EX-10.2
SUBSCRIPTION AGREEMENT
This Subscription Agreement (this "AGREEMENT") is entered into as of
January 26, 2007 by and among Patient Safety Technologies, Inc., a Delaware
corporation (together with its successors and permitted assigns, the "ISSUER"),
and A Plus International, Inc., a California corporation with an office located
at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx, Xxxxxxxxxx 00000 (together with its successors
and permitted assigns, the "INVESTOR").
RECITALS
Subject to the terms and conditions of this Agreement, the Investor
desires to subscribe for and purchase, and the Issuer desires to issue and sell
to the Investor, certain shares of the Issuer's common stock, par value $.33 per
share (the "COMMON STOCK"), to purchase shares of Common Stock. The Issuer is
offering One Million ($1,000,000) in shares of Common Stock, in a private
placement to the Investor at a purchase price of One Dollar and Twenty-Five
Cents ($1.25) per share and on the other terms and conditions contained in this
Agreement (the "OFFERING"), including thirty seven and one half percent (37.5%)
warrant coverage at Two Dollars ($2.00) per share, exercisable for a period of
five (5) years (the "WARRANT"); PROVIDED that the Issuer reserves the right to
issue and sell a lesser or greater number of shares. Additional information
disclosed in the Company's 10-K's and 10-Q's is hereby incorporated by
reference.
TERMS OF AGREEMENT
In consideration of the mutual representations and warranties,
covenants and agreements contained herein, the parties hereto agree as follows:
1. SUBSCRIPTION AND ISSUANCE OF COMMON STOCK.
1.1 SUBSCRIPTION AND ISSUANCE OF COMMON STOCK. Subject to the
terms and conditions of this Agreement, the Issuer shall issue and sell to the
Investor, and the Investor subscribes for and shall purchase from the Issuer,
that number of shares of Common Stock set forth on such Investor's counterpart
signature page hereof (the "Shares" or "SECURITIES") for the aggregate purchase
price set forth on such counterpart signature page, which aggregate purchase
price shall be equal to the product of the number of Shares subscribed for by
such Investor multiplied by the per share purchase price specified in the above
Recitals to this Agreement (the "PURCHASE Price"). The Purchase Price includes
the Warrant.
1.2 LEGENDS.
Any certificate or certificates representing the Shares shall
bear the following legend, in addition to any legend that may
be required by any Requirements of Law:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE BEING
ISSUED PURSUANT TO THE TERMS OF A SUBSCRIPTION
AGREEMENT WITH THE ISSUER DATED AS OF ___________,
2007, A COPY OF WHICH IS ON FILE WITH THE ISSUER.
THE SHARES REPRESENTED BY THIS CERTIFICATE ISSUED
HEREWITH UNDER SUCH SUBSCRIPTION AGREEMENT WILL NOT
BE SEPARATELY TRANSFERABLE.
IN ADDITION, THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND IN
COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY
STATE WITH RESPECT THERETO OR IN ACCORDANCE WITH AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE AND ALSO MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH ANY APPLICABLE RULES OF THE
SECURITIES AND EXCHANGE COMMISSION.
1.3 FUTURE FINANCINGS. In the event the Issuer conducts additional
financings, the Investor shall have the right to participate in such financings
such that its percentage ownership interest in the Issuer remains unchanged.
2. CLOSING.
2.1 CLOSING. The closing of the transactions contemplated herein
(the "CLOSING") shall take place simultaneously upon execution of this Agreement
at the offices of Issuer located at 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000, Xxx
Xxxxxxx, XX 00000. At the Closing: (i) the Investor participating in such
Closing shall pay to the Issuer, by wire transfer of immediately available funds
to an account designated in writing by the Issuer, the cash portion of the
Purchase Price, $500,000, for the Shares being purchased by such Investor
hereunder; (ii) the Investor shall deliver to the Issuer, as requested by the
Issuer, Safety Sponge product valued at $500,000. The value of such Safety
Sponge product shall be determined in accordance with the provisions of the
Exclusive License and Supply Agreement entered into on January 26, 2007, between
the Issuers wholly-owned subsidiary, SurgiCount Medical, Inc., a California
corporation, and the Investor; (iii) the Issuer shall issue to such Investor the
Shares being purchased by the Investor hereunder and shall deliver or cause to
be delivered to such Investor a certificate or certificates representing such
Shares duly registered in the name of such Investor, as specified on the
signature pages hereto; and (iv) all other actions referred to in this Agreement
which are required to be taken at such Closing shall be taken and all other
agreements and documents referred to in this Agreement that are required for
such Closing shall be executed and delivered.
All funds can be wired to Issuer's escrow agent as follows:
Bank: Keybank National Association
000 XX 0xx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Name: TOL FBO Patient Safety Technologies
ABA: 000000000
Acct: 370151012967
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Any checks are to be made out to Transfer Online, Inc. and mailed to:
Transfer Online, Inc.
000 XX Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attn: Escrow Acct. 370151012967
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
As a material inducement to the Issuer to enter into this Agreement and
issue the Securities, the Investor represents, warrants, and covenants to the
Issuer as follows:
3.1 POWER AND AUTHORITY. Such Investor, if other than a natural
person, is an entity duly organized, validly existing and in good standing under
the laws of the state of its incorporation or formation. Such Investor has the
corporate, partnership or other power (or, in the case of a natural person,
legal capacity) and authority under applicable law to execute and deliver this
Agreement and consummate the transactions contemplated hereby, and has all
necessary authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. Such Investor
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
3.2 NO VIOLATION. The execution and delivery by such Investor of
this Agreement, the consummation of the transactions contemplated hereby, and
the compliance by such Investor with the terms and provisions hereof, will not:
(i) result in a default under (or give any other party the right, with the
giving of notice or the passage of time (or both), to declare a default or
accelerate any obligation under) any Contract to which such Investor is a party
or by which it or its properties or assets are bound (except to the extent such
defaults or accelerations, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on such Investor); (ii)
violate any Requirement of Law applicable to such Investor; or (iii) if such
Investor is other than a natural person, violate any charter, bylaws or similar
documents of such Investor. At or prior to the Closing, such Investor will have
complied with all Requirements of Law applicable to it in connection with the
Offering and at all times thereafter such Investor will comply with all
Requirements of Law applicable to it in connection with any resale or transfer
by such Investor of any Securities acquired by such Investor pursuant to this
Agreement.
3.3 CONSENTS/APPROVALS. No consents, filings, authorizations or
actions of any Governmental Authority are required for such Investor's
execution, delivery and performance of this Agreement. No consent, approval,
waiver or other actions by any Person under any Contract to which such Investor
is a party or by which such Investor or any of its properties or assets are
bound is required or necessary for the execution, delivery and performance by
such Investor of this Agreement and the consummation of the transactions
contemplated hereby.
3.4 ENFORCEABILITY. This Agreement has been duly executed and
delivered by such Investor and (assuming it has been duly authorized, executed,
and delivered by the Issuer)
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constitutes a legal, valid and binding obligation of such Investor, enforceable
against such Investor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyances, reorganization, moratorium or similar laws from time to time in
effect affecting the enforcement of creditor's rights generally, and general
equitable principles, regardless of whether enforceability is considered in a
proceeding at law or in equity, and except for the indemnity provisions of
ARTICLE 5 of this Agreement, which may not be enforceable based upon public
policy considerations.
3.5 INVESTMENT INTENT. Buyer is acquiring the Shares for its own
account, for investment purposes only and not with a view to resale or other
distribution thereof, nor with the intention of selling, transferring or
otherwise disposing of all or any part of such Shares, or any interest therein,
for any particular price, or at any particular time, or upon the happening of
any particular event or circumstances, except selling, transferring, or
disposing of such Shares made in full compliance with all applicable provisions
of the Securities Act of 1993 (the "Securities Act") and the Securities Exchange
Act of 1934, and the Rules and Regulations promulgated by the Securities and
Exchange Commission thereunder, all as amended.
3.6 ACCREDITED INVESTOR. Such Investor is an "accredited investor"
as such term is defined in Rule 501(a) of Regulation D under the Securities Act.
Without limiting the foregoing representation, such Investor confirms that it
has reviewed the partial definition of an "Accredited Investor" which is
attached hereto as EXHIBIT A (which is not a complete definition of the term,
but which includes the most likely categories of qualification) to confirm the
accuracy of such representation, and such Investor has noted by paragraph
number, on its signature page hereto, the category(ies) pursuant to which such
Investor qualifies as an "Accredited Investor" according to the definition set
forth in EXHIBIT A. Such Investor has not been formed for the purpose of
acquiring the Securities. Such Investor is not an officer, director, employee,
investment advisor, promoter, general partner, Affiliate or member of the
advisory board of the Issuer.
3.7 ADEQUATE INFORMATION. Such Investor has received either from
the Issuer or through a search of the Issuer's public filings with the SEC (the
"SEC REPORTS"), and has reviewed, such information as such Investor considers
necessary or appropriate to evaluate the risks and merits of an investment in,
and make an informed investment decision with respect to, the Securities. Such
Investor acknowledges that each of the SEC Reports, including the risk factors
contained therein, are specifically incorporated herein by reference and form an
integral part of this Agreement.
3.8 OPPORTUNITY TO QUESTION. Such Investor has had the opportunity
to question, and has questioned, to the extent deemed necessary or appropriate,
representatives of the Issuer so as to receive answers from the Issuer's
representatives regarding the terms and conditions of an investment in the
Securities and to verify information obtained in such Investor's examination of
the Issuer, including, without limitation, the information that such Investor
may have received and reviewed as referenced in SECTION 3.7 in relation to its
investment in the Securities.
3.9 NO OTHER REPRESENTATIONS. No oral or written representations
have been made to such Investor in connection with such Investor's acquisition
of the Securities which were in any way inconsistent with the information
reviewed by such Investor. Such Investor acknowledges
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that, in deciding whether to enter into this Agreement and to acquire the
Securities hereunder, it has not relied on any representations or warranties of
any type or description made by the Issuer or any of its representatives with
regard to the Issuer or its business, property or prospects of the investment
contemplated herein, other than the representations and warranties of the Issuer
set forth in this ARTICLE 3.
3.10 KNOWLEDGE AND EXPERIENCE. Such Investor understands that an
investment in the Securities involves substantial risk. Such Investor has such
knowledge and experience in financial, tax and business matters, including
substantial experience in evaluating and investing in common stock and other
securities (including the common stock and other securities of speculative
companies), so as to enable such Investor to utilize the information referred to
in SECTION 3.7 hereof and any other information made available by the Issuer to
such Investor in order to evaluate the merits and risks of an investment in the
Securities and to make an informed investment decision with respect thereto.
Specifically, such Investor has given appropriate consideration to the early
stage of development of the Issuer's primary business as well as the Issuer's
financial condition including its ability to continue as a going concern.
3.11 INDEPENDENT DECISION. Such Investor is not relying on the
Issuer or on any legal or other opinion in the materials reviewed by such
Investor with respect to the financial or tax considerations of such Investor
relating to its investment in the Securities. Such Investor has relied solely on
the representations and warranties, covenants and agreements of the Issuer in
this Agreement (including the exhibits and schedules hereto) and on its
examination and independent investigation in making its decision to acquire the
Securities.
4. REGISTRATION RIGHTS.
The Issuer is required to include the Securities, including any
securities acquired from the exercise of the Warrant, acquired pursuant to the
terms of this Agreement in the next registration statement, excluding a
registration statement on Form S-4 or S-8, filed with the SEC. In the event the
Issuer files a registration statement pursuant to the Securities Act of 1933, as
amended, the Securities, including any securities acquired pursuant to exercise
of the Warrant, shall be included for resale in such registration statement, as
provided in EXHIBIT B hereto. A form of the Warrant to be issued pursuant hereto
is attached as EXHIBIT C.
5. INDEMNIFICATION.
5.1 INDEMNIFICATION BY THE ISSUER. The Issuer will indemnify and
hold harmless the Holder or Selling Stockholder of Shares covered by a
Registration Statement pursuant to the provisions of ARTICLE 6, any Person who
controls such Holder or Selling Stockholder within the meaning of the Securities
Act, and any officer, director, investment adviser, employee, agent, partner,
member or Affiliate of such Holder or Selling Stockholder (each, a
"HOLDER/SELLING STOCKHOLDER INDEMNIFIED PARTY"), from and against, and will
reimburse each such Holder/Selling Stockholder Indemnified Party with respect
to, any and all claims, actions, demands, losses, damages, liabilities, costs
and expenses to which such Holder/Selling Stockholder or any such Holder/Selling
Stockholder Indemnified Party may become subject under the Securities Act or
otherwise, insofar as such claims, actions, demands, losses, damages,
liabilities, costs or expenses arise out of or are based upon: (a) any untrue
statement or alleged
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untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto; (b) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
preliminary prospectus or prospectus, in light of the circumstances under which
they were made) not misleading; or (c) any materially inaccurate representation
or breach of any material warranty, agreement or covenant of the Issuer
contained herein; PROVIDED that the Issuer will not be liable in any such case
to the extent that any such claim, action, demand, loss, damage, liability, cost
or expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission (i) made in reliance on and conformity
with information furnished by any Holder/Selling Stockholder in writing
specifically for use in the preparation thereof or (ii) which was cured in an
amendment or supplement to the prospectus (or any amendment or supplement
thereto) delivered to the Holder/Selling Stockholder on a timely basis to permit
proper delivery thereof prior to the date on which any Shares were transferred
or sold.
5.2 INDEMNIFICATION BY THE HOLDER OR SELLING STOCKHOLDER. Each
Holder and each Selling Stockholder of Shares covered by a Registration
Statement pursuant to the provisions of ARTICLE 4 will indemnify and hold
harmless the Issuer, any Person who controls the Issuer within the meaning of
the Securities Act, and any officer, director, employee, agent, partner, member
or Affiliate of the Issuer (each, an "ISSUER INDEMNIFIED Party") from and
against, and will reimburse the Issuer Indemnified Parties with respect to, any
and all claims, actions, demands, losses, damages, liabilities, costs or
expenses to which such Issuer Indemnified Parties may become subject under the
Securities Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses arise out of or are based upon: (a) any untrue or alleged untrue
statement of any material fact contained in such Registration Statement, any
prospectus contained therein or any amendment or supplement thereto; or (b) the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, (in the case of any
preliminary prospectus or prospectus, in light of the circumstances under which
they were made) not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was so made in reliance on and conformity with written
information furnished by such Holder or Selling Stockholder specifically for use
in the preparation thereof; PROVIDED that the liability of any Holder or Selling
Stockholder pursuant to this SECTION 5.2 shall be limited to an amount not to
exceed the net proceeds received by such Holder or Selling Stockholder from the
sale of Registrable Securities pursuant to the Registration Statement which
gives rise to such obligation to indemnify.
5.3 PROCEDURES. Promptly after receipt by a party indemnified
pursuant to the provisions of SECTION 5.1 or SECTION 5.2 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of SECTION 5.1 or
SECTION 5.2, notify the indemnifying party of the commencement thereof; PROVIDED
the omission to so notify the indemnifying party will not relieve it from any
liability which it may have to an indemnified party otherwise than under this
ARTICLE 5, and shall not relieve the indemnifying party from liability under
this ARTICLE 5, except to the extent that such indemnifying party is materially
prejudiced by such omission. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying
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party shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party pursuant to the provisions of SECTION 5.1 or
SECTION 5.2 for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof. No indemnifying party
shall be liable to an indemnified party for any settlement of any action or
claim without the consent of the indemnifying party. No indemnifying party will
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of an unconditional release from all liability in
respect to such action, claim or litigation.
6. MISCELLANEOUS.
6.1 DEFINED TERMS. As used herein the following terms shall have
the following meanings:
(a) "AFFILIATE" has the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in effect
on the date hereof.
(b) "AGREEMENT" has the meaning specified in the preamble
to this Agreement.
(c) "AMEX" has the meaning specified in SECTION 6.12 of
this Agreement.
(d) "BUSINESS DAY" means any day except Saturday, Sunday
and any day which shall be a federal legal holiday or a day on which either (i)
the SEC or (ii) banking institutions in the State of New York are authorized or
required by law or other governmental action to close.
(e) "BYLAWS" means the Bylaws of the Issuer, as the same
may be supplemented, amended, or restated from time to time.
(f) "CERTIFICATE OF INCORPORATION" means the Issuer's
Certificate of Incorporation, as the same may be supplemented, amended or
restated from time to time.
(g) "CLOSING" has the meaning specified in SECTION 2.1 of
this Agreement.
(h) "COMMON STOCK" has the meaning specified in the
Recitals to this Agreement.
(i) "CONFIDENTIAL INFORMATION" has the meaning specified
in SECTION 6.13 of this Agreement.
(j) "CONTRACT" means any indenture, lease, sublease, loan
agreement, mortgage, note, restriction, commitment, obligation or other
contract, agreement or instrument.
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(k) Intentionally deleted.
(l) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(m) "GAAP" means generally accepted accounting principles
in effect in the United States of America.
(n) "GOVERNMENTAL AUTHORITY" means any nation or
government, any state or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
(o) "HOLDER/SELLING STOCKHOLDER INDEMNIFIED PARTY" has
the meaning specified in SECTION 5.1 of this Agreement.
(p) "INVESTOR" has the meaning specified in the preamble
to this Agreement.
(q) "ISSUER" means Patient Safety Technologies, Inc., a
Delaware corporation.
(r) "ISSUER INDEMNIFIED PARTY" has the meaning specified
in SECTION 5.2 of this Agreement.
(s) "KNOWLEDGE" means, with respect to the Issuer, the
actual knowledge of Xxxxxxx X. Xxxxx.
(t) "MATERIAL ADVERSE EFFECT" means a material and
adverse change in, or effect on, the financial condition, properties, assets,
liabilities, rights, obligations, operations or business, of a Person.
(u) "OFFERING" has the meaning specified in the Recitals
to this Agreement.
(v) "PERMIT" means any permit, certificate, consent,
approval, authorization, order, license, variance, franchise or other similar
indicia of authority issued or granted by any Governmental Authority.
(w) "PERSON" means a natural person, partnership,
corporation, limited liability company, business trust, joint stock company,
estate, trust, unincorporated association, joint venture, Governmental Authority
or other entity, of whatever nature.
(x) "PURCHASE PRICE" has the meaning specified in SECTION
1.1 of this Agreement.
(y) "RULE 144" means Rule 144 promulgated under the
Securities Act, or any successor thereto.
(z) "SEC" means the Securities and Exchange Commission.
(aa) "SECURITIES" has the meaning specified in SECTION 1.1
of this Agreement.
(bb) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
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(cc) "SHARES" has the meaning specified in SECTION 1.1 of
this Agreement.
(dd) "WARRANT" has the meaning specified in the Recitals
to this Agreement.
6.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the
defined meanings when used in any certificates, reports or other documents made
or delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) All accounting terms shall have a meaning determined
in accordance with GAAP.
(d) The words "hereof," "herein" and "hereunder," and
words of similar import, when used in this Agreement shall refer to this
Agreement as a whole (including any exhibits and schedules hereto) and not to
any particular provision of this Agreement.
6.3 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
subsequently designate in writing to the other party):
(a) if to the Issuer to:
Patient Safety Technologies, Inc.
c/o Xxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
(b) if to an Investor, to the address set forth next to
such Investor's name on such Investor's counterpart signature page hereto.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered by hand, by messenger or by courier, or if sent by facsimile, upon
confirmation of receipt.
6.4 ENTIRE AGREEMENT. This Agreement (including the exhibits and
schedules attached hereto) and other documents delivered at the Closing pursuant
hereto, contain the entire understanding of the parties in respect of its
subject matter and supersede all prior agreements and understandings between the
parties with respect to such subject matter.
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6.5 EXPENSES; TAXES. The parties shall pay their own fees and
expenses, including their own counsel fees, incurred in connection with this
Agreement or any transaction contemplated hereby. Any sales tax, stamp duty,
deed transfer or other tax (except taxes based on the income of the Investors)
arising out of the issuance of the Securities (but not with respect to
subsequent transfers) by the Issuer to the Investors and consummation of the
transactions contemplated by this Agreement shall be paid by the Issuer.
6.6 AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by the parties to this Agreement. No failure to exercise, and no delay
in exercising, any right, power or privilege under this Agreement shall operate
as a waiver, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude the exercise of any other right, power or
privilege. No waiver of any breach of any provision shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any other provision,
nor shall any waiver be implied from any course of dealing between the parties.
No extension of time for performance of any obligations or other acts hereunder
or under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts. The rights and remedies
of the parties under this Agreement are in addition to all other rights and
remedies, at law or equity, that they may have against each other.
6.7 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and legal assigns. The rights and obligations of the
Issuer pursuant to this Agreement may not be assigned to any third party without
the prior written consent of the Holders of a majority of the Registrable
Securities.
6.8 COUNTERPARTS; FACSIMILE SIGNATURE. This Agreement may be
executed by facsimile signature and in any number of counterparts, each of which
shall be an original but all of which together shall constitute one and the same
instrument.
6.9 HEADINGS. The headings contained in this Agreement are for
convenience of reference only and are not to be given any legal effect and shall
not affect the meaning or interpretation of this Agreement.
6.10 GOVERNING LAW; INTERPRETATION. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of California applicable to contracts executed and to be wholly performed
within such state.
6.11 SEVERABILITY. The parties stipulate that the terms and
provisions of this Agreement are fair and reasonable as of the date of this
Agreement. However, any provision of this Agreement shall be determined by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated. If, moreover, any of those provisions shall for any reason be
determined by a court of competent jurisdiction to be unenforceable because
excessively broad or vague as to duration, activity or subject, it shall be
construed by limiting, reducing or defining it, so as to be enforceable.
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6.12 FURTHER ASSURANCES. Each of the parties hereto shall execute
and deliver such additional instruments and other documents and shall take such
further actions as may be reasonably necessary or appropriate to effectuate,
carry out and comply with all of the terms of this Agreement and the
transactions contemplated hereby. Each of the Investor and the Issuer shall make
on a prompt and timely basis all governmental or regulatory notifications and
filings required to be made by it with or to any Governmental Authority in
connection with the consummation of the transactions contemplated hereby. The
Issuer and the Investor agree to cooperate with one another in the preparation
and filing of all forms, notifications, reports and information, if any,
required or reasonably deemed advisable pursuant to any Requirement of Law or
the American Stock Exchange ("AMEX") rules in connection with the transactions
contemplated by this Agreement and to use their respective commercially
reasonable efforts to agree jointly on a method to overcome any objections by
any Governmental Authority to any such transactions.
6.13 CONFIDENTIAL INFORMATION. The Investor confirms that it has
entered into a confidentiality agreement with the Issuer, pursuant to which such
Investor has agreed to keep confidential certain information relating to the
Issuer that has been disclosed by the Issuer to the Investor in connection with
such Investor's investment in the Securities, and that such Investor shall
continue to be bound by such confidentiality agreement after the Closing. In
addition, the Investor agrees that no portion of the Confidential Information
(as defined below) shall be disclosed to third parties, except as may be
required by law, without the prior express written consent of the Issuer;
PROVIDED that the Investor may share such information with such of its officers
and professional advisors as may need to know such information to assist such
Investor in its evaluation thereof, on the condition that such parties agree to
be bound by the terms of this SECTION 6.13. "CONFIDENTIAL INFORMATION" means the
existence and terms of this Agreement, the transactions contemplated hereby, and
the disclosures and other information contained herein, excluding any
disclosures or other information that is publicly available.
6.14 BOARD REPRESENTATION. The Board of Directors of the Issuer
("Board") shall include at least 1 member designate by the Investor, namely
Xxxxxxx Xxx.
6.15 MATTERS REQUIRING INVESTOR DIRECTOR APPROVAL. The Issuer will
not, without Board approval, which approval must include the affirmative vote of
the Investor designated Director: (i) incur any aggregate indebtedness in excess
of $200,000 that is not already included in a Board-approved budget, other than
trade credit incurred in the ordinary course of business and convertible debt
that shall automatically convert to common stock upon the requisite approvals;
or (ii) sell, transfer, license, pledge or encumber technology or intellectual
property, other than licenses granted in the ordinary course of business
6.16 MANAGEMENT AND INFORMATION RIGHTS. Until the later time of two
years from the closing of a Financing or such time as the Issuer's revenues are
sufficient to fund the Issuer's operations the Investor will be granted access
to Company facilities and personnel during normal business hours and with
reasonable advance notification. The Issuer will deliver to the Investor (i)
annual, quarterly, and, to the extent readily available, monthly financial
statements, and other information as determined by the Board; (ii) thirty days
prior to the end of each fiscal year, a comprehensive operating budget
forecasting the Issuer's revenues, expenses, and cash position on a
month-to-month basis for the upcoming fiscal year; and (iii) promptly following
the end of
11
each quarter an up-to-date capitalization table, certified by the CFO.
6.17 Registration of Shares. The Issuer shall, within the earlier
of ninety (90) days of an equity raise with gross proceeds of at least Four
Million Dollars ($4,000,000) or July 15, 2007, cause to be filed a Registration
Statement under the Securities Act of 1933, as amended, for the registration and
resale of the Share and Warrants as applicable.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12
IN WITNESS WHEREOF, the parties hereto have caused this Subscription
Agreement to be duly executed and delivered as of the date set forth below.
ISSUER:
PATIENT SAFETY TECHNOLOGIES, INC.
By:
---------------------------------------
Name: Xxxxxxx X. Xxxxx
-------------------------------------
Title: Chief Executive Officer
------------------------------------
13
[INVESTOR COUNTERPART SIGNATURE PAGE]
NAME OF INVESTOR (please print) ADDRESS FOR NOTICE (please print)
0000 Xxxxxxxxxx Xxxxxx
---------------------------------
A Plus International, Inc. Xxxxx, XX 00000
------------------------------------ ---------------------------------
---------------------------------
Attention:
-----------------------
Tax Identification #:
------------
SIGNATURE
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Date:
-------------------------------
Exact name to appear on stock certificate: Number of Shares subscribed for:
A Plus International, Inc. 800,000
------------------------------------ --------------------------
Aggregate Purchase Price (see SECTION 1.1): Categories pursuant to which
Investor qualifies as an
Accredited Investor as defined
in EXHIBIT A to this Agreement
(please indicate the applicable
section numbers noted on
EXHIBIT A to this Agreement):
Category 3
$1,000,000 ---------------------------------
---------
14
EXHIBIT A
DEFINITION OF "ACCREDITED INVESTOR"
"ACCREDITED INVESTOR" shall mean any person who comes within any of the
following categories, or who the Issuer reasonably believes comes within any of
the following categories, at the time of the sale of the Securities to that
person:
1. Any bank as defined in section 3(a)(2) of the Act, or
any savings and loan association or other institution as defined in section
3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity;
any broker or dealer registered pursuant to section 15 of the Securities
Exchange Act of 1934; any insurance company as defined in section 2(13) of the
Act; any investment company registered under the Investment Company Act of 1940
or a business development company as defined in section 2(a)(48) of that Act;
any Small Business Investment Company licensed by the U.S. Small Business
Administration under section 301(c) or (d) of the Small Business Investment Act
of 1958; any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total assets in
excess of $5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are Accredited Investors;
2. Any private business development company as defined
in section 202(a)(22) of the Investment Advisers Act of 1940;
3. Any organization described in section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
4. Any director, executive officer, or general partner
of the Issuer, or any director, executive officer, or general partner of a
general partner of the Issuer;
5. Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the time of his purchase exceeds
$1,000,000;
6. Any natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year;
7. Any trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Securities, whose purchase
is directed by a sophisticated person as described in 230.506(b)(2)(ii); and
8. Any entity in which all of the equity owners are
Accredited Investors.
EXHIBIT B
NOTICE AND QUESTIONNAIRE
The undersigned beneficial holder of Registrable Securities of Patient
Safety Technologies, Inc. (the "ISSUER") understands that the Issuer has filed
or intends to file with the Securities and Exchange Commission (the "SEC"),
within the earlier of ninety (90) days of an equity raise with gross proceeds of
at least Four Million Dollars ($4,000,000) or July 15, 2007, a Registration
Statement under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
for the registration and resale of the Registrable Securities in accordance with
the terms of the Subscription Agreement (the "SUBSCRIPTION AGREEMENT") by and
among the Issuer and the purchasers of the Issuer's securities thereunder. The
Subscription Agreement is available from the Issuer upon request at the address
set forth below. All capitalized terms used but not otherwise defined herein
shall have the respective meanings given to them in the Subscription Agreement.
Each beneficial owner of Registrable Securities that has agreed to be
bound by certain provisions of the Subscription Agreement is entitled to the
benefits of the Subscription Agreement under such provisions. In order to sell
or otherwise dispose of any Registrable Securities pursuant to the Registration
Statement, a beneficial owner of Registrable Securities generally will be
required to be named as a selling securityholder in the related prospectus,
deliver a prospectus to purchasers of Registrable Securities and be bound by
those provisions of the Subscription Agreement applicable to such beneficial
owner (including certain indemnification provisions as described below).
Beneficial owners that do not complete this Notice and Questionnaire and deliver
it to the Issuer as provided below will not be named as selling securityholders
in the prospectus and therefore will not be permitted to sell any Registrable
Securities pursuant to the Registration Statement.
Certain legal consequences may arise from being named as selling
securityholders in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the "SELLING STOCKHOLDER") of
Registrable Securities hereby requests that the Issuer include in the
Registration Statement the Registrable Securities beneficially owned by it and
listed below in Item 3 (unless otherwise specified under Item 3) pursuant to the
Registration Statement. The undersigned Selling Stockholder, by signing and
returning this Notice and Questionnaire, understands that it will be bound by
the terms and conditions of this Notice and Questionnaire and the Subscription
Agreement.
The undersigned Selling Stockholder hereby provides the following
information to the Issuer and represents and warrants that such information is
accurate and complete:
QUESTIONNAIRE
1. (a) Full Legal Name of Selling Stockholder: ______________________
(b) Full legal name of registered holder (if not the same as (a)
above) through which Registrable Securities listed in (3)
below are held: _________________________
(c) Full legal name of broker-dealer or other third party through
which Registrable Securities listed in (3) below are held:
__________________________________
(d) Full legal name of DTC participant (if applicable and if not
the same as (b) or (c) above) through which Registrable
Securities listed in (3) below are held:
2. Address for Notices to Selling Stockholder:
Telephone:___________________________________________________________
Fax:_________________________________________________________________
Contact Person:______________________________________________________
3. Beneficial ownership of Registrable Securities:______________________
_____________________________________________________________________
_____________________________________________________________________
UNLESS OTHERWISE INDICATED IN THE SPACE PROVIDED BELOW, ALL SHARES OF
COMMON STOCK LISTED IN RESPONSE TO ITEM (3) ABOVE WILL BE INCLUDED IN
THE REGISTRATION STATEMENT. IF THE UNDERSIGNED DOES NOT WISH ALL SUCH
SHARES OF COMMON STOCK TO BE SO INCLUDED, PLEASE INDICATE BELOW THE
PRINCIPAL AMOUNT OR THE NUMBER OF SHARES TO BE INCLUDED:_____________
______________________________
4. Beneficial Ownership of the Issuer's securities owned by the Selling
Stockholder:__________________________________________________
EXCEPT AS SET FORTH BELOW IN THIS ITEM (4), THE UNDERSIGNED IS
NOT THE BENEFICIAL OR REGISTERED OWNER OF ANY SECURITIES OF
THE ISSUER OTHER THAN THE REGISTRABLE SECURITIES LISTED ABOVE
IN ITEM (3).
(a) Type and amount of other securities beneficially owned by the
Selling Stockholder:__________________________________________
(b) CUSIP No(s). of such other securities beneficially owned:_____
5. Relationship with the Issuer:________________________________________
2
EXCEPT AS SET FORTH BELOW, NEITHER THE UNDERSIGNED NOR ANY OF ITS
AFFILIATES, DIRECTORS OR PRINCIPAL EQUITY HOLDERS (5% OR MORE) HAS
HELD ANY POSITION OR OFFICE OR HAS HAD ANY OTHER MATERIAL
RELATIONSHIP WITH THE ISSUER (OR ITS PREDECESSORS OR AFFILIATES)
DURING THE PAST THREE YEARS.
State any exceptions to the foregoing here:_______________________________
The undersigned Selling Stockholder acknowledges that it understands
its obligation to comply with the provisions of the Exchange Act, and the rules
thereunder relating to stock manipulation, particularly Regulation M thereunder
(or any successor rules or regulations) and the provisions of the Securities Act
relating to prospectus delivery, in connection with any offering of Registrable
Securities pursuant to the Registration Statement. The undersigned Selling
Stockholder agrees that neither it nor any person acting on its behalf will
engage in any transaction in violation of such provisions.
The Selling Stockholder hereby acknowledges its obligations under the
Subscription Agreement to indemnify and hold harmless certain persons set forth
therein. Pursuant to the Subscription Agreement, the Issuer has agreed under
certain circumstances to indemnify the Selling Stockholders against certain
liabilities.
In accordance with the undersigned Selling Stockholder's obligation
under the Subscription Agreement to provide such information as maybe required
by law for inclusion in the Registration Statement, the undersigned Selling
Stockholder agrees to promptly notify the Issuer of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
at any time while the Registration Statement remains effective. All notices
hereunder and pursuant to the Subscription Agreement shall be made in writing at
the address set forth below.
In the event any Selling Stockholder transfers all or any portion of
the Registrable Securities listed in Item (3) above after the date on which such
information is provided to the Issuer, the Selling Stockholder will notify the
transferees at the time of transfer of its rights and obligations under this
Notice and Questionnaire and the Subscription Agreement.
By signing below, the undersigned Selling Stockholder consents to the
disclosure of the information contained herein in its answers to items (1)
through (5) above and the inclusion of such information in the Registration
Statement and any related prospectus. The undersigned Selling Stockholder
understands that such information will be relied upon by the Issuer without
independent investigation or inquiry in connection with the preparation or
amendment of the Registration Statement and any related prospectus.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3
IN WITNESS WHEREOF, the undersigned Selling Stockholder, by authority
duly given, has caused this Notice and Questionnaire to be executed and
delivered either in person or by its authorized agent.
Selling Stockholder:
By:______________________________________
Name:
Title:
Dated:__________________
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:
PATIENT SAFETY TECHNOLOGIES, INC.
c/o XXXXXXX X. XXXXX
0000 XXXXXXX XXXX XXXX
XXXXX 000
XXX XXXXXXX, XX 00000
4
EXHIBIT C
WARRANT
THIS WARRANT IS BEING ISSUED TOGETHER WITH SHARES OF COMMON STOCK OF THE ISSUER
PURSUANT TO A SUBSCRIPTION AGREEMENT WITH THE ISSUER DATED AS OF JANUARY 26,
2007, A COPY OF WHICH IS ON FILE WITH THE ISSUER. NEITHER THIS WARRANT NOR THE
SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY AN OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE FORM AND SUBSTANCE OF WHICH SHALL BE ACCEPTABLE TO THE COMPANY.
COMMON STOCK PURCHASE WARRANT
To Purchase 300,000 Shares of Common Stock of
PATIENT SAFETY TECHNOLOGIES, INC.
This certifies that, for value received, A Plus Internation, Inc. a
California corporation (the "Holder"), is entitled, upon the terms and subject
to the limitations on exercise and the conditions hereinafter set forth, at any
time on or after the date hereof (the "INITIAL EXERCISE DATE") and on or prior
to the fifth (5th) anniversary of the Initial Exercise Date (the "TERMINATION
DATE") but not thereafter, to subscribe for and purchase from Patient Safety
Technologies, Inc., a Delaware corporation (the "ISSUER"), up to 300,000
shares(1) (the "WARRANT SHARES") of Common Stock, par value $.33 per share, of
the Issuer (the "COMMON STOCK"). The purchase price of each Warrant Share (the
"EXERCISE PRICE") under this Warrant shall be equal to $2.00. The Exercise Price
and the number of shares for which the Warrant is exercisable shall be subject
to adjustment as provided herein. This Warrant is being issued pursuant to the
terms and conditions of that certain Subscription Agreement, dated as of even
date herewith, by and among the Issuer and the investors listed therein (the
"SUBSCRIPTION AGREEMENT").
1. CERTAIN DEFINITIONS. Capitalized terms used but not otherwise
defined herein shall have the meanings set forth for such terms in the
Subscription Agreement. In addition, the following terms shall have the
following respective meanings for purposes of this Warrant:
---------------------------
(1) Equals 37.5% of the number of Shares purchased by the Holder pursuant to the
Subscription Agreement.
1
(a) "CLOSING PRICE" means on any particular date: (i) the last
reported closing bid price per share of Common Stock on such date on the
Exchange (as reported by Bloomberg L.P. at 4:15 p.m. New York time as the last
reported closing bid price for regular session trading on such day); (ii) if
there is no such closing bid price per share on such date, the closing bid price
on the Exchange on the date nearest preceding such date (as reported by
Bloomberg L.P. at 4:15 p.m. New York time as the closing bid price for regular
session trading on such day; (iii) if the Common Stock is not then listed or
quoted on an Exchange and if prices for the Common Stock are then reported in
the "pink sheets" published by Pink Sheets LLC (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported; or (iv) if the shares of Common
Stock are not then publicly traded, the fair market value of a share of Common
Stock as determined in good faith by the Issuer's Board of Directors.
(b) "EXCHANGE" means the following markets or exchanges on which
the Common Stock is listed or quoted for trading on a given date: (i) the
American Stock Exchange; (ii) the New York Stock Exchange; (iii) the Nasdaq
National Market; or (iv) the Nasdaq SmallCap Market.
(c) "EXERCISE PERIOD" means the period between the Initial
Exercise Date and the Termination Date.
(d) "TRADING DAY" means: (i) a day on which the Common Stock is
traded on an Exchange; (ii) if the Common Stock is not listed on an Exchange, a
day on which the Common Stock is traded on the over-the-counter market, as
reported by the OTC Bulletin Board; or (iii) if the Common Stock is not quoted
on the OTC Bulletin Board, a day on which the Common Stock is quoted in the
over-the-counter market as reported by Pink Sheets LLC (or any similar
organization or agency succeeding its functions of reporting prices); PROVIDED
that in the event that the Common Stock is not listed or quoted as set forth in
CLAUSE (I), (II) or (III) hereof, then Trading Day shall mean any Business Day.
(e) "WARRANT AGENT" means Transfer Online, Inc. in its capacity as
warrant agent for the Issuer or, if it is no longer serving in that capacity,
such other Person, if any, that is then serving as Warrant Agent for the Issuer.
2. TITLE TO WARRANT. At any time prior to the Termination Date
and subject to compliance with applicable laws and the terms hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, at the
office or agency of the Issuer (or any Warrant Agent for the Issuer) by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed;
PROVIDED that any transferee of this Warrant shall, upon the request of the
Issuer, deliver to the Issuer: (i) a written opinion of legal counsel in form
and substance acceptable to the Issuer to the effect that such transfer may be
made without registration under the Securities Act or under applicable state
securities laws; (ii) an investment representation letter in form and substance
acceptable to the Issuer; and (iii) if the registration rights with respect to
the Warrant Shares set forth in the Subscription Agreement are to be assigned to
such transferee, a notice of assignment and agreement, duly executed by such
transferee, to be bound by certain provisions of the
2
Subscription Agreement, as set forth in the Subscription Agreement or in this
Warrant.
3. AUTHORIZATION OF SHARES. The Issuer covenants that all shares
of Common Stock that may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon such exercise, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
4. EXERCISE OF WARRANT.
(a) This Warrant may be exercised, in whole or in part, at any
time or times during the Exercise Period, subject to SECTION 4(c).
(b) In order to effect the exercise of this Warrant, the Holder
shall: (i) surrender this Warrant and the Notice of Exercise form annexed
hereto, duly executed, at the office of the Issuer (or such other office or
agency of the Issuer as it may designate by notice in writing to the registered
holder hereof at the address of such holder appearing on the books of the
Issuer); (ii) remit payment of the aggregate Exercise Price for the Warrant
Shares being acquired by wire transfer or cashier's check drawn on a United
States bank to the Issuer in accordance with the instructions of the Issuer; and
(iii) pay all taxes required to be paid by the Holder, if any, pursuant to
SECTION 6 hereof. This Warrant shall be deemed to have been exercised, and the
Holder shall be deemed to have become the holder of record of the Warrant Shares
for which this Warrant has exercised, on the first date upon which the Holder
has complied with each of the conditions set forth in this SECTION 4(b).
(c) The Issuer shall have the right to "call" the Warrant (the
"WARRANT CALL") and cause the Holder to exercise this Warrant with respect to
50% of the Warrant Shares subject hereto in the event that, at any time
following the Initial Exercise Date: (i) any one of the following events occurs:
(A) a Registration Statement covering all the Warrant Shares issuable upon the
exercise of this Warrant has been filed and declared effective, or (B) all the
Warrant Shares then owned by the Holder, acting independently of all other
Holders, are eligible for sale under Rule 144, or (C) the second (2nd)
anniversary of the Initial Exercise Date; AND (ii) after the occurrence of any
one of the events listed in CLAUSE (I), the Closing Price exceeds 200% of the
Exercise Price for at least five (5) consecutive Trading Days (the conditions
described in CLAUSES (I) and (II) being collectively referred to herein as the
"WARRANT CALL CONDITIONS"). If the Issuer chooses to exercise the Warrant Call
at any time following the fulfillment of the Warrant Call Conditions, then the
Issuer shall deliver to the Holder written notice (the "CALL NOTICE") stating
that Warrant Call Conditions have been satisfied and specifying the number of
Warrant Shares with respect to which the Warrant must be exercised. Within
twenty (20) Business Days of the delivery of the Call Notice to the Holder (the
"CALL PERIOD"), the Holder shall exercise this Warrant with respect to the 50%
of the Warrant Shares subject hereto in accordance with the procedure set forth
in SECTION 4(b). If the Holder fails to timely pay the amount required upon
exercise of the Warrant Call, then the Issuer's sole remedy shall be to cancel a
corresponding portion (50%) of this Warrant, which cancellation may be effected
by the Issuer in its sole discretion and without further written notice to the
Holder. Notwithstanding the foregoing provisions of this SECTION 4(c), it shall
be a condition to (i) the Issuer's exercise of the Warrant Call and (ii) the
Holder's obligation to exercise this Warrant during the Call Period that a
3
Registration Statement covering the Warrant Shares be effective at all times
during the Call Period.
(d) Upon any proper exercise of this Warrant in accordance with
SECTION 4(b), the Holder shall be entitled to promptly receive a certificate for
the number of Warrant Shares acquired in connection with such exercise.
(e) If this Warrant shall have been exercised in part, the Issuer
shall, at the time of delivery of the certificate or certificates representing
Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder
to acquire the remaining Warrant Shares subject to this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.
5. NO FRACTIONAL SHARES OR SCRIP. No fractional Warrant Shares or
scrip representing fractional Warrant Shares shall be issued upon the exercise
of this Warrant. As to any fraction of a Warrant Share which Holder would
otherwise be entitled to acquire upon such exercise, the Issuer shall pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price.
6. CHARGES, TAXES AND EXPENSES. Issuance of certificates for
Warrant Shares issued upon the exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Issuer, and such certificates shall be issued in the name
of the Holder or in such name or names as may be directed by the Holder;
PROVIDED that in the event certificates for Warrant Shares are to be issued in a
name other than the name of the Holder of this Warrant, this Warrant, when
surrendered for exercise, shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder; and the Issuer may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.
7. CLOSING OF BOOKS. The Issuer will not close its stockholder
books or records in any manner which prevents the timely exercise of this
Warrant pursuant to the terms hereof.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. This Warrant does not
entitle the Holder to any voting rights or other rights as a stockholder of the
Issuer prior to the exercise hereof in accordance with SECTION 4 hereof.
9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Issuer
covenants that upon receipt by the Issuer of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant certificate or
any stock certificate relating to the Warrant Shares, and in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to it (which
shall not include the posting of any bond), and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Issuer will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
4
10. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed
day for the taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then such action may be taken or
such right may be exercised on the next succeeding Business Day.
11. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
The number and kind of securities purchasable upon the exercise of this Warrant
and the Exercise Price shall be subject to adjustment from time to time in the
event that the Issuer shall: (i) pay a dividend in shares of Common Stock or
make a distribution in shares of Common Stock to holders of its outstanding
Common Stock; (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares of Common Stock; (iii) combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock; or (iv) issue
any shares of its capital stock in a reclassification of the Common Stock
(including, without limitation, any spin-off of any subsidiary). Upon the
occurrence of any such event, the number of Warrant Shares purchasable upon
exercise of this Warrant immediately prior thereto shall be adjusted so that the
Holder shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Issuer which such Holder would have owned or have been
entitled to receive had such Warrant been exercised in advance of such event.
Upon each such adjustment of the kind and number of Warrant Shares or other
securities of the Issuer which are purchasable hereunder, the Holder shall
thereafter be entitled to purchase the number of Warrant Shares or other
securities resulting from such adjustment at an Exercise Price per Warrant Share
or other security obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the result by
the number of Warrant Shares or other securities of the Issuer resulting from
such adjustment. An adjustment made pursuant to this SECTION 11 shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event.
12. RECLASSIFICATION, REORGANIZATION, CONSOLIDATION, MERGER AND
SALE OF ASSETS. In the event of: (i) any reclassification, capital
reorganization, or change in the Common Stock (other than as a result of a
subdivision, combination, stock dividend or other transaction provided for in
SECTION 11 above); (ii) any share exchange, merger or similar transaction of the
Issuer with or into another person or entity (other than a share exchange,
merger or similar transaction in which the Issuer is the acquiring or surviving
corporation and which does not result in any change in the Common Stock other
than the issuance of additional shares of Common Stock); or (iii) the sale,
exchange, lease, transfer or other disposition of all or substantially all the
properties and assets of the Issuer as an entirety (in any such case, a
"REORGANIZATION EVENT"), then, as a condition of such Reorganization Event,
lawful provisions shall be made, and duly executed documents evidencing the same
from the Issuer or its successor shall be delivered to the Holder, so that the
Holder shall have the right at any time prior to the expiration of this Warrant
to purchase, at a total price equal to the aggregate Exercise Price then payable
upon the exercise of this Warrant, the kind and amount of shares of stock and
other securities and property receivable in connection with such Reorganization
Event by a holder of the same number of shares of Common Stock as were
purchasable by the Holder immediately prior to such Reorganization Event. In any
such case appropriate provisions shall be made with respect to the rights and
interests of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any shares of stock or other securities and property
deliverable upon exercise hereof, at the same
5
aggregate purchase price as is then payable hereunder.
13. VOLUNTARY ADJUSTMENT BY THE ISSUER. Subject to any applicable
Requirements of Law, the Issuer may at any time during the Exercise Period
reduce the then-current Exercise Price to any amount and for any period of time
deemed appropriate by the Board of Directors of the Issuer.
14. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted as herein provided, the Issuer
shall promptly mail by registered or certified mail, return receipt requested,
to the Holder notice of such adjustment or adjustments setting forth the number
of Warrant Shares (and other securities or property) purchasable upon the
exercise of this Warrant and the Exercise Pri ce of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such notice, in the absence of
manifest error, shall be conclusive evidence of the correctness of such
adjustment.
15. NOTICES OF RECORD DATE. In the event of any taking by the
Issuer of a record of the holders of Common Stock for the purpose of determining
the holders thereof who are entitled to receive any dividend (other than a cash
dividend which is the same as cash dividends paid in previous quarters) or other
distribution in respect of shares of Common Stock, the Issuer shall mail to the
Holder, at least ten (10) days prior to such record date, a notice specifying
the date on which any such record is to be taken for the purpose of such
dividend or distribution.
16. NO IMPAIRMENT. The Issuer shall not by any action, including,
without limitation, amending its Certificate of Incorporation or through any
Reorganization Event or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment.
17. MISCELLANEOUS.
(a) Any term of this Warrant may be amended and the observance of
any term of this Warrant may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Issuer and the Holder.
(b) Any notice, request or other document required or permitted to
be given or delivered to the Holder or the Issuer shall be delivered or shall be
sent by certified mail, postage prepaid, to the Holder at its address as shown
on the books of the Issuer or to the Issuer at the address set forth in the
Subscription Agreement or such other address as either may from time to time
provide to the other.
(c) This Warrant shall be binding upon any corporation succeeding
the Issuer by merger, consolidation or acquisition of all or substantially all
the Issuer's assets. All the obligations of
6
the Issuer and the Holder relating to the Warrant Shares issuable upon the
exercise of this Warrant shall survive the exercise and termination of this
Warrant. All the covenants and agreements of the Issuer and the Holder shall
inure to the benefit of the successors and assigns of the Holder and the Issuer,
respectively.
(d) The description headings of the several sections and
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. This Warrant shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the laws
of the State of California.
(e) Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
7
IN WITNESS WHEREOF, each of the Issuer and the Holder has caused this
Warrant to be executed as of the date set forth below.
Dated: As of January 26, 2007
ISSUER:
PATIENT SAFETY TECHNOLOGIES, INC.
By: _____________________________________
Xxxxxxx X. Xxxxx
Chief Executive Officer
HOLDER:
________________________________________
By: _____________________________________
Name: _____________________________________
Title: ____________________________________
COUNTERSIGNED BY:
TRANSFER ONLINE, INC., AS WARRANT AGENT
By:_____________________________________
8
NOTICE OF EXERCISE
(To be executed and submitted, along with the Warrant)
To: Transfer Online, Inc.
000 XX Xxxxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
(1) The undersigned hereby elects to purchase (check
applicable box):
|_| all of the shares of Common Stock of Patient
Safety Technologies, Inc. (the "COMMON
STOCK") covered by the attached Warrant; or
|_| ______________ shares of Common Stock
covered by the attached Warrant.
The undersigned tenders herewith payment of the exercise price
for such shares in full, together with all applicable transfer taxes,
if any, as provided in the attached Warrant, which is $__________. Such
payment takes the form of (check applicable box):
|_| $__________ in lawful money of the United
States by
|_| wire transfer to the Issuer
|_| cashier's check to the Issuer
(2) Please issue a certificate or certificates
representing such shares of Common Stock in the name of the undersigned or in
such other name as is specified below:
____________________________
(Name)
____________________________
(Address)
____________________________
The undersigned represents and warrants that all offers and sales by
the undersigned of the securities issuable upon exercise of the within Warrant
shall be made pursuant to registration of the Common Stock under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), or pursuant to an exemption from
registration under the Securities Act.
Dated: _________________ ______________________________
Signature
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply required information.
Do not use this form to exercise the Warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby,
including the registration rights set forth therein or in the Subscription
Agreement that accompanied the form of warrant (the ("Subscription Agreement"),
are hereby assigned to __________________________________ whose address is
_________________________________________________________.
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: _________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
Agreement of Assignee:
I hereby agree to be bound by the terms of the Subscription Agreement including
sections 4, 5 and 6 thereof.
Dated: ______________, _______
Assignee's Signature: _____________________________
Assignee's Address: _____________________________
_____________________________
