible for Awards under the 2005 Directors Plan will be limited to Directors
of the Company who are not employees or consultants of the Company. The
Compensation Committee will select who will receive Awards and the amount and
nature of such Awards.
10
What
Happens If the Number of Outstanding Shares Changes Because of a Merger,
Consolidation, Recapitalization or Reorganization?
In
the
event that the outstanding shares of Common Stock are increased, decreased
or
changed or converted into other securities by reason of merger, reorganization,
consolidation, recapitalization, stock dividend, extraordinary cash dividend
or
other change in the corporate structure affecting the stock, the number of
shares that may be delivered under the 2005 Directors Plan and the number and/or
the purchase price of shares subject to outstanding Awards under the 2005
Directors Plan shall be adjusted at the sole discretion of the Compensation
Committee to the extent that the Compensation Committee determines to be
appropriate
When
Will the 2005 Directors Plan Terminate?
The
2005
Directors Plan will shall terminate ten (10) years from the earlier of the
date
of its adoption by the Board of Directors or the date on which the 2005
Directors Plan is approved by the affirmative vote of the holders of a majority
of the outstanding shares of capital stock of the Company entitled to vote
thereon, but the Board of Directors may terminate the 2005 Directors Plan at
any
time prior to that date and Awards granted prior to such termination may extend
beyond such date. Termination of the 2005 Directors Plan will not alter or
impair, without the consent of the Awardee, any of the rights or obligations
of
any Award made under the 2005 Directors Plan.
What
Changes Can the Board Make to the 2005 Directors Plan?
The
Board
may from time to time alter, amend, suspend or discontinue the 2005 Directors
Plan. However, no such action of the Board may alter the provisions of the
2005
Directors Plan so as to alter any outstanding Awards to the detriment of the
Awardee or participant without such participant's or Awardees consent, and
no
amendment to the 2005 Directors Plan may be made without stockholder approval
if
such amendment would materially increase the benefits to the Awardees or the
participants in the 2005 Directors Plan, materially increase the number of
shares issuable under the 2005 Directors Plan, extend the terms of the 2005
Directors Plan or the period during which Awards may be granted or exercised
or
materially modify requirements as to eligibility to participate in the 2005
Directors Plan.
What
Are the Important Provisions of the Plan With Respect to Each Type of Award?
Grant.
The
Compensation Committee may, at its discretion, award options to purchase shares
of common stock to a recipient (the "Option Awards"). The Option Awards will
be
issued pursuant to an agreement between the Company and the Awardee. Each
recipient of an Option Award upon exercise of the option will be a stockholder
and have all the rights of a stockholder with respect to such shares, including
the right to vote and receive all dividends or other distributions made or
paid
with respect to such shares.
In
the
event of a participant's retirement, permanent disability or death, or in cases
of special circumstances, the Board of Directors may waive any or all of the
remaining restrictions and limitations imposed under the 2005 Directors Plan
with respect to any Awards.
Restrictions
on Transferability.
These
options and shares of stock underlying the options may not be sold, exchanged,
transferred, pledged, hypothecated, or otherwise disposed of until such time
as
any stated restrictions lapse. The Compensation Committee, in its absolute
discretion, may impose such restrictions on the transferability of the Awards
granted in this 2005 Directors Plan as it deems appropriate. Any such
restrictions shall be set forth in the Agreement with respect to such Awards
and
may be referred to on the certificates evidencing shares issued pursuant to
any
such Award. Shares of restricted stock will be evidenced by a certificate that
bears a restrictive legend.
What
are the U.S. Federal Income Tax Consequences of the 2005 Directors Plan?
The
following discussion is a summary of the U.S. Federal income tax consequences
to
recipients of Awards and to us with respect to Awards granted under the 2005
Directors Plan. The 2005 Directors Plan is not qualified under Section 401(a)
of
the Code.
Stock
awarded to an Awardee may be subject to any number of restrictions (including
deferred vesting, limitations on transfer, and forfeit ability) imposed by
the
Board of Directors. In general, the receipt of stock with restrictions will
not
result in the recognition of income by an Awardee until such time as the shares
are either not forfeitable or are freely transferable. Upon the lapse of such
restrictions, the Awardee will be required to include as ordinary income the
difference between the amounts paid for the stock, if any, and the fair market
value of such stock on the date the restrictions lapse and the
Company will be entitled to a corresponding deduction. In addition, any
dividends paid with respect to the stock prior to the lapse of the restrictions
will be treated as compensation income by the Awardee and will be deductible
by
the Company. Awardees receiving Stock Awards may elect to include the value
of
such stock (less any amounts paid for such stock) as ordinary income at the
time
the Award is made. Awardees making this election would treat any gain or loss
realized on a sale of the stock as capital gain or loss, but would not be
entitled to any loss deduction if they forfeited the stock pursuant to the
restrictions imposed by the Board of Directors.
In
view
of the complexity of the tax aspects of transactions involving the grant and
exercise Awards, and because the impact of taxes will vary depending on
individual circumstances, each Awardee receiving an Award under the 2005
Directors Plan should consult their own tax advisor to determine the tax
consequences in such Awardee's particular circumstances.
Recommendation
of the Board of Directors
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE 2005
DIRECTORS PLAN.
11
AUDIT
COMMITTEE REPORT
The
Audit
Committee assists the Board of Directors in its oversight of the integrity
of
the financial statements of the Company, the qualifications, independence and
performance of the Company’s independent registered public accountants, the
performance of the Company’s internal audit function and compliance by the
Company with legal and regulatory requirements.
The
Audit
Committee is comprised solely of "independent" directors as that term is defined
under applicable SEC rules. The Audit Committee annually reviews and assesses
the adequacy of its charter in order to insure early or timely compliance with
statutory, regulatory, listing and other requirements applicable to the Company.
The
Audit
Committee has received from the independent registered public accountants a
formal written statement describing all relationships between the auditors
and
the Company that might bear on the auditors’ independence consistent with
Independence Standards Board Standard No. 1, “Independence Discussions with
Audit Committees,” and has discussed with the auditors any relationships that
may impact their objectivity and independence, and satisfied itself as to the
auditors’ independence. The Audit Committee also discussed with management and
the independent registered public accountants the quality and adequacy of the
Company’s internal controls. The Audit Committee also reviewed with the
independent registered public accountants, their audit plans, audit scope and
identification of audit risks.
The
Audit
Committee has discussed and reviewed with the independent registered public
accountants all communications required by generally accepted accounting
standards, including those described in Statement on Auditing Standards No.
61,
as amended, “Communications with Audit Committees” and, with and without
management present, discussed and reviewed the results of the independent
registered public accountants’ examination of the financial statements.
The
Audit
Committee has reviewed and discussed the audited financial statements of the
Company as of and for the fiscal year ended January 31, 2005, with management
and the independent registered public accountants. Management has the
responsibility for the preparation of the Company’s financial statements and the
independent registered public accountants have the responsibility for the
examination of those statements.
Based
on
the above review and discussions with management and the independent registered
public accountants, the Audit Committee recommended to the Board of Directors
that the Company’s audited financial statements be included in its Annual Report
on Form 10-KSB for the fiscal year ended January 31, 2005, for filing with
the
Securities and Exchange Commission.
| Submitted by the Audit Committee | |
|
Donald
Picker
|
|
The
information contained in the above Audit Committee Report shall not be deemed
“
soliciting material” or “filed” with the SEC, or subject to the liabilities of
Section 18 of the Securities Exchange Act of 1934, except to the extent that
the
Company specifically incorporates this Report by reference into such filings.
Principal
Accountant Fees and Services
Audit
Fees.
The
aggregate fees billed and unbilled for the fiscal years ended January 31, 2005
and 2004 for professional services rendered by the Company’s principal
accountants for the audits of its annual financial statements and the review
of
its financial statements included in the Company’s quarterly reports on Form
10-QSB were approximately $28,271 and $8,000, respectively.
Audit-Related
Fees.
There
were no aggregate fees billed for the fiscal years ended January 31, 2005 and
2004 for assurance and related services rendered by the Company’s principal
accountants related to the performance of the audit or review of its financial
statements.
Tax
and Other Fees.
There
were no aggregate fees billed for the fiscal years ended January 31, 2005 and
2004 as there were no tax related or other services rendered by the Company’s
principal accountants in connection with the preparation of its federal and
state tax returns.
Policy
on Audit Committee Pre-Approval of Audit, Audit-Related and Permissible
Non-Audit Services of the Independent Registered Public
Accountants
Consistent
with SEC policies and guidelines regarding audit independence, the Audit
Committee is responsible for the pre-approval of all audit and permissible
non-audit services provided by the Company’s principal accountants on a
case-by-case basis. The Audit Committee has established a policy regarding
approval of all audit and permissible non-audit services provided by the
Company’s principal accountants. The Audit Committee pre-approves these services
by category and service. The Audit Committee has pre-approved all of the
services provided by the Company’s principal accountants.
12
Share
Ownership by Principal Stockholders and Management
The
following table indicates beneficial ownership of the Company’s common stock as
of February 24, 2006 by:
|
·
|
Each
person or entity known by the Company to beneficially own 5% or
more of the outstanding shares of our common
stock;
|
|
·
|
Each
of the Company's executive officers and directors;
and
|
|
·
|
All
of the Company's executive officers and directors as a
group.
|
Except
as
otherwise indicated, the persons named in the table have sole voting and
investment power with respect to all shares beneficially owned, subject to
community property laws, where applicable. Unless other indicated, the address
of each beneficial owner listed below is c/o Xenomics, Inc., 420 Lexington
Avenue, Suite 1701, New York, New York 10170.
|
Name
of Beneficial Owner
|
Number
of Shares
|
Percentage
of Shares Beneficially
Owned
(1)
|
||
|
Executive
officers and directors:
|
||||
|
Gabriele
M. Cerrone
Co-Chairman
of the Board
|
2,005,858
(2)
|
10.2
|
||
|
L.
David Tomei
Co-Chairman
of the Board, Chief
Executive Officer and President
|
1,950,860
(3)
|
9.9
|
||
|
Frederick
Larcombe
Chief
Financial Officer and Secretary
|
0
|
|
||
|
Samuil
Umansky
Chief
Scientific Officer and Director
|
1,898,309
(4)
|
9.7
|
||
|
Hovsep
Melkonyan
Vice
President, Research
|
1,023,803
(5)
|
5.3
|
||
|
V.
Randy White
Director
|
300,000
(6)
|
1.6
|
||
|
Christoph
Bruening
Director
|
115,000
|
*
|
||
|
Donald
Picker
Director
|
170,000
(7)
|
*
|
||
|
John
P. Brancaccio
Director
|
0
|
|
||
|
All
Directors and Executive Officers as a group (9 persons)
|
7,463,830
(8)
|
32.8
|
||
|
5%
or greater stockholders:
|
||||
|
Panetta
Partners, Ltd.
|
955,858
(9)
|
5.1
|
||
|
*
less than 1%
|
(1)
Applicable
percentage ownership as of February 24, 2006 is based upon 18,604,300 shares
of
common stock outstanding. Beneficial ownership is determined in accordance
with
Item 403 of Regulation S-B. Under Item 403, shares issuable within 60 days
upon
exercise of outstanding options, warrants, rights or conversion privileges
("Purchase Rights") are deemed outstanding for the purpose of calculating the
number and percentage owned by the holder of such Purchase Rights, but not
deemed outstanding for the purpose of calculating the percentage owned by any
other person. "Beneficial ownership" under Item 403 includes all shares over
which a person has sole or shared
13
dispositive
or voting power whether or not such person has a pecuniary interest in such
shares for purposes of Section 16 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”).
(2)
Consists
of 1,050,000 shares issuable upon exercise of stock options owned by Gabriele
M.
Cerrone and 955,858 shares of common stock owned by Panetta Partners, Ltd.
Mr.
Cerrone is the sole managing partner and control person of Panetta Partners,
Ltd. and in such capacity only exercises voting and dispositive control over
securities owned by Panetta, despite him having only a small pecuniary interest
in such securities.
(3)
Includes 1,012,500 shares issuable upon exercise of stock options.
(4) Includes
1,012,500 shares issuable upon exercise of stock options.
(5)
Includes 675,000 shares issuable upon exercise of stock options.
(6) Consists
of 300,000 shares issuable
upon exercise of stock option.
(7)
Includes 75,000 shares issuable upon exercise of stock options.
(8)
Includes 4,125,000 shares issuable upon exercise of stock options.
(9)
These
shares are also included in the
reported beneficial ownership of one of the Company's Co-Chairman. See Note
2
above.
The
beneficial ownership table above does not give effect to a voting agreement
dated June 24, 2004 among L. David Tomei, Co-Chairman, Chief Executive
Officer and President, Samuil
Umansky, Chief Scientific Officer, Hovsep Melkonyan, Vice President, Research,
Anatoly Lichtenstein and Kathryn Wilkie (collectively, the “Xenomics
Shareholders”), Panetta Partners Ltd., an affiliate of Gabriele M.
Cerrone, the Company's Co-Chairman, Hawkeye Incubator Ltd., Etruscan
Mobilia Investments, Ltd. and Lazio Bioventure Ltd. (collectively, the “Original
Shareholders”) and Christoph Bruening, a director, Fimi, SPA, Blenton
Management, Roffredo Gaetani, Nicola Granato, R. Merrill Hunter, Mike Wilkins,
and Fossil Ventures LLC (collectively, the “Investors”) pursuant to which so
long as the Xenomics Shareholders own an aggregate 752,667 shares of common
stock of our company, such Xenomics Shareholders shall have the right to (i)
designate 1/3 of the members of the Board of Directors if the number of
directors on the Board is more than 7, (ii) designate 2 directors if the number
of directors on the Board is between 5 and 7 or (iii) designate 1 director
if
the number of directors on the Board is less than 5. Messrs. Tomei and Umansky
were designated by the former holders of Xenomics Sub shares, to serve as
directors pursuant to the voting agreement. The voting agreement, which also
provides that Mr. Tomei and Mr. Cerrone serve as co-chairmen of the Board,
will
terminate upon the earlier of (a) the adjudication by a court of competent
jurisdiction that the Company is bankrupt or insolvent, (b) the filing of a
certificate of dissolution by the Company, (c) upon the written consent
of the Company and a majority of the Xenomics Shareholders, (d) upon
the listing of the Company's shares of common stock on Nasdaq or a
national securities exchange, or (e) June 15, 2007.
The
following summary compensation table sets forth certain information concerning
compensation paid to the Company's Chief Executive Officer
and its four most highly paid executive officers (the "Named Executive
Officers") whose total annual salary and bonus for services rendered in all
capacities for the year ended January 31, 2005 was $100,000 or more.
|
Summary
Compensation
Table
|
|||||||||||||
|
Annual
Compensation
|
|||||||||||||
|
Name
and Principal Position
|
Year
|
Salary
|
Bonus
|
Other
Annual Compensation
|
|||||||||
|
V.
Randy White, Ph.D, former Chief Executive Officer (1)
|
2005
|
$
|
62,019
|
$
|
—
|
$
|
—
|
||||||
(1)
Dr.
White became Chief Executive Officer on September 3, 2004 and left the Company
as Chief Executive Officer on February 23, 2006 to pursue other
interests.
For
the
year ended January 31, 2005, no other executive officer had total annual salary
and bonus for $100,000 or more. Prior to the acquisition of Xenomics on July
2,
2004, Xenomics never paid compensation to its executive officers.
14
Option
Grants in Fiscal Year 2005
The
following table sets forth certain information concerning grants of stock
options to the Named Executive Officers during the fiscal year ended January
31,
2005.
|
Name
|
Number
of Shares
Underlying
Options Granted
|
Percent
of Total Options
Granted
to Employees in 2005
|
Exercise
Price Per Share
|
Expiration
Date
|
||||
|
V.
Randy White, Ph.D,
former
Chief Executive Officer
|
1,425,000
|
26.2%
|
$2.25
|
9/13/2014
|
Aggregated
Option Exercises in Fiscal Year 2005 and Year End Option Values
The
following table provides certain information with respect to the Named Executive
Officers concerning the exercise of stock options during the fiscal year ended
January 31, 2005 and the value of unexercised stock options held as of such
date.
|
Number
of Shares
Underlying
Options at January 31, 2005
|
Value
of Unexercised In the
Money
Options at January 31, 2005
|
|||||||
|
Name
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
(1)
|
||||
|
V.
Randy White, Ph.D,
former
Chief Executive Officer
|
—
|
1,425,000
|
—
|
$2,493,750
|
||||
During
the fiscal year ended January 31, 2005, no options were exercised.
(1)
Amounts calculated by subtracting the exercise price of the options from the
market value of the underlying common stock using the closing price on the
OTC
Bulletin Board of $4.00 per share on January 31, 2005.
Employment
Agreements
On
February 14, 2005, the Company entered into an employment agreement with Bernard
Denoyer, pursuant to which Mr. Denoyer will serve as Vice President-Controller
for period of 1 year commencing February 14, 2005. The agreement is
automatically renewed for successive 1 year periods until written notice not
to
renew is delivered by either the Company or Mr. Denoyer. Mr. Denoyer’s salary is
$60,000 per year. In connection with the employment agreement, Mr. Denoyer
received a grant of 75,000 incentive stock options pursuant to our stock option
plan with an exercise price of $2.50 per share. Such options will vest at the
rate of 25,000 per year for a period of three years beginning on January 14,
2006.
On
July
2, 2004, the Company entered into an employment agreement with Samuil Umansky,
Ph.D., pursuant to which Dr. Umansky serves as President and Chief Scientific
Officer. Dr. Umansky's employment agreement is for a term of 36 months beginning
June 24, 2004 and is automatically renewable for successive one year periods
at
the end of the term. Dr. Umansky's salary is $175,000 per year and he is
eligible to receive a cash bonus of up to 50% of his salary per year. In
connection with the employment agreement, Dr. Umansky received a grant of
1,012,500 stock options which vest in annual installments of 253,125, 303,750
and 455,625 and are exercisable at $1.25 per share.
On
July
2, 2004, the Company entered into an employment agreement with Hovsep Melkonyan,
Ph.D., pursuant to which Dr. Melkonyan serves as Vice President, Research for
a
term of 36 months beginning June 24, 2004, which is automatically renewable
for
successive one year periods at the end of the term. Dr. Melkonyan's salary
is
$135,000 per year and he is eligible to receive a cash bonus of up to 50% of
his
salary per year. In connection with the employment agreement, Dr. Melkonyan
received a grant of 675,000 stock options which vest in annual installments
of
168,750, 202,500 and 303,750 and are exercisable at $1.25 per share.
On
September 3, 2004, Dr. V. Randy White and the Company entered into a letter
agreement. Pursuant to the letter agreement, the Company employed Dr. White
as
Chief Executive Officer for a period of 3 years commencing September 13, 2004.
Dr. White was paid an annual base salary of $215,000. The Company agreed to
rent
for Dr. White's benefit a studio apartment in New York, New York.
Dr.
White
was granted an aggregate 1,425,000 incentive stock options pursuant to the
Plan
with an exercise price of $2.25 per share.
15
300,000
of such options shall vest on the first anniversary of the date of the Letter
Agreement, 350,000 of such options shall vest on the second anniversary of
the
date of the letter agreement and 400,000 of such options shall vest on the
third
anniversary of the date of the letter agreement. The remaining 375,000 options
shall vest in the event there is a sale of the Company for consideration equal
to $15.00 per share or more. On February 23, 2006, Dr. White left the Company
to
pursue other interests and the letter agreement was terminated.
Consulting
Agreements
On July 2, 2004, the Company entered into a consulting agreement with L. David
Tomei, Ph.D., pursuant to which Dr. Tomei agreed to serve as Co-Chairman of
the
Board. Dr. Tomei's consulting agreement is for a term of 36 months beginning
June 24, 2004 and is automatically renewable for successive one year periods
at
the end of the term. Dr. Tomei's annual consulting fee is $175,000 per year
and
he is eligible to receive cash bonuses upon the achievement of certain
milestones. Dr. Tomei received a grant of 1,012,500 stock options which vest
in
annual installments of 253,125, 303,750 and 455,625 and are exercisable at
$1.25
per share.
Gabriele
M. Cerrone, the Company’s Co-Chairman, serves as a consultant to the Company
pursuant to an agreement entered into on June 24, 2005. The term of the
agreement is for three years with automatic renewal for successive one year
periods unless either party gives notice to the other not to renew the
agreement. The duties of Mr. Cerrone pursuant to the agreement consist of
business development, strategic planning, capital markets and corporate
financing consulting advice. Mr. Cerrone’s compensation under the agreement is
$16,500 per month. Pursuant to the agreement, in July 2005 the Company paid
Mr.
Cerrone a $50,000 signing bonus. Mr. Cerrone is eligible each year of the
agreement for a cash bonus of up to 15% of his base annual compensation of
$198,000. In the event the agreement is terminated without cause or for good
reason, Mr. Cerrone will receive a cash payment equal to the aggregate amount
of
the compensation payments for the then remaining term of the agreement. In
addition, in such event, all unvested stock options owned by Mr.
Cerrone will immediately vest and the exercise period of such options will
be extended to the later of the longest period permitted by the stock option
plans or ten years following termination. In the event a change of control
of
our company occurs, Mr. Cerrone shall be entitled to such compensation upon
the
subsequent termination of the agreement within two years of the change in
control unless such termination is the result of Mr. Cerrone's death, disability
or retirement or Mr. Cerrone’s termination for cause.
Stock
Option Plan
The
following table summarizes information about the Company’s equity compensation
plans as of January 31, 2005.
Equity
Compensation Plan Information
|
Plan
Category
|
|
Number
of Shares of Common Stock to be Issued upon Exercise of Outstanding
Options
|
|
Weighted-Average
Exercise Price of Outstanding Options
|
|
Number
of Options Remaining Available for Future Issuance Under Equity
Compensation Plans (excluding securities reflected in column
(a))
|
||||
|
(a)
|
(b)
|
(c)
|
||||||||
|
Equity
Compensation Plans Approved
by Stockholders
|
5,000,000
|
$
|
1.50
|
0
|
(1)
|
|||||
|
|
||||||||||
|
Equity
Compensation Plans Not
Approved by Stockholders
|
1,956,341
|
$
|
2.71
|
n/a
|
||||||
|
Total
|
6,956,341
|
$
|
1.84
|
|||||||
(1)
Management has proposed to amend the Plan to increase the number of shares
reserved for issuance under the Plan from 5,000,000 to 12,000,000. See Proposal
No. 2.
The
Xenomics, Inc. 2004 Stock Option Plan, as amended (the “Plan”) authorizes the
grant of stock options to directors, eligible employees, including executive
officers and consultants. The value realizable from exercisable options is
dependent upon the extent to which the Company’s performance is reflected in the
value of its common stock at any particular point in time. Equity compensation
in the form of stock options is designed to provide long-term incentives to
directors, executive officers and other employees. The Company approves the
granting of options in order to motivate these employees to maximize stockholder
value. Generally, vesting for options granted under the Plan is determined
at
the time of grant, and options expire after a 10-year period. Options are
granted at an excise price not less than the fair market value at the date
of
grant. As a result of this policy, directors, executives, employees and
consultants are rewarded economically only to the extent that the stockholders
also benefit through appreciation in the market. Options granted to employees
are based on such factors as individual initiative, achievement and performance.
In administering grants to executives, the Company evaluates each executive's
total equity compensation package. The Company generally reviews the option
holdings of each of the executive officers, including vesting and exercise
price
and the then current value of such unvested options. The Company considers
equity compensation to be an integral part of a competitive executive
compensation package and an important mechanism to align the interests of
management with those of our stockholders. The options that are granted under
the Plan may be either "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
non-statutory stock options at the discretion of the Board of Directors and
as
reflected in the terms of the written option agreement. The Plan is not a
qualified deferred compensation plan under Section 401(a) of the Code, and
is
not subject to the provisions of the Employee Retirement Income Security Act
of
1974, as amended (ERISA).
On
May
24, 2005, the Compensation Committee in recognition of the substantial time
and
effort to the Company’s affairs during the past year by each of Gabriele M.
Cerrone, Co-Chairman, L. David Tomei, Co-Chairman and President of SpaXen
Italia, srl, our joint venture with the Spallanzani National Institute for
Infectious Diseases in Rome, Italy, Samuil Umansky, President and Hovsep
Melkonyan, Vice President, Research, accelerated the vesting of outstanding
stock options dated June 24, 2004 previously granted to each such officer in
the
16
amounts
of 1,050,000, 1,012,500, 1,012,500 and 675,000, respectively, so that such
options vest as of May 24, 2005.
In
addition, the Compensation Committee granted additional nonqualified stock
options to Messrs. Cerrone, Tomei, Umansky and Melknoyan in the amounts of
240,000, 255,000, 225,000 and 75,000, respectively, pursuant to the Plan,
subject to stockholder approval of an increase in the number of shares of common
stock issuable under the Plan, as an additional incentive to perform in the
future on behalf of our company and its stockholders. Such options are
exercisable at $2.50 per share with 33-1/3% of the options granted to each
officer vesting on each of the first three anniversaries of the date of
grant.
Gabriel
M. Cerrone, who became Co-Chairman of the board in July 2005, is the managing
partner and owns 1% of Panetta Partners, Ltd., a Colorado limited partnership.
Panetta Partners acquired the equivalent of 222,000,000 shares of the Company’s
Common Stock for $386,400 in February 2004, which then constituted 97% of the
outstanding Common Stock. As part of the acquisition of Xenomics and the
completion of the private placement in July 2004, the Company redeemed 1,971,734
pre-split shares (the equivalent of 218,862,474 post-split shares) from Panetta
Partners for $500,000 of cash which resulted a gain of $113,600 to Panetta
Partners , prior to the deduction of legal, accounting, travel and patent
research expenses incurred by Panetta Partners during the period from February
to July 2004. The principal purpose of the redemption was to lower the relative
percentage of shares owned by Panetta Partners compared to non-affiliates,
which
facilitated the private placement and acquisition of Xenomics Sub from
non-affiliates. None of the Company’s officers or directors, other than Mr.
Cerrone, and Christoph Bruening (who served as the Company’s sole officer and
director from February 2004 to July 2004) were our affiliates prior to the
acquisition of Xenomics. Panetta Partners would have owned approximately 94%
of
the outstanding Common Stock immediately after the acquisition of Xenomics
rather than 15% if the Company had not redeemed shares of its Common Stock
simultaneously with the private placement and the acquisition. The $500,000
redemption price was determined by negotiation between Panetta Partners, and
the
former holders of Xenomics Sub based on factors such as the acquisition price,
the price of the shares expected to be sold in the private placement and what
number of shares should be held by unaffiliated holders after the closing of
the
acquisition of Xenomics Sub.
On
May
24, 2005, the Compensation Committee in recognition of the substantial time
and
effort to the Company’s affairs during the past year by each of Gabriele M.
Cerrone, Co-Chairman, L. David Tomei, Co-Chairman and President of SpaXen
Italia, srl, the Company’s joint venture with the Spallanzani National Institute
for Infectious Diseases in Rome, Italy, Samuil Umansky, President and Hovsep
Melkonyan, Vice President, Research, accelerated the vesting of outstanding
stock options dated June 24, 2004 previously granted to each such officer in
the
amounts of 1,050,000, 1,012,500, 1,012,500 and 675,000, respectively, so that
such options vest as of May 24, 2005.
In
addition, the Compensation Committee granted additional nonqualified stock
options to Messrs. Cerrone, Tomei, Umansky and Melkonyan in the amounts of
240,000, 255,000, 225,000 and 75,000, respectively, pursuant to the Plan,
subject to stockholder approval of an increase in the number of shares of common
stock issuable under the Plan, as an additional incentive to perform in the
future on behalf of our company and its stockholders. Such options are
exercisable at $2.50 per share with 33-1/3% of the options granted to each
officer vesting on each of the first three anniversaries of the date of grant.
The
Company completed the acquisition of Xenomics Sub on July 2, 2004 by issuing
2,258,001 shares of its common stock to Xenomics Subs’ five shareholders in
exchange for all outstanding shares of Xenomics Sub stock (the
"Exchange"). The Exchange was made according to the terms of a Securities
Exchange Agreement dated May 18, 2004. As part of the Exchange, the
Company:
|
|
·
|
amended
its articles of incorporation to change its corporate name to "Xenomics,
Inc." and to split its stock outstanding prior to the redemption
111 for 1
(effective July 26, 2004).
|
|
|
·
|
redeemed
1,971,734 pre-split shares (the equivalent of 218,862,474 post-split
shares) from Panetta Partners Ltd., a principal shareholder at the
time,
for $500,000 or $0.0023 per share.
|
|
|
·
|
entered
into employment agreements with two of the former Xenomics Sub
shareholders and a consulting agreement with one of the former Xenomics
Sub shareholders.
|
|
|
·
|
entered
into a Voting Agreement with certain investors, the former Xenomics
Sub
shareholders and certain principal shareholders.
|
|
|
·
|
entered
into a Technology Acquisition Agreement with the former Xenomics
Sub
shareholders under which the Company granted an option to the former
Xenomics Sub holders to acquire Xenomics Sub technology if the Company
fails to apply at least 50% of the net proceeds of financing it raises
to
the development of Xenomics Sub technology during the period ending
July
1, 2006 in exchange for all of the Company’s shares and share equivalents
held by the former Xenomics Sub holders at the time such option is
exercised.
|
The
Company sold 100,000 of the 2,645,210 shares sold in the June 2004 private
placement to Christoph Bruening, a director of the Company.
On
April
12, 2004, the founders of Xenomics Sub consisting of Messrs. Tomei, Umansky
and
Melkonyan contributed $1,655,028 in deferred compensation to Xenomics Sub
stockholders’ equity.
17
On
February 24, 2004, Jeannine Karklins, the Company’s former President, Treasurer,
Secretary, principal shareholder and control person entered into a Capital
Stock
Purchase Agreement with Panetta Partners, a limited partnership affiliated
with
the Company’s current Co-Chairman, Gabriele M. Cerrone, pursuant to which
Panetta purchased an aggregate 2,000,000 restricted shares of common stock
from
Ms. Karklins for $386,400 which represented approximately 97% of the Company’s
outstanding shares of common stock at the time. Pursuant to the agreement,
Ms.
Karklins resigned as an officer and director of the Company.
The
Board
of Directors knows of no other business which will be presented at the Annual
Meeting. If any other matters properly come before the meeting, the persons
named in the enclosed Proxy and will vote the shares represented thereby in
accordance with their judgment on such matters.
ADDITIONAL
INFORMATION
Additional
copies of Xenomics’ Annual Report and Form 10-KSB/A for the fiscal year ended
January 31, 2005 may be obtained without charge by writing to the Secretary,
Xenomics, Inc., 420 Lexington Avenue, Suite 1701, New York, New York 10170.
Stockholders
who wish to submit proposals pursuant to Rule 14a-8 of the 1934 Act for
inclusion in the Proxy Statement for the Company's 2006 Annual Meeting of
Stockholders must submit the same to the Secretary, at the Company's principal
executive office at 420 Lexington Avenue, Suite 1701, New York, New York 10170,
no later than June 15, 2006.
Proxy
Solicitation Costs.
The
proxies being solicited hereby are being solicited by the Company. The Company
will bear the entire cost of solicitation of proxies, including preparation,
assembly, printing and mailing of this Proxy Statement, the proxy card and
any
additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of common stock beneficially owned
by
others to forward to such beneficial owners. Officers and regular employees
of
the Company may, but without compensation other than their regular compensation,
solicit proxies by further mailing or personal conversations, or by telephone,
telex, facsimile or electronic means. The Company will, upon request, reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of stock.
THE
BOARD
OF DIRECTORS
New
York,
New York
February
28, 2006
18
Appendix
A
XENOMICS,
INC.
AUDIT
COMMITTEE CHARTER
Organization
There
shall be a committee appointed by the Board of Directors of Xenomics,
Inc., a
Florida corporation (the “Corporation”) of members of the Board of Directors all
of which shall be independent non-employee directors to be known as the
audit
committee (the “Committee”). The number of Committee members shall be as
determined by the Board of Directors consistent with the Corporation’s
certificate of incorporation and by-laws as the same may be amended from
time to
time. The Committee shall be composed of directors who are independent
of the
management of the Corporation and are free of any relationship that,
in the
opinion of the Board of Directors, would interfere with their exercise
of
independent judgment as a Committee member. All members of the Committee
shall
have a working familiarity with basic finance and accounting practices
and at
least one member of the Committee shall be a “financial expert” as defined by
the Securities and Exchange Commission in its rules. The Committee Chair
and
members shall be designated annually by a majority of the full Board,
and may be
removed, at any time, with or without cause, by a majority of the full
Board.
Vacancies shall be filled by a majority of the full Board.
Statement
of Purpose
The
Committee shall provide assistance to the Board of Directors in fulfilling
their
responsibility to the shareholders, potential shareholders and investment
community relating to corporate accounting, reporting practices of the
Corporation, the quality and integrity of the financial reports of the
Corporation and the Corporation’s compliance with legal and regulatory
requirements. In so doing, it is the responsibility of the Committee
to maintain
free and open means of communication between the directors, the independent
auditors and the financial management to the Corporation.
Responsibilities
In
carrying out its responsibilities, the Committee believes its policies
and
procedures should remain flexible, in order to best react to changing
conditions
and to ensure to the directors and shareholders that the corporate accounting
and reporting practices of the Corporation are in accordance with all
requirements and are of the highest quality.
In
carrying out these responsibilities, the Committee will:
| · |
Serve
as an independent and objective party to monitor the Corporation’s
financial reporting process and internal control system and
complaints or
concerns relating thereto.
|
A-1
| · |
To
recommend, for shareholder approval, the independent auditor
to examine
the Corporation’s accounts, controls and financial statements. The
Committee shall have the sole authority and responsibility
to select,
evaluate and if necessary replace the independent auditor.
The Committee
shall have the sole authority to approve all audit engagement
fees and
terms and the Committee, or a member of the Committee, must
pre-approve
any non-audit service provided to the Corporation by the Corporation’s
independent auditor.
|
| · |
Meet
with the independent auditors and financial management of the
Corporation
to review the scope of the proposed audit for the current year
and the
audit procedures to be utilized, and at the conclusion thereof
review such
audit, including any comments or recommendations of the independent
auditors.
|
| · |
Obtain
and review at least annually, a formal written report from
the independent
auditor setting forth its internal quality-control procedures;
material
issues raised in the prior five years by its internal quality-control
reviews and their resolution. The Committee will review at
least annually
all relationships between the independent auditor and the
Corporation.
|
| · |
Ensure
that the lead audit partner assigned by the independent auditor
as well as
the audit partner responsible for reviewing the audit of the
corporation’s
financial statements shall be changed at least every five
years.
|
| · |
Review
and appraise the audit efforts of independent auditors of the
Corporation
and, where appropriate, recommend the replacement of the independent
accountants.
|
| · |
Consider
and approve, if appropriate, major changes to the Corporation’s accounting
principles and practices as suggested by the independent auditors
or
management.
|
| · |
Establish
regular and separate systems of reporting to the Committee
by management
and the independent auditors regarding any significant judgements
made in
management’s preparation of the financial statements and the view of each
as to appropriateness of such judgments and additional items
as required
under the Sarbanes-Oxley Act including critical accounting
policies.
|
| · |
Review
with the independent auditors and financial accounting personnel,
the
adequacy and effectiveness of the accounting and financial
controls of the
Corporation, and elicit any recommendations for the improvement
of such
internal control procedures or particular areas where new or
more detailed
controls or procedures are desirable. Particular emphasis should
be given
to the adequacy of such internal controls to assess and manage
financial
risk
|
A-2
exposure
and to expose any payments, transactions or procedures that might be
deemed
illegal or otherwise improper.
| · |
Review
and approve the internal corporate audit staff functions, including
(i)
purpose, authority and organizational reporting lines; (ii)
annual audit
plan, budget and staffing; (iii) concurrence in the appointment,
compensation and rotation of the internal audit management
function; and
(iv) results of internal audits.
|
| · |
Review
the financial statements contained in the annual report and
quarterly
report to shareholders with management and the independent
auditors to
determine that the independent auditors are satisfied with
the disclosure
and content of the financial statements to be presented to
the
shareholders. Any changes in accounting principles should be
reviewed.
|
| · |
Prepare
and publish an annual Committee report in the proxy statement
of the
Corporation.
|
| · |
Review
with management of the Corporation any financial information,
earnings
press releases and earnings guidance filed with the Securities
and
Exchange Commission or disseminated to the public, including
any
certification, report, opinion or review rendered by the independent
auditors.
|
| · |
Provide
sufficient opportunity for the independent auditors to meet
with the
members of the Committee without members of management present.
Among the
items to be discussed in these meetings are the independent
auditors’
evaluation of the Corporation’s financial, accounting and auditing
personnel, and the cooperation that the independent auditors
received
during the course of the audit.
|
| · |
Establish
procedures for receiving and treating complaints received by
the
Corporation regarding accounting, internal accounting controls
and
auditing matters, and the confidential anonymous submission
by employees
of concerns regarding questionable accounting or auditing matters.
|
| · |
Submit
the minutes of all meetings of the Committee to, or discuss
the matters
discussed at each Committee meeting with, the board of
directors.
|
| · |
Review
matters relating to waivers of the Corporation’s codes of conduct and
conflict of interest matters.
|
| · |
Investigate
any matter brought to its attention within the scope of its
duties, with
the power to retain outside advisors for this purpose if, in
its judgment,
that is appropriate.
|
Committee
Performance Evaluation
A-3
|
The
Committee shall annually conduct an evaluation of its performance
in
fulfilling its responsibilities and meeting its goals, as outlined
above.
|
Meetings
|
A
majority of Committee members shall constitute a quorum for
the
transaction of business. The action of a majority of those
present at a
meeting at which a quorum is attained, shall be the act of
the Committee.
The Committee may delegate matters within its responsibility
to
subcommittees composed of certain of its members. The
Committee shall meet in executive session without the presence
of any
members of management as often as it deems appropriate.
The Committee shall meet as required, keep a record of its
proceedings, if
appropriate or needed, and report thereon from time to time
to the Board
of Directors.
|
A-4
Appendix
B
XENOMICS,
INC.
2005
DIRECTORS’ STOCK OPTION PLAN
1.
PURPOSE. The purpose of the Xenomics, Inc. 2005 Directors’ Stock Option Plan
(the "Plan") is to advance the interests of Xenomics, Inc. (the "Company")
by
providing non-employee directors of the Company, through the grant of options
to
purchase shares of Common Stock (as hereinafter defined), with a larger personal
and financial interest in the Company's success.
2.
ADMINISTRATION. The Plan shall be administered by the Company’s Compensation
Committee (the "Committee") consisting of at least two independent members
of
the Board of Directors of the Company (the "Board"). The Committee shall
have
full power and authority to interpret the Plan, to establish such rules and
regulations as it deems appropriate for the administration of the Plan, and
to
take such other action as it deems necessary or desirable for the administration
of the Plan. The Committee's interpretation and construction of any provision
of
the Plan or the terms of any Option (as hereinafter defined) shall be conclusive
and binding on all parties. So
long
as the Company is subject to Section 16(b) of the Securities Exchange
Act of 1934, as amended, the Company will comply with the applicable
requirements of Rule 16b-3.
3.
PARTICIPANTS. Each director of the Company who is not an employee or consultant
of the Company (an "Outside Director") shall be eligible to be granted Options
to purchase shares of Common Stock ("Options") under the Plan.
Nothing
contained in the Plan, or in any Option granted pursuant to the Plan, shall
confer upon any Director any right to the continuation of his or her
directorship or limit in any way the right of the Company to terminate his
or
her directorship at any time.
4.
THE
SHARES. Options may be granted from time to time under the Plan for the
purchase, in the aggregate, of not more than 1,000,000 shares of common stock,
par value $0.0001 per share, of the Company ("Common Stock") (subject to
adjustment pursuant to Section 13). Such shares of Common Stock may be set
aside
out of the authorized but unissued shares of Common Stock not reserved for
any
other purpose or out of previously issued shares acquired by the Company
and
held in its treasury. Any shares of Common Stock which, by reason of the
termination or expiration of an Option or otherwise, are no longer subject
to
purchase pursuant to an Option granted under the Plan may again be subjected
to
an Option under the Plan.
5.
OPTION
GRANTS. Options shall be evidenced by Option agreements which shall be subject
to the terms and conditions set forth in the Plan and such other terms and
conditions not inconsistent herewith as the Committee may approve.
|
(a)
|
As of the effective date of his or her initial appointment or election to the Board (the "Initial Appointment Date"), an Outside Director shall receive a grant of an Option to purchase 60,000 shares of Common Stock (subject to adjustment pursuant to Section 13). |
B-1
|
(b)
|
Upon
the date of the Annual Meeting of Stockholders of the Company to
be held
on April 4, 2006 (the “2005 Annual Meeting”) or any adjournment or
adjournments thereof, each Outside Director who has been reelected
at the
2005 Annual Meeting and is continuing as a member of the Board
as of the
completion of the 2005 Annual Meeting shall receive an Option to
purchase
12,000 shares of Common Stock (subject to adjustment pursuant to
Section
13).
|
|
(c)
|
each year after the 2005 Annual Meeting, upon the date of an Annual Meeting of Stockholders of the Company (an “Annual Meeting”) each Outside Director who has been reelected at such Annual Meeting and is continuing as a member of the Board as of the completion of such Annual Meeting shall receive an Option to purchase 12,000 shares of Common Stock (subject to adjustment pursuant to Section 13); provided, however, that an Outside Director who has been reelected at such Annual Meeting and is continuing as a member of the Board as of the completion of such Annual Meeting but has not been a member of the Board during the entire period between such Annual Meeting and the prior Annual Meeting shall receive an Option to purchase that number of shares equal to the product of (i) 12,000 and (ii) a fraction, where the numerator is the number of days in the 12-month period immediately preceding such Annual Meeting during which such Outside Director was an Outside Director and the denominator is 365. |
|
(d)
|
each year on and after the 2005 Annual Meeting of Stockholders of the Corporation to be held on April 4, 2006, upon the date of an Annual Meeting, the Board shall have the sole discretion to grant to any Non Employee Director who has been elected at such Annual Meeting and is continuing as a member of the Board as of the completion of such Annual Meeting and, during the time period between such Annual Meeting and the prior Annual Meeting, who (i) has served on a committee of the Board (but who has not served as the chairman of a Board Committee), including but not limited to, the Audit Committee, the Compensation Committee and the Corporate Governance/Nominating Committee (each, a "Board Committee"), an Option to purchase up to 6,000 shares of Common Stock and (ii) has served as the chairman of a Board Committee, an Option to purchase up to 10,000 shares of Common Stock, subject to adjustment as provided in Section 13. |
6.
OPTION
PRICE. The price (the "Option Price") at which shares of Common Stock may
be
purchased upon the exercise of an Option granted under the Plan shall be
the
fair market value of such shares on the date of grant of such Option. As
used
herein, fair market value shall be the closing price of the Common Stock
on the
date of determination (if the Common Stock is then traded on a national
securities exchange or in the Nasdaq National Market System) or, if not so
traded, the average of the closing bid and asked prices thereof on such day
or,
if the Common Stock is not traded on the date of determination, on the last
preceding date on which the Common Stock is traded.
B-2
7.
TERM
AND EXERCISABILITY OF OPTIONS. Options shall be granted for a maximum term
of 10
years. Subject to the other provisions of the Plan relating to exercisability
of
Options, or as otherwise provided by the Committee and evidenced in an Option
agreement, the participant shall have the cumulative right as of the first,
second, and third anniversaries of the date of grant, to purchase up to
one-third, two-thirds, and 100%, respectively, of the Option Shares; provided,
however, that in the event of a Change of Control, the participant shall
have
the cumulative right to purchase up to 100% of the Option Shares. Vesting
of an
Option will cease on the date of the participant ceasing to be a director
of the
Company.
A
Change
of Control means the happening of any of the following:
(a)
When
any person, as defined in Section 3(a)(9) of the Securities Exchange Act
of 1934
(the "Exchange Act") and as used in Sections 13(d) and 14(d) thereof, including
a group as defined in Section 13(d) of the Exchange Act, but excluding the
Company and any subsidiary and any employee benefit plan sponsored or maintained
by the Company or any subsidiary (including any trustee of such plan acting
as
trustee), or any person, entity or group specifically excluded by the Board,
directly or indirectly, becomes the beneficial owner (as defined in Rule
13d-3
under the Exchange Act, as amended from time to time) of securities of the
Company representing 20 percent or more of the combined voting power of the
Company's then outstanding securities;
(b)
When
Incumbent Directors cease for any reason to constitute at least two-thirds
of
the Board (where Incumbent Director means any director on the date of adoption
of the Plan and any director elected by, or on the recommendation of, or
with
the approval of, a majority of the directors who then qualified as Incumbent
Directors);
(c)
The
effective date of any merger or consolidation of the Company with another
corporation where (i) the shareholders of the Company, immediately prior
to the
merger or consolidation, do not beneficially own, immediately after the merger
or consolidation, shares entitling such shareholders to 50% or more of all
votes
(without consideration of the rights of any class of stock to elect directors
by
a separate class vote) to which all shareholders of the corporation issuing
cash
or securities in the merger or consolidation would be entitled in the election
of directors, or (ii) where the members of the Board, immediately prior to
the
merger or consolidation, do not, immediately after the merger or consolidation,
constitute a majority of the board of directors of the corporation issuing
cash
or securities in the merger; provided, however, that, in each of the cases
set
forth above in clauses (c)(i) or (c)(ii), no Change of Control shall be deemed
to take place if the transaction was approved by the Board of Directors,
the
majority of the members of which were in place prior to the commencement
of such
sale, merger or consolidation; or
(d)
The
date of approval by the shareholders of the Company of the liquidation of
the
Company or the sale or other disposition of all or substantially all of the
assets of the Company.
B-3
8.
TERMINATION OF DIRECTORSHIP. Except as otherwise provided in this Section
8, or as otherwise provided by the Committee and evidenced in an Option
agreement, no person may exercise a vested Option more than three months
after
the first date on which he or she ceases to be a director of the Company.
If a
participant ceases to be a director of the Company by reason of death or
disability, any vested Options held by him or her may be exercised within
12
months after the date he or she ceases to be a director of the Company. In
no
event may an Option be exercised after the expiration of the term of such
Option.
9.
PAYMENT. Full payment of the purchase price for shares of Common Stock purchased
upon the exercise, in whole or in part, of an Option granted under the Plan
shall be made at the time of such exercise. The Option Price may be paid
in
cash, in shares of Common Stock valued at their fair market value on the
date of
exercise or with any other form of compensation permissible for such purposes
under Delaware law, as determined by the Committee in its judgment.
Alternatively, an Option may be exercised in whole or in part by delivering
a
properly executed exercise notice together with irrevocable instructions
to a
broker to deliver promptly to the Company the amount of sale or loan proceeds
necessary to pay the Option Price, and such other documents as the Committee
may
determine.
No
shares
of Common Stock shall be issued or transferred to a participant until full
payment therefor has been made, and a participant shall have none of the
rights
of a stockholder until shares are issued or transferred to him or her.
10.
NONTRANSFERABILITY. Options granted under the Plan shall not be transferable
other than by will or by the laws of descent and distribution, and, during
a
participant's lifetime, shall be exercisable only by him or her. Notwithstanding
the foregoing, a participant may transfer any Option granted under the Plan
to
the participant's spouse, children, grandchildren, parents, and/or siblings
or
to one or more trusts for the benefit of such family members, if the agreement
evidencing such Option so provides and the participant does not receive any
consideration for the transfer. Any Option so transferred shall continue
to be
subject to the same terms and conditions that applied to such Option immediately
prior to its transfer (except that such transferred Option shall not be further
transferable by the transferee during the transferee's lifetime).
11.
ISSUANCE OF SHARES. If a participant so requests, shares purchased upon the
exercise of an Option may be issued or transferred in the name of the
participant and another person jointly with the right of survivorship.
12.
STATUS OF OPTIONS. Options granted under the Plan are nonqualified options
not
qualifying as incentive stock options under Section 422 of the Internal Revenue
Code of 1986, as amended.
13.
CHANGES IN CAPITAL STRUCTURE, ETC. In the event of any merger, share exchange,
reorganization, consolidation, recapitalization, reclassification, distribution,
stock dividend, stock split, reverse stock split, split-up, spin-off, or
other
similar
B-4
transaction
or event affecting the Common Stock, the Committee is authorized, to the
extent
it deems appropriate, to make substitutions or adjustments in the aggregate
number and kind of shares of Common Stock reserved
for issuance under the Plan, in the number, kind and price of shares of Common
Stock subject to outstanding awards, and in the award limits under the Plan
(or
to make provision for cash payment
to the holder of an Option). Outstanding Options shall be appropriately amended
as to price and other terms in a manner consistent with the aforementioned
adjustment to the shares of Common Stock subject to the Plan. Fractional
shares
resulting from any adjustment in Options pursuant to this Section 13 may
be
settled in cash or
otherwise as the Committee shall determine. Notice of any adjustment shall
be
given by the Company to each holder of an Option which shall have been adjusted
and such adjustment (whether or not such notice is given) shall be effective
and
binding for all purposes of this Plan.
14.
EFFECTIVE DATE AND TERMINATION OF PLAN. The Plan shall become effective on
the
date of its adoption by the Board or a duly authorized committee thereof,
subject to the approval of the Plan by the Company’s stockholders at the 2005
Annual Meeting. The Plan shall terminate 10 years from the date of its adoption
or such earlier date as the Board or such committee may determine. Any Option
outstanding under the Plan at the time of its termination shall remain in
effect
in accordance with its terms and conditions and those of the Plan.
15.
AMENDMENT. The Board or a duly authorized committee thereof may amend the
Plan
in any respect from time to time; provided, however, that no amendment shall
become effective unless approved by affirmative vote of the Company's
shareholders if such approval is necessary or desirable for the continued
validity of the Plan or if the failure to obtain such approval would adversely
affect the compliance of the Plan with Rule 16b-3 or any successor rule under
the Securities Exchange Act of 1934, as amended, or any other rule or
regulation. No amendment may, without the consent of a participant, impair
his
or her rights under any Option previously granted under the Plan.
The
Board
or a duly authorized committee thereof shall have the power, in the event
of any
disposition of substantially all of the assets of the Company, its dissolution,
any merger or consolidation of the Company with or into any other corporation,
or the merger or consolidation of any corporation into the Company, to amend
all
outstanding Options to terminate such Options as of such effectiveness. If
the
Board shall exercise such power, all Options then outstanding shall be deemed
to
terminate upon such effectiveness.
16.
LEGAL
AND REGULATORY REQUIREMENTS. No Option shall be exercisable and no shares
will
be delivered under the Plan except in compliance with all applicable federal
and
state laws and regulations including, without limitation, compliance with
the
rules of all domestic stock exchanges on which the Common Stock may be listed.
Any share certificate issued to evidence shares for which an Option is exercised
may bear such legends and statements as the Committee shall deem advisable
to
assure compliance with federal and state laws and regulations. No Option
shall
be exercisable, and no shares will be delivered under the Plan, until the
Company has obtained consent or approval from
B-5
regulatory
bodies, federal or state, having jurisdiction over such matters as the Committee
may deem advisable.
In
the
case of the exercise of an Option by a person or estate acquiring the right
to
exercise the Option by bequest or inheritance, the Committee may require
reasonable evidence as to the ownership of the Option and may require consents
and releases of taxing authorities that it may deem advisable.
B-6
XENOMICS,
INC.
PROXY
FOR ANNUAL MEETING TO BE HELD ON APRIL 4, 2006
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints, Gabriele M. Cerrone and L. David Tomei, and each
of
them, as proxies, each with full power of substitution, to represent and to
vote
all the shares of common stock of Xenomics, Inc. (the "Company"), which the
undersigned would be entitled to vote, at the Company's Annual Meeting of
Stockholders to be held on April 4, 2006 and at any adjournments thereof,
subject to the directions indicated on the reverse side hereof.
In
their
discretion, the proxy is authorized to vote upon any other matter that may
properly come before the meeting or any adjournments thereof.
THIS
PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE, BUT IF NO
CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES
AND FOR THE PROPOSALS LISTED ON THE REVERSE SIDE.
IMPORTANT--This
Proxy must be signed and dated on the reverse side.
THIS
IS YOUR PROXY
YOUR
VOTE IS IMPORTANT!
Dear
Stockholder:
We
cordially invite you to attend the Annual Meeting of Stockholders of Xenomics,
Inc. to be held at the Grand Hyatt, Park Avenue at Grand Central, New York,
New
York 10017, on April 4, 2006, beginning at 11:00 a.m. Eastern Daylight Time.
Please
read the proxy statement which describes the proposals and presents other
important information, and complete, sign and return your proxy promptly in
the
enclosed envelope.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1-3
| 1. |
Election
of Directors
|
FOR
|
WITHOLD
|
|
Nominees
|
|||
|
01
- Gabriele M. Cerrone
|
o
|
o
|
|
|
02
- L. David Tomei, Ph.D.
|
o
|
o
|
|
|
03
- Samuel Umansky, M.D., Ph.D.
|
o
|
o
|
|
|
04
- John P. Brancaccio
|
o
|
o
|
|
|
05
- Donald H. Picker, Ph.D.
|
o
|
o
|
| 2. |
Proposal
to amend the Xenomics, Inc. 2004 Stock Option Plan (the “Plan”) increasing
the number of shares of common stock of the Company which are reserved
for
issuance under the Plan from 5,000,000 to 12,000,000
|
FOR
o
|
AGAINST
o
|
ABSTAIN
o
|
| 3. |
Proposal
to approve Xenomics, Inc. 2005 Directors
Stock Option Plan
|
FOR
|
AGAINST
|
ABSTAIN
|
|
|
o
|
o
|
o
|
Important:
Please sign exactly as name appears on this proxy. When signing as attorney,
executor, trustee, guardian, corporate officer, etc., please indicate full
title.
|
Dated:________________,
2006
Signature
__________________________________________
Name
(printed) ______________________________________
Title
______________________________________________
|
YOUR
VOTE IS IMPORTANT
VOTE
TODAY IN ONE OF THREE WAYS:
1.
VOTE
BY TELEPHONE: After
you
call the phone number below, you will be asked to enter the control number
at
the bottom of the page. You will need to respond to only a few simple prompts.
Your vote will be confirmed and cast as directed.
Call
toll-free in the U.S. or Canada at
1-866-626-4508
on
a
touch-tone telephone
OR
2.
VOTE
BY INTERNET:
Log-on
to
www.votestock.com
Enter
your control number printed below
Vote
your
proxy by checking the appropriate boxes
Click
on
“Accept Vote”
OR
3. VOTE
BY MAIL: If
you do
not wish to vote by telephone or over the internet, please complete, sign,
date
and return the above proxy card in the pre-paid envelope provided.
YOUR
CONTROL NUMBER IS:
|
You
may vote by telephone or Internet 24 hours a day, 7 days a
week.
Your
telephone or Internet vote authorizes the named proxies to vote in
the
same manner as if you marked, signed and returned your proxy
card.
|