[GRAPHIC OMITTED]
THE
MED o DESIGN
CORPORATION
2810 Bunsen Avenue
Ventura, California 93003
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------------------------
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 Tuesday, December 15, 1998,
at 9:00 a.m. local time, for the following purposes:
1. To elect eight 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
Pricewaterhouse Coopers LLP as the Company's independent
accountants for the fiscal year ending December 31, 1998.
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 October 27, 1998, as the record date
for determining stockholders entitled to notice of the Annual Meeting and to
vote at such adjournments thereof. Only stockholders of record as of the close
of business on October 27, 1998, are 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 your shares
eligible to be voted at the Annual Meeting.
By Order of the Board of Directors
Joseph N. Bongiovanni, III, Secretary
Dated: November 6, 1998
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
THE
MED o DESIGN
CORPORATION
[GRAPHIC OMITTED]
2810 Bunsen Avenue
Ventura, California 93003
----------------------
PROXY STATEMENT
----------------------
GENERAL
The enclosed proxy is solicited pursuant to this Proxy Statement to be mailed on
or about November 6, 1998 by the Board of Directors of The Med-Design
Corporation, a Delaware corporation [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 (805) 339-0375.
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 anytime 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 issued and outstanding, who are entitled to notice
of, and to vote at, the Annual Meeting is October 27, 1998.
Voting Securities
As of the close of business on October 27, 1998, there were 7,951,570
shares of Common Stock outstanding, each of which will entitle its holder to one
vote at the Annual Meeting. There is no cumulative voting.
1
<PAGE>
ITEM 1 - ELECTION OF DIRECTORS
At December 31, 1997, the Board of Directors consisted of seven
persons, James M. Donegan, John A. Botich, Joseph N. Bongiovanni, III, Gilbert
M. White, John F. Kelley, William A. Jolly and John S. Marr. The Board of
Directors appointed two additional directors, Pasquale L. Vallone and Vincent J.
Papa, in August 1998, in accordance with the agreement respecting the issuance
of the Company's convertible debentures in June-July, 1998. Dr. John S. Marr
resigned as a director of the Company in October, 1998. The nominating
committee, which has the task of nominating members for the Board, has nominated
Messrs. Donegan, Botich, Bongiovanni, White, Kelley, Jolly, Vallone and Papa.
The Stockholders are being asked to elect eight 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 qualified.
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 October 27, 1998, 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 ................................. 1,264,115(3) 15.89%
Thor R. Halseth .................................. 422,146(4) 5.30%
Michael J. Botich ................................ 350,992(4) 4.41%
John A. Botich ................................... 265,380(5) 3.33%
Joseph N. Bongiovanni, III ....................... 17,000(6) *
Gilbert M. White ................................. 183,400(7) 2.35%
John F. Kelley ................................... 453,750(8) 5.41%
William A. Jolly ................................. 13,000(9) *
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percent of Class
Name and Address (1) Beneficially Owned (2) Beneficially Owned
-------------------- ---------------------- ------------------
<S> <C> <C>
Pasquale L. Vallone .............................. 91,026 *
Vincent J. Papa .................................. -0-
Hathaway & Associates, Ltd. ...................... 477,000(10) 6.00%
All Directors and Officers as a Group (13 persons) 3,105,989(11) 36.45%
</TABLE>
- --------------------
*Less than one percent (1%)
3
<PAGE>
(1) Unless otherwise indicated, the address of each named holder is c/o
The Med-Design Corporation, 2810 Bunsen Avenue, Ventura, California
93003.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting on
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 October 27, 1998, 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 person 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 Pennsylvania Uniform Gifts to Minor
Act and options to purchase 5,000 shares of Common Stock pursuant to
the Company's Non-Qualified Stock Option Plan ("Option Plan").
(4) Includes options to purchase 6,400 shares of Common Stock granted
pursuant to the Company's Option Plan.
(5) Includes 5,446 shares of Common Stock owned by Mr. Botich's spouse,
Nina Dominguez and Jacqueline Treguboff as joint tenants and options to
purchase 9,400 shares of Common Stock granted pursuant to the Option
Plan.
(6) Includes Options to purchase 7,000 shares of Common Stock granted
pursuant to the Company's Option Plan.
(7) Includes 1,400 shares of Common Stock held by Mr. White's spouse,
options to purchase 8,400 shares of Common Stock granted pursuant to
the Option Plan and warrants to purchase 50,000 shares of Common Stock.
(8) Includes options to purchase 48,000 shares of Common Stock pursuant to
the Company's Option Plan, warrants to purchase 300,000 shares of the
Company's Common Stock granted by the Company and $100,000 in
convertible debenture bonds with the rights to convert to 80,000 shares
of common stock.
(9) Includes warrants to purchase 5,000 shares of Common Stock owned by Mr.
Jolly and the option to purchase 4,000 shares of Common Stock pursuant
to the Company's Option Plan.
(10) 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.
(11) Includes options, warrants and convertible notes to purchase 564,800
shares of Common Stock granted to directors and officers of the
Company.
4
<PAGE>
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 (3) 47 Chairman of the Board, Chief Executive 1994
Officer and President
John A. Botich (2) 75 Director 1994
Lawrence D. Ellis 47 Vice President, Chief Financial Officer 1996
Joseph N. Bongiovanni, III (3) 54 Vice President, Secretary and Director 1994
Gilbert M. White (1)(3) 62 Director 1994
Michael J. Botich 50 Senior Vice President, Research and 1994
Development
Thor R. Halseth 45 Senior Vice President, Design 1994
Donald M. Shea 62 Vice President, Manufacturing and 1994
Automation Engineering
John F. Kelley (2) 54 Director 1995
William A. Jolly (2) 44 Director 1997
Pasquale L. Vallone (1)(2) 70 Director 1998
Vincent J. Papa (1)(2)(3) 48 Director 1998
</TABLE>
- ----------------
(1) Member of the Audit Committee of the Board of Directors
(2) Member of the Compensation Committee of the Board of Directors
(3) 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 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.
Mr. Botich is a director of the Company. From 1995 to 1997, Mr. Botich
served as Executive Vice President and 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.
Mr. Ellis is the Company's Vice President, and Chief Financial Officer.
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
5
<PAGE>
accounting experience with Ernst & Young, LLP.
Mr. Bongiovanni is a director and is a Vice President and the Secretary
of the Company. Since 1978, Mr. Bongiovanni has been the senior partner of the
law firm Bongiovanni & Berger.
Mr. White is a director and was an Executive Vice President of the
Company. Prior to joining the Company in 1995, Mr. White had been a Senior Vice
President of Rollins Hudig Hall, a large international insurance firm, where he
designed, marketed and serviced complex insurance programs for large national
and international clients since 1984.
Mr. Botich is the Senior Vice President, Research and Development of
the Company, from 1990 to 1995, Mr. Botich was the Senior Vice President of MDI,
where he assisted in developing, engineering and designing the Company's safety
needle technology.
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.
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.
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.
Mr. Jolly is a director of the Company. Since 1996, Mr. Jolly has
served as a partner 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 consumer
products operation in 16 countries with 2,000 employees. The Company has
previously retained Fine Equities, Inc. for investment banking services and may
do so in the future.
Mr. Vallone is a director of the Company. Mr. Vallone is a consultant
for U.S. Aviation Underwriters, Inc. Mr. Vallone served in the underwriting and
technical areas at U.S. Aviation Underwriters for 50 years, until his retirement
in June, 1997.
Mr. Papa is a director of the Company. Mr. Papa is the Managing
Director and General Counsel for P.M.G. Capital Corp., a wholly owned affiliate
of the Pennsylvania Merchant Group, where he has been since 1995. Prior to
joining P.M.G., Mr. Papa was counsel for the Metallgesellschaft Group. The
Company has previously retained P.M.G. for investment banking services and may
do so in the future.
The Board of Directors recommends that stockholders vote FOR the
election of Messrs. Donegan, Botich, Bongiovanni, White, Kelley, Jolly, Vallone
and Papa.
Board Committees and Meetings
The Board of Directors has an Audit Committee, a Compensation Committee
and a Nominating Committee. The
6
<PAGE>
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 scope and results 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 to fill vacancies and to nominate directors of the
Company's various subsidiaries, with such nomination to be approved by the Board
in each case.
During the fiscal year ended December 31, 1997, eight meetings of the
Board of Directors were held, at which all directors were present. The Audit
Committee and the Compensation Committee each held one meeting during the fiscal
year ended December 31, 1997. The Nominating Committee did not meet during the
fiscal year ended December 31, 1997. Its functions, however, were performed by
the Board as a whole. No Director who was a Director or member of a committee
during 1997 attended fewer than 75% of the Board meetings or committee meetings
held during fiscal year 1997.
ITEM 2 - APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected, subject to the stockholders'
approval, Pricewaterhouse Coopers LLP, as independent accountants, to audit the
financial statements of the Company for the fiscal year ending December 31,
1998. Pricewaterhouse Coopers LLP, was the Company's independent accountants for
the fiscal year ended December 31, 1997. A representative of Pricewaterhouse
Coopers LLP 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, 1997.
Vote Required for Approval of Independent Accountant
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 Pricewaterhouse Coopers LLP 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.
The Board of Directors recommends that stockholders vote FOR the
approval of the appointment of Pricewaterhouse Coopers LLP as the Company's
independent accountants.
7
<PAGE>
EXECUTIVE COMPENSATION
Compensation Table
The following table set forth information on the annual compensation of
the Chief Executive Officer whose salary exceeded $100,000 for the fiscal year
ended December 31, 1997 for service rendered in all capacities during the fiscal
year ended December 31, 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Name and Principal Position Year Salary
- --------------------------- ---- ------
<S> <C> <C>
James M. Donegan 1997 182,692
Chairman of the Board, Chief Executive Officer and President ........... 1996 169,615
</TABLE>
Option Grants in Fiscal Year 1997
The following table sets forth the option grants made during the fiscal
year ended December 31, 1997 to the Company's executive officer whose cash
compensation for the fiscal year ended December 31, 1997 exceeded $100,000:
<TABLE>
<CAPTION>
Percentage of Total
Options Granted to
Options Granted Employees in Exercise Price
Name (# of Shares) Fiscal Year ($/Share) Expiration Date
---- ----------------- ------------------- -------------- ---------------
<S> <C> <C> <C> <C>
James M. Donegan 25,000 13% 8.00 2/14/07(1)
</TABLE>
- ----------------
(1) Represents options granted by the Company to Mr. Donegan 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,
1997, none of the options granted Mr. Donegan were exercisable, and based on the
closing price of the Company's Common Stock on December 31, 1997, those options
had no value.
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 non-competition 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, and has not been
increased in 1998.
8
<PAGE>
On June 10, 1998, the Board approved an agreement with James M. Donegan whereby
he agreed under certain terms and conditions to resign as President and Chief
Executive Officer, waiving the terms of his employment agreement to enable the
Company to search for and hire an operationally oriented executive to manage the
Company on a day to day basis, if requested by the Board. No such request was
ever made. Since no request was made and no search conducted, on October 22,
1998, the agreement was formally rescinded by the parties.
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,
1997, all Section 16(a) filing requirements applicable to its officers,
directors, and ten-percent holders were satisfied.
CERTAIN TRANSACTIONS WITH MANAGEMENT,
BOARD MEMBERS AND PROMOTERS
Joseph N. Bongiovanni, III, the senior partner of the law firm
Bongiovanni & Berger, is a director, Vice President and Secretary of the
company. During the fiscal year ended December 31, 1997, Bongiovanni & Berger
received $31,830 for legal services billed to the Company in 1997.
John F. Kelley, a director of the Company, performed consulting
services to the Company during 1997 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. In addition, the Company issued to Mr. Kelley warrants to
purchase 100,000 shares of the Company's common stock on each of October 10,
1997 and January 14, 1998. The exercise prices of these warrants was $5.44 and
$2.88, respectively, per share. On October 10, 1997 the exercise price of the
stock option issued to Mr. Kelley on June 3, 1996, was reset, pursuant to the
action of the Board of Directors, to $4.50 per share. Further, on January 14,
1998, the exercise price of the warrants issued to Mr. Kelley on March 19, 1997
and October 10, 1997 were reset, pursuant to the action of the Board of
Directors, to $2.88 per share.
On August 25, 1998, pursuant to action by the Board of Directors, Mr.
Kelley was appointed Chief Negotiator for the Company and on September 4, 1998
entered into an agreement in which the Company will issue a warrant for 200,000
shares of common stock at $1.25 that is conditional upon the signing of an
agreement with a potential strategic partner.
In June 1998, Mr. Kelley participated in the private placement of
$1,550,000 of the Company's convertible debentures. Mr. Kelley purchased
$100,000 of convertible debentures which bear an interest rate of 4% and are
convertible into the Company's common stock at a price of $1.25.
William A. Jolly, a director of the Company, is a partner 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 was 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.
Gilbert M. White, a director of the Company, resigned as an officer of
the Company on January 30, 1998. In connection with Mr. White's resignation, on
January 14, 1998, the Company granted to Mr. White warrants to purchase 50,000
shares of the Company's stock at an exercise price of $2.88 per share as well as
executed a consulting agreement with Mr. White whereby Mr. White shall provide
insurance-related consulting services to the Company for a one year
9
<PAGE>
period at an hourly rate of $125.00 and a maximum payment to Mr. White of
$65,000.
John A. Botich, a director of the Company, resigned as an officer of
the Company on July 31, 1997. In connection with Mr. Botich's retirement, the
Company executed a consulting agreement with him for a six month period, whereby
Mr. Botich would advise the Company on operational issues. In consideration for
these services, Mr. Botich has been paid $50,000. The consulting agreement was
renewed on January 14, 1998 for a six month period and again on July 31, 1998
with compensation increased to $60,000.
Pasquale L. Vallone, a director of the Company, entered into an
agreement to lend the Company $250,000 on May 29, 1998. The loan is unsecured
for a period of 1 year with interest at prime rate. The loan is callable upon
change of control of the Company, the signing of any significant licensing or
joint venture agreement or any refinancing of the Company in excess of $500,000.
As a further condition of the loan, the Company also agreed to issue 33,000
shares of common stock which is earned ratably over the period of 1 year that
the full amount of the loan remains outstanding.
James M. Donegan, Chairman of the Board, Chief Executive Officer,
committed to a standby agreement to fund the Company up to $1.4 million should
the necessity arise on March 27, 1998. Delayed payments from the Company's
licensing agreement initiated such a necessity and the Company was informed by
Mr. Donegan that he would be unable to satisfy the standby commitment in a
timely manner. In light of its cash needs, the Company alternatively accepted a
proposal from a third party for it to invest $1.5 million in convertible
debentures of the Company, secured by the Company's patents and convertible at
$1.25 per share.
Vincent J. Papa, a director of the Company, is the Managing Director
and General Counsel for P.M.G. Capital Corp., a wholly owned affiliate of the
Pennsylvania Merchant Group. Pennsylvania Merchant Group was engaged by the
Company to serve as placement agent of $1,550,000 of the Company's convertible
debentures (which was consummated on June 29th and July 22nd of 1998), for which
it received fees and a reimbursement of expense approximating $76,000.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the next annual
meeting of stockholders, to be held in 1999, must be received by the Company at
2810 Bunsen Ave, Ventura, California 93003, by December 29, 1998.
By Order of the Board of Directors
Joseph N. Bongiovanni, III, Secretary
Dated: November 6, 1998
10
<PAGE>
PROXY
THE MED-DESIGN CORPORATION
ANNUAL MEETING OF STOCKHOLDERS -- DECEMBER 15, 1998
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 in Philadelphia, Pennsylvania, on December 15, 1998 at 9:00
A.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, William A. Jolly, Pasquale L. Vallone and
Vincent J. Papa
/ / FOR / / WITHHOLD AUTHORITY
all nominees listed 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 PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending December 31,
1998.
/ / FOR / / AGAINST / / ABSTAIN
3. To transact such other business as may properly come before the meeting or
any adjournments thereof.
Dated: _________________, 1998
______________________________
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.
