EX-10.3
SUBSCRIPTION AGREEMENT
This Subscription Agreement (this "AGREEMENT") is entered into as of
__________, 2006 by and among Patient Safety Technologies, Inc., a Delaware
corporation (together with its successors and permitted assigns, the "ISSUER"),
and the undersigned investors (each, together with its successors and permitted
assigns, the "INVESTOR" and collectively, together with their successors and
permitted assigns, the "INVESTORS").
RECITALS
Subject to the terms and conditions of this Agreement, the Investors
desire to subscribe for and purchase, and the Issuer desires to issue and sell
to the Investors, 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 Investors 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 fifty percent (50%) warrant coverage at
Two Dollars ($2.00) per share, exercisable for a period of three (3) 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 each
Investor, and each 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 ___________,
2006, 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.
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) each 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 Purchase Price for the
Shares being purchased by such Investor hereunder; (ii) the Issuer shall issue
to each 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 (iii) 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
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
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3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
As a material inducement to the Issuer to enter into this Agreement and
issue the Securities, each 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) 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.
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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 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
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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.
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 each 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 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
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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 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
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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.
(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.
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(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 Xxxxxx "Xxxx" Xxxx III.
(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 1.2
of this Agreement.
(bb) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(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.
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(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 Xxxxxx "Xxxx" Xxxx III
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.
6.5 EXPENSES; TAXES. Except as otherwise provided in this
Agreement, 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; PROVIDED that the Issuer shall pay at the Closing the
reasonable legal fees (up to a maximum of $20,000) of a single special counsel
to the Investors. 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.
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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.
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 Investors 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 Investors agree to
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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. Each 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, each 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 each 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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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:_______________________________
Title:______________________________
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[INVESTOR COUNTERPART SIGNATURE PAGE]
NAME OF INVESTOR (please print) ADDRESS FOR NOTICE (please print)
_____________________________
_____________________________
_____________________________ _____________________________
Attention:___________________
Tax Identification #:________
SIGNATURE
By:__________________________
Name:________________________
Title:_______________________
Date:________________________
Exact name to appear on stock certificate: Number of Shares subscribed for:
_____________________________ _____________________________
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):
$_________________ _____________________________
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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 ninety (90) days of an equity raise with gross proceeds of at least Four
Million Dollars ($4,000,000), 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]
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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 XXXXXX "XXXX" XXXX III
0000 XXXXXXX XXXX XXXX
XXXXX 000
XXX XXXXXXX, XX 00000
4
EXHIBIT C
WARRANT
THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I)
SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF
1933, AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144(K), OR
(III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.
SUBJECT TO THE PROVISIONS OF SECTION 10 HEREOF, THIS WARRANT SHALL BE
VOID AFTER 5:00 P.M. EASTERN TIME THREE YEARS FROM THE DATE OF ISSUANCE (the
"EXPIRATION DATE").
PATIENT SAFETY TECHNOLOGIES, INC.
WARRANT TO PURCHASE _______ SHARES OF
COMMON STOCK, PAR VALUE $0.33 PER SHARE
FOR VALUE RECEIVED, ___________________ ("Warrantholder"), is entitled
to purchase, subject to the provisions of this Warrant, from Patient Safety
Technologies, Inc., a Delaware corporation (the "Company"), at any time not
later than 5:00 P.M., Eastern time, on the Expiration Date (as defined above),
at an exercise price of $2.00 per share (the exercise price in effect being
herein called the "Warrant Price"), ________ shares ("Warrant Shares") of the
Company's Common Stock, par value $0.33 per share ("Common Stock"). The number
of Warrant Shares purchasable upon exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time as described herein.
Section 1. REGISTRATION. The Company shall maintain books for the
transfer and registration of the Warrant. Upon the initial issuance of this
Warrant, the Company shall issue and register the Warrant in the name of the
Warrantholder.
Section 2. TRANSFERS. As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended (the "Securities Act"), or an exemption from such
registration. Subject to such restrictions, the Company shall transfer this
Warrant from time to time upon the books to be maintained by the Company for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer and such other documents as
may be reasonably required by the Company, including, if required by the
Company, an opinion of its counsel to the effect that such transfer is exempt
from the registration requirements of the Securities Act, to establish that such
transfer is being made in accordance with the terms hereof, and a new Warrant
shall be issued to the transferee and the surrendered Warrant shall be canceled
by the Company.
Section 3. EXERCISE OF WARRANT. Subject to the provisions hereof, the
Warrantholder may exercise this Warrant in whole or in part at any time prior to
its expiration upon surrender of the Warrant, together with delivery of the duly
executed Warrant exercise form attached hereto as Appendix A (the "Exercise
Agreement") and payment by cash, certified check or wire transfer of funds for
the aggregate Warrant Price for that number of Warrant Shares then being
purchased, to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the Warrantholder). The Warrant Shares
so purchased shall be deemed to be issued to the Warrantholder or the
Warrantholder's designee, as the record owner of such shares, as of the close of
business on the date on which this Warrant shall have been surrendered (or
evidence of loss, theft or destruction thereof and security or indemnity
satisfactory to the Company), the Warrant Price shall have been paid and the
completed Exercise Agreement shall have been delivered. Certificates for the
Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the Warrantholder
within a reasonable time, not exceeding three (3) business days, after this
Warrant shall have been so exercised. The certificates so delivered shall be in
such denominations as may be requested by the Warrantholder and shall be
registered in the name of the Warrantholder or such other name as shall be
designated by the Warrantholder. If this Warrant shall have been exercised only
in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the
Warrantholder a new Warrant representing the number of shares with respect to
which this Warrant shall not then have been exercised. As used herein, "business
day" means a day, other than a Saturday or Sunday, on which banks in New York
City are open for the general transaction of business. Each exercise hereof
shall constitute the re-affirmation that the Warrantholder is an accredited
investor according to Rule 501 of Regulation D.
Section 4. COMPLIANCE WITH THE SECURITIES ACT OF 1933. The Company may
cause the legend set forth on the first page of this Warrant to be set forth on
each Warrant or similar legend on any security issued or issuable upon exercise
of this Warrant, unless counsel for the Company is of the opinion as to any such
security that such legend is unnecessary.
Section 5. PAYMENT OF TAXES. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the Warrantholder in respect of which such shares are
issued, and in such case, the Company shall not be required to issue or deliver
any certificate for Warrant Shares or any Warrant until the person requesting
the same has paid to the Company the amount of such tax or has established to
the Company's reasonable satisfaction that such tax has been paid. The
Warrantholder shall be responsible for income taxes due under federal, state or
other law, if any such tax is due.
Section 6. MUTILATED OR MISSING WARRANTS. In case this Warrant shall be
mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares,
2
but only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.
Section 7. RESERVATION OF COMMON STOCK. The Company hereby represents
and warrants that there have been reserved, and the Company shall at all
applicable times keep reserved until issued (if necessary) as contemplated by
this Section 7, out of the authorized and unissued shares of Common Stock,
sufficient shares to provide for the exercise of the rights of purchase
represented by this Warrant. The Company agrees that all Warrant Shares issued
upon due exercise of the Warrant shall be, at the time of delivery of the
certificates for such Warrant Shares, duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock of the Company.
Section 8. ADJUSTMENTS. Subject and pursuant to the provisions of this
Section 8, unless waived in a particular case by the Warrantholder, the Warrant
Price and number of Warrant Shares subject to this Warrant shall be subject to
adjustment from time to time as set forth hereinafter.
(a) If the Company shall, at any time or from time to
time while this Warrant is outstanding, pay a dividend or make a distribution on
its Common Stock in shares of Common Stock, subdivide its outstanding shares of
Common Stock into a greater number of shares or combine its outstanding shares
of Common Stock into a smaller number of shares or issue by reclassification of
its outstanding shares of Common Stock any shares of its capital stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), then the number of
Warrant Shares purchasable upon exercise of the Warrant and the Warrant Price in
effect immediately prior to the date upon which such change shall become
effective, shall be adjusted by the Company so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrantholder would have received
if the Warrant had been exercised immediately prior to such event upon payment
of a Warrant Price that has been adjusted to reflect a fair allocation of the
economics of such event to the Warrantholder. Such adjustments shall be made
successively whenever any event listed above shall occur.
(b) If any capital reorganization, reclassification of
the capital stock of the Company, consolidation or merger of the Company with
another corporation in which the Company is not the survivor, or sale, transfer
or other disposition of all or substantially all of the Company's assets to
another corporation shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition, lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder
3
to the end that the provisions hereof (including, without limitation, provision
for adjustment of the Warrant Price) shall thereafter be applicable, as nearly
equivalent as may be practicable in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise hereof. The Company shall not
effect any such consolidation, merger, sale, transfer or other disposition
unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation or
merger, or the corporation purchasing or otherwise acquiring such assets or
other appropriate corporation or entity shall assume the obligation to deliver
to the Warrantholder, at the last address of the Warrantholder appearing on the
books of the Company, such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the Warrantholder may be entitled to
purchase, and the other obligations under this Warrant. The provisions of this
paragraph (b) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers or other
dispositions.
(c) In case the Company shall fix a payment date for the
making of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness or assets
(other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends or distributions referred to in Section
8(a)), or subscription rights or warrants, the Warrant Price to be in effect
after such payment date shall be determined by multiplying the Warrant Price in
effect immediately prior to such payment date by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding multiplied
by the Market Price (as defined below) per share of Common Stock immediately
prior to such payment date, less the fair market value (as determined by the
Company's Board of Directors in good faith) of said assets or evidences of
indebtedness so distributed, or of such subscription rights or warrants, and the
denominator of which shall be the total number of shares of Common Stock
outstanding multiplied by such Market Price per share of Common Stock
immediately prior to such payment date. "Market Price" as of a particular date
(the "Valuation Date") shall mean the following: (a) if the Common Stock is then
listed on a national stock exchange, the closing sale price of one share of
Common Stock on such exchange on the last trading day prior to the Valuation
Date; (b) if the Common Stock is then quoted on The Nasdaq Stock Market, Inc.
("Nasdaq"), the National Association of Securities Dealers, Inc. OTC Bulletin
Board (the "Bulletin Board") or such similar exchange or association, the
closing sale price of one share of Common Stock on Nasdaq, the Bulletin Board or
such other exchange or association on the last trading day prior to the
Valuation Date or, if no such closing sale price is available, the average of
the high bid and the low asked price quoted thereon on the last trading day
prior to the Valuation Date; or (c) if the Common Stock is not then listed on a
national stock exchange or quoted on Nasdaq, the Bulletin Board or such other
exchange or association, the fair market value of one share of Common Stock as
of the Valuation Date, shall be determined in good faith by the Board of
Directors of the Company and the Warrantholder. If the Common Stock is not then
listed on a national securities exchange, the Bulletin Board or such other
exchange or association, the Board of Directors of the Company shall respond
promptly, in writing, to an inquiry by the Warrantholder prior to the exercise
hereunder as to the fair market value of a share of Common Stock as determined
by the Board of Directors of the Company. In the event that the Board of
Directors of the Company and the Warrantholder are unable to agree upon the fair
market value in respect of subpart (c) hereof, the Company and the
4
Warrantholder shall jointly select an appraiser, who is experienced in such
matters. The decision of such appraiser shall be final and conclusive, and the
cost of such appraiser shall be borne equally by the Company and the
Warrantholder. Such adjustment shall be made successively whenever such a
payment date is fixed.
(d) An adjustment to the Warrant Price shall become
effective immediately after the payment date in the case of each dividend or
distribution and immediately after the effective date of each other event which
requires an adjustment.
(e) In the event that, as a result of an adjustment made
pursuant to this Section 8, the Warrantholder shall become entitled to receive
any shares of capital stock of the Company other than shares of Common Stock,
the number of such other shares so receivable upon exercise of this Warrant
shall be subject thereafter to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Warrant Shares contained in this Warrant.
Section 9. FRACTIONAL INTEREST. The Company shall not be required to
issue fractions of Warrant Shares upon the exercise of this Warrant. If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this Section 9, be deliverable upon such exercise, the Company, in
lieu of delivering such fractional share, shall pay to the exercising
Warrantholder an amount in cash equal to the Market Price of such fractional
share of Common Stock on the date of exercise.
Section 10. BENEFITS. Nothing in this Warrant shall be construed to
give any person, firm or corporation (other than the Company and the
Warrantholder) any legal or equitable right, remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the Company and
the Warrantholder.
Section 11. LIMITATIONS ON EXERCISE. Notwithstanding anything to the
contrary contained herein, the number of Warrant Shares that may be acquired by
Warrantholder upon any exercise of this Warrant (or otherwise in respect hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then
beneficially owned by Warrantholder and its affiliates and any other persons
whose beneficial ownership of Common Stock would be aggregated with the
Warrantholder's for purposes of Section 13(d) of the Exchange Act does not
exceed 9.999% of the total number of issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock issuable upon such
exercise). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. This restriction may not be waived and may not be
amended by agreement of the parties.
Section 12. TRADING MARKET LIMITATIONS. Unless permitted by the
applicable rules and regulations of the principal securities market on which the
Common Stock is then listed or traded, in no event shall the Company issue upon
exercise of or otherwise pursuant to this Warrant more than the maximum number
of shares of Common Stock that the Company can issue pursuant to any rule
5
of the principal securities market on which the Common Stock is then traded (the
"Maximum Share Amount"), which shall be 19.99% of the total shares of Common
Stock then outstanding. In the event that the sum of (x) the aggregate number of
shares of Common Stock issued upon exercise of this Warrant and (y) the
aggregate number of shares of Common Stock that remain issuable upon exercise of
the Warrant represents at least one hundred percent (100%) of the Maximum Share
Amount (the "Triggering Event"), the Company will use its best efforts to seek
and obtain Stockholder Approval (or obtain such other relief as will allow
exercises hereunder in excess of the Maximum Share Amount) as soon as
practicable following the Triggering Event. As used herein, "Stockholder
Approval" means approval by the shareholders of the Company to authorize the
issuance of the full number of shares of Common Stock that would be issuable
upon full exercise of this Warrant but for the Maximum Share Amount.
Section 13. STOCK DIVIDENDS AND SPLITS. If the Company, at any time
while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock
or otherwise makes a distribution on any class of capital stock that is payable
in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, or (iii) combines outstanding shares of Common
Stock into a smaller number of shares, then in each such case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination.
Section 14. NOTICES TO WARRANTHOLDER. Upon the happening of any event
requiring an adjustment of the Warrant Price, the Company shall promptly give
written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Failure to give such notice to the Warrantholder or any
defect therein shall not affect the legality or validity of the subject
adjustment.
Section 15. NOTICES. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or facsimile, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first class mail,
postage prepaid, and (iv) if given by an internationally recognized overnight
air courier, then such notice shall be deemed given one business day after
delivery to such carrier. All notices shall be addressed as follows: if to the
Warrantholder, at its address as set forth in the Company's books and records
and, if to the Company, at the address as follows, or at such other address as
the Warrantholder or the Company may designate by ten days' advance written
notice to the other:
6
If to the Company:
Patient Safety Technologies, Inc.
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Section 16. SUCCESSORS. All the covenants and provisions hereof by or
for the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.
Section 17. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. This Warrant shall be governed by, and construed in accordance with, the
internal laws of the State of California, without reference to the choice of law
provisions thereof. The Company and, by accepting this Warrant, the
Warrantholder, each irrevocably submits to the exclusive jurisdiction of the
courts of the State of California located in Los Angeles County and federal
courts located in Los Angeles County, California for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Warrant and
the transactions contemplated hereby. Service of process in connection with any
such suit, action or proceeding may be served on each party hereto anywhere in
the world by the same methods as are specified for the giving of notices under
this Warrant. The Company and, by accepting this Warrant, the Warrantholder,
each irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. The Company
and, by accepting this Warrant, the Warrantholder, each irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY
WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO
THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO
THIS WAIVER.
Section 18. NO RIGHTS AS STOCKHOLDER. Prior to the exercise of this
Warrant, the Warrantholder shall not have or exercise any rights as a
stockholder of the Company by virtue of its ownership of this Warrant.
Section 19. AMENDMENT; WAIVER. Any term of this Warrant may be amended
or waived upon the written consent of the Company and the holder of the Warrant.
Section 20. SECTION HEADINGS. The section headings in this Warrant are
for the convenience of the Company and the Warrantholder and in no way alter,
modify, amend, limit or restrict the provisions hereof.
7
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of the ___ day of _________, 200__.
PATIENT SAFETY TECHNOLOGIES, INC.
By:__________________________
Name: Xxxxx Xxxxxxxxxxx
Title: President
8
APPENDIX A
PATIENT SAFETY TECHNOLOGIES, INC.
WARRANT EXERCISE FORM
To Patient Safety Technologies, Inc.:
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder by the payment of the Warrant Price and surrender of the Warrant,
_________ shares of Common Stock ("Warrant Shares") provided for therein, and
requests that certificates for the Warrant Shares be issued as follows:
_____________________________________
Name
_____________________________________
_____________________________________
Address
_____________________________________
Federal Tax ID or Social Security No.
and delivered by (certified mail to the above address, or (electronically
(provide DWAC Instructions: ___________________), or (other (specify):
_______________________________________________________________________), and,
if the number of Warrant Shares shall not be all the Warrant Shares purchasable
upon exercise of the Warrant, that a new Warrant for the balance of the Warrant
Shares purchasable upon exercise of this Warrant be registered in the name of
the undersigned Warrantholder or the undersigned's Assignee as below indicated
and delivered to the address stated below.
Dated: ___________________, ____
Note: The signature must correspond with the name of the Warrantholder as
written on the first page of the Warrant in every particular, without alteration
or enlargement or any change whatever, unless the Warrant has been assigned.
Warrant Signature: ________________________________
Name (please print): ________________________________
________________________________
________________________________
Address
________________________________
Federal Identification or
Social Security No.
Assignee:
________________________________
