SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, 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)(1) 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:
<PAGE>
PROXY STATEMENT
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC.
655 East Medical Drive
Bountiful, Utah 84010
ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 10, 1997
INTRODUCTION
This Proxy Statement is being furnished to holders of Specialized
Health Products International, Inc. (the "Company") common stock, par value
$0.02 per share ("Common Stock"), in connection with the solicitation of proxies
by the Company for use at the Annual Meeting of Stockholders of the Company (the
"Annual Meeting") to be held at Little America Hotel and Towers, 500 South Main
Street, Salt Lake City, Utah 84101, at 9:00 a.m. (local time) on December 10,
1997, and at any adjournment(s) or postponement(s) thereof. This Proxy
Statement, the enclosed Notice and the enclosed form of proxy are being first
mailed to stockholders of the Company on or about November 24, 1997.
VOTING AT THE ANNUAL MEETING
The Board of Directors of the Company (the "Board") has fixed the close
of business on November 24, 1997, as the record date (the "Record Date") for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting. As of the Record Date, there were outstanding 9,379,842 shares of the
Company's Common Stock held by approximately 350 holders of record. On the
Record Date there were no shares of the Company's Common Stock held as treasury
stock by the Company. Holders of record of the Company's Common Stock on the
Record Date are entitled to cast one vote per share, exercisable in person or by
properly executed proxy, with respect to each matter to be considered by them at
the Annual Meeting. The presence, in person or by properly executed proxy, of
the holders of a majority of the outstanding shares of the Company's Common
Stock is necessary to constitute a quorum at the Annual Meeting.
Common Stock will be voted in accordance with the instructions
indicated in a properly executed proxy. If no instructions are indicated, such
stock will be voted as recommended by the Board. If any other matters are
properly presented to the Annual Meeting for action, the person(s) named in the
enclosed form(s) of proxy and acting thereunder will have discretion to vote on
such matters in accordance with their best judgment. Broker non-votes and
abstentions are not treated as votes cast for purposes of any of the matters to
be voted on at the meeting. A stockholder who has given a proxy may revoke it by
voting in person at the meeting, or by giving written notice of revocation or a
later-dated proxy to the Secretary of the Company at any time before the closing
of the polls at the meeting. Any written notice revoking a proxy should be sent
to Specialized Health Products International, Inc., 655 East Medical Drive,
Bountiful, Utah 84010, Attention: Mr. J. Clark Robinson, Secretary.
The Company's Bylaws require the affirmative vote of a plurality of the
votes cast at the meeting for the election of directors. The Board recommends
that holders of the Company's Common Stock vote FOR the approval of election of
the directors proposed by the Board.
<PAGE>
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
1. Election of Directors
Board of Directors
The Company's Board is divided into three classes. One class of
directors is elected at each annual meeting of stockholders for a three-year
term. Each year a different class of directors will be elected on a rotating
basis. The terms of Dr. Gale H. Thorne and Bradley C. Robinson expire in 1997.
The term of David A. Robinson will expire in 1998 and the terms of Gary W.
Farnes and Robert R. Walker will expire in 1999.
At this meeting two directors have been nominated by the Board for
election to the class whose terms expire at the 2000 annual meeting. The persons
nominated are Dr. Gale H. Thorne and Bradley C. Robinson, both of whom are
currently directors of the Company.
Unless otherwise specified, proxy votes will be cast for the election
of all of the nominees as directors. If any such person should be unavailable
for election, the Board may either reduce the number of directors accordingly or
designate a substitute nominee. In the latter event, it is intended that proxy
votes will be cast for the election of such substitute nominee. Stockholder
nominations of persons for election as directors are subject to the notice
requirements described under the caption "Other Matters" appearing later in this
proxy statement. Election of the nominee directors requires the affirmative vote
of a plurality of the votes cast at the meeting for the election of directors.
The following pages contain information concerning the nominees and the
directors whose terms of office will continue after the meeting. Unless the
context otherwise requires, all references in this Proxy to the "Company" shall
mean Specialized Health Products International, Inc. and its subsidiary,
Specialized Health Products, Inc. ("SHP"), on a consolidated basis and, where
the context so requires, shall include its predecessors.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED
HEREIN.
2
<PAGE>
Directors and Executive Officers of the Company
With the
Company
Name Age Position Since
David A. Robinson (1) 54 President, Chairman of the Board, Chief 1993
Executive Officer and Director
Bradley C. Robinson (1) 28 Vice President - Business Development and 1993
Director
Dr. Gale H. Thorne 65 Vice President - Product Development and 1994
Director
Charles D. Roe 46 Vice President - Finance and Investor 1997
Relations, Chief Financial Officer
J. Clark Robinson 55 Secretary and Treasurer 1995
Gary W. Farnes (2) 57 Director 1995
Robert R. Walker(2) 68 Director 1994
- ---------------
(1) Member of Executive Committee.
(2) Member of Compensation Committee.
David A. Robinson. Mr. Robinson is the President, Chief Executive
Officer and Chairman of the Board of the Company. He has been a director and
officer of the Company since November 1993. From November 1992 to November 1993,
Mr. Robinson was President of EPC Products, Inc., a distribution company based
in Bountiful, Utah. From 1981 to 1992, Mr. Robinson was President of Royce
Photo/Graphics Supply, Inc., a distributor of photographic and graphic arts
equipment and supplies based in Glendale, California. He holds a Masters degree
in Business Administration and a Masters degree in Management Science from the
University of Southern California. Mr. Robinson is the brother of J. Clark
Robinson, Secretary and Treasurer of the Company, and an uncle of Bradley C.
Robinson, Vice President - Business Development and a director of the Company.
Bradley C. Robinson. Mr. Robinson is the Vice President - Business
Development of the Company. He has been a director and officer of the Company
since November 1993. From November 1992 to November 1993, Mr. Robinson was Vice
President of EPC Products, Inc., a distribution company based in Bountiful,
Utah. Mr. Robinson is the son of J. Clark Robinson, Secretary and Treasurer of
the Company, a nephew of David A. Robinson, President, Chief Executive Officer,
Chairman of the Board and a director of the Company, and a son-in-law of Gary W.
Farnes, a director of the Company.
Dr. Gale H. Thorne. Dr. Thorne is the Vice President - Product
Development, for the Company. He has been a director since January 1995, and has
held his present position as Vice President - Product Development, since October
1994. From 1993 to 1994, Dr. Thorne was a Vice President - Engineering, of
Eneco, Inc., a Salt Lake City, Utah corporation engaged in the business of
developing cold-fusion products. During Dr. Thorne's tenure at Eneco, Inc., the
company was engaged primarily in the business of prosecuting patent applications
relating to the cold-fusion technology. From 1989 to 1993, Dr. Thorne was
employed as a patent consultant and patent agent with Foster & Foster, a Salt
Lake City intellectual property law firm. Dr. Thorne holds twenty-six patents
and has published numerous technical publications. He has been a technical
consultant and a member of the Board of the Small Business Innovation Program of
the State of Utah. Dr. Thorne manages all the patent and product development
work for the Company. He holds a Ph.D. in Biophysics from the University of
3
<PAGE>
Utah. He is a past president of Thorne, Smith, Astill, Inc., an engineering
director for Becton, Dickinson and Company Immunochemistry Division and a vice
president and division manager for Varian and Diasonics Ultrasound.
Charles D. Roe. Mr. Roe is the Chief Financial Officer and Vice
President - Finance and Investor Relations. He was appointed to his present
position in November 1997 and has been with the Company since October 1997. Mr.
Roe is a certified public accountant licensed in the State of Utah and has
principally been engaged in the practice of public accounting since 1976,
including four years with Arthur Andersen LLP. Mr. Roe's public accounting
emphasis has been related to the performance of audit services to private and
public enterprises along with management and other general business and income
tax related services. From June 1995 through October 1997, Mr. Roe worked in
association with Jones, Jensen & Co., a certified public accounting firm which
is a member of the McGladrey Network of accounting firms, specializing in audits
of public companies. Mr. Roe was employed by Wellshire Services, Inc. from June
1993 to June 1995 providing various services to numerous public and private
companies in the United States and Europe. From 1987 to October 1997, Mr. Roe
has owned and operated a public accounting practice focusing on financial
audits, individual and corporate income tax consultation and preparation and
other advisory services. Since 1987, Mr. Roe has served on the board of
directors and as secretary of Covington Capital Corporation, a privately owned
financing business. From June 1995 through November 1996, Mr. Roe was employed
by the company providing management services to various companies financed by
Covington Capital Corporation. Mr. Roe graduated from the University of Utah
with a bachelors of arts degree in accounting.
J. Clark Robinson. Mr. Robinson is the Secretary and Treasurer of the
Company. He was the Chief Financial Officer and director of the Company from
September 1995 through November 1997. Mr. Roe replaced Mr. Robinson as the
Company's Chief Financial Officer in November 1997. From 1974 to the present,
Mr. Robinson has been General Manager of Lagoon Corporation, which operates an
amusement park in the Salt Lake City, Utah area. At present, Mr. Robinson spends
approximately one-half of his time working for the Company and one-half of his
time working for Lagoon Corporation. Mr. Robinson has also been President of the
International Association of Amusement Parks and Attractions, an international
industry trade group. He holds a Masters degree in Business Administration from
the University of Utah. Mr. Robinson is the brother of David A. Robinson,
President, Chief Executive Officer, Chairman of the Board and a director of the
Company, and the father of Bradley C. Robinson, Vice President - Business
Development and a director of the Company.
Gary W. Farnes. Mr. Farnes is a director of the Company. He has been a
director since 1995 and is currently a consultant for Holy Cross Health Systems,
a multi-hospital health care system headquartered in South Bend, Indiana. From
1977 to 1995, Mr. Farnes was employed by Intermountain Health Care, a regional
hospital company and from 1995 to August 1997, Mr. Farnes was the Senior
Executive Vice President for Holy Cross Health Systems. At the time that Mr.
Farnes left Intermountain Health Care, he held the position of Vice President,
Hospital Division. He holds a Bachelors degree in Business and Psychology from
Brigham Young University and a Masters degree in Business Administration from
George Washington University. Mr. Farnes is the father-in-law of Bradley C.
Robinson, Vice President - Business Development and a director of the Company.
Robert R. Walker. Mr. Walker is a director of the Company. Mr. Walker
has been a director since March 1994. He is currently self-employed as a
consultant in the health care industry primarily in the area of start-up medical
device companies. From 1976 to 1992, Mr. Walker was employed by IHC Affiliated
Services Division of Intermountain Health Care, a regional hospital company,
from which he retired as President of IHC Affiliated Services. He is also a
former Chairman of the Board of AmeriNet, Inc., which is a national group
purchasing organization for hospitals, clinics, detox/drug centers, emergency,
nursing homes, private laboratories, psychiatric centers, rehabilitation
facilities, surgical centers and institutions such as schools and prisons. Mr.
Walker is a member of the American Hospital Association and the Hospital
Financial Management Association. He holds a Bachelor of Science degree in
Business Administration.
4
<PAGE>
Executive officers of the Company are elected by the Board on an annual
basis and serve at the discretion of the Board.
Board Committees
The Board has a Compensation Committee (the "Committee") and an
Executive Committee. The Board does not have an audit or nominating committee,
but the Board anticipates creating an audit committee within the next three
months.
The Compensation Committee held one meeting and took action by
unanimous consent on one occasion during the fiscal year ended December 31,
1996. As part of its responsibilities, the Committee administers the Company's
Non-Qualified Stock Option Plan ("NQSOP"), establishes general compensation
policy and, except as prohibited by applicable law, may take any and all action
that the Board could take relating to the compensation of employees, directors
and other parties. The Committee also evaluates the performance of and makes
compensation recommendations for senior management, including the Chief
Executive Officer. Members of the Committee are Mr. Gary W. Farnes and Mr.
Robert R. Walker.
The Executive Committee held thirteen meetings during the fiscal year
ended December 31, 1996. The Executive Committee has most of the power of the
Board and can act when the Board is not in session. Members of this Executive
Committee are Mr. David A. Robinson and Mr. Bradley C. Robinson.
Board Meetings and Directors' Attendance
The Board held four meetings and took action by unanimous consent on
five occasions during the fiscal year ended December 31, 1996. To date during
1997, the Board has held five meetings and took action by unanimous consent five
occasions. No incumbent director attended fewer than 75 percent of the Board
meetings held or fewer than 75 percent of the committee meetings held by
committees on which an incumbent director served during the fiscal year ended
December 31, 1996 or to date during 1997.
Certain Relationships And Related Transactions
Dr. Gale H. Thorne, a director and officer of the Company, is entitled
to a royalty of two and one-half percent on the Company's gross revenues
received from the sale of products utilizing the ExtreSafe(R) medical needle
withdrawal, blood collection device and intravenous flow gauge technologies
(collectively, the "Thorne Products"). These royalties were agreed to in 1994 in
exchange for Dr. Thorne's assignment to the Company of intellectual property
rights he owned prior to his involvement with the Company, which intellectual
property rights relate to the Thorne Products. In addition, the Company is
required under the agreement to pay Dr. Thorne minimum royalty payments of not
less than $435,000 over a six year period beginning in 1998. Minimum royalty
payments in 1998 and 1999 will total in the aggregate $195,000.
The law firm of Blackburn & Stoll, LC provides legal services to the
Company. Eric L. Robinson, a member of that firm, is the son of J. Clark
Robinson and the brother of Bradley C. Robinson.
In January 1997, David A. Robinson, a director and officer of the
Company exercised options to purchase 87,500 shares of the Company's common
stock in order to provide needed working capital for the Company. Mr. Robinson
obtained the funds to exercise the options by margining shares of the Company's
stock that he owned. In August 1997, his margin was called and Mr. Robinson
borrowed $182,577 from the Company to pay the margin call. Interest on the loan
will be paid at eight percent per annum, payable on demand.
5
<PAGE>
Security Ownership of Management and Certain Beneficial Owners
The following table sets forth certain information with respect to the
beneficial ownership of the common stock of the Company as of November 10, 1997,
for: (i) each person who is known by the Company to beneficially own more than 5
percent of the Company's common stock, (ii) each of the Company's directors,
(iii) each of the Company's Named Executive Officers (defined below), and (iv)
all directors and executive officers as a group. As of November 10, 1997, the
Company had 9,379,842 shares of common stock outstanding.
Shares
Name and Address Beneficially Percentage of
of Beneficial Owner(1) Owned(2) Total(2) Position
- ---------------------- -------- -------- --------
David A. Robinson(3) 641,925 7% President, CEO, Chairman of
the Board and Director
Bradley C. Robinson(4) 639,541 7% Vice President - Business
Development and Director
Dr. Gale H. Thorne(5) 181,655 2% Vice President - Product
Development and Director
Gary W. Farnes(6) 100,000 1% Director
Robert R. Walker(7) 113,000 1% Director
Executive Officers and 1,676,121 18%
Directors as a Group
five persons)
John T. Clarke(8) 665,306 7%
Thatchetts Camp Road
Gerrards Cross
Buckinghamshire, England
Capital Growth 938,040 9%
International, LLC(9)
11601 Wilshire Boulevard,
Suite 500
Los Angeles, CA 90025
- --------------
(1) Except where otherwise indicated, the address of the beneficial owner is
deemed to be the same address as the Company.
(2) Beneficial ownership is determined in accordance with SEC rules and
generally includes holding voting and investment power with respect to the
securities. Shares of Common Stock subject to options or warrants currently
exercisable, or exercisable within 60 days, are deemed outstanding for
computing the percentage of the total number of shares beneficially owned
by the designated person, but are not deemed outstanding for computing the
percentage for any other person.
(3) Includes 417,719 shares and stock options to purchase 212,500 shares. Also
includes 11,706 shares purchased through the Company's 401(k) plan. Does
not include the Earn-Out Shares. See Long-Term Incentives and Executive
Compensation.
6
<PAGE>
(4) Includes 330,219 shares and stock options to purchase 300,000 shares. Also
includes 9,322 shares purchased through the Company's 401(k) plan. Does not
include the Earn-Out Shares. See Long-Term Incentives and Executive
Compensation.
(5) Includes 18,000 shares, stock options to purchase 115,000 shares and Series
A Warrants to purchase 15,000 shares. Also includes 25,000 shares that Dr.
Thorne is deemed to beneficially own through a trust and 8,655 shares
purchased through the Company's 401(k) plan.
(6) Includes 50,000 shares and stock options to purchase 50,000 shares.
(7) Includes stock options to purchase 50,000 shares. Also includes 63,000
shares that Mr. Walker is deemed to beneficially own through a trust.
(8) Includes 163,000 shares, stock options to purchase 300,000 shares and
Series A Warrants to purchase 3,000 shares. Also includes 18,000 shares
that Mr. Clarke is deemed to beneficially own as a result of their being
owned by an entity which he controls; 123,465 shares, Series A Warrants to
purchase 18,000 shares and Series B Warrants to purchase 21,841 shares
owned by his spouse; and 18,000 shares owned by a minor child, all of which
he is deemed to beneficially own. Does not include the Earn-Out Shares. See
Long-Term Incentives and Executive Compensation.
(9) Includes Series B Warrants to purchase 918,040 shares and stock options to
purchase 20,000 shares.
The Company is not aware of any arrangements, the operation of which
may, at a subsequent date, result in a change in control of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
The members of the Board, the executive officers of the Company and
persons who hold more than 10 percent of the Company's Common Stock are subject
to reporting requirements of Section 16(a) of the Securities Exchange Act of
1934, which require them to file reports with respect to their ownership of and
transaction in the Company's securities, and furnish the Company copies of all
such reports they file. Based upon the copies of those reports furnished to the
Company, and written representations that no other reports were required to be
filed, the Company believes that all reporting requirements under Section 16(a)
for the fiscal year ended December 31, 1996, were met in a timely manner by its
executive officers, Board members and greater than 10 percent stockholders,
except that Dr. Gale H. Thorne did not timely report one transaction and Mr.
John T. Clarke, a former director of the Company, did not timely report one
transaction.
Report of the Compensation Committee on Executive Compensation
The Committee (the "Committee") is presently comprised of two members
of the Company's Board. The Committee's responsibilities include, administering
the Company's NQSOP, establishing general compensation policy and, except as
prohibited by applicable law, taking any and all action that the Board could
take relating to the compensation of employees, directors and other parties. The
Committee also evaluates the performance of and makes compensation
recommendations for senior management, including the Chief Executive Officer.
Executive Compensation Philosophy
The Company attempts to design executive compensation to achieve two
principal objectives. First, the program is intended to be fully competitive so
that the Company may attract, motivate and retain talented executives. Second,
the program is intended to create an alignment of interests between the
Company's executives and stockholders such that a significant portion of each
executive's compensation varies with business performance.
The Committee's philosophy is to pay competitive annual salaries,
coupled with a leveraged incentive system that pays more than competitive total
compensation for performance exceeding financial goals and Company objectives.
The leveraged incentive system consists of annual compensation, bonuses and
stock compensation consisting primarily of stock options and Earn-Out stock
(discussed below).
7
<PAGE>
Based on assessments by the Board and the Committee, the Committee
believes that the Company's compensation program for the Named Executive
Officers has the following characteristics that serve to align executive
interests with long-term stockholder interests:
a. Emphasizes "at risk" pay such as bonuses, options and long-term
incentives.
b. Emphasizes long-term compensation such as options and Earn-Out
stock.
c. Rewards financial results and promotion of Company objectives
rather than individual performance against individual objectives.
The Omnibus Reconciliation Act of 1993 (OBRA) established certain
requirements in order for compensation exceeding $1 million earned by certain
senior executives to be deductible. The Company's executive compensation
programs have been structured to comply with OBRA. The actions of the Committee
regarding the compensation paid, or to be paid, to executive management, have
also complied with OBRA. However, the Committee reserves the right to forego
deductibility if in its discretion it believes a particular compensation program
or payment is consistent with the overall best interests of the Company and its
stockholders. In addition, the compensation received by certain individuals
under the Company's NQSOP and/or Earn-Out program may fall outside the
deductibility limitations of OBRA if the Company is highly successful as
reflected in the Company's stock price and/or income.
Annual Salaries
Salary ranges and increases for executives, including the CEO and the
other Named Executive Officers, are established annually based on competitive
data. Within those ranges, individual salaries vary based upon the individual's
work experience, performance, level of responsibility, impact on the business,
tenure and potential for advancement within the organization. Annual salaries
for newly-hired executives are determined at time of hire taking into account
the above factors other than tenure.
Short-Term Incentives
The Company provides short-term incentives in the form of discretionary
cash bonuses based on financial performance, promotion of the Company's
objectives and the Company's cash position. Bonuses are awarded to management
and others on the basis of the individual's work experience, performance, level
of responsibility, impact on the business, tenure and potential for advancement
within the organization.
Long-Term Incentives
In September 1995, the Company adopted the non-qualified stock option
plan ("NQSOP") wherein the Company is authorized to grant options to purchase up
to 1,500,000 shares of the Company's Common Stock. Pursuant to the NQSOP, the
Company has granted Stock Options to purchase 1,413,500 shares of Common Stock.
Of these Stock Options, approximately 1,175,405 are currently exercisable and
238,095 vest over time. All of the Stock Options expire five years after the
date of grant.
The grant of options to key employees encourages equity ownership and
closely aligns management interests with the interests of stockholders.
Additionally, because options are subject to forfeiture if the employee leaves
the Company, options provide an incentive to remain with the Company long term.
At least annually, the Committee reviews the advisability of granting
options to members of management having strategic impact on product, staffing,
technology, pricing, investment or policy matters. The aggregate number of
options granted to management is based on the value of each individual's actual
and potential contributions to the Company as well as competitive norms.
8
<PAGE>
In conjunction with the 1995 acquisition (the "Acquisition") wherein
Specialized Health Products, Inc. ("SHP") became a wholly owned subsidiary of
the Company, David A. Robinson, Bradley C. Robinson and John T. Clarke
(collectively the "Founders"), who are the founders of the Company and,
respectively, the President, Chief Executive Officer, Chairman of the Board and
a director; a Vice President and director; and a former director of the Company
have the opportunity to receive up to an aggregate of 2,000,000 additional
shares of common stock (the "Earn-Out Shares"). The Founders have the right to
divide the Earn-Out Shares among themselves or their assigns, if earned, based
on performance, contributions to the Company and/or other factors relating to
the business success of the Company. Any issuance of Earn-Out Shares would be
based upon the level of pre-tax consolidated net income, adjusted to exclude any
expense arising from the obligation to issue or the issuance of the Earn-Out
Shares and any income or expense associated with non-recurring or extraordinary
items as determined in accordance with generally accepted accounting principles
("Adjusted PTNI"). At the date the Earn-Out Shares agreement was adopted, the
value of the Common Stock was $2.00 per share. At November 10, 1997, the
Company's common stock was trading at $2.00.
The Earn-Out Shares have not vested. No dividends will be paid on the
Earn-Out Shares unless and until they vest. The Earn-Out Shares will vest as
follows. If Adjusted PTNI for 1997 or 1998 equals or exceeds $1,500,000, then an
aggregate of 350,000 Earn-Out Shares will be issued, but only one issuance of
350,000 Earn-Out Shares will be made based on the $1,500,000 level of Adjusted
PTNI.
If Adjusted PTNI for 1997 or 1998 equals or exceeds $5,000,000, then
there will be issued that aggregate number of Earn-Out Shares calculated by
subtracting the number of Earn-Out Shares previously issued or issuable (if any)
from 1,100,000, provided that only one issuance of Earn-Out Shares will be made
based on the $5,000,000 level of Adjusted PTNI.
If Adjusted PTNI for 1997 or 1998 equals or exceeds $8,000,000, then
there will be issued that aggregate number of Earn-Out Shares calculated by
subtracting the number of Earn-Out Shares previously issued or issuable (if any)
from 2,000,000, provided that in no event will an aggregate of more than
2,000,000 Earn-Out Shares be issued.
The Company expects that the issuance of Earn-Out Shares will be deemed
to be the payment of compensation to the recipients and will result in a charge
to the earnings of the Company in the year or years the Earn-Out Shares are
earned, in an amount equal to the fair market value of the Earn-Out Shares. This
charge to earnings could have a substantial negative impact on the earnings of
the Company in the year or years in which the compensation expense is
recognized. As a result, the Board and the Committee are working with a
compensation consulting firm to discuss equitable modifications to the Earn-Out
program to address this matter and expect to make changes with respect thereto.
Corporation Performance and CEO Pay
The Company is engaged principally in the development of
cost-effective, disposable, proprietary health care products designed to reduce
the incidence of accidental injury in the health care industry, and thus reduce
the spread of disease. The Company has created a portfolio of proprietary health
care products that are in various stages of production, pre-production,
development and research. At present, the Company is focusing its resources and
activities principally on marketing products currently available for sale,
preparing products nearing completion for manufacturing and marketing,
developing new products designed to reduce the risk of acquiring HIV/AIDS,
hepatitis B and other blood-borne diseases through accidental needlesticks, and
the development of other medical products.
In August 1996, the Company entered into a distribution agreement (the
"Distribution Agreement") with Becton Dickinson and Company Sharps Disposal
Systems ("BDSDS") whereby BDSDS is marketing and distributing the Company's
Safety Cradle(R) sharps containers. Safety Cradle(R) sharps containers are used
for the disposal of contaminated sharps (i.e., needles, syringes, intravenous
catheters, surgical blades, lancets, etc.). The Safety Cradle(R) sharps
containers covered by the Distribution Agreement are redesigned versions of an
9
<PAGE>
earlier container developed by the Company. In 1997, however, BDSDS did not
order the minimum required amount of product under the terms of the Distribution
Agreement and, therefore, BDSDS' exclusive distribution rights became
nonexclusive. In addition, the Company gave notice of termination of the
Distribution Agreement, as it is authorized to do in the case of BDSDS' failure
to purchase the minimum amount of product required by the Distribution
Agreement. The Company gave notice of termination in order to negotiate better
terms on a distribution agreement. Both BDSDS and SHP have been working
diligently to negotiate an agreement with the proper focus and strategy to
accelerate sales of the Company's sharps containers into the home healthcare
market. In the meantime, BDSDS is selling sharps containers under the terms of
the original agreement.
The Company received approval to use the name ExtreSafe(R) as a
registered trademark in 1997. It plans to use this trademark in safety needle
and lance products.
In May 1997, the Company entered into an agreement (the "License
Agreement") with Becton Dickinson and Company Infusion Therapy division ("BDIT")
relating to a single application (the "Technology") of the Company's
ExtreSafe(R) safety needle withdrawal technology. Pursuant to the terms of the
License Agreement, BDIT made payments of $1,750,000 and $250,000 to the Company
in June and September 1997, respectively, and is required to make an additional
payment of $2,000,000 upon the earlier of the date of the first sales by BDIT of
a product utilizing the Technology or April 5, 1998. Of these total payments,
$3,750,000 million represents advanced royalties for sales occurring before the
year 2002 and the $250,000 represents a product development fee. BDIT is also
required to pay ongoing royalties to the Company based on sales of products
utilizing the Technology. In addition, beginning in BDIT's fiscal year 2002,
BDIT is required to pay minimum royalties in order to maintain exclusive rights
under the License Agreement.
The ExtreSafe(R) Lancet Strip has previously been assembled manually by
the Company with automated assembly beginning in November 1997. Automated
equipment will be moved from its place of origin to be installed at the site of
an independent third-party manufacturer that will manufacture the ExtreSafe(R)
Lancet Strip under a contract with the Company beginning in December 1997. The
automated production equipment is not yet in full operation. The costs of manual
assembly have exceeded the related revenues from the minimal sales of the
ExtreSafe(R) Lancet Strip. The use of automated production equipment is expected
to substantially reduce the cost to manufacture the ExtreSafe(R) Lancet Strip
and increase manufacturing capacity.
In September 1997, the Company entered into an agreement (the "Alliance
Agreement") with New Alliance of Independent Medical Distributors, Inc. dba
Alliance Medical ("Alliance Medical") which provides for the Company to
manufacture and Alliance Medical to market and sell the ExtreSafe(R) Lancet
Strip on an exclusive basis in hospitals, alternative-site (e.g., homecare,
plasma centers and blood banks) and consumer markets in the United States. The
Alliance Agreement provides for an initial term of three years including annual
minimum purchase quantities at specified prices, with annual renewal terms
thereafter. The Company does not expect to realize significant sales under the
Alliance Agreement until January 1998, after automated equipment is in place and
operating and following an incubation period for verification of product
sterility. However, there have been some sales of the manually assembled product
to Alliance Medical, principally for market assessment and development purposes.
The Company is seeking additional parties to market and distribute the
ExtreSafe(R) Lancets Strip in foreign markets. There is no assurance that the
Company will enter into any other arrangements or realize sufficient sales from
the Alliance Medical arrangement with respect to the marketing and distribution
of ExtreSafe(R) Lancet Strips.
The Company is developing a number of products using its ExtreSafe(R)
medical needle withdrawal technology. This technology allows a contaminated
needle to be automatically retracted and immediately encapsulated without
exposure of the health care worker to the contaminated needle. Products under
10
<PAGE>
development that incorporate the ExtreSafe(R) medical needle withdrawal
technology include ExtreSafe(R) phlebotomy devices, ExtreSafe(R) catheters and
several different ExtreSafe(R) syringe applications. Prototypes of the
ExtreSafe(R) phlebotomy device, ExtreSafe(R) catheters and ExtreSafe(R) syringes
have been completed. The FDA has granted one 510(k) clearance to market relating
to the ExtreSafe(R) medical needle withdrawal technology and a second 510(k)
application with the FDA relating to an additional application of the
ExtreSafe(R) medical needle withdrawal technology has been filed. The Company is
conducting research on a safety intravenous flow gauge and blood collection
devices.
An affiliate of the Company, Quantum Imaging Corporation ("QIC"), is
developing filmless digitized imaging technology for which a prototype has been
developed. In addition, the Company has an option to purchase Zerbec, Inc.'s 50%
ownership interest in QIC for approximately $3.5 million. The Company has not
decided whether it will exercise its option.
While most of the Company's products are not yet in the production
stage of development, during 1996, the Company made significant strides toward
bringing its products to market. During 1996 the Company: (1) entered into a
distribution agreement under which BDSDS markets and distributes the Company's
Safety Cradle(R) sharps containers; (2) filed applications for four patents; (3)
received notice of allowance for six patents (including the transporter patent
and sixth needle withdrawal patent); (4) received a second 510(k) Notification
on its Safety Cradle(R) sharps container; (5) instituted a Quality Assurance
Program to meet FDA requirements; and (6) completed two production Safety
Cradle(R) molds, one ExtreSafe(R) catheter prototype and one molded ExtreSafe(R)
phlebotomy prototype model.
To the date hereof in 1997, the Company: (1) entered into the License
Agreement with BDIT relating to a single application of the Company's
ExtreSafe(R) safety needle withdrawal technology; (2) received $2 million in
payments relating to the License Agreement; (3) entered into the Alliance
Agreement whereby the Company will manufacture and Alliance Medical will market
and sell the ExtreSafe(R) Lancet Strip on an exclusive basis in certain markets
in the United States; (4) completed automated assembly equipment for the
ExtreSafe(R) Lancet Strip; (5) received approval to use the name ExtreSafe(R) as
a registered trademark; (6) received a second 510(k) Notification on its
ExtreSafe(R) phlebotomy device; (7) filed applications for three patents; (8)
received notice of allowance for four patents (including the seventh needle
withdrawal patent); (9) completed implementation of the Quality Assurance
Program; (10) raised approximately $1.5 million through the sale of equity and
equity related securities; and (11) has completed five additional Safety
Cradle(R) molds for three different sizes of sharps containers, one additional
phlebotomy prototype model mold, two new stereolithography prototype phlebotomy
models and two stereolithography syringe models.
The Committee believes that Mr. David A. Robinson's compensation
package aligns his interests with those of the stockholders. While the
importance of the above achievements is noted, the Company's cash flow was
extremely tight during 1996. As a result, Mr. Robinson's $240,000 salary was not
increased. Mr. Robinson received $13,906 in other compensation and no bonuses or
stock options were granted. See Summary Compensation Table for description of
other compensation amounts. The Committee also believes that the Earn-Out
program should be refocused so that Mr. Robinson and other interested parties
are not incentivized to sell certain products or technologies to maximize
short-term revenues when a license agreement, distribution arrangement or other
package may be more advantageous to the Company in the long-term.
Members of the Committee are Gary W. Farnes and Robert R. Walker.
Performance Graph
The following performance graph compares the performance of the
Company's Common Stock to the NASDAQ Composite Index ("NCI") and to the S&P
Health Care Index ("HCI"). The graph assumes that the value of the investment in
the Company's Common Stock and each index was $100 at October 25, 1995, the
approximate date upon which the Company first had securities registered under
11
<PAGE>
Section 12 of the Securities Exchange Act of 1934, and that all dividends were
reinvested. As a designer of safety medical products, the Company is not easily
categorized with other more specific industry indices.
Cumulative Total Stockholder Return
October 1995 through September 1997
[OBJECT OMITTED]
<TABLE>
<CAPTION>
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
10/25/95 12/29/95 3/29/96 6/28/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHPI o $100 $160.47 $213.95 $79.07 $61.63 $66.28 $65.12 $44.19 $38.37
NCI |_| $100 $102.50 $107.30 $115.45 $119.53 $125.77 $119.02 $140.49 $164.22
HCI (DELTA)$100 $107.45 $111.13 $115.40 $122.16 $127.31 $133.00 $166.71 $164.66
- ---- ---- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
Executive Compensation
The tables below set forth certain information concerning compensation
paid by the Company to its Chief Executive Officer and all other executive
officers with annual compensation in excess of $100,000 (determined for the year
ended December 31, 1996) (the "Named Executive Officers"). The tables include
information related to stock options granted to the Named Executive Officers.
Summary Compensation Table. The following table provides certain
information regarding compensation paid by the Company to the Named Executive
Officers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation Awards
Restricted Stock All Other
Name and Salary Bonus Other Annual Stock Options/ LTIP Compensation
Principal Position Year ($)(1) ($)(2) Compensation($)(3) Awards ($) SAR(#) Payouts($) ($)(4)
------------------ ---- ------ ------ ------------------ ---------- ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David A. Robinson, 1994 120,000 --- --- --- --- ---
90,000(5)
President, CEO, Chairman 1995 193,590 25,000 --- 666,666(6) 300,000(7) --- 1,876
of the Board and 1996 240,000 --- 8,000 --- --- --- 5,906
Director
Bradley C. Robinson, VP, 1994 89,128 --- --- --- --- ---
90,000(5)
Business Development and 1995 148,590 25,000 --- 666,666(6) 300,000(8) --- 625
Director 1996 160,000 --- 5,033 --- --- --- 980
Dr. Gale H. Thorne, VP 1994 16,958 --- --- --- 36,000(9) --- ---
Product Development and 1995 128,333 25,000 --- --- 57,000(8) --- 2,758
Director 1996 150,000 --- 4,640 --- 40,000(8) --- 364
- ---------------
</TABLE>
(1) All amounts paid as salary were paid pursuant to the Company's obligations
under employment contracts with the above individuals. These employment
contracts have been amended from time to time during the periods set forth
above. The annual salaries of the Named Executive Officers, as set forth in
their employment contracts, are $240,000 for Mr. David A. Robinson,
$160,000 for Mr. Bradley C. Robinson and $150,000 for Dr. Gale H. Thorne.
(2) The cash bonuses were awarded by the Company in recognition of the
recipients' contributions toward completion of the Acquisition.
12
<PAGE>
(3) These amounts represent payments by the Company into its 401(k) retirement
plan for the benefit of the Named Executive Officer.
(4) These amounts represent he amounts paid by the Company for term life
insurance on the lives of the Named Executive Officer with insurance
proceeds payable to the beneficiary designated by the Named Executive
Officer. These insurance policies have no cash surrender values.
(5) These options were exercised on September 1, 1995, and were issued under
the SHP's non-qualified stock option plan (the "SHP NQSOP"). These options
became obligations of the Company pursuant to the terms of the Acquisition.
(6) These are Earn-Out Shares.
(7) Options issued pursuant to the NQSOP; options to purchase 87,500 shares were
exercised on January 10, 1997.
(8) Options issued pursuant to the NQSOP.
(9) Options to purchase 18,000 shares of the Company's Common Stock were
exercised on September 1, 1995. Said options were issued under the SHP
NQSOP.
Option Grants in 1996. The following table sets forth certain
information with respect to stock options granted during the year ended December
31, 1996, to Named Executive Officers.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants Potential Realizable
------------------------------------------------------------ Value at Assumed Annual
Number of Percent of Exercise Rate of Stock Price
Shares Total Options or Base appreciation for Option
Underlying Granted to Price Per Term
Options Employees in Share Expiration ------------------------
Name Granted Fiscal Year ($) Date 5% 10%
---- ------- ----------- --- ---- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
David A. Robinson --- --- --- --- --- ---
Bradley C. Robinson --- --- --- --- --- ---
Dr. Gale H. Thorne 40,000(1) 33% $2.625 12/10/01 $29,010 $64,104
- ---------------
</TABLE>
(1) These options were issued pursuant to the NQSOP and vest on December 10,
1997.
13
<PAGE>
Option Exercises and Year-End Holdings. The following table sets forth
certain information with respect to stock options exercised during the year
ended December 31, 1996, and the number of shares of Common Stock covered by
both exercisable and unexercisable stock options and stock appreciation rights
("SARs") held by each of the Named Executive Officers at December 31, 1996.
The Company has not issued SARs.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Fiscal Options/SARs at Fiscal
Shares Year-End Year-End($)
Acquired On Value (Exercisable/ (Exercisable/
Name Exercise (#) Realized ($) Unexercisable) Unexercisable)(1)
---- ------------ ------------ ------------------------ -----------------
<S> <C> <C> <C> <C>
David A. Robinson --- --- 300,000(2)/0 $468,900/$0
Bradley C. Robinson --- --- 300,000(3)/0 $468,900/$0
Dr. Gale H. Thorne --- --- 75,000/40,000(4) $146,205/$37,520
- ---------------
</TABLE>
(1) The last trading price of the Company's Common Stock on December 31, 1996,
was $3.5625 per share.
(2) Options exercisable at $2.00 per share, of which options to acquire 87,500
shares of Common Stock were exercised on January 10, 1997.
(3) Options exercisable at $2.00 per share.
(4) Represents 18,000 options currently exercisable at an exercise price of
$.39 per share; 57,000 options currently exercisable at $2.00 per share;
and 40,000 options exercisable beginning December 10, 1997, at $2.625 per
share.
Compensation of Directors
No cash fees are paid to non-employee directors of the Company by the
Company for service on the Board. During 1996, the Company granted to
non-employee directors under the NQSOP, stock options to purchase 60,000 shares
of Common Stock at an exercise price of $2.625 per share. The Company has made
no other agreements regarding compensation of non-employee directors. Directors
of the Company who are also officers of the Company receive no additional
compensation for their service as directors. All directors are entitled to
reimbursement for reasonable expenses incurred in the performance of their
duties as Board members.
Employment and Indemnity Agreements
The Company has entered into employment agreements with each of Mr.
David A. Robinson, Mr. Bradley C. Robinson and Dr. Gale H. Thorne (collectively,
the "Senior Executives"). These employment agreements, which have been amended
from time to time, provide that (i) Mr. David A. Robinson receive a salary of
$240,000 per year, Mr. Bradley C. Robinson receive a salary of $160,000 per
year, and Dr. Gale H. Thorne receive a salary of $150,000 per year; (ii) the
Senior Executives' employment agreements are for terms of three years, expiring
on November 3, 2000; (iii) the Senior Executives are entitled to a reasonable
car allowance; (iv) if the employment of a Senior Executive is terminated by
reason of disability or other than for cause, the salary of such Senior
14
<PAGE>
Executive will continue for the full term of the agreement; (v) if a Senior
Executive is terminated for cause, the salary of such Senior Executive ceases as
of the date of termination; (vi) the Company will provide each Senior Executive
with up to $1,000,000 of term life insurance while the Senior Executive is
employed by the Company; and (vii) the Senior Executives shall keep all
proprietary information relating to the business of the Company confidential
both during and after the term of the agreements. The Company does not have
employment agreements with any of its other executive officers or key employees.
The Company has entered into indemnity agreements (the "Indemnity
Agreements") with each of its executive officers and directors pursuant to which
the Company has agreed to indemnify the officers and directors to the fullest
extent permitted by law for any event or occurrence related to the service of
the indemnitee as an officer or director of the Company that takes place prior
to or after the execution of the Indemnity Agreement. The Indemnity Agreements
obligate the Company to reimburse or advance expenses relating to any proceeding
arising out of an indemnifiable event. Under the Indemnity Agreements, the
officers and directors of the Company are presumed to have met the relevant
standards of conduct required by Delaware law for indemnification. Should the
Indemnity Agreements be held to be unenforceable, indemnification of these
officers and directors may be provided by the Company in certain cases at its
discretion.
401(k) Retirement Plan
Effective in 1996, the Company adopted a 401(k) retirement plan whereby
the Company contributes five percent of payroll compensation to the plan and
matches employee contributions to the plan on a dollar for dollar basis up to
the maximum contribution allowed by applicable tax law. The Named Executive
Officers have invested all of the funds in their 401(k) accounts in common stock
of the Company.
Indemnification for Securities Act Liabilities
Delaware law authorizes, and the Company's Bylaws and Indemnity
Agreements provide for, indemnification of the Company's directors and officers
against claims, liabilities, amounts paid in settlement and expenses in a
variety of circumstances. Indemnification for liabilities arising under the
federal securities laws may be permitted for directors, officers and controlling
persons of the Company pursuant to the foregoing or otherwise. However, the
Company has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
federal securities laws and is, therefore, unenforceable.
Stock Options and Warrants
During 1994, the Board of SHP approved the SHP NQSOP. Options granted
under the SHP NQSOP had to have exercise prices not less than the fair market
value of the underlying stock at the date of grant as determined by SHP's Board
of Directors. The number of shares, terms and exercise period of options granted
under the SHP NQSOP were determined by the SHP Board of Directors on an
option-by-option basis. On the date of the Acquisition, all options issued under
the SHP NQSOP became obligations of the Company and the SHP NQSOP was
terminated. As of November 10, 1997, options to acquire an aggregate of 18,000
shares of Common Stock were outstanding in connection with the SHP NQSOP.
Options issued under the SHP NQSOP expire in 1999.
On September 1, 1995, the Company adopted the NQSOP and has reserved
1,500,000 shares of Common Stock for the possible exercise of options under the
plan. The exercise price of options granted under the NQSOP must be not less
than the fair market value of the underlying stock at the date of grant as
determined by the Board. Options granted under the NQSOP expire five years from
the date of grant. As of November 10, 1997, options to acquire an aggregate of
1,413,500 shares of Common Stock at exercise prices ranging from $2.00 to $2.625
per share had been granted and are presently outstanding (not including options
granted under the SHP NQSOP).
15
<PAGE>
Compensation Committee Interlocks and Insider Participation
No executive officers of the Company serve on the Committee of the
Board of the Company (or in a similar capacity) for the Company or any other
entity.
2. Other Matters
Discretionary Authority
At the time of mailing of this proxy statement, the Board was not aware of any
other matters which might be presented at the meeting. If any matter not
described in this Proxy Statement should properly be presented, the persons
named in the accompanying proxy form will vote such proxy in accordance with
their judgment.
Independent Public Accountants
On October 14, 1996, the Board elected to retain Arthur Andersen LLP
("AA") as its independent auditor. From November 10, 1995 to October 14, 1996
KPMG Peat Marwick LLP ("KPMG") had acted as the Company's independent auditor
and Nielson, Grimmett & Company ("NGC") had acted as the Company's independent
auditor prior thereto. The Company's decisions to change auditors was
recommended by the Board in each instance and the retention of AA as the
Company's independent auditor was ratified by the Company's stockholders at the
1996 annual meeting of stockholders.
The report of NGC on the financial statements of the Company for the
fiscal year ended December 31, 1994 and the report of KPMG on the financial
statements of the Company for the two fiscal years ended December 31, 1995, did
not contain any adverse opinion or disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting principles.
During the Company's two most recent fiscal years and all subsequent
interim periods preceding such changes in auditors, there were no disagreements
with NGC or KPMG on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements(s), if
not resolved to the satisfaction of the former accountant, would have caused it
to make a reference to the subject matter of the disagreements(s) in connection
with its report; nor has NGC or KPMG ever presented a written report, or
otherwise communicated in writing to the Company or the Board the existence of
any "disagreement" or "reportable event" within the meaning of Item 304 of
Regulation S-K.
The Company authorized NGC to respond fully to the inquiries of KPMG
and the Company authorized KPMG to respond fully to the inquiries of AA. Both
NGC and KPMG have provided the Company with letters addressed to the SEC, as
required by Item 304(a)(3) of Regulations S-K, which letters have been filed
with the SEC.
The Company retained AA as its independent auditor for the current year
and expects representatives of AA to be present at the Company's 1997 Annual
Meeting of Stockholders. AA will have the opportunity to make a statement at the
annual meeting if it desires to do so and it is expected that representatives of
AA will be available to respond to appropriate questions if called upon to do
so.
Notice Requirements
Any stockholder who desires to have a proposal included in the
Company's proxy soliciting material relating to the Company's 1998 annual
meeting of stockholders should send to the Secretary of the Company a signed
notice of intent. This notice, including the text of the proposal, must be
received no later than February 15, 1998.
16
<PAGE>
Annual Report
This Proxy Statement has been preceded or accompanied by an Annual
Report for the fiscal year ended December 31, 1996 and Form 10-Q for the period
ending September 30, 1997. Stockholders are referred to such report and Form
10-Q for financial and other information about the activities of the Company,
but such report and the Form 10-Q are not to be deemed a part of the proxy
soliciting material.
Expenses and Methods of Solicitation
The expenses of soliciting proxies will be paid by the Company. In
addition to the use of the mails, proxies may be solicited personally, or by
telephone or other means of communications, by directors, officers and employees
of the Company and its subsidiaries, who will not receive additional
compensation therefor. Arrangements will also be made with brokerage firms and
other custodians, nominees and fiduciaries for the forwarding of proxy
solicitation material to certain beneficial owners of the Company's common
stock, and the Company will reimburse such forwarding parties for reasonable
expenses incurred by them.
By order of the Board of Directors,
By /s/ J. Clark Robinson
---------------------------
J. Clark Robinson, Secretary
16
<PAGE>
APPENDIX A
PROXY CARD
for
ANNUAL MEETING OF STOCKHOLDERS
of
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC.
This Proxy is Solicited on Behalf of the Board Of Directors. The undersigned
hereby appoints David A. Robinson as Proxy, with the power to appoint his
substitute and hereby authorize them to represent and to vote, as designated
below, all the shares of common stock of Specialized Health Products
International, Inc. held of record by the undersigned on November 24, 1997 at
the annual meeting of stockholders to be held on December 10, 1997 or any
adjournment thereof.
1. Election of Nominee Directors
[ ] FOR Dr. Gale H. Thorne [ ] WITHHOLD AUTHORITY to vote for
Dr. Gale H.Thorne
[ ] FOR Bradley C. Robinson [ ] WITHHOLD AUTHORITY to vote for
Bradley C. Robinson
2. In their discretion, the Proxy is authorized to vote upon such other business
as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder(s). If no directions are made,
this proxy will be voted for the above Proposals.
Please sign below. When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full
corporation name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Dated: ________________________, 1997 _____________________________________
(signature)
-------------------------------------
(signature if held jointly)
-------------------------------------
(print name of stockholder(s))
Please mark, sign, date and return the proxy card promptly using the enclosed
envelope or proxy cards may be sent by facsimile to Colonial Stock Transfer Co.,
Inc. at (801) 355-6505.
