<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ROCKWELL MEDICAL TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
ROCKWELL MEDICAL TECHNOLOGIES, INC.
28025 OAKLAND OAKS
WIXOM, MICHIGAN 48393
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Rockwell Medical Technologies, Inc. (the "Company"), on Monday, May 10, 1999 at
9:00 a.m. at the Doubletree Hotel, 27000 Sheraton Drive, Novi, Michigan. Your
Board of Directors and management look forward to greeting personally those
Shareholders who are able to attend.
The meeting principally concerns two matters of particular interest to the
Shareholders: one director is to be elected for a three-year term expiring in
2002; and the approval of an increase in the number of shares with respect to
which stock options may be granted under Company's 1997 Stock Option Plan from
450,000 Common Shares in the aggregate to 900,000 Common Shares in the
aggregate.
Your Board of Directors supports these proposals and believes that they are
in the best interests of the Company and of the Shareholders, and your Board of
Directors recommends a vote "FOR" each such proposal. The accompanying Proxy
Statement contains additional information and should be reviewed carefully by
Shareholders. A copy of the Company's Annual Report for 1998 is also enclosed.
It is important that your shares be represented and voted at the meeting,
whether or not you plan to attend. Please sign, date and mail the enclosed proxy
card at your earliest convenience.
Your continued interest and participation in the affairs of the Company are
greatly appreciated.
Sincerely,
/s/ GARY D. LEWIS
Gary D. Lewis
Chairman
Wixom, Michigan
April 12, 1999
<PAGE> 3
ROCKWELL MEDICAL TECHNOLOGIES, INC.
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
MAY 10, 1999
-------------------------
To the Shareholders of Rockwell Medical Technologies, Inc.:
Notice is hereby given that the 1999 Annual Meeting of Shareholders of
Rockwell Medical Technologies, Inc. (the "Company") will be held at the
Doubletree Hotel, 27000 Sheraton Drive, Novi, Michigan on May 10, 1999 at 9:00
a.m., to consider and take action upon the following matters:
(1) The election of one (1) director for a term to expire in 2002;
(2) The approval of an increase in the number of shares with respect
to which stock options may be granted under the Company's 1997 Stock Option
Plan from 450,000 Common Shares in the aggregate to 900,000 Common Shares
in the aggregate; and
(3) The transaction of such other business as may properly come before
the meeting or any adjourning thereof.
Only shareholders of record on April 8, 1999, will be entitled to notice
of, and to vote at, the meeting or any adjournment thereof.
All shareholders are cordially invited to attend the meeting. Whether or
not you intend to be present, please complete, date, sign and return the
enclosed proxy card in the stamped and addressed envelope enclosed for your
convenience. Shareholders can help the Company avoid unnecessary expense and
delay by promptly returning the enclosed proxy card. The business of the meeting
to be acted upon by the shareholders cannot be transacted unless at least a
majority of the outstanding Common Shares of the Company is represented at the
meeting.
A copy of the Annual Report of the Company for the fiscal year ended
December 31, 1998, accompanies this Notice.
By Order of the Board of Directors
/s/ THOMAS E. KLEMA
Thomas E. Klema
Secretary
<PAGE> 4
ROCKWELL MEDICAL TECHNOLOGIES, INC.
28025 OAKLAND OAKS
WIXOM, MICHIGAN 48393
-------------------------
PROXY STATEMENT
-------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 10, 1999
-------------------------
INTRODUCTION
GENERAL
The Annual Meeting of Shareholders of Rockwell Medical Technologies, Inc.
(the "Company") will be held at the Doubletree Hotel, 27000 Sheraton Drive,
Novi, Michigan on Monday, May 10, 1999, at 9:00 a.m., Eastern Daylight Time, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. The approximate mailing date for this Proxy Statement is April 12,
1999.
It is important that your shares be represented at the meeting. Whether or
not you intend to attend the meeting, please sign and date the enclosed proxy
and return it to the Company. The proxy is solicited by the Board of Directors
of the Company. Common Shares represented by valid proxies in the enclosed form
will be voted if received in time for the Annual Meeting. The expenses in
connection with the solicitation of proxies will be borne by the Company and may
include requests by mail and personal contact by the Company's Directors,
officers and employees. The Company will reimburse brokers or other nominees for
their out-of-pocket expenses in forwarding proxy materials to principals. Any
person giving a proxy has the power to revoke it any time before it is voted.
Michael J. Xirinachs, a Class II Director of the Company with a term
expiring this year, resigned effective January 4, 1999. Subsequent to Mr.
Xirinachs's resignation, the Board of Directors of the Company unanimously voted
to reduce the size of the Board of Directors to three members, and to
re-apportion the existing Directors among the three classes by appointing Gary
D. Lewis to serve as the Class II Director. Previously, Mr. Lewis had served as
a Class I Director and had been re-elected to serve as a Class I Director for a
term to expire in 2001 at the Company's Annual Meeting of Shareholders held last
year on May 26, 1998.
VOTING SECURITIES AND PRINCIPAL HOLDERS
Voting Rights and Outstanding Shares
Only shareholders of record at the close of business on April 8, 1999 (the
"Record Date"), will be entitled to notice of, and to vote at, the Annual
Meeting or any adjournment of the meeting. As of the close of business on the
Record Date, the Company had 4,830,450 outstanding Common Shares, no par value
("Common Shares"), the only class of stock outstanding and entitled to vote.
Each Common Share is entitled to one vote on each matter submitted for a
vote at the Annual Meeting. The presence, in person or by proxy, of the holders
of record of a majority of the outstanding Common Shares entitled to vote, or
2,415,226 Common Shares, is necessary to constitute a quorum for the transaction
of business at the meeting or any adjournment thereof.
Revocability of Proxies
A Shareholder giving a proxy may revoke it at any time before it is voted
by giving written notice of such revocation to the Secretary of the Company or
by executing and delivering to the Secretary a later dated proxy. Attendance at
the meeting by a Shareholder who is given a proxy will not have the effect of
revoking it
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<PAGE> 5
unless such Shareholder gives such written notice of revocation to the Secretary
before the proxy is voted. Any written notice revoking a proxy, and any later
dated proxy, should be sent to Rockwell Medical Technologies, Inc., 28025
Oakland Oaks, Wixom, Michigan 48393, Attention: Thomas E. Klema, Secretary.
Valid proxies in the enclosed form which are returned in time for the
Annual Meeting and executed and dated in accordance with the instructions on the
proxy will be voted as specified in the proxy. If no specification is made, the
proxies will be voted FOR the proposal described below.
Principal Holders of the Company's Voting Securities
The following table sets forth information with respect to persons known to
the Company to be the beneficial owners of more than five percent of the
outstanding Common Shares:
<TABLE>
<CAPTION>
PERCENT OF OUTSTANDING
NAME AND ADDRESS AMOUNT AND NATURE OF COMMON SHARES
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP AS OF RECORD DATE(A)
------------------- -------------------- ----------------------
<S> <C> <C>
Gary D. Lewis.......................................... 770,000(b) 15.9(b)
28025 Oakland Oaks
Wixom, Michigan 48393
Patricia Xirinachs..................................... 770,000 15.9(c)
28025 Oakland Oaks
Wixom, Michigan 48393
Robert L. Chioini...................................... 570,000 11.6(d)
28025 Oakland Oaks
Wixom, Michigan 48393
</TABLE>
- -------------------------
(a) Based on 4,830,450 Common Shares outstanding as of the Record Date.
(b) Includes 675,000 Common Shares owned jointly with Mr. Lewis's wife, 50,000
Common Shares held in custodial accounts for the benefit of Mr. Lewis's two
minor children and 25,000 Common Shares owned by another child of Mr. Lewis,
and includes 20,000 Common Shares that Mr. Lewis has the right to acquire
within 60 days of the Record Date pursuant to the Company's 1997 Stock
Option Plan.
(c) Includes 20,000 Common Shares that Mrs. Xirinachs's husband, Michael J.
Xirinachs, has the right to acquire within 60 days of the Record Date
pursuant to the Company's 1997 Stock Option Plan. This information is based
solely on the Schedule 13-G filed by Michael J. Xirianchs with the
Securities and Exchange Commission on February 12, 1999, and conversations
between the Company and the transfer agent.
(d) Includes 70,000 Common Shares that Mr. Chioini has the right to acquire
within 60 days of the Record Date pursuant to the Company's 1997 Stock
Option Plan.
I. ELECTION OF DIRECTORS
At the Annual Meeting, one Director comprising the Class II Directors is to
be elected for a three-year term expiring in 2002. It is intended that votes
will be cast pursuant to proxies received from Shareholders of the Company FOR
the nominee listed hereinafter, who is presently a Director of the Company,
unless contrary instructions are received.
If for any reason the nominee becomes unavailable for election, the proxies
solicited will be voted for such nominee as is selected by management.
Management has no reason to believe that the nominee is not available or will
not serve if elected. The election of such Director will be decided by a
plurality of the Common Shares present and entitled to vote at the Annual
Meeting.
The following Table sets forth the name, age, position with the Company,
principal occupation, term of service and beneficial ownership of Common Shares
with respect to the nominee for election as a Director,
3
<PAGE> 6
with respect to each Director whose term of office as a Director will continue
after this Annual Meeting, and with respect to each executive officer of the
Company named in the Summary Compensation Table below:
<TABLE>
<CAPTION>
COMMON SHARES
OF THE COMPANY PERCENTAGE OF
POSITIONS AND BENEFICIALLY OUTSTANDING COMMON
NAME AND YEAR OFFICES WITH THE OWNED AS OF SHARES OF THE COMPANY
FIRST BECAME COMPANY AND OTHER THE RECORD OWNED AS OF TERM AS DIRECTOR
A DIRECTOR AGE PRINCIPAL OCCUPATIONS DATE(A) THE RECORD DATE(B) TO EXPIRE
------------- --- --------------------- -------------- --------------------- ----------------
<S> <C> <C> <C> <C> <C>
NOMINEE FOR ELECTION AS DIRECTOR
Gary D. Lewis (1996)........... 48 Chairman of the 770,000(c) 15.9 2002
Board; President and
Director of Wall
Street Partners, Inc.
DIRECTORS CONTINUING IN OFFICE
Robert L. Chioini (1996)....... 34 President and Chief 570,000(d) 11.6 2000
Executive Officer of
the Company
Norman L. McKee (1997)......... 42 President of 20,000(e) * 2001
Strategic Growth
Management, Inc.
OTHER EXECUTIVE OFFICERS
James J. Connor................ 47 Former Vice President 0 0
of Finance, Chief
Financial Officer,
Treasurer and
Secretary(f)
All directors and all executive officers as a group
(4 persons).................................................. 1,372,500(g) 27.7%
</TABLE>
- -------------------------
* Less than 1%.
(a) All Directors and executive officers named herein have sole voting power and
sole investment power with respect to Common Shares beneficially owned,
except as otherwise noted below.
(b) Based on 4,830,450 Common Shares outstanding as of the Record Date.
(c) Includes 675,000 Common Shares owned jointly with Mr. Lewis's wife, 50,000
Common Shares held in custodial accounts for the benefit of Mr. Lewis's two
minor children and 25,000 Common Shares owned by another child of Mr. Lewis,
and includes 20,000 Common Shares that Mr. Lewis has the right to acquire
within 60 days of the Record Date pursuant to the Company's 1997 Stock
Option Plan.
(d) Includes 70,000 Common Shares that Mr. Chioini has the right to acquire
within 60 days of the Record Date pursuant to the Company's 1997 Stock
Option Plan.
(e) Includes 20,000 Common Shares that Mr. McKee has the right to acquire within
60 days of the Record Date pursuant to the Company's 1997 Stock Option Plan.
(f) During the first quarter of 1999, Mr. Connor resigned as Vice President of
Finance, Chief Financial Officer, Treasurer and Secretary.
(g) Includes 122,500 Common Shares which the directors and executive officers
have the right to acquire within 60 days of the Record Date pursuant to the
Company's 1997 Stock Option Plan.
OTHER INFORMATION RELATING TO DIRECTORS
GARY D. LEWIS is a founder of the Company and has been Chairman of the
Board of Directors of the Company since its formation in October 1996. Mr. Lewis
also served as Secretary and Treasurer of the Company from October 1996 to July
1997. Mr. Lewis has also served as President of OmniSource, Inc., a medical
device distributor, from December 1994 to December 1997. Mr. Lewis also founded
and served as
4
<PAGE> 7
President and Chief Executive Officer of Somanetics Corporation, a medical
device manufacturer, from its inception in 1982 to February 1995. Mr. Lewis is
also the sole stockholder of, and serves as President and a Director of, Wall
Street Partners, Inc. ("Wall Street"), a management consulting firm that
provides business consulting services to the Company. See "Transactions with
Management -- Consulting Agreement."
ROBERT L. CHIOINI is a founder of the Company, has served as the President
and Chief Executive Officer of the Company since February 1997, and has been a
Director of the Company since its formation in October 1996. From January 1996
to February 1997, Mr. Chioini served as Director of Operations of Rockwell
Medical Supplies, L.L.C., a company which manufactured hemodialysis concentrates
and distributed such concentrates and other hemodialysis products. From January
1995 to January 1996, Mr. Chioini served as President of Rockwell Medical, Inc.,
a company which manufactured hemodialysis kits and distributed such kits and
other hemodialysis products. From 1993 to 1995, Mr. Chioini served as a Regional
Sales Manager at Dial Medical of Florida, Inc., currently Gambro Healthcare, a
company which manufactures and distributes hemodialysis concentrates and owns
hemodialysis clinics. Mr. Chioini is a party to an employment agreement with the
Company which expires February 19, 2000.
NORMAN L. MCKEE joined the Board of Directors of the Company in July 1997.
In July 1997, Mr. McKee founded, and currently serves as the President of,
Strategic Growth Management, Inc., a management consulting firm. Mr. McKee
served as Senior Vice President, Treasurer and Chief Financial Officer of Saga
Communications, Inc. ("Saga"), a company which owns and operates radio stations
and a television station, from 1994 to July 1997. From 1988 to 1994, Mr. McKee
served as Vice President, Treasurer and Chief Financial Officer of Saga. Mr.
McKee also served on the Board of Directors of Saga from 1992 to July 1997.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Audit Committee which is presently comprised of Messrs.
Lewis (Chairman) and McKee. The Audit Committee's duties include the periodic
review of the Company's financial statements and meetings with the Company's
independent auditors. The Audit Committee's duties also include recommending to
the Board of Directors the conditions, compensation and term of appointment of
the independent certified public accountants for the audit of the Company's
books and accounts. During 1998, the Audit Committee held one meeting and had
informal discussions in lieu of additional meetings.
The Company does not have a compensation committee or a nominating
committee.
During the year ended December 31, 1998, the Board of Directors held five
meetings and the Board of Directors took action by written consent in lieu of a
meeting on five occasions. All Directors executed each of the consent
resolutions and all of the members of the Audit Committee of the Board of
Directors attended the single meeting of such committee.
5
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table
The following table sets forth the compensation for the years ended
December 31, 1997 and 1998 awarded to, earned by or paid to Mr. Robert L.
Chioini, the Company's Chief Executive Officer, and the other executive officer
of the Company whose total annual salary and bonus exceeded $100,000 for the
year ended December 31, 1998. During the years ended December 31, 1997 and 1998,
no other officers earned in excess of $100,000 in total annual salary and bonus.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
----------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS COMPENSATION OPTIONS(#)
--------------------------- ---- --------- ----- ------------ ----------
<S> <C> <C> <C> <C> <C>
Robert L. Chioini, President and...... 1998 $150,000(1) $47,500(2) $11,385(3) 100,000
Chief Executive Officer 1997 $101,700 (4) $46,828(5) 90,000
James J. Connor, Vice President and... 1998 $120,000 $ 4,230(7) 0
Chief Financial Officer(6) 1997 $ 51,750 50,000
</TABLE>
- -------------------------
(1) On February 19, 1997, the Company entered into a three-year employment
agreement with Mr. Chioini pursuant to which Mr. Chioini is paid an annual
salary of $150,000.
(2) The 1998 Bonus primarily represents performance incentive compensation paid
or accrued in 1998.
(3) Other annual compensation in 1998 included (i) $3,685 of income related to
the Company's executive perquisites for health, life and dental insurance,
and (ii) reimbursement of approximately $7,700 of expenses related to the
Company's automobile car allowance program.
(4) In 1997, Mr. Chioini was paid a salary of $115,000 of which $41,700 was
deferred until 1998 at the election of Mr. Chioini following the completion
of the Company's initial public offering.
(5) Other annual compensation in 1997 included (i) the amount of compensation
($32,812) attributable to the difference in exercise price of options to
purchase Common Shares granted to Mr. Chioini and the initial public
offering price of the Company's Common Shares of $4.00 per share, and (ii)
reimbursement of approximately $7,700 of expenses related to the Company's
automobile car allowance program.
(6) Mr. Connor resigned as Vice President of Finance, Chief Financial Officer,
Secretary and Treasurer effective in the first quarter of 1999.
(7) Mr. Connor received other annual compensation relating to the Company's
executive perquisites for health, life and dental expenses.
6
<PAGE> 9
Option Grants and Related Information
The following table provides information with respect to options granted
during fiscal year 1998 to the executive officers named in the Summary
Compensation Table above.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE OF
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH.) DATE
---- ---------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Robert L. Chioini................................. 100,000 84% $1.50 12/2/08
James J. Connor................................... -- -- -- --
</TABLE>
- -------------------------
(1) These options which were granted pursuant to the Company's Stock Option
Plan, become exercisable annually in 25% increments beginning on the grant
date (December 2, 1998) and have a term of ten years.
(2) Represents value of the options at end of ten year term, assuming the market
price of the Company's Common Shares appreciates at an annually compounded
rate of 5% to 10% from the grant date price of $1.50 per Common Share. These
amounts represent assumed rates of appreciation only. Actual gains, if any,
will be dependent on overall market conditions and on future performance of
the Company's Common Shares. There can be no assurance that the amounts
reflected in the table will be achieved.
The following table provides information regarding the aggregate option
exercises and fiscal year-end option values relating to the executive officers
named in the Summary Compensation Table above.
AGGREGATED OPTION EXERCISES
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END AT FISCAL YEAR END
SHARES ACQUIRED VALUE (EXERCISABLE/ (EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE) UNEXERCISABLE)
---- --------------- -------- --------------------- --------------------
<S> <C> <C> <C> <C>
Robert L. Chioini.............. 0 0 70,000/120,000 $15,625.00/$46,875.00
James J. Conner................ 0 0 12,500/ 37,500 $ 8,593.75/$25,781.25
</TABLE>
Compensation of Directors
The Company's Directors who are not officers or employees of the Company
(collectively, the "Outside Directors") receive $1,000 for each Board meeting
attended in person and $250 for each telephonic Board meeting attended. The
Company also reimburses Outside Directors for their reasonable expenses of
attending Board and Board committee meetings.
In July 1997, the Board of Directors and shareholders of the Company
adopted the Rockwell Medical Technologies, Inc. 1997 Stock Option Plan (the
"Stock Option Plan"). The Stock Option Plan permits the Board of Directors,
among other things, to grant options to purchase Common Shares to Directors of
the Company, including Outside Directors. In July 1997, the Board of Directors
granted to each of the three existing Outside Directors options to purchase
20,000 Common Shares at a per share exercise price of $3.00. Upon the election
of any new member to the Board of Directors who is an Outside Director, the
Board of Directors intends to grant to such member an option to purchase 20,000
Common Shares at a per share exercise price equal to the fair market value of a
Common Share at the date of grant. Beginning with the first annual meeting of
the shareholders of the Company after July 1997, provided that a sufficient
number of Common Shares remain available under the Stock Option Plan, on each
date on which an annual meeting of
7
<PAGE> 10
the shareholders of the Company is held, the Board of Directors intends to grant
to each Outside Director who is then serving on the Board of Directors, an
option to purchase 5,000 Common Shares. The exercise price of such options will
be the fair market value of the Common Shares on the date of grant.
Notwithstanding the foregoing, the Company did not grant such options to Outside
Directors in 1998. The options granted to Outside Directors under the Stock
Option Plan will become fully exercisable on the first anniversary of the date
of grant. Such options will expire ten years after the date of grant. If an
Outside Director becomes an officer or employee of the Company and continues to
serve as a member of the Board of Directors, options granted under the Stock
Option Plan will remain exercisable in full.
Employment Agreements
The Company entered into an employment agreement with Robert L. Chioini in
February 1997, pursuant to which Mr. Chioini is employed as the President and
Chief Executive Officer of the Company for a period ending February 19, 2000.
Under the agreement, Mr. Chioini's base salary was set at $115,000, which may be
increased by the Board of Directors. At the closing of the Company's initial
public offering, the Board increased Mr. Chioini's base salary to $150,000. Mr.
Chioini's employment agreement contains a three year non-compete provision and
provides that he devote his full-time and attention to the Company's business.
During the first quarter of 1999, James J. Connor, Vice President of
Finance, Chief Financial Officer, Secretary and Treasurer resigned from the
Company. Mr. Connor's severance package is currently under negotiation.
The Company entered into an employment agreement with Thomas E. Klema,
effective as of January 12, 1999, pursuant to which Mr. Klema is employed as
Vice President of Finance, Chief Financial Officer, Treasurer and Secretary of
the Company for a period ending January 12, 2001. Mr. Klema's base salary is
$125,000, which may be increased by the Board of Directors. In addition,
pursuant to his employment agreement, (1) Mr. Klema was granted the option to
purchase 50,000 shares of the Company's Common Shares, vesting in three equal
annual installments beginning on January 12, 1999, exercisable at a price per
share equal to the average high and low selling price of the Company's Common
Shares on such grant date and (2) Mr. Klema receives a monthly car allowance of
$480 (plus reimbursement for fuel and routine maintenance costs). Mr. Klema's
employment agreement contains a one year non-compete provision and provides that
he devote his full time and attention to the Company's business.
REPORT OF THE BOARD OF DIRECTORS REGARDING TEN-YEAR OPTION REPRICINGS
In order to facilitate the retention of the Company's employees and to
align their interest with the interest of the Company's Shareholders, effective
April 13, 1998, in exchange for the cancellation of certain outstanding stock
options, the Company granted stock options to purchase an aggregate of 126,300
Common Shares under the Company's 1997 Stock Option Plan to each then current
employee of the Company, other than Robert L. Chioini, the President and Chief
Executive Officer of the Company, and such other employees who elected to not
participate. The new options cover the same number of shares and are subject to
substantially the same terms and conditions as the options previously granted to
such employees in the Company's 1997 fiscal year under the Company's 1997 Stock
Option Plan except that (i) the exercise price of the new option is the fair
market value of the Company's Common Shares as of the date of grant ($1.4375 per
share), (ii) with respect to the options granted to the Company's executive
officers, such options become exercisable in one-quarter cumulative annual
increments beginning on the grant date and expire April 13, 2008, (iii) with
respect to the options granted to the employees of the Company (other than
executive officers), such options become exercisable in one-third cumulative
annual increments beginning April 13, 1999 and expire April 13, 2008, and (iv)
the issuance of the new options in conditioned upon each applicable employee
agreeing to cancel the options previously granted to such employee as described
above.
By the Board of Directors
Gary D. Lewis
Norman L. McKee
Robert L. Chioini
8
<PAGE> 11
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), requires the Company's officers and Directors and persons who own more
than ten percent of a registered class of the Company's equity securities to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission (the "Commission") and the Nasdaq Stock Market. Officers,
Directors and greater than ten percent Shareholders are required by regulation
of the Commission to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms received by it, or
written representation from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the Company's
current fiscal year ended December 31, 1998, the Company's four Directors and
James J. Connor, the Company's Vice President of Finance, Chief Financial
Officer, Secretary and Treasurer through March 2, 1999, filed their respective
Form 3's late.
TRANSACTIONS WITH MANAGEMENT
Acquisition of Business of Predecessor Company
On February 19, 1997, the Company acquired the business of Rockwell Medical
Supplies, L.L.C. (the "Supply Company") and Rockwell Transportation, L.L.C. (the
"Transportation Company" and together with the Supply Company, the "Predecessor
Company") for total consideration of $2,441,664.47 pursuant to an Asset Purchase
Agreement dated as of November 1, 1996, as amended (the "Asset Purchase
Agreement"). Mr. Robert L. Chioini, the President, Chief Executive Officer and a
Director of the Company, owned a 20% equity interest in the Supply Company. The
purchase price consisted of (i) $150,000 paid to the Sellers in cash; (ii) a
cash payment to NBD Bank of approximately $375,000 to retire an outstanding debt
owed by the Predecessor Company to NBD Bank; and (iii) an 8.5% promissory note
in the principal amount of $1,916,664.47 made by the Company in favor of the
Supply Company (the "Note"). In addition, in connection with the purchase of the
business from the Predecessor Company, the Company paid $178,000 to the landlord
under the lease pursuant to which the Company leases its manufacturing facility
as a prepayment of future rents and as an additional security deposit in order
to induce such landlord to consent to the assignment of the lease and to release
the Predecessor Company and its shareholders, including Mr. Chioini, from their
obligations under such lease.
Under the terms of the Note and the Asset Purchase Agreement, a prepayment
of $500,000 on the Note was due on May 19, 1997, which date was extended by the
Supply Company to May 31, 1997. Pursuant to a letter agreement dated April 4,
1997, the Supply Company agreed that, upon receipt of the $500,000 prepayment on
the Note, the remaining principal balance under the Note would be converted into
shares of Series A Preferred Stock at a conversion ratio of one share of Series
A Preferred Stock for each $1.00 of outstanding principal due under the Note.
The Company made the required $500,000 prepayment under the Note and the Note
was converted into 1,416,664 shares of Series A Preferred Stock.
In accordance with the terms of the Asset Purchase Agreement, the purchase
price paid by the Company for the Predecessor Company's business was reduced by
$320,749 based on a provision in the Asset Purchase Agreement which provides
that the purchase price would be reduced on a dollar for dollar basis to the
extent that the net worth of the Predecessor Company at the closing of the
acquisition was below a target amount set forth in the Asset Purchase Agreement.
320,749 shares of Series A Preferred Stock were surrendered by the Supply
Company to the Company for cancellation in payment of such purchase price
adjustment. In accordance with the terms of the Series A Preferred Stock, the
Company redeemed the remaining 1,095,915 shares of Series A Preferred Stock on
January 30, 1998 for an aggregate redemption price of $1,158,187.
Consulting Agreement
The Company is party to consulting agreement with Wall Street Partners,
Inc. ("Wall Street") dated as of February 19, 1997 pursuant to which Wall Street
provides management and financial consulting services to the Company. The
Company agreed to pay Wall Street a consulting fee of $25,000 per month from the
date of
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<PAGE> 12
the agreement through June 30, 1998, subject to renewal upon the mutual
agreement of the Company and Wall Street. Such agreement was renewed through
October 31, 1998. The Company also renewed the agreement with Wall Street from
November 1, 1999 to December 31, 1998, but for a reduced fee of $20,000 per
month. The Company and Wall Street further extended their agreement (at a fee of
$20,000 per month) through June 30, 1999, subject to renewal upon the mutual
agreement of the Company and Wall Street. Prior to February 19, 1997, Wall
Street rendered consulting services to the Company beginning in November 1996
for a consulting fee of $25,000 per month. Wall Street is owned by Gary D. Lewis
and, until October, 1998, by Michael J. Xirinachs, each of whom is a founder of
the Company. The Company has paid or accrued an aggregate of $350,000 during the
Company's fiscal year ended December 31, 1997 and $290,000 during the Company's
fiscal year ended December 31, 1998 in consulting fees to Wall Street under
these arrangements.
Shareholder Loans
On April 29, 1997, Messrs. Chioini, Lewis and Xirinachs loaned $50,000,
$25,000 and $50,000, respectively, to the Company. The loans were evidenced by
8.5% promissory notes in the amounts of $50,000, $25,000 and $50,000,
respectively. The Company repaid such loans, including accrued interest, in
June, 1997. Each of Messrs. Lewis and Chioini serves as a Director of the
Company, and until January 4, 1999, Mr. Xirinachs served as a Director of the
Company; Mr. Chioini also serves as the Company's President and Chief Executive
Officer.
In November 1997, the Company obtained a $100,000 loan from Mr. Xirinachs.
The loan bore interest at the rate of 24% per annum. The Company repaid such
loan, including accrued interest in February 1998. Mr. Xirinachs is a founder of
the Company and until January 4, 1999, served as a Director of the Company.
Related-Party Loan
In July, 1997, the Company obtained a loan from Karen Bagley in the
principal amount of $100,000 to pay employee salaries and other accrued
expenses. The loan bore interest at an annual rate of 24% per annum and was
payable in full, including accrued interest, on a demand basis. The Company
repaid such loan, including accrued interest, in January 1998. Karen Bagley is
the wife of Patrick Bagley, whose firm serves as legal counsel to the Company on
certain matters and also to Mr. Robert L. Chioini in a personal capacity. Mr.
Chioini is the President, Chief Executive Officer and a Director of the Company.
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<PAGE> 13
II. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1997 STOCK
OPTION PLAN TO INCREASE AUTHORIZED SHARES
INTRODUCTION
The Board of Directors believes that it would be in the best interests of
the Company and its shareholders to increase the number of shares of Common
Stock that is available to be granted as options under the Company's Stock
Option Plan and, subject to shareholder approval, has approved an increase in
the number of shares available under the Stock Option Plan from 450,000 in the
aggregate to 900,000 in the aggregate.
As of December 31, 1998, there were 407,450 Common Shares subject to
outstanding options under the Stock Option Plan, and at the Record Date there
were approximately 418,550 Common Shares subject to outstanding options under
the Stock Option Plan. All capitalized terms not hereinafter defined shall have
the meaning given them in the Stock Option Plan.
STOCK OPTION PLAN
Adoption; General; Purpose; Participants; and Administration
The Company's Board of Directors adopted the Stock Option Plan on July 15,
1997.
Pursuant to the Stock Option Plan, 450,000 Common Shares are currently
reserved for issuance pursuant to options granted or to be granted to key
employees (including officers), directors, consultants or advisors (the
"Participants") of or to the Company or of or to any corporation or other entity
in which the Company has a direct or indirect ownership interest of 50% or more
of the total combined voting power of all classes of outstanding voting equity
interests ("Subsidiary") as determined by a committee appointed by the Board of
Directors (the "Committee").
The purpose of the Stock Option Plan is to provide Participants with an
increased incentive to make significant and extraordinary contributions to the
long-term performance and growth of the Company, to join the interests of
Participants with the interests of shareholders of the Company and to facilitate
attracting and retaining the Participants. The Stock Option Plan, however, could
have an "anti-takeover" effect, particularly with regard to the Committee's
ability to accelerate the exercisability of stock options in connection with a
change in control.
The Stock Option Plan is administered by the Committee. Members of the
Committee serve at the pleasure of the Board of Directors and may be removed or
replaced by the Board of Directors at any time.
The selection of persons who are eligible to participate in the Stock
Option Plan and grants and awards to those individuals are determined by the
Committee, in its Discretion. The only established criterion to determine
eligibility under the Stock Option Plan is that individuals must be key
employees (including officers), directors, consultants or advisors of or to the
Company or any Subsidiary, as determined by the Committee in its Discretion;
provided that Incentive Options (as defined below) may be granted only to
employees (as defined in the Internal Revenue Code of 1986, as amended (the
"Code")) of the Company or a corporate Subsidiary, to the extent required by
Section 422 of the Code, or any successor provision.
Incentive and Nonqualified Options; Restrictions; Exercise Price; and Related
Matters
The Stock Option Plan provides for (i) the grant of "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended ("Incentive Options"), and (ii) the grant of "nonqualified stock
options" (i.e., options that do not meet the requirements of Section 422)
("Nonqualified Options"). The Stock Option Plan also contains certain
restrictions against transfer and other terms and conditions which are to be
determined by the Committee.
Any Incentive Option granted under the Stock Option Plan must have an
exercise price not less than 100% of the fair market value of the shares on the
date on which such option is granted. With respect to an Incentive Option
granted to a Participant who owns more than 10% of the total combined voting
shares of the Company or of any parent or Subsidiary of the Company, the
exercise price of such option must not be less
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<PAGE> 14
than 110% of the fair market value of the shares subject to such option on the
date such option is granted. A Nonqualified Option granted under the Stock
Option Plan must have an exercise price of not less than the par value, if any,
of the Common Shares.
Limitations; Amendment; Exercise; Forfeiture; Vesting; Extraordinary
Transactions; Termination; and Related Matters
Subject to certain adjustments, no Participant may be granted stock options
to purchase more than 200,000 Common Shares in the aggregate in any fiscal year.
In addition, grants and awards are subject to the maximum number of shares
remaining with respect to which stock options may be granted at any time under
the Stock Option Plan. There are also certain limitations on the maximum value
of Incentive Options that may become first exercisable by any person in any
year. Each grant or award under the Stock Option Plan must be evidenced by a
written agreement containing such provisions as may be approved by the
Committee.
The Board of Directors may terminate or amend the Stock Option Plan, or
amend any stock option agreement under the Stock Option Plan, at any time;
provided that, (i) to the extent required by Section 162(m) of the Code and
related regulations, or any successor rule, but only with respect to amendments
or revisions affecting Participants whose compensation is subject to Section
162(m) of the Code, and to the extent required by Section 422 of the Code, or
any successor section, but only with respect to Incentive Stock Options, no such
amendment or revision may increase the maximum number of shares in the aggregate
that are subject to the Stock Option Plan without the approval or ratification
of the shareholders of the Company, and (ii) no such amendment or revision may
change the option price or alter or impair any stock option previously granted
under the Stock Option Plan, in a manner adverse to a Participant, without the
consent of such Participant.
Common Shares awarded under the Stock Option Plan typically will be subject
to vesting and unvested shares awarded to a Participant will be forfeited and
transferred back to the Company if the Participant ceases to be employed by the
Company for any reason other than death or permanent disability. If the
employment of a Participant is terminated by action of the Company without cause
or by agreement of the Company and the Participant, the Committee may, at its
Discretion, release some or all of the shares from the restrictions. If a
Participant ceases to be an employee of the Company because of death or
permanent disability, the restrictions will lapse with respect to such shares,
unless otherwise determined by the Committee.
Options granted under the Stock Option Plan may be exercised only while the
Participant is an employee, director, consultant or advisor of or to the Company
or a Subsidiary, except as provided for in the event of "Extraordinary
Transactions" (as described below) and except that the Committee may, in its
Discretion, permit the exercise of all or any portion of the options granted to
such Participant (i) for a period not to exceed three months following such
termination with respect to Incentive Options that are intended to remain
Incentive Options if such termination is not due to death or permanent
disability of the Participant, (ii) for a period not to exceed one year
following termination of employment with respect to Incentive Options that are
intended to remain Incentive Options if termination of employment is due to the
death or permanent disability of the Participant, and (iii) for a period not to
extend beyond the expiration date with respect to Nonqualified Options or
Incentive Options that are not intended to remain Incentive Options, all subject
to any restrictions, terms and conditions fixed by the Committee either at the
date of the award or at the date it exercises such Discretion.
If not sooner terminated, each stock option granted under the Stock Option
Plan will expire not more than ten years from the date of grant; provided that,
with respect to an Incentive Option granted to a Participant who, at the time of
the grant, owns more than 10% of the total combined voting stock of all classes
of stock of the Company or of any parent or Subsidiary, such option must expire
not more than five years after the date of the grant.
In no event, however, shall an option be exercisable after its expiration
date, and, unless the Committee in its Discretion determines otherwise (pursuant
to the Stock Option Plan), an option may only be exercised after termination of
a Participant's employment, consultation or other service by or to the Company
to the
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<PAGE> 15
extent exercisable on the date of such termination or to the extent exercisable
as a result of the reason for such termination.
If the Company engages in specified consolidations, mergers, transfers of
substantially all of its properties and assets, dissolutions, liquidations,
reorganizations or reclassifications in such a way that holders of Common Shares
are entitled to receive stock, securities, cash or other assets with respect to,
or in exchange for, the Common Shares (each an "Extraordinary Transaction"),
then each Participant holding a stock option granted under the Stock Option
Plan, upon the exercise of such option after consummation of an Extraordinary
Transaction, will be entitled to receive (for the same aggregate exercise price)
the stock and other securities, cash and assets the Participant would have
received upon consummation of an Extraordinary Transaction if he or she had
exercised the option in full immediately before the consummation of such
Extraordinary Transaction.
Unless sooner terminated by the Board of Directors, the Stock Option Plan
will terminate on July 15, 2007, which is ten years after its original adoption
by the Board of Directors, and no stock options may be granted under the Stock
Option Plan after that date. The termination of the Stock Option Plan will not
affect the validity of any option outstanding on the date of termination.
PROPOSED AMENDMENT
A FULL COPY OF THE STOCK OPTION PLAN, AS PROPOSED TO BE AMENDED, MARKED TO
SHOW THE PROPOSED CHANGES, IS ATTACHED AS EXHIBIT A TO THIS PROXY STATEMENT. THE
MAJOR FEATURES OF THE STOCK OPTION PLAN, AS PROPOSED TO BE AMENDED, WERE
SUMMARIZED ABOVE, BUT THE FOREGOING IS ONLY A SUMMARY AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE ACTUAL TEXT.
This proposed increase in the number of shares under the Stock Option Plan
requires the affirmative vote of a majority of the votes present in person or by
proxy at the Annual Meeting. The Board of Directors recommends a vote FOR
approval of the increase in the number of shares under the Stock Option Plan.
OTHER MATTERS
ANNUAL REPORT
A copy of the Annual Report to Shareholders for the fiscal year ended
December 31, 1998 accompanies this Proxy Statement. The Company files an Annual
Report on Form 10-KSB with the Securities and Exchange Commission. The Company
will provide, without charge, to each person being solicited by this Proxy
Statement, upon the written request of any such person, a copy of the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998 (as
filed with the Securities and Exchange Commission, excluding exhibits for which
a reasonable charge shall be imposed). If a person requesting the Annual Report
was not a shareholder of record on April 8, 1999, the request must contain a
good faith representation that the person making the request was a beneficial
owner of Common Shares at the close of business on such date. All such requests
should be directed to Thomas E. Klema, Chief Financial Officer and Secretary,
Rockwell Medical Technologies, Inc., 28025 Oakland Oaks, Wixom, Michigan 48393.
RELATIONSHIP WITH INDEPENDENT AUDITOR
Plante & Moran, L.L.P. is the independent auditor for the Company and its
subsidiaries and has reported on the Company's consolidated financial statements
included in the Annual Report of the Company which accompanies this proxy
statement. The Company's independent auditor is appointed by the Board of
Directors. The Board of Directors has reappointed Plante & Moran, L.L.P. as
independent auditor for the year ending December 31, 1999.
Representatives of Plante & Moran, L.L.P. are expected to be present at the
Annual Meeting of the Shareholders and will have the opportunity to make a
statement at the meeting if they desire to do so. The representatives will also
be available to respond to appropriate questions.
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<PAGE> 16
SHAREHOLDER PROPOSALS
A shareholder proposal which is intended to be presented at the Company's
2000 Annual Meeting of Shareholders must be received by the Company's Secretary
at the Company's principal executive office, 28025 Oakland Oaks, Wixom, Michigan
48393, by December 14, 1999 to be considered for inclusion in the Proxy
Statement and Proxy relating to that meeting. Such proposal should be sent by
certified mail, return receipt requested.
The Company must receive notice of any proposals of shareholders that are
intended to be presented at the Company's 2000 Annual Meeting of Shareholders,
but that are not intended to be considered for inclusion in the Company's Proxy
Statement and Proxy related to that meeting, no later than February 27, 2000 to
be considered timely. Such proposals should be sent by certified mail, return
receipt requested and addressed to the Company's Secretary at the Company's
principal executive office, 28025 Oakland Oaks, Wixom, Michigan 48393. If the
Company does not have notice of the matter by that date, the Company's form of
proxy in connection with that meeting may confer discretionary authority to vote
on that matter, and the persons named in the Company's form of proxy will vote
the shares represented by such proxies in accordance with their best judgment.
OTHER BUSINESS
Neither the Company nor the members of its Board of Directors intend to
bring before the Annual Meeting any matters other than those set forth in the
Notice of Annual Meeting of Shareholders, and they have no present knowledge
that any other matters will be presented for action at the meeting by others. If
any other matters properly come before such meeting, however, it is the
intention of the persons named in the enclosed form of proxy to vote in
accordance with their best judgment.
By Order of the Board of Directors
/s/ THOMAS E. KLEMA
Thomas E. Klema
Secretary
Wixom, Michigan
April 12, 1999
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<PAGE> 17
EXHIBIT A
ROCKWELL MEDICAL TECHNOLOGIES, INC.
1997 STOCK OPTION PLAN
1. Definitions: As used herein, the following terms shall have the
following meanings:
(a) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the applicable rules and regulations thereunder.
(b) "Committee" shall mean, (i) with respect to administration of the
Plan regarding Participants who are subject to Section 16(a) and (b) of the
Exchange Act, a committee meeting the standards of Rule 16b-3 of the Rules
and Regulations under the Exchange Act, or any similar successor rule,
appointed by the Board of Directors of the Company to perform any of the
functions and duties of the Committee under the Plan, or the Board of
Directors as a whole, and (ii) with respect to administration of the Plan
regarding all other Participants, such committee or the Board of Directors
of the Company, as described in clause (i), or such other committee or
entity appointed by the Board of Directors of the Company to perform any of
the functions and duties of the Committee under the Plan.
(c) "Common Shares" shall mean the Common Shares, no par value per
share, of the Company.
(d) "Company" shall mean Rockwell Medical Technologies, Inc., a
Michigan corporation, or any successor thereof.
(e) "Discretion" shall mean the sole discretion of the Committee, with
no requirement whatsoever that the Committee follow past practices, act in
a manner consistent with past practices, or treat any key employee,
director, consultant or advisor in a manner consistent with the treatment
afforded other key employees, directors, consultants or advisors with
respect to the Plan or otherwise.
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934 as
amended, and the rules and regulations thereunder.
(g) "Incentive Option" shall mean an option to purchase Common Shares
which meets the requirements set forth in the Plan and also is intended to
be, and qualifies as, an incentive stock option within the meaning of
Section 422 of the Code.
(h) "Nonqualified Option" shall mean an option to purchase Common
Shares which meets the requirements set forth in the Plan but is not
intended to be, or does not qualify as, an incentive stock option within
the meaning of the Code.
(i) "Participant" shall mean any individual designated by the
Committee under Paragraph 6 for participation in the Plan.
(j) "Plan" shall mean this Rockwell Medical Technologies, Inc. 1997
Stock Option Plan.
(k) "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
(l) "Subsidiary" shall mean any corporation or other entity in which
the Company has a direct or indirect ownership interest of 50% or more of
the total combined voting power of all classes of outstanding voting equity
interests.
2. Purpose of Plan: The purpose of the Plan is to provide key employees
(including officers), directors, consultants and advisors of the Company and its
Subsidiaries (collectively, "key employees") with an increased incentive to make
significant and extraordinary contributions to the long-term performance and
growth of the Company and its Subsidiaries, to join the interests of key
employees, directors, consultants and advisors with the interests of the
shareholders of the Company, and to facilitate attracting and retaining key
employees, directors, consultants and advisors of exceptional ability.
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<PAGE> 18
3. Administration: The Plan shall be administered by the Committee. Subject
to the provisions of the Plan, the Committee shall determine, from those
eligible to be Participants under the Plan, the persons to be granted stock
options, the amount of stock to be optioned to each such person, the time such
options shall be granted and the terms and conditions of any stock options. Such
terms and conditions may, in the Committee's Discretion, include, without
limitation, provisions providing for termination of the option, forfeiture of
the gain on any option exercises or both if the Participant competes with the
Company or otherwise acts contrary to the Company's interests, and provisions
imposing restrictions, potential forfeiture or both on shares acquired upon
exercise of options granted pursuant to this Plan. The Committee may condition
any grant on the potential Participant's agreement to such terms and conditions.
Subject to the provisions of the Plan, the Committee is authorized to
interpret the Plan, to promulgate, amend and rescind rules and regulations
relating to the Plan and to make all other determinations necessary or advisable
for its administration. Interpretation and construction of any provision of the
Plan by the Committee shall, unless otherwise determined by the Board of
Directors of the Company, be final and conclusive. A majority of the Committee
shall constitute a quorum, and the acts of a majority of the members present at
any meeting at which a quorum is present, or acts approved in writing by a
majority of the Committee, shall be the acts of the Committee.
4. Indemnification: In addition to such other rights of indemnification as
they may have, the members of the Committee shall be indemnified by the Company
in connection with any claim, action, suit or proceeding relating to any action
taken or failure to act under or in connection with the Plan or any option
granted hereunder to the full extent provided for under the Company's articles
of incorporation or bylaws with respect to indemnification of directors of the
Company.
5. Maximum Number of Shares Subject to Plan: The maximum number of shares
with respect to which stock options may be granted under the Plan shall be an
aggregate of 900,000 Common Shares, which may consist in whole or in part of
authorized and unissued or reacquired Common Shares. Unless the Plan shall have
been terminated, shares covered by the unexercised portion of canceled, expired
or otherwise terminated options under the Plan shall again be available for
option and sale.
Subject to Paragraph 16, the number and type of shares subject to each
outstanding stock option, the option price with respect to outstanding stock
options, the aggregate number and type of shares remaining available under the
Plan, and the maximum number and type of shares that may be granted to any
Participant in any fiscal year of the Company pursuant to Paragraph 6, shall be
subject to such adjustment as the Committee, in its Discretion, deems
appropriate to reflect such events as stock dividends, stock splits,
recapitalizations, mergers, statutory share exchanges or reorganizations of or
by the Company; provided, that no fractional shares shall be issued pursuant to
the Plan, no rights may be granted under the Plan with respect to fractional
shares, and any fractional shares resulting from such adjustments shall be
eliminated from any outstanding option.
6. Participants: The Committee shall determine and designate from time to
time, in its Discretion, those key employees (including officers), directors,
consultants and advisors of or to the Company or any Subsidiary to whom options
are to be granted and who thereby become Participants under the Plan; provided,
however, that (a) Incentive Options shall be granted only to employees (as
defined in the Code) of the Company or a corporate Subsidiary, to the extent
required by Section 422 of the Code, or any successor provision, and (b) no
Participant may be granted stock options to purchase more than 200,000 Common
Shares in the aggregate in any fiscal year of the Company, subject to any
adjustments provided in the final paragraph of Paragraph 5 and in Paragraph 16.
7. Allotment of Shares: The Committee shall determine and fix the number of
Common Shares to be offered to each Participant; provided, that no Incentive
Option may be granted under the Plan to any one Participant which would result
in the aggregate fair market value, determined as of the date the option is
granted, of the underlying stock with respect to which Incentive Options are
exercisable for the first time by such individual during any calendar year
(under all of such plans of the Company and its parent and Subsidiary
corporations) exceeding $100,000.
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8. Option Price: Subject to the rules set forth in this Paragraph 8, the
Committee, in its Discretion, shall establish the option price at the time any
option is granted. With respect to an Incentive Option, such option price shall
not be less than 100% of the fair market value of the stock on the date on which
such option is granted; provided, that with respect to an Incentive Option
granted to an employee who at the time of the grant owns (after applying the
attribution rules of Section 424(d) of the Code) more than 10% of the total
combined voting stock of the Company or of any parent or Subsidiary, the option
price shall not be less than 110% of the fair market value of the stock subject
to the Incentive Option on the date such option is granted. With respect to a
Nonqualified Option, the option price shall be not less than the par value, if
any, of the Common Shares. Fair market value of a share shall be determined by
the Committee and may be determined by using the closing sale price of the
Company's stock on any exchange or other market on which the Common Shares shall
be traded on such date, or if there is no sale on such date, on the next
following date on which there is a sale, or the average of the closing bid and
asked prices in any market or quotation system in which the Common Shares shall
be listed or traded on such date. The option price will be subject to adjustment
in accordance with the provisions of Paragraphs 5 and 16 of the Plan.
9. Granting and Exercise of Options: The granting of options under the Plan
shall be effected in accordance with determinations made by the Committee
pursuant to the provisions of the Plan, by execution of instruments in writing
in form approved by the Committee. Such instruments shall constitute binding
contracts between the Company and the Participant.
Subject to the terms of the Plan, the Committee, in its Discretion, may
grant to Participants Incentive Options, Nonqualified Options or any combination
thereof. Each option granted under the Plan shall designate the number of shares
covered thereby, if any, with respect to which the option is an Incentive Option
and the number of shares covered thereby, if any, with respect to which the
option is a Nonqualified Option.
Subject to the terms of the Plan, each option granted under the Plan shall
be exercisable at any such time or times or in any such installments as may be
determined by the Committee in its Discretion; provided, that the aggregate fair
market value (determined as of the date the option is granted) of the underlying
stock with respect to which Incentive Options are exercisable for the first time
by such individual during any calendar year (under all of such plans of the
Company and its parent and Subsidiary corporations) shall not exceed $100,000.
Except as provided in Paragraph 13, options may be exercised only while the
Participant is an employee, director, consultant or advisor of the Company or a
Subsidiary.
Notwithstanding any other term or provision of this Plan, but subject to
the requirements of the Code with respect to Incentive Options that are intended
to remain Incentive Options, in connection with a Participant ceasing to be an
employee of the Company or a Subsidiary for any reason, the stock option
agreement may provide for the acceleration of, or the Committee may accelerate,
in its Discretion (exercised at the date of the grant of the stock option or
after the date of grant), in whole or in part, the time or times or installments
with respect to which any option granted under this Plan shall be exercisable in
connection with termination of a Participant's employment with the Company or a
Subsidiary, subject to any restrictions, terms and conditions fixed by the
Committee either at the date of the award or at the date it exercises such
Discretion.
Successive stock options may be granted to the same Participant, whether or
not the option or options previously granted to such Participant remain
unexercised. A Participant may exercise any option granted under the Plan, if
then exercisable, notwithstanding that options granted to such Participant prior
to the option then being exercised remain unexercised.
10. Payment of Option Price: At the time of the exercise in whole or in
part of any option granted under this Plan, payment in full in cash, or with the
consent of the Committee, in its Discretion, in Common Shares or by a promissory
note payable to the order of the Company which is acceptable to the Committee,
shall be made by the Participant for all shares so purchased. Such payment may,
with the consent of the Committee, in its Discretion, also consist of a cash
down payment and delivery of such a promissory note in the amount of the unpaid
exercise price. In the Discretion of, and subject to such conditions as may be
established by, the Committee, payment of the option price may also be made by
the Company retaining from the shares to be delivered upon exercise of the stock
option that number of shares having a fair market value on the date of
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exercise equal to the option price of the number of shares with respect to which
the Participant exercises the option. In the Discretion of the Committee, a
Participant may exercise an option, if then exercisable, in whole or in part, by
delivery to the Company of written notice of the exercise in such form as the
Committee may prescribe, accompanied by irrevocable instructions to a stock
broker to promptly deliver to the Company full payment for the shares with
respect to which the option is exercised from the proceeds of the stock broker's
sale of or loan against some or all of the shares. Such payment may also be made
in such other manner as the Committee determines is appropriate, in its
Discretion. No Participant shall have any of the rights of a shareholder of the
Company under any option until the actual issuance of shares to such
Participant, and prior to such issuance no adjustment shall be made for
dividends, distributions or other rights in respect of such shares, except as
provided in Paragraphs 5 and 16.
11. Transferability of Option: Except as otherwise provided in this
Paragraph 11, (i) to the extent required by Section 422 of the Code, or any
successor section, but only with respect to Incentive Options, or (ii) to the
extent determined by the Committee in its Discretion (either by resolution or by
a provision in, or amendment to, the option), (a) no option granted under the
Plan to a Participant shall be transferable by such Participant otherwise than
(1) by will, or (2) by the laws of descent and distribution or, (3) with respect
to Nonqualified Options only (unless permitted by Section 422 of the Code or any
successor section), pursuant to a qualified domestic relations order as defined
in the Code or Title I of the Employee Retirement Income Security Act, or the
rules thereunder, and (b) such option shall be exercisable, during the lifetime
of the Participant, only by the Participant.
The Committee may, in its Discretion, authorize all or a portion of the
options to be granted to an optionee to be on terms which permit transfer by
such optionee to, and the exercise of such option by, (i) the spouse, children
or grandchildren of the optionee ("Immediate Family Members"), (ii) a trust or
trusts for the exclusive benefit of such Immediate Family Members, (iii) a
partnership in which such Immediate Family Members are the only partners, or
(iv) such other persons or entities as determined by the Committee, in its
Discretion, on such terms and conditions as the Committee, in its Discretion,
may determine; provided, that (y) the stock option agreement pursuant to which
such options are granted must be approved by the Committee and must expressly
provide for transferability in a manner consistent with this Paragraph 11, and
(z) subsequent transfers of transferred options shall be prohibited except for
transfers the original optionee would be permitted to make (if he or she were
still the owner of the option) in accordance with this Paragraph 11.
Following transfer, any such options shall continue to be subject to the
same terms and conditions as were applicable immediately before transfer,
provided, that for purposes of Paragraphs 9, 10, 14, 16 and 18 the term
"Participant" shall be deemed to refer to the transferee. The events of
termination of employment of Paragraph 13 shall continue to be applied with
respect to the original optionee, following which the options shall be
exercisable by the transferee only to the extent, and for the periods, specified
in Paragraph 13. The original optionee shall remain subject to withholding taxes
and related requirements upon exercise provided in Paragraph 15. The Company
shall have no obligation to provide any notice to any transferee, including,
without limitation, notice of any termination of the option as a result of
termination of the original optionee's employment with, or other service to, the
Company.
12. Continuance of Employment; No Right to Continued Employment: The
Committee may require, in its Discretion, that any Participant under the Plan to
whom an option shall be granted shall agree in writing as a condition of the
granting of such option to remain in his or her position as an employee,
director, consultant or advisor of the Company or a Subsidiary for a designated
minimum period from the date of the granting of such option as shall be fixed by
the Committee.
Nothing contained in the Plan or in any option granted pursuant to the
Plan, nor any action taken by the Committee hereunder, shall confer upon any
Participant any right with respect to continuation of employment, consultation
or other service by or to the Company or a Subsidiary nor interfere in any way
with the right of the Company or a Subsidiary to terminate such person's
employment, consultation or other service at any time.
A-4
<PAGE> 21
13. Termination of Employment; Expiration of Options: Subject to the other
provisions of the Plan, including, without limitation, Paragraphs 9 and 16 and
this Paragraph 13, all rights to exercise options shall terminate when a
Participant ceases to be an employee, director, consultant or advisor of or to
the Company or a Subsidiary for any cause, except that the Committee may, in its
Discretion, permit the exercise of all or any portion of the options granted to
such Participant
(i) for a period not to exceed three months following such termination
with respect to Incentive Options that are intended to remain Incentive
Options if such termination is not due to death or permanent disability of
the Participant,
(ii) for a period not to exceed one year following termination of
employment with respect to Incentive Options that are Intended to remain
Incentive Options if termination of employment is due to the death or
permanent disability of the Participant, and
(iii) for a period not to extend beyond the expiration date with
respect to Nonqualified Options or Incentive Options that are not intended
to remain Incentive Options,
all subject to any restrictions, terms and conditions fixed by the Committee
either at the date of the award or at the date it exercises such Discretion. In
no event, however, shall an option be exercisable after its expiration date,
and, unless the Committee in its Discretion determines otherwise (pursuant to
Paragraph 9 or Paragraph 16), an option may only be exercised after termination
of a Participant's employment, consultation or other service by or to the
Company to the extent exercisable on the date of such termination or to the
extent exercisable as a result of the reason for such termination. The Committee
may evidence the exercise of its Discretion under this Paragraph 13 in any
manner it deems appropriate, including by resolution or by a provision in, or
amendment to, the option.
If not sooner terminated, each stock option granted under the Plan shall
expire not more than 10 years from the date of the granting thereof; provided,
that with respect to an Incentive Option granted to a Participant who, at the
time of the grant, owns (after applying the attribution rules of Section 424(d)
of the Code) more than 10% of the total combined voting stock of all classes of
stock of the Company or of any parent or Subsidiary, such option shall expire
not more than 5 years after the date of granting thereof.
14. Investment Purpose: If the Committee in its Discretion determines that
as a matter of law such procedure is or may be desirable, it may require a
Participant, upon any exercise of any option granted under the Plan or any
portion thereof and as a condition to the Company's obligation to deliver
certificates representing the shares subject to exercise, to execute and deliver
to the Company a written statement, in form satisfactory to the Committee,
representing and warranting that the Participant's purchase of Common Shares
upon exercise thereof shall be for such person's own account, for investment and
not with a view to the resale or distribution thereof and that any subsequent
sale or offer for sale of any such shares shall be made either pursuant to (a) a
Registration Statement on an appropriate form under the Securities Act, which
Registration Statement has become effective and is current with respect to the
shares being offered and sold, or (b) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption the
Participant shall, prior to any offer for sale or sale of such shares, obtain a
favorable written opinion from counsel for or approved by the Company as to the
availability of such exemption. The Company may endorse an appropriate legend
referring to the foregoing restriction upon the certificate or certificates
representing any shares issued or transferred to the Participant upon exercise
of any option granted under the Plan.
15. Withholding Payments: If upon the exercise of any Nonqualified Option
or a disqualifying disposition (within the meaning of Section 422 of the Code)
of shares acquired upon exercise of an Incentive Option, there shall be payable
by the Company or a Subsidiary any amount for income tax withholding, in the
Committee's Discretion, either the Participant shall pay such amount to the
Company, or the amount of Common Shares delivered by the Company to the
Participant shall be appropriately reduced, to reimburse the Company or such
Subsidiary for such payment. The Company or any of its Subsidiaries shall have
the right to withhold the amount of such taxes from any other sums or property
due or to become due from the Company or any of its Subsidiaries to the
Participant upon such terms and conditions as the Committee shall prescribe. The
Company may also defer issuance of the stock upon exercise of such option until
payment by the
A-5
<PAGE> 22
Participant to the Company of the amount of any such tax. The Committee may, in
its Discretion, permit Participants to satisfy such withholding obligations, in
whole or in part, by electing to have the amount of Common Shares delivered or
deliverable by the Company upon exercise of a stock option appropriately
reduced, or by electing to tender Common Shares back to the Company subsequent
to exercise of a stock option to reimburse the Company or such Subsidiary for
such income tax withholding, subject to such rules and regulations, if any, as
the Committee may adopt. The Committee may make such other arrangements with
respect to income tax withholding as it shall determine.
16. Extraordinary Transactions: In case the Company (i) consolidates with
or merges into any other corporation or other entity and is not the continuing
or surviving entity of such consolidation or merger, or (ii) permits any other
corporation or other entity to consolidate with or merge into the Company and
the Company is the continuing or surviving entity but, in connection with such
consolidation or merger, the Common Shares are changed into or exchanged for
stock or other securities of any other corporation or other entity or cash or
any other assets, or (iii) transfers all or substantially all of its properties
and assets to any other corporation or other person or entity, or (iv) dissolves
or liquidates, or (v) effects a capital reorganization or reclassification in
such a way that holders of Common Shares shall be entitled to receive stock,
securities, cash or other assets with respect to or in exchange for the Common
Shares, then, and in each such case, proper provision shall be made so that,
each Participant holding a stock option upon the exercise of such option at any
time after the consummation of such consolidation, merger, transfer,
dissolution, liquidation, reorganization or reclassification (each transaction,
for purposes of this Paragraph 16, being herein called a "Transaction"), shall
be entitled to receive (at the aggregate option price in effect for all Common
Shares issuable upon such exercise immediately prior to such consummation and as
adjusted to the time of such Transaction), in lieu of Common Shares issuable
upon such exercise prior to such consummation, the stock and other securities,
cash and assets to which such Participant would have been entitled upon such
consummation if such Participant had so exercised such stock option in full
immediately prior thereto (subject to adjustments subsequent to such Transaction
provided for in Paragraph 5).
Notwithstanding anything in the Plan to the contrary, in connection with
any Transaction and effective as of a date selected by the Committee, which date
shall, in the Committee's judgment, be far enough in advance of the Transaction
to permit Participants holding stock options to exercise their options and
participate in the Transaction as a holder of Common Shares, the Committee,
acting in its Discretion without the consent of any Participant, may effect one
or more of the following alternatives with respect to all of the outstanding
stock options (which alternatives may be made conditional on the occurrence of
the applicable Transaction and which may, if permitted by law, vary among
individual Participants): (a) accelerate the time at which stock options then
outstanding may be exercised so that such stock options may be exercised in full
for a limited period of time on or before a specified date fixed by the
Committee after which specified date all unexercised stock options and all
rights of Participants thereunder shall terminate; (b) accelerate the time at
which stock options then outstanding may be exercised so that such stock options
may be exercised in full for their then remaining term; or (c) require the
mandatory surrender to the Company of outstanding stock options held by such
Participants (irrespective of whether such stock options are then exercisable)
as of a date, before or not later than sixty days after such Transaction,
specified by the Committee, and in such event the Company shall thereupon cancel
such stock options and shall pay to each Participant an amount of cash equal to
the excess of the fair market value of the aggregate Common Shares subject to
such stock option, determined as of the date such Transaction is effective, over
the aggregate option price of such shares, less any applicable withholding
taxes; provided, however, the Committee shall not select an alternative (unless
consented to by the Participant) such that, if a Participant exercised his or
her accelerated stock option pursuant to alternative (a) or (b) and participated
in the Transaction or received cash pursuant to alternative (c), the alternative
would result in the Participant's owing any money by virtue of the operation of
Section 16(b) of the Exchange Act. If all such alternatives have such a result,
the Committee shall, in its Discretion, take such action to put such Participant
in as close to the same position as such Participant would have been in had
alternative (a), (b) or (c) been selected but without resulting in any payment
by such Participant pursuant to Section 16(b) of the Exchange Act.
Notwithstanding the foregoing, with the consent of affected Participants, each
with respect to such Participant's option only, the Committee may in lieu of the
foregoing make such provision with respect to any Transaction as it deems
appropriate.
A-6
<PAGE> 23
17. Effectiveness of Plan: This Plan shall be effective on the date the
Board of Directors of the Company adopts this Plan, provided, that the
shareholders of the Company approve the Plan within 12 months before or after
its adoption by the Board of Directors. Options may be granted before
shareholder approval of this Plan, but each such option shall be subject to
shareholder approval of this Plan. No option granted under this Plan shall be
exercisable unless and until this Plan shall have been approved by the Company's
shareholders.
18. Termination, Duration and Amendments to the Plan: The Plan may be
abandoned or terminated at any time by the Board of Directors of the Company.
Unless sooner terminated, the Plan shall terminate on the date ten years after
the earlier of its adoption by the Board of Directors or its approval by the
shareholders of the Company, and no stock options may be granted under the Plan
thereafter. The termination of the Plan shall not affect the validity of any
option which is outstanding on the date of termination.
For the purpose of conforming to any changes in applicable law or
governmental regulations, or for any other lawful purpose, the Board of
Directors shall have the right, with or without approval of the shareholders of
the Company, to amend or revise the terms of this Plan or any option agreement
under this Plan at any time; provided, however, that (i) to the extent required
by Section 162(m) of the Code and related regulations, or any successor rule,
but only with respect to amendments or revisions affecting Participants whose
compensation is subject to Section 162(m) of the Code, and to the extent
required by Section 422 of the Code, or any successor section, but only with
respect to Incentive Options, no such amendment or revision shall increase the
maximum number of shares in the aggregate which are subject to this Plan
(subject, however, to the provisions of Paragraphs 5 and 16) without the
approval or ratification of the shareholders of the Company, and (ii) no such
amendment or revision shall change the option price (except as contemplated by
Paragraphs 5 and 16) or alter or impair any option which shall have been
previously granted under this Plan, in a manner adverse to a Participant,
without the consent of such Participant.
As adopted by the Board of Directors on July 15, 1997 and amended by the
Board of Directors as of April 7, 1999.
A-7
<PAGE> 24
ROCKWELL MEDICAL TECHNOLOGIES, INC.
BOARD OF DIRECTORS PROXY FOR THE ANNUAL MEETING MAY 10, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ROCKWELL MEDICAL TECHNOLOGIES, INC.
The undersigned hereby appoints Robert L. Chioini and Thomas E. Klema, and
each of them, attorneys and proxies with full power of substitution in each of
them, in the name, place and stead of the undersigned to vote as proxy all the
Common Shares, no par value per share, of the undersigned in Rockwell Medical
Technologies, Inc. (the "Company") which the undersigned is entitled to vote at
the Annual Meeting of Shareholders of the Company to be held on May 10, 1999,
and at any and all adjournments thereof.
-----------
(TO BE SIGNED ON REVERSE SIDE) SEE REVERSE
SIDE
-----------
<PAGE> 25
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
ROCKWELL MEDICAL TECHNOLOGIES, INC.
MAY 10, 1999
\/ Please Detach and Mail in the Envelope Provided \/
|X| PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<S> <C>
1. Election of Class II Director FOR WITHHELD NOMINEE:
----- -----
| | | | Gary D. Lewis
| | | |
----- -----
FOR AGAINST ABSTAIN
----- ----- -----
2. Approval of an amendment to the Rockwell | | | | | |
Medical Technologies, Inc. 1997 Stock Option | | | | | |
Plan to increase the number of Common ----- ----- -----
Shares reserved for issuance pursuant to the exercise of options granted under
the 1997 Plan by 450,000 shares, from 450,000 to 900,000 shares.
3. In their discretion with respect to any other matters that may properly come
before the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE HEREIN. THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE ONE NOMINEE AND FOR PROPOSAL 2 IF NO INSTRUCTIONS TO THE
CONTRARY ARE INDICATED OR IF NO INSTRUCTION IS GIVEN.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
</TABLE>
<TABLE>
<S> <C>
SIGNATURE(S) DATE , 1999 SIGNATURE(S) DATE , 1999
-------------------------------- ------- -------------------------------- -------
</TABLE>
NOTE: (PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. EXECUTORS, ADMINISTRATORS,
ATTORNEYS, GUARDIANS, TRUSTEES, ETC. SHOULD SO INDICATE WHEN SIGNING,
GIVING FULL TITLE AS SUCH. IF SIGNER IS A CORPORATION, EXECUTE IN FULL
CORPORATE NAME BY AUTHORIZED OFFICER. IF SHARES ARE HELD IN THE NAME OF
TWO OR MORE PERSONS, ALL SHOULD SIGN.)
