FIRST AMENDMENT TO THE AGREEMENT
AND PLAN OF MERGER AND REORGANIZATION
This First Amendment (the "Amendment") to the Agreement and Plan of
Merger and Reorganization dated November 21, 2005 (the "Agreement") is made and
entered into as of March 6, 2006, by and among: SPECIALIZED HEALTH PRODUCTS
INTERNATIONAL, INC., a Delaware corporation ("Parent"); MAMMOTH ACQUISITION SUB,
INC., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Sub"); MAMMOTH ACQUISITION SUB, LLC, a Delaware limited liability company and a
wholly owned subsidiary of Parent ("LLC"); and THE MED-DESIGN CORPORATION, a
Delaware corporation (the "Company").
RECITALS
WHEREAS, the Boards of Directors of each of Parent, Merger Sub, and the
Company and the sole member of LLC deem it advisable and in the best interest of
each entity and its respective stockholders or interest holders to amend the
Agreement as set forth herein.
WHEREAS, Section 10.1 of the Agreement provides that the Agreement may
be amended with the approval of the respective Boards of Directors of the
Company and Parent and an instrument in writing signed on behalf of each of the
parties to the Agreement.
WHEREAS, the Boards of Directors of the Company and Parent have
approved this Amendment.
AGREEMENT
NOW THEREFORE, in consideration of the promises and mutual agreements
and covenants set forth herein, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
1.1 The Amendments. (a) Section 4.8 is hereby amended by deleting it in
its entirety and substituting in its place the following:
Cash Conservation. The Company agrees that its monthly burn rate
beginning December 1, 2005 shall not exceed a rolling average of
$175,000 per month, and its cumulative burn rate from December 1, 2005
until the Closing Date shall not exceed $1,000,000. For purposes of
this section, burn rate shall be defined as the difference between (a)
the sum of (i) all revenue, determined in accordance with GAAP as
applied in the preparation of the Company's financial statements (for
purposes of this calculation, royalty revenue from Becton Xxxxxxxxx
products will be the actual reported royalty revenue for December 2005,
or $140,000 if the actual reported royalty revenue for December 2005 is
not available at the time of determination, and $112,000 per month for
January through June 2006), and (ii) net interest income minus (b) the
sum of (i) product costs (excluding depreciation and amortization),
(ii) all other expenses (excluding depreciation and amortization and
other noncash expenses, such as stock-based compensation expense),
provided that insurance expense shall include only actual cash expended
for the relevant period until the Closing Date and (iii) capital
expenditures, all determined in accordance with GAAP, as aforesaid,
other than expenses taken into account in the determination of the
Actual Company Cash Amount at November 30, 2005 in accordance with
Section 1.5(b)(iii).
(b) Section 9.1(b) is hereby amended by deleting it in its entirety and
substituting in its place the following:
by either Parent or the Company if the Merger shall not have been
consummated by June 30, 2006 (the "End Date") (provided that the right
to terminate this Agreement under this Section 9.1(b) shall not be
available to a party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date); or
1.2 Effect of Amendment. Except as and to the extent expressly modified
by this Amendment, the Agreement and exhibits and schedules thereto shall remain
in full force and effect in all respects. In the event of a conflict between
this Amendment and the Agreement, exhibits or schedules, this Amendment shall
govern.
1.3 Counterparts. This Amendment may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one amendment. Fascimile copies shall be deemed
to be binding originals.
1.4 Governing Law. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the date first above written.
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: President and CEO
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MAMMOTH ACQUISITION SUB, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: President
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MAMMOTH ACQUISITION SUB, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: President
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THE MED-DESIGN CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: Acting CEO
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