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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 and Exchange Act of 1934
Date of Report: October 22, 1997
(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 File (IRS Employer
jurisdiction of 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 5. Other Events.
On October 22, 1997, Joseph R. Meringola, the Company's Chief
Executive Officer and Chairman of the Board of Directors, resigned as a
Director, Chief Executive Officer and employee of the Registrant.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
(c) Exhibits.
1. Letter of resignation from Joseph R. Meringola
dated October 22, 1997.
2. Consulting Agreement between Joseph R.
Meringola and the Registrant dated as of
October 22, 1997.
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
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Richard G. Satin
Vice President-Operations
and General Counsel
Dated: October 28, 1997
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JOSEPH MERINGOLA
12 JEFFERSON STREET
GLEN COVE, NY 11542
October 22, 1997
The Board of Directors
Medical Action Industries Inc.
150 Motor Parkway - Suite 205
Hauppauge, NY 11788
Gentlemen:
I hereby resign my positions as Chief Executive Officer, Chairman of
the Board of Directors, and an employee of the Company effective immediately.
Very truly yours,
/s/ Joseph Meringola
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Joseph Meringola
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CONSULTING AGREEMENT
AGREEMENT made this 22nd day of October, 1997, between JOSEPH R.
MERINGOLA, residing at 12 Jefferson Street, Glen Cove, New York 11542
(hereinafter called the "Consultant"), and MEDICAL ACTION INDUSTRIES INC., a
Delaware corporation with its principal offices located at 150 Motor Parkway,
Hauppauge, New York 11788 (hereinafter called the "Company").
W I T N E S S E T H:
WHEREAS, the Consultant has been employed by the Company for in excess
of twenty years, and is presently the Chief Executive Officer of the Company;
and
WHEREAS, the Company and the Consultant desire to change the nature of
the Consultant's employment;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties hereto agree as follows:
1. Employment.
The Consultant agrees to provide business and financial
consulting services to the Company as requested by the Chief Executive Officer
or the Board of Directors of the Company. Such consulting services may include,
but will not be limited to: (a) evaluation of the progress of the Company's
business development, (b) analysis of the Company's financial condition, fiscal
posture, and operating results, and (c) analysis of the Company's proposed
operations and the projected financial results thereof. Consultant shall not be
required to provide a minimum amount of hours of consulting and shall provide
the services required hereunder when convenient to all concerned. The content
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and adequacy of the consulting services provided hereunder shall be determined
in the Consultant's sole discretion.
2. Term.
The term of the Consultant's engagement shall be for a period
commencing on January 1, 1998 and terminating on December 31, 2007, unless
sooner terminated as provided in Paragraphs 7 and 8 hereof.
3. Compensation.
The Company agrees to pay to the Consultant and the Consultant
agrees to accept the following sums (hereinafter "fee") as a consulting fee:
(a) During the Consulting Term, the Consultant shall be paid a
fee in equal monthly installments, payable in advance on the first day of each
calendar month, at an annual rate of $275,000.00.
(b) Except as otherwise provided in Paragraphs 7 and 8 hereof,
the Company's obligation to pay the fee provided for herein shall not be
affected by the disability of the Consultant.
(c) The Consultant shall not be deemed to be in breach of any
provision of this Agreement unless he shall have been given written notice from
the Company within ninety (90) days of the Company's discovering the alleged
breach by the Company and shall fail to cure the alleged breach within thirty
(30) days after receipt of said written notice.
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4. Cost and Expense.
It is understood that Consultant shall be solely responsible
for the payment of all expenses incurred in connection with the provision of his
services as described herein, including but not limited to, (i) use of an
automobile, (ii) expenses in conjunction with the use of the automobile, such as
fuel, maintenance and insurance, and (iii) obtaining medical, disability, dental
and life insurance coverage. It is specifically acknowledged and agreed that all
such expenses shall be the responsibility of the Consultant and not the Company.
5. Transition.
On the date of execution of this Agreement, the Consultant
will deliver to the Company his written resignation as Chief Executive Officer,
Chairman of the Board and employee of the Company. Thereafter, from the date of
the execution of this Agreement until December 31, 1997, the Consultant shall
have the use of the Company's facilities and office equipment for the purpose of
facilitating the closing out of his correspondence, records and activities at
his offices and in transferring all of his personal accounts, tax records and
other personal records and property from the Company's offices to the
Consultant's home or such other location as may be desired by him and all of the
salary and benefits afforded to the Consultant as an employee of the Company on
the date immediately preceding the date of this Agreement shall continue without
change.
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6. Independent Contractor Status.
(a) Consultant is providing services to the Company only for
the purpose and to the extent set forth in this Agreement, and Consultant's
relation to the Company shall at all times during the term of this Agreement be
that of an independent contractor. Consultant shall not be considered as having
an employee status or as being entitled to participate in any plans,
arrangements, or distributions by the Company pertaining to or in connection
with any pension plan, profit sharing plan or similar plan or benefit for the
Company's regular employees.
(b) Consultant shall not commit or obligate the Company to any
debt obligation or obligation without the specific written authority of the
Chief Executive Officer of the Company.
7. Restriction on Consultant's Shares.
(a) Consultant agrees that until October 31, 2002, he will not
sell, assign or otherwise encumber any shares of the capital stock of the
Company which he now owns or hereafter acquires, except to the extent that
Consultant may sell during each twelve (12) month period (i.e.,
11/1/97-10/31/98; 11/1/98-10/31/99, etc.) following the date of this Agreement a
number of shares equal to the greater of 150,000 shares or one (1%) percent of
the issued and outstanding capital stock of the Company. Shares not otherwise
sold during any twelve (12) month period do not carry over to the next twelve
month period.
(b) If Consultant violates his covenant set forth in
subparagraph (a) above, the compensation payable under Paragraph 3 hereof shall
terminate. Such termination shall be the only remedy available to the Company
for such violation.
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8. Termination.
This Agreement and Consultant's rights to be compensated
hereunder shall terminate only upon: (i) the death of the Consultant; (ii) a
material breach of this Agreement by the Consultant which is not cured within
thirty (30) days of the giving of written notice thereof to the Consultant; and
(iii) a tender for the Company's shares, the Company's sale of substantially all
of its assets to another corporation, a merger or consolidation with another
corporation, where the consideration paid to either the Company or to its
stockholders, as the case may be, is at least $7.00 per share.
9. Confidentiality.
The Consultant agrees that he will not, during the term
hereof, unless compelled to do so by legal process or unless the information is
in the public domain, make use of, or divulge to any other person, firm or
corporation, any trade or business secrets, process, method or means, or any
information concerning the business or policies of the Company (or any
affiliates thereof) which he may have learned as a result of his employment.
10. Covenant Against Competition.
During the term of this Agreement without the consent of the
Board of Directors of the Company, the Consultant agrees not to carry on
anywhere in the United States, either for himself or as a member of any
partnership, or as a stockholder, director, officer, agent, advisor or employee
of another person, firm or corporation or otherwise, any business competitive to
that then being carried on by the Company; provided, however, that the mere
ownership by the Consultant of not more than one (1%) percent
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of the outstanding shares of any corporation listed on any national securities
exchange or of not more than five (5%) percent of the outstanding shares of
stock of any corproation not so listed shall not be deemed a violation of this
covenant.
11. Failure to Pay Compensation.
In the event that the Company shall at any time during the
term of this Agreement fail to make a required monthly payment of compensation
as provided in Paragraph 3 hereof, and such failure shall continue twenty (20)
days after written notice has been given to the Company, the Consultant shall
have no further obligations hereunder and shall be under no duty to seek other
employment or otherwise mitigate his damages and the Company agrees to pay
Consultant, in the event of such a failure to pay, as liquidated damages and not
as a penalty, a lump sum of money equal to the total of fees which would be due
the Consultant from the date of the failure to pay to the end of the Consulting
Period, plus all costs and attorneys' fees which may reasonably incurred in
collecting same.
12. Entire Agreement.
This Agreement contains the entire Agreement between the
Company and the Consultant with respect to the subject matter hereof, and
supersedes and nullifies all prior agreements, whether written or oral,
understandings, promises, and undertakings with respect to the subject matter
hereof, express or implied, made by or on behalf of the parties hereto. This
Agreement cannot be modified, altered or amended except by a writing signed by
all of the parties.
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13. Benefits and Burdens.
This Agreement shall be binding upon and inure to the benefit
of the Consultant as well as the Company and its successors and assigns.
However, nothing herein contained shall permit Consultant to assign or delegate
his rights or obligations hereunder.
14. Notices.
All notices which either party is required or may desire to
give to the other party under or in connection with this Agreement shall be
sufficient if given personally or by registered or certified mail, return
receipt requested, addressed to the other party as follows:
(a) If to the Consultant:
Joseph R. Meringola
12 Jefferson Street
Glen Cove, New York 11545
with a copy to:
Robert A. Melillo, Esq.
108 Forest Avenue
P.O. Box 447
Locust Valley, New York 11560
(b) If to the Company:
Medical Action Industries Inc.
150 Motor Parkway
Hauppauge, New York 11788
Att: Paul D. Meringola, President
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with a copy to:
Richard G. Satin, Esq.
Vice President and General Counsel
Medical Action Industries Inc.
150 Motor Parkway
Hauppauge, New York 11788
15. Construction of Agreement.
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York.
16. Severability.
If any provision of this Agreement shall be held to be invalid
or unenforceable, such invalidity or unenforceability shall not effect or impair
the validity or enforceability of the remaining provisions of this Agreement,
which shall remain in full force and effect, and the parties shall continue to
be bound thereby.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
date first set forth above.
/s/ Joseph R. Meringola
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Joseph R. Meringola
MEDICAL ACTION INDUSTRIES INC.
By: /s/ Paul D. Meringola
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Its: President
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