THE MED-DESIGN CORPORATION
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made as of the __ day of December, 1998 by and among The
Med-Design Corporation, a Delaware corporation (the "Company"), and Becton,
Xxxxxxxxx and Company (the "Stockholder").
BACKGROUND
Stockholder has been issued on the date hereof 300,000 Shares of the
Company's Series A Convertible Preferred Stock (the "Preferred Stock") and the
Company has agreed, on the terms hereof, to register for sale under the
Securities Act of 1933 (the "1933 Act") shares of the Company's Common Stock
into which the Preferred Stock is convertible (said shares of Common Stock
hereafter referred to as the "Registrable Securities").
The parties hereto, each intending to be legally bound and in exchange for
the mutual covenants herein, agree as follows:
1. Piggyback Registrations.
a. Right to Piggyback. Whenever the Company proposes to register any of its
securities under the 1933 Act and the registration form to be used may be used
for the registration of Registrable Securities (a "Piggyback Registration"),
the Company will give prompt written notice to all holders of Registrable
Securities and will include in such Piggyback Registration, subject to the
allocation provisions below, all Registrable Securities with respect to which
the Company has received written requests for inclusion within 20 days after the
Company's mailing of such notice.
b. Piggyback Expenses. In all Piggyback Registrations, the Company will pay
the Registration Expenses related to the Registrable Securities of the Selling
Stockholders, but the Selling Stockholders will pay any Underwriting Commissions
related to their Registrable Securities.
c. Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
that, can be sold in such offering, at a price reasonably related to fair value,
the Company will allocate the securities to be included as follows: first, the
securities the Company proposes to sell on its own behalf; and second, any
securities (including Registrable Securities) requested to be included in such
registration, pro rata on the basis of the number of securities requested to be
included in such registration.
d. Priority on Secondary Registrations. If a Piggyback Registration is
initiated as an underwritten secondary registration on behalf of holders of the
Company's securities and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number that can be sold in such offering, at a price reasonably related to fair
value, the Company will allocate the securities to be included as follows:
first, the securities requested to be included by the holders initiating such
registration; and second, any securities (including Registrable Securities)
requested to be included in such registration, pro rata on the basis of the
number of securities requested to be included in such registration.
e. Selection of Underwriters. If any Piggyback Registration is
underwritten, the selection of investment banker(s) and manager(s) and the other
decisions regarding the underwriting arrangements for the offering will be made
by the Company.
2. Holdback Agreements.
No Stockholder shall effect any public sale or distribution of equity
securities of the Company or any securities convertible into or exchangeable or
exercisable for such securities during the seven days prior to and the 90 days
after any underwritten Piggyback Registration has become effective (except as
part of such underwritten registration).
3. Registration Procedures.
Whenever the holders of Registrable Securities have requested that any
Registrable Securities be registered pursuant to Section 1 of this Agreement,
the Company will:
a. prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
reasonable commercial efforts to cause such registration statement to become
effective;
b. prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of 120 days;
c. furnish to each Selling Stockholder such number of copies of such
registration statement, each amendment and supplement thereto and the prospectus
included in such registration statement (including each preliminary prospectus),
and such other documents as such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such seller;
d. use its best efforts to register or qualify such Registrable Securities
under such other securities or blue sky laws of such jurisdictions as the
managing underwriter(s) may reasonably request;
e. notify each Selling Stockholder at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act within the period that
the Company is required to keep
the registration statement effective of the happening of any event as a result
of which the prospectus included in such registration statement contains an
untrue statement of a material fact or omits any fact necessary to make the
statement therein not misleading, and, at the request of any such seller, the
Company will as promptly as reasonably possible prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statement therein not misleading;
f. cause all such Registrable Securities to be listed or included on
securities exchanges or automated trading markets on which similar securities
issued by the Company are then listed or included;
g. provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
h. enter into such customary agreements (including with respect to each
underwritten offering, an underwriting agreement in customary form) and take
such other customary actions as may be reasonably necessary to expedite or
facilitate the disposition of such Registrable Securities; and
i. obtain a "comfort" letter addressed to the Company's officers and board
of directors and the underwriter(s) (with respect to an underwritten offering)
from its independent public accountants in customary form and covering such
matters of the type customarily covered by "comfort" letters.
4. Indemnification.
a. The Company hereby indemnifies, to the extent permitted by law, each
Stockholder, its officers and directors, and each person who controls such
holder (within the meaning of the 1933 Act), against all losses, claims,
damages, liabilities and expenses arising out of or resulting from any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished in writing to the
Company by such Stockholder expressly for use therein or by any such holder's
failure to deliver a copy of the prospectus or any amendments or supplements
thereto after the Company has furnished such holder with a sufficient number of
copies of the same.
b. In connection with any registration statement in which a Stockholder is
participating, each such Stockholder will furnish to the Company in writing such
information with respect to such Stockholder as is reasonably requested by the
Company for use in any such registration statement or prospectus and will
indemnify, to the extent permitted by law, the Company, its directors and
officers and each person who controls the Company (within the meaning of the
0000 Xxx) against
any losses, claims, damages, liabilities and expenses resulting from any untrue
or alleged untrue statement of material fact or any omission or alleged omission
of a material fact required to be stated in the registration statement or
prospectus or any amendment thereof or supplement thereto or necessary to make
the statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in information so furnished in writing by
such holder specifically for use in preparing the registration statement.
Notwithstanding the foregoing, the liability of a Stockholder under this Section
4(b) shall be limited to an amount equal to the net proceeds actually received
by the Selling Stockholder from the sale of Registrable Securities covered by
the registration statement
c. Any person entitled to indemnification hereunder will (i) give prompt
notice to the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) unless in such indemnified party's reasonable judgment
a conflict of interest between such indemnified and idemnifying parties may
exist with respect to such claim, permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party. If the indemnifying party is not permitted to assume such defense, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). An
indemnifying party who is not entitled, or elects not, to assume the defense of
a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such in indemnified party and any other
of such indemnified parties with respect to such claim.
5. Participation in Underwritten Registrations.
No Stockholder may participate in any underwritten registration hereunder
unless such holder (a) agrees to sell such holder's securities on the basis
provided in any underwriting arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting agreements.
6. As to any particular Registrable Securities, such securities will cease
to be Registrable Securities (i) when they have been effectively registered
under the 1933 Act and disposed of in accordance with the registration statement
covering them, or (ii) on the later of the second anniversary of the date of
this Agreement or the date when they become eligible for sale pursuant to Rule
144 under the 1933 Act (or any similar provision then in force).
7. Definitions.
a. The term "Registration Expenses" means all expenses incident to the
Company's performance of or compliance with this Agreement, including all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, expenses and
fees for listing the securities to be registered on exchanges or automated
trading markets on which similar securities issued by the Company are then
listed, and fees and disbursements of counsel for the Company and of all
independent certified public accountants, underwriters (other than Underwriting
Commissions) and other persons retained by the Company.
b. The term "Selling Stockholders" means registered holders of Registrable
Securities who request inclusion of all or a portion of their shares of
Registrable Securities in a Piggyback Registration pursuant to Section 1(a).
c. The term "Stockholder" means a registered holder of Registrable
Securities.
d. The term "Underwriting Commissions" means all underwriting discounts or
commissions relating to the sale of the Registrable Securities, but excludes any
expenses reimbursed to underwriters.
8. Limitations on Subsequent Registration Rights.
From and after the date of this Agreement, the Company may enter into an
agreement with any holder or prospective holder of any securities of the Company
that would allow such holder or prospective holder to include such securities
for sale pursuant to any Registration Statement filed by the Company under the
1933 Act or that would add any such holder or prospective holder as a party to
this Agreement.
9. Miscellaneous.
c. Notices. Any notices required hereunder shall be deemed to be given
upon the earlier of the date when received at, or the seventh day after the
date when sent by certified or registered mail to, the address of the Company's
corporate headquarters in the case of any notice to the Company, and until
changed by notice to the Company, the address of the Stockholder on file with
the Company in the case of any notice to the Stockholder.
d. Amendments and Waivers. The provisions of this Agreement may be amended
or terminate and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, if approved in writing by
the Stockholders that hold a majority of the Registrable Securities.
e. Assignment; Binding Effect. This Agreement may be amended, assigned,
modified or supplemented only by a written instrument duly executed by each of
the parties hereto. This
Agreement will bind and inure to the benefit of the respective successors
(including any successor resulting from a merger or similar reorganization),
permitted assigns, heirs, and personal representatives of the parties hereto.
f. Prior Agreements. This Agreement is the only agreement among the Company
and any of the Stockholders with respect to the subject matter hereof, and any
prior agreements between the Company and any of the Stockholders relating to the
subject matter of this Agreement are terminated as of the date hereof and shall
have no further force and effect.
g. Governing Law. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by the internal law, but not
the law of conflicts, of the State of Delaware.
h. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered to be an original instrument and
to be effective as of the date first written above. Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
i. Interpretation. Unless the context of this Agreement clearly requires
otherwise, (i) references to the plural include the singular, the singular the
plural, the part the whole, (ii) references to one gender include all genders,
(iii) "or" has the inclusive meaning frequently identified with the phrase
"and/or" and (iv) "including" has the inclusive meaning frequently identified
with the phrase "but not limited to." The section and other headings contained
in this Agreement are for reference purposes only and shall not control or
affect the construction of this Agreement or the interpretation thereof in any
respect.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
The Med-Design Corporation
By:
--------------------------
Becton Xxxxxxxxx and Company
By:
--------------------------
State of Delaware
Office of the Secretary of State
I, XXXXXX X. XXXXX, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "THE MED-DESIGN CORPORATION", FILED IN THIS OFFICE ON THE
FOURTEENTH DAY OF DECEMBER, A.D. 1998, AT 10 O'CLOCK A. M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY
RECORDER OF DEEDS.
[SEAL]
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, Secretary of State
2447427 8100 AUTHENTICATION: 9459689
981479670 DATE: 12-14-98
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK
OF
THE MED-DESIGN CORPORATION
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The Med-Design Corporation, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), by its Secretary, does hereby
certify that, pursuant to authority conferred upon the Board of Directors by
Article 4 of the Amended and Restated Certificate of Incorporation of the
Company, which authorized the issuance of 5,000,000 shares of Preferred Stock of
the Company, $.01 par value per share ("Preferred Stock"), and pursuant to the
provisions of Section 151 of the Delaware General Corporation Law, as amended,
the Board of Directors of the Company, by unanimous consent in writing dated
December 11, 1998, has duly adopted resolutions providing for the issuance out
of such Preferred Stock of up to 300,000 shares of Series A Convertible
Preferred Stock, and setting forth in full the voting powers, designations,
preferences and relative, participating, optional and other special rights and
the qualifications, limitations and restrictions thereof, in their entirety, as
follows:
RESOLVED, that the Company is authorized to issue, out of the 5,000,000
shares of Preferred Stock of the Company authorized in Article 4 of its
Certificate of Incorporation, a class of Preferred Stock of the Company to be
designated as "Series A Convertible Preferred Stock," $.01 par value per share,
with the following voting powers, designations, preferences and relative,
participating, optional and other special rights and qualifications, limitations
and restrictions thereof:
The Preferred Stock of the Company authorized by this resolution shall be
designated and known as the "Series A Convertible Preferred Stock." The number
of shares of the Series A Convertible Preferred Stock authorized hereby shall be
500,000 shares.
1. Definitions. As used herein, the following terms shall have the
following definitions:
(a) "Conversion Price" shall have the meaning set forth in Section
4(a)(i) hereof.
(b) "Conversion Rights" shall have the meaning set forth in Section 4
hereof.
(c) "Original Series A Issue Price" means $5.00 per share of Series A
Preferred Stock (appropriately adjusted for stock splits, reverse stock splits
and similar type transactions or occurrences with respect to the Series A
Preferred Stock).
(d) "Purchase Agreement" means the Preferred Stock Purchase Agreement
dated the Series A Issuance Date, by and between the Corporation and Becton,
Xxxxxxxxx and Company (as defined therein).
(e) "Series A Conversion Price" shall have the meaning set forth in
Section 4(a)(i) hereof.
(f) "Series A Issuance Date" means the date on which the first share of
Series A Preferred Stock is issued.
(g) "Series A Liquidation Preference" means, as to each share of Series
A Preferred Stock, the Original Series A Issue Price, plus all accrued,
accumulated or declared but unpaid dividends thereon, if any, as adjusted for
stock splits, reverse stock splits and similar type transactions or occurrences
with respect to the Series A Preferred Stock.
(h) "Series A Preferred Stock" means the Corporation's Series A
Convertible Preferred Stock, $.01 par value per share.
2 Dividend Provisions.
(a) General. The holder of each share of Series A Preferred Stock shall
be entitled to receive, before any dividend shall be declared and paid upon or
set aside for any shares of Common Stock in any year, out of funds legally
available for that purpose, dividends at such rates and upon such terms and
conditions as hereinafter set forth.
(b) Series A Preferred Stock.
From and after the Series A Issuance Date, the holder of each share of
Series A Preferred Stock shall be entitled to receive dividends accruing from
and after the series A Issuance Date at the rate of $.40 per share per year (a
dividend of 5%) (appropriately adjusted for stock splits, reverse stock splits
and similar type transactions or occurrences with respect to the Series A
Preferred Stock). Dividends shall be paid semi-annually, with the first dividend
payment to be made 180 days after the Issuance Date. At the option of the
Company, dividends may be paid in Shares of Series A Preferred Stock based upon
the Original Series A Issuance Price hereunder.
(c) Common Stock. The holders of shares of Series A Preferred Stock
shall participate with holders of shares of Common Stock on a pro rata basis,
based on the number of shares of Common Stock held by each (assuming conversion
of all such shares of Series A Preferred Stock into Common Stock on the terms
set forth herein), in the receipt of dividends when, as and if declared by the
Board of Directors (other than a dividend payable in Common Stock or other
securities or rights convertible into or entitling the holder thereof to
receive,
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directly or indirectly, additional shares of Common Stock), which dividends
shall be in addition to and not in lieu of the dividends on shares of Series A
Preferred Stock set forth in Section 2(b).
3. Liquidation Preference.
(a) Priority. In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the assets of the
Corporation legally available for distribution to its stockholders shall be
distributed in the following order of priority:
(i) The holders of shares of Series A Preferred Stock shall be
entitled to receive, prior and in preference to any distribution in such
liquidation, dissolution or winding up of any of the assets of the Corporation
to the holders of shares of Common Stock or holders of other series of Preferred
Stock by reason of their ownership their ownership thereof, an amount per share
equal to the greater of (A) the Series A Liquidation Preference, or (B) the
amount per share that each holder of shares of Common Stock would be entitled to
receive (assuming the conversion of all of the shares of Series A Preferred
Stock into Common Stock on the terms set forth herein). If upon the occurrence
of any such distribution, the assets of the Corporation thus distributed among
the holders of shares of Series A Preferred Stock shall be insufficient to
permit the payment to such holders of the full aforesaid preferential amounts,
then the entire assets of the Corporation legally available for distribution
shall be distributed on a pro rata basis among the holders of shares of Series A
Preferred Stock (in proportion to the number of shares of Series A Preferred
Stock held by each such holder).
(ii) After the distributions described in Section 3(a)(i) hereof
have been made, the remaining assets of the Corporation, to the extent
available, shall be distributed among the holders of shares of Common Stock pro
rata based on the number of shares of Common Stock held by each.
(b) Consolidation, Merger, Etc. A consolidation or merger of the
Corporation with or into any other corporation or corporations, or a sale,
conveyance or disposition of all or substantially all of the assets of the
Corporation or the effectuation by the Corporation of a transaction or series of
related transactions in which more than 50% of the voting power of the
Corporation is disposed of, shall each be deemed to be, at the option of the
holders of majority of the outstanding shares of Series A Preferred Stock (the
"Required Holders"), a liquidation, dissolution or winding up within the meaning
of this Section 3. Any such election shall be made within 30 days of the
Required Holders' receipt of notice of the same.
(c) Valuation. Liquidation proceeds shall be payable in cash, unless
otherwise elected by the Required Holders. Any securities to be delivered to the
stockholders pursuant to a liquidation shall be valued as follows:
(i) Securities not subject to restrictions on free marketability;
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(A) If traded on a securities exchange or a national
interdealer quotation system such as NASDAQ, the value shall be deemed to be the
average of the closing prices of the securities on such exchange over the 30-day
period ending three (3) days prior to the closing;
(B) If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid prices over the 30-day period ending
three (3) days prior to the closing; and
(C) If there is no active public market, the value shall be
the fair market value thereof, as determined jointly by the Board of Directors
and the Required Holders.
(ii) The method of valuation of securities subject to investment
letter or other restrictions on free marketability shall be to make an
appropriate discount from the market value determined above in Section
3(c)(i)(A), (B) or (C) hereof to reflect the approximate fair market value
thereof, as determined jointly by the Board of Directors and the Required
Holders.
4. Conversion. The holders of shares of Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Subject to the terms and conditions of this
Section 4(a), at any time after the Series A Issuance Date, the Series A
Preferred Stock and accrued but unpaid dividends shall be convertible at the
option of the holder at a conversion price of $5.00 per share. (The "Series A
Conversion Price"). Such rights of conversion shall be exercised by the holder
thereof by giving written notice that the holder elects to convert a stated
number of shares of Series A Preferred Stock into Common Stock and by surrender
of a certificate or certificates for the shares so to be converted to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the holders
of the Series A Convertible Preferred Stock) at any time during its usual
business hours on the date set forth in such notice, together with a statement
of the name or names (with address) in which the certificate or certificates for
shares of Common Stock shall be issued.
(b) Mandatory Conversion. At the option of the Company (the "Company
Conversion Option"), exercised at any time after 270 days from the Series A
Issuance Date, the Series A Preferred Stock shall automatically be converted
into Common Stock upon written notice to the holder(s) of such Company's
exercise of the option to convert (the "Company's Conversion Notice" ). The
number of shares of Common Stock, issuable upon the exercise of the Company
Conversion Option shall be based upon a Conversion Price which is equal to 130%
of the average Closing Price of the Common Stock for the twenty consecutive
trading days immediately preceding the date on which the Company Conversion
Notice is given by the
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Company; provided, however, that said Conversion Price shall not be less than
$3.25 nor greater than $5.00 per share.
(c) Mechanics of Conversion. Before any holder of shares of Series A
Preferred Stock shall be entitled to convert any of such shares into shares of
Common Stock, such holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for the office of the Corporation or of any transfer agent for the Series
A Preferred Stock, and shall give written notice by mail, postage prepaid, or
hand delivery, to the Corporation at its principal corporate office, of the
election to convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holders of shares of Series A Preferred Stock, or the nominee or
nominees of such holders, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Series A Preferred Stock
to be converted, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock as of such date. If
the conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, as amended, the conversion
may, at the option of any holder tendering the Series A Preferred Stock for
conversion, be conditioned upon the closing with the underwriter of the sale of
securities pursuant to such offering, in which event the person(s) entitled to
receive Common Stock issuable upon such conversion of the Series A Preferred
Stock shall not be deemed to have converted such Series A Preferred Stock until
immediately prior to the closing of such sale of securities.
(d) Conversion Price Adjustments of Series A Preferred Stock. The
Series A Conversion Price shall be subject to adjustment from time to time as
follows:
(i) In the event the Corporation at any time or from time to time
after the Series A Issuance Date fixes a record date for the effectuation of a
split or subdivision of the outstanding shares of Common Stock or the
determination of holders of shares of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into or exercisable for, or entitling the
holder thereof to receive directly or indirectly, additional shares of Common
Stock (hereinafter referred to as "Common Stock Equivalents") without payment of
any consideration by such holder for the additional shares of Common Stock
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split or subdivision if no record date is fixed), the Series A
Conversion Price shall be appropriately decreased so that the number of shares
of Common Stock issuable on conversion of each share of Series A Preferred Stock
shall be increased in proportion to such increase in the aggregate number of
shares of Common Stock outstanding on a fully diluted basis.
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(ii) If the number of shares of Common Stock outstanding at any
time after the Series A Issuance Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the Series A Conversion Price shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of each share
of Series A Preferred Stock shall be decreased in proportion to such decrease in
the aggregate number of outstanding shares of Common Stock.
(e) Other Distributions. In the event the Corporation shall declare a
distribution payable in securities of other persons, evidences of indebtedness
issued by the Corporation or other persons, assets (excluding cash dividends),
securities of the Corporation other than Common Stock or options or rights not
referred to in Section 4(c) hereof, then, in each such case for the purpose of
this Section 4(d), the holders of shares of Series A Preferred Stock shall be
entitled to proportionate share of any such distribution as though they were
holders of the number of shares of Common Stock into which their shares of
Series A Preferred Stock are convertible as of the record date fixed for the
determination of the holders of shares of Common Stock entitled to receive such
distribution.
(f) Recapitalization. If at any time or from time to time there shall
be a recapitalization of Common Stock or a consolidation, merger, or other
business combination of the Corporation with or into any other corporation
(other than, with respect to any holder of Series A Preferred Stock, a split
subdivision or combination of the outstanding Common Stock or a consolidation,
merger or sale of assets or stock transaction provided for in Section 3 hereof,
which the Required Holders have elected to treat as a liquidation, dissolution
or winding up of the Corporation), provision shall be made so that each holder
of shares of Series A Preferred Stock shall thereafter be entitled to receive,
upon conversion of the Series A Preferred Stock, the number of shares of stock
or other securities or property of the Corporation or otherwise receivable upon
such recapitalization or business combination by a holder of the number of
shares of Common Stock into which such shares of Series A Preferred Stock could
have been converted immediately prior to such recapitalization or business
combination. In any such case, appropriate adjustment shall be made in the
application of this Section 4 with respect to the rights of the holders of
shares of Series A Preferred Stock after the recapitalization to the end that
the provisions of this Section 4 (including adjustments of the Series A
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series A Preferred Stock) shall be applicable after that event
as nearly equivalent as may be practicable.
(g) No Impairment. The Corporation will not, by amendment of is
Certificate of Incorporation or through any reorganization, recapitalization or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Corporation,
but will at all times in good faith assist in carrying out of all the provisions
of this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of shares
of Series A Preferred Stock against impairment.
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(h) No Fractional Shares. No fractional shares shall be issued upon
conversion of the Series A Preferred Stock, and the number of shares of Common
Stock to be issued shall be rounded down to the nearest whole share, and there
shall be no payment to a holder of shares of Series A Preferred Stock for any
such rounded fractional share. Whether or not fractional shares result from such
conversion shall be determined on the basis of the total number of shares of
Series A Preferred Stock the holder is at the time converting into Common Stock
and the number of shares of Common Stock issuable upon such aggregate
conversion.
(i) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Series A Conversion Price pursuant to this
Section 4, the Corporation, at its expense, shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and prepare and
furnish to each holder of shares of Series A Preferred Stock a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Corporation shall, upon
the written request at any time or any holder of shares of Series A Preferred
Stock, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustment and readjustment, (ii) the Series A Conversion
Price, as applicable, at the time in effect, and (iii) the number of shares of
Common Stock and the amount, if any, of other property which at the time would
be received upon the conversion of a share of Series A Preferred Stock, as
applicable.
(j) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of shares of Series A Preferred Stock, at least twenty
(20) days prior to the date specified therein, a notice specifying the date on
which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right.
(k) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of Series A Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series A Preferred Stock, and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Series A Preferred Stock, then
in addition to such other remedies as shall be available to the holder of such
shares of Series A Preferred Stock, the Corporation will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number as shall be
sufficient for such purposes.
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(l) Notices. Any notice required by the provisions of this Section 4 to
be given to the holders of shares of Series A Preferred Stock shall be deemed
given when received if delivered via courier or sent by facsimile, by telex, or
by United States mail, postage prepaid, and addressed to each holder of record
at his, her or its address appearing on the books of the Corporation.
5. Status of Converted Stock. In the event any shares of shares of Series A
Preferred Stock are converted pursuant to Section 4 hereof, the shares so
converted shall be canceled, retired and eliminated and shall not be reissued by
the Corporation. The Certificate of Incorporation of the Corporation shall be
appropriately amended to effect the corresponding reduction in the Corporation's
authorized capital stock.
6. Voting Rights.
Each holder of a share of Series A Preferred Stock shall have the right
to one vote for each share of such Series A Preferred Stock. The holders of
shares of Series A Preferred Stock shall have full voting rights and powers
equal to the voting rights and powers of the holders of shares of Common Stock,
and shall be entitled to notice of any stockholder's meeting in accordance with
the Bylaws of the Corporation and applicable law and shall vote, together with
the holders of shares of Common Stock (and any other class or series or stock
entitled to vote together as one class with the Common Stock), with respect to
any question upon which holders of shares of Common Stock have the right to
vote, as a single class, including, but not limited to, actions amending the
Certificate of Incorporation of the Corporation to increase the number of
authorized shares of Common Stock. In addition, the holders of Series A
Preferred Stock shall have the right as a class to elect, by majority vote of
the class, one member of the Board of Directors of the Corporation.
IN WITNESS WHEREOF, we have signed this certificate and affirm the truth of
the statements contained therein under penalty of perjury this 11th day of
December, 1998.
THE MED-DESIGN CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
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SERIES A
PREFERRED STOCK PURCHASE AGREEMENT
THE MED-DESIGN CORPORATION
0000 Xxxxxx Xxx.
Xxxxxxx, Xxxxxxxxxx 00000
As of December 11, 1998
Becton, Xxxxxxxxx and Company
0 Xxxxxx Xxxxx
Xxxxxxxx Xxxxx, XX 00000
Re: Series A Preferred Stock
Gentlemen:
The Med-Design Corporation (the "Company"), a Delaware corporation, agrees with
you as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01 The Preferred Shares. The Company has authorized the issuance, sale
and exchange of 300,000 shares (the "Series A Shares") of its authorized but
unissued shares of Series A Preferred Stock, $.01 par value (the "Series A
Preferred Stock), at a purchase price of $5.00 per share to Becton, Xxxxxxxxx
and Company (the "Series A Purchaser"'). The Series A Preferred Stock is
sometimes hereinafter referred to as the "Preferred Stock"; the Series A Shares
are sometimes hereinafter referred to as the "Preferred Shares"; and the Series
A Purchaser is sometimes hereinafter referred to as the "Purchaser". The
designation, rights, preferences and other terms and provisions of the Preferred
Stock are set forth in Exhibit 2.02(a) hereto.
1.02 The Conversion Shares. The Company has authorized and has reserved and
covenants to continue to reserve, free of preemptive rights and other similar
contractual rights of shareholders, a sufficient number of its authorized but
unissued shares of Common Stock to satisfy the rights of conversion of the
holders of the Preferred Shares. Any shares of Common Stock issuable upon
conversion of the Preferred Shares (and such shares when issued) are herein
referred to as the "Conversion Shares". The Preferred Shares and Conversion
Shares are sometimes collectively referred to as the "Shares".
1.03 Purchase Price and Closing. The Company agrees to issue, sell and
exchange to the Purchaser and, in consideration of and in express reliance upon
the representations, warranties, covenants, terms and conditions of this
Agreement, the Purchaser agrees to purchase, 300,000 of the Preferred Shares.
The aggregate purchase price of the Preferred Shares being acquired by Purchaser
is $1,500,000. The closing of the purchase, sale and exchange of the Preferred
Shares to be acquired by the Purchaser and delivery of the purchase price of the
Preferred Shares being acquired by Purchaser from the Company under this
Agreement shall take place at the offices of the Purchaser, on December 12,
1998, or at such time and date thereafter as the Purchaser and the Company may
agree (the "Closing"). At the closing, the Company will deliver to the Purchaser
certificates for the Preferred Shares registered in the Purchaser's name,
against delivery of a check or checks payable to the order of the Company, or a
transfer of funds to the account of the Company by wire transfer, representing
the net cash consideration.
1.04 Representations by the Purchaser.
(a) Investment Representations. Purchaser represents that it is acquiring
the Preferred Shares for its own account (and it will be the sole beneficial
owner thereof) and that the Shares are being and will be acquired by it for the
purpose of investment and not with a view to distribution or resale thereof
except pursuant to registration under the Securities Act or an exemption
therefrom. The acquisition by Purchaser of the Preferred Shares acquired by it
shall constitute a confirmation of this representation by Purchaser. Purchaser
further represents that it understands and agrees that, until registered under
the Securities Act or transferred pursuant to the provisions of Rule 144 or Rule
144A as promulgated by the Securities Exchange Commission, all certificates
evidencing any of the Shares, whether upon initial issuance or upon any transfer
thereof, shall bear a legend, prominently stamped or printed thereon, reading
substantially as follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or
applicable state securities laws. These securities have been
acquired for investment and not with a view to distribution or
resale. These securities may not be offered for sale, sold,
delivered after sale, transferred, pledged or hypothecated in the
absence of an effective registration statement covering such
shares under the Act and any applicable state securities laws, or
the availability, in the opinion of counsel, of an exemption from
registration thereunder."
(b) Access to Information. Purchaser or its representative during the
course of this transaction, and prior to the purchase of any Preferred Shares,
has had the opportunity to ask questions of and receive answers from management
of the Company concerning the terms and conditions of the offering of the
Preferred Shares and the additional information, documents, records and books
relative to its business, assets, financial condition, results of operations and
liabilities (contingent or otherwise) of the Company.
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(c) General Access. Purchaser or its representative has received and read
or reviewed, and is familiar with, this Agreement and the other agreements
executed or delivered herewith, including the terms of the Preferred Stock, and
confirms that all documents, records, and books pertaining to Purchaser's
investment in the Company and requested by Purchaser or its representative have
been made available or delivered to it.
(d) Sophistication and Knowledge. Purchaser or its representative has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the purchase of the Preferred Shares.
Purchaser can bear the economic risks of this investment and can afford a
complete loss of its investment.
(e) Transfer Restrictions Imposed by Securities Laws. Purchaser understands
that: the Shares have not been registered under the Securities Act of 1933 (the
"Securities Act") and applicable state securities laws, and therefore, cannot be
resold unless they are subsequently registered under the Securities Act and
applicable state securities laws or unless an exemption from such registration
is available; Purchaser is and must be purchasing the Preferred Shares for
investment for the account of Purchaser and not for the account or benefit of
others, and not with any present view toward resale or other distribution
thereof. Purchaser agrees not to resell or otherwise dispose of all or any part
of the Shares purchased by it, except as permitted by law, including, without
limitation, any regulations under the Securities Act and applicable state
securities laws; the Company does not have any present intention and is under no
obligation to register the Shares under the Securities Act and applicable state
securities laws, except as provided in the Registration Rights Agreement between
the Company and you; and Rule 144 or Rule 144A under the Securities Act may not
be available as a basis for exemption from registration of the Shares
thereunder.
(f) Lack of Liquidity. Purchaser has no present need for liquidity in
connection with its purchase of the Preferred Shares.
(g) Suitability and Investment Objectives. The purchase of the Preferred
Shares by Purchaser is consistent with the general investment objectives of the
Purchaser. The Purchaser understands that the purchase of the Preferred Shares
involves a high degree of risk in view of the fact that, among other things, the
Company is a start-up enterprise, and there may be no established market for
the Company's capital stock.
(h) Accredited Investor Status. Purchaser is an "Accredited Investor" as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.
1.05 Brokers of Finders. Purchaser represents that no Person has or will
have, as a result of the transactions contemplated by this Agreement, any right,
interest or valid claim against or upon the Company for any commission, fee or
other compensation as a finder or broker because of any act or omission by
Purchaser or its respective agents.
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ARTICLE II
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to purchase and pay for the Preferred Shares to
be purchased by it at the Closing is subject to the following conditions (all of
which shall be deemed satisfied or waived by the Purchaser at or prior to the
Closing in the event all of the transactions contemplated to be effected at the
Closing are consummated):
2.01 Representations and Warranties. Each of the representations and
warranties of the Company set forth in Article III hereof shall be true,
accurate and correct on the date of the Closing.
2.02 Documentation at Closing. The Purchaser shall have received prior to
or at the Closing all of the following materials, each in form and substance
satisfactory to the Purchaser and its special counsel, and each of the following
events shall have occurred, and each of the following documents shall have been
delivered, prior to or simultaneous with the Closing:
(a) A copy of the Certificate of Designations and Preferences in the
form attached as Exhibit 2.02(a), together with evidence of the filing thereof
with the Delaware Secretary of State; a certified copy of the resolutions of the
Board of Directors and Stockholders of the Company providing for the approval of
(i) the Amendment to the Articles of Incorporation of the Company in the form
attached as Exhibit 2.02(a), and (ii) the approval of this Agreement, the
issuance of the Preferred Shares and the Conversion Shares and all other
agreements or matters contemplated hereby or executed in connection herewith; a
copy of the Certificate of Designations and Preferences certified by the
Secretary of the Company to be true, complete and correct in every particular,
and certified copies of all documents evidencing other necessary corporate or
other action and governmental approvals, if any, required to be obtained at or
prior to the Closing with respect to this Agreement and the issuance of the
Preferred Shares; and a stock certificate issued in the name of the Purchaser
evidencing the Preferred Shares.
(b) A certificate of the Secretary or an Assistant Secretary of the
Company which shall certify the names of the officers of the Company authorized
to sign this Agreement, the certificates for the Preferred Shares and the other
documents, instruments or certificates to be delivered pursuant to this
Agreement by the Company or any of its officers, together with the true
signatures of such officers.
(c) A certificate of the President and the Treasurer of the Company
stating that the representations and warranties of the Company contained in
Article III hereof and otherwise made by the Company in writing in connection
with the transactions contemplated hereby are true, accurate and correct as of
the date of the Closing and that all covenants and agreements of the Company
contained herein and required to be performed prior to or at the Closing have
been performed as of the Closing.
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(d) The Company shall have obtained any consents or waivers necessary
to be obtained at or prior to the Closing to execute and deliver this Agreement,
the Preferred Shares and the other agreements and instruments executed and
delivered by the Company in connection herewith and to carry out the
transactions contemplated hereby and thereby, and such consents and waivers
shall be in full force and effect at the Closing. All corporate and other action
and governmental filings necessary to effectuate the terms of the Agreement, the
Preferred Shares and the other agreements and instruments executed and delivered
by the Company in connection herewith shall have been made or taken.
(e) The Certificate of Designations representing the Preferred Stock
shall have been filed in the form set forth in Exhibit 2.02(a) attached hereto.
(f) The Company and Purchaser shall have executed a License Agreement
(the "License Agreement") of even date herewith in form satisfactory to
Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as of the Closing as follows:
3.01 Organization and Standing of the Company. The Company is a duly
organized and validly existing corporation and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority for
the ownership and operation of its properties and for the carrying on of its
business as now conducted and as now proposed to be conducted and to execute
this Agreement and the other Agreements and documents to be executed and
delivered by the Company in connection herewith, including without limitation,
the License Agreement, and to issue and deliver the Preferred Shares and to
issue and deliver the Conversion Shares and to perform its other obligations
pursuant hereto and thereto. The Company is duly licensed or qualified and in
good standing as a foreign corporation authorized to do business in all
jurisdictions wherein the character of the property owned or leased or the
nature of the activities conducted by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified would not
have a material adverse effect on the business, operations or financial
condition of the Company.
3.02 Corporate Action. This Agreement and the other agreements executed and
delivered in connection herewith have been duly authorized, executed and
delivered by the Company and constitute the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms. The execution and delivery of this Agreement and the other
agreements to be executed and delivered in connection herewith and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all required corporation action; the Preferred Shares have been
validly issued, are fully paid and nonassessable with no personal liability
attaching to the ownership thereof and are free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or through
5
the Company except as set forth in this Agreement and the Conversion Shares
have, as of the Closing, been duly reserved for issuance upon conversion of the
Preferred Shares and, when so issued, will be duly authorized, validly issued,
fully paid and nonassessable with no personal liability attaching to the
ownership thereof and will be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or through the Company except
as set forth in this Agreement
3.03 Approvals. Except as set forth on Exhibit 3.03 and except for the
filing of any notice prior or subsequent to the Closing that may be required
under applicable state and/or Federal securities laws (which, if required, shall
be filed on a timely basis), no authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or any third party, is or will be necessary for, or in connection with,
the execution and delivery by the Company of this Agreement for the offer,
issue, sale, execution or delivery of the Shares, or for the performance by the
Company of its obligations under this Agreement or any agreement executed and
delivered by the Company in connection herewith.
3.04 Securities Act Filings. The Company has made available to Purchaser
all filings of the Company under the Securities Exchange Act of 1934 (the
"Filings"). The Company represents that filings do not contain any
misrepresentations of material fact or omit to state any material fact the
inclusion of which is necessary to make the statements therein not misleading.
The Company shall timely file all reports and statements required to be filed
under the Securities Exchange Act of 1934.
ARTICLE IV
MISCELLANEOUS
4.00 Right to Elect Director. The Company agrees to use its best efforts to
cause a designee of Series A Purchaser to be elected to the Board of Directors
of the Company after conversion of the Preferred Shares to Common Stock, at
which time the class vote of the Preferred Shares under the Certificate of
Incorporation would otherwise terminate.
4.01 Costs, Expenses and Taxes. Each party shall pay its own costs and
expenses in connection with the preparation, execution and delivery of this
Agreement and the issuance of the Preferred Shares at the Closing. The Company
shall pay the reasonable fees and out-of-pocket expenses of legal counsel,
independent public accountants, consultants and other outside experts retained
by the Purchaser in connection with any amendment or waiver to this Agreement
(initiated by the Company) or the successful enforcement of this Agreement by
the Purchaser. In addition, the Company shall pay any and all stamp, or other
similar taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement, the issuance of the Shares and the
other instruments and documents to be delivered hereunder or thereunder, and
agrees to save the Purchaser harmless from and against any and all liabilities
with respect to or resulting from any delay in the paying or omission to pay
such taxes.
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4.02 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the Company and the Purchaser and their respective
heirs, successors and assigns, except that the Company shall not have the right
to delegate its obligations hereunder or to assign its rights hereunder or any
interest herein without the prior written consent of the Purchaser.
4.03 Survival of Representations and Warranties. All representations and
warranties made in this Agreement, the Shares, or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof.
4.04 Prior Agreements. This Agreement, the terms of the Preferred Stock,
and the other agreements executed and delivered herewith constitute the entire
agreement between the parties and supersedes any prior misunderstandings or
agreements concerning the subject matter hereof.
4.05 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware, and without giving
effect to choice of law provisions.
4.06 Headings. Article, section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
4.07 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
4.08 Further Assurances. From and after the date of this Agreement, upon
the request of the Purchaser or the Company, the Company and the Purchaser shall
execute and deliver such instruments, documents and other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Shares.
IN WITNESS WHEREOF, the parties hereto have caused this Series B Preferred
Stock Purchaser Agreement to be executed as of the date first above written.
THE MED-DESIGN CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Xxxxx X. Xxxxxxx
Title: President
BECTON, XXXXXXXXX AND COMPANY
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