U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
Retractable Technologies, Inc.
(Name of Small Business Issuer in Its Charter)
Texas 75-2599762
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Thomas J. Shaw
Chairman, President and Chief Executive Officer
511 Lobo Lane
Little Elm, Texas 75068-0009
(Address of Principal Executive Offices) (Zip Code)
(972) 294-1010
(Issuer's Telephone Number)
|
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Stock
Preferred Stock
(Title of Class)
TABLE OF CONTENTS
Page No.
--------
PART I
ITEM 1. DESCRIPTION OF BUSINESS............................................................... 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION............................. 13
ITEM 3. DESCRIPTION OF PROPERTY............................................................... 19
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........................ 20
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS......................... 21
ITEM 6. EXECUTIVE COMPENSATION................................................................ 26
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................................ 30
ITEM 8. DESCRIPTION OF SECURITIES............................................................. 31
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND OTHER SHAREHOLDER
MATTERS............................................................................... 47
ITEM 2. LEGAL PROCEEDINGS..................................................................... 47
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS......................................... 47
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES............................................... 47
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS............................................. 49
PART F/S FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND 1998, AND REPORT OF INDEPENDENT
ACCOUNTANTS AND UNAUDITED FINANCIAL STATEMENTS AS OF MARCH 31, 2000 AND 1999.......... 51
PART III
ITEM 1. INDEX TO EXHIBITS..................................................................... 81
ITEM 2. DESCRIPTION OF EXHIBITS............................................................... 82
Signature Page................................................................................... 83
|
PART I - FORM 10-SB
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
Retractable Technologies, Inc., a Texas corporation (the "Company"), designs, develops, manufactures, and markets innovative patented safety needle devices for the healthcare industry. The Company's VanishPoint(R) products utilize a unique friction ring mechanism patented by Thomas J. Shaw, Founder, President, and Chief Executive Officer of the Company. VanishPoint(R) products are designed specifically to prevent needlestick injuries and to prevent reuse. The friction ring mechanism permits the automated retraction of the syringe needle into the barrel of the syringe, directly from the patient, after delivery of the medication is completed. The VanishPoint(R) blood collection tube holder utilizes the friction ring mechanism to retract the needle after blood has been drawn from the patient. Closure of an attached end cap causes the needle to retract directly from the patient into the closed tube holder. Advantages of the automated retraction products include protection from needlestick injuries, prevention of cross contamination through reuse, and reduction of disposal and other associated costs. The Company has an exclusive license for the patent rights for all of its safety needle products. The Company's goal is to become a leading provider of automated retraction safety devices.
Commercial production of the Company's 3cc VanishPoint(R) syringe began in 1997. Additional VanishPoint(R) products, which are patented, include 1cc tuberculin, insulin, and allergy antigen syringes; 5cc and 10cc syringes; and a blood collection tube holder and small tube adapter. 3cc syringes and blood collection tube holders are being manufactured using automated assembly. Commercial production of the blood collection tube holder began in the fourth quarter of 1998. 5cc and 10cc syringes are being manufactured in lesser quantities utilizing semi-automated equipment. Premarket approval has been granted by the Food and Drug Administration ("FDA") for the 1cc, 3cc, 5cc, and 10cc syringes and the blood collection tube holder and small tube adapter.
While owning and operating Checkmate Engineering, a sole proprietorship, Mr. Shaw developed and patented the idea and early prototypes of the syringe that were to become the VanishPoint(R) safety syringe. On May 9, 1994, the Company was incorporated in Texas to design, develop, manufacture, and market medical safety devices for the healthcare industry. In April 1995, Thomas J. Shaw, who owned all 1,000 issued and outstanding shares of the common stock of the Company, exchanged all 1,000 shares then outstanding for 14,000,000 shares of common stock. In May 1996, Mr. Shaw transferred 2,800,000 shares of the 14,000,000 issued and outstanding common stock to Lillian E. Salerno, a Director of the Company.
In 1996, the Company purchased assets and hired personnel from Checkmate Engineering. The Company had limited production but no sales in 1996, but focused its attention on general and administrative activities including implementing Quality System Regulation, developing a human resource department, and obtaining an application for an Order of Substantial Equivalence from the FDA allowing the Company to manufacture and sell the 3cc VanishPoint(R) syringe. In 1997, the Company began selling products to emergency medical service centers, federal prison systems, homecare facilities, small hospitals, and VA hospitals. During the second half of 1997, the Company took delivery of its 3cc automated assembly equipment and began automated assembly. Production molds for the 5cc and 10cc syringes and the blood collection tube holder were ordered in 1997. A prototype mold for the 1cc syringe was ordered and received in 1997. Automated assembly equipment for the blood collection tube holder was ordered at the end of 1997 and installed in July 1998. Commercial production of the blood collection tube holder began in 1998. The Company received its ISO 9001 Certificate in July 1998, and the VanishPoint(R) syringe received its CE Mark Certificate on July 31, 1998. The CE mark allows the Company to sell its products in Europe. In 1999, the Company focused its development on improving manufacturing processes and expanding product lines. In 1999, the Company focused its development on improvement of manufacturing processes, continuation of design and development of the manufacturing process for the 1cc syringe, and conceptual design of additional safe needle products utilizing automated retraction technology.
On May 4, 2000, the Company signed a National Marketing and Distribution Agreement ("Agreement") with Abbott Laboratories ("Abbott") for an initial five- year term. Furthermore, Abbott and the Company have agreed to the formation of a New Product Team, consisting of key personnel from both companies, that will develop new safety products that incorporate the Company's patented, proprietary technology.
The Company has not been involved in any bankruptcy or similar proceedings and has not merged or consolidated a significant amount of assets other than in the ordinary course of business except as discussed above.
BUSINESS OF ISSUER
The Company's products with pre-market approval by the FDA include 1cc tuberculin, insulin, and allergy antigen VanishPoint(R) syringes; 3cc, 5cc, and 10cc VanishPoint(R) syringes; and the VanishPoint(R) blood collection tube holder and small tube adapter. All of VanishPoint(R) products utilize a unique friction ring mechanism patented by Thomas J. Shaw, Founder, President, and Chief Executive Officer of the Company. This friction ring mechanism permits the automated retraction of the syringe needle into the barrel of the syringe, directly from the patient, after delivery of medication is completed. The VanishPoint(R) blood collection tube holder utilizes the friction mechanism to retract the needle after blood has been drawn from the patient. Closure of an attached end cap causes the needle to retract directly from the patient into the closed tube holder. Advantages of the automated retraction products include protection from needlestick injuries, prevention of cross contamination through reuse, and reduction of disposal and other associated costs. In October 1999, the ECRI (formerly known as the Emergency Care Research Institute), a recognized authority in evaluating medical devices, awarded the VanishPoint(R) syringe and blood collection tube holder its highest possible rating. The VanishPoint(R) blood collection tube holder received Risk and Insurance magazine's 1997 "Top of the Line" Award for excellence.
The Company's 1cc VanishPoint(R) tuberculin, insulin, and allergy antigen syringes will be produced in various needle lengths and gauges and packaging styles. They are expected to be available in the second half of 2000. The 3cc VanishPoint(R) syringe reached the market in the first quarter of 1997. It is available in various needle lengths and gauges. The 5cc and 10cc VanishPoint(R) syringes are being produced in various needle lengths and gauges and are currently being sold in limited quantities. Sales of the VanishPoint(R) blood collection tube holder and a small tube adapter for use with small sample collection tubes began in the third quarter of 1998.
The manufacture and sale of medical devices entails an inherent risk of liability in the event of product failure or claim of harm caused by the product's operation. The Company believes that it has adequate product liability insurance against any such claims. In March, 1998, the Journal of Healthcare Safety, Compliance and Infection Control published a survey of 26 medical facilities having used a total of 86,000 3cc syringes, during which no needlestick injuries from using the VanishPoint(R) syringes were reported.
The VanishPoint(R) syringe and needle device products are sold to and used by organizational and individual healthcare providers (primarily in the United States with limited sales outside the United States), which include, but are not limited to, acute care hospitals, alternative care facilities, doctors' offices, clinics, emergency centers, surgical centers, convalescent hospitals, VA facilities, military organizations, public health facilities, and prisons.
Based on the most recent (1998) report from Theta Corporation ("Theta"), a publisher of comprehensive market research reports on the medical device, diagnostic, biotech, and pharmaceutical industries, the number of unit sales of disposable hypodermic needles and syringes for 1997 was 6.6 billion in the United States alone, with $1 billion in projected sales. According to Theta estimates, 94 percent of the 1997 United States syringe market was made up of standard syringes--at an average price of $.11 per unit, and 6 percent was safety syringes--at an average price of $.30 per unit. Of the 6.6 billion syringes sold in 1997, 4.3 billion were purchased by hospitals and 2.3 billion were purchased by alternate care facilities. The alternate care market includes 1 billion units for retail customers--who use primarily
1cc allergy antigen and insulin syringes, 600 million units for physicians' offices--which use a mixture of all types of syringes, and 700 million units for extended care facilities. According to market leader Becton Dickinson and Company ("B-D"), approximately 20 percent of the United States market has converted to safety-engineered products and, according to their projections, 85 percent of the market will be converted within the next few years. Theta projections indicate that by 2001, 75 percent of syringes sold in the United States will be safety syringes and 25 percent will be standard with estimated pricing resulting in revenues of $1.35 billion.
Blood collection devices are used, most often by phlebotomists and laboratory technicians, to collect samples of blood from patients for diagnostic procedures. An evacuated vacuum tube used to contain the drawn blood is inserted into the tube holder, which is a plastic device with a needle attached that is designed for that purpose. Because the hollow-bore needles used for blood collection are filled with patients' blood, and because insertion of the needle into a patient's vein often requires several attempts, the ratio of needlestick injuries to number of units used is higher for blood collection tube holders than for syringes, and the risk of infection is greater. Consequently, some blood collection tube holders now incorporate safety features similar to those used in syringes. Industry resources indicate that annually there are 800 million medical procedures conducted to collect blood specimens. Based on Theta's 1998 report, the number of unit sales of blood collection tubes for 1997 was 1.3 billion in the United States alone, with $170 million in projected sales.
The syringe and needle device market is a market in transition. The nature of the products comprising the market is changing from standard to safety devices. The impetus for the change to safety devices is the risk that is carried with each needlestick injury which includes the transmission of over 20 bloodborne pathogens, including the human immunodeficiency virus (HIV, which causes AIDS), hepatitis B, and hepatitis C. Because of the occupational and public health hazards posed by conventional disposable syringes, public health policy makers and the following domestic organizations and government agencies are involved, or are becoming involved, in the current effort to get more effective safety needle products to healthcare workers:
The National Institute for Occupational Safety and Health ("NIOSH") issued a safety alert calling on employers to adopt safer needles to reduce needlestick injuries. The federal agency is a division of the Centers for Disease Control and Prevention ("CDC"). In its alert, "Preventing Needlestick Injuries in Health Care Settings," NIOSH provides the latest scientific information available about the risk of needlestick injuries. This alert adds momentum to the growing safety movement and supports the rules issued by the Federal Occupational Safety and Health Administration ("OSHA"), on November 5, 1999.
OSHA issued a Compliance Directive which instructs OSHA inspectors to cite employers who fail to evaluate and buy the safety needle devices available on the market. The directive states that where engineering controls will reduce employee exposure either by removing, eliminating, or isolating the hazard, they must be used.
The Service Employees International Union ("SEIU") has taken a proactive stance with regard to promoting the use of automated retraction needle devices in member hospitals. Events, including introduction of state and federal legislation protests by SEIU members at San Francisco General Hospital, attest to the type of support from the community that the safety products and VanishPoint(R) product line, in particular, attract. Members of the SEIU have specifically requested VanishPoint(R) products in order to make their members aware of the availability of VanishPoint(R) technology and the need for it at other facilities with union membership. Unionized healthcare workers provide healthcare staffing for 12.5 percent of United States hospital facilities.
Under California's groundbreaking legislation, the California Occupational Safety and Health Administration ("Cal OSHA") mandates healthcare employers to provide their workers with safe needle devices. This action was taken in response to events that transpired at San Francisco General Hospital and pressure from the SEIU and various federal, state, and local elected officials in California who demanded change. Representatives of the Company served on the Advisory Committee for developing the amendments. California was the first state to successfully pass legislation mandating the use of safety needle products. The bill, signed into law by Governor Pete Wilson on September 30, 1998, directed Cal OSHA to amend California's bloodborne pathogens standard. Beginning July 1, 1999, this regulation requires the use of needle products that effectively eliminate or reduce injury rates. Employers are also required to create and
maintain a log of all needlestick injuries by the type of device and the manufacturer's brand. Noncompliance with this Cal OSHA standard can result in misdemeanor and/or felony charges that carry penalties of up to three years in prison and fines up to $250,000.
Fifteen states have now enacted safety needle laws. California, Tennessee, Maryland, Texas, New Jersey, Ohio, West Virginia, Minnesota, Maine, Georgia, New Hampshire, Iowa, Alaska, Connecticut, and Oklahoma have enacted safety needle laws. In addition, numerous states have introduced legislation containing language similar to that passed in California. Federal legislation (House Bill 1899 and Senate Bill 1140) is pending with bipartisan support and support from OSHA and the Secretary of Labor.
The vast majority of decisions relating to the purchase of medical supplies are made by the purchaser representatives of the various healthcare organizations rather than the end-users of the product (nurses, doctors, and testing personnel). Furthermore, many of these organizations have entered into agreements with group purchasing organizations ("GPOs") which contract for the purchase of supplies on behalf of their member organizations in order to obtain the lowest possible prices. The GPOs individually negotiate prices with manufacturers of medical devices and supplies and thus their healthcare provider members are only able to select their medical supplies and equipment from a list of pre-negotiated suppliers. According to "The Role of Group Purchasing Organizations in the US Health Care System," a report prepared by Muse & Associates for the Health Industry Group Purchasing Association ("HIGPA"), the potential hospital marketplace for medical/surgical equipment and supplies in 1998 and 1999 was $32.8 billion and $34.1 billion, respectively. HIGPA and other industry representatives estimate that 80 percent of these hospital expenditures were channeled through GPOs. There can be no assurance that future GPO contracts will not continue to limit the Company's share of the market and have a material adverse effect on the Company's long-term financial condition. The reluctance to purchase products outside the GPO is due in part to the exclusivity of the contract and the hospital administrators' concern about losing manufacturers' rebates.
Accordingly, the Company attempts to market its products directly to the individual end-users (nurses, doctors, and testing personnel) and their purchaser representatives so that they request their GPOs add the Company's products to their list of available products and also markets its products directly to the GPOs themselves. The Company's products are available through contracts with the following: Scripps; McKessonHBOC; Health Services Corporation of America ("HSCA"); Kaiser Permanente; Premier Health Systems, Inc.; AmeriNet, Inc.; InSource Health Services; Managed Healthcare Associates ("MHA")/MedEcon; and Abbott. The Company also pursues General Services Administration ("GSA"), VA, Federal Supply Schedule (FSS), and other federal government contracts for the purchase of VanishPoint(R) products.
The Company distributes its products in the United States and its territories through 6 general line and 27 specialty distributors. The Company entered into an Agreement whereby Abbott agreed to act as a nonexclusive marketer and distributor of the Company's 1cc, 3cc, 5cc, and 10cc syringes, blood collection tube holders, and small tube adapters to acute care facilities. The Agreement is for an initial five year term. The Company will continue to utilize its current general line and specialty distributors in other market segments, such as primary care, alternate care, and acute care facilities that are not under agreements with Abbott.
The Company has developed a national direct marketing network in order to market its products to end-users and their purchaser representatives made up of approximately 20 representatives located in Texas, Georgia, California, Missouri, Tennessee, New Jersey, and Arizona. The Company employs this marketing force of product specialists and nurses strategically placed in order to take full advantage of emerging legislation concerning safety products in healthcare. The Company's marketers make calls on target markets and segments that are high volume users of syringes and blood collection tube holders. The Company's marketers penetrate all of the departments that affect the decision-making process for safety products, including the purchasing agents. They also call on alternate care sites and talk directly with the decision-makers of the facility. In addition to the marketers, the Company employs a team of registered nurses who educate healthcare providers and healthcare workers through accredited continuing education units for in-service training, exhibits at related trade shows, and publications of relevant articles in trade journals and magazines. These nurses provide clinical support to customers. In addition to marketing the Company's products, the network demonstrates the safety and cost
effectiveness of the VanishPoint(R) automated retraction products to end-users. The Company provides to healthcare facilities, through its own representatives and Abbott's representatives, cost analysis software developed by Arthur Andersen LLP which, after entry of data for their particular facility, provides healthcare professionals an analysis of the cost savings provided by using VanishPoint(R) syringes compared to the costs of standard syringes. The Company has also developed user-friendly product evaluation kits, which allow smaller facilities to conduct on-site clinical evaluations with the aid of off-site company nursing coordinators. These kits allow the Company to familiarize and educate a facility's healthcare workers regarding VanishPoint(R) products.
The Company has nonexclusive distribution agreements with various organizations for the distribution of its products in: Western Europe, Africa, Japan, Australia, Canada, Ireland, France, Germany, Switzerland, Belgium, Netherlands, Luxembourg, Korea, South Africa, Tanzania, Uganda, Zimbabwe, Botswana, Namibia, Mozambique, Angola, Zaire, Kenya, Nigeria, Mauritius, and Madagascar. In addition, the Company has exclusive distribution agreements for the distribution of its products in: the United Kingdom, Puerto Rico, Panama, South Africa, Mexico, Korea, United States Virgin Islands, British Virgin Islands, Antigua, Barbados, St. Martin, Cuba, Ireland, the Dominican Republic, Saudi Arabia, Syria, Iraq, Turkey, Iran, Pakistan, Kuwait, Morocco, Algeria, Tunisia, Egypt, Sudan, Afghanistan, Oman, Yemen, and the United Arab Emirates. Sales to foreign markets are limited at this time, as the marketing efforts are in their early stages. The total population of Western Europe exceeds 310 million, and the recognition for the urgency of safe needle devices in parts of Europe has echoed the United States model. In France, England, Germany, and Italy, organized healthcare worker unions have taken action to force hospitals and government agencies to place safety as a priority. France has led Western Europe in its recognition of safety and has implemented VanishPoint(R) blood collection tube holders in several hospitals and clinical laboratories.
Key components of the Company's strategy to increase its market share are
to (a) continue marketing emphasis in states that have implemented safe needle
legislation; (b) promote legislation in other states and at the federal level;
(c) continue to add VA facilities, health departments, emergency medical
services, federal prisons, and home healthcare facilities as customers; (d)
educate healthcare providers, insurers, healthcare workers, government agencies,
government officials, and the general public on the reduction of risk and the
cost effectiveness afforded by the Company's VanishPoint(R) products; (e) supply
product through GPOs and Integrated Delivery Networks ("IDNs"); (f) explore
possibilities for future licensing agreements and joint venture agreements for
the manufacture and distribution of safety products in the United States and
abroad; (g) offer a full product line on existing FDA approved products; (h)
introduce new products; and (i) continue to increase international sales,
particularly in Europe, where safety legislation appears to be moving parallel
to the United States, with a one to two year lag time.
Several factors could materially affect the marketability of the Company's products. Demand could be dramatically increased by current legislative efforts encouraging the use of safety syringes. Demand could also be increased if the Company were successful in the antitrust lawsuit it has filed against B-D. See "Part II-Item 2-Legal Proceedings." Marketability of the Company's products would depend, in part, on the Company's ability to meet a dramatic and sudden increase in demand and on its ability to quickly find additional production capacity through licensing agreements and joint ventures, the purchase of appropriate facilities, or manufacturing and storage services. Currently, the Company's capacity is approximately 60 percent utilized. The Company is currently reviewing alternatives for increasing capacity.
The Company has received FDA premarket approval for the 1cc tuberculin, insulin, and allergy antigen syringes and anticipates producing them by the latter part of 2000. Patents have been applied for and issued for the application of automated retraction to dental syringes, winged IV's, and catheter introducers. The Company anticipates seeking FDA premarket approval and introducing these products in the future.
According to Theta's 1998 report, the leading manufacturers of hypodermic syringes and blood collection products are B-D, with a market share of approximately 71 percent; Sherwood/Davis & Geck Division of American Home Products Company, which was acquired by Tyco International Ltd.
("Sherwood"), with a market share of approximately 22 percent; and Terumo Medical Corporation ("Terumo"), with a market share of approximately 7 percent.
Founded in 1897, B-D is headquartered in New Jersey with eight major product lines in two segments of the healthcare industry: diagnostic systems and medical supplies and devices. The medical device division accounts for approximately 1.9 billion, or 56 percent, of B-D's estimated total fiscal 1999 sales. The injection systems segment accounts for 42 percent of B-D's fiscal 1999 device division sales. In its 1999 annual report, B-D states that safety products comprise 20 percent of the United States market and projects that within the next few years, 85 percent of the market will be converted to safety devices. B-D currently manufactures the SafetyLok(TM), a syringe which utilizes a tubular plastic sheath that must be manually slid over the needle after an injection, and the SafetyGlide(TM), a syringe which utilizes a hinged lever to cover the needle tip. B-D also manufactures a safety blood collection tube holder that utilizes the SafetyLok(TM) sheath. B-D's "Vacutainer(R)" blood collection tube holder is commonly used as industry jargon to refer to blood collection tube holders in general.
Sherwood was one of five major acquisitions by Tyco International Ltd., a company headquartered in Bermuda. Tyco sells four types of products: disposable medical supplies, flow control products, electrical and electronic products, and fire detection and security devices. Tyco also owns Kendall, the market leader in medical gauze and a participant in the area of vascular therapy. Sherwood manufactures the Monoject(R), a safety syringe that utilizes a sheath similar to the B-D SafetyLok syringe, but currently does not manufacture a safety blood collection tube holder.
Founded in 1974, Terumo was the first company to sell disposable syringes in Japan. Today Terumo manufactures standard syringes and blood collection tube holders, operates internationally, and has sales in some 120 countries.
Both B-D's and Sherwood's safety syringes require the use of two hands and several extra steps to activate the tubular plastic shield which must be slid and locked into place to protect the needle. In contrast, use of the VanishPoint(R) syringe is identical to that of a standard syringe until the end of an injection, when the automated retraction mechanism retracts the needle directly from the patient safely into the barrel of the syringe. This allows the second hand to remain safely out of harm's way.
B-D and Sherwood have greater financial resources, larger and more established sales and marketing and distribution organizations, and greater market influence, including the long-term contracts with GPOs described earlier. These competitors may be able to use these resources to improve their products through research or acquisitions or develop new products, which may compete more effectively with the Company's products. There can be no assurance that the Company's competitors will not succeed in developing or marketing products that are technologically superior or more effective or commercially attractive than any that are being developed by the Company. Based on the licensing agreement B- D has entered into with Med-Design, it is possible that B-D may in the future manufacture retractable needle products. Med-Design owns patent rights to manufacture a line of retractable needle products.
In addition to B-D and Sherwood, there are companies that manufacture needlestick injury prevention products that the Company's products will compete against for market share. Among those companies are: Bio-Plexus, Inc. ("Bio- Plexus"), Smiths Industries Medical Systems ("SIMS"), and New Medical Technologies, Inc. ("NMT"). Bio-Plexus utilizes a recessed internal hollow blunt safety technology where the internal blunt is advanced and locked into place beyond the sharp outer tip of the needle. SIMS utilizes a patented sheath whereupon completion of the procedure, the healthcare worker presses the sheath against a hard surface to lock the needle into the sheath. NMT manufactures a syringe that utilizes automated retraction of the used needle within the barrel of the syringe. NMT currently manufactures and makes commercially available one syringe size in limited needle lengths.
Other events that are having an impact on the Company's competitiveness include class action lawsuits by healthcare workers and the Company's decision to pursue its claims for damages against B-D and Sherwood. Class action suits on behalf of healthcare workers have been filed in several states against B-D and Sherwood. The success of such lawsuits could, obviously, be materially beneficial to any company that provides a safer alternative technology to the standard needle products, which cause as many as 800,000 reported needlestick injuries each year. The Company has filed a lawsuit against B-D and Sherwood to pursue a claim for damages for restraint-of-trade and anti-trust violations. See "Part II-Item 2-Legal Proceedings."
The Company's competitive strengths include that the VanishPoint(R) syringe is the only safety syringe given the highest possible rating by ECRI. The Company's blood collection tube holder is one of only two safety products given the highest possible rating. The Company's products also have an advantage because minimal training and changes to practitioners' normal routines are required. Use of the Company's products also prevent unfortunate and improper reuse. The Company's competitive position is strengthened by its agreements with the following: Scripps; McKessonHBOC; HSCA; Kaiser Permanente; Premier Health Systems, Inc.; AmeriNet, Inc.; InSource Health Services; MHA/MedEcon; and Abbott.
The Company's competitive weaknesses include its current lack of market (less than 1 percent), because two well-established companies control most of the market. The Company is currently operating at a production rate of 24 million syringes and 8 million blood collection tube holders annually (less than 60 percent of capacity). The Company's competitive position is also weakened by its higher initial price per unit and the method that providers use for making purchasing decisions. The Company's products are initially more expensive. However, the price per unit is competitive or even lower than the competition once all the costs incurred during the life cycle of a syringe are considered. Such life cycle costs include disposal costs, testing and treatment costs for needlestick injuries, and treatment for contracted illnesses through needlestick injuries.
The Company purchases most of its product components from single suppliers, including needle cannulae, syringe lubricants, and needle adhesives and packaging materials. There are multiple sources of the necessary supplies, and the Company owns the molds, which are used to manufacture the plastic components of its products. However, any changes in suppliers such as Magor Molds (mold supplier), Sortimat (assembly machine supplier), Nissho (needle supplier), Multivac (packaging supplier), and/or Sterigenics (sterilization company) could disrupt production schedules. In addition, shortages may occur from some suppliers, creating delays or reductions in product shipments, which could have a material adverse effect on the Company's operating results. Further, delays in filling orders could cause problems with customers, resulting in a permanent loss in sales.
Sales from the first half of fiscal 1999 to the second half increased 261 percent due to increased sales in California after its safe needle law went into effect. Sales to end-users over the period from July 1999 through March 2000 indicate that 70 percent of units sold were in California, with over 1/3 of those sales made to Kaiser Permanente. Quintiles Laboratories Limited in Georgia made up 18 percent of the unit sales for the same period. The Company anticipates that Abbott will account for the majority of sales of the Company's products to acute care end-user facilities in 2000. The Company maintains distribution agreements to serve its nonacute care end-user facilities.
The Company's current significant acute care and nonacute care end-user facilities include: Scripps Healthcare System, Riverside Memorial Hospital, Mississippi Department of Health, and California Department of Health.
The Company currently manufactures its 3cc, 5cc, and 10cc VanishPoint(R) syringes and the VanishPoint(R) blood collection tube holder and small tube adapter in a controlled environment in Little Elm, Texas. The Company recently signed an agreement with NYPRO Precision Assemblies, a California corporation, to provide subassembly services for the 5cc and 10cc syringes. The Company has also outsourced molding of its blood collection tube holder parts to Anura Plastics Engineering Corporation ("APEC"), also a California company. The size of the facility in Little Elm, Texas, is 22,500 square feet, with 18,000 square feet dedicated to production. The facility was designed to be modular so that, as new product lines are added or duplicate production lines are built, it can be expanded to house this new equipment. Assembly of the 3cc syringe uses a fully automated process, developed by a leading equipment manufacturer, with a manufacturing capacity of approximately 3 1/2 million units per month. The automated blood collection tube holder assembly has the manufacturing capacity of approximately 1 million units per month.
All components of the Company's products, except needles, can be produced at its Little Elm manufacturing facility. Currently, in order to increase production capacity, the Company is outsourcing some of the molding and assembly processes. Technologically advanced molding machines from a leading manufacturer, using a combination of hot-runner and cold-runner molds, produce the molded parts for VanishPoint(R) products. The needles used in VanishPoint(R) products are purchased from one of the world's larger suppliers. The retraction springs are wound in-house using a high-grade stainless steel spring wire. All parts have been tested for biocompatibility and radiation tolerance. After automated assembly, products are sealed in blister packages, boxed and sent out for sterilization at one of two outside radiation facilities. The Company's packaging equipment was manufactured by a leading packaging machine manufacturer. The Company also has an automated assembly process for manufacturing its blood collection tube holders.
The Company has limited experience in manufacturing the VanishPoint(R) product line in commercial quantities. Manufacturers often encounter difficulties in scaling up production of new products, including problems involving production yields, quality control and assurance, component supply and shortages of qualified personnel, compliance with FDA regulations, and the need for further FDA premarket approval of new manufacturing processes. Difficulties encountered by the Company in manufacturing scaleup could have a material adverse effect on its business, financial condition, and results of operations.
The Company is currently operating at a production rate of 24 million syringes and 8 million blood collection tube holders annually (less than 60 percent of capacity). Currently, market demand for safety outpaces the Company's production capacity. The Company is currently reviewing methods to increase capacity which include: joint ventures with manufacturers of medical equipment, the expansion of the Company's current manufacturing facility, short-term mobile buildings to hold inventory, and the outsourcing of production and subassembly of subcomponents. The Company has executed an agreement with NYPRO Precision Assemblies, Inc., a California corporation, for the provision of subassembly services for components of the 5cc and 10cc syringes, which will enable the Company to increase its current manufacturing capacity. The Company is considering licensing and/or sublicensing of its patents, as well as joint ventures, and buying additional space for domestic production. The Company's current facilities have been augmented by an outsourcing agreement with APEC which provides the Company with additional molding capacity for parts and warehousing space in California. Long-term plans include ordering additional assembly equipment and building an additional manufacturing facility.
Thomas J. Shaw and the Company entered into a Technology License Agreement dated effective as of the 23/rd/ day of June, 1995, whereby Mr. Shaw granted the Company "... a worldwide exclusive license and right under the 'Licensed Patents' and 'Information,' to manufacture, market, sell and distribute 'Licensed Products' and 'Improvements' without right to sublicense and subject to such nonexclusive rights as may be possessed by the Federal Government..." The Company may enter into licensing arrangements with Mr. Shaw's written approval of the terms and conditions of the licensing agreement. The Licensed Products include all retractable syringes and retractable fluid sampling devices and components thereof, assembled or unassembled, which comprise an invention described in Licensed Patents, and improvements thereof including any and all Products which employ the inventive concept disclosed or claimed in the Licensed Patents. Licensed Patents were defined as patents then issued or thereafter obtained under the Subject Matter of the Patent Properties and Improvements whether the Improvements are made by Mr. Shaw, the Company, or both, irrespective of the named inventors or the date when conceived or reduced to practice during the term of the agreement. The Subject Matter was defined as retractable syringe technology, including retractable fluid collection devices otherwise known as blood samplers.
In exchange, the Company paid Mr. Shaw a $500,000 initial licensing fee which was fully paid in 1997. Furthermore, the Company agreed to pay a 5 percent royalty on gross sales after returned inventory based on the price to the end- user or intermediary as appropriate. The license terminates upon the last to expire of the patents specifically mentioned unless sooner terminated under certain circumstances. The licensing fee and royalties have been paid in accordance with this agreement.
If the license is terminated within five years of execution, Mr. Shaw is entitled to access to all trade secrets, documents, and information and is permitted to use information to make sure the invention is made available to the public. The Company has the right and obligation to obtain protection of the invention and has full and complete control over prosecution of patent properties. The license unilaterally changes to a nonexclusive license in the event of a hostile takeover. Also, if Mr. Shaw involuntarily loses control of the Company, the license becomes a nonexclusive license and a right to information.
Foreign patent protection has been sought through the Patent Cooperation Treaty, and patents have been filed for regional and national patent protection in selective countries. These regional patents include Western Europe and Africa. In addition, application has been made for national patents in selective countries where the Company believes the VanishPoint(R) syringe can be utilized most.
The Company holds 15 United States patents related to its automated retraction technology, including patents for dental syringes, catheters, winged IV sets, syringes, and blood collection tube holders. In addition, the Company has 8 applications for patents currently pending.
The Company has also registered the following trade names and trademarks:
VanishPoint(R), RT with a circle mark, and the Spiral Logo used in packaging the
Company's products. The Company also has an application pending for trademark
protection for the color coded dots on the ends of its syringes.
There are currently no patent infringement claims pending against the VanishPoint(R) retraction technology. The Company has decided, on the advice of patent counsel, not to purchase patent insurance as it would require inappropriate disclosure of information that is currently proprietary and confidential.
Pursuant to the terms of a loan from Legacy Bank (formerly Plano Bank & Trust) in the amount of $710,000, the Company has executed a negative pledge on the sale of patents without prior written permission.
The Company's success will depend, in part, on its ability to protect its intellectual property and maintain the proprietary nature of its technology through a combination of patents and other intellectual property arrangements. The Company believes these patents will be sufficient to protect the design of its current and proposed products. Litigation, either to enforce the Company's patent rights or defend from patent infringement suits, would be expensive and would divert Company resources from other planned uses. Any adverse outcome in such litigation could have an adverse effect on the Company. In addition, patent applications filed in foreign countries and patents granted in such countries are subject to laws which differ from those in the United States. Patent protection in such countries may be different from patent protection provided by United States laws and may not be favorable to the Company. There is no assurance that the Company's program for patent protection, confidentiality, and restricted access to its facilities and product specifications will be sufficient to protect the Company's proprietary technology from all competitors.
The Company and its products are regulated by the FDA. The syringe is a Class II medical device which requires assurance by the manufacturer that the device is safe and effective and that it meets certain performance standards. The FDA issued its "Order of Substantial Equivalence" (i.e., granted the Company permission to market its safety syringes) for the 3cc VanishPoint(R) syringe in December 1995; for the 5cc and 10cc VanishPoint(R) syringes in May 1997; for the 1cc tuberculin syringe in November 1997; for the 1cc VanishPoint(R) insulin, tuberculin, and allergy antigen syringes in February 1998; and for the VanishPoint(R) blood collection tube holder and small tube adapter in August 1997.
In addition to premarket clearance, the Company must register with the FDA on an annual basis and provide the FDA with a list of commercially distributed products. Texas has similar registration requirements. The FDA is required to inspect all medical device manufacturing facilities at least once every two years to determine the extent to which they are complying with Quality System Regulation. The most recent inspection occurred in April 2000, after which the auditor determined No Action Indicated (NAI).
The Company's quality system was certified for ISO 9001 compliance through TUV Essen, a subsidiary of RWTUV Germany. The certification was deemed in compliance with ISO 9001, EN ISO 9001, and EN46001 of the Medical Device Directive. In addition, RWTUV certified the VanishPoint(R) product line for the CE mark according to Annex II of the council directive 93/42/EEC of 1993 relating to medical device design, production, and final control. Since the original certification in 1997, the Company has undergone annual surveillance audits with no major noncompliances noted. The CE Mark authorizes the Company to sell in 18 different countries. The Company has engaged a European regulatory affairs company to be its authorized representative in Europe according to Medical Device Directive 93/42/EEC. The Company is currently pursuing registration with the Ministry of Health in additional countries in order to sell products in those countries.
Thomas J. Shaw developed his initial version of a safety syringe with the aid of grants by the National Institutes of Health. As a result, the federal government has the right, where the public interest justifies it, to disperse the technology to multiple manufacturers so that the safety syringe can be made widely available to the public. However, the funding was only used to develop and patent the syringe design as of 1991. That syringe was a bulkier, less effective, and more expensive version of the current product. Accordingly and on the advice of counsel, Management believes that the risk of the government demanding manufacture of this inferior product is minimal.
The Company spent $266,029, $763,690, and $842,062 in fiscal 1997, 1998, and 1999, respectively, on research and development, primarily on development of prototype molds and manufacturing processes for the following products: 1cc syringe, 5cc syringe, 10cc syringe, and a blood collection tube holder. The Company's ongoing research and development activities are performed by an internal research and development staff. This team of engineers has developed automated line assembly for the syringe and blood collection tube holder and has established processes to meet regulatory requirements. Pursuant to the Agreement entered into between the Company and Abbott, by August 2, 2000, a New Product Team, made up of no fewer than two representatives each from Abbott and the Company, will be established for the purpose of developing new products utilizing the automated retraction technology. Products currently in development include the winged butterfly IV, the catheter introducer, and the dental syringe. Possible future products include all needle medical devices to which the automated retraction mechanism can be applied.
Management believes that the Company does not incur material costs in connection with compliance with environmental laws. The Company's manufacturing waste (predominantly made up of hard plastic materials) is sold to Penn Tex Plastics, which recycles the materials.
As of May 31, 2000, the Company had 152 full-time employees and four independently contracted consultants. Of the 152 full-time employees, approximately 6 persons were engaged in research and development activities, 69 persons were engaged in manufacturing and engineering, 27 persons were engaged in quality assurance and regulatory affairs, 20 persons were engaged in sales and marketing, 25 persons were engaged in general and administrative functions, and 5 persons in facilities. No employees are covered by collective bargaining agreements, and the Company believes it maintains good relations with its employees. The Company is dependent upon a number of key Management and technical personnel, and the loss of services of one or more key employees could have a material adverse effect on the Company. The Company's President and Chief Executive Officer, Thomas J. Shaw, has an employment contract for five years. In addition to Mr. Shaw's employment contract, the Company has a one year employment contract with Phillip Zweig, Director of Communications. The Company has entered into 4 consulting agreements with independent contractors.
REPORTS TO SECURITY HOLDERS
Until this Form 10-SB becomes effective, the Company is not a reporting company as defined under the Securities Exchange Act of 1934. The Company has provided the shareholders with annual statements of financial condition, audited by independent public accountants, and an unaudited statement of financial condition, along with a newsletter, each quarter. The Company began providing quarterly reports in 1999. Prior to 1999, quarterly reports were available upon request. Other information is sent to shareholders as noteworthy events occur.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Certain statements included by reference in this Form 10-SB containing the words "believes," "anticipates," "intends," "expects," and similar such words constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Any forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the impact of dramatic increases in demand, the Company's ability to quickly increase its capacity in the event of a dramatic increase in demand, the ability of the Company to continue to finance research and development as well as operations and expansion of production through equity and debt financing, as well as sales, and the increased interest of larger market players in providing "safety needle devices." Given these uncertainties, undue reliance should not be placed on forward-looking statements.
OVERVIEW OF BUSINESS
The Company designs, develops, manufactures, and markets innovative patented safety needle devices for the healthcare industry. VanishPoint(R) products are designed specifically to prevent needlestick injuries and to prevent reuse. The friction ring mechanism permits the automated retraction of the syringe needle into the barrel of the syringe, directly from the patient, after delivery of the medication is completed. The VanishPoint(R) blood collection tube holder utilizes the friction ring mechanism to retract the needle after blood has been drawn from the patient. Closure of an attached end cap causes the needle to retract directly from the patient into the closed tube holder. The Company's goal is to become a leading provider of automated retraction safety devices.
In 1996, the Company purchased assets and hired personnel from Checkmate Engineering. The Company had limited production but no sales in 1996, but focused its attention on general and administrative activities including implementing Quality System Regulation, developing a human resource department, and obtaining an application for an Order of Substantial Equivalence from the FDA allowing the Company to manufacture and sell the 3cc VanishPoint(R) syringe. In 1997, the Company began selling products to emergency medical service centers, federal prison systems, homecare facilities, small hospitals, and VA hospitals. During the second half of 1997, the Company took delivery of its 3cc automated assembly equipment and began automated assembly. Production molds for the 5cc and 10cc syringes and the blood collection tube holder were ordered in 1997. A prototype mold for the 1cc syringe was ordered and received in 1997. Automated assembly equipment for the blood collection tube holder was ordered at the end of 1997 and installed in July 1998. Commercial production of the blood collection tube holder began in 1998. The Company received its ISO 9001 Certificate in July 1998, and the VanishPoint(R) syringe received its CE Mark Certificate on July 31, 1998. The CE mark allows the Company to sell its products in Europe. In 1999, the Company focused its development on improving manufacturing processes and expanding product lines. In 1999, the Company focused its development on improvement of manufacturing processes, continuation of design and development of the manufacturing process for the 1cc syringe, and conceptual design of additional safe needle products utilizing automated retraction technology.
From its inception in 1994 through December 31, 1999, and March 31, 2000, the Company has incurred cumulative losses from operations totaling $22,852,247 and $24,633,975, respectively.
DEVELOPMENT AND EXPANSION OF PRODUCT LINE
The Company's financial position over the past three years has been materially affected by additions to its product line. In 1997, commercial production of the 3cc syringe began, and the Company began selling its products to emergency medical service centers, federal prison center facilities, home care facilities, small hospitals, prisons, and VA hospitals. In 1998, commercial production of the blood collection tube holder began. The Company received its ISO 9001 Certificate in July 1998, which enabled it to become eligible to receive its CE mark. The Company received its CE mark, allowing it to market its products in Europe. Automated assembly equipment for production of the blood collection tube holder was installed in July 1998. In 1999, sales began to increase significantly and production continued to increase, due in large part to the safe needle legislation in California. In 2000, the Company anticipates manufacture and distribution of the 1cc VanishPoint(R) product line. In addition, Abbott and the Company have agreed to the formation of a New Product Team, consisting of key personnel from both companies, that will develop new safety products that incorporate the Company's patented, proprietary technology.
INCREASING MARKET DEMAND FOR SAFETY PRODUCTS
Demand for safety products is increasing in the United States and internationally. NIOSH issued a safety alert calling on employers to adopt safer needles to reduce needlestick injuries. OSHA issued a Compliance Directive which instructs OSHA inspectors to cite employers who fail to evaluate and buy safety needle devices. The SEIU has taken a proactive stance with regard to promoting the use of automated retraction needle devices in member hospitals and by participating in federal and state legislation protests. Due to recent legislation, Cal OSHA mandates that healthcare employers provide their workers with safe needle devices. In addition, 14 states have adopted, and more than 20 states have introduced, legislation containing language similar to that passed in California, and federal legislation is pending with support from OSHA and the Secretary of Labor. The recognition for the urgency of safe needle devices in parts of Europe and Africa has echoed the United States model. In France, England, Germany, and Italy, organized healthcare worker unions have taken action to force hospitals and government agencies to place safety as a priority. France has led Western Europe in its recognition of safety and has implemented VanishPoint(R) blood collection tube holders in several hospitals and clinical laboratories.
EXTERNAL SOURCES OF INCOME
The Company has funded operations primarily from proceeds from private placements and bank loans. The Company has been capitalized with approximately $42,000,000 raised from five separate Private Placement Offerings. As of September 30, 1995, the Company sold 5,000,000 shares of Class A Convertible Preferred Stock at $1 per share, for an aggregate of $5,000,000. As of October 31, 1996, the Company sold 1,000,000 shares of Series I Class B Convertible Preferred Stock at $5 per share for an aggregate of $5,000,000. As of January 31, 1998, the Company sold 1,000,000 shares of Series II Class B Convertible Stock at $10 per share for an aggregate of $10,000,000. As of September 30, 1999, the Company sold 1,160,200 shares of Series III Class B Convertible Preferred Stock at $10 per share for an aggregate of $11,602,000. Finally, as of June 10, 2000, the Company sold 1,133,800 shares of Series IV Convertible Preferred Stock at $10 per share for an aggregate of $11,338,000.
The Company obtained $1,200,000, $710,000, and $2,000,000 in 1996, 1997, and 2000, respectively, from bank loans. Additionally, the Company received a Small Business Administration loan of $1,000,000 in 1996 to pay for portions of automated assembly equipment, multi-cavity molds, and other equipment.
MANUFACTURING IMPROVEMENTS
The Company has constructed a 22,500 square foot facility which houses its manufacturing operations and corporate headquarters. Sales and marketing operations are located in Lewisville, Texas. The Company is producing 3cc syringes and blood collection tube holders using automated assembly equipment. The 5cc and 10cc syringes are assembled by a semiautomated process. Some assembly and
molding has been outsourced to increase production capacity. Automated equipment for the 1cc syringe is ordered, and delivery is expected in the second half of 2000.
SELECTED FINANCIAL DATA
The following selected financial data for fiscal years ended December 31, 1999 and 1998, are derived from audited financial statements of the Company, which were audited by independent public accountants. The following selected data for the three months ended March 31, 2000 and 1999, are derived from unaudited financial statements of the Company. The data should be read in conjunction with the audited financial statements and selected notes attached as an exhibit and the following discussion of results of operations.
Year Ended December 31
---------------------- Cumulative
3 Months Ended 3 Months Ended from Incep-
March 31, 2000 March 31, 1999 tion (May 9,
1999 1998 (Unaudited) (Unaudited) 1994)
---- ---- ---------- ----------- -----
Sales $ 3,375,158 $ 845,559 $ 827,819 $ 254,987 $ 5,310,851
Cost of sales 2,331,070 765,448 644,700 206,256 4,215,365
----------- ----------- ----------- ----------- ------------
Gross profit (deficit) 1,044,088 80,111 183,119 48,731 1,095,486
----------- ----------- ----------- ----------- ------------
Operating Expenses
Preproduction manufacturing 1,837,830 1,004,828 450,612 391,345 5,907,813
Sales and marketing 3,742,779 1,539,822 705,262 547,180 7,753,214
Research and development 842,062 763,690 136,253 277,588 2,462,380
General and administrative 2,863,989 2,419,821 667,514 771,152 9,475,446
----------- ----------- ----------- ----------- ------------
Total operating expenses 9,286,660 5,728,161 1,959,641 1,987,265 25,598,853
----------- ----------- ----------- ----------- ------------
Loss from operations (8,242,572) (5,648,050) (1,776,522) (1,938,534) (24,503,367)
Net interest income (expense) 9,064 (56,038) (5,206) (14,993) (130,608)
----------- ----------- ----------- ----------- ------------
Net Loss $(8,233,508) $(5,704,088) $(1,781,728) $(1,953,527) $(24,633,975)
=========== =========== =========== =========== ============
Dividends $ - $ - $ - $ - $ -
|
RESULTS OF OPERATIONS
The following discussion contains trend information and other forward- looking statements that involve a number of risks and uncertainties. The Company's actual future results could differ materially from its historical results of operations and those discussed in the forward-looking statements. All period references are to the Company's fiscal year ended December 1999 or 1998 or periods ended March 31, 2000 and 1999.
In 1996, the Company purchased assets and hired personnel from Checkmate Engineering. The Company had limited production but no sales in 1996, but focused its attention on general and administrative activities including implementing Quality System Regulation, developing a human resource department, and obtaining an application for an Order of Substantial Equivalence from the FDA allowing the Company to manufacture and sell the 3cc VanishPoint(R) syringe. In 1997, the Company began selling products to emergency medical service centers, federal prison systems, homecare facilities, small hospitals, and VA hospitals. During the second half of 1997, the Company took delivery of its 3cc automated assembly equipment and began automated assembly. Production molds for the 5cc and 10cc syringes and the blood collection tube holder were ordered in 1997. A prototype mold for the 1cc syringe was ordered and received in 1997. Automated assembly equipment for the blood collection tube holder was ordered at the end of 1997 and installed in July 1998. Commercial production of the blood collection tube holder began in 1998. The Company received its ISO 9001 Certificate in July 1998, and the
VanishPoint(R) syringe received its CE Mark Certificate on July 31, 1998. The CE mark allows the Company to sell its products in Europe. In 1999, the Company focused its development on improving manufacturing processes and expanding product lines. In 1999, the Company focused its development on improvement of manufacturing processes, continuation of design and development of the manufacturing process for the 1cc syringe, and conceptual design of additional safe needle products utilizing automated retraction technology.
In May 2000, the Company entered into an Agreement with Abbott. As part of the consideration for the Agreement, Abbott agreed to make periodic loans prior to June 30, 2005 to the Company in increments of $1,000,000 in an aggregate amount of up to $5,000,000 at an interest rate of prime plus 1% with any and all amounts loaned to be due and payable on June 30, 2005. Any loans made are secured by accounts receivables and contracts where Abbott is the account debtor, payments due to Abbott under the Agreement, and certain equipment already owned by the Company.
Comparison of Period Ended March 31, 2000, and Period Ended March 31, 1999
Net sales were $827,819 and $254,987 for the three months ended March 31, 2000, and March 31, 1999, respectively. This increase of 225 percent is due to the continuing impact of safe needle legislation, particularly in California.
Costs of sales increased from $206,256 to $644,700, principally due to increased unit sales. Cost of sales as a percentage of revenue decreased from 81 percent to 78 percent.
Preproduction costs increased from $391,345 to $450,612. Preproduction costs relative to the cost of sales decreased from 190 percent to 70 percent due to continuing to shift from a preproduction environment to a manufacturing environment.
Sales and marketing expense increased from $547,180 to $705,262, or $158,035 from the first quarter of 1999 to the first quarter of 2000. The increase is principally due to continuing the Company's marketing efforts in California.
Research and development costs decreased as the Company neared the end of its development stage.
Interest income decreased due to lower average outstanding cash balances.
Interest expense decreased as a result of more interest being capitalized in the first quarter of 2000 compared to first quarter of 1999.
Comparison of Year Ended December 31, 1999, and Year Ended December 31, 1998
Net sales were $3,375,158 and $845,559 for the years ended December 31, 1999, and December 31, 1998, respectively. The 300 percent increase in sales was principally due to increased sales in California as a result of the safe needle legislation.
Costs of sales increased from $765,448 in 1998 to $2,331,070 in 1999. As a percentage of revenue, cost of sales decreased from 91 percent in 1998, to 69 percent in 1999. The improvement is due to increased operating efficiency and continued allocation of certain manufacturing costs to preproduction and research and development expensed during the development stage.
Preproduction costs increased from $1,004,828 to $1,837,830. Preproduction costs relative to cost of sales decreased from 131 percent to 79 percent due to a shift from a preproduction environment to a manufacturing environment.
Sales and marketing expenses increased 143 percent to $3,742,779 in 1999 from $1,539,822 in 1998 but decreased as a percentage of revenue from 182 percent to 111 percent. The increase in expenses is principally due to the increased effort to market VanishPoint(R) products in California, including retaining a marketing company that provided contract sales representatives to supplement the marketing effort.
Research and development costs increased as more resources were committed to the 1cc syringe.
General and administrative costs increased 18 percent due to increases in staffing, salaries, and consulting services, offset somewhat by decreases in legal fees.
Interest income decreased due to lower average outstanding cash balances.
Interest expense decreased due to lower outstanding debt and more interest being capitalized.
Comparison of Year Ended December 31, 1998, and Year Ended December 31, 1997
Net sales were $845,559 and $262,315 for the years ended December 31, 1998, and December 31, 1997, respectively. Shipments of the 3cc VanishPoint(R) syringe began in February 1997, with 66 percent of the sales occurring during the last four months of the year. Approximately 42 percent of 1998 sales were blood collection tube holders to one customer. Sales of the 3cc VanishPoint(R) syringe were at a comparable rate during 1998 as the last four months of 1997.
Costs of sales increased in 1998 as the cost of materials sold increased in conjunction with the increase in unit sales and due to a greater allocation of manufacturing costs to cost of sales from preproduction costs.
Preproduction manufacturing costs decreased $491,590 from 1997 to 1998, because as operations shifted from a preproduction environment towards a manufacturing environment, a higher portion of the manufacturing costs were allocated to cost of sales. Also, in 1998, a significant amount of the manufacturing costs were allocated to research and development because a significant amount of manufacturing time was spent on development and refinement of the production process.
Sales and marketing expenses increased 10 percent to $1,539,822 in 1998, from $1,394,024 in 1997. The sales force was expanded in 1998, resulting in additional salary and travel expense, in order to increase sales and product awareness. These increases were partially offset by a reduction in sales and marketing consulting expenses as the Company expanded its own workforce and by a reduction in costs associated with developing marketing and advertising materials.
Research and development costs increased $497,661 in 1998, to $763,690 from $266,029 in 1997. This increase was due to the increase in time spent in the manufacturing facility to further develop, refine, and validate the production process using automated assembly equipment, so that the Company's products can be produced efficiently while maintaining the Company's high standard for quality.
General and administrative expenses increased 24 percent in 1998, to $2,419,821 from $1,952,561 in 1997. The increase was primarily in salaries and consulting services offset with decreases in legal fees and insurance.
Interest income increased due to higher average outstanding cash balances.
Interest expense decreased $118,595 due to an increase in the capitalization of interest expense on construction in progress expenditures for production equipment that the Company is having manufactured.
LIQUIDITY AND FUTURE CAPITAL REQUIREMENTS
Based on sales activity in fiscal 1999 and anticipated sales in fiscal 2000, the Company believes it will be able to sustain operations for its existing products without additional financing. Management believes that the Company will achieve its breakeven point in the year 2000. The Company believes that the existing cash and cash equivalents and cash flow from operations will be sufficient to meet the Company's presently anticipated working capital needs through 2000. To the extent the Company uses all of its cash resources, the Company will be required to obtain additional funds, if available, through additional borrowing or equity financing. There can be no assurance that such capital will be available on acceptable terms. If the Company is unable to obtain sufficient financing, it may be unable to implement
its long-term plan of operation. The Company anticipates strengthening its capital structure over the next four years by increasing capital through debt and equity offerings, improving profitability, and participating in joint ventures or licensing arrangements, where possible, to accelerate the manufacture and distribution of its products.
The Company currently produces at a rate of 24 million 3cc syringes and 8 million blood collection tube holders annually. In order to ramp up production to meet the expected demand for safe needle devices, the Company has raised $18 million in debt and equity funds in 2000. The Agreement provided a credit line of $5 million and $5 million of equity. The Company expects to fund future expansion through a combination of debt, a public offering, and internally generated funds. Capital needs are expected to require an additional $90 million over the next four years for expansion of production discussed in greater detail in "Material Commitments for Expenditures."
Sales have increased each quarter except for the fourth quarter of fiscal 1998, which was partially due to an unusually large order in the third quarter of 1998. When comparing sales in the first, second, and third quarters of fiscal 1998 to those of fiscal 1999, they increased 170 percent, 280 percent, and 150 percent, respectively. Sales for the fourth quarter of fiscal 1999 have increased 1,730 percent over those for fourth quarter of fiscal 1998. The increase in sales is primarily attributable to the California legislation requiring safety needles and similar legislation which had been passed in additional states. The Company expects this trend to continue because twenty additional states have introduced similar legislation, and the federal government is considering it as well. Also, as a result of the Abbott Agreement, sales are expected to increase. Demand could also dramatically increase in the event the Company is successful in its antitrust suit, but the Company has not based any of its financing plans on a positive result from that suit. See "Part II-Item 2-Legal Proceedings." The Company is also ramping up its production and continuing to introduce new products. The Company anticipates being able to sell all that it is able to produce.
The Company has obtained several loans over the past four years which have, together with proceeds from sales of equities, enabled the Company to pursue development and production of its products.
In January 1996, the Company obtained a loan from Western Bank & Trust in the principal amount of $1,200,000 for the purpose of financing construction improvements and the purchase of manufacturing equipment, which matures on October 24, 2001. The loan actually consisted of two loans: one in the amount of $800,000 and one in the amount of $400,000. The larger note carried interest at a rate of prime as defined by The Wall Street Journal plus 1 percent adjustable annually, while the smaller loan carried interest at a rate of CD rate plus 2 percent. The loan was secured by land, building, and equipment and by a certificate of deposit in the amount of $400,000 to be released upon achievement of certain financial ratios (with interest payable at the certificate of deposit rate plus 2 percent). This loan was guaranteed by Thomas J. Shaw, the Company's President and Chief Executive Officer, and Suzanne M. August, his wife. The loan was paid off in February 2000 with funds provided by a loan from 1st International Bank.
In July 1996, the Company obtained a United States Small Business Administration note payable to Texas Bank in the principal amount of $1,000,000, which matures on July 1, 2003. The note is payable monthly at an annual interest rate of prime plus 1.5 percent adjustable quarterly. The loan is collateralized by manufacturing equipment and guaranteed by Thomas J. Shaw, the Company's President and Chief Executive Officer, and Suzanne M. August, his wife. This loan is in good standing. The Company has agreed not to make any distribution upon its capital stock, purchase any of its capital stock, or merge without prior written consent.
In April 1997, the Company obtained a loan from Legacy Bank of Texas (formerly Plano Bank & Trust) in the principal amount of $710,000 at an interest rate of prime plus 1 percent (adjustable daily) for reimbursement for the purchase of equipment, which matures on July 10, 2004. The loan is collateralized by certain machinery and equipment, a certificate of deposit in the amount of $200,000, and restrictions on the transfer of certain patents. The loan is (continuously and without limit) guaranteed by Thomas J. Shaw, the President and Chief Executive Officer. This loan is in good standing.
In February 2000, the Company obtained loans of $2 million through the 1st International Bank. The proceeds from these loans were used to pay off the Western Bank loan and also for working capital purposes. $1,500,000 of the loan is secured by a lien on the land, building, and building improvements and matures on February 18, 2005. The remaining $500,000 is secured by the Company's accounts receivable and matures on February 18, 2001. Both loans are guaranteed by a continuing guaranty by Thomas J. Shaw, the President and Chief Executive Officer. The interest rate on both loans is the prime rate as defined in The Wall Street Journal plus 1 percent. This loan is in good standing.
In May 2000, the Company entered into an Agreement with Abbott. As part of the consideration for the Agreement, Abbott agreed to make periodic loans prior to June 30, 2005, to the Company in increments of $1,000,000 in an aggregate amount of up to $5,000,000 at an interest rate of prime plus 1 percent with any and all amounts loaned to be due and payable on June 30, 2005. Any loans made are secured by accounts receivables and contracts where Abbott is the account debtor, payments due to Abbott under the Agreement, and certain equipment already owned by the Company. The Company has not borrowed any funds under this Agreement.
The Company anticipates capital expenditures in the amount of $90 million over the next four years for the purpose of expanding capacity by adding equipment and additional space (for 18 assembly lines for syringe production and 5 lines for blood collection tube holder production), expanding the current building by an additional 60,000 square feet, and constructing a second facility for additional assembly, equipment, and warehousing needs in order to meet the Company's target production of syringes and blood collection tube holders by 2003. The Company needs this capital to fund equipment and facilities expansion for additional 1cc and 3cc syringes and blood collection tube holders, as well as equipment to manufacture 5cc and 10cc syringes. This production target equates to the Company's obtaining 6 percent of the United States' 6.6 billion- unit syringe annual market and less than 1 percent of the world's 24 billion- unit annual syringe market. The Company has obtained $18 million in a combination of debt and equity financing and expects to raise $60 million through equity financing. The Company anticipates other funding requirements to be paid from debt or operations.
The Company anticipates expenditures of $6,000,000 and $12,000,000 in fiscal 2000 and 2001, respectively, for building expansion and improvements. Management anticipates $25,525,000; $26,825,000; and $15,100,000 in capital expenditures for the manufacturing facility, equipment, and machinery in fiscal 2000, 2001, and 2002, respectively. The Company is planning to expand its manufacturing capacity by expanding its existing facility in Little Elm, Texas, by 60,000 square feet in 2000 (to house near term production and administrative needs) and purchasing additional assembly equipment. The equipment will include a 1cc printer, 1cc packaging machine, 5cc/10cc assembly equipment, blood collection tube holder assembly equipment, and blood collection tube holder molds. The Company also anticipates constructing a second facility for additional assembly equipment and warehousing needs through 2003.
Currently, the Company is in the process of purchasing 1cc automated production equipment and additional automated blood collection tube holder equipment. The Company has increased capacity by outsourcing the molding of certain sub-components of the Company's products. The Company has entered into an agreement with APEC for the provision of additional molding capacity for both parts and warehousing space in California. The Company is also pursuing licensing agreements and/or joint venture agreements for the provision of manufacturing services.
ITEM 3. DESCRIPTION OF PROPERTY
The Company's 22,500 square foot headquarters is located on 35 acres, which are owned by the Company, overlooking Lake Lewisville in Little Elm, Texas. The building is a modular portion of a larger planned building for which the engineering design has been finalized. This facility is in good condition and houses the Company's administrative offices and manufacturing facility. The Company's current expansion plans do not include going outside the 35 acres on which the headquarters is located. Management anticipates that any future development of facilities beyond that 35 acres will be in areas closer to the east and west coast customer base. The land and building on which the headquarters is located are the subject of a lien by 1st International Bank as collateral on payment of a loan in the amount of $1,500,000.
The Company also leases Suites 618, 620, and 622 S. Mill Street, Lewisville, Texas, as well as storage stalls located at 102 E. Purnell, Lewisville, Texas, from Mill Street Enterprises, a sole proprietorship owned by Lillian E. Salerno. This lease is for 4,365 square feet of office space in good condition. The storage facility is used to store office documents. The lease is for five years commencing July 1, 1997, and ending June 30, 2002, at a monthly rate of $1,900. An additional lease has been signed for 628 Mill Street for a one-year period commencing April 1, 2000. The monthly rate is $1,000. This property is used exclusively for general office and marketing purposes. The Company does not hold any real estate or related securities for investment purposes.
In the opinion of Management, all the properties and equipment are suitable for their use and are adequately covered by an insurance policy which lists Textron, Fleet Capital, Texas Bank, 1st International Bank, and Legacy Bank as the payees.
The Company plans to expand the headquarters by 60,000 square feet in fiscal 2000 at an approximate cost of $6,000,000 for additional manufacturing space as well as office space. This expanded facility will be capable of accommodating four syringe assembly lines and three blood collection tube holder lines. In 2001, the Company anticipates building a 100,000 square foot facility at an approximate cost of $12 million which will be utilized for manufacture of the projected eight 3cc assembly lines, six 1cc assembly lines, two 5cc assembly lines, two 10cc assembly lines, and five blood collection tube holder assembly lines. Management plans to finance the expansion by raising $60 million through a public offering and $10 million in debt.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of the Company's capital stock as of the date of this Form 10-SB (excluding exercisable options) for (a) each person known by the Company to own beneficially 5 percent or more of the voting capital stock, and (b) each Director and Executive Officer of the Company who owns capital stock. Except pursuant to applicable community property laws and except as otherwise indicated, each shareholder identified in the table possesses sole voting and investment power with respect to his or her shares.
Title of Class Name and Address of Amount and Nature Percent of
Beneficial Owner of Beneficial Owner Class/1/
-----------------------------------------------------------------------------------------------------------
Common Stock
-----------------------------------------------------------------------------------------------------------
As a Group Officers and Directors 14,000,000 100%
511 Lobo Lane, P.O. Box 9
Little Elm, TX 75068-0009
As Individuals Thomas J. Shaw 11,200,000 80%
Lillian E. Salerno 2,800,000 20%
-----------------------------------------------------------------------------------------------------------
Class A Convertible
Preferred Stock
-----------------------------------------------------------------------------------------------------------
As a Group Officers and Directors 150,000 3%
511 Lobo Lane, P.O. Box 9
Little Elm, TX 75068-0009
As Individuals Jimmie Shiu 150,000 3%
-----------------------------------------------------------------------------------------------------------
Class B Convertible
Preferred Stock
-----------------------------------------------------------------------------------------------------------
As a Group Officers and Directors 96,700 2.3%
511 Lobo Lane, P.O. Box 9
Little Elm, TX 75068-0009
As Individuals Thomas J. Shaw 5,000 Less than 1%
Steven R. Wisner 2,500 Less than 1%
F. John Deuschle, III 25,700 Less than 1%
Jimmie Shiu 18,500 Less than 1%
John H. Wilson, III 5,000 Less than 1%
Marwan Saker 30,000 Less than 1%
|
(1) The percentages of each class are based on 14,000,000 shares of common stock, 5,000,000 shares of Class A Convertible Preferred Stock, and 4,294,000 shares of Class B Convertible Preferred Stock outstanding as of the date of this filing.
There are no arrangements the operation of which would result in a change in control of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The following table sets forth information concerning the Directors, Executive Officers, and certain significant employees of the Company as of the date of this filing. The Company's Board of Directors consists of nine members. The Directors serve for three-year terms.
Term as
Name Age Position Director Expires
---- --- -------- ----------------
Management
Thomas J. Shaw 49 Chairman, President, Chief Executive Officer, and Director 2000**
Steven R. Wisner 43 Executive Vice President, Engineering & Production and Director 2000
Lawrence G. Salerno 40 Director of Operations N/A
James A. Hoover 51 Production Manager N/A
Russell B. Kuhlman 45 Vice President, New Markets N/A
Kathryn M. Duesman 36 Director of Clinical Services N/A
Douglas W. Cowan 56 Chief Financial Officer, Treasurer, and Director 2000
Michele M. Larios 33 Director of Legal and Legislative Policy and Secretary N/A
Outside Directors
Lillian E. Salerno 39 Director 2000**
Jimmie Shiu, M.D. 66 Director 2000*
Clarence Zierhut 71 Director 2002**
John H. Wilson, III 57 Director 2000*
F. John Deuschle, III 33 Director 2000*
Marwan Saker 44 Director 2000
Significant Employees
Phillip L. Zweig 53 Communications Director N/A
Peter B. Hegi 26 Product Development Manager N/A
Judy Ni Zhu 41 Senior Research Design Engineer N/A
S. Kristie Haddox 29 Quality Assurance Manager N/A
Shelley K. Walley 46 Manager of Regulatory Affairs N/A
Stephen C. Bezner 49 Director of Accounting N/A
|
* Elected under the terms of the Certificate of Designation, Preferences, Rights and Limitations of Series A Convertible Preferred Stock of the Company. The terms of these Directors will expire the earlier of the 2000 annual shareholders' meeting or upon payment of all dividends to the Class A shareholders.
** Members of the Compensation and Benefits Committee
MANAGEMENT
process development projects. Mr. Salerno is the Company's Management Representative, assuring that the Quality Systems are established and implemented according to ISO 9001, MDD, and FDA mandated standards. In addition, he supervised all aspects of the construction of the Company's new facilities in Little Elm, Texas. Prior to joining the Company, Mr. Salerno worked for Checkmate Engineering from 1991 to 1995 and was responsible for engineering site design and supervision of structural engineering products. Mr. Salerno is the brother of Lillian E. Salerno.
in Moraga, California, and a Juris Doctorate from Pepperdine University School of Law in Malibu, California.
OUTSIDE DIRECTORS
SIGNIFICANT EMPLOYEES
Wall Street Journal, and Bloomberg Business News and other media organizations. From 1993 to 1998, he served as Corporate Finance Editor at Business Week where he wrote a major article on the Company. Before joining the Company, he worked as a freelance financial writer and editorial consultant. His clients included Andersen Consulting and Boston Consulting Group. Mr. Zweig received a Bachelor of Arts in Behavioral Psychology from Hamilton College and a Master of Business Administration from the Baruch College Graduate School of Business.
which were for manufacturing operations of public companies. Previous employers include Overhead Door Corporation and Texas Instruments. He has a Bachelor of Science Degree from the University of Texas at Dallas.
COMMITTEE OF DIRECTORS
The Board of Directors has the following committee:
Committee Members
--------- -------
Compensation and Benefits Thomas J. Shaw--Chairman
Lillian E. Salerno
Clarence Zierhut
|
The Compensation and Benefits Committee recommends to the Board of Directors the compensation of Officers and significant employees for the Company and the granting of stock options.
FAMILY RELATIONSHIPS
There are no family relationships among the above persons except as set forth above.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
None of the above persons or any business in which such person was an executive officer have been involved in a bankruptcy petition, been subject to a criminal proceeding (excluding traffic violations and other minor offenses), been subject to any order enjoining or suspending their involvement in any type of business, or been found to have violated a securities law.
DIRECTORSHIPS IN OTHER COMPANIES
No Directors hold directorships in reporting companies other than as set forth above.
ITEM 6. EXECUTIVE COMPENSATION
The following summary compensation table sets forth the total annual compensation paid or accrued by the Company to or for the account of the Chief Executive Officer and each other executive officer of the Company whose total cash compensation exceeded $100,000 for any of the past three fiscal years:
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------- ------------------------
Awards Payout(s)
------------------------ ----------------------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Name and Principal Compen- Award(s) Options/ Payouts Compen-
Position Year Salary($) Bonus($) sation($) ($) SARs (#) ($) sation ($)
------------------ ---- --------- --------- ---------- ---------- ---------- -------- ----------
Thomas J. Shaw, 1997 130,400 50,000 0 0 0 0 0
President and CEO 1998 125,000 0
1999 162,019 0
Lillian E. Salerno, 1997 88,846 50,000 0 0 0 0 0
Former Executive 1998 90,000 0
Vice President, 1999 143,461 0
Sales & Marketing
Edward S. Aarons, 1997 0 0 0 0 0 0 0
Former Director 1998 0 0
of Sales 1999 108,598 0
|
In 1998, Mr. Shaw should have received a raise under the terms of his Employment Agreement. However, the 1998 portion of his raise in the amount of $12,019 was paid in 1999. Officers, Directors, and significant employees hold options exercisable for the purchase of 49,000; 127,500; 221,200; and
137,700 shares of common stock in the years 1999, 2000, 2001, and 2002, respectively. To date, no options or long-term incentive plan awards have been issued to Mr. Shaw or Ms. Salerno. Directors or former Directors were granted options in 1999 as follows: Steven R. Wisner, 150,000; Douglas W. Cowan, 25,000; Jimmie Shiu, 15,000; Clarence Zierhut, 1,000; John H. Wilson, III, 5,000; F. John Deuschle, III, 5,000; and Joe Reeder, 25,000.
Officers, Directors, and Significant Employees hold stock options for the purchase of common stock exercisable as follows:
Options Exercisable by Directors and Significant Employees
1999 Plan NQSOs 1999 2000 2001 2002 2003
Steven R. Wisner 65,000 65,000
Lawrence G. Salerno 5,150
James A. Hoover 3,150
Kathryn M. Duesman 5,300
Douglas W. Cowan 2,500 2,500
Jimmie Shiu, M.D. 15,000
Clarence Zierhut 5,000
John H. Wilson, III 5,000
F. John Deuschle, III 5,000
Michele M. Larios 7,700
Phillip L. Zweig 20,000
----------------------------------------------------------
0 30,000 108,800 67,500 0
==========================================================
1999 Plan ISOs 1999 2000 2001 2002 2003
Steven R. Wisner 10,000 10,000
Lawrence G. Salerno 2,500 7,650
James A. Hoover 2,500 5,650
Russell B. Kuhlman 7,800 7,800
Kathryn M. Duesman 2,500 7,800
Douglas W. Cowan 10,000 10,000
Michele M. Larios 7,700
Peter B. Hegi 3,800 3,800
Judy Ni Zhu 3,350 3,350
S. Kristie Haddox 3,950 3,950
Shelley K. Walley 2,500 2,500
----------------------------------------------------------
0 0 48,900 70,200 0
==========================================================
1996 Plan NQSOs 1999 2000 2001 2002 2003
Steven R. Wisner 2,500
Lawrence G. Salerno 5,000 15,000
James A. Hoover 5,000 14,000
Russell B. Kuhlman 17,500
Kathryn M. Duesman 1,500 10,000
Jimmie Shiu, M.D. 15,000 15,000 15,000
Clarence Zierhut 10,000 5,000 1,000
Peter B. Hegi 1,500 7,000
Judy Ni Zhu 7,500 10,000
S. Kristie Haddox 1,500 4,000
----------------------------------------------------------
49,500 97,500 16,000 0 0
==========================================================
1996 Plan ISOs 1999 2000 2001 2002 2003
Lawrence G. Salerno 7,500
James A. Hoover 7,500
Kathryn M. Duesman 7,500
Michele M. Larios 10,000
Peter B. Hegi 5,000
Judy Ni Zhu 5,000
S. Kristie Haddox 5,000
----------------------------------------------------------
0 0 47,500 0 0
==========================================================
|
COMPENSATION OF DIRECTORS
The Company pays each nonemployee Director a meeting fee of $250 for each Board meeting attended and has granted to each Director stock options of common stock each year. No additional amounts are paid for committee participation or special assignment.
EMPLOYMENT AGREEMENTS
There are no other employment agreements in place involving other Officers or Directors of the Company, except as set forth below:
The Company has a written employment agreement with Thomas J. Shaw, the Company's President and Chief Executive Officer, for an initial period of three years ending September 2002 with an automatic and continuous renewal for consecutive two-year periods. The agreement is terminable either by the Company or Thomas J. Shaw upon 30 days' written notice. The agreement provides for an annual salary of at least $150,000 with a minimal salary increase annually equal to the percentage increase in the Consumer Price Index during the previous calendar year. Thomas J. Shaw's salary shall be reviewed by the Board of Directors each January, which shall make such increases as it considers appropriate. Thomas J. Shaw is also entitled to participate in all executive bonuses as the Board of Directors, in its sole discretion, shall determine.
Under the Employment Agreement, the Company will also provide certain fringe benefits, including, but not limited to, participation in pension plans, profit-sharing plans, employee stock ownership plans, stock appreciation rights, hospitalization and health insurance, disability and life insurance, paid vacation, and sick leave. The Company also reimburses him for any reasonable and necessary business expenses, including travel and entertainment expenses, necessary to carry on his duties. Pursuant to the employment agreement, the Company has agreed to indemnify Thomas J. Shaw for all legal expenses and liabilities incurred with any proceeding involving him by reason of his being an Officer or agent of the Company. The Company has further agreed to pay reasonable attorney fees and expenses in the event that, in Thomas J. Shaw's sole judgment, he needs to retain counsel or otherwise expend his personal funds for his defense.
Thomas J. Shaw has agreed to a one-year noncompete, not to hire or attempt to hire employees of the Company for one year and to not make known Company customers or accounts or to call on or solicit Company accounts or customers in the event of termination of his employment for one year unless the termination is without cause or pursuant to a change of control of the Company. Furthermore, Mr. Shaw has the right to resign in the event that there is a change in control which is defined as a change in the majority of directors within any twelve month period without 2/3 approval of the shares outstanding and entitled to vote, or a merger where less than 50 percent of the outstanding stock survives and a majority of the Board of Directors remains, or the sale of substantially all of the assets of the Company, or any other person acquires more than 50 percent of the voting capital of the Company. Mr. Shaw retained the right to participate in other businesses as long as they do not compete with the Company and so long as he devotes the necessary working time to the Company.
The Company entered into an employment agreement with Phillip L. Zweig, the Company's Communications Director, dated December 22, 1999, which expires on December 12, 2000. Mr. Zweig's duties include obtaining and authoring favorable coverage of the Company and issues important to the Company in local and national media outlets throughout the United States. Mr. Zweig also agreed not to write articles about the Company for independent publications and shall not provide any services relating to marketing strategy, healthcare policy, publicity or media coverage, or any other services in the United States to any manufacturer of needle products, healthcare group purchasing organizations, or any individual or business entity that is in direct competition with the business of the Company during his employment with the Company and for three years hereafter. In exchange, the Company agreed to pay Mr. Zweig an annual salary of $85,000 and to grant Mr. Zweig options for the purchase of 20,000 shares of the Company's common stock under the 1999 Stock Option Plan. The Company also agreed to pay
reasonable travel, entertainment, and related expenses as well as to provide Mr. Zweig with standard benefits. Mr. Zweig shall be considered for bonuses on the same terms as other management employees.
INDEPENDENT CONSULTING AGREEMENTS
From the Company's inception to the present, Robert Stathopulos, a former Director, has served as an independent consultant pursuant to an oral agreement with the Company for the provision of advice regarding various matters, including, but not limited to, Quality Assurance and Regulatory Affairs. The Company has agreed to pay him $700 per day worked. Mr. Stathopulos currently works every other week Monday through Friday afternoon. The Company has also agreed to pay Mr. Stathopulos' expenses, which have varied between $650 to $1,000 per week and are made up of business related travel expenses. This consulting agreement is at will and has no termination date.
The Company entered into a consulting agreement with Lillian E. Salerno, d/b/a MediTrade International, a sole proprietorship, on June 1, 2000. The contract is for a one year term and Ms. Salerno has agreed to establish contacts with major European entities to develop marketing and distribution channels as well as licensing agreements. Ms. Salerno will be paid $16,667 per month plus up to $5,000 of business expenses incurred on behalf of the Company for the term of the contract. In the event Ms. Salerno does establish a business relationship which leads to a licensing agreement, she will be paid 5 percent of the licensing fee as such fees are collected by the Company.
The Company entered into a Consulting Agreement on February 28, 2000, with F. Simon Tolbert, Jr. wherein Mr. Tolbert agreed to advise the Company regarding public relations efforts and to assist the Company in establishing relationships with foundations and public interest groups in exchange for $7,500 and a bonus which is to be determined by the Company based on various factors, which is not to exceed $260,000. The term of the Consulting Agreement ends July 1, 2000.
The Company entered into a Consulting Agreement on March 15, 2000, with International Export and Consulting where International Export and Consulting agreed to advise the Company with respect to selection of an international distribution network, potential strategic partners, and future licensing for VanishPoint(R) technology in the Middle East. In exchange, the Company has agreed to pay a consulting fee in the amount of $2,000 a month for ten months as well as nonqualified stock options ("NQSOs") for 61,000 shares of the Company's common stock at an exercise price of $10 per share. Marwan Saker, a principal in International Export and Consulting, is a Director.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management believes that all of the transactions set forth below were made on terms no less favorable to the Company than could have been obtained from unaffiliated third parties. There are no preset limits on payments to related parties. Payments are made after services are provided.
Thomas J. Shaw, the Company's President and Chief Executive Officer who beneficially owns 80 percent of the Company's common stock, was paid a licensing fee of $500,000 (amortized over 17 years) from the Company for the exclusive worldwide licensing rights to manufacture, market, sell, and distribute all the retractable medical safety products. In addition, Mr. Shaw receives a 5 percent gross royalty on all licensed products sold to customers over the life of the technology licensing agreement. Mr. Shaw was paid a royalty of $110,197 and $42,571 for 1999 and 1998, respectively. Mr. Shaw was paid $138,888 in royalties from January 1, 2000, to the date of this filing. As of the date of this filing, Mr. Shaw has been paid $236,247 as a royalty for the two years ended June 1, 2000.
In September 1996, the Company purchased the 3cc prototype molds from Thomas J. Shaw, d/b/a Checkmate Engineering, a sole proprietorship. The purchase was financed by a note for the full
purchase price of $108,252. The note provided for no interest for the first 305 days and, subsequently, interest at a rate of 12 percent per annum. Interest expense related to this note was $1,400 and $5,258 for the years ended December 31, 1999 and 1998, respectively. The note was paid in full in 1999.
Lillian E. Salerno, a Director of the Company, d/b/a Mill Street Enterprises ("Mill Street"), a sole proprietorship, leases offices at 618, 620, and 622 S. Mill Street, in Lewisville, Texas, to the Company for its marketing and sales department. The lease is for a five-year term commencing July 1, 1997, and ending June 30, 2002, at an annual rental rate of $22,800. The Company also has a lease for additional office space with Mill Street for one year commencing April 1, 2000, at a rate of $1,000 per month. Lease payments for $15,800 have been paid in 2000.
A former Director of the Company, Robert Stathopulos, was paid consulting fees by the Company of $96,372 in 1999 and $69,259 in 2000 through the date of this filing.
Douglas W. Cowan, a Director and Chief Financial Officer and Treasurer of the Company, received $76,651 and $58,345 in 1998 and 1999, respectively, for accounting and other consulting services prior to becoming a Director and employee of the Company.
The Company paid $23,381 and $30,258 in 1999 and 1998, respectively, and $10,537 has been paid in 2000, to family members of its Chief Executive Officer for various consulting services.
ITEM 8. DESCRIPTION OF SECURITIES
As of the date of this filing, the Company's authorized capital consists of 100,000,000 shares of common stock, no par value, 5,000,000 shares of Class A Convertible Preferred Stock, par value of $1 per share, and 5,000,000 shares of Class B Convertible Preferred Stock, par value of $1 per share. No capital stock carries preemptive rights. There are no provisions in the Restated Articles of Incorporation and Amended and Restated Bylaws that would delay, defer, or prevent a change in control of the Company other than provisions in the Restated Articles of Incorporation that prohibit cumulative voting by shareholders and provisions which provide that the Board of Directors shall consist of two classes with one-half of each class elected every three years. The Company serves as its own registrar and transfer agent. All of the Company's outstanding shares of common and preferred stock are "restricted securities" and, in the future, may be sold only upon compliance with the Securities Act of 1933, as amended ("Securities Act"), or an exemption therefrom.
COMMON STOCK
The Company is authorized to issue 100,000,000 shares of no par value common stock (the "Common Stock"). As of the date of this filing, there are 14,000,000 shares of Common Stock issued and outstanding. Additionally, 1,000,000 shares are set aside under both the 1996 Stock Option Plans and 2,000,000 shares of Common Stock have been set aside under the 1999 Stock Option Plan for employees, Directors, and other qualified individuals. These shares are issuable upon the exercise of options. As of March 31, 2000, options for the purchase of 146,605 shares of Common Stock are exercisable. Options for the purchase of 437,655 shares of Common Stock become exercisable by December 31, 2000. No shares are held as treasury stock.
Shares of the Company's Common Stock have no conversion rights and no restrictions on alienation and are fully paid and are not liable to further call or assessment. Each share of the Company's Common Stock is entitled to share ratably in any asset available for distribution to holders of its equity securities upon liquidation of the Company, subject to the preference of the holders of each class and series of the preferred stock. Pursuant to the requirements of a loan from Texas Bank, the Company has agreed not to return capital to the shareholders or redeem outstanding shares without the bank's prior consent.
All shares of the Company's Common Stock have equal voting rights and, when validly issued and outstanding, have one vote per share on all matters to be voted upon by stockholders. The holders of the Common Stock elect the Directors subject to certain limited voting rights of the holders of the Class A Convertible Preferred Shares and Series II Class B Convertible Preferred Shares where dividends are in
arrears for 12 consecutive quarters. See "Class A Convertible Preferred Stock" and "Series II Class B Convertible Preferred Stock." Cumulative voting in the election of Directors is not allowed.
Holders of the Company's Common Stock are entitled to receive dividends when and if declared by the Company's Board of Directors out of funds available therefor. The Company has not paid any dividends since its inception and presently anticipates that all earnings, if any, will be retained for development of the Company's business and that no dividends on its Common Stock will be declared in the foreseeable future. Any future dividends will be subject to the discretion of the Company's Board of Directors and will depend upon, among other things, future earnings, full payment of dividends on the Class A Convertible Preferred Stock, and Series I, Series II, Series III, and Series IV Class B Convertible Preferred Stock, the operating and financial condition of the Company, its capital requirements, and its general business conditions.
CLASS A CONVERTIBLE PREFERRED STOCK
The Company is authorized to issue not more than 5,000,000 shares of Class A Convertible Preferred Stock at $1.00 par value and has 5,000,000 shares issued and outstanding held by 131 shareholders. The Board of Directors of the Company has the authority to divide the Class A Convertible Preferred Shares into series and to set the relative rights and preferences among the series, within the limitations provided by Article 2.13 of the Texas Business Corporation Act. This summary is not intended to be complete and is subject to, and qualified in its entirety by reference to, the Certificate of Designation, Preferences, Rights, and Limitations of Series A Convertible Preferred Stock of the Company, filed with the Secretary of the State of Texas, amending the Company's Articles of Incorporation, and setting forth the rights, preferences, and limitations of the Class A Convertible Preferred Stock, the form of which is attached hereto as part of Exhibit 2.1.
Holders of shares of Class A Convertible Preferred Stock (the "Class A Stock") will be entitled to receive, if, when, and as declared by the Board of Directors out of funds legally available therefor, cumulative cash dividends of $.12 per share per annum, payable quarterly, commencing September 1, 1995. If a dividend upon any shares of Class A Stock is in arrears, no dividends may be paid or declared and set aside for payment, or other distribution made upon the Common Stock or any other stock of the Company ranking junior to the Class A Stock as to dividends. In addition, no Common Stock or any other stock of the Company ranking junior to the Class A Stock as to dividends, may be redeemed, purchased, or otherwise acquired for any consideration by the Company except in certain circumstances. As of April 15, 2000, $2,766,572 in dividends are in arrears.
Except as required by the laws of the State of Texas, the holders of the Class A Stock are generally not entitled to vote. In the event dividends payable on the Class A Stock shares shall be in arrears for 12 consecutive quarterly dividend periods, the holders of the majority of the outstanding Class A shares shall have the exclusive right (voting separately as a class with one vote per Class A share) to elect one-third of the Board of Directors which Directors shall serve until the next annual meeting or so long as such arrearage shall continue. As of March 31, 1999, dividends to Class A shareholders were in arrears for 12 consecutive dividend periods and accordingly, on October 4, 1999, the Class A shareholders elected three (one-third) of the Directors to the Board of Directors.
So long as any shares of Class A Stock remain outstanding, the Company shall not, without the affirmative vote or consent of the holders of at least 51 percent of the shares of the Class A Stock outstanding at the time: (a) authorize, create, issue, or increase the authorized or issued amount of any class or series of stock ranking equal to or senior to the Class A Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution, or winding up of the Company; or (b) amend, alter, or repeal the provisions of the Company's Articles of Incorporation, or of the rights of the Class A Stock, so as to alter or change the powers, preferences, or special rights of the shares of the Class A Stock so as to affect them adversely.
Each share of Class A Stock will be convertible at any time subsequent to three years after issuance, at the option of the holder thereof into Common Stock of the Company at a conversion rate of one share of Common Stock for each share of Class A Stock. The conversion price is subject to adjustment in certain events.
The Company prior to three years from the date of issuance may not redeem the Class A Stock. On and after such date, the Class A Stock may be redeemed at the option of the Company, in whole or in part, at any time and from time to time, on at least 30 days' and not more than 60 days' written notice at the redemption price of $1.70 per share, together with accrued and unpaid dividends to the date fixed for redemption.
In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the holders of outstanding shares of Class A Stock are entitled to receive liquidating distributions equivalent to $1.50 per share, plus accrued and unpaid dividends to the date of distribution, out of the assets of the Company available for distribution to stockholders, before any distribution of assets is made to holders of Common Stock or any stock ranking junior to the Class A Stock upon liquidation, dissolution, or winding up. If upon any liquidation, dissolution, or winding up of the Company, the amounts available for distribution with respect to the Class A Stock are not sufficient to satisfy the full liquidation rights of the Class A Stock, the holders of the Class A Stock will share ratably in any such distribution of assets.
Until six months after the last shares of the Class A Stock are redeemed, retired, converted, or otherwise no longer outstanding, the Company will give notice to the holders of the Class A Stock no less than 20 days before filing a registration statement under the Securities Act (excluding registrations pertaining to securities issuable pursuant to employee stock option or stock purchase plans, or pursuant to the acquisition of a business). The Company will also afford the holders of the Class A Stock the opportunity to have included in any one, but not more than two registrations shares of Common Stock acquired upon conversion of the Class A Stock. The Company is entitled to exclude the shares of any holder from a maximum of one registration (on the advice of its investment banking firm that inclusion would materially interfere with the orderly sale of securities offered under such registration statement) so long as no other holder's shares are included in the registration.
CLASS B CONVERTIBLE PREFERRED STOCK (SERIES I, II, III, AND IV)
The Company is authorized to issue 5,000,000 shares of Class B Convertible Preferred Shares at $1 par value per share. The Board of Directors of the Company has the authority to divide the Class B preferred shares into series and to set the relative rights and preferences among the series, within the limitations provided by Texas Business Corporation Act, Article 2.13. This summary is not intended to be complete and is subject to, and qualified in its entirety by, reference to the Certificates of Designation, Preferences, Rights, and Limitations of Series I, II, III, and IV Class B Convertible Preferred Stock of the Company, filed with the Secretary of the State of Texas, amending the Company's Articles of Incorporation, and setting forth the rights, preferences, and limitations of the Series I, II, III, and IV Class B Convertible Preferred Stock, the forms of which are attached hereto as part of Exhibit 2.1.
SERIES I CLASS B CONVERTIBLE PREFERRED STOCK
The Company is authorized to issue not more than 5,000,000 shares and has 1,000,000 shares outstanding held by 148 shareholders as of the date of this filing. The Series I Class B Convertible Preferred Stock ranks senior to the Company's Common Stock with respect to dividends and upon liquidation, dissolution, or winding up, but secondary to the Company's 5,000,000 shares of Class A Convertible Preferred Stock.
Holders of shares of Series I Class B Convertible Preferred Stock (the "Series I Stock") will be entitled to receive, if, when, and as declared by the Board of Directors out of funds legally available therefor, cumulative cash dividends of $.50 per share per annum, payable quarterly, commencing December 31, 1996. If a dividend upon any shares of Series I Stock is in arrears, no dividends may be paid or declared and set aside for payment, or other distribution made upon the Common Stock or any other stock of the Company ranking junior to the Series I Stock as to dividends. In addition, no Common Stock, or any other stock of the Company ranking junior to the Series I Stock as to dividends, may be redeemed, purchased, or otherwise acquired for any consideration by the Company except in certain circumstances. As of April 15, 2000, $1,780,163 in dividends were in arrears.
Except as required by the laws of the State of Texas, the holders of the Series I Stock are not entitled to vote.
So long as any shares of Series I Stock remain outstanding, the Company shall not, without the affirmative vote or consent of the holders of at least 51 percent of the shares of the Series I Stock outstanding at the time: (a) authorize, create, issue, or increase the authorized or issued amount of any class or series of stock ranking equal to or senior to the Series I Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution, or winding up of the Company; or (b) amend, alter, or repeal the provisions of the Company's Articles of Incorporation, or of the rights of the Series I Stock so as to alter or change the powers, preferences, or special rights of the shares of the Series I Stock so as to affect them adversely.
Each share of Series I Stock will be convertible at any time subsequent to three years after issuance, at the option of the holder thereof into Common Stock of the Company at a conversion rate of one share of Common Stock for each share of Series I Stock. The conversion price is subject to adjustment in certain events.
The Company prior to three years from the date of issuance may not redeem the Series I Stock. On and after such date, the Series I Stock may be redeemed at the option of the Company, in whole or in part, at any time and from time to time, on at least 30 days' and not more than 60 days' written notice, at the redemption price of $7.50 per share, together with accrued and unpaid dividends to the date fixed for redemption.
In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the holders of outstanding shares of Series I Stock are entitled to receive liquidating distributions equivalent to $6.25 per share, plus accrued and unpaid dividends to the date of distribution, out of the assets of the Company available for distribution to stockholders, before any distribution of assets is made to holders of Common Stock or any stock ranking junior to the Series I Stock upon liquidation, dissolution, or winding up. If, upon any liquidation, dissolution, or winding up of the Company, the amounts available for distribution with respect to the Series I Stock are not sufficient to satisfy the full liquidation rights of the Series I Stock, the holders of the Series I Stock will share ratably in any such distribution of assets in proportion to the full respective preferential amounts to which they are entitled.
Until six months after the last shares of the Series I Stock are redeemed, retired, converted, or otherwise no longer outstanding, the Company will give notice to the holders of the Series I Stock no less than 20 days before filing a registration statement under the Securities Act (excluding registrations pertaining to securities issuable pursuant to employee stock option or stock purchase plans, or pursuant to the acquisition of a business). The Company will also afford the holders of the Series I Stock the
opportunity to have included in any one, but not more than two registrations shares of Common Stock acquired upon conversion of the Series I Stock. The Company is entitled to exclude the shares of any holder from a maximum of one registration (on the advice of its investment banking firm that inclusion would materially interfere with the orderly sale of securities offered under such registration statement) so long as no other holder's shares are included in the registration.
SERIES II CLASS B CONVERTIBLE PREFERRED STOCK
The Company is authorized to issue not more than 5,000,000 shares and has 1,000,000 shares outstanding held by 145 shareholders as of the date of this filing. The Series II Class B Convertible Preferred Stock ranks senior to the Company's Common Stock with respect to dividends and upon liquidation, dissolution, or winding up, but secondary to the Company's 5,000,000 shares of Class A Stock and Series I Stock.
Holders of shares of Series II Class B Convertible Preferred Stock (the "Series II Stock") will be entitled to receive, if, when, and as declared by the Board of Directors out of funds legally available therefor, cumulative cash dividends of $1 per share per annum, payable quarterly, commencing December 31, 1997. If a dividend upon any shares of Series II Stock is in arrears, no dividends may be paid or declared and set aside for payment, or other distribution made upon the Common Stock or any other stock of the Company ranking junior to the Series II Stock as to dividends. In addition, no Common Stock, or any other stock of the Company ranking junior to the Series II Stock as to dividends, may be redeemed, purchased, or otherwise acquired for any consideration by the Company except in certain circumstances. As of April 15, 2000, $2,476,492 in dividends are in arrears.
So long as any shares of Series II Stock remain outstanding, the Company shall not, without the affirmative vote or consent of the holders of at least 51 percent of the shares of the Series II Stock outstanding at the time: (a) authorize, create, issue, or increase the authorized or issued amount of any class or series of stock ranking equal to or senior to the Series II Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution, or winding up of the Company; or (b) amend, alter, or repeal the provisions of the Company's Articles of Incorporation, or of the rights of the Series II Stock so as to alter or change the powers, preferences, or special rights of the shares of the Series II Stock so as to affect them adversely.
Each share of Series II Stock will be convertible at any time subsequent to three years after issuance, at the option of the holder thereof into Common Stock of the Company at a conversion rate of one share of Common Stock for each share of Series II Stock. The conversion price is subject to adjustment in certain events.
In the event the Company files a registration statement, the holders of the Series II Stock will have the opportunity to convert their shares prior to the three-year holding period.
The Company, prior to three years from the date of issuance, may not redeem the Series II Stock. On and after such date, the Series II Stock may be redeemed at the option of the Company, in whole or in part, at any time and from time to time, on at least 30 days' and not more than 60 days' written notice at
the redemption price of $15 per share, together with accrued and unpaid dividends to the date fixed for redemption.
In the event the Company files a registration statement, the Company may, at its option, accelerate its redemption rights.
In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the holders of outstanding shares of Series II Stock are entitled to receive liquidating distributions equivalent to $12.50 per share, plus accrued and unpaid dividends to the date of distribution, out of the assets of the Company available for distribution to stockholders, before any distribution of assets is made to holders of Common Stock or any stock ranking junior to the Series II Stock upon liquidation, dissolution, or winding up. If upon any liquidation, dissolution, or winding up of the Company, the amounts available for distribution with respect to the Series II Stock are not sufficient to satisfy the full liquidation rights of the Series II Stock, the holders of the Series II Stock will share ratably in any such distribution of assets in proportion to the full respective preferential amounts to which they are entitled.
Until six months after the last shares of the Series II Stock are redeemed, retired, converted, or otherwise no longer outstanding, the Company will give notice to the holders of the Series II Stock no less than 20 days before filing a registration statement under the Securities Act (excluding registrations pertaining to securities issuable pursuant to employee stock option or stock purchase plans, or pursuant to the acquisition of a business). The Company will also afford the holders of the Series II Stock the opportunity to have included in any one, but not more than two registrations shares of Common Stock acquired upon conversion of the Series II Stock. The Company is entitled to exclude the shares of any holder from a maximum of one registration (on the advice of its investment banking firm that inclusion would materially interfere with the orderly sale of securities offered under such registration statement) so long as no other holder's shares are included in the registration.
In the event the Company files a registration statement, the holders of the Series II Stock will have the opportunity to convert their shares prior to the three-year holding period, and the Company may, at its option, accelerate its redemption rights.
SERIES III CLASS B CONVERTIBLE PREFERRED STOCK
The Company is authorized to issue not more than 2,000,000 shares and has 1,160,200 shares outstanding held by 225 shareholders as of the date of this filing. The Series III Class B Convertible Preferred Stock ranks senior to the Company's Common Stock with respect to dividends and upon liquidation, dissolution, or winding up, but secondary to the Company's 5,000,000 shares of Class A Stock and Series I and II Stock.
Holders of shares of Series III Class B Convertible Preferred Stock (the "Series III Stock") will be entitled to receive, if, when, and as declared by the Board of Directors out of funds legally available therefor, cumulative cash dividends of $1 per share per annum, payable quarterly, commencing December 31, 1998. If a dividend upon any shares of Series III Stock is in arrears, no dividends may be paid or declared and set aside for payment, or other distribution made upon the Common Stock or any other stock of the Company ranking junior to the Series III Stock as to dividends. In addition, no Common Stock or any other stock of the Company ranking junior to the Series III Stock as to dividends, may be redeemed, purchased, or otherwise acquired for any consideration by the Company except in certain circumstances. As of April 15, 2000, $1,230,804 in dividends are in arrears.
Except as required by the laws of the State of Texas, the holders of the Series III Stock are not entitled to vote.
So long as any shares of Series III Stock remain outstanding, the Company shall not, without the affirmative vote or consent of the holders of at least 51 percent of the shares of the Series III Stock outstanding at the time: (a) authorize, create, issue, or increase the authorized or issued amount of any class or series of stock ranking equal to or senior to the Series III Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution, or winding up of the Company; or (b) amend, alter, or repeal the provisions of the Company's Articles of Incorporation, or of the rights of the Series III Stock so as to alter or change the powers, preferences, or special rights of the shares of the Series III Stock so as to affect them adversely.
Each share of Series III Stock will be convertible at any time subsequent to three years after issuance, at the option of the holder thereof into Common Stock of the Company at a conversion rate of one share of Common Stock for each share of Series III Stock. The conversion price is subject to adjustment in certain events.
In the event the Company files a registration statement, the holders of the Series III Stock will have the opportunity to convert their shares prior to the three-year holding period. The Company may, at its option at any time within 180 days after the registration statement is deemed effective, demand the conversion of the Series III Stock.
The Company, prior to three years from the date of issuance, may not redeem the Series III Stock. On and after such date, the Series III Stock may be redeemed at the option of the Company, in whole or in part, at any time and from time to time, on at least 30 days' and not more than 60 days' written notice at the redemption price of $15 per share, together with accrued and unpaid dividends to the date fixed for redemption.
In the event the Company files a registration statement, the Company may, at its option at any time within 180 days after the registration statement is deemed effective, demand the conversion of the Series III Stock.
In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the holders of outstanding shares of Series III Stock are entitled to receive liquidating distributions equivalent to $12.50 per share, plus accrued and unpaid dividends to the date of distribution, out of the assets of the Company available for distribution to stockholders, before any distribution of assets is made to holders of Common Stock or any stock ranking junior to the Series III Stock upon liquidation, dissolution, or winding up. If upon any liquidation, dissolution, or winding up of the Company, the amounts available for distribution with respect to the Series III Stock are not sufficient to satisfy the full liquidation rights of the Series III Stock, the holders of the Series III Stock will share ratably in any such distribution of assets in proportion to the full respective preferential amounts to which they are entitled.
Until six months after the last shares of the Series III Stock is redeemed, retired, converted, or otherwise no longer outstanding, the Company will give notice to the holders of the Series III Stock no less than 20 days before filing a registration statement under the Securities Act (excluding registrations pertaining to securities issuable pursuant to employee stock option or stock purchase plans, or pursuant to the acquisition of a business). The Company will also afford the holders of the Series III Stock the opportunity to have included in any one, but not more than two registrations shares of Common Stock acquired upon conversion of the Series III Stock. The Company is entitled to exclude the shares of any holder from a maximum of one registration (if in its sole discretion it decides that the inclusion of such shares will materially interfere with the orderly sale of the securities being offered under such registration statement) so long as no other holder's shares are included in the registration.
In the event the Company files an initial registration statement, the holders of the Series III Stock will have the opportunity to convert their shares prior to the three-year holding period. The Company
may, at its option at any time within 180 days after the registration statement is deemed effective, demand the conversion of the Series III Stock.
SERIES IV CLASS B CONVERTIBLE PREFERRED STOCK
On December 10, 1999, the Company was authorized to issue not more than 1,300,000 shares and has 1,133,800 shares outstanding held by 28 shareholders as of the date of this filing. The Series IV Class B Convertible Preferred Stock ranks senior to the Company's Common Stock with respect to dividends and upon liquidation, dissolution, or winding up, but secondary to the Company's 5,000,000 shares of Class A Stock and Series I, II, and III Stock.
Holders of shares of Series IV Class B Convertible Preferred Stock (the "Series IV Stock") will be entitled to receive, if, when, and as declared by the Board of Directors out of funds legally available therefor, cumulative cash dividends of $1 per share per annum, payable quarterly, commencing December 31, 2000. If a dividend upon any shares of Series IV Stock is in arrears, no dividends may be paid or declared and set aside for payment or other distribution made upon the Common Stock or any other stock of the Company ranking junior to the Series IV Stock as to dividends. In addition, no Common Stock or any other stock of the Company ranking junior to the Series IV Stock as to dividends may be redeemed, purchased, or otherwise acquired for any consideration by the Company except in certain circumstances. As of April 15, 2000, $9,534 in dividends are in arrears.
Except as required by the laws of the State of Texas, the holders of the Series IV Stock are not entitled to vote.
So long as any shares of Series IV Stock remain outstanding, the Company shall not, without the affirmative vote or consent of the holders of at least 51 percent of the shares of the Series IV Stock outstanding at the time: (a) authorize, create, issue, or increase the authorized or issued amount of any class or series of stock ranking equal to or senior to the Series IV Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution, or winding up of the Company; or (b) amend, alter, or repeal the provisions of the Company's Articles of Incorporation, or of the rights of the Series IV Stock so as to alter or change the powers, preferences, or special rights of the shares of the Series IV Stock so as to affect them adversely.
Each share of Series IV Stock will be convertible at any time subsequent to three years after issuance, at the option of the holder thereof into Common Stock of the Company at a conversion rate of one share of Common Stock for each share of Series IV Stock. The conversion price is subject to adjustment in certain events.
In the event that the Company files an initial registration statement, the holders of Series IV Stock may convert their shares prior to the three-year holding period. The Company may also, at its option any time within 180 days after the registration statement is deemed effective, demand the conversion of the Series IV Stock.
The Company, prior to three years from the date of issuance, may not redeem the Series IV Stock. On and after such date, the Series IV Stock may be redeemed at the option of the Company, in whole or in part, at any time and from time to time, on at least 30 days' and not more than 60 days' written notice to convert or redeem the shares, at the redemption price of $11 per share, together with accrued and unpaid dividends to the date fixed for redemption.
In the event that the Company files an initial registration statement, the Company may, at its option any time within 180 days after the registration statement is deemed effective, demand the conversion of the Series IV Stock.
In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the holders of outstanding shares of Series IV Stock are entitled to receive liquidating distributions equivalent to $11 per share, plus accrued and unpaid dividends to the date of distribution, out of the assets of the Company available for distribution to stockholders, before any distribution of assets is made to holders of Common Stock or any stock ranking junior to the Series IV Stock upon liquidation, dissolution, or winding up. If upon any liquidation, dissolution, or winding up of the Company, the amounts available for distribution with respect to the Series IV Stock are not sufficient to satisfy the full liquidation rights of the Series IV Stock, the holders of the Series IV Stock will share ratably in any such distribution of assets in proportion to the full respective preferential amounts to which they are entitled.
Until six months after the last shares of the Series IV Stock are redeemed, retired, converted, or otherwise no longer outstanding, the Company will give notice to the holders of the Series IV Stock no less than 20 days before filing a registration statement under the Securities Act (excluding registrations pertaining to securities issuable pursuant to employee stock option or stock purchase plans, or pursuant to the acquisition of a business). The Company will also afford the holders of the Series IV Stock the opportunity to have included in any one, but not more than two registrations shares of common stock acquired upon conversion of the Series IV Stock. The Company is entitled to exclude the shares of any holder from a maximum of one registration (if in its sole discretion it decides that inclusion would materially interfere with the orderly sale of securities offered under such registration statement) so long as no other holder's shares are included in the registration.
In the event that the Company files an initial registration statement, the holders of Series IV Stock may convert their shares prior to the three-year holding period. The Company may also, at its option any time within 180 days after the initial registration statement is deemed effective, demand the conversion of the Series IV Stock.
OVERVIEW OF THE COMPANY'S 1999 STOCK OPTION PLAN
On September 14, 1999, the Board of Directors adopted the 1999 Stock Option Plan effective as of July 1, 1999 (the "Plan" for purposes of this section only). In order to qualify options under the Plan as incentive stock options ("ISOs"), the shareholders must approve the Plan on or before September 14, 2000. The shareholders approved the Plan on September 14, 1999. The Plan provides for the granting of ISOs and NQSOs as defined in the Plan and collectively referred to in this section only as "Awards." The purpose of the Plan is to encourage stock ownership by the Company's key employees, to provide an incentive for such employees to expand and improve the profitability of the Company, and to assist the Company in attracting and retaining key personnel through the grant of ISOs and NQSOs to purchase shares of common stock. The following description is intended to be a summary of the Plan's principal terms and is qualified in its entirety by reference to the complete text attached as an exhibit to this Form 10-SB.
The Plan authorizes the Compensation and Benefits Committee or, in the absence of a committee, the Board of Directors to grant ISOs to key employees of the Company and NQSOs to other employees, independent contractors, and nonemployee directors. No directors have options vesting within 60 days of this filing.
As of May 31, 2000, the Company had granted ISOs to purchase 492,550 shares and NQSOs to purchase 217,550 shares to employees under the 1999 Stock Option Plan. There were ISOs to purchase 103,800 shares and NQSOs to purchase 5,300 shares that were cancelled under the terms of the Plan. There were 33,500 employee NQSOs exercisable at the filing date. No ISOs were exercisable. The exercise price for the ISOs is $10. The NQSOs have exercise prices from $1 to $10. The Company granted NQSOs to purchase 182,500 shares to nonemployees, none of which have been cancelled and none are exercisable at the date of the filing.
Exercisable options under the 1999 Stock Option Plan are shown below:
All Options, Including Officers and
Significant Employees 1999 2000 2001 2002 2003
ISOs - - 163,925 204,250 20,575
Employee NQSOs 26,000 27,500 91,250 67,500 -
Nonemployee Directors NQSOs - 10,000 20,000 - -
Nonemployee NQSOs 57,500 64,998 30,002
------ ------ ------- ------- -
- ------
------
Total 26,000 95,000 340,173 301,752 20,575
====== ====== ======= ======= ======
Officers and significant employees 1999 2000 2001 2002 2003
ISOs 0 0 48,900 70,200 0
Nonemployee Directors NQSOs 0 10,000 20,000 0 0
Employee NQSOs 0 20,000 88,800 67,500 0
------ ------ ------- ------- ------
Total 0 30,000 157,700 137,700 0
====== ====== ======= ======= ======
|
A maximum of 2 million shares of common stock are reserved and available for distribution pursuant to Awards granted under the Plan, subject to adjustment to reflect a subdivision or consolidation of shares or any other capital adjustment, payment of a stock dividend, or other increase or decrease in such shares effected without consideration. Shares may be distributed under the Plan, in whole or in part, from authorized and unissued shares or treasury shares. The Compensation and Benefits Committee shall be responsible to the Board of Directors for the operation of the Plan and shall make recommendations to the Board of Directors with respect to participation in the Plan and with respect to the terms, limitations, restrictions, conditions, and extent of that participation. The interpretation and construction of a provision of the Plan by the Compensation and Benefits Committee shall be final unless otherwise determined by the Board of Directors. The Board of Directors, upon recommendation by the Compensation and Benefits Committee or upon its own action, may grant stock options. Options may not be exercised by tendering outstanding shares except as permitted by the Compensation and Benefits Committee, in its sole discretion.
Options granted under the Plan may be ISOs, as defined under and subject to
Section 422 of the Internal Revenue Code (the "Code"), or NQSOs.
The options will be exercisable at such times and subject to such terms and conditions as the Board of Directors or the Compensation and Benefits Committee may determine. All options must expire no later than ten years from the date of grant in the case of ISOs held by a non-10 percent shareholder, no later than five years from the date of grant in the case of a 10 percent shareholder, and as determined by the Board of Directors/Compensation and Benefits Committee at the date of grant in the case of NQSOs.
Generally, ISOs will terminate three months after termination of the optionee's employment without cause and automatically upon termination for cause, or one year following the termination of employment due to death or permanent disability; provided, however, that options will expire prior to said times if and at such time that the original option exercise term otherwise expires. Generally, options may be exercised only to the extent exercisable on the date of termination, death, or disability. Generally, NQSOs will terminate automatically upon termination of the optionee's employment for cause and one year following termination of employment due to death. Nonvested NQSOs are forfeited upon termination of employment with or without cause, permanent disability, or death; provided, however, that options will expire prior to said times if and at such time that the original option exercise term otherwise expires.
The option price for any ISO will not be less than 100 percent of the fair market value of the Company's Common Stock as of the date of grant. In the event the optionee is a 10 percent shareholder, the price of the ISO shall be 110 percent of the fair market value of the common stock as of the date of grant. In the event the optionee is not a 10 percent shareholder, the price of the ISO shall be 100 percent of the fair market value of the Common Stock as of the date of grant. The Board of Directors has set $10 as the fair market value of the Company's Common Stock for ISOs granted to date. The option price for an NQSO will be determined by the Board of Directors or Compensation and Benefits Committee on the date of grant. The holder of an NQSO must, prior to issuance of a stock certificate, remit to the Company the amount, if any, of any taxes required to be withheld upon exercise of the NQSO.
The ISOs are not transferable except by will or the laws of descent and distribution. NQSOs may not be transferred for a period of one year from the date of grant to a nonaffiliate and may not be transferred for a period of two years from the date of grant to affiliates.
The Plan may be amended or discontinued by the Board of Directors or the Compensation and Benefits Committee provided that the Board of Directors may not, without the approval of the stockholders: (a) except as expressly provided in the Plan, increase the total number of shares reserved for the purposes of the Plan, (b) decrease the option price of an ISO to less than the amounts provided for in the Plan, and (c) extend the duration of the Plan. No amendment, alteration, or discontinuation may impair the rights of an optionee without his consent.
Under the Plan, the Board of Directors and Compensation and Benefits Committee has wide discretion and flexibility, enabling it to administer the Plan in the manner it determines to be in the best interest of the Company. Thus, Awards may be granted in various combinations and sequences and may be subject to various conditions, restrictions, and limitations at grant or upon exercise or payment not inconsistent with the terms of the Plan. The Board of Directors' and Compensation and Benefits Committee's determinations with respect to which employees will receive Awards, and the form, amount and frequency, and the terms and conditions thereof, need not be uniform as to similarly situated persons. The designation of an employee to receive one form of an Award under the Plan does not require the Board of Directors or Compensation and Benefits Committee to designate or entitle such employee to receive any other form of Award.
The Plan limits the number of ISOs that can be issued to key employees. Other than limiting Awards to key employees, there are no restrictions on the number of officers or other employees eligible to receive Awards or the Awards that may be granted to one person. In addition, the Plan does not limit the aggregate number of Awards that may be granted except that the number of shares reserved for distribution under the Plan cannot exceed 2 million shares.
OVERVIEW OF THE 1996 INCENTIVE STOCK OPTION PLAN OF THE COMPANY
On January 30, 1996, the Board of Directors adopted the 1996 Incentive Stock Option Plan of the Company (the "Plan" for purposes of this section only). The shareholders of the Company adopted the Plan on April 26, 1996. The Plan provides for the granting of ISOs as defined in the Plan and collectively referred to in this section only as "Awards." The purpose of the Plan is to encourage stock ownership by certain officers and key employees of the Company, in attracting qualified personnel to the Company, and to provide additional incentives for such employees to promote and contribute to the success of the Company. The following description is intended to be a summary of the Plan's principal terms and is qualified in its entirety by reference to the complete text attached as an exhibit to this Form 10-SB.
The Plan authorizes the Compensation and Benefits Committee to grant ISOs to current, full-time employees. As of the date of this filing, ISOs for the right to purchase 117,500 shares of the Company have been granted. As of the date of this filing, 47,500 options granted to directors have vested. Stock options, which were granted under the Plan but which do not meet certain statutory requirements for ISOs, are classified as NQSOs.
As of May 31, 2000, the Company had granted ISOs for the purchase of 200,550 shares and NQSOs for the purchase of 357,955 shares to employees under the 1996 Incentive Stock Option Plan.
There were ISOs for the purchase of 83,050 shares and NQSOs for the purchase of 191,050 shares that were cancelled under the terms of the Plan. The exercise price for the ISOs is $10. The NQSOs have exercise prices from $1 to $10. The Company granted NQSOs for the purchase of 278,500 shares to nonemployees, 60,000 of which have expired.
Exercisable Options under the 1996 Incentive Stock Option Plan are as follows:
All Options, Including Officers and
Significant Employees 1999 2000 2001
ISOs 0 7,750 109,750
NQSOs 46,605 133,300 0
------ ------- -------
46,605 141,050 109,750
====== ======= =======
Officers and significant employees
1999 2000 2001
ISOs 0 0 47,500
NQSOs 24,500 77,500 0
------ ------- -------
24,500 77,500 47,505
====== ======= =======
|
Under the 1996 Incentive Stock Option Plan, a maximum of 800,000 shares of Common Stock are reserved and available for distribution pursuant to Awards granted under the Plan, subject to adjustment to reflect a subdivision or consolidation of shares payment of a stock dividend on Common Stock or other increase or decrease in such shares effected without consideration. If shares subject to an Award granted under the Plan ceases to be subject to such Awards, such share will again be available for distribution under the Plan. Shares may be distributed under the Plan, in whole or in part, from authorized and unissued shares. The Compensation and Benefits Committee shall be responsible to the Board of Directors for the operation of the Plan and shall make recommendations to the Board of Directors with respect to participation in the Plan and with respect to the terms, limitations, restrictions, conditions, and extent of that participation. The interpretation and construction of a provision of the Plan by the Compensation and Benefits Committee shall be final unless otherwise determined by the Board of Directors.
Options granted under the Plan shall be ISOs as defined under and subject to Section 422 of the Code.
The options will be exercisable at such times and subject to such terms and conditions as the Compensation and Benefits Committee may determine. In no event shall an option be exercisable prior to three years from the date of grant or after the expiration of ten years from the date of grant.
Generally, ISOs will terminate three months after termination of the optionee's employment if termination is for a reason other than death or disability. If termination is by disability, the Compensation and Benefits Committee has the right to extend the exercise period for up to one year from termination. If the termination is a result of death, the option may be exercised within three months after death. Generally, options may be exercised only to the extent exercisable on the date of termination, death, or disability.
The option price for any ISO will not be less than 100 percent of the fair market value of the Company's Common Stock as of the date of grant. In the event the optionee is a 10 percent shareholder, the price of the ISO shall be 110 percent of the fair market value of the Common Stock as of the date of grant. In the event the optionee is not a 10 percent shareholder, the price of the ISO shall be 100 percent of the fair market value of the Common Stock as of the date of grant.
The options are not transferable except by will or the laws of descent and distribution. In the event an optionee exercises his option and the Company issues shares as a result of that exercise, no disposition of the resulting shares by the optionee may be made within three years from the date of the grant of the option or within one year after transfer of such shares to the optionee. The Company shall not be required upon exercise of an option to issue or deliver shares prior to completion of registration or
other qualification under any state or federal law as the Company shall determine to be desirable. In the event the optionee exercises his option and receives a bona fide offer for all or a portion of the shares, he shall give the Company the exclusive right and option within 15 days of the date of notice to the Company to purchase the shares on the same terms. In the event of a dissolution of the Company or a merger where the Company is not the surviving entity, each option shall terminate but not before the Company gives 30 days' notice of the optionee's right to exercise his option.
The Plan may be amended or discontinued by the Board of Directors or the Compensation and Benefits Committee provided that they may not modify an outstanding option so as to specify a lower price or accept the surrender of outstanding options and authorize the granting of new options in substitution thereof specifying a lower price. The Plan may be modified or amended by affirmative vote of the majority of the common stock plus the affirmative vote of all the remaining stock. No amendment, alteration, or discontinuation may impair the rights of an optionee without his consent.
Under the Plan, the Compensation and Benefits Committee has wide discretion and flexibility, enabling it to administer the Plan in the manner it determines to be in the best interest of the Company. Thus, Awards may be granted in various combinations and sequences and may be subject to various conditions, restrictions, and limitations at grant or upon exercise or payment not inconsistent with the terms of the Plan. The Compensation and Benefits Committee's determinations, with respect to which employees will receive Awards, and the form, amount and frequency, and the terms and conditions thereof, are subject to wide discretion. The designation of an employee to receive one form of an Award under the Plan does not require the Board of Directors or Compensation and Benefits Committee to designate or entitle such employee to receive any other form of Award.
The Plan does limit the employees eligible to receive Awards to certain officers and key employees and contain limits on the number of shares which may be subject to options which may be granted to any one person. However, the Plan does not limit the aggregate number of Awards that may be granted except that the number of shares reserved for distribution under the Plan cannot exceed 800,000 shares.
OVERVIEW OF THE COMPANY'S 1996 STOCK OPTION PLAN FOR DIRECTORS AND OTHER INDIVIDUALS
On April 23, 1996, the Board of Directors adopted the Company's 1996 Stock Option Plan for Directors and Other Individuals (the "Plan" for purposes of this section only). The Plan provides for the granting of NQSOs as defined in the Plan and collectively referred to in this section only as "Awards." The purpose of the Plan is to encourage stock ownership by certain directors and other individuals, in attracting qualified directors to the Company's Board of Directors and to provide additional incentives for such directors to promote and contribute to the success of the Company. The following description is intended to be a summary of the Plan's principal terms and is qualified in its entirety by reference to the complete text attached as an exhibit to this Form 10-SB.
The Plan authorizes the Compensation and Benefits Committee to grant NQSOs to members of the Company's current Board of Directors and other individuals who have made a contribution toward the Company's success, who have served continuously as a Director for not less than three years from grant, or who have continuously provided services as a consultant, independent contractor, or otherwise for not less than three years from grant and who before such option is not the holder of more than 10 percent of the total combined voting power or value of all classes of stock.
As of May 31, 2000, the Company granted 278,500 NQSOs to nonemployees, 60,000 of which have been cancelled. The prices ranged from $1 to $10. Nonemployee directors NQSOs of 25,000, 20,000, and 16,000 vest in 1999, 2000, and 2001, respectively. Nonemployee NQSOs of 49,000, 48,000, and 60,500 vest in 1999, 2000, and 2001, respectively.
Exercisable Options under the 1996 Stock Option Plan for Directors and Other Individuals are as follows:
All Options, Including Officers and
Significant Employees 1999 2000 2001
Nonemployee Directors NQSOs 25,000 20,000 16,000
Nonemployee NQSOs 49,000 48,000 60,500
------ ------ ------
Total 74,000 68,000 76,500
====== ====== ======
Officers and significant employees 1999 2000 2001
Nonemployee Directors NQSOs 25,000 20,000 16,000
====== ====== ======
|
A maximum of 200,000 shares of common stock are reserved and available for distribution pursuant to Awards granted under the Plan, subject to adjustment to reflect a subdivision or consolidation of shares payment of a stock dividend on common stock or other increase or decrease in such shares effected without consideration. If shares subject to an Award granted under the Plan ceases to be subject to such Awards, such share will again be available for distribution under the Plan. Shares may be distributed under the Plan, in whole or in part, from authorized and unissued shares. The Compensation and Benefits Committee shall be responsible to the Board of Directors for the operation of the Plan and shall make recommendations to the Board of Directors with respect to participation in the Plan and with respect to the terms, limitations, restrictions, conditions, and extent of that participation. The interpretation and construction of a provision of the Plan by the Compensation and Benefits Committee shall be final unless otherwise determined by the Board of Directors.
Options granted under the Plan shall be NQSOs.
The options will be exercisable at such times and subject to such terms and conditions as the Compensation and Benefits Committee may determine. In no event shall an option be exercisable prior to three years from the date of grant or after the expiration of ten years from the date of grant.
Generally, the options will terminate three months after termination of the optionee's service if termination is for a reason other than death or disability. If termination is by disability, the Compensation and Benefits Committee has the right to extend the exercise period for one year from termination. If the termination is a result of death, the option may be exercised within three months after death. Generally, options may be exercised only to the extent exercisable on the date of termination, death, or disability.
The option price for any option will not be less than 100 percent of the fair market value of the Company's Common Stock as of the date of grant. In the event the optionee is a 10 percent shareholder, the price of the option shall be 110 percent of the fair market value of the Common Stock as of the date of grant. In the event the optionee is not a 10 percent shareholder, the price of the option shall be 100 percent of the fair market value of the Common Stock as of the date of grant.
The NQSOs are not transferable except by will or the laws of descent and distribution. In the event an optionee exercises his option and the Company issues shares as a result of that exercise, no disposition of the resulting shares by the optionee may be made within three years from the date of the grant of the option. The Company shall not be required upon exercise of an option to issue or deliver shares prior to completion of registration or other qualification under any state or federal law as the Company shall determine to be desirable. In the event the optionee exercises his option and receives a bona fide offer for all or a portion of the shares, he shall give the Company the exclusive right and option within 15 days of the date of notice to the Company to purchase the shares on the same terms. In the event of a dissolution of the Company or a merger where the Company is not the surviving entity, each option shall terminate but not before the Company gives 30 days' notice of the optionee's right to exercise his option.
The Plan may be amended or discontinued by the Board of Directors or the Compensation and Benefits Committee provided that it may not modify an outstanding option so as to specify a lower price or accept the surrender of outstanding options and authorize the granting of new options in substitution thereof specifying a lower price. The Plan may be modified or amended by affirmative vote of the majority of the Common Stock plus the affirmative vote of all the remaining stock. No amendment, alteration, or discontinuation may impair the rights of an optionee without his consent.
Under the Plan, the Compensation and Benefits Committee has wide discretion and flexibility, enabling it to administer the Plan in the manner it determines to be in the best interest of the Company. Thus, Awards may be granted in various combinations and sequences and may be subject to various conditions, restrictions, and limitations at grant or upon exercise or payment not inconsistent with the terms of the Plan. The Compensation and Benefits Committee's determinations with respect to which employees will receive Awards, and the form, amount and frequency, and the terms and conditions thereof, are subject to wide discretion. The designation of an employee to receive one form of an Award under the Plan does not require the Board of Directors or Compensation and Benefits Committee to designate or entitle such employee to receive any other form of Award.
The Plan does not limit either the number of persons eligible to receive Awards or the type or number of shares which may be subject to options or other Awards which may be granted to any one person. In addition, the Plan does not limit the aggregate number of Awards that may be granted except that the number of shares reserved for distribution under the Plan cannot exceed 200,000 shares.
OPTION FOR CONVERSION OF LOAN PRINCIPAL INTO COMMON STOCK
Pursuant to the Agreement between the Company and Abbott, Abbott agreed to make periodic loans to the Company prior to June 30, 2005, in increments of $1,000,000 in an aggregate amount of up to $5,000,000. Pursuant to the Agreement, the Company gave Abbott the right, at its option, to convert any and all principal amounts owed into Common Stock of the Company at a price of $10 per share (adjustable for events affecting the number of outstanding shares of Common Stock). Abbott also holds registration rights with respect to the shares of Common Stock issued upon conversion of any principal amount loaned pursuant to the Agreement. Subject to limitations contained in the Agreement and related Registration Rights Agreement, these registration rights include the following:
. Any time after the Company becomes eligible to file a registration statement on Form S-3, Abbott may require that the Company use its best efforts to effect a registration of Abbott Common Stock acquired by conversion of any principal amounts owed (the "Registerable Securities") only where Abbott agrees to abide by the terms of the underwriting as agreed upon by the underwriters and the Company. The right to request registration may not be exercised more than three times. This right is subject to the ability of the underwriters to limit the number of shares included in the offering in view of market conditions.
. If the Company registers any common stock in a public offering for cash whether as a primary or secondary offer or pursuant to registration rights granted to other holders (not including a registration relating solely to employee benefit plans on Form S-8 or registration on Form S-4 relating solely to a transaction subject to Rule 145), Abbott is entitled to request and the Company must take reasonable efforts to include the Registerable Securities in the registration. This right is subject to the ability of the underwriters to limit the number of shares included in the offering in view of market conditions.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS
The following is a brief summary of the Company's understanding of the principal anticipated federal income tax consequences of Awards made under the Plans based upon the applicable provisions of the Code in effect on the date hereof. This summary is not intended to be exhaustive and does not describe foreign, state, or local tax consequences.
An optionee will not realize taxable income at the time an ISO is granted or exercised. Company Common Stock is issued to an optionee pursuant to the exercise of an ISO, and if no disqualifying disposition of the shares is made by the optionee within two years of the date of grant or within one year after exercise of the option, then (a) any gain upon the subsequent sale of the shares will be taxed to the optionee as a capital gain, and any loss sustained will be a capital loss, and (b) no deduction will be allowed to the Company for federal income tax purposes. The spread between the ISO price and the fair market value of the shares at the time of exercise is a preference item for purposes of the alternative minimum tax.
If an optionee disposes of shares acquired upon the exercise of an ISO before the expiration of the holding periods described above, then generally (a) the optionee will be taxed as if he had received compensation income in the year of disposition in an amount equal to the excess, if any, of the fair market value of the shares on the exercise date (or, if less, the amount realized on value of the shares on the disposition of the shares) over the option price paid for such shares, and (b) the Company will generally be entitled to a corresponding deduction in that year. Any further gain or loss realized by the participant will be taxed as short-term or long-term capital gain or loss, as the case may be, and will not result in any deduction by the Company.
Exercise of an ISO may cause the optionee to incur alternative minimum tax liability even if he has no taxable income from the exercise under general income tax principles.
Stock acquired through exercise of an ISO must be held for more than 12 months to obtain long-term capital gains treatment.
All stock acquired pursuant to the exercise of an ISO is subject to the holding period rules and disqualifying disposition rules described above. Pursuant to the Plan, an ISO can only be exercised by payment of the consideration in cash.
To the extent that the fair market value of the Company's Common Stock (determined as of the date of grant) subject to ISOs exercisable for the first time by an optionee during any calendar year exceeds $100,000, those options will not be considered ISOs.
An optionee will generally not recognize taxable income at the time an NQSO is granted, but taxable income will be realized, and the Company will generally be entitled to a deduction, at the time of exercise of the NQSO. The amount of income and the Company's deduction will be equal to the difference between the fair market value of the shares on the date of exercise and the NQSO exercise price. The income realized will be taxed to the optionee at the ordinary income tax rates for federal income tax purposes. Withholding is required upon exercise of an NQSO. On subsequent disposition of the shares acquired upon exercise of an NQSO, capital gain or loss as determined under the normal capital asset holding period rules will be realized in the amount of the difference between the proceeds of sale and the fair market value of the shares on the date of exercise.
Under the Plans, a participant must pay the Company, no later than the date on which an amount first becomes includable in the participant's gross income for federal income tax purposes with respect to an Award, any taxes required to be withheld with respect to such amount. Such withholding may generally not be settled with shares that constitute part of the Award giving rise to the withholding obligation unless the Compensation and Benefits Committee grants special permission. Otherwise, withholding must be made in a manner that provides cash to the Company. The amount of income recognized is not reduced by the retention of the Company of shares issuable under an Award to satisfy withholding obligations; the transaction is taxed as if the shares were sold.
PART II - FORM 10-SB
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
There is no public trading market for the Company's Common Stock. The Company's 14,000,000 shares of outstanding Common Stock are held by the Company's Chief Executive Officer, Thomas J. Shaw, and Lillian E. Salerno, a Director. As of May 31, 2000, 1,286,405 shares of Common Stock are subject to outstanding options and 9,294,000 shares are reserved for issuance upon conversion of both classes of preferred stock. 7,725 shares of Series IV Class B Convertible Preferred Stock are reserved for issuance upon exercise of warrants. The Company has not agreed to register any shares of Common Stock for public sale except for those registration rights held by Abbott pursuant to the Agreement and those contained in Certificates of Designation for certain Convertible Preferred Stock as set forth in greater detail in Part I - Item 8 - DESCRIPTION OF SECURITIES.
The Company has not declared or paid any dividends on its Common Stock since its inception. The Company has no current plans to pay any cash dividends on the Common Stock. The Company intends to retain all earnings, except those required to be paid to the holders of the Preferred Stock which cannot at this time be paid, to support the Company's operations and future growth. As of May 31, 2000, approximately $8,876,846 in dividends had accumulated on both classes of Preferred Stock. The Company has reserved the right to issue 500,000 shares of Class B Convertible Preferred Shares as a dividend. Pursuant to the requirements of a loan from Texas Bank, the Company has agreed not to return capital to the shareholders or redeem outstanding shares without the bank's prior consent. Dividends on inferior series and classes of preferred stock are prohibited until those owed to the superior classes and series are paid.
ITEM 2. LEGAL PROCEEDINGS
The Company filed a lawsuit on September 30, 1998, in the District Court of Brazoria County in the 239/th/ Judicial District against B-D, Tyco International (U.S.), Inc., VHA, Inc., The Community Hospital of Brazosport, Angleton-Danbury General Hospital, and Sweeney Community Hospital. The Company is alleging an antitrust conspiracy between the defendants whereby they contracted among themselves and many other hospitals, doctors, and healthcare organizations in order to exclude the Company from selling the safety syringes and to maintain their own market share in violation of Texas Free Enterprise and Antitrust Act ("TFEAA"). The case is still in the discovery stage. The Company is not a party to any other legal proceeding. As of the date of this filing, Angleton-Danbury General Hospital has been dropped from the lawsuit. Premier, Inc., Novation, LLC, and Premier Purchasing Partnerships have been added to the lawsuit.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There have been no changes in or disagreements with the principal independent accountants during the two most recent fiscal years.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The following discussion outlines all securities sold by the Company for cash or services rendered during the previous three years. Unless otherwise described, all of the shares sold or granted were issued pursuant to the authority granted by the private offering exemption outlined in Section 4(2) of the Securities Act. None of the below mentioned "sales" were made to more than 35 nonaccredited investors and none were made with a view toward distribution. All shares issued were restricted and contained either a Rule 144 or Regulation S legend as appropriate.
In 1997, the Company issued ISOs for the purchase of 22,750 shares of common stock and NQSOs for the purchase of 273,200 shares of common stock under the 1996 Incentive Stock Option Plan. The Company issued NQSOs for the purchase of 95,500 shares under the 1996 Stock Option Plan for Directors and Other Individuals.
From May 10, 1997, to November 15, 1997, the Company, with the assistance of Southwest Merchant Group, offered and sold pursuant to Rule 506 of the Securities Act to 131 accredited and 14 nonaccredited investors 1,000,000 shares of Series II Class B Convertible Preferred Stock at a price of $10
per share for a total payment of $10,000,000. The Company entered into an agreement with Southwest Merchant Group effective July 16, 1997, whereby Southwest Merchant agreed to provide best efforts to sell up to 1,000,000 shares of Series II Stock. In return the Company agreed to pay a combined financial advisory, investment banking, and selling commission equal to 5 percent of the value of the shares sold with an option to take, instead of cash, 2 1/2 percent of the gross funds in warrants. Southwest Merchant Group was to receive two warrants for each dollar of compensation owed to Southwest Merchant Group. Each warrant gave Southwest Merchant Group the right to purchase 1/10 of a share of Series IV Stock. $37,500 in compensation was paid to Southwest Merchant Group in the form of cash. Southwest Merchant Group was issued 75,000 of Series IV Stock for the purchase of 7,500 shares of Series IV Stock. No warrants have been exercised and none have expired.
In 1998, the Company issued ISOs for the purchase of 177,800 shares of Common Stock under the 1996 Incentive Stock Option Plan and NQSOs for the purchase of 86,500 shares of Common Stock under the 1996 Stock Option Plan for Directors and Other Individuals.
From July 10, 1998, to September 30, 1999, the Company, with the assistance of Northstar, Asset Allocations Securities Corp., and Ameriprop Inc. ("broker dealers"), offered and sold pursuant to Rule 506 of the Securities Act to 225 accredited and 21 nonaccredited investors 1,160,200 shares of Series III Stock at a price of $10 per share for a total payment of $11,602,000. The Company entered into an agreement with the broker dealers that, in exchange for the best efforts of the broker to sell the shares, the brokers would be entitled to a combined due diligence fee and selling commission equal to 7 percent of the value of each share sold by the brokers. Northstar was paid $279,580, Asset Allocations Securities Corp. was paid 247,450, and Ameriprop was paid $25,550.
In 1999 and in connection with an employment agreement, the Company issued NQSOs for the purchase of 20,000 shares of the Company's Common Stock under the 1999 Stock Option Plan to Phillip Zweig. Half of the options vest on the 180/th/ day of the agreement (June 10, 2000) and the other half vest on the day prior to the expiration of the agreement (December 11, 2000).
In 1999, the Company issued ISOs for the purchase of 451,400 shares and NQSOs for the purchase of 362,550 shares of Common Stock of the Company under the 1999 Stock Option Plan.
From January 11, 2000, to May 10, 2000, the Company, with the assistance of Asset Allocations Securities Corp. and Northstar, offered and sold 1,138,800 shares of Series IV Stock to 25 accredited and 3 nonaccredited investors pursuant to Rule 506 at a price of $10 per share for a total of $11,388,000. Pursuant to individual Selling Agreements dated March 9, 2000, and March 1, 2000, respectively, warrants for the purchase of 75 and 150 shares of Series IV Stock of the Company were issued to Asset Allocations Securities Corp. and Northstar as partial commissions. Each warrant entitles the holder to purchase one share of the Common Stock at an exercise price of $10 per share. Asset Allocations Securities Corp. and Northstar received $1,750 and $3,500 in cash commissions, respectively.
In 2000, the Company has issued ISOs for the purchase of 41,150 shares and NQSOs for the purchase of 37,500 shares of Common Stock under the 1999 Stock Option Plan.
In connection with a consulting agreement, the Company will issue NQSOs for the purchase of up to 61,000 shares of the Company's Common Stock at an exercise price of $10 per share to International Export and Consulting.
In March 2000, the Company entered into a letter agreement with New Horizons International ("NHI") and Colebrand Limited whereby NHI and Colebrand Limited would provide consulting services regarding marketing advice. In the event they provide the Company with a contact that results in a proposed investment in any amount up to $60 million which terms are acceptable to the Company in its sole and absolute discretion, NHI will receive 5 percent of the total amount of capital invested in cash, and Colebrand Limited will receive the issuance of a number and type of securities equal to 2 1/2 percent of the total number and type of securities issued and a warrant for the right to purchase up to an amount of securities equal to 2 1/2 percent of the total number and type of securities sold.
In May 2000, the Company entered into an Agreement with Abbott. Pursuant to the Agreement, Abbott agreed to loan to the Company, in increments of $1,000,000, an aggregate of up to $5,000,000 at an interest rate of prime plus 1% per year up to the maturity date of June 30, 2005. In consideration, the Company agreed that any and all principal amounts borrowed could be converted into Common Stock at
a price of $10 per share. As of the date of this filing, the Company has not borrowed any funds under this Agreement and no Common Stock has been issued.
Pursuant to a Selling Agreement entered into between the Company and Northstar dated March 1, 2000, and in exchange for Northstar's assistance with the offering of Series IV Stock, the Company will issue a warrant in the name of Northstar for the purchase of 150 shares of the Series IV Stock of the Company at $10 per share for each 100 shares sold by this broker in the private placement offering in which it assisted. Northstar sold 2,500 shares of the Series IV Stock and, accordingly, may purchase pursuant to exercise of this warrant 75 shares of the Series IV Stock of the Company. The warrant expires on March 15, 2002.
Pursuant to a Selling Agreement between the Company and Asset Allocations Securities Corp. dated March 9, 2000, and in exchange for the assistance of this broker with the offering of the Series IV Stock, the Company will issue a warrant in the name of Asset Allocations Securities Corp. for the purchase of 75 shares of the Series IV Stock at $10 per share for each 100 shares sold by this broker. Asset Allocations Securities Corp. sold 5,000 shares of the Series IV Stock and, accordingly, may purchase pursuant to exercise of this warrant 150 shares of the Series IV Stock of the Company. The warrant expires on March 15, 2002.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Amended and Restated Bylaws provide that the Company shall indemnify each of its Directors and Officers to the maximum extent allowed by the Texas Business Corporation Act ("TBCA") for expenses incurred in proceedings where the Officer or Director is a party by reason of holding his position as an Officer or Director subject to not being found liable for negligence or misconduct. Expenses incurred in anticipation of litigation or in settlement of anticipated litigation are also covered. The TBCA permits such indemnification, so long as such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company. Such indemnification may be made only upon a determination by the Board of Directors that such indemnification is proper in the circumstances because the person to be indemnified has met the applicable standard of conduct to permit indemnification under the law. The Company is also permitted to advance to such persons payment for their expenses incurred in defending a proceeding to which indemnification might apply, provided the recipient provides an undertaking agreeing to repay all such advanced amounts if it is ultimately determined that he or she is not entitled to be indemnified. However, please see below regarding limitations on indemnification for liabilities arising under the Securities Act.
Pursuant to a Corporate Liability Policy issued by Executive Risk Specialty Insurance Company which covers certain claims against covered persons occurring after November 28, 1995, and certain claims against the Company occurring after November 28, 1997, and which expires on November 28, 2000 (the "Policy"), the Officers, Directors, and employees of the Company and the Company are insured against certain loss liabilities and legal expenses. Generally, the Company and "Insured Persons," as defined in the Policy, are insured against losses arising out of employment practices and errors, omissions, misstatements, or breaches of duty. They are also insured against legal expenses arising out of the covered risks. The Policy limit is $1,000,000 subject to a reinstatement or request for additional coverage of up to an additional $1,000,000 for an additional premium. However, the Policy does not cover fines, taxes, punitive awards, or business expenses incurred by reason of change in ownership by reason of a change in legal status. Furthermore, the Policy does not cover losses or legal expenses for tort claims (except those relating to employment practices), toxic torts, derivative actions where the Company does not participate, or claims arising under an express contract. The Policy covers patent and trademark defense expenses up to $1,000,000 but does not cover claims alleging infringement. Claims arising out of violations of various federal and state securities laws are not covered except that the insurer is obligated to provide a quote for additional coverage related to public offerings. The insured have no rights to settle without permission of the carrier.
Pursuant to a written employment agreement with Thomas J. Shaw, the Company has agreed to indemnify Thomas J. Shaw for all legal expenses and liabilities incurred with any proceeding involving him by reason of his being an Officer or agent of the Company. The Company has further agreed to pay
reasonable attorney fees and expenses in the event that, in Thomas J. Shaw's sole judgment, he needs to retain counsel or otherwise expend his personal funds for his defense. However, please see below regarding limitations on indemnification for liabilities arising under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to Directors, Officers, and Controlling Persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a Director or Officer of the Company in the successful defense of any action, suit, or proceeding) is asserted by such Director or Officer in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
PART F/S FORM 10-SB
FINANCIAL STATEMENTS
RETRACTABLE TECHNOLOGIES, INC.
Texas
FINANCIAL STATEMENTS
AS OF
DECEMBER 31, 1999 AND 1998
AND
REPORT OF INDEPENDENT ACCOUNTANTS
AND
UNAUDITED FINANCIAL STATEMENTS
AS OF
MARCH 31, 2000 AND 1999
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT ACCOUNTANTS
DECEMBER 31, 1999 AND 1998
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
Page
----
Report of Independent Accountants 54
Financial Statements:
Balance Sheets as of December 31, 1999 and 1998 55
Statements of Operations for the years ended
December 31, 1999, 1998 and 1997 and inception
(May 9, 1994) through December 31, 1999 56
Statements of Changes in Stockholders' Equity
for the years ended December 31, 1999, 1998 and 1997 57
Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997 and inception
(May 9, 1994) through December 31, 1999 58
Notes to Financial Statements 59-73
|
Report of Independent Accountants
To the Board of Directors and
the Stockholders of Retractable Technologies, Inc.
In our opinion, the accompanying balance sheets and the related statements of operations, of changes in stockholders' equity and of cash flows present fairly, in all material respects, the financial position of Retractable Technologies, Inc. (a development stage enterprise) at December 31, 1999 and 1998, and the results of its operations, its changes in stockholders' equity and its cash flows for each of the three years in the period ended December 31, 1999 in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. The financial statements of Retractable Technologies, Inc. for the periods from May 9, 1994 (date of inception) to December 31, 1996, were audited by other independent accountants whose reports dated March 12, 1997 and June 30, 1998 expressed unqualified opinions on those statements.
PricewaterhouseCoopers LLP
Dallas, Texas
June 1, 2000
RETRACTABLE TECHNOLOGIES, INC
A Development Stage Enterprise
December 31,
------------- ---------------
ASSETS 1999 1998
------------- ---------------
Current assets:
Cash and cash equivalents $ 646,005 $ 1,627,863
Accounts receivable, net of allowance for doubtful accounts of
$10,972 and $0, respectively 599,424 100,728
Inventories 677,962 653,958
Other current assets 47,800 51,103
------------- ---------------
Total current assets 1,971,191 2,433,652
Property, plant and equipment, net 10,101,524 8,923,842
Restricted certificates of deposit 600,000 600,000
Intangible assets and deferred charges, net 536,014 554,757
------------- ---------------
Total assets $ 13,208,729 $ 12,512,251
============= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 844,165 $ 332,241
Current portion of long-term debt 463,329 431,743
Note payable to related party - 25,966
Accrued compensation 118,038 107,226
Other accrued liabilities 589,309 52,491
------------- ---------------
Total current liabilities 2,014,841 949,667
------------- ---------------
Long-term debt, net of current maturities 2,506,335 2,870,959
------------- ---------------
Stockholders' equity:
Preferred stock $1 par value:
Class A; authorized, issued and outstanding: 5,000,000 shares
(liquidation preference of $7,500,000) 5,000,000 5,000,000
Class B; authorized: 5,000,000 shares
Series I Class B; issued and outstanding:
1,000,000 shares, (liquidation preference of $6,250,000) 1,000,000 1,000,000
Series II Class B; issued and outstanding:
1,000,000 shares, (liquidation preference of $12,500,000) 1,000,000 1,000,000
Series III Class B; issued and outstanding:
1,160,200 and 301,800 shares, respectively (liquidation preference of
$14,502,500 and $3,772,500, respectively) 1,160,200 301,800
Common stock, no par value; authorized: 40,000,000 shares; issued and
outstanding: 14,000,000 shares 1,000 1,000
Additional paid-in capital 23,564,235 16,378,481
Unearned compensation (185,635) (370,917)
Deficit accumulated during the development stage (22,852,247) (14,618,739)
------------- ---------------
Total stockholders' equity 8,687,553 8,691,625
------------- ---------------
Total liabilities and stockholders' equity $ 13,208,729 $ 12,512,251
============= ===============
|
See accompanying notes to the financial statements.
RETRACTABLE TECHNOLOGIES, INC
A Development Stage Enterprise
STATEMENTS OF OPERATIONS
-------------------------------------------------------------------------------------------------------------------
Cumulative
from
Years ended December 31, inception
--------------------------------------------------------
1999 1998 1997 (May 9, 1994)
----------------- ------------------ ----------------- -----------------
Sales, net $ 3,375,158 $ 845,559 $ 262,315 $ 4,483,032
Cost of sales 2,331,070 765,448 474,147 3,570,665
----------------- ------------------ ----------------- -----------------
Gross income (deficit) 1,044,088 80,111 (211,832) 912,367
----------------- ------------------ ----------------- -----------------
Operating expenses:
Preproduction manufacturing 1,837,830 1,004,828 1,496,418 5,457,201
Sales and marketing 3,742,779 1,539,822 1,394,024 7,047,952
Research and development 842,062 763,690 266,029 2,326,127
General and administrative 2,863,989 2,419,821 1,952,561 8,807,932
----------------- ------------------ ----------------- -----------------
Total operating expenses 9,286,660 5,728,161 5,109,032 23,639,212
----------------- ------------------ ----------------- -----------------
Loss from operations (8,242,572) (5,648,050) (5,320,864) (22,726,845)
Interest income 122,028 162,116 133,413 647,042
Interest expense, net (112,964) (218,154) (336,749) (772,444)
----------------- ------------------ ----------------- -----------------
Net loss incurred during
development stage $ (8,233,508) $ (5,704,088) $ (5,524,200) $ (22,852,247)
================= ================== ================ =================
|
See accompanying notes to the financial statements.
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
Class A Series I Class B Series II Class B
---------------------------- ---------------------------- ------------------------
Shares Amount Shares Amount Shares Amount
------------- ------------- ------------- ------------- ---------- -----------
Balance as of December 31, 1996 5,000,000 $ 5,000,000 983,000 $ 983,000 $
Issued Preferred Series I Class B
9,000 shares, $1 par 9,000 9,000
Issued Preferred Series II Class B
945,700 shares, $1 par 945,700 945,700
Issuance of compensatory stock options
Recognition of stock option compensation
Collections of notes receivable
Reclassification of note receivable
to reflect collection
Net loss incurred during development stage
----------- ------------ ---------- ------------ ---------- -----------
Balance as of December 31, 1997 5,000,000 $ 5,000,000 992,000 $ 992,000 945,700 $ 945,700
----------- ------------ ---------- ------------ ---------- -----------
Issued Preferred Series I Class B
8,000 shares, $1 par 8,000 8,000
Issued Preferred Series II Class B
54,300 shares, $1 par 54,300 54,300
Issued Preferred Series III Class B
301,800 shares, $1 par (net of
commissions and other expenses
of $290,221)
Issuance of compensatory stock options
Recognition of stock option compensation
Terminations of stock options
Net loss incurred during development stage
----------- ------------ ---------- ------------ ---------- -----------
Balance as of December 31, 1998 5,000,000 $ 5,000,000 1,000,000 $ 1,000,000 1,000,000 $ 1,000,000
----------- ------------ ---------- ------------ ---------- -----------
Issued Preferred Series III Class B
858,400 shares, $1 par
Issuance of compensatory stock options
Recognition of stock option compensation
Terminations of stock options
Net loss incurred during development stage
----------- ------------ ---------- ------------ ---------- -----------
Balance as of December 31, 1999 5,000,000 $ 5,000,000 1,000,000 $ 1,000,000 1,000,000 $ 1,000,000
=========== ============ ========== ============ ========== ===========
Series III Class B Common
---------------------------- ----------------------------
Shares Amount Shares Amount
------------- ------------- ------------- -------------
Balance as of December 31, 1996 $ 14,000,000 $ 1,000
Issued Preferred Series I Class B
9,000 shares, $1 par
Issued Preferred Series II Class B
945,700 shares, $1 par
Issuance of compensatory stock options
Recognition of stock option compensation
Collections of notes receivable
Reclassification of note receivable
to reflect collection
Net loss incurred during development stage
------------ ------------- ----------- ------------
Balance as of December 31, 1997 - $ - 14,000,000 $ 1,000
------------ ------------- ----------- ------------
Issued Preferred Series I Class B
8,000 shares, $1 par
Issued Preferred Series II Class B
54,300 shares, $1 par
Issued Preferred Series III Class B
301,800 shares, $1 par (net of
commissions and other expenses
of $290,221) 301,800 301,800
Issuance of compensatory stock options
Recognition of stock option compensation
Terminations of stock options
Net loss incurred during development stage
------------ ------------- ----------- ------------
Balance as of December 31, 1998 301,800 $ 301,800 14,000,000 $ 1,000
------------ ------------- ----------- ------------
Issued Preferred Series III Class B
858,400 shares, $1 par 858,400 858,400
Issuance of compensatory stock options
Recognition of stock option compensation
Terminations of stock options
Net loss incurred during development stage
------------ ------------- ----------- ------------
Balance as of December 31, 1999 1,160,200 $ 1,160,200 14,000,000 $ 1,000
============ ============= =========== ============
Deficit
Notes Accumulated
Receivable Additional During
from Paid-in Unearned Development
Stockholders Capital Compensation Stage Total
-------------- -------------- -------------- -------------- --------------
Balance as of December 31, 1996 $ (257,500) $ 4,303,213 $ (287,290) $ (3,390,451) $ 6,351,972
Issued Preferred Series I Class B
9,000 shares, $1 par 36,000 45,000
Issued Preferred Series II Class B
945,700 shares, $1 par 8,436,300 9,382,000
Issuance of compensatory stock options 748,539 (748,539)
Recognition of stock option compensation 286,540 286,540
Collections of notes receivable 207,500 207,500
Reclassification of note receivable
to reflect collection 50,000 50,000
Net loss incurred during development stage (5,524,200) (5,524,200)
----------- ------------- ------------ ------------ -------------
Balance as of December 31, 1997 $ - $ 13,524,052 $ (749,289) $ (8,914,651) $ 10,798,812
----------- ------------- ------------ ------------ -------------
Issued Preferred Series I Class B
8,000 shares, $1 par 32,000 40,000
Issued Preferred Series II Class B
54,300 shares, $1 par 488,700 543,000
Issued Preferred Series III Class B
301,800 shares, $1 par (net of
commissions and other expenses
of $290,221) 2,425,979 2,727,779
Issuance of compensatory stock options 70,000 (70,000)
Recognition of stock option compensation 286,122 286,122
Terminations of stock options (162,250) 162,250
Net loss incurred during development stage (5,704,088) (5,704,088)
----------- ------------- ------------ ------------ -------------
Balance as of December 31, 1998 $ - $ 16,378,481 $ (370,917) $(14,618,739) $ 8,691,625
----------- ------------- ------------ ------------ -------------
Issued Preferred Series III Class B
858,400 shares, $1 par 7,266,914 8,125,314
Issuance of compensatory stock options 214,354 (214,354)
Recognition of stock option compensation 104,122 104,122
Terminations of stock options (295,514) 295,514
Net loss incurred during development stage (8,233,508) (8,233,508)
----------- ------------- ------------ ------------ -------------
Balance as of December 31, 1999 $ - $ 23,564,235 $ (185,635) $(22,852,247) $ 8,687,553
=========== ============= ============ ============ =============
|
See accompanying notes to the financial statements.
RETRACTABLE TECHNOLOGIES, INC
A Development Stage Enterprise
Cumulative
Years ended December 31, from inception
------------------------------------------------
1999 1998 1997 (May 9, 1994)
-------------- --------------- --------------- -----------------
Cash flows from operating activities
Net loss incurred during development stage $ (8,233,508) $ (5,704,088) $ (5,524,200) $ (22,852,247)
Depreciation and amortization 950,471 807,060 455,909 2,765,730
Provision for doubtful accounts 10,972 - - 10,972
Recognition of stock option compensation 104,122 286,122 286,540 760,707
Adjustments to reconcile net loss to net cash
used in operating activities:
Increase in inventories (24,004) (173,308) (308,188) (677,962)
(Increase) decrease in accounts and note
receivable (509,668) 6,320 (102,048) (610,396)
Increase in deferred charges - - - (25,931)
(Increase) decrease in other current assets 3,303 (34,603) (16,500) (47,800)
Increase (decrease) in accounts payable
and note payable to related party 485,958 (647,460) 738,725 780,699
Increase in other accrued liabilities 547,630 70,811 57,994 707,347
-------------- --------------- --------------- -----------------
Net cash used by operating activities (6,664,724) (5,389,146) (4,411,768) (19,188,881)
-------------- --------------- --------------- -----------------
Cash flows from investing activities
Purchase of property, plant and equipment (1,960,609) (1,179,547) (3,252,731) (11,445,793)
Acquisition of patents, trademarks and licenses (39,077) (45,095) - (182,595)
Purchase of restricted certificate of deposit - - (200,000) (600,000)
Organization costs paid - - (15,291) (20,851)
-------------- --------------- --------------- -----------------
Net cash used by investing activities (1,999,686) (1,224,642) (3,468,022) (12,249,239)
-------------- --------------- --------------- -----------------
Cash flows from financing activities
Borrowings under long-term debt and notes payable - 25,749 986,242 3,065,362
Repayments of long-term debt and notes payable (442,762) (438,000) (350,675) (1,297,830)
Proceeds from issuance of preferred stock 8,584,000 3,601,000 9,427,000 31,307,000
Proceeds from issuance of common stock - - - 1,000
Commissions and other expenses related to
preferred stock issuance (458,686) (290,221) - (748,907)
Collections of notes receivable from stockholders - - 257,500 257,500
Obligation under license agreement - - (56,175) (500,000)
-------------- --------------- --------------- -----------------
Net cash provided by financing activities 7,682,552 2,898,528 10,263,892 32,084,125
-------------- --------------- --------------- -----------------
Net increase (decrease) in cash (981,858) (3,715,260) 2,384,102 646,005
Cash and cash equivalents at:
Beginning of period 1,627,863 5,343,123 2,959,021 -
-------------- --------------- --------------- -----------------
End of period $ 646,005 $ 1,627,863 $ 5,343,123 $ 646,005
============== =============== =============== =================
Supplemental disclosures of cash flow
information:
Interest paid $ 281,905 $ 324,116 $ 321,887 $ 1,025,443
============== =============== =============== =================
Supplemental schedule of noncash financing
activities:
Preferred stock issued in exchange for notes
receivable $ - $ - $ - $ 257,500
============== =============== =============== =================
Offering costs to be settled with warrants $ - $ - $ 37,500 $ 37,500
============== =============== =============== =================
Acquisition of equipment through capital lease $ 109,724 $ 50,435 $ 380,485 $ 1,228,097
============== =============== =============== =================
|
See accompanying notes to the financial statements.
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
1. BUSINESS OF THE COMPANY
Retractable Technologies, Inc. (the "Company") was incorporated in Texas on May 9, 1994, to design, develop, manufacture and market safety syringes and other safety medical products for the health care profession. The Company began operations in 1995. The Company's manufacturing and administrative facilities are located in Little Elm, Texas. The Company's primary products are the VanishPoint(R) Syringe in the 3cc, 5cc and 10cc sizes and Blood Collection Tube Holders. The Company has conducted preliminary clinical evaluations and worked with national distributors to encourage healthcare facilities to transition from the use of standard syringes to the VanishPoint(R) Syringe. Preliminary shipments, which commenced in February 1997, included syringes for hospital product evaluations as well as for sale in clinics and other healthcare settings. The Company has been considered a development stage enterprise for financial reporting purposes as significant efforts have been devoted to financial planning, raising capital, research and development, acquiring equipment, training personnel, developing markets and starting up production. Coincident with the agreement with Abbot Laboratories (see Note 11), effective May 4, 2000, the Company completed its development stage.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.
Cash and cash equivalents
For purposes of reporting cash flows, cash and cash equivalents include unrestricted cash and investments with original maturities of three months or less.
Inventories
Inventories are valued at the lower of cost or market, with cost being determined using a standard cost method, which approximates average cost. Provision is made for any excess or obsolete inventories.
Property, plant and equipment
Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred. Cost includes major expenditures for improvements, and replacements which extend useful lives or increase capacity and interest cost associated with significant capital additions. For the years ended December 31, 1999 and 1998, the Company capitalized interest of approximately $169,000 and $105,000, respectively, and none in fiscal year 1997. Gains or losses from property disposals are included in income.
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
Depreciation and amortization is calculated using the straight-line method over the following useful lives:
Production equipment 7 to 10 years Office furniture and equipment 3 to 10 years Building 39 years Building improvements 15 years Automobiles 7 years |
Long-lived assets
When events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable, the Company will review the net realizable value of the long-lived assets through an assessment of the estimated future cash flows related to such assets. In the event that assets are found to be carried at amounts which are in excess of estimated gross future cash flows, the assets will be adjusted for impairment to a level commensurate with a discounted cash flow analysis of the underlying assets.
Restricted certificates of deposit
Investments in certificates of deposit are restricted in accordance with the terms of certain notes payable.
Intangible assets and deferred charges
Intangible assets are stated at cost and consist primarily of patents, a license agreement granting exclusive rights to use patented technology, and trademarks which are amortized using the straight-line method over 17 years. Other intangible assets consist of deferred charges for loan origination fees, which are amortized over the life of the debt (seven years).
Financial instruments
The fair market value of financial instruments is determined by reference to various market data and other valuation techniques as appropriate. The Company believes that the fair value of financial instruments approximate their recorded values.
Concentrations of credit risk
The Company's financial instruments exposed to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivable. Cash balances, which may exceed the federally insured limits, are maintained in financial institutions; however, management believes the institutions are of high credit quality. The majority of accounts receivable are due from companies which are well-established entities. As a consequence, management considers any exposure from concentrations of credit risks to be limited.
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
Revenue recognition
Revenue is recognized for sales to distributors when title and risk of ownership passes to the distributor, generally upon shipment. Revenue is recorded on the basis of sales price to distributors. Revenues on sales to distributors for federal or GPO contracts are recorded net of contractual pricing allowances to those end customers. Revenue for shipments directly to end users is recognized when title and risk of ownership passes from the Company.
Income taxes
The Company provides for deferred income taxes in accordance with Statement of Financial Accounting Standard No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires an asset and liability approach for financial accounting and reporting for income taxes based on the tax effects of differences between the financial statement and tax bases of assets and liabilities, based on enacted rates expected to be in effect when such basis differences reverse in future periods. Deferred tax assets are periodically reviewed for reliability. Valuation allowances are recorded when realizability of deferred tax assets is not likely.
Research and development costs
Research and development costs are expensed as incurred.
Stock-based compensation
The Company has adopted the disclosure only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), which establishes accounting and reporting standards for stock-based employee compensation plans. As permitted by SFAS 123, the Company has elected not to adopt the fair value based method of accounting for stock-based employee compensation and will account for such arrangements under Accounting Principles Board Opinion No. 25. Accordingly, compensation cost for stock options issued to directors, officers and employees is measured as the excess, if any, of the fair market value of the Company's stock at the date of grant over the amount the director, officer or employee must pay to acquire the stock. Expense is recognized ratably from the date of grant over the vesting period of the option. Unearned compensation reflected in the Stockholders' Equity section of the balance sheet is the portion of such compensation that has not been charged to operations.
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
3. INVENTORIES
Inventories consist of the following
December 31,
---------------------------
1999 1998
--------- ---------
Raw materials $ 405,823 $ 348,053
Work in process 27,699 5,464
Finished goods 268,766 300,441
--------- ---------
702,288 653,958
Inventory reserve (24,326) -
--------- ---------
$ 677,962 $ 653,958
========= =========
4. PROPERTY, PLANT AND EQUIPMENT
|
Property, plant and equipment consist of the following:
December 31,
--------------------------
1999 1998
------------ ------------
Land $ 261,893 $ 261,893
Building and building improvements 1,767,185 1,752,115
Production equipment 7,719,979 6,692,236
Office furniture and equipment 596,058 464,945
Construction in progress 2,306,916 1,410,509
Automobiles 21,858 21,858
------------ -----------
12,673,889 10,603,556
Accumulated depreciation and amortization (2,572,365) (1,679,714)
------------ -----------
$ 10,101,524 $ 8,923,842
============ ===========
|
Acquisition costs of production equipment financed through capital leases were $1,118,556 and $1,008,832 at December 31, 1999, and 1998 respectively. Accumulated amortization on these leases was $358,552 and $255,852 at December 31, 1999 and 1998, respectively.
Depreciation expense and capital lease amortization expense for the years ended December 31, 1999, 1998 and 1997 was $892,651, $761,282 and $414,894, respectively.
RETRACTABLE TECHNOLOGIES, INC.
A development Stage Enterprise
5. INTANGIBLE ASSETS AND DEFERRED CHARGES
Intangible assets and deferred charges consist of the following:
December 31,
-------------------------
1999 1998
----------- ------------
License agreement $ 500,000 $ 500,000
Trademarks and patents 182,590 143,513
Loan origination fees 25,938 25,938
Organization costs - 20,851
----------- ------------
708,528 690,302
Accumulated amortization (172,514) (135,545)
----------- ------------
$ 536,014 $ 554,757
----------- ------------
|
In 1995, the Company entered into the license agreement with an officer of the Company for the exclusive right to manufacture, market and distribute products utilizing automated retraction technology. This technology is the subject of various patents and patent applications owned by the officer of the Company. The initial licensing fee of $500,000 is being amortized over 17 years. The license agreement also provides for quarterly payments of a 5% royalty fee to the officer on gross sales. The royalty fee expense is recognized in the period in which it is earned. Royalty fees of $194,247, $46,098 and $9,284 are included in cost of sales for the years ended December 31, 1999, 1998 and 1997, respectively.
Amortization expense for the years ended December 31, 1999, 1998 and 1997 was $57,820, $45,778 and $41,015, respectively.
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
6. LONG-TERM DEBT
Long-term debt consists of the following:
December 31,
--------------------------------
1999 1998
-------------- ---------------
Small Business Administration note payable to Texas Bank for a maximum
of $1,000,000, all of which was drawn during 1997. Payable in monthly
principal and interest installments of approximately $16,000. Interest
at prime plus 1.5%; 10% on December 31, 1999; adjustable quarterly.
Matures on July 1, 2003. Collateralized by equipment. Guaranteed by an
officer. $ 569,630 $ 705,566
Notes payable to Western Bank and Trust. Interest adjustable annually on
October 24. Matures on October 24, 2001. Secured by land, building and
equipment, and by a certificate of deposit to be released upon
achievement of certain financial ratios. Guaranteed by an officer.
- Interest only payable until October 24, 1996; thereafter, monthly
principal and interest payments of approximately $8,000.
Interest at prime plus 1%; 9.5% on December 31, 1999. 750,789 767,960
- Interest payable monthly at Bank's certificate of deposit rate
plus 2%; 7% on December 31, 1999. 400,000 400,000
Note payable to Legacy Bank of Texas. Payable in monthly installments of
approximately $8,000 plus interest. Interest at prime plus 1%; 9.5% on
December 31, 1999; adjustable daily. Matures on July 10, 2004.
Collateralized by certain machinery and equipment, a certificate of
deposit of $200,000 and restrictions on the transfer of certain
patents. Covenants require the Company to achieve defined debt
coverage ratios or maintain a defined ratio of total liabilities to
total net worth. Guaranteed by an officer.
464,881 566,309
Note payable to First State Bank of Texas in monthly principal and
interest installments of approximately $400. Interest at 7.5%. Matures on
August 13, 2000. Collateralized by company vehicle. 3,333 8,119
Note payable to AFCO. Payable in monthly principal and interest installments
of approximately $2,000. Interest at 8.8%. Matures on May 28, 2000. 7,491 24,403
Capital lease obligations payable in monthly installments ranging from
approximately $500 to $10,000 through October, 2004. Interest at rates
from 9.98% to 14.18%. Collateralized by certain machinery and equipment.
Covenants require the Company to maintain a minimum net worth of
$3,750,000 and a defined ratio of total liabilities to total net worth.
Guaranteed by an officer. The Company is not in compliance with
obligations to deliver documents under this agreement. The lessor
has provided a waiver related to this noncompliance. 773,540 830,345
-------------- ---------------
2,969,664 3,302,702
Less: current portion (463,329) (431,743)
-------------- ---------------
$ 2,506,335 $ 2,870,959
============== ===============
|
RETRACTABLE TECHNOLOGIES, INC.
A Developmemtal Stage Enterprise
The aggregate maturities of long-term debt as of December 31, 1999 are as follows:
2000 $ 463,329
2001 1,572,041
2002 467,577
2003 373,358
2004 93,359
Thereafter -
-------------
Total $ 2,969,664
-------------
|
Subsequent to December 31, 1999, the Company obtained two new loans from 1st International Bank totaling $2,000,000. Land, building and improvements secure $1,500,000, and the remaining $500,000 is secured by accounts receivable. The proceeds, along with a release of $400,000 of restricted cash by Western Bank subsequent to December 31, 1999, were used to pay off indebtedness to Western Bank. Remaining proceeds provided funds for equipment and operating needs. The building loan matures on February 18, 2005 and the note secured by accounts receivable matures February 18, 2001.
7. INCOME TAXES
The provision for income taxes consists of the following:
December 31,
--------------------------------
1999 1998
-------------- ----------------
Current $ - $ -
Deferred benefit (2,932,189) (2,096,602)
Increase in valuation allowance 2,932,189 2,096,602
-------------- ----------------
$ - $ -
-------------- ----------------
|
The Company has net operating loss carryforwards of approximately $24,129,273, and $15,600,527 at December 31, 1999 and 1998, respectively, which will begin to expire in 2010. The Company has established a valuation allowance to the extent of its deferred tax assets since presently it is more likely than not that a tax benefit will not be realized prior to the expiration of related carryforward periods.
RETRACTABLE TECHNOLOGIES, INC.
A Developmemtal Stage Enterprise
The provision for income taxes varies from the statutory income tax rate as follows:
December 31,
-----------------------------------
1999 1998
--------------- ---------------
Income tax benefit at the U.S. federal statutory rate (35.0)% (35.0)%
Valuation allowance 35.6 36.8
Permanent differences 0.6 1.9
State income tax, net of federal benefits (2.7) (2.6)
Other 1.5 (1.1)
--------------- ---------------
Effective tax (benefit) provision rate - -
=============== ===============
|
Temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities that gave rise to significant portions of deferred tax amounts related to the following:
December 31,
-----------------------------------
1999 1998
---------------- ---------------
Net operating loss carryforwards $ 9,084,478 $ 5,873,269
Property, plant and equipment (1,007,274) (714,913)
Deferred charges 142,155 159,883
Accrued expenses and reserves 54,213 23,144
--------------- ---------------
Net noncurrent deferred tax asset before valuation allowance 8,273,572 5,341,383
Valuation allowance (8,273,572) (5,341,383)
--------------- ---------------
Net deferred tax asset $ - $ -
=============== ===============
|
8. STOCKHOLDERS' EQUITY
Preferred stock
The Company has two classes of preferred stock, Class A and Class B. The Class B Preferred Stock has three series: Series I, Series II and Series III. Subsequent to December 31, 1999, the Company began taking subscriptions for a fourth series, Series IV Class B (see Note 11).
The Company authorized 5,000,000 shares of $1 par value Class A Convertible Preferred Stock ("Class A Stock") in April 1995. These shares were outstanding at December 31, 1999 and 1998. Holders of Class A Stock are entitled to receive a cumulative annual cash dividend of $.12 per share, payable quarterly if declared by the board of directors. Holders of Class A Stock generally have no voting rights until dividends are in arrears and unpaid for twelve consecutive quarters. In such case, the holders of Class A Stock have the right to elect one-third of the board of directors of the
Company. At December 31, 1999 and 1998, approximately $2,616,983 and $2,016,983, respectively, of dividends which have not been declared were in arrears. Accordingly, Class A shareholders elected three members to the Board during 1999.
Class A Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $1.70 per share, plus all accrued and unpaid dividends. Each share of Class A Preferred Stock may be converted to one share of common stock after three years from the date of issuance at the option of the shareholder. In the event of voluntary or involuntary dissolution, liquidation or winding up of the Company, holders of Class A Stock then outstanding are entitled to $1.50 per share plus all accrued and unpaid dividends, prior to any distributions to holders of Class B preferred stock or of common stock.
The Company has authorized 5,000,000 shares of $1 par value Convertible Preferred Stock which have been allocated among Series I, II, III and IV in the amounts of 1,000,000, 1,000,000, 1,160,200 and 1,300,000 shares, respectively. The remaining 539,800 authorized shares have not been assigned a series.
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
There were 1,000,000 shares of $1 par value Series I Class B Convertible Preferred Stock ("Series I Class B Stock") issued and outstanding at December 31, 1999 and 1998. Holders of Series I Class B Stock are entitled to receive a cumulative annual dividend of $.50 per share, payable quarterly if declared by the board of directors. At December 31, 1999 and 1998 approximately $1,658,996 and $1,185,552, respectively, of dividends which have not been declared were in arrears.
Series I Class B Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $7.50 per share, plus all accrued and unpaid dividends. Each share of Series I Class B Stock may, at the option of the stockholder, be converted to one share of common stock after three years from the date of issuance or in the event the Company files an initial registration statement under the Securities Act of 1933. In the event of voluntary or involuntary dissolution, liquidation or winding up of the Company, holders of Series I Class B Stock then outstanding are entitled to $6.25 per share, plus all accrued and unpaid dividends, after distribution obligations to Class A Stock have been satisfied and prior to any distributions to holders of Series II Class B Convertible Preferred Stock ("Series II Class B Stock"), Series III Class B Convertible Preferred Stock ("Series III Class B Stock") or common stock.
There were 1,000,000 shares of $1 par value Series II Class B Stock issued and outstanding at December 31, 1999 and 1998, respectively. Holders of Series II Class B Stock are entitled to receive a cumulative annual dividend of $1.00 per share, payable quarterly if declared by the board of directors. Holders of Series II Class B Stock generally have no voting rights until dividends are in arrears and unpaid for twelve consecutive quarters. In such case, the holders of Series II Class B Stock have the right to elect one-third of the board of directors of the Company. At December 31, 1999 and 1998 approximately $2,227,177 and $1,256,981, respectively, of dividends which have not been declared were in arrears.
Series II Class B Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $15.00 per share plus all accrued and unpaid dividends. Each share of Series II Class B Stock may, at the option of the stockholder, be converted to one share of common stock after three years from the date of issuance or in the event the Company files an initial registration statement under the Securities Act of 1933. In the event of voluntary or involuntary dissolution, liquidation or winding up of the Company, holders of Series II Class B Stock then outstanding are entitled to $12.50 per share, plus all accrued and unpaid dividends, after distribution obligations to holders of Class A Stock and Series I Class B Stock have been satisfied and prior to any distributions to holders of Series III Class B Stock or common stock.
There were 1,160,200 shares and 301,800 shares of $1 par value Series III Class B Stock issued and outstanding at December 31, 1999 and 1998, respectively. Holders of Series III Class B Stock are entitled to receive a cumulative annual dividend of $1.00 per share, payable quarterly if declared by the board of directors. At December 31, 1999 and 1998, approximately $941,549 and $41,701, respectively, of dividends which have not been declared were in arrears.
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
Series III Class B Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $15.00 per share, plus all accrued and unpaid dividends. Each share of Series III Class B Stock may, at the option of the stockholder, be converted to one share of common stock after three years from the date of issuance or in the event the Company files an initial registration statement under the Securities Act of 1933. In the event of voluntary or involuntary dissolution, liquidation or winding up of the Company, holders of Series III Class B Stock then outstanding are entitled to $12.50 per share, plus all accrued and unpaid dividends, after distribution obligations to Class A Stock, Series I Class B Stock and Series II Class B Stock have been satisfied and prior to any distributions to holders of common stock.
On January 11, 2000, the Company issued a Private Placement Memorandum offering up to 1,300,000 shares of its Series IV Class B Convertible Preferred Stock ("Series IV Class B Stock") at $10 per share.
As of May 22, 2000, subscriptions for 1,133,800 shares of the Series IV Class B Stock had been received.
Series IV Class B Stock ranks senior to the Company's common stock with respect to dividends and upon liquidation, dissolution or winding up, but secondary to the Company's Class A Stock; and Series I Class B, Series II Class B and Series III Class B Stock. Holders of Series IV Class B Stock will be entitled to receive a cumulative annual dividend of $1.00 per share, payable quarterly, if declared by the board of directors. Holders of Series IV Class B Stock generally have no voting rights.
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
Series IV Class B Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $11.00 per share plus all accrued and unpaid dividends. Each share of Series IV Class B Stock may, at the option of the stockholder any time subsequent to three years from date of issuance, be converted into common stock at a conversion price of $10 per share, or in the event the Company files an initial registration statement under the Securities Act of 1933.
In the event of voluntary or involuntary liquidation, dissolution or winding up of the Company, holders of Series IV Class B Stock then outstanding are entitled to receive liquidating distributions of $11.00 per share, plus accrued and unpaid dividends.
Common stock
The Company is authorized to issue 40,000,000 shares of no par value common stock, of which 14,000,000 shares are issued and outstanding at December 31, 1999 and 1998. Subsequent to December 31, 1999, the board of directors approved an increase in the number of authorized shares to 100,000,000.
9. RELATED PARTY TRANSACTIONS
In September 1996, the Company purchased the 3cc prototype mold from Checkmate Engineering, a sole proprietorship of an officer of the Company. The purchase was financed by a note for the full purchase price of $108,252. The note provided for no interest for the first 305 days and, subsequently, for interest at a rate of 12% per annum. Interest expense related to this note was $1,357, $5,258 and $4,092 for the years ended December 31, 1999, 1998 and 1997, respectively. The balance of the note was $25,966 as of December 31, 1998. The remaining balance on the note was paid in full in 1999.
The Company has a lease with Mill Street Enterprises ("Mill Street"), a sole proprietorship owned by a Board member, for sales and marketing offices in Lewisville, Texas. During 1999, 1998 and 1997, the Company paid $22,800 each year under this lease. The Company also has a lease with Mill Street for additional office space for one year commencing April 1, 2000, at a rate of $1,000 per month.
During 1999, 1998 and 1997, the Company paid $23,381, $30,258 and $49,615, respectively, to family members of its chief executive officer for various consulting services. During 1999, 1998 and 1997, the Company paid $96,372, $127,921 and $77,430, respectively, to a former director for various consulting services.
The Company has a license agreement with an officer of the Company. See Note 5.
See Note 11 for related party subsequent event.
RETRACTABLE TECHNOLOGIES, INC.
A Developmemtal Stage Enterprise
10. STOCK OPTIONS AND WARRANTS
Stock options
The Company has three stock option plans that provide for the granting of stock options to officers, employees and other individuals. During 1999, the Company approved the 1999 Stock Option Plan. The 1999 Plan is the only plan with stock option awards available for grant and the Company has reserved 2,000,000 shares of common stock for use upon the exercise of options under this plan.
The Company also has shares outstanding under the 1996 Incentive Stock Option Plan and the 1996 Stock Option Plan for Directors and Other Individuals. All plans are administered and exercise prices at which options are granted are determined by a committee appointed by the board of directors. Shares exercised come from the Company's authorized but unissued common stock. The options vest over periods up to three years from the date of grant and generally expire ten years after the date of grant. All options issued under the 1996 plans expire three months after termination of employment or service to the Company. No options have been exercised under these plans.
Director, officer and employee options
Pro forma information regarding net income is required by SFAS 123. This information has been derived as if the Company had accounted for its directors, officers and employee stock options under the fair value method in accordance with SFAS 123. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in 1999, 1998 and 1997: no dividend yield; expected volatility of 0%; risk-free interest rates of 5.9%, 5.4% and 6.4%, respectively; and expected lives of 5.3 years. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting periods. The Company's pro forma information follows:
Years Ended December 31,
-------------------------------------------------------------------------------------------
1999 1998 1997
--------------------------- ----------------------------- -----------------------------
As As As
Reported Pro Forma Reported Pro Forma Reported Pro Forma
----------- ------------- ------------- ------------- ------------- -------------
Net loss $(8,233,508) $ (8,341,433) $ (5,704,088) $ (5,842,497) $ (5,524,200) $ (5,627,602)
|
The effects of applying FAS 123 in this pro forma disclosure are not indicative of future amounts as FAS 123 does not consider additional awards anticipated in the future.
RETRACTABLE TECHNOLOGIES, INC
A Development Stage Enterprise
A summary of director, officer and employee options granted and outstanding under the Plans is presented below:
Years Ended December 31,
------------------------------------------------------------------
1999 1998 1997
---------------------- --------------------- ---------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
---------- ---------- -------- ---------- -------- ----------
Outstanding at beginning of period 566,855 $ 6.01 460,305 $ 4.28 130,105 $ 1.53
Granted at prices in excess of
fair market value 735,450 10.00 177,800 10.00 22,750 10.00
Granted at prices below
fair market value 8,500 4.53 - - 345,700 5.00
Exercised - - - - - -
Forfeited (230,600) (7.72) (71,250) (4.78) (38,250) (4.90)
---------- ----------- --------- ----------- --------- ----------
Outstanding at end of period 1,080,205 $ 8.35 566,855 $ 6.01 460,305 $ 4.28
========== =========== ========= ========== ========== ==========
Exercisable at end of period 112,605 $ 3.35 - $ - - $ -
Weighted average fair value
of options granted during period $ .04 $ - $ 3.45
|
The following table summarizes information about directors, officer and employee options outstanding under the Plans at December 31, 1999:
Weighted
Average
Remaining
Exercise Shares Contractual Shares
Prices Outstanding Life Exercisable
------------- ------------- ------------- ------------
$ 1.00 77,780 6.32 77,780
$ 5.00 216,525 7.33 9,825
$ 10.00 785,900 9.30 25,000
|
Compensation expense has been recognized for the years ended December 31, 1999, 1998 and 1997 in connection with options which were granted with exercise prices less than the fair market value of the common stock of the Company on the date of grant as determined by the board of directors.
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
Non-employee options
Options were granted to non-employees during the years ended December 31 as follows:
Years Ended December 31,
--------------------------------------------------------------------------
1999 1998 1997
--------------------- --------------------- --------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
-------- ---------- -------- ---------- ------ ----------
Outstanding at beginning of period 152,500 $ 6.91 67,000 $ 2.97 34,000 $ 1.00
Granted 70,000 10.00 86,500 10.00 33,000 5.00
Exercised - - - - - -
Forfeited (37,000) (8.92) (1,000) (10.00) - -
------- --------- ------- --------- ------ ---------
Outstanding at end of period 185,500 $ 7.68 152,500 $ 6.91 67,000 $ 2.97
======= ========= ======= ========= ====== =========
Exercisable at end of period 34,000 $ 1.00 - $ - - $ -
Weighted average fair value
of options granted during period $ 1.79 $ 1.71 $ 3.88
|
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in 1999, 1998 and 1997: no dividend yield; expected volatility of 30%, 30% and 60%, respectively; risk-free interest rates of 5.9%, 5.4% and 6.3%, respectively; and expected lives of 5.3 years, 5.3 years and 3 years, respectively. The expense related to these grants is reflected in periods up to three years, in which services must be completed, for these options to become exercisable. Unearned compensation reflects the portion of the grant that has not yet been charged to operations.
Warrants
The Company has an obligation to issue warrants in connection with the underwriting of the Series II Class B Stock sales. Ten warrants entitle the holder to purchase one share of common stock at an exercise price of $1.00 per warrant. The fair market value of the warrants was recorded as part of the fees for the preferred stock offering.
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
11. SUBSEQUENT EVENTS
On May 4, 2000, the Company entered into four agreements with Abbott
Laboratories ("Abbott"): 1) National Marketing and Distribution Agreement;
2) Registration Rights Agreement; 3) Credit Agreement and 4) Security
Agreement. The National Marketing and Distribution Agreement provides that
Abbott will purchase and market the Company's Vanish Point(R) automated
retraction syringes and blood collection devices to its U.S. acute care
hospital customers. The agreement is for a five year term. The agreement
also calls for the establishment of a new product team comprised by key
personnel from both companies designed to concentrate on development of new
safety products that incorporate the Company's patented, proprietary
technology.
The Credit Agreement provides that Abbott will extend to the Company a credit line in the amount of $5 million. Disbursement amounts shall be in multiples of $1 million. Interest accrues at a rate of prime rate plus 1% and is payable quarterly beginning June 30, 2001. The Credit Agreement also provides that Abbott may, at its option, convert the note balance into common stock at a specified conversion price. The loan matures on June 30, 2005. In connection with the Credit Agreement, the Security Agreement grants Abbott a continuing security interest in certain of the Company's assets.
The Registration Rights Agreement gives Abbott certain registration rights if the conversion privilege in the Credit Agreement is exercised.
On April 7, 2000, the Company entered into a manufacturing agreement with an unrelated party to outsource the assembly of its 5cc and 10cc syringes. The agreement calls for the Company to purchase and consign machinery and equipment to the unrelated party and provide training for its employees. The Company is obligated under the agreement to purchase a minimum volume of product from the unrelated party at mutually agreed upon prices. The volume and price for the initial contract year ended April 30, 2001 resulted in a purchase commitment of $100,000 for the Company.
Effective June 1, 2000, the Company entered into a Consulting Agreement ("Agreement") with a Board member, formerly Executive Vice President of Sales and Marketing, who is also related to an employee of the Company. The Agreement is for a one-year term, renewable with consent of both parties, whereby the Board member has agreed to establish contacts with major European entities, approved by the Company, to develop marketing and distribution channels as well as licensing agreements. The Agreement calls for an annual payment of $200,000, payable in equal monthly installments and an expense allowance of up to $5,000 for expenses incurred on behalf of the Company. In the event a licensee contacted by the Board member is signed with the Company, the Board member will receive 5% of licensing fees collected by the Company.
See footnotes 6 and 8 for subsequent event activity related to debt and equity, respectively.
Retractable Technologies, Inc.
Statements of Operations
---------------------------------------------------------------------------
(Unaudited)
Three Months Three Months Cumulative
ended ended From Inception
March 31, 2000 March 31, 1999 (May 4, 1994)
-------------- -------------- --------------
Sales $ 827,819 $ 254,987 $ 5,310,851
Cost of sales 644,700 206,256 4,215,365
------------ ------------ -------------
Gross profit 183,119 48,731 1,095,486
------------ ------------ -------------
Operating expenses:
Preproduction
manufacturing 450,612 391,345 5,907,813
Sales and marketing 705,262 547,180 7,753,214
Research and development 136,253 277,588 2,462,380
General and administrative 667,514 771,152 9,475,446
------------ ------------ -------------
Total operating expenses 1,959,641 1,987,265 25,598,853
------------ ------------ -------------
Loss from operations (1,776,522) (1,938,534) (24,503,367)
Interest income 15,542 31,235 662,584
Interest expense (20,748) (46,228) (793,192)
------------ ------------ -------------
Net loss $(1,781,728) $(1,953,527) $(24,633,975)
============ ============ =============
|
December 31, 1999 March 31,
2000
--------------------------------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 646,005 $ 1,024,987
Accounts receivable 599,424 354,504
Inventories 677,962 1,254,835
Other current assets 47,800 173,543
------------ ------------
Total current assets 1,971,191 2,807,869
Property, plant, and equipment, net $ 10,101,524 $ 9,993,454
Restricted cash 600,000 -
Intangible assets and deferred charges, net 536,014 562,709
------------ ------------
Total assets $ 13,208,729 $ 13,364,032
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 844,165 $ 537,556
Current portion of long-term debt 463,329 965,491
Accrued compensation 118,038 99,040
Other accrued liabilities 589,309 590,221
------------ ------------
Total current liabilities 2,014,841 2,192,308
------------ -----------
Long-term debt, net of current maturities 2,506,335 2,588,477
Stockholders' equity
Preferred Stock $1 par value
Class A 5,000,000 5,000,000
Series I, Class B 1,000,000 1,000,000
Series II, Class B 1,000,000 1,000,000
Series III, Class B 1,160,200 1,160,200
Series IV, Class B 161,500
Common stock 1,000 1,000
Additional paid-in capital 23,564,235 25,017,735
Unearned compensation (185,635) (123,213)
Deficit accumulated during the development stage (22,852,247) (24,633,975)
------------ ------------
Total stockholders' equity 8,687,553 8,583,247
------------ ------------
Total liabilities and stockholders' equity $ 13,208,729 $ 13,364,032
============ ============
|
Retractable Technologies, Inc.
Statements of Cash Flows
===================================================================================================================================
(Unaudited)
Three Months Three Months Cumulative
ended ended From Inception
March 31, 2000 March 31, 1999 (May 9, 1994)
-------------- -------------- --------------
Cash flows from operating activities
Net loss $ (1,781,728) $ (1,953,527) $ (24,633,975)
Depreciation and amortization 247,365 218,555 3,013,095
Provision for doubtful accounts - - 10,972
Recognition of stock option compensation 62,422 86,954 823,129
Adjustments to reconcile net loss to net
cash
provide by operating activities:
(Increase) decrease in inventories (576,873) 98,597 (1,254,835)
(Increase) decrease in accounts and
note receivable 244,920 (93,837) (26,950)
(Increase) decrease in deferred charges - - (25,931)
(Increase) decrease in other current
assets (125,743) (26,222) (173,543)
Increase (decrease) in accounts payable (306,609) (41,930) 474,090
Increase (decrease) in other accrued
liabilities (18,086) 114,620 350,735
-------------- -------------- --------------
Net cash used by operating activities (2,254,332) (1,596,790) (21,443,213)
-------------- -------------- --------------
Cash flows from investing activities
Purchase of property, plant, and
equipment (127,228) (559,849) (11,573,021)
Acquisition of patents, trademarks, and
licenses (38,763) (6,887) (221,358)
Sale (purchase) of restricted certificate of
deposit 600,000 - -
Stock subscriptions held in escrow - - (20,851)
-------------- -------------- --------------
Net cash used by investing activities 434,009 (566,736) (11,815,230)
-------------- -------------- --------------
Cash flows from financing activities
Borrowings under long-term debt and
notes payable 2,079,851 24,718 5,145,213
Repayments of long-term debt and notes
payable (1,495,546) (148,434) (2,793,376)
Proceeds from issuance of preferred
stock 1,615,000 3,137,000 32,922,000
Proceeds from issuance of common stock - - 1,000
Expenses related to preferred stock offerings (136,514) (748,907)
Collections of notes receivable from
stockholders - - 257,500
Obligation under license agreement - - (500,000)
-------------- -------------- --------------
Net cash provided (used) by financing
activities 2,199,305 2,876,770 34,283,430
-------------- -------------- --------------
Net increase (decrease) in cash 378,982 713,244 1,024,987
Cash and cash equivalents at:
Beginning of period 646,005 1,627,863 -
-------------- -------------- --------------
End of period $ 1,024,987 $ 2,341,107 $ 1,024,987
============== ============== ==============
|
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION
Retractable Technologies, Inc. (the "Company") was incorporated in Texas on May 9, 1994, to design, develop, manufacture and market safety syringes and other safety medical products for the health care profession. The Company began operations in 1995. The Company's manufacturing and administrative facilities are located in Little Elm, Texas. The Company's primary products are the VanishPoint(R) Syringe in the 3cc, 5cc and 10cc sizes and Blood Collection Tube Holders. The Company has conducted preliminary clinical evaluations and worked with national distributors to encourage healthcare facilities to transition from the use of standard syringes to the VanishPoint(R) Syringe. Preliminary shipments, which commenced in February 1997, included syringes for hospital product evaluations as well as for sale in clinics and other healthcare settings. The Company has been considered a development stage enterprise for financial reporting purposes as significant efforts have been devoted to financial planning, raising capital, research and development, acquiring equipment, training personnel, developing markets and starting up production. Coincident with the agreement with Abbott Laboratories (see Note 5), effective May 4, 2000, the Company completed its development stage.
Basis of Presentation
The accompanying condensed financial statements are unaudited and, in the opinion of management, reflect all adjustments that are necessary for a fair presentation of the financial position and results of operations for the periods presented. All of such adjustments are of a normal and recurring nature. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the entire year. The condensed financial statements should be read in conjunction with the financial statement disclosures contained in the Company's audited financial statements for the year ended December 31, 1999.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include unrestricted cash and investments with original maturities of three months or less.
Inventories
Inventories are valued at the lower of cost or market, with cost being determined using a standard cost method, which approximates average cost. Provision is made for any excess or obsolete inventories.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred. Cost includes major expenditures for improvements, and replacements which extend useful lives or increase capacity and interest cost associated with significant capital additions. For the three months ended March 31, 2000 and 1999, the Company capitalized interest of $53,848 and $34,277 respectively. Gains or losses from property disposals are included in income.
Depreciation and amortization is calculated using the straight-line method over the following useful lives:
Production equipment 7 to 10 years Office furniture and equipment 3 to 10 years Building 39 years Building improvements 15 years Automobiles 7 years |
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Long-lived Assets
When events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable, the Company will review the net realizable value of the long-lived assets through an assessment of the estimated future cash flows related to such assets. In the event that assets are found to be carried at amounts which are in excess of estimated gross future cash flows, the assets will be adjusted for impairment to a level commensurate with a discounted cash flow analysis of the underlying assets.
Intangible Assets and Deferred Charges
Intangible assets are stated at cost and consist primarily of patents, a license agreement granting exclusive rights to use patented technology, and trademarks which are amortized using the straight-line method over 17 years. Other intangible assets consist of deferred charges for loan origination fees, which are amortized over the life of the debt (seven years).
Financial Instruments
The fair market value of financial instruments is determined by reference to various market data and other valuation techniques as appropriate. The Company believes that the fair value of financial instruments approximate their recorded values.
Concentrations of Credit Risk
The Company's financial instruments exposed to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivable. Cash balances, which may exceed the federally insured limits, are maintained in financial institutions; however, management believes the institutions are of high credit quality. The majority of accounts receivable are due from companies which are well-established entities. As a consequence, management considers any exposure from concentrations of credit risks to be limited.
Revenue Recognition
Revenue is recognized for sales to distributors when title and risk of ownership passes to the distributor, generally upon shipment. Revenue is recorded on the basis of sales price to distributors. Revenues on sales to distributors for federal or GPO contracts are recorded net of contractual pricing allowances to those end customers. Revenue for shipments directly to end users is recognized when title and risk of ownership passes from the Company.
Income Taxes
The Company provides for deferred income taxes in accordance with Statement of Financial Accounting Standard No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires an asset and liability approach for financial accounting and reporting for income taxes based on the tax effects of differences between the financial statement and tax bases of assets and liabilities, based on enacted rates expected to be in effect when such basis differences reverse in future periods. Deferred tax assets are periodically reviewed for reliability. Valuation allowances are recorded when realizability of deferred tax assets is not likely.
Research and Development Costs
Research and development costs are expensed as incurred.
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Stock-Based Compensation
The Company has adopted the disclosure only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123"), which establishes accounting and reporting standards for stock-based employee compensation plans. As permitted by SFAS 123, the Company has elected not to adopt the fair value based method of accounting for stock-based employees compensation and will account for such arrangements under Accounting Principles Board Opinion No. 25. Accordingly, compensation cost for stock options issued to directors, officers, and employees is measured as the excess, if any, of the fair market value of the Company's stock at the date of grant over the amount the director, officer or employee must pay to acquire the stock. Expense is recognized ratably from the date of grant over the vesting period of the option. Unearned compensation reflected in the Stockholder's Equity section of the balance sheet is the portion of such compensation that has not been charged to operations.
3. LONG TERM DEBT
On February 18, 2000, the Company obtained two new loans from 1/st/ International Bank totaling $2,000,000. Land, building and improvements secured $1,500,000, and the remaining $500,000 is secured by accounts receivable. The proceeds, along with a release of $400,000 of restricted cash by Western Bank subsequent to December 31, 1999, were used to pay off indebtedness to Western Bank. Remaining proceeds provided funds for equipment and operating needs. The building loan matures on February 18, 2005 and the note secured by accounts receivable matures February 18, 2001.
4. STOCKHOLDERS EQUITY
On January 11, 2000, the Company issued a Private Placement Memorandum offering up to 1,300,000 shares of its Series IV Class B Convertible Preferred Stock ("Series IV, Class B Stock") at $10 per share.
As of May 22, 2000, subscriptions for 1,133,800 shares of the Series IV Class B has been received.
Series IV Class B stock ranks senior to the Company's common stock with respect to dividends and upon liquidation, dissolution or winding up, but secondary to the Company's Class A Stock; and Series I Class B, Series II Class B and Series III Class B dividend of $1.00 per share, payable quarterly, if declared by the board of directors.
Holders of Series IV Class Stock generally have no voting rights. Series IV Class B Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $11.00 per share plus all accrued and unpaid dividends. Each share of Series IV Class B Stock may, at the option of the stockholder any time subsequent to three years from date of issuance, be converted into common stock at a conversion price of $10 per share, or in the event the Company files an initial registration statement under the Securities Act of 1933.
In the event of voluntary or involuntary liquidation, dissolution or winding up of the Company, holders of Series IV Class B Stock then outstanding are entitled to receive liquidating distributions of $11.00 per share, plus accrued and unpaid dividends.
5. SUBSEQUENT EVENTS
On May 4, 2000, the Company entered into four agreements with Abbott Laboratories ("Abbott"): 1) National Marketing and Distribution Agreement; 2) Registration Rights Agreement; 3) Credit Agreement and 4) Security Agreement. The National Marketing and Distribution Agreement provides that Abbott will purchase and market the Company's VanishPoint(R)
RETRACTABLE TECHNOLOGIES, INC.
A Development Stage Enterprise
CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
automated retraction syringes and blood collection devices to its U.S. acute care hospital customers. The agreement is for a five year term. The agreement also calls for the establishment of a new product team comprised by key personnel from both companies designed to concentrate on development of new safety products that incorporate the Company's patented, proprietary technology.
The Credit Agreement provides that Abbott will extend to the Company a credit line in the amount of $5 million. Disbursement amounts shall be in multiples of $1 million. Interest accrues at a rate of prime rate plus 1% and is payable quarterly beginning June 30, 2001. The Credit Agreement also provides that Abbott may, at its option, convert the note balance into common stock at a specified conversion price. The loan matures on June 30, 2005. In connection with the Credit Agreement, the Security Agreement grants Abbott a continuing security interest in certain of the Company's assets.
The Registration Rights Agreement gives Abbott certain registration rights if the conversion privilege in the Credit Agreement is exercised.
On April 7, 2000, the Company entered into a manufacturing agreement with an unrelated party to outsource the assembly of its 5cc and 10cc syringes. The agreement calls for the Company to purchase and consign machinery and equipment to the unrelated party and provide training for its employees. The Company is obligated under the agreement to purchase a minimum volume of product from the unrelated party at mutually agreed upon prices. The volume and price for the initial contract year ended April 30, 2001 resulted in a purchase commitment of $100,000 for the Company.
Effective June 1, 2000, the Company entered into a Consulting Agreement ("Agreement") with a Board member, formerly Executive Vice President of Sales and Marketing, who is also related to an employee of the Company. The Agreement is for a one-year term, renewable with consent of both parties, whereby the Board member has agreed to establish contacts with major European entities, approved by the Company, to develop marketing and distribution channels as well as licensing agreements. The Agreement calls for an annual payment of $200,000, payable in equal monthly installments and an expense allowance of up to $5,000 for expenses incurred on behalf of the Company. In the event a licensee contacted by the Board member is signed with the Company, the Board member will receive 5% of licensing fees collected by the Company.
PART III - FORM 10-SB
ITEM 1. INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
2.1 Restated Articles of Incorporation of the Company filed April 13,
2000
2.2 Amended and Restated Bylaws of the Company
3.1 Sample Common Stock certificate
3.2 See 2.1 - Exhibit A to Restated Articles of Incorporation of the
Company filed April 13, 2000 (Certificate of Designation,
Preferences, Rights and Limitations of Series A Convertible
Preferred Stock of the Company)
3.3 Sample Class A Convertible Preferred Stock Certificate
3.4 See 2.1 - See Exhibit B to Restated Articles of Incorporation of
the Company filed April 13, 2000 (Certificate of Designation,
Preferences, Rights, and Limitations of Class B Convertible
Preferred Stock of the Company)
3.5 Sample Series I Class B Convertible Preferred Stock Certificate
3.6 See 2.1 - Exhibit C to Restated Articles of Incorporation of the
Company filed April 13, 2000 (Certificate of Designation,
Preferences, Rights and Limitations of the Series II Class B
Convertible Preferred Stock of the Company)
3.7 Sample Series II Class B Convertible Preferred Stock Certificate
3.8 See 2.1 - Exhibit D to Restated Articles of Incorporation of the
Company filed April 13, 2000 (Certificate of Designation,
Preferences, Rights and Limitations of the Series III Class B
Convertible Preferred Stock of the Company)
3.9 Sample Series III Class B Convertible Preferred Stock Certificate
3.10 See 2.1 - Exhibit E to Restated Articles of Incorporation of the
Company filed April 13, 2000 (Certificate of Designation,
Preferences, Rights and Limitations of the Series IV Class B
Convertible Preferred Stock of the Company)
3.11 Sample Series IV Class B Convertible Preferred Stock Certificate
3.12 The Company's 1999 Stock Option Plan
3.13 1996 Incentive Stock Option Plan of the Company
3.14 1996 Stock Option Plan for Directors and Other Individuals
3.15 Letter Agreement with New Horizons International and Colebrand
Limited dated March 30, 2000
3.16 See 6.1 - National Marketing and Distribution Agreement between the
Company and Abbott Laboratories dated as of May 4, 2000 and
Registration Rights Agreement between the Company and Abbott
Laboratories dated as of May 4, 2000
3.17 Form of Southwest Merchant Group Warrant to Purchase 7,500 shares
of Series IV Class B Preferred Stock to be issued
3.18 Selling Agreement between the Company and Northstar dated March 1,
2000
|
3.19 Selling Agreement between the Company and Asset Allocations
Securities Corp. dated March 9, 2000
6.1 National Marketing and Distribution Agreement between the Company
and Abbott Laboratories dated as of May 4, 2000 with exhibits
6.2 Contract Manufacturing Agreement Between the Company and Nypro
Precision Assemblies, Inc. dated as of April 7, 2000
6.3 Sample United States Distribution Agreement
6.4 Sample Foreign Distribution Agreement
6.5 Consulting Agreement between the Company and Lillian E. Salerno
dba/MediTrade International dated May 27, 2000
6.6 Employment Agreement between the Company and Thomas J. Shaw dated
as of September 28, 1999
6.7 Technology License Agreement between Thomas J. Shaw and the Company
dated the 23rd day of June 1995
6.8 Consulting Agreement by and between the Company and International
Export and Consulting dated March 15, 2000
12.1 Consent of Independent Accountants dated June 23, 2000
27 Financial Data Schedule
ITEM 2. DESCRIPTION OF EXHIBITS
|
Exhibits identified in the Index above are bound and included herewith.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, Retractable Technologies, Inc. caused this registration statement to be signed on its behalf by the undersigned thereunto duly authorized.
Date: June 23, 2000 RETRACTABLE TECHNOLOGIES, INC.
(Registrant)
BY: /s/ Thomas S. Shaw
------------------------------------
THOMAS J. SHAW
CHAIRMAN, PRESIDENT, AND CHIEF
EXECUTIVE OFFICER
|
EXHIBIT 2.1
RESTATED ARTICLES OF INCORPORATION
OF
RETRACTABLE TECHNOLOGIES, INC.
Pursuant to the provisions of Article 4.07 of the Texas Business Corporation Act, Retractable Technologies, Inc. (hereinafter called the "Corporation") hereby adopts the following amendments and restates the Articles of Incorporation of the Corporation as previously amended and as further amended by these Restated Articles of Incorporation of the Corporation as follows:
The name of the Corporation is Retractable Technologies, Inc.
The following amendment to the Articles of Incorporation was adopted by the Board of Directors of the Corporation and by the shareholders of the Corporation effective as of February 8, 2000, for the purpose of changing the corporate purpose. The Amendment alters Article III of the original Articles of Incorporation filed on May 9, 1994, and the full text of Article III, as hereby amended, is as follows:
The purpose for which the Corporation is organized is the transaction of any or all lawful business for which corporations may be incorporated under the Texas Business Corporation Act.
The following amendment to the Articles of Incorporation was adopted by the
Board of Directors of the Corporation and by the shareholders of the Corporation
effective as of February 8, 2000, for the purpose of changing the number of
authorized shares of Common Stock of the Corporation from 40,000,000 shares to
100,000,000 shares. The Amendment alters Section 4.01 of Article IV of the
original Articles of Incorporation as amended by that certain Articles of
Correction of the Corporation filed on July 29, 1998, and the full text of
Section 4.01 of Article IV, as hereby amended, is as follows:
The aggregate number of shares which the Corporation shall have the authority to issue is 100,000,000 shares of Common Stock, no par value, 5,000,000 shares of Preferred Stock Class A with a par value of One
Dollar ($1.00) per share, and 5,000,000 shares of Preferred Stock Class B with a par value of One Dollar ($1.00) per share.
The following amendment to the Articles of Incorporation was adopted by the Board of Directors of the Corporation and by the shareholders of the Corporation effective as of February 8, 2000, for the purpose of clarifying how vacancies by directors are filled for vacancies of directors appointed pursuant to dividend default voting rights as well as generally elected directors. The Amendment alters Section (c) of Article X of the original Articles of Incorporation as amended by that certain Articles of Amendment of the Corporation filed July 29, 1998, and the full text of Section (c) of Article X, as hereby amended, is as follows:
(c) Newly Created Directorships and Vacancies. Vacancies of generally elected directors may be filled by a majority vote of the remaining generally elected directors, though less than a quorum, or by a sole remaining generally elected Director. Vacancies of directors elected pursuant to a dividend default election by preferred shareholders shall be filled by the remaining directors so elected or by a sole remaining director elected by such shareholders, if any. In the event that no directors elected pursuant to a dividend default election remain, the vacancy may be filled by a vote of those shareholders that originally elected the director whose office is vacant.
The following amendment to the Articles of Incorporation was adopted by the
Board of Directors of the Corporation and by the shareholders of the Corporation
effective as of February 8, 2000, for the purpose of changing the definition of
cause for removal of a director from proof beyond a reasonable doubt to proof
and to clarify how the removal process applies to directors elected pursuant to
a dividend default election. The Amendment alters Section (d) of Article X of
the original Articles of Incorporation as amended by that certain Articles of
Amendment of the Corporation filed July 29, 1998, and the full text of Section
(d) of Article X, as hereby amended, is as follows:
(d) Removal. Any director, or the entire Board of Directors, may be removed from office at any annual or special meeting called for such purpose and then only for cause and only by the affirmative vote of the holders of 66-2/3% or more of the voting power of all of the shares of the Corporation entitled to vote in the election of such Director(s) being removed. As used herein, cause shall mean only the following: proof that a director has been convicted of a felony, committed a grossly negligent or willful misconduct resulting in a material detriment to the Corpo-
oration, or committed a material breach of his or her fiduciary duty to the Corporation resulting in a material detriment to the Corporation.
The following amendment to the Articles of Incorporation was adopted by the
Board of Directors of the Corporation and by the shareholders of the Corporation
effective as of February 8, 2000, for the purpose of clarifying that the
language limiting the method by which a special meeting may be called only
applies to special meetings called for the purpose of amending Article X of the
Articles of Incorporation or related provisions of the Amended and Restated
Bylaws of the Corporation. The Amendment alters Section (f) of Article X of the
original Articles of Incorporation as amended by that certain Articles of
Amendment of the Corporation filed July 29, 1998, and the full text of Section
(f) of Article X, as hereby amended, is as follows:
(f) Call of Special Meeting to Alter Article X. Notwithstanding anything contained in these Articles of Incorporation to the contrary, the affirmative vote of the holders of 66-2/3% or more of the voting power of all the shares of the Corporation entitled to vote in the election of directors, voting together as a single class, shall be required to call a special meeting of the shareholders in order to alter, amend, adopt any provision inconsistent with or repeal this Article X, or to alter, amend, or adopt any provision inconsistent with comparable sections of the Amended and Restated Bylaws.
The following amendment to the Articles of Incorporation was adopted by the Board of Directors of the Corporation and by the shareholders of the Corporation effective as of February 8, 2000, for the purpose of denying preemptive rights. The Amendment is an addition to the Articles of Incorporation as Article XII. The full text of Article XII is as follows:
No holder of any shares of the Corporation shall have any preemptive right to subscribe or acquire any additional, unissued or treasury shares of the Corporation or any securities of the Corporation which are convertible into or which carry a right to subscribe for or acquire shares of the Corporation.
Each amendment made by these Restated Articles of Incorporation, which amendments are set forth in Articles II through VII above, has been effected in conformity with the provisions of the Texas Business Corporation Act.
This Restatement of the Articles of Incorporation of the Corporation accurately copies the Articles of Incorporation and all amendments thereto that are in effect to date and as further amended by these Restated Articles of Incorporation of the Corporation and there are no other changes in any provision thereof except that the number of directors now constituting the Board of Directors and the names and addresses of the persons now serving as directors have been inserted in lieu of similar information concerning the initial Board of Directors and the names and addresses of each incorporator has been omitted pursuant to Article 4.07 of the Texas Business Corporation Act.
The Articles of Incorporation of the Corporation as amended and supplemented by all certificates of amendment previously issued by the Secretary of State and as further amended by these Restated Articles of Incorporation of the Corporation is hereby restated in its entirety as follows:
ARTICLES OF INCORPORATION
OF
RETRACTABLE TECHNOLOGIES, INC.
I, the undersigned natural person of the age of eighteen (18) years or more, acting as an Incorporator of a corporation under the Texas Business Corporation Act, do hereby adopt the following Articles of Incorporation for such Corporation:
ARTICLE I.
The name of the Corporation is Retractable Technologies, Inc.
ARTICLE II.
The period of its duration is perpetual.
ARTICLE III
The purpose for which the Corporation is organized is the transaction of any or all lawful business for which corporations may be incorporated under the Texas Business Corporation Act.
ARTICLE IV
4.01 The aggregate number of shares which the Corporation shall have the authority to issue is 100,000,000 shares of Common Stock, no par value, 5,000,000 shares of Preferred Stock Class A with a par value of One Dollar ($1.00) per share and 5,000,000 shares of Preferred Stock Class B with a par value of One Dollar ($1.00) per share.
4.02 The Corporation is authorized to issue three classes of stock, one designated as Common Stock, no par value, one designated as Preferred Stock Class A, par value One Dollar ($1.00) per share, and one designated as Preferred Stock Class B, par value One Dollar ($1.00) per share, each as described in this Article IV above. Provided, however, that none of the shares of Preferred Stock of either class shall carry any voting rights for the election of Directors or for any other matters, except where specifically designated or required by the applicable provisions of the Texas Business Corporation Act.
4.03 The Directors shall have the authority to divide each class of the Preferred Stock into series and to set the relative rights and preferences as to and between series, including dividends, issuance of Preferred Stock, redemption of such shares and the conversion of any shares of Preferred Stock to other or common shares. Prior to the issuance of any Preferred Stock of a series established by resolution adopted by the Directors, the Corporation shall file with the Secretary of State the notice required by Article 2.13 of the Texas business Corporation Act.
4.04 The relative rights and preferences of the shares of Preferred Stock
Class A are set forth in the Certificate of Designation, Preferences,
Rights, and Limitations of Series A Convertible Preferred Stock of
the Corporation filed on October 13, 1995, which certificate is
attached hereto and incorporated herein for all purposes as Exhibit
A.
4.05 The relative rights and preferences of the shares of the Series I Preferred Stock Class B are set forth in the Certificate of Designation, Preferences, Rights, and Limitations of Class B Convertible Preferred Stock of the Corporation filed on May 11, 1996, which certificate is attached hereto and incorporated herein for all purposes as Exhibit B.
4.06 The relative rights and preferences of the shares of the Series II Preferred Stock Class B are set forth in the Certificate of Designation, Preferences, Rights, and Limitations of Series II Class B Convertible Preferred Stock of the Corporation filed on May 27, 1997, which certifi-
cate is attached hereto and incorporated herein for all purposes as Exhibit C.
4.07 The relative rights and preferences of the shares of the Series III Preferred Stock Class B are set forth in the Certificate of Designation, Preferences, Rights, and Limitations of Series III Class B Convertible Preferred Stock of the Corporation filed on July 29, 1998, which certificate is attached hereto and incorporated herein for all purposes as Exhibit D.
4.08 The relative rights and preferences of the shares of the Series IV Preferred Stock Class B are set forth in the Certificate of Designation, Preferences, Rights, and Limitations of Series IV Class B Convertible Preferred Stock of the Corporation filed on January 24, 2000, which certificate is attached hereto and incorporated herein for all purposes as Exhibit E.
ARTICLE V
The Corporation will not commence business until it has received, for the issuance of its shares, consideration of the value of One Thousand Dollars ($1,000.00), consisting of money, labor done, or property actually received. The manner in which any exchange, reclassification, cancellation of issued shares is as follows: The present holder of 1,000 shares of no par value common stock may exchange such shares for 14,000,000 shares of no par value Common Stock.
ARTICLE VI
Cumulative voting is expressly prohibited.
ARTICLE VII
The street address of its registered office is 511 Lobo Lane, P.O. Box 9, Little Elm, Texas 75068-0009 and the name of its registered agent is Lillian E. Salerno.
ARTICLE VIII
The Directors of the Corporation shall be not less than three (3) nor more than twenty-one (21) in number and the name and address of the directors who are to serve until the annual meeting of year indicated or until their successors are elected and qualified or until their term is terminated are as follows:
Director Address Term expires
-----------------------------------------------------------------
Thomas J. Shaw 511 Lobo Lane 2000
PO Box 9
Little Elm, TX 75068-0009
Steve Wisner 511 Lobo Lane 2000
PO Box 9
Little Elm, TX 75068-0009
Lillian E Salerno 511 Lobo Lane 2000
PO Box 9
Little Elm, TX 75068-0009
Douglas W. Cowan 511 Lobo Lane 2000
PO Box 9
Little Elm, TX 75068-0009
Jimmie Shiu 511 Lobo Lane 2000*
PO Box 9
Little Elm, TX 75068-0009
Clarence Zierhut 511 Lobo Lane 2002
PO Box 9
Little Elm, TX 75068-0009
John H. Wilson, III 511 Lobo Lane 2000*
PO Box 9
Little Elm, TX 75068-0009
F. John Deuschle, III 511 Lobo Lane 2000*
PO Box 9
Little Elm, TX 75068-0009
|
ARTICLE IX
The name and address of the incorporator is intentionally omitted.
ARTICLE X
Corporate Governance
a) Number, Election, and Terms of Directors. The business and affairs of the Corporation shall be managed by a Board of Directors, which, subject to the rights of holders of shares of any class of series of Preferred Stock of the Corporation then outstanding to elect additional directors under specified circumstances, shall consist of not less than three nor more than twenty-one persons.
The exact number of directors within the minimum and maximum limitations specified in the preceding sentence shall be fixed from time to time by either (i) the Board of Directors pursuant to a resolution adopted by the majority of the entire Board of Directors, or (ii) the affirmative vote of the holders of 66-2/3% or more of the voting power of all of the shares of the Corporation entitled to vote generally in the election of directors voting together as a single class. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. The directors shall be divided into two classes as nearly equal in number as possible, with the term of office of the first class to expire at the 1998 annual meeting of stockholders, and the term of office of the second class to expire at the 2000 annual meeting of stockholders, and with the members of each class to hold office until their successors shall have been elected and qualified. At each annual meeting of stockholders following such initial classification and election, directors elected to succeed those directors shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election.
b) Stockholder Nomination of Director Candidates. Advance notice of stockholder nominations for the election of directors shall be submitted to the Board of Directors at least 60 days in advance of the scheduled date for the next annual meeting of stockholders.
c) Newly Created Directorships and Vacancies. Vacancies of generally elected directors may be filled by a majority vote of the remaining generally elected directors, though less than a quorum, or by a sole remaining generally elected director. Vacancies of directors elected pursuant to a dividend default election by preferred shareholders shall be filled by the remaining directors so elected or by a sole remaining director elected by such shareholders, if any. In the event that no directors elected pursuant to a dividend default election remain, the vacancy may be filled by a vote of those shareholders that originally elected the director whose office is vacant.
d) Removal. Any director, or the entire Board of Directors, may be removed from office at any annual or special meeting called for such purpose, and then only for cause and only by the affirmative vote of the holders of 66-2/3% or more of the voting power of all of the shares of the Corporation entitled to vote in the election of such director(s) being removed. As used herein, cause shall
mean only the following: proof that a director has been convicted of a felony, committed a grossly negligent or willful misconduct resulting in a material detriment to the Corporation, or committed a material breach of his or her fiduciary duty to the Corporation resulting in a material detriment to the Corporation.
e) Amendment, Repeal, etc. Notwithstanding anything contained in these Articles of Incorporation to the contrary and subject to the rights of the holders of any Preferred Stock outstanding, the affirmative vote of the holders of 66-2/3% or more of the voting power of all of the shares of the Corporation entitled to vote in the election of Directors, voting together as a single class, shall be required to alter, amend, or adopt any provision inconsistent with or repeal this Article X or to alter, amend, adopt any provision inconsistent with or repeal comparable sections of the Amended and Restated Bylaws of the Corporation.
f) Call of Special Meeting to Alter Article X. Notwithstanding anything contained in these Articles of Incorporation to the contrary, the affirmative vote of the holders of 66-2/3% or more of the voting power of all of the shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to call a special meeting of the shareholders in order to alter, amend, adopt any provision inconsistent with or repeal this Article X, or to alter, amend, or adopt any provision inconsistent with comparable sections of the Amended and Restated Bylaws.
ARTICLE XI
The Board of Directors is hereby authorized to create and issue, whether or not in connection with the issuance and sale of any of its stock or other securities, rights (the "Rights") entitling the holders thereof to purchase from the Corporation shares of capital stock or other securities. The times at which and the terms upon which the Rights are to be issued will be determined by the Board of Directors and set forth in the contracts or instruments that evidence the Rights. The authority of the Board of Directors with respect to the Rights shall include, but not be limited to, determination of the following:
a) The initial purchase price per share of the capital stock or other securities of the Corporation to be purchased upon exercise of the Rights.
b) Provisions relating to the times at which and the circumstances under which the Rights may be exercised or sold or otherwise transferred, either together with or separately from, any other securities of the Corporation.
c) Provisions that adjust the number or exercise price of the Rights or amount or nature of the securities or other property receivable upon exercise of the Rights in the event of a combination, split, or recapitalization of any capital stock of the Corporation, a change in ownership of the Corporation's securities, or a reorganization, merger, consolidation, sale of assets, or other occurrence relating to the Corporation or any capital stock of the Corporation, and provisions restricting the ability of the Corporation to enter into any such transaction absent an assumption by the other party or parties thereto of the obligations of the Corporation under such Rights.
d) Provisions that deny the holder of a specified percentage of the outstanding securities of the Corporation the right to exercise the Rights and/or cause the Rights held by such holder to become void.
e) Provisions that permit the Corporation to redeem the Rights.
f) The appointment of a Rights agent with respect to the Rights.
ARTICLE XII
No holder of any shares of the Corporation shall have any preemptive right to subscribe or acquire any additional, unissued or treasury shares of the Corporation or any securities of the Corporation which are convertible into or which carry a right to subscribe for or acquire shares of the Corporation.
ARTICLE XI
The number of shares of the Corporation that were issued and outstanding and entitled to vote at the time of the adoption of the amendments was fourteen million (14,000,000) shares of Common Stock having no par value per share.
ARTICLE XII
The holders of all the shares of the Corporation that were issued and outstanding and entitled to vote on the amendments have signed a consent in writing adopting the amendments.
IN WITNESS WHEREOF, Thomas J. Shaw has executed these Restated Articles of Incorporation of Retractable Technologies, Inc. effective as of the 8th day of February, 2000.
RETRACTABLE TECHNOLOGIES, INC.
BY: /s/ Thomas J. Shaw ----------------------------- THOMAS J. SHAW PRESIDENT |
CERTIFICATE OF DESIGNATION, PREFERENCES
RIGHTS AND LIMITATIONS OF SERIES A
CONVERTIBLE PREFERRED STOCK
OF
RETRACTABLE TECHNOLOGIES, INC.
Pursuant to Article 2.13 of the Texas Business Corporation Act and Article Five of its Articles of Incorporation, Retractable Technologies, Inc., a corporation organized and existing under the laws of the State of Texas (the Corporation),
DOES HEREBY CERTIFY that pursuant to the authority conferred upon the Board of Directors of the Corporation by the Articles of Incorporation, as amended, and pursuant to Article 2.13 of the Texas Business Corporation Act, said Board of Directors, by unanimous written consent executed May 10, 1995, adopted a resolution providing for the creation of a series of Preferred Stock consisting of not more than five million (5,000,000) shares of Class A Convertible Preferred Stock, which resolution is and reads as follows:
RESOLVED that, pursuant to the authority provided in the Corporation's Articles of Incorporation and expressly granted to and vested in the Board of Directors of Retractable Technologies, Inc. (the "Corporation"), the Board of Directors hereby creates out of the Class A Preferred Stock, par value one dollar per share, of the Corporation a series of Series A Preferred Stock consisting of not more than five million (5,000,000) shares, and the Board of Directors hereby fixes the designation and the powers, preference and rights, and the qualifications, limitations and restrictions thereof, to the extent not otherwise provided in the Corporation's qualifications, limitations and restrictions thereof, to the extent not otherwise provided in the Corporation's Articles of Incorporation, as follows:
EXHIBIT A
date which a dividend may be declared is hereafter called the "Dividend Date," and each quarterly period ending with a Dividend Date is hereinafter referred to as the "Dividend Period." Dividends shall be payable fifteen calendar days after the Dividend Due Date, provided however, that if such date on which a dividend is payable is a Saturday, Sunday or legal holiday, such dividend shall be payable on the next following business day to the holders of record (whether singular or plural, the "Holder").
up, or (B) purchased or otherwise acquired for any consideration by the Corporation except (1) pursuant to an acquisition made pursuant to the terms of one or more offers to purchase all of the outstanding shares of the Series A Preferred Stock, which offers shall each have been accepted by the holders of at least 50% of the shares of the Series A Preferred Stock receiving such offer outstanding at the commencement of the first of such purchase offers, or (2) by conversion into or exchange for stock of the Corporation ranking junior to the Series A Preferred Stock as to dividends and upon liquidation, dissolution or winding up.
So long as any shares of Series A Preferred Stock remain outstanding, the consent of the holders of at least fifty-one (51%) percent of the shares of Series A Preferred Stock outstanding at the time voting separately as a class, given in person or by proxy, either in writing at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:
(i) The authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock (including any class or series of Preferred Stock) ranking equal or prior (as the terms are hereinafter defined in this Section 3) to the Series A Preferred Stock; or
(ii) The amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Articles of Incorporation or of this resolution which would alter or change the powers, preferences or special rights of the shares of the Series A Preferred Stock so as to affect them adversely; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred Stock ranking junior to the Series A Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to adversely affect such powers, preferences or special rights.
The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series A Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.
Preferred Stock shall have the exclusive right (voting separately as a class) to elect one-third of the Board of Directors of the Corporation at the Corporation's next annual meeting of stockholders (to serve until the next annual meeting of stockholders, and until their successors are duly elected and qualified) and at each subsequent annual meeting of stockholders so long as such arrearage shall continue, and the Common Stock voting separately as a class, shall be entitled to elect the remainder of the Board of Directors of the Corporation. At elections for such directors, each holder of Series A Preferred Stock shall be entitled to one vote for each share of Preferred Stock held. The right of the holders of Series A Preferred Stock, voting separately as a class, to elect members of the Board of Directors of the Corporation as aforesaid shall continue until such time as all dividends accumulated on the Series A Preferred Stock shall have been paid in full, at which time such right shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned.
Directors elected by the holders of Series A Preferred Stock shall continue to serve as such directors until such time as all dividends accumulated on the Series A Preferred Stock shall have been paid in full, at which time the term of office of all persons elected as directors by the holders of shares of Series A Preferred Stock shall forthwith terminate. In the case of any vacancy in the office of a director occurring among the directors elected by the holder of a class (with the Series A Preferred Stock and Common Stock being treated as separate classes) of stock, the remaining directors so elected by that class may by affirmative vote of a majority thereof (or the remaining director so elected if there be but one) elect a successor or successors to hold office for the unexpired term of the director or directors whose place or places shall be vacant. Any director who shall have been elected by the holders of a class of stock or by any directors so elected as provided in the next preceding sentence hereof may be removed during the aforesaid term of office, either for or without cause, by, and only by, the affirmative vote of the holders of a majority of the shares of the class of stock who elected such director or directors, given either at a special meeting of such shareholders duly called for that purpose or pursuant to a written consent of shareholders, and any vacancy thereby created may be filled by the holders of that class of stock represented at such meeting or pursuant to such written consent. Whenever the term of office of the directors elected by the holders of Series A Preferred Stock voting as a class shall end and the special voting powers vested in the holders of Series A Preferred Stock voting as a class shall end and the special voting powers vested in the holders of Series A Preferred Stock as provided in this Section 4 shall have expired, the number of directors shall be such number as may be provided for in the Articles of Incorporation or Bylaws irrespective of any increase made pursuant to the provisions of this Section 4.
on a record date for the payment of a dividend on the Series A Preferred Stock to receive the dividend due on such shares of Series A Preferred Stock on the corresponding Dividend Due Date.)
No sinking fund shall be established for the Series A Preferred Stock.
Notice of any proposed redemption of shares of Series A Preferred Stock shall be mailed by means of first class mail, postage paid, addressed to the holders of record of the shares of Series A Preferred Stock to be redeemed, at their respective addresses then appearing on the books of the Corporation, at least thirty (30) but not more than sixty (60) days prior to the date fixed for such redemption (herein referred to as the "Redemption Date"). Each such notice shall specify (i) the Redemption Date; (ii) the Redemption Price; (iii) the place for payment and for delivering the stock certificate(s) and transfer instrument(s) in order to collect the Redemption Price; (iv) the shares of Series A Preferred Stock to be redeemed; and (v) the then effective Conversion Price (as defined below) and that the right of holders of shares of Series A Preferred Stock being redeemed to exercise their conversion right shall terminate as to such shares at the close of business on the fifth day before the Redemption Date (provided that no default by the Corporation in the payment of the applicable Redemption Price (including any accrued and unpaid dividends) shall have occurred and be continuing). Any notice mailed in such manner shall be conclusively deemed to have been duly given whether or not such notice is in fact received. If less than all the outstanding shares of Series A Preferred Stock are to be redeemed, the Corporation will select those to be redeemed by lot or by a substantially equivalent method. In order to facilitate the redemption of Series A Preferred Stock to be redeemed, which shall not be more than sixty (60) days prior to the Redemption Date with respect thereto.
The holder of any shares of Series A Preferred Stock redeemed upon any exercise of the Corporation's redemption right shall not be entitled to receive payment of the Redemption Price for such shares until such holder shall cause to be delivered to the place specified in the notice given with respect to such redemption (i) the certificate(s) representing such shares of Series A Preferred Stock; and (ii) transfer instrument(s) satisfactory to the Corporation and sufficient to transfer such shares of Series A Preferred Stock to the Corporation free of any adverse interest. No interest shall accrue on the Redemption Price of any share of Series A Preferred Stock after its Redemption Date.
Subject to Section 2 hereof, the Corporation shall have the right to purchase shares of Series A Preferred Stock from the owner of such shares on such terms as may be agreeable to such owner. Shares of Series A Preferred Stock may be acquired by the Corporation from any stockholder pursuant to this paragraph without offering any other stockholder an equal opportunity to sell his stock to the Corporation, and no purchase by the Corporation from any stockholder pursuant to this paragraph shall be deemed to create any right on the part of any stockholder to sell any shares of Series A Preferred Stock (or any other stock) to the Corporation.
Notwithstanding the foregoing provisions of this Section 5, and subject to the provisions of Section 2 hereof, if a dividend upon any shares of Series A Preferred Stock is past due, (i) no shares of the Series A Preferred Stock may be redeemed, except (A) by means of a redemption pursuant to which all outstanding shares of the Series A Preferred Stock are simultaneously redeemed (or offered to be so redeemed) or pursuant to which the outstanding shares of the Series A Preferred Stock are redeemed on a pro rata basis (or offered to be so redeemed), or (B) by conversion of shares of Series A Preferred Stock into, or exchange of such shares for, Common Stock or any other stock of the Corporation ranking junior to the Series A Preferred Stock as to dividends and upon liquidation, dissolution or winding up.
If upon any Liquidation of the Corporation, the assets available for distribution to the holder of Series A Preferred Stock which shall then be outstanding (hereinafter in this paragraph called the "Total Amount Available") shall be insufficient to pay the holders of all outstanding shares of Series A Preferred Stock the full amounts (including all dividends accrued and unpaid) to which they shall be entitled by reason of such Liquidation of the Corporation, then there shall be paid ratably to the holders of the Series A Preferred Stock in connection with such Liquidation of the Corporation, an amount equal to each holder's pro rata share of the Total Amount Available.
The voluntary sale, conveyance, lease, exchange or transfer of all or substantially all the property or assets of the Corporation, or the merger or consolidation of the Corporation into the Corporation, or any purchase or redemption of some or all of the shares of any class or series of stock of the Corporation, shall not be deemed to be a Liquidation of the Corporation for the purposes of this Section 6 (unless in connection therewith the Liquidation of the Corporation is specifically approved).
date fixed for such redemption; or (ii) the date fixed for such exchange, provided that the Corporation has set aside funds sufficient to effect such redemption to convert such share into that number of fully paid and non- assessable shares of Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing $1.00 by the Conversion Rate then in effect.
The Corporation shall, as soon as practicable after receipt of such written notice and the proper surrender to the Corporation of the certificate or certificates representing shares of Series A Preferred Stock to be converted in accordance with the above provisions, issue and deliver for the benefit of the Holder at the office of the Corporation's duly appointed transfer agent (the "Transfer Agent") to the Holder for whose account such shares of Series A Preferred Stock were so surrendered or to such Holder's nominee or nominees, certificates for the number of shares of Common Stock to which the Holder shall be entitled. The certificates of Common Stock of the Corporation issued upon conversion shall bear such legends as may be required by state or federal laws. Such conversion shall be deemed to have been effective immediately prior to the close of business on the date on which the Corporation shall have received both such written notice and the properly surrendered certificates for shares of Series A Preferred Stock to be converted (the "Conversion Date"), and at such time the rights of the Holder shall cease and the person or persons entitled to receive the shares of Common Stock issuable upon the conversion of such shares of Series A Preferred Stock shall be deemed to be, and shall be treated for all purposes as, the record Holder or Holders of such Common Stock on the Conversion Date. The Corporation shall not be required to convert, and no surrender of shares of Series A Preferred Stock or written notice of conversion with respect thereto shall be effected for that purpose, while the stock transfer books of the Corporation are closed for any reasonable business purpose for any reasonable period of time, but the proper surrender of shares of Series A Preferred Stock for conversion immediately upon the reopening of such books. During the period in which the stock transfer books of the Corporation are closed, the Corporation may neither declare a dividend, declare a record date for payment of dividends nor make any payment of dividends.
(i) While any shares of Series A Preferred Stock shall be outstanding, in case the Corporation shall subdivide the outstanding shares of Common Stock into a greater number of shares of Common Stock or combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, or issue, by reclassification of its shares of Common Stock, any shares of the Corporation, the Conversion Rate in effect immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the number of shares which it would have owned or been entitled to receive after the happening of any of the events described above, had such shares of Series A Preferred Stock been converted immediately prior to the happening of such event, such adjustment to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination or reclassification, as the case may be, becomes effective.
(ii) In case the Corporation shall be consolidated with, or merge into, any other corporation, and the Corporation does not survive, proper provisions shall be made as a part of the terms of such consolidation or merger, whereby the Holder shall thereafter be entitled, upon exercise of such Holder's conversion rights, to receive the kind and amount of shares of stock or other securities of the Corporation resulting from such consolidation or merger, or such other property, as the Holder would have received if such conversion rights were exercised immediately prior to the effectiveness of such merger of consolidation.
(iii) In the event the Corporation at any time, or from time to time after June 15, 1995 makes or issues, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock or Common Stock Equivalents (as defined herein) which does not provide for the payment of any consideration upon the issuance, conversion or exercise thereof, without a corresponding dividend or other distribution to the Holder, based upon the number of shares of Common Stock into which the Series A Preferred Stock is convertible, then and in each such event the Conversion Rate then in effect will be increased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying such Conversion Rate by a fraction:
(A) The number of which will be the total number of shares of Common Stock issues and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution (which, in the case of Common Stock Equivalents, shall mean the maximum number of shares of Common Stock issuable with respect thereto, as set forth in the instrument relative thereto without regard to any provision for subsequent adjustment); and
(B) The denominator of which will be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date;
provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Rate will be recomputed accordingly as of the close of business on such record date, and thereafter such Conversion Rate will be adjusted pursuant to this subparagraph (iii) as of the time of actual payment of such dividends of distributions.
(iv) In the event the Corporation at any time or from time to time after June 15, 1995 makes or issues, or fixes a record date for the determination of holders of
Common Stock entitled to receive a dividend or other distribution payable to all holders of Common Stock in securities of the Corporation Stock Equivalents, then, upon making such dividend or distribution provisions will be made so that the Holder will receive the amount of securities of the Corporation which it would have received had its Series A Preferred Stock been converted into Common Stock on the date of such event.
(v) In the event the Corporation sells or issues any Common Stock, or sells or issues Common Stock Equivalents which can be converted into Common Stock at a per share consideration (as defined below in this subparagraph (v) of paragraph 7(B) less than the Stipulated Price then in effect, then the Holder shall be entitled to purchase from the Corporation in cash (for the same per share consideration at which such Common Stock was issued or the per share price at which a share of Common Stock is acquirable upon exercise or conversion of Common Stock Equivalents) that additional number of shares of Common Stock which, when added to the number of shares of Common Stock acquirable by the Holder upon conversion of any shares of Series A Preferred Stock outstanding and held by such Holder immediately before such issue or sale (the "Acquirable Shares"), will equal a percentage of the number of shares of Common Stock Deemed Outstanding (as defined herein) immediately after such sale or issuance that is the same as the percentage of the number of shares of Common Stock Deemed Outstanding immediately before such issuance or sale represented by the Acquirable Shares. This right shall exist for a forty-five-day period following the sale or issuance of shares of Common Stock or Common Stock Equivalents, and thereafter shall cease to exist.
For the above purposes, the per share consideration with respect to the sale or issuance of Common Stock will be the price per share received by the Corporation, prior to the payment of any expenses, commissions, discounts and other applicable costs. With respect to the sale or issuance of Common Stock Equivalents which are convertible into or exchangeable for Common Stock without further consider, the per share consideration will be determined by dividing the maximum number of shares of Common Stock issuable with respect to such Common Stock Equivalents (as set forth in the instrument relating thereto without regard to any provisions contained therein for subsequent adjustment of such number) into the aggregate consideration receivable by the Corporation upon the sale or issuance of such Common Stock Equivalents. With respect to the issuance of other Common Stock Equivalents, the per share consideration will be determined by dividing the maximum number of shares of Common Stock issuable with respect to such Common Stock Equivalents into the total aggregate consideration received by the Corporation upon the sale or issuance of such Common Stock Equivalents plus the minimum aggregate amount of additional consideration received by the Corporation upon the conversion or exercise of such Common Stock Equivalents. In connection with the sale or issuance of Common
Stock and/or Common Stock Equivalents for non-cash consideration, the amount of consideration will be the fair market value of such consideration as determined in good faith by the Board of Directors of the Corporation.
(vi) As used herein, the term "Stipulated Price" means initial price of $1.00 per share of Common Stock, as adjusted from time to time pursuant to subparagraph (viii) of this paragraph 7(f); and the term "Common Stock Equivalent" means any securities (whether debt or equity securities) or rights issued by the Corporation convertible into or entitling the holder thereof to receive shares of, or securities convertible into, Common Stock. The number of shares of "Common Stock Deemed Outstanding" at any date shall equal the sum of the number of shares of Common Stock then outstanding plus the number of shares of Common Stock then obtainable pursuant to Common Stock Equivalents.
(vii) In the event the Corporation declares any dividend or distribution payable to holders of its Common Stock (other than dividends payable out of the Corporation's retained earnings or earned surplus and dividends payable in shares of Common Stock or in securities convertible into or exchangeable for shares of Common Stock or rights or warrants to purchase Common Stock or securities convertible into or exchangeable for shares of Common Stock or any other securities issued by the Corporation), the Conversion Rate in effect immediately prior to the record date for such dividend or distribution shall be proportionately adjusted so that the Holder shall be entitled to receive the number of shares of Common Stock into which such shares of Common Stock or Preferred Stock was convertible immediately prior to such record date multiplied by a fraction, the numerator of which is the fair market value of a share of Common Stock on such record date and the denominator of which is such per share fair market value of a share of Common Stock on such record date less the fair market value on such record date of the securities or other property which are distributed as a dividend or other distribution. The term "fair market value" of a share of Common Stock or of any other security or other type of property on any date means (A) in the case of Common Stock or any other security (I) if the principal trading market for such Common Stock of other security is an exchange or the NASDAQ national market on such date, the closing price on such exchange or the NASDAQ national market on such date, provided, if trading of such Common Stock or other security is listed on any consolidated tape, the fair market value shall be the closing price set forth on such consolidated tape on such date, or (II) if the principal market for such Common Stock or other security is the over-the- counter market (other than the NASDAQ national market) the mean between the closing bid and asked prices on such date as set forth by NASDAQ or (B) in the case of Common Stock or any other security for which the fair market value cannot be determined pursuant to clause (A) above or of any other security or type of property, fair market value thereof on such date as determined in good faith by the Board of Directors.
(viii) Whenever the Conversion Rate is adjusted pursuant to this paragraph (7)(f), the Stipulated Price shall also be adjusted by multiplying it by a fraction that is the reciprocal of the fraction used to adjust the Conversion Rate.
(ix) The Corporation will not, by amendment of its Articles of Incorporation or through any dissolution, issuance or sale of securities 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 at all times in good faith will assist in the carrying out of all the provisions of this paragraph and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Holder against impairment.
(x) No adjustment in the Conversion Rate shall be required, unless such adjustment would require an increase or decrease of at least one (1) share of Common Stock in the Conversion Rate of one share of Series A Preferred Stock, provided that all adjustments which do not meet this minimum requirement shall be cumulated and the adjustment will be made when the cumulated total is sufficient to require an adjustment. All calculations made pursuant to this subparagraph (x) of paragraph (7)(f) shall be made to the nearest one hundredth (1/100th) of a share of Common Stock.
(other than a registration Statement pertaining to securities issuable pursuant to employee stock option, stock purchase, or similar plans or a registration statement pertaining to securities issuable in connection with the acquisition of a business, whether through merger, consolidation, acquisition of assets, or exchange of securities) covering any Common Stock or other securities of the Corporation, and will afford the Holder the opportunity to have included in such registration all or such part of the shares of Common Stock acquired upon conversion of Series A Preferred Stock, as may be designated by written notice to the Corporation not later than 10 days following receipt of such notice from the Corporation. The Corporation shall be entitled to exclude the shares of Common Stock held by the Holder from any one, but not more than one, such registration if the Corporation is advised by its investment banking firm that the inclusion of such shares will, in the opinion of such investment banking firm, materially interfere with the orderly sale and distribution of the securities being offered under such registration statement by the Corporation. Notwithstanding the foregoing, the Corporation shall not be entitled to exclude the shares of Common Stock held by the Holder if shares of other shareholders are being included in any such registration statement and, in such circumstances, the Holder shall be entitled to include the shares of Common Stock held by them on a pro rata basis in the proportion that the number of shares of Common Stock held by the Holder bears to the shares of Common Stock held by all other shareholders, including shares in such registration statement. The Holder shall not be entitled to include shares in more than two registration statement pursuant to the provisions of this subdivision a of paragraph (8), and all rights of the Holder under this subdivision a of paragraph (8) shall terminate after the Holder has included shares of Common Stock in two registration statements pursuant to this subdivision a of paragraph (8).
So long as any of the Series A Preferred Stock shall be outstanding, the Corporation shall submit to the Holder financial reports no less frequently than annually.
a. As used herein, the term "Common Stock" shall mean the Corporation's Common Stock, $1.00 per share, or, in the case of any reclassification or change of outstanding shares of Common Stock, the stock or securities issued in exchange
for such Common Stock. The term "Common Stock" shall also include any capital stock of the Corporation authorized after June 15, 1995 which shall not be limited to a fixed sum or sums or percentage or percentages of par value in respect of the rights of the holders thereof to participate in dividends or in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation.
b. The shares of Series A Preferred Stock shall be fully transferrable by the Holder thereof, subject to compliance with the applicable provisions of federal and state securities laws.
IN WITNESS WHEREOF, RETRACTABLE TECHNOLOGIES, INC. has caused its corporate seal to be hereunto affixed and this Certificate to be signed by its President and Secretary this _______ day of May, 1995.
/s/ Thomas J. Shaw
----------------------------------------
President
ATTEST:
/s/ Lillian E. Salerno
--------------------------------
Secretary
|
CERTIFICATE OF DESIGNATION, PREFERENCES
RIGHTS AND LIMITATIONS OF Class B
CONVERTIBLE PREFERRED STOCK
OF
RETRACTABLE TECHNOLOGIES, INC.
Pursuant to Article 2.13 of the Texas Business Corporation Act and Article Five of its Articles of Incorporation, Retractable Technologies, Inc., a corporation organized and existing under the laws of the State of Texas (the Corporation),
DOES HEREBY CERTIFY that pursuant to the authority conferred upon the Board of Directors of the Corporation by the Articles of Incorporation, as amended, and pursuant to Article 2.13 of the Texas Business Corporation Act, said Board of Directors, by unanimous written consent executed May 10, 1995, adopted a resolution providing for the creation of a series of Preferred Stock consisting of not more than five million (5,000,000) shares of Class B Convertible Preferred Stock, which resolution is and reads as follows:
RESOLVED that, pursuant to the authority provided in the Corporation's Articles of Incorporation and expressly granted to and vested in the Board of Directors of Retractable Technologies, Inc. (the "Corporation"), the Board of Directors hereby creates out of the Preferred Stock, par value one dollar per share, of the Corporation a series of Class B Preferred Stock consisting of not more than five million (5,000,000) shares, and the Board of Directors hereby fixes the designation and the powers, preference and rights, and the qualifications, limitations and restrictions thereof, to the extent not otherwise provided in the Corporation's qualifications, limitations and restrictions thereof, to the extent not otherwise provided in the Corporation's Articles of Incorporation, as follows:
EXHIBIT B
date which a dividend may be declared is hereafter called the "Dividend Date," and each quarterly period ending with a Dividend Date is hereinafter referred to as the "Dividend Period." Dividends shall be payable fifteen calendar days after the Dividend Due Date, provided however, that if such date on which a dividend is payable is a Saturday, Sunday or legal holiday, such dividend shall be payable on the next following business day to the holders of record (whether singular or plural, the "Holder").
up, or (B) purchased or otherwise acquired for any consideration by the Corporation except (1) pursuant to an acquisition made pursuant to the terms of one or more offers to purchase all of the outstanding shares of the Class B Preferred Stock, which offers shall each have been accepted by the holders of at least 50% of the shares of the Class B Preferred Stock receiving such offer outstanding at the commencement of the first of such purchase offers, or (2) by conversion into or exchange for stock of the Corporation ranking junior to the Class B Preferred Stock as to dividends and upon liquidation, dissolution or winding up.
So long as any shares of Class B Preferred Stock remain outstanding, the consent of the holders of at least fifty-one (51%) percent of the shares of Class B Preferred Stock outstanding at the time voting separately as a class, given in person or by proxy, either in writing at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:
(i) The authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock (including any class or series of Preferred Stock) ranking equal or prior (as the terms are hereinafter defined in this Section 3) to the Class B Preferred Stock; or
(ii) The amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Articles of Incorporation or of this resolution which would alter or change the powers, preferences or special rights of the shares of the Class B Preferred Stock so as to affect them adversely; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred Stock ranking junior to the Class B Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to adversely affect such powers, preferences or special rights.
The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Class B Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.
redemption (subject to the right of the holder of record of shares of Class B Preferred Stock on a record date for the payment of a dividend on the Class B Preferred Stock to receive the dividend due on such shares of Class B Preferred Stock on the corresponding Dividend Due Date.)
No sinking fund shall be established for the Class B Preferred Stock.
Notice of any proposed redemption of shares of Class B Preferred Stock shall be mailed by means of first class mail, postage paid, addressed to the holders of record of the shares of Class B Preferred Stock to be redeemed, at their respective addresses then appearing on the books of the Corporation, at least thirty (30) but not more than sixty (60) days prior to the date fixed for such redemption (herein referred to as the "Redemption Date"). Each such notice shall specify (i) the Redemption Date; (ii) the Redemption Price; (iii) the place for payment and for delivering the stock certificate(s) and transfer instrument(s) in order to collect the Redemption Price; (iv) the shares of Class B Preferred Stock to be redeemed; and (v) the then effective Conversion Price (as defined below) and that the right of holders of shares of Class B Preferred Stock being redeemed to exercise their conversion right shall terminate as to such shares at the close of business on the fifth day before the Redemption Date (provided that no default by the Corporation in the payment of the applicable Redemption Price (including any accrued and unpaid dividends) shall have occurred and be continuing. Any notice mailed in such manner shall be conclusively deemed to have been duly given whether or not such notice is in fact received. If less than all the outstanding shares of Class B Preferred Stock are to be redeemed, the Corporation will select those to be redeemed by lot or by a substantially equivalent method. In order to facilitate the redemption of Class B Preferred Stock to be redeemed, which shall not be more than sixty (60) days prior to the Redemption Date with respect thereto.
The holder of any shares of Class B Preferred Stock redeemed upon any exercise of the Corporation's redemption right shall not be entitled to receive payment of the Redemption Price for such shares until such holder shall cause to be delivered to the place specified in the notice given with respect to such redemption (i) the certificate(s) representing such shares of Class B Preferred Stock; and (ii) transfer instrument(s) satisfactory to the Corporation and sufficient to transfer such shares of Class B Preferred Stock to the Corporation free of any adverse interest. No interest shall accrue on the Redemption Price of any share of Class B Preferred Stock after its Redemption Date.
Subject to Section 2 hereof, the Corporation shall have the right to purchase shares of Class B Preferred Stock from the owner of such shares on such terms as may be agreeable to such owner. Shares of Class B Preferred Stock may be acquired by the Corporation from any stockholder pursuant to this paragraph without offering any other stockholder an equal opportunity to sell his stock to the Corporation, and no purchase by the Corporation from any stockholder pursuant to this paragraph shall be deemed to create any right on the part of any stockholder to sell any shares of Class B Preferred Stock (or any other stock) to the Corporation.
Notwithstanding the foregoing provisions of this Section 4, and subject to the provisions of Section 2 hereof, if a dividend upon any shares of Class B Preferred Stock is past due, (i) no shares of the Class B Preferred Stock may be redeemed, except (A) by means of a redemption pursuant to which all outstanding shares of the Class B Preferred Stock are simultaneously redeemed (or offered to be so redeemed) or pursuant to which the outstanding shares of the Class B Preferred Stock are redeemed on a pro rata basis (or offered to be so redeemed), or (B) by conversion of shares of Class B Preferred Stock into, or exchange of such shares for, Common Stock or any other stock of the Corporation ranking junior to the Class B Preferred Stock as to dividends and upon liquidation, dissolution or winding up.
If upon any Liquidation of the Corporation, the assets available for distribution to the holder of Class B Preferred Stock which shall then be outstanding (hereinafter in this paragraph called the "Total Amount Available") shall be insufficient to pay the holders of all outstanding shares of Class B Preferred Stock the full amounts (including all dividends accrued and unpaid) to which they shall be entitled by reason of such Liquidation of the Corporation, then there shall be paid ratably to the holders of the Class B Preferred Stock in connection with such Liquidation of the Corporation, an amount equal to each holder's pro rata share of the Total Amount Available.
The voluntary sale, conveyance, lease, exchange or transfer of all or substantially all the property or assets of the Corporation, or the merger or consolidation of the Corporation into the Corporation, or any purchase or redemption of some or all of the shares of any class or series of stock of the Corporation, shall not be deemed to be a Liquidation of the Corporation for the purposes of this Section 5 (unless in connection therewith the Liquidation of the Corporation is specifically approved).
date fixed for such redemption; or (ii) the date fixed for such exchange, provided that the Corporation has set aside funds sufficient to effect such redemption to convert such share into that number of fully paid and non- assessable shares of Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing $5.00 by the Conversion Rate then in effect.
The Corporation shall, as soon as practicable after receipt of such written notice and the proper surrender to the Corporation of the certificate or certificates representing shares of Class B Preferred Stock to be converted in accordance with the above provisions, issue and deliver for the benefit of the Holder at the office of the Corporation's duly appointed transfer agent (the "Transfer Agent") to the Holder for whose account such shares of Class B Preferred Stock were so surrendered or to such Holder's nominee or nominees, certificates for the number of shares of Common Stock to which the Holder shall be entitled. The certificates of Common Stock of the Corporation issued upon conversion shall bear such legends as may be required by state or federal laws. Such conversion shall be deemed to have been effective immediately prior to the close of business on the date on which the Corporation shall have received both such written notice and the properly surrendered certificates for shares of Class B Preferred Stock to be converted (the "Conversion Date"), and at such time the rights of the Holder shall cease and the person or persons entitled to receive the shares of Common Stock issuable upon the conversion of such shares of Class B Preferred Stock shall be deemed to be, and shall be treated for all purposes as, the record Holder or Holders of such Common Stock on the Conversion Date. The Corporation shall not be required to convert, and no surrender of shares of Class B Preferred Stock or written notice of conversion with respect thereto shall be effected for that purpose, while the stock transfer books of the Corporation are closed for any reasonable business purpose for any reasonable period of time, but the proper surrender of shares of Class B Preferred Stock for conversion immediately upon the reopening of such books. During the period in which the stock transfer books of the Corporation are closed, the Corporation may neither declare a dividend, declare a record date for payment of dividends nor make any payment of dividends.
(i) While any shares of Class B Preferred Stock shall be outstanding, in case the Corporation shall subdivide the outstanding shares of Common Stock into a greater number of shares of Common Stock or combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, or issue, by reclassification of its shares of Common Stock, any shares of the Corporation, the Conversion Rate in effect immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the number of shares which it would have owned or been entitled to receive after the happening of any of the events described above, had such shares of Class B Preferred Stock been converted immediately prior to the happening of such event, such adjustment to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination or reclassification, as the case may be, becomes effective.
(ii) In case the Corporation shall be consolidated with, or merge into, any other corporation, and the Corporation does not survive, proper provisions shall be made as a part of the terms of such consolidation or merger, whereby the Holder shall thereafter be entitled, upon exercise of such Holder's conversion rights, to receive the kind and amount of shares of stock or other securities of the Corporation resulting from such consolidation or merger, or such other property, as the Holder would have received if such conversion rights were exercised immediately prior to the effectiveness of such merger of consolidation.
(iii) In the event the Corporation at any time, or from time to time after June 15, 1996 makes or issues, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock or Common Stock Equivalents (as defined herein) which does not provide for the payment of any consideration upon the issuance, conversion or exercise thereof, without a corresponding dividend or other distribution to the Holder, based upon the number of shares of Common Stock into which the Class B Preferred Stock is convertible, then and in each such event the Conversion Rate then in effect will be increased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying such Conversion Rate by a fraction:
(A) The number of which will be the total number of shares of Common Stock issues and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution (which, in the case of Common Stock Equivalents, shall mean the maximum number of shares of Common Stock issuable with respect thereto, as set forth in the instrument relative thereto without regard to any provision for subsequent adjustment); and
(B) The denominator of which will be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date;
provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Rate will be recomputed accordingly as of the close of business on such record date, and thereafter such Conversion Rate will be adjusted pursuant to this subparagraph (iii) as of the time of actual payment of such dividends of distributions.
(iv) In the event the Corporation at any time or from time to time after June 15, 1996 makes or issues, or fixes a record date for the determination of holders of
Common Stock entitled to receive a dividend or other distribution payable to all holders of Common Stock in securities of the Corporation Stock Equivalents, then, upon making such dividend or distribution provisions will be made so that the Holder will receive the amount of securities of the Corporation which it would have received had its Class B Preferred Stock been converted into Common Stock on the date of such event.
(v) In the event the Corporation sells or issues any Common Stock, or sells or issues Common Stock Equivalents which can be converted into Common Stock at a per share consideration (as defined below in this subparagraph (v) of paragraph 7(B) less than the Stipulated Price then in effect, then the Holder shall be entitled to purchase from the Corporation in cash (for the same per share consideration at which such Common Stock was issued or the per share price at which a share of Common Stock is acquirable upon exercise or conversion of Common Stock Equivalents) that additional number of shares of Common Stock which, when added to the number of shares of Common Stock acquirable by the Holder upon conversion of any shares of Class B Preferred Stock outstanding and held by such Holder immediately before such issue or sale (the "Acquirable Shares"), will equal a percentage of the number of shares of Common Stock Deemed Outstanding (as defined herein) immediately after such sale or issuance that is the same as the percentage of the number of shares of Common Stock Deemed Outstanding immediately before such issuance or sale represented by the Acquirable Shares. This right shall exist for a forty-five-day period following the sale or issuance of shares of Common Stock or Common Stock Equivalents, and thereafter shall cease to exist.
For the above purposes, the per share consideration with respect to the sale or issuance of Common Stock will be the price per share received by the Corporation, prior to the payment of any expenses, commissions, discounts and other applicable costs. With respect to the sale or issuance of Common Stock Equivalents which are convertible into or exchangeable for Common Stock without further consider, the per share consideration will be determined by dividing the maximum number of shares of Common Stock issuable with respect to such Common Stock Equivalents (as set forth in the instrument relating thereto without regard to any provisions contained therein for subsequent adjustment of such number) into the aggregate consideration receivable by the Corporation upon the sale or issuance of such Common Stock Equivalents. With respect to the issuance of other Common Stock Equivalents, the per share consideration will be determined by dividing the maximum number of shares of Common Stock issuable with respect to such Common Stock Equivalents into the total aggregate consideration received by the Corporation upon the sale or issuance of such Common Stock Equivalents plus the minimum aggregate amount of additional consideration received by the Corporation upon the conversion or exercise of such Common Stock Equivalents. In connection with the sale or issuance of Common
Stock and/or Common Stock Equivalents for non-cash consideration, the amount of consideration will be the fair market value of such consideration as determined in good faith by the Board of Directors of the Corporation.
(vi) As used herein, the term "Stipulated Price" means initial price of $5.00 per share of Common Stock, as adjusted from time to time pursuant to subparagraph (viii) of this paragraph 7(f); and the term "Common Stock Equivalent" means any securities (whether debt or equity securities) or rights issued by the Corporation convertible into or entitling the holder thereof to receive shares of, or securities convertible into, Common Stock. The number of shares of "Common Stock Deemed Outstanding" at any date shall equal the sum of the number of shares of Common Stock then outstanding plus the number of shares of Common Stock then obtainable pursuant to Common Stock Equivalents.
(vii) In the event the Corporation declares any dividend or distribution payable to holders of its Common Stock (other than dividends payable out of the Corporation's retained earnings or earned surplus and dividends payable in shares of Common Stock or in securities convertible into or exchangeable for shares of Common Stock or rights or warrants to purchase Common Stock or securities convertible into or exchangeable for shares of Common Stock or any other securities issued by the Corporation), the Conversion Rate in effect immediately prior to the record date for such dividend or distribution shall be proportionately adjusted so that the Holder shall be entitled to receive the number of shares of Common Stock into which such shares of Common Stock or Preferred Stock was convertible immediately prior to such record date multiplied by a fraction, the numerator of which is the fair market value of a share of Common Stock on such record date and the denominator of which is such per share fair market value of a share of Common Stock on such record date less the fair market value on such record date of the securities or other property which are distributed as a dividend or other distribution. The term "fair market value" of a share of Common Stock or of any other security or other type of property on any date means (A) in the case of Common Stock or any other security (I) if the principal trading market for such Common Stock of other security is an exchange or the NASDAQ national market on such date, the closing price on such exchange or the NASDAQ national market on such date, provided, if trading of such Common Stock or other security is listed on any consolidated tape, the fair market value shall be the closing price set forth on such consolidated tape on such date, or (II) if the principal market for such Common Stock or other security is the over-the- counter market (other than the NASDAQ national market) the mean between the closing bid and asked prices on such date as set forth by NASDAQ or (B) in the case of Common Stock or any other security for which the fair market value cannot be determined pursuant to clause (A) above or of any other security or type of property, fair market value thereof on such date as determined in good faith by the Board of Directors.
(viii) Whenever the Conversion Rate is adjusted pursuant to this paragraph (6)(f), the Stipulated Price shall also be adjusted by multiplying it by a fraction that is the reciprocal of the fraction used to adjust the Conversion Rate.
(ix) The Corporation will not, by amendment of its Articles of Incorporation or through any dissolution, issuance or sale of securities 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 at all times in good faith will assist in the carrying out of all the provisions of this paragraph and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Holder against impairment.
(x) No adjustment in the Conversion Rate shall be required, unless such adjustment would require an increase or decrease of at least one (1) share of Common Stock in the Conversion Rate of one share of Class B Preferred Stock, provided that all adjustments which do not meet this minimum requirement shall be cumulated and the adjustment will be made when the cumulated total is sufficient to require an adjustment. All calculations made pursuant to this subparagraph (x) of paragraph (6)(f) shall be made to the nearest one hundredth (1/100th) of a share of Common Stock.
(other than a registration Statement pertaining to securities issuable pursuant to employee stock option, stock purchase, or similar plans or a registration statement pertaining to securities issuable in connection with the acquisition of a business, whether through merger, consolidation, acquisition of assets, or exchange of securities) covering any Common Stock or other securities of the Corporation, and will afford the Holder the opportunity to have included in such registration all or such part of the shares of Common Stock acquired upon conversion of Class B Preferred Stock, as may be designated by written notice to the Corporation not later than 10 days following receipt of such notice from the Corporation. The Corporation shall be entitled to exclude the shares of Common Stock held by the Holder from any one, but not more than one, such registration if the Corporation is advised by its investment banking firm that the inclusion of such shares will, in the opinion of such investment banking firm, materially interfere with the orderly sale and distribution of the securities being offered under such registration statement by the Corporation. Notwithstanding the foregoing, the Corporation shall not be entitled to exclude the shares of Common Stock held by the Holder if shares of other shareholders are being included in any such registration statement and, in such circumstances, the Holder shall be entitled to include the shares of Common Stock held by them on a pro rata basis in the proportion that the number of shares of Common Stock held by the Holder bears to the shares of Common Stock held by all other shareholders, including shares in such registration statement. The Holder shall not be entitled to include shares in more than two registration statement pursuant to the provisions of this subdivision a of paragraph (7), and all rights of the Holder under this subdivision a of paragraph (7) shall terminate after the Holder has included shares of Common Stock in two registration statements pursuant to this subdivision a of paragraph (7).
So long as any of the Class B Preferred Stock shall be outstanding, the Corporation shall submit to the Holder financial reports no less frequently than annually.
a. As used herein, the term "Common Stock" shall mean the Corporation's Common Stock, no par value, or, in the case of any reclassification or change of outstanding shares of Common Stock, the stock or securities issued in exchange for such Common Stock. The term "Common Stock" shall also include any capital stock of the
Corporation authorized after June 15, 1995 which shall not be limited to a fixed sum or sums or percentage or percentages of par value in respect of the rights of the holders thereof to participate in dividends or in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation.
b. The shares of Class B Preferred Stock shall be fully transferrable by the Holder thereof, subject to compliance with the applicable provisions of federal and state securities laws.
IN WITNESS WHEREOF, RETRACTABLE TECHNOLOGIES, INC. has caused its corporate seal to be hereunto affixed and this Certificate to be signed by its President and Secretary this 30 day of April, 1996.
/s/ Thomas J. Shaw
----------------------------------
President
ATTEST:
/s/ Lillian E. Salerno
-------------------------------
Secretary
|
CERTIFICATE OF DESIGNATION, PREFERENCES
RIGHTS AND LIMITATIONS OF THE SERIES II CLASS B
CONVERTIBLE PREFERRED STOCK
OF
RETRACTABLE TECHNOLOGIES, INC.
Pursuant to Article 2.13 of the Texas Business Corporation Act and Article Five of its Articles of Incorporation, Retractable Technologies, Inc., a corporation organized and existing under the laws of the State of Texas (the Corporation),
DOES HEREBY CERTIFY that pursuant to the authority conferred upon the Board of Directors of the Corporation by the Articles of Incorporation, as amended, and pursuant to Article 2.13 of the Texas Business Corporation Act, said Board of Directors, by unanimous written consent executed May 10, 1995, adopted a resolution providing for the creation of a series of Preferred Stock consisting of not more than five million (5,000,000) shares of Series II Class B Convertible Preferred Stock, which resolution is and reads as follows:
RESOLVED that, pursuant to the authority provided in the Corporation's Articles of Incorporation and expressly granted to and vested in the Board of Directors of Retractable Technologies, Inc. (the "Corporation"), the Board of Directors hereby creates out of the Preferred Stock, par value one dollar per share, of the Corporation a series of Series II Class B Preferred Stock consisting of not more than five million (5,000,000) shares, and the Board of Directors hereby fixes the designation and the powers, preference and rights, and the qualifications, limitations and restrictions thereof, to the extent not otherwise provided in the Corporation's qualifications, limitations and restrictions thereof, to the extent not otherwise provided in the Corporation's Articles of Incorporation, as follows:
EXHIBIT C
date which a dividend may be declared is hereafter called the "Dividend Date," and each quarterly period ending with a Dividend Date is hereinafter referred to as the "Dividend Period." Dividends shall be payable fifteen calendar days after the Dividend Due Date, provided however, that if such date on which a dividend is payable is a Saturday, Sunday or legal holiday, such dividend shall be payable on the next following business day to the holders of record (whether singular or plural, the "Holder").
otherwise acquired for any consideration by the Corporation except (1) pursuant to an acquisition made pursuant to the terms of one or more offers to purchase all of the outstanding shares of the Series II Class B Preferred Stock, which offers shall each have been accepted by the holders of at least 50% of the shares of the Series II Class B Preferred Stock receiving such offer outstanding at the commencement of the first of such purchase offers, or (2) by conversion into or exchange for stock of the Corporation ranking junior to the Series II Class B Preferred Stock as to dividends and upon liquidation, dissolution or winding up.
So long as any shares of Series II Class B Preferred Stock remain outstanding, the consent of the holders of at least fifty-one (51%) percent of the shares of Series II Class B Preferred Stock outstanding at the time voting separately as a class, given in person or by proxy, either in writing at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:
(i) The authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock (including any class or series of Preferred Stock) ranking equal or prior (as the terms are hereinafter defined in this Section 3) to the Series II Class B Preferred Stock; or
(ii) The amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Articles of Incorporation or of this resolution which would alter or change the powers, preferences or special rights of the shares of the Series II Class B Preferred Stock so as to affect them adversely; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred Stock ranking junior to the Series II Class B Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to adversely affect such powers, preferences or special rights.
The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series II Class B Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.
meeting of stockholders (to serve until the next annual meeting of shareholders, and until their successors are duly elected and qualified) and at each subsequent annual meeting of stockholders so long as such arrearage shall continue, and the Common Stock voting separately as a class, shall be entitled to elect the remainder of the Board of Directors of the Corporation. At elections for such directors, each holder of Series II Class B Preferred Stock shall be entitled to one vote for each share of Preferred Stock held. The right of the holders of Series II Class B Preferred Stock, voting separately as a class, to elect members of the Board of the Directors of the Corporation as aforesaid shall continue until such time as all dividends accumulated on the Series II Class B Preferred Stock shall have been paid in full, at which time such right shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned.
Directors elected by the holders of Series II Class B Preferred Stock shall continue to serve as such directors until such time as all dividends accumulated on the Series II Class B Preferred Stock shall have been paid in full, at which time the term of office of all persons elected as directors by the holders of shares of Series II Class B Preferred Stock shall forthwith terminate. In the case of any vacancy in the office of a director occurring among the directors elected by the holder of a class (with the Series II Class B Preferred Stock and Common Stock being treated as separate classes) of stock, the remaining directors so elected by that class may by affirmative vote of a majority thereof (or the remaining director so elected if there be but one) elect a successor or successors to hold office for the unexpired term of the director or directors whose place or places shall be vacant. Any director who shall have been elected by the holders of a class of stock or by an directors so elected as provided in the next preceding sentence hereof may be removed during the aforesaid term of office, either for or without cause, by, and only by, the affirmative vote of the holders of a majority of the shares of the class of stock who elected such director or directors, given either at a special meeting of such shareholders duly called for that purpose or pursuant to a written consent of shareholders, and any vacancy thereby created may be filled by the holders of that class of stock represented at such meeting or pursuant to such written consent. Whenever the term of office of the directors elected by the holders of Series II Class B Preferred Stock voting as a class shall end and the special voting powers vested in the holders of Series II Class B Preferred Stock voting as a class shall end and the special voting powers vested in the holders of Series II Class B Preferred Stock as provided in this Section 4 shall have expired, the number of directors shall be such number as may be provided for in the Articles of Incorporation or Bylaws irrespective of any increase made pursuant to the provisions of this Section 4.
Preferred Stock to receive the dividend due on such shares of Series II Class B Preferred Stock on the corresponding Dividend Due Date.)
No sinking fund shall be established for the Series II Class B Preferred Stock.
Notice of any proposed redemption of shares of Series II Class B
Preferred Stock shall be mailed by means of first class mail, postage paid,
addressed to the holders of record of the shares of Series II Class B Preferred
Stock to be redeemed, at their respective addresses then appearing on the books
of the Corporation, at least thirty (30) but not more than sixty (60) days prior
to the date fixed for such redemption (herein referred to as the "Redemption
Date"). Each such notice shall specify (i) the Redemption Date; (ii) the
Redemption Price; (iii) the place for payment and for delivering the stock
certificate(s) and transfer instrument(s) in order to collect the Redemption
Price; (iv) the shares of Series II Class B Preferred Stock to be redeemed; and
(v) the then effective Conversion Price (as defined below) and that the right of
holders of shares of Series II Class B Preferred Stock being redeemed to
exercise their conversion right shall terminate as to such shares at the close
of business on the fifth day before the Redemption Date (provided that no
default by the Corporation in the payment of the applicable Redemption Price
(including any accrued and unpaid dividends) shall have occurred and be
continuing). Any notice mailed in such manner shall be conclusively deemed to
have been duly given whether or not such notice is in fact received. If less
than all the outstanding shares of Series II Class B Preferred Stock are to be
redeemed, the Corporation will select those to be redeemed by lot or by a
substantially equivalent method. In order to facilitate the redemption of Series
II Class B Preferred Stock to be redeemed, which shall not be more than sixty
(60) days prior to the Redemption Date with respect thereto.
The holder of any shares of Series II Class B Preferred Stock redeemed upon any exercise of the Corporation's redemption right shall not be entitled to receive payment of the Redemption Price for such shares until such holder shall cause to be delivered to the place specified in the notice given with respect to such redemption (i) the certificate(s) representing such shares of Series II Class B Preferred Stock; and (ii) transfer instrument(s) satisfactory to the Corporation and sufficient to transfer such shares of Series II Class B Preferred Stock to the Corporation free of any adverse interest. No interest shall accrue on the Redemption Price of any share of Series II Class B Preferred Stock after its Redemption Date.
Subject to Section 2 hereof, the Corporation shall have the right to purchase shares of Series II Class B Preferred Stock from the owner of such shares on such terms as may be agreeable to such owner. Shares of Series II Class B Preferred Stock may be acquired by the Corporation from any stockholder pursuant to this paragraph without offering any other stockholder an equal opportunity to sell his stock to the Corporation, and no purchase by the Corporation from any stockholder pursuant to this paragraph shall be deemed to create any right on the part of any stockholder to sell any shares of Series II Class B Preferred Stock (or any other stock) to the Corporation.
Notwithstanding the foregoing provisions of this Section 5, and subject to the provisions of Section 2 hereof, if a dividend upon any shares of Series II Class B Preferred Stock is past due, (i) no shares of the Series II Class B Preferred Stock may be redeemed, except (A) by means of a redemption pursuant to which all outstanding shares of the Series II Class B Preferred Stock are simultaneously redeemed (or offered to be so redeemed) or pursuant to which the outstanding shares of the Series II Class B Preferred Stock are redeemed on a pro rata basis (or offered to be so redeemed), or (B) by conversion of shares of Series II Class B Preferred Stock into, or exchange of such shares for, Common Stock or any other stock of the Corporation ranking junior to the Series II Class B Preferred Stock as to dividends and upon liquidation, dissolution or winding up.
If upon any Liquidation of the Corporation, the assets available for distribution to the holder of Series II Class B Preferred Stock which shall then be outstanding (hereinafter in this paragraph called the "Total Amount Available") shall be insufficient to pay the holders of all outstanding shares of Series II Class B Preferred Stock the full amounts (including all dividends accrued and unpaid) to which they shall be entitled by reason of such Liquidation of the Corporation, then there shall be paid ratably to the holders of the Series II Class B Preferred Stock in connection with such Liquidation of the Corporation, an amount equal to each holder's pro rata share of the Total Amount Available.
The voluntary sale, conveyance, lease, exchange or transfer of all or substantially all the property or assets of the Corporation, or the merger or consolidation of the Corporation into the Corporation, or any purchase or redemption of some or all of the shares of any class or series of stock of the Corporation, shall not be deemed to be a Liquidation of the corporation for the purposes of this Section 6 (unless in connection therewith the Liquidation of the Corporation is specifically approved).
that the Corporation has set aside funds sufficient to effect such redemption to convert such share into that number of fully paid and non-assessable shares of Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing $10.00 by the Conversion Rate then in effect.
The Corporation shall, as soon as practicable after receipt of such written notice and the proper surrender to the Corporation of the certificate or certificates representing shares of Series II Class B Preferred Stock to be converted in accordance with the above provisions, issue and deliver for the benefit of the Holder at the office of the Corporation's duly appointed transfer agent (the "Transfer Agent") to the Holder for whose account such shares of Series II Class B Preferred Stock were so surrendered or to such Holder's nominee or nominees, certificates for the number of shares of Common Stock to which the Holder shall be entitled. The certificates of Common Stock of the Corporation issued upon conversion shall bear such legends as may be required by state or federal laws. Such conversion shall be deemed to have been effective immediately prior to the close of business on the date on which the Corporation shall have received both such written notice and the properly surrendered certificates for shares of Series II Class B Preferred Stock to be converted (the "Conversion Date"), and at such time the rights of the Holder shall cease and the person or persons entitled to receive the shares of Common Stock issuable upon the conversion of such shares of Series II Class B Preferred Stock shall be deemed to be, and shall be treated for all purposes as, the record Holder or Holders of such Common Stock on the Conversion Date. The Corporation shall not be required to convert, and no surrender of shares of Series II Class B Preferred Stock or written notice of conversion with respect thereto shall be effected for that purpose, while the stock transfer books of the Corporation are closed for any reasonable business purpose for any reasonable period of time, but the proper surrender of shares of Series II Class B Preferred Stock for conversion immediately upon the reopening of such books. During the period in which the stock transfer books of the Corporation are closed, the
Corporation may neither declare a dividend, declare a record date for payment of dividends nor make any payment of dividends.
(i) While any shares of Series II Class B Preferred Stock shall be outstanding, in case the Corporation shall subdivide the outstanding shares of Common Stock into a greater number of shares of Common Stock or combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, or issue, by reclassification of its shares of Common Stock any shares of the Corporation, the Conversion Rate in effect immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the number of shares which it would have owned or been entitled to receive after
the happening of any of the events described above, had such shares of Series II Class B Preferred Stock been converted immediately prior to the happening of such event, such adjustment to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination or reclassification, as the case may be, becomes effective.
(ii) In case the Corporation shall be consolidated with, or merge into, any other corporation, and the Corporation does not survive, proper provisions shall be made as a part of the terms of such consolidation or merger, whereby the Holder shall thereafter be entitled, upon exercise of such Holder's conversion rights, to receive the kind and amount of shares of stock or other securities of the Corporation resulting from such consolidation or merger, or such other property, as the Holder would have received if such conversion rights were exercised immediately prior to the effectiveness of such merger of consolidation.
(iii) In the event the Corporation at any time, or from time to time after June 15, 1997 makes or issues, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock or Common Stock Equivalents (as defined herein) which does not provide for the payment of any consideration upon the issuance, conversion or exercise thereof, without a corresponding dividend or other distribution to the Holder, based upon the number of shares of Common Stock into which the Series II Class B Preferred Stock is convertible, then and in each such event the Conversion Rate then in effect will be increased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying such Conversion Rate by a fraction:
(A) The numerator of which will be the total number of shares of Common Stock issues and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution (which, in the case of Common Stock Equivalents, shall mean the maximum number of shares of Common Stock issuable with respect thereto, as set forth in the instrument relative thereto without regard to any provision for subsequent adjustment); and
(B) The denominator of which will be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date;
provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Rate will be recomputed accordingly as of the close of business on such record date, and thereafter such Conversion Rate will be adjusted pursuant to this subparagraph (iii) as of the time of actual payment of such dividends or distributions.
(iv) In the event the Corporation at any time or from time to time after June 15, 1997 makes or issues, or fixes a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable to all holders of Common Stock in securities of the Corporation or Common Stock Equivalents, then, upon making such dividend or distribution provisions will be made so that the Holder will receive the amount of securities of the Corporation which it would have received had its Series II Class B Preferred Stock been converted into Common Stock on the date of such event.
(v) In the event the Corporation sells or issues any Common Stock, or sells or issues Common Stock Equivalents which can be converted into Common Stock at a per share consideration (as defined below in this subparagraph (v) of paragraph 7(f) less than the Stipulated Price then in effect, then the Holder shall be entitled to purchase from the Corporation in cash (for the same per share consideration at which such Common Stock was issued or the per share price at which a share of Common Stock is acquirable upon exercise or conversion of Common Stock Equivalents) that additional number of shares of Common Stock which, when added to the number of shares of Common Stock acquirable by the Holder upon conversion of any shares of Series II Class B Preferred Stock outstanding and held by such Holder immediately before such issue or sale (the "Acquirable Shares"), will equal a percentage of the number of shares of Common Stock Deemed Outstanding (as defined herein) immediately after such sale or issuance that is the same as the percentage of the number of shares of Common Stock Deemed Outstanding immediately before such issuance or sale represented by the Acquirable Shares. This right shall exist for a forty-five-day period following the sale or issuance of shares of Common Stock or Common Stock Equivalents, and thereafter shall cease to exist.
For the above purposes, the per share consideration with respect to the sale or issuance of Common Stock will be the price per share received by the Corporation, prior to the payment of any expenses, commissions, discounts and other applicable costs. With respect to the sale or issuance of Common Stock Equivalents which are convertible into or exchangeable for Common Stock without further consideration, the per share consideration will be determined by dividing the maximum number of shares of Common Stock issuable with respect
to such Common Stock Equivalents (as set forth in the instrument relating thereto without regard to any provisions contained therein for subsequent adjustment of such number) into the aggregate consideration receivable by the Corporation upon the sale or issuance of such Common Stock Equivalents. With respect to the issuance of other Common Stock Equivalents, the per share consideration will be determined by dividing the maximum number of shares of Common Stock issuable with respect to such Common Stock Equivalents into the total aggregate consideration received by the Corporation upon the sale or issuance of such Common Stock Equivalents plus the minimum aggregate amount of additional consideration received by the Corporation upon the conversion or exercise of such Common Stock Equivalents. In connection with the sale or issuance of Common Stock and/or Common Stock Equivalents for non-cash consideration, the amount of consideration will be the fair market value of such consideration as determined in good faith by the Board of Directors of the Corporation.
(vi) As used herein, the term "Stipulated Price" means initial price of $10.00 per share of Common Stock, as adjusted from time to time pursuant to subparagraph (viii) of this paragraph 7(f); and the term "Common Stock Equivalent" means any securities (whether debt or equity securities) or rights issued by the Corporation convertible into or entitling the holder thereof to receive shares of, or securities convertible into, Common Stock. The number of shares of "Common Stock Deemed Outstanding" at any date shall equal the sum of the number of shares of Common Stock then outstanding plus the number of shares of Common Stock then obtainable pursuant to Common Stock Equivalents.
(vii) In the event the Corporation declares any dividend or distribution payable to holders of its Common Stock (other than dividends payable out of the Corporation's retained earnings or earned surplus and dividends payable in shares of Common Stock or in securities convertible into or exchangeable for shares of Common Stock or rights or warrants to purchase Common Stock or securities convertible into or exchangeable for shares of Common Stock or any other securities issued by the Corporation), the Conversion Rate in effect immediately prior to the record date for such dividend or distribution shall be proportionately adjusted so that the Holder shall be entitled to receive the number of shares of Common Stock into which such shares of Common Stock or Preferred Stock was convertible immediately prior to such record date multiplied by a fraction, the numerator of which is the fair market value of a share of Common Stock on such record date and the denominator of which is such per share fair market value of a share of Common Stock on such record date less the fair market value on such record date of the securities or other property which are distributed as a dividend or other distribution. The term
"fair market value" of a share of Common Stock or of any other security or other type of property on any date means (A) in the case of Common Stock or any other security (I) if the principal trading market for such Common Stock or other security is an exchange or the NASDAQ national market on such date, the closing price on such exchange or the NASDAQ national market on such date, provided, if trading of such Common Stock or other security is listed on any consolidated tape, the fair market value shall be the closing price set forth on such consolidated tape on such date, or (II) if the principal market for such Common Stock or other security is the over-the-counter market (other than the NASDAQ national market) the mean between the closing bid and asked prices on such date as set forth by NASDAQ or (B) in the case of Common Stock or any other security for which the fair market value cannot be determined pursuant to clause (A) above or of any other security or type of property, fair market value thereof on such date as determined in good faith by the Board of Directors.
(viii) Whenever the Conversion Rate is adjusted pursuant to this paragraph (7)(f), the Stipulated Price shall also be adjusted by multiplying it by a fraction that is the reciprocal of the fraction used to adjust the Conversion Rate.
(ix) The Corporation will not, by amendment of its Articles of Incorporation or through any dissolution, issuance or sale of securities 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 at all times in good faith will assist in the carrying out of all the provisions of this paragraph and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Holder against impairment.
(x) No adjustment in the Conversion Rate shall be required, unless such adjustment would require an increase or decrease of at least one (1) share of Common Stock in the Conversion Rate of one share of Series II Class B Preferred Stock, provided that all adjustments which do not meet this minimum requirement shall be cumulated and the adjustment will be made when the cumulated total is sufficient to require an adjustment. All calculations made pursuant to this subparagraph (x) of paragraph (7)(f) shall be made to the nearest one-hundredth (1/100th) of a share of Common Stock.
preceding the day of conversion.
c. Notwithstanding anything to the contrary contained herein, in the event that the Corporation files an initial registration statement under the Securities Act of 1933, as amended (other than a registration statement pertaining to securities issuable in connection with the acquisition of a business, whether through merger, consolidation, acquisition of assets or exchange of securities) concerning any Common Stock of the Corporation, it will afford the Holder the opportunity to convert his shares into that number of fully paid and non-assessable shares of Common Stock prior to the three year holding period stated in paragraph 7 above. The Corporation may also, at its option, accelerate its redemption rights pursuant to paragraph 4 above in the event that the Corporation files an initial registration statement under the Securities Act of 1933, as amended.
So long as any of the Series II Class B Preferred Stock shall be outstanding, the Corporation shall submit to the Holder financial reports no less frequently than annually.
a. As used herein, the term "Common Stock" shall mean the Corporation's Common Stock, no par value, or, in the case of any reclassification or change of outstanding shares of Common Stock, the stock or securities issued in exchange for such Common Stock. The term "Common Stock" shall also include any capital stock of the Corporation authorized after June 15, 1995 which shall not be limited to a fixed sum or sums or percentage or percentages of par value in respect of the rights of the holders thereof to participate in dividends or in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation.
b. The shares of Series II Class B Preferred Stock shall be fully transferable by the Holder thereof, subject to compliance with the applicable provisions of federal and state securities laws.
IN WITNESS WHEREOF, RETRACTABLE TECHNOLOGIES, INC. has caused its corporate seal to be hereunto affixed and this Certificate to be signed by its President and Secretary this 10th day of May, 1997.
/s/ Thomas J. Shaw
----------------------------------------
President
ATTEST:
/s/ Shayne Blythe
---------------------------
Secretary
|
CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND LIMITATIONS
OF THE SERIES III CLASS B CONVERTIBLE PREFERRED STOCK
OF
RETRACTABLE TECHNOLOGIES, INC.
Pursuant to the Article 2.13 of the Texas Business Corporation Act and Article Four of its Articles of Incorporation, Retractable Technologies, Inc., a corporation organized and existing under the laws of the State of Texas (the Corporation),
DOES HEREBY CERTIFY that pursuant to the authority conferred upon the Board of Directors of the Corporation by the Articles of Incorporation, as amended, and pursuant to the Texas Business Corporation Act, said Board of Directors, by unanimous written consent executed July 2, 1998, adopted a resolution providing for the creation of a series of Preferred Stock consisting of not more than two million (2,000,000) shares of Series III Class B Convertible Preferred Stock, which resolution is and reads as follows:
RESOLVED that, pursuant to the authority provided in the Corporation's Articles of Incorporation and expressly granted to and vested in the Board of Directors of Retractable Technologies, Inc. (the "Corporation"), the Board of Directors hereby creates out of the Preferred Stock, par value one ($1.00) dollar per share, of the Corporation a series of Preferred Stock called the Series III Class B Preferred Stock, consisting of not more than two million (2,000,000) shares, and the Board of Directors hereby fixes the designation and the powers, preference and rights, and the qualifications, limitations and restrictions thereof, to the extent not otherwise provided in the Corporation's qualifications, limitations and restrictions thereof, to the extent not otherwise provided in the Corporation's Articles of Incorporation, as follows:
1. Designation of series. The designation of the series of Preferred Stock created by this resolution shall be "Series III Class B Convertible Preferred Stock" (the "Series III Class B Preferred Stock").
2. Dividends on Series III Class B Preferred Stock.
a. Dividend Amount. The holders of the Series III Class B Preferred Stock shall be entitled to receive, in any calendar year, if when and as declared by the Board of Directors, out of any assets at the time legally available therefor and subject to the further limitations set out herein, dividends at the per annum rate of $1.00 per share, all such dividends due quarterly in arrears as of the last day of each March, June, September and December of each year, the first dividend being declarable on December 31, 1998. On each date which a dividend may be declared is hereafter called the "Dividend Date," and each quarterly period ending with a Dividend Date is hereinafter referred to as the "Dividend Period." Dividends shall be payable fifteen calendar days after the Dividend Due Date, provided however, that if such date on which a dividend is payable is a Saturday, Sunday or legal holiday, such dividend shall be payable on the next following business day to the holders of record (whether singular or plural, the "Holder").
b. Dividends Cumulative. Dividends upon the Series III Class B Preferred Stock shall be accrued and be cumulative, whether or not in any Dividend Period or Periods there shall be funds of the Corporation legally available for the payment of such dividends.
c. Dividend Accrual. On each Dividend Due Date all dividends which shall have accrued since the last Dividend Due Date on each share of Series III Class B Preferred Stock outstanding on such Dividend Due Date shall accumulate and be deemed to become "due." Any dividend which shall not be paid on the Dividend Due Date on which it shall become due shall be deemed to be "past due" until such dividend shall be paid or until the share of Series III Class B Preferred Stock with respect to which such dividend became due shall no longer be outstanding, whichever is the earlier to occur. No interest, sum of money in lieu of interest or other property or securities shall be payable in respect of any dividend payment or payments which are past due. Dividends paid on shares of Series III Class B Preferred Stock in an amount less that the total amount of such dividends at the time accumulated and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares
at the time outstanding. Dividend payments made with respect to a Dividend Due Date shall be deemed to be made in payment of the dividends which became due on that Dividend Due Date.
d. Dividend Arrearage. If a dividend upon any shares of Series III Class
B Preferred Stock is in arrears, all dividends or other distributions
declared upon shares of the Series III Class B Preferred Stock (other
than dividends paid in stock of the Corporation ranking junior to the
Series III Class B Preferred Stock as to dividends and upon
liquidation, dissolution or winding up) may only be declared pro rata.
Except as set forth above, if a dividend upon any shares of Series III
Class B Preferred Stock is in arrears: (i) no dividends (in cash,
stock or other property) may be paid or declared and set aside for
payment or any other distribution made upon any stock of the
Corporation ranking junior to the Series III Class B Preferred Stock
as to dividends (other than dividends of distributions in stock of the
Corporation ranking junior to the Series III Class B Preferred Stock
as to dividends and upon liquidation, dissolution or winding up); and
(ii) no stock of the Corporation ranking junior to the Series III
Class B Preferred Stock as to dividends may be (A) redeemed pursuant
to a sinking fund or otherwise, except (1) by means of redemption
pursuant to which all outstanding shares of the Series III Class B
Preferred Stock are redeemed, or (2) by conversion of any such junior
stock into, or exchange of any such junior stock into, or exchange of
any such junior stock for stock of the Corporation ranking junior to
the Series III Class B Preferred Stock as to dividends and upon
liquidation, dissolution or winding up, or (B) purchased or otherwise
acquired for any consideration by the Corporation except (1) pursuant
to an acquisition made pursuant to the terms of one or more offers to
purchase all of the outstanding shares of the Series III Class B
Preferred Stock, which offers shall each have been accepted by the
holders of at least 50% of the shares of the Series III Class B
Preferred Stock receiving such offer outstanding at the commencement
of the first of such purchase offers, or (2) by conversion into or
exchange for stock of the Corporation ranking junior to the Series III
Class B Preferred Stock as to dividends and upon liquidation or
winding up.
3. General, Class and Series Voting Rights. Except as provided in this Section 3, or as otherwise from time to time required by law, the Series III Class B Preferred Stock shall have no voting rights.
So long as any shares of Series III Class B Preferred Stock remain outstanding, the consent of the holders of at least fifty-one (51%) percent of the shares of Series III Class B Preferred Stock outstanding at the time voting separately as a class, given in person or by proxy, either in writing at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:
(i) The authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock (including any class or series of Preferred Stock) ranking equal or prior (as the terms are hereinafter defined in this Section 3) to the Series III Class B Preferred Stock; or
(ii) The amendment, alteration, or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Articles of Incorporation or of this resolution which would alter or change the powers, preferences or special rights of the shares of the Series III Class B Preferred Stock so as to affect them adversely; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred stock ranking junior to the Series III Class B Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to adversely affect such powers, preferences or special rights.
The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series III Class B Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.
4. Redemption. The outstanding shares of Series III Class B Preferred Stock shall be nonredeemable prior to the lapse of three (3) years from the date of issuance. On and after such date, the Series III Class B Preferred Stock may be redeemed at the option of the Corporation, as a whole at any time or in part from time to time, at the Redemption Price of $15.00 per share plus all dividends (whether or not declared or due) accrued and unpaid to the date of redemption
(subject to the right of the holder of record of shares of Series III Class B Preferred Stock on a record date for the payment of a dividend on the Series III Class B Preferred Stock to receive the dividend due on such shares of Series III Class B Preferred Stock on the corresponding Dividend Due Date).
No sinking fund shall be established for the Series III Class B Preferred Stock.
Notice of any proposed redemption of shares of Series III Class B Preferred
Stock shall be mailed by means of first class mail, postage paid, addressed
to the holders of record of the shares of Series III Class B Preferred
Stock to be redeemed, at their respective addresses then appearing on the
books of the Corporation, at least thirty (30) days but not more than sixty
(60) days prior to the date fixed for such redemption (herein referred to
as the "Redemption Date"). Each such notice shall specify (i) the
Redemption Date; (ii) the Redemption Price; (iii) the place for payment and
for delivering the stock certificate(s) and transfer instrument(s) in order
to collect the Redemption Price; (iv) the shares of Series III Class B
Preferred Stock to be redeemed; and (v) the then effective Conversion Price
(as defined below) and that the right of holders of shares of Series III
Class B Preferred Stock being redeemed to exercise their Conversion right
shall terminate as to such shares at the close of business on the fifth day
before the Redemption Date, provided that no default by the Corporation in
the payment of the applicable Redemption Price (including any accrued and
unpaid dividends) shall have occurred and be continuing. Any notice mailed
in such manner shall be conclusively deemed to have been duly given whether
or not such notice is, in fact, received. If less than all the outstanding
shares of Series III Class B Preferred Stock are to be redeemed, the
Corporation will select those to be redeemed by lot or by a substantially
equivalent method. In order to facilitate the redemption of Series III
Class B Preferred Stock to be redeemed, notice of any such proposed
redemption, shall not be more than sixty (60) days prior to the Redemption
Date with respect thereto.
The holder of any shares of Series III Class B Preferred Stock redeemed upon any exercise of the Corporation's redemption right shall not be entitled to receive payment of the Redemption Price for such shares until such holder shall cause to be delivered to the place specified in the notice given with respect to such redemption (i) the certificate(s) representing such shares of Series III Class B Preferred Stock; and (ii) transfer instrument(s) satisfactory to the Corporation and sufficient to transfer such shares free of any adverse interest. No interest shall accrue on the Redemption Price of any share of Series III Class B Preferred Stock after its Redemption Date.
Subject to Section 2 hereof, the Corporation shall have the right to purchase shares of Series III Class B Preferred Stock from the owner of such shares on such terms as may be agreeable to such owner. Shares of Series III Class B Preferred Stock may be acquired by the Corporation from any stockholder pursuant to this paragraph without offering any other stockholder an equal opportunity to sell his stock to the Corporation, and no purchase by the Corporation from any stockholder pursuant to this paragraph shall be deemed to create any right on the part of any stockholder to sell any shares of Series III Class B Preferred Stock (or any other stock) to the Corporation.
Notwithstanding the foregoing provisions of this Section 4, and subject to the provisions of Section 2 hereof, if a dividend upon any shares of Series III Class B Preferred Stock is past due, (i) no shares of the Series III Class B Preferred Stock may be redeemed, except (A) by means of a redemption pursuant to which all outstanding shares of the Series III Class B Preferred Stock are simultaneously redeemed (or offered to be so redeemed) or pursuant to which the outstanding shares of the Series III Class B Preferred Stock are redeemed on a pro rata basis (or offered to be so redeemed), or (B) by conversion of shares of Series III Class B Preferred Stock into, or exchange of such shares for, Common Stock or any other stock of the Corporation ranking junior to the Series III Class B Preferred Stock as to dividends and upon liquidation, dissolution or winding up.
5. Liquidation. In the event of any voluntary or involuntary dissolution,
liquidation or winding up of the Corporation (for the purposes of this
Section 5, a "Liquidation"), before any distribution of assets shall be
made to the holders of the Common Stock or the holders of any other stock
that ranks junior to the Series III Class B Preferred Stock in respect
of distributions upon the Liquidation of the Corporation, the holder of
each share of Series III Class B Preferred Stock then outstanding shall be
entitled to $12.50 per share plus all dividends (whether or not declared or
due) accrued
and unpaid on such share on the date fixed for the distribution of assets of the Corporation to the holders of Series III Class B Preferred Stock.
If upon any Liquidation of the Corporation, the assets available for distribution to the holder of Series III Class B Preferred Stock which shall then be outstanding (hereinafter in this paragraph called the "Total Amount Available") shall be insufficient to pay the holders of all outstanding shares of Series III Class B Preferred Stock the full amounts (including all dividends accrued and unpaid) to which they shall be entitled by reason of such Liquidation of the Corporation, then there shall be paid ratably to the holders of the Series III Class B Preferred Stock in connection with such Liquidation of the Corporation, an amount equal to each holder's pro rata share of the Total Amount Available.
The voluntary sale, conveyance, lease, exchange or transfer of all or substantially all the property or assets of the Corporation, or the merger or consolidation of the Corporation into another Corporation, or any purchase or redemption of some or all of the shares of any class or series of stock of the Corporation, shall not be deemed to be a Liquidation of the Corporation for the purposes of this Section 6 (unless in connection therewith the Liquidation of the Corporation is specifically approved).
6. Conversion Privilege. At any time subsequent to three years after issuance of any share of Series III Class B Preferred Stock, the holder of any share of Series III Class B Preferred Stock ("Holder") shall have the right, at such Holder's option (but if such share is called for redemption or exchange at the election of the Corporation, then in respect of such share only to and including but not after the close of business on (i) the fifth calendar day before the date fixed for such redemption; or (ii) the date fixed for such exchange, provided that the Corporation has set aside funds sufficient to effect such redemption) to convert such share into that number of fully paid and non-assessable shares of Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing $10.00 by the Conversion Rate then in effect.
a. Conversion Rate. Each share of Series III Class B Preferred Stock may be converted, subject to the terms and provisions of this paragraph 6 into one (1) share of the Corporation's Common Stock, which is a price equal to one share of Common Stock for each $10.00 of Series III Class B Preferred Stock or, in case an adjustment of such rate has taken place pursuant to the provisions of subdivision (f) of this paragraph 6, then at the Conversion Rate as last adjusted (such rate or adjusted rate, shall be expressed as the number of shares of Common Stock to be acquired upon conversion of one share of Series III Class B Preferred Stock, and shall be referred to herein as the "Conversion Rate"). Each share of Series III Class B Preferred Stock shall be Convertible into Common Stock by surrender to the Corporation of the certificate representing such shares of Series III Class B Preferred Stock to be converted by the Holder and by giving written notice to the Corporation of the Holder's election to convert.
The Corporation shall, as soon as practicable after receipt of such written notice and the proper surrender to the Corporation of the certificate or certificates representing shares of Series III Class B Preferred Stock to be converted in accordance with the above provisions, issue and deliver for the benefit of the Holder at the office of the Corporation's duly appointed transfer agent (the "Transfer Agent") to the Holder for whose account such shares of Series III Class B Preferred Stock were so surrendered or to such Holder's nominee or nominees, certificates for the number of shares of Common Stock to which the Holder shall be entitled. The certificates of Common Stock of the Corporation issued upon conversion shall bear such legends as may be required by state or federal laws. Such conversion shall be deemed to have been effective immediately prior to the close of business on the date on which the Corporation shall have received both such written notice and the properly surrendered certificates for shares of Series III Class B Preferred Stock to be converted (the "Conversion Date"), and at such time the rights of the Holder shall cease and the person or persons entitled to receive the shares of Common Stock issuable upon the conversion of such shares of Series III Class B Preferred Stock shall be deemed to be, and shall be treated for all purposes as, the record Holder or Holders of such Common Stock on the Conversion Date. The Corporation shall not be required to convert, and no surrender of shares of Series III Class B Preferred Stock or written notice of conversion with respect thereto shall be effected for that purpose, while the stock transfer books of the Corporation are closed for any reasonable business purpose for any reasonable period of time, but shall be required to convert upon the proper surrender of shares of Series III Class B Preferred Stock for conversion
immediately upon the reopening of such books. During the period in which the stock transfer books of the Corporation are closed, the Corporation may neither declare a dividend, declare a record date for payment of dividends nor make any payment of dividends.
b. Dividends. If any shares of Series III Class B Preferred Stock shall be converted during any dividend payment period, the Holder shall be entitled to all dividends accrued up to and through such Conversion Date, at the rate set forth herein, whether or not there has been a dividend date, as set forth in paragraph 2 hereof.
c. Cancellation. Series III Class B Preferred Stock converted into Common stock pursuant to the provisions of this paragraph 6 shall be retired and cancelled by the Corporation and given the status of authorized and unissued preferred stock.
d. Reissuance if Conversion is Partial. In the case of any certificate representing shares of Series III Class B Preferred Stock which is surrendered for conversion only in part, the Corporation shall issue and deliver to the Holder a new certificate or certificates for Series III Class B Preferred Stock of such denominations as requested by the Holder in the amount of Series III Class B Preferred Stock equal to the unconverted shares of the Series III Class B Preferred Stock represented by the certificate so surrendered.
e. Reservations of Shares. The Corporation shall at all times during which shares of Series III Class B Preferred Stock may be converted into Common Stock as provided in this paragraph (e), reserve and keep available, out of any Common Stock held as treasury stock or out of its authorized and unissued Common Stock, or both, solely for the purpose of delivery upon conversion of the shares of Series III Class B Preferred Stock as herein provided, such number of shares of Common Stock as shall then be sufficient to effect the conversion of all shares of Series III Class B Preferred Stock from time to time outstanding, and shall take such action as may from time to time be necessary to ensure that such shares of Common Stock will, when issued upon conversion of Series III Class B Preferred Stock, be fully paid and nonassessable.
f. Adjustment of Conversion Rate. The Conversion Rate provided in subdivision (a) of this paragraph 6, in respect of Series III Class B Preferred Stock, shall be subject to adjustments from time to time as follows:
(i) While any shares of Series III Class B Preferred Stock shall be outstanding, in case the Corporation shall subdivide the outstanding shares of Common Stock into a greater number of shares of Common Stock or combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, or issue, by reclassification of its shares of Common Stock, any shares of the Corporation, the Conversion Rate in effect immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the number of shares which it would have owned or been entitled to receive after the happening of any of the events described above, had such shares of Series III Class B Preferred Stock been converted immediately prior to the happening of such event, such adjustment to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination or reclassification, as the case may be, becomes effective.
(ii) In case the Corporation shall be consolidated with, or merge into, any other corporation, and the Corporation does not survive, proper provisions shall be made as a part of the terms of such consolidation or merger, whereby the Holder shall thereafter be entitled, upon exercise of such Holder's conversion rights, to receive the kind and amount of shares of stock or other securities of the Corporation resulting from such consolidation or merger, or such other property, as the Holder would have received if such conversion rights were exercised immediately prior to the effectiveness of such merger or consolidation.
(iii) In the event the Corporation at any time, or from time to time after August 1, 1998 makes or issues, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock or Common Stock Equivalents (as defined herein) which does not provide for the payment of any consideration upon the issuance, conversion or exercise
thereof, without a corresponding dividend or other distribution to the Holder, based upon the number of shares of Common Stock into which the Series III Class B Preferred Stock is convertible, then and in each such event the Conversion Rate then in effect will be increased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying such Conversion rate by a fraction:
(A) The numerator of which will be the total number of shares of Common Stock issued and Outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution (which, in the case of Common Stock Equivalents, shall mean the maximum number of shares of Common Stock issuable with respect thereto, as set forth in the instrument relative thereto without regard to any provision for subsequent adjustment); and
(B) The denominator of which will be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date; provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Rate will be recomputed accordingly as of the close of business on such record date, and thereafter such Conversion Rate will be adjusted pursuant to this subparagraph (iii) as of the time of actual payment of such dividends or distributions.
(iv) In the event the Corporation at any time or from time to time after August 1, 1998 makes or issues, or fixes a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable to all holders of Common Stock in securities of the Corporation or Common Stock Equivalents, then, upon making such dividend or distribution provisions will be made so that the Holder will receive the amount of securities of the Corporation which it would have received had its Series III Class B Preferred Stock been converted into Common Stock on the date of such event.
(v) In the event the Corporation sells or issues any Common Stock, or sells or issues Common Stock Equivalents which can be converted into Common Stock at a per share consideration (as defined below in this subparagraph (v) of paragraph 6(f) less than the Stipulated Price then in effect, then the Holder shall be entitled to purchase from the Corporation in cash (for the same per share consideration at which such Common Stock was issued or the per share price at which a share of Common Stock is acquirable upon exercise or conversion of Common Stock Equivalents) that additional number of shares of Common Stock which, when added to the number of shares of Common Stock acquirable by the Holder upon conversion of any shares of Series III Class B Preferred Stock outstanding and held by such Holder immediately before such issue or sale (the "Acquirable Shares"), will equal a percentage of the number of shares of Common Stock Deemed Outstanding (as defined herein) immediately after such sale or issuance that is the same as the percentage of the number of shares of Common Stock Deemed Outstanding immediately before such issuance or sale represented by the Acquirable Shares. This right shall exist for a forty-five-day period following the sale or issuance of shares of Common Stock or Common Stock Equivalents, and thereafter shall cease to exist.
For the above purposes, the per share consideration with respect to the sale or issuance of Common Stock will be the price per share received by the Corporation, prior to the payment of any expenses, commissions, discounts and other applicable costs. With respect to the sale or issuance of Common Stock Equivalents which are convertible into or exchangeable for Common Stock without further consideration, the per share consideration will be determined by dividing the maximum number of shares of Common Stock issuable with respect to such Common Stock Equivalents (as set forth in the instrument relating thereto without regarding to any provisions contained therein for subsequent adjustment of such number) into the aggregate consideration receivable by the Corporation upon the sale or issuance of such Common Stock Equivalents. With respect to the issuance of other Common Stock Equivalents, the per share consideration will be determined by dividing the maximum number of shares of Common Stock issuable with respect to such Common Stock Equivalents into the total aggregate consideration received by the Corporation upon the sale
or issuance of such Common Stock Equivalents plus the minimum aggregate amount of additional consideration received by the Corporation upon the conversion or exercise of such Common Stock Equivalents. In connection with the sale or issuance of Common Stock and/or Common Stock Equivalents for non-cash consideration, the amount of consideration will be the fair market value of such consideration as determined in good faith by the Board of Directors of the Corporation.
(vi) As used herein, the term "Stipulated Price" means initial price of $10.00 per share of Common Stock, as adjusted from time to time pursuant to subparagraph (viii) of this paragraph 6(f); and the term "Common Stock Equivalent" means any securities (whether debt or equity securities) or rights issued by the Corporation convertible into or entitling the holder thereof to receive shares of, or securities convertible into, Common Stock. The number of shares of "Common Stock Deemed Outstanding" at any date shall equal the sum of the number of shares of Common Stock then outstanding plus the number of shares of Common Stock then obtainable pursuant to Common Stock Equivalents.
(vii) In the event the Corporation declares any dividend or distribution payable to holders of its Common Stock (other than dividends payable out of the Corporation's retained earnings or earned surplus and dividends payable in shares of Common Stock or in securities convertible into or exchangeable for shares of Common Stock or rights or warrants to purchase Common Stock or securities convertible into or exchangeable for shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock or any other securities issued by the Corporation), the Conversion Rate in effect immediately prior to the record date for such dividend or distribution shall be proportionately adjusted so that the Holder shall be entitled to receive the number of shares of Common Stock into which such shares of Common Stock or Preferred Stock was convertible immediately prior to such record date multiplied by a fraction, the numerator of which is the fair market value of a share of Common Stock on such record date and the denominator of which is such per share fair market value of a share of Common Stock on such record date less the fair market value on such record date of the securities or other property which are distributed as a dividend or other distribution. The term "fair market value" of a share of Common Stock or of any other security or other type of property on any date means (A) in the case of Common Stock or any other security (I) if the principal trading market for such Common Stock or other security is an exchange or the NASDAQ national market on such date, the closing price on such exchange or the NASDAQ national market on such date, provided, if trading of such Common Stock or other security is listed on any consolidated tape, the fair market value shall be the closing price set forth on such consolidated tape on such date, or (II) if the principal market for such Common Stock or other security is the over-the-counter market (other than the NASDAQ national market) the mean between the closing bid and asked prices on such date as set forth by NASDAQ or (B) in the case of Common Stock or any other security for which the fair market value cannot be determined pursuant to clause (A) above or of any other security or type of property, fair market value thereof on such date as determined in good faith by the Board of Directors.
(viii) Whenever the Conversion Rate is adjusted pursuant to this paragraph
6(f), the Stipulated Price shall also be adjusted by multiplying it
by a fraction that is the reciprocal of the fraction used to adjust
the Conversion Rate.
(ix) The Corporation will not, by amendment of its Articles of Incorporation or through any dissolution, issuance or sale of securities 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 at all times in good faith will assist in the carrying out of all the provisions of this paragraph and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Holder against impairment.
(x) No adjustment in the Conversion Rate shall be required, unless such adjustment would require an increase or decrease of at least one (1) share of Common Stock in the Conversion Rate of one share of Series III Class B Preferred Stock, provided that all adjustments which do not meet this minimum requirement shall be cumulated and the adjustment will be made when the cumulated total is sufficient to require an adjustment.
All calculations made pursuant to this subparagraph (x) of paragraph 6(f) shall be made to the nearest one-hundredth (1/100th) of a share of Common Stock.
g. Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares of Common Stock shall be issued upon any conversion of shares of Series III Class B Preferred Stock but, in lieu thereof, there shall be paid an amount in cash equal to the same fraction of the current market price of a whole share of Common Stock on the day preceding the day of conversion.
h. Statement to Transfer Agent. Whenever the Conversion Rate for shares of Series III Class B Preferred Stock shall be adjusted pursuant to the provisions of paragraph 6(f) hereof, the Corporation shall forthwith maintain at its office and, if applicable, file with the Transfer Agent for shares of Series III Class B Preferred Stock and for shares of Common Stock, a statement signed by the President or a Vice President of the Corporation and by its Treasurer or an Assistant Treasurer, stating the adjusted Conversion Rate and setting forth in reasonable detail the method of calculation and the facts requiring such adjustment, such calculations to be confirmed by the Corporation's independent auditors, and stating the facts on which the calculation is based. Each adjustment shall remain in effect until a subsequent adjustment hereunder is required.
7. Registration Rights.
a. Piggyback Registration. The Corporation, for a period ending six months after the last share of Series III Class B Preferred Stock is redeemed, retired, converted or otherwise no longer outstanding, will give written notice to the Holder not less than 20 days in advance of the initial filing of any registration statement under the Securities Act of 1933 (other than a registration Statement pertaining to securities issuable pursuant to employee stock option, stock purchase, or similar plans or a registration statement pertaining to securities issuable in connection with the acquisition of a business, whether through merger, consolidation, acquisition of assets, or exchange of securities) covering any Common Stock or other securities of the Corporation, and will afford the Holder the opportunity to have included in such registration all or such part of the shares of Common Stock acquired upon conversion of Series III Class B Preferred Stock, as may be designated by written notice to the Corporation not later than 10 days following receipt of such notice from the Corporation. The Corporation shall be entitled to exclude the shares of Common Stock held by the Holder from any one, but not more than one, such registration if the Corporation in its sole discretion decides that the inclusion of such shares will materially interfere with the orderly sale and distribution of the securities being offered under such registration statement by the Corporation. Notwithstanding the foregoing, the Corporation shall not be entitled to exclude the shares of Common Stock held by the Holder if shares of other shareholders are being included in any such registration statement and, in such circumstances, the Holder shall be entitled to include the shares of Common Stock held by them on a pro rata basis in the proportion that the number of shares of Common Stock held by the Holder bears to the shares of Common Stock held by all other shareholders, including shares in such registration statement. The Holder shall not be entitled to include shares in more than two registration statement pursuant to the provisions of this subdivision (a) of paragraph 7, and all rights of the Holder under this subdivision (a) of paragraph 7 shall terminate after the Holder has included shares of Common Stock in two registration statements pursuant to this subdivision A of paragraph 7.
b. Expenses. The Corporation will pay all out-of-pocket costs and expenses of any registration effected pursuant to the provisions of subdivision (a) of this paragraph 7, including registration fees, legal fees, accounting fees, printing expenses (including such number of any preliminary and the final prospectus as may be reasonably requested), blue sky qualification fees and expenses, and all other expenses, except for underwriting commissions or discounts applicable to the shares of Common Stock being sold by the Holder and the fees of counsel for the Holder, all of which shall be paid by the Holder.
c. Notwithstanding anything to the contrary contained herein, in the event that the Corporation files an initial registration statement under the Securities Act of 1933, as amended (other than a registration statement pertaining to securities issuable in connection with the acquisition of a business, whether through merger, consolidation,
acquisition of assets or exchange of securities) concerning any Common Stock of the Corporation, it will afford the Holder the opportunity to convert his shares into that number of fully paid and non-assessable shares of Common Stock prior to the three year holding period stated in paragraph 6 above. The Corporation may also, at its option at any time within one-hundred and eighty (180) days after an initial registration statement is deemed effective, demand the conversion of the Series III Class B Preferred Stock into that number of fully paid and non-assessable shares of Common Stock as provided herein.
8. Reports.
So long as any of the Series III Class B Preferred Stock shall be outstanding, the Corporation shall submit to the Holder financial reports no less frequently than annually.
9. Miscellaneous.
a. As used herein, the term "Common Stock" shall mean the Corporation's Common Stock, no par value, or, in the case of any reclassification or change of outstanding shares of Common Stock, the stock or securities issued in exchange for such Common Stock. The term "Common Stock" shall also include any capital stock of the Corporation authorized after March 31, 1998 which shall not be limited to a fixed sum or sums or percentage or percentages of par value in respect of the rights of the holders thereof to participate in dividends or in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation.
b. The shares of Series III Class B Preferred Stock shall be fully transferable by the Holder thereof, subject to compliance with the applicable provisions of federal and state securities laws.
IN WITNESS WHEREOF, RETRACTABLE TECHNOLOGIES, INC. has caused its corporate seal to be hereunto affixed and this Certificate to be signed by its Chief Executive Officer Secretary this 10 day of July, 1998.
/s/ Thomas J. Shaw
-------------------------------------
THOMAS J. SHAW,
Its: Chief Executive Officer
ATTEST:
/s/ Lillian E. Salerno
----------------------------
LILLIAN E. SALERNO
Secretary
|
CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND LIMITATIONS
OF THE SERIES IV CLASS B CONVERTIBLE PREFERRED STOCK
OF
RETRACTABLE TECHNOLOGIES, INC.
Pursuant to Article 2.13 of the Texas Business Corporation Act and Article Four of its Articles of Incorporation, Retractable Technologies, Inc., a corporation organized and existing under the laws of the State of Texas (the "Corporation"),
DOES HEREBY CERTIFY that, pursuant to the authority conferred upon the Board of Directors of the Corporation by the Articles of Incorporation, as amended, and pursuant to the Texas Business Corporation Act, said Board of Directors, by unanimous written consent, executed December 20, 1999, adopted a resolution providing for the creation of a series of Preferred Stock consisting of not more than one million three hundred thousand (1,300,000) shares of Series IV Class B Convertible Preferred Stock, which resolution is and reads as follows:
RESOLVED that pursuant to the authority provided in the Corporation's Articles of Incorporation and expressly granted to and vested in the Board of Directors of the Corporation, the Board of Directors hereby creates out of the Preferred Stock, par value One Dollar ($1.00) per share, of the Corporation a series of Preferred Stock called the Series IV Class B Preferred Stock, consisting of not more than one million three hundred thousand (1,300,000) shares, and the Board of Directors hereby fixes the designation and the powers, preference and rights, and the qualifications, limitations and restrictions thereof, to the extent not otherwise provided in the Corporation's qualifications, limitations and restrictions thereof, to the extent not otherwise provided in the Corporation's Articles of Incorporation, as follows:
1. Designation of Series. The designation of the series of Preferred Stock created by this resolution shall be "Series IV Class B Convertible Preferred Stock" (the "Series IV Class B Preferred Stock").
2. Dividends on Series IV Class B Preferred Stock.
a. Dividend Amount. The holders of the Series IV Class B Preferred Stock shall be entitled to receive, in any calendar year, if, when and as declared by the Board of Directors, out of any assets at the time legally available therefor and subject to the further limitations set out herein, dividends at the per annum rate of $1.00 per share, all such dividends due quarterly in arrears as of the last day of each March, June, September and December of each year, the first dividend being declarable on December 31, 2000. On each date which a dividend may be declared is hereafter called the "Dividend Date," and each quarterly period ending with a Dividend Date is hereinafter referred to as the "Dividend Period." Dividends shall be payable fifteen calendar days after the Dividend Due Date, provided however, that if such date on which a dividend is payable is a Saturday, Sunday or legal holiday, such dividend shall be payable on the next following business day to the holders of record (whether singular or plural, the "Holder").
b. Dividends Cumulative. Dividends upon the Series IV Class B Preferred Stock shall be accrued and be cumulative, whether or not in any Dividend Period or Periods there shall be funds of the Corporation legally available for the payment of such dividends.
c. Dividend Accrual. On each Dividend Due Date all dividends which shall have accrued since the last Dividend Due Date on each share of Series IV Class B Preferred Stock outstanding on such Dividend Due Date shall accumulate and be deemed to become "due." Any dividend which shall not be paid on the Dividend Due Date on which it shall become due shall be deemed to be "past due" until such dividend shall be paid or until the share of Series IV Class B Preferred Stock with respect to which such dividend became due shall no longer be outstanding, whichever is the earlier to occur. No interest, sum of money in lieu of interest or other property or securities shall be payable in respect of any dividend payment or payments which are past due. Dividends paid on shares of Series IV Class B Preferred Stock in an amount less that the total amount of such
EXHIBIT E
dividends at the time accumulated and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. Dividend payments made with respect to a Dividend Due Date shall be deemed to be made in payment of the dividends which became due on that Dividend Due Date.
d. Dividend Arrearage. If a dividend upon any shares of Series IV Class B Preferred Stock is in arrears, all dividends or other distributions declared upon shares of the Series IV Class B Preferred Stock (other than dividends paid in stock of the Corporation ranking junior to the Series IV Class B Preferred Stock as to dividends and upon liquidation, dissolution or winding up) may only be declared pro rata. Except as set forth above, if a dividend upon any shares of Series IV Class B Preferred Stock is in arrears: (i) no dividends (in cash, stock or other property) may be paid or declared and set aside for payment or any other distribution made upon any stock of the Corporation ranking junior to the Series IV Class B Preferred Stock as to dividends (other than dividends of distributions in stock of the Corporation ranking junior to the Series IV Class B Preferred Stock as to dividends and upon liquidation, dissolution or winding up); and (ii) no stock of the Corporation ranking junior to the Series IV Class B Preferred Stock as to dividends may be (A) redeemed pursuant to a sinking fund or otherwise, except (1) by means of redemption pursuant to which all outstanding shares of the Series IV Class B Preferred Stock are redeemed, or (2) by conversion of any such junior stock into, or exchange of any such junior stock into, or exchange of any such junior stock for stock of the Corporation ranking junior to the Series IV Class B Preferred Stock as to dividends and upon liquidation, dissolution or winding up, or (B) purchased or otherwise acquired for any consideration by the Corporation except (1) pursuant to an acquisition made pursuant to the terms of one or more offers to purchase all of the outstanding shares of the Series IV Class B Preferred Stock, which offers shall each have been accepted by the holders of at least 50% of the shares of the Series IV Class B Preferred Stock receiving such offer outstanding at the commencement of the first of such purchase offers, or (2) by conversion into or exchange for stock of the Corporation ranking junior to the Series IV Class B Preferred Stock as to dividends and upon liquidation or winding up.
3. General, Class and Series Voting Rights. Except as provided in this
Section 3, or as otherwise from time to time required by law, the
Series IV Class B Preferred Stock shall have no voting rights.
So long as any shares of Series IV Class B Preferred Stock remain outstanding, the consent of the holders of at least fifty-one percent (51%) of the shares of Series IV Class B Preferred Stock outstanding at the time voting separately as a class, given in person or by proxy, either in writing at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:
(i) The authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock (including any class or series of Preferred Stock) ranking equal or prior to the Series IV Class B Preferred Stock; or
(ii) The amendment, alteration, or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Articles of Incorporation or of this resolution which would alter or change the powers, preferences or special rights of the shares of the Series IV Class B Preferred Stock so as to affect them adversely; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred stock ranking junior to the Series IV Class B Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to adversely affect such powers, preferences or special rights.
The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series IV Class B Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.
4. Redemption. The outstanding shares of Series IV Class B Preferred Stock shall be nonredeemable prior to the lapse of three (3) years from the date of issuance. On and after such date, the Series IV Class B Preferred Stock may be redeemed at the option of the Corporation, as a whole at any time or in part from time to time, at the Redemption Price of $11.00 per share plus all dividends (whether or not declared or due) accrued and unpaid to the date of redemption (subject to the right of the holder of record of shares of Series IV Class B Preferred Stock on a record date for the payment of a dividend on the Series IV Class B Preferred Stock to receive the dividend due on such shares of Series IV Class B Preferred Stock on the corresponding Dividend Due Date).
No sinking fund shall be established for the Series IV Class B Preferred Stock.
Notice of any proposed redemption of shares of Series IV Class B Preferred
Stock shall be mailed by means of first class mail, postage paid, addressed
to the holders of record of the shares of Series IV Class B Preferred Stock
to be redeemed, at their respective addresses then appearing on the books
of the Corporation, at least thirty (30) days but not more than sixty (60)
days prior to the date fixed for such redemption (herein referred to as the
"Redemption Date"). Each such notice shall specify (i) the Redemption Date;
(ii) the Redemption Price; (iii) the place for payment and for delivering
the stock certificate(s) and transfer instrument(s) in order to collect the
Redemption Price; (iv) the shares of Series IV Class B Preferred Stock to
be redeemed; and (v) the then effective Conversion Price (as defined below)
and that the right of holders of shares of Series IV Class B Preferred
Stock being redeemed to exercise their conversion right shall terminate as
to such shares at the close of business on the fifth day before the
Redemption Date, provided that no default by the Corporation in the payment
of the applicable Redemption Price (including any accrued and unpaid
dividends) shall have occurred and be continuing. Any notice mailed in such
manner shall be conclusively deemed to have been duly given whether or not
such notice is, in fact, received. If less than all the outstanding shares
of Series IV Class B Preferred Stock are to be redeemed, the Corporation
will select those to be redeemed by lot or by a substantially equivalent
method. In order to facilitate the redemption of Series IV Class B
Preferred Stock to be redeemed, notice of any such proposed redemption
shall not be more than sixty (60) days prior to the Redemption Date with
respect thereto.
The holder of any shares of Series IV Class B Preferred Stock redeemed upon any exercise of the Corporation's redemption right shall not be entitled to receive payment of the Redemption Price for such shares until such holder shall cause to be delivered to the place specified in the notice given with respect to, such redemption (i) the certificate(s) representing such shares of Series IV Class B Preferred Stock; and (ii) transfer instrument(s) satisfactory to the Corporation and sufficient to transfer such shares free of any adverse interest. No interest shall accrue on the Redemption Price of any share of Series IV Class B Preferred Stock after its Redemption Date.
Subject to Section 2 hereof, the Corporation shall have the right to purchase shares of Series IV Class B Preferred Stock from the owner of such shares on such term as may be agreeable to such owner. Shares of Series IV Class B Preferred Stock may be acquired by the Corporation from any stockholder pursuant to this paragraph without offering any other stockholder an equal opportunity to sell his stock to the Corporation, and no purchase by the Corporation from any stockholder pursuant to this paragraph shall be deemed to create any right on the part of any stockholder to sell any shares of Series IV Class B Preferred Stock (or any other stock) to the Corporation.
Notwithstanding the foregoing provisions of this Section 4, and subject to
the provisions of Section 2 hereof, if a dividend upon any shares of Series
IV Class B Preferred Stock is past due, no shares of the Series IV Class B
Preferred Stock may be redeemed, except (i) by means of a redemption
pursuant to which all outstanding shares of the Series IV Class B Preferred
Stock are simultaneously redeemed (or offered to be so redeemed) or
pursuant to which the outstanding shares of the Series IV Class B Preferred
Stock are redeemed on a pro rata basis (or offered to be so redeemed), or
(ii) by conversion of shares of Series IV Class B Preferred Stock into, or
exchange of such shares for, Common Stock or any other stock of the
Corporation ranking junior to the Series IV Class B Preferred Stock as to
dividends and upon liquidation, dissolution or winding up.
5. Liquidation. In the event of any voluntary or involuntary dissolution,
liquidation or winding up of the Corporation (for the purposes of this
Section 5, a "Liquidation"), before any distribution of assets shall be
made to the holders of the Common Stock or the holders of any other stock
that ranks junior to the Series IV Class B Preferred Stock in respect of
distributions upon the Liquidation of the Corporation, the holder of each
share of Series IV Class B Preferred Stock then outstanding shall be
entitled to $11.00 per share plus all dividends (whether or not declared or
due) accrued and unpaid on such share on the date fixed for the
distribution of assets of the Corporation to the holders of Series IV Class
B Preferred Stock.
If upon any Liquidation of the Corporation, the assets available for distribution to the holder of Series IV Class B Preferred Stock which shall then be outstanding (hereinafter in this paragraph called the "Total Amount Available") shall be insufficient to pay the holders of all outstanding shares of Series IV Class B Preferred Stock the full amounts (including all dividends accrued and unpaid) to which they shall be entitled by reason of such Liquidation of the Corporation, then there shall be paid ratably to the holders of the Series IV Class B Preferred Stock in connection with such Liquidation of the Corporation, an amount equal to each holder's pro rata share of the Total Amount Available.
The voluntary sale, conveyance, lease, exchange or transfer of all or substantially all the property or assets of the Corporation, or the merger or consolidation of the Corporation into another Corporation, or any purchase or redemption of some or all of the shares of any class or series of stock of the Corporation, shall not be deemed to be a Liquidation of the Corporation for the purposes of this Section 6 (unless in connection therewith the Liquidation of the Corporation is specifically approved).
6. Conversion Privilege. At any time subsequent to three years after issuance of any share of Series IV Class B Preferred Stock, the holder of any share of Series IV Class B Preferred Stock ("Holder") shall have the right, at such Holder's option (but if such share is called for redemption or exchange at the election of the Corporation, then in respect of such share only to and including but not after the close of business on (i) the fifth calendar day before the date fixed for such redemption; or (ii) the date fixed for such exchange, provided that the Corporation has set aside funds sufficient to effect such redemption) to convert such share into that number of fully paid and non-assessable shares of Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing $10.00 by the Conversion Rate then in effect.
a. Conversion Rate. Each share of Series IV Class B Preferred Stock may be converted, subject to the terms and provisions of this paragraph 6 into one (1) share of the Corporation's Common Stock, which is a price equal to one share of Common Stock for each $10.00 of Series IV Class B Preferred Stock or, in case an adjustment of such rate has taken place pursuant to the provisions of subdivision (f) of this paragraph 6, then at the Conversion Rate as last adjusted (such rate or adjusted rate, shall be expressed as the number of shares of Common Stock to be acquired upon conversion of one share of Series IV Class B Preferred Stock, and shall be referred to herein as the "Conversion Rate") ("Conversion Price"). Each share of Series IV Class B Preferred Stock shall be Convertible into Common Stock by surrender to the Corporation of the certificate representing such shares of Series IV Class B Preferred Stock to be converted by the Holder and by giving written notice to the Corporation of the Holder's election to convert.
The Corporation shall, as soon as practicable after receipt of such written notice and the proper surrender to the Corporation of the certificate or certificates representing shares of Series IV Class B Preferred Stock to be converted in accordance with the above provisions, issue and deliver for the benefit of the Holder at the office of the Corporation's duly appointed transfer agent (the "Transfer Agent") to the Holder for whose account such shares of Series IV Class B Preferred Stock were so surrendered or to such Holder's nominee or nominees, certificates for the number of shares of Common Stock to which the Holder shall be entitled. The certificates of Common Stock of the Corporation issued upon conversion shall bear such legends as may be required by state or federal laws.
Such conversion shall be deemed to have been effective immediately prior to the close of business on the date on which the Corporation shall have received both such written notice and the properly surrendered certificates for shares of Series IV Class B Preferred Stock to be converted (the "Conversion Date"), and at such time the rights of the Holder shall cease and the person or persons entitled to receive the shares of Common Stock issuable upon the conversion of such shares of Series IV Class B Preferred Stock shall be deemed to be, and shall be treated for all purposes as, the record Holder or Holders of such Common Stock on the Conversion Date. The Corporation shall not be required to convert, and no surrender of shares of Series IV Class B Preferred Stock or written notice of conversion with respect thereto shall be effected for that purpose, while the stock transfer books of the Corporation are closed for any reasonable business purpose for any reasonable period of time, but shall be required to convert upon the proper surrender of shares of Series IV Class B Preferred Stock for conversion immediately upon the reopening of such books. During the period in which the stock transfer books of the Corporation are closed, the Corporation may neither declare a dividend, declare a record date for payment of dividends nor make any payment of dividends.
b. Dividends. If any shares of Series IV Class B Preferred Stock shall be converted during any dividend payment period, the Holder shall be entitled to all dividends accrued up to and through such Conversion Date, at the rate set forth herein, whether or not there has been a dividend date, as set forth in paragraph 2 hereof.
c. Cancellation. Series IV Class B Preferred Stock converted into Common stock pursuant to the provisions of this paragraph 6 shall be retired and cancelled by the Corporation and given the status of authorized and unissued preferred stock.
d. Reissuance if Conversion is Partial. In the case of any certificate representing shares of Series IV Class B Preferred Stock which is surrendered for conversion only in part, the Corporation shall issue and deliver to the Holder a new certificate or certificates for Series IV Class B Preferred Stock of such denominations as requested by the Holder in the amount of Series IV Class B Preferred Stock equal to the unconverted shares of the Series IV Class B Preferred Stock represented by the certificate so surrendered.
e. Reservations of Shares. The Corporation shall at all times during which shares of Series IV Class B Preferred Stock may be converted into Common Stock as provided in this paragraph (e), reserve and keep available, out of any Common Stock held as treasury stock or out of its authorized and unissued Common Stock, or both, solely for the purpose of delivery upon conversion of the shares of Series IV Class B Preferred Stock as herein provided, such number of shares of Common Stock as shall then be sufficient to effect the conversion of all shares of Series IV Class B Preferred Stock from time to time outstanding, and shall take such action as may from time to time be necessary to ensure that such shares of Common Stock will, when issued upon conversion of Series IV Class B Preferred Stock, be fully paid and nonassessable.
f. Adjustment of Conversion Rate. The Conversion Rate provided in subdivision (a) of this paragraph 6, in respect of Series IV Class B Preferred Stock, shall be subject to adjustments from time to time as follows:
(i) While any shares of Series IV Class B Preferred Stock shall be outstanding, in case the Corporation shall subdivide the outstanding shares of Common Stock into a greater number of shares of Common Stock or combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, or issue, by reclassification of its shares of Common Stock, any shares of the Corporation, the Conversion Rate in effect immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the number of shares which it would have owned or been entitled to receive after the happening of any of the events described above, had such shares of Series IV Class B Preferred Stock been converted immediately prior to the happening of such event, such
adjustment to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination or reclassification, as the case may be, becomes effective.
(ii) In case the Corporation shall be consolidated with, or merge into, any other corporation, and the Corporation does not survive, proper provisions shall be made as a part of the terms of such consolidation or merger, whereby the Holder shall thereafter be entitled, upon exercise of such Holder's conversion rights, to receive the kind and amount of shares of stock or other securities of the Corporation resulting from such consolidation or merger, or such other property, as the Holder would have received if such conversion rights were exercised immediately prior to the effectiveness of such merger or consolidation.
(iii) In the event the Corporation at any time, or from time to time after December 31, 1999, makes or issues, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend distribution payable in additional shares of Common Stock or Common Stock Equivalents (as defined which does not provide for the payment of any consideration upon the issuance, conversion or thereof, without a corresponding dividend or other distribution to the Holder, based upon the number of shares of Common Stock into which the Series IV Class B Preferred Stock is convertible, then and in each such event the Conversion Rate then in effect will be increased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying such Conversion rate by a fraction:
(A) The numerator of which will be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution (which, in the case of Common Stock Equivalents, shall mean the maximum number of shares of Common Stock issuable with respect thereto, as set forth in the instrument relative thereto without regard to any provision for subsequent adjustment); and
(B) The denominator of which will be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date; provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Rate will be recomputed accordingly as of the close of business on such record date, and thereafter such Conversion Rate will be adjusted pursuant to this subparagraph (iii) as of the time of actual payment of such dividends or distributions.
(iv) In the event the Corporation at any time or from time to time after December 31, 1999, makes or issues, or fixes a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable to all holders of Common Stock in securities of the Corporation or Common Stock Equivalents, then, upon making such dividend or distribution provisions will be made so that the Holder will receive the amount of securities of the Corporation which it would have received had its Series IV Class B Preferred Stock been converted into Common Stock on the date of such event.
(v) In the event the Corporation sells or issues any Common Stock, or sells or issues Common Stock Equivalents which can be converted into Common Stock at a per share consideration (as defined below in this subparagraph (v) of paragraph 6(f)) less than the Stipulated Price then in effect, then the Holder shall be entitled to purchase from the Corporation in cash (for the same per share consideration at
which such Common Stock was issued or the per share price at which a share of Common Stock is acquirable upon exercise or conversion of Common Stock Equivalents) that additional number of shares of Common Stock which, when added to the number of shares of Common Stock acquirable by the Holder upon conversion of any shares of Series IV Class B Preferred Stock outstanding and held by such Holder immediately before such issue or sale (the "Acquirable Shares"), will equal a percentage of the number of shares of Common Stock Deemed Outstanding (as defined herein) immediately after such sale or issuance that is the same as the percentage of the number of shares of Common Stock Deemed Outstanding immediately before such issuance or sale represented by the Acquirable Shares. This right shall exist for a 45-day period following the sale or issuance of shares of Common Stock or Common Stock Equivalents, and thereafter shall cease to exist.
For the above purposes, the per share consideration with respect to the sale or issuance of Common Stock will be the price per share received by the Corporation, prior to the payment of any expenses, commissions, discounts and other applicable costs. With respect to the sale or issuance of Common Stock Equivalents which are convertible into or exchangeable for Common Stock without further consideration, the per share consideration will be determined by dividing the maximum number of shares of Common Stock issuable with respect to such Common Stock Equivalents (as set forth in the instrument relating thereto without regarding to any provisions contained therein for subsequent adjustment of such number) into the aggregate consideration receivable by the Corporation upon the sale or issuance of such Common Stock Equivalents. With respect to the issuance of other Common Stock Equivalents, the per share consideration will be determined by dividing the maximum number of shares of Common Stock issuable with respect to such Common Stock Equivalents into the total aggregate consideration received by the Corporation upon the sale or issuance of such Common Stock Equivalents plus the minimum aggregate amount of additional consideration received by the Corporation upon the conversion or exercise of such Common Stock Equivalents. In connection with the sale or issuance of Common Stock and/or Common Stock Equivalents for non-cash consideration, the amount of consideration will be the fair market value of such consideration as determined in good faith by the Board of Directors of the Corporation.
(vi) As used herein, the term "Stipulated Price" means initial price of $10.00 per share of Common Stock, as adjusted from time to time pursuant to subparagraph (viii) of this paragraph 6(f); and the term "Common Stock Equivalent" means any securities (whether debt or equity securities) or rights issued by the Corporation convertible into or entitling the holder thereof to receive shares of, or securities convertible into, Common Stock. The number of shares of "Common Stock Deemed Outstanding" at any date shall equal the sum of the number of shares of Common Stock then outstanding plus the number of shares of Common Stock then obtainable pursuant to Common Stock Equivalents.
(vii) In the event the Corporation declares any dividend or distribution payable to holders of its Common Stock (other than dividends payable out of the Corporation's retained earnings or earned surplus and dividends payable in shares of Common Stock or in securities convertible into or exchangeable for shares of Common Stock or rights or warrants to purchase Common Stock or securities convertible into or exchangeable for shares of Common Stock or any other securities issued by the Corporation), the Conversion Rate in effect immediately prior to the record date for such dividend or distribution shall be proportionately adjusted so that the Holder shall be entitled to receive the number of shares of Common Stock into which such shares of Common Stock or
Preferred Stock was convertible immediately prior to such record date multiplied by a fraction, the numerator of which is the fair market value of a share of Common Stock on such record date and the denominator of which is such per share fair market value of a share of Common Stock on such record date less the fair market value on such record date of the securities or other property which are distributed as a dividend or other distribution. The term "fair market value" of a share of Common Stock or of any other security or other type of property on any date means (A) in the case of Common Stock or any other security (I) if the principal trading market for such Common Stock or other security is an exchange or the NASDAQ national market on such date, the closing price on such exchange or the NASDAQ national market on such date, provided, if trading of such Common Stock or other security is listed on any consolidated tape, the fair market value shall be the closing price set forth on such consolidated tape on such date, or (II) if the principal market for such Common Stock or other security is the over-the-counter market (other than the NASDAQ national market) the mean between the closing bid and asked prices on such date as set forth by NASDAQ or (B) in the case of Common Stock or any other security for which the fair market value cannot be determined pursuant to clause (A) above or of any other security or type of property, fair market value thereof on such date as determined in good faith by the Board of Directors.
(viii) Whenever the Conversion Rate is adjusted pursuant to this paragraph 6(f), the Stipulated Price shall also be adjusted by multiplying it by a fraction that is the reciprocal of the fraction used to adjust the Conversion Rate.
(ix) The Corporation will not, by amendment of its Articles of Incorporation or through any dissolution, issuance or sale of securities 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 at all times in good faith will assist in the carrying out of all the provisions of this paragraph and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Holder against impairment.
(x) No adjustment in the Conversion Rate shall be required, unless such adjustment would require an increase or decrease of at least one (1) share of Common Stock in the Conversion Rate of one share of Series B Preferred Stock, provided that all adjustments which do not meet this minimum requirement cumulated and the adjustment will be made when the cumulated total is sufficient to require an adjustment. All calculations made pursuant to this subparagraph (x) of paragraph 6(f) shall be made to the nearest one-hundredth (1/100th) of a share of Common Stock.
g. Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares of Common Stock shall be issued upon any conversion of shares of Series IV Class B Preferred Stock but, in lieu thereof, there shall be paid an amount in cash equal to the same fraction of the current market price of a whole share of Common Stock on the day preceding the day of conversion.
h. Statement to Transfer Agent. Whenever the Conversion Rate for shares of Series IV Class B Preferred Stock shall be adjusted pursuant to the provisions of paragraph 6(f) hereof, the Corporation shall forthwith maintain at its office and, if applicable, file with the Transfer Agent for shares of Series IV Class B Preferred Stock and for shares of Common Stock, a statement signed by the President or a Vice President of the Corporation and by its Treasurer or an Assistant Treasurer, stating the adjusted Conversion Rate and setting forth in reasonable detail the method of calculation and the facts requiring such adjustment, such calculations to be confirmed by the Corporation's independent auditors, and stating the facts on which the calculation is based. Each adjustment shall remain in effect until a subsequent adjustment hereunder is required.
7. Registration Rights.
a. Piggyback Registration. The Corporation, for a period ending six
months after the last share of Series IV Class B Preferred Stock is
redeemed, retired, converted or otherwise no longer outstanding, will
give written notice to the Holder not less than 20 days in advance of
the initial filing of any registration statement under the Securities
Act of 1933, as amended (other than a registration statement
pertaining to securities issuable pursuant to employee stock option,
stock purchase, or similar plans or a registration statement
pertaining to securities issuable in connection with the acquisition
of a business, whether through merger, consolidation, acquisition of
assets, or exchange of securities), covering any Common Stock or other
securities of the Corporation, and will afford the Holder the
opportunity to have included in such registration all or such part of
the shares of Common Stock acquired upon conversion of Series IV Class
B Preferred Stock, as may be designated by written notice to the
Corporation not later than 10 days following receipt of such notice
from the Corporation. The Corporation shall be entitled to exclude the
shares of Common Stock held by the Holder from any one, but not more
than one, such registration if the Corporation in its sole discretion
decides that the inclusion of such shares will materially interfere
with the orderly sale and distribution of the securities being offered
under such registration statement by the Corporation. Notwithstanding
the foregoing, the Corporation shall not be entitled to exclude the
shares of Common Stock held by the Holder if shares of other
shareholders are being included in any such registration statement
and, in such circumstances, the Holder shall be entitled to include
the shares of Common Stock held by them on a pro rata basis in the
proportion that the number of shares of Common Stock held by the
Holder bears to the shares of Common Stock held by all other
shareholders, including shares in such registration statement. The
Holder shall not be entitled to include shares in more than two
registration statements pursuant to the provisions of this subdivision
(a) of paragraph 7, and all rights of the Holder under this
subdivision (a) of paragraph 7 shall terminate after the Holder has
included shares of Common Stock in two registration statements
pursuant to this subdivision (a) of paragraph 7.
b. Expenses. The Corporation will pay all out-of-pocket costs and expenses of any registration effected pursuant to the provisions of subdivision (a) of this paragraph 7, including registration fees, legal fees, accounting fees, printing expenses (including such number of any preliminary and the final prospectus as may be reasonably requested), blue sky qualification fees and expenses, and all other expenses, except for underwriting commissions or discounts applicable to the shares of Common Stock being sold by the Holder and the fees of counsel for the Holder, all of which shall be paid by the Holder.
c. Notwithstanding anything to the contrary contained herein, in the event that the Corporation files an initial registration statement under the Securities Act of 1933, as amended (other than a registration statement pertaining to securities issuable in connection with the acquisition of a business, whether through merger, consolidation, acquisition of assets or exchange of securities), concerning any Common Stock of the Corporation, it will afford the Holder the opportunity to convert his shares into that number of fully paid and non-assessable shares of Common Stock prior to the 3-year holding period stated in paragraph 6 above. The Corporation may also, at its option at any time within one-hundred eighty (180) days after an initial registration statement is deemed effective, demand the conversion of the Series IV Class B Preferred Stock into that number of fully paid and nonassessable shares of Common Stock as provided herein.
8. Reports.
So long as any of the Series IV Class B Preferred Stock shall be outstanding, the Corporation shall submit to the Holder financial reports no less frequently than annually.
9. Miscellaneous.
a. As used herein, the term "Common Stock" shall mean the Corporation's Common Stock, no par value, or, in the case of any reclassification or change of outstanding shares of Common Stock, the stock or securities issued in exchange for such Common Stock.
b. The shares of Series IV Class B Preferred Stock shall be fully transferable by the Holder thereof, subject to compliance with the applicable provisions of federal and state securities laws.
IN WITNESS WHEREOF, RETRACTABLE TECHNOLOGIES, INC. has caused its corporate seal to be hereunto affixed and this Certificate to be signed by its Chief Executive Officer and Secretary this 21/st/ day of January, 2000.
/s/ Thomas J. Shaw
------------------------------
THOMAS J. SHAW,
Its: Chief Executive Officer
ATTEST:
/s/ Michele Larios
--------------------------
MICHELE LARIOS
Secretary
|
EXHIBIT 2.2
AMENDED AND RESTATED
BYLAWS
OF
RETRACTABLE TECHNOLOGIES, INC.
ARTICLE I
OFFICES
ARTICLE II
SHAREHOLDERS' MEETING
to be delivered when deposited in the United States mail addressed to the Shareholder at his address as it appears on the stock transfer books of the corporation, with postage thereon paid.
ARTICLE III
DIRECTORS
circumstances, the Board of Directors shall consist of not less than three nor more than twenty-one persons. The exact number of Directors within the minimum and maximum limitations specified in the preceding sentence shall be fixed from time to time by either (i) the Board of Directors pursuant to a resolution adopted by a majority of the entire Board of Directors, (ii) the affirmative vote of the holders of 66 2/3% or more of the voting power of all of the shares of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, or (iii) the Articles of Incorporation. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of any incumbent Director. The Directors shall be divided into two classes, as nearly equal in number as possible, with the term of office of the first class to expire at the 1998 annual meeting of Shareholders and the term of the second class to expire at the 2000 annual meeting of Shareholders (an initial three (3) year term), and with the members of each class to hold office until their successors have been elected and qualified. At each annual meeting of Shareholders following such initial classification and election, Directors, elected to succeed those Directors whose terms expire shall be elected for a term of office for the class whose term of office expires at all such future annual meetings.
the authorized number of Directors does not remove any Director prior to the expiration of his term of office.
meeting, unless the express purpose for such attendance is to present the objection that the meeting is not lawfully called or convened.
litigation. The Board of Directors may, in proper cases, extend the indemnification to cover the good faith settlement of any such action, suit, or proceeding, whether formally instituted or not to the maximum extent permitted by Article 2.02-1 of Texas Business Corporation Act.
ARTICLE IV
OFFICERS
delegate to any officer or committee the power to appoint any such subordinate officers, committees or agents, to specify their duties and to determine their compensation.
Secretary, or his refusal to or neglect to act, notice may be given and served by Vice-President or by the Board of Directors.
ARTICLE V
EXECUTION OF INSTRUMENTS AND DEPOSIT OF FUNDS
ARTICLE VI
ISSUANCE AND TRANSFER OF SHARES
6.3 Fractional Shares. The corporation may, but shall not be obligated to, issue a certificate for a fractional share, and the Board of Directors may, in lieu thereof, arrange for the disposition thereof by those entitled thereto, pay the fair value in cash or issue scrip in registered or bearer form which shall entitle the holder to receive a certificate for a full share only upon the surrender of such scrip aggregating a full share. A certificate for a fractional share shall, but scrip shall not, unless otherwise provided herein, entitle the holder to exercise voting rights, to receive dividends, or to participate in any of the assets of the corporation in the event of liquidation. Such scrip, if issued, shall become void if not exchanged for certificates representing full shares within one year after its issue, or such scrip may be subject to the condition that the shares for which it is exchangeable may be sold by the corporation and
the proceeds thereof distributed to the holders of such scrip, and the same may be subject to any other conditions which the Board of Directors may deem advisable.
(a) That the corporation is organized under the laws of the State of Texas;
(b) The name of the person to whom issued;
(c) The number and class of shares and the designation of the series, if any, which such certificate represents;
(d) The par value of each share represented by such certificate, or a statement that the shares are without par value.
such officer before the certificate is issued, the certificate may be issued by the corporation with the same effect as if he were such officer at the date of its issuance.
ARTICLE VII
CORPORATE RECORDS, REPORTS, AND SEAL
(a) A balance sheet as of such closing date;
(b) A statement of income or profit and loss for the year ended on such closing date;
(c) Such other information as the Directors shall determine.
ARTICLE VIII
AMENDMENT OF BYLAWS
ARTICLE IX
MISCELLANEOUS
Attendance of a Director or a Shareholder, whether in person or by proxy, at any meeting shall constitute a waiver of notice of such meeting, except where such Director or Shareholder attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.
The above and foregoing Bylaws and all amendments and supplements to them are superseded by these Amended and Restated Bylaws which accurately incorporate all amendments set forth as of the 8th day of February, 2000.
/s/ Thomas J. Shaw
-----------------------------
THOMAS J. SHAW
Chairman of the Board
ATTEST:
/s/ Michele Larios
-----------------------------
MICHELE LARIOS, Secretary
|
Bylaws of Retractable Technologies, Inc. - Page 20
SEE REVERSE SIDE
NUMBER SHARES
C
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS
RETRACTABLE TECHNOLOGIES, INC.
AUTHORIZED TO ISSUE 50,000,000 SHARES
40,000,000 COMMON SHARES - PAR VALUE $1.00 EACH 5,000,000 CLASS A PREFERRED SHARES - PAR VALUE $1.00 EACH 5,000,000 CLASS B PREFERRED SHARES - PAR VALUE $1.00 EACH
This Certifies that ______________________________________ is the owner of _____________________________________fully paid and non-assessable Shares of the Common Shares of RETRACTABLE TECHNOLOGIES, INC.
transferable only on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officers and to be sealed with the Seal of the Corporation
this __________ day of _________ A.D. 19__
___________________________________ ___________________________________
Secretary President
================================================================================
|
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. Additional abbreviations may also be used though not in the list.
TEN COM ----as tenants in common UNIF GIFT MIN ACT ----..........Custodian.........(Minor)
TEN ENT ----as tenants by the entireties Under Uniform Gifts to Minors Act .............(State)
JT TEN ----as joint tenants with right of survivorship
and not as tenants in common
PLEASE INSERT SOCIAL SECURITY OR OTHER
Identifying Number of Assignee
|
__________________________________________________________________________Shares represented by the within Certificate, and hereby irrevocably constitutes and appoints____________________________________________________________Attorney to transfer said shares on the books of the within-named Corporation with full power of substitution in the premises.
Dated, ____________________
In presence of ___________________________________
***Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular without alteration
or enlargement, or any change whatever.
SEE REVERSE SIDE
NUMBER SHARES
A 176
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS
RETRACTABLE TECHNOLOGIES, INC.
AUTHORIZED TO ISSUE 50,000,000 SHARES
40,000,000 COMMON SHARES - NO PAR VALUE
5,000,000 CLASS A PREFERRED SHARES - PAR VALUE $1.00 EACH 5,000,000 CLASS B PREFERRED SHARES - PAR VALUE $1.00 EACH
This Certifies that ______________________________________ is the owner of _____________________________________fully paid and non-assessable Shares of the Class A Preferred Shares of RETRACTABLE TECHNOLOGIES, INC.
transferable only on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officers and to be sealed with the Seal of the Corporation
this __________ day of _________ A.D. _____
___________________________________ ___________________________________
Secretary President
================================================================================
|
There are no pre-emptive rights.
Transfer subject to restrictions in the By-Laws.
The Corporation will furnish without charge to each stockholder who so requests, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
The shares represented by this certificate have not been registered under any federal or state securities law. They have been acquired for investment and may not be transferred without an effective registration statement pursuance to such laws or an opinion of legal counsel satisfactory to the Corporation that registration is not required.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. Additional abbreviations may also be used though not in the list.
TEN COM ----as tenants in common UNIF GIFT MIN ACT ----..........Custodian.........(Minor)
TEN ENT ----as tenants by the entireties Under Uniform Gifts to Minors Act ..................(State)
JT TEN ----as joint tenants with right of survivorship
and not as tenants in common
PLEASE INSERT SOCIAL SECURITY OR OTHER
Identifying Number of Assignee
|
__________________________________________________________________________Shares represented by the within Certificate, and hereby irrevocably constitutes and appoints____________________________________________________________Attorney to transfer said shares on the books of the within-named Corporation with full power of substitution in the premises.
Dated, ____________________
In presence of ___________________________________
***Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular without alteration
or enlargement, or any change whatever.
SEE REVERSE SIDE
NUMBER SHARES
B 210
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS
RETRACTABLE TECHNOLOGIES, INC.
AUTHORIZED TO ISSUE 50,000,000 SHARES
40,000,000 COMMON SHARES - NO PAR VALUE
5,000,000 CLASS A PREFERRED SHARES - PAR VALUE $1.00 EACH 5,000,000 CLASS B PREFERRED SHARES - PAR VALUE $1.00 EACH
This Certifies that ______________________________________ is the owner of _____________________________________fully paid and non-assessable Shares of the Series I Class B Preferred Shares of RETRACTABLE TECHNOLOGIES, INC.
transferable only on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officers and to be sealed with the Seal of the Corporation
this __________ day of _________ A.D. _____
___________________________________ ___________________________________
Secretary President
================================================================================
|
There are no pre-emptive rights.
Transfer subject to restrictions in the By-Laws.
The Corporation will furnish without charge to each stockholder who so requests, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
The shares represented by this certificate have not been registered under any federal or state securities law. They have been acquired for investment and may not be transferred without an effective registration statement pursuance to such laws or an opinion of legal counsel satisfactory to the Corporation that registration is not required.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. Additional abbreviations may also be used though not in the list.
TEN COM ----as tenants in common UNIF GIFT MIN ACT ----..........Custodian.........(Minor)
TEN ENT ----as tenants by the entireties Under Uniform Gifts to Minors Act .............(State)
JT TEN ----as joint tenants with right of survivorship
and not as tenants in common
PLEASE INSERT SOCIAL SECURITY OR OTHER
Identifying Number of Assignee
|
__________________________________________________________________________Shares represented by the within Certificate, and hereby irrevocably constitutes and appoints____________________________________________________________Attorney to transfer said shares on the books of the within-named Corporation with full power of substitution in the premises.
Dated, ____________________
In presence of ___________________________________
***Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular without alteration
or enlargement, or any change whatever.
SEE REVERSE SIDE
NUMBER SHARES
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS
RETRACTABLE TECHNOLOGIES, INC.
AUTHORIZED TO ISSUE 50,000,000 SHARES
40,000,000 COMMON SHARES - PAR VALUE $1.00 EACH 5,000,000 CLASS A PREFERRED SHARES - PAR VALUE $1.00 EACH 5,000,000 CLASS B PREFERRED SHARES - PAR VALUE $1.00 EACH
This Certifies that ______________________________________ is the owner of _____________________________________fully paid and non-assessable Shares of the Series II Class B Preferred Shares of RETRACTABLE TECHNOLOGIES, INC.
transferable only on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officers and to be sealed with the Seal of the Corporation
this __________ day of _________ A.D. _____
___________________________________ ___________________________________
Secretary President
================================================================================
|
There are no pre-emptive rights. Transfer subject to restrictions in the By-Laws.
The Corporation will furnish without charge to each stockholder who so requests, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
The shares represented by this certificate have not been registered under any federal or state securities law. They have been acquired for investment and may not be transferred without an effective registration statement pursuance to such laws or an opinion of legal counsel satisfactory to the Corporation that registration is not required.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. Additional abbreviations may also be used though not in the list.
TEN COM ---- as tenants in common UNIF GIFT MIN ACT ----..........Custodian.........(Minor)
TEN ENT ---- as tenants by the entiretie Under Uniform Gifts to Minor Act ...................(State)
JT TEN ---- as joint tenants with right of survivorship
and not as tenants in common
PLEASE INSERT SOCIAL SECURITY OR OTHER
Identifying Number of Assignee
|
__________________________________________________________________________Shares represented by the within Certificate, and hereby irrevocably constitutes and appoints____________________________________________________________Attorney to transfer said shares on the books of the within-named Corporation with full power of substitution in the premises.
Dated, ____________________
In presence of ___________________________________
***Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular without alteration
or enlargement, or any change whatever.
SEE REVERSE SIDE
NUMBER SHARES
I 290
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS
RETRACTABLE TECHNOLOGIES, INC.
AUTHORIZED TO ISSUE 50,000,000 SHARES
40,000,000 COMMON SHARES - NO PAR VALUE
5,000,000 CLASS A PREFERRED SHARES - PAR VALUE $1.00 EACH 5,000,000 CLASS B PREFERRED SHARES - PAR VALUE $1.00 EACH
This Certifies that ______________________________________ is the owner of _____________________________________fully paid and non-assessable Shares of the Series III Class B Preferred Shares of RETRACTABLE TECHNOLOGIES, INC.
transferable only on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officers and to be sealed with the Seal of the Corporation
this __________ day of _________ A.D. _____
___________________________________ ___________________________________
Secretary President
================================================================================
|
There are no pre-emptive rights. Transfer subject to restrictions in the By-Laws.
The Corporation will furnish without charge to each stockholder who so requests, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
The shares represented by this certificate have not been registered under any federal or state securities law. They have been acquired for investment and may not be transferred without an effective registration statement pursuance to such laws or an opinion of legal counsel satisfactory to the Corporation that registration is not required.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. Additional abbreviations may also be used though not in the list.
TEN COM ----as tenants in common UNIF GIFT MIN ACT ----..........Custodian.........(Minor)
TEN ENT ----as tenants by the entireties Under Uniform Gifts to Minors Act .............(State)
JT TEN ----as joint tenants with right of survivorship
and not as tenants in common
PLEASE INSERT SOCIAL SECURITY OR OTHER
Identifying Number of Assignee
|
__________________________________________________________________________Shares represented by the within Certificate, and hereby irrevocably constitutes and appoints____________________________________________________________Attorney to transfer said shares on the books of the within-named Corporation with full power of substitution in the premises.
Dated, ____________________
In presence of ___________________________________
***Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular without alteration
or enlargement, or any change whatever.
SEE REVERSE SIDE
NUMBER SHARES
IV 018
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS
RETRACTABLE TECHNOLOGIES, INC.
AUTHORIZED TO ISSUE 50,000,000 SHARES
40,000,000 COMMON SHARES - NO PAR VALUE
5,000,000 CLASS A PREFERRED SHARES - PAR VALUE $1.00 EACH 5,000,000 CLASS B PREFERRED SHARES - PAR VALUE $1.00 EACH
This Certifies that ______________________________________ is the owner of _____________________________________fully paid and non-assessable Shares of the Series IV Class B Preferred Shares of RETRACTABLE TECHNOLOGIES, INC.
transferable only on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officers and to be sealed with the Seal of the Corporation
this __________ day of _________ A.D. _____
___________________________________ ___________________________________
Secretary President
================================================================================
|
There are no pre-emptive rights. Transfer subject to restrictions in the By-Laws.
The Corporation will furnish without charge to each stockholder who so requests, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
The shares represented by this certificate have not been registered under any federal or state securities law. They have been acquired for investment and may not be transferred without an effective registration statement pursuance to such laws or an opinion of legal counsel satisfactory to the Corporation that registration is not required.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. Additional abbreviations may also be used though not in the list.
TEN COM ----as tenants in common UNIF GIFT MIN ACT ----..........Custodian.........(Minor)
TEN ENT ----as tenants by the entireties Under Uniform Gifts to Minors Act .............(State)
JT TEN ----as joint tenants with right of survivorship
and not as tenants in common
PLEASE INSERT SOCIAL SECURITY OR OTHER
Identifying Number of Assignee
|
__________________________________________________________________________Shares represented by the within Certificate, and hereby irrevocably constitutes and appoints____________________________________________________________Attorney to transfer said shares on the books of the within-named Corporation with full power of substitution in the premises.
Dated, ____________________
In presence of ___________________________________
***Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular without alteration
or enlargement, or any change whatever.
Exhibit 3.12
RETRACTABLE TECHNOLOGIES, INC.
1999 STOCK OPTION PLAN
This Retractable Technologies, Inc. 1999 Stock Option Plan (hereinafter called the "Plan") was adopted by the Board of Directors of Retractable Technologies, Inc., a Texas corporation (hereinafter called the "Company"), on September 14, 1999. The date of approval of the Plan (hereinafter called the "Date of Approval") is fixed at July 1, 1999. The Plan will be submitted to the Shareholders of the Company for approval within one (1) year of the Date of Approval.
(A) "Board" shall mean the Board of Directors of the Company.
(B) "Committee" shall mean the Compensation Committee, which shall be appointed by the Board.
(C) "Company" shall mean Retractable Technologies, Inc., a Texas corporation.
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(E) "ISO" shall mean an incentive stock option within the meaning of Section 422 of the Code to purchase Stock, granted pursuant to this Plan.
(F) "NQSO" shall mean a non-qualified stock option to purchase Stock, granted pursuant to this Plan.
Retractable Technologies, Inc.
1999 Stock Option Plan - Page 1 of 9
(G) "Option Price" shall mean the purchase price for Stock pursuant to a Stock Option as determined in Section (6) of this Plan.
(H) "Participant" shall mean an employee of the Company, or of any subsidiary of the Company, to whom an ISO is granted under this Plan, and in the case of an NQSO, shall mean such persons or an independent contractor to whom an NQSO is granted pursuant to this Plan.
(I) "Plan" shall mean this Retractable Technologies, Inc. 1999 Stock Option Plan.
(J) "Stock" shall mean the common stock of the Company, no par value.
(K) "Stock Option" shall mean an IS or NQSO.
Retractable Technologies, Inc.
1999 Stock Option Plan - Page 2 of 9
Retractable Technologies, Inc.
1999 Stock Option Plan - Page 3 of 9
Company is to (i) calculate the amount of withholding tax due as if all shares
for which a NQSO is to be exercised were delivered, (ii) increase withholding on
his cash compensation on the date the NQSO is exercised, and/or (iii) use the
procedure described in the following provisions of this Subsection (6). One (1)
month prior to exercise of a NQSO, the Participant may deliver a notice of
withholding election to the Company. The notice shall state that the Company is
to (i) calculate the amount of withholding tax due as if all shares for which a
NQSO is to be exercised were delivered; (ii) reduce that number of shares made
available for delivery so that the fair market value of the shares withheld on
the exercise date approximates the Company's withholding tax obligation, and
(iii) pay the cash to the Internal Revenue Service and other applicable taxing
authorities on the Participant's behalf instead. No withholding obligation shall
be imposed by this Section (6) unless also imposed by applicable law.
(i) Notwithstanding Section 7(B) of this Plan, upon the death of the Participant, any ISO exercisable on the date of death may be exercised by the Participant's estate or by a person who acquires the right to exercise such ISO by bequest or inheritance or by reason of the death of the Participant, provided that such exercise occurs within both the remaining option term of the ISO and within twelve (12) months after the Participant's death.
(ii) The provisions of this Subsection 7(A) shall apply notwithstanding the fact that the Participant's employment may have terminated prior to death, and if the Stock Option remains exercisable but only to the extent of any ISOs exercisable on the date of death.
Retractable Technologies, Inc.
1999 Stock Option Plan - Page 4 of 9
(3) months after the termination of the Participant's employment without cause and automatically upon termination with cause.
(i) Notwithstanding Section 8(B) of this Plan, upon the death of the Participant, any NQSO exercisable on the date of death may be exercised by the Participant's estate or by a
Retractable Technologies, Inc.
1999 Stock Option Plan - Page 5 of 9
person who acquires the right to exercise such NQSO by bequest or inheritance or by reason of the death of the Participant, provided that such exercise occurs within both the remaining option term of the NQSO and within twelve (12) months after the Participant's death. Any nonvested NQSOs shall be forfeited at the death of the Participant.
(ii) The provisions of this Subsection 8(A) shall apply notwithstanding the fact that the Participant's employment may have terminated prior to death, and if the NQSO remains exercisable but only to the extent of any NQSOs exercisable on the date of death.
Retractable Technologies, Inc.
1999 Stock Option Plan - Page 6 of 9
Retractable Technologies, Inc.
1999 Stock Option Plan - Page 7 of 9
dissolution or liquidation, or such merger or consolidation, to exercise such Participant's Stock Options in whole or in part, but only to the extent that such Stock Options are otherwise exercisable under the terms of this Plan.
(A) The employer corporation's name, address and taxpayer identification number;
(B) The name, address and taxpayer identification number of the person to whom the ISO shares are transferred;
(C) The name and address of the Company;
(D) The date the ISO was granted:
(E) The date the shares were transferred pursuant to the exercise of the ISO;
(F) The fair market value of the Stock on date of exercise;
(G) The number of shares transferred upon exercise of the ISO;
Retractable Technologies, Inc.
1999 Stock Option Plan - Page 8 of 9
(H) A statement that the IS was an ISO; and
(I) The total cost of the shares.
(A) Except as provided in Section (11) of the Plan, increase the total number of shares reserved for the purposes of the Plan;
(B) Decrease the Option Price of an IS to less than the amounts shown in Section (6) of the Plan; or
(C) Extend the duration of the Plan.
Except as provided in Section (11) of the Plan, neither shall any amendment, alteration or discontinuation impair the rights of any holder of a Stock Option theretofore granted without his consent; provided, however, that if the Committee after consulting with management of the Company determines the application of an accounting standard in compliance with any statement issued by the Financial Accounting Standards Board concerning the treatment of employee stock options would have a significant adverse effect on the Company's financial statements because of the fact that Stock Options granted before the issuance of such statement are then outstanding, then the Committee in its absolute discretion may cancel and revoke all outstanding Stock Options to which such adverse effect is attributed and the holders of those Stock Options shall have no further rights in respect thereof. Such cancellation and revocation shall be effective upon written notice by the Committee to the holders of such Stock Options.
Retractable Technologies, Inc.
1999 Stock Option Plan - Page 9 of 9
RETRACTABLE TECHNOLOGIES, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Retractable Technologies, Inc. Nonqualified Stock Option Agreement (the "Agreement") is made and entered into by and between RETRACTABLE TECHNOLOGIES, INC. (the "Company") and ____________________ (the "Optionee"). The Company and the Optionee are sometimes hereinafter collectively referred to as the "Parties".
(A) After _________________________, ______;
(B) Termination of employment with cause; or
(C) Twelve (12) months after the Optionee's termination of employment due to death.
Nonvested options (options that have not become exercisable) are automatically forfeited upon death, permanent disability or termination of employment with or without cause. The unexercised portion of an Option with respect to which there has been a partial exercise shall remain exercisable during its remaining term.
RETRACTABLE TECHNOLOGIES, INC.
NONQUALIFIED STOCK OPTION AGREEMENT - Page 1 of 6
incorporated herein for all purposes, to the Company specifying the number of
shares to be purchased, specifying how the withholding tax obligation shall be
satisfied and specifying a business day (the "Exercise Date") not less than five
(5) days nor more than one (1) months from the date such notice is given, for
the payment of the purchase price against delivery of the shares being
purchased. The giving of such written notice to the Company shall constitute an
irrevocable election to purchase the number of shares specified in the notice
and to exercise the right on the date specified in the notice. Upon payment of
all amounts due from the Optionee including tax withholding upon exercise of
this Option, the Company shall cause certificates for any shares to be delivered
to the Optionee (or the person exercising the Optionee's options in the event of
his death) at its principal business office within ten (10) business days after
the Exercise Date.
RETRACTABLE TECHNOLOGIES, INC.
NONQUALIFIED STOCK OPTION AGREEMENT - Page 2 of 6
Affiliate for a period of one (1) years from the date of grant. This Option may not be transferred to an Affiliated (as that term is defined in the Plan) for a period of two (2) years from the date of grant. Any permitted transfer must nevertheless comply with all applicable state and federal securities laws. The Options granted hereunder have not been registered under applicable securities laws.
RETRACTABLE TECHNOLOGIES, INC.
NONQUALIFIED STOCK OPTION AGREEMENT - Page 3 of 6
of competent jurisdiction to be invalid, illegal or unenforceable in any respect for any reason, the invalid, illegal or unenforceable term, provision or agreement shall not affect any other term, provision or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal or unenforceable term, provision or agreement had never been contained herein.
RETRACTABLE TECHNOLOGIES, INC.
NONQUALIFIED STOCK OPTION AGREEMENT - Page 4 of 6
(A) Notice to the Company shall be addressed and delivered as follows:
RETRACTABLE TECHNOLOGIES, INC.
P. 0. BOX 9
511 LOBO LANE
LITTLE ELM, TEXAS 75068-0009
ATTENTION: THOMAS J. SHAW
PRESIDENT AND CHIEF EXECUTIVE OFFICER
|
(B) Notice to the Optionee shall be addressed and delivered as follows:
IN WITNESS WHEREOF, the Company, RETRACTABLE TECHNOLOGIES, INC. has caused these presents to be signed on this the ____ day of ____________, _____ by its duly authorized officer.
RETRACTABLE TECHNOLOGIES, INC.
RETRACTABLE TECHNOLOGIES, INC.
NONQUALIFIED STOCK OPTION AGREEMENT - Page 5 of 6
By:_______________________________________
THOMAS J. SHAW
President and Chief Executive Officer
ATTEST:
ACCEPTED AND AGREED TO:
RETRACTABLE TECHNOLOGIES, INC.
NONQUALIFIED STOCK OPTION AGREEMENT - Page 6 of 6
RETRACTABLE TECHNOLOGIES, INC.
1999 INCENTIVE STOCK OPTION AGREEMENT
This Retractable Technologies, Inc. 1999 Incentive Stock Option Agreement (the "Agreement") is made and entered into by and between RETRACTABLE TECHNOLOGIES, INC. (the "Company") and ____________________, a key employee of the Company or its subsidiaries (the "Optionee"). The Company and the Optionee are sometimes hereinafter collectively referred to as the "Parties".
Date: ________ _________ __________
Options Exercisable: ________ _________ __________
In no event shall the aggregate fair market value of stock (determined as of the date of grant of the Option) with respect to which Options become first exercisable by the Optionee in any calendar year exceed One Hundred Thousand Dollars ($100,000.00).
Retractable Technologies, Inc. 1999
Incentive Stock Option Agreement - Page 1 of 8 Pages
all events after ten (10) years from the date of grant.
Notwithstanding the foregoing, no Option granted to an Optionee who is
deemed to be a 10% Shareholder may be exercised after the expiration
of five (5) years from the date it is granted.
(i) Notwithstanding Section 2(C) of this Agreement, upon the death of the Optionee, any Option exercisable on the date of death may be exercised by the Optionee's estate or by a person who acquires the right to exercise such Option by bequest or inheritance or by reason of the death of the Optionee, provided that such exercise occurs within both the remaining option term of the Option and twelve (12) months after the Optionee's death. Any Option not then exercisable is forfeited upon death.
(ii) The provisions of this Subsection (2)(B) shall apply notwithstanding the fact that the Optionee's employment may have terminated by reason of permanent disability prior to death, but only to the extent of any Options exercisable on the date of death.
Retractable Technologies, Inc. 1999
Incentive Stock Option Agreement - Page 2 of 8 Pages
than five (5) days nor more than one (1) month from the date such notice is given, for the payment of the purchase price against delivery of the shares being purchased. The giving of such written notice to the Company shall constitute an irrevocable election to purchase the number of shares specified in the notice and to exercise the right on the date specified in the notice. Upon payment by cashier's check of all amounts due from the Optionee upon exercise of this Option, the Company shall cause certificates for any shares to be delivered to the Optionee (or the person exercising the Optionee's options in the event of his death) at its principal business office within ten (10) business days after the Exercise Date or in all events within the maximum term of the Option.
Retractable Technologies, Inc. 1999
Incentive Stock Option Agreement - Page 3 of 8 Pages
Retractable Technologies, Inc. 1999
Incentive Stock Option Agreement - Page 4 of 8 Pages
this Agreement shall be construed in all respects as if the invalid, illegal or unenforceable term, provision or agreement had never been contained herein.
Retractable Technologies, Inc. 1999
Incentive Stock Option Agreement - Page 5 of 8 Pages
(A) Notice to the Company shall be addressed and delivered as follows:
RETRACTABLE TECHNOLOGIES, INC.
POST OFFICE BOX 9
511 LOBO LANE
LITTLE ELM, TEXAS 75068-0009
ATTENTION: THOMAS J. SHAW
PRESIDENT AND CHIEF EXECUTIVE OFFICER
(B) Notice to the Optionee shall be addressed and delivered as follows:
IN WITNESS WHEREOF, the Company has caused these presents to be signed by its duly authorized President as of the ____ day of May, 1999.
RETRACTABLE TECHNOLOGIES, INC.
By:________________________________________
Thomas J. Shaw
President and Chief Executive Officer
Retractable Technologies, Inc. 1999
Incentive Stock Option Agreement - Page 6 of 8 Pages
ATTEST:
ACCEPTED AND AGREED TO:
Retractable Technologies, Inc. 1999
Incentive Stock Option Agreement - Page 7 of 8 Pages
EXHIBIT "A"
NOTICE OF EXERCISE OF 1999 INCENTIVE
STOCK OPTION AND RECORD OF STOCK TRANSFER
To: Retractable Technologies, Inc.
I hereby exercise (all/a portion of) my 1999 Incentive Stock Option granted by RETRACTABLE TECHNOLOGIES, INC., as of ______________, ____, subject to all the terms and provisions thereof and of the 1999 Stock Option Plan referred to therein, and notify you of my desire to purchase ______________ shares of Common Stock of the Company which were offered to me pursuant to said Option.
The Option Price due for this purchase is $______________________ in cash.
DATED: __________________, ____.
"Date of Notice"
I select the following Exercise Date: ________________________, ____.
(Not less than five days nor more than one [1] month from the Date of Notice)
Social Security No.:________________________
Receipt is hereby acknowledged of the delivery to me by RETRACTABLE TECHNOLOGIES, INC. on ________ of stock certificate #________, dated ________, for ________ shares of the Company's Common Stock purchased by me pursuant to the terms and conditions of the 1999 Stock Option Plan referred to above.
Social Security No.:________________________
Retractable Technologies, Inc. 1999
Incentive Stock Option Agreement - Page 8 of 8 Pages
EXHIBIT 3.13
1996 INCENTIVE STOCK OPTION PLAN
OF
RETRACTABLE TECHNOLOGIES, INC.
WHEREAS, the Board of Directors desires to authorize stock options pursuant to an Incentive Compensation Stock Option Plan (the "Plan") to certain officers and key employees of RETRACTABLE TECHNOLOGIES, INC. (the "Company");
WHEREAS, this Plan is intended to encourage ownership of the common stock of the Company by certain officers and key employees of the Company, who have performed well in their capacities and who have potential for assuming higher levels of responsibility with the Company, and
WHEREAS, this Plan, as adopted, should aid in attracting qualified personnel to the Company, and provide additional incentive for such employees to promote and contribute to the success of the Company.
NOW, THEREFORE, IT IS RESOLVED that the following shall constitute the Incentive Compensation Stock Option Plan of the Company, as defined in Internal Revenue Code Section 422A, as amended, (the "Code"), unless subsequently amended by the Board of Directors as herein provided:
ARTICLE I
COMMON STOCK SUBJECT TO PLAN
1.01 Subject to adjustment as provided in Section 10.1 hereof, there will be reserved for the use upon the exercise of options (the "Options") to be granted from time to time under the Plan, an aggregate of eight hundred thousand (800,000) shares of the common stock (the "Common Stock") of the Company, which shares shall be authorized but unissued shares of Common Stock. If an Option ceases to be exercisable, in whole or in part, the shares representing such Option shall continue to be available under the Plan for purposes of granting Options with respect thereto.
The Company shall not be required, upon the exercise of any Option, to issue or deliver any shares of stock prior to the completion of such registration or other qualification of such shares under any State or Federal law, rule or regulation as the Company shall determine to be necessary or desirable.
RTI Incentive Compensation Stock Option Plan
April 19, 1996
ARTICLE II
ADMINISTRATION OF THE PLAN
The Committee shall have the sole authority and power, subject to the express provisions and limitations of the Plan, to construe the Plan and Option agreements granted hereunder, and to adopt, prescribe, amend, and rescind rules and regulations relating to the Plan, and to make all determinations necessary or advisable for administering the Plan. The interpretation and construction by the Committee of any provisions of the Plan or any Option granted hereunder shall be in accordance with Section 422A, as amended, of the Code, and the regulations thereunder, and shall be final and conclusive, unless otherwise determined by the Board of Directors. No member of the Board of Directors or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted under it.
ARTICLE III
EMPLOYEES TO WHOM OPTIONS SHALL BE GRANTED
3.01 Options may be granted only to full-time employees. Employees will be granted, on an individual basis, an option to purchase a specified number of shares authorized at an option price not less than the fair market value of the stock at the time the
RTI Incentive Compensation Stock Option Plan
April 19, 1996
Option is granted. The number of Options granted will be at the sole discretion of the Committee.
3.02 Only current employees, who have been in the continuous employ of the Company for not less than three (3) years from the date the Option was granted, are eligible to exercise the Option or any portion thereof. The term "continuous employ" encompasses time off from work for vacations, sick leaves and military leaves.
3.03 Subject to the provisions of Section 6.01 hereof, no individual shall be granted an Option who, immediately before such Option was granted, would own more than ten percent (10%) of the total combined voting power or value of all classes of stock of the Company. Any Option granted under this Plan shall be granted within ten (10) years from the date this Plan is adopted.
ARTICLE IV
FACTORS TO BE CONSIDERED IN GRANTING OPTIONS
4.01 In making any determination as to employees to whom an Option shall be granted and as to the number of shares to be covered by such an Option, the Committee shall take into account the duties of the respective employees; their present and potential contributions to the success of the Company; and such other factors as the Committee shall deem relevant in connection with accomplishing the purpose of the Plan.
ARTICLE V
OPTION PRICES
5.01 The purchase price or prices of the shares of the Common Stock of the Company, which shall be offered to any employee under the Plan and covered by each Option, shall be one hundred percent (100%) of the fair market value of the Common Stock at the time of granting the Option. During such time as the Common Stock of the Company is not listed upon an established stock exchange, the fair market value per share shall be determined in good faith by the Committee at the time the Option is granted.
ARTICLE VI
TERMS AND CONDITIONS OF OPTIONS
6.01 All Options granted pursuant to this Plan must be granted within ten
(10) years from the date the Plan is adopted by the Board of Directors of the
Company.
RTI Incentive Compensation Stock Option Plan
April 19, 1996
If an optionee's employment is terminated by reason of disability (within the meaning of Section 105(d)(4) of the Code), the Committee shall have the right, in its sole discretion, to extend the exercise period for a period not in excess of one (1) year following the date of termination of the optionee's employment.
If an optionee dies while in the employment of the Company and shall not have fully exercised vested Options granted pursuant to the Plan, such Option may be exercised, in whole or in part, at any time within three (3) months after the optionee's death by the executors or administrators of the optionee's estate or by any person or persons who shall have acquired the Option directly from the optionee by bequest or inheritance, subject to the condition that no Option shall be exercisable after the expiration of ten (10) years from the date it is granted.
RTI Incentive Compensation Stock Option Plan
April 19, 1996
ARTICLE VII
MODE AND TIME OF PAYMENT
7.01 The purchase price of the shares of the Common stock as to which the Option shall be exercised shall be paid in full in cash at the time of exercise of the Option.
ARTICLE VIII
RIGHTS AS A SHAREHOLDER
8.01 The holder of an Option shall have no rights as a Shareholder with respect to the shares covered by his Option until the due exercise of the Option and the date of issuance of one or more stock certificates to him for such shares. No adjustments shall be made for dividends (ordinary or extraordinary, whether in cash, securities, or other property) or distributions or other rights for which the record date is prior to the date such certificate is issued, except as provided in Section 10 hereof.
RTI Incentive Compensation Stock Option Plan
April 19, 1996
ARTICLE IX
THE COMPANY'S RIGHT OF FIRST REFUSAL
9.01 In the event an optionee under this Plan exercises his Option and becomes a Shareholder and receives a bona fide offer for the purchase of all or a portion of his Shares (or any rights or interests therein), such Shareholder (hereinafter referred to as the "Offering Shareholder") shall give written notice of such offer to the Secretary of the Company. The notice must set forth the name of the proposed transferee; the number of shares to be transferred; the price per share; and all other terms and conditions of the proposed transfer.
On receipt of the notice with respect to such offer, the Company shall have the exclusive right and option, exercisable at any time during a period of fifteen (15) days from the date of said notice, to purchase the Shares of the Company covered by the offer in question at the same price and on the same terms and conditions of the offer as set out in such notice. If the Company decides to exercise the Option, it shall give written notification of this effect to the Shareholder desiring to sell, and said sale and purchase shall be closed within thirty (30) days thereafter. If the Company does not elect to exercise its option to purchase any or all of the Offered Shares free and clear of any restrictions against transfer that might otherwise have been created by this Agreement but subject to State and Federal securities law, the Company shall give written notification to the Offering Shareholder of their intent not to purchase the offered shares. The right of the Company to exercise its option to purchase shall be subject to the laws of the State of Texas governing the rights of a corporation to purchase its own shares.
ARTICLE X
ADJUSTMENTS ON CHANGES IN CAPITALIZATION
10.01 Subject to any required action by the Shareholders, the number of shares of Common Stock covered by the Plan, the number of shares of Common Stock covered by each outstanding Option, and the price per share thereof in each such Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock of the Company. This adjustment can result from a subdivision or consolidation of shares or the payment of a stock dividend (but only on the Common Stock) or any other increase or decrease in the number of such shares effected without receipt or consideration by the Company. Upon exercise of the Option, the optionee shall receive the same number of shares he would have received had he been holder of all shares subject to his outstanding Options immediately before the effective date of such change in the number of issued shares of the Common Stock of the Company.
RTI Incentive Compensation Stock Option Plan
April 19, 1996
Subject to any required action by the Shareholders, if the Company shall be the surviving corporation in any merger or consolidation, each outstanding Option shall pertain to and apply to the securities to which a holder of the number of shares of Common Stock subject to the Option would have been entitled. A dissolution or liquidation of the Company or a merger or consolidation in which the Company is not the surviving corporation, shall cause each outstanding Option to terminate as of a date to be fixed by the Committee (which date shall be as of or prior to the effective date of any such dissolution or liquidation or merger or consolidation), provided that not less than thirty (30) days' written notice of the date so fixed as such termination date shall be given to each optionee, and each optionee shall, in such event, have the right, during the said thirty (30) days preceding such termination date, to exercise his Option, in whole or in part, in the manner herein set forth.
In the event of a change in the Common Stock of the Company as presently constituted, which change is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any change shall be deemed to be the Common Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments, if any, shall be made by the Committee whose determination in that respect shall be final, binding and conclusive, provided that each Option granted pursuant to this Plan shall not be adjusted in a manner that causes the Option to fail to continue to qualify as an Incentive Stock Option within the meaning of Section 422A, as amended, of the Code. The Company shall give timely notice of any adjustments made to each holder under this Plan and such adjustments shall be effective and binding.
Except as hereinbefore expressly provided in this Article 10.01, the
holder of an Option shall have no rights by reason of any of the following:
subdivision or consolidation of shares of stock of any class; the payment of any
stock dividend; any other increase or decrease in the number of shares of stock
of any class by reason of any dissolution, liquidation, merger, reorganization,
or consolidation; spin-off of assets; or stock of another corporation. Any issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock subject to the Option.
The grant of an Option shall not affect, in any way, the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets.
RTI Incentive Compensation Stock Option Plan
April 19, 1996
ARTICLE XI
INVESTMENT PURPOSE
11.01 Each Option under the Plan shall be granted on the condition that the purchase of the shares of stock thereunder shall be for investment purposes, and not with a view of resale or distribution, provided however, that in the event the shares of stock subject to such Option are registered under the Securities Act of 1933, as amended, or in the event a resale of such shares of stock without such registration would otherwise be permissible, such condition shall be inoperative if, in the opinion of counsel for the Company, such condition is not required under the Securities Act of 1933, as amended, or any other applicable law, regulation, or rule of any governmental agency.
ARTICLE XII
TIME OF GRANTING OPTIONS
12.01 Neither anything contained in the Plan or in any resolution adopted or to be adopted by the Board of Directors or the Shareholders of the Company, nor any action taken by the Committee, shall constitute the granting of any Option. The granting of an Option shall take place only when a written Option Agreement acceptable in form and substance to the Committee, subject to the terms and conditions hereof, shall have been duly executed and delivered by or on behalf of the Company and the employee to whom such Option shall be granted.
ARTICLE XIII
NO OBLIGATION TO EXERCISE OPTION
13.01 The granting of an Option shall impose no obligation upon the optionee to exercise such Option or to exercise the Option in its entirety.
ARTICLE XIV
MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS
14.01 Subject to the terms and conditions and within the limitations of the Plan, the Committee and the Board of Directors may modify, extend, or renew outstanding Options granted under the Plan, or accept the surrender of outstanding Options (to the extent not therefore exercised). Neither the Committee nor the Board of Directors shall, however, modify any outstanding Options so as to specify a lower price or accept the surrender of outstanding Options and authorize the granting of new Options in substitution therefore specifying a lower price. Notwithstanding the foregoing, however, no
RTI Incentive Compensation Stock Option Plan
April 19, 1996
modification of an Option shall, without the consent of the optionee, alter or impair any rights or obligations under any Option theretofore granted under the Plan.
ARTICLE XV
EFFECTIVE DATE OF THE PLAN
15.01 The Plan shall become effective on such date as the Board of Directors shall determine; but only after the Shareholders of the Company shall, by the affirmative vote of the holders of a majority in interest of the Common Stock, have approved the Plan.
ARTICLE XVI
TERMINATION OF THE PLAN
16.01 This Plan shall terminate ten (10) years after its approval by the Shareholders of the Common Stock of the Company or adoption by the Board of Directors, whichever is earlier. Options may be granted under this Plan at any time and from time to time prior to its termination. Any Option outstanding under the Plan at the time of its termination shall remain in effect until the Option shall have been exercised or shall have expired.
ARTICLE XVII
AMENDMENT OF THE PLAN
17.01 The Plan, may, at any time or from time to time, be terminated, modified, or amended by the Shareholders of the Company, by the affirmative vote of a majority in interest of the Common Stock, in addition to the affirmative vote of a majority in interest of all the stock of the Company. The Committee may, at any time and from time to time, modify or amend the Plan (including such form of Option Agreement as herein above mentioned) in such respects as it shall deem advisable in order that the Option shall be "Incentive Stock Options" as defined in Section 422A, as amended, of the Code, or to conform to any change in the law, or in any other respect which shall not change (a) the maximum number of shares for which an Option may be granted under the Plan; or (b) the option prices (other than to change the manner of determining the fair market value of the Common Stock for the purpose of Section 6 hereof to conform with any then applicable provisions of the Code or regulations thereunder); or (c) the periods during which an Option may be granted or exercised; or (d) the provisions relating to the determination of employees to whom an Option shall be granted and the number of shares to be covered by such Option; or (e) the provisions relating to adjustments to be made upon changes in capitalization, the termination or any modification or amendment of the Plan shall not, without the consent of an employee, affect his rights under an Option theretofore granted to him.
RTI Incentive Compensation Stock Option Plan
April 19, 1996
ARTICLE XVIII
INDEMNIFICATION OF COMMITTEE
18.01 In addition to such other rights of indemnification as they may have as Directors or as members of the Committee, the members of the Committee shall be indemnified by the Company against the reasonable expenses, including attorney's fees actually and necessarily incurred in connection with the defense of any action, suit or proceedings, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee member is liable for negligence or misconduct in the performance of his duties; provided that within sixty (60) days after institution of any such action, suit or proceeding, a Committee member shall in writing offer the Company the opportunity, at is own expense, to pursue and defend the same.
ARTICLE XIX
APPLICATION OF FUNDS
19.01 The proceeds received by the Company from the sale of Common Stock pursuant to Options granted hereunder will be used for general corporate purposes.
ARTICLE XX
APPROVAL OF SHAREHOLDERS
20.01 The Plan shall be submitted to the Shareholders of the Company within twelve (12) months after the date the Plan is adopted by the Board of Directors for the approval by the holders of at least a majority of the capital stock of the Company then outstanding and entitled to vote thereon.
ARTICLE XXI
In the event that any one or more of the Sections, or portions thereof, contained in this Plan shall be held invalid, illegal or unenforceable in any respect by a court, such invalidity, illegality, or unenforceability shall not affect the other sections of the Plan and said remaining sections shall remain full effect.
RTI Incentive Compensation Stock Option Plan
April 19, 1996
EXECUTED AS OF THE 30 day of April, 1996.
RETRACTABLE TECHNOLOGIES, INC.
/s/ Thomas J. Shaw
By: --------------------------------
Thomas J. Shaw, President
ATTEST:
/s/ Lillian E. Salerno
By: --------------------------------
Lillian E. Salerno
Chief Operating Officer
|
I, ____________________________, the Option Holder, hereby acknowledge by my signature that I understand and agree to the term of this Plan.
ACCEPTED BY:
DATE: _____________________
RTI Incentive Compensation Stock Option Plan April 19, 1996
Exhibit 3.14
RETRACTABLE TECHNOLOGIES, INC.'S
1996 STOCK OPTION PLAN FOR
DIRECTORS AND OTHER INDIVIDUALS
WHEREAS, the Board of Directors desires to authorize stock options to certain Directors of RETRACTABLE TECHNOLOGIES, INC. (the "Company") and other individuals;
WHEREAS, this Plan is intended to encourage ownership of the common stock of the Company by certain Directors of the Company and other individuals who have performed well in their capacities and who have contributed, in part, to the Company's success; and
WHEREAS, this Plan, as adopted, should aid in attracting qualified Directors to the Company's Board, and provide additional incentives for such Directors and other individuals to promote and contribute to the success of the Company;
NOW THEREFORE IT IS RESOLVED that the following shall constitute the Stock Option Plan (the "Plan") of the Company, unless subsequently amended by the Board of Directors as herein provided:
ARTICLE I
COMMON STOCK SUBJECT TO PLAN
1.01 Subject to adjustment as provided in Article X, Section 10.01 hereof, there will be reserved for the use upon the exercise of options (the "Options") to be granted from time to time under the Plan, an aggregate of two hundred thousand (200,000) shares of the common stock (the "Common Stock") of the Company, which shares shall be authorized but unissued shares of Common Stock. If an Option ceases to be exercisable, in whole or in part, the shares representing such Option shall continue to be available under the Plan for purposes of granting Options with respect thereto.
1.02 The Company shall not be required, upon the exercise of any Option, to issue or deliver any shares of stock prior to the completion of such registration or other qualification of such shares under any State or Federal law, rule or regulation as the Company shall determine to be necessary or desirable.
ARTICLE II
RTI Stock Option Plan
Directors & Other Individuals
April 19, 1996 - Page 1
ADMINISTRATION OF THE PLAN
The Committee shall have the sole authority and power, subject to the express provisions and limitations of the Plan, to construe the Plan and Option agreements granted hereunder, and to adopt, prescribe, amend, and rescind rules and regulations relating to the Plan, and to make all determinations necessary or advisable for administering the Plan. The interpretation and construction by the Committee of any provisions of the Plan or any Option granted hereunder shall be in accordance with all applicable laws and regulations, and shall be final and conclusive, unless otherwise determined by the Board of Directors. No member of the Board of Directors or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted under it.
ARTICLE III
DIRECTORS AND OTHER INDIVIDUALS TO
WHOM OPTIONS SHALL BE GRANTED
3.01 Options may be granted only to members of the Company's Board of Directors and other individuals who have made a contribution towards the Company's success. Directors and other individuals will be granted, on an individual basis, an option to purchase a specified number of shares authorized at an option price not less than the fair market value of the stock at the time the option in granted. The number of options
RTI Stock Option Plan
Directors & Other Individuals
April 19, 1996 - Page 2
granted will be at the sole discretion of the Committee.
3.02 With the exception of the individuals described in Section 3.03 below, only current directors who have been serving continuously for not less than three (3) years from the date the Option was granted, are eligible to exercise the Option or any portion thereof. The term "continuously" means for three annual terms of service.
3.03 Except as set forth in Section 3.02 above, only individuals who have continuously provided services, either as a consultant, independent contractor or otherwise on the Company's behalf for not less than three (3) years from the date the Option was granted are eligible to exercise the Option or any portion thereof. The term "continuously" means for three (3) annual terms of service.
3.04 In no event shall the term "other individuals" encompass an individual who would be classified as the Company's employee as defined by the IRS Code or any other applicable law.
3.05 Subject to the provisions of Section 6.01 hereof, no individual shall be granted an option who, immediately before such Option was granted, would own more than ten percent (10%) of the total combined voting power or value of all classes of stock of the Company. Any option granted under this Plan shall be granted within ten (10) years from the date this Plan is adopted.
ARTICLE IV
FACTORS TO BE CONSIDERED IN GRANTING OPTIONS
4.01 In making any determination as to Directors and other individuals to whom an Option shall be granted and as to the number of shares to be covered by such an Option, the Committee may grant options based on its sole and absolute discretion.
ARTICLE V
OPTION PRICES
5.01 The purchase price or prices of the shares of the Common Stock of the Company, which shall be offered to any Director or individual under the Plan and covered by each Option, shall be one hundred percent (100%) of the fair market value of the Common Stock at the time of granting the Option. During such time as the Common Stock of the Company is not listed upon an established stock exchange, the fair market value per share shall be determined in good faith by the Committee at the time the Option is granted.
RTI Stock Option Plan
Directors & Other Individuals
April 19, 1996 - Page 3
ARTICLE VI
TERMS AND CONDITIONS OF OPTIONS
6.01 All Options granted pursuant to this Plan must be granted within ten (10) years from the date the Plan is adopted by the Board of Directors of the Company.
If a Director's service on the Board of Directors is terminated by reason of disability, the Committee shall have the right, in its sole discretion, to extend the exercise period for a period not in excess of one (1) year following the date of termination of the Director's service on the Board of Directors.
If a Director covered by this Plan dies while in service of the Company's Board of Directors and shall not have fully exercised vested Options granted pursuant to the Plan, such Option may be exercised in whole or in part, at any time within three (3) months after the Director's death by the executors or administrators of the Director's estate or by any person or persons who shall have acquired the Option directly from the Director by bequest or inheritance, subject to the condition that no Option shall be exercisable after the expiration of ten (10) years from the date it is granted.
RTI Stock Option Plan
Directors & Other Individuals
April 19, 1996 - Page 4
If an individual's service for the Company is terminated by reason of disability, the Committee shall have the right, in its sole discretion, to extend the exercise period for a period not in excess of one (1) year following the date of termination of the individual's service for the Company.
If an individual covered by this Plan dies while in service of the Company and shall not have fully exercised vested Options granted pursuant to the Plan, such Option may be exercised, in whole or in part, at any time within three (3) months after the individual's death by the executors or administrators of the individual's estate or by any person or persons who shall have acquired the Option directly from the individual by bequest or inheritance, subject to the condition that no Option shall be exercisable after the expiration of ten (10) years from the date it is granted.
RTI Stock Option Plan
Directors & Other Individuals
April 19, 1996 - Page 5
Option, the Company may require the Optionee to execute any documents or take any action which may be then necessary to comply with the Securities Act of 1933 and the rules and regulations promulgated thereunder, or any other applicable federal or state laws regulating the sale and issuance of Securities, and the Company may, if it deems necessary, include provisions in the stock option agreements to assure such compliance. The Company may, from time to time change the requirements with respect to enforcing compliance with the federal and state securities laws, including the request for and enforcement of letters of investment intent, such requirements to be determined by the Company in its judgment as necessary to assure compliance with said laws. Such changes may be made with respect to any particular option or stock issued upon exercise thereof.
ARTICLE VII
MODE AND TIME OF PAYMENT
7.01 The purchase price of the shares of the Common Stock as to which the Option shall be exercised shall be paid in full in cash at the time of exercise of the Option.
ARTICLE VIII
RIGHTS AS A SHAREHOLDER
8.01 The holder of an Option shall have no rights as a shareholder with respect to the shares covered by his Option until the due exercise of the Option and the date of issuance of one or more stock certificates to him for such shares. No adjustment shall be made for dividends (ordinary or extraordinary whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such certificate is issued, except as provided in Article X hereof.
ARTICLE IX
THE COMPANY'S RIGHT OF FIRST REFUSAL
9.01 In the event an Optionee under this Plan exercises his Option and becomes a Shareholder and receives a bona fide offer for the purchase of all or a portion of his Shares (or any rights or interests therein), such Shareholder (hereinafter referred to as the Offering Shareholder) shall give written notice of such offer to the Secretary of the Company. The notice must set forth the name of the proposed transferee, the number
RTI Stock Option Plan
Directors & Other Individuals
April 19, 1996 - Page 6
of shares to be transferred, the price per share, and all other terms and conditions of the proposed transfer.
On receipt of the notice with respect to such offer, the Company shall have the exclusive right and option, exercisable at any time during a period of fifteen (15) days from the date of said notice to purchase the shares of the Company covered by the offer in question at the same price and on the same terms and conditions of the offer as set out in such notice. If the Company decides to exercise the option, it shall give written notification of this effect to the Shareholder desiring to sell, and said sale and purchase shall be closed within thirty (30) days thereafter. If the Company does not elect to exercise its option to purchase any or all of the Offered Shares to the prospective purchaser free and clear of any restrictions against transfer that might otherwise have been created by this agreement but subject to State and Federal securities law. Provided, further, that the right of the Company to exercise its option to purchase shall be subject to the laws of the State of Texas governing the rights of a corporation to purchase its own shares.
ARTICLE X
ADJUSTMENTS ON CHANGES IN CAPITALIZATION
10.01 Subject to any required action by the Shareholders, the number of shares of Common Stock covered by the Plan, the number of shares of Common Stock covered by each outstanding Option, and the price per share thereof in each such Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock of the Company resulting from a subdivision or consolidation of shares or the payment of a stock dividend (but only on the Common Stock) or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company, so that upon exercise of the Option, the Optionee shall receive the same number of shares he would have received had he been holder of all shares subject to his outstanding Options immediately before the effective date of such change in the number of issued shares of the Common Stock of the Company.
Subject to any required action by the Shareholders, if the Company shall be the surviving corporation in any merger or consolidation, each outstanding Option shall pertain to and apply to the securities to which a holder of the number of shares of Common Stock subject to the Option would have been entitled. A dissolution or liquidation of the Company or a merger or consolidation in which the Company is not the surviving corporation, shall cause each outstanding Option to terminate as of a date to be fixed by the Committee (which date shall be as of or prior to the effective date of any such dissolution or liquidation or merger or consolidation), provided that not less than thirty (30) days' written notice of the date so fixed as such termination date shall be given to each Optionee, and each Optionee shall, in such event, have the right, during
RTI Stock Option Plan
Directors & Other Individuals
April 19, 1996 - Page 7
the said thirty (30) days preceding such termination date to exercise his option, in whole or in part, in the manner herein set forth.
In the event of a change in the Common Stock of the Company as presently constituted, which change is limited to a change of all its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any change shall be deemed to be the Common Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments, if any, shall be made by the Committee whose determination in that respect shall be final, binding and conclusive. The Company shall give timely notice of any adjustments made to each holder of an Option under this Plan and such adjustments shall be effective and binding on the Optionee.
Except as hereinbefore expressly provided in this Section 10.01,
the holder of an Option shall have no rights by reason of any of the following:
subdivision or consolidation of shares of stock of any class; the payment of any
stock dividend; any other increase or decrease in the number of shares of stock
of any class by reason of any dissolution, liquidation, merger, reorganization,
or consolidation; spin-off of assets; or stock of another corporation. Any issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock subject to the Option.
The grant of an Option pursuant to the Plan shall not affect, in any way, the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets.
ARTICLE XI
INVESTMENT PURPOSE
11.01 Each Option under the Plan shall be granted on the condition that the purchases of the shares thereunder shall be for investment purposes, and not with a view of resale or distribution, provided however, that in the event the shares of stock subject to such Option are registered under the Securities Act of 1933, as amended, or in the event a resale of such shares of stock without such registration would otherwise be permissible, such condition shall be inoperative if, in the opinion of counsel for the Company, such condition is not required under the Securities Act of 1933 or any other applicable law, regulation, or rule of any governmental agency.
RTI Stock Option Plan
Directors & Other Individuals
April 19, 1996 - Page 8
ARTICLE XII
TIME OF GRANTING OPTIONS
12.01 Neither anything contained in the Plan or in any resolution adopted or to be adopted by the Board of Directors or the Shareholders of the Company, nor any action taken by the Committee, shall constitute the granting of any Option. The granting of an Option shall take place only when a written Option Agreement acceptable in form and substance to the Committee, subject to the terms and conditions hereof, shall have been duly executed and delivered by or on behalf of the Company and the Director or other individual to whom such Option shall be granted.
ARTICLE XIII
NO OBLIGATION TO EXERCISE OPTION
13.01 The granting of an Option shall impose no obligation upon the Optionee to exercise such Option.
ARTICLE XIV
MODIFICATION, EXTENSION, AND RENEWAL OF OPTIONS
14.01 Subject to the terms and conditions and within the limitations of the Plan, the Committee and the Board of Directors may modify, extend, or renew outstanding Options granted under the Plan, or accept the surrender of outstanding Options (to the extent not therefore exercised). Neither the Committee nor the Board of Directors shall, however, modify any outstanding options so as to specify a lower price or accept the surrender of outstanding options and authorize the granting of new options in substitution therefore specifying a lower price. Notwithstanding the foregoing, however, no modification of an Option shall, without the consent of the Optionee, alter or impair any rights or obligations under any Option theretofore granted under the Plan.
ARTICLE XV
EFFECTIVE DATE OF THE PLAN
15.01 The Plan shall become effective on such date as the Board of Directors shall determine, but only after the Shareholders of the Company shall, by the affirmative vote of the holders of a majority in interest of the Common Stock, have approved the Plan.
ARTICLE XVI
RTI Stock Option Plan
Directors & Other Individuals
April 19, 1996 - Page 9
TERMINATION OF THE PLAN
16.01 This Plan shall terminate ten (10) years after its approval by the Shareholders of the Common Stock of the Company or adoption by the Board of Directors, whichever is earlier. Options may be granted under this Plan at any time and from time to time prior to its termination. Any Option outstanding under the Plan at the time of its termination shall remain in effect until the Option shall have been exercised or shall have been expired.
ARTICLE XVII
AMENDMENT OF THE PLAN
17.01 The Plan may, at any time or from time to time, be terminated, modified, or amended by the Shareholders of the Company, by the affirmative vote of a majority in interest of the Common Stock, in addition to the affirmative vote of a majority in interest of all the stock of the Company. The Committee may, at any time and from time to time, modify or amend the Plan (including such form of Option Agreement as herein above mentioned) in such respects as it shall deem advisable in order to conform to any change in applicable law, or in any other respect which shall not change; (a) the maximum number of shares for which Option may be granted under the Plan; or (b) the option prices other than to change the manner of determining the fair market value of the Common Stock for the purpose of Article VI hereof to conform with any then applicable provisions of the Code or regulations thereunder; or (c) the periods during which an Option may be granted or exercised; or (d) the provisions relating to the determination of Directors and other individuals to whom an Option shall be granted and the number of shares to be covered by such Option; or (e) the provisions relating to adjustments to be made upon changes in capitalization, the termination or any modification or amendment of the Plan shall not, without the consent of the Optionee, affect his rights under an Option theretofore granted to him.
ARTICLE XVIII
INDEMNIFICATION OF COMMITTEE
18.01 In addition to such other rights of indemnification as they may have as Directors or as members of the Committee, the members of the Committee shall be indemnified by the Company against the reasonable expenses, including attorney's fees actually and necessarily incurred in connection with the defense of any action, suit or proceedings, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel
RTI Stock Option Plan
Directors & Other Individuals
April 19, 1996 - Page 10
selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee member is liable for negligence or misconduct in the performance of his duties; provided that within sixty (60) days after institution of any such action, suit or proceeding, a Committee member shall in writing offer the Company the opportunity, at its own expense, to pursue and defend the same.
ARTICLE XIX
APPLICATION OF FUNDS
19.01 The proceeds received by the Company from the sale of Common Stock pursuant to Options granted hereunder will be used for general corporate purposes.
ARTICLE XX
APPROVAL OF SHAREHOLDERS
20.01 The Plan shall be submitted to the Shareholders of the Company within twelve (12) months after the date the Plan is adopted by the Board of Directors for approval by the holders of at least a majority of the capital stock of the Company then outstanding and entitled to vote thereon.
ARTICLE XXI
MISCELLANEOUS PROVISIONS
21.01 In the event that any one or more of the Articles, or portions thereof, contained in this Plan shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect the other Articles of the Plan and said remaining Articles shall remain in full effect and force.
EXECUTED this 23/rd/ day of April, 1996.
RETRACTABLE TECHNOLOGIES, INC.
By: _______________________________
Thomas J. Shaw
President
RTI Stock Option Plan
Directors & Other Individuals
April 19, 1996 - Page 11
ATTEST:
By: ______________________________
Lillian E. Salerno
Secretary
I, ______________________________________, the Option Holder, hereby acknowledged by my signature that I understand and agree to the terms of this Plan.
ACCEPTED BY:
DATE: _____________________
RTI Stock Option Plan
Directors & Other Individuals
April 19, 1996 - Page 12
Exhibit 3.15
[LETTERHEAD RETRACTABLE TECHNOLOGIES, INC APPEARS HERE]
March 30, 2000
via Facsimile at 703-765-7386
Joseph P. Koz, PhD
Chief Executive Officer
New Horizons International
6408 Boulevard View, Suite 200
Alexandria, VA 22307
Dear Joe:
Pursuant to our conversation on March 10, 2000, the purpose of this letter is to set forth the agreement of Retractable Technologies, Inc. ("RTI") to retain the services of New Horizons International ("NHI") and Colebrand Limited ("Colebrand") as consultants to provide marketing advice and assistance, including, but not limited to, contacts with possible Accredited Investors and contacts with domestic and international organizations for RTI's use in enhancing its product reputation within the industry ("Consulting Services"). RTI assures consultants that no other United Kingdom party will have access to any records of RTI for the purpose of an equity investment in RTI other than the Series IV Class B Convertible Preferred Stock currently underway. This restriction will be effective for 90 days from the date of this letter.
In the event NHI and Colebrand provide a contact that results in a proposed investment in RTI in any amount up to $60 million, which terms are all acceptable to RTI, in its sole and absolute discretion, NHI and Colebrand shall be entitled to a Consulting Fee for providing the above Consulting Services. The Consulting Fee shall be payable as follows:
5% of the total amount of capital invested by the Accredited Investors payable in cash to NHI;
Issuance to Colebrand Limited of a number and type of securities equal to 2 1/2% of the total number and type of securities issued to the Accredited Investors; and
Issuance of a warrant to Colebrand Limited for the right to purchase up to an amount of securities equal to 2 1/2% of the total number and type of securities sold to the Accredited Investors.
Joseph P. Koz, PhD
March 14, 2000
If the above reflects NHI's and Colebrand's understanding of this agreement, please evidence this agreement by execution of this letter where indicated below. Thank you for your assistance.
Sincerely,
/s/ Thomas J. Shaw Thomas J. Shaw President and CEO Retractable Technologies, Inc. |
The above correctly and completely sets forth the agreement with RTI regarding the provision of consulting services.
Date: April 4, 2000 New Horizons International
By: /s/ Joseph P. Koz
--------------------------------
Joseph P. Koz
Chief Executive Officer
Date: April 10, 2000 Colebrand Limited
By: /s/ [ILLEGIBLE]^^
--------------------------------
|
EXHIBIT 3.17
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT MADE UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT.
Void after 5:00 p.m., Dallas Time, on March 15, 2002
75,000 Warrants to Purchase 7,500 Shares of Series IV Class B Preferred Stock
WARRANT TO PURCHASE PREFERRED STOCK
RETRACTABLE TECHNOLOGIES, INC.
This Is To Certify That, FOR VALUE RECEIVED,
SOUTHWEST MERCHANT GROUP
or registered assignee ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from RETRACTABLE TECHNOLOGIES, INC., a Texas corporation ("Company"), at any time on or after March 15, 2000, and not later than 5:00 p.m., Dallas Time, on March 15, 2002, Seven thousand five hundred (7,500) shares of Series IV Class B Preferred Stock of the Company ("Preferred Stock") at a purchase price per share of Ten Dollars ($10.00) (the "Exercise Price") plus 10 warrants for each share of stock purchased. The number of shares of Preferred Stock to be received upon the exercise of this Warrant and the price to be paid for a share of Preferred Stock may be adjusted from time to time as hereinafter set forth. This Warrant is for the purchase in the aggregate of Seven thousand five hundred (7,500) shares of Preferred Stock of the Company, and the terms "Warrant" or "Warrants" as used herein means this Warrant and any new Warrant(s) to be issued herein.
the stock transfer books of the Company shall then be closed or that certificates representing such shares of Preferred Stock shall not then be delivered to the Holder.
RETRACTABLE TECHNOLOGIES, INC.
By:_____________________________
Thomas J. Shaw, President
Date: ________________, 2000
Attest:
[Seal]
PURCHASE FORM
Dated _______________, 2000
The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing ________ shares of Series IV Class B Preferred Stock and hereby makes payment of $____________ in payment of the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name__________________________________________________________
(please typewrite or print in block letters)
Address_______________________________________________________
Signature_____________________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED,_______________________________________________________
hereby sells, assigns, and transfers unto
Name___________________________________________________________________________
(please typewrite or print in block letters)
Address________________________________________________________________________
the right to purchase Series IV Class B Preferred Stock represented by this Warrant to the extent of ________ shares as to which such right is exercisable and does hereby irrevocably constitute and appoint_____________________________ ___________________________________________, attorney, to transfer the same on the books of the Company with full power of substitution in the premises.
Signature___________________________________
Dated:________________, 200_.
WARRANT - Page 4 of 4 Pages
Exhibit 3.18
Northstar
5000 Quorum
Suite 620
Dallas, TX 75240
(972)385-9595
Retractable Technologies, Inc., a Texas corporation (the "Company"), proposes to offer and sell a maximum of one million three hundred thousand (1,300,000) shares of its Series IV Class B Convertible Preferred Stock ("Preferred Stock") to selected investors for Ten Dollars ($10.00) per share in transactions not constituting a public offering. The terms and conditions of such offers and sales, and disclosure of material facts made by the Company regarding the offering, are described in the Private Placement Memorandum, dated January 11, 2000 (the "Memorandum"). Northstar will be referred to herein as the "Broker-Dealer." The Company's and the Broker-Dealer's rights and obligations under this Agreement shall commence on the date first signed by both parties and terminate on March 15, 2000 (the "Contract Term"), unless the Contract Term is extended by written agreement of the parties. The capitalized terms used in this Agreement have the meanings given them in the Memorandum unless defined herein.
a. As compensation for the services rendered by the Broker-Dealer
pursuant to this Agreement, the Company shall pay the Broker-Dealer
combined selling concessions (fees, non-accountable due diligence expenses,
commissions, etc.) equal to Seven Percent (7%) of the cash price for all
shares of Preferred Stock sold by the Broker-Dealer, and shall furthermore
grant to the Broker-Dealer a warrant giving it the right, for a period of
two (2) years from the conclusion of the Contract Period, to purchase three
(3) shares of the Preferred Stock, at the cash offering price for each
share, for each one hundred (100) shares of Preferred Stock sold under this
Agreement. The Company shall pay the Broker-Dealer its sales commission
within thirty (30) days after each prospective investor's Subscription
Agreement is accepted by the Company and such investor's
subscription is converted to immediately available funds. The Company shall issue the Warrant, in the form attached hereto as Exhibit "A", within thirty (30) days after conclusion of the Contract Period. The Broker-Dealer shall have no right to additional compensation from the Company by reason of the sale or issuance of Preferred Stock upon the Broker-Dealer's exercise of the warrant, or, if applicable, its conversion of Preferred Stock obtained from such exercise into Common Stock.
b. Broker-Dealer will not receive sales concession payments or Warrant participation for sales of shares of Preferred Stock in the offering to any of the Company's present Class A and B Preferred Stock shareholders who were not customers of the Broker-Dealer prior to the commencement of this offering.
c. All subscriptions are subject to confirmation and acceptance by the
Company. The Company may, in its sole discretion, for any reason, reject
any subscription submitted to it by the Broker-Dealer. Subscription checks
are to be made payable to the order of "Retractable Technologies, Inc.
Escrow Account" in the amount of the purchase price of such Shares and are
to be mailed with all executed subscription documents to: Retractable
Technologies, Inc., 511 Lobo Lane, Little Elm, Texas 75068, Attention:
Douglas W. Cowan, Chief Financial Officer.
a. The Company has taken and will take all actions necessary to cause the offer and sale of the Preferred Stock to be exempt from the registration requirements of the Securities Act of 1933 (the "1933 Act") by provision of Sections 3(b) and 4(2) thereof, and Regulation D of the Rules and Regulations of the Securities and Exchange Commission (the "Commission") promulgated thereunder. For purposes of this Agreement, the Company may and will rely upon the accuracy and completion of representations made by investors in their Subscription Agreements.
b. The Company will cooperate in Broker-Dealer's efforts on the Company's behalf. The Company will supply without charge such number of copies of the Memorandum and any supplemental information or subsidiary documents as the Broker-Dealer may reasonably require. The Company will consult with the Broker-Dealer and its salesmen upon request and will assist the Broker-Dealer in familiarizing its sales force with the Company and the Preferred Stock.
c. The Company has taken and will take all actions necessary to cause the offer and sale of the Preferred Stock to be exempt from the securities registration or qualification requirements of any State or jurisdiction in which the Company authorizes the Broker-Dealer to offer Preferred Stock.
d. The Memorandum and all amendments or supplements thereto contain and will contain, during the Contract Term and any extension thereof, all statements required by provisions of the 1933 Act and the Securities Exchange Act of 1934 (the "1934 Act"), and neither the Memorandum, nor any amendment or supplement thereto, contains or will contain any untrue statement of material fact, or omits or will omit any material fact which is required to be stated therein or is necessary to make the statements therein not misleading, as required by the 1933 Act or the 1934 Act.
e. The Company is duly organized, validly existing, and in good standing under the laws of the State of Texas, with power and authority to enter into this Agreement and to conduct business as described in the Memorandum.
f. The Company's execution and delivery of this Agreement and compliance with the terms hereof will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any agreement or instrument to which the Company is a party.
a. The Broker-Dealer is a member in good standing of the National Association of Securities Dealers, Inc. ("NASD"); is registered with the Commission as a broker and dealer in securities under the 1934 Act; is duly licensed to engage in business as a broker-dealer within each State in which it will offer or sell the Preferred Stock; and will maintain such registrations and qualifications throughout the Contract Term and any extension thereof.
b. The Broker-Dealer (i) will offer the Preferred Stock in a manner so
as to preserve the exemptions from securities registration provided in
Sections 3(b) and 4(2) of the 1933 Act and Regulation D promulgated
thereunder, and as claimed by the Company, and will not knowingly take or
omit to take any action in connection with offers or sales of the Preferred
Stock that would render the offering not eligible to claim an exemption
from registration under Regulation D; (ii) will comply with the 1933 Act,
the 1934 Act, and all other applicable federal and State laws, with the
rules and regulation of the Commission, and with the Constitution, Bylaws,
and Conduct Rules of the NASD; (iii) will not offer or sell the Preferred
Stock in any State or jurisdiction until such time as it is advised by the
Company that the Preferred Stock may lawfully be sold in such jurisdiction
and then only if and to the extent that the Broker-Dealer may be duly
licensed to conduct business as a broker-dealer within such jurisdiction;
(iv) will make no representation with respect to the offering and/or sale
of the Preferred Stock except those contained in the Memorandum, will use
only the Memorandum, including any supplements thereto provided by the
Company, and will make no offer of the Preferred Stock for sale without
providing a prospective purchaser
with a Memorandum; (v) and will assume full responsibility for the selling efforts of its representatives and for the thorough and proper training of its representatives so that special emphasis will be given to the principles of full and fair disclosure to prospective investors.
c. The Broker-Dealer will not offer the Preferred Stock by means of any form of general solicitation or general advertising and will not hold any publicly advertised seminars relating to the Company's offering of Preferred Stock.
d. To the knowledge of the Broker-Dealer, no action or proceeding is pending against the Broker-Dealer or any of its officers or directors concerning the Broker-Dealer's activities as a broker or dealer that would affect the Company's offering of the Preferred Stock.
e. The Broker-Dealer is a corporation duly organized, validly existing, and in good standing under the laws of the States of Texas with all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder.
f. Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will result in a breach of any of the terms or conditions of, or constitute a default under, the Articles of Incorporation or Bylaws of the Broker-Dealer or any indenture, agreement, or other instrument to which the Broker-Dealer is a party, nor result in violation of any order directed to the Broker-Dealer by any court or any federal or state regulatory body or administrative agency having jurisdiction over the Broker-Dealer or its affiliates.
g. The Broker-Dealer knows of no person who rendered any services in connection with the introduction of the Company to the Broker-Dealer, and no person acting by, through, or under the Broker-Dealer will be entitled to receive from the Broker-Dealer or from the Company any finder's fees or similar payments.
h. The Broker-Dealer will, upon request during the Contract Term and promptly after the conclusion of the Contract Term, supply the Company with all information required from the Broker-Dealer for the completion of a Form D, and such additional information as the Company may reasonably request to be supplied to the securities commissions of all States or jurisdiction in which the Preferred Stock has been sold.
i. All sales materials referring to the stock, including all correspondence with prospective offerees or purchasers, must be submitted to the Company for approval before use.
All of the above representations and warranties shall survive the performance or termination of this Agreement.
a. The Company will indemnify and hold harmless the Broker-Dealer and each "Affiliated Person" (defined to include the Broker-Dealer's officers, directors, partners, employees, and each person who controls any of the foregoing persons within the meaning of Section 15 of the 1933 Act) from and against any and all losses, claims, damages, expenses, or liabilities to which the Broker-Dealer or any Affiliated Person may become subject under the 1933 Act, under the 1934 Act, under any other statute, at common law, or otherwise, and will reimburse the Broker-Dealer and each such Affiliated Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any actions, whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities, or actions arise out of or are based upon any actual or asserted failure or neglect of the Company to (i) comply with any agreement, covenant, representation, or warranty in this Agreement; or (ii) comply with the 1933 Act, the 1934 Act, any rule or regulation promulgated thereunder, or any law or regulation of any state or jurisdiction in connection with the sale of the Preferred Stock.
b. Within fifteen (15) business days after receipt by the Broker- Dealer or any Affiliated Person of notice of the commencement of any action in respect of which indemnity may be sought against the Company, the Broker-Dealer or such Affiliated Person shall notify the Company in writing of such action. The Company shall then assume the defense of such action (including the employment of counsel and payment of expenses) insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the Company. The Broker-Dealer or Affiliated Person shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be the obligation of the Company unless specifically authorized by the Company. This indemnity agreement shall be in addition to any liability that the Company may otherwise have.
a. The Broker-Dealer will indemnify and hold harmless the Company and each "Affiliated Person" (defined to include the Company's officers, directors, partners, employees, and each person who controls any of the foregoing persons within the meaning of Section 15 of the 1933 Act) from and against any and all losses, claims, damages, expenses, or liabilities to which the Company or any Affiliated Person may become subject under the 1933 Act, under the 1934 Act, under any other statute, at common law, or otherwise, and will reimburse the Company and each such Affiliated Person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any actions, whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities, or actions arise out of or are based upon any actual or asserted failure or neglect of the Broker- Dealer to (i) comply with any agreement, covenant, representation, or warranty in this Agreement, or (ii) comply with the 1933 Act, the 1934 Act, any rule or regulation promulgated thereunder, or any law or regulation of any state or jurisdiction in connection with the sale of the Preferred Stock.
b. Within fifteen (15) business days after receipt by the Company or any Affiliated Person of notice of the commencement of any action in respect of which indemnity may be sought against the Broker-Dealer, the Company or such Affiliated Person shall notify the Broker-Dealer in writing of such action. The Broker-Dealer shall then assume the defense of such action (including the employment of counsel and payment of expenses) insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the Broker-Dealer. The Company or Affiliated Person shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be the obligation of the Broker-Dealer unless specifically authorized by the Broker-Dealer. This indemnity agreement shall be in addition to any liability that the Broker-Dealer may otherwise have.
or mailed as required by the preceding sentence. All telefaxed notices to the Broker-Dealer shall be transmitted to:
Mr. Russell Tarbett
Northstar
(972)490-1619
All telefaxed notices to the Company shall be transmitted to:
Thomas J. Shaw
Retractable Technologies, Inc.
(972)294-4400
By: /s/ Thomas J. Shaw ---------------------------------- Thomas J. Shaw President and Chief Executive Officer Retractable Technologies, Inc. |
Northstar
By: /s/ Russell Tarbett
----------------------------------
Russell Tarbett
Title: CEO
-------------------------------
Date: 3-1-00
--------------------------------
|
SELLING AGREEMENT - Page 7 of 7 Pages
EXHIBIT 3.19
Asset Allocations Securities Corp.
777 Old Saw Mill River Road
Suite 240
Tarrytown, NY 10591
(914)347-8800
Retractable Technologies, Inc., a Texas corporation (the "Company"), proposes to offer and sell a maximum of one million three hundred thousand (1,300,000) shares of its Series IV Class B Convertible Preferred Stock ("Preferred Stock") to selected investors for Ten Dollars ($10.00) per share in transactions not constituting a public offering. The terms and conditions of such offers and sales, and disclosure of material facts made by the Company regarding the offering, are described in the Private Placement Memorandum, dated January 11, 2000 (the "Memorandum"). Asset Allocations Securities Corp. will be referred to herein as the "Broker-Dealer." The Company's and the Broker-Dealer's rights and obligations under this Agreement shall commence on the date first signed by both parties and terminate on March 15, 2000 (the "Contract Term"), unless the Contract Term is extended by written agreement of the parties. The capitalized terms used in this Agreement have the meanings given them in the Memorandum unless defined herein.
a. As compensation for the services rendered by the Broker-Dealer
pursuant to this Agreement, the Company shall pay the Broker-Dealer
combined selling concessions (fees, non-accountable due diligence expenses,
commissions, etc.) equal to Seven Percent (7%) of the cash price for all
shares of Preferred Stock sold by the Broker-Dealer, and shall furthermore
grant to the Broker-Dealer a warrant giving it the right, for a period of
two (2) years from the conclusion of the Contract Period, to purchase three
(3) shares of the Preferred Stock, at the cash offering price for each
share, for each one hundred (100) shares of Preferred Stock sold under this
Agreement. The Company shall pay the Broker-Dealer its sales commission
within thirty (30) days after each prospective investor's
Subscription Agreement is accepted by the Company and such investor's subscription is converted to immediately available funds. The Company shall issue the Warrant, in the form attached hereto as Exhibit "A", within thirty (30) days after conclusion of the Contract Period. The Broker-Dealer shall have no right to additional compensation from the Company by reason of the sale or issuance of Preferred Stock upon the Broker-Dealer's exercise of the warrant, or, if applicable, its conversion of Preferred Stock obtained from such exercise into Common Stock.
b. Broker-Dealer will not receive sales concession payments or Warrant participation for sales of shares of Preferred Stock in the offering to any of the Company's present Class A and B Preferred Stock shareholders who were not customers of the Broker-Dealer prior to the commencement of this offering.
c. All subscriptions are subject to confirmation and acceptance by the
Company. The Company may, in its sole discretion, for any reason, reject
any subscription submitted to it by the Broker-Dealer. Subscription checks
are to be made payable to the order of "Retractable Technologies, Inc.
Escrow Account" in the amount of the purchase price of such Shares and are
to be mailed with all executed subscription documents to: Retractable
Technologies, Inc., 511 Lobo Lane, Little Elm, Texas 75068, Attention:
Douglas W. Cowan, Chief Financial Officer.
a. The Company has taken and will take all actions necessary to cause the offer and sale of the Preferred Stock to be exempt from the registration requirements of the Securities Act of 1933 (the "1933 Act") by provision of Sections 3(b) and 4(2) thereof, and Regulation D of the Rules and Regulations of the Securities and Exchange Commission (the "Commission") promulgated thereunder. For purposes of this Agreement, the Company may and will rely upon the accuracy and completion of representations made by investors in their Subscription Agreements.
b. The Company will cooperate in Broker-Dealer's efforts on the Company's behalf. The Company will supply without charge such number of copies of the Memorandum and any supplemental information or subsidiary documents as the Broker-Dealer may reasonably require. The Company will consult with the Broker-Dealer and its salesmen upon request and will assist the Broker-Dealer in familiarizing its sales force with the Company and the Preferred Stock.
c. The Company has taken and will take all actions necessary to cause the offer and sale of the Preferred Stock to be exempt from the securities
registration or qualification requirements of any State or jurisdiction in which the Company authorizes the Broker-Dealer to offer Preferred Stock.
d. The Memorandum and all amendments or supplements thereto contain and will contain, during the Contract Term and any extension thereof, all statements required by provisions of the 1933 Act and the Securities Exchange Act of 1934 (the "1934 Act"), and neither the Memorandum, nor any amendment or supplement thereto, contains or will contain any untrue statement of material fact, or omits or will omit any material fact which is required to be stated therein or is necessary to make the statements therein not misleading, as required by the 1933 Act or the 1934 Act.
e. The Company is duly organized, validly existing, and in good standing under the laws of the State of Texas, with power and authority to enter into this Agreement and to conduct business as described in the Memorandum.
f. The Company's execution and delivery of this Agreement and compliance with the terms hereof will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any agreement or instrument to which the Company is a party.
a. The Broker-Dealer is a member in good standing of the National Association of Securities Dealers, Inc. ("NASD"); is registered with the Commission as a broker and dealer in securities under the 1934 Act; is duly licensed to engage in business as a broker-dealer within each State in which it will offer or sell the Preferred Stock; and will maintain such registrations and qualifications throughout the Contract Term and any extension thereof.
b. The Broker-Dealer (i) will offer the Preferred Stock in a manner
so as to preserve the exemptions from securities registration provided in
Sections 3(b) and 4(2) of the 1933 Act and Regulation D promulgated
thereunder, and as claimed by the Company, and will not knowingly take or
omit to take any action in connection with offers or sales of the Preferred
Stock that would render the offering not eligible to claim an exemption
from registration under Regulation D; (ii) will comply with the 1933 Act,
the 1934 Act, and all other applicable federal and State laws, with the
rules and regulation of the Commission, and with the Constitution, Bylaws,
and Conduct Rules of the NASD; (iii) will not offer or sell the Preferred
Stock in any State or jurisdiction until such time as it is advised by the
Company that the Preferred Stock may lawfully be sold in such jurisdiction
and then only if and to the extent that the Broker-Dealer may be duly
licensed to conduct business as a broker-dealer within such jurisdiction;
(iv) will make no representation with respect to the offering and/or sale
of the Preferred Stock except those contained in the Memorandum, will use
only the Memorandum,
including any supplements thereto provided by the Company, and will make no offer of the Preferred Stock for sale without providing a prospective purchaser with a Memorandum; (v) and will assume full responsibility for the selling efforts of its representatives and for the thorough and proper training of its representatives so that special emphasis will be given to the principles of full and fair disclosure to prospective investors.
c. The Broker-Dealer will not offer the Preferred Stock by means of any form of general solicitation or general advertising and will not hold any publicly advertised seminars relating to the Company's offering of Preferred Stock.
d. To the knowledge of the Broker-Dealer, no action or proceeding is pending against the Broker-Dealer or any of its officers or directors concerning the Broker-Dealer's activities as a broker or dealer that would affect the Company's offering of the Preferred Stock.
e. The Broker-Dealer is a corporation duly organized, validly existing, and in good standing under the laws of the States of Texas with all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder.
f. Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will result in a breach of any of the terms or conditions of, or constitute a default under, the Articles of Incorporation or Bylaws of the Broker-Dealer or any indenture, agreement, or other instrument to which the Broker-Dealer is a party, nor result in violation of any order directed to the Broker-Dealer by any court or any federal or state regulatory body or administrative agency having jurisdiction over the Broker-Dealer or its affiliates.
g. The Broker-Dealer knows of no person who rendered any services in connection with the introduction of the Company to the Broker-Dealer, and no person acting by, through, or under the Broker-Dealer will be entitled to receive from the Broker-Dealer or from the Company any finder's fees or similar payments.
h. The Broker-Dealer will, upon request during the Contract Term and promptly after the conclusion of the Contract Term, supply the Company with all information required from the Broker-Dealer for the completion of a Form D, and such additional information as the Company may reasonably request to be supplied to the securities commissions of all States or jurisdiction in which the Preferred Stock has been sold.
i. All sales materials referring to the stock, including all correspondence with prospective offerees or purchasers, must be submitted to the Company for approval before use.
All of the above representations and warranties shall survive the performance or termination of this Agreement.
a. The Company will indemnify and hold harmless the Broker-Dealer and each "Affiliated Person" (defined to include the Broker-Dealer's officers, directors, partners, employees, and each person who controls any of the foregoing persons within the meaning of Section 15 of the 1933 Act) from and against any and all losses, claims, damages, expenses, or liabilities to which the Broker-Dealer or any Affiliated Person may become subject under the 1933 Act, under the 1934 Act, under any other statute, at common law, or otherwise, and will reimburse the Broker-Dealer and each such Affiliated Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any actions, whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities, or actions arise out of or are based upon any actual or asserted failure or neglect of the Company to (i) comply with any agreement, covenant, representation, or warranty in this Agreement; or (ii) comply with the 1933 Act, the 1934 Act, any rule or regulation promulgated thereunder, or any law or regulation of any state or jurisdiction in connection with the sale of the Preferred Stock.
b. Within fifteen (15) business days after receipt by the Broker- Dealer or any Affiliated Person of notice of the commencement of any action in respect of which indemnity may be sought against the Company, the Broker-Dealer or such Affiliated Person shall notify the Company in writing of such action. The Company shall then assume the defense of such action (including the employment of counsel and payment of expenses) insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the Company. The Broker-Dealer or Affiliated Person shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be the obligation of the Company unless specifically authorized by the Company. This indemnity agreement shall be in addition to any liability that the Company may otherwise have.
a. The Broker-Dealer will indemnify and hold harmless the Company and each "Affiliated Person" (defined to include the Company's officers, directors, partners, employees, and each person who controls any of the foregoing persons within the meaning of Section 15 of the 1933 Act) from and against any and all losses, claims, damages, expenses, or liabilities to which the Company or any Affiliated Person may become subject under the 1933 Act, under the 1934 Act, under any other statute, at common law, or otherwise, and will reimburse the
Company and each such Affiliated Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any actions, whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities, or actions arise out of or are based upon any actual or asserted failure or neglect of the Broker- Dealer to (i) comply with any agreement, covenant, representation, or warranty in this Agreement, or (ii) comply with the 1933 Act, the 1934 Act, any rule or regulation promulgated thereunder, or any law or regulation of any state or jurisdiction in connection with the sale of the Preferred Stock.
b. Within fifteen (15) business days after receipt by the Company or any Affiliated Person of notice of the commencement of any action in respect of which indemnity may be sought against the Broker-Dealer, the Company or such Affiliated Person shall notify the Broker-Dealer in writing of such action. The Broker-Dealer shall then assume the defense of such action (including the employment of counsel and payment of expenses) insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the Broker-Dealer. The Company or Affiliated Person shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be the obligation of the Broker-Dealer unless specifically authorized by the Broker-Dealer. This indemnity agreement shall be in addition to any liability that the Broker-Dealer may otherwise have.
or mailed as required by the preceding sentence. All telefaxed notices to the Broker-Dealer shall be transmitted to:
Mr. Jeff Rachlin
Asset Allocations Securities Corp
(914)747-0090
All telefaxed notices to the Company shall be transmitted to:
Thomas J. Shaw
Retractable Technologies. Inc.
(972)294-4400
By: /s/ Thomas J. Shaw
---------------------------------------
Thomas J. Shaw
President and Chief Executive Officer
Retractable Technologies, Inc.
|
Asset Allocation Securities Corp.
By: /s/ Jeff Rachlin
---------------------------------------
Jeff Rachlin
Title: President
-------------------------------------
Date: 3-9-00
-------------------------------------
|
SELLING AGREEMENT - Page 7 of 7 Pages
EXHIBIT 6.1
This National Marketing and Distribution Agreement (this "Agreement") is made as of May 2, 2000 (the "Effective Date") by and between Retractable Technologies, Inc., a Texas corporation, with its principal offices at 511 Lobo Lane, Little Elm, Texas 75068 ("Manufacturer"), and Abbott Laboratories, an Illinois corporation ("Marketer"), with its principal offices at 100 Abbott Park Road, Abbott Park, Illinois 60064. The term "Marketer" as used herein shall include both Marketer and Marketer's Affiliates (as hereinafter defined).
RECITALS
WHEREAS, Manufacturer has developed and incorporated automated retraction technology to needle products;
WHEREAS, Manufacturer desires to collaborate with Marketer with respect to the marketing and distribution of such needle products throughout all possessions, territories and commonwealths of the United States of America.; and
WHEREAS, Marketer desires to collaborate with Manufacturer with respect to such needle products.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and undertakings contained herein, the parties hereto agree as follows:
In addition to the other terms defined elsewhere herein, the following terms shall have the following meanings when used in this Agreement (and any term defined in the singular shall have the same meaning when used in the plural, and vice versa, unless stated otherwise):
1.1 "Affiliate" shall mean any corporation or other business entity controlled by, controlling of or under common control with a Party (as hereinafter defined). For this purpose, "control" of any corporation or other business entity shall mean direct or indirect beneficial ownership of at least fifty (50%) percent of the voting interests of such corporation or other business entity, or such other relationship that constitutes actual control of such corporation or other business entity.
1.2 "Business Combination Transaction" shall mean any transaction or
series of related transactions involving (a) any merger, consolidation, share
exchange, reorganization, recapitalization, business combination or similar
transaction unless, immediately following the consummation of such transaction
or series of related transactions, the common shareholders of Manufacturer
immediately prior thereto will continue to be holders of at least a majority of
the common equity securities of the ultimate parent entity surviving such
transaction or series of related transactions or (b) any sale or other transfer
(other than to a directly or indirectly wholly-owned subsidiary of Manufacturer)
of all or a substantial amount of the assets of Manufacturer or its
subsidiaries, taken as a whole.
1.3 "Calendar Quarter" shall mean a period of three (3) consecutive calendar months commencing on January 1, April 1, July 1 or October 1 of any Calendar Year (as hereinafter defined).
1.4 "Calendar Year" shall mean, for the first Calendar Year, that time period that commences on the Effective Date and ends on the following December 31, and for all subsequent Calendar Years, the twelve-month period commencing on January 1 and ending on December 31.
1.5 "Confidential Information" shall mean the existence and terms of this Agreement, any and all technical data, information, materials and other know-how including, but not limited to, trade secrets presently owned by or developed by, or on behalf of either Party and/or its Affiliates during the term of this Agreement, which relate to the Products (as hereinafter defined), their development, manufacture, regulatory filings, promotion, marketing, distribution, sale or use and any and all financial data and information relating to the business of either of the Parties and/or of their Affiliates, which a Party and/or its Affiliates discloses to the other Party and/or its Affiliates in writing and identifies as being confidential, or if disclosed orally, visually or through some other media, is identified as confidential at the time of disclosure and is summarized in writing within thirty (30) days of such disclosure and identified as confidential, except any portion thereof which:
(a) is known to the receiving Party and/or its Affiliates at the time of the disclosure, as evidenced by its written records;
(b) is disclosed to the receiving Party and/or its Affiliates by a Third Party having a right to make such disclosure;
(c) becomes patented, published or otherwise part of the public domain through no fault of the receiving Party and/or its Affiliates;
(d) is independently developed by or for the receiving Party and/or its Affiliates without use of Confidential Information disclosed hereunder as evidenced by its written records; or
(e) is required by law to be disclosed.
1.6 "Current Good Manufacturing Practices" or "cGMPs" shall mean the current Good Manufacturing Practices as described in 21 CFR 211, as amended or updated from time to time.
1.7 "Demonstration Product" shall mean Product provided by Manufacturer to Marketer at no charge for use in demonstrating the features and benefits of the Product to customers.
1.8 "Distribution Margin" shall mean Net ASP (as hereinafter defined) minus Net Cost (as hereinafter defined).
1.10 "Distributor" means a natural person, corporation, partnership, trust, joint venture, or other business entity or organization that is not a Wholesaler (as hereinafter defined), and that primarily sells or resells Products to end users.
1.11 "Distributor Reversal" means, with respect to a Product, the difference between the Distributor's acquisition cost for a Product and the contract price at which the Distributor sold such Product to an end user.
1.12 "Hospital Market" shall mean (a) all customers in the Territory (as
hereinafter defined) with a minimum of ten (10) in-patient beds; (b) all other
customers in the Territory purchasing any Product (or eligible to purchase any
Product) under purchasing contracts entered into by customers referenced in
Section 1.12 (a); and (c) any group purchasing organization in which customers
referenced in Section 1.12 (a) and (b) form a majority of the members.
1.13 "Marketer Fee" shall mean the payment due to Marketer from Manufacturer per unit of Product sold by Marketer.
1.14 "Net ASP" shall mean the net average sales price which is determined by dividing the Net Sales (as hereinafter defined) by the number of Saleable Units of each Product attributable to such Net Sales.
1.15 "Net Cost" shall mean the Transfer Price minus Marketer Fee.
1.16 "Net Sales" shall mean the gross sales of a particular Product billed
to customers by Marketer in the Territory, less: (a) allowances and adjustments
separately and actually credited or payable to customers, including credit for
damaged, outdated and returned products; (b) trade discounts booked; (c) cash
discounts booked; (d) transportation charges (including transportation insurance
costs), handling charges, sales taxes, excise taxes and duties and other similar
charges invoiced to customers; (e) rebates, management/administrative fees, and
(f) wholesaler/distributor reversals paid or payable, if any. Any discount
allowance or rebate or management/administrative fee for the Product which is
given to a customer due to the purchase of a product other than the Product or
due to the purchase of any service (whether or not relating to the Product),
shall not be taken into consideration for the calculation of Net Sales.
Distribution of Samples also shall not be taken into consideration for the
calculation of Net Sales. As used herein, "management/administrative fee" shall
mean a fee paid to a customer or Third Party (as hereinafter defined) with
respect to the provision of services to such customer or Third Party.
1.18 "Party" shall mean Abbott Laboratories or Retractable Technologies, Inc., and "Parties" shall mean Abbott Laboratories and Retractable Technologies, Inc.
1.19 "Person" shall mean a natural person, a corporation, a partnership, a trust, a joint venture, any governmental authority, and any other entity or organization.
1.21 "Purchase Forecast" shall mean a written forecast which estimates, in accordance with Section 3.1 of this Agreement, the amount of each Product Marketer shall purchase from Manufacturer.
1.22 "Purchase Order" shall mean a firm order specifying the amount of each Product to be purchased by and delivered to Marketer.
1.24 "Sample(s)" shall mean Product provided to a Third Party at no charge for use in evaluating the performance of the Product.
1.25 "Territory" shall mean all possessions, territories and commonwealths of the United States of America.
1.26 "Third Party" shall mean any Person that is not a Party or an Affiliate of a Party.
1.28 "Wholesaler" shall mean a natural person, corporation, partnership, trust, joint venture, or other business entity or organization that purchases products from Marketer and primarily sells or resells Products to end users which end users have contracts with the Parties at a price less than the price at which Marketer invoices such Products to such entity, and who customarily processes a reversal based upon the differences between such prices.
1.29 "Wholesale Acquisition Cost" or "WAC" means, with respect to a Product, the price at which Marketer invoices such Product to a Wholesaler.
1.30 "Wholesaler Network" is the aggregate of the Wholesalers.
1.31 "Wholesaler Reversal" means, with respect to a Product, the difference between the WAC for a Product and the contract price at which the Wholesaler sold such Product to an end user in the Hospital Market.
2. Marketing and Distribution
without limitation transportation costs, associated with conducting the inventory assessment described in the preceding sentence.
In the event Manufacturer elects or is requested by Marketer to issue a credit to the Wholesaler Network for Wholesaler Reversals with respect to Products sold by Manufacturer prior to the First Sales Date, Manufacturer will be entitled to offset the amount of any such credit against its liability to Marketer for the Wholesaler Reversals calculated pursuant to this Section 2.3(d).
understandings regarding any Business Combination Transaction. Each Proposal Receipt Notice shall include, to the extent possible, a detailed explanation of the nature of such proposal, including the proposed terms and conditions of any proposed transaction, and the identity of the Person or Persons making such proposal or on whose behalf such proposal is made.
(a) provides Marketer with written notice of its intention to enter into any such agreements or understandings, which notice shall include a detailed explanation of the nature of the agreements, or understandings that Manufacturer proposes to enter into, including the proposed terms and conditions of any such agreements or understandings, and the identity of any Persons and classes of Persons with whom Manufacturer intends to enter into any such agreement or understanding (a "Business Combination Notice"); and
(b) negotiates solely, exclusively and in good faith with Marketer for a period of not less than sixty (60) days from the date of Marketer's receipt of the corresponding Business Combination Notice (the "Exclusive Negotiating Period") regarding entering into a Business Combination Transaction with Marketer on terms at least as favorable to Manufacturer as the proposed terms and mutually acceptable to Marketer and Manufacturer.
demands for any Product, provided, however, that in the event that demand for Products exceeds Manufacturer's production capabilities, Manufacturer shall allocate production resources based on forecasted orders specified in Marketer's Purchase Forecast.
promptly notify Marketer of any impending visit or inspection, or significant inquiry, by a regulatory authority with regards to any Product.
(b) In addition, Manufacturer shall be allowed an annual inflationary adjustment to the
Transfer Prices for demonstrable increases in raw material and/or labor costs. Such annual inflationary increases shall be limited to the lesser of the annual percentage increase for the most recent twelve (12) month period for which figures are available in the Consumer Price Index (CPI), issued by the Bureau of Labor Statistics, U.S. Department of Labor, or Marketer's annual inflationary price increase to end user customers.
(a) Within thirty (30) days of the end of each Calendar Quarter, Marketer shall issue to Manufacturer a quarterly sales report ("Quarterly Sales Report") identifying the amount of Product sold by Marketer during the preceding Calendar Quarter. Manufacturer shall pay to Marketer a Marketer Fee of ten cents ($.10) per unit of Product sold in the preceding Calendar Quarter. Such Marketer Fee is due and payable within forty-five (45) days after receipt of the Quarterly Sales Report.
per Calendar Year, Manufacturer shall have the right, at its cost, to have audited Marketer's books and records kept pursuant to this Agreement to determine whether there was any mistake or impropriety in determining amounts payable to Manufacturer by Marketer during the current or previous Calendar Year. Such audits shall be conducted by an independent auditing or accounting firm chosen by the auditing party and agreed to by the audited party, such agreement not to be unreasonably withheld. Any audit hereunder shall be preceded by no less than thirty (30) days' prior written notice of intent to audit, and shall be conducted during normal business hours, at an agreed upon date and time. The independent auditing or accounting firm may reveal to Manufacturer only the existence and the amount of any discrepancy. If an audit reveals any underpayment or overpayment by Marketer, the Parties shall reconcile such discrepancy within fifteen (15) days from date of audit completion. If an audit reveals an underpayment greater than five (5%) between amounts due and amounts paid to Manufacturer, then Marketer shall reimburse Manufacturer for the cost of such audit. Marketer's books and records and any audit report shall be considered Confidential Information by Manufacturer. If Manufacturer decides to employ the use of an independent auditing or accounting firm pursuant to the terms of this Section 5.7, then such auditor shall execute a written confidentiality agreement with Marketer, which confidentiality agreement shall be at least as stringent as that provided herein. The scope of such auditor's report to the Manufacturer shall be strictly limited to the scope of the audit permitted pursuant to the terms of this Agreement and a copy of such report shall be delivered to both Parties.
Marketer and Manufacturer agree to negotiate in good faith the terms and conditions of a credit agreement and a security agreement pursuant to which Marketer shall loan to Manufacturer Five Million Dollars (US$5,000,000) within five (5) business days of the Effective Date. The loan shall (1) accrue interest from the date the loan is granted, (2) bear interest at an annual rate equal to one percent (1%) plus the Prime Rate (as hereinafter defined), and (3) interest shall be repayable no earlier than June 30, 2001. "Prime Rate" means that rate of interest per year announced from time to time by The Northern Trust Company called its prime rate.
Marketer agrees that its use of Manufacturer's Proprietary Marks shall enure to the benefit of Manufacturer. Marketer hereby: i) acknowledges the validity of Manufacturer's Proprietary Marks; ii) acknowledges that Manufacturer is the owner of Manufacturer's Proprietary Marks and of all
goodwill associated with Manufacturer's Proprietary Marks or with the Products;
iii) agrees not to acquire any interest in, infringe upon, contest, or take any
other action to injure or to assist another to injure Manufacturer's rights in
Manufacturer's Proprietary Marks; and iv) agrees that any interest which may be
acquired by Marketer during the term of this Agreement or within one year
thereafter in Manufacturer's Proprietary Marks or in goodwill associated with
Manufacturer's Proprietary Marks or the Products, whether in the Territory or
elsewhere, shall be acquired on behalf of and for the benefit of Manufacturer
and shall be assigned to Manufacturer upon request at no charge.
Marketer shall use Manufacturer's Proprietary Marks only in connection with Manufacturer's Products, and only during the term of this Agreement. Marketer shall seek to benefit from the goodwill associated with Manufacturer's Proprietary Marks or the Products only during the term of this Agreement and only within the Territory. Marketer shall promptly report to Manufacturer any violation of Manufacturer's rights in Manufacturer's Proprietary Marks or goodwill of which Marketer becomes aware.
inventory, FOB Marketer's facility, at the Transfer Prices paid by Marketer for those Products under first-in first-out accounting principles. Any Products tendered for repurchase by Marketer to Manufacturer shall be in new and original condition and in Saleable Unit sizes. If this Agreement is terminated pursuant to Section 9.5, then Marketer shall have the right to market and distribute all remaining inventory in Marketer's possession as of the date of termination of this Agreement.
(a) Marketer warrants that it has full power and authority to enter into this Agreement and shall carry out the distributorship granted hereunder in good faith. Marketer further warrants that it has made no commitments inconsistent with this Agreement.
(b) Marketer shall sell Products only in Saleable Units. Marketer shall not make any warranties or representations regarding the Products beyond those warranties and representations which are expressly issued or approved by Manufacturer in writing or which are included in Manufacturer's promotional or informational materials.
(c) Marketer shall pass on to customers Manufacturer's standard limited warranties and disclaimers. Marketer further agrees not to represent the Products in a manner that is inconsistent with the Products' label claims or the Product literature or to otherwise misrepresent the Products.
(d) Marketer warrants that in the event that Marketer, during the term of this Agreement, obtains rights to needle technology by purchase, amalgamation, merger, or Business Combination Transaction, which rights would be infringed by the manufacture, use, offer for sale, or sale of Products by Manufacturer, Marketer shall not assert such rights against Manufacturer during the
term of this Agreement and Marketer shall continue to meet its obligations under the terms of this Agreement.
(a) Manufacturer warrants that, it has full power and authority to enter into this Agreement and grant to Marketer the distributorship granted hereunder. Manufacturer further warrants that it has made and shall make no commitments inconsistent with this Agreement.
(b) Manufacturer warrants that, to the best of its knowledge, it is unaware of any Third Party intellectual property rights, including but not limited to, patent, trademark, copyright, and/or trade secret rights that would be infringed as a result of the making, using, offering for sale, and/or selling of Products in the Territory. Manufacturer further warrants that it does not have current communications from Third Parties alleging that the making, using, offering for sale, and/or selling of Products in the Territory is an infringement of any Third Party's intellectual property right.
(c) Manufacturer warrants that after due inquiry and to its best knowledge and belief, it has the right to make, use, offer for sale, and/or sell products that are within the scope of the Patent Rights.
(d) Any warranty for the Products shall run directly from Manufacturer to customers, notwithstanding the fact that customers may return Products to Marketer and not to Manufacturer. Marketer shall not make any warranty or representation to any customer which is more protective of such customer than the warranties and/or representations provided by Manufacturer. For purposes of clarification, the sole remedy of customers in the case of defective Product shall be that Manufacturer shall replace such returned defective Product.
(e) Manufacturer's liability for failure of the Products to conform with any other implied warranty, express warranty or specification required for conformance with this Agreement shall be limited to a return of the purchase price paid by Marketer.
arising out of, related to or in connection with: (a) the manufacture and shipment of Products to Marketer or the use or sale of Products including product liability claims, product recalls and government regulatory actions; (b) the breach of Manufacturer's warranties, representations or covenants set forth in this Agreement; (c) the termination by Manufacturer of any distributor of Products in the Territory (other than Marketer and any sub-distributor appointed by Marketer hereunder); and/or (d) the wrongful or negligent acts or omissions on the part of Manufacturer's employees, agents or representatives except to the extent caused by wrongful or negligent acts or omissions on the part of Marketer's employees, agents or representatives.
Manufacturer shall: i) carry liability insurance with a minimum limit of five million dollars ($5,000,000); ii) list Marketer as an additional insured of the policy throughout the Term of this Agreement; and iii) provide Marketer with a certificate evidencing such insurance within thirty (30) days after execution of this Agreement.
confidential by the Receiving Party (as defined in Section 11.2 hereof) according to the terms set forth in Section 11.2.
If to Manufacturer:
Retractable Technologies, Inc.
511 Lobo Lane
Little Elm, Texas 75068
Attention: Thomas J. Shaw Chief Executive Officer and President
With a copy to:
Legal Department
511 Lobo Lane
Little Elm, Texas 75068
Attention: Michele Larios
If to Marketer:
Senior Vice President
Hospital Products Division
Abbott Laboratories
200 Abbott Park Road
Abbott Park, Illinois 60064-3537
With a copy to:
Divisional Vice President, D-322
Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064-3500
Notices shall be effective upon receipt if personally delivered or delivered by facsimile, or on the third business day following the date of mailing or the carrier receipt date if by private mail carrier. A Party may change its address listed above by notice to the other Party.
[Signature page follows]
The Parties intending to be bound by the terms and conditions hereof have caused this Agreement to be signed by their duly authorized representatives on the date first above written.
ABBOTT LABORATORIES RETRACTABLE TECHNOLOGIES, INC.
By: /s/ Richard A. Gonzalez By: /s/ Thomas J. Shaw
------------------------------ -----------------------------
Senior Vice President,
Title: Hospital Products Title: CEO
--------------------------- -------------------------
Date: May 2, 2000 Date: 5/4/00
---------------------------- ---------------------------
|
RETRACTABLE TECHNOLOGIES, INC.
AND
ABBOTT LABORATORIES
National Marketing and Distribution Agreement
Calculation made as follows:
(Net ASP - Transfer Price + Marketer Fee)/ Net ASP
Example:
Net ASP = $.42
Transfer Price = $.45
Marketer Fee = $.10
(.42 - .45 + .10)/.42 = 16.6%
RETRACTABLE TECHNOLOGIES, INC.
AND
ABBOTT LABORATORIES
National Marketing and Distribution Agreement
Syringe Patents Issue Date 6,015,438 Full Displacement Retractable Syringe 01/18/00 5,637,092 Syringe Plunger Locking Assembly 06/10/97 5,632,733 Tamperproof Retractable Syringe 05/27/97 5,578,011 Tamperproof Retractable Syringe 11/26/96 5,389,076 Single Use Medical Device with Retraction Mechanism 02/14/95 5,385,551 Nonreusable Medical Device with Front Retraction 01/31/95 5,267,961 Nonreusable Syringe with Safety Indicator 12/07/93 5,188,613 Nonreusable Syringe with Safety Indicator 02/23/93 5,120,310 Nonreusable Syringe 06/09/92 |
Blood Collection Tube Holder Issue Date
5,810,775 Cap Operated Retractable Medical Device 09/22/98
5,423,758 Retractable Fluid Collection Device 06/13/95
RETRACTABLE TECHNOLOGIES, INC.
AND
ABBOTT LABORATORIES
National Marketing and Distribution Agreement
------------------------------------------------------------------------------------------------------------------------------------
Product Description Saleable Unit Transfer Price
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 25G x 5/8" 100/bx $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 25G x 1" 100/bx $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 23G x 1" 100/bx $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 22G x 1" 100/bx $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 22G x 1 1/2" 100/bx $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 21G x 1" 100/bx $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 21G x 1 1/2" 100/bx $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 20G x 1" 100/bx $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 20G x 1 1/2" 100/bx $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
5cc VanishPoint(R) syringe 22G x 1" 100/bx $75.00/bx
------------------------------------------------------------------------------------------------------------------------------------
5cc VanishPoint(R) syringe 22G x 1 1/2" 100/bx $75.00/bx
------------------------------------------------------------------------------------------------------------------------------------
5cc VanishPoint(R) syringe 21G x 1" 100/bx $75.00/bx
------------------------------------------------------------------------------------------------------------------------------------
5cc VanishPoint(R) syringe 21G x 1 1/2" 100/bx $75.00/bx
------------------------------------------------------------------------------------------------------------------------------------
5cc VanishPoint(R) syringe 20G x 1" 100/bx $75.00/bx
------------------------------------------------------------------------------------------------------------------------------------
5cc VanishPoint(R) syringe 20G x 1 1/2" 100/bx $75.00/bx
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
10cc VanishPoint(R) syringe 22G x 1" 100/bx $85.00/bx
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Sales Margin Split
Product Description Net Cost 50/50 for Net ASP:
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 25G x 5/8" $35.00/bx more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 25G x 1" $35.00/bx more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 23G x 1" $35.00/bx more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 22G x 1" $35.00/bx more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 22G x 1 1/2" $35.00/bx more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 21G x 1" $35.00/bx more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 21G x 1 1/2" $35.00/bx more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 20G x 1" $35.00/bx more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------
3cc VanishPoint(R) syringe 20G x 1 1/2" $35.00/bx more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
5cc VanishPoint(R) syringe 22G x 1" $65.00/bx more than $90/bx and less than or equals to $100/bx
------------------------------------------------------------------------------------------------------------------------------------
5cc VanishPoint(R) syringe 22G x 1 1/2" $65.00/bx more than $90/bx and less than or equals to $100/bx
------------------------------------------------------------------------------------------------------------------------------------
5cc VanishPoint(R) syringe 21G x 1" $65.00/bx more than $90/bx and less than or equals to $100/bx
------------------------------------------------------------------------------------------------------------------------------------
5cc VanishPoint(R) syringe 21G x 1 1/2" $65.00/bx more than $90/bx and less than or equals to $100/bx
------------------------------------------------------------------------------------------------------------------------------------
5cc VanishPoint(R) syringe 20G x 1" $65.00/bx more than $90/bx and less than or equals to $100/bx
------------------------------------------------------------------------------------------------------------------------------------
5cc VanishPoint(R) syringe 20G x 1 1/2" $65.00/bx more than $90/bx and less than or equals to $100/bx
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
10cc VanishPoint(R) syringe 22G x 1" $75.00/bx more than $100/bx and less than or equals to $110/bx
------------------------------------------------------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------------------------------------------------------
10cc VanishPoint(R) syringe 22G x 1 1/2" 100/bx $85.00/bx
------------------------------------------------------------------------------------------------------------------------------------
10cc VanishPoint(R) syringe 21G x 1" 100/bx $85.00/bx
------------------------------------------------------------------------------------------------------------------------------------
10cc VanishPoint(R) syringe 21G x 1 1/2" 100/bx $85.00/bx
------------------------------------------------------------------------------------------------------------------------------------
10cc VanishPoint(R) syringe 20G x 1" 100/bx $85.00/bx
------------------------------------------------------------------------------------------------------------------------------------
10cc VanishPoint(R) syringe 20G x 1 1/2" 100/bx $85.00/bx
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
VanishPoint(R) blood collection tube holder 250/cs $87.50/cs
------------------------------------------------------------------------------------------------------------------------------------
VanishPoint(R) small diameter tube adapter 25/bx $6.25/bx
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
1cc VanishPoint(R) tuberculin syringe 25G x 100/bx $50.00/bx
5/8"
------------------------------------------------------------------------------------------------------------------------------------
1cc VanishPoint(R) tuberculin syringe 27G x 100/bx $50.00/bx
1/2"
------------------------------------------------------------------------------------------------------------------------------------
1cc VanishPoint(R) U-100 insulin syringe 100/bx $50.00/bx
29G x 1/2"
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
10cc VanishPoint(R) syringe 22G x 1 1/2" $75.00/bx more than $100/bx and less than or equals to $110/bx
------------------------------------------------------------------------------------------------------------------------------------
10cc VanishPoint(R) syringe 21G x 1" $75.00/bx more than $100/bx and less than or equals to $110/bx
------------------------------------------------------------------------------------------------------------------------------------
10cc VanishPoint(R) syringe 21G x 1 1/2" $75.00/bx more than $100/bx and less than or equals to $110/bx
------------------------------------------------------------------------------------------------------------------------------------
10cc VanishPoint(R) syringe 20G x 1" $75.00/bx more than $100/bx and less than or equals to $110/bx
------------------------------------------------------------------------------------------------------------------------------------
10cc VanishPoint(R) syringe 20G x 1 1/2" $75.00/bx more than $100/bx and less than or equals to $110/bx
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
VanishPoint(R) blood collection tube holder $62.50/cs more than $125/cs and less than or equals to $150/cs
------------------------------------------------------------------------------------------------------------------------------------
VanishPoint(R) small diameter tube adapter $3.75/bx more than $10/bx and less than or equals to $12.50/bx
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
1cc VanishPoint(R) tuberculin syringe 25G x $40.00/bx more than $65/bx and less than or equals to $75/bx
5/8"
------------------------------------------------------------------------------------------------------------------------------------
1cc VanishPoint(R) tuberculin syringe 27G x $40.00/bx more than $65/bx and less than or equals to $75/bx
1/2"
------------------------------------------------------------------------------------------------------------------------------------
1cc VanishPoint(R) U-100 insulin syringe $40.00/bx more than $65/bx and less than or equals to $75/bx
29G x 1/2"
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
|
RETRACTABLE TECHNOLOGIES, INC.
AND
ABBOTT LABORATORIES
National Marketing and Distribution Agreement
1. Atlanta Distribution Center, 1635 Stone Ridge Drive, Stone Mountain, GA 30083, Phone: (770) 493-8330, Fax: (770) 938-9945
2. Chicago Distribution Center, Attn: D-209, AP5, One Abbott Park Road, Abbott Park, IL 60064-3500, Phone: (847) 937-5973, Fax: (847) 937-1708
3. Dallas Distribution Center, 4653 Nall Road, Farmer's Branch, TX 75244- 4618, Phone: (972) 934-1050, Fax (972) 934-1054
4. King of Prussia Distribution Center, 920 Eighth Avenue East, King of Prussia, PA 19406, Phone: (610) 265-9100, Fax (610) 265-9103
5. Los Angeles Distribution Center, 13939 Borale Street, (PO Box 60162 Terminal Annex, LA 90060), Sante Fe Springs, CA 90670, Phone: (562) 921-0321, Fax (562) 921-7432
RETRACTABLE TECHNOLOGIES, INC.
AND
ABBOTT LABORATORIES
National Marketing and Distribution Agreement
GENERAL INFORMATION
TERMS OF SALE AND RETURN GOODS POLICY
DRUG WHOLESALERS & MED/SURG DISTRIBUTORS & RADIOLOGY SUPPLIERS
EFFECTIVE DECEMBER 1, 1997
. It is the intention of the Hospital Products Division of Abbott Laboratories to issue full credit for all Return Goods, provided the minimal conditions of this policy are met.
. Shortages/Damaged product. Shortages or damaged must be reported to Customer Service at 1-800-222-6883 upon receipt of product. To insure credit for damaged product, please provide the carrier's damaged goods report or other similar documentation.
. Credit for expiration-dated products will be allowed as follows:
Full Credit for products returned in salable condition with remaining dating or not less than 3 months past expiration.
Exceptions:
. Controlled drugs and temperature sensitive products (e.g.
Liposyn(R), Quelicin(R), Atracurium, Lorazepam, Cenolate(R), and
Pancuronium Bromide) must have 6 or fewer months of dating or not
be less than three (3) months past expiration.
. Calcijex(R) is not returnable for credit except in the event of an ordering or shipping error reported within ten (10) days of delivery. Expired product is not eligible for credit.
. Schedule II product returns must be arranged by calling Abbott Laboratories at 1-800-323-9030, extension 6868 so that appropriate forms and labels can be mailed.
. Products are ineligible for credit which were:
1. returned in less than a full salable unit.
2. returned opened, marked, or not in original packaging.
3. acquired from Abbott as nonreturnable.
4. previously sold by Drug Wholesalers, Radiology Suppliers, or Med/Surg Distributors to end customers.
5. manufactured to customer specification.
6. not shipped and billed to Drug Wholesalers, Radiology Suppliers, or Med/Surg Distributors by Abbott.
7. involved in a deal, or bankruptcy sale, or have deteriorated due to conditions beyond Abbott's control, such as from improper storage, heat, cold, humidity, water, dust, dirt, smoke, or fire.
. Abbott reserves the right to destroy products which are returned outside the above policy, or which are considered unfit or unsafe for use; to reduce or refuse credit when inadequate inventory controls cause excessive product returns; and to revise or make exceptions to this policy at Abbott's discretion.
. Customers are encouraged to return only full, unopened cases of product unless product is expired or nearly expired. Prior to returning overstocked product to Abbott, multi-location wholesalers/distributors/suppliers are encouraged to employ interdivisional transfers when possible.
RETRACTABLE TECHNOLOGIES, INC.
AND
ABBOTT LABORATORIES
National Marketing and Distribution Agreement
See Attached
Exhibit 4.2
Packaging Specification - PK271
Description : Packaging VanishPoint Small Tube Adapter Revision : 00 ECN : 106 Date : 02/02/1999 Ref. Drawing : PK271 |
4.1 Class I Defects None
4.2 Class II Defects
4.2.1 Incorrect Lot Number
Lot No. on Carton Label does not match product inside.
4.2.2 Missing Shelf Carton Label
|
4.3 Class III Defects None
4.4 Class IV Defects None
4.5 Class V Defects None
5.0 Other Requirements
Non applicable.
End of Document Page 3
RETRACTABLE TECHNOLOGIES, INC.
AND
ABBOTT LABORATORIES
National Marketing and Distribution Agreement
The parties recognize that bona fide disputes as to certain matters may
arise from time to time during the term of this Agreement which relate to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective presidents (or their designees)
of the affected subsidiaries, divisions, or business units within twenty-eight
(28) days after such notice is received (all references to "days" in this ADR
provision are to calendar days).
If the matter has not been resolved within twenty-eight (28) days of
the notice of dispute, or if the parties fail to meet within such twenty-eight
(28) days, either party may initiate an ADR proceeding as provided herein. The
parties shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the other party of the issues to be resolved by ADR. Within fourteen (14) days after its receipt of such notice, the other party may, by written notice to the party initiating the ADR, add additional issues to be resolved within the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR notice, the parties shall select a mutually acceptable neutral to preside in the resolution of any disputes in this ADR proceeding. If the parties are unable to agree on a mutually acceptable neutral within such period, either party may request the President of the CPR Institute for Dispute Resolution ("CPR"), 366 Madison Avenue, 14th Floor, New York, New York 10017, to select a neutral pursuant to the following procedures:
(a) The CPR shall submit to the parties a list of not less than five (5) candidates within fourteen (14) days after receipt of the request, along with a Curriculum Vitae for each candidate. No candidate shall be an employee, director, or shareholder of either party or any of their subsidiaries or affiliates.
(b) Such list shall include a statement of disclosure by each candidate of any circumstances likely to affect his or her impartiality.
(c) Each party shall number the candidates in order of preference (with the number one (1) signifying the greatest preference) and shall deliver the list to the CPR within seven (7) days following receipt of the list of candidates. If a party believes a conflict of interest exists regarding any of the candidates, that party shall provide a written explanation of the conflict to the
CPR along with its list showing its order of preference for the candidates. Any party failing to return a list of preferences on time shall be deemed to have no order of preference.
(d) If the parties collectively have identified fewer than three
(3) candidates deemed to have conflicts, the CPR immediately shall designate as
the neutral the candidate for whom the parties collectively have indicated the
greatest preference. If a tie should result between two candidates, the CPR may
designate either candidate. If the parties collectively have identified three
(3) or more candidates deemed to have conflicts, the CPR shall review the
explanations regarding conflicts and, in its sole discretion, may either (i)
immediately designate as the neutral the candidate for whom the parties
collectively have indicated the greatest preference, or (ii) issue a new list of
not less than five (5) candidates, in which case the procedures set forth in
subparagraphs 2(a) - 2(d) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six
(56) days after selection, the neutral shall hold a hearing to resolve each of
the issues identified by the parties. The ADR proceeding shall take place at a
location agreed upon by the parties. If the parties cannot agree, the neutral
shall designate a location other than the principal place of business of either
party or any of their subsidiaries or affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit the following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely in any oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the hearing, and a short summary of the anticipated testimony of each witness;
(c) a proposed ruling on each issue to be resolved, together with a request for a specific damage award or other remedy for each issue. The proposed rulings and remedies shall not contain any recitation of the facts or any legal arguments and shall not exceed one (1) page per issue.
(d) a brief in support of such party's proposed rulings and remedies, provided that the brief shall not exceed twenty (20) pages. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d), no discovery shall be required or permitted by any means, including depositions, interrogatories, requests for admissions, or production of documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing time to present its case. The neutral shall determine whether each party has had the five (5) hours to which it is entitled.
(b) Each party shall be entitled, but not required, to make an opening statement, to present regular and rebuttal testimony, documents or other evidence, to cross-examine witnesses, and to make a closing argument. Cross-examination of witnesses shall occur immediately after their
direct testimony, and cross-examination time shall be charged against the party conducting the cross-examination.
(c) The party initiating the ADR shall begin the hearing and, if it chooses to make an opening statement, shall address not only issues it raised but also any issues raised by the responding party. The responding party, if it chooses to make an opening statement, also shall address all issues raised in the ADR. Thereafter, the presentation of regular and rebuttal testimony and documents, other evidence, and closing arguments shall proceed in the same sequence.
(d) Except when testifying, witnesses shall be excluded from the hearing until closing arguments.
(e) Settlement negotiations, including any statements made therein, shall not be admissible under any circumstances. Affidavits prepared for purposes of the ADR hearing also shall not be admissible. As to all other matters, the neutral shall have sole discretion regarding the admissibility of any evidence.
6. Within seven (7) days following completion of the hearing, each party may submit to the other party and the neutral a post-hearing brief in support of its proposed rulings and remedies, provided that such brief shall not contain or discuss any new evidence and shall not exceed ten (10) pages. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days following completion of the hearing. Such ruling shall adopt in its entirety the proposed ruling and remedy of one of the parties on each disputed issue but may adopt one party's proposed rulings and remedies on some issues and the other party's proposed rulings and remedies on other issues. The neutral shall issue a written ruling which shall contain the findings of fact and conclusions of law.
8. The neutral shall be paid a reasonable fee plus expenses. These fees and expenses, along with the reasonable legal fees and expenses of the prevailing party (including all expert witness fees and expenses), the fees and expenses of a court reporter, and any expenses for a hearing room, shall be paid as follows:
(a) If the neutral rules in favor of one party on all disputed issues in the ADR, the losing party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one party on some issues and the other party on other issues, the neutral shall issue with the rulings a written determination as to how such fees and expenses shall be allocated between the parties. The neutral shall allocate fees and expenses in a way that bears a reasonable relationship to the outcome of the ADR, with the party prevailing on more issues, or on issues of greater value or gravity, recovering a relatively larger share of its legal fees and expenses.
9. The rulings of the neutral and the allocation of fees and expenses shall be binding, non-reviewable, and non-appealable, and may be entered as a final judgment in any court having jurisdiction.
10. The rulings of the neutral shall be subject to judicial review only to the extent that such review shall be limited to the findings of fact and conclusions of law to establish whether the
ruling was arbitrary and capricious and/or clearly erroneous.
11. Except as provided in paragraph 10 or as required by law, the existence of the dispute, any settlement negotiations, the ADR hearing, any submissions (including exhibits, testimony, proposed rulings, and briefs), and the rulings shall be deemed Confidential Information. The neutral shall have the authority to impose sanctions for unauthorized disclosure of Confidential Information.
EXHIBIT C
SUBSCRIPTION DOCUMENTS
SUBSCRIPTION AGREEMENT
Mr. Douglas W. Cowan Memorandum No. _________
Chief Financial Officer and Treasurer
Retractable Technologies, Inc.
511 Lobo Lane, P. O. Box 9
Little Elm, Texas 75068
Dear Mr. Cowan:
The undersigned hereby tenders this subscription and applies for the purchase of Series IV Class B Convertible Preferred Stock (the "Preferred Stock"), $10.00 per share, of Retractable Technologies, Inc., a Texas corporation (the "Company").
Subject to the terms and conditions of this Subscription Agreement, the undersigned irrevocably agrees to purchase $________________ of the Series IV Class B Convertible Preferred Stock at $10.00 per share and tenders herewith the cash contribution as set forth on Page 4 below.
The undersigned is delivering to the Company at the address set forth above the following:
(i) One signed copy of this Subscription Agreement;
(ii) One Suitability Questionnaire with Sections A and D completed and Sections B (Determination of Accredited Investor Status) and C (Agent Account Information) completed where appropriate; and
(iii) A check payable to Retractable Technologies Escrow Account in the amount set forth on page 4 below.
Upon receipt and acceptance of this Subscription Agreement, the Company will deposit any check tendered herewith and promptly deliver the subscribed Preferred Stock after receipt of the minimum subscription of $500,000. The undersigned acknowledges that the Company may, at its sole discretion, terminate the offering of Preferred Stock for any reason. If for any reason the subscription is rejected, all amounts received hereunder shall be returned without interest or deductions, together with this Subscription Agreement. The Company may accept subscriptions while continuing the offering until termination.
The undersigned hereby makes the following representations and warranties to the Company and agrees to indemnify, hold harmless and pay all judgments or any claims against the Company from any liability or injury incurred (including all legal fees and expenses) as a result of any misrepresentation herein or any warranties not performed by the undersigned.
(c) If the undersigned is a corporation, partnership, trust or other entity, (1) it is duly organized, validly existing, and in good standing under the laws of its relevant jurisdiction and has all the requisite power and authority to invest the shares as provided herein, (2) such investment does not result in any violation of, or conflict with, any term of the charter in or bylaws of the undersigned or any instrument or regulation applicable to it; (3) such investment has been duly authorized by all necessary action on behalf of the undersigned; and (4) this Subscription Agreement has been duly executed and delivered on behalf of the undersigned and constitutes a legal, valid and binding agreement of the undersigned, enforceable in accordance with its terms.
(e) I have consulted with the following advisor(s), if any (such advisor[s]) are hereinafter collectively referred to as the "Purchaser Representative") (if NONE, so indicate):
(f) I and/or my Purchaser Representative have read and analyzed and are familiar with the Confidential Private Placement Memorandum dated January 11, 2000 (the "Private Placement Memorandum"), this Subscription Agreement, and any other related documents, and I confirm that all documents requested by me and/or my Purchaser Representative have been made available to us, and that we have been supplied with all of the additional information concerning this investment that we have requested.
(g) I personally, or together with my Purchaser Representative, have such knowledge and experience in financial, securities, investment and business matters that I am, or we are, capable of evaluating the merits and risks of this investment.
(h) I understand that an investment in the Preferred Stock is highly speculative and subject to substantial risks, and I am capable of bearing the high degree of economic risk and burdens of this venture, including, but not limited to, the possibility of the complete loss of all contributed capital, the lack of a public market and limited transferability of the Preferred Stock, such that it might not be possible to readily liquidate this investment.
(i) The solicitation of this offer to purchase Preferred Stock was directly communicated to me by the Company through the Private Placement Memorandum, to which this Subscription Agreement is attached, in such a manner that I was able to ask questions and receive answers from a person acting on behalf of the Company concerning the terms and conditions of this transaction and, at no time was I presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general advertising.
(j) No representations or promises have been made concerning the marketability or value of the Preferred Stock. The undersigned understands the restrictions on transfer described
in the Private Placement Memorandum. The undersigned further acknowledges and agrees that, because the Preferred Stock has not been registered under the Securities Act and is being offered and sold pursuant to an exemption from registration, the Preferred Stock cannot be sold unless it is subsequently registered under said Act or an exemption from registration is available, and the undersigned must continue to bear the economic risk of his or her investment in the Preferred Stock for an indefinite period of time.
(k) The Preferred Stock will not be resold or otherwise disposed of, unless the Preferred Stock is subsequently registered under the Securities Act and appropriate state securities laws or unless the Company receives an opinion of counsel satisfactory to it that an exemption from registration is available.
(l) I am aware of the following:
(1) There are substantial restrictions on the transferability to the Preferred Stock, the Preferred Stock will not be registered under the Securities Act or the securities laws of any state and any such registration is unlikely. In addition, investors in the Company have no right to require that the Preferred Stock be registered under the Securities Act or the securities laws of any state.
(2) No federal or state agency has made any finding or determination as to the fairness for public investment, nor any recommendation nor endorsement, of the Preferred Stock.
(m) The representation, warranties, agreements and acknowledgments contained herein and the information set forth in the Suitability Questionnaire executed by me, are true and correct, and may be relied on by the Company in determining whether to accept or reject this subscription. The undersigned will promptly notify the Company if the above-mentioned representations or information become no longer accurate. In addition, all such representations, warranties, agreements and acknowledgments shall survive the purchase of the Preferred Stock.
(n) I have not distributed the Private Placement Memorandum to anyone other than my Purchaser Representative and no persons other than myself and my Purchaser Representative have used this Private Placement Memorandum or any copies thereof.
(o) I hereby agree to indemnify the Company and hold the Company harmless from and against any and all liability, damage, cost or expense incurred on account of or arising out of:
(1) Any inaccuracy in my declaration, representations and warranties herein above set forth;
(2) My disposition of any of the Shares contrary to my foregoing declarations, representations and warranties.
(p) I understand that all investment funds accepted by the Company pursuant to the sale of Preferred Stock through this offering shall be made immediately available to the Company for use as described in the Private Placement Memorandum.
The undersigned desires to take title to this interest as follows (check one):
X
---- (a) Separate Property; ____ (b) Joint Tenancy; ____ (c) Community Property; ____ (d) Tenancy in Common; ____ (e) Other: _________________________________ (please describe) |
The exact spelling of the name(s) under the title to the Shares shall be taken is (please print):
The undersigned agrees not to transfer or assign the obligations or duties contained in this Subscription Agreement, or any of his or her interest herein.
Notwithstanding anything contained herein to the contrary, every person or entity who, in addition to or in lieu of the undersigned, is deemed to be a purchaser pursuant to Regulation D promulgated under the Securities Act makes and joins in making all of the covenants, representations and warranties made by the undersigned.
Execution and delivery of this Subscription Agreement and tender of the payment referenced in Paragraph 1 above shall constitute an irrevocable offer to purchase the Preferred Stock indicated, which offer may be accepted or rejected by the Company. Acceptance shall be only by written acceptance executed by a duly authorized officer of the Company.
TOTAL SHARES 500,00 OF PREFERRED STOCK SUBSCRIBED (at $10.00 per share):
DOLLAR AMOUNT: $5 Million
MAKE ALL CHECKS PAYABLE TO: "RETRACTABLE TECHNOLOGIES ESCROW ACCOUNT"
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement this 4th day of May, 2000.
Telephone No. (847) 938-5962
ACCEPTED BY:
RETRACTABLE TECHNOLOGIES, INC.
SUITABILITY QUESTIONNAIRE
Mr. Douglas W. Cowan
Chief Financial Officer and Treasurer
Retractable Technologies, Inc.
51 Lobo Lane, P. O. Box 9
Little Elm, Texas 75068-0009
Dear Mr. Cowan:
The following information is furnished to you in regard to an offer to purchase shares of Series IV Class B Convertible Preferred Stock (the "Shares") of Retractable Technologies, Inc., a Texas corporation (the "Company"), pursuant to Sections 3(b) and 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Regulation D promulgated thereunder ("Regulation D") or Regulation S. I understand that you will rely upon the following information for purposes of such determination, and that the Shares will not be registered under the Securities Act in reliance upon the exemption from registration provided by Sections 3(b) and 4(2) of the Securities Act and Regulation D and Regulation S.
I AM FURNISHING YOU THE FOLLOWING INFORMATION WITH THE UNDERSTANDING THAT ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY. I agree that you may present this questionnaire to such parties as you deem appropriate if called upon to establish that the proposed offer and sale of the Shares is exempt from registration under the Securities Act or meets the requirements of applicable state securities laws.
I understand that this questionnaire is merely a request for information. I understand that this questionnaire is not an offer to sell the Shares and that no sale will occur prior to the acceptance of my subscription by the Company.
PLEASE ANSWER ALL QUESTIONS
If the appropriate answer is "None" or "Not applicable," please so state. Please print or type your answer to all questions. Attach additional sheets if necessary to complete your answers to any item.
N/A
SECTION A
GENERAL INFORMATION
(All Investors must Complete this Section)
11 a. Federal income tax filing status for last year:
b. Expected Federal income tax status for current year:
c. Not applicable because I am not a U.S. Citizen _____
SECTION B
DETERMINATION OF ACCREDITED INVESTOR STATUS
N/A (a) I certify that I am an accredited investor because (1) I had
--- individual income (exclusive of any income attributable to my
spouse) of more than $200,000 in each of the most recent two
years, and I reasonably expect to have an individual income in
excess of $200,000 for the current year, or (2) I had joint
income (including income attributable to my spouse) of more
than $300,000 in each of the most recent two years, and I
reasonably expect to have joint income in excess of $300,000
for the current year.
N/A (b) I certify that I am an accredited investor because I have an
--- individual net worth, or my spouse and I have a combined
individual net worth, in excess of $1,000,000. For purposes of
this section, "individual net worth" means the excess of the
total assets at fair market value, including home and personal
property, over total liabilities.
N/A (c) I certify that I am an accredited investor because I am a
--- director or executive officer of the Company.
ITEM 2. ACCREDITED PARTNERSHIPS, CORPORATIONS OR OTHER ENTITIES WHICH
--------------------------------------------------------------
ARE NOT TRUSTS MUST INITIAL AT LEAST ONE OF THE FOLLOWING
---------------------------------------------------------
STATEMENTS:
----------
X (a) The investor hereby certifies that it has (1) total assets in
--- excess of $5,000,000, and (2) was not formed for the specific
purchase of investing in the Company.
N/A (b) The investor hereby certifies that all of the equity owners of
--- the investor are accredited individual investors as defined in
Item 1, above. All equity owners must complete page 11 if this
----
Item 2(b) is being utilized to claim accredited investor
status.
N/A (c) The investor hereby certifies that it is either (1) a bank as
--- defined in Section 3(a)(2) of the Securities Act, or a savings
and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; (2) a broker or dealer
registered pursuant to Section 15 of the Securities Exchange
Act of 1934; (3) an insurance company as defined in Section
2(13) of the Securities Act; (4) an investment company
registered under the Investment Company Act of 1940, or a
business development company as defined in Section 2(a)(48) of
that Act; (5) a Small Business Investment Company licensed by
the U. S. Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of 1958; or (6) an
employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and
loan association, insurance company or registered investment
advisor, or if the employee benefit plan has total assets in
excess of $5,000,000 or, in a self-directed plan, with
investment decisions made solely by persons who are accredited
investors.
N/A (d) The undersigned hereby certifies that it is a private business
--- development company as defined in Section 202(a)(22) of the
Investment Advisor Act of 1940.
-9-
|
ITEM 3. ACCREDITED TRUSTS MUST INITIAL AT LEAST ONE OF THE FOLLOWING
------------------------------------------------------------
STATEMENTS:
----------
N/A (a) The investor hereby certifies that (1) it has total assets in
--- excess of $5,000,000, (2) the investor was not formed for the
specific purpose of investing in the Company, and (3) this
purchase has been directed by a person acting on behalf of the
investor who, ether alone or with his or her purchaser
representative(s) has such knowledge and experience in
financial and business matters that he or she is capable of
evaluating the merits and risks of this investment.
N/A (b) The investor hereby certifies that it is a revocable trust
--- that may be amended or revoked at any time by the grantors,
and all the grantors are accredited individual investors as
defined in Item 1, above. If this Item 3(b) is being utilized
to claim accredited investor status, page 11 must be completed
by each of the grantors of the trust.
ITEM 4. ALL ACCREDITED INVESTORS MUST INITIAL THE FOLLOWING LINE:
--------------------------------------------------------
X (a) I understand that the representations contained in this
--- Section B are made for the purpose of qualifying me as an
accredited investor as that term is defined by the Securities
and Exchange Commission for the purpose of inducing a sale of
securities to me. I hereby represent that the statement or
statements initialed above are true and correct in all
respects. I understand that a false representation may
constitute a violation of law, and that any person who suffers
damage as a result of a false representation may have a claim
against me for damages.
|
N/A
SECTION C
AGENT ACCOUNT INFORMATION
SECTION D
SIGNATURE PAGE TO BE COMPLETED BY ALL INVESTORS
I represent that:
(a) I am aware that any Preferred Stock purchased by me will be "restricted securities," thereby requiring my investment to be maintained for an indefinite period of time and that the Company is under no obligation to register the Preferred Stock for resale under the federal or state securities laws.
(b) I acknowledge that all information that I have provided anywhere in this Suitability Questionnaire concerning me and my financial position is correct and complete as of the date set forth below, and if there should be any material change in such information prior to the acceptance of any subscription, I will immediately provide such information to the Company.
(c) I purchased the Preferred Stock:
(i) directly from the Company; or
CREDIT AGREEMENT
This Credit Agreement (this "Agreement"), is entered into as of May 4, 2000, by and between Abbott Laboratories, an Illinois corporation ("Abbott"), as lender, and Retractable Technologies, Inc., a Texas corporation (the "Company"), as borrower.
W I T N E S S E T H:
WHEREAS, the Company and Abbott have agreed to enter into this Agreement, which provides that Abbott, as lender, shall loan to the Company, as borrower at the Company's request, an amount not to exceed an aggregate of Five Million Dollars ($5,000,000).
NOW, THEREFORE, the Company and Abbott hereby agree as follows:
(a) "Acceleration" means that the Loan (as defined in Section 2.1): (i) shall not have been paid at the Maturity Date, or (ii) shall have become due and payable prior to its stated maturity pursuant to Section 7.2.
(b) "Affiliate" means any Person (other than a Subsidiary):
(i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under
common control with, the Company, (ii) which beneficially
owns or holds ten percent (10 %) or more of any class of
the Voting Stock of the Company, or (iii) ten percent
(10%) or more of the Voting Stock or in the case of a
Person which is not a corporation, ten percent (10 %) or
more of the equity interest of which is beneficially owned
or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and
policies of a Person, whether through the ownership of
Voting Stock, by contract or otherwise.
(c) "Agreement" means this Credit Agreement.
(d) "Board of Directors" means either the board of directors of the Company or any duly authorized committee thereof.
(e) "Business Day" means any day other than a Saturday, Sunday, legal holiday or other day on which commercial banks located in Dallas, Texas or Chicago, Illinois are authorized or required by law to be closed.
(f) "Collateral" shall have the meaning set forth in the Security Agreement.
(g) "Commission" means the Securities and Exchange Commission, or successor regulatory entity.
(h) "Common Stock" means the Common Stock, no par value, of the Company.
(i) "Company" means Retractable Technologies, Inc., a Texas corporation, and any Person who in accordance with the terms of this Agreement succeeds to all, or substantially all, of the assets or business of Retractable Technologies, Inc.
(j) "Disbursement Date" means any date on or prior to June 30, 2005, on which a disbursement of the Loan is made. Each Disbursement Date shall be on the date designated in a written notice from the Company to Abbott; provided, however, that (i) Abbott shall not be required to make any disbursement if the conditions hereto are not satisfied, and (ii) Abbott shall in no event be required to make any disbursement after June 30, 2005.
(k) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA shall be construed to also refer to any successor sections.
(l) "Event of Default" shall have the meaning set forth in
Section 7.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(n) "GAAP" means generally accepted accounting principles at the time in the United States.
(o) "Holder" means the registered holder of the Note, initially Abbott.
(p) "Interest Payment Date" means the last day of each March,
June, September and December commencing with the later of
(i) June 30, 2001 or (ii) the first such date after the
initial Disbursement Date.
(q) "Lien" means any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute or contract, and including but not limited to the security interest or lien arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term "Lien" shall include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances (including, with respect to stock, stockholder agreements, voting trust agreements, buy-back agreements and all similar arrangements) affecting property. For the purposes of this Agreement, the Company shall be deemed to be the owner of any property which it has acquired or holds subject to a conditional sale agreement, capitalized lease or other arrangement pursuant to which title to the property has been retained by or vested in some other Person for security purposes and such retention or vesting shall constitute a Lien.
(r) "Maturity" means any date on which the Loan or any portion thereof becomes due and payable, whether as stated or by virtue of mandatory prepayment, by acceleration or otherwise.
(s) "Maturity Date" means June 30, 2005.
(t) "Nasdaq" and "Nasdaq National Market" shall have the meanings specified in paragraph 9.5(f).
(u) "National Marketing and Distribution Agreement" means the Marketing and Distribution Agreement governing collaboration between the Company and Abbott on the marketing and distribution of needles using automated retraction technology developed by the Company of even date herewith.
(v) "Note" means the note described in Section 2.6.
(w) "Obligations" means all loans, advances, debts, liabilities, obligations, covenants and duties owing to Abbott by the Company, of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, arising under this Agreement.
(x) "Person" means an individual, partnership, corporation, limited liability company, trust or unincorporated organization, and a government or agency or political subdivision thereof.
(y) "Prime Rate" means that rate of interest per year announced from time to time by The Northern Trust Company called its prime rate, which may not at any time be the lowest rate of interest charged by The Northern Trust Company. Changes in the rate of interest resulting from a change in the Prime Rate shall take effect on the date set forth in each announcement.
(z) "Preferred Stock" means stock of the Company of any class or series ranking prior to any other class or series of stock of the Company with respect to the payment of dividends or the distribution of assets upon the liquidation, dissolution or winding up of the Company.
(aa) "Registration Rights Agreement" means the Registration Rights Agreement by and between Abbott and the Company of even date herewith a copy of which is attached hereto as Exhibit A.
(bb) "Securities Act" means the Securities Act of 1933, as amended.
(cc) "Security Agreement" means a security agreement, in form satisfactory to Abbott, dated the date hereof of the Company, as amended, modified or restated from time to time.
(dd) "Stated Maturity," when used with respect to the Note or any installment of interest hereon, means the date specified in the Note as the fixed date on which the principal of the Note or any installment of interest is due and payable.
(ee) "Subsidiary" means a corporation, partnership or other entity at least a majority of whose Voting Stock is owned directly or indirectly by the Company.
(ff) "Voting Stock" means securities of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions).
applicable, except where such principles are inconsistent with the requirements of this Agreement. Each accounting term not defined herein and each accounting term partly defined herein to the extent not defined shall have the meaning given to it under generally accepted accounting principles.
due. Any payment which is received in Abbott's account later than 12:00 noon, Central time, shall be deemed to have been received on the immediately succeeding Business Day. Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest.
(a) is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all necessary licenses and permits to own and operate its properties and to carry on its business as now conducted and as presently proposed to be conducted; and
(c) is duly licensed or qualified and is in good standing as a foreign corporation in each jurisdiction wherein the nature of the business transacted by it or the nature of the property owned or leased by it makes such licensing or qualification necessary.
(a) The Company's authorized capital stock consists of:
(1) one hundred million (100,000,000) shares of Common Stock, no par value, of which fourteen million (14,000,000) shares are issued and outstanding as of the date hereof;
(2) five million (5,000,000) shares of $1 par value Class A Preferred Stock, of which five million (5,000,000) shares are issued and outstanding as of the date hereof, and which are convertible into five million (5,000,000) shares of Common Stock; and
(3) five million (5,000,000) shares of $1 par value Class B Preferred Stock, par value, of which:
(A) one million (1,000,000) shares have been designated Series I Class B Preferred Stock, of which one million (1,000,000) shares are issued and outstanding as of the date hereof, and which are convertible into one million (1,000,000) shares of Common Stock,
(B) one million (1,000,000) shares have been designated Series II Class B Preferred Stock, of which one million (1,000,000) shares are issued and outstanding as of the date hereof, and which are convertible into one million (1,000,000) shares of Common Stock,
(C) one million one hundred sixty thousand, two hundred (1,160,200) shares have been designated Series III Class B Preferred Stock, of which one million one hundred sixty thousand, two hundred (1,160,200) shares are issued and outstanding as of the date hereof, and which are convertible into one million one hundred sixty thousand, two hundred (1,160,200) shares of Common Stock, and
(D) one million three hundred thousand (1,300,000) shares have been designated Series IV Class B Preferred Stock, of which one hundred sixty three thousand, seven hundred (163,700) shares are issued and outstanding as of the date hereof, and which are convertible into one million one hundred sixty three thousand, seven hundred (163,700) shares of Common Stock.
(b) All of the issued and outstanding shares of Common Stock, Series A Preferred Stock, and Series B Preferred Stock have been duly authorized and validly issued and are fully paid and nonassessable. As of the date hereof, the Company had outstanding options to purchase an aggregate of one million four hundred thousand (1,400,000) shares of Common Stock.
(c) Except as otherwise set forth in Exhibit B Disclosure Schedule, there are no preemptive or other outstanding rights, options, warrants, voting agreements, conversion rights, or agreements for the purchase or acquisition from the Company of any shares of its capital stock or other securities of the Company.
(a) The Company has all requisite corporate power and authority to enter into this Agreement and the Security Agreement and will have all requisite corporate power and authority to issue the Note and, subject to satisfaction of the conditions set forth herein and therein, to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Security Agreement and the consummation of the transactions contemplated hereby and thereby have been, and the execution and delivery of the Note and the consummation of the transactions contemplated thereby will be, duly authorized by all necessary corporate action on the part of the Company. This Agreement and the Security Agreement have been, and the Note will be, duly executed and delivered by the Company, and constitute the valid and binding obligation of the Company, enforceable in accordance with their respective terms, subject to the effect of applicable bankruptcy, insolvency, reorganization, or other similar laws affecting the rights of creditors and the effect or availability of rules of law governing specific performance, injunctive relief, or other equitable remedies. Provided the conditions set forth in Section 6 are satisfied, the execution and delivery of this Agreement, the Security Agreement, and the Note do not or will not, and the consummation of the transactions contemplated hereby or thereby will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation, or acceleration of any obligation under (i) any provision of the Articles of Incorporation or Bylaws of the Company, or (ii) any material agreement or instrument, permit, franchise, license, judgment or order, applicable to the Company or its properties or assets.
(b) No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority (a "Governmental Entity") or other Person or entity, is required by, or with respect to, the Company in connection with the execution and delivery of this Agreement or the Security Agreement or the consummation by the Company of the transactions contemplated hereby or thereby, except for such consents, approvals, orders, authorizations, registrations, declarations, and filings as may be required under applicable federal and state securities laws and the laws of any foreign country.
cash flows for the fiscal year ended December 31, 1998 and the Company's audited balance sheet at December 31, 1998; and the unaudited statement of operations and statement of cash flows for the nine (9) months ended September 30, 1999 and the unaudited balance sheet at December 31, 1999. The balance sheet at December 31, 1999 is hereinafter referred to as the "Company Balance Sheet," and all such financial statements are hereinafter referred to collectively as the "Company Financial Statements." The Company Financial Statements have been and will be prepared in accordance with GAAP applied on a consistent basis, except for any change due to the adoption of an accounting principle established by the FASB, AICPA, SEC or any other accounting standard setting board, during the periods involved, and fairly present and will present the consolidated financial position of the Company and the results of its operations as of the date and for the periods indicated thereon. At the date of the Company Balance Sheet (the "Company Balance Sheet Date"), the Company had no liabilities or obligations, secured or unsecured (whether accrued, absolute, contingent or otherwise) not reflected on the Company Balance Sheet or the accompanying notes thereto.
(a) There have been no changes in the condition (financial or otherwise), business, net worth, assets, properties, employees, operations, obligations or liabilities of the Company which, in the aggregate, have had or may be reasonably expected to have a materially adverse effect on the condition, business, net worth, assets, prospects, properties or operations of the Company.
(b) The Company has not issued, or authorized for issuance, or entered into any commitment to issue, any equity security, bond, note, or other security of the Company.
(c) The Company has not incurred debt for borrowed money, nor incurred any obligation or liability except in the ordinary and usual course of business and in any event not in excess of Fifty Thousand Dollars ($50,000) for any single occurrence.
(d) The Company has not paid any obligation or liability, or discharged, settled or satisfied any claim, lien or encumbrance, except for current liabilities in the ordinary and usual course of business and in any event
not in excess of Fifty Thousand Dollars ($50,000) for any single occurrence.
(e) The Company has not declared or made any dividend, payment, or other distribution on or with respect to any share of capital stock of the Company.
(f) The Company has not purchased, redeemed or otherwise acquired or committed itself to acquire, directly or indirectly, any share or shares of capital stock of the Company.
(g) The Company has not mortgaged, pledged, or otherwise encumbered any of its assets or properties.
(h) The Company has not disposed of, or agreed to dispose of, by sale, lease, license or otherwise, any asset or property, tangible or intangible, except, in the case of such other assets and property, in the ordinary and usual course of business, and in each case for a consideration believed to be at least equal to the fair value of such asset or property and in any event not in excess of Fifty Thousand Dollars ($50,000) for any single item or One Hundred Thousand Dollars ($100,000) in the aggregate other than inventory sold or returned in the normal course of business.
(i) The Company has not purchased or agreed to purchase or otherwise acquire any securities of any corporation, partnership, joint venture, firm, or other entity; the Company has not made any expenditure or commitment for the purchase, acquisition, construction or improvement of a capital asset, except in the ordinary and usual course of business and in any event not in excess of Fifty Thousand Dollars ($50,000) for any single item or One Hundred Thousand Dollars($100,000) in the aggregate.
(j) The Company has not entered into any transaction or contract, or made any commitment to do the same, except in the ordinary and usual course of business.
(k) The Company has not sold, assigned, transferred or conveyed, or committed itself to sell, assign, transfer or convey, any Proprietary Rights (as defined in Section 3.14).
(l) The Company has not adopted or amended any bonus, incentive, profit-sharing, stock option, stock purchase, pension, retirement, deferred-compensation, severance, life insurance, medical or other benefit plan, agreement, trust, fund or arrangement for the benefit of
employees of any kind whatsoever, nor entered into or amended any agreement relating to employment, services as an independent contractor or consultant, or severance or termination pay, nor agreed to do any of the foregoing.
(m) The Company has not effected or agreed to effect any change in its directors, officers or key employees.
(n) The Company has not effected or committed itself to effect any amendment or modification in its Articles of Incorporation or Bylaws, except as contemplated by this Agreement.
(o) The Company has not modified its accounting principles in any material respect, except for those changes required by the adoption of an accounting principle promulgated by the FASB, the AICPA, the Securities and Exchange Commission, or any other accounting standards setting bodies.
the Company, the business of the Company has been conducted in accordance with all applicable laws, regulations, orders and other requirements of governmental authorities.
(a) Each of the Company's material agreements or contracts is a legal, binding and enforceable obligation by or against the Company, subject to the effect of applicable bankruptcy, insolvency, reorganization, moratorium or other similar federal or state laws affecting the rights of creditors and the effect or availability of rules of law governing specific performance, injunctive relief or other equitable remedies (regardless of whether any such remedy is considered in a proceeding at law or in equity). To the Company's knowledge, no party with whom the Company has an agreement or contract is in default thereunder or has breached any term or provision thereof which is material to the conduct of the Company's business.
(b) The Company has performed, or is now performing, the obligations of, and the Company is not in material default (or would by the lapse of time and/or the giving of notice be in material default) in respect of, any contract, agreement or commitment binding upon it or its assets or properties and material to the conduct of its business. No third party has raised any claim, dispute, or controversy with respect to any of the contracts of the Company, whether fully performed or currently being performed, nor has the Company received written notice or warning of alleged nonperformance, delay in delivery or other noncompliance by the Company with respect to its obligations under any of those contracts, nor are there any facts which exist indicating that any of those contracts may be totally or partially terminated or suspended by the other parties thereto.
(a) The Company has provided Abbott with a complete list in writing of all patents and applications for patents, trademarks, trade names, service marks, and copyrights, and applications therefor, owned or used by the Company or in which it has any rights or licenses, except for software used by the Company and generally available on the commercial market. The Company has disclosed to Abbott all material agreements of the Company with each officer, employee or consultant of the Company providing the Company with title and ownership to patents, patent applications, trade secrets and inventions developed or used by the Company in its business. All of such agreements so described are valid, enforceable and legally binding, subject to the effect of applicable bankruptcy, insolvency, reorganization or other similar laws affecting the rights of creditors or availability of rules of law governing specific performance, injunctive relief or other equitable remedies (regardless of whether any such remedy is considered in a proceeding at law or in equity).
(b) The Company owns or possesses licenses or other rights to use all patents, patent applications, trademarks, trademark applications, trade secrets, service marks, trade names, copyrights, inventions, drawings, designs, customer lists, proprietary know-how or information, or other rights with respect thereto (collectively referred to as "Proprietary Rights"), used in the business of the Company, and the same are sufficient to conduct the Company's business as it has been and is now being conducted.
(c) The operations of the Company do not conflict with or infringe, and no one has asserted to the Company that such operations conflict with or infringe, on any Proprietary Rights, owned, possessed or used by any third party. There are no claims, disputes, actions, proceedings, suits, or appeals pending against the Company with respect to any Proprietary Rights (other than those, if any, with respect to which service of process or similar notice may not yet have been made on the Company), and, none has been threatened against the Company. To the knowledge of the Company, there are no facts or alleged facts which would reasonably serve as a basis for any claim that the Company does not have the right to use, free of any rights or claims of others, all Proprietary Rights in the development, manufacture, use, sale, or other disposition of any or all products or services presently being used, furnished, or sold in the conduct of the business of the Company as it has been and is now being conducted.
(d) To the Company's knowledge, no employee of the Company is in violation of any term of any employment contract, proprietary information and inventions agreement, non-competition agreement, or any other contract or agreement relating to the relationship of any such employee with the Company or any previous employer.
(a) The Company does not have, and is not liable with respect to, any employee benefit plans, multi-employer plans and employee benefit plans (as defined in section 3(2) or section 3(3) of the Employee Retirement Income Security Act of 1974, as amended).
(b) The Company has no liabilities with respect to any of the following which would have a reasonable likelihood of having a material adverse effect on the condition (financial or otherwise), business, net worth, assets, prospects, properties or operations of the Company:
(i) bonus, deferred compensation, incentive, restricted stock, stock purchase, stock option, stock appreciation right, phantom stock, debenture, supplemental pension, profit- sharing, royalty pool, commission or similar plan or arrangement;
(ii) employment, consulting or termination agreement; or
(iii) other plan, program, agreement, procedure, policy, commitment, understanding or other arrangement relating to employee benefits, executive compensation, fringe benefits, severance pay, terms of employment or services as a director, officer, employee or independent contractor.
(c) The Company has not been and is not a party to, or subject to, or affected by, any collective bargaining agreement or other labor contract. The Company has complied in all respects with all laws, rules and regulations relating to employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits, collective bargaining, the payment of social security and similar taxes, occupational safety and health and plant closing.
the Company to Abbott in connection with the negotiation of the sale of the Note, contains any untrue statement of a material fact or omits a material fact necessary to make the statements contained herein or therein not misleading. There is no fact peculiar to the Company which the Company has not disclosed to Abbott in writing which materially adversely affects nor, so far as the Company can now foresee, will materially adversely affect, the properties, business, profits, or condition (financial or otherwise) of the Company.
(a) Abbott is acquiring the Note for Abbott's own account, and for the purpose of investment and not with a view to the distribution thereof, and that Abbott has no present intention of selling, negotiating, or otherwise disposing of the Note; it being understood, however, that the disposition of Abbott's property shall at all times be and remain within its control, and
(b) the Note has not been registered under section 5 of the Securities Act and that Abbott will only re-offer or resell the Note purchased by Abbott under this Agreement pursuant to an effective registration statement under the Securities Act or in accordance with an available exemption from the requirements of section 5 of the Securities Act.
(a) are not in violation or breach of, and will not conflict with or constitute a default under, any of the terms of the Articles of Incorporation or Bylaws of Abbott or any of its Subsidiaries, or any material contract, agreement or commitment binding upon Abbott or any of its assets or properties;
(b) will not result in the creation or imposition of any Lien, equity or restriction in favor of any third party upon any of the assets or properties of Abbott; and
(c) will not conflict with or violate any applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court having jurisdiction over Abbott or any of its assets or properties.
additions so that at all times the efficiency thereof shall be maintained in all material respects.
(a) consolidate with or merge into any other Person,
(b) acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any Person or division thereof,
(c) otherwise acquire or agree to acquire any assets which are material to the Company except in the ordinary course of business consistent with prior practice; or
(d) acquire any stock or other equity securities of any Person.
(a) the validity, applicability, or amount thereof is being contested in good faith by appropriate actions or proceedings which will prevent the forfeiture or sale of any property of the Company or any material interference with the use thereof by the Company, and
(b) the Company shall set aside, in accordance with GAAP, on its books, reserves deemed by it to be adequate with respect thereto. The Company will promptly comply with all laws, ordinances, or governmental rules and regulations to which it is subject including, without limitation, the Occupational Safety and Health Act of 1970, as amended, ERISA, and all laws, ordinances, governmental rules and regulations relating to environmental protection in all applicable jurisdictions, the violation of which could materially and adversely affect the properties, business, profits or condition of the Company.
reasonable terms no less favorable to the Company than would be obtained in a comparable arm's-length transaction with a Person other than an Affiliate. The Company, has properly disclosed all transactions with its Affiliates on Exhibit B, Disclosure Schedule.
(a) a copy of each report, schedule and other document filed or received by the Company during such period pursuant to the requirements of federal and state securities laws, if any,
(b) all other material information concerning the business, properties and personnel of the Company and any other materials as Abbott may reasonably request. Abbott will not use such information for purposes other than this Agreement and will otherwise hold all confidential material contained in such information in confidence (and Abbott will cause its consultants and advisors to also hold such information in confidence), and
(c) within 120 days after the end of each fiscal year of the Company, an audited balance sheet of the Company as at the end of such year and audited statements of income and of cash flows of the Company for such year, certified by certified public accountants of established national reputation selected by the Company, and prepared in accordance with GAAP. The foregoing financial statements shall be prepared on consolidated basis, if the Company then has any subsidiaries.
To the extent such information is publicly available on the Internet, the Company shall have fulfilled its obligations under this Section 5.13.
(a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act;
(b) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act;
(c) so long as a Holder owns any restricted Common Stock, furnish to the Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144, and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration.
(a) all indebtedness of the Company to banks, insurance companies, or other financial institutions regularly engaged in the business of lending money, which is for money borrowed by the Company (whether or not secured), and
(b) any such indebtedness or any debentures, notes or other evidence of indebtedness issued in exchange for such Senior Indebtedness, or any indebtedness arising from the satisfaction of such Senior Indebtedness by a guarantor.
payment shall be made in respect of the principal of or interest on the Note, unless within three (3) months after the happening of such Event of Default, the maturity of such Senior Indebtedness shall not have been accelerated.
on conversion contained in Section 9.4), at the option of Abbott at any time and from time to time at Abbott's sole discretion, the Note may be converted at the principal amount thereof, into fully paid and nonassessable shares of Common Stock at the Conversion Price, in effect at the time of conversion. The price at which shares of Common Stock shall be delivered upon conversion (the "Conversion Price") shall be initially $10.00 per share of Common Stock. The Conversion Price shall be adjusted in certain instances as provided in Section 9.5.
rounded down) and the remaining unconverted principal amount of the Note shall remain outstanding.
(a) In case the Company shall pay or make a dividend or other distribution on any class of capital stock of the Company in the form of Common Stock, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Conversion Price by a fraction the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph 9.5(a), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company.
(b) In case the Company shall issue rights, options, or warrants to all holders of its Common Stock (not being available on an equivalent basis to Abbott upon conversion) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share of the Common Stock, determined as provided in paragraph 9.5(f), on the date fixed for the determination of stockholders entitled to receive such rights, options, or warrants (other than pursuant to a dividend reinvestment plan), the Conversion Price in effect at the opening of business on the day following the date fixed for such determination shall be reduced to a price (calculated to the nearest cent) determined by multiplying such Conversion Price by a fraction the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock which the aggregate consideration received by the Company for the total number of additional shares of Common Stock so offered for subscription or purchase would purchase at the Conversion Price in effect immediately prior to the date fixed for such determination and the denominator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the
number of shares of Common Stock so offered for subscription or purchase, such reduction to become effective immediately at the opening of business on the day following the date fixed for such determination. For purposes of this paragraph 9.5(b), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not issue any rights, options, or warrants in respect of shares of Common Stock held in the treasury of the Company.
(c) In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and, conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective.
(d) In case the Company shall, by dividend, redemption, stock purchase or otherwise, distribute to holders of its Common Stock evidences of its indebtedness or assets (including securities, but excluding any rights, options, or warrants referred to in paragraph 9.5(b), any dividend or distribution paid exclusively in cash and any dividend or distribution referred to in Section 9.5(d)), the Conversion Price shall be adjusted to equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution by a fraction the numerator of which shall be the current market price per share, determined as provided in paragraph 9.5(f), of the Common Stock on the date fixed for such determination less the then fair market value (as determined in good faith by an independent majority of the Board of Directors) of the portion of the assets or evidences of indebtedness so distributed applicable to one share of Common Stock and the denominator shall be the current market price per share, determined as provided in paragraph 9.5(f), of the Common Stock, such adjustment to become effective immediately prior to the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such distribution.
(e) The reclassification of Common Stock into securities including securities other than Common Stock (other than any reclassification upon a consolidation or merger to which Section 9.11 applies) shall be deemed to involve (i) a distribution of such securities other than Common Stock to all holders of Common Stock and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of stockholders entitled to receive such distribution" and the "date fixed for such determination" within the meaning of paragraph 9.5(c), and (ii) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter.
(f) For the purpose of any computation under paragraphs 9.5(c), (d), and (e), the current market price per share of Common Stock on any date shall be deemed to be the average of the daily Closing Prices for the five (5) consecutive trading days selected by the Company commencing not more than twenty (20) trading days before, and ending not later than, the earlier of the day in question and the day before the "ex" date with respect to the issuance or distribution requiring such computation. The "Closing Price" for each trading day shall be the reported last sale price regular way or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way, in either case on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the National Association of Securities Dealers Automated Quotations system ("Nasdaq") National Market System ("Nasdaq National Market") or, if not listed or admitted to trading on Nasdaq National Market, on Nasdaq, or, if the Common Stock is not listed or admitted to trading on any national securities exchange or Nasdaq National Market or quoted on Nasdaq, the average of the closing bid and asked prices in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Company for that purpose, or, if the Common Stock does not have any closing bid and asked prices in the over-the-counter market during the relevant period of time, the fair market value per share as determined in good faith by an independent majority of the Board of Directors as of the most recent available month-end determined pursuant to GAAP. For purposes of this paragraph, the term "`ex' date," when used with respect to any issuance or distribution, shall mean the first date on which the Common Stock trades regular way on such exchange or in such market without the right to receive such issuance or distribution.
(g) The Company may make such reductions in the Conversion Price, in
addition to those required by paragraphs 9.5(a), (b), (c) and
(d), as it considers to be advisable in order to avoid or
diminish any income tax to any holders of shares of Common Stock
resulting from any dividend or distribution of stock or issuance
of rights or warrants to purchase or subscribe for stock or from
any event treated as such for federal income tax purposes or for
any other reasons.
(a) the Company shall compute the adjusted Conversion Price in accordance with Section 9.5 and shall prepare a certificate signed by the Chief Financial Officer of the Company setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed at the offices of the Company.
(b) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall forthwith be required, and as soon as practicable after it is required, such notice shall be mailed by the Company to the Holder in accordance with the terms of Section 12.2 herein.
(a) the Company shall declare a dividend (or any other distribution) on its Common Stock payable otherwise than in cash out of its earned surplus; or
(b) the Company shall authorize the granting to the holders of its Common Stock of warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights, including grants given under the Company Stock Option Plan; or
(c) of any reclassification of the Common Stock of the Company (other than a subdivision or combination of its outstanding shares of Common Stock), or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any stockholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; then the Company shall cause to be filed at the offices of
the Company, and shall cause to be mailed to the Holder at its last address as it shall appear in the Note Register, at least twenty (20) days or ten (10) days in any case specified in paragraph 9.7 (a) or (b) prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined, or (y) the date on which such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding up. Neither the failure to give such notice nor any defect therein shall affect the legality or validity of the proceedings described in paragraphs 9.7 (a) through (d).
securities laws. At any time and from time to time, upon not less than twenty (20) days notice to that effect given by Abbott and, upon surrender of the Note at the Company's office by Abbott, the Company will deliver in exchange therefor, without expense to Abbott, except as set forth below, one Note for the same aggregate principal amount as the then unpaid principal amount of the Note so surrendered, provided such Note shall be in the amount of the full principal amount of the Note and there shall be no right to divide the Note, dated as of the date to which interest has been paid on the Note so surrendered or, if such surrender is prior to the payment of any interest thereon, then dated as of the date of issue, registered in the name of such Person as may be designated by Abbott, and otherwise of the same form and tenor as the Note so surrendered for exchange. The Company may require the payment of a sum sufficient to cover any stamp tax or governmental charge imposed upon such exchange or transfer.
(a) whether or not the transactions contemplated hereby are consummated, pay or reimburse Abbott within five Business Days after demand for all costs and expenses incurred by Abbott in connection with the development, preparation, delivery, administration and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including reasonable attorneys fees and expenses incurred by Abbott with respect thereto; and
(b) pay or reimburse Abbot within five Business Days after demand for all costs and expenses (including reasonable attorneys fees and expenses) incurred by it in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or any other document delivered in connection therewith during the existence of an Event of Default or after acceleration of the loans (including in connection with any "workout" or restructuring regarding the Loans).
minimize any liabilities, damages, deficiencies, claims, judgments, assessments, costs and expenses in respect of which indemnity may be sought under this Agreement. The Indemnitee shall give prompt written notice to the party from whom indemnification is sought (the "Indemnitor") of the assertion of a claim for indemnification; provided, however, that the Indemnitee's failure to notify the Indemnitor shall not excuse the Indemnitor's obligation to indemnify the Indemnitee except to the extent that such failure prejudices the Indemnitor's defense of any such claim. No such notice of assertion of a claim shall satisfy the requirements of this Section 11 unless it describes in reasonable detail and in good faith the facts and circumstances upon which the asserted claim for indemnification is based. If any action or proceeding shall be brought in connection with any liability or claim to be indemnified hereunder, the Indemnitee shall provide the Indemnitor twenty (20) calendar days to decide whether to defend such liability or claim. During such period, the Indemnitee shall take all necessary steps to protect the interests of itself and the Indemnitor, including the filing of any necessary responsive pleadings, the seeking of emergency relief or other action necessary to maintain the status quo, subject to reimbursement from the Indemnitor of its expenses in doing so. The Indemnitor shall (with, if necessary, reservation of rights) defend such action or proceeding at its expense, using counsel selected by the insurance company insuring against any such claim and undertaking to defend such claim, or by other counsel selected by it and approved by the Indemnitee, which approval shall not be unreasonably withheld or delayed. The Indemnitor shall keep the Indemnitee fully apprised at all times of the status of the defense and shall consult with the Indemnitee prior to the settlement of any indemnified matter. Indemnitee agrees to use reasonable efforts to cooperate with Indemnitor in connection with its defense of indemnifiable claims. In the event the Indemnitee has a claim or claims against any third party growing out of or connected with the indemnified matter, then upon receipt of indemnification, the Indemnitee shall fully assign to the Indemnitor the entire claim or claims to the extent of the indemnification actually paid by the Indemnitor and the Indemnitor shall thereupon be subrogated with respect to such claim or claims of the Indemnitee.
If to the Company:
Retractable Technologies, Inc.
P.O. Box 9
511 Lobo Lane
Little Elm, Texas 75068-0009
Attention: Thomas J. Shaw
President and CEO
With a copy to:
Retractable Technologies, Inc.
Finance Department
P.O. Box 9
511 Lobo Lane
Little Elm, Texas 75068-0009
Attention: Douglas W. Cowan
Chief Financial Officer and Treasurer
If to Abbott:
Abbott Laboratories
200 Abbott Park Road
Abbott Park, IL 60064-3537
Attention: Senior Vice President,
Hospital Products Division
With a copy to:
Abbott Laboratories
Legal Division
D-322, AP6D
100 Abbott Park Road
Abbott Park, IL 60064-6049
Attn: Divisional Vice President,
D-322, 6049
In Witness Whereof, the parties hereto have executed this Agreement as of the date and year first above written.
ABBOTT LABORATORIES RETRACTABLE TECHNOLOGIES,
INC.
By: Richard A. Gonzalez By: Thomas J. Shaw
---------------------------- -----------------------
Richard A. Gonzalez
Its: Senior Vice President Its: CEO
--------------------------- ----------------------
Hospital Products
|
$5,000,000 _________, 2000
Abbott is authorized to endorse the amount and the date on which each Loan is made, the maturity date therefor and each payment of principal with respect thereto on the schedules annexed hereto and made a part hereof, or on continuations thereof which shall be attached hereto and made a part hereof; provided, that any failure to endorse such information on such schedule or continuation thereof shall not in any manner affect any obligation of the Company under the Credit Agreement and this Note).
This Note is the Note referred to in, and is entitled to the benefits of, the Credit Agreement, which Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. This Note is secured pursuant to the Security Agreement, as defined in the Credit Agreement.
Terms defined in the Credit Agreement are used herein with their defined meanings therein unless otherwise defined herein. This Note shall be governed by, and construed and interpreted in accordance with, the laws of the State of Illinois applicable to contracts made and to be performed entirely within such State.
RETRACTABLE TECHNOLOGIES, INC.
By:_____________________________
Title:__________________________
Schedule to Note
(1) (2) (3) (4)
Date Amount Amount Notation
of of Made
Base Loan Loan Repaid By
________________________________________________________________________________
________________________________________________________________________________
|
ANNEX B
DISPUTE RESOLUTION
The parties recognize that a bona fide dispute as to certain matters may arise from time to time during the term of this Agreement which relates to either party's rights and/or obligations. To have such a dispute resolved by this Alternative Dispute Resolution ("ADR") provision, a party first must send written notice of the dispute to the other party for attempted resolution by good faith negotiations between their respective presidents (or their equivalents) of the affected subsidiaries, divisions, or business units within twenty-eight (28) days after such notice is received (all references to "days" in this ADR provision are to calendar days). If the matter has not been resolved within twenty-eight (28) days of the notice of dispute, or if the parties fail to meet within such twenty-eight (28) days, either party may initiate an ADR proceeding as provided herein. The parties shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the other party of the issues to be resolved by ADR. Within fourteen (14) days after its receipt of such notice, the other party may, by written notice to the party initiating the ADR, add additional issues to be resolved within the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR notice, the parties shall select a mutually acceptable neutral to preside in the resolution of any disputes in this ADR proceeding. If the parties are unable to agree on a mutually acceptable neutral within such period, either party may request the President of the CPR Institute for Dispute Resolution ("CPR"), 366 Madison Avenue, 14th Floor, New York, New York 10017, to select a neutral pursuant to the following procedures: (a) The CPR shall submit to the parties a list of not less than five(5) candidates within fourteen (14) days after receipt of the request, along with a CURRICULUM VITAE for each candidate. No candidate shall be an employee, director, or shareholder of either party or any of their subsidiaries or affiliates. (b) Such list shall include a statement of disclosure by each candidate of any circumstances likely to affect his or her impartiality. (c) Each party shall number the candidates in order of preference (with the number one (1) signifying the greatest preference) and shall deliver the list to the CPR within seven (7) days following receipt of the list of candidates. If a party believes a conflict of interest exists regarding any of the candidates, that party shall provide a written explanation of the conflict to the CPR along with its list showing its order of preference for the candidates. Any party failing to return a list of preferences on time shall be deemed to have no order of preference. (d) If the parties collectively have identified fewer than three (3) candidates deemed to have conflicts, the CPR immediately shall designate as the neutral the candidate for whom the parties collectively have indicated the greatest preference. If a tie should result between two candidates, the CPR may designate either candidate. If the parties collectively have identified three (3) or more candidates deemed to have conflicts, the CPR shall review the explanations regarding conflicts and, in its sole discretion, may either (i) immediately designate as the neutral the candidate for whom the parties collectively have indicated the greatest preference, or (ii) issue a new list of not
less than five (5) candidates, in which case the procedures set forth in subparagraphs 2(a) - 2(d) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56) days after selection, the neutral shall hold a hearing to resolve each of the issues identified by the parties. The ADR proceeding shall take place at a location in the State of Illinois agreed upon by the parties. If the parties cannot agree, the neutral shall designate a location in the State of Illinois other than the principal place of business of either party or any of their subsidiaries or affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit
the following to the other party and the neutral: (a) a copy of all exhibits on
which such party intends to rely in any oral or written presentation to the
neutral; (b) a list of any witnesses such party intends to call at the hearing,
and a short summary of the anticipated testimony of each witness; (c) a proposed
ruling on each issue to be resolved, together with a request for a specific
damage award or other remedy for each issue. The proposed rulings and remedies
shall not contain any recitation of the facts or any legal arguments and shall
not exceed one (1) page per issue. (d) a brief in support of such party's
proposed rulings and remedies, provided that the brief shall not exceed twenty
(20) pages. This page limitation shall apply regardless of the number of issues
raised in the ADR proceeding. Except as expressly set forth in subparagraphs
4(a) - 4(d), no discovery shall be required or permitted by any means, including
depositions, interrogatories, requests for admissions, or production of
documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be governed by the following rules: (a) Each party shall be entitled to five (5) hours of hearing time to present its case. The neutral shall determine whether each party has had the five (5) hours to which it is entitled. (b) Each party shall be entitled, but not required, to make an opening statement, to present regular and rebuttal testimony, documents or other evidence, to cross-examine witnesses, and to make a closing argument. Cross-examination of witnesses shall occur immediately after their direct testimony, and cross-examination time shall be charged against the party conducting the cross-examination. (c) The party initiating the ADR shall begin the hearing and, if it chooses to make an opening statement, shall address not only issues it raised but also any issues raised by the responding party. The responding party, if it chooses to make an opening statement, also shall address all issues raised in the ADR. Thereafter, the presentation of regular and rebuttal testimony and documents, other evidence, and closing arguments shall proceed in the same sequence. (d) Except when testifying, witnesses shall be excluded from the hearing until closing arguments. (e) Settlement negotiations, including any statements made therein, shall not be admissible under any circumstances. Affidavits prepared for purposes of the ADR hearing also shall not be admissible. As to all other matters, the neutral shall have sole discretion regarding the admissibility of any evidence.
6. Within seven (7) days following completion of the hearing, each party may submit to the other party and the neutral a post-hearing brief in support of its proposed rulings and remedies, provided that such brief shall not contain or discuss any new evidence and shall not
exceed ten (10) pages. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days following completion of the hearing. Such ruling shall adopt in its entirety the proposed ruling and remedy of one of the parties on each disputed issue but may adopt one party's proposed rulings and remedies on some issues and the other party's proposed rulings and remedies on other issues. The neutral shall issue a written opinion or otherwise explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees
and expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the fees and
expenses of a court reporter, and any expenses for a hearing room, shall be paid
as follows: (a) If the neutral rules in favor of one party on all disputed
issues in the ADR, the losing party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one party on some issues and the other
party on other issues, the neutral shall issue with the rulings a written
determination as to how such fees and expenses shall be allocated between the
parties. The neutral shall allocate fees and expenses in a way that bears a
reasonable relationship to the outcome of the ADR, with the party prevailing on
more issues, or on issues of greater value or gravity, recovering a relatively
larger share of its legal fees and expenses.
9. The rulings of the neutral and the allocation of fees and expenses shall be binding, non-reviewable, and non-appealable, and may be entered as a final judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 or as required by law, the existence
of the dispute, any settlement negotiations, the ADR hearing, any submissions
(including exhibits, testimony, proposed rulings, and briefs), and the rulings
shall be deemed Confidential Information. The neutral shall have the authority
to impose sanctions for unauthorized disclosure of Confidential Information.
EX-5 6 EXHIBIT 5
Credit Agreement
Exhibit A
Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is made as of May ___, 2000, by and between Retractable Technologies, Inc., a Texas corporation with its principal office at 511 Lobo Lane, Little Elm, Texas 75068 ("RTI"), and Abbott Laboratories, an Illinois corporation with its principal office at 100 Abbott Park Road, Abbott Park, Illinois 60064-6400("Abbott").
RECITALS
WHEREAS, RTI and Abbott have entered into a Credit Agreement (the "Credit Agreement") of even date herewith; and
WHEREAS, the execution and delivery of this Agreement are a condition to the Closing of the Credit Agreement;
NOW, THEREFORE, RTI and Abbott agree as follows:
(a) If the registration of which RTI gives notice pursuant to Section 2.2 is for a registered offering involving an underwriting, then Abbott's right to registration shall be conditioned upon Abbott's participation in the underwriting and the inclusion of Abbott's Registrable Securities in the underwriting to the extent provided in this Agreement. Abbott [together with RTI and the holders of other securities of RTI distributing their securities through that underwriting (such other holders being termed the "Other Holders")] shall enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected by RTI.
(b) Notwithstanding any other provision of this Article 2, if the
representative of the underwriters advises RTI in writing that
marketing factors require a limitation on the number of shares to
be underwritten, then RTI shall so inform Abbott and the Other
Holders. The number of shares of RTI common stock being sold by
RTI for its own account shall not be reduced by operation of this
Section 2.3. The number of shares of Registrable Securities held
by Abbott and the Other Holder(s) that may be included in the
underwriting (in addition to those being sold by RTI for its own
account) shall be allocated among Abbott and the Other Holders in
proportion (as nearly as practicable) to the amount of
Registrable Securities owned by each such holder.
(c) Any holder which does not agree to the terms of the such underwriting shall be excluded from that underwriting by written notice from RTI or the underwriter. Any Registrable Securities or other securities excluded or withdraw from that underwriting shall be withdrawn from the registration.
Article 2, RTI will use reasonable efforts to:
(a) keep such registration effective until the earliest of:
(i) such date as all of the Shares have been sold, or
(ii) if RTI is not then eligible to effect such registration on Form S-3 (or a similar successor form), one hundred and twenty (120) days after the effective date of the Registration Statement, or
(iii) the termination of the registration rights pursuant to Section 2.9 of this Agreement.
(b) prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the Registration Statement;
(c) furnish such number of prospectuses, prospectus supplements, and other documents incident thereto, including any amendment of or supplement to the prospectus, as Abbott from time to time may reasonably request;
(d) cause all Shares registered as described in this Agreement to be listed on any securities exchange or quoted on any quotation service on which similar securities issued by RTI are then listed or quoted;
(e) provide a transfer agent and registrar for all Registrable Securities registered pursuant to the Registration Statement and a CUSIP number for all such Shares;
(f) otherwise use reasonable efforts to comply with all applicable rules and regulations of the SEC; and
(g) file the documents required of RTI and otherwise use reasonable efforts to maintain requisite blue sky clearance in:
(i) all jurisdictions in which any of the Shares are sold originally; and
(ii) all other states specified in writing by Abbott, provided as to this clause (ii), however, that RTI shall not be required to qualify to do business or consent to service of process in any state in which it is not now so qualified or has not so consented.
(a) In the event Abbott intends to resell Shares pursuant to a Registration Statement, Abbott shall give RTI five (5) business days notice of its intent to sell in reliance on such Registration Statement (the "Notice of Sale"). RTI may refuse to permit Abbott to resell any Shares pursuant to the Registration Statement; provided, however, that in order to exercise this right, RTI must deliver to Abbott a certificate in writing within three (3) business days following its receipt of the Notice of Sale from Abbott to the effect that a sale pursuant to the Registration Statement in its then current form could constitute a violation of the federal securities laws. In such an event, RTI shall either (i) use commercially reasonable efforts to amend promptly the Registration Statement, if necessary, and take all other actions necessary to allow such sale under the federal securities laws, and shall notify Abbott promptly after it has determined that such sale has become permissible under the federal securities laws, or (ii) exercise its right under paragraph (b) below to delay the sale.
(b) If in the good faith judgment of the Board of Directors of RTI, after consultation with counsel, the filing of a Registration Statement or an amendment thereto or prospectus supplement so as permit the proposed sale without a violation of securities laws would materially adversely affect a pending or scheduled public offering, or an acquisition, merger, or similar transaction, or negotiations of either of the foregoing, or would require the disclosure of another material development prior to the time it would otherwise be required to be disclosed in a manner adverse to the best interests of RTI, then it may decline to permit the resale of any Shares pursuant to the Registration Statement for up to a maximum of ninety (90) days, provided that it may not exercise this right more than once in any twelve (12) month period.
(c) If RTI has delivered a prospectus to Abbott and after having done so the prospectus is amended to comply with the requirements of the Securities
Act, RTI shall reasonably promptly notify Abbott and, if requested, Abbott shall immediately cease making offers of Registrable Securities and return all prospectuses to the Company. The Company shall reasonably promptly provide Abbott with revised prospectuses and, following receipt of the revised prospectuses, Abbott shall be free to resume making offers of the Registrable Securities.
(d) Abbott covenants and agrees that it will not sell any Shares pursuant to a Registration Statement during the periods sales in reliance upon the Registration Statement are prohibited as set forth in this Section 2.6.
(a) RTI is, prior to such transfer, furnished with written notice of the name and address of such transferee and the Shares with respect to which such registration rights are being assigned and a copy of a duly executed written instrument in form reasonably satisfactory to RTI by which transferee assumes all of the obligations and liabilities of its transferor hereunder and agrees itself to be bound hereby;
(b) immediately following such transfer the disposition of the Shares by the transferee is restricted under the Securities Act;
(d) Abbott guarantees the performance of the transferee of its obligations under this Agreement.
pursuant to this Section 2.9, RTI may withdraw the Registration Statement, or any portion thereof, covering the Shares.
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety
(90) days after the effective date of the first registration
statement filed by RTI for the offering of its securities to the
general public;
(b) file with the SEC in a timely manner all reports and other documents required of RTI under the Securities Act and the Exchange Act; and
(c) furnish to Abbott, so long as Abbott owns any Shares, forthwith upon request (i) a written statement by RTI that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by RTI), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly report of RTI and such other reports and documents so filed by RTI, and (iii) such other information as may by reasonably requested in availing Abbott of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to such form.
(a) If requested by the managing underwriter of an underwritten public offering by RTI of RTI common stock, Abbott hereby agrees that, for a period of one hundred eighty (180) days following the effective date of a Registration Statement, (i) it will not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of RTI common stock or any securities convertible into or exercisable or exchangeable for RTI common stock; (ii) it will not enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the RTI common stock, whether any such transaction described in clause (i) or (ii) above is to be settled by
delivery of RTI common stock or such other securities, in cash or otherwise; and (iii) it shall execute any other customary lock-up agreements as may be requested by the managing underwriters, provided that all stockholders holding not less than the number of shares of RTI common stock held by Abbott (including the shares of RTI common stock issuable upon conversion of the Shares, or other convertible securities, or upon exercise of options, warrants or rights) and all officers and directors of RTI enter into similar agreements.
(b) RTI may impose stop-transfer instructions with respect to Registrable Securities or other securities subject to the foregoing restrictions until the end of the applicable lock-up period.
(c) Abbott shall treat confidentially any written notice received by Abbott from RTI regarding RTI's plans to file a Registration Statement and shall not disclose such information to any person other than as necessary to exercise its rights under this Agreement.
(a) an untrue statement made in (or upon the omission of a material fact from) such Registration Statement in reliance upon and in conformity with written information furnished to RTI by or on behalf of Abbott specifically for use in preparation of the Registration Statement,
(b) the failure of Abbott to comply with the covenants or agreements contained in Section 2.6 hereof, or
(c) any untrue statement or omission in any prospectus that is corrected in any subsequent prospectus that was delivered to Abbott prior to the pertinent sale or sales by Abbott.
(a) either an untrue statement made in or the omission of a material fact from such Registration Statement in reliance upon and in conformity with written information furnished to RTI by or on behalf of Abbott specifically for use in preparation of the Registration Statement,
(b) the failure of Abbott to comply with the covenants or agreements contained in Section 2.6 hereof, or
(c) any untrue statement or omission in any prospectus that is corrected in any subsequent prospectus that was delivered to Abbott prior to the pertinent sale or sales by Abbott, and Abbott will, as incurred, reimburse RTI and such persons for any legal or other expenses reasonably incurred in investigating, defending, or preparing to defend any such action, proceeding, or claim;
provided, however, that in no event shall Abbott's cumulative aggregate liability under this Section 3.2, or under Section 3.4, or under Sections 3.2 and 3.4 together, exceed the net amount received by Abbott from the sale of the Shares to which such loss relates minus the amount of any damages which Abbott has otherwise been required to pay by reason of such untrue or allegedly untrue statement or omission or alleged omission.
by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above in this Section 3.4 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
As to Abbott:
Senior Vice President
Hospital Products Division
Abbott Laboratories
200 Abbott Park Road
Abbott Park, Illinois 60064-3537
With copy (which will not constitute notice) to:
Divisional Vice President, D-322
Abbott Laboratories
100 Abbott Park Road
AP6D D-322
Abbott Park, Illinois 60064-6049
As to RTI:
Retractable Technologies, Inc.
511 Lobo Lane
Little Elm, Texas 75068
Attn: Thomas J. Shaw, Chief
Executive Officer and President
With copy (which will not constitute notice) to:
Retractable Technologies, Inc.
Legal Department
511 Lobo Lane
Little Elm, Texas 75068
Attn: Michele Larios
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate by their duly authorized officers as of the date first above written.
ABBOTT LABORATORIES RETRACTABLE TECHNOLOGIES,
INC.
By:/s/Richard A. Gonzalez By:/s/ Thomas J. Shaw
---------------------- -------------------------
Richard A. Gonzalez
Title: Senior Vice President, Title: CEO
Hospital Products ----------------------
|
Credit Agreement
Exhibit B
Disclosure Schedule
(Confidential Private Placement
Memorandum Dated
January 11, 2000)
Credit Agreement
Exhibit C
Financial Statements and Reports
of Independent Accountants
for December 13, 1998, 1997, 1996
Credit Agreement
Exhibit D
Disclosure Statement
CREDIT AGREEMENT DISCLOSURE STATEMENT
RTI has raised additional capital in 1999 through issuance of its Series III Convertible Preferred Stock in the amount of $11.6 million.
RTI has sold $1.6 million of its Series IV Convertible Preferred Stock in 2000.
RTI completed a loan and credit facility for $1.5 million and $.5 million, respectively, in February 2000 through 1/st/ International Bank. These funds were used to pay off an existing loan and provide additional funds for equipment and working capital needs of RTI. The loan is secured by land, building, and building improvements. It is the property located at 511 Lobo Lane, Little Elm, Texas
The proceeds of the Credit Agreement will be used for equipment and manufacturing operations.
RTI has no monetary judgments of $250,000 or more against it.
RTI currently has $3.7 million of long term debt, including current maturities.
RTI anticipates a debt to equity ratio no lower than 1:1 in five years. Current projections are 1:20 in 2003.
Product liability insurance is $5 million each occurrence and $6 million aggregate.
RTI currently has 1.4 million stock options and warrants outstanding.
RTI does provide Employee Benefits, such as medical, dental and life insurance
RTI Confidential
Retractable Technologies Inc.
Change Change
12/31/98 12/31/99 98 to 99 Apr-00 99 to Apr-00
Preferred Stock - Class A Series 1 5,000,000 5,000,000 -
Preferred Stock - Class B Series 1 1,000,000 1,000,000 -
Preferred Stock - Class B Series II 1,000,000 1,000,000 -
Preferred Stock - Class B Series III (note 1) - 1,160,200 1,160,200
Preferred Stock - Class B Series IV (note 2) - - - 1,615,000 1,615,000
Common Stock 1,000 1,000 -
Additional Paid in Capital 16,680,281 23,670,110 6,989,829
1. Sale of Series III Class B Convertible Stock
2. Sale of Series IV Class B Convertible Stock
|
SECURITY AGREEMENT
WHEREAS, Abbott may from time to time make loans, advances or other financial accommodations to the Company;
WHEREAS, the obligations of the Company to Abbott are to be secured pursuant to this Agreement;
NOW, THEREFORE, for and in consideration of any loan, advance or other financial accommodation heretofore or hereafter made to the Company by Abbott, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
All of the Company's:
(i) Accounts Receivable; with respect to which Abbott is the Account Debtor;
(ii) Contract Rights; with respect to which Abbott is the Account Debtor;
(iii) right, title and interest in payments (the "NMDA Payments") owed by Abbott to the Company under the National Marketing and Distribution Agreement between the Company and Abbott dated the date hereof;
(iv) finished goods manufactured pursuant to the terms of the National Marketing and Distribution Agreement, allocated for Abbott, and thereby identified with Abbott Lot Numbers; and
(v) unencumbered molds as listed in Schedule IV, and all additions, improvements, substitutions and replacements thereto;
together with all books, records, writings, data bases, information and other property relating to, used or useful in connection with, or evidencing, embodying, incorporating or referring to any of the foregoing, and all proceeds, products, offspring, rents, issues, profits and returns of and from any of the foregoing.
Upon request by Abbott during the existence of a Default, the Company will forthwith, upon receipt, transmit and deliver to Abbott, in the form received, all cash, checks, drafts and other instruments or writings for the payment of money (properly endorsed, where required, so that such items may be collected by Abbott) which may be received by the Company at any time in full or partial payment or otherwise as proceeds of any of the Collateral. Except as Abbott may otherwise consent in writing, any such items which may be so received by the Company
will not be commingled with any other of its funds or property, but will be held separate and apart from its own funds or property and upon express trust for Abbott until delivery is made to Abbott. The Company will comply with the terms and conditions of any consent given by Abbott pursuant to the foregoing sentence.
Abbott (or any designee thereof) is authorized to endorse, in the name of the Company, any item, howsoever received by Abbott, representing any payment on or other proceeds of any of the Collateral.
lease of Inventory in the ordinary course of its business and sales of Equipment which is no longer useful in its business or which is being replaced by similar Equipment, will not sell, lease, assign or create or permit to exist any lien or security interest on any Collateral; (g) will at all times keep all of its Inventory pledged hereunder insured under policies maintained with reputable, financially sound insurance companies against loss, damage, theft and other risks to such extent as is customarily maintained by companies similarly situated, and cause all such policies to provide that loss thereunder shall be payable to Abbott as its interest may appear (it being understood that (A) so long as no Default exists, Abbott shall deliver any proceeds of such insurance which may be received by it to the Company and (B) whenever a Default exists, Abbott may apply any proceeds of such insurance which may be received by it toward payment of the Liabilities, whether or not due, in such order of application as Abbott may determine), and such policies or certificates thereof shall, if Abbott so requests, be deposited with or furnished to Abbott; (h) will take such actions as are reasonably necessary to keep its Inventory pledged hereunder in good repair and condition; (i) will take such actions as are reasonably necessary to keep its Equipment pledged hereunder in good repair and condition and in good working order, ordinary wear and tear excepted; (j) will promptly pay when due all license fees, registration fees, taxes, assessments and other charges which may be levied upon or assessed against the ownership, operation, possession, maintenance or use of its Equipment pledged hereunder and other Goods; (k) will, upon request of Abbott, (i) cause to be noted on the applicable certificate, in the event any of its Equipment is covered by a certificate of title, the security interest of Abbott in the Equipment covered thereby, and (ii) deliver all such certificates to Abbott or its designees; (l) will take all steps reasonably necessary to protect, preserve and maintain all of its rights in the Collateral; (m) will keep all of the tangible Collateral in the United States; and (n) will reimburse Abbott for all expenses, including reasonable attorney's fees and charges, incurred by Abbott in seeking to collect or enforce any rights in respect of the Collateral.
Any expenses incurred in protecting, preserving or maintaining any Collateral shall be borne by the Company.
Abbott to preserve or protect any right with respect to such Collateral against prior parties, or to do any act with respect to the preservation of such Collateral not so requested by the Company, shall be deemed of itself a failure to exercise reasonable care in the custody or preservation of such Collateral.
Any notice shall be given in the manner provided under the Credit Agreement.
The Company agrees to pay all expenses, including reasonable attorney's fees and charges paid or incurred by Abbott in endeavoring to collect the Liabilities, or any part thereof, and in enforcing this Agreement, and such obligations will themselves be Liabilities.
No delay on the part of Abbott in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by Abbott of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy.
This Security Agreement shall remain in full force and effect until all Liabilities have been paid in full and all commitments by Abbott to make loans, advances or other financial accommodations to the Company have terminated. If at any time all or any part of any payment theretofore applied by Abbott to any of the Liabilities is or must be rescinded or returned by Abbott for any reason whatsoever (including the insolvency, bankruptcy or reorganization of the Company), such Liabilities shall, for the purposes of this Agreement, to the extent that such payment is or must be rescinded or returned, be deemed to have continued in existence, notwithstanding such application by Abbott, and this Agreement shall continue to be effective or be reinstated, as the case may be, as to such Liabilities, all as though such application by Abbott had not been made.
This Agreement shall be construed in accordance with and governed by the laws of the State of Illinois applicable to contracts made and to be fully performed in such State, subject, however, to the applicability of the Uniform Commercial Code of any jurisdiction in which any Goods may be located at any given time. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
The rights and privileges of Abbott hereunder shall inure to the benefit of its successors and assigns.
This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement.
This Agreement and the Collateral shall not be subject to the subordination agreement set forth in Section 9 of the Credit Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year first above written.
ABBOTT LABORATORIES
By: /s/ Richard A. Gonzalez
--------------------------------------------
Title: Senior Vice President, Hospital Products
----------------------------------------
|
RETRACTABLE TECHNOLOGIES, INC.
By: /s/ Thomas J. Shaw
---------------------------------------------
Title: CEO
-----------------------------------------
|
The Company's chief executive office is located at:
511 Lobo Lane
Little Elm, TX 75068
The Company also has a location at:
622 South Mill Street
Lewisville, TX 75057
SCHEDULE III
None
Security Agreement Unencumbered Molds
---------------------------------------------------------------------------------------
Category Description Vendor
---------------------------------------------------------------------------------------
Production Molds Magor Mold 10cc Family from CIP Magor Mold
---------------------------------------------------------------------------------------
Magor Mold 5cc Family from CIP Magor Mold
---------------------------------------------------------------------------------------
8 cavity Tubeholder Housing mold Magor Mold
---------------------------------------------------------------------------------------
Magor Mold 8 cavity Tubeholder-Small Tube Adapter Magor Mold
---------------------------------------------------------------------------------------
Magor Mold cavity Tubeholder Activation Tube Magor Mold
---------------------------------------------------------------------------------------
Magor Mold 8 cavity Tubeholder - Threaded Disk Magor Mold
---------------------------------------------------------------------------------------
Magor Mold/Mold #1522 (cavities match Mold 1498) Magor Mold
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Molds on Order Magor Mold 32 cavity housing for 1cc line Magor Mold
---------------------------------------------------------------------------------------
Magor Mold 16 cavity runner for 1cc line Magor Mold
---------------------------------------------------------------------------------------
|
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is made as of May 4, 2000, by and between Retractable Technologies, Inc., a Texas corporation with its principal office at 511 Lobo Lane, Little Elm, Texas 75068 ("RTI"), and Abbott Laboratories, an Illinois corporation with its principal office at 100 Abbott Park Road, Abbott Park, Illinois 60064-6400 ("Abbott").
RECITALS
WHEREAS, RTI and Abbott have entered into a Credit Agreement (the "Credit Agreement") of even date herewith; and
WHEREAS, the execution and delivery of this Agreement are a condition to the Closing of the Credit Agreement;
NOW, THEREFORE, RTI and Abbott agree as follows:
RTI - Reg. Rights Agmt
May 2, 2000 -1-
1.7 Securities Act. The term "Securities Act" means the Securities
--------------
Act of 1933, as amended.
1.8 Shares. The term "Shares" means the shares of common stock of
------
RTI, no par value, issuable or issued upon conversion of the Note
issued pursuant to the Credit Agreement, and any shares of common
stock of RTI issued as a dividend or other distribution with
respect to such capital stock.
2. Registration. RTI covenants and agrees as follows:
------------
2.1 S-3 Registration. At any time after RTI becomes eligible to file
----------------
a Registration Statement on Form S-3 (or any successor form
relating to secondary offerings), Abbott may request RTI, in
writing, to effect a registration on Form S-3 (or such successor
form), of Registrable Securities. Thereupon, RTI shall, as
expeditiously as possible, use its best efforts to effect the
registration on Form S-3 (or such successor form) of all
Registrable Securities which RTI has been requested to so
register. The right to request registration on Form S-3 pursuant
to this Section 2.1 may not be exercised more than three (3)
times by Abbott. RTI shall not be required to include any
Registrable Securities in such registration unless Abbott accepts
the terms of the underwriting as agreed upon between RTI and the
underwriters selected by RTI (provided that such terms must be
consistent with this Agreement and are applicable to other
shareholders offering their shares in such registration).
2.2 Piggyback Registration. Whenever RTI proposes to register any of
----------------------
its securities under the Securities Act for a public offering for
cash, whether as a primary or secondary offering or pursuant to
registration rights granted to holders of other securities of RTI
other than (a) a registration relating solely to employee benefit
plans on Form S-8 (or a similar successor form), or (b) a
registration on Form S-4 (or a similar successor form) relating
solely to a transaction subject to Rule 145 under the Securities
Act), RTI will promptly give Abbott written notice thereof, and
subject to the terms of Section 2.3 below, use its reasonable
efforts to include in such registration (and any related
qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all Registrable Securities
specified in a written request to RTI made within fifteen (15)
business days after the receipt of such written notice by Abbott.
|
RTI - Reg. Rights Agmt
May 2, 2000 -2-
(a) If the registration of which RTI gives notice pursuant to
Section 2.2 is for a registered offering involving an
underwriting, then Abbott's right to registration shall be
conditioned upon Abbott's participation in the underwriting
and the inclusion of Abbott's Registrable Securities in the
underwriting to the extent provided in this Agreement.
Abbott [together with RTI and the holders of other
securities of RTI distributing their securities through that
underwriting (such other holders being termed the "Other
Holders")] shall enter into an underwriting agreement in
customary form with the representative of the underwriter or
underwriters selected by RTI.
(b) Notwithstanding any other provision of this Article 2, if the representative of the underwriters advises RTI in writing that marketing factors require a limitation on the number of shares to be underwritten, then RTI shall so inform Abbott and the Other Holders. The number of shares of RTI common stock being sold by RTI for its own account shall not be reduced by operation of this Section 2.3. The number of shares of Registrable Securities held by Abbott and the Other Holder(s) that may be included in the underwriting (in addition to those being sold by RTI for its own account) shall be allocated among Abbott and the Other Holders in proportion (as nearly as practicable) to the amount of Registrable Securities owned by each such holder.
(c) Any holder which does not agree to the terms of the such underwriting shall be excluded from that underwriting by written notice from RTI or the underwriter. Any Registrable Securities or other securities excluded or withdrawn from that underwriting shall be withdrawn from the registration.
RTI - Reg. Rights Agmt
May 2, 2000 -3-
Article 2, RTI will use reasonable efforts to:
(a) keep such registration effective until the earliest of:
(i) such date as all of the Shares have been sold, or
(ii) if RTI is not then eligible to effect such
registration on Form S-3 (or a similar successor
form), one hundred and twenty (120) days after the
effective date of the Registration Statement, or
(iii) the termination of the registration rights pursuant to
Section 2.9 of this Agreement.
(b) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus
used in connection with the Registration Statement as may be
necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities
covered by the Registration Statement;
(c) furnish such number of prospectuses, prospectus supplements,
and other documents incident thereto, including any
amendment of or supplement to the prospectus, as Abbott from
time to time may reasonably request;
(d) cause all Shares registered as described in this Agreement
to be listed on any securities exchange or quoted on any
quotation service on which similar securities issued by RTI
are then listed or quoted;
(e) provide a transfer agent and registrar for all Registrable
Securities registered pursuant to the Registration Statement
and a CUSIP number for all such Shares;
(f) otherwise use reasonable efforts to comply with all
applicable rules and regulations of the SEC; and
|
RTI - Reg. Rights Agmt
May 2, 2000 -4-
(g) file the documents required of RTI and otherwise use
reasonable efforts to maintain requisite blue sky clearance
in:
(i) all jurisdictions in which any of the Shares are sold
originally; and
(ii) all other states specified in writing by Abbott,
provided as to this clause (ii), however, that RTI
shall not be required to qualify to do business or
consent to service of process in any state in which it
is not now so qualified or has not so consented.
|
(a) In the event Abbott intends to resell Shares pursuant to a Registration Statement, Abbott shall give RTI five (5) business days notice of its intent to sell in reliance on such Registration Statement (the "Notice of Sale"). RTI may refuse to permit Abbott to resell any Shares pursuant to the Registration Statement; provided, however, that in order to exercise this right, RTI must deliver to Abbott a certificate in writing within three (3) business days following its receipt of the Notice of Sale from Abbott to the effect that a sale pursuant to the Registration Statement in its then current form could constitute a violation of the federal securities laws. In such an event, RTI shall either (i) use commercially reasonable efforts to amend promptly the Registration Statement, if necessary, and take all other actions necessary to allow such sale under the federal securities laws, and shall notify Abbott promptly after it has determined that such sale has become permissible under the federal securities laws, or (ii) exercise its right under paragraph (b) below to delay the sale.
(b) If in the good faith judgment of the Board of Directors of
RTI, after consultation with counsel, the filing of a
Registration Statement or an amendment thereto or prospectus
supplement so as permit the proposed sale without a
violation of securities laws would materially adversely
affect a pending or scheduled public offering, or an
acquisition, merger, or similar transaction, or negotiations
of either of the foregoing, or would require the disclosure
of another material development prior to the time it would
otherwise be required to be disclosed in a manner adverse to
the best interests of RTI, then it may decline to permit the
resale of any Shares pursuant to the Registration Statement
for up to a maximum of ninety (90) days, provided that it
may not exercise this right more than once in any twelve
(12) month period.
(c) If RTI has delivered a prospectus to Abbott and after having done so the prospectus is amended to comply with the requirements of the Securities
RTI - Reg. Rights Agmt
May 2, 2000 -5-
Act, RTI shall reasonably promptly notify Abbott and, if
requested, Abbott shall immediately cease making offers of
Registrable Securities and return all prospectuses to the
Company. The Company shall reasonably promptly provide
Abbott with revised prospectuses and, following receipt of
the revised prospectuses, Abbott shall be free to resume
making offers of the Registrable Securities.
(d) Abbott covenants and agrees that it will not sell any Shares
pursuant to a Registration Statement during the periods
sales in reliance upon the Registration Statement are
prohibited as set forth in this Section 2.6.
|
(a) RTI is, prior to such transfer, furnished with written notice of the name and address of such transferee and the Shares with respect to which such registration rights are being assigned and a copy of a duly executed written instrument in form reasonably satisfactory to RTI by which such transferee assumes all of the obligations and liabilities of its transferor hereunder and agrees itself to be bound hereby;
(b) immediately following such transfer the disposition of the Shares by the transferee is restricted under the Securities Act;
(d) Abbott guarantees the performance of the transferee of its obligations under this Agreement.
RTI - Reg. Rights Agmt
May 2, 2000 -6-
pursuant to this Section 2.9, RTI may withdraw the Registration
Statement, or any portion thereof, covering the Shares.
2.10 Reports Under Securities Exchange Act of 1934. With a view to
---------------------------------------------
making available to Abbott the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the
SEC that may at any time permit Abbott to sell securities of RTI
to the public without registration or pursuant to a registration
on Form S-3, RTI agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times
after ninety (90) days after the effective date of the first
registration statement filed by RTI for the offering of its
securities to the general public;
(b) file with the SEC in a timely manner all reports and other
documents required of RTI under the Securities Act and the
Exchange Act; and
(c) furnish to Abbott, so long as Abbott owns any Shares,
forthwith upon request (i) a written statement by RTI that
it has complied with the reporting requirements of SEC Rule
144 (at any time after ninety (90) days after the effective
date of the first registration statement filed by RTI), the
Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), or that
it qualifies as a registrant whose securities may be resold
pursuant to Form S-3, (ii) a copy of the most recent annual
or quarterly report of RTI and such other reports and
documents so filed by RTI, and (iii) such other information
as may be reasonably requested in availing Abbott of any
rule or regulation of the SEC that permits the selling of
any such securities without registration or pursuant to such
form.
2.12 "Lock-up" Agreement; Confidentiality of Notices.
-----------------------------------------------
(a) If requested by the managing underwriter of an underwritten
public offering by RTI of RTI common stock, Abbott hereby
agrees that, for a period of one hundred eighty (180) days
following the effective date of a Registration Statement,
(i) it will not offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of RTI common stock or
any securities convertible into or exercisable or
exchangeable for RTI common stock; (ii) it will not enter
into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic
consequences of ownership of the RTI common stock, whether
any such transaction described in clause (i) or (ii) above
is to be settled by
|
RTI - Reg. Rights Agmt
May 2, 2000 -7-
delivery of RTI common stock or such other securities, in
cash or otherwise; and (iii) it shall execute any other
customary lock-up agreements as may be requested by the
managing underwriters, provided that all stockholders
holding not less than the number of shares of RTI common
stock held by Abbott (including the shares of RTI common
stock issuable upon conversion of the Shares, or other
convertible securities, or upon exercise of options,
warrants or rights) and all officers and directors of RTI
enter into similar agreements.
(b) RTI may impose stop-transfer instructions with respect to
Registrable Securities or other securities subject to the
foregoing restrictions until the end of the applicable lock-
up period.
(c) Abbott shall treat confidentially any written notice
received by Abbott from RTI regarding RTI's plans to file a
Registration Statement and shall not disclose such
information to any person other than as necessary to
exercise its rights under this Agreement.
|
(a) an untrue statement made in (or upon the omission of a material fact from) such Registration Statement in reliance upon and in conformity with written information furnished to RTI by or on behalf of Abbott specifically for use in preparation of the Registration Statement,
(b) the failure of RTI to comply with the covenants or agreements contained in Section 2.5 hereof, or
RTI - Reg. Rights Agmt
May 2, 2000 -8-
(c) any untrue statement or omission in any prospectus that is
corrected in any subsequent prospectus that was delivered to
Abbott prior to the pertinent sale or sales by Abbott.
|
(a) either an untrue statement made in or the omission of a material fact from such Registration Statement in reliance upon and in conformity with written information furnished to RTI by or on behalf of Abbott specifically for use in preparation of the Registration Statement,
(b) the failure of Abbott to comply with the covenants or agreements contained in Section 2.6 hereof, or
(c) any untrue statement or omission in any prospectus that is corrected in any subsequent prospectus that was delivered to Abbott prior to the pertinent sale or sales by Abbott, and Abbott will, as incurred, reimburse RTI and such persons for any legal or other expenses reasonably incurred in investigating, defending, or preparing to defend any such action, proceeding, or claim;
provided, however, that in no event shall Abbott's cumulative aggregate liability under this Section 3.2, or under Section 3.4, or under Sections 3.2 and 3.4 together, exceed the net amount received by Abbott from the sale of the Shares to which such loss relates minus the amount of any damages which Abbott has otherwise been required to pay by reason of such untrue or allegedly untrue statement or omission or alleged omission.
RTI - Reg. Rights Agmt
May 2, 2000 -9-
3.3 Indemnification Procedures. Promptly after receipt by any
--------------------------
indemnified party of a notice of a claim or the beginning of any
action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Article 3, such indemnified
person shall notify the indemnifying person in writing of such
claim or of the commencement of such action and, subject to the
provisions hereinafter stated, in case any such action shall be
brought against an indemnified person and the indemnifying person
shall have been notified thereof, the indemnifying person shall
be entitled to participate therein, and, to the extent that it
shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to the indemnified person. After notice
from the indemnifying person to such indemnified person of the
indemnifying person's election to assume the defense thereof, the
indemnifying person shall not be liable to such indemnified
person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof;
provided, however, that if there exists or shall exist a conflict
of interest that would make it inappropriate in the reasonable
judgment of the indemnified person for the same counsel to
present both the indemnified person and such indemnifying person
or any affiliate or associate thereof, the indemnified person
shall be entitled to retain its own counsel at the expense of
such indemnifying person.
3.4 Contribution. If the indemnification provided for in this Article
------------
3 is unavailable to or insufficient to hold harmless an
indemnified party under Section 3.1 or 3.2 above in respect of
any losses, claims, damages, or liabilities (or actions or
proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims,
damages, or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of RTI
on one hand and Abbott on the other in connection with the
statements or omissions which resulted in such losses, claims,
damages, or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact
related to information supplied by RTI on one hand or Abbott on
the other and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement
or omission; provided, however, that in no event shall Abbott's
cumulative aggregate liability under this Section 3.4, or under
Section 3.2, or under Sections 3.2 and 3.4 together, exceed the
net amount received by Abbott from the sale of the Shares to
which such loss relates minus the amount of any damages which
Abbott has otherwise been required to pay by reason of such
untrue or allegedly untrue statement or omission or alleged
omission. RTI and Abbott agree that it would not be just and
equitable if contribution pursuant to this Section 3.4 were
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to above in this Section 3.4. The amount
paid or payable
|
RTI - Reg. Rights Agmt
May 2, 2000 -10-
by an indemnified party as a result of the losses, claims,
damages, or liabilities (or actions in respect thereof) referred
to above in this Section 3.4 shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or
claim. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
3.5 Continuing Obligations. The obligations of RTI and Abbott under
----------------------
this Article 3 shall survive the completion of the offering of
the Shares pursuant to the Registration Statement and shall be in
addition to any liability that RTI and Abbott may otherwise have.
4. Miscellaneous.
-------------
4.1 Waiver. The failure on the part of RTI or Abbott to exercise or
------
enforce any right conferred upon it hereunder shall not be deemed
to be a waiver of any such right, nor operate to bar the exercise
or enforcement thereof at any time or times thereafter.
4.2 Notices. Any notice required or permitted to be given by the
-------
terms of this Agreement by a party shall be given by prepaid,
registered air mall or by express delivery service, such as
Federal Express or DHL, properly addressed to the address of the
other party set forth below, or to such other address as may,
from time to time, be designated in writing by such other party,
and shall be deemed to have been given upon receipt:
As to Abbott:
Senior Vice President
Hospital Products Division
Abbott Laboratories
200 Abbott Park Road
Abbott Park, Illinois 60064-3537
With copy (which will not constitute notice) to:
Divisional Vice President, D-322
Abbott Laboratories
100 Abbott Park Road
AP6D D-322
Abbott Park, Illinois 60064-6049
|
RTI - Reg. Rights Agmt
May 2, 2000 -11-
As to RTI:
Retractable Technologies, Inc.
511 Lobo Lane
Little Elm, Texas 75068
Attn: Thomas J. Shaw, Chief
Executive Officer and President
With copy (which will not constitute notice) to:
Retractable Technologies, Inc.
Legal Department
511 Lobo Lane
Little Elm, Texas 75068
Attn: Michele Larios
RTI - Reg. Rights Agmt
May 2, 2000 -12-
4.7 Assignment. This Agreement shall not be assignable by the
----------
parties, except as permitted under Section 2.9 or (a) to an
Affiliate of such party, provided the assigning party guarantees
the performance of the Affiliate, (b) as mutually agreed to in
writing in advance, or (c) as incident to the merger,
consolidation, reorganization, or acquisition of stock or assets
affecting actual voting control of the assigning party or
affecting all or substantially all of the assets of such party to
which this Agreement relates. Any permitted assignment shall be
binding on the successors of the assigning party. Any assignment
or attempted assignment by any party in violation of the terms of
this Section 4.7, shall be null and void and of no legal effect.
For purposes of this Agreement, the term "Affiliate" shall mean,
with respect to any party hereto, any corporation or other form
of business organization, which directly owns, controls, is
controlled by, or is under common control with, such party. An
entity shall be regarded as being in control of another entity if
the former entity has the direct or indirect power to order or
cause the direction of the policies of the other entity whether
(x) through the ownership of more than fifty percent (50%) of the
voting securities of the other entity; or (y) by contract,
statute, regulation, or otherwise.
4.8 Severability. In the event that any provision of this Agreement
------------
is held by a court of competent jurisdiction to be unenforceable
because it is invalid or in conflict with any law of any relevant
jurisdiction, (a) the validity of the remaining provisions shall
not be affected, (b) the particular provision shall to the extent
permitted by law be reasonably construed and equitably reformed
to be valid and enforceable, and (c) the rights and obligations
of the parties shall be construed and enforced as if the
Agreement did not contain the unreformed, particular provisions
held to be unenforceable.
4.9 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original.
|
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate by their duly authorized officers as of the date first above written.
ABBOTT LABORATORIES RETRACTABLE TECHNOLOGIES, INC.
By: /s/ Richard A. Gonzalez By: /s/ Thomas J. Shaw
----------------------------- -----------------------------
Richard A. Gonzalez
Title: Senior Vice President, Title: CEO
Hospital Products
RTI - Reg. Rights Agmt
May 2, 2000 -13-
|
EXHIBIT 6.2
CONTRACT MANUFACTURING AGREEMENT
THIS CONTRACT MANUFACTURING AGREEMENT is entered into as of April 7, 2000, by and between Retractable Technologies, Inc. ("RTI"), a corporation organized under the laws of the state of Texas with its principal place of business at 511 Lobo Lane, Little Elm, Texas 75068 and Nypro Precision Assemblies, Inc. ("NPA") a corporation organized under the laws of the State of California, with its principal place of business at Suite F, 505 Otay Valley Road, Chula Vista, California 91911.
RECITALS:
A. RTI has designed and developed certain medical Products (as defined below).
B. NPA, in conjunction with its wholly owned Mexican subsidiary ENSAMBLES NYPRO, S.A. de C.V. ("NPA - Mexico"), is in the business of toll manufacturing medical products for third parties.
C. RTI wishes to contract with NPA to toll manufacture the Products at the Tijuana Plant of NPA - Mexico located in Tijuana, Mexico.
D. In connection with the foregoing, RTI intends to purchase and consign to NPA certain machinery and equipment to be used by NPA and NPA - Mexico in the manufacture of the Products at the Tijuana Plant.
NOW THEREFORE, in consideration of the mutual covenants contained herein, RTI and NPA agree to the following:
1. DEFINITIONS:
As used in this Agreement, the following terms shall have the following meanings:
a. "Affiliates" shall mean (a) an entity controlled by a common parent that owns more than fifty percent of the voting stock of both such entity and one of the parties to this Agreement and (b) such parent company.
b. "Approval Date" as to any particular Product, shall mean the date on which such Product has been cleared for marketing pursuant to a 510(k) submission to the FDA and all other necessary clearances, approvals or registrations from the FDA or other appropriate regulatory authorities have been obtained so as to enable the manufacture, distribution, marketing and sale of such Product.
c. "Batch" with respect to any of the Products, refers to a separate and distinct quantity of such Product processed under continuous and identical conditions and designated by a batch or lot number and an expiration date.
d. "Certificate of Compliance" shall mean a document certifying that a Batch of a particular Product or Molded Component meets all Specifications or other requirements therefor, as the case may be, which Certificate is dated and signed by a duly authorized representative of the Quality Control or Quality Assurance department of the party rendering the same.
e. "Chula Vista Facility" shall mean the facility of NPA located at Suite F, 505 Otay Valley Road, Chula Vista, California 91911.
f. "Contract Anniversary Date" shall mean the first day of May. By way of illustration, the first contract Anniversary Date shall be May 1, 2001 and the Second Contract Anniversary Date shall be May 1, 2002.
g. "Contract Year" shall mean, with respect to each year, the period May 1 through the following April 30. By way of illustration, the Second Contract Year shall commence on May 1, 2000 and shall run through April 30, 2001.
h. "Cost of Assembly" shall mean the fully absorbed or total manufacturing cost to NPA of assembling Products under the terms of this Agreement, calculated in accordance with United States generally accepted accounting principles consistently applied.
i. "Equipment" shall mean the machinery and equipment identified on Schedule A hereto and any production, testing, manufacturing or other machinery and equipment provided to NPA or its Affiliates on a consignment basis by RTI for the purpose of assembling RTI Products.
j. "FDA" shall mean the United States Food and Drug Administration, or any successor body.
k. "CGMP" shall mean current good manufacturing practice as required by the regulations of the FDA.
l. "RTI" shall mean Retractable Technologies, Inc.
m. "Molded Components" shall mean any item listed on Schedule B hereto (as such Schedule may be amended from time to time by mutual agreement between the parties), which are produced and supplied by RTI to NPA for incorporation into the Products.
n. "Initial Term" shall mean that period commencing on April 7, 2000 and ending on April 6, 2001.
o. "Maximum Volume Commitment" shall mean the maximum amount of Product which NPA shall be required to process for RTI in any given Contract Year (unless otherwise mutually agreed to by the parties in writing), pursuant to Section 7 hereof.
p. "Minimum Volume Commitment" shall mean the minimum amount of Product
which RTI shall order from NPA in any given Contract Year (unless
otherwise mutually agreed to by the parties in writing), pursuant to
Section 7 hereof.
q. "NPA" shall mean Nypro Precision Assemblies, Inc.
r. "NP" - Mexico" shall mean Ensambles Nypro, S.A. de C.V.
s. "Other Materials" shall mean all raw materials (other than RTI Molded Components) utilized in the manufacture of the Products.
t. "Products" or "Product" shall mean the Products set forth on Schedule C hereto, as the same shall be amended in writing from time to time by the mutual agreement of RTI and NPA.
u. "Purchase Orders" shall have the meaning set forth in Section 6 below.
v. "Shipment Instruction" shall mean the written shipment instructions pursuant to which RTI shall direct NPA to ship Product; provided, however, that in the event of any conflict between the terms of such Shipment Instructions and the terms of this Agreement, the terms of this Agreement shall be controlling.
w. "Specifications" of a particular Product shall mean the specifications for such Product stated in the "RTI Assembly Product Specification" as set forth in Schedule D, as the same may be amended from time to time in writing by the mutual agreement of RTI and NPA.
x. "Technology" shall mean that technology (including technical, scientific, industrial information or knowledge, confidential information and expertise) in relation to the formulation and composition of any of the Products and the processes, means and procedures for the manufacture and production of Products utilizing any of the Molded Components and/or any of the Other Materials.
y. "Tijuana Plant" shall mean the manufacturing plant owned and operated by NPA - Mexico at 2 do Eje Oriente Poniente #20581 Cd. Industrial Nueva Tijuana Otay Tijuana, B.C.C.P. 22500 Mexico.
z. "Trademarks" shall mean the trademarks set forth on Schedule E hereto.
aa. "Defects in Workmanship" shall mean making products which do not meet specifications established by the RTI.
2. MANUFACTURING SERVICES
Subject to the terms and conditions of this Agreement, NPA shall, and shall cause NPA - Mexico, to manufacture Product at the Tijuana Plant for RTI pursuant to applicable Purchase Orders utilizing the Technology and in accordance with the Specifications provided by RTI.
3. EQUIPMENT; INITIAL START-UP; ONGOING MAINTENANCE
a. RTI will provide the Equipment for assembly of the Products to NPA on a consignment basis, for installation and use at the Tijuana Plant. RTI will be responsible, at its cost, for arranging shipment of the Equipment to the Tijuana Plant, and will coordinate and arrange for the installation, debugging and validation of the Equipment, all with assistance from NPA.
b. All validation documents related to the Equipment shall be the sole property of RTI. To the extent that any of such documentation is required to be maintained and updated at the Tijuana Plant, NPA shall properly maintain and update the same in accordance with all applicable FDA rules and regulations, and shall forward to RTI all such copies of such documentation as RTI shall request. At the termination of this Agreement all of such validation documentation shall be promptly returned to RTI at RTI's cost. NPA may retain a copy of all validation documentation for archival purposes.
c. RTI will be responsible for providing the initial training of NPA's staff in the operation and maintenance of the Equipment and in connection therewith shall arrange for the provision to NPA of all necessary training manuals and maintenance guides required for operation of the Equipment and continual training by NPA of new employees.
d. NPA agrees that all of such Equipment will be used exclusively for the manufacture of the Products. Use of the Equipment for any other purposes may occur only with the prior written consent of RTI.
e. NPA will be responsible for maintaining the Equipment in a reasonable
manner by adherence to equipment use and maintenance guidelines
provided by the manufacturer of the equipment. NPA agrees further to
use only those operators and mechanics who have been trained in the
proper and appropriate use and care of the Equipment pursuant to
Section 3(c) above.
f. RTI shall reimburse NPA for all reasonable maintenance costs of the Equipment, including purchasing a reasonable spare parts inventory and providing for any needed factory servicing, provided that NPA shall provide to RTI appropriate invoices or other documentation detailing such costs, in form reasonably satisfactory to RTI.
g. RTI will retain ownership of the Equipment at all times during and after the term of this Agreement. Upon termination of this Agreement, NPA will promptly return the Equipment to RTI at such location in the United States of America as RTI shall designate. NPA shall ensure that upon the termination of this Agreement, for whatever reason, the Equipment is returned to RTI in good working order, subject to normal wear and tear, and is shipped in an appropriate commercial manner, by carrier reasonably acceptable to RTI. In the event that this Agreement is terminated for any reasons the cost for the return of the Equipment to RTI shall be borne by RTI, except in the event that NPA terminates this Agreement for convenience.
h. NPA will use its best efforts and take all such actions as are necessary or appropriate to identify the Equipment as the property of RTI and to secure the ownership, right, title and interests of RTI in and to the Equipment under the applicable state and federal laws of the United States and Mexico.
4. MOLDED COMPONENTS AND OTHER MATERIALS
a. RTI shall provide to NPA all RTI Molded Components necessary to produce the Products. In addition, RTI shall provide to NPA all Other Materials required to produce the Products, except as otherwise provided for in Section 4 (b) below.
b. Notwithstanding the provisions of Section 4(a) above, NPA and RTI may agree from time to time that certain Other Materials will by purchased by NPA on behalf of RTI. In no case shall such a purchase be made except pursuant to prior written agreement. In the event of such a purchase, NPA shall provide to RTI copies of invoices or other statements detailing such purchases in a form reasonably complete and satisfactory to RTI. Upon the receipt of such documentation, RTI shall promptly reimburse NPA for all costs incurred by NPA in connection with the purchase of such Other Materials for the account of RTI. In such case, NPA shall be responsible for ensuring that all of such Other Materials meet all Specifications and are otherwise in compliance with all
applicable FDA standards for use in the Products, all in a manner consistent with the provisions of this Section 4.
c. All RTI Molded Components and all Other Materials provided or arranged to be provided by RTI hereunder shall be delivered to NPA at the Chula Vista Facility. All RTI Molded Components shall be packed in double bagged clear poly bags with each bag labeled stating RTI part number, lot number and quantity therein. RTI will assure suitable packing of RTI Molded Components so as to withstand all reasonable handling.
d. RTI will ensure that all shipments of RTI Molded Components are accompanied by shipping papers specifying the part numbers and lot numbers and quantity of the shipment as well as a Certificate of Compliance in respect thereof. It shall be the responsibility of the party ordering any Other Materials (whether RTI or NPA) to ensure that a Certificate of Compliance in respect of such Other Materials is sent to the other party.
e. NPA will complete a receiving report upon receipt of each shipment from RTI. If there is a discrepancy between the receiving report and the shipping papers for any RTI Molded Components or any Other Materials ordered or provided by RTI, then NPA shall notify RTI immediately by fax. The notice shall detail the discrepancy and provide all necessary information regarding the shipment. RTI shall be responsible for resolving any such discrepancy and locating any lost items. In the event of such a discrepancy, NPA shall not assemble any portion of the shipment until directed in writing by RTI to do so.
f. NPA may refuse to accept or to process damaged or improperly packaged RTI Molded Components or any Other Materials provided or ordered by RTI within seven (7) days of receipt thereof. NPA shall notify RTI immediately in writing of any refusal to accept shipment immediately upon refusing shipment. The notice shall detail the reason for the refusal and should be accompanied by the appropriate shipping papers and Certificate of Compliance as well as any samples or pictures which would demonstrate the reason given. RTI shall investigate the complaint and respond to the NPA complaint. RTI shall provide NPA with any written report resulting from such investigation. In the event the complaint is deemed justified and the material is unusable, RTI shall be responsible for procuring replacement material as quickly as possible. In the event that the complaint is not deemed justified, the parties shall meet to resolve the matter, negotiating in good faith.
g. RTI agrees to supply to the Chula Vista Facility all RTI Molded Components and required Other Materials not less than one week prior to the scheduled week for assembly thereof.
h. RTI will retain ownership of the Molded Components and Other Materials at all times during and after the term of this Agreement. Upon termination of the Agreement, NPA will promptly return all unused Molded Components and Other Materials to RTI at such location in the United States of America as RTI shall designate. NPA shall ensure that upon the termination of this Agreement, the Molded Components and Other Materials are returned to RTI in substantially the same condition and packaged in the same manner as when received by NPA and are shipped in an appropriate commercial manner, by carrier reasonably acceptable to RTI. The party responsible for the cost of the return of Equipment to RTI under Section 3(g) shall also be responsible for the shipping cost for the return to RTI of the Molded Components and Other Materials.
i. NPA agrees that RTI shall be entitled to store at the NPA facility, at no cost to RTI, quantities of RTI Molded Components and Other Materials sufficient for fifteen (15) days of assembly of Products, as detailed in the Forecasts described in Section 5 below. NPA shall use appropriate care and diligence in storing such RTI Molded Components and Other Materials, and shall keep the same in a segregated area in the NPA facility. NPA will use its best efforts and take all such actions as are necessary or appropriate to identify the RTI Molded Components and Other Materials as the property of RTI and to secure the ownership, right, title and interests of RTI in and to the RTI Molded Components and Other Materials under the applicable state and federal laws of the United States and Mexico. Notwithstanding the foregoing, RTI shall bear the risk of loss or damage for the RTI Molded Components and Other Materials stored at the NPA facility.
5. FORECASTS
a. RTI shall deliver to NPA, within thirty (30) days after the execution of this Agreement, a non-binding, but best estimate, forecast of orders for Products for the First Contract Year, broken out on a calendar quarter basis. Thereafter, not later than sixty (60) days prior to each Contract Anniversary Date, and subject to the applicable Maximum Volume Commitments and Minimum Volume Commitments, RTI shall deliver to NPA a non-binding, but best estimate, forecast of order for Products for the subsequent Contract Year, broken out in the same manner as for the First Contract Year.
b. RTI shall deliver to NPA, thirty (30) days prior to the commencement of each month in a Contract Year, a binding Purchase Order of Product to be assembled by NPA during said month and a best estimate forecast of Product to be assembled by NPA during each of the two months following said month. However, RTI shall deliver a binding Purchase Order for assembly work to be performed during the first month of the First Contract Year not less than 30 days in advance of such month.
6. PURCHASE ORDERS
Orders for NPA to assemble Product shall be placed by RTI by means of
written purchase orders ("Purchase Orders") in a form reasonably acceptable to
both RTI and NPA, accompanied by Shipment Instructions, which shall be delivered
by RTI to NPA at its designated address. All such Purchase Orders shall conform
with the requirements as to price and quantity that are set forth elsewhere in
this Agreement. In the event of any conflict between the terms of any such
Purchase Order or Shipment Instructions and the terms of this Agreement, the
provisions of this Agreement shall control unless the parties have specifically
agreed in writing otherwise. NPA shall confirm in writing to RTI each Purchase
Order within (5) days of its receipt of such order. For confirmed purchase
orders, RTI shall not issue any change orders pertaining to shipments within the
(15) days of the date of scheduled shipment.
7. MINIMUM AND MAXIMUM ORDERS
a. Set forth on Schedule H hereto is the Minimum Volume Commitment for each Product for the Initial Contract Year, subject to the Approval date for each particular Product.
b. Set forth on Schedule H hereto is the Maximum Volume Commitment for each Product for the Initial Contract Year, subject to the Approval Date for each particular Product.
c. Not later than ninety (90) days prior to each Contract Anniversary Date, the parties shall review and agree upon revised Minimum Volume Commitments and Maximum Volume Commitments, on a product-by-product basis, for the succeeding Contract Year. In the event that the parties do not agree upon such revised commitments for a subsequent Contract Year, then the existing Minimum Volume Commitments and Maximum Volume Commitments shall remain in effect for such subsequent Contract Year.
8. PURCHASE PRICE FOR PRODUCT
a. The purchase price for each of the Products for the First Contract Year shall be as set forth on Schedule G attached hereto. Not later than ninety (90) days prior to each Contract Anniversary Date the parties shall review the pricing for the subsequent Contract Year. In the event that NPA's Cost of Assembly for assembling the Products shall have increased or decreased during the prior twelve months, then the parties shall adjust the purchase price for Products for the next Contract Year, either upward or downward, to reflect such changes in NPA's Cost of Assembly during the prior twelve months. Notwithstanding the foregoing, in no event shall the price on any particular product be increased or decreased in any Contract Year by more than five percent (5%) from the preceding Contract Year.
b. In conducting the foregoing review of the purchase price, NPA shall make available to RTI such books, records and evidence as NPA shall provide to analyze the change in NPA's Cost of Assembly and justify a change in pricing.
c. NPA will invoice after delivery of Products in accordance with RTI's Shipping Instructions, and payment will be due within thirty (30) calendar days after the date of invoice, without deduction or offset, in United States dollars and delivered to NPA at the address stated on the invoice.
9. SHIPMENT OF PRODUCT
a. Upon receipt and acceptance of a Purchase Order from RTI, NPA shall use its best efforts to ship Products from the Chula Vista Facility to RTI or other site designated by RTI in the Shipment Instructions within seven (7) days of the shipment date specified in such Purchase Order.
b. The shipment and delivery of the Products by NPA as provided in Paragraph 9(a) above shall be by a freight company approved by RTI and shall meet the FDA requirements for delivery of non-sterile medical device Products. RTI shall pay for all freight, F.O.B. the Chula Vista Facility, and for all insurance costs.
10. QUALITY CONTROL: ACCEPTANCE OF PRODUCTS AND PRODUCT COMPLAINTS
a. NPA shall perform the quality control tests on the Products as prescribed by RTI for the assembled components and/or packaged devices. NPA shall provide RTI with advance written notice of any proposed changes to the method of manufacture, associated facilities or other validated processes associated with any of the Products. All changes to process shall require written prior authorization from RTI.
b. NPA shall label the Products as outlined in quality control procedures and instruction manuals provided by RTI. A copy of the Certificate of Compliance to each Batch of Product shipped to RTI will be sent to RTI upon shipment from NPA, pursuant to Section 9(a) above.
c. NPA will comply with all CGMP and other FDA and other regulatory
requirements applicable to the processing of Products at NPA and NPA-
Mexico facilities. RTI shall be entitled to conduct audits with or
without notice to NPA to assure compliance with said requirements.
During any such audit contemplated by this subsection RTI shall, in
order to ensure that NPA and NPA-Mexico comply with CGMP and other FDA
and other regulatory requirements applicable to the processing of the
Products, have the right: (i) to inspect manufacturing facilities of
NPA and NPA-Mexico; (ii) to inspect quality control procedures; and
(iii) to review any records maintained pursuant to this Agreement.
d. In the event that (i) any Products are returned to RTI by its customers alleging that said Products are defective or (ii) RTI receives any other Product complaints from its customers or (iii) receives or is informed of any Product complaint from any consumer, then RTI shall notify NPA in writing, specifying the manner in which said Products are claimed to be defective or the nature of the complaint. Upon receipt of such notification NPA shall, and shall cause its Affiliates to, provide all reasonable assistance to RTI in investigating and analyzing the Product complaints. NPA shall promptly provide to RTI a written report within ten (10) days of its determination and conclusion with respect to the Product complaint.
e. Except for returns of Product which fail to meet the Specifications or other requirements set forth in this Agreement, the parties understand and agree that the Products are made-to-order for RTI and that there shall therefore be no returns whatsoever for credit of properly manufactured Products which meet those Specifications and requirements and are timely delivered in accordance with Purchase Orders.
11. PRODUCT WARRANTY AND RECALLS
a. PRODUCT WARRANTY
NPA warrants that the Products assembled for RTI under this Agreement will be, at the time of delivery to RTI, free from any liens or other defects in title, will conform to the applicable specifications set forth by RTI, and will be free from material defects in workmanship (and materials, if NPA is responsible for procuring materials from its own sources) under normal use and service. NPA will not, however, be responsible for, and this warranty will not apply to any defects in the Products arising out of RTI's design or the use of materials or components that RTI furnished to NPA or directed NPA to use. A claim under this warranty must be made by RTI in writing within 2 months from the date of delivery of the applicable units of Product. NPA's obligations to RTI under this warranty are as follows:
i. RETURNS
A. NPA will, at its option, repair or replace without charge to RTI any of Products found to be defective within the terms of this warranty if RTI returns it, freight prepaid to NPA. At NPA's option, however, NPA may also elect to accept
return of the Product and refund to RTI the purchase price RTI paid for such product. Repaired or replaced Product will carry this same warranty for the balance of the warranty period.
B. NPA will not be required to ship replacement Products until NPA has confirmed through examination that the returned units are defective within the terms of this warranty. NPA will pay freight costs to shop any repaired or replacement units to RTI. If NPA is unable to repair or replace the returned units within a reasonable time, then RTI will be entitled to the refund of its purchase price for the units.
C. This warranty does not apply to any defect attributed to purchased components specified by RTI, or to any units of Product which NPA determines have been subjected by a party other than NPA to: operating or environmental conditions beyond those normally expected for the Product based upon the materials specified, improper application, improper maintenance or repair, alteration, accident or any other negligent omission in use or handling.
D. Products returned to NPA which NPA determines are not defective within the terms of this warranty will be returned to RTI, and RTI will reimburse NPA upon invoice for return transportation charges and NPA's normal hourly charge applicable to inspection of the Product.
E. Purchased components of the Products specified by RTI are warranted only to the extent, and subject to the terms of the original warranty given by the manufacturer to NPA. NPA's sole obligation with respect to such components shall be, at RTI's expense, to prosecute on behalf of RTI all warranty claims against such component manufacturers upon receipt of written authorization of RTI.
b. RECALLS
i. If RTI determines that a Product should be recalled for any reason, including without limitation an FDA request for a recall or a voluntary product withdrawal, RTI shall give written notice to NPA specifying its reasons for the necessity of a recall (the "Recall Notice").
ii. In the event that RTI believes that the reason for such Product recall is a defect in the Product caused by the failure of the Product to meet appropriate Specifications upon shipment by NPA, then RTI shall so specify in the Recall Notice.
iii. If NPA agrees with RTI's determination of fault on the part of NPA as stated in such a Recall Notice, then NPA shall, at the option of RTI, either:
A. use all reasonable efforts to replace all Product so recalled within sixty (60) days from the date of the Recall Notice; or
B. refund to RTI the purchase price RTI paid for the recalled Products, or credit RTI the amount NPA invoiced RTI for the recalled Products.
v. With respect to any recall, RTI shall contact the FDA and shall be responsible for coordinating all of the necessary activities in connection with such recall, Product withdrawal, or field correction, and shall make all statements to the media, including but not limited to, press releases and interviews for publication or broadcast. NPA, as instructed by RTI, will use its best efforts to cooperate in all investigations involving any recall, Product withdrawal, or field correction of any Product.
vi. NPA shall immediately notify RTI of any inspections by the FDA including, without limitation, inspections as a result of a recall or any other regulatory issue relating to any of the Products. NPA shall also have the duty to immediately notify RTI if it becomes aware, or reasonably should have become aware, of any concern that may affect the function or safety of any of the Products.
c. NPA's liability to RTI for damages due to any return or recall of Products shall not exceed the total price RTI paid NPA for the Products at issued in RTI's claim. This limitation will apply regardless of the form of the action (i.e. whether the lawsuit is in contract or in tort, including negligence).
12. TRADEMARKS AND LABELING
a. The Trademarks shall remain the exclusive property of RTI. NPA and its Affiliates shall use the Trademarks only in accordance with RTI instructions and acceptable trademark practices. Nothing contained herein shall impose any obligation upon RTI or any of its affiliates to register or otherwise maintain in force any of the Trademarks.
b. NPA shall label each of the Products in accordance with the labeling instructions provided by RTI and shall not affix or apply to any of the Products any trademark or other name, logo or emblem without the prior written permission of RTI.
c. Nothing contained herein shall be construed as conferring any license in favor of NPA or its Affiliates to any other trademarks owned or claimed to be owned by RTI or any of its Affiliates.
d. NPA shall promptly bring to the attention of RTI any improper or wrongful use of any of the Trademarks which may come to the attention of NPA.
13. RELATIONSHIP OF RTI AND NPA
The relationship between RTI and NPA that is created by this Agreement shall be that of vendor and purchaser, and not that of principal and agent. In the performance of this Agreement, neither party shall have the authority to assume or create any obligation or responsibility, either express or implied, on behalf of or in the name of the other party, or to represent or bind the other party in any manner whatsoever.
14. REPRESENTATIONS AND WARRANTIES OF RTI
RTI hereby represents and warrants to NPA as follows:
a. RTI has the corporate power and authority to execute, deliver and perform this Agreement and the transactions contemplated hereby. The execution and delivery of this Agreement have been duly authorized by RTI. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not violate or conflict with any provision of RTI's Articles of Incorporation or by-laws or, to the best of its knowledge, any agreement, instrument, law or regulation to which RTI is bound. No approvals of authorizations of this Agreement or of the acts or transactions contemplated hereby is required by law or otherwise in order to make this Agreement binding upon RTI. This Agreement, and all other instruments required hereby to be executed and delivered to NPA by RTI are now, or when delivered will be, the legal, valid and binding instrument of RTI.
b. RTI has, or at the time of placing Purchase Orders for a particular Product will have, all approvals required to fulfill, satisfy and perform its obligations set forth in this Agreement.
c. RTI warrants that is has full power and authority to enter into this Agreement, has title and interest in the Technology, the Product design, the Specifications, and the manufacturing processes. RTI further warrants that it has the power to authorize NPA to use the same in connection with NPA's performance under this Contract.
d. OTHER THAN AS EXPRESSLY STATED ABOVE IN THIS SECTION 14, RTI MAKES NO REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY.
15. REPRESENTATIONS AND WARRANTIES OF NPA
NPA hereby represents and warrants to RTI as follows:
a. NPA has the corporate power and authority to execute, deliver and perform this Agreement and the transactions contemplated hereby. The execution and delivery of this Agreement have been duly authorized by NPA. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not violate or conflict with any provision of NPA's Articles of Incorporation or by-laws or, to the best of its knowledge, any agreement, instrument, law or regulation to which NPA is bound. No approvals of authorizations
of this Agreement or of the acts or transactions contemplated hereby is required by law or otherwise in order to make this Agreement binding upon NPA. This Agreement, and all other instruments required hereby to be executed and delivered to RTI by NPA are now, or when delivered will be, the legal, valid and binding instrument of NPA.
b. NPA-Mexico has the corporate power and authority to perform all obligations contemplated to be performed by it under this Agreement. The performance by NPA-Mexico of its obligations contemplated under this Agreement does not and will not violate or conflict with any provisions of any organizational or corporate documents of NPA-Mexico, or to the best knowledge of NPA or any of NPA's Affiliates, of any agreement, instrument, law or regulation to which NPA-Mexico is bound. No approvals or authorizations are required by law or otherwise in order for NPA-Mexico to perform all obligations contemplated to be performed by it under this Agreement. This Agreement shall not impede on any rights to sell, ship, market, manufacture RTI products in Mexico that RTI had prior to the signing of this Agreement.
c. NPA and its affiliates have all permits required to fulfill, satisfy and perform its obligations and responsibilities set forth in this Agreement.
d. All Products manufactured and shipped to RTI pursuant to this Agreement will be manufactured, packaged, tested and stored in accordance with the requirements of the then CGMP in an FDA approved facility, and will at the time of shipment be free from defects in workmanship.
e. OTHER THAN AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NPA EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, GUARANTEES OR REMEDIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
16. INDEMNIFICATION
a. NPA hereby agrees to indemnify, defend and hold harmless RTI and any Affiliates of RTI from any and all loss (except direct reprocurement costs and consequential loss, such as, for example, loss of business or of profits), compensatory loss for personal injury, liability, damage, claim, cost and expense (including, without limitation, reasonable costs of defense and settlement) arising from or in connection with:
i. the breach of any of NPA's representations and warranties made under this Agreement;
ii. the breach by NPA or any of its Affiliates of any undertaking, covenant or obligation hereunder of NPA or its Affiliates; and
iii. any claim asserted against RTI at law or equity by any person, which arises at the Tijuana Plant or the Chula Vista Facility, provided that such damage or injury does not arise from any defects in Equipment or RTI Molded Components supplied by RTI (unless caused by NPA's failure to maintain or handle properly such Equipment or RTI Molded Components). Specifically excluded from claims under this subsection (iii) shall be claims made by any person who is an employee or agent of RTI who is on such premises in a business capacity for RTI and who is otherwise covered by workman's compensation or other similar insurance provided by RTI.
b. RTI hereby agrees to indemnify, defend and hold harmless NPA and any Affiliates of NPA from any and all loss (except for consequential loss, such as, for example, loss of business or of profits), liability, damage, claim, cost and expense (including without limitation, reasonable costs of defense and settlement) arising from or in connection with:
i. the breach of any of RTI's representations and warranties made under this Agreement;
ii. the breach by RTI of any undertaking, covenant, or obligation hereunder of RTI;
iii. any product liability or claim of failure of the Products made by a third party, unless resulting solely and directly from a Defect in Workmanship attributable to NPA; and
iv. any claim that (a) the design of any of the Products, (b) any engineering or manufacturing process that RTI directs NPA to use, or (c) any materials or components required by RTI to be used in or with the Products, infringes any third party's patent, copyright, trade secret or other intellectual property right.
c. Except as otherwise provided in Section 19 (d) herein, the parties specifically agree that neither of them shall be liable to the other, or the other's respective Affiliates, for lost revenues or profits, or for any other similar consequential damages, whether indirect, special or incidental, even if such damages were foreseeable or the party seeking indemnification had informed the indemnifying party of their potential.
d. Each party hereto shall give prompt written notice to the other of any actual or threatened claim which might give rise to a claim for indemnification hereunder. If the facts giving rise to any indemnification hereunder shall involve any actual or threatened claim or demand by any third party against either party hereto (the "Indemnitee"), shall give notice of such fact to the other party against whom such claim for indemnification is or will be made (the "Indemnitor"). The Indemnitor shall then be entitled (without prejudice to the right of the Indemnitee to participate at its own expense through counsel of its own choosing) to defend such claim in the name of the Indemnitee at the expense of the Indemnitor and through any counsel of the Indemnitor's own choosing, reasonably satisfactory to the Indemnitee, if the Indemnitor gives written notice of its intention to do so to the Indemnitee within thirty (30) days after receipt of the aforesaid notice from the Indemnitee. Whether or not the Indemnitor chooses to defend any such claim, all parties hereto shall cooperate in the defense thereof and shall furnish such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials, and appeals, as may be reasonably required in connection therewith. No claim shall be settled for which any Indemnitor shall be liable without the consent of the Indemnitor, which consent shall not be unreasonably withheld.
17. CONFIDENTIALITY
a. Each party agrees that neither it nor any of its Affiliates will disclose any confidential information of the other party that it may acquire at any time during the term of this Agreement without the prior written consent of such party. Each party agrees to use all reasonable efforts to prevent unauthorized publication or disclosure by any person of such confidential information, including
requiring its or its Affiliates' employees, consultants or agents to enter into similar confidentiality Agreements in relation to such confidential information.
b. The obligations undertaken by each party under this section shall continue in force for a period of five years following the termination or expiration of this Agreement.
c. The obligations contained in this section do not apply to any information:
i. which, at the time of receipt by a party, was already generally known in the medical device industry through no breach of any duty of confidentiality by such party to the other party;
ii. which a party can establish to have been known to it at the time of receipt from the other party and not to have been acquired directly or indirectly from the other party;
iii. acquired by a party from a third party through no breach of any duty of confidentiality by such party to the other party;
iv. required by law to be provided to governmental agencies, but any such disclosure shall be only for the purpose of providing such information to such governmental agencies; and
v. disclosed to an affiliate of NPA for purposes consistent with this Agreement.
18. INTELLECTUAL PROPERTY RIGHTS
NPA acknowledges and agrees that RTI owns, or has the right to use, the Technology and all industrial and intellectual property rights of any kind in relation to the Technology including patents, registered or other designs, copyrights, the Trademarks and any trade names, manufacturing and assembly methodologies and techniques, and any other confidential information related to the assembly of the Products. Nothing contained in this Agreement shall be effective to give NPA or any of its Affiliates any rights of ownership in or to the Technology or any intellectual property relating to the Technology. The Technology and related intellectual property and confidential information is provided to NPA under this Agreement for the sole purpose of enabling NPA to assemble the Products for RTI under this Agreement.
19. TERMS, RENEWAL, AND TERMINATION OF AGREEMENT
a. This Agreement shall run for the Initial Term and thereafter shall automatically renew for additional successive terms of one year, unless terminated pursuant to the provisions of this Agreement.
b. Either party may terminate this Agreement effective at the end of any Contract Year by serving on the other party written notice of its intent to terminate at least ninety (90) days prior to the next Contract Anniversary Date.
c. This Agreement also may be terminated by notice in writing;
i. by either party if the other party shall default in the performance of any obligation under this Agreement and such default shall continue for a period of not less than thirty (30) days after written notice specifying such default shall have been
given;
________________________________________________________________________________
April 7, 2000 RTI - NPA Agreement Confidential Page 14 of 17 RTI T.S NPA F.V.
--- ----
|
ii. immediately by either party if the other party i) discontinues or dissolves its business; ii) becomes insolvent; iii) makes an assignment for the benefit of creditors or other arrangement pursuant to any bankruptcy law; iv) institutes or permits to be instituted against it legal proceedings seeking receivership, trusteeship, bankruptcy, reorganization, readjustment of debt, or any similar legal proceedings; or v) if a receiver is appointed for the for the business and such receiver is not discharged within thirty (30) days.
iii. immediately by either party if all or a major part of the assets of the other party are disposed of or acquired by any other person.
d. Immediately upon termination of this Agreement, RTI shall accept and pay for:
i. any Other Materials ordered by NPA, pursuant to instructions given under Section 4(b) hereof;
ii. all finished Products in transit and in NPA's inventory at the close of business on the effective date of termination, provided that the same have been assembled pursuant to valid Purchase Orders;
iii. NPA's Cost of Assembly for all work-in-process on Products at the close of business on the effective date of termination, such Cost to be pro-rated to reflect the actual percentage of work completed on such work-in-process, provided that such work-in- process shall have been ordered pursuant to valid Purchase Orders, and
iv. In the event RTI terminates this Agreement with 90 days notice, RTI shall pay NPA direct labor costs NPA would have incurred in its performance of the forecasted orders for the 90 day period following the date of notification of termination. In the event that RTI terminates this Agreement with less than ninety (90) days notice, RTI shall pay the actual severance costs incurred by NPA due to the unplanned termination.
e. Upon termination or expiration of this Agreement, the parties shall as soon as possible reconcile all accounts and determine the disposition of any Equipment and inventory of unfinished goods, Molded Components, and other Materials, all of which are acknowledged to be owned by RTI under this Agreement.
20. FORCE MAJEURE
The timely performance of obligations under this Agreement shall be excused during each period of delay caused by an event or condition which is reasonably beyond the control of the party obligated to perform such as an act of god, unusually severe weather, flood, fire, unavailability or accident of transport, shortage of power, equipment or qualified equipment or materials, strike, civil commotion, riot, terrorism, sabotage, explosion, war, revolution, or act of government ("Force Majeure Event"). In the event of a delay exceeding three days caused by a Force Majeure Event, the party obligated to perform shall: i) immediately give the other party written notice of the cause and expected duration of the delay; and ii) take all reasonable steps to recommence performance of its obligations under this Agreement as soon as possible. In the event that performance is so delayed for more than thirty days, the other party may give written notice immediately
terminating this Agreement without liability, but subject to section 19(d). This paragraph shall not excuse any obligation relating to payment or indemnification.
21. NOTICES
Notices provided under this Agreement to be given or served by either party on the other shall be given in writing and served personally or by prepaid registered airmail post or by express mail or by means of facsimile to the following respective addresses or to other addresses as the parties may hereafter advise each other in writing. Any such notice given by registered mail or express mail shall be deemed given and served on the day falling five days after the date of postmark.
To: RTI
Retractable Technologies, Inc.
511 Lobo Lane, P.O. Box 9
Little Elm, Texas 75068-0009
Attention: Larry Salerno
Fax: (972) 294-4400
22. EXECUTION OF ALL NECESSARY ADDITIONAL DOCUMENTS
Each party agrees that it will forthwith upon the request of the other party execute and deliver all such instruments and Agreements and will take all such other actions as the other party may reasonably request from time to time in order to effectuate the intent and purposes of this Agreement.
23. WAIVER
The failure of either party to insist upon strict performance of any term or provision herein shall not be deemed a waiver of any subsequent breach or default of the same or any other term nor as an implied modification of this Agreement.
24. ASSIGNMENT AND AMENDMENT
Other than an assignment by RTI to any of its affiliates, neither this Agreement nor any rights arising hereunder may be assigned by either party without the prior written consent of the other party, which consent shall not be unreasonably withheld. No amendment hereof shall be binding unless made in writing and signed by the parties hereto.
25. ENTIRE AGREEMENT
This Agreement, together with the Schedule(s) hereto, constitutes the entire Agreement between the parties. This Agreement supersedes, and the terms of this Agreement govern, any prior, contemporaneous, or collateral Agreements between the parties. The parties each acknowledge that they have not entered into this Agreement in reliance upon any representation or warranty by any person or entity other than those which are specifically set forth herein. This Agreement may only be changed by mutual written Agreement of authorized representatives of the parties.
26. GOVERNING LAW
The rights of the parties shall be governed by, and this Agreement (including its form, execution, validity, construction and effect) shall be interpreted in accordance with, the laws of the State of California and the federal law applicable therein; without regard to its conflict of laws rules. Any legal proceeding relating to this Agreement or the relationship of the parties (including their affiliates) shall be settled in a court of general jurisdiction in the State of California. Other than claims for indemnification, no recovery in any legal proceeding relating to this Agreement may be based in whole or in part upon conduct which occurred more than two years prior to the filing of such legal proceeding, but a shorter time may be specified by applicable law.
27. SEVERABILITY
If any provision of this Agreement is held by a court to be invalid, void or unenforceable, then: i) the offending provision shall be deleted only to the extent required by law; ii) the Parties shall cooperate in reforming this Agreement to effectuate the intent of the offending provision to the fullest extent allowed by law; and iii) any such reformations as well as the remaining provisions of this Agreement shall survive and continue in full force and effect without being impaired or invalidated in any way.
IN WITNESS WHEREOF, this Agreement has been executed by the parties on the date first written above.
RETRACTABLE TECHNOLOGIES, INC. NYPRO PRECISION ASSEMBLIES INC.
By: /s/ Thomas J. Shaw, By: /s/ Fernando Velazquez
---------------------------------- -----------------------------
Thomas J. Shaw, President and CEO Fernando Velazquez, President
ENSAMBLES NYPRO S.A. de C.V.
By: /s/ Fernando Velazquez
-----------------------------
Fernando Velazquez, Presidente
|
END
SCHEDULE A
EQUIPMENT LISTING BY I.D. NUMBER FOR MEXICO PROJECT
----------------------------------------------------------------------------------------------------------------------------
I.D. NUMBER DESCRIPTION QUANTITY DIMENSIONS
==========================================================================================================================
PRODUCT EQUIPMENT
--------------------------------------------------------------------------------------------------------------------------
RT001 Barrel Printer 1 64" x 36"
--------------------------------------------------------------------------------------------------------------------------
RT002 Barrel Lube Station 1 32" x 12" x 12"
--------------------------------------------------------------------------------------------------------------------------
RT003 Vacuum Pump 1 16" x 12"
--------------------------------------------------------------------------------------------------------------------------
RT004 Barrel Lube Reservoir 1 12" x 12" x 12"
--------------------------------------------------------------------------------------------------------------------------
RT005 Barrel Pushdown Station 1 25" x 16" x 36"
--------------------------------------------------------------------------------------------------------------------------
RT006 Lubrication Tumbler 1 36" x 36" x 60"
--------------------------------------------------------------------------------------------------------------------------
RT007 Plunger Plug Pushdown Station 1 28" x 16" x 30
--------------------------------------------------------------------------------------------------------------------------
RT008 Plunger Seal Loan Station 1 36" x 10" x 9"
--------------------------------------------------------------------------------------------------------------------------
RT009 Plunger Cap Push In Station 1 7" x 7" x 7"
--------------------------------------------------------------------------------------------------------------------------
RT010 Assembly Table 1 36" x 48"
--------------------------------------------------------------------------------------------------------------------------
RT011 Assembly Table 1 36" x 48"
--------------------------------------------------------------------------------------------------------------------------
RT012 Assembly Table 1 36" x 48"
--------------------------------------------------------------------------------------------------------------------------
RT013-015 Friction Ring/Needle Holder Assembly 3 6" x 6"
--------------------------------------------------------------------------------------------------------------------------
RT016-031 5cc Barrel Assembly Racks 15 15" x 1" x 6"
--------------------------------------------------------------------------------------------------------------------------
RT032-046 10cc Barrel Assembly Racks 15 15" x 1" x 6"
--------------------------------------------------------------------------------------------------------------------------
QUALITY INSPECTION TOOLS
==========================================================================================================================
RTQ001 20 Gauge Go-No-Go Pin 1
--------------------------------------------------------------------------------------------------------------------------
RTQ002 21 Gauge Go-No-Go Pin 1
--------------------------------------------------------------------------------------------------------------------------
RTQ003 22 Gauge Go-No-Go Pin 1
--------------------------------------------------------------------------------------------------------------------------
RTQ004 Zero Graduation Line Location Tool 1
--------------------------------------------------------------------------------------------------------------------------
|
SCHEDULE B
COMPONENTS
MOLDED COMPONENTS
-------------------------------------------------------------------------------------
DESCRIPTION RTI PART # COUNTRY OF ORIGIN
------------------------------------------------------------------------------------
Unprinted Syringe Barrel SB050 USA
------------------------------------------------------------------------------------
Plunger Handle PH050 USA
------------------------------------------------------------------------------------
Plunger Seal PS050 USA
------------------------------------------------------------------------------------
Friction Ring FR030 USA
------------------------------------------------------------------------------------
Plunger Cap (Black) PC033 USA
------------------------------------------------------------------------------------
Plunger Plug PP030 USA
------------------------------------------------------------------------------------
Needle Holder (Black) NH033 USA
------------------------------------------------------------------------------------
Plunger Cap (Deep Green) PC035 USA
------------------------------------------------------------------------------------
Needle Holder (Deep Green) NH035 USA
------------------------------------------------------------------------------------
Plunger Cap (Yellow) PC037 USA
------------------------------------------------------------------------------------
Plunger Holder (Yellow) NH037 USA
------------------------------------------------------------------------------------
|
OTHER COMPONENTS
------------------------------------------------------------------------------------
DESCRIPTION RTI PART # COUNTRY OF ORIGIN
-----------------------------------------------------------------------------------
Retraction Springs PS030 USA
------------------------------------------------------------------------------------
UP 82 Ink Black #70 PI001 USA
------------------------------------------------------------------------------------
UP82H Hardener PI002 USA
------------------------------------------------------------------------------------
UP82T Thinner PI003 USA
------------------------------------------------------------------------------------
Hexane LU005 USA
------------------------------------------------------------------------------------
Medical Fluid 360 (12500cs) LU003 USA
------------------------------------------------------------------------------------
Medical Fluid 360 (1000cs) LU002 USA
------------------------------------------------------------------------------------
Silicone Fluid (350cs) LU004 USA
------------------------------------------------------------------------------------
|
SCHEDULE C
PRODUCTS
RTI PART # ITEM DESCRIPTION
------------------------------------------------------------------------------
RT-522 5cc Sub-Assembly 22 Gauge Needle Holder / Black Plunger Cap
------------------------------------------------------------------------------
RT-521 5cc Sub-Assembly 21 Gauge Needle Holder / Green Plunger Cap
------------------------------------------------------------------------------
RT-520 5cc Sub-Assembly 20 Gauge Needle Holder / Yellow Plunger Cap
------------------------------------------------------------------------------
RT-1022 10cc Sub-Assembly 22 Gauge Needle Holder / Black Plunger Cap
------------------------------------------------------------------------------
RT-1021 10cc Sub-Assembly 21 Gauge Needle Holder / Green Plunger Cap
------------------------------------------------------------------------------
RT-1020 10cc Sub-Assembly 20 Gauge Needle Holder / Yellow Plunger Cap
------------------------------------------------------------------------------
|
SCHEDULE D
RTI COMPONENT AND PURCHASING SPECIFICATIONS
(ATTACHED)
RT-522 5cc Sub-Assembly 22 Gauge Needle Holder/Black Plunger Cap ----------------------------------------------------------------------------- RT-521 5cc Sub-Assembly 21 Gauge Needle Holder/Green Plunger Cap ----------------------------------------------------------------------------- RT-520 5cc Sub-Assembly 20 Gauge Needle Holder/Yellow Plunger Cap ----------------------------------------------------------------------------- RT-1022 10cc Sub-Assembly 22 Gauge Needle Holder/Black Plunger Cap ----------------------------------------------------------------------------- RT-1021 10cc Sub-Assembly 21 Gauge Needle Holder/Green Plunger Cap ----------------------------------------------------------------------------- RT-1020 10cc Sub-Assembly 20 Gauge Needle Holder/Yellow Plunger Cap ----------------------------------------------------------------------------- |
Description : 5cc 22G VanishPoint(R) Syringe Subassembly Revision : 0 CRO : 00-47 Date : Ref. Drawing : RT-522 -------------------------------------------------------------------------------- |
1. Component Function
The 5cc VanishPoint syringe assembly once a needle is assembled, is intended to draw and dispense fluid medication safely and accurately in healthcare or other environments. After dispensing medication, the needle retracts into the plunger handle and the syringe is rendered unusable.
2. Relevant Design Features
The relevant design features of the VanishPoint syringe that are inspected are as follows:
----------------------------------------------------------------------------------------------------------
Class I Defects Class II Defects Class III Defects Class IV Defects Class V Defects
----------------------------------------------------------------------------------------------------------
None Correct Plunger Cap Needle Holder Lubricant in Barrel None
[Black] (Interface Diameter [.0030g - .0065g]
.029" - .031")
----------------------------------------------------------------------------------------------------------
Correct Barrel Print Needle Holder
Alignment Pushout
[Minimum 2.0 lbs]
----------------------------------------------------------------------------------------------------------
Activation Force
[Maximum 12.5 lbs]
----------------------------------------------------------------------------------------------------------
|
3. Relevant Quality Defects
The relevant quality defects of the VanishPoint syringe that are inspected are as follows:
----------------------------------------------------------------------------------------------------------
Class I Defects Class II Defects Class III Defects Class IV Defects Class V Defects
----------------------------------------------------------------------------------------------------------
None None Missing Components None Smudged/Missing
Barrel Print which
does not inhibit
proper use
----------------------------------------------------------------------------------------------------------
Incorrectly Assembled Visible Contaminates
Components In Fluid Pathway
[Dark .04 - .05 mm/2/]
[Light .04 - .10 mm/2/]
----------------------------------------------------------------------------------------------------------
Visible Contaminates
In Fluid Pathway
[Dark (greater than) .06 mm/2/]
[Light (greater than) .015 mm/2/]
----------------------------------------------------------------------------------------------------------
Damage
----------------------------------------------------------------------------------------------------------
Illegible Barrel Print
which inhibits proper
use
----------------------------------------------------------------------------------------------------------
|
4. References
Procedure GQA011/QSP-66
Procedure IP028/QSP-32
Size Estimation Chart for use with TAPPI T 564 and ISO Standard 5350-3
========================================================================================================== Quality Assurance Mgr/Date: Production Mgr./Date: Product Development Mgr./Date: __________________________ _____________________ _______________________ K. Baker 1023 J. Hoover 1009 P. Hegi 1026 ========================================================================================================== |
Description : Syringe Barrels, 5cc 22G VanishPoint(R) Syringe Subassembly
Revision : 0
CRO : 00-47
Date :
Material :
--------------------------------------------------------------------------------
Component Specification : RT-522
--------------------------------------------------------------------------------
Vendor Code NY-1
Vendor Name NYPRO
Reorder Part RT-522
Vendor Code NA
Vendor Name NA
Number NA
--------------------------------------------------------------------------------
Supply Vendor With
Tool : Yes
Specification : Yes
Material : Yes
Vendor to Supply
Material Cert. : No
Compliance Cert. : Yes
Inspection Report : No
--------------------------------------------------------------------------------
Special Instructions
|
Double poly bags with gussets
================================================================================
Purchasing/Date: Quality Assurance Product Development
Manager/Date: Manager/Date:
____________________ ____________________ _______________________
K. Kanniah 1279 K. Baker 1023 P. Hegi 1026
================================================================================
--------------------------------------------------------------------------
|
Description : 5cc 21G VanishPoint(R) Syringe Subassembly Revision : 0 CRO : 00-47 Date : Ref. Drawing : RT-521 -------------------------------------------------------------------------------- |
1. Component Function
The 5cc VanishPoint syringe assembly once a needle is assembled, is intended to draw and dispense fluid medication safely and accurately in healthcare or other environments. After dispensing medication, the needle retracts into the plunger handle and the syringe is rendered unusable.
2. Relevant Design Features
The relevant design features of the VanishPoint syringe that are inspected are as follows:
----------------------------------------------------------------------------------------------------------
Class I Defects Class II Defects Class III Defects Class IV Defects Class V Defects
----------------------------------------------------------------------------------------------------------
None Correct Plunger Cap Needle Holder Lubricant in Barrel None
[Green] (Interface Diameter [.0030g - .0065g]
.033" - .035")
----------------------------------------------------------------------------------------------------------
Correct Barrel Print Needle Holder
Alignment Pushout
[Minimum 2.0 lbs]
----------------------------------------------------------------------------------------------------------
Activation Force
[Maximum 12.5 lbs]
----------------------------------------------------------------------------------------------------------
|
3. Relevant Quality Defects
The relevant quality defects of the VanishPoint syringe that are inspected are as follows:
----------------------------------------------------------------------------------------------------------
Class I Defects Class II Defects Class III Defects Class IV Defects Class V Defects
----------------------------------------------------------------------------------------------------------
None None Missing Components None Smudged/Missing
Barrel Print which
does not inhibit
proper use
----------------------------------------------------------------------------------------------------------
Incorrectly Assembled Visible Contaminates
Components In Fluid Pathway
[Dark .04 - .05 mm/2/]
[Light .04 - .10 mm/2/]
----------------------------------------------------------------------------------------------------------
Visible Contaminates
In Fluid Pathway
[Dark (greater than) .06 mm/2/]
[Light (greater than) .015 mm/2/]
----------------------------------------------------------------------------------------------------------
Damage
----------------------------------------------------------------------------------------------------------
Illegible Barrel Print
which inhibits proper
use
----------------------------------------------------------------------------------------------------------
|
4. References
Procedure GQA011/QSP-66
Procedure IP028/QSP-32
Size Estimation Chart for use with TAPPI T 564 and ISO Standard 5350-3
========================================================================================================== Quality Assurance Mgr/Date: Production Mgr./Date: Product Development Mgr./Date: __________________________ _____________________ _______________________ K. Baker 1023 J. Hoover 1009 P. Hegi 1026 ========================================================================================================== |
Description : Syringe Barrels, 5cc 21G VanishPoint(R) Syringe Subassembly
Revision : 0
CRO : 00-47
Date :
Material :
--------------------------------------------------------------------------------
Component Specification : RT-521
--------------------------------------------------------------------------------
Vendor Code NY-1
Vendor Name NYPRO
Reorder Part RT-521
Vendor Code NA
Vendor Name NA
Number NA
--------------------------------------------------------------------------------
Supply Vendor With
Tool : Yes
Specification : Yes
Material : Yes
Vendor to Supply
Material Cert. : No
Compliance Cert. : Yes
Inspection Report : No
--------------------------------------------------------------------------------
Special Instructions
|
Double poly bags with gussets
================================================================================
Purchasing/Date: Quality Assurance Product Development
Manager/Date: Manager/Date:
______________________ _______________________ ________________________
K. Kanniah 1279 K. Baker 1023 P. Hegi 1026
================================================================================
___________________________________________________________________________
|
Description : 5cc 20G VanishPoint(R) Syringe Subassembly Revision : 0 CRO : 00-47 Date : Ref. Drawing : RT-520 -------------------------------------------------------------------------------- |
1. Component Function
The 5cc VanishPoint syringe assembly once a needle is assembled, is intended to draw and dispense fluid medication safely and accurately in healthcare or other environments. After dispensing medication, the needle retracts into the plunger handle and the syringe is rendered unusable.
2. Relevant Design Features
The relevant design features of the VanishPoint syringe that are inspected are as follows:
----------------------------------------------------------------------------------------------------------
Class I Defects Class II Defects Class III Defects Class IV Defects Class V Defects
----------------------------------------------------------------------------------------------------------
None Correct Plunger Cap Needle Holder Lubricant in Barrel None
[Yellow] (Interface Diameter [.0030g - .0065g]
.036" - .038")
----------------------------------------------------------------------------------------------------------
Correct Barrel Print Needle Holder
Alignment Pushout
[Minimum 2.0 lbs]
----------------------------------------------------------------------------------------------------------
Activation Force
[Maximum 12.5 lbs]
----------------------------------------------------------------------------------------------------------
|
3. Relevant Quality Defects
The relevant quality defects of the VanishPoint syringe that are inspected are as follows:
----------------------------------------------------------------------------------------------------------
Class I Defects Class II Defects Class III Defects Class IV Defects Class V Defects
----------------------------------------------------------------------------------------------------------
None None Missing Components None Smudged/Missing
Barrel Print which
does not inhibit
proper use
----------------------------------------------------------------------------------------------------------
Incorrectly Assembled Visible Contaminates
Components In Fluid Pathway
[Dark .04 - .05 mm/2/]
[Light .04 - .10 mm/2/]
----------------------------------------------------------------------------------------------------------
Visible Contaminates
In Fluid Pathway
[Dark (greater than) .06 mm/2/]
[Light (greater than) .015 mm/2/]
----------------------------------------------------------------------------------------------------------
Damage
----------------------------------------------------------------------------------------------------------
Illegible Barrel Print
which inhibits proper
use
----------------------------------------------------------------------------------------------------------
|
4. References
Procedure GQA011/QSP-66
Procedure IP028/QSP-32
Size Estimation Chart for use with TAPPI T 564 and ISO Standard 5350-3
========================================================================================================== Quality Assurance Mgr/Date: Production Mgr./Date: Product Development Mgr./Date: __________________________ _____________________ _______________________ K. Baker 1023 J. Hoover 1009 P. Hegi 1026 ========================================================================================================== |
Description : Syringe Barrels, 5cc 20G VanishPoint(R) Syringe Subassembly
Revision : 0
CRO : 00-47
Date :
Material :
--------------------------------------------------------------------------------
Component Specification : RT1-520
--------------------------------------------------------------------------------
Vendor Code NY-1
Vendor Name NYPRO
Recorder Part RT-520
Vendor Code NA
Vendor Name NA
Number NA
--------------------------------------------------------------------------------
Supply Vendor With
Tool : Yes
Specification : Yes
Material : Yes
Vendor to Supply
Material Cert. : No
Compliance Cert. : Yes
Inspection Report : No
--------------------------------------------------------------------------------
Special Instructions
|
Double poly bags with gussets
================================================================================
Purchasing/Date: Quality Assurance Product Development
Manager/Date Manager/Date:
__________________________ ____________________ _________________________
K. Kanniah 1279 K. Baker 1023 P. Hegi 1026
================================================================================
------------------------------------------------------------------------------
|
Description : 10cc 22G VanishPoint(R) Syringe Subassembly Revision : 0 CRO : 00-47 Date : Ref. Drawing : RT-1022 -------------------------------------------------------------------------------- |
1. Component Function
The 10cc VanishPoint syringe assembly once assembled with a needle, is intended to draw and dispense fluid medication safely and accurately in healthcare or other environments. After dispensing medication, the needle retracts into the plunger handle and the syringe is rendered unusable.
2. Relevant Design Features
The relevant design features of the VanishPoint syringe that are inspected are as follows:
----------------------------------------------------------------------------------------------------------
Class I Defects Class II Defects Class III Defects Class IV Defects Class V Defects
----------------------------------------------------------------------------------------------------------
None Correct Plunger Cap Needle Holder Lubricant in Barrel None
[Black] (Interface Diameter [.0060g - .0100g]
.029" - .031")
----------------------------------------------------------------------------------------------------------
Correct Barrel Print Needle Holder
Alignment Pushout
[Minimum 2.0 lbs]
----------------------------------------------------------------------------------------------------------
Activation Force
[Maximum 12.0 lbs]
----------------------------------------------------------------------------------------------------------
|
3. Relevant Quality Defects
The relevant quality defects of the VanishPoint syringe that are inspected are as follows:
----------------------------------------------------------------------------------------------------------
Class I Defects Class II Defects Class III Defects Class IV Defects Class V Defects
----------------------------------------------------------------------------------------------------------
None None Missing Components None Smudged/Missing
Barrel Print which
does not inhibit
proper use
----------------------------------------------------------------------------------------------------------
Incorrectly Assembled Visible Contaminates
Components In Fluid Pathway
[Dark .04 - .05 mm/2/]
[Light .04 - .10 mm/2/]
----------------------------------------------------------------------------------------------------------
Visible Contaminates
In Fluid Pathway
[Dark greater than .06 mm/2/]
[Light greater than .015 mm/2/]
----------------------------------------------------------------------------------------------------------
Damage
----------------------------------------------------------------------------------------------------------
Illegible Barrel Print
which inhibits proper
use
----------------------------------------------------------------------------------------------------------
|
4. References Procedure GQA011/QSP-66 Procedure IP028/QSP-32 Size Estimation Chart for use with TAPPI T 564 and ISO Standard 5350-3
========================================================================================================== Quality Assurance Mgr/Date: Production Mgr./Date: Product Development Mgr./Date: __________________________ _____________________ _______________________ K. Baker 1023 J. Hoover 1009 P. Hegi 1026 ========================================================================================================== |
Description : 10cc 22G VanishPoint(R) Syringe Subassembly
Revision : 0
CRO : 00-47
Date :
Material :
--------------------------------------------------------------------------------
Component Specification : RT-1022
--------------------------------------------------------------------------------
Vendor Code NY-1
Vendor Name NYPRO
Vendor Part Number RT-1022
Vendor Code NA
Vendor Name NA
Vendor Part Number NA
--------------------------------------------------------------------------------
Supply Vendor With
Tool : Yes
Specification : Yes
Material : Yes
Vendor to Supply
Material Cert. : No
Compliance Cert. : Yes
Inspection Report : No
--------------------------------------------------------------------------------
Special Instructions
|
Double poly bags with gussets
================================================================================
Purchasing/Date: Quality Assurance Product Development
Manager/Date: Manager/Date:
__________________________ ____________________ _________________________
K. Kanniah 1279 K. Baker 1023 P. Hegi 1026
================================================================================
--------------------------------------------------------------------------
|
Description : 10cc 21G VanishPoint(R) Syringe Subassembly Revision : 0 CRO : 00-47 Date : Ref. Drawing : RT-1021 -------------------------------------------------------------------------------- |
1. Component Function
The 10cc VanishPoint syringe assembly once assembled needle, is intended to draw and dispense fluid medication safely and accurately in healthcare or other environments. After dispensing medication, the needle retracts into the plunger handle and the syringe is rendered unusable.
2. Relevant Design Features
The relevant design features of the VanishPoint syringe that are inspected are as follows:
----------------------------------------------------------------------------------------------------------
Class I Defects Class II Defects Class III Defects Class IV Defects Class V Defects
----------------------------------------------------------------------------------------------------------
None Correct Plunger Cap Needle Holder Lubricant in Barrel None
[Green] (Interface Diameter [.0060g - .0100g]
.036" - .038")
----------------------------------------------------------------------------------------------------------
Correct Barrel Print Needle Holder
Alignment Pushout
[Minimum 2.0 lbs]
----------------------------------------------------------------------------------------------------------
Activation Force
[Maximum 12.0 lbs]
----------------------------------------------------------------------------------------------------------
|
3. Relevant Quality Defects
The relevant quality defects of the VanishPoint syringe that are inspected are as follows:
----------------------------------------------------------------------------------------------------------
Class I Defects Class II Defects Class III Defects Class IV Defects Class V Defects
----------------------------------------------------------------------------------------------------------
None None Missing Components None Smudged/Missing
Barrel Print which
does not inhibit
proper use
----------------------------------------------------------------------------------------------------------
Incorrectly Assembled Visible Contaminates
Components In Fluid Pathway
[Dark .04 - .05 mm/2/]
[Light .04 - .10 mm/2/]
----------------------------------------------------------------------------------------------------------
Visible Contaminates
In Pathway
[Dark (greater than) .06 mm/2/]
[Light (greater than) .15 mm/2/]
----------------------------------------------------------------------------------------------------------
Damage
----------------------------------------------------------------------------------------------------------
Illegible Barrel Print
which inhibits proper
use
----------------------------------------------------------------------------------------------------------
|
4. References
Procedure GQA011/QSP-66
Procedure IP028/QSP-32
Size Estimation Chart for use with TAPPI T 564 and ISO Standard 5350-3
========================================================================================================== Quality Assurance Mgr/Date: Production Mgr./Date Product Development Mgr./Date: __________________________ _____________________ _______________________ K. Baker 1023 J. Hoover 1009 P. Hegi 1026 ========================================================================================================== |
Description : Syringe Barrels, 10cc 21G VanishPoint(R) Syringe Subassembly
Revision : 0
CRO : 00-47
Date :
Material :
-------------------------------------------------------------------------------
Component Specification :RT-1021
-------------------------------------------------------------------------------
Vendor Code NY-1
Vendor Name NYPRO
Reorder Part RT-1021
Vendor Code NA
Vendor Name NA
Number NA
-------------------------------------------------------------------------------
Supply Vendor With
Tool : Yes
Specification : Yes
Material : Yes
Vendor to Supply
Material Cert. : No
Compliance Cert. : Yes
Inspection Report : No
-------------------------------------------------------------------------------
Special Instructions
|
Double poly bags with gussets
================================================================================
Purchasing/Date: Quality Assurance Product Development
Manager/Date: Manager/Date:
_____________________ ____________________ ______________________
K. Kanniah 1279 K. Baker 1023 P. Hegi 1026
================================================================================
----------------------------------------------------------------------------
|
Description : 10cc 20G VanishPoint(R) Syringe Subassembly Revision : 0 CRO : 00-47 Date : Ref. Drawing : RT-1020 -------------------------------------------------------------------------------- |
1. Component Function
The 10cc VanishPoint syringe assembly once assembled needle, is intended to draw and dispense fluid medication safely and accurately in healthcare or other environments. After dispensing medication, the needle retracts into the plunger handle and the syringe is rendered unusable.
2. Relevant Design Features
The relevant design features of the VanishPoint syringe that are inspected are as follows:
----------------------------------------------------------------------------------------------------------
Class I Defects Class II Defects Class III Defects Class IV Defects Class V Defects
----------------------------------------------------------------------------------------------------------
None Correct Plunger Cap Needle Holder Lubricant in Barrel None
[Yellow] (Interface Diameter [.0060g - .0100g]
.036" - .038")
----------------------------------------------------------------------------------------------------------
Correct Barrel Print Needle Holder
Alignment Pushout
[Minimum 2.0 lbs]
----------------------------------------------------------------------------------------------------------
Activation Force
[Maximum 12.0 lbs]
----------------------------------------------------------------------------------------------------------
|
3. Relevant Quality Defects
The relevant quality defects of the VanishPoint syringe that are inspected are as follows:
----------------------------------------------------------------------------------------------------------
Class I Defects Class II Defects Class III Defects Class IV Defects Class V Defects
----------------------------------------------------------------------------------------------------------
None None Missing Components None Smudged/Missing
Barrel Print which
does not inhibit
proper use
----------------------------------------------------------------------------------------------------------
Incorrectly Assembled Visible Contaminates
Components In Pathway
[Dark .04 - .05 mm/2/]
[Light .04 - .10 mm/2/]
----------------------------------------------------------------------------------------------------------
Visible Contaminates
In Pathway
[Dark (greater than) .06 mm/2/]
[Light (greater than) .15 mm/2/]
----------------------------------------------------------------------------------------------------------
Damage
----------------------------------------------------------------------------------------------------------
Illegible Barrel Print
which inhibits proper
use
----------------------------------------------------------------------------------------------------------
|
4. References
Procedure GQA011/QSP-66
Procedure IP028/QSP-32
Size Estimation Chart for use with TAPPI T 564 and ISO Standard 5350-3
========================================================================================================== Quality Assurance Mgr/Date: Production Mgr./Date: Product Development Mgr./Date: __________________________ _____________________ _______________________ K. Baker 1023 J. Hoover 1009 P. Hegi 1026 ========================================================================================================== |
Description : Syringe Barrels, 10cc 20G VanishPoint(R) Syringe Subassembly
Revision : 0
CRO : 00-47
Date :
Material :
--------------------------------------------------------------------------------
Component Specification : RT-1020
--------------------------------------------------------------------------------
Vendor Code NY-1
Vendor Name NYPRO
Reorder Part RT-1020
Vendor Code NA
Vendor Name NA
Number NA
--------------------------------------------------------------------------------
Supply Vendor With
Tool : Yes
Specification : Yes
Material : Yes
Vendor to Supply
Material Cert. : No
Compliance Cert. : Yes
Inspection Report : No
--------------------------------------------------------------------------------
Special Instructions
|
Double poly bags with gussets
================================================================================
Purchasing/Date: Quality Assurance Product Development
Manager/Date: Manager/Date:
_______________________ _______________________ ________________________
K. Kanniah 1279 K. Baker 1023 P. Hegi 1026
================================================================================
__________________________________________________________________________
|
SCHEDULE E
TRADEMARKS
"Manufacturer's Proprietary Marks" include all trademarks, tradenames, logotypes and trade dress employed by manufacturer and include, but not limited to :
a. the name "VanishPoint";
b. the letters "RT" surrounded by an oval;
c. the graphic depiction of a needle surrounded by a spring;
d. a colored spot on the exposed end of the syringe plunger;
e. the appearance and arrangement of information on the wrapper containing
each individual Product;
f. other marks which are sufficiently similar to the foregoing to cause
confusion regarding the source of goods;
g. additional marks identified by Manufacturer.
SCHEDULE F
SET-UP CHARGES
------------------------------------------------------------------------------
DESCRIPTION NOT TO EXCEED
COST (USD)
------------------------------------------------------------------------------
Training at RTI: travel and per diem expenses $ 3,250.00
------------------------------------------------------------------------------
Wages for two engineers and two technicians $ 4,000.00
------------------------------------------------------------------------------
Equipment installation and layout $ 3,500.00
------------------------------------------------------------------------------
Set-up and validate assembly line $ 3,800.00
==========
------------------------------------------------------------------------------
Total set-up costs $14,550.00
------------------------------------------------------------------------------
|
SCHEDULE G
F.O.B. NYPRO CHULA VISTA
--------------------------------------------------------------------------------------------------------------------------
PART # ITEM DESCRIPTION PRICE/U.S.D.
==========================================================================================================================
RT-522 5cc Sub-Assembly 22 Gauge Needle Holder/Black Plunger Cap 0.10
--------------------------------------------------------------------------------------------------------------------------
RT-521 5cc Sub-Assembly 21 Gauge Needle Holder/Green Plunger Cap 0.10
--------------------------------------------------------------------------------------------------------------------------
RT-520 5cc Sub-Assembly 20 Gauge Needle Holder/Yellow Plunger Cap 0.10
--------------------------------------------------------------------------------------------------------------------------
RT-1022 10cc Sub-Assembly 22 Gauge Needle Holder/Black Plunger Cap 0.10
--------------------------------------------------------------------------------------------------------------------------
RT-1021 10cc Sub-Assembly 21 Gauge Needle Holder/Green Plunger Cap 0.10
--------------------------------------------------------------------------------------------------------------------------
RT-1022 10cc Sub-Assembly 20 Gauge Needle Holder/Yellow Plunger Cap 0.10
--------------------------------------------------------------------------------------------------------------------------
|
SCHEDULE H
VOLUME COMMITMENTS
---------------------------------------------------------------------------------------------------------------------------
ESTIMATED ESTIMATED
MINIMUM MAXIMUM
ITEM ANNUAL ANNUAL
PART # DESCRIPTION VOLUME VOLUME
---------------------------------------------------------------------------------------------------------------------------
RT-522 5cc Sub-Assembly 22 Gauge Needle Holder/ 150,000 1,500,000
Black Plunger Cap
---------------------------------------------------------------------------------------------------------------------------
RT-521 5cc Sub-Assembly 21 Gauge Needle Holder/ 100,000 1,500,000
Green Plunger Cap
---------------------------------------------------------------------------------------------------------------------------
RT-520 5cc Sub-Assembly 20 Gauge Needle Holder/ 300,000 3,000,000
Yellow Plunger Cap
---------------------------------------------------------------------------------------------------------------------------
RT-1022 10cc Sub-Assembly 22 Gauge Needle Holder/ 150,000 2,000,000
Black Plunger Cap
---------------------------------------------------------------------------------------------------------------------------
RT-1021 10cc Sub-Assembly 21 Gauge Needle Holder/ 150,000 2,000,000
Green Plunger Cap
---------------------------------------------------------------------------------------------------------------------------
RT-1020 10cc Sub-Assembly 20 Gauge Needle Holder/ 150,000 2,000,000
Yellow Plunger Cap
---------------------------------------------------------------------------------------------------------------------------
|
April 7, 2000 RTI - NPA Agreement Confidential RTI T.S. NPA F.V.
Exhibit 6.3
Retractable Technologies, Inc., a Texas corporation ("Manufacturer"), and ______________________________________, a ________________ corporation ("Distributor"), enter into this Distribution Agreement (the "Agreement") and agree as follows:
Elm, Texas within thirty (30) calendar days from the date of original invoice. Past due balances will bear interest at the rate of one and one-half percent (1- 1/2%) per month, or at the highest rate allowed by law, if lower. Manufacturer may in its sole discretion establish a maximum credit limit to be extended to Distributor and may revise same from time to time. Manufacturer may in its sole discretion refuse to extend further credit if Distributor fails to remit payment for invoices when due or exceeds the credit limit established by Manufacturer.
Distributor warrants that: i) operation of its business is not and
will not become substantially associated with any Proprietary Mark of
Manufacturer (as defined in Section 13 of this Agreement); ii) operation of its
business is not and will not become substantially reliant on Manufacturer; and
iii) Distributor's sales arising from this Agreement do not represent more than
10% of its total sales in dollar volume and will not do so during the Term of
this Agreement. Manufacturer will not provide Distributor with a marketing or
promotional plan, but instead relies on Distributor's status as a professional
sales organization possessing substantial contacts and experience in the
distribution of medical products to the healthcare industry.
Although Manufacturer may voluntarily provide sample marketing materials, Distributor shall be responsible to develop and pay for printing and distribution of any marketing materials used by Distributor; all such marketing materials must be approved by Manufacturer prior to use solely to ensure the factual accuracy of any statement regarding the Products and the absence of any unapproved representations regarding the Products.
Distributor shall include a copy of those directions with every opened box or portion thereof which is distributed by Distributor. Distributor shall sell only complete and unopened boxes of Products; Distributor may distribute opened or partial boxes only as free samples. Distributor shall distribute Products in their original individual wrappers as packaged by Manufacturer.
Any party seeking indemnification under this Agreement must, as a condition of indemnification, provide the party from whom indemnification is sought with: i) prompt notice of the reported or alleged defect, infringement, injury or claim; ii) the opportunity to investigate such claim, control the defense of such claim, and settle such claim at its discretion; iii) such information and assistance as the indemnifying party may reasonably require to defend against such claim; and iv) the obligations required of Distributor by the preceding paragraph.
Manufacturer shall, if the conditions of this section have been met by
Distributor, indemnify, defend and hold Distributor harmless from and against
any claim asserted against or liability incurred by Distributor (including cost
of defense and reasonable settlement) arising out of use of the Products: i) for
injury to person or property arising from breach of any express warranty made in
Section 10 of this Agreement, ii) for products liability, or iii) for
infringement of intellectual property by the Products; provided, however, that
such claim does not result in whole or in part from the negligence, willful
misconduct, breach of this Agreement, or making of any unauthorized
representation regarding the Products by Distributor. Manufacturer shall:
i) carry product liability insurance with a minimum limit of five million
dollars ($5,000,000); ii) list Distributor as an additional insured of the
policy throughout the Term of this Agreement; and iii) provide Distributor with
a certificate evidencing such insurance within thirty (30) days after execution
of this Agreement. Manufacturer's liability for failure of the Products to
conform with any other implied warranty, express warranty or specification
required for conformance with this Agreement shall be limited to a return of the
purchase price paid by Distributor.
Distributor shall, if the conditions of this section have been met by Manufacturer, indemnify, defend and hold Manufacturer harmless from and against any claim asserted against or liability incurred by Manufacturer (including cost of defense and reasonable settlement) arising in whole or in part out of the negligence, willful misconduct, breach of this Agreement, or making of any unauthorized representation regarding the Products by Distributor.
depiction of a needle surrounded by a spring; iv) a colored spot on the exposed end of the syringe plunger; v) the appearance and arrangement of information on the wrapper containing each individual Product; and vi) all other marks which are sufficiently similar to the foregoing to cause confusion regarding the source of goods.
Distributor hereby: i) acknowledges the validity of Manufacturer's Proprietary Marks; ii) acknowledges that Manufacturer is the owner of Manufacturer's Proprietary Marks and of all goodwill associated with Manufacturer's Proprietary Marks or with the Products; iii) agrees not to acquire any interest in, infringe upon, contest, or take any other action to injure or to assist another to injure Manufacturer's rights in Manufacturer's Proprietary Marks; and iv) agrees that any interest which may be acquired by Distributor during the Term of this Agreement or within one year thereafter in Manufacturer's Proprietary Marks or in the goodwill associated with Manufacturer's Proprietary Marks or the Products, whether in the Territory or elsewhere, shall be acquired on behalf of and for the benefit of Manufacturer and shall be assigned to Manufacturer upon request at no charge.
Distributor shall use Manufacturer's Proprietary Marks only to identify the Products sold by Distributor, only in connection with Manufacturer's Products, and only during the Term of this Agreement. Distributor shall seek to benefit from the goodwill associated with Manufacturer's Proprietary Marks or the Products only during the Term of this Agreement and only within the Territory. Distributor shall promptly report to Manufacturer any violation of Manufacturer's rights in Manufacturer's Proprietary Marks or goodwill.
If either party shall fail to remedy a default of this Agreement within
thirty (30) days following written notice of the specific default involved, the
non-defaulting party may immediately terminate this Agreement for good cause by
giving written notice to the defaulting party within fifteen days following
expiration of the 30-day period permitted for cure. If either party provides a
written notice of default, such event of default shall be conclusively deemed to
have occurred unless the party alleged to be in default provides written notice,
in the same degree of detail as the notice alleging the default, of either:
i) the reasons why it is not in default; ii) the reasons why its default is
excused; or iii) how the default has been timely cured.
Manufacturer may immediately terminate this Agreement for good cause if
Distributor buys or sells Products in violation of Section 2 of this Agreement.
This Agreement will automatically terminate if either party: i) discontinues or
dissolves its business; ii) becomes insolvent; iii) makes an assignment for the
benefit of creditors or other arrangement pursuant to any bankruptcy law;
iv) institutes or permits to be instituted against it legal proceedings seeking
receivership, trusteeship, bankruptcy, reorganization, readjustment of debt, or
any similar legal proceedings; or v) if a receiver is appointed for the for the
business and such receiver is not discharged within thirty (30) days.
Either party may refuse to renew this Agreement for any cause whatsoever. Failure of the parties to agree on volume requirements or other performance standards for a subsequent term shall constitute good cause for refusal to renew this Agreement. Placement of orders by Distributor and acceptance of same by Manufacturer after giving notice of termination or after the effective date of termination shall not operate to reinstate or renew this Agreement nor to create a new relationship of manufacturer and distributor on any other terms. This Agreement may be reinstated following termination or notice thereof, and may be renewed or extended beyond the date set for its automatic termination, only by an explicit statement to that effect which sets forth the reinstated, renewed or extended date of automatic termination and is signed by both parties. Should a court of competent jurisdiction nevertheless find a reinstatement or renewal of this Agreement or otherwise find a continuing relationship as manufacturer and distributor in the absence of such a writing, the period of such reinstatement, renewal or relationship (and of any renewals thereof) shall be limited in duration to thirty (30) days.
An explicit statement signed by both parties is required to reinstate this Agreement following notice of termination or to renew this Agreement. Placement of orders by Distributor and acceptance of same by Manufacturer after giving notice of termination or after the effective date of termination shall not operate to reinstate or renew this Agreement. Should a court of competent jurisdiction nevertheless find a reinstatement or renewal of this Agreement by implication or by operation of law, the period of such reinstatement or renewal (and of any renewals thereof) shall be limited in duration to thirty (30) days.
Neither termination of this Agreement in the manner set forth in this Agreement nor failure to renew this Agreement shall entitle the other party to receive damages, indemnification or compensation by reason of such termination or nonrenewal. Termination of this Agreement shall not affect the right of Distributor to place orders which are to be delivered prior to the effective date of such termination, shall not affect the right of Manufacturer to receive payment for Products accepted by Distributor, and shall not relieve either party of any liability incurred prior to termination. Sections 9-16 of this Agreement shall survive termination of this Agreement.
Upon termination of this Agreement, Manufacturer shall have the option to repurchase from Distributor all or any portion of Manufacturer's Products remaining in Distributor's inventory, FOB Distributor's facility, at the price paid for those Products under First In First Out accounting. Manufacturer may insist that any Products tendered for repurchase be in new and original condition in unopened cases. Distributor may make a good faith effort to sell any inventory not so repurchased at prices not higher than those which were charged by Distributor prior to termination.
Correspondence to Manufacturer Correspondence to Manufacturer regarding orders regarding default or termination ---------------- -------------------------------- Purchasing Department Thomas Shaw Retractable Technologies, Inc. Retractable Technologies, Inc. P.O. Box 9 P.O. Box 9 511 Lobo Lane 511 Lobo Lane Little Elm, Texas 75068 Little Elm, Texas 75068 972-294-1010 972-294-1010 972-294-4400 - fax 972-294-4400 - fax Correspondence to Distributor Correspondence to Distributor regarding orders regarding default or termination ---------------- -------------------------------- __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ |
compliance with the Medicare Anti-Kickback statute including the nature and extent of the costs of Products purchased and sold under this Agreement.
statement, promise, agreement, understanding, arrangement or inducement other than those which are specifically set forth in this Agreement. No modification of this Agreement shall be effective unless made in writing and signed by the party against whom enforcement of the modification is sought. Distributor understands that no employee or representative of Manufacturer is authorized to modify this Agreement orally or in any other manner except in writing.
In WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date written below.
MANUFACTURER DISTRIBUTOR
Retractable Technologies, Inc. Name
By:____________________________ By:____________________________
Thomas J. Shaw Name
President and Chief Executive Officer Title
Date: ________________ Date:________________
|
EXHIBIT A
Products and Pricing
--------------------------------------------------------------------------------
Product Distributor Price
--------------------------------------------------------------------------------
VanishPoint(R) 3cc syringe $0.50 each
--------------------------------------------------------------------------------
VanishPoint(R) 5cc syringe $0.60 each
--------------------------------------------------------------------------------
VanishPoint(R) 10cc syringe $0.65 each
--------------------------------------------------------------------------------
VanishPoint(R) blood collection tube holder $0.40 each
--------------------------------------------------------------------------------
VanishPoint(R) small tube adapter $0.15 each
--------------------------------------------------------------------------------
|
The accompanying floppy diskette contains a file called Dist Tracking.xls which can be opened in Excel version 5.0 higher. Following each month Distributor should complete and provide the Sales Data sheet to Manufacturer by email at rti@onramp.net or by regular mail at 511 Lobo Lane, Little Elm, Texas 75068. This file must be provided by the 10th of the month following the month of sale in order for any applicable chargeback credits to be applied in the month following sale. Comments and questions should be directed to 972-294-1010.
Pressing Ctrl-S to save the file will also activate a macro which prompts the user for information needed to distinguish such tracking file. The macro will first prompt the user for the month in which the sales occurred. For example, if the month in which the sales occurred is July, then the user should enter the number 7. The macro will automatically add a leading 0 for the month, add the year, and add Retractable's internal number for the distributor (which has already been coded into the file) to generate a file identifier consisting of the six digit distributor number + the two digit sales month + the two digit year. The macro will then prompt the user for the directory path where the file should be saved. It is imperative that the last character for the directory be \. For example, if the directory where the user wants to save the file is C:\Sales\ then this should be entered.
The accompanying field descriptions detail the information needed in each record. For each invoice there should be one record per row per item showing the number of units sold, the price, and the lot numbers. The units should be 100 for 1 box of syringes and 250 for 1 box of blood collection tube holders. Retractable should be contacted if Distributor's system instead generates units at the box level. When the Contract Code is entered in the field denoted as CONTR_CODE, the Contract Number and Contract type will automatically appear, this file will be updated as needed when new contracts are executed.
------------------------------------------------------------------------------- CONTR CODE CONTR NAME CONTR TYPE CONTR NUM ------------------------------------------------------------------------------- AMR AmeriNet GPO VH 126 00 ------------------------------------------------------------------------------- CAGE CAGE Code FEDERAL IBFK3 ------------------------------------------------------------------------------- CHW Catholice Healthcare West IDN N/A ------------------------------------------------------------------------------- DAPA DAPA FEDERAL SPO200-98-H-5018 ------------------------------------------------------------------------------- DBPA DBPA FEDERAL VA-797-98-FIA-001 ------------------------------------------------------------------------------- FSS BCTH Federal Supply Sch. BCTH FEDERAL V797P-5370X ------------------------------------------------------------------------------- FSS SYR Federal Supply Sch. Syringe FEDERAL V797P-3646K ------------------------------------------------------------------------------- KAI Kaiser HMO N/A ------------------------------------------------------------------------------- MED MedEcon GPO 900 ------------------------------------------------------------------------------- OTHER No Contract NO CONTRACT ------------------------------------------------------------------------------- NYSTA NY State Contract STATE PGB-4068 ------------------------------------------------------------------------------- PRE Premier Purchasing GPO PP-EV-001 ------------------------------------------------------------------------------- PUC Purchase Connection GPO N/A ------------------------------------------------------------------------------- TEN Tenet Healthcare IDN N/A ------------------------------------------------------------------------------- XXSTA State Contract STATE N/A ------------------------------------------------------------------------------- YYCTY County Contract COUNTY N/A ------------------------------------------------------------------------------- |
--------------------------------------------------------------------------
Field Name Description
--------------------------------------------------------------------------
DIST_NUM RTI Assigned Distributor Number
--------------------------------------------------------------------------
DCUST_NUM Distributor Assigned Customer Number
--------------------------------------------------------------------------
DCUST_NAME Distributor Customer Name
--------------------------------------------------------------------------
DCUST_ADR_PHY "Physical/Street" Customer Address
--------------------------------------------------------------------------
DCUST_ADR-MAIL "Mailing" Customer Address
--------------------------------------------------------------------------
DCUST_CITY Customer City
--------------------------------------------------------------------------
DCUST_STATE Customer State
--------------------------------------------------------------------------
DCUST_PHY_ZIP Customer "Physical/Street" Zip
--------------------------------------------------------------------------
DCUST_?? Customer "Mailing" Zip
--------------------------------------------------------------------------
CONTR_CODE Abbreviated Code for Contract Name
--------------------------------------------------------------------------
CONTR_NUM Contract Number
--------------------------------------------------------------------------
CONTR_TYPE Type of Entity or Contract
--------------------------------------------------------------------------
INV_NUM Invoice Number
--------------------------------------------------------------------------
INV_DATE Invoice Date
--------------------------------------------------------------------------
ITEM_NUM Item Number
--------------------------------------------------------------------------
LOT_NUM Lot Number
--------------------------------------------------------------------------
QTY_PURCH Quantity Purchased in units
--------------------------------------------------------------------------
ITEM PRICE Item Price for GPO, Government
--------------------------------------------------------------------------
---------------------------------------------------------------------------
Item# Description
--------------------------------------------------------------------------
10301 Box of 100 VanishPoint 3cc Syringes 25G x 5/8"
--------------------------------------------------------------------------
10311 Box of 100 VanishPoint 3cc Syringes 23G x 1"
--------------------------------------------------------------------------
10331 Box of 100 VanishPoint 3cc Syringes 22G x 1"
--------------------------------------------------------------------------
10341 Box of 100 VanishPoint 3cc Syringes 22G x 1 1/2"
--------------------------------------------------------------------------
10351 Box of 100 VanishPoint 3cc Syringes 21G x 1"
--------------------------------------------------------------------------
10361 Box of 100 VanishPoint 3cc Syringes 21G x 1 1/2"
--------------------------------------------------------------------------
10371 Box of 100 VanishPoint 3cc Syringes 20G x 1"
--------------------------------------------------------------------------
10381 Box of 100 VanishPoint 3cc Syringes 20G x 1 1/2"
--------------------------------------------------------------------------
10391 Box of 100 VanishPoint 3cc Syringes 25G x 1"
--------------------------------------------------------------------------
10531 Box of 100 VanishPoint 5cc Syringes 22G x 1"
--------------------------------------------------------------------------
10541 Box of 100 VanishPoint 5cc Syringes 22G x 1 1/2"
--------------------------------------------------------------------------
10551 Box of 100 VanishPoint 5cc Syringes 21G x 1"
--------------------------------------------------------------------------
10561 Box of 100 VanishPoint 5cc Syringes 21G x 1 1/2"
--------------------------------------------------------------------------
10571 Box of 100 VanishPoint 5cc Syringes 20G x 1"
--------------------------------------------------------------------------
10581 Box of 100 VanishPoint 5cc Syringes 20G x 1 1/2"
--------------------------------------------------------------------------
11031 Box of 100 VanishPoint 10cc Syringes 22G x 1"
--------------------------------------------------------------------------
11041 Box of 100 VanishPoint 10cc Syringes 22G x 1 1/2"
--------------------------------------------------------------------------
11051 Box of 100 VanishPoint 10cc Syringes 21G x 1"
--------------------------------------------------------------------------
11061 Box of 100 VanishPoint 10cc Syringes 21G x 1 1/2"
--------------------------------------------------------------------------
11071 Box of 100 VanishPoint 10cc Syringes 20G x 1"
--------------------------------------------------------------------------
11081 Box of 100 VanishPoint 10cc Syringes 20G x 1 1/2"
--------------------------------------------------------------------------
22701 Box of 250 VanishPoint Blood Collection Tube Holders
--------------------------------------------------------------------------
22711 Box of 25 VanishPoint Small Diameter Tube Adapters
--------------------------------------------------------------------------
|
Exhibit 6.4
Retractable Technologies, Inc., a Texas U.S.A. corporation ("Manufacturer"), and ____________________, an ____________________ corporation ("Distributor"), enter into this Distribution Agreement (the "Agreement") and agree as follows:
thirty (30) days from date of original invoice. All subsequent orders shall be due and payable in full via wire transfer so that good funds are available at Manufacturer's bank within forty-five (45) calendar days following the date of original invoice, except that Manufacturer may in its sole discretion still require payment in full prior to shipping if Distributor's payment on any prior invoice is still outstanding or if Distributor has failed to remit payment for any prior invoice when due. A service charge of one and one-half percent (1- 1/2%) per month will be added to all past due balances (or at the highest amount allowed by law, if lower). Manufacturer may in its sole discretion establish a maximum credit limit to be extended to Distributor and revise same from time to time. Manufacturer may in its sole discretion refuse to extend further credit if Distributor fails to remit payment for invoices when due or exceeds the credit limit established by Manufacturer.
"Manufacturer's Proprietary Marks" include all trademarks, trade names,
logotypes and trade dress employed by Manufacturer and include, but are not
limited to: i) the name "VanishPoint"; ii) the letters "RT" surrounded by an
oval; iii) the graphic depiction of a needle surrounded by a spring; iv) the
appearance and arrangement of information on the wrapper containing each
individual Product; and v) all other marks which are sufficiently similar to the
foregoing to cause confusion regarding the source of goods. Distributor hereby:
i) acknowledges the validity of Manufacturer's Proprietary Marks; ii)
acknowledges that Manufacturer's Proprietary Marks are the property of
Manufacturer; iii) agrees not to acquire any interest in, infringe upon,
contest, or take any other action to injure or to assist another to injure
Manufacturer's rights in Manufacturer's Proprietary Marks; and iv) agrees that
any interest which may be acquired by Distributor in Manufacturer's Proprietary
Marks during the Term of this Agreement or within one year thereafter, whether
in the Territory or elsewhere, shall be acquired on behalf of and for the
benefit of Manufacturer and shall be assigned to Manufacturer upon request at no
charge. Distributor shall use Manufacturer's Proprietary Marks only to identify
the Products sold by Distributor, only in connection with
Manufacturer's Products, and only during the Term of this Agreement.
Any party seeking indemnification under this Agreement must, as a condition of indemnification, provide the party from whom indemnification is sought with: i) prompt notice of the reported or alleged defect, infringement, injury or claim; ii) the opportunity to investigate such claim, control the defense of such claim, and settle such claim at its discretion; iii) such information and assistance as the indemnifying party may reasonably require to defend against such claim; and iv) in the case of Distributor, fulfill the obligations stated in the preceding paragraph.
Manufacturer shall, if the conditions of this section have been met by Distributor, indemnify, defend and hold Distributor harmless from and against any claim asserted against or liability (including cost of defense and reasonable settlement) incurred by Distributor for injury to person or property arising from breach of any express warranty made in section 9 of this Agreement, for products liability, or for infringement of intellectual property, provided that such claim does not result in whole or in part from the negligence, willful misconduct, breach of this Agreement, or
making of any unauthorized representation regarding the Products by Distributor.
Manufacturer will carry product liability insurance with a minimum limit of five
million dollars ($5,000,000), will list Distributor as an additional insured of
this product liability policy throughout the term of this Agreement, and will
provide Distributor with a certificate evidencing such insurance within thirty
(30) calendar days after execution of this Agreement. Manufacturer's liability
for failure of the Products to conform with any other implied warranty, express
warranty, guarantee or specification required for conformance with this
Agreement shall be limited to a return of the purchase price paid by
Distributor.
Distributor shall, if the conditions of this section have been met by Manufacturer, indemnify, defend and hold Manufacturer harmless from and against any claim asserted against or liability (including cost of defense and reasonable settlement) incurred by Manufacturer arising in whole or in part out of the negligence, willful misconduct, breach of this Agreement, or making of any unauthorized representation regarding the Products by Distributor or its distributors.
Manufacturer shall notify Distributor if any competitor of Distributor
acquires more than 20% of the outstanding shares of Manufacturer. Within fifteen
(15) days following Distributor's receipt of such notice, Distributor may: i)
immediately terminate this Agreement for good cause by giving written notice to
Manufacturer; or instead ii) demand that Manufacturer provide written assurance
that Manufacturer will continue to make available to Distributor the volume of
Products required under this Agreement and will not discriminate against
Distributor in the date of Delivery of Distributor's orders. If Manufacturer
fails to provide such written assurance within fifteen days following receipt of
Distributor's demand, then Distributor may immediately terminate this Agreement
for good cause by giving written notice to Manufacturer within fifteen (15) days
following the period permitted for providing such written assurance.
Either party may terminate this Agreement without good cause with
ninety (90) days prior written notice. In the event that, i) manufacturer
terminates this Agreement without good cause, or ii) Manufacturer breaches this
Agreement and fails to timely cure such breach or iii) a majority of the assets
or stock of Manufacturer is acquired by another business entity during the term
of this Agreement; then Manufacturer shall be liable to Distributor for eight
(8) times the profit earned by Distributor under this Agreement during the
quarter preceding such acquisition, breach or termination; except that if a
majority of the assets or stock of Manufacturer is acquired by another business
entity, then Manufacturer may instead at its option offer to extend the term of
this Agreement through the third anniversary of such acquisition. Distributor's
profit shall be calculated under this paragraph as Distributor's actual sales
during said quarter less: i) the price paid for such Product by Distributor to
Manufacturer; ii) the actual shipping cost from Manufacturer to Distributor; and
iii) any other customs duties, sales taxes or value added taxes regularly
included by Distributor in its sale price of the Products.
This Agreement will automatically terminate if either party: i) becomes insolvent; ii) institutes or permits to be instituted against it any legal proceedings seeking receivership, trusteeship, bankruptcy, reorganization, readjustment of debt, or any similar legal proceedings; iii) makes an assignment for the benefit of creditors or other arrangement pursuant to any bankruptcy law; iv) discontinues or dissolves its business; or v) if a receiver is appointed for the for the business and such receiver is not discharged within thirty (30) days.
Once notice has been given of this Agreement's termination, this Agreement may be reinstated only by an explicit statement to that effect signed by both parties. Placement of orders by Distributor and acceptance of same by Manufacturer after giving notice of termination or after termination shall not operate to reinstate or renew this Agreement.
Termination of this Agreement in the manner set forth in this Agreement shall not entitle the other party to receive damages, indemnification or compensation by reason of such termination. Termination of this Agreement shall not affect the right of Distributor to place and receive orders prior to the effective date of such termination, shall not affect the right of Manufacturer to receive payment and lot tracing information for Products Delivered to Distributor, and shall not relieve either party of any liability incurred prior to termination. Sections 7-13 of this Agreement shall survive termination.
Upon termination of this Agreement, Manufacturer shall repurchase from Distributor all of Manufacturer's Products remaining in Distributor's inventory, FOB Distributor's facility, at the acquisition cost actually paid by Distributor calculated as purchase price plus shipping cost plus customs duties plus European VAT turnover tax but excluding any other tax, all under First In First Out accounting, provided such inventory is in saleable condition. The manufacturer is not obligated to repurchase any inventory that is not in saleable condition.
Correspondence to Manufacturer Correspondence to Manufacturer regarding orders regarding default or termination ---------------- -------------------------------- Purchasing Department Thomas Shaw Retractable Technologies, Inc. Retractable Technologies, Inc. P.O. Box 9 P.O. Box 9 511 Lobo Lane 511 Lobo Lane Little Elm, Texas 75068 Little Elm, Texas 75068 972-294-1010 972-294-1010 972-294-4400 - fax 972-294-4400 - fax Correspondence to Distributor Correspondence to Distributor regarding orders regarding default or termination ---------------- -------------------------------- |
excused to the extent that delay of such performance is caused by an act of God, unusually severe weather, strike, civil commotion, riot, terrorism, sabotage, war, revolution, act of government, world shortage of qualified equipment or materials, or other cause which is reasonably beyond the control of the party obligated to perform. If performance is so delayed for more than ninety (90) calendar days, the parties shall meet and attempt to arrive at a resolution within the spirit and intent of this Agreement. This paragraph shall not excuse any obligation relating to payment or indemnification.
In WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date written below.
MANUFACTURER DISTRIBUTOR Retractable Technologies, Inc. By:____________________________ By:____________________________ Thomas J. Shaw Name President and Chief Executive Officer Title Date: ________________ Date: ________________ |
--------------------------------------------------------------------------------------------------
EXHIBIT A
Products and Pricing
--------------------------------------------------------------------------------------------------
Product Distributor Price (in U.S. dollars)
--------------------------------------------------------------------------------------------------
VanishPoint(R) blood collection tube holders $ 0.25 each
--------------------------------------------------------------------------------------------------
VanishPoint(R) small tube adaptor $ 0.12 each
--------------------------------------------------------------------------------------------------
VanishPoint(R) 3cc syringes $ 0.35 each
--------------------------------------------------------------------------------------------------
VanishPoint(R) 5cc syringes $ 0.50 each
--------------------------------------------------------------------------------------------------
VanishPoint(R) 10cc syringes $ 0.55 each
--------------------------------------------------------------------------------------------------
Note: VanishPoint(R) 1cc, 5cc and 10cc syringes are not yet available, but Manufacturer shall
notify Distributor when these products become available and shall then make these products
available at the above prices. Samples in limited quantities may be provided before availability
for commercial sale.
--------------------------------------------------------------------------------------------------
|
Retractable Technologies - Distribution Agreement -Page 8 of 8- Mfr:__ Dist:__
EXHIBIT 6.5
Retractable Technologies, Inc.
and
Lillian E. Salerno dba/MediTrade International
This Consulting Agreement (hereinafter referred to as "Agreement") is made and entered into by and between Retractable Technologies, Inc. (hereinafter called the "Corporation") and Lillian E. Salerno dba/MediTrade International (hereinafter called "Consultant"). The Corporation and Consultant are hereinafter collectively called the "Parties". Consultant hereby agrees to provide Consulting Services for the Corporation. The Corporation hereby agrees to compensate Consultant.
The Consultant will from time to time specify by written indication those companies or entities which fall within the scope of the potential agencies and companies to be contacted. In addition, Consultant will also maintain written documentation and records of activities undertaken on behalf of the Corporation. Consultant will provide the Corporation with written reports of such activities. The Corporation's prior written consent will be evidenced by designating potential contacts on Appendix "A" to this Agreement with the company's name, the date and Corporation's signature thereon. The Consultant agrees that if it commences negotiations with a company or companies without the Corporation's written consent, Consultant will automatically forfeit all rights to commissions under this Agreement with respect to the company or companies in question.
In the event the Corporation has reason to remove a company or entity from the Consultant, the Consultant will be notified in writing to that effect and if negotiations are already underway between the Consultant and said company or entity, and the Consultant so requests, the Consultant will be given a reasonable time to bring the negotiations to fruition before the company or entity is removed from the scope of the network under this Agreement.
Either party may refuse to renew this Agreement for any cause whatsoever. Failure of the parties to agree on potential contacts, pricing or other performance standards for a subsequent term shall constitute good cause for refusal to renew this Agreement. This Agreement may be reinstated following termination or notice thereof, and may be renewed or extended beyond the date set for its automatic termination, only by an explicit statement to that effect which sets forth the reinstated, renewed or extended date of termination and is signed by both parties. Should a court of competent jurisdiction nevertheless find a reinstatement or renewal of this Agreement or otherwise find a continuing relationship as corporation and consultant in the absence of such a writing, the period of such reinstatement, renewal or relationship (and of any renewals thereof) shall be limited in duration to thirty (30) days.
Neither termination of this Agreement in the manner set forth in this Agreement nor failure to renew this Agreement shall entitle the other party to receive damages, indemnification or compensation by reason of such termination or nonrenewal.
A licensing commission will be paid to the Consultant, as set forth below, if and only if the Consultant successfully brings an approved third party identified in Exhibit A to the negotiating table and assists in negotiating terms and conditions suitable to the Corporation in the implementation of one or more international licensing agreements resulting in an agreement between the Corporation and the party which calls for a payment or a stream of payments over time for the right to make, use or sell the technology. In the event no agreement is reached between the parties, and irrespective of the reason no agreement is reached, the Consultant shall not be entitled to a licensing commission under this Agreement.
If a licensing agreement is consummated between the Corporation and a third party identified as an approved contact the consultant shall be entitled to receive a commission of five percent (5%) of any payments identified as the licensing fee to be paid to the Corporation from the third party whether paid in one payment or as a stream of payments identified as the licensing fee received over time by the Corporation from the third party. The licensing fee commissions payable to the Consultant shall be paid to the Consultant promptly after each licensing fee payment is received by the Corporation. In the event that the paying party or parties agree to render direct payment to Consultant of the five percent (5%) licensing fee commission, Corporation will consent to such payment.
If, within two (2) years after the expiration of this Agreement, the Corporation enters into an agreement with an approved contact party brought to the negotiating table by the Consultant during the term of this Agreement, and where serious negotiations took place with said party in
which Consultant aided and participated, then the Consultant shall be entitled to a commission for a licensing fee resulting from that agreement.
Each Party shall use the Confidential Information of the other Party only for the purpose of the activities contemplated by this Agreement and shall not disclose such Confidential Information to a Third Party and will keep such Confidential Information confidential and will not use such Confidential Information except in connection with performing Consulting Services for the Corporation unless and until either (a) the Corporation consents to disclosure or (b) such knowledge and information otherwise becomes generally available to the public through no fault of Consultant. Confidential information of a specific nature shall not be considered available to the public or in Consultant's prior possession merely because information of a less specific nature was available to the public or in Consultant's prior possession. The Parties shall ensure that their Affiliates keep all Confidential Information exchanged hereunder confidential in accordance with the provisions hereof as though the Affiliates were parties hereto. This provision shall remain in effect for a period of five (5) years after termination or expiration of this Agreement for all Confidential Information except for trade secrets, which shall always be treated as Confidential Information.
Upon termination of this Agreement, Consultant shall return to the Corporation all product, all manuals, flyers, pictures and other printed materials (including copies thereof), and all computer readable data and software, and shall also erase all computer readable data and software from all fixed and floppy drives retained by Consultant, regardless of whether such printed materials or computer readable data were provided to Consultant by the Corporation or were created or received by Consultant in the course of providing Consulting Services to the Corporation.
7. Relationships with Competitors. The term "Competitor" of the Corporation means any company, enterprise or person (other than the Corporation) that is engaged in the design, development, manufacture, distribution or sale of automated retraction syringes, catheters or blood
collection tube holders. Consultant represents that, prior to signing this Agreement, Consultant has advised the Corporation in writing of any relationship which Consultant may have (either currently or in the past) with any Competitor of the Corporation. Consultant shall immediately advise the Corporation of any such relationship that arises during the term of this Agreement. Consultant agrees that, during the term of this Agreement and for a period of two (2) years thereafter, Consultant will not perform any services for any competitor of the Corporation or utilize any Confidential Information of the Corporation nor perform any services for any Competitor of the Corporation.
A. Notice to the Corporation shall be addressed and delivered as follows:
Retractable Technologies, Inc.
511 Lobo Lane, Post Office Box 9
Little Elm, TX 75068-0009
(888) 806-2626
(972) 292-1630 Facsimile
B. Notice to the Consultant shall be addressed and delivered as follows:
Lillian E. Salerno dba/MediTrade International
c/o Lillian E. Salerno
432 Edwards
Lewisville, Texas 75057
(972)436-0748
Subsequent Consulting Agreement Schedules may supplement this Agreement regarding the specific Consultant Services to be performed and the compensation
therefor, but such
Consulting Agreement - Page 4 of 6 Consultant LES Retractable TS.
----- ----
|
Consulting Agreement Schedules are subject to and may not contradict this Agreement and, in the event of any conflict, the terms of this Agreement shall prevail.
RETRACTABLE TECHNOLOGIES, INC. LILLIAN E.SALERNO dba/MEDITRADE
INTERNATIONAL
By: /s/ Thomas J. Shaw By: /s/ Lillian E. Salerno
------------------------------ ---------------------------------
Thomas J. Shaw Lillian E.Salerno
President and CEO President
Dated: 5/27/00 Dated: 5/27/00
--------------------------- ------------------------------
Consulting Agreement - Page 5 of 6 Consultant LES Retractable T.S.
----- -----
|
APPENDIX "A"
APPROVED CONTACTS
Company Name Date Consent
------------ ---- -------
Greiner Labortechnik- Austria 5/27/00 TJS
------------- -------------
B/Braun Medical Inc.- Germany 5/27/00 TJS
------------- -------------
Aventis Pasteur- France 5/27/00 TJS
------------- -------------
Novartis AG- Switzerland 5/27/00 TJS
------------- -------------
Roche Holding, Ltd.- Switzerland 5/27/00 TJS
------------- -------------
Consulting Agreement - Page 6 of 6 Consultant LES Retractable T.S.
----- -----
|
EXHIBIT 6.6
This Employment Agreement, effective as of September 28, 1999 (the "Agreement"), is entered into by and between RETRACTABLE TECHNOLOGIES, INC., a Texas corporation (the "Company"), the principal offices of which are located at 511 Lobo Lane, P.O. Box 9, Little Elm, Texas 75068, and THOMAS J. SHAW ("Shaw"). In consideration of the mutual covenants and conditions contained in this Agreement, the parties agree to the following:
DUTIES AND COMPENSATION
(i) all reasonable and customary executive "fringe benefits," including, but not limited to, participation in pension plans, profit-sharing plans, employee stock ownership plans, stock option plans (whether statutory or not), stock appreciation rights plans, hospitalization insurance, medical insurance, dental insurance, disability insurance, life insurance, and such other benefits that are granted to or provided for executives now in the employ of the Company or that may be granted to or provided for them during the term of Shaw's employment under this Agreement; and
(ii) paid vacation and sick leave, as determined by the Board.
(i) During the term of this Agreement the Company shall pay directly or reimburse Shaw for all reasonable and necessary travel, entertainment, or other related expenses incurred by him in carrying on his duties and responsibilities under this Agreement. In addition, the Company shall furnish Shaw with a cellular telephone and suitable office space and facilities for the performance of his duties.
(ii) During the term of this Agreement the Company shall pay for Shaw's membership dues in professional organizations and for any seminars and conferences related to Company business.
TERMINATION OF EMPLOYMENT
If Shaw's employment under this Agreement is terminated by the Company because he has a permanent disability, the Company shall pay Shaw, not later than the 30th day following the date of termination, a lump sum severance payment consisting of (1) Shaw's salary through the date of his termination, (2) all amounts Shaw is entitled to upon termination of employment under the Company's employee benefit plans, (3) Shaw's undiscounted salary through the Termination Date, or if greater for a period of 24 months, and (4) a pro rata amount of bonus he is eligible to receive under any Company bonus program.
If the Company terminates Shaw's employment "for cause" the Company shall pay Shaw, not later than the 30th day following the date of termination, a lump sum severance payment consisting of (1) Shaw's salary through the date of his termination and (2) all amounts Shaw is entitled to upon termination of employment under the Company's employee benefits plans.
undiscounted salary through the Termination Date, or if greater for a period of 24 months, and (4) a pro rata amount of bonus he is eligible to receive under any Company bonus program.
If Shaw exercises his right to terminate his employment following a Change of Control, he shall receive, not later than the 30th day following the date of termination, a lump sum severance payment consisting of (1) Shaw's salary through the date of his termination, (2) all amounts Shaw is entitled to upon termination of employment under the Company's employee benefits plans, (3) Shaw's undiscounted salary through the Termination Date, or if greater for a period of 24 months, and (4) a pro rata amount of bonus he is eligible to receive under any Company bonus program.
RESTRICTIONS DURING AND AFTER EMPLOYMENT
(a) Make known to any person, firm, or corporation the names and addresses of any of the customers or accounts of the Company; or
(b) Call on, solicit, or take away, or attempt to call on, solicit, or take away any of the customers or accounts of the Company on whom Shaw called or with whom he became acquainted during his employment with the Company, either for himself or for any other person, firm, or corporation.
MISCELLANEOUS
waiver of any provision or condition of this Agreement shall be construed as a future waiver of such provision or condition.
RETRACTABLE TECHNOLOGIES, INC.
By: Douglas W. Cowan /s/ Thomas J. Shaw
------------------------ --------------------------
Chief Financial Officer Thomas J. Shaw
------------------------
________________________
Date: 9/28/99 Date: SEPT. 28, 1999
----------------------- --------------------
|
Exhibit 6.7 Confidential
TECHNOLOGY LICENSE AGREEMENT
This Agreement is effective as of the date subscribed below, between Thomas J. Shaw, an individual residing at 1510 Hillcrest, Little Elm, Texas 75068 (hereinafter "LICENSOR"), and Retractable Technologies, Incorporated, a corporation organized under the laws of the State of Texas, having a place of business at 622 South Mill Street, Lewisville, Texas 75057 (hereinafter "LICENSEE"), who mutually agree as follows:
RECITALS
1. Licensor has spent a number of years developing and perfecting retractable syringe technology to help solve the AIDS epidemic and prevent accidental transmission of disease vectors. These activities have resulted in possession of a substantial body of knowledge and know-how together with a number of inventions which are reflected in a substantial portfolio of United States and foreign patents and patent applications on retractable syringe technology.
2. Licensor and his organization have devoted a considerable amount of time, energy and expense in developing and perfecting prototype products, conducting tests to establish feasibility and proceeding toward regulatory approval and market acceptance.
3. Licensor is the owner of the know-how and patent properties described herein and has the right to license the patent properties. Licensor warrants that the patents and patent applications which are the subject of this Agreement have not been licensed to others.
4. Licensee wishes to acquire an exclusive license to manufacture, market, sell, distribute and otherwise exploit the retractable syringe technology which is the subject of Licensor's patents and patent applications described herein, and future improvements, together
Technology License Agreement Page 1
with all technical information and know-how which Licensor may now possess or later obtain during the term of this Agreement with respect to the subject matter of this Agreement.
1. The general subject matter of this Agreement is retractable syringe technology including retractable fluid collection devices otherwise known as blood samplers. These include syringes for injecting fluids which retract after an injection is given and devices for collecting fluid samples which can be retracted after the sample is taken.
2. The subject matter of this Agreement includes trade secrets, technical information, marketing and regulatory information, and know-how possessed by Licensor, hereinafter collectively referred to as "Information". The Information includes, but is not limited to, knowledge collected or developed by Licensor concerning technical features, design, construction, materials, production and assembly techniques, molding requirements, knowledge of what works and what does not work, regulatory requirements, and knowledge of the competitive market, which Licensor has developed or obtained during the course of developing the retractable syringe technology.
3. The subject matter of this Agreement includes all of Licensor's patents and patent applications on retractable syringe technology, both domestic and foreign, including any continuations, divisions, and reissues thereof, as well as all foreign counterpart patent applications that can be filed and improvements thereof. This Agreement specifically includes the following "Patent Properties" which are set forth below:
Technology License Agreement Page 2
U.S. Patent 5,120,310, Issued June 9, 1992, entitled Nonreusable Syringe;
U.S. Patent 5,188,613, Issued February 23, 1993, entitled Nonreusable Syringe with Safety Clip;
U.S. Patent 5,267,961, Issued December 7, 1993, entitled Nonreusable Syringe with Safety Clip;
Foreign Counterpart Patent Applications on the Nonreusable Syringe with Safety Clip corresponding to U.S. Patents 5,120,310 and 5,188,613 for Europe (Serial No. 92910361.2), China (Serial No. 92102245.X), India (Serial No. 186/CAL/92), Mexico (Serial No. 92-01493), and Taiwan (Serial No. 82205282);
U.S. Patent 5,423,758, Issued June 13, 1995, Entitled Retractable Fluid Collection Device and a Counterpart Patent Cooperation Treaty Application Serial No. 94/13953, Entitled Blood Sampler, Filed December 6, 1994 designating all PCT countries;
U.S. Patent 5,385,551, Issued January 31, 1995, Entitled Nonreusable Syringe with Front Retraction and a Counterpart Patent Cooperation Treaty Application Serial No. PCT/US94/10235, Filed September 7, 1994 designating all PCT countries;
U.S. Patent 5,389,076, Issued February 14, 1995, Entitled Single Use Medical Device with Retraction Mechanism and a Counterpart Patent Cooperation Treaty Application Serial No. PCT/US95/03953, Filed March 31, 1995 designating all PCT countries;
U.S. Patent Application Serial No. 380107, Filed January 30, 1995, Entitled Syringe Plunger Seal and Locking Assembly, and the right to file Patent Applications thereon in nearly any foreign country until January 30, 1996; and
A new U.S. Patent Application filed in May, 1995, Entitled Tamperproof Retractable Syringe with Serial No. 08/438,954, and the right to file Patent Applications thereon in nearly any foreign country until May, 1996.
Technology License Agreement Page 3
These patents and patent applications and the right to file additional foreign regional and national counterpart applications are collectively referred to herein as "Patent Properties".
4. It is understood and recognized by both parties that some, but not all, of the "Patent Properties" are subject to Federal government rights under Chapter 18, Title 35, United States Code, entitled "Patent Rights in Inventions Made with Federal Assistance."
As used in this Agreement, the following terms shall have the meanings stated.
1. "Invention" or "Inventions" shall mean the syringe technology disclosed or claimed in the Patent Properties, and improvements thereon.
2. "Information" shall mean the trade secrets and other information and know-how referred to in paragraph 2 under Subject Matter.
3. "Licensed Patents" shall mean patents now issued or hereafter obtained under the subject matter of the "Patent Properties" set forth above, and improvements thereof. Said improvements shall be deemed "Licensed Patent(s)" whether made by Licensor or by Licensee or both, irrespective of the named inventors or the date when conceived or reduced to practice during the term of this Agreement.
4. "Products" and "Licensed Products" shall mean all retractable syringes and retractable fluid sampling devices and components thereof, assembled or unassembled, which comprise an invention described in "Licensed Patents", and improvements thereof, including any and all Products which employ the inventive concept disclosed or claimed in the Licensed Patents.
Technology License Agreement Page 4
5. "Improvements" comprise anything which performs the same function as the invention disclosed or claimed in the Licensed Patents, in a better or more economical way.
6. "Royalty" herein broadly shall mean constituting payments due from Licensee to Licensor with respect to sales of Licensed Products and includes consideration for Licensor's Information now possessed or hereafter acquired.
1. Licensor hereby grants to Licensee a worldwide exclusive license and right under the "Licensed Patents" and "Information", to manufacture, market, sell, and distribute "Licensed Products" and "Improvements", without right to sublicense and subject to such nonexclusive rights as may be possessed by the Federal government, according to the terms and conditions of this Agreement.
2. Licensor reserves the right to approve sublicensing by Licensee upon specific request, provided Licensor approves in writing the terms and conditions imposed upon the proposed sublicensee, such terms and conditions to be set forth in a written sublicense agreement which shall be subject to the terms and conditions of this Agreement.
1. Licensor will receive an initial licensing fee of $500,000.00 upon full subscription of a concurrent stock offering of 5,000,000 shares of preferred stock to be issued by Licensee, in addition to the royalty set forth in the other paragraphs of this Section Three. Said initial licensing fee shall be paid to Licensor according to the following schedule:
Technology License Agreement Page 5
One-third ($166,666) upon subscription of 3,000,000 shares of preferred stock;
One-third ($166,666) upon subscription of 4,000,000 shares of preferred stock; and
A final one-third ($166,666) upon the first to occur of a subscription of the full 5,000,000 shares of preferred stock or three (3) years of company operations.
2. Licensee shall pay to Licensor a royalty on "Licensed Products" sold, in the amount of five (5) percent of gross sales of "Licensed Products" to customers, according to the next paragraph of this Section Three. For purposes hereof, Licensed Product shall be deemed sold when it is invoiced and shipped to a customer. No royalty shall be payable upon "Licensed Products" when returned, accepted for return and credited to a customer account.
3. The amount of royalty shall be determined in the following manner. If the customer is the end user of the Product, the five percent (5%) royalty shall be based upon the price to the end user. If the customer is a third party intermediary unrelated to Licensee, the five percent (5%) royalty shall be based on the price to the intermediary. If Licensee distributes Product through one or more related entities, such as subsidiaries, affiliated companies, parent companies, holding companies or unincorporated divisions or the like, the five percent (5%) royalty shall be based on the price from the last of the related entities in the chain of distribution to the first third party intermediary customer or the end user customer, as the case may be. Licensee shall have the obligation to render royalty payments to Licensor based upon a "price" which is determined in good faith as representing the real monetary value to be received by
Technology License Agreement Page 6
Licensor from the sale of Licensed Products to third party intermediary customers and end users without resorting to artificially low prices designed mainly to reduce royalty otherwise due.
1. The term of this Agreement shall commence on the execution date hereof and end at the date of expiration of the last to expire of the domestic patents described as "Licensed Patents" in Section One of this Agreement, unless sooner terminated under the terms and conditions set forth in this Agreement.
2. In event of an early termination of this Agreement within the first five (5) calendar years, Licensor shall be given access to all trade secrets, documents and other "Information" of the type defined in Section One which is in the possession, custody or control of Licensee and shall be permitted to use such "Information" in order to make sure the "Invention" is made available to the public.
1. Licensee shall be obligated on a best effort basis to commercially exploit the Subject Matter of this Agreement in good faith.
1. Licensee agrees that it will not assign the rights or obligations of this Agreement to any other party, including subsidiaries, affiliates or related entities without the written consent
Technology License Agreement Page 7
of Licensor. Any purported assignment by Licensee in violation of this provision shall be null and void and grounds for immediate termination of this Agreement.
1. Licensee has the right and obligation to attempt to obtain patent protection for the "Invention", to maintain and preserve pending patent applications and patents obtained and shall have full and complete control over the prosecution of the "Patent Properties." This obligation is subject to Licensees sound business judgment. Licensor shall cooperate as a party with the Licensee as is reasonably necessary or desirable in any such patent prosecution.
2. If in the exercise of its business judgment Licensee decides not to pursue or maintain any patent or patent application, Licensee shall give written notice to Licensor in time to act and thereafter Licensor shall have whatever rights he can obtain for his own benefit and Licensee shall not have exclusive license with respect to such rights.
1. Licensee will keep complete and accurate account of the sales of "Licensed Products" that are subject to Royalty under this Agreement and shall maintain its records for inspection by Licensor for a period of at least two (2) years after the last Royalty payment made.
2. Licensor shall be provided quarterly, within thirty (30) days after the end of each quarter, with all Royalty payments due under this Agreement by Licensee and by any sublicensees of the Licensee, for sales of Licensed Product for that quarter, including any unpaid
Technology License Agreement Page 8
Royalty due Licensor from any previous quarter on sales of Product, and shall be provided with a report as indicated below.
3. Licensee shall provide to Licensor a written report along with each quarterly Royalty payment which shall show the number of "Licensed Products" sold during that quarter of each type of Product, the distributor to whom sold, and the gross selling price. The same information shall be provided quarterly by Licensee for each sublicensee.
4. It is further understood that Licensor shall have the right, personally or through designated agents or representatives to examine, without cost, and without limitations, the books and records of Licensee sufficient to determine correctness of sales records of "Licensed Products".
1. Licensee shall be required to mark the "Licensed Product" sold under this Agreement in accordance with the statutes of the United States relating to the marketing of Patented Products. If foreign protection is obtained, marking under the patent laws of the applicable foreign countries shall be required.
1. Licensee shall have the right to sue for infringement in its own name or if necessary, in its own name and Licensor's name, and in such circumstances Licensor hereby agrees to be joined in a suit for infringement.
Technology License Agreement Page 9
2. Licensor agrees to cooperate fully in the prosecution of such action as Licensee in its discretion chooses to undertake against the alleged infringement.
3. Both parties to this Agreement shall have the duty to promptly notify the other of any circumstances which it believes might be an infringement of any patent rights that have been obtained on the Invention which is the Subject Matter of this Agreement.
4. If Licensee elects to take action against alleged infringers, it shall have the right to control the litigation, name its own attorneys and bear the cost, expenses and attorney fees of such litigation and if damages or other proceeds shall be obtained from such litigation, they shall be shared equally with Licensor after deducting all costs, expenses and attorney fees reasonably expended in conducting the litigation.
5. In the event Licensee in its discretion chooses not to take action against alleged infringement of any patent rights to the Invention which is the subject matter of this Agreement, it shall be required to promptly notify Licensor of the circumstances of such alleged infringement and its decision not to take action against the alleged infringer, and in such cases Licensor may bring suit at its own expense for its own benefit against such infringer and Licensee agrees to cooperate fully in the prosecution of such action and if necessary to be named as a party to the action.
1. If Licensee shall at any time make default in the payment of any Royalty or the providing of any report under this Agreement, or shall commit any breach of any covenant or agreement contained herein, or shall make any false report, and fail to remedy any such defaults
Technology License Agreement Page 10
or breaches within thirty (30) days after written notice thereof by Licensor, Licensor may at its option, terminate this Agreement and revoke any license herein granted, by notice in writing to such effect. Such action shall not prejudice the right of Licensor to receive any Royalty or other sum due at the time of such termination and shall not prejudice any cause of action or claim of Licensor accrued or to accrue on account of any breach or default by Licensee. Breach of a material term of this Agreement is grounds for termination by either party subject to an opportunity to cure within thirty (30) days after written notice of said breach.
2. In the event Licensee should find itself subject to a hostile takeover, and said hostile takeover is consummated, Licensor reserves the right to unilaterally change the nature of the license granted herein from exclusive to nonexclusive without giving any consideration in return for such change.
3. This Agreement is based upon the understanding that Licensor will have and maintain a controlling interest in Licensee. If Licensor suffers an involuntary loss of his controlling interest, Licensor shall have the right coincident with his loss of controlling interest, to immediately downgrade the license granted herein from exclusive to nonexclusive and have the right to Information specified in Section Four, paragraph 2, without limitation, unless Licensor in writing voluntarily surrenders the right specified in this paragraph. In the event Licensor voluntarily sells or otherwise voluntarily transfers some of all of his stock for valuable consideration, the result of said sale or transfer being said loss of controlling interest, then
Technology License Agreement Page 11
Licensor shall not have the right to change this License from exclusive to non-exclusive and Licensee shall continue to enjoy the full benefits of this License Agreement according to its terms and conditions.
1. Should any part or provision of this Agreement be held unenforceable or in conflict with the law of any jurisdiction, the validity of the remaining parts or provisions shall not be affected by such holding and the Agreement may be reformed to best effectuate the interest of the parties as to the remainder of the Agreement.
2. It is understood and agreed that any delay, waiver or omission by Licensor to exercise any right or power arising from a breach or default in any of the terms, provisions or covenants of this Agreement shall not be construed to be a waiver by Licensor of any subsequent breach or default of the same or other terms, provisions or covenants.
3. This Agreement contains the entire understanding of the parties, shall supersede other oral or written agreements and shall be binding on and inure to the benefit of the respective heirs, legal representatives, executors, successors and assigns of the parties. It may not be modified in any way unless in writing.
4. This Agreement shall be construed, interpreted and enforced according to the laws of the State of Texas.
Technology License Agreement Page 12
5. All notices required or provided for in this Agreement shall be in writing and shall be given in person or sent by registered or certified mail, postage prepaid, properly addressed to the last given address of the party to be served unless the address is changed by notice in writing given by the respective parties. Notice shall be effective upon the date upon which such notice was mailed.
Executed this 23 day of June, 1995.
/s/ Thomas J. Shaw
---------------------------------------
Thomas J. Shaw, Licensor
/s/ Thomas J. Shaw
---------------------------------------
Retractable Technologies, Inc., Licensee
By: Thomas J. Shaw, President
|
STATE OF TEXAS (S)
(S)
COUNTY OF DALLAS (S)
Thomas J. Shaw, an individual, personally appeared before me, and being first duly sworn declared that he executed this Technology License Agreement on the date shown above and states that the statements therein contained are true and correct.
Subscribed and sworn to before me this 23rd day of June, 1995.
/s/ Jean E. Brown --------------------------------------- Notary Public Signature |
Seal [SEAL APPEARS HERE] My commission expires the 12th day of ---- June, 1999. Technology License Agreement Page 13 |
STATE OF TEXAS (S)
(S)
COUNTY OF DALLAS (S)
|
Thomas J. Shaw, as President of Retractable Technologies, Inc., personally appeared before me, and being first duly sworn declared that he executed this Technology License Agreement on the date shown above and states that the statements therein contained are true and correct.
Subscribed and sworn to before me this 23rd day of June, 1995.
/s/ Jean E. Brown --------------------------------------- Notary Public Signature |
Seal [SEAL APPEARS HERE] My commission expires the 12th day of
----
June, 1999.
|
Technology License Agreement Page 14
EXHIBIT 6.8
This Consulting Agreement is made and entered into by and between Retractable Technologies, Inc. (hereinafter called the "Corporation") and International Export and Consulting (hereinafter called "Consultant"). The Corporation and Consultant are hereinafter collectively called the "Parties". Consultant hereby agrees to provide Consulting Services for the Corporation. The Corporation hereby agrees to compensate Consultant.
Consultant may learn Confidential Information of the Corporation in connection with this Consulting Agreement and/or the performance of Consulting Services pursuant to this Agreement. Consultant will keep such Confidential Information confidential and will not use such Confidential Information except in connection with performing Consulting Services for the Corporation unless and until either (a) the Corporation consents to disclosure or (b) such knowledge and information otherwise becomes generally available to the public through no fault of Consultant. Confidential Information of a specific nature shall not be considered available to the public or in Consultant's prior possession merely because information of a less specific nature was available to the public or in Consultant's prior possession.
Upon termination of this Consulting Agreement, Consultant shall return to the Corporation all product, all manuals, flyers, pictures and other printed materials (including copies thereof), and all computer readable data and software, and shall also erase all computer readable data and software from all fixed and floppy drives retained by Consultant, regardless of whether such printed materials or computer readable data were provided to Consultant by the Corporation or were created or received by Consultant in the course of providing Consulting Services to the Corporation.
they have theretofore specified by written notice delivered in accordance herewith:
1. Notice to the Corporation shall be addressed and delivered as follows:
Retractable Technologies, Inc.
511 Lobo Lane, Post Office Box 9
Little Elm, TX 75068-0009
888.806.2626
972.294.4400 Facsimile
2. Notice to the Consultant shall be addressed and delivered as follows:
International Export & Consulting
4500 Fuller Drive #426
Irving, TX 75038
Retractable Technologies, Inc. International Export & Consulting
_________________________________ ____________________________________
By: Thomas J. Shaw By: Marwan M. Saker
President and CEO Consultant
Dated: __________________________ Dated: _____________________________
|
EXHIBIT 12.1
We hereby consent to the use in this Registration Statement on Form 10-SB of our report dated June 1, 2000 relating to the financial statements of Retractable Technologies, Inc., which appears in such Registration Statement.
PricewaterhouseCoopers LLP
Dallas, Texas
June 23, 2000
| ARTICLE 5 |
| PERIOD TYPE | YEAR | 3 MOS |
| FISCAL YEAR END | DEC 31 1999 | MAR 31 2000 |
| PERIOD START | JAN 01 1999 | JAN 01 2000 |
| PERIOD END | DEC 31 1999 | MAR 31 2000 |
| CASH | 646,005 | 1,024,987 |
| SECURITIES | 0 | 0 |
| RECEIVABLES | 610,396 | 365,476 |
| ALLOWANCES | (10,972) | (10,972) |
| INVENTORY | 677,962 | 1,254,835 |
| CURRENT ASSETS | 1,971,191 | 2,807,869 |
| PP&E | 12,673,889 | 12,801,117 |
| DEPRECIATION | (2,572,365) | (2,807,663) |
| TOTAL ASSETS | 13,208,729 | 13,364,032 |
| CURRENT LIABILITIES | (2,014,841) | (2,192,308) |
| BONDS | 0 | 0 |
| PREFERRED MANDATORY | 0 | 0 |
| PREFERRED | (8,160,200) | (8,321,700) |
| COMMON | (1,000) | (1,000) |
| OTHER SE | (526,353) | (260,547) |
| TOTAL LIABILITY AND EQUITY | (13,208,729) | (13,364,032) |
| SALES | (3,375,158) | (827,819) |
| TOTAL REVENUES | (3,375,158) | (827,819) |
| CGS | 2,331,070 | 644,700 |
| TOTAL COSTS | 9,286,660 | 1,959,641 |
| OTHER EXPENSES | 0 | 0 |
| LOSS PROVISION | 0 | 0 |
| INTEREST EXPENSE | (9,064) | 5,206 |
| INCOME PRETAX | 8,223,508 | 1,781,728 |
| INCOME TAX | 0 | 0 |
| INCOME CONTINUING | 8,223,508 | 1,781,728 |
| DISCONTINUED | 0 | 0 |
| EXTRAORDINARY | 0 | 0 |
| CHANGES | 0 | 0 |
| NET INCOME | 8,223,508 | 1,781,728 |
| EPS BASIC | 0 | 0 |
| EPS DILUTED | 0 | 0 |