SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (section)240.14a-11(c) or
(section)240.14a-12
The Med-Design Corporation
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(Name of Registrant as Specified In Its Charter)
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(Names of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
<PAGE>
1) Amount Previously Paid:
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2) Form, Schedule or Registration No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
[MED DESIGN LOGO]
North American Building, Suite 310
121 South Broad Street
Philadelphia, Pennsylvania 19107
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The
Med-Design Corporation (the "Company") will be held at The Union League, Broad
and Sansom Streets, Philadelphia, Pennsylvania, on Thursday, June 26, 1997, at
1:30 p.m. local time, for the following purposes:
1. To elect seven directors of the Company to serve for the following
year, or until their successors have been elected and qualified.
2. To act upon a proposal to ratify the appointment of Coopers & Lybrand
L.L.P. as the Company's independent accountants for the fiscal year
ending December 31, 1997.
3. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
A proxy, if properly executed and received in time for the voting, will be
voted in the manner directed therein. If no direction is made, such proxy will
be voted FOR all proposals therein. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The Board of Directors has fixed May 14, 1997, as the record date for
determining stockholders entitled to notice of the Annual Meeting and to vote at
such any adjournments thereof. Only stockholders of record as of the close of
business on May 14, 1997, entitled to notice of, and to vote at, such meeting or
any adjournments thereof.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to attend, you are urged to complete, date and sign the enclosed proxy and
return it promptly. If you receive more than one form of proxy, it is an
indication that your shares are registered in more than one account, and each
such proxy must be completed and returned if you wish to vote all of your shares
eligible to be voted at the Annual Meeting.
By Order of the Board of Directors
/s/ Joseph N. Bongiovanni, III
-------------------------------------
Joseph N. Bongiovanni, III, Secretary
Dated: May 16, 1997.
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PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE.
<PAGE>
[MED DESIGN LOGO]
North American Building, Suite 310
121 South Broad Street
Philadelphia, Pennsylvania 19107
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PROXY STATEMENT
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GENERAL
The enclosed proxy is solicited pursuant to this Proxy Statement (to be
mailed on or about May 16, 1997) by the Board of Directors of The Med-Design
Corporation, a Delaware corporation (the for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the time and place shown in
the attached Notice of Annual Meeting of Stockholders and at any adjournment or
adjournments thereof. The Company's telephone number is (215) 735-2700.
INFORMATION CONCERNING VOTING AND PROXIES
Proxies
Shares represented by proxies, if properly signed, dated and received in
time for the voting, will be voted at the Annual Meeting as specified, or, if
not otherwise specified, FOR the election as directors of the nominees named
herein and FOR each other proposal described in the attached Notice of Annual
Meeting of Stockholders. Such proxies are revocable at any time before they are
exercised by written notice to the Secretary of the Company. Attendance at the
Annual Meeting will not, without delivery of the written notice described in the
immediately preceding sentence, constitute revocation of a proxy. Management is
not aware at the date hereof of any matter to be presented at the Annual Meeting
other than the election of directors and the other proposal described in the
attached Notice of Annual Meeting of Stockholders. If any other matter is
properly presented, the persons named in the proxy will vote thereon according
to their best judgement.
The expense of soliciting proxies for the Annual Meeting, including the
cost of preparing, assembling and mailing the notice, proxy and Proxy Statement,
will be paid by the Company. The solicitation will be made by directors,
officers and regular employees of the Company without additional compensation.
In addition, banks, brokers and other nominees will be reimbursed for their
customary expenses incurred in connection with the forwarding of such materials.
The Company may employ an outside firm to assist in the solicitation of proxies
and the cost, if any, for such services will be paid by the Company. Proxies may
be solicited by personal interview, mail, telephone or facsimile transmission.
Record Date
The record date for determining the holders of the common stock, $.01 par
value per share, of the Company ("Common Stock"), the only class of capital
stock of the Company that is
<PAGE>
issued and outstanding, who are entitled to notice of, and to vote at, the
Annual Meeting is May 14, 1997.
Voting Securities
As of the close of business on April 16, 1997, there were 7,924,570 shares
of Common Stock outstanding, each of which will entitle its holder of to one
vote at the Annual Meeting. There is no cumulative voting.
ITEM 1 - ELECTION OF DIRECTORS
At December 31, 1996, the Board of Directors consisted of seven persons,
James M. Donegan, John A. Botich, Joseph N. Bongiovanni, III, Gilbert M. White,
John F. Kelley, Gary L. Crocker and John S. Marr. Mr. Gary L. Crocker served as
a Director of the Company until March 17, 1997, at which time he resigned.
Thereafter, on April 28, 1997, Mr. William A. Jolly was appointed by the Board
to fill the unexpired term of Mr. Crocker. The Nominating Committee, which has
the task of nominating members for the Board, has nominated Messrs. Donegan,
Botich, Bongiovanni, White, Kelley, Marr and Jolly. The Stockholders are being
asked to elect seven directors, who will comprise the Board of Directors of the
Company, to serve for the ensuing year and until their successors are duly
elected and qualified. All of the nominees are currently directors of the
Company. If elected, each nominee will serve until the next annual meeting of
stockholders of the Company or until his successor is elected and qualifies.
The persons named in the proxy intend to vote, unless otherwise instructed,
FOR the election as director of each nominee. Each nominee has expressed his
willingness to serve as a director if elected and the Company knows of no reason
why any nominee would be unable to serve. If any nominee is not available for
election at the time of the Annual Meeting, however, the proxy holders may vote
for any other person in their discretion or may refrain from electing or voting
to elect anyone to fill the position. The directors shall be elected by a
plurality of the votes of the shares present in person or represented by proxy
and entitled to vote at the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 2, 1997, certain information
with respect to the beneficial ownership of Common Stock by each person known to
the Company to own beneficially five percent or more of the outstanding Common
Stock (the only class outstanding), by each director, and by all officers and
directors as a group.
<TABLE>
<CAPTION>
Number of Shares Percent of Class
Name and Address(1) Beneficially Owned (2) Beneficially Owned
------------------- ---------------------- ------------------
<S> <C> <C>
James M. Donegan................................ 1,457,115 (3) 18.39%
Thor R. Halseth................................. 452,546 (4) 5.71%
Michael J. Botich............................... 401,592 (4) 5.07%
John A. Botich.................................. 260,580 (5) 3.29%
Joseph N. Bongiovanni, III...................... 12,000 (4) *
Gilbert M. White................................ 100,500 (6) 1.27%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percent of Class
Name and Address(1) Beneficially Owned (2) Beneficially Owned
------------------- ---------------------- ------------------
<S> <C> <C>
John F. Kelley.................................. 141,750 (7) 1.76%
John S. Marr, MD................................ 26,000 (8) *
William A. Jolly................................ 9,000 (9) *
Scudder, Stevens & Clark, Inc................... 438,000(10) 5.54%
Hathaway & Associates, Ltd...................... 477,000(11) 6.02%
All Directors and Officers as a Group
(13 persons).................................. 2,944,083(12) 36.28%
</TABLE>
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* Less than one percent (1%)
(1) Unless otherwise indicated, the address of each named holder is c/o The
Med-Design Corporation, North American Building, Suite 310, 121 South Broad
Street, Philadelphia, Pennsylvania 19107.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to options, warrants and convertible notes currently exercisable or
convertible, or exercisable or convertible within sixty (60) days of April
2, 1997, are deemed outstanding for computing the percentage of the person
holding such securities but are not deemed outstanding for computing the
percentage of any other person. Except as indicated by footnote, and
subject to community property laws where applicable, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them.
(3) Includes 1,600 shares of Common Stock held by Mr. Donegan as custodian for
Derek Donegan, his son, under the Pennsylvania Uniform Gifts to Minors Act.
(4) Includes options to purchase 2,000 shares of Common Stock granted pursuant
to the Company's Non-Qualified Stock Option Plan ("Option Plan").
(5) Includes 5,446 shares of Common Stock owned by Mr. Botich's spouse, Nina
Dominquez and Jacqueline Treguboff as joint tenants and options to purchase
3,200 shares of Common Stock granted pursuant to the Option Plan.
(6) Includes 200 shares of Common Stock held by Mr. White's spouse and options
to purchase 3,200 shares of Common Stock granted pursuant to the Option
Plan.
(7) Includes options to purchase 16,000 shares of Common Stock pursuant to the
Company's Option Plan and warrants to purchase 100,000 shares of the
Company's Common Stock granted by the Company.
(8) Includes options to purchase 16,000 shares of Common Stock pursuant to the
Company's Option Plan.
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<PAGE>
(9) Includes warrants to purchase 5,000 shares of Common Stock owned by Mr.
Jolly.
(10) Based on a Schedule 13G filed with the Securities and Exchange Commission
on February 10, 1997 by Scudder, Stevens & Clark ("SS&C"). The address for
SS&C is 345 Park Avenue, New York, NY 10154.
(11) Based on a Schedule 13G filed with the Securities and Exchange Commission
on January 31, 1997 by Hathaway & Associates, Ltd., whose address is 119
Rowayton Avenue, Rowayton, CT 06853.
(12) Includes options and warrants to purchase 190,400 shares of Common Stock
granted to directors and officers of the Company.
DIRECTORS AND EXECUTIVE OFFICERS
Identification and Business Experience
The following table sets forth the names and certain information about each
of the nominees for election as a director of the Company and the executive
officers of the Company.
<TABLE>
<CAPTION>
Director/
Name Age Position(s) Officer Since
---- --- ----------- -------------
<S> <C> <C> <C>
James M. Donegan (1)(2)(4).............. 45 Chairman of the Board, Chief Executive 1994
Officer and President
John A. Botich (1)(4)................... 73 Executive Vice President, Chief 1994
Operating Officer and Director
Patrick E. Rodgers...................... 56 Executive Vice President, Finance and 1994
Chief Financial Officer
Joseph N. Bongiovanni, III(1)(4) 52 Vice President, Secretary and Director 1994
Gilbert M. White (4).................... 58 Executive Vice President and Director 1994
John J. Osborne......................... 50 Senior Vice President, Marketing 1994
Michael J. Botich....................... 48 Senior Vice President, Research and 1994
Development
Thor R. Halseth......................... 44 Senior Vice President, Design 1994
Donald M. Shea.......................... 60 Vice President, Manufacturing and 1994
Automation Engineering
Lawrence D. Ellis....................... 46 Vice President and Controller 1996
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C>
John F. Kelley (1)(2)(4)................ 53 Director 1995
John S. Marr (1)(3)..................... 56 Director 1995
William A. Jolly (3).................... 43 Director 1997
</TABLE>
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(1) Member of the Executive Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
(3) Member of the Compensation Committee of the Board of Directors.
(4) Member of the Nominating Committee of the Board of Directors.
There are no family relationships among any of the directors, executive
officers and significant employees of the Company, other than among John A.
Botich and Michael J. Botich, who are father and son.
Mr. Donegan is the Chairman of the Board of Directors of the Company and is
the Chief Executive Officer and President of the Company. From 1991 to 1995, Mr.
Donegan served as the marketing executive for the Structured Investment Division
of Chase Manhattan Bank and most recently as the Managing Director of Chase
Futures Management, Inc. From 1988 to 1991, Mr. Donegan was Vice President of
Chase Futures Inc., where he developed and implemented a financial futures/risk
management product/services line. Prior to his employment at Chase, Mr. Donegan
was a Vice President at Kidder Peabody & Co.
Mr. John A. Botich is a director of the Company and an Executive Vice
President and the Chief Operating Officer of the Company. From 1990 to 1995, Mr.
Botich served as the Chief Executive Officer of Med-Design, Inc., the
predecessor of the Company ("MDI"). Prior to joining MDI he was a Senior Vice
President and Group Manager with VTN Corporation ("VTN"), a publicly held
engineering, construction management and energy development company for 15
years. At VTN, Mr. Botich developed and implemented long range strategic
planning. While at VTN, he also served as President of another subsidiary, VTN
Energy Systems, Inc., where he directed the development of alternative energy
systems and projects. Mr. Botich also served as the President of VTN
International, Inc., a subsidiary of VTN, where he was responsible for the
executive direction of all international projects, including marketing, contract
negotiations, establishing overseas offices, establishing agency representations
and implementing financial and legal services.
Mr. Rodgers is the Company's Executive Vice President, Finance and Chief
Financial Officer. From April, 1994, to 1995, Mr. Rodgers served as the Chief
Financial Officer of Saratoga Beverage Group, Inc., a manufacturer of bottled
water. From 1990 to April, 1994, Mr. Rodgers was a self-employed financial and
accounting consultant to regional airlines, manufacturing companies and other
organizations. Mr. Rodgers is a member of the American Institute of Certified
Public Accountants and New Jersey Institute of Certified Public Accountants. He
holds a B.S. degree in Accounting from Rutgers University.
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<PAGE>
Mr. Bongiovanni is a director and is a Vice President and the Secretary of
the Company. Mr. Bongiovanni is an attorney admitted to practice before the
state and Federal courts in the Commonwealth of Pennsylvania and the United
States Supreme Court. Since 1978, Mr. Bongiovanni has been the senior partner of
the law firm Bongiovanni & Berger. He has also been an Associate Professor of
Business Law & Real Estate at the School of Business and Management, Temple
University since 1985. Mr. Bongiovanni holds an A.B. in Classical Languages and
Philosophy from Haverford College and a J.D. from Temple University School of
Law.
Mr. White is a director and is an Executive Vice President of the Company.
Since 1984, Mr. White has been a Senior Vice President of Rollins Hudig Hall, a
large international insurance brokerage firm, where he designed, marketed and
serviced complex insurance programs for large national and international
clients.
Mr. Osborne is the Senior Vice President, Marketing of the Company. From
June, 1992, to 1995, Mr. Osborne served as President of PRN Medical Associates,
a firm specializing in the sale and marketing of medical devices for selected
manufacturers, where he was responsible for marketing, sales training,
advertising, public relations and the organization and implementation of sales
and distribution networks. Prior to PRN Medical Associates, from January, 1991,
to June, 1992, Mr. Osborne was Director of Sales and Marketing for Med-Con
International, a sales and marketing firm representing several manufacturers of
medical equipment and devices. For the three years prior to joining Med-Con
International, Mr. Osborne was a Regional Sales Manager for White Stone Medical
Products, a distribution and marketing firm representing medical product
suppliers.
Mr. Michael J. Botich is the Senior Vice President, Research and
Development of the Company. From 1990 to 1995, Mr. Botich was the Senior Vice
President, Research and Development of MDI, where he assisted in developing,
engineering and designing the Company's safety needle technology. From 1984 to
1992 Mr. Botich served as the Director of Engineering for Designworks U.S.A., a
firm specializing in industrial design and product development in the
automotive, electronics, computer, medical and consumer products industries,
where he directed and implemented the design of new and innovative products for
clients from the concept phase through prototypes, testing, final product design
and manufacturing drawings and specifications. Prior to joining Designworks
U.S.A., Mr. Botich was Senior Design Engineer with Unitek Corporation, a
subsidiary of Bristol-Meyers Squibb Corporation in the business of dental and
laboratory product development and manufacturing, where he researched, developed
and designed specialized dental and laboratory equipment. Mr. Botich has also
served from time to time as an independent design and engineering consultant and
is the inventor or co-inventor of record of twelve United States and foreign
patents.
Mr. Halseth is the Company's Senior Vice President, Design. From 1990 to
1995, Mr. Halseth served as President and Director of Design for MDI, where he
assisted in developing, engineering and designing the Company's safety needle
technology. In addition, Mr. Halseth was a Senior Product Designer for
Designworks U.S.A. from 1984 to 1995, where he directed and implemented the
design of new and innovative products from the concept phase through models,
prototypes and final product configuration. In addition, he was the principal
designer of various products for the automotive, electronics, computer,
recreational and consumer products industries. Prior to joining Designworks
U.S.A., from 1982 to 1984, Mr. Halseth was Director of Design for Metcore
Manufacturing, a manufacturer of bank and executive desk accessories, where he
designed a line of new products. Mr. Halseth holds a B.A. in Industrial Design
from Montana State University
-6-
<PAGE>
and a B.S. in Industrial Design from Art Center College of Design. In 1986, Mr.
Halseth received the IDEA Award and the ID Award for the design of the Oculab
Ophthalmic Tonometer. Mr. Halseth was the principal designer for the Compaq
Computer Proliant 2000 File Server for which he received the 1993 Most Valuable
Product award by PC Computing. Mr. Halseth is the inventor or co-inventor of
record of thirteen United States and foreign patents.
Mr. Shea is the Vice President, Manufacturing and Automation Engineering of
the Company. From October, 1992, to 1995, Mr. Shea was the owner of Cimarron
Automation Services, a manufacturing consulting firm, where he provided
consulting services to MDI and other companies for the planning of manufacturing
processes and automated assembly systems. From January, 1991, to 1992, Mr. Shea
also served as the Manager of the Biomed Division of Automation Tooling, Inc.
From November, 1977, to 1990, Mr. Shea served as Senior Vice President for
Engineering/Manufacturing at Charles Wyle Engineering Corporation, where he
directed and implemented the design and building of high-speed automation
equipment. Prior to joining Charles Wyle, Mr. Shea was Production Engineer for
Abbot Laboratories for four years, where he managed the design, fabrication and
installation of automated assembly equipment for medical products. Mr. Shea is a
Registered Professional Engineer in the State of California.
Mr. Ellis is the Company's Vice President and Corporate Controller. From
1991 to 1995, Mr. Ellis served as Controller for Phonotics, Inc., a company
engaged in the research and development and manufacturing of fiber optic test
equipment. In addition to Controller and Treasurer experience, Mr. Ellis has
six years of public accounting experience with Ernst & Young, L.L.P. Mr. Ellis
is a member of the American Institute of Certified Public Accountants and the
Illinois and California Societies of Certified Public Accountants. He has a
B.S.C. in accounting from DePaul University.
Mr. Kelley is a director of the Company. Since January, 1996, Mr. Kelley
has been engaged in consulting services as an independent contractor. From 1988
to January, 1996, Mr. Kelley was employed by Chase Manhattan Bank where he
served as the President and a director of Chase Manhattan Futures Corporation,
the President of Chase Futures Management Inc., and the President of Chase
Futures Advisors Inc. Prior to joining Chase in 1988, Mr. Kelley was employed by
First Boston Corporation as a manager of the Equity Futures and Portfolio
Trading Department.
Dr. Marr is a director of the Company. Dr. Marr received his M.D. from New
York Medical College in 1967 and his M.P.H. from Harvard School Of Public Health
College in 1972. Since October, 1995, Dr. Marr has served as Medical Director of
MD Health Plan. From 1993 to October, 1995, Dr. Marr served as the Physician
Epidemiologist for the New York State Department of Health. From 1991 to 1993,
Dr. Marr served as the Director of Greenwich Hospital Outpatient Clinics. From
1982 to 1991, Dr. Marr was the Medical Director of Exxon Minerals Co. He has
authored or co-authored over thirty-five publications and three books on public
health. He is a Clinical Associate Professor at the Department of Community and
Preventative Medicine at New York Medical College and a lecturer at State
University of New York, Department of Environmental Medicine and Community
Health.
Mr. William A. Jolly is a director of the Company. Since 1996, Mr. Jolly
has served as Chairman of Fine Equities, Inc., a New York investment bank. From
1994 to 1996, he served as Vice President Worldwide Consumer Products,
Asia-Pacific Region, for Scott Worldwide, Inc., where he was responsible for a
consumer products operation in 16 countries with 2,000 employees. From 1990 to
1994, Mr. Jolly served as President for PT Procter & Gamble Indonesia, where he
was responsible for the successful introduction of several OTC upper respiratory
products. From 1979 to 1990, he held various management positions within the
Procter & Gamble organization, primarily in the Asia-Pacific Region. Mr. Jolly
holds an MBA degree from the University of North Carolina at Chapel Hill and a
B.A. from Duke University.
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<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF MESSRS. DONEGAN, BOTICH, BONGIOVANNI, WHITE, KELLEY, MARR AND JOLLY.
Board Committees and Meetings
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation Committee and a Nominating Committee. The Executive Committee has
all powers of and the authority to exercise all the duties of the Board in the
management of the business of the Company that may lawfully be delegated to it
by the Board. The Audit Committee has the authority and duty to recommend to the
Board the auditors to be engaged as the Company's independent public accountants
and to review the results and scope of the audit and other services provided by
the Company's independent accountants and to take such other action as it deems
appropriate to insure the appropriate safeguarding of the Company's assets and
appropriate accounting of its assets and liabilities. The Compensation Committee
has all powers of and the authority to exercise all duties of the Board in
matters relating to executive compensation and administration of all stock
option and other employee benefit plans of the Company, subject to the terms of
such plans. The Nominating Committee has the authority and duty to nominate
directors of the Company for election at each annual meeting of stockholders, to
nominate directors of the Company to fill vacancies and to nominate directors of
the Company's various subsidiaries, with such nominations to be approved by the
Board in each case.
During the fiscal year ended December 31, 1996, six meetings of the Board
of Directors were held, at which all directors were present. The Executive
Committee, the Audit Committee and the Compensation Committee each held one
meeting during the fiscal year ended December 31, 1996. The Nominating Committee
did not meet during the fiscal year ended December 31, 1996. No Director who
was a Director or member of a committee during 1996 attended fewer than 75% of
the Board meetings or committee meetings held during fiscal year 1996.
ITEM 2. - APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected, subject to the stockholders' approval,
Coopers & Lybrand L.L.P., as independent accountants, to audit the financial
statements of the Company for the fiscal year ending December 31, 1997. Coopers
& Lybrand L.L.P. was the Company's independent accountants for the fiscal year
ended December 31, 1996. A representative of Coopers & Lybrand L.L.P. is
expected to be present at the Annual Meeting and will have an opportunity to
make a statement if he or she desires to do so and to answer appropriate
questions with respect to that firm's examination of the Company's financial
statements and records for the fiscal year ended December 31, 1996.
Vote Required for Approval of Independent Accountants
Under Delaware law, the affirmative vote of a majority of the votes cast by
the holders of the Company's shares present in person or represented by proxy
and entitled to vote at the Annual Meeting is required to approve the
appointment of Coopers & Lybrand L.L.P. as the Company's independent
accountants. Under Delaware law abstentions are counted in determining the
number of votes cast and, thus, will have the effect of a vote against the
proposal. Under Delaware law, a broker non-vote will not be counted in
determining the number of votes cast and, thus, will have no effect on the
outcome of the vote.
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<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL
OF THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS.
EXECUTIVE COMPENSATION
Compensation Table
The following table sets forth information on the annual compensation of
the Chief Executive Officer and the one other executive officer of the Company
whose salary and bonus exceeded $100,000 for the fiscal year ended December 31,
1996 for service rendered in all capacities during the fiscal year ended
December 31, 1996 (Summary Compensation Table).
<TABLE>
<CAPTION>
Annual Compensation
--------------------------------------
Name and Principal Position Year Salary($) Bonus($)
- --------------------------- ---- --------- ---------
<S> <C> <C> <C>
James M. Donegan.................................. 1996 169,615 -0-
Chairman of the Board, Chief Executive Officer 1995 87,385 20,000(1)
and President
John A. Botich.................................... 1996 157,181(2) -0-
Executive Vice President and Chief Operating 1995 285,205(3) 10,000(1)
Officer
</TABLE>
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(1) Bonus amounts were paid in January, 1996, for service in the fiscal year
ended December 31, 1995.
(2) Includes salary paid of $121,807 earned and paid in the fiscal year ended
December 31, 1996 and salary of $35,374 paid in the fiscal year ended
December 31, 1995, but earned and deferred from 1992 through 1994 for
services rendered as Chief Executive Officer of MDI.
(3) Includes salary of $57,665 earned and paid in the fiscal year ended
December 31, 1995 and salary of $227,540 paid in the fiscal year ended
December 31, 1995, but earned and deferred from 1992 through 1994 for
services as Chief Executive Officer of MDI.
Option Grants in Fiscal Year 1996
The following table sets forth the option grants made during the fiscal
year ended December 31, 1996 to the Company's only two executive officers whose
cash compensation for the fiscal year ended December 31, 1996 exceeded $100,000:
<TABLE>
<CAPTION>
Percentage of Total
Options Granted to
Options Granted Employees in Exercise Price Expiration
Name (# of Shares) Fiscal Year ($/Share) Date
- ---- --------------- ------------------- -------------- ----------
<S> <C> <C> <C> <C>
James M. Donegan -- -- -- --
John A. Botich 16,000(1) 13% 7.13 1/16/2006(1)
</TABLE>
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(1) Represents options granted by the Company to Mr. Botich pursuant to the
Option Plan. Pursuant to the Option Plan, twenty percent (20%) of the
options vest and become exercisable each year on the anniversary date of
the grant and upon vesting, such options will expire five years thereafter.
On December 31, 1996, none of the options granted Mr. Botich were
exercisable, and based on the closing price of the Company's Common Stock
on December 31, 1996, those options had no value.
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<PAGE>
Compensation of Directors
The Independent Directors receive $500 per meeting attended and annually
receive options to purchase 16,000 shares of Common Stock pursuant to the Plan
as compensation for services on the Board of Directors and any committees
thereof. No other directors receive cash or other compensation for services on
the Board of Directors or any committee thereof. All directors are entitled to
reimbursement for reasonable expenses incurred in the performance of their
duties as Board members.
Employment Agreements
On April 5, 1995, the Company entered into an employment agreement with
James M. Donegan, as Chief Executive Officer and President, for an initial term
of five years. The agreement provided for a base compensation of $160,000 for
the first year and bonuses and additional compensation as may be determined by
the Board of Directors in its sole discretion. The Board of Directors may also
in its sole discretion increase such base compensation, bonuses and additional
compensation in each subsequent year. The agreement may be terminated for cause
and contains a noncompetition provision extending for three years after
termination of employment. For the fiscal year ending December 31, 1997, Mr.
Donegan's base compensation has been increased to $185,000.
In addition, on April 5, 1995, the Company entered into an employment
agreement with John A. Botich, as Chief Operating Officer and Executive Vice
President, for an initial term of three years. The agreement provided for a base
compensation of $115,000 for the first year and bonuses and other additional
compensation as may be determined by the Board of Directors in its sole
discretion. The Board of Directors may also in its sole discretion increase such
base compensation, bonuses and additional compensation in each subsequent year.
The agreement may be terminated for cause and contains a non-competition
provision extending for three years after termination of employment. For the
fiscal year ending December 31, 1997, Mr. Botich's base compensation has been
increased to $125,000.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than ten percent of a registered
class of the Company's equity securities ("ten-percent holders") to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors, and ten-percent holders are required by
regulation to furnish the Company with copies of all Section 16(a) forms that
they file.
Based solely on review of the copies of such forms furnished to the
Company, the Company believes that, during the fiscal year ended December 31,
1996, all Section 16(a) filing requirements applicable to its officers,
directors, and ten-percent holders were satisfied.
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<PAGE>
CERTAIN TRANSACTIONS WITH MANAGEMENT, BOARD MEMBERS
AND PROMOTERS
Joseph N. Bongiovanni, III, the senior partner of the law firm of
Bongiovanni & Berger, is a director, Vice President and Secretary of the
company. During the fiscal year ended December 31, 1996, Bongiovanni & Berger
received $35,374 for legal services performed for the Company in 1996.
John F. Kelley, a director of the Company, performed consulting services to
the Company during 1996 by evaluating and negotiating strategic alliances on
behalf of the Company as well as provided substantial ongoing administrative
support functions, for which the Company issued to Mr. Kelley warrants on
March 19, 1997 to purchase 100,000 shares of Common Stock at an exercise price
of $7.50. On March 19, 1997, the closing price of the Common Stock was $8.50.
William A. Jolly, a director of the Company, is the Chairman of the Board
of Fine Equities, Inc. ("Fine"). Fine was engaged by the Company to serve as
the placement agent for a private placement of $5,000,000 of the company's
Common Stock (which as consummated on January 23, 1997), for which it received
fees and a reimbursement of expenses approximating $345,000, together with
warrants ("Warrants") to purchase 100,000 shares of Common Stock at an
exercise price of $5.50 per share. Fine assigned Warrants to Mr. Jolly to
purchase 5,000 shares of Common Stock.
The Company acquired Med Design, Inc. ("MDI"), the predecessor of the
Company, in a merger on April 6, 1995, pursuant to the terms of a merger
agreement (the "Merger"). Under the terms of the Merger, the Company issued and
delivered 1,219,742 shares of Common Stock to the MDI shareholders in exchange
for their shares of MDI common stock. The Company also issued 27,572 shares of
Common Stock to certain creditors and a former noteholder of MDI in satisfaction
of MDI obligations. In addition, the Company issued a Note made payable to the
former MDI shareholders in the principal amount of $1,000,000. The Note was paid
in full by the Company out of the net proceeds of the Company's initial public
offering in 1995.
Furthermore, in connection with the Merger, (i) Michael Botich, the
Company's Senior Vice President, Research and Development, received 411,092
shares of Common Stock and $330,295; (ii) Thor Halseth, the Company's Senior
Vice President, Design, received 465,546 shares of Common Stock and $374,045;
(iii) John A. Botich, the Executive Vice President and Chief Operating Officer
and a director of the Company, received (A) 191,934 shares of Common Stock and
$154,210, (B) $227,540 out of the net proceeds of the Company's initial public
offering in 1995 as accrued but unpaid compensation for his services to MDI from
1992 through 1994, and (C) 60,000 shares of Common Stock for his services to the
Company from 1991 through 1994; (iv) James M. Donegan, the Chief Executive
Officer and a director of the Company, received 1,541,824 shares of Common Stock
as founder's stock and was reimbursed $68,354 out of the net proceeds of the
Company's initial public offering in 1995 for expenses of the Company for which
he advanced personal funds; (v) Gilbert M. White, an Executive Vice President of
the Company and a director, received 100,000 shares of Common Stock on November
15, 1994 for promotional services provided to or on behalf of the Company, and
was reimbursed $11,933 out of the net proceeds of the Company's initial public
offering in 1995 for expenses of the Company for which he advanced personal
funds; and (vi) John J. Osborne, the Senior Vice President, Marketing for the
Company, received 40,000 shares of Common Stock on November 15, 1994 for
promotional services provided to or on behalf of the Company, and was reimbursed
$1,015 out of the net proceeds of the Company's initial public offering in 1995
for expenses of the Company for which he advanced personal funds.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the next annual meeting
of stockholders, to be held in 1998, must be received by the Company at North
American Building, Suite 310, 121 South Broad Street, Philadelphia, Pennsylvania
19107, by December 14, 1997.
By Order of the Board of Directors
/s/ Joseph N. Bongiovanni, III
-------------------------------------
Joseph N. Bongiovanni, III, Secretary
Date: May 16, 1997
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<PAGE>
PROXY
THE MED-DESIGN CORPORATION
ANNUAL MEETING OF STOCKHOLDERS -- JUNE 26, 1997
The undersigned hereby revokes all previous proxies for his shares and
appoints James M. Donegan, Joseph N. Bongiovanni, III, and Gilbert M. White, and
each of them, proxies of the undersigned with full power of substitution to vote
all shares of the common stock, $.01 par value per share, of The Med-Design
Corporation (the "Company") that the undersigned is entitled to vote at the
Company's Annual Meeting of Stockholders to be held at The Union League, Broad
and Sansom Streets, Philadelphia, Pennsylvania, on June 26, 1997, at 1:30 p.m.
local time, including any adjournments thereof, upon the matters set forth
below.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT WILL BE
VOTED AS SPECIFIED AND IF NO SPECIFICATION IS MADE, THIS PROXY SHALL BE VOTED
FOR THE PROPOSALS SET FORTH IN ITEMS 1 (INCLUDING ALL NOMINEES FOR DIRECTORS)
AND 2 AND WITHIN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTER
PURSUANT TO ITEM 3.
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. Election of Directors
NOMINEES: James M. Donegan, John A. Botich, Joseph N. Bongiovanni, III,
Gilbert M. White, John F. Kelley, John S. Marr, and William A. Jolly.
/ / FOR / / WITHHOLD AUTHORITY
all nominees list above to vote for all nominees listed above
________________________________________________________________________________
/ / FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
(Continued and to be signed on reverse side.)
<PAGE>
2. Proposal to ratify the appointment of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending December 31,
1997.
/ / FOR / / AGAINST / / ABSTAIN
3. To transact such other business as may properly come before the meeting or
any adjournments thereof.
Dated: _________________, 1997
______________________________
Signature
______________________________
Signature
Note: please sign exactly as
your name appears on the
proxy. If signing for estates,
trusts or corporations, title
or capacity should be stated.
If shares are held jointly,
each holder must sign.
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE.
NO POSTAGE REQUIRED IF MAILED IN THE U.S.
<PAGE>
