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Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
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FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
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MEDICAL ACTION INDUSTRIES INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 11-2421849
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
150 Motor Parkway, Hauppauge, New York 11788
(Address of Principal Executive Offices) (Zip Code)
1989 NON-QUALIFIED STOCK OPTION PLAN
1994 STOCK INCENTIVE PLAN
(Full Title of Plans)
RICHARD G. SATIN, VICE PRESIDENT AND GENERAL COUNSEL
MEDICAL ACTION INDUSTRIES INC.
150 Motor Parkway
Hauppauge, New York 11788
(Name and Address of Agent for Service)
(516)231-4600
(Telephone number, including area code, of Agent for Service)
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Securities to to be Price Per Offering Registration
Be Registered Registered Share (1) Price (1) Fee
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Common Stock,
Par value
$.001 per share 850,000 shs. $2.56 $2,176,000 $751
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(1) Estimated solely for the purpose of calculating the registration fee,
based upon the closing price of the Company's Common Stock on the
NASDAQ-National Market System on October 8, 1998.
(2) In addition, pursuant to Rule 416(a) under the Securities Act of
1933, this registration statement also covers an indeterminate amount
of additional shares of Common Stock which may become issuable
pursuant to anti-dilution and adjustment provisions of the Plan.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Securities and Exchange
Commission (the "Commission") by Medical Action Industries Inc., a Delaware
corporation (the "Corporation" or the "Registrant"), are incorporated herein
by reference.
(a) The Corporation's Annual Report filed on Form 10-K for the
fiscal year ended March 31, 1998.
(b) The Corporation's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1998.
(c) The description of the Corporation's common stock, par value
$.001 per share, contained in the Company's Registration
Statement filed on Form 8-A pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act').
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates that all
remaining securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents. Any statement in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for the purposes of this Registration Statement to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
Not applicable.
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Item 5. Interest of Named Experts and Counsel.
Mr. Richard G. Satin is Vice President, General Counsel and Corporate
Secretary of the Company. Mr. Satin has been granted 50,000 options under the
1989 Non-Qualified Stock Option Plan, as amended, at exercise prices ranging
from $1.69 to $1.75 per share and 225,000 options under the 1994 Stock
Incentive Plan, as amended, at exercise prices ranging from $.97 to $3.375 per
share.
Item 6. Indemnification of Directors and Officers.
Under provisions of the Certificate of Incorporation and By-Laws of
the Registrant, each person who is or was a director or officer of the
Registrant shall be indemnified by Registrant as of right to the full extent
permitted or authorized by the General Corporation Law of Delaware.
Under such law, to the extent that such person is successful on the
merits of a defense of a suit or proceeding brought against him by reason of
the fact that he is a director or officer of Registrant, he shall be
indemnified against expenses (including attorneys' fees) reasonably incurred
in connection with such action.
If unsuccessful in the defense of a third-party civil suit or a
criminal suit is settled, such a person shall be indemnified under such law
against both (1) expenses (including attorneys' fees) and (2) judgments, fines
and amounts paid in settlement if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of
Registrant, and with respect to any criminal action, had no reasonable cause
to believe his conduct was unlawful.
If unsuccessful in the defense of a suit bought by or in the right of
Registrant, or if such suit is settled, such a person shall be indemnified
under such law only against expenses (including attorneys' fees) incurred in
the defense or settlement of such suit if he acted in good faith and in a
manner believed to be in, or not opposed to, the best interests of Registrant,
except that if such a person is adjudicated to be liable in such suit for
negligence or misconduct in the performance of his duty to Registrant, he
cannot be made whole event for expenses unless the court determines that he is
fairly and reasonably entitled to be indemnified for such expenses.
Item 7. Exemption from Registration Claimed.
Not applicable.
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Item 8. Exhibits.
4.1 1989 Non-Qualified Stock Option Plan, as amended.
4.2 1994 Stock Incentive Plan, as amended.
5 Opinion and consent of Richard G. Satin, Vice President and
General Counsel, relating to the legality of securities
under the 1989 Non-Qualified Stock Option Plan, as amended,
and 1994 Stock Incentive Plan, as amended.
23.1 Consent of Grant Thornton, LLP.
23.2 Consent of Ernst & Young, LLP.
23.3 Consent of Richard G. Satin, Vice President and General
Counsel - included in his opinion filed as Exhibit 5.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement;
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the registration statement;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed
in the registration statement or any material
change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8, and information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the
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Registrant pursuant to Sections 13 or 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purposes of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a
new registration statement relating to the
securities offered therein, and the offering of
such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment of any of the securities
being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement that shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by the controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Hauppauge, New York on the 9th day of October, 1998.
MEDICAL ACTION INDUSTRIES INC.
By: /s/ Paul D. Meringola
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Paul D. Meringola, Chief Executive
Officer and President
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed on October 9, 1998 by the
following persons in the capacities indicated. Each person whose signature
appears below constitutes and appoints Paul D. Meringola, with full power of
substitution, our true and lawful attorney and agent to do any and all acts
and things in our name and on our behalf in our capacities indicated below
which we may deem necessary or advisable to enable Medical Action Industries
Inc. to comply with the Securities Act of 1933, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission, in
connection with this Registration Statement including specifically, but
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not limited to, power and authority to sign for us or any of us in our names
in the capacities stated below, any and all amendments (including
post-effective amendments) thereof; and we do hereby ratify and confirm all
that we shall do or cause to be done by virtue thereof.
Signature Title
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/s/ Paul D. Meringola Chief Executive Officer, President
- -------------------------- and Director
Paul D. Meringola
/s/ Richard G. Satin Vice President, General Counsel
- -------------------------- and Director
Richard G. Satin (Principal Accounting Officer)
/s/ Bernard Wengrover Director
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Bernard Wengrover
/s/ Philip F. Corso Director
- --------------------------
Philip F. Corso
/s/ Thomas A. Nicosia Director
- --------------------------
Thomas A. Nicosia
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
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MEDICAL ACTION INDUSTRIES INC.
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Form S-8 Registration Statement
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EXHIBIT INDEX
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Page No. in Sequential
Exhibit Numbering of all Pages,
Number Exhibit Description including Exhibit Pages
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4.1 1989 Non-Qualified Stock
Option Plan............................... 8
4.2 1994 Stock Incentive
Plan...................................... 13
5 Opinion and Consent of Counsel............ 25
23.1 Consent of Grant Thornton LLP............. 26
23.2 Consent of Ernst & Young LLP.............. 27
23.3 Consent of Counsel........................ See Exhibit 5
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MEDICAL ACTION INDUSTRIES INC.
1989 NON-QUALIFIED STOCK OPTION PLAN, AS AMENDED
1. Purpose and Effect
(a) The purpose and effect of this plan (the "Plan") is to induce
officers, directors and other senior executives and management and supervisory
personnel of and consultants to Medical Action Industries Inc., a Delaware
corporation ("Medical Action") and its subsidiaries (Medical Action and its
subsidiaries being hereinafter collectively referred to as the "Company"), who
are in a position to make material contributions to the Company's success, to
remain in the service of the Company, to offer them incentives and rewards in
recognition of their share in the Company's progress, and to encourage them to
continue to promote the best interests of the Company through the grant to
them of options (the "Options") for the purchase of Common Stock, $.001 par
value, of Medical Action (the "Common Stock"). The Plan is also intended to
aid the Company in competing with other enterprises for the services of new
senior executives needed to help insure continued development. For purposes of
this Plan, the term "subsidiaries" shall include all corporations at least 50%
of the voting stock of which is owned directly or indirectly by Medical
Action.
(b) In the event that this Plan is not approved by the stockholders
of Medical Action, the Plan and all Options granted and to be granted
hereunder shall be null and void, and the Company shall have no obligation of
any nature whatsoever to any employee, director or other person arising out of
either the Plan or any Options granted or to be granted thereunder.
2. Administration
(a) The Plan shall be administered by the Board of Directors of
Medical Action (the "Board"), provided however, that the Board may, in the
exercise of its discretion, designate from among its members a Compensation
Committee (the "Committee") consisting of no fewer than three directors, each
of whom shall be a "disinterested person" within the meaning of Rule 16b-3 (or
any successor rule or regulation) promulgated under the Securities Exchange
Act of 1934, as amended ("Exchange Act"), and may delegate to the Committee
full power and authority, subject to such orders or resolutions not
inconsistent with the provisions of the Plan as may from time to time be
issued or adopted by the Board, to interpret the provisions and supervise the
administration of the Plan. Any member of the Committee may be removed at any
time either with or without cause by resolution adopted by the Board, and any
vacancy on the
Exhibit 4.1
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Committee may at any time be filled by resolution adopted by the Board. Any or
all powers and functions of the Committee may at any time and from time to
time be exercised by the Board; provided, however, that with respect to the
participation in the Plan of persons who are members of the Board, such powers
and functions of the Committee may be exercised by the Board only if, at the
time of such exercise, a majority of the members of the entire Board and a
majority of the directors acting in the particular matter are "disinterested
persons" within the meanings of Rule 16b-3 promulgated under the Exchange Act.
(b) Each Option shall be evidenced by an Option Agreement that shall
contain terms and conditions (consistent with the terms and conditions of this
Plan) as may be approved by the Board or the Committee, as the case may be,
and shall be signed by an officer of Medical Action and the optionee (the
"Optionee").
(c) Subject to an applicable provision of Medical Action's By-Laws,
all decisions made by the Board or the Committee pursuant to the provisions of
the Plan and related orders or resolutions of the Board shall be final,
conclusive and binding on all persons, including the Company, stockholders,
employees and Optionees.
3. Shares Subject to the Plan
(a) The shares of Common Stock to be delivered upon the exercise of
Options granted under the Plan shall be made available, at the discretion of
the Board, either from the authorized but unissued shares of Common Stock or
from shares of Common Stock reacquired by Medical Action and held in treasury.
(b) Subject to adjustments made pursuant to the provisions of
Paragraph (c) of this Section 3, the aggregate number of shares to be
delivered upon exercise of all Options that may be granted under this Plan
shall be 2,150,000 shares. If an Option granted under the Plan shall expire or
terminate for any reason during the term of the Plan, the shares subject to
but not delivered under such Option shall be available for the grant of other
Options. The foregoing notwithstanding, no person may be granted Options in
any calendar year to purchase shares of Common Stock which in the aggregate
have a fair market value of more than $100,000.
(c) In the event of a merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, or other change in corporate
structure affecting the Common Stock, appropriate adjustment shall be made in
the aggregate number of shares subject to the Plan and in the number of shares
subject to unexercised Options previously granted under the Plan.
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4. Eligibility and Participation
The persons eligible to receive Options shall consist of officers,
directors and other senior executives and management and supervisory personnel
of and consultants to the Company. Subject to the limitations of the Plan, the
Board or the Committee, as the case may be, shall select the person to be
granted Options, determine the number of shares and exercise price subject to
each Option, and determine the time when each Option shall be granted. More
than one Option may be granted to the same person.
5. Term of Plan and Option Period
The terms during which Options may be granted under the Plan shall
commence on October 25, 1989 and expire on October 24, 2009, provided,
however, that if the Plan is not approved by the stockholders of Medical
Action all Options granted hereunder shall become null and void. Subject to
the provisions of the Plan with respect to death, retirement and termination
of employment, the maximum period during which each Option may be exercised
may be fixed by the Board or the Committee, as the case may be, at the time
such Option is granted but shall in no event exceed ten (10) years.
6. Exercise Price
(a) The price at which shares of Common Stock may be purchased upon
exercise of a particular Option shall not be less than eighty-five (85%) of
the fair market value of such shares on date such Option is granted, as
determined by the Board or the Committee, as the case may be.
(b) For purposes of determining the Fair Market Value of a share of
Common Stock on the date of grant, if the Common Stock (i) is then listed on
any national securities exchange, the Fair Market Value shall be the closing
price per share of the Common Stock on such exchange at the close of the
trading session on the date of grant, (ii) is then listed on NASDAQ (but not
on any national securities exchange), the Fair Market Value shall be the
closing price per share of the Common Stock on NASDAQ on the date of grant, or
(iii) is then traded on the over-the-counter market (but not on a national
securities exchange or NASDAQ), the Fair Market Value shall be the average of
the closing bid and asked prices of the Common Stock as reported by the
National Quotation Bureau, Inc. or other entity then publishing bid and asked
prices for the Common Stock for the date of grant, or, if unavailable, then
the last trading date on which bid and asked quotations were published
immediately preceding the date of grant.
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7. Exercise of Options
(a) Each Option granted under this Plan may be exercised only during
the continuance of the Optionee's employment or service with the Company and
only as to such percentage of the shares covered thereby during such periods
as may be determined at the time of grant by the Board or the Committee, as
the case may be, but if no such percentage is specified, then each Option
granted under this Plan may be exercised as to 50% of the shares covered
thereby one year after the date of grant and as to an additional 50% of the
shares covered thereby two years after the date of grant (so that such Option
may be exercised as to 100% of the shares covered thereby beginning two (2)
years after the date of grant), except in the case of death, retirement or
termination of employment or service as hereinafter provided. Subject to the
foregoing limitations and the terms and conditions of the option certificate,
each Option shall be exercisable with respect to such number of shares and
during such periods as shall be fixed by the Board or the Committee, as the
case may be; provided, however, that if the Board or the Committee grants an
Option or Options exercisable in more than one installment, and if the
employment or service of an Optionee holding such Option is terminated, the
Option shall be exercisable as to such number of shares as to which the
Optionee had the right to exercise on the date of termination of employment
services.
(b) No shares of Common Stock shall be delivered pursuant to the
exercise of any Option, in whole or in part, until qualified for delivery
under such laws and regulations as may be deemed by the Board or the
Committee, as the case may be, to be applicable thereto and until payment in
full of the exercise price thereof is received by the Company.
(c) When exercising Options in whole or in part, Optionees may pay
the exercise price in cash, in shares of Common Stock or by means of any other
consideration acceptable to the Board or the Committee. For purposes of
valuing any share of Common Stock used to exercise any Option in whole or in
part, such shares shall be valued as provided in Section 6(b). Shares of
Common Stock used to exercise any Option granted hereunder shall be free and
clear of all liens, pledges, claims, encumbrances and restrictions of any kind
or nature whatsoever, other than restrictions imposed upon such shares
pursuant to the provisions of the Securities Act of 1933, as amended.
(d) No Optionee, or legal representative, legatee, or distributee of
an Optionee, shall be deemed to be a holder of any shares subject to any
Option granted hereunder unless and until the certificate or certificates
therefor have been issued and delivered.
8. Non-Transferability of Options
An Option granted under the Plan may not be transferred except by
will or the laws of descent and distribution, and during the lifetime of the
person to whom granted, may be exercised only by such person.
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9. Death, Retirement and Termination of Employment
Any Option, the period of which has not theretofore expired, shall
terminate at the time of death of the person to whom granted or at the time of
retirement or termination for any reason of such person's employment or
service with the Company, and no share of Common Stock may thereafter be
delivered pursuant to such Option, except that:
(a) upon retirement or termination of employment or service
(other than by death, disability, voluntary termination or
termination for cause), an Optionee may within two (2) months after
the date of such retirement or termination, purchase all or part of
the shares with respect to which such Optionee is entitled to
exercise such Option, in accordance with the provisions of Section 7
hereof, but in no event after the expiration of the term of the
Option ("cause" for purposes of this Plan shall mean (i) willful
disregard of duties, (ii) habitual absence from employment or
service, (ii) intoxication, or (iv) dishonesty);
(b) upon the "disability" of any Optionee, the Optionee may
within six (6) months after the date of such termination of
employment, but in no event after the expiration of the term of the
Option, purchase all or part of the shares with respect to which such
Optionee is entitled to exercise such Option, in accordance with the
provisions of Section 7 hereof. For purposes of the Plan, the term
"disability" shall mean a physical or mental disability as defined in
Section 105 of the Internal Revenue Code of 1986, as amended; and
(c) upon the death of any Optionee while in active
employment or service, the person or person to whom such Optionee's
rights under the Option are transferred by will or the law of descent
and distribution may, within six (6) months after the date of such
Optionee's death, but in no event after the expiration of the term of
the Option, purchase all or any part of the shares with respect to
which the Option was exercisable on the date of death in accordance
with the provisions of Section 7 hereof.
10. Amendments and Discontinuance
The Board may amend, suspend, or discontinue the Plan, but may not,
without the prior approval of Medical Action's stockholders, make any
amendments that would (i) make any material change in the class of eligible
persons as defined in the Plan, (ii) increase the total number of shares for
which Options may be granted under the Plan, (iii) extend the term of the Plan
or the maximum option period, (iv) decrease the minimum option price, or (v)
permit adjustments in the number and option price of shares granted under the
Plan except as permitted by the provisions of Paragraph (c) of Section 3
above.
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MEDICAL ACTION INDUSTRIES INC.
1994 STOCK INCENTIVE PLAN, AS AMENDED
SECTION 1 DEFINITIONS
1.1 Definitions. Whenever used herein, the masculine pronoun shall be deemed
to include the feminine and the singular to include the plural, unless the
context clearly indicates otherwise, and the following capitalized words and
phrases are used herein within the meaning thereafter ascribed:
(a) "Board of Directors" means the board of directors of the Company.
(b) "Change in Control" means the first to occur of the following
events:
(i) any person (as defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and 14(d) thereof),
excluding the Company, any Subsidiary and any employee benefit plan
sponsored or maintained by the Company or any Subsidiary (including
any trustee of such plan acting as trustee), but including 'group' as
defined in Section 13(d)(3) of the Exchange Act (a "Person"), becomes
the beneficial owner of shares of the Company having at least twenty
(20%) percent of the total number of votes that may be cast for the
election of directors of the Company (the "Voting Shares"); provided
that no Change of Control will occur as a result of an acquisition of
stock by the Company which increases, proportionately, the stock
representing the voting power of the Company, and provided further
that if such person or group acquires stock representing more than
twenty percent (20%) of the voting power of the Company by reason of
share purchases by the Company, and after such share purchases by the
Company acquires any additional shares representing the voting power
of the Company, then a Change in Control shall occur;
(ii) the shareholders of the Company shall approve any
merger or other business combination of the Company, sale of the
Company's assets or combination of the foregoing transactions (a
"Transaction") other than a Transaction involving only the Company
and one or more of its Subsidiaries, or a Transaction immediately
following which the shareholders of the Company immediately prior to
the Transaction continue to have a majority of the voting power in
the resulting entity excluding for this purpose any shareholder
owning directly or indirectly more than ten percent (10%) of the
shares of the other company involved in the merger; or
Exhibit 4.2
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(iii) within any 24-month period beginning on or after June
30, 1994, who were directors of the Company immediately before the
beginning of such period (the "Incumbent Directors") shall cease (for
any reason other than death) to constitute at least a majority of the
Board of Directors or the board of directors of any successor to the
Company, provided that any director who was not a director as of July
1, 1994 shall be deemed to be an Incumbent Director if such director
was elected to the Board of Directors by, or on the recommendation of
or with the approval of, at least two-thirds of the directors who
then qualified as Incumbent Directors either actually or by prior
operation of this clause (iii); and provided further that any
director elected to the Board of Directors to avoid or settle a
threatened or actual proxy contest shall in no event be deemed to be
an Incumbent Director.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the committee appointed by the Board of
Directors to administer the Plan. The Committee shall consist of at least two
members of the Board of Directors, each of whom shall be a "disinterested
person", as defined in Rule 16b-3 as promulgated under the Exchange Act.
(e) "Company" means Medical Action Industries Inc., a Delaware
corporation.
(f) "Disability" has the same meaning as provided in the long-term
disability plan or policy maintained or, if applicable, most recently
maintained, by the Company or, if applicable, any affiliate of the Company for
the Participant. If no long-term disability plan or policy was ever maintained
on behalf of the Participant or, if the determination of Disability relates to
an Incentive Stock Option, disability shall mean the condition described in
Code Section 22(e)(3), as amended from time to time. In the event of a
dispute, the determination of Disability shall be made by the Committee and
shall be supported by advice of a physician competent in the area to which
such Disability relates.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(h) "Fair Market Value" with regard to a date means the closing price
at which Stock shall have been sold on the last trading date prior to that
date as reported by the National Association of Securities Dealers Automated
Quotation System (or, if applicable, as reported by a national securities
exchange selected by the Committee on which the shares of Stock are then
actively traded) and published in The Wall Street Journal; provided that, for
purposes of granting awards other than Incentive Stock Options, Fair Market
Value of the shares of Stock may be determined by the Committee by reference
to the average market value determined over a period certain or as of
specified dates, to a tender offer price for the shares of Stock (if
settlement of an award is triggered by such an event) or to any other
reasonable measure of fair market value.
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(i) "Option" means a non-qualified stock option or an incentive stock
option.
(j) "Over 10% Owner" means an individual who at the time an Incentive
Stock Option is granted owns Stock possessing more than 10% of the total
combined voting power of the Company or one of its Subsidiaries, determined by
applying the attribution rules of Code Section 424(d).
(k) "Participant" means an individual who receives a Stock Incentive
hereunder.
(l) "Plan" means the Medical Action Industries Inc 1994 Stock
Incentive Plan.
(m) "Stock" means the Company's common stock, $.001 par value.
(n) "Stock Incentive Agreement" means an agreement between the
Company and a Participant or other documentation evidencing an award of a
Stock Incentive.
(o) "Stock Incentive Program" means a written program established by
the Committee, pursuant to which Stock Incentives are awarded under the Plan
under uniform terms, conditions and restrictions set forth in such written
program.
(p) "Stock Incentives" means, collectively, Incentive Stock Options,
Non-Qualified Stock Options and Stock Awards.
(q) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, with respect to
Incentive Stock Options, at the time of the granting of the Option, each of
the corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain.
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SECTION 2 THE STOCK INCENTIVE PLAN
2.1 Purpose of the Plan. The Plan is intended to (a) provide incentive to
officers and key employees of the Company and its affiliates to stimulate
their efforts toward the continued success of the Company and to operate and
manage the business in a manner that will provide for the long-term growth and
profitability of the Company; (b) encourage stock ownership by officers and
key employees by providing them with a means to acquire a proprietary interest
in the Company, acquire shares of Stock, or to receive compensation which is
based upon appreciation in the value of Stock; and (c) provide a means of
obtaining, rewarding and retaining key personnel.
2.2 Stock Subject to the Plan. Subject to adjustment in accordance with
Section 5.2, 850,000 shares of Stock (the "Maximum Plan Shares") are hereby
reserved exclusively for issuance pursuant to Stock Incentives. At no time
shall the Company have outstanding Stock Incentives in excess of the Maximum
Plan shares; for this purpose, the outstanding Stock Incentives and shares of
Stock issued in respect of Stock Incentives shall be computed in accordance
wit Rule 16b-3(a)(1) as promulgated under the Exchange Act. To the extent
permitted by Rule 16b-3(a)(1) as promulgated under the Exchange Act, the
shares of Stock attributable to the nonvested, unpaid, unexercised,
unconverted or otherwise unsettled portion of any Stock Incentive that is
forfeited or cancelled or expires or terminates for any reason without
becoming vested, paid, exercised, converted or otherwise settled in full shall
again be available for purposes of the Plan.
2.3 Administration of the Plan. The Plan shall be administered by the
Committee. The Committee shall have full authority in its discretion to
determine the officers and key employees of the Company or its affiliates to
whom Stock Incentives shall be granted and the terms and provisions of Stock
Incentives subject to the Plan; provided, however, that any award of a Stock
Incentive to any employee who is also a member of the Board of Directors shall
be approved by the majority of the "disinterested persons", as defined in Rule
16b-3 as promulgated under the Exchange Act, then serving as members of the
Board of Directors, upon the recommendation of the Committee. Subject to the
provisions of the Plan, the Committee shall have full and conclusive authority
to interpret the Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the respective
Stock Incentive Agreements and to make all other determinations necessary or
advisable for the proper administration of the Plan. The Committee's
determinations under the Plan need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, awards
under the Plan (whether or not such persons are similarly situated). The
Committee's decisions shall be final and binding on all Participants.
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2.4 Eligibility and Limits. Stock Incentives may be granted only to officers
and key employees of the Company, or any affiliate of the Company; provided,
however, that directors who serve on the Committee shall not be eligible to
receive awards that are subject to Section 16 of the Exchange Act while they
are members of the Committee and that an incentive stock option may only be
granted to an employee of the Company or any Subsidiary. In the case of
incentive stock options, the aggregate Fair Market Value (determined as at the
date an incentive stock option is granted) of stock with respect to which
stock options intended to meet the requirements of Code Section 422 become
exercisable for the first time by an individual during any calendar year under
all plans of the Company and its Subsidiaries shall not exceed $100,000;
provided further, that if the limitation is exceeded, the incentive stock
option(s) which cause the limitation to be exceeded shall be treated as
non-qualified stock option(s).
SECTION 3 TERMS OF STOCK INCENTIVES
3.1 Terms and Conditions of All Stock Incentives.
(a) The number of shares of Stock as to which a Stock Incentive shall
be granted shall be determined by the Committee in its sole discretion,
subject to the provisions of Section 2.2 as to the total number of shares
available for grants under the Plan.
(b) Each Stock Incentive shall either be evidenced by a Stock
Incentive Agreement in such form and containing such terms, conditions and
restrictions as the Committee may determine to be appropriate, or be made
subject to the terms of a Stock Incentive Program, containing such terms,
conditions and restrictions as the Committee may determine to be appropriate.
Each Stock Incentive Agreement or Stock Incentive Program shall be subject to
the terms of the Plan and any provisions contained in the Stock Incentive
Agreement or Stock Incentive Program that are inconsistent with the Plan shall
be null and void.
(c) The date a Stock Incentive is granted shall be date on which the
Committee has approved the terms and conditions of the Stock Incentive and has
determined the recipient of the Stock Incentive and the number of shares
covered by the Stock Incentive.
(d) Each Stock Incentive Agreement or Stock Incentive Program shall
provide that, in the event of a Change in Control, the Stock Incentive shall
be cashed out on the basis of any price not greater than the highest price
paid for a share of Stock in any transaction reported by the National
Association of Securities Dealers Automated Quotation System or any national
securities exchange selected by the Committee on which the shares of Stock are
then actively traded during a specified period immediately preceding or ending
on the date of the Change in Control or offered for a share of Stock in any
tender offer occurring during a specified period immediately preceding or
ending on the date the tender offer commenced; provided that, in no case shall
any such specified
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period exceed one (1) year (the "Change in Control Price"). For purposes of
this Subsection the cash-out of a Stock Incentive shall be determined as
follows:
(i) Options shall be cashed out on the basis of the excess,
if any, of the Change in Control Price (but not more than the Fair
Market Value of the Stock on the date of the cash-out in the case of
Incentive Stock Options) over the Exercise Price with or without
regard to whether the Option may otherwise be exercisable only in
part; and
(ii) Stock Awards shall be cashed out in an amount equal to
the Change in Control Price with or without regard to any conditions
or restrictions otherwise applicable to any such Stock Incentive.
(e) Any Stock Incentive may be granted in connection with all or any
portion of a previously or contemporaneously granted Stock Incentive. Exercise
or vesting of a Stock Incentive granted in connection with another Stock
Incentive may result in a pro rata surrender or cancellation of any related
Stock Incentive, as specified in the applicable Stock Incentive Agreement or
Stock Incentive Program.
(f) Stock Incentives shall not be transferable or assignable except
by will or by the laws of descent and distribution and shall be exercisable,
during the Participant's lifetime, only by the Participant, or in the event of
the Disability of the Participant, by the legal representative of the
Participant.
3.2 Terms and Conditions of Options. Each Option granted under the Plan shall
be evidenced by a Stock Incentive Agreement. At the time any Option is
granted, the Committee shall determine whether the Option is to be an
incentive stock option described in Code Section 422 or a non-qualified stock
option, and the Option shall be clearly identified as to its status as an
incentive stock option or a non-qualified stock option. An incentive stock
option may only be granted within ten (10) years from the earlier of the date
the Plan is adopted or approved by the Company's stockholders.
(a) Option Price. Subject to adjustment in accordance with Section
5.2 and the other provisions of this Section 3.2, the exercise price (the
"Exercise Price") per share of Stock purchasable under any Option shall be as
set forth in the applicable Stock Incentive Agreement, but in no event shall
it be less than the Fair Market Value on the date the Option is granted. With
respect to each grant of an incentive stock option to a Participant who is an
Over 10% Owner, the Exercise Price shall not be less than 110% of the Fair
Market Value on the date the Option is granted. The Exercise Price of an
Option may not be amended or modified after the grant of the Option, and an
Option may not be surrendered in consideration of or exchanged for a grant of
a new Option having an Exercise Price below that of an Option which was
surrendered or exchanged.
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(b) Option Term. Any incentive stock option granted to a Participant
who is not an Over 10% Owner shall not be exercisable after the expiration of
ten (10) years after the date the Option is granted. Any incentive stock
option granted to an Over 10% Owner shall not be exercisable after the
expiration of five (5) years after the date the Option is granted. The term of
any non-qualified stock option plan shall be as specified in the applicable
Stock Incentive Agreement.
(c) Payment. Payment for all shares of Stock purchased pursuant to
exercise of an Option shall be made in any form or manner authorized by the
Committee in the Stock Incentive Agreement or by amendment thereto, including,
but not limited to, cash or, if the Stock Incentive Agreement provides, (i) by
delivery to the Company of a number of shares of Stock which have been owned
by the holder for at least six (6) months prior to the date of exercising
having an aggregate Fair Market Value of not less than the product of the
Exercise Price multiplied by the number of shares the Participant intends to
purchase upon exercise of the Option on the date of delivery; (ii) in a
cashless exercise through a broker; or (iii) by having a number of shares of
Stock withheld, the Fair Market Value of which as of the date of exercise is
sufficient to satisfy the Exercise Price. In its discretion, the Committee
also may authorize (at the time an Option is granted or thereafter) Company
financing to assist the Participant as to payment of the Exercise Price on
such terms as may be offered by the Committee in its discretion. Any such
financing shall require the payment by the Participant of interest on the
amount financed at a rate not less than the "applicable federal rate" under
the Code. Payment shall be made at the time that the Option or any part
thereof is exercised, and no shares shall be issued or delivered upon exercise
of an Option until full payment has been made by the Participant. The holder
of an Option as such shall have none of the rights of a stockholder.
(d) Conditions to the Exercise of an Option. Each Option granted
under the Plan shall be exercisable by whom, at such time or times, or upon
the occurrence of such event or events, and in such amounts, as the Committee
shall specify in the Stock Incentive Agreement; provided, however, that
subsequent to the grant of an Option, the Committee, at any time before
complete termination of such Option, may accelerate the time or times at which
such Option may be exercised in whole or in part, including, without
limitation, upon a Change in Control and may permit the Participant or any
other designated person to exercise the Option, or any portion thereof, for
all or part of the remaining Option term, notwithstanding any provision of the
Stock Incentive Agreement to the contrary.
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(e) Termination of Incentive Stock Option. With respect to an
incentive stock option, in the event of termination of employment of a
Participant, the Option or portion thereof held by the Participant which is
unexercised shall expire, terminate, and become unexercisable no later than
the expiration of three (3) months after the date of termination of
employment; provided, however, that in the case of a holder whose termination
of employment is due to death or Disability, one (1) year shall be substituted
for such three (3) month period. For purposes of this Subsection (e),
termination of employment of the Participant shall not be deemed to have
occurred if the Participant is employed by another corporation (or a parent or
subsidiary corporation of such other corporation) which has assumed the
incentive stock option of the Participant in a transaction to which Code
Section 424(a) is applicable.
(f) Special Provisions for Certain Substitute Options.
Notwithstanding anything to the contrary in this Section 3.2, any Option
issued in substitution for an option previously issued by another entity,
which substitution occurs in connection with a transaction to which Code
Section 424(a) is applicable, may provide for an exercise price computed in
accordance with such Code Section and the regulations thereunder and may
contain such other terms and conditions as the Committee may prescribe to
cause such substitute Option to contain as nearly as possible the same terms
and conditions (including the applicable vesting and termination provisions)
as those contained in the previously issued option being replaced thereby.
3.3 Terms and Conditions of Stock Awards. The number of shares of Stock
subject to a Stock Award and restrictions or conditions on such shares, if
any, shall be as the Committee determines, and the certificate for such shares
shall bear evidence of any restrictions or conditions. Subsequent to the date
of the grant of the Stock Award, the Committee shall have the power to permit,
in its discretion, an acceleration of the expiration of an applicable
restriction period with respect to any part or all of the shares awarded to a
Participant. The Committee may require a cash payment from the Participant in
an amount no greater than the aggregate Fair Market Value of the shares of
Stock awarded determined at the date of grant in exchange for the grant of a
Stock Award or may grant a Stock Award without the requirement of a cash
payment. In the event that shares of Stock subject to Stock Awards are
forfeited by a Participant, such shares of Stock may again be subject to a new
Stock Award under the Plan.
3.4 Treatment of Awards Upon Termination of Employment. Except as otherwise
provided by Plan Section 3.2(e), any award under this Plan to a Participant
who has terminated employment may be cancelled, accelerated, paid or
continued, as provided in the applicable Stock Incentive Agreement or Stock
Incentive Program, or, in the absence of such provision, as the Committee may
determine. The portion of any award exercisable in the event of continuation
or the amount of any payment due under a continued award may be adjusted by
the Committee to reflect the Participant's period of service from the date of
grant through the date of the Participant's termination of employment or such
other factors as the Committee determines are relevant to its decision to
continue the award.
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SECTION 4 RESTRICTIONS ON STOCK
4.1 Escrow of Shares. Any certificates representing the shares of Stock issued
under the Plan shall be issued in the Participant's name, but, if the
applicable Stock Incentive Agreement or Stock Incentive Program so provides,
the shares of Stock shall be held by a custodian designated by the Committee
(the "Custodian"). Each applicable Stock Incentive Agreement or Stock
Incentive Program providing for transfer of shares of Stock to the Custodian
shall appoint the Custodian as the attorney-in-fact for the Participant for
the term specified in the applicable Stock Incentive Agreement or Stock
Incentive Program, with full power and authority in the Participant's name,
place and stead to transfer, assign and convey to the Company any shares of
Stock held by the Custodian for such Participant, if the Participant forfeits
the shares under the terms of the applicable Stock Incentive Agreement or
Stock Incentive Program. During the period that the Custodian holds the shares
subject to this Section, the Participant shall be entitled to all rights,
except as provided in the applicable Stock Incentive Agreement or Stock
Incentive Program, applicable to shares of Stock not so held. Any dividends
declared on shares of Stock held by the Custodian shall, as the Committee may
provide in the applicable Stock Incentive Agreement or Stock Incentive
Program, be paid directly to the Participant or, in the alternative, be
retained by the Custodian or by the Company until the expiration of the term
specified in the applicable Stock Incentive Agreement or Stock Incentive
Program and shall then be delivered, together with any proceeds, with the
shares of Stock to the Participant or to the Company, as applicable.
4.2 Restrictions on Transfer. The Participant shall not have the right to make
or permit to exist any disposition of the shares of Stock issued pursuant to
the Plan except as provided in the Plan or the applicable Stock Incentive
Agreement or Stock Incentive Program. Any disposition of the shares of Stock
issued under the Plan by the Participant not made in accordance with the Plan
or the applicable Stock Incentive Agreement or Stock Incentive Program shall
be void. The Company shall not recognize, or have the duty to recognize, any
disposition not made in accordance with the Plan and the applicable Stock
Incentive Agreement or Stock Incentive Program, and the shares so transferred
shall continue to be bound by the Plan and the applicable Stock Incentive
Agreement or Stock Incentive Program.
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SECTION 5 GENERAL PROVISIONS
5.1 Withholding. The Company shall deduct from all cash distributions under
the Plan any taxes required to be withheld by federal, state or local
government. Whenever the Company proposes or is required to issue or transfer
shares of Stock under the Plan or upon the vesting of any Stock Award, the
Company shall have the right to require the recipient to remit to the Company
an amount sufficient to satisfy any federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares or the vesting of such Stock Award. A Participant may pay the
withholding tax in cash, or, if the applicable Stock Incentive Agreement or
Stock Incentive Program provides, a Participant may elect to have the number
of shares of Stock he is to receive reduced by, or with respect to a Stock
Award, tender back to the Company, the smallest number of whole shares of
Stock which, when multiplied by the Fair Market Value of the shares of Stock
determined as of the Tax Date (defined below), is sufficient to satisfy
federal, state and local, if any, withholding taxes arising from exercise or
payment of a Stock Incentive (a "Withholding Election"). A Participant may
make a Withholding Election only if both of the following conditions are met:
(a) The Withholding Election must be made on or prior to the date on
which the amount of tax required to be withheld is determined (the "Tax Date")
by executing and delivering to the Company a properly completed notice of
Withholding Election as prescribed by the Committee; and
(b) Any Withholding Election made will be irrevocable except on six
months advance written notice delivered to the Company; however, the Committee
may in its sole discretion disapprove and give no effect to the Withholding
Election.
5.2 Changes in Capitalization; Merger; Liquidation.
(a) The number of shares of Stock reserved for the grant of Options
and Stock Awards; the number of shares of Stock reserved for issuance upon the
exercise or payment, as applicable, of each outstanding Option, and upon
vesting or grant, as applicable, of each Stock Award; the Exercise Price of
each outstanding Option shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Stock resulting from a subdivision
or combination of shares or the payment of a stock dividend in shares of Stock
to holders of outstanding shares of Stock or any other increase or decrease in
the number of shares of Stock outstanding effected without receipt of
consideration by the Company.
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(b) In the event of a merger, consolidation or other reorganization
of the Company or tender offer for shares of Stock, the Committee may make
such adjustments with respect to awards and take such other action as it deems
necessary or appropriate to reflect such merger, consolidation, reorganization
or tender offer, including, without limitation, the substitution of new
awards, or the adjustment of outstanding awards, the acceleration of awards or
the removal of restrictions on outstanding awards. Any adjustment pursuant to
this Section 5.2 may provide, in the Committee's discretion, for the
elimination without payment therefor of any fractional shares that might
otherwise become subject to any Stock Incentive, but shall not otherwise
diminish the then value of the Stock Incentive.
(c) The existence of the Plan and the Stock Incentives granted
pursuant to the Plan shall not affect in any way the right or power of the
Company to make or authorize any adjustment, reclassification, reorganization
or other change in its capital or business structure, any merger or
consolidation of the Company, any issue of debt or equity securities having
preference or priorities as to the Stock or the rights thereof, the
dissolution or liquidation of the Company, any sale or transfer of all or any
part of its business or assets, or any other corporate act or proceeding.
5.3 Cash Awards. The Committee may, at any time and in its discretion, grant
to any holder of a Stock Incentive the right to receive, at such times and in
such amounts as determined by the Committee in its discretion, a cash amount
which is intended to reimburse such person for all or a portion of the
federal, state and local income taxes imposed upon such person as a
consequence of the receipt of the Stock Incentive or the exercise of rights
thereunder.
5.4 Compliance with Code. All incentive stock options to be granted hereunder
are intended to comply with Code Section 422, and all provisions of the Plan
and all incentive stock options granted hereunder shall be construed in such
manner as to effectuate that intent.
5.5 Right to Terminate Employment. Nothing in the Plan or in any Stock
Incentive shall confer upon any Participant the right to continue as an
employee or officer of the Company or any of its affiliates or affect the
right of the Company or any of its affiliates to terminate the Participant's
employment at any time.
5.6 Non-alienation of Benefits. Other than as specifically provided with
regard to the death of a Participant, no benefit under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge; and any attempt to do so shall be void. No such
benefit shall, prior to receipt by the Participant, be in any manner liable
for or subject to the debts, contracts, liabilities, engagements or torts of
the Participant.
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5.7 Listing and Legal Compliance. The Committee may suspend the exercise or
payment of any Stock Incentive so long as it determines that securities
exchange listing or registration or qualification under any securities laws is
required in connection therewith and has not been completed on terms
acceptable to the Committee.
5.8 Termination and Amendment of the Plan. The Board of Directors at any time
may amend or terminate the Plan without stockholder approval; provided,
however, that the Board of Directors may condition any amendment on the
approval of stockholders of the Company if such approval is necessary or
advisable with respect to tax, securities or other applicable laws. No such
termination or amendment without the consent of the holder of a Stock
Incentive shall adversely affect the rights of the Participant under such
Stock Incentive.
5.9 Stockholder Approval. The Plan shall be submitted to the stockholders of
the Company for their approval within twelve (12) months before or after the
adoption of the Plan by the Board of Directors of the Company. If such
approval is not obtained, any Stock Incentive granted hereunder shall be void.
5.10 Choice of Law. The laws of the State of Delaware shall govern the Plan,
to the extent not preempted by federal law.
5.11 Effective Date of Plan. The Plan shall become effective upon the date the
Plan is approved by the stockholders of the Company.
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October 9, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Medical Action Industries Inc.
Registration Statement on Form S-8
Gentlemen:
Reference is made to the filing by Medical Action Industries Inc.
(the "Corporation") of a Registration Statement on Form S-8 with the
Securities and Exchange Commission pursuant to the provisions of the
Securities Act of 1933, as amended, covering the registration of 850,000
shares of the Corporation's Common Stock, $.001 par value per share, in
connection with the Corporation's 1989 Non-Qualified Stock Option Plan, as
amended, and 1994 Stock Incentive Plan, as amended.
As General Counsel for the Corporation, I have examined its corporate
records, including its Certificate of Incorporation, By-Laws, its corporate
minutes, the form of its Common Stock certificate, its 1989 Non-Qualified
Stock Option Plan, as amended, and 1994 Stock Incentive Plan, as amended,
related documents under such plans, and such other documents as I have deemed
necessary or relevant under the circumstances.
Based upon my examination, I am of the opinion that:
1. The Corporation is duly organized and validly existing under
the laws of the State of Delaware.
2. There have been reserved for issuance by the Board of
Directors of the Corporation 850,000 shares of its Common
Stock, $.001 par value per share. The shares of the
Corporation's Common Stock, when issued under the 1989
Non-Qualified Stock Option Plan, as amended, and 1994 Stock
Incentive Plan, as amended, will be validly authorized,
legally issued, fully paid and non-assessable.
I hereby consent to be named in the Registration Statement as General
Counsel of the Corporation, and I hereby consent to the filing of this opinion
as Exhibit 5 to the Registration Statement.
Very truly yours,
/s/ Richard G. Satin
Richard G. Satin
Vice President-Operations
and General Counsel
Exhibit 5
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Consent of Independent Auditors
We have issued our reports dated May 28, 1998 accompanying the financial
statements of Medical Action Industries Inc. appearing in the 1998 Annual
Report of the Company to its shareholders and accompanying the schedule
included in the Annual Report on Form 10-K for the year ended March 31, 1998
which is incorporated by reference in this Registration Statement on Form S-8.
We consent to the incorporation by reference in the Registration Statement of
the aforementioned report.
/s/ Grant Thornton LLP
Grant Thornton LLP
Melville, New York
October 9, 1998
Exhibit 23.1
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Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the registration of 850,000 shares of Common Stock
pursuant to the Medical Action Industries Inc. 1989 Non-Qualified Stock Option
Plan, as amended, and 1994 Stock Incentive Plan, as amended, of our report
dated May 23, 1997 with respect to the financial statements of Medical Action
Industries Inc. incorporated by reference in its Annual Report (Form 10-K) for
the year ended March 31, 1998 and the related financial statement schedule
included therein, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Ernst & Young LLP
Melville, New York
October 9, 1998
Exhibit 23.2
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