UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
Filed by
the Registrant x
Filed by
a Party other than the Registrant ¨
Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
For Use of the Commission Only (As Permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to § 240.14a-12
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PATIENT
SAFETY TECHNOLOGIES, 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):
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
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Aggregate
number of securities to which transaction applies:
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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Fee
paid previously with preliminary
materials.
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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 for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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Form,
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PATIENT
SAFETY TECHNOLOGIES, INC.
June 22,
2009
Dear
Stockholders:
You are
cordially invited to attend the Annual Meeting of Stockholders of Patient Safety
Technologies, Inc., which will be held on August 6, 2009, at 10:00 a.m., at
the Los Angeles Airport Marriott Hotel located at 5855 W. Century Blvd., Los
Angeles, California.
At the
Annual Meeting, stockholders will be asked (1) to elect three Class I Directors
to hold office for a term expiring in 2010, elect two Class II Directors to hold
office for a term expiring in 2011, and elect two Class III Directors to hold
office for a term expiring in 2012, (2) ratify the appointment of independent
auditors, (3) approve the amendment and restatement of the Company's certificate
of incorporation to increase the authorized shares of Common Stock, (4) approve
the Patient Safety Technologies, Inc. 2009 Stock Option Plan and (5) approve the
amendment of the Company’s certificate of incorporation to reorganize the
structure of the Board of Directors, authorizing the Board to amend and restate
the Company’s certificate of incorporation if this proposal is
approved. Information of these matters is set forth in the
accompanying Proxy Statement.
It is
important that your shares be represented at the Annual Meeting, whether or not
you plan to attend in person. Please indicate on the enclosed proxy
card your vote on the matters presented, and sign, date and return the proxy
card in the enclosed envelope. If you do attend the Annual Meeting
and wish to vote in person, your proxy can be withdrawn at that
time. We urge you to vote “FOR” the election of all of the nominees
named in the Proxy Statement, “FOR” ratification of the appointment of
independent auditors, “FOR” the approval of the amendment and restatement of the
Company's certificate of incorporation to increase the authorized number of
shares, “FOR” the Patient Safety Technologies, Inc. 2009 Stock Option Plan as
set forth in the accompanying Proxy Statement and “FOR” the restructure of the
Board of Directors class structure.
If you
have any questions about your proxy card, voting procedures or other matters in
the Proxy Statement, please feel free to call us at (951) 587-6201.
Sincerely,
Patient
Safety Technologies, Inc.
/s/ Steven H.
Kane
Steven H.
Kane
Chairman
of the Board, President and Chief Executive Officer
PATIENT
SAFETY TECHNOLOGIES, INC.
43460
Ridge Park Drive, Suite 140
Temecula,
California 92591
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
OF
PATIENT SAFETY TECHNOLOGIES, INC.
To
Be Held On August 6, 2009
The 2009
Annual Meeting of the Stockholders of Patient Safety Technologies, Inc., a
Delaware corporation, will be held on August 6, 2009, at 10:00 a.m., at the
Los Angeles Airport Marriott Hotel, located at 5855 W. Century Blvd., Los
Angeles, California for the following purposes, each of which is described more
fully in the accompanying proxy statement:
1. Proposal No. 1: To
elect three Class I Directors to hold office for a term expiring in 2010, elect
two Class II Directors to hold office for a term expiring in 2011, and elect two
Class III Directors to hold office for a term expiring in 2012, or until each of
their successors have been duly elected and qualified or until their earlier
death, resignation or removal, in accordance with the Company’s bylaws, as
amended;
2. Proposal No. 2: To ratify the
appointment by our Board of Squar, Milner, Peterson, Miranda &
Williamson, L.L.P. to
serve as independent auditors for the fiscal year ending December 31,
2009;
3. Proposal No. 3: To
approve the amendment and restatement of the Company's certificate of
incorporation to increase the authorized number of shares of Common Stock from
25,000,000 shares to 100,000,000 shares;
4. Proposal No. 4: To
approve the Patient Safety Technologies, Inc. 2009 Stock Option
Plan;
5. Proposal No. 5: To
approve the amendment of the Company’s certificate of incorporation to
restructure the Board of Directors, reducing the three classes of directors to
one class of directors, and authorizing the Board to amend and restate the
Company’s certificate of incorporation if this proposal is approved;
and
6. To
consider and transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The Board
has fixed the close of business on June 16, 2009 as the record date for the
determination of the stockholders entitled to notice of, and to vote at, the
Annual Meeting or any adjournment or postponement thereof. Each stockholder of
record as of the Record Date will be entitled to one vote for each share of
Common Stock and one vote for each share of Preferred Stock held on the Record
Date.
June 22,
2009
By Order
of the Board of Directors
Steven H.
Kane
Chairman
of the Board, President, and Chief Executive Officer
| You
are cordially invited to attend the Annual Meeting in person. Whether or
not you expect to attend, please vote your shares using any of the
following methods: Common stockholders may vote by telephone or
the Internet, as described in the instructions in the proxy card; Common
and Preferred stockholders may complete, sign and date the proxy card or
voting instruction card and return in the prepaid envelope; or Common and
Preferred stockholders may vote in person at the meeting. A return
envelope (which is postage prepaid if mailed in the United States) is
enclosed for your convenience. Even if you have voted by proxy, you may
still vote in person if you attend the Annual Meeting. Please note,
however, that if your shares are held of record by a broker, bank or other
nominee and you wish to vote at the Annual Meeting, you must obtain a
proxy issued in your name from that record
holder. |
PATIENT
SAFETY TECHNOLOGIES, INC.
43460
Ridge Park Drive, Suite 140
Temecula,
California 92591
FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
August 6,
2009
QUESTIONS
AND ANSWERS ABOUT THIS PROXY STATEMENT AND VOTING
Why
am I receiving these materials?
You have
been sent this proxy statement and the enclosed proxy card because Patient
Safety Technologies, Inc. is soliciting your proxy to vote at the Annual Meeting
on the proposals described in this proxy statement. You are invited to attend
the Annual Meeting to vote in person on the proposals. However, you do not need
to attend the Annual Meeting to vote your shares. Instead, you may vote your
shares as further described in the proxy statement and on the enclosed proxy
card. The Notice of Annual Meeting of Stockholders, this proxy
statement and the accompanying proxy cards are first being mailed to
stockholders on or about July 23, 2009.
When
Is the Annual Meeting?
August 6,
2009, 10:00 a.m. Pacific Daylight Time
Where
Will the Annual Meeting Be Held?
The
meeting will be held at the Los Angeles Airport Marriott Hotel, located at 5855
W. Century Blvd., Los Angeles, California.
Who
can vote at the Annual Meeting?
Only
stockholders of record at the close of business on June 16, 2009 will be
entitled to vote at the Annual Meeting. You are entitled to one vote for each
share of common stock and preferred stock held on that date. As of the Record
Date, there were 17,197,872 shares of Common Stock and 10,950 shares of
Preferred Stock outstanding and entitled to vote.
Stockholder
of Record: Shares Registered in Your Name
If on the
Record Date your shares were registered directly in your name with the Company,
then you are a stockholder of record. As a stockholder of record, you may vote
in person at the Annual Meeting or vote by proxy. Whether or not you plan to
attend the Annual Meeting, the Company encourages you to fill out and return the
enclosed proxy card to ensure your representation at the Annual
Meeting.
Beneficial
Owner: Shares Registered in the Name of a Broker or Bank
If on the
Record Date your shares were held in an account at a brokerage firm, bank,
dealer, or other similar organization, then you are the beneficial owner of
shares held in “street name” and these proxy materials are being forwarded to
you by that organization. The organization holding your account is considered
the stockholder of record for purposes of voting at the Annual Meeting. As the
beneficial owner, you have the right to direct your brokerage firm, bank, dealer
or other similar organization on how to vote the shares in your account. You are
also invited to attend the Annual Meeting, as discussed further below. However,
since you are not the stockholder of record, you may not vote your shares in
person at the Annual Meeting unless you request and obtain a valid proxy from
your broker or other agent. Your brokerage firm, bank, dealer or other agent
should have provided you a voting instruction card for you to use in directing
the stockholder of record how to vote your shares or obtain a proxy allowing you
to vote your shares personally.
What
am I voting on?
There are
five matters scheduled for a vote at the Annual Meeting:
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Proposal No. 1:
To elect three Class I Directors to hold office for a one-year term
expiring in 2010, elect two Class II Directors to hold office for a
two-year term expiring in 2011, and elect two Class III Directors to hold
office for a three-year term expiring in 2012, or until each of their
successors have been duly elected and qualified or until their earlier
death, resignation or removal, in accordance with the Company’s bylaws, as
amended;
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Proposal No.
2: To ratify the appointment by our Board of Squar,
Milner, Peterson, Miranda & Williamson, L.L.P. to
serve as independent auditors for the fiscal year ending December 31,
2009;
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Proposal No.
3: To approve the amendment and restatement of the
Company's certificate of incorporation to increase the authorized number
of shares of Common Stock from 25,000,000 shares to 100,000,000
shares;
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Proposal No.
4: To approve the Patient Safety Technologies, Inc. 2009
Stock Option Plan;
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Proposal No.
5: To approve the amendment of the Company’s certificate
of incorporation to restructure the Board of Directors, reducing the three
classes of directors to one class of directors, and authorizing the Board
to amend and restate the Company’s certificate of incorporation if this
proposal is approved; and
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To
consider and transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement
thereof.
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Each of
these proposals, as well as the recommendation of the Board with respect to each
of these proposals, are described in greater detail elsewhere in this proxy
statement.
How
do I vote?
Your vote
is important. Please sign and return the enclosed proxy card in the enclosed
envelope to ensure that your shares are represented at the meeting. Common
stockholders may also vote by telephone or over the Internet. Please refer to
the proxy card and other voting instructions included with these proxy materials
for more information on the voting methods available to you. If you vote your proxy over the
Internet or by telephone, you do NOT need to mail back your proxy card.
The procedures for voting are fairly straightforward, as described
below.
With
respect to the election of directors, you may either vote “FOR” the nominee
proposed by the Board or you may abstain from voting for the nominee specified.
For each of the other matters to be voted on, you may vote “FOR” or “AGAINST” or
“ABSTAIN” from voting.
Can
I vote by telephone or electronically?
If you
are a registered Common stockholder (that is, if you hold your common stock in
certificate form), you may vote by telephone, or electronically through the
Internet, by following the instructions included with your proxy
card. Registered holders of Preferred Stock must sign and return the
enclosed proxy card in the enclosed envelope. If your shares of
common stock 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.
Stockholder
of Record: Shares Registered in Your Name
If you
are a stockholder of record, you may vote in person at the Annual Meeting or
vote by proxy using the enclosed proxy card. To vote in person, you need only
attend the Annual Meeting, where you will be given a ballot to vote
on each of the proposals. To vote using the proxy card, simply complete, sign
and date the enclosed proxy card and return it promptly in the postage prepaid
envelope provided. If you are a holder of record of Common Stock, you should
complete, sign and date the proxy card marked with “Common Stock” in the upper
right hand corner. If you are a holder of record of Preferred Stock, you should
complete, sign and date the proxy card marked with “Preferred Stock” in the
upper right hand corner. If you are a holder of record of both Common Stock and
Preferred Stock, you should complete, sign and date both proxy cards. So long as
we receive your signed proxy card by the Annual Meeting, your shares will be
voted as you have directed on the card.
Whether
or not you plan to attend the Annual Meeting, the Company encourages you to vote
by proxy to ensure your representation at the Annual Meeting. You may still
attend the Annual Meeting and vote in person even if you have already voted by
proxy.
Beneficial
Owner: Shares Registered in the Name of Broker or Bank
If you
are a beneficial owner of shares registered in the name of your brokerage firm,
bank, dealer, or other similar organization, you should have received a voting
instruction card with these proxy materials from that organization. Simply
complete and mail the voting instruction card to ensure your representation at
the Annual Meeting. Alternatively, you may vote in person at the Annual Meeting.
However, to vote in person at the Annual Meeting, you must obtain a valid proxy
from your brokerage firm, bank, dealer or other similar organization. Follow the
instructions from your brokerage firm, bank, dealer, or other similar
organization included with these proxy materials, or contact your brokerage
firm, bank, dealer, or other similar organization to request a proxy
form.
If your
shares are held in “street name,” you will need to obtain a proxy form from the
institution that holds your shares and follow the instructions included on that
form regarding how to instruct your broker to vote your shares. If you do not
give instructions to your broker, your broker can vote your shares only with
respect to “discretionary” items, but not with respect to “non-discretionary”
items. Discretionary items are proposals considered routine under the rules of
certain self-regulatory organizations, such as the New York Stock Exchange and
the American Stock Exchange, on which your broker may vote shares held in street
name in the absence of your voting instructions. On non-discretionary items for
which you do not give your broker instructions, the shares will be treated as
broker non-votes (which are considered shares for which the brokerage firm,
bank, dealer, or other similar organization or nominee has not received voting
instructions from the record holder and does not have discretionary authority to
vote the shares on certain proposals).
How
many votes do I have?
On each
matter to be voted upon at the Annual Meeting, you have one vote for each share
of Common Stock and one vote for each share of Preferred Stock you own as of the
Record Date. The Common Stock and Preferred Stock will vote together as a single
class with regard to each of the proposals to be considered at the Annual
Meeting.
What
if I return a proxy card but do not make specific choices?
If you
return a signed and dated proxy card without marking any voting selections, all
of your shares will be voted “FOR” the election of the nominee for director and
“FOR” each of the other proposals described in this proxy statement. If any
other matter is properly presented at the meeting, your proxy (one of the
individuals named on your proxy card as your proxy) will vote your shares using
his or her best judgment.
Who
is paying for this proxy solicitation?
The
Company will pay for the entire cost of soliciting proxies. The Company may also
reimburse brokerage firms, banks, dealers, or other similar organizations or
agents for the cost of forwarding proxy materials to beneficial owners. In
addition to these mailed proxy materials, the Company’s directors and officers
may also solicit proxies in person, by telephone or by other means of
communication; however, directors and officers will not be paid any additional
compensation for soliciting proxies.
What
does it mean if I receive more than one proxy card?
If you
receive more than one proxy card marked “Common Stock” or “Preferred Stock” in
the upper right hand corner, it means that your shares are registered in more
than one name or are registered in different accounts. Please complete,
sign, date and return each proxy card to ensure that all of your shares are
voted at the Annual Meeting.
Can
I change my vote after submitting my proxy card?
You can
change your vote by revoking your proxy at any time before the final vote at the
Annual Meeting. You may revoke your proxy in any one of three ways:
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You
may submit another properly completed proxy card with a more recent date
than that of the proxy card first
submitted;
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You
may send a written notice that you are revoking your proxy to the
Company’s Corporate Secretary at 43460 Ridge Park Drive, Suite 140,
Temecula, California 92590; or
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You
may attend the Annual Meeting and vote in person in accordance with the
procedures specified above. However, simply attending the Annual Meeting
will not, by itself, revoke your proxy. Furthermore, if your shares are
held in the name of a bank, broker or other holder of record, you must
obtain a proxy, executed in your favor, from the holder of record to be
able to vote at the meeting.
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Following
the final vote at the Annual Meeting, you may not revoke your proxy or otherwise
change your vote.
How
are votes counted?
Votes
will be counted by the inspector of election appointed for the Annual
Meeting.
How
many votes are needed to approve each proposal?
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Proposal No. 1:
The nominees for director receiving the highest number of
affirmative votes properly cast in person or by proxy at the Annual
Meeting by the holders of Common Stock and Preferred Stock, voting
together as a single class, will be elected. Abstentions and
broker non-votes will have no effect on the result of the
vote
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Proposal No. 2: Proposal
No. 2 (to ratify the appointment by our Board of Squar, Milner, Peterson,
Miranda & Williamson, L.L.P. to
serve as independent auditors for the fiscal year ending December 31,
2009) will be approved if a majority of the total votes properly cast in
person or by proxy at the Annual Meeting by the holders of Common Stock
and Preferred Stock, voting together as a single class, vote “FOR” the
proposal. Abstentions and broker non-votes will have no effect on the
result of the vote.
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Proposal No. 3 Proposal
No. 3 (the amendment and restatement of the Company’s certificate of
incorporation to increase the authorized number of shares of Common Stock)
must receive a "FOR" vote from the majority of the outstanding shares of
Common Stock and Preferred Stock, voting together as a single class.
Abstentions and broker non-votes will have the same effect as votes
"against" Proposal No. 3.
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Proposal No. 4 Proposal
No. 4 (to approve the Patient Safety Technologies, Inc. 2009 Stock Option
Plan) will
be approved if a majority of the total votes properly cast in person or by
proxy at the Annual Meeting by the holders of Common Stock and Preferred
Stock, voting together as a single class, vote “FOR” the proposal.
Abstentions and broker non-votes will have no effect on the result of the
vote.
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Proposal No. 5 Proposal
No. 5 (to approve the amendment of the Company’s certificate of
incorporation to restructure the Board of Directors, reducing the three
classes of directors to one class of directors, and authorizing the Board
to amend and restate the Company’s certificate of incorporation if this
proposal is approved) must receive a “FOR” vote from the majority of the
outstanding shares of Common Stock and Preferred Stock, voting together as
a single class. Abstentions and broker non-votes will have the
same effect as votes “against” Proposal No.
5.
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The
approval of each proposal described in this proxy statement is independent from
the approval of each of the other proposals described in this proxy
statement.
What
is the quorum requirement?
A quorum
of stockholders is necessary to hold a valid meeting. For purposes of
Proposal Nos. 1, 2, 3, 4 and 5, a quorum will be present if at least a
majority of the outstanding shares of Common Stock and Preferred Stock are
represented by stockholders present at the Annual Meeting or by proxy. As of the
Record Date, there were 17,197,872 shares of Common Stock and 10,950 shares
of Preferred Stock outstanding and entitled to vote.
Your
shares will be counted towards the quorum only if you submit a valid proxy card
or if you vote at the Annual Meeting. Abstentions, broker non-votes and votes
withheld from director nominees count as "shares present" at the annual meeting
for purposes of determining a quorum. However, abstentions and broker non-votes
do not count in the voting results. A broker non-vote occurs when a broker or
other nominee who holds shares for another does not vote on a particular item
because the broker or nominee does not have discretionary authority for that
item and has not received instructions from the owner of the shares. If there is
no quorum, a majority of the votes present at the Annual Meeting may adjourn or
postpone the Annual Meeting to another date upon which a quorum may be
obtained.
Any
adjournment may be made with respect to one or more proposals for the Company,
but not necessarily for all proposals of the Company. In the event that a quorum
is present at the Annual Meeting but sufficient votes to approve any proposal
are not received, the persons named as proxies may propose one or more
adjournments of the Annual Meeting to permit further solicitation of proxies or
to obtain the vote required for approval of one or more proposals.
How
can I find out the results of the voting at the Annual Meeting?
Preliminary
voting results will be announced at the Annual Meeting. Final voting results
will be published in the Company’s Quarterly Report on Form 10-Q for the
quarter ending September 30, 2009.
YOUR
BOARD OF DIRECTORS HAS APPROVED EACH OF THE PROPOSALS SET FORTH
HEREIN.
REASONS
FOR THE ANNUAL MEETING
The
Annual Meeting is being held in order to vote on several important proposals.
Each proposal that will be presented at the Annual Meeting is described in
greater detail below.
PROPOSAL NO.
1
ELECTION
OF DIRECTORS
Background
Pursuant
to the Company’s Amended and Restated Certificate of Incorporation, the number
of directors constituting the Board shall be fixed from time to time by
resolution passed by a majority of the Board. The number of directors on the
Board is currently fixed at seven. Directors serve until their
successors are elected and qualified. No current disagreement exists between the
Company and any of the current members of the Board regarding the operations,
policies or practices of the Company. Herbert Langsam and Dr. Louis Glazer are
elected by a vote of the preferred stockholders voting as a class under the
terms of the Certificate of Designation of Series A Convertible Preferred Stock
Agreement dated February 22, 2000.
Steven H.
Kane, Chairman of the Board, President and Chief Executive Officer of the
Company, has been nominated for election to the Board as a Class I Director for
a term expiring in 2010. Mr. Kane was appointed to fill an open directorship on
February 7, 2008, pursuant to the terms of a Securities Purchase Agreement dated
October 17, 2007 by and between the Company and Francis Capital Management,
LLC.
John P.
Francis, has been nominated for election to the Board as a Class I Director for
a term expiring in 2010. Mr. Francis was appointed to fill an open directorship
vacated by a former director, William B. Horne, on November 26, 2007, pursuant
to the terms of a Securities Purchase Agreement dated October 17, 2007 by and
between the Company and Francis Capital Management, LLC.
Howard E.
Chase, has been nominated for election to the Board as a Class I Director for a
term expiring in 2010. Mr. Chase was appointed to fill an open
directorship vacated by the former director David Augustine.
Herbert
Langsam, has been nominated for election to the Board as a Class II Director for
a term expiring in 2011. Mr. Langsam was appointed to fill an open
directorship vacated by a former director on October 22, 2004.
Wenchen
Lin, has been nominated for election to the Board as a Class II Director for a
term expiring in 2011. Mr. Lin was appointed to fill an open directorship
vacated by the former director Alice Campbell, on March 28, 2007, pursuant to
the terms of a Subscription Agreement dated January 29, 2007 by and between the
Company and A Plus International, Inc.
Louis
Glazer, M.D. Ph.G., has been nominated for election to the Board as a Class III
Director for a term expiring in 2012. Dr. Glazer was appointed to fill an open
directorship vacated by the former director on October 22,
2004.
Loren L.
McFarland, has been nominated for election to the Board as a Class III Director
for a term expiring in 2012. Mr. McFarland was appointed to fill an
open directorship vacated by the former director David Bruce.
Information
Regarding the Company’s Directors and Nominees
The names
and certain information concerning the current directors and the persons
nominated by the Board to be elected as directors of the Company at the Annual
Meeting are set forth below. All shares represented by the proxies will be voted
“FOR” the election to the Board of the nominees named below unless authority to
vote for the nominees has been withheld in the proxy. Although the nominees have
consented to serve as directors if elected, and the Board has no reason to
believe that the nominees will be unable to serve as directors, if the nominees
withdraw or otherwise become unavailable to serve, shares represented by the
proxies will be voted “FOR” any substitute nominees designated by the
Board.
The
following table sets forth certain information regarding the Company’s current
directors whose terms of office will continue after the Annual Meeting and the
nominees for election to the Board at the Annual Meeting. The background
information for each of the current directors and the nominees set forth below
has been provided to the Company is each respective individual.
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Name and Year First
Elected Director
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Age
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Background
Information
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Steven
H. Kane (2008)
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56
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Steven H. Kane is the
Company’s Chairman, President and Chief Executive Officer and has served
as a director of the Company since November 26, 2007 and is a current
nominee for reelection as a Class I Director. Prior to
joining the Company in May 2009 as President and Chief Executive Officer,
Mr. Kane was the President, Chief Executive Officer and Director of
Protalex, Inc. (OTCBB: PRTX) and has over 30 years experience in the
health care industry. From April 1997 to August 2000, Mr. Kane served as
Vice President of North American Sales & Field Operations for Aspect
Medical. While at Aspect, he helped guide the company to a successful
initial public offering in January 2000. Prior to Aspect, Mr. Kane was
Eastern Area Vice President for Pyxis Corporation, where he was
instrumental in positioning the company for its successful initial public
offering in 1992. Pyxis later was acquired by Cardinal Health for $1
billion. Prior to that, Mr. Kane worked in sales management with Eli-Lilly
and Becton Dickinson.
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John
P. Francis (2007)
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43
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John P. Francis has
served as a director of the Company since November 26, 2007 and is a
current nominee for reelection as a Class I Director. Mr.
Francis is President of Francis Capital Management, LLC, an investment
management firm specializing in small capitalization equities.
Mr. Francis has over eighteen years of experience in
investment management, finance and accounting. Mr. Francis
earned his bachelor’s degree in Economics and MBA from the Anderson School
at the University of California at Los Angeles.
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Howard
E. Chase (2009)
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73
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Howard E. Chase, is a
current nominee for election as a Class I Director. From December 2001
until present, he was the President and Chief Executive Officer of The
Hollandbrook Group, LLC, which provides advisory, director and executive
services to early stage companies. Mr. Chase served as President and
Chief Executive Officer of Carret Holdings, Inc. (formerly Matrix Global
Investments, Inc.), a holding company for asset management businesses,
from June 1999 until December 2001. Mr. Chase served as President and
Chief Executive Officer of Trident Rowan Group, Inc., a U.S. public
holding company with interests in certain Italian companies and real
estate, from September 1993 to March 1998 and served as Chairman of the
Board of TRGI from March 1998 to December 1999. From 1984 to August 1995,
Mr. Chase was a partner in the law firm of Morrison Cohen
Singer & Weinstein, LLP in New York City. Mr.
Chase served on the board of Thoatec Corporation from 1986 until May
2009. Mr. Chase currently sits on the board of several
companies, including ThinGap LLC, a private company and the Music Academy
of the West, a Santa Barbara, California non-profit.. Mr.
Chase earned his bachelor’s degree from Harvard University and his law
degree from Harvard Law School.
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Herbert
Langsam (2004)
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78
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Herbert Langsam has
served as a Class II Director of the Company since October 22,
2004 and is a current nominee for reelection as a Class II Director.
Mr. Langsam also currently serves as president of Medicare
Recoveries, Inc., a private company located in Oklahoma City, Oklahoma
focused on providing Medicare claims and recovery services.
Mr. Langsam serves as a member of the board of trustees for the
Geriatric Research Drug Therapy Institute and as an adjunct professor at
the University of Oklahoma Pharmacy School. Previously, Mr. Langsam
was the founder, president and chief executive officer of Langsam Health
Services, a conglomerate of health care companies that serviced 17,000
long-term care residents, which was acquired by Omnicare, Inc. in 1991.
Mr. Langsam also served as the vice president of pharmacy services
for Omnicare, Inc. following its acquisition of Langsam Health Services.
Mr. Langsam received his B.S. in pharmacy from the University of
Oklahoma.
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Wenchen
Lin (2007)
|
53
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Wenchen Lin has served
as a Class II Director of the Company since March 28, 2007 and is a
current nominee for reelection as a Class II Director. Mr. Lin has almost twenty
years experience as the President and founder of A Plus International, a
successful manufacturer producing a variety of surgical dressings, film
and plastic products and servicing the custom procedural tray industry on
cotton textile products. A Plus has established relationships with key
market leaders in the industries A Plus services. Mr. Lin began his career
serving as Vice-President to large trade and shipping companies, such as
Trade Diversified, Inc. and Brother Trucking Co. and has vast knowledge
and experience in oversees factories, trade, transport and distribution.
Mr. Lin received his MBA from Ohio University and his accounting degree
from Taiwan Suzhou University.
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Louis
Glazer, M.D., Ph.G. (2004)
|
78
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Louis Glazer, M.D.,
Ph.G. has served as a Class III Director of the Company since
October 22, 2004 and is a current nominee for reelection as a
Class III Director. Since October 2004, Dr. Glazer has served in
various positions of the Company, including that of Director, Chairman of
the Board, CEO, Vice-Chairman and Chief Health and Science Officer,
overseeing the development of the Company’s Safety-Sponge™
system. Until 2002, Dr. Glazer served as the chief anesthesiologist
and medical director for the Vitreo-Retinal Clinic in Memphis, Tennessee
for over 25 years. Prior to that, Dr. Glazer taught obstetrics
anesthesia at the University of Tennessee, while practicing anesthesiology
at numerous hospitals in Memphis, Tennessee. Dr. Glazer received his
B.S. in pharmacy from the University of Oklahoma and his M.D. from the
University of Bologna School of Medicine in Italy. He presently
serves on the Executive Council of the Center for Patient Safety Research
and Practice at Harvard Medical School and the Brigham and Women’s
Hospital in Boston, MA.
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Loren
L. McFarland (2009)
|
50
|
Loren L. McFarland, is a current nominee
for election as a Class III Director. He is currently an
independent consultant providing financial advisory services to start-ups
in the medical device industry. He served as Chief Financial
Officer and Treasurer of Mentor Corporation, a NYSE listed medical device
company from May 2004 to November 2007. From 1985 to 2004
he filled various financial positions at Mentor including Vice President
of Finance and Corporate Controller from 2001 to May 2004, Controller
from 1989 to 2001, Assistant Controller from 1987 to 1989 and General
Accounting Manager from 1985 to 1987. Prior to his employment with Mentor,
Mr. McFarland was employed by Touche Ross and Co., a public
accounting firm, as a Certified Public Accountant and auditor from 1981 to
1985. Mr. McFarland earned his bachelor’s degree in
Business Administration and Accounting from the University of North Dakota
and a master’s degree in Business Administration from the Anderson School
at University of California at Los Angeles in 1999. Mr.
McFarland recently completed the ISS Director Certification Program at
UCLA.
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Our Board has determined
that Messrs. Langsam, Chase and McFarland are each “independent” as that term is
defined by the NASDAQ. Under the NASDAQ definition, an independent
director is a person who (1) is not currently (or whose immediate family members
are not currently), and has not been over the past three years (or whose
immediate family members have not been over the past three years), employed by
the company; (2) has not (or whose immediate family members have not) been paid
more than $60,000 during the current or past three fiscal years; (3) has
not (or whose immediately family has not) been a partner in or controlling
shareholder or executive officer of an organization which the company made, or
from which the company received, payments in excess of the greater of $200,000
or 5% of that organizations consolidated gross revenues, in any of the most
recent three fiscal years; (4) has not (or whose immediate family members have
not), over the past three years been employed as an executive officer of a
company in which an executive officer of the Company has served on that
company’s compensation committee; or (5) is not currently (or whose immediate
family members are not currently), and has not been over the past three years
(or whose immediate family members have not been over the past three years) a
partner of the Company’s outside auditor. A director who is, or at any time
during the past three years, was employed by the Company or by any parent or
subsidiary of the Company, shall not be considered independent.
Role
of the Board
Pursuant
to Delaware law, our business, property and affairs are managed under the
direction of our Board. The Board has responsibility for establishing broad
corporate policies and for the overall performance and direction of the Company,
but is not involved in day-to-day operations. Members of the Board keep informed
of our business by participating in board and committee meetings, by reviewing
analyses and reports sent to them regularly, and through discussions with our
executive officers.
2008
Board Meetings
Our Board
met eleven times during the fiscal year ended December 31, 2008. Each
Board member and each of the director nominees, with the exception of Mr. Lin,
attended 90% or more of the aggregate number of meetings of the Board and of the
committees on which he or she served that were held while he or she was a
director or committee member, respectively, during fiscal 2008. Mr.
Lin attended 73% of the meetings held.
Board
Committees
Our Board
has established the following committees:
Compensation
Committee
The
Compensation Committee operates pursuant to an Amended and Restated Charter of
the Compensation Committee. The Compensation Committee determines and recommends
to the Board the compensation to be paid the Company’s executive officers and
also reviews the amount of salary and bonus for each of the Company’s other
officers and employees. In addition, the Compensation Committee determines and
recommends to the Board the amount of stock option grants to be issued to the
Company’s officers and directors under the Company’s existing Stock Incentive
Plan and/or Non-Statutory Stock Option Plan, respectively and will determine
individual performance awards for such participants.
The
Compensation Committee members currently are Howard E. Chase, Loren L.
McFarland and Herbert Langsam. Mr. Chase and Mr. McFarland are
considered independent under Rule 10A-3 under the Exchange
Act. Each member of the Compensation Committee is a “non-employee
director” for purposes of Rule 16b-3 under Section 16 of the Exchange
Act. None of these individuals is a present or former officer or
employee of the Company. Mr. Chase serves as the Chairman of
the Compensation Committee.
Audit
Committee
The
primary function of the Audit Committee is to oversee and monitor the Company’s
accounting and reporting processes and the audits of the Company’s financial
statements. The Audit Committee members currently are Loren L. McFarland, Howard
E. Chase and Herbert Langsam, all of whom are considered independent under
Rule 10A-3 under the Exchange Act. Mr. McFarland serves as
the Chairman of the Audit Committee.
Nominating
Committee
The
primary function of the Nominating Committee is to participate in the
consideration of potential nominations for election to the Board. Once the
candidates are selected, the Nominating Committee presents them to the Board for
their evaluation and consideration. The Nominating Committee members
currently are Howard E, Chase, Wenchen Lin and Steven H. Kane. Mr.
Chase is considered independent under Rule 10A-3 under the Exchange Act and
serves as the Chairman of the Nominating Committee.
Vote
Required
The five
nominees for director who will be elected by a vote of the Common Stock and
Preferred Stock, voting together as a class, and the two nominees for director
who will be elected by a vote of the Preferred Stock voting as a class,
receiving the highest number of affirmative votes properly cast in person or by
proxy at the Annual Meeting by the holders of Common Stock and Preferred Stock,
voting together as described above, will be elected. Abstentions and broker
non-votes will have no effect on the result of the vote.
Voting
by the Proxies
The
Proxies will vote your shares in accordance with your instructions. If you have
not given specific instructions to the contrary, your shares will be voted to
approve the election of the nominees named in the Proxy Statement. Although the
Company knows of no reason why the nominees would not be able to serve, if a
nominee were not available for election, the Proxies would vote your Common
Stock to approve the election of any substitute nominee proposed by the Board of
Directors. The Board may also choose to reduce the number of directors to be
elected as permitted by our bylaws.
BOARD
RECOMMENDATION
THE
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE ALL OF YOUR SHARES “FOR” THE ELECTION
TO THE BOARD OF ALL OF THE NOMINEES DESCRIBED IN THIS
PROPOSAL NO. 1.
RATIFICATION
OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Background
On
October 6, 2006, the Company, upon the approval of the Audit Committee
(which consisted solely of directors who are not “interested persons” of the
Company), engaged Squar, Milner, Peterson, Miranda &
Williamson, L.L.P. to serve as the Company’s independent accountants. Squar
Milner has served as the Company’s independent accountants for the fiscal years
ended December 31, 2006, 2007 and 2008 and has been approved by the Audit
Committee to act as the Company’s independent accountants for fiscal year ended
December 31, 2009. The engagement of Squar Milner to serve as the
Company’s independent accountants for the fiscal year ended December 31, 2009 is
subject to ratification by the Company’s stockholders at the Annual
Meeting. If the selection is not ratified, the Audit Committee will
consider whether it is appropriate to select another registered public
accounting firm. Even if the selection is ratified, the Audit
Committee in its discretion may select a different registered public accounting
firm at any time during the year if it determines that such a change would be in
the best interests of the Company and our shareholders.
The
Company has invited a representative of Squar Milner to be present at the Annual
Meeting and if accepted, will have an opportunity to make a statement if he or
she so chooses and will be available to respond to appropriate
questions.
Unless
marked to the contrary, the shares represented by the enclosed proxy card will
be voted “FOR” ratification of the appointment of Squar Milner as the
independent public accountants of the Company for the fiscal year ended December
31, 2009.
Fees
Paid to Independent Public Accountants for 2008 and 2007
The
following are aggregate fees billed to the Company by its independent auditors
for work performed in 2008 and 2007:
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|
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Fiscal
Year Ended
December 31, 2008
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|
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Fiscal
Year Ended
December 31, 2007
|
|
|
Audit
Fees
|
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$ |
195,000 |
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$ |
169,000 |
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Audit-Related
Fees
|
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$ |
4,000 |
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$ |
— |
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Tax
Fees
|
|
$ |
13,000 |
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$ |
9,000 |
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All
Other Fees
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$ |
— |
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|
$ |
— |
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Total
Fees
|
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$ |
212,000 |
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$ |
178,000 |
|
Audit Fees. Audit fees
consist of fees billed for professional services rendered for the audit of our
year-end consolidated financial statements and reviews of the interim
consolidated financial statements included in quarterly reports and services
that are normally provided by independent accountants in connection with
statutory and regulatory filings.
Audit-Related Fees.
Audit-related fees consist of fees billed for assurance and related
services that are reasonably related to the performance of the audit or review
of our consolidated financial statements and are not reported under “Audit Fees.” These
services include attest services that are not required by statute or regulation
and consultations concerning financial accounting and reporting
standards.
Tax Fees. Tax fees consist of
fees billed for professional services for tax compliance. These services include
assistance regarding federal, state and local tax compliance.
All Other Fees. All other
fees would include fees for products and services other than the services
reported above.
Audit
Committee Report
Effective
June 17, 2009, Loren L. McFarland, Howard E. Chase and Herbert Langsam joined
the Audit Committee. Mr. McFarland was appointed Chairman of the
Committee. On June 17, 2009 Steven H. Kane resigned from the Audit
Committee. Mr. Kane had served on the Audit Committee as Interim
Chairman since January 17, 2008. On June 11, 2008, Arnold E. Spangler
resigned as a director and member of the Audit Committee. From June 11, 2008
through June 10, 2009, the Audit Committee was comprised of Steven H.
Kane.
The Audit
Committee has reviewed and discussed the audited financial statements with
management. The Audit Committee has discussed with Squar Milner the matters
required to be discussed by SAS 61, as may be modified or supplemented. The
Audit Committee has received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard No. 1
(Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees), as may be modified or supplemented, and has discussed with
Squar Milner the independent accountant's independence. Based on the review and
discussions referred to above, the Audit Committee elected to include the
audited financial statements be included in the Company's Annual Report on Form
10-K for the last fiscal year for filing with the Commission.
Vote
Required
Proposal No. 2
(the ratification of the appointment by the Board of Squar Milner to serve as
independent auditors for the fiscal year ending December 31, 2009 will be
approved if a majority of the total votes properly cast in person or by proxy at
the Annual Meeting by the holders of Common Stock and Preferred Stock, voting
together as a single class, vote “FOR” the proposal. Abstentions and broker
non-votes will have no effect on the result of the vote.
BOARD
RECOMMENDATION
THE
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE ALL OF YOUR SHARES “FOR” THE
RATIFICATION OF SQUAR MILNER TO SERVE AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS AS DESCRIBED IN THIS PROPOSAL NO. 2.
PROPOSAL NO.
3
INCREASE
IN AUTHORIZED NUMBER OF SHARES OF COMMON STOCK
Background
The
Company is requesting stockholder approval of the amendment and restatement of
the Company’s certificate of incorporation to effect an increase the authorized
number of shares of Common Stock from 25,000,000 shares to 100,000,000 shares.
Assuming approval of this Proposal No. 3, the Company’s certificate of
incorporation would be amended and restated as set forth in the form of Amended
and Restated Certificate of Incorporation included as Appendix A to this proxy
statement. The Board has already approved the Restated Certificate and, assuming
the approval of this Proposal No. 3, the Restated Certificate will become
effective upon its filing with the Secretary of State of the State of
Delaware.
Information
concerning the proposed increase in authorized number of shares
The
authorized shares of Common Stock in and of itself does not affect the rights of
the holders of currently issued and outstanding Common Stock and Preferred
Stock. However, the issuance of of any additional shares of Common Stock will
dilute the earnings per share and the net asset value of current holders of
Common Stock. The issuance of additional shares will dilute the
voting impact of common shares held by current holders of Common
Stock.
The
purposes for seeking shareholder approval to increase the number of authorized
shares of common stock are as follows:
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(1)
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sufficient
shares of common stock to be available for issuance to holders of
14,521,000 warrants and holders of 4,377,000 stock options to purchase
common stock:
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(2)
|
providing
authorized common stock to be used in future
financing;
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(3)
|
providing
additional authorized shares of common stock to be used in connection with
business combinations.
|
Vote
Required
Proposal No. 3
(amendment and restatement of the Company's certificate of incorporation as set
forth in the Restated Certificate to increase the authorized number of shares of
Common Stock from 25,000,000 shares to 100,000,000 shares) will be approved if
the total votes properly cast in person or by proxy at the Annual Meeting by a
majority of the outstanding shares of Common Stock and Preferred Stock, voting
together as a single class, vote “FOR” the proposal. Abstentions and broker
non-votes will have no effect on the result of the vote.
BOARD
RECOMMENDATION
THE
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE ALL OF YOUR SHARES “FOR” THE
AMENDMENT AND RESTATEMENT OF THE COMPANY’S CERTIFICATE OF INCORPORATION AS SET
FORTH IN APPENDIX A.
PROPOSAL NO.
4
APPROVAL
OF THE COMPANY’S 2009 STOCK OPTION PLAN
Subject
to ratification by the stockholders, the Board of Directors has adopted and
approved the Patient Safety Technology, Inc. 2009 Stock Option Plan (the 2009
Plan). The following summary of the 2009 Plan is qualified in its entirety by
reference to its complete text, which is attached to this Proxy Statement as
Appendix B.
Upon the
approval of this Proposal No. 4, the Board will have the discretion to
grant options to purchase up to 3,000,000 shares of Common Stock of the Company
under the 2009 Plan. These shares are in addition to the 2,500,000 shares
reserved for issuance under the Company’s 2004 Stock Option Plan (the 2004
Plan). As of May 31, 2009, options to purchase an aggregate of
1,627,000 shares of Common Stock and restricted stock awards of an aggregate of
849,000 shares had been issued pursuant to the 2004 Plan.
Description
of the 2009 Plan
General
The
purpose of the 2009 Plan is to allow the Company to provide equity-based
incentives designed to attract, retain and motivate employees of the Company and
its subsidiaries. The Board believes that equity based compensation
plays an important role in aligning the incentives of the Company’s employees
with the interests of its stockholders.
The 2009
Plan will be administered by our Board or by a committee designated by our
Board. The Board or its committee may grant options under the 2009 Plan to
employees (including employees who are officers and directors of the Company)
and directors of the Company, as well as consultants, advisors and other
independent contractors who provide services to the Company.
Our Board
has approved reserving 3,000,000 shares of Common Stock for issuance under the
2009 Plan (subject to adjustment for stock splits and similar events). This
number of shares represents approximately 17.5% of the outstanding Common
Stock of the Company as of the Record Date.
Description
of Stock Options
The Board
or its committee may grant non-statutory options to all eligible plan
participants and may grant incentive stock options to eligible plan participants
who are employees of the Company or its subsidiaries. With respect to each
grant, the Board or its committee will determine the number of shares subject to
the award, and the exercise price, term, manner of exercise and vesting terms or
other conditions for the option to become exercisable.
Transferability
of Options
Options
granted under the 2009 Plan are non-transferable during the recipient’s
lifetime, and may be transferred only in the event of the holder’s death, by
will or the laws of descent and distribution.
Amendment
of the 2009 Plan
Our Board
may amend, suspend or discontinue the 2009 Plan at any time.
Change of
Control
In
connection with certain change of control transactions, all outstanding options
may become exercisable prior to consummation of the transaction if the options
are not assumed by the Company’s successor entity. Any options not
exercised or assumed will generally expire upon completion of certain change of
control transactions.
Termination
of Plan and Dilution
The 2009
Plan will terminate on March 11, 2019, unless sooner terminated by the
Board. No options may be granted after termination of the 2009 Plan,
although options outstanding at the time of termination will continue to be
exercisable in accordance with their terms. The issuance of shares of Common
Stock upon the exercise of options granted
under the 2009 Plan will dilute the voting power of current stockholders. The
extent of dilution will depend on the number of shares subject to options
awarded and exercised.
Federal
Income Tax Consequences
THE
FOLLOWING DISCUSSION SETS FORTH CERTAIN UNITED STATES INCOME TAX CONSIDERATIONS
IN CONNECTION WITH THE 2009 PLAN. THESE TAX CONSIDERATIONS ARE STATED IN GENERAL
TERMS AND ARE BASED ON THE INTERNAL REVENUE CODE OF 1986 IN ITS CURRENT FORM AND
CURRENT JUDICIAL AND ADMINISTRATIVE INTERPRETATIONS THEREOF. THIS DISCUSSION
DOES NOT ADDRESS STATE OR LOCAL TAX CONSIDERATIONS WITH RESPECT TO THE 2009
PLAN. MOREOVER, THE TAX CONSIDERATIONS RELEVANT TO THE 2009 PLAN MAY VARY
DEPENDING ON A PARTICIPANT’S STATUS AND CIRCUMSTANCES.
When a
non-statutory stock option granted pursuant to the 2009 Plan is exercised, the
plan participant will realize ordinary income for tax purposes measured by the
difference between the aggregate purchase price of the shares as to which the
option is exercised and the aggregate fair market value of shares on the
exercise date. The Company will be entitled to a deduction in the
year the option is exercised equal to the amount the plan participant is
required to report as ordinary income.
Options
that qualify as incentive stock options do not require the plan participant to
recognize ordinary income for federal tax purposes upon exercise; and the
Company will not be entitled to a federal income tax deduction in connection
with the exercise of these options. However, the difference between the option
price and the fair market value of the shares acquired upon exercise of an
incentive stock option will be treated as an “item of tax preference” for
purposes of the alternative minimum tax.
Under
existing federal income tax law, if shares purchased pursuant to the exercise of
such an option are not disposed of by the optionee before the later of two years
from the date of grant of the option or within one year after the date of
exercise of the option, then any gain or loss recognized upon ultimate
disposition of the shares will be treated as long-term capital gain or
loss. If the optionee disposes of the shares acquired by exercise of
an incentive stock option before the expiration of the holding period described
in the preceding sentence, the optionee must recognize as ordinary income an
amount equal to the difference between the optionee’s basis in the shares and
the selling price. In that event, the Company will be entitled to a deduction
equal to the amount the employee is required to report as ordinary
income.
New
Plan Benefits
The Board
has prospectively authorized a single option award under the 2009 Plan subject
to its approval of the 2009 by the Company’s stockholders. The
recipient of this prospective option award of 100,000 shares is an officer of
the Company who is not a named executive officer. This option, if
issued, will be granted at the fair market value as of the date of
grant. No other prospective awards have been authorized as of the
date of this Proxy Statement with regard to additional issuances.
Vote
Required
Proposal
No. 4 (the authorization and approval of the Patient Safety Technology ,
Inc. 2009 Stock Option Plan) will be approved if a majority of the total votes
properly cast in person or by proxy at the Annual Meeting by the holders of
Common Stock and Preferred Stock, voting together as a single class, vote “FOR”
the proposal. Abstentions and broker non-votes will have no effect on the result
of the vote.
BOARD
RECOMMENDATION
THE
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE ALL OF YOUR SHARES “FOR” THE APPROVAL
OF THE PATIENT SAFETY TECHNOLOGY, INC. 2009 STOCK OPTION PLAN AS DESCRIBED IN
THIS PROPOSAL NO. 4.
PROPOSAL
NO. 5
AMENDMENT
OF CERTIFICATE OF INCORPORATION
TO
PROVIDE FOR ANNUAL ELECTION OF DIRECTORS
Background
Under the
Company’s current certificate of incorporation, the Company’s Board is divided
into three classes of directors. Approximately one-third of the
directors stands for election each year for a three-year term.
The Board
has unanimously approved, and is recommending that the stockholders vote in
favor of, an amendment to the Company’s certificate of incorporation to
eliminate the division of the Board into multiple classes. If this proposal is
approved, all of the directors of the Company would be for one-year terms at
each annual meeting of stockholders of the Company.
Information
Concerning the Proposed Restructuring of the Board
The
proposed elimination of the division of the Board into classes is intended to
enhance the ability of the stockholders to alter the composition of the Board on
an annual basis. However, the change in Board structure may affect
the continuity and stability in the Company’s leadership and policies, by
allowing the entire Board to be replaced each year.
The
proposal is the result of the Board ongoing review of the Company’s corporate
governance procedures. The Board weighed the advantages and
disadvantages of a declassification of the Board structure, in light of recent
trends in corporate governance amongst similarly situated
companies. Proponents of unified boards of directors believe that
classified boards reduce the accountability of directors by limiting the ability
of stockholders to evaluate director performance and elect directors on an
annual basis. Conversely, advocates of classified boards believe that
longer director terms provide greater continuity and stability, and make it
easier for Boards to support forward-looking strategies that will enhance
stockholder value in the long run.
Although
the proposal is not being advanced in connection with any expected change of
control of the Company, the change in the structure of the Board may make it
easier for a change of control of the Company to be effected. If this
proposal is approved, the entire Board may be replaced at the next annual
stockholders’ meeting through the normal election process. As a result, the
change in the Board structure may tend to encourage certain takeover bids, which
could include takeover bids that some stockholders may feel would not be in
their best interests. Elimination of Board classification may also
reduce the negotiating leverage of the Company’s Board and management with
certain prospective acquirors, if these potential buyers believe they can
acquire control more easily by through a director election context rather than
arms-length negotiations with the current Board.
While the
Company believes that the advantages of having a unitary Board outweigh the
potential disadvantages, you should consider all of the relevant effects of a
classified Board when voting on this Proposal No. 5.
Amendment
of Certificate of Incorporation
If both
this Proposal and Proposal No. 2 (increase in authorized number of shares of
Common Stock) are approved by the stockholders at the annual meeting, then the
Company’s Amended and Restated Certificate of Incorporation will be amended and
restated to read as set forth in Appendix A attached to this proxy statement,
which eliminates the classified Board provisions contained in our current
Certificate of Incorporation.
If this
Proposal is approved by the stockholders at the annual meeting, but Proposal No.
2 (increase in authorized number of shares of Common Stock) is not, then Article
V, Section A.2. of the Company’s Amended and Restated Certificate of
Incorporation will be amended to read as set forth in Appendix A attached to
this proxy statement, but no other changes will be made to our Certificate of
Incorporation.
Vote
Required
Proposal No. 5
(amendment of the Company’s certificate of incorporation to provide for annual
election of directors) will be approved if the total votes properly cast in
person or by proxy at the Annual Meeting by a majority of the outstanding shares
of Common Stock and Preferred Stock, voting together as a single class, vote
“FOR” the proposal. Abstentions and broker non-votes will have the same effect
as a vote “AGAINST” this proposal.
BOARD
RECOMMENDATION
THE
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE ALL OF YOUR SHARES “FOR” THE PROPOSED
AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO PROVIDE FOR ANNUAL ELECTION OF
DIRECTORS, AS DESCRIBED IN THIS PROPOSAL NO. 5.
ADDITIONAL
INFORMATION
BENEFICIAL
OWNERSHIP OF THE COMPANY’S COMMON STOCK
OF
PRINCIPAL STOCKHOLDERS, DIRECTORS AND MANAGEMENT
The
following tables set forth certain information with respect to beneficial
ownership (as that term is defined in the rules and regulations of the SEC) of
the Company’s common stock and preferred stock as of May 30, 2009, by (1) each
person who is known by the Company to be the beneficial owner of more than five
percent of the outstanding common stock and preferred stock, (2) each director
of the Company, (3) each current executive officer listed in the Summary
Compensation Table and (4) all directors and named executive officers of the
Company as a group. Except as otherwise indicated, to the Company’s knowledge,
all shares are beneficially owned and investment and voting power is held as
stated by the persons named as owners. The address for all beneficial owners,
unless stated otherwise below, is c/o Patient Safety Technologies, Inc., 43460
Ridge Park Drive, Suite 140, Temecula, CA 92590.
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Beneficial
Ownership
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Name and Address of Beneficial
Owner
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Number
of Shares
of Common Stock (1)
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Percent
of Class
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Number
of Shares
of Preferred Stock (2)
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Percent
of Class
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Greater than 5% Beneficial
Owners :
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Compass
Compass Management Limited
795
Ridge Lake Blvd., Suite 106
Memphis,
TN 38120
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2,600,000 |
(3) |
|
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14.3 |
% |
|
|
— |
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|
— |
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Francis
Capital Management, LLC
429
Santa Monica Blvd., Suite 320
Santa
Monica, CA 90401
|
|
|
3,214,200 |
(4) |
|
|
16.8 |
% |
|
|
— |
|
|
|
— |
|
|
|
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Radisson
Trading Company
No.
87 Lang 58
Rong
Hua West Rd., Shanghai 201103 China
|
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1,280,000 |
(5) |
|
|
7.2 |
% |
|
|
— |
|
|
|
— |
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|
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DSAM
Fund LP
222
Broadway, 6th
Floor
New
York, NY 10038
|
|
|
1,114,000 |
(6) |
|
|
6.3 |
% |
|
|
— |
|
|
|
— |
|
|
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A
Plus International, Inc.
5138
Eucalyptus Avenue
Chino,
California 91710
|
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1,100,000 |
(7) |
|
|
6.3 |
% |
|
|
— |
|
|
|
— |
|
|
|
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|
|
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|
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|
|
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|
|
|
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Alan
E. Morelli
225
Mantua Road
Pacific
Palisades, California 90272
|
|
|
1,627,252 |
(8) |
|
|
8.6 |
% |
|
|
— |
|
|
|
— |
|
|
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Charles
J. Kalina III
93
Grove Street
Somerville,
NJ 08876
|
|
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1,068,993 |
(9) |
|
|
6.1 |
% |
|
|
— |
|
|
|
— |
|
|
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|
|
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Melanie
Glazer
1800
Century Park East, Ste. 200
Los
Angeles, California 90067
|
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345,293 |
(10) |
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2.0 |
% |
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8,150 |
|
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74.4 |
% |
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Zealous
Partners LLC
1800
Century Park East, Ste. 200
Los
Angeles, California 90067
|
|
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58,500 |
(11) |
|
|
* |
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2,600 |
|
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23.7 |
% |
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Directors and Named Executive
Officers :
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John
P. Francis
|
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3,214,200 |
(4) |
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16.8 |
% |
|
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— |
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— |
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|
|
|
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|
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|
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Wenchen
Lin
|
|
|
1,100,000 |
(7) |
|
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6.3 |
% |
|
|
— |
|
|
|
— |
|
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Brian
Stewart
|
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663,000 |
(12) |
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3.8 |
% |
|
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— |
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— |
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Herbert
Langsam
|
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179,153 |
(13) |
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1.0 |
% |
|
|
— |
|
|
|
— |
|
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Louis
Glazer, M.D., Ph.G
|
|
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180,000 |
(14) |
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1.0 |
% |
|
|
— |
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|
|
— |
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|
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|
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|
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Steven
Kane
|
|
|
166,666 |
(15) |
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|
1.0 |
% |
|
|
— |
|
|
|
— |
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All
directors and named executive
officers
as a group (6 persons)
|
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5,503,019 |
|
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29.9 |
% |
|
|
— |
|
|
|
— |
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(1)
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Applicable
percentage ownership is based on 17,197,872 shares of common stock
outstanding as of May 30, 2009, together with securities exercisable or
convertible into shares of common stock within 60 days of May 30, 2009 for
each security holder. Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission and generally
includes voting or investment power with respect to securities. Shares of
common stock that a person has the right to acquire beneficial ownership
of upon the exercise or conversion of options, convertible stock, warrants
or other securities that are currently exercisable or convertible or that
will become exercisable or convertible within 60 days of May 30, 2009 are
deemed to be beneficially owned by the person holding such securities for
the purpose of computing the percentage of ownership of such person, but
are not treated as outstanding for the purpose of computing the percentage
ownership of any other person.
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(2)
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Applicable
percentage ownership is based on 10,950 shares of Series A Convertible
Preferred Stock outstanding. Each share of Series A Convertible Preferred
Stock is convertible into 22.5 shares of common stock. Except as otherwise
required by law, each holder of Series A Convertible Preferred Stock is
entitled to vote on all matters submitted to our stockholders, voting
together with the holders of common stock as a single class, with each
shares of Series A Convertible Preferred Stock entitled to one vote per
share.
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(3)
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Consists
of: (a) 1,600,000 shares of common stock; and (b) warrants to purchase
1,000,000 shares of common stock.
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(4)
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Consists
of: (a) 1,272,000 shares of common stock; and (b) warrants to purchase
1,942,200 shares of common stock. John Francis has voting and
investment control over the securities held by Francis Capital Management,
LLC.
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(5)
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Consists
of: (a) 800,000 shares of common stock; and (b) warrants to purchase
480,000 shares of common stock.
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(6)
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Consists
of: (a) 640,000 shares of common stock; and (b) warrants to purchase
474,000 shares of common stock.
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(7)
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A
Plus International, Inc. owns 800,000 shares of common stock and
warrants to purchase 300,000 shares of common stock.
Mr. Lin has the power to vote and direct the disposition of all
securities owned by A Plus International, Inc.
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(8)
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Consists
of warrants to purchase 1,627,252 shares of common
stock.
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(9)
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Consists
of: (a) 600,682 shares of common stock; and (b) warrants to purchase
468,311 shares of common stock.
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(10)
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Consists
of: (a) 275,072 shares of common stock; (b) warrants to purchase 70,221
shares of common stock; and (c) 183,375 shares of common stock
issuable upon conversion of 8,150 shares of Series A Convertible
Preferred Stock.
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(11)
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Consists
of: (a) 58,500 shares of common stock issuable upon conversion of 2,600
shares of Series A Convertible Preferred Stock.
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(12)
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Consists
of: (a) 130,000 shares of common stock; (b) warrants to purchase 348,000
shares of common stock; (c) 60,000 shares of common stock issuable upon
exercise of stock options with an exercise price of $5.27 per share that
expire March 30, 2015; and (d) 125,000 shares of common stock issuable
upon exercise of stock options with an exercise price of $0.75 per
share.
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(13)
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Consists
of: (a) 79,653 shares of common stock; (b) 15,000 shares of common stock
issuable upon exercise of stock options with an exercise price of $4.30
per share that expire on January 25, 2016; (c) 19,500 shares of common
stock issuable upon exercise of stock options with an exercise price of
$5.27 per share that expire on March 30, 2015; and (d) warrants to
purchase 65,000 shares of common stock.
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(14)
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Consists
of: (a) 90,000 shares of common stock issuable upon exercise of stock
options with an exercise price of $4.10 per share that expire on January
31, 2016; and (b) 90,000 shares of common stock issuable upon exercise of
stock options with an exercise price of $5.27 per share that expire on
March 30, 2015.
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(15)
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Consists
of warrants to purchase 166,666 shares of common
stock.
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INFORMATION
REGARDING THE COMPANY’S
EXECUTIVE
OFFICERS, ITS BOARD AND ITS COMMITTEES
Directors
and Executive Officers
Our
directors and executive officers as of June 22, 2009 are as
follows:
|
Name
|
|
Age
|
|
Position (s)
|
|
Steven
H. Kane
|
|
56
|
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Chairman
of the Board of Directors, President and Chief Executive
Officer
|
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Mary
A. Lay
|
|
52
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Interim
Chief Financial Officer and Corporate Secretary
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Brian
Stewart
|
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37
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Vice
President Business Development
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Howard
E. Chase
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73
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Director
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John
P. Francis
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43
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Director
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Louis
Glazer, M.D., Ph.G.
|
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78
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Director
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Herbert
Langsam
|
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78
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Director
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Wenchen
Lin
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53
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Director
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Loren
L. McFarland
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50
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|
Director
|
The
information below is for executive officers that are not members of our Board of
Directors. Please refer to Proposal No. 1, Election of Directors, for
information on members of our Board of Directors.
Mary A.
Lay, age 52, Interim Chief Financial Officer and Principal Accounting
Officer, Secretary. Prior to joining the Company, from 2005 to 2008, Ms. Lay
served as the Chief Financial Officer of Meret Optical Communications, Inc. a
privately held manufacturer of RF Subsystems; from 2002 to 2004 as Vice
President of Finance and Acting Chief Financial Officer of Sorrento Networks
Corporation a mid-market manufacturer of intelligent optical networking
solutions listed on the NASDAQ Global Market; from 1999 to 2002 as Chief
Financial Officer for a dot.com development stage company and a golf publication
and manufacturing company. Ms. Lay earned a MBA from the University
of Phoenix and a BA of Business with emphasis in Financial Accounting from
National University. She received her CPA certification in
Maryland.
Brian E. Stewart,
age 37, Co-Founder of SurgiCount Medical, Inc., Vice President Business
Development. Prior to returning to SurgiCount, Mr. Stewart worked in
the investment banking division of Credit Suisse and CIBC World Markets.
In addition to his investment banking and entrepreneurial experience, Mr.
Stewart’s previous experience includes Strome Investment Management, a hedge
fund in Santa Monica, CA. Mr. Stewart received his MBA from The Anderson
School at UCLA and his BA in Economics from UCLA where he graduated Phi Beta
Kappa and Summa Cum Laude.
Board
of Directors and Committee Information
The Board
has three committees: an Audit Committee, a Compensation Committee and a
Nominating Committee. The Audit Committee and Compensation Committee operate
pursuant to a committee charter. The charter of each committee is available
without charge, upon a written request mailed to: c/o Corporate Secretary,
Patient Safety Technologies, Inc., 43460 Ridge Park Drive, Suite 140, Temecula,
CA 92590.
As of
December 31, 2008, the cash compensation earned by each director of the Company
varied. Steven H. Kane and David Augustine earned $125,000 and
$20,000, respectively in fees and Arnold Spangler received stock option grants
valued at $134,750. The other directors were eligible to receive a
fee of $500 plus reimbursement of expenses incurred in attending each board
meeting. During 2008, the Company did not compensate Messrs. Langsam,
Lin, Francis, Glazer and Adams for serving on the Board of
Directors. All compensation earned by Messrs. Kane,
Augustine and Spangler is set forth in the “Summary Compensation
Table.” All compensation earned by Messrs. Kane and Augustine for
fiscal year 2008 was accrued but not paid.
The Board
met seven times during the fiscal year ended December 31, 2007 and eleven times
during the fiscal year ended December 31, 2008. Each Board member, with the
exception of Mr. Lin attended 90% or more of the aggregate number of meetings of
the Board and of the committees on which he or she served that was held during
the period for which he or she was a director or committee member,
respectively. Mr. Lin, attended 73% of the meeting
held. Furthermore, it is the Company’s policy to invite, but not
require, each of its directors and director nominees to attend the Company’s
annual meeting of stockholders.
The
following table provides membership and meeting information for 2008 and 2007
for each of the Board’s committees:
|
Name
|
|
Audit
|
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|
Nominating
|
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|
Compensation
|
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2008
|
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2007
|
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2008
|
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|
2007
|
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|
2008
|
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|
2007
|
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|
Louis
Glazer, M.D., Ph.G.(1)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
X |
|
|
|
— |
|
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Herbert
Langsam(2)
|
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|
— |
|
|
|
X |
|
|
|
— |
|
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|
— |
|
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|
X |
|
|
|
X |
|
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Arnold
E. Spangler(3)
|
|
|
X |
|
|
|
X |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
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David
Augustine (4)
|
|
|
X |
|
|
|
— |
|
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|
X |
|
|
|
— |
|
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|
— |
|
|
|
X |
|
|
Wenchen
Lin(5)
|
|
|
— |
|
|
|
— |
|
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|
X |
|
|
|
— |
|
|
|
— |
|
|
|
— |
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John
P. Francis(6)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
X |
|
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Steven
H. Kane(7)*
|
|
|
X |
|
|
|
— |
|
|
|
X |
|
|
|
— |
|
|
|
X |
|
|
|
— |
|
|
William
Adams(8)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
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Total
meetings in fiscal years
|
|
|
-1- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
* Committee
Chairperson.
X Denotes
committee member.
|
(1)
|
Louis
Glazer was elected to the Board at the Special Meeting on October 22, 2004
and was also appointed as a member of the respective committees listed
above.
|
|
(2)
|
Herbert
Langsam was elected to the Board at the Special Meeting on October 22,
2004 and was also appointed as a member of the respective committees
listed above.
|
|
(3)
|
Arnold
Spangler was elected to the Board as of January 6, 2006 and resigned on
June 11, 2008. Mr. Spangler currently does not serve on the
Board or as an Officer.
|
|
(4)
|
David
Augustine was elected to the Board as a director effective January 24,
2007 and resigned March 10, 2009. Mr. Augustine currently does
not serve on the Board or as an
Officer.
|
|
(5)
|
Wenchen
Lin was elected to the Board as a director effective March 28,
2007.
|
|
(6)
|
John
P. Francis was elected to the Board as a director effective November 26,
2007.
|
|
(7)
|
Steven
H. Kane was elected to the Board as a director effective February 7,
2008.
|
|
(8)
|
William
Adams was elected to the Board as a director effective June 11, 2008 and
resigned January 5, 2009. Mr. Adams currently does not serve on
the Board or as an Officer.
|
Below is
a description of each committee of the Board. The Board has determined that each
member of each committee meets the required applicable rules and regulations
regarding “independence” and that each member is free of any relationship that
would interfere with his or her individual exercise of independent judgment with
regard to the Company. Each of the committees described below has authority to
engage legal counsel or other experts or consultants, as it deems appropriate to
carry out its responsibilities.
Audit
Committee
The Audit
Committee operates pursuant to an Amended and Restated Charter of the Audit
Committee, which sets forth the responsibilities of the Audit Committee. The
primary function of the Audit Committee is to oversee and monitor the Company’s
accounting and reporting processes and the audits of the Company’s financial
statements.
The Audit
Committee members currently are Loren L. McFarland and Howard E. Chase,
both of whom are considered independent under Rule 10A-3 under the Exchange
Act. Mr. McFarland serves as the Chairman of the Audit
Committee.
Nominating
Committee
The
Nominating Committee has the power and authority to nominate qualified
applicants to the Board when a vacancy arises. The Nominating
Committee members currently are Howard E. Chase, Wenchen Lin and Steven H.
Kane. Mr. Chase is considered independent under Rule 10A-3 under
the Exchange Act. Mr. Chase serves as the Chairman of the Nominating
Committee.
Compensation
Committee
The
Compensation Committee operates pursuant to an Amended and Restated Charter of
the Compensation Committee. The Compensation Committee determines and recommends
to the Board the compensation to be paid to the Company’s executive officers and
also reviews the amount of salary and bonus for each of the Company’s other
officers and employees. In addition, the Compensation Committee determines and
recommends to the Board the amount of stock option grants to be made to the
Company’s officers and directors under the Company’s existing Stock Incentive
Plan and/or Non-Statutory Stock Option Plan, respectively and will determine
individual performance awards for such participants.
The
Compensation Committee members currently are Howard E. Chase, Loren L. McFarland
and Herbert Langsam. Messrs. Chase, McFarland and Langsam are all
considered independent under Rule 10A-3 under the Exchange Act. Each member
of the Compensation Committee is a “non-employee director” for purposes of
Rule 16b-3 under Section 16 of the Exchange Act. Mr. Chase serves
as the Chairman of the Compensation Committee.
Nomination
of Directors
The
Company currently has a separate nominating committee of the Board. The
Nominating Committee members participate in the consideration of potential
nominations for election to the Board. Once the candidates are selected, the
Nominating Committee presents them to the Board for their evaluation and
consideration.
To
fulfill its responsibility to recruit and recommend to the stockholders nominees
for election as directors, the Nominating Committee reviews, on an annual basis,
the appropriate skills and characteristics required of directors in the context
of the current make-up of the Board. This assessment of nominees is based upon
various criteria, including their integrity, independence, accomplishments,
prior or current association with institutions noted for their excellence,
ability to exercise sound business judgment, demonstrated leadership ability,
breadth and knowledge about issues affecting the Company, and background and
experience in areas important to the operation of the Company.
In the
case of incumbent directors whose terms of office are set to expire, the Board
reviews such directors’ overall service to the Company during their terms,
including the number of meetings attended, level of participation and quality of
performance. Consideration of new director nominee candidates typically involves
a series of internal discussions,
review of information concerning candidates and interviews with selected
candidates. In identifying potential new director candidates, the Nominating
Committee seeks recommendations from members of the Board, members of
management, and stockholders. The Nominating Committee may also, if necessary or
appropriate, retain a professional search firm in order to assist it in these
efforts.
The
Nominating Committee considers recommendations for Board candidates submitted by
stockholders using the same criteria (described above) that it applies to
recommendations from directors and members of management. In order to be
considered, a recommendation from a stockholder must be received by the Board no
later than February 12, 2010, the 120th calendar day before the date of the
Company’s proxy statement released to stockholders in connection with the
previous year’s annual meeting of stockholders and must include the
stockholder’s name and contact information, the candidate’s name and contact
information, a description of any relationship between the stockholder and the
candidate, a description of the candidate’s qualifications, and a signed
statement from the candidate that he or she is willing and able to serve on the
Board. Stockholders must submit recommendations in writing to the Board at
c/o Corporate Secretary, Patient Safety Technologies, Inc., 43460 Ridge
Park Drive, Suite 140, Temecula, CA 92590.
After
consideration, and consistent with the Board’s policies described above, all of
the members of the Nominating Committee recommended, and the Board unanimously
approved, the nominations of Steven H. Kane, John P. Francis, Howard E.
Chase, Wenchen Lin, and Loren L. McFarland,. Dr. Louis
Glazer and Herbert Langsam were nominated by the preferred stockholders and such
nomination was unanimously approved by the Board.
Compensation
Committee Interlocks and Insider Participation
During
the last fiscal year, no executive officer of the Company served either as:
(1) a member of the compensation committee (or other board committee
performing equivalent functions or, in the absence of any such committee, the
entire Board of Directors) of another entity, one of whose executive officers
served on the compensation committee (or other board committee performing
equivalent functions or, in the absence of any such committee, the entire Board
of Directors) of the Company; (2) a director of another entity, one of
whose executive officers served on the compensation committee (or other board
committee performing equivalent functions or, in the absence of any such
committee, the entire Board of Directors) of the Company; or (3) a member
of the compensation committee (or other board committee performing equivalent
functions or, in the absence of any such committee, the entire Board of
Directors) of another entity, one of whose executive officers served as a
director of the Company. Our Compensation Committee had no meetings in 2008. As
a result of this, our Board made all the compensation decisions for 2008 and
William Horne and William Adams were both executive officers of the
Company.
Our
Compensation Committee did not meet during 2008. Our Board has reviewed the
Compensation Discussion and Analysis and discussed that analysis with
management. Based on its review and discussions with management, our Board has
decided that the Compensation Discussion and Analysis will be included in the
company’s Annual Report on Form 10-K for 2008 and the Company’s 2009 proxy
statement. This report is provided by the following directors:
Steven H.
Kane Wenchen
Lin
John
Francis Dr.
Louis Glazer
Herbert
Langsam
COMPENSATION
DISCUSSION AND ANALYSIS
For 2009,
we have designed the compensation program for our named executive officers to
attract, motivate, and retain key executives who drive the Company’s success. We
seek to employ the best executive talent in our line of business. We want to
reward our executives for business achievements and satisfaction of corporate
objectives. Additionally, the overall executive compensation program, taken as a
whole, should align the interests of the executives with the stockholders’
interests. We achieve these objectives through a compensation package
that:
|
|
·
|
provides
competitive total compensation consisting primarily of cash and
stock,
|
|
|
·
|
allows
our officer’s to participate in the benefit programs that we offer to all
full-time employees,
|
|
|
·
|
provides
certain officer’s to receive additional fringe
benefits,
|
|
|
·
|
differentiates
rewards based on the officer’s contributions to company performance,
and
|
|
|
·
|
encourages
our named executive officers to act as owners with an equity interest in
Patient Safety.
|
Determining
Executive Compensation
The
independent members of the Board approve the compensation of our named executive
officers. The Compensation Committee makes a recommendation to the
independent directors for annual compensation (including salary, bonus and
stock-based compensation) of our named executive officers. These recommendations
are based on:
Chief executive
officer
|
|
·
|
The
chief executive officer’s historical
earnings,
|
|
|
·
|
a
market competitive assessment of similar roles at other
companies,
|
|
|
·
|
the
earnings of other named executive officers,
and
|
|
|
·
|
an
evaluation of the chief executive officer’s performance for the fiscal
year.
|
Named executive officers
(other than the chief executive officer).
|
|
·
|
The
executive’s historical earnings,
|
|
|
·
|
a
market competitive assessment of similar roles at other
companies,
|
|
|
·
|
internal
comparisons to the compensation of other
executives,
|
|
|
·
|
evaluations
of performance for the fiscal year,
and
|
|
|
·
|
the
chief executive officer’s recommendations for each named executive
officer’s base pay, and bonus
amounts.
|
The
evaluation is based on the success of the named executive officer in achieving
his performance commitments, which include financial, strategic and company
culture/leadership goals. The Board approves the named executive officers
salary, bonus and stock-based compensation in the first quarter of the fiscal
year after the relevant performance information is available.
The
Components of our Executive Compensation Program
Our
executive compensation program consists of three elements: (1) base salaries,
which provide financial security and recognize individual achievement; (2)
annual cash incentives, which are awarded based on achieving yearly performance
goals; and (3) long-term equity incentives, which are meant to ensure that the
interests of our executives and stockholders are aligned.
We use
this mix of programs for a variety of reasons:
|
|
·
|
As
a whole, the mix of elements allows us to offer compensation packages
comparable to those offered by other organizations from which we may seek
to recruit executive talent.
|
|
|
·
|
As
a package, these particular programs provide both a current and a
long-term incentive for our executive officers, and help align the
executives’ incentives with stockholder interests. In
particular, equity incentive awards offer a long term incentive to enhance
the value of the Company’s Common Stock, while cash bonus programs reward
achieving tangible performance
targets.
|
|
|
·
|
The
incentive programs provide a retention incentive for our
executives.
|
We also
provide our named executive officers with a package of fringe benefits provided
to all full-time benefits eligible employees. These benefits include such items
as health insurance and group term life insurance. We provide certain executives
with an additional automobile allowance benefit.
We
believe that our named executive officers should have formalized employment
agreements. The existence of a agreements helps set clear expectations for the
employment relationship. We also believe that the level of security that an
employment contract provides to the executive is an important retention tool,
and that in many instances we need to offer written employment agreements to
compete effectively for executive talent. Certain terms of our current
employment agreements with the named executive officers are discussed in the
“Employment Agreements” section.
Our
Process for Setting Executive Pay
The
Compensation Committee’s focus is to determine the compensation of the chief
executive officer and to review the proposals of the chief executive officer
regarding the compensation for other named executive officers. In 2009, the
Compensation Committee will present recommendations to the entire Board of
Directors for their approval.
Our
executive compensation process begins with the chief executive officer’s
submission of each executive’s total pay package to the Compensation Committee
for its consideration. We maintain a pay structure with ranges for each type of
compensation (base pay, bonus, equity grant) for the named executive officers.
We have developed this structure based on our knowledge of our
industry.
Our
process for determining the value of each component of executive pay has
functioned in the following manner for 2009:
Base pay: Base
compensation for all of our named executive officers is provided for in their
respective employment agreements, and the Company has the ability to make annual
increases to the base pay level. Looking at information from other reporting
companies, the chief executive officer makes a recommendation for executive base
pay increases to the Compensation Committee. The Compensation Committee reviews
the information provided by the chief executive officer and its supporting data,
and makes a determination of annual base pay increases.
Annual bonus: Our
annual bonus program for executives is administered in the following manner. Our
Compensation Committee determines the amount of bonuses, if any, for each of our
named executive officers. To the extent bonuses are made they are on
a completely discretionary basis at the reasonable and good faith discretion of
the Compensation Committee, based upon the financial performance of the
Company.
Equity grants: In
certain circumstances, the Compensation Committee may award equity grants to
named executive officers. The reasons for these grants
include:
|
|
·
|
an
incentive to join the Company, based on compensation that is being
forfeited through the termination of previous
employment,
|
|
|
·
|
to
encourage retention of critical
talent,
|
|
|
·
|
as
a strategic investment in someone deemed critical to the Company’s
leadership, and
|
|
|
·
|
to
reward outstanding performance
|
The chief
executive officer recommends the equity grant, if any, to a named executive
officer. At the time as offer of employment is made, the chief executive officer
provides the Compensation Committee with a proposal for equity grants as part of
the employment contract process. In this case, in 2009, the amount of the grant
will be based on the equity grant ranges for the position, which the Company
maintains. In 2009, the Compensation Committee will consider the chief executive
officer’s recommendation and makes a final decision based on the factors listed
above. Equity grants that were made to named executive officers during 2008 were
authorized by the full board in lieu of the
compensation committee. All of the options granted in 2008 were
valued at fair market value as of the date of grant (as further explained
below).
We
establish the exercise price for our options in the following
manner.
For a new
hire, the Compensation Committee approves the grant and establishes the price
based on the Company’s closing price on the day of Compensation committee
approval; however, if the executive has not yet started employment as of the
date of Compensation Committee approval, the price is set as the Company’s
closing price on the executive’s first day of work.
For a new
contract for a current executive, the Compensation Committee approves the grant
and establishes the price based on the Company’s closing price on the day of
Compensation Committee approval.
We
believe that the grant of fair market value stock options, even though there is
now a financial statement impact before the options are exercised, continues to
provide substantial benefits to the Company and the executive. We benefit
because the options align the executive’s financial interest with the
shareholders’ interest:
The
executives benefit because:
|
|
·
|
They
can realize additional income if our shares increase in value,
and
|
|
|
·
|
They
have no personal income tax impact until they exercise the
options
|
We do not
maintain any equity ownership guidelines for our named executive officers. We
have adopted a corporate policy which expressly prohibits any named executive
officer from trading in derivative securities of our Company, short selling our
securities, or purchasing our securities on margin at any time. We do not time
the granting of our options with any favorable or unfavorable news relating to
our Company. Proximity of any awards to an earnings announcement, market event
or other event related to us is purely coincidental.
Because
we feel that each of our named executive officers provides unique services to
us, we do not use a fixed relationship between base pay, short term bonus and
equity awards. When the Compensation Committee makes the final decisions about a
named executive officers’ total compensation package for a particular year, the
three elements (base pay, bonus and equity award) are considered both
individually and as a complete package. We do not take into account amounts that
a named executive officer may have realized in a particular year as a result of
short-term bonus awards or stock option exercises when we establish pay levels
and goals for the current year. Overall, we believe that our total compensation
program is reasonable while being competitive with market peers.
In
2008, our Compensation Committee did not meet. Due to the financial position of
the Company, with the exception of Richard Bertran, our Board set the base
salaries of our named executive officers at the same level as 2007. In the case
of Mr. Bertran, our Board increased his base salary because of his increased
responsibilities with the Company. Our Board also determined that in
order to conserve cash no annual bonuses were granted or paid in 2008 to our
named executive officers. Our Board did make several equity awards to our named
executive officers based on each individual’s performance during 2008. Our Board
did not document its analysis for any of these compensation
decisions.
The
following table sets forth information concerning the annual and long-term
compensation earned by or paid to our Chief Executive Officer and to other
persons who served as executive officers at and/or during the fiscal year ended
December 31, 2008, who earned compensation exceeding $100,000 during 2008 and
(the “named
executive officers”), for services as executive officers for the last two
fiscal years.
|
SUMMARY
COMPENSATION TABLE
|
|
Name
and principal position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)
(8)
|
Option
& Warrant Awards ($)
(8)
|
Non-Equity
Incentive Plan Compensation ($)
|
Nonqualified
Deferred Compensation Earnings ($)
|
All
Other
Compensation
($)
(9)
|
Total
($)
|
|
William
B. Horne, Former Chief Executive & Chief Financial Officer
(1)
|
2008
2007
|
131,429
218,750
|
-
-
|
-
30,991
|
469,653
30,896
|
-
-
|
-
-
|
-
-
|
601,082
280,637
|
|
Bill
Adams,
Former
President & Chief Executive Officer of SurgiCount
(2)
|
2008
2007
|
312,500
312,500
|
-
-
|
-
-
|
646,381
29,148
|
-
-
|
-
-
|
11,480
-
|
970,361
341,648
|
|
Richard
Bertran, Former President of SurgiCount(3)
|
2008
2007
|
260.417
231,243
|
-
-
|
-
-
|
421,788
53,329
|
-
-
|
-
-
|
12.343
-
|
694,548
284,572
|
|
Mary
Lay
Interim
Chief Financial Officer(4)
|
2008
|
77,903
|
-
|
-
|
-
|
-
|
-
|
-
|
77,903
|
|
Lynne
Silverstein, Former Executive Vice President (5)
|
2007
|
105,000
|
-
|
25,000
|
-
|
-
|
-
|
-
|
130,000
|
|
James
Schafer, Former Director of Manufacturing of SurgiCount(6)
|
2007
|
67,051
|
-
|
37,500
|
-
|
-
|
-
|
-
|
104,551
|
|
Milton
“Todd” Ault III, Former Chief Executive Officer
(7)
|
2007
|
-
|
-
|
26,100
|
-
|
-
|
-
|
-
|
26,100
|
|
|
(1)
|
Mr.
Horne resigned October 13, 2008.
|
|
|
(2)
|
Mr.
Adams resigned January 5, 2009.
|
|
|
(3)
|
Mr.
Bertran resigned January 6, 2009.
|
|
|
(4)
|
Ms.
Lay was appointed Interim Chief Financial Officer on October 13,
2008
|
|
|
(5)
|
Ms.
Silverstein resigned October 15,
2007
|
|
|
(6)
|
Mr.
Schafer resigned August 8, 2007
|
|
|
(7)
|
Mr.
Ault resigned January 5, 2007
|
|
|
(8)
|
Represents
the dollar amount recognized for financial reporting purposes of
restricted stock grants, warrant grants, and stock options awarded in 2008
and 2007, respectively, computed in accordance with SFAS
123(R).
|
|
|
(9)
|
Primarily
represents car payments paid by the
Company
|
The
following table sets forth information with respect to the named executive
officers concerning the grant of stock, warrants, stock options during the
fiscal year ended December 31, 2008. The Company did not have any outstanding
stock appreciation rights (“SARs”) as
of December 31, 2008.
|
GRANTS
OF PLAN-BASED AWARDS
|
|
Name
|
Grant
Date
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan
Awards
|
Estimated
Future Payouts
Under
Equity Incentive Plan
Awards
|
All
Other Stock Awards: Number of Shares of Stocks or Units
|
All
Other Option Awards: Number of Securities Underlying
Options(#)
|
Exercise
or Base Price of Option Awards
($/Sh)
|
Grant
Date Fair Value of Stock and Option Awards
|
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
|
Milton
“Todd” Ault
|
2007
|
0
|
0
|
0
|
0
|
0
|
0
|
15,000
|
0
|
0
|
26,100
|
|
James
Schafer
|
2007
|
0
|
0
|
0
|
0
|
0
|
0
|
25,000
|
0
|
0
|
37,500
|
|
William
B. Horne
|
2008
2007
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
18,019
|
471,600
24,000
|
$1.52
$2.00
|
469,653
69,855
|
|
Bill
Adams
|
2008
2007
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
650,000
24,000
|
$1.25
$2.00
|
646,381
36,917
|
|
Lynne
Silverstein
|
2007
|
0
|
0
|
0
|
0
|
0
|
0
|
20,000
|
0
|
0
|
25,000
|
|
Richard
Bertran
|
2008
2007
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
425,000
50,000
|
1.25
1.39
|
421,788
53,329
|
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|
OPTION
AWARDS
|
STOCK
AWARDS
|
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of Shares or
Units
of Stock That Have
Not
Vested (#)
|
Market
Value of Shares or
Units
of Stock That Have
Not
Vested
($)
|
|
|
Bill
Adams
|
300,000
87,500
20,000
4,000
|
1.25
1.25
2.00
2.00
|
06/12/2018
04/24/2015
03/16/2012
11/26/2012
|
—
|
—
|
|
|
Lynne
Silverstein
|
—
|
—
|
—
|
—
|
—
|
|
|
Richard
Bertran
|
175,000
50,000
62,500
|
1.25
1.39
1.25
|
06/12/2018
10/02/2017
04/24/2015
|
—
—
|
—
—
|
|
Pension
Benefits
The
Company does not offer a pension benefit plan.
Non-Qualified
Deferred Compensation
The
Company does not offer a non-qualified deferred compensation plan.
Compensation
of Directors
As of
December 31, 2008, the cash compensation earned by each director of the Company
varies. Steven H. Kane and David Augustine earned $125,000 and
$20,000 respectively in fees and Arnold Spangler received stock option grants
valued at $134,750. The other directors were eligible to receive a
fee of $500 plus reimbursement of expenses incurred in attending each board
meeting. During 2008, the Company did not compensate Messrs. Langsam,
Lin, Francis, Glazer and Adams for serving on the Board of
Directors. All compensation earned by Messrs. Kane
and Augustine is set forth in the “Summary Compensation Table.”
Director
Compensation
|
Name
|
Fees
Earned or Paid in Cash ($)
|
Stock
Awards
($) (7)
|
Option
Awards
($) (7)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Change
in Pension
Value
and Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total ($)
|
|
Arnold
Spangler(1)
|
-
|
134,750
|
-
|
-
|
-
|
-
|
134,750
|
|
Herbert
Langsam
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
David
Augustine (2)
|
20,000
|
-
|
-
|
-
|
-
|
-
|
20,000
|
|
Wenchen
Lin (3)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
John
Francis (4)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Steven
H. Kane (5)
|
125,000
|
-
|
-
|
-
|
-
|
-
|
125,000
|
|
Louis
Glazer, M.D., Ph.G.,
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
William
Adams(6)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
(1)
|
Mr.
Spangler resigned as a director on June 11, 2008 and does not currently
serve on the Board or as an
Officer.
|
|
|
(2)
|
Mr.
Augustine was appointed as a director effective January 24, 2007 and
resigned March 10, 2009. The $20,000 in director’s fees were
accrued but not paid.
|
|
|
(3)
|
Mr.
Lin was appointed as a director effective March 28,
2007.
|
|
|
(4)
|
Mr.
Francis was appointed as a director effective November 26,
2007.
|
|
|
(5)
|
Mr.
Kane was appointed as a director effective February 7,
2008. The $125,000 in director’s fees were accrued but not
paid.
|
|
|
(6)
|
Mr.
Adams was appointed as a director effective June 11, 2008 and resigned
January 5, 2009.
|
|
|
(7)
|
Represents
the dollar amount recognized for financial reporting purposes of
restricted stock grants and stock options awarded, computed in accordance
with SFAS 123(R).
|
Securities
Authorized for Issuance Under Equity Compensation Plans
On
December 31, 2008, there were 2,500,000 options to purchase shares of common
stock authorized under the Amended and Restated Stock Option and Restricted
Stock Plan, with 24,000 options, warrants, or shares of common stock available
for future issuance under the Amended and Restated Stock Option and Restricted
Stock Plan adopted in 2004. The following table shows information with respect
to equity compensation plan under which the Company's common stock is authorized
for issuance as of the fiscal year ended December 31, 2008.
|
Plan
category
|
Number
of securities
to
be issued upon
exercise
of
outstanding
options,
warrants
and rights
|
Number
of shares of restricted common stock issued
|
Weighted
average
exercise
price of
outstanding
options,
warrants
and rights
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation
plans
(excluding
securities
reflected in
column
(a) and (b)
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
|
Equity
compensation plans
approved
by security
holders
|
1,627,000
|
849,010
|
$3.49
|
23,990
|
|
|
|
|
|
|
|
Equity
compensation plans
not
approved by security
holders
|
-0-
|
-0-
|
-0-
|
-0-
|
|
|
|
|
|
|
|
Total
|
1,627,000
|
849,010
|
-0-
|
23,990
|
Employment
Contracts and Termination and Change of Control Arrangements
Effective
May 7, 2009, the Company entered into an employment agreement with Steven H.
Kane as President and Chief Executive Officer. Mr. Kane will receive an initial
annual base salary of $325,000 and he is eligible to receive an incentive bonus
each fiscal year in the amount of not less than 25% of his annual base salary
for such year, with the payment of such bonus based on Mr. Kane’s achievement of
performance objectives established by the Company’s Board of Directors each
fiscal year. The Agreement also provides for certain severance
arrangements for Mr. Kane. In the event that Mr. Kane’s employment is
terminated without cause the Company is required to pay Mr. Kane (1) all accrued
but unpaid compensation; (2) severance payments based on his annual base salary
for a period of
twelve months; (3) a pro-rated bonus for the year in which termination occurred;
and (4) payment of, or reimbursement for, the continuation of his health and
welfare benefits coverage pursuant to COBRA for a twelve-month period following
such termination or resignation date.
Pursuant
to the Agreement, the Company granted Mr. Kane incentive stock options to
purchase 2,000,000 shares of the Company’ common stock. The option
exercise price of the option was set at the average closing bid and ask price of
the Company’s common stock to the effective date of the
Agreement. Upon the six-month anniversary of the effective date of
the Agreement, 250,000 Shares subject to the Option shall vest and become
exercisable and thereafter, the remaining shares will vest over a forty-two
month period at the rate of 1/48th of the
total shares per month. In addition, upon a change of control of the
Company that occurs during his employment, any unvested options shall become
fully vested and Mr. Kane will receive a cash payment of two times his current
base salary.
Effective
January 5, 2009, the Company entered into an employment agreement with Brian
Stewart as Vice President of Business Development. Mr. Stewart will receive an
initial annual base salary of $225,000 and he is eligible to receive an
incentive bonus each fiscal year in accordance with the terms of the executive
bonus plan, which will be determined by the Chief Executive
Officer. The Agreement also provides for certain severance
arrangements for Mr. Stewart. In the event that Mr. Stewart’s
employment is terminated without cause the Company is required to pay Mr.
Stewart (1) all accrued but unpaid compensation; (2) severance payments based on
his annual base salary for a period of twelve months. If Mr. Stewart
becomes employed prior to the end of the twelve (12) month period, the Company
shall no longer be obligate to compensate Mr. Stewart; (3) a pro-rated bonus for
the year in which termination occurred; and (4) payment of, or reimbursement
for, the continuation of his health and welfare benefits coverage pursuant to
COBRA for a twelve-month period following such termination or resignation
date.
Pursuant
to the Agreement, the Company granted Mr. Stewart incentive stock options to
purchase 750,000 shares of the Company’ common stock. The option
exercise price of the option was set at the average closing bid and ask price of
the Company’s common stock to the effective date of the
Agreement. Upon the six-month anniversary of the effective date of
the Agreement, 93,750 Shares subject to the Option shall vest and become
exercisable and thereafter, the remaining shares will vest over a forty-two
month period at the rate of 1/48th of the
total shares per month. In addition, upon a change of control of the
Company that occurs during his employment, any unvested options shall become
fully vested and Mr. Stewart will receive a cash payment of two times his
current base salary.
Except as
provided in the employment contracts of Messrs. Kane and Stewart, there exists
no plan or arrangement calling for compensation on the retirement or resignation
or any other termination of such individual’s employment with the
Company. The Compensation Committee will consider, consistent with
its duties, the terms of any such agreements, plans or
arrangements.
Indemnification
Agreements
There are
no indemnification agreements known to management which have been entered into
by the Company, except as set forth in the Company’s Amended and Restated
Certificate of Incorporation, which authorizes the Company to indemnify its
executive officers, directors, agents, and any other persons to whom Delaware
law permits the Company to provide indemnification, in excess of the
indemnification otherwise permitted by Section 145 of the Delaware General
Corporation Law, subject only to limits created by applicable Delaware law
(statutory or non-statutory) with respect to actions for breach of duty to the
Company, its stockholders and others.
Policy
With Respect To Section 162(m)
Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
provides that, unless an appropriate exemption applies, a tax deduction for the
Company for compensation of certain executive officers named in the Summary
Compensation Table will not be allowed to the extent such compensation in any
taxable year exceeds $1 million. As no executive officer of the Company received
compensation during 2008 approaching $1 million, and the
Company does not believe that any executive officer's compensation is likely to
exceed $1 million in 2009, the Company has not developed an executive
compensation policy with respect to qualifying compensation paid to its
executive officers for deductibility under Section 162(m) of the
Code.
Certain
Relationships and Related Party Transactions
A
Plus International, Inc.
On
January 29, 2007, the Company entered into an Exclusive License and Supply
Agreement with A Plus International, Inc., a surgical supplies
manufacturer. Pursuant to the Supply Agreement, A Plus was granted
the exclusive, worldwide license to manufacture SurgiCount sponges and
towels.
Under
this agreement, A Plus effectively serves as the Company’s sole source supplier
of consumables for resale to the Company’s customers. The Supply
Agreement has a term of eight years. The agreement provides a pricing
schedule which is to remain fixed at current level for the first three (3) years
of the Supply Agreement; thereafter, the pricing schedule is subject to
adjustment based on certain price indexes and exchange rates.
On April
11, 2008 the Company issued a $100,000 short-term note payable to A Plus, which
was paid in full on May 30, 2008, including $1,000 in accrued
interest. In May 2008, the Company paid A Plus a deposit
of $700,000 to be applied against product purchases from A
Plus. The Company also issued to A Plus a Warrant to purchase up to
300,000 shares of Common Stock of the Company at an exercise price of $2.00 per
share, and with a term of seven (7) years. As of December 31, 2008
the entire $700,000 purchase credit had been applied to surgical sponge
purchases.
Wenchen
Lin, a director and significant beneficial owner of the Company is an officer
and significant equity holder of A Plus. By virtue of his ownership
interest in A Plus, Mr. Lin realized income of approximately $1.4 million and
$467,000 from A Plus’ sales pursuant to the Supply Agreement during the years
ended December 31, 2008 and 2007, respectively.
Relationship
between Health West Marketing Inc., A Plus and the Company’s former Chief
Executive Officer
William
Adams, the Company’s former Chief Executive Officer, has served as Chief
Executive Officer and President of Health West Marketing Inc. since its
inception in 1983. Mr. Adams has informed the Company that during the
years ended December 31, 2008 and 2007 Health West Marketing Incorporated
received payments for consulting services of $240,000 annually from A Plus
International, Inc. The consulting arrangement between A Plus and
Health West has been an ongoing agreement between the respective parties, and
was in place at the time the Company entered into the Supply Agreement with A
Plus.
The
competitiveness of the pricing offered by A Plus under the Supply Agreement has
not been ascertained by the Company’s current management. The Company
did not recognize any income or expense in connection with the arrangement
between A Plus and Health West.
Mr.
Adams’ employment with the Company terminated on January 5,
2009. From January 9 through April 14, 2009, the Company engaged Mr.
Adams’ services as an independent consultant for a monthly fee of $25,000,
equivalent to Mr. Adams former base salary as an employee, plus a car
allowance. Commencing on April 15, 2009, fees payable to Mr. Adams
have been reduced to $10,000 per month and his car allowance has been
discontinued. The Company is currently negotiating a written
consulting services agreement with Mr. Adams.
A
stockholder who wishes to communicate with the Board or with specific individual
directors may send written communications by mail, addressed to the Board
generally, or to any specific director or directors individually, at:
c/o Corporate Secretary, Patient Safety Technologies, Inc., 43460 Ridge
Park Drive, Suite 140, Temecula, CA 92590. All communications so addressed will
be forwarded to the Board or the individual director or directors, as
applicable.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a)
of the Exchange Act requires the Company’s executive officers and directors, and
persons who beneficially own more than 10% of the Common Stock, to file initial
statements of beneficial ownership (Form 3), and statements of changes in
beneficial ownership (Form 4 or 5), of securities of the Company with the
SEC. Executive officers, directors and greater than 10% stockholders also are
required by the SEC to furnish the Company with copies of all forms that they
file pursuant to Section 16(a).
To the
Company’s knowledge, based solely on its review of the copies of such forms
received by it, or written representations from certain reporting persons that
no additional forms were required for those persons, the Company believes that
its executive officers, directors and greater than 10% beneficial owners have
complied with the Section 16(a) filing requirements applicable to them for
the fiscal year ended December 31, 2008, except as follows: Mr. Horne did
not timely file one report covering one transaction, Mr. Langsam did not timely
file one report covering one transaction and Mr. Adams did not timely file one
report covering one transaction.
Householding
of Proxy Materials
The SEC
has adopted rules that permit companies and intermediaries (e.g., brokers) to
satisfy the delivery requirements for proxy statements with respect to two or
more stockholders sharing the same address by delivering a single proxy
statement addressed to those stockholders. This process, which is commonly
referred to as “householding,” potentially means extra convenience for
stockholders and cost savings for companies.
In
connection with the Annual Meeting, a number of brokers with account holders who
are Company stockholders will be “householding” our proxy materials. A single
proxy statement will be delivered to multiple stockholders sharing an address
unless contrary instructions have been received from the affected stockholders.
Once you have received notice from your broker that they will be “householding”
communications to your address, “householding” will continue until you are
notified otherwise or until you revoke your consent. If, at any time, you no
longer wish to participate in “householding” and would prefer to receive a
separate proxy statement, please notify your broker or contact the Company’s
Corporate Secretary at 43460 Ridge Park Drive, Suite 140, Temecula, CA 92590 or
via phone at (951) 587-6201. Stockholders who currently receive multiple
copies of the proxy statement at their address and would like to request
“householding” of their communications should contact their broker.
No
Dissenters' Rights
Stockholders
do not have the statutory right to dissent and obtain an appraisal of their
shares under Delaware law in connection with the matters to be voted on at the
Annual Meeting.
The
Company will furnish, without charge, a copy of the Company’s most recent annual
report on Form 10-K to any stockholder that requests a copy. Requests for
the annual report should be directed to the Company’s Corporate Secretary at
43460 Ridge Park Drive, Suite 140, Temecula, CA 92590, phone:
(951) 587-6201.
Where
You Can Find More Information About the Company
The
Company files annual, quarterly and current reports, proxy statements and other
information with the SEC. You can read and copy any materials that the Company
files with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can obtain information about the operation of the
SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains a Web site that contains information we file electronically with the
SEC, which you can access over the Internet at http://www.sec.gov. Copies of
these materials may also be obtained by mail from the Public Reference Section
of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates.
The Board
does not know of any other matters that may properly be brought, and which are
likely to be brought, before
the Annual Meeting. However, should other matters be properly brought before the
Annual Meeting, the persons named on the enclosed proxy or their substitutes
will vote in accordance with their best judgment on such matters.
2010
Annual Meeting of Stockholders
Stockholders
may present proposals for action at a future meeting only if they comply with
the requirements of the proxy rules established by the Securities and Exchange
Commission and our bylaws. Stockholder proposals that are intended to
be presented at our 2010 Annual Meeting of Stockholders (the “`2010 Annual
Meeting”) and included in the proxy solicitation materials related to
that meeting, must be received by us, no later than February 12, 2010, which is
120 calendar days prior to the anniversary date of the filing of this Proxy
Statement.
Stockholders
are also advised to review our bylaws, which contain additional advance notice
requirements, including requirements with respect to advance notice of
stockholder proposals and director nominations. Under our current
bylaws, a stockholder proposal or a nomination for a director must be in writing
and should be addressed to the Corporate Secretary at our principal executive
offices located at 43460 Ridge Park Drive, Suite 140, Temecula, CA
92590.
We have
not been notified by any stockholder of his or her intent to present a
stockholder proposal from the floor at this year’s Annual Meeting. The enclosed
proxy grants the proxy holders discretionary authority to vote on any matter
properly brought before the Annual Meeting.
Discretionary
Proxy Voting Authority/Untimely Stockholder Proposals
Rule 14a-4(c)
promulgated under the Exchange Act, as amended, governs the Company’s use of its
discretionary proxy voting authority with respect to a stockholder proposal that
the stockholder has not sought to include in the Company’s proxy statement. The
rule provides that if a proponent of a proposal fails to notify the Company of
the proposal at least 45 days before the date of mailing of the prior
year’s proxy statement, then the management proxies will be allowed to use their
discretionary voting authority when the proposal is raised at the meeting,
without any discussion of the matter required in the proxy statement. With
respect to the Company’s 2010 Annual Meeting of Stockholders, if the Company is
not provided notice of a stockholder proposal which the stockholder has not
previously sought to include in the Company’s proxy statement by March 31, 2010,
management proxies will be allowed to use their discretionary authority as
indicated above. Proxies solicited by the Company will confer discretionary
voting authority with respect to these proposals, subject to SEC rules governing
the exercise of this authority.
June 22,
2009
By Order
of the Board of Director
/s/ Steven H.
Kane
Steven H.
Kane
Chairman
of the Board
AMENDED
AND RESTATED
CERTIFICATE
OF INCORPORATION
OF
PATIENT
SAFETY TECHNOLOGIES, INC.
I.
The name of this Corporation is
Patient Safety Technologies, Inc.
II.
The address of its registered office
in the State of Delaware is 1209 Orange Street in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
III.
The purpose of this Corporation is to
engage in any lawful act or activity for which corporations may be organized
under the DGCL.
IV.
A. This
Corporation is authorized to issue two classes of stock to be designated,
respectively, "Common
Stock" and "Preferred
Stock". The total number of shares which the Corporation is authorized to
issue is 101,000,000 shares, of which (i) 100,000,000 shares shall be Common
Stock, each having a par value of $0.33 and (ii) 1,000,000 shares shall be
Preferred Stock, each having a par value of $1.00.
B. The
Preferred Stock may be issued from time to time in one or more series. The Board
of Directors is hereby expressly authorized to: (i) provide for the issuance of
all or any of the remaining shares of the Preferred Stock in one or more series;
(ii) fix or alter from time to time the designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations or
restrictions of any wholly unissued series of Preferred Stock; (iii) establish
from time to time the number of shares constituting any such series or any of
them; and (iv) increase or decrease the number of shares of any series
subsequent to the issuance of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be decreased in accordance with the foregoing sentence, the shares
constituting such decrease shall resume the status that they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
C. Each
outstanding share of Common Stock shall entitle the holder thereof to one vote
on each matter properly submitted to the stockholders of the Corporation for
their vote; provided, however, that, except
as otherwise required by law, holders of Common Stock shall not be entitled to
vote on any amendment to this Certificate of Incorporation (including any
certificate of designation filed with respect to any series of Preferred Stock)
that relates solely to the terms of one or more outstanding series of Preferred
Stock if the holders of such affected series of Preferred Stock are entitled,
either separately or together as a class with the holders of one or more other
series of Preferred Stock, to vote thereon by law or pursuant to this
Certificate of Incorporation (including any certificate of designation filed
with respect to any series of Preferred Stock).
D. SERIES A PREFERRED STOCK. Of
the authorized number of shares of Preferred Stock, 500,000 shares shall be
designated as "Series A Convertible Preferred Stock" (the "Series A
Preferred Stock") with the following voting powers, preferences and
relative participating, optional and other special rights and qualifications,
limitations and restrictions:
1. RANKING. The Series A
Preferred Stock shall, with respect to distributions upon the liquidation,
winding-up and dissolution of the Corporation, rank: (i) senior to all classes
of Common Stock of the Corporation and to each other class of capital stock or
series of Preferred Stock other than the Series A Preferred Stock issued by the
Corporation after the first date upon which shares of Series A Preferred Stock
were originally issued by the Corporation (the "Initial Closing
Date"), the terms of which do not expressly provide that it ranks
senior to or on a parity with the Series A Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up and dissolution
of the Corporation (collectively referred to with the Common Stock of the
Corporation as "Junior
Securities"); (ii) on a parity with any additional shares of Series A
Preferred Stock issued by the Corporation after the Initial Closing Date and any
other class of capital stock or any additional series of preferred stock issued
by the Corporation established after the Initial Closing Date by the Board of
Directors, the terms of which expressly provide that such class or series will
rank on a parity with the Series A Preferred Stock as to dividend distributions
and distributions upon the liquidation, winding-up and dissolution of the
Corporation (collectively referred to as "Parity
Securities"); and (iii) junior to each class of capital stock or series
of Preferred Stock other than the Series A Preferred Stock issued by the
Corporation after the Initial Closing Date by the Board of Directors, the terms
of which expressly provide that such class or series will rank senior to the
Series A Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding-up and dissolution of the Corporation (collectively
referred to as "Senior
Securities"). Notwithstanding the foregoing, a security shall not be
deemed to be a "Senior Security" solely because such security has a stated
dividend or interest coupon.
2. DIVIDENDS.
a. So
long as any shares of Series A Preferred Stock shall be outstanding, the holders
of such Series A Preferred Stock shall be entitled to receive out of any funds
legally available therefor, when, as and if declared by the Board of Directors
of the Corporation, preferential dividends in cash at a rate of 7% per annum on
the Liquidation Preference (as defined below) hereunder, payable quarterly on
the first day other than a Saturday, a Sunday, or any day on which banking
institutions in New York, New York are required or authorized by law or other
governmental action to be closed (a "Business
Day") of each calendar quarter on a pro rata basis with any Parity
Securities. Such dividends shall be cumulative and begin to accrue from the date
of issuance of such shares, whether or not declared and whether or not there
shall be net profits or net assets of the Corporation legally available for the
payment of those dividends.
b. So
long as any shares of Series A Preferred Stock shall be outstanding, no dividend
whatsoever (except a dividend payable in Common Stock) shall be paid or declared
and no distribution shall be made, on account of any Junior Securities of the
Corporation and no Junior Securities shall be purchased unless (i) all dividends
in respect of the Series A Preferred Stock for all past and current dividend
periods have been paid and all amounts in respect of the redemption of the
Series A Preferred Stock required to be paid herein have been paid in full and
(ii) such Junior Securities have an "asset coverage" (as such term is used under
the Investment Company Act of 1940, as amended (the "Investment
Company Act")) of at least 200% after deducting the amount of such
dividend, distribution or purchase price, as the case may be.
3. CONVERSION
RIGHTS.
a. OPTIONAL CONVERSION OF SERIES A
PREFERRED STOCK INTO COMMON STOCK. A holder of shares of
Series A Preferred Stock may, at any time prior to the tenth anniversary of the
Initial Closing Date, convert such shares into Common Stock, unless previously
redeemed, at the option of the holder thereof. The Series A Preferred Stock will
cease to be convertible after the tenth anniversary of the Initial Closing Date.
For the purposes of conversion, each share of Series A Preferred Stock shall be
valued at the Liquidation Preference, which shall be divided by the greater of
$20 or a rate equal to 15% above the average closing price for the ten
consecutive days on which the American Stock Exchange or other applicable stock
exchange or market is open for business (each, a "Trading
Day") prior to the Initial Closing Date (the "Conversion
Rate") to determine the number of shares of Common Stock issuable upon
conversion. Immediately following such conversion, the rights of the holders of
converted Series A Preferred Stock shall cease and the persons entitled to
receive the Common Stock upon the conversion of Series A Preferred Stock shall
be treated for all purposes as having become the owners of such Common
Stock.
b. MECHANICS; TRANSFER TAX; CONVERSION
RATE.
(i) To
convert the Series A Preferred Stock, a holder must (A) surrender the
certificate or certificates evidencing the shares of Series A Preferred Stock to
be converted, duly endorsed in a form satisfactory to the Corporation, at the
office of the Corporation or the transfer agent, if any, for the Series A
Preferred Stock (the "Transfer
Agent"), (B) notify the Corporation at such office that holder elects to
convert
the Series A Preferred Stock and the number of shares holder wishes to convert,
(C) state in writing the name or names in which holder wishes the certificate or
certificates for shares of Common Stock to be issued, and (D) pay any transfer
or similar tax if required by subparagraph (iii) below. In the event that holder
fails to notify the Corporation of the number of shares of Series A Preferred
Stock which holder wishes to convert, holder shall be deemed to have elected to
convert all shares represented by the certificate or certificates surrendered
for conversion. The date on which any such holder satisfies all those
requirements is the "Conversion
Date". As soon as practicable thereafter, the Corporation shall deliver a
certificate for the number of full shares of Common Stock issuable upon the
conversion, and a new certificate representing the unconverted portion, if any,
of the shares of Series A Preferred Stock represented by the certificate or
certificates surrendered for conversion. The person in whose name the Common
Stock certificate is registered shall be treated as the stockholder of record on
and after the Conversion Date.
(ii) The
Corporation shall not issue any fractional shares of Common Stock upon
conversion of the Series A Preferred Stock. Instead the Corporation shall pay a
cash adjustment based upon the closing price of the Common Stock on the
principal securities exchange on which the Common Stock is then listed on the
Business Day prior to the Conversion Date.
(iii) If
a holder converts shares of Series A Preferred Stock, the Corporation shall pay
any documentary, stamp or similar issue or transfer tax due on the issue of
shares of Common Stock upon the conversion. However, the holder shall pay any
such tax that is due because the shares are issued in a name other than the
holder's name.
(iv) The
Corporation has reserved and shall continue to reserve out of its authorized but
unissued Common Stock, or its Common Stock held in treasury, enough shares of
Common Stock to permit the conversion, in full, of the Series A Preferred Stock
to Common Stock. All shares of Common Stock that may be issued upon conversion
of the Series A Preferred Stock shall be fully paid and nonassessable. The
Corporation shall endeavor to comply with all securities laws regulating the
offer and delivery of shares of Common Stock upon conversion of the Series A
Preferred Stock and shall endeavor to list such shares of Common Stock on each
national securities exchange or automated quotation system on which the Common
Stock is then listed.
(v) In
case the outstanding shares of Common Stock shall be subdivided into a greater
number of shares of Common Stock, the Conversion Rate shall be reduced, and,
conversely, in case the outstanding shares of Common Stock shall be combined
into a smaller number of shares of Common Stock, the Conversion Rate shall be
increased by the product of the Conversion Rate and a fraction the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such subdivision or combination, as the case may be, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such subdivision or combination, as the case may be. Such
reduction or increase, as the case may be, shall become effective immediately
after the opening of business on the Business Day following the day upon which
such subdivision or combination becomes effective.
(vi) If
the Corporation at any time while the Series A Preferred Stock, or any portion
thereof, remains outstanding, shall change any of the securities as to which
conversion rights under this Amended and Restated Certificate of Incorporation
exist into the same or a different number of securities of any other class or
classes, the Series A Preferred Stock shall thereafter represent the right to
acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the securities that were subject to the
conversion rights under this Amended and Restated Certificate of Incorporation
immediately prior to such reclassification or other change and the Conversion
Rate of the Series A Preferred Stock shall be appropriately
adjusted.
(vii) Shares
issuable on conversion of shares of Series A Preferred Stock shall include only
shares of the class designated as Common Stock of the Corporation on the Initial
Closing Date or shares of any class or classes resulting from any
reclassification thereof and which have no preferences in respect of dividends
or amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation and which are not subject to
redemption by the Corporation; provided that, if at any time there shall be more
than one such resulting class, the shares of each such class then so issuable
shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.
(viii) No
adjustment in the Conversion Rate shall reduce the Conversion Rate below the
then par value of the Common Stock.
(ix) Whenever
the Conversion Rate is adjusted, the Corporation shall promptly mail to holders
of Series A Preferred Stock, first class, postage prepaid, a notice of the
adjustment. The Corporation shall file with the Transfer Agent for the Series A
Preferred Stock, if any, a certificate from the Corporation's chief financial
officer briefly stating the facts requiring the adjustment and the manner of
computing it. In the event of any dispute thereon, the opinion of the
Corporation's independent public accountants, if accepted by the Board of
Directors of the Corporation, shall be conclusive and binding on the holders of
the Series A Preferred Stock absent manifest error.
(x) The
Corporation from time to time may reduce the Conversion Rate if it considers
such reductions to be advisable in order that any event treated for federal
income tax purposes as a dividend of stock or stock rights will not be taxable
to the holders of Common Stock by any amount.
(xi) If:
(a) the Corporation takes any
action which would require an adjustment in the Conversion Rate pursuant to
paragraph 3(b)(v) or 3(b)(vi) above;
(b) the Corporation
consolidates or merges with, or transfers all or substantially all of its assets
to, another corporation (other than a wholly owned subsidiary of the
Corporation), and stockholders of the Corporation must approve the transaction;
or
(c) there is a dissolution or
liquidation of the Corporation;
the Corporation shall mail to the
holders of the Series A Preferred Stock, first class, postage prepaid, a notice
stating the proposed record or effective date, as the case may be. The
Corporation shall mail the notice at least 10 days before such date. However,
failure to mail the notice or any defect in it shall not affect the validity of
any transaction referred to in subparagraph (a), (b) or (c) of this paragraph
3(b)(xi).
(xii) In the case of any
consolidation of the Corporation or the merger of the Corporation with or into
any other entity or the sale or transfer of all or substantially all the assets
of the Corporation pursuant to which the Common Stock is converted into other
securities, cash or assets, then, upon consummation of such transaction, each
share of Series A Preferred Stock shall automatically become convertible into
the kind and amount of securities, cash or other assets receivable upon the
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock into which such share of Series A Preferred Stock might have been
converted immediately prior to such consolidation, merger, transfer or sale
(assuming such holder of Common Stock failed to exercise any rights of election
and received per share the kind and amount of consideration receivable per share
by a plurality of non electing shares). Appropriate adjustment (as determined by
the Board of Directors of the Corporation) shall be made in the application of
the provisions herein set forth with respect to the rights and interests
thereafter of the holders of Series A Preferred Stock, to the end that the
provisions set forth herein (including provisions with respect to changes in and
other adjustment of the Conversion Rate) shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or other
securities or property thereafter deliverable upon the conversion of Series A
Preferred Stock. If this paragraph 3(b)(xii) applies, paragraph 3(b)(v) and
3(b)(vi) do not apply.
(xiii) In any case in which
this paragraph 3 shall require that an adjustment as a result of any event
becomes effective from and after a record date, the Corporation may elect to
defer until after the occurrence of such event the issuance to the holder of any
shares of Series A Preferred Stock converted after such record date and before
the occurrence of such event of the additional shares of Common Stock issuable
upon such conversion over and above the shares issuable on the basis of the
Conversion Rate in effect immediately prior to adjustment; provided, however, that if such
event shall not have occurred and authorization of such
event shall be rescinded by the Corporation, the Conversion Rate shall be
recomputed immediately upon such rescission to the price that would have been in
effect had such event not been authorized, provided that such rescission is
permitted by and effective under applicable laws.
4. LIQUIDATION
PREFERENCE. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation or reduction or decrease in its
capital stock resulting in a distribution of assets to the holders of any class
or series of the Corporation's capital stock, each holder of shares of the
Series A Preferred Stock will be entitled to payment out of the assets of the
Corporation available for distribution of an amount equal to $100 per share of
Series A Preferred Stock (the "Liquidation
Preference") held by such holder, plus accrued and unpaid dividends, if
any, to the date fixed for liquidation, dissolution, winding-up or reduction or
decrease in capital stock, before any distribution is made on any Junior
Securities, including, without limitation, Common Stock of the Corporation.
After payment in full of the Liquidation Preference and all accrued and unpaid
dividends, if any, to which holders of Series A Preferred Stock are entitled,
such holders will not be entitled to any further participation in any
distribution of assets of the Corporation. If, upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, the amounts payable
with respect to the Series A Preferred Stock and all other Parity Securities are
not paid in full, the holders of the Series A Preferred Stock and the Parity
Securities will share equally and ratably in any distribution of assets of the
Corporation in proportion to the full liquidation preference and accumulated and
unpaid dividends, if any, to which each is entitled. However, neither the
voluntary sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Corporation nor the consolidation or merger of the Corporation
with or into one or more individuals, partnerships, companies, associations,
joint stock companies, limited liability companies, trusts, joint ventures,
unincorporated organizations or governmental authorities (each, a "Person")
will be deemed to be a voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation or reduction or decrease in capital stock, unless
such sale, conveyance, exchange or transfer shall be in connection with a
liquidation, dissolution or winding-up of the business of the Corporation or
reduction or decrease in capital stock.
5. REDEMPTIONS.
a. The
Series A Preferred Stock shall not be redeemed by the Corporation prior to the
first anniversary of the Initial Closing Date.
b. The
Series A Preferred Stock may be redeemed by the Corporation at any time on or
after the one-year anniversary of the Initial Closing Date, in whole or in part,
on a pro rata basis, if at any time on or after the Initial Closing Date the
average trading price of the Common Stock for at least twenty days during any
thirty consecutive Trading Days is equal to or in excess of 150% of the
Conversion Rate; provided, however, that the
holders of the Series A Preferred Stock shall have the right, up until 5 p.m.,
New York time, on the third Business Day preceding the Redemption Date to
convert the Series A Preferred Stock to Common Stock at the Conversion Rate. If
any holder fails to convert the Series A Preferred Stock during the period
contemplated above, the Corporation may redeem the Series A Preferred Stock in
cash at a price per share equal to the Liquidation Preference plus any accrued
and unpaid dividends thereon through to the date of such redemption plus any
dividends which were scheduled to accrue thereon up through the end of the
calendar year of such redemption.
c. The
Series A Preferred Stock may be redeemed by the Corporation at any time on or
after the three-year anniversary of the Initial Closing Date (whether or not the
circumstances described in subparagraph (b) shall have occurred prior to such
time), at a redemption price in cash equal to the Liquidation Preference per
share of Series A Preferred Stock plus any accrued and unpaid dividends thereon
through the date of such redemption.
d. At
least 15 Business Days prior to the date fixed for any redemption of the Series
A Preferred Stock (the "Redemption
Date"), written notice (the "Redemption
Notice") shall be given by first-class mail, postage prepaid, to each
holder of record on the record date fixed for such redemption of the Series A
Preferred Stock at such holder's address as the same appears on the stock
register of the Corporation, provided that failure to give such notice or any
deficiency therein shall not affect the validity of the procedure for the
redemption of any shares of Series A Preferred Stock to be redeemed except as to
the holder or holders to whom the Corporation
has failed to give said notice or except as to the holder or holders whose
notice was defective. The Redemption Notice shall state:
(i) whether the
redemption is pursuant to subparagraph (b) or (c) hereof;
(ii) the redemption
price;
(iii) whether all or less than
all the outstanding shares of the Series A Preferred Stock are to be redeemed
and the total number of shares of the Series A Preferred Stock being
redeemed;
(iv) the number of
shares of Series A Preferred Stock held, as of the appropriate record date, by
the holder that the Corporation intends to redeem;
(v) the Redemption
Date;
(vi) that the
holder has the right to convert the Series A Preferred Stock to Common Stock
until 5 p.m., New York time, on the third Business Day preceding the Redemption
Date by complying with the provisions of
Section 3
hereof;
(vii) that the
holder is to surrender to the Corporation, at the place or places where
certificates for shares of Series A Preferred Stock are to be surrendered for
redemption, in the manner and at the price designated, its certificate or
certificates representing the shares of Series A Preferred Stock to be redeemed;
and
(viii) that dividends on the
shares of the Series A Preferred Stock to be redeemed shall cease to accrue on
the Redemption Date unless the Corporation defaults in the payment of the
redemption price.
e. Each
holder of Series A Preferred Stock shall surrender the certificate or
certificates representing such shares of Series A Preferred Stock to the
Corporation, duly endorsed, in the manner and at the place designated in the
Redemption Notice and on the date of redemption. The full redemption price for
such shares of Series A Preferred Stock shall be payable in cash to the Person
whose name appears on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be canceled and retired. In the event that
less than all of the shares represented by any such certificate are redeemed, a
new certificate shall be issued representing the unredeemed shares.
f. Unless
the Corporation defaults in the payment in full of the applicable redemption
price, dividends on the Series A Preferred Stock called for redemption shall
cease to accumulate on the Redemption Date, and the holders of such redeemed
shares shall cease to have any further rights with respect thereto from and
after the Redemption Date, other than the right to receive the redemption price,
without interest.
6. VOTING
RIGHTS.
a. The
holders of Series A Preferred Stock shall be entitled to notice of all
stockholders meetings in accordance with the Corporation's bylaws and the DGCL,
and except as otherwise required by applicable law, the holders of the Series A
Preferred Stock shall be entitled to vote on all matters submitted to the
stockholders for a vote, voting together with the holders of the Common Stock as
a single class, with each share of Series A Preferred Stock entitled to one vote
per share.
b. The
holders of the Series A Preferred Stock, voting separately as one class, shall
have the right to elect (i) two directors at all times during which the Series A
Preferred Stock is outstanding and (ii) a majority of the directors, if at any
time dividends on the Series A Preferred Stock shall be unpaid in an amount
equal to two full years' dividends on such securities, and to continue to be so
represented until all dividends in arrears shall have been paid or otherwise
provided for (subject, however to the prior rights, if any, of the
holders of any class of Senior Securities outstanding.) If any vacancies shall
exist in the offices of directors elected by the holders of the Series A
Preferred Stock, such vacancy shall be filled as follows:
(i) Upon
the written request of the holders of record of at least 25% of the shares of
Series A Preferred Stock then outstanding addressed to the Secretary of the
Corporation, a proper officer of the Corporation shall call a special meeting of
the holders of Series A Preferred Stock for the purpose of electing the
directors which such holders are entitled to elect. If such meeting shall not be
called by the proper officer of the Corporation within 30 days after personal
service of said written request upon the Secretary of the Corporation, or within
30 days after mailing the same within the United States by certified mail,
addressed to the Secretary of the Corporation at its principal executive
offices, then the holders of record of at least 25% of the outstanding shares of
the Series A Preferred Stock may designate in writing one of their number to
call such meeting at the expense of the Corporation, and such meeting may be
called by the Person so designated upon the notice required for the annual
meetings of stockholders of the Corporation and shall be held at the place for
holding the annual meetings of stockholders or such other place in the United
States as shall be designated in such notice. Notwithstanding the provisions of
this subparagraph, no such special meeting shall be called if any such request
is received less than 60 days before the date fixed for the next ensuing annual
or special meeting of stockholders of the Corporation. Any holder of shares of
the Series A Preferred Stock so designated shall have, and the Corporation shall
provide, access to the lists of holders of shares of the Series A Preferred
Stock for purposes of calling a meeting pursuant to the provisions of this
subparagraph.
(ii) At
any meeting held for the purpose of electing directors at which the holders of
Series A Preferred Stock shall have the right to elect directors, the presence
in person or by proxy of the holders of at least a majority of the holders of
the Series A Preferred Stock present at such meeting, or represented by proxy,
shall have the right to elect directors.
(iii) Any
vacancy occurring in the office of a director elected by the holders of the
Series A Preferred Stock may be filled by the remaining director elected by such
holders unless and until such vacancy shall be filled by such
holders.
c. The
Corporation shall not, without the affirmative vote or consent of the holders of
at least a majority of the shares of Series A Preferred Stock then outstanding
voting as one class:
(i) amend
or otherwise alter this Amended and Restated Certificate of Incorporation in any
manner that under the DGCL or the Investment Company Act requires the prior vote
as a separate class of the holders of Series A Preferred Stock;
(ii) take
any action which detracts from the voting powers, preferences and relative,
participating, optional and other special rights, and qualifications,
limitations, and restrictions of the Series A Preferred Stock; provided, however, that the
Corporation shall be entitled, without the consent of any holders of Series A
Preferred Stock, to make additional issuances of Series A Preferred Stock,
Senior Securities, Parity Securities or Junior Securities;
(iii) waive
compliance with any provision of paragraph D of Article IV of this Amended and
Restated Certificate of Incorporation; or
(iv) complete
any plan of reorganization adversely affecting the Series A Preferred Stock or
take any of the actions enumerated in Section 13(a) of the Investment Company
Act.
d. Without
the consent of each holder affected, an amendment or waiver of this Amended and
Restated Certificate of Incorporation may not (with respect to any shares of
Series A Preferred Stock held by a non-consenting holder):
(i) alter
the voting rights with respect to the Series A Preferred Stock or reduce the
number of shares of Series A Preferred Stock whose holders must consent to an
amendment, supplement or waiver;
(ii) reduce
the Liquidation Preference or alter the provisions with respect to the
redemption of the Series A Preferred Stock;
(iii) alter
in any manner the conversion rights of the holders of Series A Preferred Stock
set forth in paragraph 3 hereof;
(iv)
reduce the rate of or change the time for payment of dividends on any share of
Series A Preferred Stock;
(v) waive
the consequences of any failure to pay dividends on the Series A Preferred
Stock;
(vi)
make any share of Series A Preferred Stock payable in any form other than as
stated in this Amended and Restated Certificate of Incorporation;
(vii) make
any change in the provisions of this Amended and Restated Certificate of
Incorporation relating to waivers of the rights of holders of Series A Preferred
Stock to receive the Liquidation Preference and dividends on the Series A
Preferred Stock;
(viii) waive
a redemption payment with respect to any share of Series A Preferred Stock;
or
(ix) make
any change in the foregoing amendment and waiver provisions.
e. The
Corporation in its sole discretion may without the vote or consent of any
holders of the Series A Preferred Stock amend or supplement this Amended and
Restated Certificate of Incorporation:
(i) to
cure any ambiguity, defect or inconsistency in any manner that does not
adversely affect the holders of Series A Preferred Stock;
(ii) to
provide for uncertificated Series A Preferred Stock in addition to or in place
of certificated Series A Preferred Stock;
(iii) to
make any change that would provide any additional rights; or
(iv) in
any manner that benefits the holders of the Series A Preferred Stock or that
does not adversely affect the rights under this Amended and Restated Certificate
of Incorporation of any such holder.
7. EXCLUSION OF OTHER
RIGHTS. Except as may otherwise be required by law, the shares
of Series A Preferred Stock shall not have any voting powers, preferences and
relative, participating, optional or other special rights, other than those
specifically set forth in this Amended and Restated Certificate of Incorporation
(as the same may be amended from time to time). The shares of Series A Preferred
Stock shall have no preemptive or subscription rights.
8. HEADINGS OF
SUBDIVISIONS. The headings of the various subdivisions hereof
are for convenience of reference only and shall not affect the interpretation of
any of the provisions hereof.
9. SEVERABILITY OF
PROVISIONS. If any voting powers, preferences and relative,
participating, optional and other special rights of the Series A Preferred Stock
and qualifications, limitations and restrictions thereof set forth in this
Amended and Restated Certificate of Incorporation (as the same may be amended
from time to time) is invalid, unlawful or incapable of being enforced by reason
of any rule of law or public policy, all other voting powers, preferences and
relative, participating, optional and other special rights of Series A
Preferred Stock and qualifications, limitations and restrictions thereof set
forth in this resolution (as so amended) which can be given effect without the
invalid, unlawful or unenforceable voting powers, preferences and relative,
participating, optional or other special rights of Series A Preferred Stock and
qualifications, limitations and restrictions thereof shall, nevertheless, remain
in full force and effect and no voting powers, preferences and relative,
participating, optional or other special rights of Series A Preferred Stock and
qualifications, limitations and restrictions thereof herein set forth shall be
deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of Series A Preferred Stock and
qualifications, limitations and restrictions thereof unless so expressed
herein.
10. RE-ISSUANCE OF SERIES A PREFERRED
STOCK. Shares of Series A Preferred Stock that have been
issued and reacquired in any manner, including shares purchased or redeemed or
exchanged or converted, shall (upon compliance with any applicable provisions of
the laws of Delaware) have the status of authorized but unissued shares of
preferred stock of the Corporation undesignated as to series and may be
designated or re-designated and issued or reissued, as the case may be, as part
of any series of preferred stock of the Corporation, provided that any issuance
of such shares as Series A Preferred Stock must be in compliance with the terms
hereof.
11. MUTILATED OR MISSING SERIES A
PREFERRED STOCK CERTIFICATES. If any of the Series A Preferred
Stock certificates shall be mutilated, lost, stolen or destroyed, the
Corporation shall issue, in exchange and in substitution for and upon
cancellation of the mutilated Series A Preferred Stock certificate, or in lieu
of and substitution for the Series A Preferred Stock certificate lost, stolen or
destroyed, a new Series A Preferred Stock certificate of like tenor and
representing an equivalent amount of shares of Series A Preferred Stock, but
only upon receipt of evidence of such loss, theft or destruction of such Series
A Preferred Stock certificate and indemnity, if requested, satisfactory to the
Corporation and the Transfer Agent (if other than the Corporation).
V.
For the management of the business
and for the conduct of the affairs of the Corporation, and in further
definition, limitation and regulation of the powers of the Corporation, of its
directors and of its stockholders or any class thereof, as the case may be, it
is further provided that:
A. BOARD
OF DIRECTORS.
1. POWERS AND NUMBERS OF DIRECTORS.
The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed exclusively
by one or more resolutions adopted by the Board of Directors and not
inconsistent with the Certificate of Incorporation of the
Corporation.
2. CLASSIFICATION. Subject
to the rights of the holders of any series of Preferred Stock to elect
additional directors under specified circumstances, the directors shall be
elected to a term of one year. At each succeeding annual
meeting of stockholders, all directors shall be elected for a term of one
year. Notwithstanding the foregoing provisions of this section, each
director shall serve until his successor is duly elected and qualified or until
his death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
3. REMOVAL
OF DIRECTORS.
a. Subject
to the rights of any series of Preferred Stock to elect additional directors
under specified circumstances, neither the Board of Directors nor any individual
director may be removed without cause.
b. Subject
to any limitation imposed by law, any individual director or directors may be
removed with cause by the affirmative vote of the holders of a majority of the
voting power of all then-outstanding shares of capital stock of the Corporation
entitled to vote generally at an election of directors.
4. VACANCIES. Subject to the
rights of the holders of any series of Preferred Stock, any vacancies on the
Board of Directors resulting from death, resignation, disqualification, removal
or other causes and any newly created directorships resulting from any increase
in the number of directors, shall, unless the Board of Directors determines by
resolution that any such vacancies or newly created directorships shall be
filled by the stockholders, except as otherwise provided by law, be filled only
by the affirmative vote of a majority of the directors then in office, even
though less than a quorum of the Board of Directors, and not by the
stockholders. Any director elected in accordance with the preceding sentence
shall hold office for the remainder of the full term of the director for which
the vacancy was created or occurred and until such director's successor shall
have been elected and qualified.
B. BYLAW AMENDMENTS. The Board is
expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. The
stockholders shall also have power to adopt, amend or repeal the Bylaws of the
Corporation; provided, however, that, in
addition to any vote of the holders of any class or series of stock of the
Corporation required by law or by this Certificate of Incorporation, the
affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then-outstanding shares of the
capital stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to adopt, amend
or repeal any provision of the Bylaws of the Corporation. The directors of the
Corporation need not be elected by written ballot unless the Bylaws so
provide.
C. STOCKHOLDER ACTION. No action
shall be taken by the stockholders of the Corporation except at an annual or
special meeting of stockholders called in accordance with the Bylaws. No action
shall be taken by the stockholders by written consent or electronic
transmission.
D. ADVANCE NOTICE. Advance notice
of stockholder nominations for the election of directors and of business to be
brought by stockholders before any meeting of the stockholders of the
Corporation shall be given in the manner provided in the Bylaws of the
Corporation.
VI.
A. A
current or former director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability: (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the DGCL; or (iv) for any
transaction from which the director derived any improper personal benefit. If
the DGCL is hereafter amended to further reduce or to authorize, with the
approval of the Corporation's stockholders, further reductions in the liability
of the Corporation's directors for breach of fiduciary duty, then a current or
former director of the Corporation shall not be liable for any such breach to
the fullest extent permitted by the DGCL as so amended.
B. To
the extent permitted by applicable law, this Corporation is also authorized to
provide indemnification of, and advancement of expenses to, its agents (and any
other persons to which Delaware law permits this Corporation to provide
indemnification) in excess of the indemnification and advancement otherwise
permitted by Section 145 of the DGCL through bylaw provisions, agreements with
such agents (or other persons), the requisite vote of stockholders or
disinterested directors or otherwise, subject only to limits created by
applicable Delaware law (statutory or non-statutory), with respect to actions
for breach of duty to the Corporation, its stockholders and others.
C. Any
repeal or modification of any of the foregoing provisions of this Article VI
shall be prospective and shall not adversely affect any right or protection of a
director, officer, agent or other person existing at the time of, or increase
the liability of any director of the Corporation with respect to any acts or
omissions of such director occurring prior to, such repeal or
modification.
VII.
A. The
Corporation reserves the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, except as provided in paragraph
B of this Article VII, and all rights conferred upon the stockholders herein are
granted subject to this reservation.
B. Notwithstanding
any other provisions of this Certificate of Incorporation or any provision of
law which might otherwise permit a lesser vote or no vote, but in addition to
any affirmative vote of the holders of any particular class or series of the
Corporation required by law, this Certificate of Incorporation or any
certificate of designation filed with respect to a series of Preferred Stock,
the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of the then-outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to alter, amend or repeal Articles
V, VI or VII.
PATIENT
SAFETY TECHNOLOGIES, INC.
2009
STOCK OPTION PLAN
PATIENT SAFETY TECHNOLOGIES,
INC.
2009
STOCK OPTION PLAN
1. PURPOSE. This
Stock Option Plan (the “Plan”) is intended to serve as an incentive to, and to
encourage stock ownership by, certain eligible participants rendering services
to Patient Safety Technologies, Inc., a Delaware corporation (the
“Corporation”), and certain affiliates, as set forth below, so that they may
acquire or increase their proprietary interest in the Corporation and to
encourage them to remain in the service of the Corporation.
2. ADMINISTRATION.
2.1 Committee. The
Plan shall be administered by the Board of Directors of the Corporation (the
“Board of Directors”) or a committee of two or more members appointed by the
Board of Directors (the “Committee”) who are Non-Employee Directors as defined
in Rule 16b-3 promulgated under Section 16 of the Securities Exchange
Act of 1934 and an outside director as defined in Treasury Regulation
§ 1.162-27(e)(3). If the Board of Directors does not appoint a
Committee, reference to the Committee herein below shall mean the Board of
Directors. If a Committee is appointed, it shall select one of its
members as Chairman and shall appoint a Secretary, who need not be a member of
the Committee. The Committee shall hold meetings at such times and
places as it may determine and minutes of such meetings shall be
recorded. Acts by a majority of the Committee in a meeting at which a
quorum is present and acts approved in writing by a majority of the members of
the Committee shall be valid acts of the Committee.
2.2 Term. If
the Board of Directors selects a Committee, the members of the Committee shall
serve on the Committee for the period of time determined by the Board of
Directors and shall be subject to removal by the Board of Directors at any
time. The Board of Directors may terminate the function of the
Committee at any time and resume all powers and authority previously delegated
to the Committee.
2.3 Authority. The
Committee shall have sole discretion and authority to grant options under the
Plan to eligible participants rendering services to the Corporation or any
“parent” or “subsidiary” of the Corporation, as defined in Section 424 of
the Internal Revenue Code of 1986, as amended (the “Code”) (“Parent or
Subsidiary”), at such times, under such terms and in such amounts as it may
decide. For purposes of this Plan and any Stock Option Agreement (as
defined below), the term “Corporation” shall include any Parent or Subsidiary,
if applicable. Subject to the express provisions of the Plan, the
Committee shall have complete discretion and authority to interpret the Plan, to
prescribe, amend and rescind the rules and regulations relating to the Plan, to
determine the details and provisions of any Stock Option Agreement, to
accelerate any options granted under the Plan and to make all other
determinations necessary or advisable for the administration of the Plan. Except
that the purchase price of any option may not be reduced after grant, whether
through amendment, cancellation, replacement or otherwise, except as provided
for in Section 6 of this plan.2.4Type of
Option. The Committee shall have full authority and discretion
to determine, and shall specify, whether the eligible individual will be granted
options intended to qualify as incentive options under Section 422 of the Code
(“Incentive Options”) or options which are not intended to qualify under Section
422 of the Code (“Non-Qualified Options”); provided, however, that Incentive
Options shall only be granted to employees of the Corporation, or a Parent or
Subsidiary thereof, and shall be subject to the special limitations set forth
herein attributable to Incentive Options.
2.5 Interpretation. The
interpretation and construction by the Committee of any provisions of the Plan
or of any option granted under the Plan shall be final and binding on all
parties having an interest in this Plan or any option granted
hereunder. No member of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any option
granted under the Plan.
3. ELIGIBILITY.
3.1 General. All
directors, officers, employees of and certain persons rendering services to the
Corporation, or any Parent or Subsidiary, relative to the Corporation’s, or any
Parent’s or Subsidiaries’, management, operation or development shall be
eligible to receive options under the Plan. The selection of
recipients of options shall be within the sole and absolute discretion of the
Committee. No person shall be granted an option under this Plan
unless such person has executed the grant representation letter set forth on
Exhibit “A,” as such Exhibit may be amended by the Committee from time
to time. No person shall be granted an Incentive Option under this
Plan unless such person is an employee of the Corporation, or a Parent or
Subsidiary, on the date of grant. No employee shall be granted more
than 500,000 options in any one calendar year period, unless authorized by the
board.
3.2 Termination of
Eligibility.
3.2.1 If
an optionee ceases to be employed by the Corporation, or its Parent or
Subsidiary, is no longer an officer or member of the Board of Directors of the
Corporation or no longer performs services for the Corporation, or its Parent or
Subsidiary for any reason (other than for “cause,” as hereinafter defined, or
such optionee’s death), any vested option granted hereunder to such optionee
shall expire three months after the date the occurrence giving rise to such
termination of eligibility (or 1 year in the event an optionee is “disabled,” as
defined in Section 22(e)(3) of the Code) or upon the date it expires
by its terms, whichever is earlier. Any option that has not vested in
the optionee as of the date of such termination shall immediately expire and
shall be null and void. The Committee shall, in its sole and absolute
discretion, decide, using the provisions set forth in Treasury Regulations
Section 1.421-7(h), whether an authorized leave of absence or absence for
military or governmental service, or absence for any other reason, shall
constitute termination of eligibility for purposes of this Section.
3.2.2 If
an optionee ceases to be employed by the Corporation, or its Parent or
Subsidiary, is no longer an officer or member of the Board of Directors of the
Corporation, or no longer performs services for the Corporation, or its Parent
or Subsidiary and such termination is as a result of “cause,” as hereinafter
defined, then all options granted hereunder to such optionee shall expire on the
date of the occurrence giving rise to such termination of eligibility or upon
the date it expires by its terms, whichever is earlier, and such optionee shall
have no rights with respect to any unexercised options. For purposes
of this Plan, “cause” shall mean an optionee’s personal dishonesty, misconduct,
breach of fiduciary duty, incompetence, intentional failure to perform stated
obligations, willful violation of any law, rule, regulation or final cease and
desist order, or any material breach of any provision of this Plan, any Stock
Option Agreement or any employment agreement. The Board of Directors
shall have complete discretion and authority to determine whether the
termination of the optionee is for cause.
3.3 Death of Optionee and
Transfer of Option. In the event an optionee shall die, a
vested option may be exercised (subject to the condition that no option shall be
exercisable after its expiration and only to the extent that the optionee’s
right to exercise such option had accrued at the time of the optionee’s death)
at any time within six months after the optionee’s death by the executors or
administrators of the optionee or by any person or persons who shall have
acquired the option directly from the optionee by bequest or
inheritance. Any option that has not vested in the optionee as of the
date of death or termination of employment, whichever is earlier, shall
immediately expire and shall be null and void; provided however, that the
Committee may include in any option agreement a provision that the optionee’s
shares will fully vest upon death of the optionee. No option shall be
transferable by the optionee other than by will or the laws of intestate
succession.
3.4 Limitation on Incentive
Options. No person shall be granted any Incentive Option to
the extent that the aggregate fair market value of the Stock (as defined below)
to which such options are exercisable for the first time by the optionee during
any calendar year (under all plans of the Corporation as determined under
Section 422(d) of the Code) exceeds $100,000. 4.IDENTIFICATION OF
STOCK. The Stock, as defined herein, subject to the options
shall be shares of the Corporation’s authorized but unissued or acquired or
reacquired common stock (the “Stock”). The aggregate number of shares
subject to outstanding options shall not exceed Three Million Thousand
(3,000,000) shares of Stock (subject to adjustment as provided in
Section 6), all of which may be granted
as incentive stock options. If any option granted hereunder shall
expire or terminate for any reason without having been exercised in full, the
unpurchased shares subject thereto shall again be available for purposes of this
Plan.
5. TERMS AND CONDITIONS OF
OPTIONS. Any option granted pursuant to the Plan shall be
evidenced by an agreement (“Stock Option Agreement”) in such form as the
Committee shall from time to time determine, which agreement shall comply with
and be subject to the following terms and conditions:
5.1 Number of
Shares. Each option shall state the number of shares of Stock
to which it pertains.
5.2 Option Exercise
Price. Each option shall state the option exercise price,
which shall be determined by the Committee; provided, however, that (i) the
exercise price of any option shall not be less than the fair market value of the
Stock, as determined by the Committee, on the date of grant of such option and
(ii) the exercise price of any Incentive Stock Option granted to any person who
owns more than 10% of the total combined voting power of all classes of the
Corporation’s stock, as determined for purposes of Section 422 of the Code,
shall not be less than 110% of the fair market value of the Stock, as determined
by the Committee, on the date of grant of such option. The purchase
price of any option may not be reduced after grant, whether through amendment,
cancellation, replacement or otherwise except as provided for in Section 6 of
this plan.
5.3 Term of
Option. The term of an option granted hereunder shall be
determined by the Committee at the time of grant, but shall not exceed ten years
from the date of the grant. The term of any Incentive Option granted
to an employee who owns more than 10% of the total combined voting power of all
classes of the Corporation’s stock, as determined for purposes of Section 422 of
the Code, shall in no event exceed five years from the date of
grant. All options shall be subject to early termination as set forth
in this Plan. In no event shall any option be exercisable after the
expiration of its term.
5.4 Method of
Exercise. An option shall be exercised by written notice to
the Corporation by the optionee (or successor in the event of death) and
execution by the optionee of an exercise representation letter in the form set
forth on Exhibit ”B,” as such Exhibit may be amended by the Committee
from time to time. Such written notice shall state the number of
shares with respect to which the option is being exercised and designate a time,
during normal business hours of the Corporation, for the delivery thereof
(“Exercise Date”), which time shall be at least 30 days after the giving of such
notice unless an earlier date shall have been mutually agreed
upon. At the time specified in the written notice, the Corporation
shall deliver to the optionee at the principal office of the Corporation, or
such other appropriate place as may be determined by the Committee, a
certificate or certificates for such shares. Notwithstanding the
foregoing, the Corporation may postpone delivery of any certificate or
certificates after notice of exercise for such reasonable period as may be
required to comply with any applicable listing requirements of any securities
exchange. In the event an option shall be exercisable by any person
other than the optionee, the required notice under this Section shall be
accompanied by appropriate proof of the right of such person to exercise the
option.
5.5 Medium and Time of
Payment. The option exercise price shall be payable in full on
or before the option Exercise Date by certified or bank cashier’s check, or
other method deemed acceptable by the Board or the Committee.
5.6 Fair Market
Value. The fair market value of a share of Stock on any
relevant date shall be determined in accordance with the following
provisions:
5.6.1 If
the Stock at the time is neither listed nor admitted to trading on any stock
exchange nor traded in the over-the-counter market, then the fair market value
shall be determined by the Committee after taking into account such factors as
the Committee shall deem appropriate.
5.6.2 If
the Stock is not at the time listed or admitted to trading on any stock exchange
but is traded in the over-the-counter market, the fair market value shall be the
mean between the highest bid and lowest asked prices (or, if such information is
available, the closing selling price) of one share of Stock on the date in
question in the over-the-counter market, as such prices are reported by the
National Association of Securities Dealers through its NASDAQ system or any
successor system. If there are no reported bid and asked prices (or
closing
selling price) for the Stock on the date in question, then the mean between the
highest bid and lowest asked prices (or the closing selling price) on the last
preceding date for which such quotations exist shall be determinative of fair
market value.
5.6.3 If
the Stock is at the time listed or admitted to trading on any stock exchange,
then the fair market value shall be the closing selling price of one share of
Stock on the date in question on the stock exchange determined by the Committee
to be the primary market for the Stock, as such price is officially quoted in
the composite tape of transactions on such exchange. If there is no
sale of Stock on such exchange on the date in question, then the fair market
value shall be the closing selling price on the exchange on the last preceding
date for which such quotation exists.
5.7 Rights as a
Stockholder. An optionee or successor shall have no rights as
a stockholder with respect to any Stock underlying any option until the date of
the issuance to such optionee of a certificate for such Stock. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such Stock certificate is issued, except as
provided in Section 6.
5.8 Modification, Extension and
Renewal of Options. Subject to the terms and conditions of the
Plan, the Committee may modify, extend or renew outstanding options granted
under the Plan, or accept the surrender of outstanding options (to the extent
not exercised) and authorize the granting of new options in substitution
therefor.
5.9 Vesting and
Restrictions. The Committee shall have complete authority and
discretion to set the terms, conditions, restrictions, vesting schedules and
other provisions of any option in the applicable Stock Option Agreement and
shall have complete authority to require conditions and restrictions on any
Stock issued pursuant to this Plan; provided, however, that, except with respect
to options granted to officers or directors of the Corporation, options granted
pursuant to this Plan shall be exercisable or “vest” at the rate of at least 25%
per year over the 4-year period beginning on the date the option is
granted. Options granted to officers and directors shall become
exercisable or “vest,” subject to reasonable conditions, at any time during any
period established by the Corporation.
5.10 Other
Provisions. The Stock Option Agreements shall contain such
other provisions, including without limitation, restrictions or conditions upon
the exercise of options, as the Committee shall deem advisable.
6. ADJUSTMENTS UPON CHANGES IN
CAPITALIZATION.
6.1 Subdivision or
Consolidation. Subject to any required action by stockholders
of the Corporation, the number of shares of Stock covered by each outstanding
option, and the exercise price thereof, the number of shares of Common Stock
which may be issued under the Plan but are not then subject to outstanding stock
options, and the maximum number of shares as to which stock options may be
granted and as to which shares may be awarded during any calendar year under
Section 3.1 shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Stock of the Corporation resulting from a
subdivision or consolidation of shares, including, but not limited to, a stock
split, reverse stock split, recapitalization, continuation or reclassification,
or the payment of a stock dividend (but only on the Stock) or any other increase
or decrease in the number of such shares effected without receipt of
consideration by the Corporation.
If the
outstanding shares of Stock shall be changed into or exchangeable for a
different number or kind of shares of stock or other securities of the
Corporation or another corporation, or cash or other property, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of Stock subject to any then outstanding option, and for each share of
Stock which may be issued under the Plan but which is not then subject to any
outstanding option, the number and kind of shares of stock or other securities
(and in the case of outstanding options, the cash or other property) into which
each outstanding share of the Stock shall be so changed or for which each such
share shall be exchangeable.
In case
of any adjustment or substitution as provided for in this Section 6.1, the
aggregate option price for all shares subject to each then outstanding option,
prior to such adjustment or substitution shall be the aggregate option price for
all shares of stock or other securities (including any fraction), cash or other
property to which such shares shall have been adjusted or which shall have been
substituted for such shares. Any new option or exercise price per
share or other unit shall be carried to at least three decimal places with the
last decimal place rounded upwards to the nearest whole number.
If the
outstanding shares of the Stock shall be changed in value by reason of any
spin-off, split-off or split-up, or dividend in partial liquidation, dividend in
property other than cash, or extraordinary distribution to stockholders of the
Stock, the Committee shall make any adjustments to any then outstanding stock
option, which it determines are equitably required to prevent dilution or
enlargement of the rights of optionees which would otherwise result from any
such transaction.
No
adjustment or substitution provided for in this Section 6.1 shall require
the Corporation to issue or sell a fraction of a share or other
security. Accordingly, all fractional shares or other securities
which result from any such adjustment or substitution shall be eliminated and
not carried forward to any subsequent adjustment or substitution.
If any
such adjustment or substitution provided for in this Section 6.1 requires
the approval of stockholders in order to enable the Corporation to grant
Incentive Stock Options, then no such adjustment or substitution shall be made
without the required stockholder approval. Notwithstanding the foregoing, in the
case of Incentive Stock Options, if the effect of any such adjustment or
substitution would be to cause the stock option to fail to continue to qualify
as an Incentive Stock Option or to cause a modification, extension or renewal of
such stock option within the meaning of Section 424 of the Code, the Committee
may elect that such adjustment or substitution not be made but rather shall use
reasonable efforts to effect such other adjustment of each then outstanding
stock option as the Committee, in its discretion, shall deem equitable and which
will not result in any disqualification, modification, extension or renewal
(within the meaning of Section 424 of the Code) of such Incentive Stock
Option.
6.2 Capital
Transactions. Upon a sale or exchange of all or substantially
all of the assets of the Corporation, a merger or consolidation in which the
Corporation is not the surviving corporation, a merger, reorganization or
consolidation in which the Corporation is the surviving corporation and
stockholders of the Corporation exchange their stock for securities or property,
a liquidation of the Corporation or similar transaction, as determined by the
Committee (“Capital Transaction”), this Plan and each option issued under this
Plan, whether vested or unvested, shall terminate, unless such options are
assumed by a successor corporation in a merger or consolidation, immediately
prior to such Capital Transaction; provided, however, that if the outstanding
options will not be assumed by a successor corporation in a merger or
consolidation, subject to terms approved by the Committee, all optionees will
have the right, during the 15 days prior to such Capital Transaction, to
exercise all options. For purposes of this right of exercise prior to
a Capital Transaction in which the options will not be assumed, all options
granted to the optionees will be considered fully vested. The
Corporation shall, subject to any nondisclosure provisions, attempt to provide
optionees at least 15 days notice of the option termination date. The
Committee may (but shall not be obligated to) (i) accelerate the vesting of
any option or (ii) apply the foregoing provisions, including but not
limited to termination of this Plan and any options granted pursuant to the
Plan, in the event there is a sale of 51% or more of the stock of the
Corporation in any two year period or a transaction similar to a Capital
Transaction.
6.3 Adjustments. To
the extent that the foregoing adjustments relate to stock or securities of the
Corporation, such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and
conclusive.
6.4 Ability to
Adjust. The grant of an option pursuant to the Plan shall not
affect in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or
any part of its business or assets.
6.5 Notice of
Adjustment. Whenever the Corporation shall take any action
resulting in any adjustment provided for in this Section, the Corporation shall
forthwith deliver notice of such action to each optionee, which notice shall set
forth the number of shares subject to the option and the exercise price thereof
resulting from such adjustment.
6.6 Limitation on
Adjustments. Any adjustment, assumption or substitution of an
Incentive Option shall comply with Section 424 of the Code, if
applicable.
7. NONASSIGNABILITY. Options
granted under this Plan may not be sold, pledged, assigned or transferred in any
manner other than by will or by the laws of intestate succession, and may be
exercised during the lifetime of an optionee only by such
optionee. Any transfer in violation of this Section shall void
such option and any Stock Option Agreement entered into by the optionee and the
Corporation regarding such transferred option shall be void and have no further
force or effect. No option shall be pledged or hypothecated in any
way, nor shall any option be subject to execution, attachment or similar
process.
8. NO RIGHT OF
EMPLOYMENT. Neither the grant nor exercise of any option nor
anything in this Plan shall impose upon the Corporation or any other corporation
any obligation to employ or continue to employ any optionee. The
right of the Corporation and any other corporation to terminate any employee
shall not be diminished or affected because an option has been granted to such
employee.
9. TERM OF
PLAN. This Plan is effective on the date the Plan is adopted
by the Board of Directors and options may be granted pursuant to the Plan from
time to time within a period of ten (10) years from such date, or the date of
any required stockholder approval required under the Plan, if
earlier. Termination of the Plan shall not affect any option
theretofore granted.
10. AMENDMENT OF THE
PLAN. The Board of Directors of the Corporation may, subject
to any required stockholder approval, suspend, discontinue or terminate the
Plan, or revise or amend it in any respect whatsoever with respect to any shares
of Stock at that time not subject to options.
11. APPLICATION OF
FUNDS. The proceeds received by the Corporation from the sale
of Stock pursuant to options may be used for general corporate
purposes.
12. RESERVATION OF
SHARES. The Corporation, during the term of this Plan, shall
at all times reserve and keep available such number of shares of Stock as shall
be sufficient to satisfy the requirements of the Plan.
13. NO OBLIGATION TO EXERCISE
OPTION. The granting of an option shall not impose any
obligation upon the optionee to exercise such option.
14. APPROVAL OF BOARD OF
DIRECTORS AND STOCKHOLDERS. The Plan, as amended, shall not
take effect until approved by the Board of Directors of the
Corporation. This amended and restated Plan shall be approved by a
vote of the stockholders within 12 months from the date of approval by the Board
of Directors. In the event such stockholder vote is not obtained, all
options granted pursuant to the terms of the amended and restated Plan, whether
vested or unvested, shall be null and void.
15. WITHHOLDING
TAXES. Notwithstanding anything else to the contrary in this
Plan or any Stock Option Agreement, the exercise of any option shall be
conditioned upon payment by such optionee in cash, or other provisions
satisfactory to the Committee, of all local, state, federal or other withholding
taxes applicable, in the Committee’s judgment, to the exercise or to later
disposition of shares acquired upon exercise of an option (including any
repurchase of an option or the Stock).
16. SECURITIES LAWS
COMPLIANCE. Notwithstanding anything contained herein, the
Corporation shall not be obligated to grant any option under this Plan or to
sell, issue or effect any transfer of any Stock unless (i) such grant, sale,
issuance or transfer is at such time effectively registered or exempt from
registration under the Securities Act of 1933, as amended (the “Act”), (ii) the
shares shall have been listed (or authorized for listing upon official notice of
issuance) upon each stock exchange, if any, on which the Stock may then be
listed and (iii) the grant, sale and/or issuance complies with all other
applicable laws, regulations, rules and orders
which may then be in effect. As a condition to exercise of any
option, each optionee shall make such representations as may be deemed
appropriate by counsel to the Corporation for the Corporation to use any
available exemption from registration under the Act or qualification under any
applicable state securities law.
17. RESTRICTIVE
LEGENDS. The certificates representing the Stock issued upon
exercise of options granted pursuant to this Plan will bear any legends required
by applicable securities laws as determined by the Committee.
18. NOTICES. Any
notice to be given under the terms of the Plan shall be addressed to the
Corporation in care of its Secretary at its principal office, and any notice to
be given to an optionee shall be addressed to such optionee at the address
maintained by the Corporation for such person or at such other address as the
optionee may specify in writing to the Corporation.
This
Plan, as adopted by the Board of Directors as of March 11, 2009.
PATIENT
SAFETY TECHNOLOGIES, INC.,
a
Delaware corporation
Signature: /s/ Steven H.
Kane
Printed
Name: Steven H. Kane
Title: Chairman
of the Board of Directors
PROXY
— COMMON
STOCK
PATIENT
SAFETY TECHNOLOGIES, INC.
PROXY FOR
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 6,
2009
The
undersigned hereby appoints Steven H. Kane and Mary A. Lay, or either of them,
as attorneys and proxies to vote all the shares of Common Stock, par value $0.33
per share, of Patient Safety Technologies, Inc. (the “Company”),
which are outstanding in the name of the undersigned and which the undersigned
would be entitled to vote as of June 16, 2009, at the Company’s Annual Meeting
of Stockholders, to be held at the Los Angeles Airport Marriott Hotel, located
at 5855 W. Century Blvd., Los Angeles, California, on August 6, 2009, at
10:00 a.m., and at any or all adjournments or postponements thereof; and
the undersigned hereby instructs and authorizes said attorneys to vote as
indicated on the reverse side.
The
shares represented hereby will be voted in accordance with the instructions
contained on the reverse side. If no instructions are given the shares will be
voted “FOR” the election of all of the nominees in item 1 and “FOR” items 2, 3
and 4 below, each of said items being more fully described in the notice of
meeting and accompanying proxy statement, receipt of which is hereby
acknowledged. In the event of any proposed adjournment of the Annual Meeting to
permit further solicitation of proxies with respect to any proposal listed
below, shares will be voted “FOR” adjournment.
(Continued
and to be signed on reverse side)
Address
Change/Comments (Mark the corresponding box on the reverse side)
PLEASE
INDICATE VOTES ON OPPOSITE SIDE OF THE CARD
TO
VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
Vote
by Internet or Telephone or Mail
24
Hours a Day, 7 Days a Week
Internet
and telephone voting is available through 11:59 PM Eastern Time
the
day prior to annual meeting day.
Your
Internet or telephone vote authorizes the named proxies to vote your shares in
the same manner
as
if you marked, signed and returned your proxy card
|
Internet
xxx
Use
the Internet to vote your
proxy, Have
your proxy card
in
hand when you access the
web
site
|
OR
|
Telephone
xxx-xxx-xxxx
Use
any touch-tone
telephone
to vote your proxy. Have your proxy card in
hand
when you call
|
OR
|
Mail
Mark,
sign and date
your
proxy card
and
return it in the
enclosed
postage-paid envelope
|
PLEASE
INDICATE YOUR VOTE BY FILLING IN THE APPROPRIATE BOX BELOW, AS SHOWN, USING BLUE
OR BLACK INK OR DARK PENCIL. DO NOT USE RED INK. IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED FOR THE PROPOSALS DESCRIBED HEREIN.
|
Proposal
No. 1
|
Approval
of the election to the Board of Steven H. Kane, John P. Francis and Howard
E. Chase as Class I Directors for a term expiring in 2010, Herbert Langsam
and Wenchen Lin as Class II Directors for a term expiring in 2011, and Dr.
Louis Glazer and Loren L. McFarland as Class III Directors for
a term expiring in 2012, or until their successors have been duly elected
and qualified or until their earlier death, resignation or removal, in
accordance with the Company’s bylaws, as
amended.
|
|
FOR
the nominees listed
(except
as marked to the
contrary
below)
|
|
WITHHOLD
AUTHORITY
to
vote for all the
nominee(s)
listed
|
|
[ ]
|
|
[ ]
|
Withheld
for the nominees you list below: (Write that nominee’s name in the space
provided below.)
|
Proposal
No. 2
|
Approval
of the ratification of the appointment by the Board of Directors of the
Company of Squar, Milner, Peterson, Miranda &
Williamson, L.L.P. to serve as independent auditors for the fiscal
year ending December 31, 2009.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[ ]
|
[ ]
|
[ ]
|
|
Proposal
No. 3
|
Approval
of the amendment and restatement of the Company's certificate of
incorporation to increase the authorized number of shares of Common Stock
from 25,000,000 shares to 100,000,000
shares.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[ ]
|
[ ]
|
[ ]
|
|
Proposal
No. 4
|
Approval
of the Company’s 2009 Stock Option
Plan.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[ ]
|
[ ]
|
[ ]
|
|
Proposal
No. 5
|
Approval
of the amendment and restatement of the Company’s certificate of
incorporation to restructure the Board of Directors from three classes of
directors to one class of
directors.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[ ]
|
[ ]
|
[ ]
|
|
|
|
|
|
|
|
|
In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Annual Meeting or any adjournment or postponement
thereof.
THIS
PROXY MAY BE REVOKED PRIOR TO ITS EXERCISE.
PLEASE
DATE, SIGN AND MAIL PROXY CARD IN THE ENCLOSED ENVELOPE
Signature
of Common Stockholder(s): ______________________________ Dated: _______,
2009
Signature
of Common Stockholder(s): ______________________________ Dated: _______,
2009
Please
sign as name appears hereon. When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
PROXY
—
PREFERRED STOCK
PATIENT
SAFETY TECHNOLOGIES, INC.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 6,
2009
The
undersigned hereby appoints Steven H. Kane and Mary A. Lay, or either of them,
as attorneys and proxies to vote all the shares of Common Stock, par value $0.33
per share, of Patient Safety Technologies, Inc. (the “Company”),
which are outstanding in the name of the undersigned and which the undersigned
would be entitled to vote as of June 16, 2009, at the Company’s Annual Meeting
of Stockholders, to be held at the Los Angeles Airport Marriott Hotel, located
at 5855 W. Century Blvd., Los Angeles, California, on August 6, 2009, at
10:00 a.m., and at any or all adjournments or postponements thereof; and
the undersigned hereby instructs and authorizes said attorneys to vote as
indicated on the reverse side.
The
shares represented hereby will be voted in accordance with the instructions
contained on the reverse side. If no instructions are given the shares will be
voted “FOR” the election of all of the nominees in item 1 and “FOR” items 2, 3,
4 and 5 below, each of said items being more fully described in the notice of
meeting and accompanying proxy statement, receipt of which is hereby
acknowledged. In the event of any proposed adjournment of the Annual Meeting to
permit further solicitation of proxies with respect to any proposal listed
below, shares will be voted “FOR” adjournment.
(Continued
and to be signed on reverse side)
Address
Change/Comments (Mark the corresponding box on the reverse side)
PLEASE
INDICATE VOTES ON OPPOSITE SIDE OF THE CARD
TO
VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
PLEASE
INDICATE YOUR VOTE BY FILLING IN THE APPROPRIATE BOX BELOW, AS SHOWN, USING BLUE
OR BLACK INK OR DARK PENCIL. DO NOT USE RED INK. IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED FOR THE PROPOSALS DESCRIBED HEREIN.
|
Proposal
No. 1
|
Approval
of the election to the Board of Steven H. Kane, John P. Francis and Howard
E. Chase as Class I Directors for a term expiring in 2010, Herbert Langsam
and Wenchen Lin as Class II Directors for a term expiring in 2011, and Dr.
Louis Glazer and Loren L. McFarland as Class III Directors for
a term expiring in 2012, or until their successors have been duly elected
and qualified or until their earlier death, resignation or removal, in
accordance with the Company’s bylaws, as
amended.
|
|
FOR
the nominees listed
(except
as marked to the
contrary
below)
|
|
WITHHOLD
AUTHORITY
to
vote for all the
nominee(s)
listed
|
|
[ ]
|
|
[ ]
|
Withheld
for the nominees you list below: (Write that nominee’s name in the space
provided below.)
|
Proposal
No. 2
|
Approval
of the ratification of the appointment by the Board of Directors of the
Company of Squar, Milner, Peterson, Miranda &
Williamson, L.L.P. to serve as independent auditors for the fiscal
year ending December 31, 2009.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[ ]
|
[ ]
|
[ ]
|
|
Proposal
No. 3
|
Approval
of the amendment and restatement of the Company's certificate of
incorporation to increase the authorized number of shares of Common Stock
from 25,000,000 shares to 100,000,000
shares.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[ ]
|
[ ]
|
[ ]
|
|
Proposal
No. 4
|
Approval
of the Company’s 2009 Stock Option
Plan.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[ ]
|
[ ]
|
[ ]
|
|
Proposal
No. 5
|
Approval
of the amendment of the Company’s certificate of incorporation to
restructure the Board of Directors, reducing the three classes of
directors to one class of directors, and authorizing the Board to amend
and restate the Company’s certificate of incorporation if this proposal is
approved.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[ ]
|
[ ]
|
[ ]
|
|
|
|
|
|
|
|
|
In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Annual Meeting or any adjournment or postponement
thereof.
THIS
PROXY MAY BE REVOKED PRIOR TO ITS EXERCISE.
PLEASE
DATE, SIGN AND MAIL PROXY CARD IN THE ENCLOSED ENVELOPE
Signature
of Common Stockholder(s): _________________________ Dated: _______,
2009
Signature
of Common Stockholder(s): _________________________ Dated: _______,
2009
Please
sign as name appears hereon. When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.