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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: January 30, 1996
(Date of earliest event reported)
MEDICAL ACTION INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
Delaware 0-13251 11-2421849
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
150 Motor Parkway, Hauppauge, New York 11788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
including area code (516) 231-4600
(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets.
On January 30, 1996, Registrant's wholly-owned
subsidiary, SBW Acquisition Corp. ("Acquisition"), pursuant to a
Purchase Agreement among Lawson Mardon Medical Products, Inc.
("Lawson Mardon" or "SBW"), Lawson Mardon Medical Products, a
trading division of Lawson Mardon Packaging UK Ltd. ("LM
Whitehaven"), Registrant and Acquisition, acquired certain assets
relating to the sterilization packaging, monitoring and
contamination control products business of Lawson Mardon.
The purchase price for the acquired assets consisted of
$25,000 in cash (which was paid at closing) and a Promissory Note
in the amount of $855,793, which is payable in four (4) equal
monthly installments commencing on March 1, 1996, subject, however,
to reduction depending on the actual collections by the Registrant
of the purchased accounts receivable. In addition, Registrant
agreed to purchase approximately $527,000 of SBW inventory on a
consignment basis through August 1, 1996 and is required to
purchase substantially all remaining unsold inventory at that time.
The assets acquired included customer lists, accounts
receivable, inventory, office equipment and furniture used to
distribute Lawson Mardon's products, including heat seal pouches,
multi-pouch reels, heat seal reels, self-seal pouches, gussetted
heat seal pouches, sterilization monitors, autoclave indicator
tape, sterility maintenance covers - self seal, sterility
maintenance covers - heat seal, autoclavable bags for steam
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sterilization with indicator, bio hazard red collection bags and
laboratory transport bags (hereinafter the "Products").
The Products were manufactured for Lawson Mardon by an
affiliated corporation in the United Kingdom, Lawson Mardon
Packaging UK Ltd., which has agreed, pursuant to a separate Supply
Agreement, to provide Registrant finished goods for a one year
period commencing on the date of closing and thereafter for an
additional two year period the raw materials that are required to
allow Registrant to manufacture the Products in its facility in
Asheville, North Carolina.
None of the office equipment acquired by Acquisition is
utilized in the manufacture of the Products or constitutes plant
equipment.
The Registrant utilized the funds available under its Third
Amended and Restated Revolving Credit Note and Agreement (the "Loan
Agreement") with European American Bank to satisfy the cash portion
of the purchase price. The funds provided under the Loan Agreement
were made in the ordinary course of business.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
(a) Financial Statements of Business Acquired.
In accordance herewith, the Registrant is not
required to file the financial statements of the business acquired.
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(b) Pro Forma Financial Statements.
In accordance herewith, the Registrant is not
required to furnish pro forma financial information relative to the
acquired business.
(c) Exhibits.
(2) Purchase Agreement dated as of January 30, 1996
among Lawson Mardon Medical Products, Inc., Lawson Mardon Medical
Products, a trading division of Lawson Mardon Packaging UK Ltd.,
Registrant and SBW Acquisition Corp.
(10) Supply Agreement dated January 30, 1996 between
Lawson Mardon Medical Products, a trading division of Lawson Mardon
Packaging UK Ltd. and Registrant.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MEDICAL ACTION INDUSTRIES INC.
By: /s/ Richard G. Satin
-------------------------------
Richard G. Satin, Vice President
(Principal Accounting Officer)
Dated: February 6, 1996
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (hereinafter the "Agreement") is made,
executed and entered into on this 30th day of January, 1996 by and
between LAWSON MARDON MEDICAL PRODUCTS, INC., a Texas corporation
(hereinafter "Lawson Mardon"), LAWSON MARDON MEDICAL PRODUCTS, a
trading division of LAWSON MARDON PACKAGING UK LTD., a company
registered in England (hereinafter "LM Whitehaven"), SBW
ACQUISITION CORP., a Delaware corporation (hereinafter
"Acquisition") and MEDICAL ACTION INDUSTRIES INC., a Delaware
corporation (hereinafter "Medical Action").
W I T N E S S E T H :
WHEREAS, Lawson Mardon is engaged in the business of marketing
a variety of sterilization packaging, monitoring and contamination
control products described in Exhibit "A" attached hereto for sale
in North America (hereinafter the "Products"); and
WHEREAS, Acquisition wishes to purchase or acquire from Lawson
Mardon, and Lawson Mardon wishes to sell, assign and transfer to
Acquisition, certain selected assets and properties held in
connection with, necessary for, or material to the business and
operations of Lawson Mardon, upon the basis of representations and
warranties of Lawson Mardon, subject to the exceptions set forth in
the disclosure schedule (hereinafter the "Schedule") ; and
EXHIBIT 2
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WHEREAS, concurrently with the execution and delivery of this
Agreement, LM Whitehaven and Medical Action will enter into a
certain agreement providing for the purchase of the Products and
raw materials for a specified period after closing, and for the
provision of certain transitional services;
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants, agreements and conditions
contained herein, and of the mutual benefits to be derived hereby,
the parties hereto agree as follows:
1. Transfer of Lawson Mardon.
(a) Lawson Mardon shall transfer and deliver to
Acquisition and Acquisition shall receive from Lawson Mardon, free
from all liabilities and encumbrances (except as to those assigned
to and assumed by Acquisition as specified in Exhibit "C" attached
hereto), certain of Lawson Mardon's assets, owned and operated by
Lawson Mardon (hereinafter the "Assets") at the business premises
located at 9075 Knight Road, Houston, Texas 77054 (hereinafter the
"Premises"), more particularly described as follows:
(i) All know-how, technology, formulae, trade
secrets, processes and confidential
information regarding manufacture, production,
quality control and government registrations
and documentations of those certain Products,
and patent documentation for the Products; and
(ii) All related marketing materials and brochures,
advertising rights and customer lists;
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(iii) All fixtures, furniture, business
equipment and all other tangible personal
property of Lawson Mardon used to
distribute the Products and product lists
sold herein;
(iv) Lawson Mardon's rights under or to all
contracts, licenses, governmental permits,
trademarks, copyrights, patents and security
deposits, including all deposits on the
Premises, if any and if transferable, made by
or granted to Lawson Mardon in connection with
the Products; and
(v) Lawson Mardon's rights to the name "SBW" in
North America for a period of twelve (12)
months, and all other trade names which it
owns or used in connection with the business
to the extent provided in a separate License
Agreement dated as of the closing between LM
Whitehaven and Medical Action;
(vi) An assignment of Lawson Mardon's rights, title
and interest as lessee under the lease of the
Premises. Acquisition agrees to assume and
pay said lease. A copy of said lease is
attached hereto as Exhibit "B".
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(b) Excluded Assets. Lawson Mardon assets not subject
to transfer under Paragraph 1(a) above including the following:
(i) Lawson Mardon's corporate records, minute
books, stock transfer records, etc;
(ii) Rights and interests obtained pursuant to the
terms of this Agreement;
(iii) All cash, certificates of deposit and
marketable securities as of the date of
closing; and
(iv) Any and all rights, title and interest held in
connection with the operations and business of
Sparco.
2. Closing. The closing of the sale and purchase of the
Assets (the "Closing") shall take place at 10:00 a.m. local time on
the 30th day of January, 1996 at the offices of Medical Action
Industries Inc., 150 Motor Parkway, Hauppauge, New York 11788 or
such other time and place upon which the parties may agree. The
day on which the Closing actually occurs in herein sometimes
referred to as the "Closing Date".
At the time of Closing, upon delivery by Acquisition of the
consideration as described in paragraph 3 hereof, Lawson Mardon
shall execute and deliver to Acquisition a Bill of Sale and such
other instruments as may be necessary to transfer to Acquisition
all of the Assets. Lawson Mardon shall also deliver possession of
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the Premises. The Bill of Sale and other instruments will contain
the usual warranties and affidavits of title and will effectively
transfer to Acquisition full title to the Assets, free and clear of
all liens, security interests and encumbrances (except to the
extent set forth in Exhibit "C").
3. Purchase Price. On the terms and subject to the
conditions set forth in this Agreement, Medical Action agrees to
pay or cause to be paid to Lawson Mardon an aggregate of U.S.
$880,793.44 (the "Purchase Price"). The Purchase Price shall be
payable at the Closing, as follows:
(a) Twenty Five Thousand ($25,000.00) Dollars by way of
certified or cashier's check payable to Lawson Mardon's order;
and
(b) By the execution and delivery to Lawson Mardon of a
Non-Negotiable Promissory Note (the "Promissory Note") of
Medical Action in the principal amount of $855,793.44 together
with interest thereon at the rate set forth in the Wall Street
Journal as the prime rate. Such Promissory Note shall be
substantially in the form of Exhibit "D" annexed hereto and
shall provide for payment in four (4) equal monthly
installments of $213,948.36 each, commencing thirty (30) days
after Closing. However, such installments due under the
Promissory Note shall be reduced to the extent that any (i)
accounts receivable relating to the Products, shipped prior to
the Closing Date which remain outstanding for more than one
hundred twenty (120) days from the date of invoice net of
unapplied credits ("Expiration Date") or (ii) such account
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receivable is reduced as the result of validly issued credits,
tracing fees, rebates or authorized returns consistent with
the past practices of Lawson Mardon. In the event Medical
Action receives payments on account of such sales after the
Expiration Date, it shall hold such payments in trust and
promptly forward such payments to Lawson Mardon. All accounts
receivable relating to Products shipped by Medical Action on
or after the Closing Date shall belong to Medical Action.
3.1. Excluded Liabilities. Notwithstanding any provision
hereof or any schedule or exhibit hereto and regardless of any
disclosure to Acquisition or Medical Action, Acquisition and
Medical Action shall not assume any liabilities, obligations or
commitments of Lawson Mardon (other than those assigned and assumed
by Acquisition on Exhibit "C") relating to or arising out of the
operation of the business or the ownership of the Assets prior to
the Closing.
4. Consignment.
4.1 On the Closing Date, Lawson Mardon shall consign and
deliver to Acquisition the "Consigned Inventory", as hereinafter
defined.
4.2 For the purposes of this Agreement, "Inventory"
shall mean the inventory of Lawson Mardon comprised of the
following:
(a) heat seal pouches, multi-pouch reels, heat seal
reels, self-seal pouches, gussetted heat seal pouches,
sterilization monitors, autoclave indicator tape steam, sterility
maintenance covers - self-seal, sterilization maintenance covers -
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heat seal, autoclavable bags for steam sterilization with indicator
bio hazard red collection bags, laboratory transport bags,
sterilization integrators and indicators and unassembled components
and raw materials used for the assembly or manufacture thereof.
For the purposes of this Agreement, "Consigned Inventory"
shall mean the Inventory which is accepted by and loaded onto
Medical Action trucks as hereinafter described.
4.3 On the Closing Date, or as soon thereafter as
practicable, Lawson Mardon shall assemble the Inventory at the
Premises for loading onto Medical Action's trucks. The parties
shall physically count the Inventory as it is accepted by and
loaded onto Medical Action's trucks and prepare and initial a
schedule (the "Inventory Schedule") of the Inventory so delivered
to Medical Action, with a specific description of the type and
quantities of each type of the Inventory loaded onto Medical
Action's trucks; provided, however, that Medical Action shall have
the right to reject such of the Inventory which it, in its
reasonable discretion, feels is defective, obsolete or unsalable.
Inventory accepted by Medical Action and loaded onto its trucks as
aforesaid shall constitute the Consigned Inventory. Medical Action
shall bear all risk of loss for the Inventory once it is accepted
and loaded onto Medical Action's trucks.
5. Terms of Consignment.
5.1 All Consigned Inventory shall be held by Medical
Action at its premises and at no other place without Lawson
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Mardon's prior written approval, which shall not be unreasonably
withheld. Medical Action shall not charge Lawson Mardon for
storage of the Consigned Inventory.
5.2 Medical Action agrees that:
(a) Lawson Mardon shall retain title to the
Consigned Inventory until sold or paid for by Medical Action;
(b) Medical Action will be liable and responsible
for all loss or damage to the Consigned Inventory and shall insure
the same against fire and extended loss in an amount at least equal
to the Consigned Inventory price to be paid by Medical Action to
Lawson Mardon;
(c) Lawson Mardon shall not be liable for payment
of local, state or county taxes assessed or levied on the Consigned
Inventory held in Medical Action's possession;
(d) Medical Action shall have sole responsibility
and authority (subject to the terms of this Agreement) for the
storing and manner of selling of the Consigned Inventory and shall
bear the costs thereby incurred, including delivery expense from
Medical Action's place of business to Medical Action's customers.
5.3 Medical Action shall pay for the Consigned Inventory
pursuant to Sections 6 and 7.
5.4 All of the Consigned Inventory delivered to Medical
Action shall be of good, usable and merchantable quality in all
material respects, and will not include obsolete or discontinued
items. Except as set forth on Exhibit "E", all Consigned Inventory
will be (i) of such quality as to meet the quality control
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standards of Lawson Mardon and any applicable government quality
control standards; (ii) salable as current inventories at the
current prices thereof in the ordinary course of business; and
(iii) recorded on the books of Lawson Mardon at the lower of cost
or market value.
6. Consigned Inventory Price. The price ultimately to be
paid by Medical Action to Lawson Mardon for the Consigned Inventory
delivered to Medical Action pursuant to Section 4 hereof will be an
amount (the "Amount") derived by applying the prices set forth on
Exhibit "F" attached hereto for each type of Consigned Inventory
against the quantities set forth for each such type of Consigned
Inventory on the Inventory Schedule.
7. Payment of Consigned Inventory Price. (a) The
Consigned Inventory price payable under this Section 7 shall be
paid as follows: Within seven (7) business days following the end
of each week, Medical Action shall (i) deliver to Lawson Mardon a
complete accounting of all sales of the Consigned Inventory to
others for such week, setting forth the quantities of the various
products sold and the purchasers involved; (ii) pay Lawson Mardon
for that part of the Consigned Inventory sold in such week (based
on the prices set forth in Exhibit "F"). Lawson Mardon shall have
the right upon reasonable notice to Medical Action to enter the
premises of Medical Action for the purposes of ascertaining the
quantity of Consigned Inventory remaining on hand, and in this
respect, Medical Action shall keep and make available to Lawson
Mardon accurate and complete records of Consigned Inventory sold
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by it so as to enable Lawson Mardon to accurately determine the
amounts due for Consigned Inventory.
(b) Notwithstanding the provisions of Section 8(a) and
except for those items set forth on Exhibit "G", the entire unpaid
balance of the purchase price due for the Consigned Inventory shall
be paid no later than August 1, 1996.
8. Lawson Mardon's Representations and Warranties. Lawson
Mardon represents and warrants to Medical Action as follows:
(a) Organization of Lawson Mardon. Lawson Mardon is
duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Texas with full corporate
power and authority to own its properties and to conduct its
business as now conducted. Lawson Mardon is duly qualified to do
business as a foreign corporation in good standing in all
jurisdictions where the nature of its assets or business requires
such qualification and such jurisdictions are listed in Part A of
the Schedule. Lawson Mardon does not own, directly or indirectly,
shares of capital stock in any corporation. The Certificate of
Incorporation and the By-Laws of Lawson Mardon, heretofore
delivered by Lawson Mardon to Acquisition, are complete and correct
and contain all amendments thereto.
(b) Authority of Lawson Mardon. Lawson Mardon has the
corporate power to enter into this Agreement and to carry out the
transactions contemplated hereby, and to execute and deliver all of
the agreements described herein (the "Related Agreements"). The
execution and delivery of this Agreement, the Related Agreements
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and the consummation of the transactions contemplated hereby have
been duly approved and authorized by the Board of Directors of
Lawson Mardon and has been approved by its stockholders; except for
the adoption of this Agreement, Related Agreements and approval of
the transactions contemplated hereby by its stockholders, no other
corporate acts or proceedings on the part of Lawson Mardon are
necessary to authorize this Agreement, Related Agreements or the
consummation of the transactions contemplated hereby. This
Agreement and the Related Agreements constitute valid and legally
binding obligations of Lawson Mardon and each is enforceable
against Lawson Mardon in accordance with its terms. Except as set
forth in Part B of the Schedule, the execution and delivery of this
Agreement and the Related Agreements by Lawson Mardon do not, and
the consummation of the transactions contemplated hereby will not,
violate or constitute a default under (i) any provision of the
Certificate of Incorporation or By-Laws of Lawson Mardon, (ii) any
provision of (or result in acceleration of any obligation under)
any mortgage, note, lien, lease, agreement, instrument, arbitration
award, judgment or decree to which Lawson Mardon is a party or by
which Lawson Mardon is subject or (iii) any laws of the United
States or any state or jurisdiction in which Lawson Mardon conducts
business.
(c) Consents, etc.. To the best of their knowledge, no
consent, authorization, order or approval or, or filing or
recording with, any governmental commission, board or other
regulatory body is required for or in connection with the execution
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and delivery of this Agreement by Lawson Mardon and the
consummation by Lawson Mardon of the transactions contemplated
hereby.
(d) Financial Statements. Lawson Mardon has previously
furnished Acquisition with a true and complete copy of the
unaudited balance sheets of Lawson Mardon as of December 31, 1995
and the related unaudited statement of operations, shareholders'
equity and cash flows for the twelve months then ended ("Lawson
Mardon Financial Statements").
(e) Absence of Certain Changes or Events. Since
December 31, 1995 there has not been any material adverse change in
the properties or business of operations of Lawson Mardon.
(f) Governmental Authorization and Compliance with Laws.
Lawson Mardon is in compliance in all material respects with all
applicable material requirements of all governmental authorities
(Federal, state, municipal or other) with respect to the business
engaged in by it and is not in default in any material respect
under any judgment, order, injunction, rule, ruling or regulation
of any governmental commission, agency or instrumentality. There
are no Products sold by Lawson Mardon which would require any
approval of the Food and Drug Administration ("FDA") or any other
United States governmental body, whether Federal, state or local,
prior to distribution of such Products, for which such approval has
not been obtained. All Products sold by Lawson Mardon in any
jurisdiction meet the applicable legal requirements of such
jurisdiction and all requisite governmental approvals have been
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duly obtained and are in full force and effect, and there is no
basis known to Lawson Mardon for the FDA or any other governmental
body to deny or rescind any approval for any commercially
distributed Product of Lawson Mardon. There is no action or
proceeding by the FDA or any other governmental body, including,
but not limited to, recall procedures, pending or threatened
against Lawson Mardon relating to the safety or efficacy of any of
the Products of Lawson Mardon, and, to the best knowledge of Lawson
Mardon, there is no basis therefor. Lawson Mardon has all material
permits, certificates, licenses, approval and other authorizations
required in connection with the operation of their business, a
complete list of which are set forth in Part F of the Schedule.
(g) Tax Matters.
(A) The amounts shown as tax liabilities on the
balance sheet of Lawson Mardon as of December 31, 1995 included in
the Lawson Mardon Financial Statements will be sufficient for the
payment of all federal, state, county, local and foreign Taxes (as
hereinafter defined) of Lawson Mardon, whether or not disputed,
which were properly accruable at that date. There are no
agreements by Lawson Mardon for the extension of the time for the
assessment of any Taxes. Neither the Internal Revenue Service (the
"IRS") nor any other taxing authority is now asserting, or to the
knowledge of Lawson Mardon threatening to assert, against Lawson
Mardon any claim for additional Taxes, nor to Lawson Mardon's
knowledge is the IRS or any other taxing authority auditing any tax
return filed by Lawson Mardon.
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(B) Lawson Mardon has timely filed (or received
appropriate extensions to file) (and until the Closing will timely
file) all returns, declarations, reports, estimates, information
returns and statements ("Returns") required to be filed or sent by
or with respect to them in respect of any Taxes;
(C) Lawson Mardon has timely paid or provided (and
until the Closing will timely pay or in good faith contest) all
Taxes that are due and payable;
(D) Lawson Mardon has complied in all material
respects with all applicable laws, rules and regulations relating
to the payment and withholding of Taxes and have timely withheld
from employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over
under all applicable laws;
For purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies or other assessments, including,
without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp,
occupation, property or other taxes, customs duties, fees,
assessments or changes of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts
imposed by any tax authority (domestic or foreign) upon Lawson
Mardon.
(h) Title to Properties; Absence of Liens and
Encumbrances, etc. Except for leased properties, Lawson Mardon has
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good and marketable title to the tangible properties and assets,
real, personal and mixed, to be transferred hereunder, including
without limitation those referred to in the balance sheet as of
December 31, 1995 referred to in Paragraph (e) of this Section 8
(other than properties or assets disposed of in the ordinary course
of business since the date of such balance sheet), free and clear
of all liens, charges, pledges, security interests or other
encumbrances, except as reflected in the Lawson Mardon Financial
Statements or in Part H of the Schedule.
(i) Contracts, etc. Part I of the Schedule contains a
true and complete list of all of the following described contracts
and Leases:
(i) all sales contracts of Lawson Mardon
having a sales price of $5,000.00 or more or not to be
performed within one year regardless of amount and all
purchase orders having a purchase price of $2,500.00 or more;
(ii) all other contracts of Lawson Mardon
(other than sales contracts and purchase orders), employment,
consulting, agency, collective bargaining or other similar
contracts and agreements, leases, mortgages, indentures,
promissory notes, deeds loan or credit agreements, or similar
instruments involving amounts in excess of $25,000 or more or
not to be performed within one year regardless of amount;
(iii) all pension, profit-sharing or employee
benefit plans, employment contracts, contracts with unions and
other agreements relating to employees of Lawson Mardon;
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(iv) all Lawson Mardon policies of insurance
issued during the past five years; and
(v) all deeds to real property owned by Lawson
Mardon.
(vi) all license, licensing arrangements and
other contracts providing in whole or in part for the use of, or
limiting the use of, any intellectual property.
(vii) joint venture, partnership and
similar contracts involving a sharing of profits or expenses.
(viii) asset purchase agreements and other
acquisition or divestiture agreements, including but not limited to
any agreements relating to the sale, lease or disposal of any
assets (other than sale of inventory in the ordinary course of
business).
Except as set forth in Part I of the Schedule, Lawson
Mardon is not in default, and no event has occurred which (whether
with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute a default under any
of the above described contracts and leases, and all such contracts
and leases are valid and legally binding.
(j) Litigation. Except as set forth in Part J of
the Schedule, there is no claim, action, suit or proceeding in or
before any court or administrative or regulatory agency pending, or
the knowledge of Lawson Mardon contemplated or threatened, against
Lawson Mardon or any of its properties.
(k) Patents, Copyrights, Trademarks, etc. Lawson Mardon
has good and marketable title to all patents, patent applications,
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copyrights, trademarks and trade names, brand names, proprietary
and other technical information, technology, inventions,
discoveries, improvements, processes, know-how, formulae, drawings,
specifications, production data, trade secrets and computer
software and programs, and licenses thereof, which are necessary
for the operation of its businesses as presently conducted, a true
and complete list of which is included in Part K of the Schedule
and there are no claims or proceedings threatened or pending
against Lawson Mardon asserting that Lawson Mardon is infringing
any such intellectual property rights of any other person.
(l) Employee Benefit Plans. Other than those set forth
in Part L of the Schedule, Lawson Mardon does not maintain,
administer or contribute to any bonus, profit-sharing, pension,
retirement, stock purchase, stock options, deferred compensation,
hospitalization, medical, life insurance, disability, severance pay
or other benefit plan arrangement or program, including, but not
limited to, any employee benefit plan within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), covering any of Lawson Mardon's employees (the
"Plans").
Lawson Mardon has furnished Acquisition with (i) complete
and accurate copies of all documents comprising or pertaining to
each Plan, including each amendment and any trust agreement,
insurance contract, or other arrangement for the funding of
benefits under such Plan, (ii) copies of all determination letters
or private rulings issued by the IRS with respect to each Plan and
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copies of all applications and requests filed with the IRS for such
determination or rulings, (iii) a copy of the three (3) most recent
annual reports (Form 5500) for each Plan and (iv) a copy of the
most recent summary plan description ("SPD"), and all summaries of
material modifications to such SPD, for each Plan.
Each Plan is, and at all times since its inception has
been, in compliance in all material respects with all the
provisions of ERISA applicable to such Plan, and with all other
laws, rules and regulations applicable to such Plan.
There are no pending, or to the best of the knowledge of
Lawson Mardon, threatened, legal actions, proceedings or
investigations against Lawson Mardon, or any Plan, other than
routine claims for benefits, which could result in liability being
imposed upon any of the Plans or upon Lawson Mardon with respect to
any of the Plans and there is no basis for any such legal action or
proceeding ("Benefit Liabilities").
Except as set forth in Part L of the Schedule, there are
no agreements between Lawson Mardon and any labor union and Lawson
Mardon is not, and has never been, a participating employer in any
multi-employer plan, as such term is defined in Section 3(37) of
ERISA, or in any multiple employer plan described in Section 413(c)
of the Code. To the extent that Lawson Mardon is or has been a
participating employer in any multi-employer plan (as so defined),
Lawson Mardon is not now, or would upon withdrawal therefrom
become, liable for any withdrawal liability to or in respect of
such multi-employer plan.
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The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not
result in any payment (whether of severance pay or otherwise)
becoming due from any of the Plans, or from Lawson Mardon with
respect to any of the Plans, to any individual, or result in the
vesting, acceleration or payment or increases in the amount of any
benefit payable under any of the Plans to any individual.
(m) Finder's Fee. No brokers or finders were employed
by Lawson Mardon in connection with any of the transactions
contemplated by this Agreement.
(n) No Failure to Disclose. Lawson Mardon has not
failed to disclose to Acquisition any material agreement,
arrangement, event or occurrence, or threatened or anticipated
event or occurrence known to Lawson Mardon, which would or might
reasonably be deemed to have a material and adverse effect on the
business of Lawson Mardon.
(o) Insider Interests. No officer or director of Lawson
Mardon has any agreement with Lawson Mardon or any interest in any
property, real, personal or mixed, tangible or intangible
(including, without limitation, patents, patent applications,
trademarks, trade names or other intellectual property), used in or
pertaining to the business of Lawson Mardon except as a stockholder
or employee and except as set forth in Part O of the Schedule.
(p) Labor Controversies. Except as set forth in Part P
of the Schedule, there are no controversies between Lawson Mardon
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and any employees of Lawson Mardon or any unresolved labor union
grievances or unfair labor practices or labor arbitration
proceedings pending or threatened relating to Lawson Mardon and
there are not any organizational efforts presently being made or
threatened involving any of Lawson Mardon's employees. Lawson
Mardon has not received notice of any claim that it has not
complied with any laws relating to wages, hours, collective
bargaining, the payment of social security and similar taxes, equal
employment opportunity, employment discrimination or employment
safety, or that it is liable for any arrears of wages or any taxes
or penalties for failure to comply with any of the foregoing.
(q) Use of Real Property. The real properties leased by
Lawson Mardon are used and operated in compliance and conformity in
all material respects with all applicable leases, contracts,
commitments, licenses and permits. Lawson Mardon has not received
notice of violation of any applicable zoning or building
regulation, ordinance or other law, order, regulation or
requirement relating to the operations of Lawson Mardon and to
Lawson Mardon's knowledge there is no such violation.
(r) Accounts Receivable. The accounts receivable are
reflected on the Lawson Mardon Financial Statements, and all
accounts receivable of Lawson Mardon arising since the date of such
balance sheet arose from bona fide transactions in the ordinary
course of business, and the materials or services involved have
been provided to the account obligor, and, except as contemplated
by the relevant contract, no further materials or services are
20
<PAGE>
required to be provided in order to complete the sales and to
entitle Lawson Mardon, or its assignees, to collect the accounts
receivable in full. Except as set forth in Part R of the Schedule,
no such account receivable has been assigned or pledged to any
other person, firm or corporation, and except for unapplied
credits, no defense or setoff to any such account has been asserted
by the obligor.
(s) Compliance with Environmental Laws. Except as set
forth in Part S of the Schedule:
(i) Lawson Mardon is in compliance with all
environmental laws, regulations, permits and orders applicable
to them, and with all laws, regulations, permits and orders
governing or relating to asbestos removal or abatement.
(ii) Except for temporary storage on premises
pending arrangements for removal, Lawson Mardon has not
transported, stored, treated or disposed of, nor has it
allowed or arranged for any third parties to transport, store,
treat or dispose of, hazardous substances or other waste to or
at any location other than a site lawfully permitted to
receive such hazardous substances or other waste for such
purposes; and Lawson Mardon has not performed, arranged for or
allowed by any method or procedure such transportation,
storage, treatment or disposal in contravention of any laws or
regulations. Lawson Mardon has not disposed, or allowed or
arranged for any third parties to dispose, of hazardous
substances or other waste upon property owned or leased by it.
21
<PAGE>
(iii) There has not occurred, nor is there
presently occurring, a Release of any hazardous substance on,
into or beneath a surface of any parcel of real property in
which Lawson Mardon has or has had an ownership interest or
any leasehold interest. For purposes of this Section, the
term "Release" shall mean releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping.
(iv) Lawson Mardon has not transported or disposed
of, nor have they allowed or arranged for any third parties to
transport or dispose of, any hazardous substance or other
waste to or at a site which, pursuant to the U.S.
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA") or any similar
state law, (A) has been placed on the National Priorities List
or its state equivalent, or (B) the Environmental Protection
Agency or the relevant state agency has proposed or is
proposing to place on the National Priorities List or its
state equivalent. Lawson Mardon has not received notice, or
has knowledge, of any facts which could give rise to any
notice that Lawson Mardon is a potentially responsible party
for a federal or state environmental cleanup site or for
corrective action under CERCLA or any other applicable law or
regulation. Lawson Mardon has not submitted nor was required
to submit any notice pursuant to Section 103(c) of CERCLA.
Lawson Mardon has not received any written or oral request for
22
<PAGE>
information in connection with a federal or state
environmental cleanup site or has undertaken (or been
requested to undertake) any response or remedial actions or
cleanup actions of any kind at the request of any federal,
state or local government entity, or at the request of any
other person or entity ("Environmental Liabilities").
(v) There are no laws, regulations, ordinances,
licenses, permits or orders relating to environmental or
worker safety matters requiring any work, repairs,
construction or capital expenditures with respect to the
assets or properties of Lawson Mardon.
(vi) Part S of the Schedule identifies (A) all
environmental audits, assessments or occupational health
studies undertaken by Lawson Mardon or its agents or by any
governmental agencies with respect to the operations or
properties of Lawson Mardon; (B) the results of any
groundwater, soil, air or asbestos monitoring undertaken with
respect to any real property owned or leased by Lawson Mardon;
(C) all written communications of Lawson Mardon with
environmental agencies; and (D) all citations issued with
respect to Lawson Mardon under the Occupational Safety and
Health Act (29 U.S.C. Sections 651 et seq.).
(t) Representations and Warranties. All representations
and warranties set forth herein and each certificate furnished or
to be furnished to Medical Action or Acquisition pursuant hereto
contains complete, accurate and true statements of all material
facts stated therein and do not omit to state any material facts
23
<PAGE>
necessary to make the statements contained therein not misleading.
(u) Suppliers's Raw Materials. Part U of the Schedule
in connection with the Products sets forth (a) the name and
addresses of all suppliers (including, without limitation, Lawson
Mardon and any facilities thereof) from which Lawson Mardon ordered
raw materials, supplies, merchandise and other goods and services
with an aggregate purchase price for each such supplier of
$2,500.00 or more during the twelve month period ended December 31,
1995, and (b) the amount for which each such supplier invoiced
Lawson Mardon during such period. Lawson Mardon has not received
any notice or has any reason to believe that there has been any
material adverse change in the price of such raw materials,
supplies, merchandise or other goods or services, or that any such
supplier will not sell raw materials, supplies, merchandise and
other goods to Acquisition at any time after the Closing Date on
terms and conditions similar to those used in its current sales to
Lawson Mardon, subject to general and customary price increases.
(v) Product Warranties. Except as set forth in Part V
of the Schedule, and for warranties under applicable law, (a) there
are no warranties, express or implied, written or oral, with
respect to the Products and (b) there are no pending or threatened
claims with respect to any such warranty, and Lawson Mardon has no
liability with respect to such warranty, whether known or unknown,
absolute, accrued, contingent or otherwise and whether due or to
become due.
24
<PAGE>
(w) Liability for Transfer Taxes. Lawson Mardon shall
be responsible for the timely payment of, and shall indemnify and
hold harmless Acquisition and Medical Action against, all sales
(including, without limitation, bulk sales) use, value added,
documentary, stamp, gross receipts, convenience, excise, license
and other similar taxes and fees (the "Transfer Taxes") arising out
of or in connection with or attributable to the transactions
affected pursuant to this Agreement and the Related Agreements.
Lawson Mardon shall prepare and timely file all tax returns
required to be filed in respect of the Transfer Taxes.
9. Medical Action and Acquisition Representations and
Warranties. Each of Acquisition and Medical Action jointly and
severally represents and warrants to Lawson Mardon as follows:
(a) Organization of Acquisition and Medical Action.
Acquisition and Medical Action are corporations duly organized,
validly existing and in good standing under the laws of their
respective jurisdictions of incorporation.
(b) Authority of Acquisition and Medical Action.
Acquisition and Medical Action each individually have the corporate
power to enter into this Agreement and to carry out the
transactions contemplated hereby. The execution and delivery of
this Agreement, Related Agreements and the consummation of the
transactions contemplated hereby have been duly authorized by the
Board of Directors of Acquisition and Medical Action, as the sole
stockholder of Acquisition and by the Board of Directors of Medical
Action; and (i) no other corporate acts or proceedings on the part
25
<PAGE>
of Acquisition or Medical Action are necessary to authorize this
Agreement, Related Agreements or the consummation of the
transactions contemplated hereby, and (ii) this Agreement and the
Related Agreements constitute the valid and legally binding
obligations of Acquisition and Medical Action enforceable against
Acquisition and Medical Action in accordance with their terms. The
execution and delivery of this Agreement and the Related Agreements
do not, and the consummation of the transactions contemplated
hereby will not, violate or constitute a default under any
provision of the Certificate of Incorporation or By-Laws of
Acquisition or Medical Action or any provision of (or result in the
acceleration of any obligation under) any mortgage, note, lien,
lease, agreement, instrument, arbitration award, judgment or decree
to which either of Acquisition or Medical Action is a party or by
which they are bound or to which any of their property is subject,
or any laws of the United States or any state or jurisdiction in
which Acquisition or Medical Action conducts business.
(c) Consents, etc. No consent, authorization, order or
approval of, or filing or registration with, any governmental
commission, board or other regulatory body is required for or in
connection with the execution and delivery of this Agreement by
Acquisition and Medical Action and the consummation by Acquisition
and Medical Action of the transactions contemplated hereby.
(d) Finder's Fee. No brokers or finders were employed
by Acquisition or Medical Action in connection with any of the
transactions contemplated by this Agreement.
26
<PAGE>
10.1 Lawson Mardon covenants and agrees with Acquisition as
follows:
(a) Certification of Stockholder Vote. Prior to the
Closing, Lawson Mardon shall deliver to Acquisition a certificate
of its secretary setting forth the unanimous approval by Lawson
Mardon Stockholders of (i) the adoption of this Agreement and (ii)
the transactions contemplated hereby.
11. Conditions to Obligations of Each Party. The obligations
of the parties to consummate the transactions contemplated hereby
shall be subject to the fulfillment on or prior to the Closing Date
of the following conditions:
11.1 No Injunction, etc. Consummation of the
transactions contemplated hereby shall not have been restrained,
enjoined or otherwise prohibited by any applicable law, including
any order, injunction, decree or judgment of any court or other
Governmental Authority and no proceeding with respect to the
application of any such applicable law to such effect shall be
pending.
11.2 Asset Acquisition Statement. Medical Action and
Lawson Mardon shall, within sixty (60) days of Closing, complete
and execute a Form 8594, Asset Acquisition Statement, under Section
1060 of the Internal Revenue Code, and deliver a copy of such form
to the other party. In addition, each party will file such form in
its tax returns for all periods which include the Closing Date.
11.3 Conditions to Obligations of Acquisition and Medical
Action. The obligations of Acquisition and Medical Action to
27
<PAGE>
consummate the transactions contemplated hereby shall be subject to
the fulfillment (or waiver by Acquisition and Medical Action) on or
prior to the Closing Date of the following conditions, which Lawson
Mardon agrees to use reasonable good faith efforts to cause to be
fulfilled.
(i) Representations, Performance. The
representations and warranties of Lawson Mardon contained in this
Agreement (a) shall be true and correct in all material respects on
and as of the date hereof, and (b) shall be repeated and shall be
true and correct in all material respects on and as of the Closing
Date with the same effect as though made on and as of the Closing
Date. Lawson Mardon shall have duly performed and complied in all
material respects with all agreements and conditions required to be
performed or complied with by it prior to or on the Closing Date.
Lawson Mardon shall have delivered to Acquisition a certificate,
dated the Closing Date and signed by its duly authorized officers,
to the foregoing effect.
(ii) Consents. Lawson Mardon shall obtain such
governmental permits, orders or consents, if any, as may be
required in connection with the transactions contemplated by this
Agreement or the Related Agreements, including but not limited to
the consent of the lessor of the Premises to the assignment of such
lease to Acquisition. Acquisition shall also have received an
estoppel certificate addressed to Acquisition from the lessor,
dated as of the Closing Date, identifying the lease documents and
any amendments thereto, stating that the lease is in full force and
28
<PAGE>
effect and, to the best knowledge of the lessor, that Lawson Mardon
is not in default under the lease and no event has occurred that,
with notice or lapse of time or both, would constitute a default by
Lawson Mardon under the lease and containing any other information
reasonably requested by Acquisition.
(iii) No Material Adverse Effect. No event,
occurrence, fact, condition, change, development or effect shall
have occurred since December 31, 1995 that, individually or in the
aggregate, has constituted or resulted in, or could reasonably be
expected to constitute or result in, a material adverse effect to
the business of Lawson Mardon.
(iv) Related Agreements. Lawson Mardon and/or LM
Whitehaven, as the case may be, shall have entered into each of the
following agreements with Acquisition and/or Medical Action, as the
case may be;
(a) A Supply Agreement in the form attached hereto as
Exhibit "H", pursuant to which LM Whitehaven will sell to
Medical Action for a period of one (1) year following the
Closing Date, at least the same volume of Products produced by
LM Whitehaven as would have been purchased by Lawson Mardon
and the necessary raw materials required to produce the
Products for a two (2) year period commencing on the first
anniversary date of the Closing;
(b) A Trademark License Agreement in the form attached
hereto as Exhibit "I", pursuant to which LM Whitehaven will
grant to Acquisition and Medical Action, on a royalty-free
29
<PAGE>
basis, the right to use in connection with the business
certain trademarks and other intellectual property specified
therein in North America for a period of one (1) year
following the Closing;
(c) A Non-Competition Agreement in the form attached
hereto as Exhibit "J", pursuant to which LM Whitehaven agrees
not to, directly or indirectly, engage, either directly or
indirectly, in any business competitive with the assets
acquired hereunder in North America, and Medical Action agrees
not to directly or indirectly engage, either directly or
indirectly, in any business competitive with the assets
acquired hereunder anywhere in the world, except for North
America, for a period of five (5) years.
(v) Lawson Mardon Legal Opinion. Acquisition shall have
received an opinion dated the Closing from William F. Harmeyer
& Associates, counsel for Lawson Mardon that:
(a) Lawson Mardon is a corporation validly organized,
legally existing and in good standing under the laws of the
jurisdiction of its incorporation with corporate power and
authority to own its properties and to conduct its business as
then being conducted;
(b) Lawson Mardon has full corporate power to carry out
the transactions contemplated by this Agreement; this
Agreement has been duly executed and delivered by Lawson
Mardon; all necessary corporate action has been taken by
Lawson Mardon and its Board of Directors and stockholders to
30
<PAGE>
authorize Lawson Mardon to execute and deliver this Agreement
and to consummate the transactions contemplated hereby; and
this Agreement is a valid and legally binding obligation of
Lawson Mardon, enforceable against Lawson Mardon in accordance
with its terms, except as may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights generally or by general principles
of equity;
(c) The execution, delivery and performance by Lawson
Mardon of this Agreement and the consummation of the
transactions contemplated by this Agreement will not
constitute a violation of any provision of the Certificate of
Incorporation or By-Laws of Lawson Mardon.
(vi) LM Whitehaven Legal Opinion. Acquisition shall have
received an opinion dated the Closing from Kate Anthony Wilkinson,
counsel for LM Whitehaven, that:
(a) LM Whitehaven has full corporate power to carry out
the transactions contemplated by this Agreement; this Agreement and
the Related Agreements have been duly executed and delivered by LM
Whitehaven; all necessary corporate action has been taken by LM
Whitehaven and its Board of Directors to authorize LM Whitehaven to
execute and deliver this Agreement and the Related Agreements and
to consummate the transactions contemplated hereby; and this
Agreement and the Related Agreements are valid and legally binding
obligations of LM Whitehaven.
31
<PAGE>
(vii) Corporate Proceedings. All corporate
proceedings of Lawson Mardon and LM Whitehaven in connection with
this Agreement and the Related Agreements and the transactions
contemplated hereby, and all documents and instruments incidental
thereto, shall be reasonably satisfactory in substance and form to
Acquisition and its counsel, and Acquisition and its counsel shall
have received all such documents and instruments, or copies thereof
(certified, if requested), as may be reasonably requested.
11.4 Conditions to Obligations of Lawson Mardon. The
obligations of Lawson Mardon to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver
by Lawson Mardon), on or prior to the Closing Date, of the
following additional conditions, which Acquisition and Medical
Action agree to use reasonable good faith efforts to cause to be
fulfilled.
(i) Representations, Performance. The
representations and warranties of Acquisition and Medical Action
contained in this Agreement shall be true and correct in all
material respects on and as of the date hereof, and (b) shall be
repeated and shall be true and correct in all material respects on
and as of the Closing Date with the same effect as though made on
and as of the Closing Date. Acquisition and Medical Action shall
have duly performed and complied in all material respects with all
agreements and conditions required by its respective agreement to
be performed or complied with by them prior to or on the Closing
32
<PAGE>
Date. Acquisition and Medical Action shall have delivered to
Lawson Mardon a certificate, dated the Closing Date and signed by
its duly authorized officers, to the foregoing effect.
(ii) Permits, Orders and Consents. Medical Action
and Acquisition shall, in connection herewith, comply with all
applicable securities laws and will obtain such governmental
permits, orders or consents, if any, as may be required in
connection with the transactions contemplated by this Agreement.
(iii) No Material Adverse Effect. No event,
occurrence, fact, condition, change, development or effect shall
have occurred since December 31, 1995 that, individually or in the
aggregate, has constituted or resulted in, or could reasonably be
expected to constitute or result in, a material adverse effect.
(iv) Related Agreements. Acquisition or Medical
Action, as the case may be, shall have entered into the Related
Agreements with LM Whitehaven.
(v) Legal Opinion. Lawson Mardon shall have
received an opinion dated the Closing Date from Richard G.
Satin, Esq., General Counsel of Medical Action and
Acquisition, that:
(a) Each of Medical Action and Acquisition is a
corporation validly organized, legally existing and in good
standing under the laws of its respective jurisdiction of
incorporation with full corporate power and authority to own their
properties and to conduct their businesses as they are then being
conducted;
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<PAGE>
(b) The authorized, issued and outstanding capital stock
of Acquisition is as stated in such opinion; the outstanding shares
of capital stock of Acquisition are owned of record and
beneficially by Medical Action;
(c) Each of Medical Action and Acquisition has full
corporate power to carry out the transactions contemplated by this
Agreement; this Agreement and the Related Agreements have been duly
executed and delivered by each of Medical Action and Acquisition
and all necessary corporate action has been taken by each of
Medical Action and Acquisition, their Board of Directors and
shareholders in order to consummate the transactions contemplated
by this Agreement, to execute and deliver this Agreement and the
Related Agreements and to make this Agreement the valid and legally
binding obligations of each of Medical Action and Acquisition
enforceable against Medical Action and Acquisition in accordance
with its terms, except as may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting creditors'
rights generally or by general principles of equity;
(d) The execution, delivery and performance of this
Agreement by Medical Action and Acquisition and the consummation of
the transactions contemplated by this Agreement will not constitute
a violation of any provision of the Certificate of Incorporation of
Medical Action or Acquisition or either of their By-Laws or, to the
best of such counsel's knowledge, under any agreement or other
document to or by which Medical Action or Acquisition is a party or
is bound or any judgment, decree, or
34
<PAGE>
order of any court or other governmental authority which is binding on Medical
Action and Acquisition or any of their properties; and
(e) No consent or approval by any governmental authority
which has not been obtained is required in connection with the
consummation by Medical Action and Acquisition of the transactions
contemplated by this Agreement.
(vi) Corporate Proceedings. All corporate
proceedings of Acquisition and Medical Action in connection with
this Agreement and the Related Agreements and the transactions
contemplated hereby, and all documents and instruments incidental
thereto, shall be reasonably satisfactory in substance and form to
Lawson Mardon and its counsel, and Lawson Mardon and its counsel
shall have received all such documents and instruments, or copies
thereof (certified, if requested), as may be reasonably requested.
(vii) The execution and delivery of the
Promissory Note by Medical Action.
12. Reliance by Counsel. In rendering any opinion referred
to herein, counsel may rely, as to any factual matters involved in
their opinion, on certificates of public officials and of corporate
officers, opinions of corporate general counsel, and such other
evidence as such counsel may reasonably deem appropriate and, as to
matters governed by the Delaware General Corporation Law ("DGCL")
or the laws of jurisdictions other than the United States or the
State of New York an opinion of local counsel in such
jurisdictions, which counsel shall be satisfactory to the other
parties in the exercise of their reasonable judgment.
35
<PAGE>
12.1 Notices. Any notice to a party hereto pursuant to this
Agreement shall be in writing, shall be deemed given when received,
and shall be delivered personally or sent by certified or
registered mail or by telecopier addressed as follows:
To Acquisition:
Medial Action Industries Inc.
150 Motor Parkway
Hauppauge, New York 11788
Attn: Paul D. Meringola, President
Telecopier No.: 516-231-3075
with a copy to:
Richard G. Satin, Esq.
150 Motor Parkway
Hauppauge, New York 11788
Telecopier No.: 516-231-3075
To Lawson Mardon:
c/o Alusuisse-Lonza America Inc.
17-17 Route 208
Fairlawn, New Jersey 07410
Attn: Rolf C. Bachmann, Treasurer
Telecopier No.: 201-794-2680
36
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To LM Whitehaven:
Lawson Mardon Medical Packaging
Moresby Park
Whitehaven
Cumbria
CA2884D U.K.
Attn: Andrew Walker
Telephone No.: 01946 66444
Telecopier No: 01946 66445
with a copy to:
Lawson Mardon Packaging Ltd.
Avonbank, Clifton Down
Bristol B58 3HT - U.K.
Telecopier No: (0117)973 5810
Attn: Kate Anthony Wilkinson, Legal Advisor
12.2 Entire Agreement; Law Governing. This Agreement together
with all other agreements contemplated hereby (a) constitute the
entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof, (b) may be executed in
several counterparts, each of which will be deemed an original and
all of which shall constitute one and the same instrument, and (c)
except as otherwise stated in any other agreement, shall be
governed in all respects, including validity, interpretation and
effect, by the internal substantive laws of the State of Delaware.
12.3 Publicity and Disclosures. No press releases or public
disclosures of the transactions contemplated by this Agreement,
either oral or written, shall be made without the prior written
consent of all the parties hereto, provided, however, that no such
consent shall be unreasonably withheld or delayed and provided
further that no such consent shall be required if (a) in the
opinion of counsel for the party proposing to make such press
release or public disclosure, such press release and/or public
37
<PAGE>
disclosure is required by applicable law, rules or regulations or
by stock exchange requirement, and (b) time does not permit the
obtaining of approval by the other parties.
12.4 (a) Indemnification by Lawson Mardon and LM Whitehaven.
Lawson Mardon and LM Whitehaven covenant and agree to defend,
indemnify and hold harmless Medical Action and Acquisition from and
against, and pay or reimburse them for, any and all claims,
liabilities, obligations, losses, fines, costs, royalties,
proceedings, deficiencies or damages (whether or not resulting from
third party claims), including out-of-pocket
expenses and reasonable attorneys' fees incurred in the
investigation or defense of any of the same or in asserting any of
their respective rights hereunder (collectively, the "Losses")
resulting from or arising out of:
(i) Any inaccuracy of any representation or
warranty made by Lawson Mardon or LM
Whitehaven herein;
(ii) Any Excluded Liabilities as set forth in
Section 1(b) herein;
(iii) Any and all Taxes relating to or arising
out of the business of Lawson Mardon;
(iv) Any and all Benefit Liabilities;
(v) All Environmental Liabilities and costs
arising out of the business of Lawson Mardon
prior to the Closing Date;
38
<PAGE>
(vi) Any product liability claim with respect to
the Products manufactured or sold prior to the
Closing Date; and
(vii) Any failure of Lawson Mardon to timely
pay all applicable Transfer Taxes.
Any claim for indemnification pursuant to clause (i) of
this Section 12.4(a), however, shall be limited to $500,000.00.
(b) Indemnification by Medical Action and Acquisition.
Medical Action and Acquisition covenant and agree to defend,
indemnify and hold harmless Lawson Mardon and LM Whitehaven from
and against any and all losses resulting from or arising out of:
(i) The Assumed Liabilities; and
(ii) The operation of the business by Medical Action
or Acquisition and operation or use of the Assets
following the Closing Date, except to the extent such
Losses result from or arise out of the Excluded
Liabilities (as set forth in Section 1(b) herein) or
constitute Losses for which Lawson Mardon and LM
Whitehaven are required to indemnify Medical Action and
Acquisition under Section 12.4(a) above.
(c) Survival of Representations and Warranties. The
representations, warranties and covenants of Lawson Mardon, LM
Whitehaven, Acquisition and Medical Action contained in this
Agreement, or in any instrument delivered by each of them
hereunder, shall survive for a period of eighteen months from the
date of Closing. No claim for indemnification may be brought later
than eighteen (18) months after the date of Closing.
39
<PAGE>
12.5 Headings. The headings and captions of the sections and
subsections of this Agreement are included for the convenience of
reference only and shall have no effect on the construction or
meaning of this Agreement.
12.6 Right to Notice of Sale.
(a) LM Whitehaven shall not, at any time prior to
January 31, 2001, sell or convey substantially all of its assets or
merge or consolidate with or into any other corporation without
first giving written notice thereof to Medical Action, which notice
is hereinafter referred to as the "Notice of Sale".
(b) The Notice of Sale shall include the complete terms
of the proposed transaction and the name of the prospective
purchaser.
(c) For a period of ten (10) days after receipt by
Medical Action of the Notice of Sale, Medical Action shall have the
right to give written notice to LM Whitehaven of Medical Action's
interest in negotiating and executing, within a period of ninety
(90) days, a definitive agreement under which Medical Action would
purchase the business operations of LM Whitehaven upon the terms of
the proposed transaction included in the Notice of Sale. In the
event that LM Whitehaven does not receive written notice of Medical
Action's exercise of the right herein granted within said 10 day
period, there shall be a conclusive presumption that Medical Action
has elected not to exercise its right hereunder, and LM Whitehaven
may sell its business operations to others at substantially the
same terms set forth in the Notice of Sale.
40
<PAGE>
12.7 Name Change. Within forty-five (45) days of Closing,
Acquisition agrees to amend its Certificate of Incorporation
changing its name to not include the words "SBW".
IN WITNESS WHEREOF, the parties hereto have caused this
Agremeent to be duly executed as of the date first above written.
LAWSON MARDON MEDICAL PRODUCTS, INC.
By: /s/ William J. Abbott
-------------------------------
Name: William J. Abbott
Title: President
LAWSON MARDON MEDICAL PRODUCTS, a
trading division of LAWSON MARDON
PACKAGING UK LTD.
By: /s/ Alistair Napier
--------------------------------
Name: Alistair Napier
Title: Director
MEDICAL ACTION INDUSTRIES INC.
By: /s/ Paul D. Meringola
--------------------------------
Name: Paul D. Meringola
Title: President
SBW ACQUISITION CORP.
By: /s/ Paul D. Meringola
--------------------------------
Name: Paul D. Meringola
Title: President
41
<PAGE>
SUPPLY AGREEMENT
This Supply Agreement is made the 30th day of January, 1996 by
and between LAWSON MARDON MEDICAL PRODUCTS, a trading division of
LAWSON MARDON PACKAGING UK LTD. (a company registered in England
with registered number 409295), whose trading address is at Moresby
Parks, Whitehaven, Cumbria, England CA28 8YD and whose registered
office is situate at Avonbank, Clifton Down, Bristol BS8 3HT,
England ("the Supplier"), and MEDICAL ACTION INDUSTRIES INC., a
Delaware corporation whose registered office is situate at 150
Motor Parkway, Hauppauge, New York 11788 ("the Purchaser").
WHEREAS, the Supplier carries on the business of manufacturing
and selling medical packaging products, including the Pouches,
Special Items and Products (as hereinafter defined); and
WHEREAS, the Purchaser is a supplier of medical products in
the United States of America; and
WHEREAS, the Purchaser wishes to purchase from the Supplier
and the Supplier wishes to supply the Purchaser with the Pouches,
Special Items and Products on the terms set out in this Agreement.
1. INTERPRETATION. In this Agreement, unless the context
otherwise requires, the following words and expressions shall have
the following meanings:
(a) Commencement Date shall mean 30 January, 1996.
(b) Force Majeure shall mean, in relation to either
party, any circumstances beyond the reasonable control of that
party (including, without limitation, strike, industrial action,
shortage of raw material supplies and transportation delays).
EXHIBIT 10
<PAGE>
(c) Goods shall mean Pouches, Products and Special Items
or any of them collectively.
(d) Pouches shall mean the pouches produced by the
Supplier using the Products, details of which are set out in
Schedule 1.
(e) Products shall mean printed paper medical grade and
laminated polyester/polypropylene suitable for the manufacture of
standard heat seal and self-seal pouches, as supplied by the
Supplier, details of which are set out in Schedule 2.
(f) Special Items shall mean reels of tubing and
gusseted pouches to be supplied in accordance with clause 2.1 and
2.2, details of which are set out in Schedule 3.
(g) Year shall mean the period of twelve (12) months
from the Commencement Date and each consecutive period of twelve
(12) months thereafter during the continuation of this Agreement.
2. SALE OF POUCHES, SPECIAL ITEMS AND PRODUCTS.
2.1. During the first Year of this Agreement, the
Supplier will supply and the Purchaser shall buy such quantities of
the Pouches and Special Items as specified in Schedule 5. The
Purchaser shall issue purchase orders for the quantity of Pouches
and Special Items as per Schedule 5. Subject to the terms of this
Agreement, the Supplier shall manufacture and deliver in accordance
with such purchase orders.
2.2. During the second year and all subsequent Years, the
Purchaser and the Supplier shall discuss the Purchaser's
requirements for Special Items, and where agreed, the Supplier
shall supply and the Purchaser shall purchase these Special Items.
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The Supplier shall not be obliged to supply any Pouches in the
second or subsequent years.
2.3. During the second year and all subsequent Years, the
Purchaser shall purchase and, provided that the Purchaser complies
with the terms of the agreement, the Supplier shall supply such
quantities of the Products as may from time to time be ordered by
the Purchaser, subject to the terms of this Agreement.
2.4. In the second and all subsequent Years, the
Purchaser shall purchase 100% of its requirements for the Products
from the Supplier, where agreed.
2.5. Subject to clauses 2.1 and 2.4 above, there is no
minimum guaranteed quantities of Products, but the Purchaser
acknowledges that the Supplier shall not be obliged to ship any
order for Products which is less than a complete 20 or 40 foot
container.
2.6. Save in the cases of Pouches and Special Items to be
supplied in the first Year, which shall be ordered in accordance
with clause 2.1, all orders for Products and Special Items shall be
submitted in writing by the Purchaser as a firm commitment to the
Supplier. The orders shall specify the Products and Special Items
required and the required delivery date. The delivery date shall
be discussed with the Supplier and shall be acknowledged with an
agreed shipment date.
2.7. The Purchaser shall also notify the Supplier in
writing of:
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2.7.1. the estimated orders of the Products
for each Year, within three months prior to that
Year; and
2.7.2. the estimated orders for the
Products for each quarter within eight weeks prior
to each quarter.
2.8 The Purchaser acknowledges that normal lead time for
shipment of Goods is eight (8) weeks from order and four (4) weeks
from call off of existing stock and that shipment is unlikely to be
capable of being made in any shorter period unless otherwise agreed
by the Supplier in advance.
3. SPECIFICATION
3.1. The Goods sold by the Supplier shall comply with the
applicable British Standard Specifications from time to time. A
copy of the relevant British Standard Specifications as at the date
hereof is attached as Schedule 4.
3.2. The Purchaser shall be entitled to reject, in
accordance with the terms of clause 5, any part of an order for
Goods which does not comply with the specification referred to in
clause 3.1.
3.3. The Supplier's liability is limited to supply of
Goods which comply with the applicable British Standard
Specifications from time to time. The Supplier's liability is
limited in the event of breach to the value of the Goods supplied.
4. PRICE AND PAYMENT TERMS.
4.1. The price for the Pouches shall be as specified in
the last column of Schedule 1. Payment shall be made in U.S.
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Dollars to the Supplier's bank account at Credit Suisse, P.O. Box
3700, Church Street Station, New York, New York 10008-3700 (Dollar
Account No. 36125901) or such other account as specified from time
to time.
4.2.1. Subject to adjustment in accordance with
the remaining provisions of clause 4, the price for the Products
and the Special Items shall be as agreed between the Supplier and
the Purchaser at the start of each Year and the first such prices
shall be as specified in Schedule 2 and Schedule 3. Such prices
shall apply for the duration of the relevant Year unless adjusted
due to raw material price adjustment as in accordance with the
following sub-clause.
4.2.2. During the course of each Year, the
Supplier shall adjust at any time prices for the Products and
Special Items in the event that the prices for plastic resin, paper
pulp or the raw material at any date have changed by 10% or more
when compared to the prices for such raw materials as at 3 January,
1996. For the avoidance of doubt there shall be no adjustment in
prices until the price of raw materials has changed by 10% or more
when compared to the prices as at 3 January, 1996, but that
thereafter, any adjustment in such prices, however small, shall, if
the Supplier so chooses, entitle the Supplier to change the prices
charged for the Products and Special Items by the same amount.
Reference price for pulp is the Paper and Pulp Index and Platts
Polymerscan for plastic.
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4.3. The Supplier shall notify the Purchaser in writing
of any proposed price change arising as a result of the operation
of clause 4.2.1 and such increase shall take effect on all
shipments starting ninety (90) days after the sending of such
notification.
4.4. Prices charged by the Supplier for Goods are CIF
East Coast USA port. Duty shall be paid by the Purchaser.
4.5. Payment for Pouches and Special Items for the first
Year shall be made against an agreed usage schedule as attached in
Schedule 5. Payment for Products and Special Items for the second
and subsequent years shall be made by the Purchaser thirty (30)
days from date of receipt by Purchaser in its facility.
4.6. In the event of late payment of any invoice for
whatever reason, interest at a rate of 1% per annum above the Base
Rate of Lloyds Bank Plc from time to time shall be charged on the
amount outstanding from the date payment was due until the date
payment is received.
4.7. The Supplier retains title and property to the Goods
until full payment is received in cleared funds for all Goods for
which payment is outstanding. Until such time, the Supplier shall
ensure that they are clearly marked as the Supplier's Goods.
5. INSPECTION AND REJECTION.
5.1. In the event that any item does not comply with the
specification referred to in clause 3.1, or is damaged in transit,
the Purchaser shall be entitled to reject such item. The Purchaser
shall notify the Supplier in writing within seven (7) days of
delivery at the Purchaser's facility of any Goods that are damaged
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in transit in order to enable the Supplier to replace such items
and maintain continuity of supply.
5.2. The Supplier shall, at no additional cost to the
Purchaser, replace items which are defective or do not conform to
specification as soon as practicable if needed by emergency
shipment to replenish stock outage. The Supplier will have no
further liability to the Purchaser. When such replacement is not
sufficient to cover stock outage at the Purchaser, the Purchaser
may, after it has received confirmation from the Supplier that it
is unable to replenish stock outage in sufficient time, obtain
emergency supply of Goods from other sources of standard items in
the open market, and provided prior notification of price has been
given to the Supplier, charge to the Supplier the excess cost,
where the "market price" for the item purchased exceeds that
normally charged under this Agreement.
5.3. Except as provided in clauses 3.3 and 5.2, the
Supplier shall not be liable for any costs, claims, damages,
expenses or losses, either direct or indirect (including
consequential losses) arising out of or in connection with this
Agreement or the Goods so supplied.
6. MANUFACTURE AND DELIVERY.
6.1. The Supplier shall use best endeavors to manufacture
and maintain sufficient stocks of the Products to fulfill its
obligations under this Agreement.
6.2. Except to the extent otherwise provided in this
Agreement, the Supplier and the Purchaser shall agree to the date
for shipment of the Goods purchased by the Purchaser, but in all
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cases the time of shipment or of delivery shall not be of the
essence.
6.3. Delivery of the items purchased by the Purchaser
shall take place at the East Coast port in the USA. Risk shall
pass to the Purchaser upon the shipment being landed at the East
Coast port in the USA.
6.4 The packaging of the Goods and the pallets shall not
be returnable to the Supplier.
7. FORCE MAJEURE. If either party is affected by Force
Majeure in respect of any of its obligations hereunder, it shall
promptly notify the other party of the nature and extent of the
circumstances in question. Notwithstanding any other provision in
this Agreement, neither party shall be deemed to be in breach of
this Agreement, or otherwise be liable to the other, for any delay
in performance or non-performance of any of its obligations under
this Agreement, to the extent that the delay or non-performance is
due to any Force Majeure of which it has notified the other party
and the time for performance of that obligation shall be extended
accordingly.
8. DURATION AND TERM.
8.1. This Agreement shall come into force on the
Commencement Date and subject to the following provisions shall
continue in force for a period of two (2) years and thereafter
unless and until terminated by either party giving to the other
party no less than twelve (12) months prior written notice to
expire at any time on or after the end of that period.
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8.2. Either party shall be entitled to forthwith
terminate this Agreement by written notice to the other if:
8.2.1. that party commits any continuing or
material breach of any of the
provisions of this Agreement and in
the case of such a breach which is
capable of remedy, fails to remedy
the same within thirty (30) days
after receipt of a written notice
giving full particulars of the
breach and requiring it to be
remedied;
8.2.2. an encumbrancer takes possession or
a receiver or liquidator of
administrator or equivalent in any
jurisdiction or similar person is
appointed over any of the property
or assets of that other party;
8.2.3. that other party makes any voluntary
agreement with its creditors or
becomes subject to an administration
order or similar in any
jurisdiction;
8.2.4. that other party goes into
liquidation (except for the purposes
of amalgamation, reconstruction or
other reorganisation and in such
manner that the company resulting
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from the reorganisation effectively
agrees to be bound by or to assume
the obligations imposed on that
other party under this Agreement);
or
8.2.5. that other party ceases, or
threatens to cease, to carry on
business.
8.3 The rights to terminate this Agreement given by this
clause shall not prejudice any other right or remedy of either
party in respect of the breach concerned (if any) or any other
breach.
9. GENERAL PROVISIONS.
9.1. The standard terms and conditions of sale of the
Supplier (attached as Schedule 6) shall apply to the relationship
between the parties except to the extent specifically provided in
this Agreement, and where there is a conflict between the terms,
the terms of this Agreement shall apply.
9.2. The Supplier shall be entitled to perform any of its
obligations undertaken by it and to exercise any of the rights
granted to it under this Agreement through any other company within
the Lawson Mardon group of companies.
9.3. The Supplier shall be entitled to carry out its
obligations under this Agreement through any agents or sub-
contractors appointed by it for which consent must be given by the
Purchaser, which will not be unreasonably withheld or delayed.
Those sub-contractors and agents are bound by the same
specifications.
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9.4. Except as provided in clauses 9.2 and 9.3, this
Agreement is personal to the parties hereto and neither of them
may, without the prior written consent of the other party, assign,
mortgage, charge or dispose of any of its rights hereunder or sub-
contract or otherwise delegate any of its obligations under this
Agreement.
9.5. Nothing in this Agreement shall create or be deemed
to create, a partnership between the parties.
9.6. This Agreement contains the entire agreement between
the parties with respect to the subject matter and supersedes all
previous agreements and understandings between the parties and may
not be modified or varied except by an instrument in writing signed
by the duly authorized representatives of each of the parties.
9.7. Each party acknowledges that, in entering into this
Agreement, it does not do so on the basis of or relying on any
representation, warranty or other provisions except as expressly
provided in this Agreement and accordingly, all conditions,
warranties or other terms implied by statute or common law are
hereby excluded to the fullest extent permitted by law.
9.8. If any provision of this Agreement is held by any
court or other competent authority to be void or unenforceable in
whole or in part, the other provisions of this Agremeent and the
remainder of the affected provisions shall continue to be valid.
9.9. Any waiver by either party of a breach of any
provision of this Agreement shall not be considered as a waiver of
any subsequent breach of the same or any other provision.
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10. NOTICES.
10.1. Any notice or other information required or
authorised by this Agreement to be given by either party to the
other may be given by hand or sent by first class pre-paid air mail
post or facsimile transmission to the other party at the following
address or such other address as may be notified for this purpose
from time to time.
Lawson Mardon Medical Products
Moresby Parks
Whitehaven
Cumbria
CA28 8YD
Telephone: 0044 1946 66444
Facsimile: 0044 1946 66445
For the attention of Andrew Walker
Medical Action Industries Inc.
150 Motor Parkway
Hauppauge, New York 11788
Telephone: 001 516 231 4600
Facsimile: 001 516 231 3075
For the attention of Paul Meringola 516 231 4600 ext.
225.
10.3. Any notice served by hand shall be deemed to
have been served immediately, any notice served by post shall be
deemed to have been served seven (7) days after posting it to the
correct address and any notice served by facsimile transmission
shall be deemed to have been served upon receipt of a valid
transmission, provided it is transmitted on a business day in the
relevant country, and if not, then on the next business day in the
relevant country.
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11. LAW AND JURISDICTION.
11.1. This Agreement shall be read and construed in
accordance with the laws of England and Wales.
11.2. The parties submit to the non-exclusive
jurisdiction of the English courts.
IN WITNESS WHEREOF, this Agreement has been signed by the duly
authorised representatives of the parties hereto the day and year
first above written.
LAWSON MARDON MEDICAL PRODUCTS, a trading
division of LAWSON MARDON PACKAGING UK LTD.
By: /s/ Alistair Napier
------------------------------------
MEDICAL ACTION INDUSTRIES INC.
By: /s/ Paul D. Meringola
------------------------------------
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