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>
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC.
585 West 500 South
Bountiful, Utah 84010
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 22, 2000
NOTICE is hereby given that the Annual Meeting of Stockholders of
Specialized Health Products International, Inc. (the "Company") will be held at
the Salt Lake City Marriott Hotel, 75 South West Temple, Salt Lake City, Utah
84101, at 10:00 a.m. (local time, SLC) on June 22, 2000, for the following
purposes:
1. To elect one member of the Board of Directors for the term
expiring at the 2003 annual meeting of stockholders.
2. To approve the Specialized Health Products International, Inc.
2000 Stock Option Plan.
3. To transact such other business as may properly come before
such meeting or any adjournments thereof.
The record date for the meeting is the close of business on May 15,
2000 and only the holders of Common Stock of the Company on that date will be
entitled to vote at such meeting or any adjournment thereof.
By order of the Board of Directors
/s/ Charles D. Roe
-----------------------------
Secretary
May 16, 2000
Please Return Your Signed Proxy
PLEASE COMPLETE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE. THIS
WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE MEETING. IT WILL, HOWEVER,
HELP ASSURE A QUORUM AND AVOID ADDED PROXY SOLICITATION COSTS.
<PAGE>
PROXY STATEMENT
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC.
585 West 500 South
Bountiful, Utah 84010
ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 22, 2000
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 the Salt Lake City Marriott Hotel, 75 South West
Temple, Salt Lake City, Utah 84101, at 10:00 a.m. (local time) on June 22, 2000,
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 May 16, 2000.
VOTING AT THE ANNUAL MEETING
The Board of Directors of the Company (the "Board") has fixed the close
of business on May 15, 2000, 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 12,356,440 shares of the
Company's Common Stock held by approximately 313 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., 585 West 500 South,
Bountiful, Utah 84010, Attention: Mr. Charles D. Roe, Secretary.
The directors are elected by a plurality of the votes cast at the
meeting in person or by proxy. Approval of the Specialized Health Products
International, Inc. 2000 Stock Option Plan requires the vote of a majority of
the stockholders that are present at the meeting in person or by proxy. The
Board recommends that holders of the Company's Common Stock vote FOR the
approval of election of the directors proposed by the Board and FOR the approval
of the Specialized Health Products International, Inc. 2000 Stock Option Plan.
<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 David G. Hurley expire in 2000. The
term of David A. Robinson will expire in 2001. The terms of David T. Rovee and
Robert R. Walker will expire in 2002. David G. Hurley has chosen to not be
nominated for a subsequent board term. Malinda S. Mitchell resigned as a
director of the Company in April 2000 due to time constraints relating to here
recent appointment as CEO at Stanford Hospital and Clinics.
At this meeting one director has been nominated by the Board for
election to the class whose term expires at the 2003 annual meeting. The person
nominated is Dr. Gale H. Thorne, who is currently a director of the Company.
Unless otherwise specified, proxy votes will be cast for the election
of the nominees as directors. If any such person should be unavailable for
election, the Board may designate a substitute nominee. 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 director 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. ("SHPI") and its
subsidiaries, Specialized Health Products, Inc. ("SHP"), Specialized Cooperative
Corporation, Safety Syringe Corporation, Iontophoretics Corporation and
MedInservice.com, Inc., on a consolidated basis and, where the context so
requires, shall include its predecessors.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTOR OF THE NOMINEE NAMED
HEREIN.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
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Set forth below is certain information concerning each of the directors
and executive officers of the Company as of April 12, 2000.
With the
Name Age Position Company Since
David A. Robinson(1) 56 President, Chairman of the Board, 1993
Chief Executive Officer and Director
Dr. Gale H. Thorne(1) 67 Vice President - Product Development 1994
and Director
Charles D. Roe 49 Vice President - Finance and Investor 1997
Relations, Chief Financial Officer,
Secretary and Treasurer
David G. Hurley(2) 64 Director 1999
Dr. David T. Rovee(2) 60 Director 1998
Robert R. Walker(2) 69 Director 1994
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(1) Member of Executive Committee.
(2) Member of Audit and Compensation Committees.
David A. Robinson. Mr. Robinson is 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 and his term expires in 2001. 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.
Dr. Gale H. Thorne. Dr. Thorne is Vice President - Product Development,
for the Company. He has been a director since January 1995 and his term expires
in 2000. Dr. Thorne has held his present position as Vice President - Product
Development, since October 1994. From 1993 to 1994, Dr. Thorne was Vice
President - Engineering, of Eneco, Inc., a Utah company. During Dr. Thorne's
tenure at Eneco, Inc., Dr. Thorne was primarily engaged in prosecuting patents.
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 thirty 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 and is a patent agent. He
holds a Ph.D. in Biophysics from the University of 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 Chief Financial Officer, Vice President -
Finance and Investor Relations, Secretary and Treasurer of the Company. He was
appointed to his position as Chief Financial Officer and Vice-President in
November 1997, he was appointed as Secretary and Treasurer in December 1997 and
he 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. 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 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 that
company providing management services
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to various companies financed by Covington Capital Corporation. Mr. Roe
graduated from the University of Utah with a Bachelor of Arts degree in
Accounting.
David G. Hurley. Mr. Hurley has been a director of the Company since
February 1999 and his term expires in 2000. He has spent the last 33 years in
the management consulting and financial advisory business. For 25 years at
Arthur D. Little, Inc., Mr. Hurley was involved in corporate development
consulting with large and mid-sized firms throughout North America. Since 1991,
Mr. Hurley has been self employed and working principally as a management
consultant and financial advisor. He has a Bachelors degree in Economics,
Masters degree in Business Administration and has completed the Advanced
Management Program at the Harvard Graduate School of Business.
Dr. David T. Rovee. Dr. Rovee has been a director of the Company since
April 1998 and his term expires in 2002. He is currently a business management
and technology consultant in the pharmaceutical and medical products fields.
From 1991 to 2000 he served as President and Chief Operating Officer of
Organogenesis, Inc., a publicly traded biotechnology company. Prior to his
employment with Organogenesis, Inc., Dr. Rovee was employed for a twenty-five
year period by Johnson & Johnson in various capacities including Vice President
and Director of Research and Development for Johnson & Johnson Patient Care,
Inc. Dr. Rovee has a Bachelors degree in Biology from Memphis State University,
a Masters degree in Zoology from Louisiana State University and a Ph.D. in
Development Biology from Brown University.
Robert R. Walker. Mr. Walker is a director of the Company and has been
since March 1994 and his term expires in 2002. He is currently self-employed as
a consultant in the healthcare 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 Healthcare, 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.
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 an Executive Committee, Audit Committee and Compensation
Committee. The Board does not have a nominating committee.
The Executive Committee held 28 meetings during 1999. The Executive
Committee has certain powers delegated to in by the Board and can act when the
Board is not in session. Members of the Executive Committee are David A.
Robinson and Dr. Gale H. Thorne.
The Company's Audit Committee held 4 meetings during 1999. The function
of the Audit Committee as detailed in the Audit Committee Charter is (a) to
review the professional services and independence of the Company's independent
auditors and the scope of the annual external audit as recommended by the
independent auditors, (b) to ensure that the scope of the annual external audit
is sufficiently comprehensive, (c) to review, in consultation with the
independent auditors, the plan and results of the annual external audit and the
adequacy of the Company's internal control systems, (d) to review, with
management and the independent auditors, the Company's annual financial
statements, financial reporting practices and the results of each external
audit, and (e) to undertake reasonably related activities to those set forth in
clauses (a) through (d) above. Members of the Audit Committee are David G.
Hurley, David T. Rovee and Robert R. Walker.
The Company's Compensation Committee held 3 meetings during 1999. The
Compensation Committee administers the Company's stock option plan, establishes
a general compensation policy for the Company and, except as prohibited by
applicable law, may take any and all actions that the Board could take relating
to the
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<PAGE>
compensation of employees, directors and other parties. Members of the
Compensation Committee are David G. Hurley, David T. Rovee and Robert R. Walker.
Board Meetings and Directors' Attendance
The Board held 6 meetings and took action by unanimous consent on 3
occasions during the fiscal year ended December 31, 1999. 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, 1999.
Certain Relationships And Related Transactions
Dr. Gale H. Thorne, a director and officer of the Company, was 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
technology, 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 was
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. Scheduled minimum
royalty payments in 1998 and 1999 totaled in the aggregate $195,000. As a
condition of the private placement that closed in January 1998, Dr. Thorne
released the Company from all royalty obligations relating to Thorne Products in
exchange for the issuance of 750,000 SHPI Warrants to Dr. Thorne and his
assigns. As a result, none of the scheduled minimum cash royalty payments were
made to Dr. Thorne.
The law firm of Blackburn & Stoll, LC provides legal services to the
Company. Eric L. Robinson, a member of that firm, is the nephew of David A.
Robinson.
In December 1997, the Company entered into a development and license
agreement with JJM to commercialize two applications of medical safety needle
technology. The JJM Agreement provides for monthly development payments by JJM,
sharing of field related patent costs, payments for initial periods of low
volume manufacturing, an ongoing royalty stream and a JJM investment in molds,
assembly equipment and other capital costs related to commercialization of each
product. The JJM Agreement also provides for an ongoing joint cooperative
program between the Company and JJM which derives future funding directly from
sales of Company created products, low volume manufacturing revenue for the
Company and an ongoing royalty stream for additional safety products which are
jointly approved for development. In connection with the JJM Agreement, Johnson
& Johnson Development Corporation purchased $2,000,000 of Company securities
comprised of common stock and Series D Warrants in a private placement that
closed in January 1998.
In May 1999, the Company paid Westbridge Capital Partners $90,000 to
provide an independent verification of the Company's evaluation of certain
medical safety product markets and segments and to evaluate and make
recommendations regarding investment market and investor relations matters.
David G. Hurley, a director of the Company, is an affiliate of Westbridge
Capital Partners.
5
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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 May 4, 2000, 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 April 12, 2000, the
Company had 12,356,440 shares of Common Stock outstanding.
<TABLE>
<CAPTION>
Shares
Name and Address Beneficially Percentage of
of Beneficial Owner (1) Owned (2) Total (2) Position
----------------------- --------- --------- --------
<S> <C> <C> <C>
David A. Robinson (3) 640,717 5.1% President, CEO, Chairman
of the Board and Director
Dr. Gale H. Thorne (4) 400,905 3.2% Vice President - Product
Development and Director
Charles D. Roe (5) 38,936 * Chief Financial Officer, VP
Finance and Investor
Relations
David G. Hurley (6) 16,000 * Director
Dr. David T. Rovee (7) 27,000 * Director
Robert R. Walker (8) 139,000 1.1% Director
Executive Officers and Directors 1,262,558 9.8%
as a Group (five persons)
Johnson & Johnson Development 2,000,000 15.0%
Corporation (9)
One Johnson & Johnson Plaza, New
Brunswick, NJ 08933
Asdale Ltd (10) 1,500,000 11.4%
44 Lowndes Street
London, England
* Less than 1%.
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</TABLE>
(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 330,219 shares of common stock and stock options to purchase
250,000 shares of common stock. Also includes 60,498 shares of common stock
purchased through the Company's 401(k) plan.
(4) Includes 18,000 shares of common stock, stock options to purchase 115,000
shares of common stock and warrants to purchase 200,000 shares of common
stock. Also includes 25,000 shares of common stock that Dr. Thorne is
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deemed to beneficially own through a trust and 42,905 shares of common
stock purchased through the Company's 401(k) plan. See "Certain
Relationships and Related Transactions."
(5) Includes 13,936 shares of common stock purchased through the Company's
401(k) plan and stock options to acquire 25,000 shares of common stock.
Does not include stock options to acquire 25,000 shares of common stock
that vest in October 2000.
(6) Includes stock options to acquire 16,000 shares of common stock. Does not
include stock options to purchase 4,000 shares of common stock that vest in
December 2000.
(7) Includes 1,000 shares of common stock and stock options to purchase 26,000
shares of common stock. Does not include stock options to purchase 4,000
shares of common stock that vest in December 2000.
(8) Includes stock options to purchase 76,000 shares of common stock. Also
includes 63,000 shares of common stock that Mr. Walker is deemed to
beneficially own through a trust. Does not include stock options to acquire
4,000 shares of common stock that vest in December 2000.
(9) Includes 1,000,000 shares of common stock and 1,000,000 Series D Warrants.
(10) Includes 750,000 shares of common stock and 750,000 Series D Warrants.
The Company is not aware of any arrangements 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 ten 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, 1999, were met in a timely manner by its
executive officers, Board members and greater than ten percent stockholders.
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 $100,000 (determined for the year
ended December 31, 1999) (the "Named Executive Officers"). The tables include
information related to stock options granted to the Named Executive Officers.
Summary Compensation Table. The following table provides certain
information regarding compensation paid by the Company to the Named Executive
Officers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Awards Payouts
------------------- ------ -------
Restricted Stock All Other
Name and Other Annual Stock Options/ LTIP Compensation
Principal Position Year Salary ($) Bonus ($) Compensation($)(1) Awards ($) SAR(#) Payouts($) ($)
------------------ ---- ---------- --------- ------------------ ---------- ------ ---------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David A. Robinson, 1997 240,000 --- 4,750 --- --- --- 4,150
President, CEO, Chairman 1998 240,000 1,000 10,000 --- --- --- 10,428
of the Board and Director 1999 225,416(2) --- 10,000 --- --- --- 68,508(4)
Dr. Gale H. Thorne, VP 1997 150,000 --- 4,750 --- --- --- 429
Product Development and 1998 150,000 1,000 6,925 --- --- --- 6,925
Director 1999 146,041(2) --- 7,302 --- --- --- 21,752(5)
--- --- ---
Charles D. Roe, VP 1997 20,833 --- --- --- 50,000(3) --- ---
Finance and Investor 1998 100,000 1,000 5,050 --- --- --- 226
Relations and CFO 1999 104,022(2) --- 3,438 --- --- --- 1,044(6)
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David L. Thorne 1997 80,292 --- 4,000 --- --- ---
Manager - Product 1998 94,666 300 4,748 --- --- ---
Development 1999 100,000(2) --- 5,000 --- --- --- 51,044(7)
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</TABLE>
(1) These amounts represent payments by the Company into its 401(k) retirement
plan for the benefit of the Named Executive Officer.
(2) In January 1999, Dr. Thorne's salary was increased from $150,000 to
$165,000 per year, Mr. Roe's was increased from $100,000 to $110,000 per
year and Mr. David Thorne's salary was increased from $96,000 to $100,000.
In September 1999, Mr. Robinson's salary was reduced from $240,000 to
$190,000 per year, Dr. Thorne's salary was reduced from $165,000 to
$100,000 per year and Mr. Roe's salary was reduced from $110,000 to $90,000
per year.
(3) Options issued pursuant to the non-qualified stock option plan.
(4) This represents payment of accrued vacation, $67,400 of which was used to
payoff a subscription receivable in a noncash transaction. Effective
January 1, 1999, the Company changed its accrued vacation policy and
subsequent to that date allows a maximum of twenty days vacation pay to be
carried forward from year to year.
(5) This includes $17,957 payment of accrued vacation, $6,920 of which was used
to payoff a subscription receivable in a noncash transaction. Effective
January 1, 1999, the Company changed its accrued vacation policy and
subsequent to that date allows a maximum of twenty days vacation pay to be
carried forward from year to year. Also includes $3,795 in life insurance
on Dr. Thorne with insurance proceeds payable to the beneficiary designated
by Dr. Thorne. This insurance policy has no cash surrender value.
(6) These amounts represent the amounts paid by the Company for term life
insurance on the life of Mr. Roe with insurance proceeds payable to the
beneficiary designated by Mr. Roe. This insurance policy has no cash
surrender value.
(7) Represents $50,000 paid to Mr. Thorne for cancellation of SHPI Warrants to
acquire 25,000 shares of common stock. Also represents $1,044 paid by the
Company for term life insurance on the life of Mr. Thorne with insurance
proceeds payable to the beneficiary designated by Mr. Thorne. This
insurance policy has no cash surrender value.
Compensation of Directors
No cash fees or other consideration were paid to employee directors of
the Company by the Company for service on the Board during 1999. During 1999,
the Company compensated non-employee directors at a rate of $10,000 per year
payable in equal quarterly installments along with options to purchase 16,000
shares of the Company's common stock that were granted in equal quarterly
installments at an exercise price of $2.00 per share. The Company expects that
the 2000 compensation for non-employee directors will be the same as the 1999
compensation including the issuance of options to purchase 16,000 shares of the
Company's common stock granted in equal quarterly installments at an exercise
price equal to the fair market value of the underlying common stock on the date
of grant, but in no event shall the exercise price be less than $1.00 per share.
The Company has made no other agreements regarding compensation of non-employee
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 an employment agreement with Mr. David A.
Robinson. Mr. Robinson's employment agreement, which has been amended from time
to time, provides that (i) Mr. Robinson receive a salary of $190,000 per year
beginning September 16, 1999; (ii) Mr. Robinson's current employment agreement
expires on December 31, 2001; (iii) Mr. Robinson is entitled to vacation pay and
health insurance; (iv) if the employment of Mr. Robinson is terminated by reason
of disability or other than for cause, his salary will continue for the full
term of the agreement; (v) if Mr. Robinson is terminated for cause, his salary
ceases as of the date of termination; (vi) the Company will provide Mr. Robinson
with up to $1,000,000 of term life insurance while he is employed by the
Company; and (vii) Mr. Robinson shall keep all proprietary information relating
to the business of the Company confidential both during and after the term of
the agreement. The Company does not have employment agreements with any of its
other Named Executive Officers.
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<PAGE>
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.
Accrued Vacation Pay
Effective January 1, 1999, the Company changed its vacation policy.
Prior to January 1, 1999, the Company's policy was to allow executive officers
to carry over vacation from year to year without limitation. After January 1,
1999, the Company allows all employees to carry over a maximum of twenty days
vacation pay from year to year.
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 Act
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 Act and is,
therefore, unenforceable.
Stock Options and Warrants
In October 1998, the Company's stockholders approved the adoption of
the Specialized Health Products International, Inc. 1998 Stock Option Plan (the
"1998 Option Plan"). The 1998 Option Plan will permit the Company to grant
"non-qualified stock options" and "incentive stock options" to acquire the
Company's Common Stock. The total number of shares authorized for the 1998
Option Plan may be allocated by the Board between the non-qualified stock
options and the incentive stock options from time to time, subject to certain
requirements of the Internal Revenue Code of 1986, as amended. The option
exercise price per share under the 1998 Option Plan may not be less than the
fair market value of a share of Common Stock on the date on which the option is
granted and in no event can the exercise price be less than $2.00 per share. A
total of 2,000,000 shares are allocated to the 1998 Option Plan, but the 1998
Option Plan also restricts the total number of shares of Common Stock that the
Company can grant options to acquire under all of its existing stock option
plans to 2,000,000 shares. As of April 12, 2000, options to acquire an aggregate
of 565,000 shares of Common Stock at an exercise price of $2.00 per share had
been granted and are presently outstanding under the 1998 Option Plan and stock
options exercisable for 1,399,500 shares of Company common stock at exercise
prices ranging from $.39 to $2.625 are outstanding under plans that preceded the
1998 Option Plan. None of the options granted under the 1998 Option Plan were
granted to executive officers of the Company.
Compensation Committee Interlocks and Insider Participation
No executive officers of the Company serve on the Compensation
Committee (or in a like capacity) for the Company or any other entity.
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2. Approval of the Specialized Health Products International, Inc. 2000 Stock
Option Plan
At the Annual Meeting, stockholders will be asked to approve the
Specialized Health Products International, Inc. 2000 Stock Option Plan (the
"2000 Option Plan"). A copy of the 2000 Option Plan is attached to this Proxy
Statement as Appendix A and is incorporated herein by reference. The description
below of the 2000 Option Plan is qualified in its entirety by reference to the
complete text of the 2000 Option Plan. Terms not defined herein shall have the
meanings set forth in the 2000 Option Plan.
Description of Principal Features of the 2000 Option Plan
The 2000 Option Plan is intended to afford an incentive to employees,
Board members and consultants of the Company and its subsidiaries to acquire or
increase a proprietary interest in the Company, to become or continue as
employees, Board members or consultants, to devote their best efforts on behalf
of the Company and to align the interests of such persons with the Company's
stockholders to promote the success of the Company's business. Additional
objectives of the 2000 Option Plan are (i) to broaden the share ownership of the
staff of the Company and (ii) to create, in effect, a bonus program for key
personnel which compensates designated individuals with shares of the Company.
The 2000 Option Plan will permit the Company to grant "non-qualified
stock options" and/or "incentive stock options" to acquire the Company's Common
Stock. The total number of shares authorized for the 2000 Option Plan may be
allocated by the Board between non-qualified stock options and incentive stock
options from time to time, subject to certain requirements of the Internal
Revenue Code of 1986, as amended (the "Code").
A total of 2,500,000 shares will be allocated to the 2000 Option Plan.
The 2000 Option Plan does not allow the Company to grant stock options
exercisable for more than 2,500,000 shares of common stock under all of the
Company's stock option plans collectively. There are currently stock options
exercisable for 1,964,500 shares of common stock under the Company's existing
stock option plans. Accordingly, assuming no change in the number of outstanding
options under existing plans, options to acquire 535,500 shares of common stock
will initially be available for issuance under the 2000 Option Plan. Thus, the
adoption of the 2000 Option Plan will result in a total of 500,000 additional
shares of common stock being available for issuance in excess of the current
2,000,000 share maximum. If the 2000 Option Plan is approved, the Company will
not grant additional options under its existing stock option plans. While no
determination has been made, some of the options outstanding under current
option plans could be canceled and replaced with options granted under the 2000
Option Plan which grants may be at exercise prices or terms that are different
than terms and exercise prices under existing plans. In addition, all executive
officers and all directors of the Company would qualify for awards under the
2000 Option Plan. No determination has been made, however, if or in what amounts
option grants would be made to any particular person under the 2000 Option Plan.
It is intended that all shares issued pursuant to the exercise of
options under the 2000 Option Plan will be drawn from the authorized stock. It
is not anticipated that any of such shares will be purchased on the open market
or allocated from treasury shares, if any.
Award Plan
The grant of options or awards will be dictated by the achievement of a
mixture of individual and corporate performance goals determined by the Board
or, at the Board's election, the Compensation Committee (the body administering
the 2000 Option Plan is hereinafter referred to as either the Board or the
Compensation Committee). Awards under the 2000 Option Plan will be focused on
Company employees, Board members and consultants whose contribution and
achievement can make a difference to Company financial performance and hence,
indirectly, stockholder value creation. As of April 12, 2000, the Company had
seventeen employees and five Board members.
Awards under the 2000 Option Plan may begin in 2000, although the
Compensation Committee has made no determination with respect thereto. The
specific structure of the 2000 Option Plan for this and subsequent years will be
determined by the Compensation Committee.
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The 2000 Option Plan authorizes the Compensation Committee to grant
"incentive stock options," ("ISO's") within the meaning of Section 422 of the
Internal Revenue Code (the "Code"), and nonqualified stock options ("NQSO's"),
pursuant to the applicable terms and conditions of the 2000 Option Plan and of
the agreement evidencing such grant. The aggregate fair market value of the
ISO's granted to any one optionee under the Option Plan, or any similar plan,
that first become exercisable in any calendar year may not exceed $100,000.
The option exercise price per share may not be less than the fair
market value of a share of Common Stock on the date on which the option is
granted. Notwithstanding the foregoing, such exercise price per share shall in
no case be less than $1.00 per share of Common Stock. Each option agreement
shall provide the exercise schedule for the option as determined by the
Compensation Committee (which may include a requirement for achieving
performance goals), provided, that the Compensation Committee shall have the
authority to accelerate the exercisability of any outstanding option at such
time and under such circumstances as it, in its sole discretion, deems
appropriate. The exercise period can be up to ten years from the date of the
grant of the option as determined by the Compensation Committee, provided,
however, that in the case of an ISO, such exercise period shall not exceed ten
years from the date of grant of such option as allowed by the Code. The exercise
period shall be subject to early termination and accelerated vesting as provided
in the 2000 Option Plan. Generally, it is anticipated that options granted under
the 2000 Option Plan will vest on a basis determined appropriate by the board of
directors, including consideration of length of service for Company employees.
Options granted under the 2000 Option Plan will not be transferable
other than by will or by the laws of descent and distribution or to a
beneficiary upon the death of a grantee, and such options that may be
exercisable shall be exercised during the lifetime of the grantee only by the
grantee or his or her guardian or legal representative; except as otherwise
provided in the 2000 Option Plan.
General
The Option Plan is intended to satisfy the requirements of Rule 16b-3
promulgated under Section 16 of the Exchange Act ("Rule 16b-3") and, with
respect to ISO's, to generally serve as a qualified performance-based
compensation program under OBRA. However, the compensation received by certain
individuals under the Company's 2000 Option Plan may fall outside the
deductibility limitations of OBRA if the Company is successful as reflected in
the Company's stock price and/or income.
The 2000 Option Plan will be administered by the Compensation Committee
of the Board. The Compensation Committee determines (i) which
employees/independent contractors of the Company and its subsidiaries shall be
granted an option to acquire of Common Stock of the Company; (ii) the number of
shares into which the option is exercisable; (iii) the amount to be paid by a
grantee upon exercise of an option or award; (iv) the time or times and the
conditions subject to which options or awards may be made and become
exercisable; and (v) the form of consideration that may be used to pay for
shares issued upon exercise thereof. The Compensation Committee is also
responsible for other questions involving the administration and interpretation
of the 2000 Option Plan.
The Board may from time to time suspend, terminate, modify or amend the
2000 Option Plan, but may not, without the approval of the Company's
stockholders, increase the aggregate number of shares of Common Stock subject to
the 2000 Option Plan (except for increases due to certain adjustments), decrease
the minimum exercise price specified by the 2000 Option Plan in respect of ISO's
or change the class of persons eligible to receive options or awards under the
2000 Option Plan or adopt any amendment for which stockholder approval is
required under applicable Delaware law.
The Board may terminate the 2000 Option Plan at any time. The
termination of the 2000 Option Plan will not alter or impair any rights or
obligations under any option or award previously granted under the 2000 Option
Plan.
The selection of the eligible individuals who will receive options
under the 2000 Option Plan, upon approval of the 2000 Option Plan by
stockholders, and the size and type of options is generally to be determined by
the Compensation Committee in its discretion. No options or awards have been
made or granted under the 2000
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Option Plan, nor are any such options or awards now determinable. Thus, it is
not possible to predict the benefits or amounts that will be received by or
allocated to particular individuals or groups of employees.
Certain Federal Tax Consequences
The following is a brief summary of the principal federal income tax
consequences under current federal income tax laws relating to options granted
under the Option Plan. This summary is not intended to be exhaustive and, among
other things, does not describe state, local or foreign income tax consequences.
Incentive Stock Options
The Company understands the federal income tax consequences of ISO's to
be generally as follows: an employee receiving an ISO will not be in receipt of
taxable income upon the grant of the ISO or upon its timely excise. Exercise of
an ISO will be timely if made during its term and if the optionee remains an
employee of the Company or its subsidiaries at all times during the period
beginning on the date of the grant of the ISO and ending on the date three
months before the date of exercise (or one year before the date of exercise in
the case of a disabled optionee). Exercise of an ISO will also be timely if made
at any time (provided it is exercisable by its terms) by the legal
representative of an optionee who dies (i) while in the employ of the Company or
its subsidiaries or (ii) within three months after termination of employment.
The 2000 Option Plan, however, limits the right of the legal representative of
any optionee who has died within one month of his or her termination of
employment. Upon ultimate sale of the stock received upon such exercise, except
as noted below, the optionee will recognize capital gain or loss (if the stock
is a capital asset of the optionee) equal to the difference between the amount
realized upon such sale and the option exercise price. The Company, under these
circumstances, will not be entitled to any federal income tax deduction in
connection with either the exercise of the ISO or the sale of such stock by the
optionee.
If, however, the stock acquired pursuant to such exercise of an ISO is
disposed of by the optionee prior to the expiration of two years from the date
of grant of the option or one year from the date that such stock is transferred
to the optionee upon exercise (a "disqualifying disposition"), any gain realized
by the optionee generally will be taxable at the time of such disqualifying
disposition as follows: (i) as ordinary income to the extent of the difference
between the option exercise price and the lesser of the fair market value of the
stock on the date the ISO is exercised and the amount realized on such
disqualifying disposition and (ii) if the stock is a capital asset of the
optionee, as capital gain to the extent of any excess of the amount realized on
such disqualifying disposition over the fair market value of the stock on the
date that governs the determination of his or her ordinary income. In such case,
the Company may claim a federal income tax deduction at the time of such
disqualifying disposition for the amount taxable to the optionee as ordinary
income, provided the Company satisfies certain tax information reporting
requirements.
The amount by which the fair market value of the stock on the exercise
date of an ISO exceeds the option exercise price will constitute an item of tax
preference for purposes of the "alternative minimum tax" set forth in the Code.
Nonqualified Stock Options
In the case of NQSO's, the Company understands that the optionee will
not generally be taxed upon grant of any such option. Rather, at the time of
exercise of an NQSO, the optionee will, except as noted below, realize ordinary
income for federal tax purposes in an amount equal to the excess of the fair
market value of the shares purchased over the option exercise price. The Company
will generally be entitled to a tax deduction at such time and in the same
amount that the optionee realizes ordinary income, provided the Company
satisfies certain tax information reporting requirements. If stock so acquired
is later sold or exchanged, then the difference between the sales price and the
fair market value of such stock on the date of exercise of the option is
generally taxable as long-term capital gain or loss if such stock is held for a
sufficient period of time.
THE BOARD HAS UNANIMOUSLY APPROVED AND RECOMMENDS A VOTE "FOR" APPROVAL
OF THE 2000 OPTION PLAN.
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3. 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
The Company retained Arthur Andersen LLP ("AA") as its independent
auditor for the current year. AA has acted as the Company's independent auditor
since 1996. The Company expects representatives of AA to be present at the
Company's 2000 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 2001 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, 2001.
Annual Report
This Proxy Statement has been preceded or accompanied by an Annual
Report for the fiscal year ended December 31, 1999, and quarterly report on Form
10-QSB for the period ended March 31, 2000. Stockholders are referred to such
reports for financial and other information about the activities of the Company,
but such reports 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/ Charles D. Roe
--------------------------
Charles D. Roe, Secretary
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APPENDIX A
Specialized Health Products International, Inc.
2000 Stock Option Plan
1. Purpose; Effectiveness of the Plan.
(a) The purpose of this Plan is to advance the interests of the
Company and its stockholders by helping the Company obtain and
retain the services of employees, officers, consultants, and
directors, upon whose judgment, initiative and efforts the
Company is substantially dependent, and to provide those
persons with further incentives to advance the interests of
the Company.
(b) This Plan will become effective on the date of its adoption by
the Board, provided the Plan is approved by the stockholders
of the Company (excluding holders of shares of Stock issued by
the Company pursuant to the exercise of options granted under
this Plan) within twelve months before or after that date. If
the Plan is not so approved by the stockholders of the
Company, any options granted under this Plan will be rescinded
and will be void. This Plan will remain in effect until it is
terminated by the Board or the Committee (as defined
hereafter) under Section 9 hereof, except that no ISO (as
defined herein) will be granted after the tenth anniversary of
the date of this Plan's adoption by the Board. This Plan will
be governed by, and construed in accordance with, the laws of
the State of Delaware.
2. Certain Definitions. Unless the context otherwise requires, the following
defined terms (together with other capitalized terms defined elsewhere in this
Plan) will govern the construction of this Plan, and of any stock option
agreements entered into pursuant to this Plan:
(a) "10% Stockholder" means a person who owns, either directly or
indirectly by virtue of the ownership attribution provisions
set forth in Section 424(d) of the Code at the time he or she
is granted an Option, stock possessing more than ten percent
(10%) of the total combined voting power or value of all
classes of stock of the Company and/or of its subsidiaries;
(b) "1933 Act" means the federal Securities Act of 1933, as
amended;
(c) "Board" means the Board of Directors of the Company;
(d) "Code" means the Internal Revenue Code of 1986, as amended
(references herein to Sections of the Code are intended to
refer to Sections of the Code as enacted at the time of this
Plan's adoption by the Board and as subsequently amended, or
to any substantially similar successor provisions of the Code
resulting from recodification, renumbering or otherwise);
(e) "Committee" means a committee of two or more Non-Employee
Directors, appointed by the Board, to administer and interpret
this Plan; provided that the term "Committee" will refer to
the Board during such times as no Committee is appointed by
the Board;
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(f) "Company" means Specialized Health Products International,
Inc., a Delaware corporation;
(g) "Disability" has the same meaning as "permanent and total
disability," as defined in Section 22(e)(3) of the Code;
(h) "Eligible Participants" means persons who, at a particular
time, are employees, officers, consultants, or directors of
the Company or its subsidiaries;
(i) "Fair Market Value" means, with respect to the Stock and as of
the date an ISO or a Formula Option is granted hereunder, the
market price per share of such Stock determined by the
Committee in good faith on such basis as it deems appropriate.
(j) "ISO" has the same meaning as "incentive stock option," as
defined in Section 422 of the Code;
(k) "Just Cause Termination" means a termination by the Company of
an Optionee's employment by and/or service to the Company (or
if the Optionee is a director, removal of the Optionee from
the Board by action of the stockholders or, if permitted by
applicable law and the by-laws of the Company, the other
directors), in connection with the good faith determination of
the Company's board of directors (or of the Company's
stockholders if the Optionee is a director and the removal of
the Optionee from the Board is by action of the stockholders,
but in either case excluding the vote of the Optionee if he or
she is a director or a stockholder) that the Optionee has
engaged in any acts involving dishonesty or moral turpitude or
in any acts that materially and adversely affect the business,
affairs or reputation of the Company or its subsidiaries;
(l) "Non-Employee Director" has the same meaning as
"Non-Employee-Director," as defined in Rule 16b-3 as
promulgated under the Securities Exchange Act of 1934).;
(m) "NSO" means any option granted under this Plan whether
designated by the Committee as a "non-qualified stock option,"
a "non-statutory stock option" or otherwise, other than an
option designated by the Committee as an ISO, or any option so
designated but which, for any reason, fails to qualify as an
ISO pursuant to Section 422 of the Code and the rules and
regulations thereunder;
(n) "Option" means an option granted pursuant to this Plan
entitling the option holder to acquire shares of Stock issued
by the Company pursuant to the valid exercise of the option;
(o) "Option Agreement" means an agreement between the Company and
an Optionee, in form and substance satisfactory to the
Committee in its sole discretion, consistent with this Plan;
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(p) "Option Price" with respect to any particular Option means the
exercise price at which the Optionee may acquire each share of
the Option Stock called for under such Option;
(q) "Option Stock" means Stock issued or issuable by the Company
pursuant to the valid exercise of an Option;
(r) "Optionee" means an Eligible Participant to whom Options are
granted hereunder, and any transferee thereof pursuant to a
Transfer authorized under this Plan;
(s) "Plan" means this Specialized Health Products International,
Inc. 1998 Stock Option Plan of the Company;
(t) "QDRO" has the same meaning as "qualified domestic relations
order" as defined in Section 414(p) of the Code;
(u) "Stock" means shares of the Company's Common Stock, $.02 par
value;
(v) "Transfer," with respect to Option Stock, includes, without
limitation, a voluntary or involuntary sale, assignment,
transfer, conveyance, pledge, hypothecation, encumbrance,
disposal, loan, gift, attachment or levy of such Option Stock,
including without limitation an assignment for the benefit of
creditors of the Optionee, a transfer by operation of law,
such as a transfer by will or under the laws of descent and
distribution, an execution of judgment against the Option
Stock or the acquisition of record or beneficial ownership
thereof by a lender or creditor, a transfer pursuant to a
QDRO, or to any decree of divorce, dissolution or separate
maintenance, any property settlement, any separation agreement
or any other agreement with a spouse (except for estate
planning purposes) under which a part or all of the shares of
Option Stock are transferred or awarded to the spouse of the
Optionee or are required to be sold; or a transfer resulting
from the filing by the Optionee of a petition for relief, or
the filing of an involuntary petition against such Optionee,
under the bankruptcy laws of the United States or of any other
nation.
3. Eligibility. The Company may grant Options under this Plan only to persons
who are Eligible Participants as of the time of such grant. Subject to the
provisions of Sections 4(d), 5 and 6 hereof, there is no limitation on the
number of Options that may be granted to an Eligible Participant.
4. Administration.
(a) Committee. The Committee, if appointed by the Board, will
administer this Plan. If the Board, in its discretion, does
not appoint such a Committee, the Board itself will administer
this Plan and take such other actions as the Committee is
authorized to take hereunder; provided that the Board may take
such actions hereunder in the same manner as the Board may
take other actions under the Company's Certificate of
Incorporation and By-laws generally.
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(b) Authority and Discretion of Committee. The Committee will have
full and final authority in its discretion, at any time and
from time to time, subject only to the express terms,
conditions and other provisions of the Company's Certificate
of Incorporation, By-laws and this Plan, and the specific
limitations on such discretion set forth herein:
(i) to select and approve the persons who will be granted
Options under this Plan from among the Eligible
Participants, and to grant to any person so selected
one or more Options to purchase such number of shares
of Option Stock as the Committee may determine;
(ii) to determine the period or periods of time during
which Options may be exercised, the Option Price and
the duration of such Options, and other matters to be
determined by the Committee in connection with
specific Option grants and Options Agreements as
specified under this Plan;
(iii) to interpret this Plan, to prescribe, amend and
rescind rules and regulations relating to this Plan,
and to make all other determinations necessary or
advisable for the operation and administration of
this Plan; and
(iv) to delegate all or a portion of its authority under
subsections (i) and (ii) of this Section 4(b) to one
or more directors of the Company who are executive
officers of the Company, but only in connection with
Options granted to Eligible Participants who are not
subject to the reporting and liability provisions of
Section 16 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder,
and subject to such restrictions and limitations
(such as the aggregate number of shares of Option
Stock called for by such Options that may be granted)
as the Committee may decide to impose on such
delegate directors.
(c) Limitation on Authority. Notwithstanding the foregoing, or any
other provision of this Plan, the Committee will have no
authority to grant Options to any of its members, unless
approved by the Board.
(d) Designation of Options. Except as otherwise provided herein,
the Committee will designate any Option granted hereunder
either as an ISO or as an NSO. To the extent that the Fair
Market Value (determined at the time the Option is granted) of
Stock with respect to which all ISOs are exercisable for the
first time by any individual during any calendar year
(pursuant to this Plan and all other plans of the Company
and/or its subsidiaries) exceeds $100,000, such option will be
treated as an NSO. Notwithstanding the general eligibility
provisions of Section 3 hereof, the Committee may grant ISOs
only to persons who are employees of the Company and/or its
subsidiaries.
(e) Option Agreements. Options will be deemed granted hereunder
only upon the execution and delivery of an Option Agreement by
the Optionee and a duly authorized officer of the Company.
Options will not be deemed granted hereunder merely upon the
authorization of such grant by the Committee.
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5. Shares Reserved for Options.
(a) Option Pool. The aggregate number of shares of Option Stock
that may be issued pursuant to the exercise of Options granted
under this Plan will not exceed two million five hundred
thousand (2,500,000) (the "Option Pool"), provided that such
number will be increased by the number of shares of Option
Stock that the Company subsequently may reacquire through
repurchase or otherwise. Shares of Option Stock that would
have been issuable pursuant to Options, but that are no longer
issuable because all or part of those Options have terminated
or expired, will be deemed not to have been issued for
purposes of computing the number of shares of Option Stock
remaining in the Option Pool and available for issuance.
Notwithstanding the foregoing, the Company will not grant
Options under the this Plan and the Company's previously
adopted non-qualified stock option plans to acquire in
aggregate more than two million five hundred thousand
(2,500,000) shares of Stock.
(b) Adjustments Upon Changes in Stock. In the event of any change
in the outstanding Stock of the Company as a result of a stock
split, reverse stock split, stock dividend, recapitalization,
combination or reclassification, appropriate proportionate
adjustments will be made in: (i) the aggregate number of
shares of Option Stock in the Option Pool that may be issued
pursuant to the exercise of Options granted hereunder; (ii)
the Option Price and the number of shares of Option Stock
called for in each outstanding Option granted hereunder; and
(iii) other rights and matters determined on a per share basis
under this Plan or any Option Agreement hereunder. Any such
adjustments will be made only by the Board, and when so made
will be effective, conclusive and binding for all purposes
with respect to this Plan and all Options then outstanding. No
such adjustments will be required by reason of the issuance or
sale by the Company for cash or other consideration of
additional shares of its Stock or securities convertible into
or exchangeable for shares of its Stock.
6. Terms of Stock Option Agreements. Each Option granted pursuant to this Plan
will be evidenced by an agreement (an "Option Agreement") between the Company
and the person to whom such Option is granted, in form and substance
satisfactory to the Committee in its sole discretion, consistent with this Plan.
Without limiting the foregoing, each Option Agreement (unless otherwise stated
therein) will be deemed to include the following terms and conditions:
(a) Covenants of Optionee. At the discretion of the Committee, the
person to whom an Option is granted hereunder, as a condition
to the granting of the Option, must execute and deliver to the
Company a confidential information agreement approved by the
Committee. Nothing contained in this Plan, any Option
Agreement or in any other agreement executed in connection
with the granting of an Option under this Plan will confer
upon any Optionee any right with respect to the continuation
of his or her status as an employee of, consultant or
independent contractor to, or director of, the Company or its
subsidiaries.
(b) Vesting Periods. Except as otherwise provided herein, each
Option Agreement may specify the period or periods of time
within which each Option or portion thereof will first become
exercisable (the "Vesting Period") with respect to the total
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number of shares of Option Stock called for thereunder (the
"Total Award Option Stock"). Such Vesting Periods will be
fixed by the Committee in its discretion, and may be
accelerated or shortened by the Committee in its discretion.
(c) Exercise of the Option.
(i) Mechanics and Notice. An Option may be exercised to
the extent exercisable (1) by giving written notice
of exercise to the Company, specifying the number of
full shares of Option Stock to be purchased and
accompanied by full payment of the Option Price
thereof and the amount of withholding taxes pursuant
to subsection 6(c)(ii) below; and (2) by giving
assurances satisfactory to the Company that the
shares of Option Stock to be purchased upon such
exercise are being purchased for investment and not
with a view to resale in connection with any
distribution of such shares in violation of the 1933
Act; provided, however, that in the event the Option
Stock called for under the Option is registered under
the 1933 Act, or in the event resale of such Option
Stock without such registration would otherwise be
permissible, this second condition will be
inoperative if, in the opinion of counsel for the
Company, such condition is not required under the
1933 Act, or any other applicable law, regulation or
rule of any governmental agency.
(ii) Withholding Taxes. As a condition to the issuance of
the shares of Option Stock upon full or partial
exercise of an NSO granted under this Plan, the
Optionee will pay to the Company in cash, or in such
other form as the Committee may determine in its
discretion, the amount of the Company's tax
withholding liability required in connection with
such exercise. For purposes of this subsection
6(c)(ii), "tax withholding liability" will mean all
federal and state income taxes, social security tax,
and any other taxes applicable to the compensation
income arising from the transaction required by
applicable law to be withheld by the Company.
(d) Payment of Option Price. Each Option Agreement will specify
the Option Price with respect to the exercise of Option Stock
thereunder, to be fixed by the Committee in its discretion,
but in no event will the Option Price be less than the greater
of (i) $1.00 per share of Common Stock or (ii) the Fair Market
Value (or, in case the Optionee is a 10% Stockholder, one
hundred ten percent (110%) of such Fair Market Value) of the
Option Stock at the time such ISO is granted. The Option Price
will be payable to the Company in United States dollars in
cash or by check or, such other legal consideration as may be
approved by the Committee, in its discretion.
(e) Termination of the Option. Except as otherwise provided
herein, each Option Agreement will specify the period of time,
to be fixed by the Committee in its discretion, during which
the Option granted therein will be exercisable, not to exceed
ten years from the date of grant in the case of an ISO (the
"Option Period"); provided that the Option Period will not
exceed five years from the date of grant in the case of an ISO
granted to a 10% Stockholder. To the extent
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not previously exercised, each Option will terminate upon the
expiration of the Option Period specified in the Option
Agreement; provided, however, that each such Option will
terminate, if earlier: (i) ninety days after the date that the
Optionee ceases to be an Eligible Participant for any reason,
other than by reason of death or disability; (ii) twelve
months after the date that the Optionee ceases to be an
Eligible Participant by reason of such person's death or
disability; or (iii) immediately as of the date that the
Optionee ceases to be an Eligible Participant by reason of a
Just Cause Termination. In the event of a sale or all or
substantially all of the assets of the Company, or a merger or
consolidation or other reorganization in which the Company is
not the surviving corporation, or in which the Company becomes
a subsidiary of another corporation (any of the foregoing
events, a "Corporate Transaction"), then notwithstanding
anything else herein, the right to exercise all then
outstanding Options will vest immediately prior to such
Corporate Transaction and will terminate immediately after
such Corporate Transaction; provided, however, that if the
Board, in its sole discretion, determines that such immediate
vesting of the right to exercise outstanding Options is not in
the best interests of the Company, then the successor
corporation must agree to assume the outstanding Options or
substitute therefor comparable options of such successor
corporation or a parent or subsidiary of such successor
corporation.
(f) Options Nontransferable. No Option will be transferable by the
Optionee otherwise than by will or the laws of descent and
distribution. During the lifetime of the Optionee, the Option
will be exercisable only by him or her.
(g) Qualification of Stock. The right to exercise an Option will
be further subject to the requirement that if at any time the
Board determines, in its discretion, that the listing,
registration or qualification of the shares of Option Stock
called for thereunder upon any securities exchange or under
any state or federal law, or the consent or approval of any
governmental regulatory authority, is necessary or desirable
as a condition of or in connection with the granting of such
Option or the purchase of shares of Option Stock thereunder,
the Option may not be exercised, in whole or in part, unless
and until such listing, registration, qualification, consent
or approval is effected or obtained free of any conditions not
acceptable to the Board, in its discretion.
(h) Additional Restrictions on Transfer. By accepting Options
and/or Option Stock under this Plan, the Optionee will be
deemed to represent, warrant and agree as follows:
(i) Securities Act of 1933. The Optionee understands that
the shares of Option Stock have not been registered
under the 1933 Act, and that such shares are not
freely tradeable and must be held indefinitely unless
such shares are either registered under the 1933 Act
or an exemption from such registration is available.
The Optione understands that the Company is under no
obligation to register the shares of Option Stock.
(ii) Other Applicable Laws. The Optionee further
understands that Transfer of the Option Stock
requires full compliance with the provisions of all
applicable laws.
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<PAGE>
(iii) Investment Intent. Unless a registration statement is
in effect with respect to the sale of Option Stock
obtained through exercise of Options granted
hereunder: (1) Upon exercise of any Option, the
Optionee will purchase the Option Stock for his or
her own account and not with a view to distribution
within the meaning of the 1933 Act, other than as may
be effected in compliance with the 1933 Act and the
rules and regulations promulgated thereunder; (2) no
one else will have any beneficial interest in the
Option Stock; and (3) he or she has no present
intention of disposing of the Option Stock at any
particular time.
(i) Compliance with Law. Notwithstanding any other provision of
this Plan, Options may be granted pursuant to this Plan, and
Option Stock may be issued pursuant to the exercise thereof by
an Optionee, only after there has been compliance with all
applicable federal and state securities laws, and all of the
same will be subject to this overriding condition. The Company
will not be required to register or qualify Option Stock with
the Securities and Exchange Commission or any State agency.
(j) Stock Certificates. Certificates representing the Option Stock
issued pursuant to the exercise of Options will bear all
legends required by law and necessary to effectuate this
Plan's provisions. The Company may place a "stop transfer"
order against shares of the Option Stock until all
restrictions and conditions set forth in this Plan and in the
legends referred to in this Section 6(j) have been complied
with.
(k) Notices. Any notice to be given to the Company under the terms
of an Option Agreement will be addressed to the Company at its
principal executive office, Attention: Corporate Secretary, or
at such other address as the Company may designate in writing.
Any notice to be given to an Optionee will be addressed to the
Optionee at the address provided to the Company by the
Optionee. Any such notice will be deemed to have been duly
given if and when enclosed in a properly sealed envelope,
addressed as aforesaid, registered and deposited, postage and
registry fee prepaid, in a post office or branch post office
regularly maintained by the United States Government.
(l) Other Provisions. The Option Agreement may contain such other
terms, provisions and conditions, including such special
forfeiture conditions, rights of repurchase, rights of first
refusal and other restrictions on Transfer of Option Stock
issued upon exercise of any Options granted hereunder, not
inconsistent with this Plan, as may be determined by the
Committee in its sole discretion.
(m) Right to Terminate Employment. Nothing in the Plan or in any
agreement entered into pursuant to the Plan shall confer upon
any participant the right to continue in the employment of the
Company or effect any right which the Company may have to
terminate the employment of such participant.
(n) Non-Uniform Determinations. The Board's determinations under
the Plan (including without limitation determinations of the
persons to receive awards, the form, amount and timing of such
awards, the terms and provisions of such awards and the
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<PAGE>
agreements evidencing same) need not be uniform and may be
made by it selectively among persons who receive, or are
eligible to receive, awards under the Plan, whether or not
such persons are similarly situated.
(o) Rights as a Shareholder. The recipient of any award under the
Plan shall have no rights as a shareholder with respect
thereto unless and until certificates for shares of Common
Stock are issued to such participant.
(p) Other Employee Benefits. Except as to plans which by their
terms include such amounts as compensation, the amount of any
compensation deemed to be received by an employee as a result
of the exercise of an Option or the sale of Option Stock will
not constitute compensation with respect to which any other
employee benefits of such employee are determined, including,
without limitation, benefits under any bonus, pension,
profit-sharing, life insurance or salary continuation plan,
except as otherwise specifically determined by the Board.
7. Proceeds from Sale of Stock. Cash proceeds from the sale of shares of Option
Stock issued from time to time upon the exercise of Options granted pursuant to
this Plan will be added to the general funds of the Company and as such will be
used from time to time for general corporate purposes.
8. Modification, Extension and Renewal of Options. Subject to the terms and
conditions and within the limitations of this Plan, the Committee may modify,
extend or renew outstanding Options granted under this Plan, or accept the
surrender of outstanding Options (to the extent not theretofore exercised) and
authorize the granting of new Options in substitution therefor (to the extent
not theretofore exercised). Notwithstanding the foregoing, however, no
modification of any Option will, without the consent of the holder of the
Option, alter or impair any rights or obligations under any Option theretofore
granted under this Plan.
9. Amendment and Discontinuance. The Board may amend, suspend or discontinue
this Plan at any time or from time to time; provided that no action of the Board
will cause ISOs granted under this Plan not to comply with Section 422 of the
Code unless the Board specifically declares such action to be made for that
purpose. Moreover, no such action may alter or impair any Option previously
granted under this Plan without the consent of the holder of such Option.
10. Plan Compliance with Rule 16b-3. With respect to persons subject to Section
16 of the Securities Exchange Act of 1934, transactions under this plan are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the 1934 Act. To the extent any provision of the plan or action
by the plan administrators fails so to comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the plan administrators.
11. Copies of Plan. A copy of this Plan will be delivered to each Optionee at or
before the time he or she executes an Option Agreement.
Date Plan Adopted by Board of Directors: May 2, 2000
Date Plan Approved by Stockholders: _________, 2000
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APPENDIX B
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 on record by the undersigned on May 15, 2000 at the
annual meeting of stockholders to be held on June 22, 2000, or any adjournment
thereof.
1. Election of Nominee Director
[ ] FOR Dr. Gale H. Thorne [ ] WITHHOLD AUTHORITY to vote for
Dr. Gale H. Thorne
2. Proposal to approve the Specialized Health Products International, Inc. 2000
Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
3. 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: ________________, 2000 ______________________________________
(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 at (801)
355-6505 or directly to the Company at
(801) 298-1759.
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