UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 26, 2006
Patient Safety Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware 333-124594 13-3419202
(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification Number)
1800 Century Park East, Ste. 200, Los Angeles, CA 90067
(Address of principal executive offices) (zip code)
(310) 895-7750
(Registrant's telephone number, including area code)
Copies to:
Marc J. Ross, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
Phone: (212) 930-9700
Fax: (212) 930-9725
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 1.01 Entry Into a Material Definitive Agreement.
Loans from Ault Glazer Bodnar Acquisition Fund LLC
Ault Glazer Bodnar Acquisition Fund LLC ("AGB Acquisition Fund") loaned
Patient Safety Technologies, Inc. (the "Company") $25,000 on January 26, 2006
and $35,000 on January 27, 2006. Together with prior loans from AGB Acquisition
Fund to the Company on January 11, 2006 and January 19, 2006, AGB Acquisition
Fund has loaned the Company a total of $295,000. As consideration for the
January 26, 2006 and January 27, 2006 loans, the Company issued AGB Acquisition
Fund two secured promissory notes in the principal amount of $25,000 and $35,000
(the "Notes") and entered into security agreements granting AGB Acquisition Fund
a security interest in the Company's personal property and fixtures, inventory,
products and proceeds as security for the Company's obligations under the Notes.
The Notes accrue interest at the rate of 7% per annum, which together with
principal is due to be repaid on March 26, 2006 (for the $25,000 principal
amount Note) and March 27, 2006 (for the $35,000 principal amount Note). At the
option of the Company, payments of principal and interest may be paid by
exchange of any securities owned by the Company valued on the day before the
respective maturity date of the Notes.
Ault Glazer Bodnar & Company, Inc. is the managing member of AGB
Acquisition Fund. The Company's former Chairman and Chief Executive Officer,
Milton "Todd" Ault, III, is Chairman and Chief Executive Officer of Ault Glazer
Bodnar & Company, Inc. The Company's Chief Financial Officer, William B. Horne,
is also Chief Financial Officer of Ault Glazer Bodnar & Company, Inc. The
Company's President and Secretary, Lynne Silverstein, is Secretary and a
director of Ault Glazer Bodnar & Company, Inc. Melanie Glazer, Manager of the
Company's subsidiary Ault Glazer Bodnar Capital Properties, LLC, is also a
director of Ault Glazer Bodnar & Company, Inc. The Company's management believes
the loan from AGB Acquisition Fund is on terms at least as favorable as could be
obtained from an unrelated third party.
Employment Agreement of Darrell W. Grimsley, Jr.
On January 30, 2006, the Company's 50%-owned subsidiary Automotive
Services Group, LLC ("ASG") entered into an amended employment agreement to
employ Darrell W. Grimsley, Jr. as ASG's Chairman and Chief Executive Officer.
The employment agreement is effective as of January 30, 2006 and continues for
an initial term of 60 months. The employment agreement will automatically renew
for successive 12-month terms unless either party delivers to the other party
written notice of termination at least 30 days before the end of the then
current term. Mr. Grimsley's base compensation is $150,000 per year. Mr.
Grimsley will receive options to purchase 100,000 shares of the Company's common
stock with a strike price of $3.75 per share granted as of July 18, 2005 in
accordance with his prior employment agreement with ASG, which options will vest
equally over four years beginning July 18, 2006. In the event that ASG has two
operating facilities and has been profitable for a period of six consecutive
months all unvested options from the July 18, 2005 option grant will
automatically vest. In addition, on the date the Company acquires Mr. Grimsley's
50% equity interest in ASG, the Company will grant him additional options to
purchase 50,000 shares of the Company's common stock with a strike price equal
to the fair market value of the Company's common stock on such date, which
options will vest equally over four years from the date of grant. Mr. Grimsley
is entitled to participate in all of ASG's benefit plans in effect from time to
time for employees of ASG. Mr. Grimsley is entitled to three weeks of paid
vacation, to be scheduled and taken in accordance with ASG's standard vacation
policies. In addition, Mr. Grimsley is entitled to sick leave and holidays at
full pay in accordance with ASG's policies established and in effect from time
to time. The agreement also contains customary provisions for disability, death,
confidentiality, indemnification and non-competition. Mr. Grimsley has the right
to voluntarily terminate the employment agreement at any time with or without
cause upon 30 days' prior written notice. If Mr. Grimsley terminates the
employment agreement for cause as described in the agreement, (a) ASG must pay
Mr. Grimsley all accrued base compensation through the date of termination plus
all accrued vacation pay and bonuses, if any, (b) as severance compensation, ASG
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must pay Mr. Grimsley an amount equal to six months of Mr. Grimsley's base
compensation and bonus at the highest rate in effect during the employment term,
(c) ASG must provide Mr. Grimsley continued health insurance benefits for six
months after the termination date, (d) ASG must obtain the release of any
collateral which Mr. Grimsley may have personally pledged as security on behalf
of ASG, and (e) all unvested stock options granted to Mr. Grimsley will
immediately vest. If ASG terminates the employment agreement without cause as
described in the agreement, (a) ASG must pay Mr. Grimsley all accrued base
compensation through the date of termination plus all accrued vacation pay and
bonuses, if any, (b) as severance compensation, ASG must pay Mr. Grimsley an
amount equal to the greater of twelve months of Mr. Grimsley's base compensation
and bonus at the highest rate in effect during the employment term or his base
compensation and bonus for the remaining employment term not to exceed 24
months, (c) ASG must provide Mr. Grimsley continued health insurance benefits
for the greater of twelve months after the termination date or the remaining
employment term or until he acquires health insurance benefits provided by
another employer, (d) ASG must obtain the release of any collateral which Mr.
Grimsley may have personally pledged as security on behalf of ASG, and (e) all
unvested stock options granted to Mr. Grimsley will immediately vest. If Mr.
Grimsley voluntarily terminates the employment agreement or ASG terminates the
agreement for cause, (a) ASG must pay Mr. Grimsley all accrued base compensation
through the date of termination plus all accrued vacation pay and bonuses, if
any, (b) ASG must obtain the release of any collateral which Mr. Grimsley may
have personally pledged as security on behalf of ASG, and (c) all unvested stock
options granted to Mr. Grimsley will be cancelled.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
See Item 1.01 above.
Item 5.01 Departure of Directors of Principal Officers; Election of
Directors; Appointment of Principal Officers.
Effective January 30, 2006, Darrell W. Grimsley, Jr. was appointed
Chairman and Chief Executive Officer of the Company's 50%-owned subsidiary ASG.
Mr. Grimsley (Age 40) has been a practicing attorney during the last five
years. From May 1, 1999 to present, Mr. Grimsley has been managing member of
D.W. Grimsley, Jr., LLC, a law firm practicing in the areas of credit, toxic
torts, employment law, due diligence reporting and business consulting and
advising. From October 1, 2003, Mr. Grimsley has been managing member of The
Bankruptcy Group, LLC a law firm focusing on business and consumer bankruptcy
law. From July 16, 2005 until December 29, 2005, Mr. Grimsley was a director of
Digicorp (OTCBB: DGCO). From August 30, 2005 until January 27, 2006, Mr.
Grimsley was a director of IPEX, Inc. (OTCBB: IPEX).
The Company expects to purchase Mr. Grimsley's 50% equity interest in ASG
from Mr. Grimsley. No definitive agreement has been reached with respect to that
transaction. Except as described above, there has been no transaction during the
last two years, or any proposed transaction, to which the Company was or is to
be a party, and in which Mr. Grimsley had or is to have a direct or indirect
material interest. There are no family relationships between Mr. Grimsley and
the Company's directors, executive officers or persons nominated or charged by
the Company to become directors or executive officers. On January 30, 2006, ASG
entered into an amended employment agreement with Mr. Grimsley, the material
terms of which are described under Item 1.01 above.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
Exhibit
Number Description
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4.1 Secured Promissory Note in the principal amount of $25,000 issued
January 26 2006 to Ault Glazer Bodnar Acquisition Fund LLC
4.2 Secured Promissory Note in the principal amount of $35,000 issued
January 27, 2006 to Ault Glazer Bodnar Acquisition Fund LLC
10.1 Security Agreement dated January 26, 2006 by and between Ault Glazer
Bodnar Acquisition Fund LLC and Patient Safety Technologies, Inc.
10.2 Security Agreement dated January 27, 2006 by and between Ault Glazer
Bodnar Acquisition Fund LLC and Patient Safety Technologies, Inc.
10.3 Amended Employment Agreement entered into as of January 30, 2006
between Automotive Services Group, LLC and D.W. Grimsley, Jr.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Patient Safety Technologies, Inc.
Dated: February 1, 2006 By: /s/ Louis Glazer M.D.
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Name: Louis Glazer, M.D., Ph.G.
Title: Chief Executive Officer
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