UNITED
STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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Schedule 14A
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(Rule 14a-101)
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SCHEDULE 14A INFORMATION
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Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the
Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for
Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
§240.14a-12
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ProUroCare
Medical Inc.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement if other than the Registrant)
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Payment of Filing Fee (Check the appropriate
box):
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No fee required.
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
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which transaction applies:
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Aggregate number of securities to
which transaction applies:
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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):
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Proposed maximum aggregate value of
transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary
materials.
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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.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration
Statement No.:
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Filing Party:
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Date Filed:
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To
our Shareholders:
The
past year at ProUroCare can best be described as one that produced exciting
business successes, significant progress in the development of our technology
and product platforms and continued expansion of our operating capabilities. I also recognize that it has been a year of
patience and anticipated rewards for our shareholders.
Our
primary business successes of the past year included:
·
The completion of a secondary public offering
which, combined with two previous private placements, raised a total $5.4
million of equity capital in an extremely difficult market. Our ability to accomplish this was directly
linked to the strength of our technology and the potential benefits that the
ProUroScan system can provide to millions of men over the age of 50.
·
The presentation of plans for a proposed
clinical study of our prostate imaging system for review by the FDA. The agency indicated that the system was a
non-significant risk device. Based on
assumptions of device performance and other statistical information provided,
the FDA indicated that the proposed study design that included a total of 40
patients from at least three clinical sites appeared reasonable. A 510(k) pathway to market clearance was
discussed, and we are pursuing that pathway.
Given the results of the clinical studies to date, we believe that we
will be able to file our 510(k) application in the third quarter.
·
The execution of two agreements with our
development partner, Artann Laboratories, that provide access to all their
existing know how and future patents in the urology field. These agreements also define the roles, responsibilities
and financial commitments that will be provided by both organizations in
completing all remaining development and clinical study activities.
·
The first demonstration of our prostate
imaging system at the annual convention of the American Urology Association,
attended by urologists from around the world.
A significant level of interest was generated among physicians from key
medical centers and other urology companies.
We
also made significant progress in refining our product strategies, advancing
our engineering and manufacturing preparedness, and improving our clinical
study and reimbursement strategy execution:
·
Our prostate imaging product platform now
features a second generation portable system.
Smaller than a laptop computer, this new system embodies all the
functionality of the previous cart-based system. We believe that a smaller, less expensive
system will be instrumental in achieving strong penetration in the urology
market. We are committed to eventually
provide communications and processing functionalities in this platform that
will facilitate the creation of a personalized prostate management information
system for physicians.
·
We have engaged a design and engineering firm
that can provide comprehensive pre-engineering manufacturing and contract
manufacturing support. They also have
the capability to assume an even larger role on new engineering projects and
assignments.
·
We hired a contract research organization to
manage and monitor the FDA clinical study.
Their involvement has expedited the study and ensured compliance with
FDA regulations.
We
have increased our capabilities immeasurably through the engagement of a broad
and talented base of professionals that are helping to guide our company. This group includes experts in contract and
patent law, reimbursement and FDA regulations, clinical studies, engineering,
manufacturing, investor and
public
relations. In many cases, we were able
to conserve cash and offer performance incentives by providing stock options to
these experts in lieu of cash payments.
We are grateful for their services, and their commitment and confidence
in our ability to perform.
These
accomplishments have begun to generate the momentum needed to carry us into the
marketing phase of our business plan, which includes leveraging the experience
and established sales force of a significant marketing partner to launch the
prostate imaging system into the market.
Discussions with several potential marketing partners are under way and
we anticipate having more news to share with you in the coming months.
Sincerely,
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Richard
Carlson, CEO
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July 8,
2009
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ProUroCare Medical Inc.
6440 Flying Cloud Dr., Suite 101
Eden Prairie, MN 55344
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 11, 2009
TO THE STOCKHOLDERS OF PROUROCARE MEDICAL INC.:
ProUroCare Medical Inc.
will hold its Annual Meeting of Stockholders at the offices of
Fredrikson &
Byron, 4000 Pillsbury Center, 200 South Sixth Street, Minneapolis, Minnesota,
55402,
on Tuesday, August 11,
2009 at 3:30 p.m. local time, or at any adjournment or adjournments
thereof. We are holding the meeting for
the following purposes:
1.
To elect four
directors to our Board of Directors;
2.
To approve our
2009 Stock Plan;
3.
To adopt
amended Articles of Incorporation;
4.
To ratify the
Audit Committees selection of our independent registered public accounting
firm for fiscal 2009; and
5.
To transact any
other business as may properly come before the meeting or any adjournments
thereof.
Holders of record of our common stock at the close of
business on June 23, 2009 will be entitled to vote at the meeting or any
adjournments thereof. Adoption of each
of our four proposals requires the affirmative vote of the holders of a
majority of the shares of our common stock present in person or represented by
proxy at the Annual Meeting
.
In addition to the
proxy statement, proxy card and voting instructions, a copy of our 2008 Annual
Report is enclosed.
You can vote your
shares by completing and returning a proxy card. Most stockholders can also vote over the
Internet or by telephone. If the
Internet and telephone voting are available to you, you can find voting
instructions in the materials accompanying the proxy statement. You can help us save money by voting over the
Internet or by telephone. You can revoke
a proxy at any time prior to its exercise at the meeting by following the
instructions in the enclosed proxy statement.
By Order of the Board of Directors,
DAVID F. KOENIG
Secretary
July 8, 2009
1
PROUROCARE MEDICAL INC
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6440 Flying Cloud Dr., Suite 101
Eden Prairie, MN 55344
PROXY STATEMENT
2009 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
AUGUST 11, 2009
This Proxy Statement is furnished in connection with
the solicitation of proxies by the Board of Directors of ProUroCare Medical
Inc. (ProUroCare, the Company, we, our or us) to be used at the 2009
Annual Meeting of Stockholders (the Annual Meeting) to be held at the offices
of
Fredrikson & Byron, 4000 Pillsbury Center, 200 South Sixth
Street, Minneapolis, Minnesota, 55402
at 3:30 p.m. local time on August 11, 2009,
for the purpose of considering and taking appropriate action with respect to
the following:
1.
The election of four
directors to our Board of Directors;
2.
The approval and adoption of
the ProUroCare Medical Inc. 2009 Stock Option Plan (the 2009 Plan);
3.
The approval and adoption of
amended Articles of Incorporation;
4.
Ratification of the
appointment of Baker Tilly Virchow Krause, LLP (Baker Tilly) as our
independent registered public accounting firm for fiscal 2009; and
5.
The transaction of any other
business as may properly come before the meeting or any adjournments thereof.
This Proxy Statement and the enclosed proxy card are
first being mailed or given to stockholders on or about July 8, 2009.
Proxies
Only holders of record of our common stock at the
close of business on June 23, 2009 (the Record Date) will be entitled to
vote at the Annual Meeting or any adjournments thereof. There were 9,894,991 shares of our common stock
outstanding on the Record Date. Each
share of common stock entitles the holder thereof to one vote upon each matter
to be presented at the Annual Meeting. A
quorum, consisting of a majority of the outstanding shares of common stock
entitled to vote at the Annual Meeting, must be present in person or
represented by proxy before action may be taken at the Annual Meeting.
Each proxy returned to
the Company will be voted in accordance with the instructions indicated
thereon. The affirmative vote of the
holders of a majority of the shares of common stock present in person or
represented by proxy at the Annual Meeting and entitled to vote is required for
ratification and approval of (i) each of the nominees for director, (ii) the
2009 Plan, (iii) the amended Articles of Incorporation, (iv) the
appointment of Baker Tilly as independent registered public accounting firm for
fiscal 2009 and (v) the approval of any other matters to be considered at
the Annual Meeting. For purposes of the
vote on the proposals listed above or any other matters to be considered at the
Annual Meeting, abstentions will be counted as votes entitled to be cast on
these matters and will have the effect of a vote against such matters. If you hold your shares in street name and do
not provide voting instructions to your broker, they will be counted as present
at the meeting for the purpose of determining a quorum and may be voted on the
proposals listed above at the discretion of your broker.
Each stockholder who signs and returns a proxy card in
the form enclosed with this Proxy Statement may revoke the proxy at any time
prior to its use by giving notice of such revocation to our Secretary in
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writing, in open meeting
or by executing and delivering a new proxy card to our Secretary. Unless so revoked, the shares represented by
each proxy card will be voted at the Annual Meeting and at any adjournments
thereof. Presence at the Annual Meeting of a stockholder who has signed a proxy
does not alone revoke that proxy.
All shares entitled to vote and represented by
properly completed proxies received prior to this meeting and not revoked at
the meeting will be voted at the meeting in accordance with your
indications. If you return a signed
proxy card without indicating how your shares should be voted on a matter and
do not revoke your proxy, the shares represented by your proxy will be voted as
the Board of Directors recommends. If
any nominee should withdraw or otherwise become unavailable for reasons not
presently known, the proxies that would have otherwise been voted for such
nominee will be voted for such substitute nominee as may be selected by the
Board of Directors.
The Board of Directors
unanimously recommends that you vote FOR the election of four director
nominees named in this Proxy Statement, FOR the adoption of the 2009 Plan, FOR
the adoption of the amended Articles of Incorporation and FOR the
ratification of Baker Tilly as our independent registered public accounting
firm for fiscal 2009.
While the Board of Directors knows of no other matters
to be presented at the Annual Meeting or any adjournment thereof, all proxies
returned to the Company will be voted on any such matter in accordance with the
judgment of the proxy holders.
Voting
Procedures
You may either vote For all the nominees to
the Board of Directors or you may Withhold your vote for any nominee you
specify. For each of the other matters to be voted on, you may vote For or Against
or abstain from voting. The procedures for voting are fairly simple:
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may
vote in person at the Annual Meeting or vote by proxy using the enclosed proxy
card. Whether or not you plan to attend the meeting, we urge you to vote by
proxy to ensure your vote is counted. You may still attend the meeting and vote
in person even if you have already voted by proxy.
·
To vote in person, come to
the Annual Meeting and we will give you a ballot when you arrive.
·
To vote using the enclosed
proxy card, simply complete, sign and date the proxy card and return it
promptly in the envelope provided. If you return your signed proxy card to us
before the Annual Meeting, we will vote your shares as you direct.
Beneficial Owner: Shares Registered in the Name of a Broker
or Bank
If you are a beneficial owner of shares registered in the
name of your broker, bank or other agent, you should have received a voting
instruction form with these proxy materials from that organization rather than
from the Company. Simply complete and mail the voting instruction form as
instructed by your broker, bank or other agent to ensure that your vote is
counted. Alternatively, you may vote by telephone or over the Internet as
instructed by your broker, bank or other agent. To vote in person at the Annual
Meeting, you must obtain a legal proxy from your broker, bank or other agent.
Follow the instructions from your broker, bank or other agent included with
these proxy materials, or contact your broker, bank or other agent to request a
legal proxy form. You may also request a
legal proxy at www.proxyvote.com.
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Cost of
Proxy Distribution and Solicitation
Our Board of Directors has sent you this
Proxy Statement. The Company will bear
the cost of preparing, assembling and mailing the proxy statement, proxy card,
2008 Annual Report and other material that may be sent to the stockholders in
connection with this solicitation. Brokerage houses and other custodians,
nominees and fiduciaries may be requested to forward soliciting material to the
beneficial owners of stock, in which case they will be reimbursed by us for
their expenses in doing so. Proxies are being solicited primarily by mail, but,
in addition, our officers and regular employees may solicit proxies personally,
by telephone, by telegram or by special letter.
No additional compensation will be paid for such employee solicitation.
Annual
Report
An Annual Report of the Company setting forth
the Companys activities and containing financial statements of the Company for
the fiscal year ended December 31, 2008 accompanies this Notice of Annual
Meeting and Proxy Statement.
Stockholders may receive, without charge, a copy of the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 2008,
including financial statements schedules and amendments thereto, as filed with
the Securities and Exchange Commission (the SEC), by writing to: ProUroCare
Medical Inc., 6440 Flying Cloud Dr., Suite 101,
Eden Prairie, MN 55344, Attention: Chief Financial Officer, or by
calling the Company at (952) 476-9093.
CORPORATE
GOVERNANCE
Director Independence
Each of Messrs. Koenig, Rudelius and Smith qualifies as an independent
director, as such term is defined in Rule 4200(a)(15) of the NASDAQ
listing standards. As an executive
officer of the Company, Mr. Carlson does not qualify as an independent
director.
Attendance at Meetings
In addition to committee
meetings, during fiscal 2008, the Board held nine meetings. Each director attended more than 75 percent
of the meetings of the Board and its committees on which the director served. It is the Companys policy that all Board
members be in attendance at the Annual Meeting of Stockholders. All Board members were in attendance at the
2008 Annual Meeting.
Code of Business Conduct and
Ethics
We have adopted a Code of Business Conduct and a Code of Ethics that
apply to all of our directors, officers and employees, including our principal
executive officer, principal financial officer, principal accounting officer or
controller and persons performing similar functions. A current copy of each of
the Code of Business Conduct and the Code of Ethics is available on our website
at http://www.prourocare.com under the heading Investors and subheading Corporate
Governance, and we intend to disclose on this website any amendment to, or
waiver of, any provision of the Code of Business Conduct and the Code of Ethics
applicable to our directors or executive officers that would otherwise be
required to be disclosed under the SEC rules or, to the extent permitted,
the NASDAQ rules. A current copy of the Code of Business Conduct and the Code
of Ethics may also be obtained, without charge, upon written request directed
to us at: ProUroCare Medical Inc.,
6440
Flying Cloud Dr., Suite 101, Eden Prairie, MN 55344.
Board Committees
The Board of Directors has three standing
committees:
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·
The
Nominating and Governance Committee, the members of which are Robert Rudelius
(Chair) and David Koenig.
·
The
Compensation Committee, the members of which are David Koenig (Chair) and
Robert Rudelius.
·
The
Audit Committee, the members of which are Scott Smith (Chair) and David Koenig.
Each committee has a charter
governing their duties and obligations to the full Board and our stockholders
that was approved by our Board of Directors, a current copy of which is
available on our website at http://www.prourocare.com under the heading Investors
and subheading Corporate Governance. The members of each of these committees
qualify as independent directors.
Nominating and Governance
Committee
Our Nominating and Governance Committees responsibilities
include:
·
recommending a size and composition of the Board that
the Committee determines is best suited to fulfilling the Boards
responsibilities;
·
identifying individuals believed to be qualified to
become Board members in accordance with the nominating criteria set forth under
the caption Director Nominations and recommending to the Board the nominees
to stand for election as directors at the Annual Meeting of stockholders or, if
applicable, at a special meeting of stockholders;
·
reviewing and recommending to the Board the charters
of all Board committees with a view to comprehensive and effective committee
operations and to prevent conflicts among committees;
·
recommending to the Board a compensation and benefits
package that will attract and retain qualified directors;
·
providing oversight of the succession plan for our CEO
and recommending to the Board a successor chief executive officer when a
vacancy occurs;
·
evaluating stockholder proposals received by the
Company and making appropriate recommendations to the Board;
·
developing and recommending to the Board a set of
corporate governance guidelines applicable to the Company and providing ongoing
oversight of governance, with the objective of compliance with corporate
governance standards, policies and practices; and
·
reviewing and recommending to the Board with regard to
articles of incorporation, bylaws or stockholder rights plan issues or changes
in fundamental corporate charter provisions.
Our Nominating and Governance
Committee is authorized to retain advisors and consultants, and to compensate
them for their services.
Our Nominating and Governance
Committee met two times during 2008.
Compensation Committee
Our Compensation Committees
responsibilities include:
·
adopting an executive compensation strategy consistent
with the Companys plans and objectives and periodically considering the
competitiveness of the Companys executive compensation and other compensation
programs with respect to relevant industries and the business community
generally;
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·
reviewing and approving corporate goals and objectives
relevant to the CEOs compensation, evaluating the CEOs performance in light
of those goals and objectives and determining and approving the CEOs
compensation based on this evaluation. In determining the long-term incentive
component of the CEOs compensation, the Committee shall consider, among other
factors, the Companys performance and relative stockholder return, the value
of similar incentive awards to chief executive officers at comparable companies,
the awards given to the CEO in past years and any other relevant factors;
·
meeting with the Companys management and, if
appropriate, independent advisors to review current trends and practices in
executive compensation and reviewing disclosure requirements under various
securities rules and regulations;
·
overseeing regulatory compliance with respect to
compensation matters, including overseeing the Companys policies on
structuring compensation programs to preserve tax deductibility, and, as and
when required, establishing performance goals and certifying that performance
goals have been attained for purposes complying with federal tax regulations;
·
reviewing and establishing all compensation
arrangements between the Company and its executive officers (such arrangements
may include, but shall not be limited to, cash compensation, bonuses, stock
options, restricted stock awards, insurance, retirement, other benefits and
other perquisites); and
·
administering all stock plans (stock options,
restricted stock, stock purchase, etc.) and granting awards under such plans
consistent with each plans intended purpose.
As set forth in the Compensation Committee
charter, the Committee:
·
has the
authority to enga
g
e
independent
compensation consultants
and legal advisors when determined by the Committee to be necessary or
appropriate. The Committee did not engage a compensation consultant to assist
it with establishing executive compensation levels in 2008;
·
has the
authority to delegate its responsibilities as it may deem appropriate, to the
extent allowed under applicable law. The Committee generally does not delegate
its responsibilities to others; and
·
requests that
the
CEO
provide to the
Committee his recommendations relative to compensation of other executive
officers of the Company. The Committee meets in executive session to determine
the compensation of the CEO of the Company.
Our Compensation Committee met four times during 2008.
Audit Committee
Our Audit Committees responsibilities include:
·
appointing, approving the compensation of and
assessing the independence of our independent registered public accounting
firm;
·
overseeing the work of our independent registered
public accounting firm, including reviewing certain reports required to be made
by the independent registered public accounting firm;
·
overseeing the work of our internal auditor, including
approving the internal audit annual plan submitted by the internal auditor;
·
reviewing and discussing with management and the
independent registered public accounting firm our annual and quarterly
financial statements and related disclosures;
·
monitoring our internal control over financial
reporting, disclosure controls and procedures, code of business conduct and
code of ethics; and
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·
meeting independently with our internal auditing
staff, the independent registered public accounting firm and management.
Our Audit Committee is authorized to retain independent legal,
accounting and other advisors, and compensate them for their services.
The board of directors has determined that both members of the Audit
Committee, Mr. Smith and Mr. Koenig, are audit committee financial
experts as that term is defined in Item 407(d)(5) of Regulation S-K
promulgated under the Securities Exchange Act of 1934, as amended (the Exchange
Act). Mr. Smith
was an Audit
Partner for Arthur Andersen and is a Certified Public Accountant and a
Certified Management Accountant.
Mr. Koenigs relevant experience includes
his service as the Chief Financial Officer and director of Quadion Corporation,
and his past consulting experience, which involved his oversight and
supervision of the performance of business enterprises respecting the
preparation, audit and evaluation of financial statements. Moreover, the Board of Directors has
determined that each of the Audit Committee members is able to read and
understand fundamental financial statements and has past employment experience
in finance or accounting.
Our Audit Committee met five times during 2008.
Audit Committee Report
The
Audit Committee has reviewed and discussed the Companys audited financial
statements for the fiscal year ended December 31, 2008 with management and
with the Companys independent registered accounting firm, Baker Tilly. The
Audit Committee has discussed with Baker Tilly the matters required to be
discussed by Statement on Auditing Standards No. 61. The Audit Committee
has received the written disclosures and the letter from Baker Tilly required
by applicable requirements of the Public Company Accounting Oversight Board
regarding Baker Tillys communications with the Audit Committee concerning independence
and has discussed with Baker Tilly its independence. In addition to the
information provided by Baker Tilly, the Audit Committee considered the level
of non-audit services provided by Baker Tilly in determining that they were
independent.
Based
on the Audit Committees review of the audited financial statements and the
review and discussions described above, the Audit Committee recommended to the
Board of Directors that the audited financial statements for the fiscal year
ended December 31, 2008 be included in the Companys Annual Report on Form 10-K
for the year ended December 31, 2008 for filing with the SEC.
Submitted by the members
of the Audit Committee
:
Scott E. Smith (Chair)
David Koenig
Director
Nominations
The process
followed by our Nominating and Governance Committee to identify and evaluate
director candidates includes requests to members of our Board of Directors and
others for recommendations, meetings from time to time to evaluate biographical
information and background material relating to potential candidates and
interviews of selected candidates by members of our Nominating and Governance
Committee and our Board of Directors.
In considering
whether to recommend any particular candidate for inclusion in our Board of
Directors slate of recommended director nominees, our Nominating and
Governance Committee considers the criteria set forth in our Nominating and
Governance Committee Charter (available on our website as noted above). These
criteria include the candidates integrity, business acumen, knowledge of our
business and industry, age, experience, commitment to participate as a director
and conflicts of interest that would
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impair such candidates ability to act in the
interests of all stockholders. Our Nominating and Governance Committee does not
assign specific weights to particular criteria and no particular criterion is a
prerequisite for any prospective nominee. Our Nominating and Governance
Committee believes that the backgrounds and qualifications of our directors,
considered as a group, should provide a composite mix of experience, knowledge
and abilities that will allow our Board of Directors to fulfill its
responsibilities.
Stockholders may
recommend individuals to our Nominating and Governance Committee for
consideration as potential director candidates by submitting the name, together
with appropriate biographical information and background materials and a
statement as to whether the stockholder or group of stockholders making the
recommendation has beneficially owned more than 5 percent of our common stock
for at least a year as of the date the recommendation is made, to the
Nominating and Governance Committee, ProU
roCare
Medical Inc., 6440 Flying Cloud Dr., Suite 101, Eden Prairie, MN 55344.
Assuming that
appropriate biographical and background material has been provided on a timely
basis, our Nominating and Governance Committee will evaluate
stockholder-recommended candidates by following substantially the same process
and considering the same criteria, as it follows for candidates submitted by
others. If our Board of Directors decides to nominate a stockholder-recommended
candidate and recommends his or her election, then his or her name will be
included in our proxy card for the next Annual Meeting.
No candidates for
director nominations were submitted by stockholders in connection with the 2009
Annual Meeting.
Stockholder
Communications with Directors
Our Board has established several means for
stockholders and others to communicate with our Board of Directors. If a
stockholder has a concern regarding our financial statements, accounting
practices or internal controls, the concern should be submitted in writing to
the Chairperson of the Audit Committee, Mr. Smith, in care of our
Secretary at
6440 Flying Cloud Dr., Suite 101,
Eden Prairie, MN 55344
. If the concern relates to our governance
practices, business ethics or corporate conduct, the concern should be
submitted in writing to the Chairperson of the Nominating and Governance
Committee, Mr. Rudelius, in care of our Secretary at the address listed
above. If a stockholder is unsure as to which category the concern relates, the
stockholder may communicate it to any one of the independent directors in care
of our Secretary at the address listed above. All stockholder communications
will be forwarded to the applicable director(s).
Section 16(a) Beneficial
Ownership Reporting Compliance
The rules of the SEC
require our directors, executive officers and holders of more than 10 percent
of our common stock to file reports of stock ownership and changes in ownership
with the Securities and Exchange Commission.
Based on the Section 16 reports filed by our directors, executive
officers and James Davis, a holder of greater than 10 percent of our common
stock, and written representations of our directors, executive officers and Mr. Davis,
we believe there were no late or inaccurate filings for transactions occurring
during fiscal 2008, except as follows:
Name
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Number of Late Reports
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Number of Transactions
Reported Late
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David Koenig
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1
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1
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Robert Rudelius
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1
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1
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Scott Smith
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1
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1
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James Davis
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2
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2
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Certain Relationships and Related Transactions
Throughout 2008,
we rented executive offices within the offices of a former director, Mr. Alex
Nazarenko. Our rental cost for these
offices was approximately $2,129 per month, which is the market price for similar
office space in Minneapolis, Minnesota.
On April 3, 2008, we purchased from Profile, LLC certain patents
(the Profile Assets) pursuant to an asset purchase agreement. At the time of the transaction, Profile, LLC
was a beneficial owner more than five
percent of the Company. The purchase
price of the Profile Assets was $300,000.
A portion of the purchase price was satisfied by the issuance of a
$150,000 promissory note in favor of Profile, LLC (the Profile Note).
On April 3, 2008, in connection with our
purchase of the Profile Assets, we borrowed an aggregate of $112,500 pursuant
to three promissory notes each in the amount of $37,500. The promissory notes
were issued in favor of James Davis, William Reiling and the Phillips W. Smith
Family Trust. On September 12,
2008, these three promissory notes were amended to extend their due dates to
the earlier of seven days following the close of an underwritten public
offering or December 31, 2008, and to give the holders an option to
convert their notes into shares of our common stock at a conversion price equal
to 70 percent of the price of the Units sold in such offering.
On July 11, 2008, our directors
received and aggregate of 21,667 of shares of our common stock in lieu of cash
for $21,667 of unpaid directors fees accrued through June 30, 2008.
On July 11, 2008, we issued a total of 37,967 shares of our common stock to
our directors in recognition of the extraordinary amount of time and
effort they spent on our restructuring and refocusing efforts since January 2007. The shares were valued at $1.00 per share and
expensed on the date of issuance.
On September 16, 2008, Mr. Davis
agreed to purchase $100,000 of the put options pursuant to our Unit Put
Agreement. On September 24, 2008,
we closed on $50,000 of Mr. Davis put commitment, and issued a $47,500
convertible note and a warrant to acquire 10,000 shares of our common stock at
an exercise price of $1.00 per share. On October 28, 2008, we closed on
the remaining $50,000 of Mr. Davis put commitment, and issued a $47,500
convertible note and a warrant to acquire an additional 10,000 shares of our
common stock at an exercise price of $1.00 per share.
On September 25, 2008, we borrowed
$150,000 pursuant to a promissory note issued in favor of Mr. Davis and
used the proceeds to retire the $150,000 principal amount of the Profile Note.
As consideration for providing the loan, we issued an immediately exercisable,
five-year warrant to purchase 100,000 shares of our common stock at $1.50 per
share to Mr. Davis.
Security Ownership of Certain Beneficial Owners
and Management
The following table sets forth certain information
regarding beneficial ownership of our common stock as of June 24, 2009, by (i) each
person known by us to be the beneficial owner of more than five percent of our
outstanding common stock, (ii) each director
and nominee for election as
a director of the Company
,
(iii) each executive officer of the Company included in the
Summary Compensation Table (the Named Executive Officers)
and (iv) all executive officers and
directors as a group.
The number of
shares beneficially owned is determined under rules promulgated by the SEC
and the information is not necessarily indicative of beneficial ownership for
any other purpose. The definition of
beneficial ownership for proxy statement purposes includes shares over which a
person has sole or shared voting power or dispositive power, whether or not a
person has any economic interest in the shares. The definition also includes
shares that a person has a right to acquire currently or within 60 days of June 24,
9
2009
. Including those shares in the table
does not, however, constitute an admission that the named holder is a direct or
indirect beneficial owner of those shares.
Unless otherwise indicated, each person or entity named in the table has
sole voting power and investment power (or shares that power with that persons
spouse) with respect to all shares of common stock listed as owned by that
person or entity. Unless otherwise
indicated, the address of each of the following persons is
6440 Flying Cloud Dr., Suite 101, Eden Prairie, MN 55344.
Name
|
|
Shares
Beneficially Owned
|
|
Percent of Class
|
|
Richard C. Carlson(1)
|
|
110,850
|
|
1.1
|
|
David F. Koenig(2)
|
|
111,300
|
|
1.1
|
|
Robert J. Rudelius(3)
|
|
108,303
|
|
1.1
|
|
Scott E. Smith(4)
|
|
171,543
|
|
1.7
|
|
Richard B. Thon(5)
|
|
58,000
|
|
*
|
|
All directors and officers as a group (5
total)(6)
|
|
559,996
|
|
5.4
|
|
James Davis (7)(8)
|
|
2,955,549
|
|
26.8
|
|
William Reiling (9)(10)
|
|
509,985
|
|
5.1
|
|
*Less than one
percent.
(1)
Includes 850 shares held directly and options to
purchase up to 110,000 shares of common stock which are currently exercisable.
(2)
Includes 1,875 shares held by Clinical Network
Management Corp. and 26,572 shares held by Clinical Network, Inc. with
respect to each of which Mr. Koenig is an officer and minority owner. Also includes 48,853 shares of common stock
held directly and currently exercisable options to purchase up to 34,000 shares
of common stock.
(3)
Includes 54,317 shares held directly, warrants to
purchase 29,986 shares of common stock and options to purchase up to 24,000
shares of common stock.
(4)
Includes 95,068 shares held directly, warrants to
purchase 52,475 shares of common stock and currently exercisable options to
purchase up to 24,000 shares of common stock.
(5)
Includes options to purchase up to 58,000 shares of
common stock which are currently exercisable.
(6)
Includes Messrs. Carlson, Koenig, Rudelius, Smith
and Thon.
(7)
The address of Mr. Davis is 6446 Flying Cloud
Drive, Eden Prairie, MN 55344.
(8)
Shares beneficially owned includes the following
directly held shares and immediately exercisable warrants and convertible
notes: 1,719,377 shares of common stock and warrants to purchase 989,530 shares
of common stock. Shares beneficially
owned also includes the following shares and immediately exercisable warrants
held by Davis & Associates Inc., 401K PSP, of which Mr. Davis
has sole voting power: 74,964 shares of common stock and warrants to purchase
91,014 shares of common stock. Shares
beneficially owned also includes the following shares and immediately
exercisable warrants held by Davis & Associates Inc., of which Mr. Davis
has sole voting power: 37,482 shares of common stock and warrants to purchase
43,182 shares of common stock
.
(9)
The
address of Mr. Reiling is 200 University Avenue W., Suite 200, St.
Paul, MN 55103.
(10)
Shares beneficially owned
includes the following: 336,027 directly held shares and immediately
exercisable warrants to purchase 173,958 shares.
10
ELECTION OF DIRECTORS
(PROPOSAL ONE)
The Board of Directors currently consists of four directors each of whom has been nominated by the Board
of Directors for re-election by the stockholders. If re-elected, each nominee has consented to
serve as a director of the Company and to hold office until the next Annual
Meeting of Stockholders or until his or her successor is elected and shall have
qualified.
The Board of Directors recommends that you vote
FOR the election of the four nominated directors. Proxies will be
voted FOR the election of the four nominees unless otherwise specified.
If for any reason any nominee shall be unavailable for election to the
Board of Directors, the named proxies will vote for such other candidate or
candidates as may be nominated by the Board of Directors. The Board of Directors has no reason to
believe that any of the nominees will be unable to serve.
Director Nominees
Richard C. Carlson
,
Director since 2006 and Acting Chairman since 2007.
Mr. Carlson was hired as our Vice
President of Marketing and Sales in January 2005, and was promoted to
Chief Executive Officer in November 2006.
Prior to joining the Company, Mr. Carlson held several positions
with SurModics, Inc., a company that provides surface modification
solutions for medical device and biomedical applications, from 1998 to 2004,
including Vice President of Marketing and Sales and Vice President of Strategic
Planning. Age: 57
David F. Koenig, Director since 2004.
Mr. Koenig served as a director of our
predecessor company, ProUroCare Inc. (PUC), from 1999 until April 2004,
when he became a director of the Company upon the merger of PUC with an
acquisition subsidiary of the Company (the Merger). From 1996 to 2005, Mr. Koenig was the
Executive Vice President and Chief Operating Officer of Solar Plastics, Inc.,
a manufacturer of custom rotationally molded plastic parts. Mr. Koenig is Chairman of the Compensation
Committee and is a member of the Nominating and Governance Committee and the
Audit Committee. Age: 68.
Robert J. Rudelius
,
Director since 2007.
Since 2003, Mr. Rudelius
has been the Managing Director and CEO of Noble Ventures, LLC, a company he
founded, providing advising and consulting services to early-stage companies in
the information technology, renewable energy and loyalty marketing fields. Mr. Rudelius is also the Managing
Director and CEO of Noble Logistics, LLC, a holding company he founded in 2002
to create, acquire and grow a variety of businesses in the freight management,
logistics and information technology industries. Mr. Rudelius is the Chairman of the
Nominating and Governance Committee and is a member of the Compensation
Committee. Age: 53.
Scott E. Smith,
Director since 2006.
He is employed by F-2 Intelligence Group (F2),
a company engaged in providing critical insights to multinational corporations
and private equity clients on a broad range of strategic issues. From 2002 to 2005, Mr. Smith served as
F2s Director of Corporate Accounts, and is currently F2s Regional Director
for Private Equity. Mr. Smith is a
Certified Public Accountant and a Certified Management Accountant. Mr. Smith is Chairman of the Audit
Committee. Age: 53.
There are no
family relationships among our executive officers or directors.
Director Compensation
Effective July 1, 2008, our Board of
Directors established a policy that each of our non-employee directors receives
an annual cash payment of $10,000 for annual services to the Company, that the
chairpersons of our Compensation, Audit and Nominating and Governance
committees receive an additional
11
annual payment of $2,500 and that each committee member receives an
annual payment of $1,000 per committee. In addition, we have also agreed to
grant to all non-employee directors a one-time non-qualified stock option upon
election or appointment to the Board of Directors to purchase 3,000 shares of
our common stock at fair market value and, additionally, to grant options to
purchase 1,000 shares of our common stock at a fair market value to each
director upon their annual re-election to the Board. These director options
vest ratably over two years of service.
Prior to July 1, 2008, each of our
non-employee directors received an annual cash payment of $5,000 for services
to the Company and the chairpersons of our Compensation, Audit and Nominating
and Governance committees received an additional annual payment of $2,500. All
non-employee directors were granted a one-time non-qualified stock option upon
appointment to the Board of Directors to purchase 3,000 shares of our common
stock at fair market value. These director options vested ratably over two years
of service. The options granted to Mr. Nazarenko and Mr. Koenig have
a ten-year term, and to Mr. Smith and Mr. Rudelius have a seven-year
term.
All directors shall be reimbursed for travel
and other out-of-pocket expenses incurred in connection with attendance at
meetings of the Board of Directors and its committees.
The table below sets forth director
compensation earned during 2008:
Name
|
|
Fees
Earned
or Paid in
Cash
($)
|
|
Stock
Awards(5)
($)
|
|
Option
Awards(6)
($)
|
|
Total
($)
|
|
David Koenig(1)
|
|
|
|
$
|
21,000
|
|
$
|
710
|
|
$
|
21,710
|
|
Alexander Nazarenko(2)
|
|
|
|
9,842
|
|
|
|
9,842
|
|
Scott Smith(3)
|
|
|
|
20,000
|
|
4,398
|
|
24,398
|
|
Robert Rudelius(4)
|
|
|
|
19,875
|
|
4,310
|
|
24,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Chairman of the Compensation Committee as
of March 14, 2008. Prior to March 14, 2008, Mr. Koenig was
Chairman of the Nominating and Governance Committee.
(2)
Mr. Nazarenko resigned from the
Board of Directors on March 11, 2008. Mr. Nazarenko served as
Chairman of the Compensation Committee until that time.
(3)
Chairman of the Audit Committee.
(4)
Chairman of the Nominating and Governance
Committee as of March 14, 2008.
(5)
On July 11, 2008, the Company issued
a total of 12,500 shares of our common stock to our directors in lieu of cash
as payment of directors fees earned in the first half of 2008. In addition, a
total of 37,967 shares of our common stock were issued to our directors in
recognition of the extraordinary amount of time and effort they put forth on
the Companys restructuring and refocusing efforts since January 1, 2007.
Finally, 9,167 shares of common stock were issued to our directors in lieu of
cash as payment for directors fees earned in 2007 (not included in the 2008
compensation). On April 13, 2009,
we issued a total of 27,366 shares of our common stock to our directors in lieu
of cash as payment of directors fees earned in the second half of 2008. The dollar amount included in this column is
the amount recognized for financial statement reporting purposes with respect
to the fiscal year ended December 31, 2008 in accordance with Statement of
Financial Accounting Standards (SFAS) No. 123 (revised 2004), Share-Based
Payment (SFAS 123R).
(6)
Each outside director held options to
acquire 4,000 shares at December 31, 2008. Options awarded during the
fiscal year are valued in accordance with SFAS 123R. See Notes 1(j) and
12(h) to the Consolidated Financial Statements for the fiscal year ended December 31,
2008 included in Item 8 of our Annual Report on Form 10-K for the fiscal
year ended December 31, 2008 for the material terms of stock option
grants.
12
Executive
Compensation and Other Information
Current Executive Officers:
Richard C. Carlson, Chief Executive Officer
. See Election of Directors (Proposal One)
above.
Richard B. Thon
,
Chief
Financial Officer.
Mr. Thon
has been our Chief Financial Officer since 2004. Age: 53.
There are no
family relationships among our executive officers or directors.
The following table sets forth the
compensation earned for services rendered in all capacities by our Chief
Executive Officer and Chief Financial Officer. There were no other executive
officers or other individuals who earned more than $100,000 during 2008. The
individuals named in the table will be hereinafter referred to as the Named
Executive Officers.
Summary Compensation Table
Name and
Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)(3)
|
|
Option
Awards
($)(4)
|
|
All Other
Compensation
($)(5)
|
|
Total
($)
|
|
Richard Carlson(1)
|
|
2008
|
|
$
|
150,000
|
|
$
|
|
|
$
|
25,451
|
|
$
|
2,103
|
|
$
|
177,554
|
|
Chief Executive
Officer and Acting Chairman of the Board
|
|
2007
|
|
150,000
|
|
|
|
120,898
|
|
|
|
270,898
|
|
Richard Thon(2)
|
|
2008
|
|
136,375
|
|
|
|
10,873
|
|
4,825
|
|
152,073
|
|
Chief Financial Officer
|
|
2007
|
|
140,000
|
|
|
|
65,348
|
|
1,200
|
|
206,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
All compensation Mr. Carlson earned
is related to his duties as an officer. Due to funding limitations, $124,335 of
Mr. Carlsons salary earned in 2006, 2007 and 2008 was unpaid as of December 31,
2008. See Executive CompensationEmployment Agreements for the terms of Mr. Carlsons
current employment arrangements.
(2)
Due to funding limitations, $144,818 of Mr. Thons
salary and bonus earned in 2006, 2007 and 2008 was unpaid as of December 31,
2008. See Executive CompensationEmployment Agreements for the terms of Mr. Thons
current employment arrangements.
(3)
Mr. Carlson and Mr. Thon each
earned a $20,000 bonus upon the closing of the Companys 2009 public
offering. This amount was accrued and
had not been paid out as of the date of this Proxy Statement.
(4)
Option awards are valued in accordance
with SFAS 123R. See Notes 1(j) and 10(h) to the
Consolidated Financial Statements for the fiscal year ended December 31,
2007 included in Item 8 of our Annual Report of Form 10-K for the fiscal
year ended December 31, 2007 and Notes 1(f) and 7(b) to the
Consolidated Financial Statements for the fiscal year ended December 31,
2008 included in Item 8 of our Annual Report on Form 10-K for the fiscal
year ended December 31, 2008 for the material terms of stock option
grants.
(5)
Other compensation represents insurance
premiums paid by us with respect to term life insurance and long-term care
polices for the benefit of the executive. There is no cash surrender value
associated with the policies.
13
Outstanding Equity Awards
at December 31, 2008
No stock options or stock-appreciation rights
were exercised during fiscal 2008, and no stock-appreciation rights were
outstanding at the end of such fiscal year. The table below sets forth outstanding
but unexercised options of our Named Executive Officers as of December 31,
2008.
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#
Exercisable)(1)
|
|
Number of
Securities
Underlying
Unexercised
Options
(#
Unexercisable)(1)
|
|
Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
|
|
Option Expiration
Date
|
|
Richard Carlson
|
|
|
|
|
|
5,000
|
(2)
|
$
|
7.50
|
|
March 1, 2011
|
|
|
|
10,000
|
|
|
|
|
|
$
|
5.00
|
|
February 1, 2017
|
|
|
|
10,000
|
(3)
|
60,000
|
(3)
|
|
|
$
|
1.00
|
|
July 11, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard Thon
|
|
|
|
|
|
5,000
|
(2)
|
$
|
7.50
|
|
March 1, 2011
|
|
|
|
3,000
|
|
|
|
|
|
$
|
11.33
|
|
April 18, 2012
|
|
|
|
10,000
|
(4)
|
25,000
|
(4)
|
|
|
$
|
1.00
|
|
July 11, 2015
|
|
(1)
See Notes 1(j) and 12(h) to
the Consolidated Financial Statements included in Item 8 in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2008 for the
material terms of stock option grants.
(2)
These awards vest upon the Company
securing approval from the Food and Drug Administration (FDA) of its
ProUroScan System.
(3)
On July 11, 2008, the Company issued
incentive stock options to acquire 70,000 shares of its common stock to Mr. Carlson.
The options are exercisable for a period of seven years at an exercise price of
$1.00 per share. Of the options, 10,000 shares vest immediately and 20,000
shares will vest on July 1 of each of 2009, 2010 and 2011. At the same
time, Mr. Carlson agreed to cancel existing, fully-vested stock options to
acquire 15,000 shares of common stock at an exercise price of $23.50 per share.
(4)
On July 11, 2008, the Company issued
incentive stock options to acquire 35,000 shares of its common stock to Mr. Thon.
The options are exercisable for a period of seven years at an exercise price of
$1.00 per share. Of the options, 10,000 shares vest immediately and 8,333
shares will vest on July 1 of each 2009, 2010 and 2011. At the same time, Mr. Thon
agreed to cancel existing, fully-vested stock options to acquire 20,000 shares
of common stock at an exercise price of $25.00 per share.
Employment Agreements and
Other Executive Compensation Matters
On July 16, 2008, we entered into an
employment agreement with Mr. Carlson, our Chief Executive Officer. The
agreement provides for a minimum annual salary of $150,000, a cash incentive
bonus potential of up to 40 percent of Mr. Carlsons base pay and
eligibility to participate in an annual grant of options to purchase shares of
common stock, as determined by our Board of Directors. The agreement provides
for severance payments if Mr. Carlsons employment is terminated by the
Company without cause or if Mr. Carlson terminates the agreement for good
reason. The severance payments includes
six months of base salary plus one month of base salary for each year of
service (up to a maximum of 12 months of base salary), payment of earned
bonuses, continued payment of existing health and life insurance benefits for a
period of six months and immediate vesting of all unvested stock options then
held by Mr. Carlson. In addition, within a one-year period following a change
in control of the Company, upon termination without cause, unacceptable
demotion or reduction in responsibilities or a relocation of more than 100
miles, Mr. Carlson will receive as severance, six months of base salary
plus one month of base salary for each year of service (up to a maximum of
12 months of base salary) and immediate vesting of all unvested stock
options then held by Mr. Carlson. The agreement prohibits Mr. Carlson
from directly or indirectly participating in the
14
ownership, management, operation or control of a competitive business
for a period of one year following termination of his employment. The agreement
will extend through December 31, 2009.
On July 1, 2008, we entered into an
employment agreement with Mr. Thon, our Chief Financial Officer that
expired on June 30, 2009. The
parties have indicated their intention to enter into a new employment agreement
under substantially similar terms in the second half of 2009. The expired 2008 agreement provided for a
minimum annual salary of $140,000, a cash incentive bonus potential of up to
30 percent of Mr. Thons base pay and eligibility to participate in
an annual grant of options to purchase shares of common stock, as determined by
our Board of Directors. The agreement provided for severance payments if Mr. Thons
employment is terminated by the Company without cause or if Mr. Thon
terminates the agreement for good reason.
The severance payments include four months of base salary plus one month
of base salary for each year of service (up to a maximum of nine months of base
salary), payment of earned bonuses, continued payment of existing health and
life insurance benefits for a period of four months and immediate vesting of
all unvested stock options then held by Mr. Thon. In addition, within a
one-year period following a change in control of the Company, upon
termination without cause, unacceptable demotion or reduction in
responsibilities or a relocation of more than 100 miles, Mr. Thon was to
receive as severance, six months of base salary plus one month of base salary
for each year of service (up to a maximum of 12 months of base salary),
and immediate vesting of all unvested stock options then held by Mr. Thon.
The agreement prohibited Mr. Thon from directly or indirectly
participating in the ownership, management, operation or control of a
competitive business for a period of one year following termination of his
employment.
From June 2006 through December 2007,
the Company deferred payment of the majority of our executive teams
compensation. As of May 31, 2009,
approximately $95,000 of our executive teams compensation from this period had
not been paid, and was recorded as an accrued liability.
2009 STOCK OPTION PLAN
(PROPOSAL TWO)
The Compensation Committee recommended, and the Board of Directors
adopted, subject to stockholder approval, the ProUroCare Medical Inc. 2009
Stock Option Plan (the 2009 Plan). The
purpose of the 2009 Plan is to promote the interests of the Company and our
stockholders by aiding us in attracting and retaining employees, officers,
consultants and directors who we expect will contribute to our success and to
enable these individuals to participate in our long-term success and growth by
giving them a proprietary interest in the Company.
The 2009 Plan authorizes the grant of stock options and other forms of
stock-based compensation. The Board of Directors believes that stock options
have been, and that stock options and other forms of stock-based compensation
will be, a very important factor in attracting and retaining experienced and
talented employees and directors who can contribute significantly to the
management, growth and profitability of our business. Additionally, the Board
of Directors believes that stock-based compensation aligns the interests of our
management and directors with the interests of our stockholders. The
availability of stock-based compensation not only increases employees focus on
the creation of stockholder value, but also enhances employee retention and
generally provides increased motivation for our employees to contribute to the
future success of the Company.
We currently award stock options under the ProUroCare Medical Inc. 2002
Stock Plan (the 2002 Plan) and the ProUroCare Medical Inc. 2004 Stock Option
Plan (the 2004 Plan). As of May 31,
2009, an aggregate of 67,000 shares remained available for future issuance
under the 2002 Plan and the 2004 Plan. The 2009 Plan will not impact the 2002
Plan or the 2004 Plan.
15
The following is a summary of the material terms of the 2009 Plan and
is qualified in its entirety by reference to the 2009 Plan. A copy of the 2009
Plan is attached as Appendix A to this Proxy Statement.
2009 Plan Summary
Purpose.
The purpose of the 2009 Plan is to
increase shareholder value and to advance the interests of the Company by
furnishing a variety of economic incentives (the Incentives) designed to
attract, retain and motivate employees, directors and consultants.
Administration
.
The 2009 Plan shall be
administered by a committee of the Companys board of directors (the Committee). The Committee shall have complete discretion
and authority to determine all provisions of all Incentives awarded under the
2009 Plan (consistent with the terms of the 2009 Plan), interpret the 2009
Plan, and make any other determination which it believes necessary and
advisable for the proper administration of the 2009 Plan. The Committees decisions and matters
relating to the 2009 Plan shall be final and conclusive for the Company and its
participants. The Committee will also
have the authority under the 2009 Plan to amend or modify the terms of any
outstanding Incentives in any manner;
provided, however
,
that any such amended or modified terms are permitted by the 2009 Plan as then
in effect, and any recipient of an Incentive adversely affected by such amended
or modified terms has consented to such amendment or modification. No amendment or modification to an Incentive,
however, whether pursuant to Section 2 or any other provisions of the 2009
Plan, will be deemed to be a re-grant of such Incentive for purposes of the
2009 Plan.
Eligible participants.
Employees of the
Company or its subsidiaries, (including officers and employees of the Company
or its subsidiaries), directors and consultants, advisors or other independent
contractors who provide services to the Company or its subsidiaries, including
members of any advisory board, shall become eligible to receive Incentives
under the Plan when designated by the Committee. As of May 31, 2009, seven employees,
directors or other independent contractors were eligible to be selected by the
Committee to receive awards under the 2009 Plan.
Shares Eligible for Awards.
The number of
shares authorized for issuance under the 2009 Plan is 1,200,000, subject to
adjustment in the event of stock splits, recapitalization or other similar
events affecting the common stock. Shares of common stock to be issued upon the
exercise of options may be either original issue or treasury shares. Shares of
common stock covered by options which terminate without being exercised will
again be available for option grants.
Accounting for Awards
. Shares of common stock issued under the 2009
Plan or that are currently subject to outstanding Incentives will be applied to
reduce the maximum number of shares of common stock remaining available for
issuance under the Plan.
To the extent that cash in
lieu of shares of common stock is delivered upon the exercise of an SAR, the
Company shall be deemed, for purposes of applying the limitation on the number
of shares, to have issued the greater of the number of shares of common stock
which it was entitled to issue upon such exercise or upon the exercise of any
related option. In the event that a
stock option or SAR granted hereunder expires or is terminated or canceled
unexercised or unvested as to any shares of common stock, such shares may again
be issued under the 2009 Plan either pursuant to stock options, SARs or
otherwise. In the event that shares of
common stock are issued hereunder as restricted stock or pursuant to a stock
award and thereafter are forfeited or reacquired by the Company pursuant to
rights reserved upon issuance thereof, such forfeited and reacquired shares may
again be issued under the Plan, either as restricted stock, pursuant to stock
awards or otherwise. The Committee may
also determine to cancel, and agree to the cancellation of, stock options in order
to make a participant eligible for the grant of a stock option at a lower price
than the option to be canceled.
16
Types of Incentives.
Incentives under the Plan may be granted
in any combination of the following forms:
·
incentive stock options and non-qualified stock options;
·
stock-appreciation rights (SARs);
·
stock awards;
·
restricted stock; and
·
performance shares.
Awards may be granted alone,
in addition to, in combination with or in substitution for, any other award
granted under the 2009 Plan or any other compensation plan. Awards can be
granted for no cash consideration or for any cash or other consideration as may
be determined by the Committee or as required by applicable law. Awards may
provide that upon the grant or exercise thereof, the holder will receive cash,
shares of our common stock, other securities or property, or any combination of
these in a single payment, installments or on a deferred basis. The exercise
price per share under any stock option and the grant price of any SAR may not
be less than the fair market value of our common stock on the date of grant of
such option or SAR. Determinations of fair market value under the 2009 Plan
will be made in accordance with methods and procedures established by the
Committee. The term of awards will be set by the Committee, but may not be
longer than 10 years and one day from the date of grant. Awards will be
adjusted by the Committee in the case of a stock dividend or other
distribution, recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of shares, issuance of warrants or other rights or other
similar corporate transaction or event that affects shares of our common stock
in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be provided under the 2009 Plan.
Stock Options
The holder of
an option will be entitled to purchase a number of shares of our common stock
at a specified exercise price during a specified time period, all as determined
by the Committee. The 2009 Plan provides that the Committee may permit exercise
of an option by a variety of methods, including payment in cash or shares of
common stock or a combination of cash and shares of common stock, or a same day
sale through a brokerage firm in accordance with regulations of the Federal
Reserve Board.
Stock Appreciation Rights.
The holder of an SAR is entitled to receive the excess of the fair
market value (calculated as of the exercise date) of a specified number of
shares of our common stock over the grant price of the SAR. SARs vest and
become exercisable in accordance with a vesting schedule established by the
Committee.
Restricted Stock.
The holder of restricted stock will own shares of our common stock
subject to restrictions imposed by the Committee (including, for example,
restrictions on the transfer ) for a specified time period determined by the
Committee. If the participants
employment or service as a director terminates during the vesting period, the
restricted stock will be forfeited, unless the Committee determines that it
would be in our best interest to waive the remaining restrictions.
Performance Awards.
A performance award may be payable in shares of common stock and will
be conditioned solely upon the achievement of one or more objective performance
goals established by the Committee. The Committee must determine the length of
the performance period, establish the performance goals for the performance
period and determine the amounts of the performance awards for each
participant. If the participants
employment or service as a director terminates during the vesting period for
any reason other than retirement, death, or disability prior to achievement of
the performance objectives, the participants rights will expire and terminate
unless otherwise determined by the Committee.
If the participants employment or service as a director terminates
during the vesting period by reason of retirement, death, or disability prior
to achievement of the performance objectives, the Committee in its discretion
may determine what portion, if any, of the performance shares should be paid to
the participant.
17
Stock Awards.
The Committee may grant unrestricted shares of our common stock,
subject to terms and conditions determined by the Committee and the limitations
in the 2009 Plan.
Transferability of Awards.
No incentive
stock option, SAR, restricted stock or performance award may be transferred,
pledged or assigned by the holder except, in the event of the holders death,
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act.
Incentive stock options transferred (except as permitted in the
preceding sentence) will continue to be outstanding for purposes of the 2009
Plan but will thereafter be deemed to be a non-qualified stock option. Non-qualified stock options may be
transferred by the holder thereof only to such holders spouse, children,
grandchildren or parents. During a
participants lifetime, a stock option may be exercised only by him or her, by
his or her guardian or legal representative or by permitted transferees.
Effect
of Termination of Employment or Other Relationship.
In
the event that a participant ceases to be an employee of or consultant to the
Company, or the participants other service with the Company is terminated, for
any reason, including death, any Incentives may be exercised or shall expire at
such times as may be determined by the Committee in its sole discretion in the
agreement evidencing an Incentive. Upon
a participants termination of employment or other service, the Committee may,
in its sole discretion (which may be exercised at any time on or after the date
of grant, including following such termination), cause options and SARs to
become or continue to become exercisable and/or remain exercisable following
termination and restricted stock awards, performance shares and stock awards
then held by such participant to vest and/or continue to vest or become free of
transfer restrictions following termination in the manner determined by the
Committee. No option or SAR may remain exercisable or continue to vest beyond
the earlier of (i) the latest date upon which the Incentive could have
expired by its original terms, and (ii) the tenth anniversary of the
original date of grant. Any incentive
stock option that remains unexercised more than one year following termination
of employment by reason of death or disability or more than three months following
termination for any reason other than death or disability will thereafter be
deemed to be a non-qualified stock option.
Maximum Award.
The maximum
number of shares that may be covered by options granted to any individual
during any calendar year will be 200,000. To the extent that the aggregate fair
market value (as of grant date) of common stock with respect to which incentive
stock options are exercisable for the first time during any calendar year by an
individual exceeds $100,000 or such other limit as may be required by the Code,
options which exceed such limit will be treated as non-qualified options.
Change of Control.
In the event of
a change of control of the Company as defined in the 2009 Plan, all unvested
options will fully vest, unless otherwise limited by the Committee at the time
of grant.
Duration, Amendment and Termination.
Unless
discontinued or terminated by the Board of Directors, the 2009 Plan will expire
on the tenth anniversary of the date it is approved by the shareholders of the
Company. No awards may be made after that date. However, unless otherwise
expressly provided in an applicable award agreement, any award granted under
the 2009 Plan prior to expiration may extend beyond the expiration of the 2009
Plan through the awards normal expiration date.
The Board may amend, suspend or discontinue
the Plan at any time; provided, however, that no amendments to the Plan will be
effective without approval of the shareholders of the Company if shareholder
approval of the amendment is then required pursuant to Section 422 of the
Code or the rules of any stock exchange or Nasdaq or similar regulatory
body. No termination, suspension or
amendment of the Plan may adversely affect any outstanding Incentive without
the consent of the affected participant;
provided, however
,
that this sentence will not impair the right of the Committee to take whatever
action it deems appropriate.
18
New Plan Benefits
.
With the exception of the
awards described in the table and accompanying footnotes below, the Committee
in its sole discretion will determine the number and types of awards that will
be granted under the 2009 Plan. Thus, it is not possible to determine the
benefits that will be received by eligible participants if the 2009 Plan is
approved by our stockholders. The average of the bid and ask price of a share
of our common stock, as reported on the OTCBB on June 19, 2009, was $0.76.
The following table shows
the number of shares issued to participants under the 2009 Plan subject to
approval by our stockholders:
ProUroCare Medical Inc. 2009
Stock Option Plan
Name and Position
|
|
Stock
Options Granted
|
|
Richard Carlson(1)
Chief Executive Officer
|
|
100,000
|
|
Richard Thon(1)
Chief Financial Officer
|
|
45,000
|
|
Executive Group
|
|
145,000
|
|
|
|
|
|
Non-Executive Director Group(2)
|
|
70,000
|
|
(1)
Options to
purchase shares of our common stock were awarded on March 3, 2009, subject
to stockholder approval of the 2009 Plan.
(2)
Options to
purchase 30,000, 20,000 and 20,000 shares of our common stock were awarded to Mr. Koenig,
Mr. Rudelius and Mr. Smith on March 3, 2009, subject to
stockholder approval of the 2009 Plan.
Federal Income
Tax Consequences.
Grant of Options and SARs.
The grant of a
stock option or SAR is not expected to result in any taxable income for the
recipient.
Exercise of Options and
SARs.
Upon exercising a non-qualified stock option, the
optionee must recognize ordinary income equal to the excess of the fair market
value of the shares of our common stock acquired on the date of exercise over
the exercise price, and we will generally be entitled at that time to an income
tax deduction for the same amount. The holder of an incentive stock option
generally will have no taxable income upon exercising the option (except that
an alternative minimum tax liability may arise), and we will not be entitled to
an income tax deduction. Upon exercising a SAR, the amount of any cash received
and the fair market value on the exercise date of any shares of our common
stock received are taxable to the recipient as ordinary income and generally
deductible by us.
Disposition of Shares
Acquired Upon Exercise of Options and SARs.
The tax consequence upon a
disposition of shares acquired through the exercise of an option or SAR will
depend on how long the shares have been held and whether the shares were
acquired by exercising an incentive stock option or by exercising a
non-qualified stock option or SAR. Generally, there will be no tax consequence
to us in connection with the disposition of shares acquired under an option or
SAR, except that we may be entitled to an income tax deduction in the case of
the disposition of shares acquired under an incentive stock option before the
applicable incentive stock option holding periods set forth in the Code have
been satisfied.
Awards Other than Options
and SARs.
As to other awards granted under the 2009 Plan that
are payable either in cash or shares of our common stock that are either
transferable or not subject to substantial risk of forfeiture, the holder of
the award must recognize ordinary income equal to (a) the amount of cash
received or, as applicable, (b) the excess of (i) the fair market
value of the shares received (determined as of the date of receipt) over (ii) the
amount (if any) paid for the shares by the holder of the award. We will
generally be entitled at that time to an income tax deduction for the same
amount.
19
As to an award that is
payable in shares of our common stock that are restricted from transfer and
subject to substantial risk of forfeiture, unless a special election is made by
the holder of the award under the Code, the holder must recognize ordinary
income equal to the excess of (i) the fair market value of the shares
received (determined as of the first time the shares become transferable or not
subject to substantial risk of forfeiture, whichever occurs earlier) over (ii) the
amount (if any) paid for the shares by the holder of the award. We will
generally be entitled at that time to an income tax deduction for the same
amount.
Income Tax Deduction.
Subject to the
usual rules concerning reasonable compensation, including our obligation
to withhold or otherwise collect certain income and payroll taxes, and assuming
that, as expected, stock options, SARs and certain other performance awards
paid under the 2009 Plan are qualified performance-based compensation within
the meaning of Section 162(m) of the Code, we will generally be
entitled to a corresponding income tax deduction at the time a participant
recognizes ordinary income from awards made under the 2009 Plan.
Special Rules for
Executive Officers and Directors Subject to Section 16 of the Exchange
Act.
Special rules may apply to individuals subject
to Section 16 of the Exchange Act. In particular, unless a special
election is made pursuant to the Internal Revenue Code, shares received through
the exercise of a stock option or SAR may be treated as restricted as to
transferability and subject to a substantial risk of forfeiture for a period of
up to six months after the date of exercise. Accordingly, the amount of any
ordinary income recognized and the amount of our income tax deduction will be
determined as of the end of that period.
Delivery of Shares for Tax
Obligation.
Under the 2009 Plan, the Committee may permit
participants receiving or exercising awards, subject to the discretion of the
Committee and upon such terms and conditions as it may impose, to deliver
shares of our common stock (either shares received upon the receipt or exercise
of the award or shares previously owned by the participant) to us to satisfy
federal, state or local tax obligations.
Section 409A of the Code.
The Committee will
administer and interpret the 2009 Plan and all award agreements in a manner
consistent with the intent to satisfy the requirements of Section 409A of
the Code to avoid any adverse tax results thereunder to a holder of an award.
If any provision of the 2009 Plan or any award agreement would result in such
adverse consequences, the Committee may amend that provision or take other
necessary action to avoid any adverse tax results and no such action will be
deemed to impair or otherwise adversely affect the rights of any holder of an
award under the 2009 Plan.
Securities
Authorized for Issuance under Equity Compensation Plans
as of Last Fiscal Year (December 31, 2008)
|
|
Number
of Securities to
be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
|
|
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
Number
of Securities
Remaining Available for
Issuance Under Equity
Compensation Plans
(excluding securities
reflected in column (a))
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved by stockholders
(1)
|
|
233,000
|
|
$
|
7.73
|
|
67,000
|
|
Equity compensation plans not approved by
stockholders (2)
|
|
611,514
|
|
$
|
3.98
|
|
|
|
Total
|
|
854,514
|
|
$
|
5.02
|
|
67,000
|
|
(1)
Includes shares of our common stock
issuable under options granted under our 2002 Plan and 2004 Plan.
(2)
Consists of warrants issued to vendors,
consultants and lenders and loan guarantors.
20
The Board of Directors recommends that you vote FOR the approval of the
2009 Plan. Proxies will be voted FOR
approval unless a contrary choice is specified.
ADOPTION OF AMENDMENTS TO
ARTICLES OF INCORPORATION
(PROPOSAL THREE)
The Board of
Directors has approved, and recommends that the stockholders approve,
amendments to, and a restatement of, our Articles of Incorporation. On June 25, 2009, the Board of Directors
authorized the amendment and restatement of our Articles of Incorporation
to: (i) specify a purpose for the
Company; (ii) provide that the Board of Directors has the exclusive power
to adopt, amend and repeal our bylaws; (iii) include provisions limiting
the personal liability of our directors and requiring the maximum
indemnification available under law for our officers and directors.
If our
stockholders approve the proposed amendments, the Amended and Restated Articles
of Incorporation will become effective upon filing with the Secretary of State
of the State of Nevada. A copy of the
Amended and Restated Articles of Incorporation reflecting the adoption of the
proposed amendments is attached as Appendix B to this Proxy Statement.
We have outlined
below the purpose and effect of each of the proposed amendments in turn.
Specifying a Purpose for the
Company
The Company
desires to specify that the Company has those broad purposes that corporations
organized under the laws of the State of Nevada permit. This amendment will have no practical effect
on our stockholders, but makes clear that the Company does not have enumerated
purposes, but instead has those broad purposes permitted under the law.
The proposed
amendment reads as follows:
3.
Purposes
. The purpose of the corporation is to engage
in any lawful act or activity for which corporations may be organized under the
laws of the State of Nevada as they may be amended from time to time.
Adoption, Amendment and Repeal of
our Bylaws by the Board of Directors
Allowing the Board
of Directors the exclusive power to adopt, amend and repeal our bylaws will
make it simpler and more efficient for the Company to make certain changes to
the bylaws. For instance, the Board of
Directors will be permitted to fix classifications, qualifications or terms of
office for the directors, without stockholder approval. This amendment will allow the Board of
Directors to have sole control over our bylaws.
The proposed
amendment regarding our bylaws reads as follows:
5.
Bylaws
. The power to adopt, amend or repeal bylaws of
the corporation is exclusively granted to the Board of Directors.
21
Limiting the Personal Liability
of our Directors and Requiring the Maximum Indemnification Available under Law
for our Officers and Directors
In order to
attract and retain directors, the Board of Directors has determined that it is
in the best interest of the Company to assure directors that they will not be
held personally liable to the Company or its stockholders for certain breaches
of fiduciary duty.
Similarly, in the
opinion of the Board of Directors, in order to remain competitive in attracting
the best officers and directors to the Company, it is necessary that the
Company provide protections for such officers and directors who, in connection
with performing their duties for the Company, become subject to actions, suits
or proceedings. The Board of Directors
believes that the officers and directors should be provided with the maximum
indemnification provided under law.
The proposed
amendment limiting personal liability for directors and requiring maximum
indemnification available under law for our officers and directors reads as
follows:
6.
Limitation of Directors
Liability; Indemnification
. The
personal liability of a director of the corporation to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
shall be eliminated to the fullest extent permitted by law, as the same exists
or may hereafter be amended. The
corporation shall indemnify (and advance expenses to) its directors and
officers to the fullest extent permitted by law, as the same exists or may
hereafter be amended. Neither the amendment,
modification or repeal of this Article nor the adoption of any provision
in these articles of incorporation inconsistent with this Article shall
adversely affect any right or protection of a director or officer of the
corporation with respect to any act or omission that occurred prior to the time
of such amendment, modification, repeal or adoption.
The Board
of Directors recommends that you vote FOR the adoption of the proposed
amendments to the Articles of Incorporation.
Proxies will be voted FOR adoption unless a contrary choice is
specified.
RATIFICATION
OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(PROPOSAL
FOUR)
Our Board of Directors and management are committed to the quality,
integrity and transparency of our financial reports. In accordance with the
duties set forth in its written charter, the Audit Committee of our Board of
Directors has appointed Baker Tilly as
our independent registered public accounting firm for
the 2009 fiscal year. A
lthough not legally required to do so, the Audit
Committee and the full Board of Directors wishes to submit the appointment of
Baker Tilly for stockholder ratification at the Annual Meeting. Representatives
of Baker Tilly are expected to be present at the Annual Meeting to answer your
questions and to make a statement if they desire to do so.
If the stockholders fail to ratify the appointment of Baker Tilly, the
Audit Committee shall meet and may reconsider its selection, but it is not
legally required to do so. Notwithstanding the proposed ratification of the
appointment of Baker Tilly by the stockholders, the Audit Committee, in its
discretion, may direct the appointment
of a new independent registered public accounting firm at
any time during
the year without notice to, or the consent of, the stockholders, if the Audit
Committee determines that such a change would be in our best interests and the
best interests of our stockholders.
The Board of Directors recommends that you vote FOR ratification of the
appointment of Baker Tilly as our independent
registered public accounting firm
for the fiscal year ending December 31,
2009. Proxies will be voted FOR
ratifying this appointment unless a contrary choice is specified.
22
Relationship with Independent
Registered Public Accounting Firm
Baker Tilly has acted as the
Companys independent
registered public accounting firm
since 2004 and
has been selected by the Audit Committee to serve in the same capacity for
fiscal 2009.
Fees of Independent Public Accountants
The following is an explanation of the fees billed to the Company by
Baker Tilly for professional services rendered for the fiscal years ended December 31,
2008 and 2007, which totaled $128,561 and $90,678, respectively.
Audit Fees.
Audit fees consist of fees
billed by Baker Tilly for
professional services rendered for the audit of our consolidated financial
statements and review of the interim consolidated financial statements included
in quarterly reports. Audit fees were $82,471
and $77,103 for the years ended December 31, 2008 and 2007, respectively.
Audit-related Fees.
Audit related fees consist
of fees billed by Baker Tilly
for professional services rendered for the review of an SEC comment letter.
Audit-related fees were $0 and $3,750 for the years ended December 31,
2008 and 2007, respectively.
Tax Fees.
Tax fees consist of fees billed by Baker Tilly for professional
services for tax compliance, tax advice and tax planning. Tax fees were $1,300 and $0 for the years
ended December 31, 2008 and 2007, respectively.
All Other Fees.
Other fees consist of fees billed by Baker Tilly for professional
services rendered for the review of private placement memorandums and
registration statement filings on Form S-1 and Form S-8. Other fees were $44,790 and $9,825 for the
years ended December 31, 2008 and 2007, respectively.
Policy on Audit Committee
Pre-Approval of Audit Services and Permissible Non-Audit Services of
Independent Registered Public Accounting Firm
The Audit Committee is responsible for
appointing, setting compensation for and overseeing the work of our independent
registered public accounting firm. The
Audit Committee has established a policy for pre-approving the services
provided by our independent registered public accounting firm in accordance
with the auditor independence rules of the SEC. This policy requires the review and
pre-approval by the Audit Committee of all audit and permissible non-audit
services provided by our independent registered public accounting firm and an
annual review of the financial plan for audit fees.
To ensure that auditor independence is
maintained, the Audit Committee annually pre-approves the audit services to be
provided by our independent registered public accounting firm and the related
estimated fees for such services, as well as the nature and extent of specific
types of audit related, tax and other non-audit services to be provided by our
independent registered public accounting firm.
As the need arises, other specific permitted
services are pre-approved on a case-by-case basis during the year. The Audit Committee has delegated to each of
its members pre-approval authority between meetings of the Audit Committee. The Audit Committee will not delegate to
management the pre-approval of services to be preformed by our independent
registered public accounting firm
All of the services provided by our
independent registered public accounting firm in fiscal 2008 and 2007 were
approved by the Audit Committee under its pre-approval policies.
STOCKHOLDER PROPOSALS
FOR THE 2010 ANNUAL MEETING
Any stockholder who desires to submit a proposal for action by the
stockholders at our 2010 Annual Meeting must submit such proposal in writing to
our Secretary, David F. Koenig, by March 10, 2010 to have the proposal
included in our proxy statement for the meeting. Due to the complexity of the respective
rights
23
of
the stockholders and us in this area, any stockholder desiring to propose such
an action is advised to consult with his or her legal counsel with respect to
such rights. We suggest that any such proposal be submitted by certified mail
return receipt requested.
Rule 14a-4 promulgated under the Exchange Act governs our use of its
discretionary proxy voting authority with respect to a stockholder proposal
that the stockholder has not sought to include in our proxy statement. Rule 14a-4
provides that if a proponent of a proposal fails to notify the company at least
45 days prior to the month and day of mailing of the prior years proxy
statement, management proxies will be allowed to use their discretionary voting
authority when the proposal is raised at the meeting, without any discussion of
the matter. With respect to our 2010 Annual
Meeting of Stockholders, if we are not provided notice of a stockholder
proposal, which the stockholder has not previously sought to include in our
proxy statement, by May 24, 2010, the management proxies will be allowed
to use their discretionary authority as outlined above.
OTHER MATTERS
The Board of Directors does not intend to
present to the meeting any other matter not referred to above and does not
presently know of any matters that may be presented to the meeting by others.
However, if other matters come before the meeting, it is the intent of the
persons named in the enclosed proxy to vote the proxy in accordance with their
best judgment.
July 8, 2009
24
Appendix A
PROUROCARE MEDICAL INC.
2009 STOCK PLAN
Adopted February 26, 2009 and amended June 4,
2009
1.
Purpose.
The
purpose of the 2009 Stock Plan (the Plan) of ProUroCare Medical Inc. (the Company),
a Nevada corporation, is to increase shareholder value and to advance the
interests of the Company by furnishing a variety of economic incentives
(variously referred to hereinafter as the Incentives) designed to attract,
retain and motivate employees, directors and consultants. Incentives may consist of opportunities to
purchase or receive shares of the Companys $0.00001 par value common stock,
(the Common Stock), monetary payments, or both, on terms and conditions
determined under this Plan.
2.
Administration.
2.1
The Plan shall be administered by a
committee of the Companys board of directors (the Committee). The Committee shall consist of not less than
two directors of the Company who shall be appointed from time to time by the
Companys board of directors. Each
member of the Committee shall qualify both as a non-employee director within
the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as
amended (together with the rules and regulations promulgated thereunder,
the Exchange Act), and as an outside director as defined in Section 162(m) of
the Internal Revenue Code of 1986, as amended (the Code). The Committee shall have complete discretion
and authority to determine all provisions of all Incentives awarded under the
Plan (consistent with the terms of the Plan), interpret the Plan, and make any
other determination which it believes necessary and advisable for the proper
administration of the Plan. The
Committees decisions and matters relating to the Plan shall be final and
conclusive for the Company and its participants. No member of the Committee will be liable for
any action or determination made in good faith with respect to the Plan or any
Incentives granted under the Plan. The
Committee will also have the authority under the Plan to amend or modify the
terms of any outstanding Incentives in any manner;
provided, however
, that any such amended or modified terms
are permitted by the Plan as then in effect, and any recipient of an Incentive
adversely affected by such amended or modified terms has consented to such
amendment or modification. No amendment
or modification to an Incentive, however, whether pursuant to this Section 2
or any other provisions of the Plan, will be deemed to be a re-grant of such
Incentive for purposes of this Plan.
If at any time there is no Committee, then for purposes of the Plan the
term Committee shall mean the Companys board of directors.
2.2
In the event of (i) any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, extraordinary dividend or divestiture, including a spinoff, or any
other similar change in corporate structure or shares, (ii) any purchase,
acquisition, sale or disposition of a significant amount of assets or a
significant business, (iii) any change in accounting principles or
practices, or (iv) any other similar change, in each case with respect to
the Company or any other entity whose performance is relevant to the grant or
vesting of an Incentive, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation) may, without the consent of any affected recipient of an
Incentive, amend or modify the vesting criteria of any outstanding Incentive
based, in whole or in part, on the financial performance of the Company (or any
subsidiary or division thereof) or such other entity so as
equitably to reflect such event, with the desired result
that the criteria for evaluating such financial performance of the Company or
such other entity will be substantially the same (in the sole discretion of the
Committee or the board of directors of the surviving corporation) following
such event as prior to such event;
provided, however
, that the amended or modified terms are
permitted by the Plan as then in effect.
3.
Eligible Participants.
Employees
of the Company or its subsidiaries, including officers and employees of the
Company or its subsidiaries), directors and consultants, advisors or other
independent contractors who provide services to the Company or its
subsidiaries, including members of any advisory board, shall become eligible to
receive Incentives under the Plan when designated by the Committee. Participants may be designated individually
or by groups or categories (for example, by pay grade) as the Committee deems
appropriate. Participation by Company
officers or its subsidiaries and any performance objectives relating to such
officers must be approved by the Committee.
Participation by others and any performance objectives relating to
others may be approved by groups or categories (for example, by pay grade)
and authority to designate participants who are not officers and to set or
modify such performance objectives may be delegated.
4.
Types of Incentives.
Incentives
under the Plan may be granted in any combination of the following forms: (a) incentive stock options and
non-statutory stock options under Section 6; (b) stock-appreciation
rights (SARs) under Section 7; (c) stock awards under Section 8;
(d) restricted stock under Section 8; and (e) performance shares
under Section 9.
5.
Shares Subject to the Plan.
5.1
Number of Shares.
Subject to adjustment as provided in Section 11.5, the number of
shares of Common Stock which may be issued under the Plan shall not exceed
1,200,000 shares of Common Stock. Shares
of Common Stock issued under the Plan or that are currently subject to
outstanding Incentives will be applied to reduce the maximum number of shares
of Common Stock remaining available for issuance under the Plan.
5.2
Cancellation.
To the extent that cash in lieu of shares of Common Stock is delivered
upon the exercise of an SAR pursuant to Section 7.4, the Company shall be
deemed, for purposes of applying the limitation on the number of shares, to
have issued the greater of the number of shares of Common Stock which it was
entitled to issue upon such exercise or upon the exercise of any related
option. In the event that a stock option
or SAR granted hereunder expires or is terminated or canceled unexercised or
unvested as to any shares of Common Stock, such shares may again be issued
under the Plan either pursuant to stock options, SARs or otherwise. In the event that shares of Common Stock are
issued hereunder as restricted stock or pursuant to a stock award and
thereafter are forfeited or reacquired by the Company pursuant to rights
reserved upon issuance thereof, such forfeited and reacquired shares may again
be issued under the Plan, either as restricted stock, pursuant to stock awards
or otherwise. The Committee may also
determine to cancel, and agree to the cancellation of, stock options in order
to make a participant eligible for the grant of a stock option at a lower price
than the option to be canceled.
6.
Stock Options.
A
stock option is a right to purchase shares of Common Stock from the
Company. The Committee may designate
whether an option is to be considered an incentive stock option or a
non-statutory stock option. To the
extent that any incentive stock option granted under the Plan ceases for any
reason to qualify as an incentive stock option for purposes of Section 422
of the Code, such incentive stock option will continue to be outstanding for
purposes of the Plan but will thereafter be deemed to be a non-statutory stock
option. Each stock option granted by the
Committee under this Plan shall be subject to the following terms and
conditions:
6.1
Price
.
The option price per share shall be determined by the Committee, subject
to adjustment under Section 11.5.
6.2
Number
.
The number of shares of Common Stock subject to the option shall be
determined by the Committee, subject to adjustment as provided in Section 11.5. The number of shares of Common Stock subject
to a stock option shall be reduced in the same proportion that the holder
thereof exercises a SAR if any SAR is granted in conjunction with or related to
the stock option. To the extent required
by Section 162(m) of the Code, as amended (the Code), and the rules and
regulations thereunder, no individual may receive options to purchase more than
200,000 shares (subject to adjustment as provided in Section 11.5) in any
year.
6.3
Term and Time for Exercise
.
Subject to earlier termination as provided in Section 11.4, the
term of each stock option shall be determined by the Committee but shall not
exceed ten (10) years and one day from the date of grant. Each stock option shall become exercisable at
such time or times during its term as shall be determined by the Committee at
the time of grant. The Committee may in
its discretion accelerate the exercisability of any stock option. Subject to the foregoing and with the
approval of the Committee, all or any part of the shares of Common Stock with
respect to which the right to purchase has accrued may be purchased by the
Company at the time of such accrual or at any time or times thereafter during
the term of the option.
6.4
Manner of Exercise
.
Subject to the conditions contained in this Plan and in the agreement
with the recipient evidencing such option, a stock option may be exercised, in
whole or in part, by giving written notice to the Company, specifying the
number of shares of Common Stock to be purchased and accompanied by the full
purchase price for such shares. The
exercise price shall be payable (a) in United States dollars upon exercise
of the option and may be paid by cash; uncertified or certified check; or bank
draft; (b) at the discretion of the Committee, by delivery of shares of
Common Stock already owned by the participant in payment of all or any part of
the exercise price, which shares shall be valued for this purpose at the Fair
Market Value (as defined in Section 11.12 below) on the date such option
is exercised; or (c) at the discretion of the Committee, by instructing
the Company to withhold from the shares of Common Stock issuable upon exercise
of the stock option shares of Common Stock in payment of all or any part of the
exercise price and/or any related withholding-tax obligations, which shares
shall be valued for this purpose at the Fair Market Value or in such other
manner as may be authorized from time to time by the Committee. Any shares of Common Stock delivered by a
participant pursuant to clause (b) above must have been held by the
participant for a period of not less than six (6) months prior to the
exercise of the option, unless otherwise determined by the Committee. Prior to the issuance of shares of Common
Stock upon the exercise of a stock option, a participant shall have no rights
as a shareholder with respect to shares of Common Stock issuable under such
stock option. Except as otherwise
provided in the Plan, no adjustment will be made for dividends or distributions
declared as of a record date preceding the date on which a participant becomes
the
holder of record of shares of Common Stock acquired upon
exercise of a stock option, except as the Committee may determine in its sole
discretion.
6.5
Incentive Stock Options
.
Notwithstanding anything in the Plan to the contrary, the following
additional provisions shall apply to the grant of stock options which are
intended to qualify as incentive stock options (as such term is defined in Section 422
of the Code):
(a)
The aggregate Fair Market Value (determined as of the time
the option is granted) of the shares of Common Stock with respect to which
incentive stock options are exercisable for the first time by any participant
during any calendar year (under the Plan and any other incentive stock-option
plans of the Company or any subsidiary or parent corporation of the Company)
shall not exceed $100,000. The
determination will be made by taking incentive stock options into account in
the order in which they were granted.
(b)
Any certificate for an incentive stock option authorized
under the Plan shall contain such other provisions as the Committee shall deem
advisable, but shall in all events be consistent with and contain all
provisions required in order to qualify the options as incentive stock options.
(c)
All incentive stock options must be granted within ten (10) years
from the earlier of the date on which this Plan was adopted by board of
directors or the date this Plan was approved by the Companys shareholders.
(d)
Unless sooner exercised, all incentive stock options shall
expire no later than ten (10) years after the date of grant. No incentive stock option may be exercisable
after ten (10) years from its date of grant (or five (5) years from
its date of grant if, at the time of grant, the participant owns, directly or
indirectly, more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any parent or subsidiary corporation of
the Company).
(e)
The exercise price for a share of Common Stock under an
incentive stock options shall be not less than one hundred percent (100%) of
the Fair Market Value of one share of Common Stock on the date of grant;
provided, however
, that the exercise price
shall be one hundred ten percent (110%) of the Fair Market Value if, at the
time the incentive stock option is granted, the participant owns, directly or
indirectly, more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any parent or subsidiary corporation of
the Company.
7.
Stock-Appreciation Rights.
An
SAR is a right to receive, without payment to the Company, a number of shares
of Common Stock, cash, or any combination thereof, the amount of which is
determined pursuant to the formula set forth in Section 7.4. An SAR may be granted (a) with respect
to any stock option granted under this Plan, either concurrently with the grant
of such stock option or at such later time as determined by the Committee (as
to all or any portion of the shares of Common Stock subject to the stock
option), or (b) alone, without reference to any related stock option. Each SAR granted by the Committee under this
Plan shall be subject to the following terms and conditions:
7.1
Number; Exercise Price
.
Each SAR granted to any participant shall relate to such number of
shares of Common Stock as shall be determined by the Committee, subject to
adjustment as provided in Section 11.5.
In the case of an SAR granted with respect to a stock
option, the number of shares of Common Stock to which the
SAR pertains shall be reduced in the same proportion that the holder of the
option exercises the related stock option.
The exercise price of an SAR will be determined by the Committee, in its
discretion, at the date of grant but may not be less than one hundred percent
(100%) of the Fair Market Value of one share of Common Stock on the date of
grant.
7.2
Duration
. Subject to earlier termination as provided in
Section 11.4, the term of each SAR shall be determined by the Committee
but shall not exceed ten (10) years and one day from the date of grant. Unless otherwise provided by the Committee,
each SAR shall become exercisable at such time or times, to such extent and
upon such conditions as the stock option, if any, to which it relates is
exercisable. The Committee may in its
discretion accelerate the exercisability of any SAR.
7.3
Exercise
.
An SAR may be exercised, in whole or in part, by giving written notice
to the Company, specifying the number of SARs which the holder wishes to
exercise. Upon receipt of such written
notice, the Company shall, within ninety (90) days thereafter, deliver to the
exercising holder certificates for the shares of Common Stock or cash, or both,
as determined by the Committee, to which the holder is entitled pursuant to Section 7.4.
7.4
Payment
.
Subject to the right of the Committee to deliver cash in lieu of shares
of Common Stock (which, as it pertains to Company officers and directors, shall
comply with all requirements of the Exchange Act), the number of shares of
Common Stock which shall be issuable upon the exercise of an SAR shall be
determined by dividing:
(a)
the number of shares of Common Stock as to which the SAR is
exercised multiplied by the amount of the appreciation in such shares (i.e.,
the amount by which the Fair Market Value of the shares of Common Stock subject
to the SAR on the exercise date exceeds (1) in the case of an SAR related
to a stock option, the exercise price of the shares of Common Stock under the
stock option or (2) in the case of an SAR granted alone and without
reference to a related stock option, an amount which shall be determined by the
Committee at the time of grant, subject to adjustment under Section 11.5);
by
(b)
the Fair Market Value of a share of Common Stock on the
exercise date.
In lieu of issuing shares of Common Stock upon the exercise of a SAR,
the Committee may elect to pay the holder of the SAR cash equal to the Fair
Market Value on the exercise date of any or all of the shares which would
otherwise be issuable. No fractional
shares of Common Stock shall be issued upon the exercise of an SAR; instead,
the holder of the SAR shall be entitled to receive a cash adjustment equal to
the same fraction of the Fair Market Value of a share of Common Stock on the
exercise date or to purchase the portion necessary to make a whole share at its
Fair Market Value on the date of exercise.
8.
Stock Awards and Restricted Stock.
A
stock award consists of the transfer by the Company to a participant of shares
of Common Stock, without other payment therefor, as additional compensation for
services rendered to the Company. The
participant receiving a stock award will have all voting, dividend, liquidation
and other rights with respect to the shares of Common Stock issued to a
participant as a stock award under this Section 8 upon the participant
becoming the holder of record of such shares.
A share of restricted stock consists of shares of Common Stock which are
sold or transferred by the Company to a participant at a price determined by the
Committee
(which price shall be at least equal to the minimum price required by
applicable law for the issuance of a share of Common Stock) and subject to
restrictions on their sale or other transfer by the participant, which
restrictions and conditions may be determined by the Committee as long as such
restrictions and conditions are not inconsistent with the terms of the
Plan. The transfer of Common Stock
pursuant to stock awards and the transfer and sale of restricted stock shall be
subject to the following terms and conditions:
8.1
Number of Shares
.
The number of shares to be transferred or sold by the Company to a
participant pursuant to a stock award or as restricted stock shall be
determined by the Committee.
8.2
Sale Price
.
The Committee shall determine the price, if any, at which shares of
restricted stock shall be sold or granted to a participant, which may vary from
time to time and among participants and which may be below the Fair Market
Value of such shares of Common Stock at the date of sale.
8.3
Restrictions
.
All shares of restricted stock transferred or sold hereunder shall be
subject to such restrictions as the Committee may determine, including without
limitation any or all of the following:
(a)
a prohibition against the sale, transfer, pledge or other
encumbrance of the shares of restricted stock, such prohibition to lapse at
such time or times as the Committee shall determine (whether in annual or more
frequent installments, at the time of the death, disability or retirement of
the holder of such shares, or otherwise);
(b)
a requirement that the holder of shares of restricted stock
forfeit, or (in the case of shares sold to a participant) resell back to the
Company at his or her cost, all or a part of such shares in the event of
termination of his or her employment or consulting engagement during any period
in which such shares are subject to restrictions; or
(c)
such other conditions or restrictions as the Committee may
deem advisable.
In order to enforce the restrictions imposed by the Committee pursuant
to Section 8.3, the participant receiving restricted stock shall enter
into an agreement with the Company setting forth the conditions of the
grant. Shares of restricted stock shall
be registered in the name of the participant and deposited, together with a
stock power endorsed in blank, with the Company unless otherwise determined by
the Committee. Each such certificate
shall bear a legend in substantially the following form:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
REPRESENTED BY IT ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING CONDITIONS
OF FORFEITURE) CONTAINED IN THE 2009 STOCK OPTION PLAN OF PROUROCARE MEDICAL
INC., (THE COMPANY), AND AN AGREEMENT ENTERED INTO BETWEEN THE REGISTERED
OWNER AND THE COMPANY. A COPY OF THE 2009
STOCK OPTION PLAN AND THE AGREEMENT IS AVAILABLE FROM THE COMPANY UPON REQUEST.
8.4
End of Restrictions
.
Subject to Section 11.3, at the end of any time period during which
the shares of restricted stock are subject to forfeiture and restrictions on
transfer, such
shares will be delivered free of all restrictions to the
participant or to the participants legal representative, beneficiary or heir.
8.5
Shareholder
.
Subject to the terms and conditions of the Plan, each participant
receiving restricted stock shall have all the rights of a shareholder with
respect to shares of stock during any period in which such shares are subject
to forfeiture and restrictions on transfer, including without limitation the
right to vote such shares. Dividends paid
in cash or property other than Common Stock with respect to shares of
restricted stock shall be paid to the participant currently. Unless the Committee determines otherwise in
its sole discretion, any dividends or distributions (including regular quarterly
cash dividends) paid with respect to shares of Common Stock subject to the
restrictions set forth above will be subject to the same restrictions as the
shares to which such dividends or distributions relate. In the event the Committee determines not to
pay dividends or distributions currently, the Committee will determine in its
sole discretion whether any interest will be paid on such dividends or
distributions. In addition, the
Committee in its sole discretion may require such dividends and distributions
to be reinvested (and in such case the participant consents to such
reinvestment) in shares of Common Stock that will be subject to the same
restrictions as the shares to which such dividends or distributions relate.
9.
Performance Shares.
A
performance share consists of an award which shall be paid in shares of Common
Stock, as described below. The grant of
a performance share shall be subject to such terms and conditions as the
Committee deems appropriate, including the following:
9.1
Performance Objectives
.
Each performance share will be subject to performance objectives
respecting the Company or one of its operating units to be achieved by the
participant before the end of a specified period. The Committee shall determine the terms and
conditions of each grant and the number of performance shares granted. If the performance objectives are achieved,
the participant will be paid in shares of Common Stock as determined by the
Committee. If such objectives are not
met, each grant of performance shares may provide for lesser payments in
accordance with formulae established in the award.
9.2
Not Shareholder
.
The grant of performance shares to a participant shall not create any
rights in such participant as a shareholder of the Company, until the payment
of shares of Common Stock with respect to an award.
9.3
No Adjustments
.
No adjustment shall be made in performance shares granted on account of
cash dividends which may be paid or other rights which may be issued to the
holders of Common Stock prior to the end of any period for which performance
objectives were established.
9.4
Expiration of Performance Shares
.
If any participants employment or consulting engagement with the
Company is terminated for any reason other than normal retirement, death or
disability prior to the achievement of the participants stated performance
objectives, all the participants rights on the performance shares shall expire
and terminate unless otherwise determined by the Committee. In the event of termination of employment or
consulting by reason of death, disability, or normal retirement, the Committee,
in its own discretion may determine what portions, if any, of the performance
shares should be paid to the participant.
10.
Change of Control.
10.1
Change
in Control
. For purposes of this Section 10, a Change
in Control of the Company will mean the following:
(a)
The
purchase or other acquisition by any one person, or more than one person acting
as a group, of stock of the Company that, together with stock held by such
person or group, constitutes more than fifty percent (50%) of the total
combined value or total combined voting power of all classes of stock issued by
the Company; provided, however, that if any one person or more than one person
acting as a group is considered to own more than fifty percent (50%) of the
total combined value or total combined voting power of such stock, the
acquisition of additional stock by the same person or persons shall not be
considered a Change of Control;
(b)
A
merger or consolidation to which the Company is a party if the individuals and
entities who were shareholders of the Company immediately prior to the
effective date of such merger or consolidation have, immediately following the
effective date of such merger or consolidation, beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of less
than fifty percent (50%) of the total combined voting power of all classes of
securities issued by the surviving entity for the election of directors of the
surviving corporation;
(c)
Any
one person, or more than one person acting as a group, acquires or has acquired
during the twelve (12) month period ending on the date of the most recent
acquisition by such person or persons, direct or indirect beneficial ownership
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of
stock of the Company constituting more than thirty (30%) of the total combined
voting power of all classes of stock issued by the Company;
(d)
The
purchase or other acquisition by any one person, or more than one person acting
as a group, of substantially all of the total gross value of the assets of the
Company during the twelve-month period ending on the date of the most recent
purchase or other acquisition by such person or persons. For purposes of this Section 2(d), gross
value means the value of the assets of the Company or the value of the assets
being disposed of, as the case may be, determined without regard to any
liabilities associated with such assets;
(e)
A
change in the composition of the Board of the Company at any time during any
consecutive twelve (12) month period such that the Continuity Directors cease
for any reason to constitute at least a majority of the Board. For purposes of
this event, Continuity Directors means those members of the Board who either:
(1)
were
directors at the beginning of such consecutive twelve (12) month period; or
(2)
were
elected by, or on the nomination or recommendation of, at least a majority of
the then-existing Board of Directors.
In all cases, the determination of whether a Change of Control Event
has occurred shall be made in accordance with Code Section 409A and the
regulations, notices and other guidance of general applicability issued
thereunder.
10.2.
Acceleration of Incentives.
Without limiting the authority of the Committee under the Plan, if a
Change in Control of the Company occurs whereby the acquiring entity or
successor to the Company does not assume the Incentives or replace them with
substantially equivalent incentive awards, then, unless otherwise provided by
the Committee in its sole discretion in the agreement evidencing an Incentive
at the time of grant, as of the date of the Change of Control: (a) all outstanding options and SARs
will vest and will become immediately exercisable in full and will remain
exercisable for the remainder of their respective terms, regardless of whether
the participant to whom such options or SARs have been granted remains in the
employ or service of the Company or any subsidiary of the Company or any
acquiring entity or successor to the Company; (b) the restrictions on all
shares of restricted stock awards shall lapse immediately; and (c) all
performance shares shall be deemed to be met and payment made immediately.
10.3.
Cash Payment for Options
.
If a Change in Control of the Company occurs, then the Committee, if
approved by the Committee in its sole discretion either in an agreement
evidencing an option at the time of grant or at any time after the grant of an
option, and without the consent of any participant affected thereby, may
determine that:
(a)
some or all participants holding outstanding stock
options will receive, with respect to some or all of the shares of Common Stock
subject to such options, as of the effective date of any such Change in Control
of the Company, cash in an amount equal to the excess of the Fair Market Value
of such shares immediately prior to the effective date of such Change in
Control of the Company over the exercise price per share of such options; and
(b)
any options as to which, as of the effective date of
any such Change in Control, the Fair Market Value of the shares of Common Stock
subject to such options is less than or equal to the exercise price per share
of such options, shall terminate as of the effective date of any such Change in
Control.
If the Committee makes a
determination as set forth in subparagraph (a) of this Section 10.3,
then, as of the effective date of any such Change in Control of the Company,
such options will terminate as to such shares and the participants formerly
holding such options will only have the right to receive such cash
payment(s). If the Committee makes a
determination as set forth in subparagraph (b) of this Section 10.3,
then, as of the effective date of any such Change in Control of the Company,
such options will terminate, become void and expire as to all unexercised
shares of Common Stock subject to such options on such date, and the
participants formerly holding such options will have no further rights with
respect to such options.
11.
General.
11.1
Effective Date
. The Plan will become effective upon its
approval by the affirmative vote of the holders of a majority of the voting
power of the shares of the Companys Common Stock present and entitled to vote
at a meeting of the stockholders. Unless approved within one year after the
date of the Plans adoption by the board of directors, the Plan shall not be
effective for any purpose.
11.2
Duration
. The Plan shall remain in effect until all
Incentives granted under the Plan have either been satisfied by the issuance of
shares of Common Stock or the payment of cash or have been terminated under the
terms of the Plan and all restrictions imposed on shares of Common Stock in
connection with their issuance under the Plan have lapsed. No Incentives may be granted under the Plan
after the tenth anniversary of the date the Plan is approved by the
shareholders of the Company.
11.3
Non-Transferability
of Incentives.
No Incentive Stock
Option, SAR, restricted stock or performance award may be transferred, pledged
or assigned by the holder thereof (except, in the event of the holders death,
by will or the laws of descent and distribution to the limited extent provided
in the Plan or the Incentive, or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder), and the Company shall not be
required to recognize any attempted assignment of such rights by any
participant. Incentive Stock Options
transferred (except as permitted in the preceding sentence) will continue to be
outstanding for purposes of the Plan but will thereafter be deemed to be a
non-qualified stock option.
Non-qualified stock options may be transferred by the holder thereof
only to such holders spouse, children, grandchildren or parents (collectively,
the Family Members), to trusts for the benefit of Family Members, to
partnerships or limited liability companies in which Family Members are the
only partners or shareholders, or to entities exempt from federal income
taxation pursuant to Section 501(c)(3) of the Code. During a participants lifetime, a stock
option may be exercised only by him or her, by his or her guardian or legal
representative or by the transferees permitted by this Section 11.3.
11.4
Effect of
Termination or Death.
In the event
that a participant ceases to be an employee of or consultant to the Company, or
the participants other service with the Company is terminated, for any reason,
including death, any Incentives may be exercised or shall expire at such times
as may be determined by the Committee in its sole discretion in the agreement
evidencing an Incentive. Notwithstanding
the other provisions of this Section 11.4, upon a participants
termination of employment or other service with the Company and all
subsidiaries, the Committee may, in its sole discretion (which may be exercised
at any time on or after the date of grant, including following such
termination), cause options and SARs (or any part thereof) then held by such
participant to become or continue to become exercisable and/or remain
exercisable following such termination of employment or service and restricted
stock awards, performance shares and stock awards then held by such participant
to vest and/or continue to vest or become free of transfer restrictions, as the
case may be, following such termination of employment or service, in each case
in the manner determined by the Committee; provided, however, that no option or
SAR may remain exercisable or continue to vest beyond the earlier of (i) the
latest date upon which the Incentive could have expired by its original terms,
and (ii) the tenth (10th) anniversary of the original date of grant. Any incentive stock option that remains
unexercised more than one (1) year following termination of employment by
reason of death or disability or more than three (3) months following
termination for any reason other than death or disability will thereafter be
deemed to be a non-statutory stock option.
Further, this Section 11.4 shall be administered in compliance with
Code Section 409A and the notices, regulations and other guidance of
general applicability issued thereunder.
11.5
Additional
Conditions
. Notwithstanding anything
in this Plan to the contrary: (a) the
Company may, if it shall determine it necessary or desirable for any reason, at
the time of award of any Incentive or the issuance of any shares of Common
Stock pursuant to any Incentive, require the recipient of the Incentive, as a
condition to the receipt thereof or to the receipt of shares of Common Stock
issued pursuant thereto, to deliver to the Company a written representation of
present intention to acquire the Incentive or the shares of Common Stock issued
pursuant thereto for his or her own account for investment and not for
distribution; and (b) if at any time the Company further determines, in
its sole discretion, that the listing, registration or qualification (or any
updating of any such document) of any Incentive or the shares of Common Stock
issuable pursuant thereto is necessary on any securities exchange or under any
federal or state securities law, or that the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of, or in
connection with the award of any Incentive, the issuance of shares of Common
Stock pursuant thereto, or the removal of any restrictions imposed on such
shares, such Incentive shall not be awarded or such shares of Common Stock
shall not be issued or such restrictions shall not be removed, as the case may
be, in whole or in part, unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
unacceptable to the Company. Notwithstanding
any other provision of the Plan or any agreements entered into pursuant to the
Plan, the Company will not be required to issue any shares of Common Stock
under this Plan, and a participant may not sell, assign, transfer or otherwise
dispose of shares of Common Stock issued pursuant to any Incentives granted
under the Plan, unless (a) there is in effect with respect to such shares
a registration statement under the Securities Act of 1933, as amended (the Securities
Act), and any applicable state or foreign securities laws or an exemption from
such registration under the Securities Act and applicable state or foreign
securities laws, and (b) there has been obtained any other consent,
approval or permit from any other regulatory body which the Committee, in its
sole discretion, deems necessary or advisable.
The Company may condition such issuance, sale or transfer upon the
receipt of any representations or agreements from the parties involved, and the
placement of any legends on certificates representing shares of Common Stock,
as may be deemed necessary or advisable by the Company in order to comply with
such securities law or other restrictions.
11.6
Adjustment
. In the event of any merger, consolidation or
reorganization of the Company with any other corporation or corporations, there
shall be substituted for each of the shares of Common Stock then subject to the
Plan, including shares subject to restrictions, options or
achievement-of-performance share objectives, the number and kind of shares of
stock or other securities to which the holders of the shares of Common Stock
will be entitled pursuant to the transaction.
In the event of any recapitalization, reclassification, stock dividend,
stock split, combination of shares or other similar change in the corporate
structure of the Company or shares of the Company, the exercise price of an
outstanding Incentive and the number of shares of Common Stock then subject to
the Plan, including shares subject to restrictions, options or achievements of performance
shares, shall be adjusted in proportion to the change in outstanding shares of
Common Stock in order to prevent dilution or enlargement of the rights of the
participants. In the event of any such
adjustments, the purchase price of any option, the performance objectives of
any Incentive, and the shares of Common Stock issuable pursuant to any
Incentive shall be adjusted as and to the extent appropriate, in the discretion
of the Committee, to provide participants with the same relative rights before
and after such adjustment.
11.7
Incentive Plans
and Agreements
. Except in the case
of stock awards, the terms of each Incentive shall be stated in a plan or
agreement approved by the Committee. The
Committee may also determine to enter into agreements with holders of options
to reclassify or convert certain outstanding options, within the terms of the
Plan, as Incentive Stock Options or as non-statutory stock options and in order
to eliminate SARs with respect to all or part of such options and any other
previously issued options.
11.8
Withholding.
(a)
The Company shall have the right to (i) withhold
and deduct from any payments made under the Plan or from future wages of the
participant (or from other
amounts that may be due and owing to the participant from the Company
or a subsidiary of the Company), or make other arrangements for the collection
of, all legally required amounts necessary to satisfy any and all foreign,
federal, state and local withholding and employment-related tax requirements
attributable to an Incentive, or (ii) require the participant promptly to
remit the amount of such withholding to the Company before taking any action,
including issuing any shares of Common Stock, with respect to an
Incentive. At any time when a participant
is required to pay to the Company an amount required to be withheld under
applicable income tax laws in connection with a distribution of Common Stock or
upon exercise of an option or SAR, the participant may satisfy this obligation
in whole or in part by electing (the Election) to have the Company withhold
from the distribution shares of Common Stock having a value up to the amount
required to be withheld. The value of
the shares to be withheld shall be based on the Fair Market Value of the Common
Stock on the date that the amount of tax to be withheld shall be determined
(the Tax Date).
(b)
The Committee may disapprove of any
Election, may suspend or terminate the right to make Elections, or may provide
with respect to any Incentive that the right to make Elections shall not apply
to such Incentive. An Election is
irrevocable.
(c)
If a participant is a Company officer or
director within the meaning of Section 16 of the Exchange Act, then an
Election is subject to the following additional restrictions: (a) no Election shall be effective for a
Tax Date which occurs within six (6) months of the grant or exercise of
the award, except that this limitation shall not apply in the event death or
disability of the participant occurs prior to the expiration of the six-month
period; and (b) the Election must be made either six months prior to the
Tax Date or must be made during a period beginning on the third business day
following the date of release for publication of the Companys quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date.
11.9
No Continued
Employment, Engagement or Right to Corporate Assets
. No participant under the Plan shall have any
right, because of his or her participation, to continue in the employ of the
Company for any period of time or to any right to continue his or her present
or any other rate of compensation.
Nothing contained in the Plan shall be construed as giving an employee,
a consultant, such persons beneficiaries or any other person any equity or
interests of any kind in the assets of the Company or creating a trust of any
kind or a fiduciary relationship of any kind between the Company and any such
person.
11.10
{this item DELETED}
11.11
Amendment
of the Plan
. The Board may amend, suspend or discontinue
the Plan at any time; provided, however, that no amendments to the Plan will be
effective without approval of the shareholders of the Company if shareholder
approval of the amendment is then required pursuant to Section 422 of the
Code or the rules of any stock exchange or Nasdaq or similar regulatory
body. No termination, suspension or
amendment of the Plan may adversely affect any outstanding Incentive without
the consent of the affected participant;
provided, however
,
that this sentence will not impair the right of the Committee to take whatever
action it deems appropriate under Section 11.5 of the Plan.
11.12
Definition
of Fair Market Value
. For purposes of this Plan, the Fair Market
Value of a share of Common Stock at a specified date shall, unless otherwise
expressly provided in this Plan, be the amount which the Committee or the
Companys board of directors determines
in good faith in the exercise of its reasonable discretion to be one
hundred percent (100%) of the fair market value of such a share as of the date
in question;
provided, however
, that
notwithstanding the foregoing, if such shares are listed on a U.S. securities
exchange or are quoted on the Nasdaq National Market System, Nasdaq SmallCap
Stock Market (Nasdaq), or the Over-The-Counter Bulletin Board (OTCBB), then
Fair Market Value shall be determined by reference to the last sale price of a
share of Common Stock on such U.S. securities exchange or Nasdaq, or the
average of the bid and ask price on the OTCBB, on the applicable date. If such U.S. securities exchange or Nasdaq is
closed for trading on such date, or if the Common Stock does not trade on such
date, then the last sale price used shall be the one on the date the Common
Stock last traded on such U.S. securities exchange or Nasdaq.
11.13
Breach
of Confidentiality, Assignment of Inventions, or Non-Compete Agreements
.
Notwithstanding anything in the Plan to the contrary, in the event that
a participant materially breaches the terms of any confidentiality,
assignment-of-inventions, or noncompete agreement entered into with the Company
or any parent or subsidiary of the Company, whether such breach occurs before
or after termination of such participants employment or other service with the
Company or any subsidiary, the Committee in its sole discretion may immediately
terminate all rights of the participant under the Plan and any agreements
evidencing an Incentive then held by the participant without notice of any kind.
11.14
Governing
Law
. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in
accordance with the laws of the State of [Minnesota], notwithstanding the
conflicts-of-law principles of Minnesota or any other jurisdiction.
11.15
Successors
and Assigns
. The Plan will be binding upon and inure to
the benefit of the successors and permitted assigns of the Company and the
participants in the Plan.
Appendix B
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
PROUROCARE MEDICAL INC.
1.
Name
. The name of
the corporation is ProUroCare Medical Inc.
2.
Registered Office and Registered Agent
.
The address of the registered office of the corporation in Nevada is The
Corporation Trust Company of Nevada, 6100 Neil Road, Suite 500, Reno, NV
89511, County of Washoe, and the name of its registered agent at that address
is The Corporation Trust Company of Nevada.
3.
Purposes
. The purpose
of the corporation is to engage in any lawful act or activity for which
corporations may be organized under the laws of the State of Nevada, as they
may be amended from time to time.
4.
Capital Stock
. The total
number of shares that the corporation is authorized to issue is 50,000,000
shares, par value $0.00001 per share, all of which shares are designated as
common stock.
5.
Bylaws
. The power to
adopt, amend or repeal bylaws of the corporation is exclusively granted to the
Board of Directors.
6.
Limitation of Directors Liability; Indemnification
.
The personal liability of a director of the corporation to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director shall be eliminated to the fullest extent permitted by law,
as the same exists or may hereafter be amended.
The corporation shall indemnify (and advance expenses to) its directors
and officers to the fullest extent permitted by law. Neither the amendment, modification or repeal
of this Article nor the adoption of any provision in this certificate of
incorporation inconsistent with this Article shall adversely affect any
right or protection of a director or officer of the corporation with respect to
any act or omission that occurred prior to the time of such amendment,
modification, repeal or adoption.
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS
PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK
BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: Signature (Joint Owners)
Signature [PLEASE SIGN WITHIN BOX] Date Date To withhold authority to vote
for any individual nominee(s), mark For All Except and write the number(s)
of the nominee(s) on the line below. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0000027456_1 R2.09.03.17 For Withhold For All All All Except The Board of
Directors recommends that you vote FOR the following: 1. Election of
Directors Nominees 01 Richard C. Carlson 02 David F. Koenig 03 Robert J.
Rudelius 04 Scott E. Smith PROUROCARE MEDICAL INC. 6440 FLYING CLOUD DR SUITE
101 EDEN PRAIRIE, MN 55344 VOTE BY MAIL Mark, sign and date your proxy card
and return it in the postage-paid envelope we have provided or return it to
Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. The
Board of Directors recommends you vote FOR the following proposal(s): For Against
Abstain 2 To approve and adopt the ProUroCare Medical Inc. 2009 Stock Option
Plan. 3 To approve and adopt Amended and Restated Articles of Incorporation.
4 To ratify the appointment of Baker Tilly Virchow Krause, LLP as independent
registered public accounting firm of the Company for 2009. 5 In their
discretion, upon such other matters that may properly come before the meeting
or any adjournment or adjournments thereof. NOTE: Such other business as may
properly come before the meeting or any adjournment thereof. Please sign
exactly as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a corporation or
partnership, please sign in full corporate or partnership name, by authorized
officer.
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0000027456_2 R2.09.03.17 Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting: The Notice &
Proxy Statement, Form 10-K, Shareholder Letter is/are available at
www.proxyvote.com . ProUroCare Medical Inc. THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS ANNUAL MEETING OF STOCKHOLDERS AUGUST 11, 2009 The
stockholder(s) hereby appoint(s) Richard C. Carlson and David F. Koenig, and
each of them, as proxies, with full power of substitution, to vote on behalf
of the undersigned the number of shares which the undersigned is then
entitled to vote, at the Annual Meeting of Stockholder(s) of ProUroCare
Medical Inc. to be held at the offices of Fredrikson & Byron, 4000
Pillsbury Center, 200 South Sixth Street, Minneapolis, Minnesota, 55402 at
3:30 p.m. local time on August 11, 2009, and at any and all adjournments
thereof, as specified below on the matters referred to and in their discretion
upon any other matters brought before the meeting, with all the powers which
the undersigned would possess if personally present. The stockholder(s)
hereby revoke(s) all previous proxies relating to the shares covered hereby
and acknowledge(s) receipt of the Notice of Annual Meeting of Stockholders
and Proxy Statement relating to the Annual Meeting of Stockholders. This
proxy, when properly executed, will be voted in the manner directed herein.
If no such direction is made, this proxy will be voted in accordance with the
Board of Directors recommendations. Continued and to be signed on reverse
side
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