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Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
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FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
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MEDICAL ACTION INDUSTRIES INC.
(Exact name of Registrant as specified in its Charter)
Delaware 11-2421849
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
150 Motor Parkway, Hauppauge, New York 11735
(Address of Principal Executive Offices) (Zip Code)
1989 NON-QUALIFIED STOCK OPTION PLAN, AS AMENDED
1994 STOCK INCENTIVE PLAN
(Full Title of the Plans)
RICHARD G. SATIN, VICE PRESIDENT AND GENERAL COUNSEL
MEDICAL ACTION INDUSTRIES INC.
150 Motor Parkway
Hauppauge, New York 11788
(Name and Address of Agent for Service)
(516)231-4600
(Telephone number, Including Area Code, of Agent for Service)
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Securities to to be Price Per Offering Registration
be Registered Registered Share(1) Price(1) Fee
- --------------------------------------------------------------------------------
Common Stock,
par value
$.001 per
share 1,000,000 shs(2) $1.69 $1,690,000 $582.76
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(1) Estimated solely for the purpose of calculating the registration fee, based
upon the closing price of the Company's Common Stock on the NASDAQ-National
Market System on October 25, 1996.
(2) In addition, pursuant to Rule 416(a) under the Securities Act of 1933, this
registration statement also covers an indeterminate number of additional shares
of Common Stock which may become issuable pursuant to anti-dilution and
adjustment provisions of the Plans.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Registrant hereby incorporates by reference into this Registration
Statement the documents listed in (a) through (c) below:
(a) The Registrant's latest annual report filed pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, or either
(I) the latest prospectus filed pursuant to Rule 424(b) under the
Securities Act of 1933 that contains audited financial statements
for the Registrant's latest fiscal year for which such statements
have been filed or (II) the Registrant's effective registration
statement on Form 10 filed under the Securities Exchange Act of
1934 containing the audited financial statements for the
Registrant's latest fiscal year;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 since the end of the fiscal year
covered by the Registrant's documents referred to in (a) above;
(c) The description of the class of securities to be offered which is
contained in a registration statement filed under Section 12 of
the Securities Exchange Act of 1934, including any amendment or
report filed for the purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all such securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents.
Item 4. Description of Securities.
Not applicable.
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Item 5. Interest of Named Experts and Counsel.
Mr. Richard G. Satin, Vice President - General Counsel and Secretary
of the Company. Mr. Satin has been granted 75,000 options under the 1989
Non-Qualified Stock Option Plan, as amended, at an exercise price of $1.75 per
share and 100,000 options under the 1994 Stock Incentive Plan, at exercise
prices ranging from $.97 to $2.375 per share.
Item 6. Indemnification of Directors and Officers.
Under provisions of the Certificate of Incorporation and By-Laws of
the Registrant, each person who is or was a director or officer of Registrant
shall be indemnified by Registrant as of right to the full extent permitted or
authorized by the General Corporation Law of Delaware.
Under such law, to the extent that such person is successful on the
merits of defense of a suit or proceeding brought against him by reason of the
fact that he is a director or officer of Registrant, he shall be indemnified
against expenses (including attorneys' fees) reasonably incurred in connection
with such action.
If unsuccessful in defense of a third-party civil suit or a criminal
suit is settled, such a person shall be indemnified under such law against both
(1) expenses (including attorneys' fees) and (2) judgments, fines and amounts
paid in settlement if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of Registrant, and with
respect to any criminal action, had no reasonable cause to believe his conduct
was unlawful.
If unsuccessful in defense of a suit brought by or in the right of
Registrant, or if such suit is settled, such a person shall be indemnified under
such law only against expenses (including attorneys' fees) incurred in the
defense or settlement of such suit if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of
Registrant, except that if such a person is adjudicated to be liable in such
suit for negligence or misconduct in the performance of his duty to Registrant,
he cannot be made whole even for expenses unless the court determines that he is
fairly and reasonably entitled to be indemnified for such expenses.
Item 7. Exemption from Registration Claimed.
Not applicable.
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Item 8. Exhibits.
4.1 1989 Non-Qualified Stock Option Plan, as amended.
4.2 1994 Stock Incentive Plan.
5 Opinion and consent of Richard G. Satin, Vice President and
General Counsel, relating to the legality of securities under the
1989 Non-Qualified Stock Option Plan, as amended, and 1994 Stock
Incentive Plan.
23 Consent of Richard G. Satin, Vice President and General Counsel -
included in his opinion filed as Exhibit 5.
23 Consent of Ernst & Young, LLP.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
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provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8, and information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Sections 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant 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 whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certified that it has reasonable grounds to believe that it meets all
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Hauppauge, New York on the 23rd day of October, 1996.
MEDICAL ACTION INDUSTRIES INC.
By: s/ Paul D. Meringola
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Paul D. Meringola
President
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on October 23, 1996 by the following
persons in the capacities indicated. Each person whose signature appears below
constitutes and appoints Paul D. Meringola, with full power of substitution, our
true and lawful attorney and agent to do any and all acts and things in our name
and on our behalf in our capacities indicated below which we may deem necessary
or advisable to enable Medical Action Industries Inc. to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission, in connection with this Registration
Statement including specifically, but not limited to, power and authority to
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sign for us or any of us in our names in the capacities stated below, any and
all amendments (including post-effective amendments) thereto; and we do hereby
ratify and confirm all that we shall do or cause to be done by virtue thereof.
Signature Title
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s/ Joseph Meringola Chairman of the Board
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Joseph Meringola
s/ Paul D. Meringola President and Director
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Paul D. Meringola
s/ Richard G. Satin Vice President and General
- --------------------------------- Counsel and Director
Richard G. Satin
s/ Bernard Wengrover Director
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Bernard Wengrover
s/ Philip F. Corso Director
- ---------------------------------
Dr. Philip F. Corso
s/ Thomas A. Nicosia Director
- ---------------------------------
Dr. Thomas A. Nicosia
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
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MEDICAL ACTION INDUSTRIES INC.
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Form S-8 Registration Statement
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EXHIBIT INDEX
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Page No. in Sequential
Exhibit Numbering of all Pages,
Number Exhibit Description including Exhibit Pages
- ------ ------------------- -----------------------
4.1 1989 Non-Qualified Stock
Option Plan, as amended............ 9
4.2 1994 Stock Incentive Plan.......... 14
5 Opinion and Consent of Counsel..... 26
23 Consent of Counsel................. See Exhibit 5
23 Consent of Ernst & Young, LLP...... 27
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EXHIBIT 4.1
MEDICAL ACTION INDUSTRIES INC.
1989 NON-QUALIFIED STOCK OPTION PLAN, AS AMENDED
1. Purpose and Effect
(a) The purpose and effect of this plan (the "Plan") is to induce officers,
directors and other senior executives and management and supervisory personnel
of and consultants to Medical Action Industries Inc., a Delaware corporation
("Medical Action") and its subsidiaries (Medical Action and its subsidiaries
being hereinafter collectively referred to as the "Company"), who are in a
position to make material contributions to the Company's success, to remain in
the service of the Company, to offer them incentives and rewards in recognition
of their share in the Company's progress, and to encourage them to continue to
promote the best interests of the Company through the grant to them of options
(the "Options") for the purchase of Common Stock, $.001 par value, of Medical
Action (the "Common Stock"). The Plan is also intended to aid the Company in
competing with other enterprises for the services of new senior executives
needed to help insure continued development. For purposes of this Plan, the term
"subsidiaries" shall include all corporations at least 50% of the voting stock
of which is owned directly or indirectly by Medical Action.
(b) In the event that this Plan is not approved by the stockholders of
Medical Action, the Plan and all Options granted and to be granted hereunder
shall be null and void, and the Company shall have no obligation of any nature
whatsoever to any employee, director or other person arising out of either the
Plan or any Options granted or to be granted thereunder.
2. Administration
(a) The Plan shall be administered by the Board of Directors of Medical
Action (the "Board"), provided however, that the Board may, in the exercise of
its discretion, designate from among its members a Compensation Committee (the
"Committee") consisting of no fewer than three directors, each of whom shall be
a "disinterested person" within the meaning of Rule 16b-3 (or any successor rule
or regulation) promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and may delegate to the Committee full power and authority,
subject to such orders or resolutions not inconsistent with the provisions of
the Plan as may from time to time be issued or adopted by the Board, to
interpret the provisions and supervise the administration of the Plan. Any
member of the Committee may be removed at any time either with or without cause
by resolution adopted by the Board, and any vacancy on the Committee may at any
time be filled by resolution adopted by the Board. Any or all powers and
functions of the
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Committee may at any time and from time to time be exercised by the Board;
provided, however, that with respect to the participation in the Plan of persons
who are members of the Board, such powers and functions of the Committee may be
exercised by the Board only if, at the time of such exercise, a majority of the
members of the entire Board and a majority of the directors acting in the
particular matter are "disinterested persons" within the meanings of Rule 16b-3
promulgated under the Exchange Act.
(b) Each Option shall be evidenced by an Option Agreement that shall
contain terms and conditions (consistent with the terms and conditions of this
Plan) as may be approved by the Board or the Committee, as the case may be, and
shall be signed by an officer of Medical Action and the optionee (the
"Optionee").
(c) Subject to an applicable provision of Medical Action's By-Laws, all
decisions made by the Board or the Committee pursuant to the provisions of the
Plan and related orders or resolutions of the Board shall be final, conclusive
and binding on all persons, including the Company, stockholders, employees and
Optionees.
3. Shares Subject to the Plan
(a) The shares of Common Stock to be delivered upon the exercise of Options
granted under the Plan shall be made available, at the discretion of the Board,
either from the authorized but unissued shares of Common Stock or from shares of
Common Stock reacquired by Medical Action and held in treasury.
(b) Subject to adjustments made pursuant to the provisions of Paragraph (c)
of this Section 3, the aggregate number of shares to be delivered upon exercise
of all Options that may be granted under this Plan shall be 1,650,000 shares. If
an Option granted under the Plan shall expire or terminate for any reason during
the term of the Plan, the shares subject to but not delivered under such Option
shall be available for the grant of other Options. The foregoing
notwithstanding, no person may be granted Options in any calendar year to
purchase shares of Common Stock which in the aggregate have a fair market value
of more than $100,000.
(c) In the event of a merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, or other change in corporate
structure affecting the Common Stock, appropriate adjustment shall be made in
the aggregate number of shares subject to the Plan and in the number of shares
subject to unexercised Options previously granted under the Plan.
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4. Eligibility and Participation
The persons eligible to receive Options shall consist of officers,
directors and other senior executives and management and supervisory personnel
of and consultants to the Company. Subject to the limitations of the Plan, the
Board or the Committee, as the case may be, shall select the person to be
granted Options, determine the number of shares and exercise price subject to
each Option, and determine the time when each Option shall be granted. More than
one Option may be granted to the same person.
5. Term of Plan and Option Period
The terms during which Options may be granted under the Plan shall commence
on October 25, 1989 and expire on October 24, 1999, provided, however, that if
the Plan is not approved by the stockholders of Medical Action all Options
granted hereunder shall become null and void. Subject to the provisions of the
Plan with respect to death, retirement and termination of employment, the
maximum period during which each Option may be exercised may be fixed by the
Board or the Committee, as the case may be, at the time such Option is granted
but shall in no event exceed five (5) years.
6. Exercise Price
(a) The price at which shares of Common Stock may be purchased upon
exercise of a particular Option shall not be less than eighty-five (85%) of the
fair market value of such shares on date such Option is granted, as determined
by the Board or the Committee, as the case may be.
(b) For purposes of determining the Fair Market Value of a share of Common
Stock on the date of grant, if the Common Stock (i) is then listed on any
national securities exchange, the Fair Market Value shall be the closing price
per share of the Common Stock on such exchange at the close of the trading
session on the date of grant, (ii) is then listed on NASDAQ (but not on any
national securities exchange), the Fair Market Value shall be the closing price
per share of the Common Stock on NASDAQ on the date of grant, or (iii) is then
traded on the over-the-counter market (but not on a national securities exchange
or NASDAQ), the Fair Market Value shall be the average of the closing bid and
asked prices of the Common Stock as reported by the National Quotation Bureau,
Inc. or other entity then publishing bid and asked prices for the Common Stock
for the date of grant, or, if unavailable, then the last trading date on which
bid and asked quotations were published immediately preceding the date of grant.
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7. Exercise of Options
(a) Each Option granted under this Plan may be exercised only during the
continuance of the Optionee's employment or service with the Company and only as
to such percentage of the shares covered thereby during such periods as may be
determined at the time of grant by the Board or the Committee, as the case may
be, but if no such percentage is specified, then each Option granted under this
Plan may be exercised as to 50% of the shares covered thereby one year after the
date of grant and as to an additional 50% of the shares covered thereby two
years after the date of grant (so that such Option may be exercised as to 100%
of the shares covered thereby beginning two (2) years after the date of grant),
except in the case of death, retirement or termination of employment or service
as hereinafter provided. Subject to the foregoing limitations and the terms and
conditions of the option certificate, each Option shall be exercisable with
respect to such number of shares and during such periods as shall be fixed by
the Board or the Committee, as the case may be; provided, however, that if the
Board or the Committee grants an Option or Options exercisable in more than one
installment, and if the employment or service of an Optionee holding such Option
is terminated, the Option shall be exercisable as to such number of shares as to
which the Optionee had the right to exercise on the date of termination of
employment services.
(b) No shares of Common Stock shall be delivered pursuant to the exercise
of any Option, in whole or in part, until qualified for delivery under such laws
and regulations as may be deemed by the Board or the Committee, as the case may
be, to be applicable thereto and until payment in full of the exercise price
thereof is received by the Company.
(c) When exercising Options in whole or in part, Optionees may pay the
exercise price in cash, in shares of Common Stock or by means of any other
consideration acceptable to the Board or the Committee. For purposes of valuing
any share of Common Stock used to exercise any Option in whole or in part, such
shares shall be valued as provided in Section 6(b). Shares of Common Stock used
to exercise any Option granted hereunder shall be free and clear of all liens,
pledges, claims, encumbrances and restrictions of any kind or nature whatsoever,
other than restrictions imposed upon such shares pursuant to the provisions of
the Securities Act of 1933, as amended.
(d) No Optionee, or legal representative, legatee, or distributee of an
Optionee, shall be deemed to be a holder of any shares subject to any Option
granted hereunder unless and until the certificate or certificates therefor have
been issued and delivered.
8. Non-Transferability of Options
An Option granted under the Plan may not be transferred except by will or
the laws of descent and distribution, and during the lifetime of the person to
whom granted, may be exercised only by such person.
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9. Death, Retirement and Termination of Employment
Any Option, the period of which has not theretofore expired, shall
terminate at the time of death of the person to whom granted or at the time of
retirement or termination for any reason of such person's employment or service
with the Company, and no share of Common Stock may thereafter be delivered
pursuant to such Option, except that:
(a) upon retirement or termination of employment or service (other
than by death, disability, voluntary termination or termination for cause),
an Optionee may within two (2) months after the date of such retirement or
termination, purchase all or part of the shares with respect to which such
Optionee is entitled to exercise such Option, in accordance with the
provisions of Section 7 hereof, but in no event after the expiration of the
term of the Option ("cause" for purposes of this Plan shall mean (i)
willful disregard of duties, (ii) habitual absence from employment or
service, (ii) intoxication, or (iv) dishonesty);
(b) upon the "disability" of any Optionee, the Optionee may within six
(6) months after the date of such termination of employment, but in no
event after the expiration of the term of the Option, purchase all or part
of the shares with respect to which such Optionee is entitled to exercise
such Option, in accordance with the provisions of Section 7 hereof. For
purposes of the Plan, the term "disability" shall mean a physical or mental
disability as defined in Section 105 of the Internal Revenue Code of 1986,
as amended; and
(c) upon the death of any Optionee while in active employment or
service, the person or person to whom such Optionee's rights under the
Option are transferred by will or the law of descent and distribution may,
within six (6) months after the date of such Optionee's death, but in no
event after the expiration of the term of the Option, purchase all or any
part of the shares with respect to which the Option was exercisable on the
date of death in accordance with the provisions of Section 7 hereof.
10. Amendments and Discontinuance
The Board may amend, suspend, or discontinue the Plan, but may not, without
the prior approval of Medical Action's stockholders, make any amendments that
would (i) make any material change in the class of eligible persons as defined
in the Plan, (ii) increase the total number of shares for which Options may be
granted under the Plan, (iii) extend the term of the Plan or the maximum option
period, (iv) decrease the minimum option price, or (v) permit adjustments in the
number and option price of shares granted under the Plan except as permitted by
the provisions of Paragraph (c) of Section 3 above.
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EXHIBIT 4.2
MEDICAL ACTION INDUSTRIES INC. 1994 STOCK INCENTIVE PLAN
SECTION 1 DEFINITIONS
1.1 Definitions. Whenever used herein, the masculine pronoun shall be deemed to
include the feminine and the singular to include the plural, unless the context
clearly indicates otherwise, and the following capitalized words and phrases are
used herein within the meaning thereafter ascribed:
(a) "Board of Directors" means the board of directors of the Company.
(b) "Change in Control" means the first to occur of the following events:
(i) any person (as defined in Section 3(a)(9) of the Exchange Act and
as used in Sections 13(d) and 14(d) thereof), excluding the Company, any
Subsidiary and any employee benefit plan sponsored or maintained by the
Company or any Subsidiary (including any trustee of such plan acting as
trustee), but including 'group' as defined in Section 13(d)(3) of the
Exchange Act (a "Person"), becomes the beneficial owner of shares of the
Company having at least twenty (20%) percent of the total number of votes
that may be cast for the election of directors of the Company (the "Voting
Shares"); provided that no Change of Control will occur as a result of an
acquisition of stock by the Company which increases, proportionately, the
stock representing the voting power of the Company, and provided further
that if such person or group acquires stock representing more than twenty
percent (20%) of the voting power of the Company by reason of share
purchases by the Company, and after such share purchases by the Company
acquires any additional shares representing the voting power of the
Company, then a Change in Control shall occur;
(ii) the shareholders of the Company shall approve any merger or other
business combination of the Company, sale of the Company's assets or
combination of the foregoing transactions (a "Transaction") other than a
Transaction involving only the Company and one or more of its Subsidiaries,
or a Transaction immediately following which the shareholders of the
Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity excluding for this purpose any
shareholder owning directly or indirectly more than ten percent (10%) of
the shares of the other company involved in the merger; or
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(iii) within any 24-month period beginning on or after June 30, 1994,
who were directors of the Company immediately before the beginning of such
period (the "Incumbent Directors") shall cease (for any reason other than
death) to constitute at least a majority of the Board of Directors or the
board of directors of any successor to the Company, provided that any
director who was not a director as of July 1, 1994 shall be deemed to be an
Incumbent Director if such director was elected to the Board of Directors
by, or on the recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as Incumbent Directors
either actually or by prior operation of this clause (iii); and provided
further that any director elected to the Board of Directors to avoid or
settle a threatened or actual proxy contest shall in no event be deemed to
be an Incumbent Director.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the committee appointed by the Board of Directors to
administer the Plan. The Committee shall consist of at least two members of the
Board of Directors, each of whom shall be a "disinterested person", as defined
in Rule 16b-3 as promulgated under the Exchange Act.
(e) "Company" means Medical Action Industries Inc., a Delaware corporation.
(f) "Disability" has the same meaning as provided in the long-term
disability plan or policy maintained or, if applicable, most recently
maintained, by the Company or, if applicable, any affiliate of the Company for
the Participant. If no long-term disability plan or policy was ever maintained
on behalf of the Participant or, if the determination of Disability relates to
an Incentive Stock Option, disability shall mean the condition described in Code
Section 22(e)(3), as amended from time to time. In the event of a dispute, the
determination of Disability shall be made by the Committee and shall be
supported by advice of a physician competent in the area to which such
Disability relates.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
(h) "Fair Market Value" with regard to a date means the closing price at
which Stock shall have been sold on the last trading date prior to that date as
reported by the National Association of Securities Dealers Automated Quotation
System (or, if applicable, as reported by a national securities exchange
selected by the Committee on which the shares of Stock are then actively traded)
and published in The Wall Street Journal; provided that, for purposes of
granting awards other than Incentive Stock Options, Fair Market Value of the
shares of Stock may be determined by the Committee by reference to the average
market value determined over a period certain or as of specified dates, to a
tender offer price for the shares of Stock (if settlement of an award is
triggered by such an event) or to any other reasonable measure of fair market
value.
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(i) "Option" means a non-qualified stock option or an incentive stock
option.
(j) "Over 10% Owner" means an individual who at the time an Incentive Stock
Option is granted owns Stock possessing more than 10% of the total combined
voting power of the Company or one of its Subsidiaries, determined by applying
the attribution rules of Code Section 424(d).
(k) "Participant" means an individual who receives a Stock Incentive
hereunder.
(l) "Plan" means the Medical Action Industries Inc 1994 Stock Incentive
Plan.
(m) "Stock" means the Company's common stock, $.001 par value.
(n) "Stock Incentive Agreement" means an agreement between the Company and
a Participant or other documentation evidencing an award of a Stock Incentive.
(o) "Stock Incentive Program" means a written program established by the
Committee, pursuant to which Stock Incentives are awarded under the Plan under
uniform terms, conditions and restrictions set forth in such written program.
(p) "Stock Incentives" means, collectively, Incentive Stock Options,
Non-Qualified Stock Options and Stock Awards.
(q) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, with respect to
Incentive Stock Options, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
<PAGE>
SECTION 2 THE STOCK INCENTIVE PLAN
2.1 Purpose of the Plan. The Plan is intended to (a) provide incentive to
officers and key employees of the Company and its affiliates to stimulate their
efforts toward the continued success of the Company and to operate and manage
the business in a manner that will provide for the long-term growth and
profitability of the Company; (b) encourage stock ownership by officers and key
employees by providing them with a means to acquire a proprietary interest in
the Company, acquire shares of Stock, or to receive compensation which is based
upon appreciation in the value of Stock; and (c) provide a means of obtaining,
rewarding and retaining key personnel.
2.2 Stock Subject to the Plan. Subject to adjustment in accordance with Section
5.2, 500,000 shares of Stock (the "Maximum Plan Shares") are hereby reserved
exclusively for issuance pursuant to Stock Incentives. At no time shall the
Company have outstanding Stock Incentives in excess of the Maximum Plan shares;
for this purpose, the outstanding Stock Incentives and shares of Stock issued in
respect of Stock Incentives shall be computed in accordance wit Rule 16b-3(a)(1)
as promulgated under the Exchange Act. To the extent permitted by Rule
16b-3(a)(1) as promulgated under the Exchange Act, the shares of Stock
attributable to the nonvested, unpaid, unexercised, unconverted or otherwise
unsettled portion of any Stock Incentive that is forfeited or cancelled or
expires or terminates for any reason without becoming vested, paid, exercised,
converted or otherwise settled in full shall again be available for purposes of
the Plan.
2.3 Administration of the Plan. The Plan shall be administered by the Committee.
The Committee shall have full authority in its discretion to determine the
officers and key employees of the Company or its affiliates to whom Stock
Incentives shall be granted and the terms and provisions of Stock Incentives
subject to the Plan; provided, however, that any award of a Stock Incentive to
any employee who is also a member of the Board of Directors shall be approved by
the majority of the "disinterested persons", as defined in Rule 16b-3 as
promulgated under the Exchange Act, then serving as members of the Board of
Directors, upon the recommendation of the Committee. Subject to the provisions
of the Plan, the Committee shall have full and conclusive authority to interpret
the Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the respective Stock Incentive
Agreements and to make all other determinations necessary or advisable for the
proper administration of the Plan. The Committee's determinations under the Plan
need not be uniform and may be made by it selectively among persons who receive,
or are eligible to receive, awards under the Plan (whether or not such persons
are similarly situated). The Committee's decisions shall be final and binding on
all Participants.
<PAGE>
2.4 Eligibility and Limits. Stock Incentives may be granted only to officers and
key employees of the Company, or any affiliate of the Company; provided,
however, that directors who serve on the Committee shall not be eligible to
receive awards that are subject to Section 16 of the Exchange Act while they are
members of the Committee and that an incentive stock option may only be granted
to an employee of the Company or any Subsidiary. In the case of incentive stock
options, the aggregate Fair Market Value (determined as at the date an incentive
stock option is granted) of stock with respect to which stock options intended
to meet the requirements of Code Section 422 become exercisable for the first
time by an indiviudal during any calendar year under all plans of the Company
and its Subsidiaries shall not exceed $100,000; provided further, that if the
limitation is exceeded, the incentive stock option(s) which cause the limitation
to be exceeded shall be treated as non-qualified stock option(s).
SECTION 3 TERMS OF STOCK INCENTIVES
3.1 Terms and Conditions of All Stock Incentives.
(a) The number of shares of Stock as to which a Stock Incentive shall be
granted shall be determined by the Committee in its sole discretion, subject to
the provisions of Section 2.2 as to the total number of shares available for
grants under the Plan.
(b) Each Stock Incentive shall either be evidenced by a Stock Incentive
Agreement in such form and containing such terms, conditions and restrictions as
the Committee may determine to be appropriate, or be made subject to the terms
of a Stock Incentive Program, containing such terms, conditions and restrictions
as the Committee may determine to be appropriate. Each Stock Incentive Agreement
or Stock Incentive Program shall be subject to the terms of the Plan and any
provisions contained in the Stock Incentive Agreement or Stock Incentive Program
that are inconsistent with the Plan shall be null and void.
(c) The date a Stock Incentive is granted shall be date on which the
Committee has approved the terms and conditions of the Stock Incentive and has
determined the recipient of the Stock Incentive and the number of shares covered
by the Stock Incentive.
(d) Each Stock Incentive Agreement or Stock Incentive Program shall provide
that, in the event of a Change in Control, the Stock Incentive shall be cashed
out on the basis of any price not greater than the highest price paid for a
share of Stock in any transaction reported by the National Association of
Securities Dealers Automated Quotation System or any national securities
exchange selected by the Committee on which the shares of Stock are then
actively traded during a specified period immediately preceding or ending on the
date of the Change in Control or offered for a share of Stock in any tender
offer occurring during a specified period immediately preceding or ending on the
date the tender offer commenced; provided that, in no case shall any such
specified period exceed one (1) year (the "Change in Control Price"). For
purposes of this Subsection the cash-out of a Stock Incentive shall be
determined as follows:
<PAGE>
(i) Options shall be cashed out on the basis of the excess, if any, of
the Change in Control Price (but not more than the Fair Market Value of the
Stock on the date of the cash-out in the case of Incentive Stock Options)
over the Exercise Price with or without regard to whether the Option may
otherwise be exercisable only in part; and
(ii) Stock Awards shall be cashed out in an amount equal to the Change
in Control Price with or without regard to any conditions or restrictions
otherwise applicable to any such Stock Incentive.
(e) Any Stock Incentive may be granted in connection with all or any
portion of a previously or contemporaneously granted Stock Incentive. Exercise
or vesting of a Stock Incentive granted in connection with another Stock
Incentive may result in a pro rata surrender or cancellation of any related
Stock Incentive, as specified in the applicable Stock Incentive Agreement or
Stock Incentive Program.
(f) Stock Incentives shall not be transferable or assignable except by will
or by the laws of descent and distribution and shall be exercisable, during the
Participant's lifetime, only by the Participant, or in the event of the
Disability of the Participant, by the legal representative of the Participant.
3.2 Terms and Conditions of Options. Each Option granted under the Plan shall be
evidenced by a Stock Incentive Agreement. At the time any Option is granted, the
Committee shall determine whether the Option is to be an incentive stock option
described in Code Section 422 or a non-qualified stock option, and the Option
shall be clearly identified as to its status as an incentive stock option or a
non-qualified stock option. An incentive stock option may only be granted within
ten (10) years from the earlier of the date the Plan is adopted or approved by
the Company's stockholders.
(a) Option Price. Subject to adjustment in accordance with Section 5.2 and
the other provisions of this Section 3.2, the exercise price (the "Exercise
Price") per share of Stock purchasable under any Option shall be as set forth in
the applicable Stock Incentive Agreement, but in no event shall it be less than
the Fair Market Value on the date the Option is granted. With respect to each
grant of an incentive stock option to a Participant who is an Over 10% Owner,
the Exercise Price shall not be less than 110% of the Fair Market Value on the
date the Option is granted. The Exercise Price of an Option may not be amended
or modified after the grant of the Option, and an Option may not be surrendered
in consideration of or exchanged for a grant of a new Option having an Exercise
Price below that of an Option which was surrendered or exchanged.
<PAGE>
(b) Option Term. Any incentive stock option granted to a Participant who is
not an Over 10% Owner shall not be exercisable after the expiration of ten (10)
years after the date the Option is granted. Any incentive stock option granted
to an Over 10% Owner shall not be exercisable after the expiration of five (5)
years after the date the Option is granted. The term of any non-qualified stock
option plan shall be as specified in the applicable Stock Incentive Agreement.
(c) Payment. Payment for all shares of Stock purchased pursuant to exercise
of an Option shall be made in any form or manner authorized by the Committee in
the Stock Incentive Agreement or by amendment thereto, including, but not
limited to, cash or, if the Stock Incentive Agreement provides, (i) by delivery
to the Company of a number of shares of Stock which have been owned by the
holder for at least six (6) months prior to the date of exercising having an
aggregate Fair Market Value of not less than the product of the Exercise Price
multiplied by the number of shares the Participant intends to purchase upon
exercise of the Option on the date of delivery; (ii) in a cashless exercise
through a broker; or (iii) by having a number of shares of Stock withheld, the
Fair Market Value of which as of the date of exercise is sufficient to satisfy
the Exercise Price. In its discretion, the Committee also may authorize (at the
time an Option is granted or thereafter) Company financing to assist the
Participant as to payment of the Exercise Price on such terms as may be offered
by the Committee in its discretion. Any such financing shall require the payment
by the Participant of interest on the amount financed at a rate not less than
the "applicable federal rate" under the Code. Payment shall be made at the time
that the Option or any part thereof is exercised, and no shares shall be issued
or delivered upon exercise of an Option until full payment has been made by the
Participant. The holder of an Option as such shall have none of the rights of a
stockholder.
(d) Conditions to the Exercise of an Option. Each Option granted under the
Plan shall be exercisable by whom, at such time or times, or upon the occurrence
of such event or events, and in such amounts, as the Committee shall specify in
the Stock Incentive Agreement; provided, however, that subsequent to the grant
of an Option, the Committee, at any time before complete termination of such
Option, may accelerate the time or times at which such Option may be exercised
in whole or in part, including, without limitation, upon a Change in Control and
may permit the Participant or any other designated person to exercise the
Option, or any portion thereof, for all or part of the remaining Option term,
notwithstanding any provision of the Stock Incentive Agreement to the contrary.
<PAGE>
(e) Termination of Incentive Stock Option. With respect to an incentive
stock option, in the event of termination of employment of a Participant, the
Option or portion thereof held by the Participant which is unexercised shall
expire, terminate, and become unexercisable no later than the expiration of
three (3) months after the date of termination of employment; provided, however,
that in the case of a holder whose termination of employment is due to death or
Disability, one (1) year shall be substituted for such three (3) month period.
For purposes of this Subsection (e), termination of employment of the
Participant shall not be deemed to have occurred if the Participant is employed
by another corporation (or a parent or subsidiary corporation of such other
corporation) which has assumed the incentive stock option of the Participant in
a transaction to which Code Section 424(a) is applicable.
(f) Special Provisions for Certain Substitute Options. Notwithstanding
anything to the contrary in this Section 3.2, any Option issued in substitution
for an option previously issued by another entity, which substitution occurs in
connection with a transaction to which Code Section 424(a) is applicable, may
provide for an exercise price computed in accordance with such Code Section and
the regulations thereunder and may contain such other terms and conditions as
the Committee may prescribe to cause such substitute Option to contain as nearly
as possible the same terms and conditions (including the applicable vesting and
termination provisions) as those contained in the previously issued option being
replaced thereby.
3.3 Terms and Conditions of Stock Awards. The number of shares of Stock subject
to a Stock Award and restrictions or conditions on such shares, if any, shall be
as the Committee determines, and the certificate for such shares shall bear
evidence of any restrictions or conditions. Subsequent to the date of the grant
of the Stock Award, the Committee shall have the power to permit, in its
discretion, an acceleration of the expiration of an applicable restriction
period with respect to any part or all of the shares awarded to a Participant.
The Committee may require a cash payment from the Participant in an amount no
greater than the aggregate Fair Market Value of the shares of Stock awarded
determined at the date of grant in exchange for the grant of a Stock Award or
may grant a Stock Award without the requirement of a cash payment. In the event
that shares of Stock subject to Stock Awards are forfeited by a Participant,
such shares of Stock may again be subject to a new Stock Award under the Plan.
3.4 Treatment of Awards Upon Termination of Employment. Except as otherwise
provided by Plan Section 3.2(e), any award under this Plan to a Participant who
has terminated employment may be cancelled, accelerated, paid or continued, as
provided in the applicable Stock Incentive Agreement or Stock Incentive Program,
or, in the absence of such provision, as the Committee may determine. The
portion of any award exercisable in the event of continuation or the amount of
any payment due under a continued award may be adjusted by the Committee to
reflect the Participant's period of service from the date of grant through the
date of the Participant's termination of employment or such other factors as the
Committee determines are relevant to its decision to continue the award.
<PAGE>
SECTION 4 RESTRICTIONS ON STOCK
4.1 Escrow of Shares. Any certificates representing the shares of Stock issued
under the Plan shall be issued in the Participant's name, but, if the applicable
Stock Incentive Agreement or Stock Incentive Program so provides, the shares of
Stock shall be held by a custodian designated by the Committee (the
"Custodian"). Each applicable Stock Incentive Agreement or Stock Incentive
Program providing for transfer of shares of Stock to the Custodian shall appoint
the Custodian as the attorney-in-fact for the Participant for the term specified
in the applicable Stock Incentive Agreement or Stock Incentive Program, with
full power and authority in the Participant's name, place and stead to transfer,
assign and convey to the Company any shares of Stock held by the Custodian for
such Participant, if the Participant forfeits the shares under the terms of the
applicable Stock Incentive Agreement or Stock Incentive Program. During the
period that the Custodian holds the shares subject to this Section, the
Participant shall be entitled to all rights, except as provided in the
applicable Stock Incentive Agreement or Stock Incentive Program, applicable to
shares of Stock not so held. Any dividends declared on shares of Stock held by
the Custodian shall, as the Committee may provide in the applicable Stock
Incentive Agreement or Stock Incentive Program, be paid directly to the
Participant or, in the alternative, be retained by the Custodian or by the
Company until the expiration of the term specified in the applicable Stock
Incentive Agreement or Stock Incentive Program and shall then be delivered,
together with any proceeds, with the shares of Stock to the Participant or to
the Company, as applicable.
4.2 Restrictions on Transfer. The Participant shall not have the right to make
or permit to exist any disposition of the shares of Stock issued pursuant to the
Plan except as provided in the Plan or the applicable Stock Incentive Agreement
or Stock Incentive Program. Any disposition of the shares of Stock issued under
the Plan by the Participant not made in accordance with the Plan or the
applicable Stock Incentive Agreement or Stock Incentive Program shall be void.
The Company shall not recognize, or have the duty to recognize, any disposition
not made in accordance with the Plan and the applicable Stock Incentive
Agreement or Stock Incentive Program, and the shares so transferred shall
continue to be bound by the Plan and the applicable Stock Incentive Agreement or
Stock Incentive Program.
<PAGE>
SECTION 5 GENERAL PROVISIONS
5.1 Withholding. The Company shall deduct from all cash distributions under the
Plan any taxes required to be withheld by federal, state or local government.
Whenever the Company proposes or is required to issue or transfer shares of
Stock under the Plan or upon the vesting of any Stock Award, the Company shall
have the right to require the recipient to remit to the Company an amount
sufficient to satisfy any federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such shares or the
vesting of such Stock Award. A Participant may pay the withholding tax in cash,
or, if the applicable Stock Incentive Agreement or Stock Incentive Program
provides, a Participant may elect to have the number of shares of Stock he is to
receive reduced by, or with respect to a Stock Award, tender back to the
Company, the smallest number of whole shares of Stock which, when multiplied by
the Fair Market Value of the shares of Stock determined as of the Tax Date
(defined below), is sufficient to satisfy federal, state and local, if any,
withholding taxes arising from exercise or payment of a Stock Incentive (a
"Withholding Election"). A Participant may make a Withholding Election only if
both of the following conditions are met:
(a) The Withholding Election must be made on or prior to the date on which
the amount of tax required to be withheld is determined (the "Tax Date") by
executing and delivering to the Company a properly completed notice of
Withholding Election as prescribed by the Committee; and
(b) Any Withholding Election made will be irrevocable except on six months
advance written notice delivered to the Company; however, the Committee may in
its sole discretion disapprove and give no effect to the Withholding Election.
5.2 Changes in Capitalization; Merger; Liquidation.
(a) The number of shares of Stock reserved for the grant of Options and
Stock Awards; the number of shares of Stock reserved for issuance upon the
exercise or payment, as applicable, of each outstanding Option, and upon vesting
or grant, as applicable, of each Stock Award; the Exercise Price of each
outstanding Option shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Stock resulting from a subdivision or
combination of shares or the payment of a stock dividend in shares of Stock to
holders of outstanding shares of Stock or any other increase or decrease in the
number of shares of Stock outstanding effected without receipt of consideration
by the Company.
<PAGE>
(b) In the event of a merger, consolidation or other reorganization of the
Company or tender offer for shares of Stock, the Committee may make such
adjustments with respect to awards and take such other action as it deems
necessary or appropriate to reflect such merger, consolidation, reorganization
or tender offer, including, without limitation, the substitution of new awards,
or the adjustment of outstanding awards, the acceleration of awards or the
removal of restrictions on outstanding awards. Any adjustment pursuant to this
Section 5.2 may provide, in the Committee's discretion, for the elimination
without payment therefor of any fractional shares that might otherwise become
subject to any Stock Incentive, but shall not otherwise diminish the then value
of the Stock Incentive.
(c) The existence of the Plan and the Stock Incentives granted pursuant to
the Plan shall not affect in any way the right or power of the Company to make
or authorize any adjustment, reclassification, reorganization or other change in
its capital or business structure, any merger or consolidation of the Company,
any issue of debt or equity securities having preference or priorities as to the
Stock or the rights thereof, the dissolution or liquidation of the Company, any
sale or transfer of all or any part of its business or assets, or any other
corporate act or proceeding.
5.3 Cash Awards. The Committee may, at any time and in its discretion, grant to
any holder of a Stock Incentive the right to receive, at such times and in such
amounts as determined by the Committee in its discretion, a cash amount which is
intended to reimburse such person for all or a portion of the federal, state and
local income taxes imposed upon such person as a consequence of the receipt of
the Stock Incentive or the exercise of rights thereunder.
5.4 Compliance with Code. All incentive stock options to be granted hereunder
are intended to comply with Code Section 422, and all provisions of the Plan and
all incentive stock options granted hereunder shall be construed in such manner
as to effectuate that intent.
5.5 Right to Terminate Employment. Nothing in the Plan or in any Stock Incentive
shall confer upon any Participant the right to continue as an employee or
officer of the Company or any of its affiliates or affect the right of the
Company or any of its affiliates to terminate the Participant's employment at
any time.
5.6 Non-alienation of Benefits. Other than as specifically provided with regard
to the death of a Participant, no benefit under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge; and any attempt to do so shall be void. No such benefit
shall, prior to receipt by the Participant, be in any manner liable for or
subject to the debts, contracts, liabilities, engagements or torts of the
Participant.
<PAGE>
5.7 Listing and Legal Compliance. The Committee may suspend the exercise or
payment of any Stock Incentive so long as it determines that securities exchange
listing or registration or qualification under any securities laws is required
in connection therewith and has not been completed on terms acceptable to the
Committee.
5.8 Termination and Amendment of the Plan. The Board of Directors at any time
may amend or terminate the Plan without stockholder approval; provided, however,
that the Board of Directors may condition any amendment on the approval of
stockholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other applicable laws. No such termination or
amendment without the consent of the holder of a Stock Incentive shall adversely
affect the rights of the Participant under such Stock Incentive.
5.9 Stockholder Approval. The Plan shall be submitted to the stockholders of the
Company for their approval within twelve (12) months before or after the
adoption of the Plan by the Board of Directors of the Company. If such approval
is not obtained, any Stock Incentive granted hereunder shall be void.
5.10 Choice of Law. The laws of the State of Delaware shall govern the Plan, to
the extent not preempted by federal law.
5.11 Effective Date of Plan. The Plan shall become effective upon the date the
Plan is approved by the stockholders of the Company.
<PAGE>
EXHIBIT 5
October 29, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Medical Action Industries Inc.
Registration Statement
Gentlemen:
Reference is made to the filing by Medial Action Industries Inc. (the
"Corporation") of a Registration Statement on Form S-8 with the Securities and
Exchange Commission pursuant to the provisions of the Securities Act of 1933, as
amended, covering the registration of 1,000,000 shares of the Corporation's
Common Stock, $.001 par value per share, in connection with the Corporation's
1994 Stock Incentive Plan and 1989 Non-Qualified Stock Option Plan, as amended.
As General Counsel for the Corporation, I have examined its corporate
records, including its Certificate of Incorporation, By-Laws, its corporate
minutes, the form of its Common Stock certificate, its 1994 Stock Incentive Plan
and 1989 Non-Qualified Stock Option Plan, as amended, related documents under
such plans, and such other documents as I have deemed necessary or relevant
under the circumstances.
Based upon my examination, I am of the opinion that:
1. The Corporation is duly organized and validly existing under the laws of
the State of Delaware and all of its wholly-owned subsidiaries are duly
organized and validly existing under the laws of the respective states in which
they are incorporated.
<PAGE>
Securities & Exchange Commission
Re: Medical Action Industries Inc.
October 29, 1996
Page -2-
2. There have been reserved for issuance by the Board of Directors of the
Corporation 1,000,000 shares of its Common Stock, $.001 par value per share. The
shares of the Corporation's Common Stock, when issued under the 1994 Stock
Incentive Plan and 1989 Non-Qualified Stock Option Plan, as amended, will be
validly authorized, legally issued, fully paid and non-assessable.
I hereby consent to be named in the Registration Statement as General
Counsel of the Corporation, and I hereby consent to the filing of this opinion
as Exhibit 5 to the Registration Statement.
Very truly yours,
Richard G. Satin
Vice President - Operations
and General Counsel
<PAGE>
EXHIBIT 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the registration of 500,000 shares of Common Stock pursuant
to the Medical Action Industries Inc. 1989 Non-Qualified Stock Option Plan, as
amended, and 500,000 shares of Common Stock pursuant to the Medical Action
Industries Inc. 1994 Stock Incentive Plan of our report dated May 24, 1996, with
respect to the consolidated financial statements of Medical Action Industries
Inc. and subsidiary incorporated by reference in its Annual Report (Form 10-K)
for the year ended March 31, 1996, and the related financial statement schedule
included therein, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Melville, New York
October 29, 1996
