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As filed with the Securities and Exchange Commission on November 30, 1998.
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MED/WASTE, INC.
(Exact name of registrant as specified in its charter)
Delaware 65-0297759
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6175 N. W. 153rd Street, Suite 324
Miami Lakes, Florida 33014
(305) 819-8877
(Address including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------------------------------
DANIEL A. STAUBER
President/Chief Executive Officer
MED/WASTE, INC.
6175 N. W. 153rd Street, Suite 324
Miami Lakes, Florida 33014
(305) 819-8877
(Name and address, including zip code, and telephone number,
including area code, of agents for service)
With a Copy to:
BRYAN W. BAUMAN, ESQ.
Wallace, Bauman, Legon, Fodiman & Shannon, P.A.
1200 Brickell Avenue, Suite 1720
Miami, Florida 33131
(305) 444-9991
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Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement has become effective.
--------------------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE
- ------------------------- ------------------ ------------------- ------------------ ------------------
<S> <C> <C>
Common Stock, par value 75,992 $ 3.875 $294,469 $88.00
$0.001 per share
</TABLE>
(1) Pursuant to Rule 457(c), the fee is calculated on the basis of the
average of the bid and asked prices on November 27, 1998 on the NASDAQ
Small Cap Market for the Common Stock
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE
HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IS NOT A SOLICITATION OF AN OFFER TO BUY THESES SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject to Completion, dated November 30, 1998
PROSPECTUS
75,992 Shares
MED/WASTE, INC.
Common Stock
A stockholder of Med/Waste, Inc., a Delaware corporation is offering to
sell 75,992 shares of the Company's common stock. The selling stockholder
acquired its shares in connection with Med/Waste's acquisition in June 1998 of
certain of the selling stockholder's assets. See "Selling Stockholder" beginning
on page 7 of this Prospectus.
The selling stockholder may offer the shares from time to time in open
market transactions (which may include block transactions) or otherwise in the
over-the-counter market through the NASDAQ Small Cap Market, or in private
transactions at prices relating to prevailing market prices or at negotiated
prices. The selling stockholder may sell shares through a broker, and such
broker may receive compensation in the form of discounts, concessions or
commissions from the selling stockholder and/or purchasers of the shares for
whom such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation as to a particular broker-dealer might be in excess of
customary commissions).
We will not receive any proceeds from the sale of the shares by the
selling shareholder. We will however, pay the costs, expenses and fees incurred
in registering the shares. The selling shareholder will be responsible for its
own selling and other expenses it may incur.
Our common stock is quoted on the NASDAQ SmallCap Market under the
symbol "MWDS." On November 27, 1998, the last reported sale price of the common
stock was $3.875 per share.
INVESTING IN MED/WASTE COMMON STOCK INVOLVES CERTAIN RISKS. YOU SHOULD
CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED THAT
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The selling stockholders and any broker executing selling orders on
behalf of the selling stockholders may be deemed to be underwriters within the
meaning of the Securities Act. Commissions received by any such broker may be
deemed to be underwriting commissions under the Securities Act.
The date of this Prospectus is November __, 1998.
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WHERE YOU CAN FIND MORE INFORMATION
Med/Waste, Inc. ("Med/Waste") files annual and special reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). You can inspect and copy the Registration
Statement on Form S-3 of which this Prospectus is a part, as well as reports,
proxy statements and other information filed by Med/Waste, at the public
reference facilities maintained by the Commission at 450 Fifth Street, N. W.,
Washington, D.C. 20549 and at the following regional offices of the Commission:
Seven World Trade Center, Suite 1300, New York, New York, 10048, and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of these materials
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N. W., Washington, D.C. 20549 upon payment of the prescribed fees.
Please call the Commission at 1-800-SEC-0330 for further information regarding
the operations of its public reference rooms. The Commission also maintains a
World Wide Web site at http:\\www.sec.gov that contains reports, proxy and
information statements, and other information regarding registrants (like
Med/Waste) that file electronically with the Commission.
Med/Waste has filed with the Commission a Registration Statement
(which term shall include all amendments, exhibits and schedules thereto) on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
which this prospectus is a part. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and to
which reference is hereby made. Statements made in this Prospectus as to the
contents of any document referred to are not necessarily complete. With respect
to each such document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows this Prospectus to "incorporate by
reference" certain other information that Med/Waste files with the Commission,
which means that we can disclose important information to you by referring to
those documents. The information incorporated by reference is an important part
of this Prospectus, and information that we file later with the Commission will
automatically update and replace this information. We incorporate by reference
the documents listed below and any future filings made by us with the Commission
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until we have sold
all of the securities that we have registered.
(1) Our Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997.
(2) Our Quarterly Reports on Form 10-QSB for the fiscal quarters
ended March 31, 1998, June 30, 1998 and September 30, 1998 together with all
amendments to such Quarterly Reports.
(3) Our Proxy Statement dated May 6, 1998 for our Annual Meeting
of Shareholders which was held on June 18, 1998.
(4) Our Current Reports on Form 8-K filed on October 14, 1998 and
November 6, 1998.
(5) The description of the preferred stock purchase rights which
are a part of our common stock which is contained in our Registration Statement
on Form 8-A dated November 6, 1998.
If you make a request for such information in writing or by
telephone, we will provide you without charge, a copy of any or all of the
information incorporated by reference in the registration statement of which
this Prospectus is a part. Requests for such information should be in writing to
MICHAEL D. ELKIN, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, 6175 N. W. 153RD
STREET, SUITE 324, MIAMI LAKES, FLORIDA 33014 (TELEPHONE: (305) 819-8877).
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FORWARD-LOOKING STATEMENTS
We have made-forward-looking statements in this Prospectus (and
in the documents that are incorporated by reference) that are subject to risks
and uncertainties. Forward-looking statements include information concerning
possible or assumed future results of our operations. Also, when we use such
words as "believes," "expects," "anticipates" or similar expressions, we are
making forward-looking statements. You should note that an investment in our
securities involves certain risks and uncertainties that could affect our future
financial results. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in "Risk Factors" and elsewhere in this Prospectus.
THE COMPANY
We provide medical waste management services throughout the
eastern United States to more than 20,000 health care facilities in Alabama,
Delaware, Florida, Georgia, Louisiana, Maryland, Mississippi, New Jersey, North
Carolina, Pennsylvania, South Carolina, Tennessee and Virginia. Our services
include the collection, transportation, treatment, tracking and related services
for the management and disposal of medical waste for large and small quantity
generators. We own and operate a medical and special waste incineration facility
in Hampton, South Carolina, and medical waste autoclave treatment facilities in
Decatur, Alabama, Mobile, Alabama, West Palm Beach, Florida and Marcus Hook,
Pennsylvania. In addition, we offer a reusable sharps container program under
the name "Sharps Express," which assists hospitals, clinics, doctors and other
health care facilities with the control and disposal of "sharps" (generally
include scalpels, syringes and needles). The Sharps Express program is designed
to reduce a medical facility's costs and risks associated with disposal of such
sharps. The program incorporates the use of reusable containers providing the
medical facility with a more environmentally friendly alternative to traditional
disposable plastic containers.
As part of our comprehensive medical waste services, we supply,
install and oversee the operation of on-site autoclaves at large quantity
generators of medical waste, typically hospitals. Our management believes that
autoclaves can reduce by up to 90%, the amount of medical waste requiring
off-site commercial treatment. This significantly reduces the expense of
disposal both due to decreased volume and the significant cost savings of
disposing of solid, versus medical waste. Hospitals either purchase or lease the
autoclave and related equipment. During the term of the lease, we will provide
maintenance and support of the autoclave on-site and collect the treated waste
and transport it for ultimate disposal at a local solid waste landfill.
According to information released in 1997 by the Environmental
Working Group of the Florida Department of Environmental Protection, the United
States generates over two million tons of medical waste per year. It has been
estimated that the current market for medical waste disposal services in the
United States is approximately $750 million per year and growing at an rate
between 7-10% annually.
Medical waste is generally any waste which has the potential to
cause an infectious disease by harboring pathogenic organisms. Medical waste
predominantly includes material that comes in contact with human and animal
blood and body fluids. The Company collects medical waste from medical waste
generators, which include hospitals, clinics, medical and dental offices,
veterinarians, laboratories, funeral homes, home health agencies and others. In
addition to medical waste collection, the Company provides programs to assist
customers to promote safe management of medical waste and comply with federal
and state requirements applicable to their operations. Special waste is
generally all non-residential waste which requires more stringent management
than municipal solid waste, but does not include medical or hazardous waste.
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Nationally, most medical waste is treated by incineration.
However, more stringent government regulation and a generally negative public
attitude toward nearby incineration facilities have resulted in a declining
number of incineration treatment facilities. Relatively few new incineration
facilities have been permitted and opened due to the significant cost of
compliance with new environmental legislation. Our incinerator is in compliance
with all federal and state regulations dealing with air pollution emissions. The
incinerator is a waste to energy facility with a rated capacity for processing
up to 270 tons per day of special and medical waste. The facility is currently
permitted under South Carolina law to incinerate up to 200 tons per day of both
liquid and solid waste.
With fewer incinerator facilities available in the future, the
market has been encouraged to develop for commercial use a variety of
environmentally acceptable alternative treatment options, the most common of
which are autoclaves. We own and operate several autoclave facilities, including
a 48 ton per day autoclave medical waste treatment facility in Marcus Hook,
Pennsylvania, a 25 ton per day autoclave facility in West Palm Beach, Florida, a
7.8 ton per day autoclave facility in Decatur , Alabama and a 13.2 ton per day
autoclave facility in Mobile, Alabama. The autoclaves treat the medical waste
through sterilization, allowing most of such waste to be handled and disposed of
as solid waste.
We are incorporated as a Delaware corporation. Our corporate
headquarters is located at 6175 N. W. 153rd Street, Suite 324, Miami Lakes,
Florida 33014. Our telephone number at our corporate headquarters is (305)
819-8877.
RISK FACTORS
You should carefully consider the risks described below before
making an investment decision. The risks and uncertainties described below are
not the only ones facing our company. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial may also impair our
business operations. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially adversely
affected. In such case, the trading price of our common stock could decline, and
you may lose all or part of your investment.
This prospectus also contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including the risks faced by us described below and elsewhere in this
prospectus.
IMPACT OF GOVERNMENT REGULATION. We operate in the highly
regulated medical waste disposal industry. As a result we are subject to
extensive and frequently changing local, state and federal laws. This statutory
and regulatory framework imposes compliance burdens and risks on us, including
requirements to obtain and maintain government permits. Our transportation,
treatment and disposal operations are subject to packaging, labeling, handling,
notice and reporting requirements, as well as requirements pertaining to
transporter registration, transportation handling procedures and the preparation
of shipping papers. These state and local regulations vary from location to
location and constantly change. State and local regulations may pose
insurmountable barriers, financial or otherwise, to the opening and operation of
facilities in states where the Company intends to operate its business. We
believe that we currently are in compliance in all material respects with the
laws and regulations governing our business and that we have all appropriate
government permits to continue operations. However, it is possible that new, or
changes to existing laws and regulations could cause us to modify our methods of
operations at costs that could be substantial. Further, since we operate our own
medical waste treatment facilities, we are subject to permitting requirements at
each location. The permitting process is complex and time consuming and is
generally opposed by local residents. Even after permits are issued, opposition
groups may attempt to compel regulators through court proceedings to modify
permit conditions or reverse decisions with respect to the initial granting of
permits. There can be no assurance that we will be able, for financial reasons
or otherwise, to comply with future environmental and
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permitting laws either in our present market or in those markets in which we
intend to expand. Delays in the permitting process could add significantly to
the cost of developing a medical waste treatment facility or transfer station
and could have a material adverse effect on our business and financial
condition.
IMPORTANCE OF GOVERNMENT ENFORCEMENT OF ENVIRONMENTAL
REGULATIONS. We believe that our business prospects in the medical waste
disposal industry are significantly enhanced by the stringent enforcement of
handling, transportation, environmental preservation and clean-up requirements
by regulatory agencies. These laws and regulations are, and will continue to be,
a principal factor affecting demand for our medical waste management services.
However, we cannot predict the future intensity and breadth of present and
future regulation and supervision of medical waste disposal procedures and the
impact of technological changes on government regulation. The level of
government enforcement is subject to constantly changing political and budgetary
pressures. A significant relaxation or reduction in government enforcement could
have a material adverse effect on our business.
INTENSE COMPETITION WITHIN INDUSTRY. We operates in a very
intensely competitive industry. Competition in our industry has resulted in
substantial price reductions in virtually all geographic areas in which we
operate. It is possible that competitive pressures within the industry will
continue price reductions. Substantial continued or accelerated price reductions
would have a material adverse effect on our business. We face competition from
several national waste disposal companies and numerous regional and local
entities. Some of our competitors are larger and have substantially greater
financial and other resources than us and are well entrenched in their
respective markets. Our primary competitors are Browning-Ferris Industries, Inc.
("BFI") and Stericycle, Inc. There can be no assurance that we will be able to
profitably compete with such other entities.
GROWTH STRATEGY DEPENDENT UPON ACQUISITIONS. A substantial
majority of our business came from acquisitions of other businesses. We expect
that this will continue in the near future. Our business strategy and our
ability to expand depends, in part, on our ability to continue acquiring other
medical waste management businesses. In order to expand, we need to be able to
identify suitable businesses to acquire, successfully negotiate their
acquisition, and then integrate their operations with our operations. The recent
consolidation in the medical waste industry has increased competition for the
acquisition of existing businesses and has resulted in fewer acquisition
opportunities and higher purchase prices. Some of our competitors for
acquisitions are larger and have significantly greater financial resources. Even
if we are successful in identifying suitable acquisition candidates, we may not
have the financial resources to pay the purchase price. We expect that future
acquisitions of other medical waste businesses will be made through payment of
cash, issuance of debt or equity securities, or a combination of these methods.
We may need to raise additional equity or debt financing to complete such
acquisitions. Any additional equity financings may be dilutive to our existing
shareholders. Debt financings, if available, may not be on terms acceptable to
us, even if available. Our failure to continue our growth strategy could have a
material adverse effect on our business.
POTENTIAL LIABILITY; INSURANCE. The medical waste disposal
industry involves potentially significant risks of statutory, contractual, tort
and common law liability. Our failure to comply with applicable laws or to
manage medical waste in an environmentally sound manner could result in
environmental contamination, personal injury and property damage. We endeavor to
maintain insurance which we consider sufficient to meet regulatory and customer
requirements and to protect our operations. However, a partially or completely
uninsured claim against us of sufficient magnitude could have a material adverse
impact on our ability to conduct our operations. Certain federal and statutory
laws impose strict, joint and several liability on current and former owners and
operators of facilities regarding the release of hazardous substances and on
generators and transporters of the hazardous substances that are brought to such
facilities. Responsible parties may be liable for substantial waste site
investigation and clean up costs as a result of the occurrence of environmental
contamination. If we were found to be a responsible party for a particular site,
we could be required to pay the entire cost of waste site investigation and
clean up, even though other parties may also
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be liable. Our ability to obtain contribution from other responsible parties may
be limited by our inability to identify those parties and by our financial
inability to contribute to investigation and clean up costs. It is possible that
in the future we may experience difficulty in obtaining appropriate insurance at
reasonable prices with reasonable coverage, which could place us at a
competitive disadvantage. The inability to obtain necessary insurance coverage,
or a successful claim against us for which we do not have adequate insurance,
could have a material adverse impact on our operations and financial condition.
ALTERNATIVE TECHNOLOGIES; TECHNOLOGICAL OBSOLESCENCE. The medical
waste industry presents continuing opportunities for the development of
alternate treatment and disposal methods. Such methods may emphasize cost
efficiencies, reduction in the volume of waste generated, environmental factors
or both. The development and commercialization of alternative treatment or
disposal technologies that are more efficient or environmentally sound treatment
and disposal methods may have a material adverse effect on ours operations. The
Company is aware of certain new medical waste treatment and disposal
technologies including the production of reusable or degradable medical
products, which, if successfully developed and commercialized would have a
material adverse effect on our current method of operations.
DEPENDENCE UPON PERSONNEL. We are dependent on the services of
Daniel A. Stauber, our President and Chief Executive Officer. We have an
employment agreement with Mr. Stauber which expires in December 2001. However,
if Mr. Stauber's services were to become unavailable to us for any reason, it
could have a material adverse effect on our business. We do not carry key man
life insurance.
NO DIVIDENDS. We have never paid any cash dividends on our Common
Stock and do not anticipate paying cash in dividends in the foreseeable future.
The payment of dividends will depend on our earnings, financial condition and
other business and economic factors as the Board of Directors may consider
relevant. We currently intend to retain any earnings to provide for the
development and growth of our business.
ANTI-TAKEOVER PROVISIONS OF CHARTER AND BYLAWS. Certain
provisions of our charter and by-laws may have the effect of making more
difficult or could delay attempts by others to obtain control of Med/Waste, even
when these attempts may be beneficial to the interests of our stockholders. For
example, the charter and bylaws include advance notice provisions, provisions
that establish a classified Board of Directors, and provisions that enable the
Board of Directors without stockholder approval, to issue up to 4,000,000 shares
of preferred stock in one or more series having terms fixed by the Board of
Directors. As of the date of this Prospectus, we have issued and outstanding
28,869 shares of Series A Preferred Stock which are convertible into an
aggregate of 679,270 shares of Common Stock. In addition, the Delaware General
Corporation Law contains provisions that may have the effect of making it more
difficult or delaying attempts by others to obtain control of the Company.
"PENNY STOCK" RULES. Our Common Stock is presently traded on the
NASDAQ Small Cap Market. The NASDAQ Stock Market recently increased the criteria
for continued inclusion on the NASDAQ Small Cap Market. If we fail to maintain
such listing for our Common Stock, and no other exclusion from the definition of
"penny stock" under the Exchange Act is available, then any broker engaging in a
transaction in our securities would be required to provide any customer with a
risk disclosure document and the compensation of the broker/dealer in the
transaction and monthly account statements showing the market values of our
securities held in the customer's accounts. The bid and offer quotations and
compensation information must be provided prior to effecting the transaction and
must be contained on the customer's confirmation. If brokers become subject to
the "penny stock" rules when engaging in transactions in our securities, they
would become less willing to engage in such transactions, thereby making it more
difficult for purchasers to dispose of the shares of Common Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common
Stock by the Selling Stockholder.
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SELLING STOCKHOLDERS
The following table lists the Med/Waste stockholder selling
pursuant to this Prospectus (the "Selling Stockholder") and the number of shares
of Med/Waste Common Stock that it owned or had the right to acquire as of
November 24, 1998. Because the Selling Stockholder may offer all or some of the
shares of Common Stock to be sold pursuant to this Prospectus (the "Shares"),
and because there are currently no agreements, arrangements or understandings
with respect to the sale of any of the Shares, no estimate can be given as to
the amount of Shares that will be held by Selling Stockholder after completion
of this offering. The Shares are being registered to permit secondary trading of
the Shares, and the Selling Stockholder may offer Shares for resale from time to
time. See "Plan of Distribution."
<TABLE>
<CAPTION>
SHARES TO BE
SHARES BENEFICIALLY BENEFICIALLY OWNED
OWNED PRIOR TO OFFERING SHARES AFTER OFFERING
NAME AND ADDRESS OF SELLING ----------------------------- BEING ----------------------------
STOCKHOLDER SHARES PERCENT OFFERED NUMBER PERCENT
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<S> <C> <C> <C> <C> <C>
BioMade Plastics, Inc. 75,992 --(1) 75,992 -- --(1)
4459 West Swamp Road
Doyletown, PA 18901
</TABLE>
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(1) The Selling Stockholder owns less than one (1%) of the
outstanding shares of the Company's common stock. The Company had 6,665,966
shares of Common Stock issued and outstanding as of November 24, 1998. The
number of shares owned by the Selling Shareholder is based upon representations
made to the Company by such Selling Stockholder
The Selling Stockholder acquired its Shares pursuant to an Asset
Purchase Agreement with the Company dated May 20, 1998. Pursuant to the Asset
Purchase Agreement, Med/Waste purchased the Selling Stockholder 's assets
related to its reusable sharps container business. The Company is registering
the Shares pursuant to certain registration rights granted to the Selling
Stockholder in the Asset Purchase Agreement
DESCRIPTION OF SECURITIES
The Company has 26,000,000 shares of authorized Common Stock, par
value $0.001 per share, of which 6,665,966 shares of Common Stock are issued and
outstanding as of the date of this Prospectus and 4,000,000 shares of preferred
stock, of which 28,869 shares of Series A Preferred Stock are outstanding.
COMMON STOCK. Each share of Common Stock is entitled to one vote
either in person or by proxy in all matters that can be voted upon by the
holders thereof at any and all meetings of the stockholders. The holders of
Common Stock (i) have equal ratable rights to dividends from funds legally
available therefore when, as and if declared by the Board of Directors of the
Company; (ii) are entitled to share ratably in all of the assets of the Company
available for distribution to holders of Common Stock upon liquidation,
dissolution or winding up of the affairs of the Company, after the satisfaction
of all liabilities of the Company any liquidation preference granted to the
holders of any class of Preferred Stock then outstanding, if any; (iii) do not
have any preemptive, subscriptive or conversion rights; and (iv) do not have any
redemption or sinking fund provisions applicable thereto.
Each share of Common Stock also represents one preferred stock
purchase right (the "Rights"). Such Rights were issued in connection with a
Rights Agreement between the Company and Continental Stock Transfer and Trust
Company as Rights Agent. Each Right, when exercisable, would entitle the
registered holder to purchase from the Company one one-hundredth (1/100) of a
share of Series B Junior Participating
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Preferred Stock, $.01 par value (the "Preferred Stock"), at a price of $25.00
per one one-hundredth (1/100) share (the "Purchase Price"), subject to
adjustment. The Rights will be exercisable only if (i) a person or group
acquires 20% or more of the Company's common stock, (ii) a person announces a
tender offer for 20% or more of the common stock, or (iii) the Company's Board
of directors makes a determination that a person is an "Adverse Person." The
Company will be entitled to redeem the Rights at $.001 per Right at any time
before a 20% position has been actually acquired. The Rights will be attached to
all certificates representing Common Stock then outstanding and no separate
Rights Certificates would be distributed. The Rights will separate from the
Common Stock once they become exercisable as described above.
The Certificate of Incorporation does not provide for cumulative
voting. Therefore, stockholders do not have the right to aggregate their votes
for the election of directors and, accordingly, stockholders holding more than
50% of the shares of Common Stock outstanding can elect all of the directors.
PREFERRED STOCK. The Company is authorized to issue 4,000,000
shares of preferred stock, without designation, par value $.01 per share. The
certificate of incorporation grants the board of directors the right to cause
the Company to issue, from time to time, all or part of the preferred shares
remaining undesignated in one or more series, and to fix the number of shares of
preferred stock and determine or alter for each series, the voting powers, full,
limited, or none, and other designations, preferences, or relative,
participating, optional or other special rights and such qualifications,
limitations, or restrictions thereof. As of the date of this Prospectus, there
were 28,869 shares of preferred stock outstanding designated as the Series A
Preferred Stock.
SERIES A PREFERRED STOCK
GENERAL. The Series A Preferred Stock has been authorized as a
series consisting of 60,000 shares, of which 28,869 shares are presently
outstanding.
DIVIDENDS. Holders of the Series A Preferred Stock are entitled
to cumulative preferential dividends payable quarterly in cash at the rate of
$9.00 per share per annum. Commencing July 1, 2000, the annual dividend rate
will increase by $2.50 per quarter up to a maximum dividend of $24.00 per annum
(i.e., the October 1, 2000 quarterly dividend shall have a cumulative amount of
$11.50 per annum.
VOTING RIGHTS. The holders of the Series A Preferred Stock with
the holders of Common Stock on all shareholder matters including the election of
directors. The holders of the Series A Preferred Stock have the number of votes
that they would have had assuming conversion of the Series A Preferred Stock
into Common Stock as of the record date for the meeting of the Company's
shareholders (presently 679,237 shares of Common Stock assuming conversion). The
holders of Series A Preferred Stock must approve by not less than two-thirds,
the issuance of any class of equity securities which ranks equal to or senior to
the Series A Preferred Stock, or to change or repeal any of the express terms of
the Series A Preferred Stock.
LIQUIDATION. In the event the Company is liquidated, after
payment of all creditors of the Company, the holders of Series A Preferred Stock
would receive $100.00 per share, plus any accrued and unpaid dividends before
the holders of any other equity interest in the Company are entitled to receive
anything.
VOLUNTARY CONVERSION. The holders of the Series A Preferred Stock
have the right to convert such shares into Common Stock. Currently each of
Series A Preferred Stock would be convertible into 23 shares of Common Stock,
based upon a value of $100 per share for the Series A Preferred Stock and a
conversion rate of $4.25 per share (the "Conversion Price"). The Conversion
Price is protected against dilution by adjustment of the conversion rate upon
the occurrence of certain events, such as stock dividends and distributions,
stock splits, recapitalization, mergers, consolidations and the issuance of
Common Stock, or options or rights to subscribe for securities convertible into
or exchangeable for Common Stock. The Company will not issue fractional shares
of Common Stock upon conversion of the Series A Preferred Stock but will pay a
cash adjustment for any such fraction. In the event of a merger, consolidation
or sale of all or substantially all of the assets of the Company, the holders of
the Series A Preferred Stock shall have a right
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<PAGE> 11
to convert into shares of Common Stock immediately prior to the change of
control at a price equal to the lesser of (i) the Conversion Price or (ii) the
price per share of Common Stock in the change of control transaction.
FORCED CONVERSION. The Company has the right to force conversion
of the Series A Preferred Stock into shares of Common Stock at any time after
issuance of the Series A Preferred Stock, provided that on the day that notice
of forced conversion is given and on the Forced Conversion Date (as defined
below) each of the following conditions are satisfied: (i) the underlying Common
Stock has been registered pursuant to the Act and such registration is then
currently effective; and (ii) the average of the closing bid price of the Common
Stock as listed on the National Association of Security Dealers Automated
Quotation System ("NASDAQ"), the New York Stock Exchange ("NYSE"), the American
Stock Exchange ("ASE") or wherever the Company's Common Stock then trades, is at
least 175% of the Conversion Price for twenty (20) trading days within a thirty
(30) consecutive trading day period. Any notice of forced conversion must be
given to all holders no less than thirty (30) days nor more than forty-five (45)
days prior to the date set forth for conversion (the "Forced Conversion Date").
On the Forced Conversion Date, the Company shall pay to all registered holders
of Series A Preferred Stock all accrued and unpaid dividends through and
including the Forced Conversion Date.
REDEMPTION. The Company has the right to redeem all of the shares
of Series A Preferred Stock commencing April 30, 2000, upon thirty (30) days
notice at a price of $100.00 per share, plus accrued and unpaid cumulative
dividends to the date of redemption. Holders of Series A Preferred Stock can
convert such shares into Common Stock at any time prior to the date for
redemption. After the redemption date, such holders' right to convert their
shares of Series A Preferred Stock called for redemption will cease and such
holders will be entitled only to the redemption price of such shares.
CERTAIN ANTI-TAKEOVER PROVISION
Certain provisions of the Company's charter and by-laws, as well
as certain provisions of Delaware law, could have the effect of deterring
takeovers. The company has also adopted a shareholder rights plan which would
also deter a hostile takeover of the Company. The Board of Directors believes
that the provisions of the Company's charter and by-laws described below are
prudent and in the best interests of the Company and its stockholders. Although
these provisions may discourage a future takeover attempt in which stockholders
might receive a premium for their shares over the then current market price and
may make removal of incumbent management more difficult, the Board of Directors
believes that the benefits of these provisions outweigh their possible
disadvantages. Management is not aware of any current effort to effect a change
in control of the Company.
Included in the rights of any series of preferred stock which may
be set by the Board of Directors may be voting rights, if any. It is possible
that the Board of Directors could authorized and issue to persons, including
existing management, a series of preferred stock with class voting rights which
might have the effect of discouraging a takeover attempt or a tender offer. Any
such issuance would have to be made for a valid business purpose and for
adequate consideration from the recipient of the preferred stock.
The Company's by-laws contain provisions relating to notice of
stockholder meetings which would prohibit a stockholder from nominating a person
for the Board of Directors or proposing certain actions relating to the
Company's business without advance written notice to the Company. Such written
notice must be a minimum of thirty (30) days prior to a stockholders' meeting
and must contain specific information about the nominee and the stockholder who
makes such nomination or proposal.
DIVIDEND POLICY. The Company has never paid any cash dividends on
its Common Stock and does not anticipate paying cash dividends in the
foreseeable future. The payment of dividends by the Company will depend on its
earnings, financial condition, and other business and economic factors affecting
the Company at that time as the Board of Directors may consider relevant. The
Company currently intends to retain any earnings to provide for the development
and growth of the Company.
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<PAGE> 12
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholder that it
intends to sell all or a portion of its Shares from time to time on the NASD
SmallCap Market (or any other exchange or automated quotation system in which
our Common Stock may then be listed), in privately negotiated transactions or
otherwise, and that sales will be made at fixed prices that may be changed, at
market prices prevailing at the times of such sales, at prices related to such
market prices or at negotiated prices. The Selling Stockholder may also make
private sales directly or through a broker or brokers, who may act as agent or
as principal. In connection with any sales, such Selling Stockholder and any
brokers participating in such sales may be deemed to be underwriters within the
meaning of the Securities Act.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Stockholder (and, if they act as agent for
the purchaser of such Shares, from such purchaser). Brokerage fees may be paid
by the Selling Stockholder, which may be in excess of usual and customary
brokerage fees. Broker-dealers may agree with the Selling Stockholder to sell a
specified number of Shares at a stipulated price, and, to the extent such a
broker-dealer is unable to do so acting as agent for the Selling Stockholder, to
purchase as principal any unsold Shares at the price required to fulfill the
broker-dealer's commitment to the Selling Stockholder. Broker-dealers who
acquire Shares as principal may thereafter resell such Shares from time to time
in transactions (which may involve crosses and block transactions and which may
involve sales to and through other broker-dealers, including transactions of the
nature described above) on the NASD SmallCap Market, in negotiated transactions
or otherwise at market prices prevailing at the time of sale or at negotiated
prices, and in connection with such resales may pay to or receive from the
purchasers of such Shares commissions computed as described above.
Any Shares covered by this Prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that Rule rather
than pursuant to this Prospectus.
The Selling Stockholders will be subject to the applicable
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, including without limitation Regulation M, which
provisions may limit the timing of purchases and sales of any of the Common
Stock by the Selling Stockholders. All of the foregoing may affect the
marketability of the Common Stock.
The Company will pay substantially all the expenses incident to
this offering of Shares by the Selling Stockholder, other than brokerage and
selling fees.
In order to comply with certain states' securities laws, if
applicable, the Common Stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Common Stock may not be sold unless the Common Stock has been registered or
qualified for sale in such state or an exemption from registration or
qualification is available and the Company or Selling Stockholders comply with
the applicable requirements.
There can be no assurance that the Selling Stockholder will sell
any or all of the Shares offered by it hereunder.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Delaware Law permits a corporation to indemnify a director,
officer, employee, or agent who is, or is threatened to be, made a party to any
threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative by reason of the fact that he is or
was a director, officer, employee, or agent of the corporation or is, or was,
serving at the request of the corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise (including an employee benefit plan), against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlements actually and
reasonably incurred by him in connection with such action, suit, or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the
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<PAGE> 13
best interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
Company's Certificate of Incorporation and Bylaws provide that the Company shall
indemnify its directors and officers to the fullest extent permitted by Delaware
law, including circumstances in which indemnification is otherwise discretionary
under Delaware law.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions or
otherwise, the small business issuer 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.
LEGAL MATTERS
Counsel for the Company, Wallace, Bauman, Legon, Fodiman &
Shannon, P.A., Coral Gables, Florida, has rendered an opinion to the effect that
the Common Stock offered hereby is duly and validly issued, fully paid and
nonassessable. Milton J. Wallace, a shareholder of the law firm, beneficially
owns 471,132 shares of the Company's Common Stock. Other shareholders of such
law firm beneficially own an aggregate of 32,816 shares of Common Stock.
EXPERTS
The consolidated financial statements included in the Company's
Annual Report on Form 10-KSB for the Year ended December 31, 1997 incorporated
by reference in this Prospectus have been audited by BDO Seidman, LLP,
independent certified public accountants to the extent and for the periods set
forth in their report incorporated herein by reference, and are incorporated
herein in reliance upon such report given upon the authority of said firm as
experts in auditing and accounting.
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<PAGE> 14
<TABLE>
<CAPTION>
- ------------------------------------------------------- ----------------------------------------------
<S> <C>
We have not authorized any dealer, salesman
or other person to give any information or
represent anything not contained or incorporated
by reference in this Prospectus. You must not
rely on any unauthorized information. This
Prospectus does not offer to sell any shares
in any jurisdiction where it is unlawful. The MED/WASTE, INC.
information in this prospectus is current only
as of its date.
---------------------
PROSPECTUS
---------------------
75,992
Shares of
COMMON STOCK
($.001 par value)
TABLE OF CONTENTS
PAGE
WHERE YOU CAN FIND MORE INFORMATION................ 2
DOCUMENTS INCORPORATED BY REFERENCE................ 2
FORWARD-LOOKING STATEMENTS......................... 3
THE COMPANY........................................ 3
RISK FACTORS....................................... 5
USE OF PROCEEDS.................................... 7
SELLING STOCKHOLDERS............................... 9
DESCRIPTION OF SECURITIES.......................... 9
PLAN OF DISTRIBUTION............................... 11
INDEMNIFICATION.................................... 11
LEGAL MATTERS...................................... 12
EXPERTS............................................ 12
________________, 1998
- ------------------------------------------------------- ----------------------------------------------
</TABLE>
<PAGE> 15
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF INSURANCE AND DISTRIBUTION
The following sets forth the estimated expenses and costs in connection
with the issuance and distribution of securities being registered hereby. All
such expenses will be borne by the Company.
Securities and Exchange Commission Registration Fee...... $ 88.00
----------
Accounting Fees and Expenses............................. 2,000.00*
Legal Fees and Expenses.................................. 10,000.00*
Printing expenses........................................ 2,000.00
Miscellaneous............................................ 912.00*
----------
Total.................................................... $15,000.00
==========
- ---------------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article TENTH of the Company's Certificate of Incorporation provides
for indemnification of the Company's officers and directors to the fullest
extent permitted by Section 145 of the Delaware General Corporation Law (the
"DGCL"). Section 145 of the DGCL provides for indemnification of directors and
officers from and against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement reasonably incurred by them in connection with
any civil, criminal, administrative or investigative claim or proceeding
(including civil actions brought as derivative actions by or in the right of the
corporation but only to the extent of expenses reasonably incurred in defending
or settling such action) in which they may become involved by reason of being a
director or officer of the corporation if the director or officer acted in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interest of the corporation and, in addition, in criminal actions, if
he had no reasonable cause to believe his conduct to be unlawful. If, in an
action brought by or in the right of the corporation, the director or officer is
adjudged to be liable for negligence or misconduct in the performance of his
duty, he will only be entitled to this indemnity as the court finds to be
proper. Persons who are successful in defense of any claim against them are
entitled to indemnification as of right against expenses actually and reasonably
incurred in connection therewith. In all other cases, indemnification shall be
made (unless otherwise ordered by a court) only if the board of directors,
acting by a majority vote of a quorum of disinterested directors, independent
legal counsel or holders of a majority of the shares entitled to vote,
determines that the applicable standard of conduct has been met. Section 145
also provides this indemnity for directors and officers of a corporation who, at
the request of the corporation, act as directors, officers, employees or agents
of other corporations, partnerships or other enterprises.
Article NINTH of the Company's Certificate of Incorporation limits the
liability of the Company's directors to the Company or its stockholders to the
fullest extent permitted by the DGCL. Section 102(b)(7) of the DGCL provides
that personal monetary liabilities of a director for breaches of his fiduciary
duties as a director may not be eliminated with regard to any breach of the duty
of loyalty, failing to act in good faith, intentional misconduct or knowing
violation of law, payment of an unlawful dividend, approval of an illegal stock
repurchase, or obtainment of an improper personal benefit. Such a provision has
no affect on the availability of equitable remedies, such as an injunction or
recision, for breach of fiduciary duty.
The employment agreements of certain officers contain a provision
requiring indemnification of such officer to the fullest extent permitted by
law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted for directors, officers and controlling persons of the
Company pursuant to the foregoing, or otherwise, the
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<PAGE> 16
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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 Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Certain of the following exhibits are filed herein and certain others,
designated by an asterisk (*) were previously filed in the registration
statement.
EXHIBIT NO. DESCRIPTION
2.1 Asset Purchase Agreement (the "Agreement") entered into as of the
20th day of May, 1998 between Safety Disposal System, Inc., a
Florida corporation, Med/Waste, Inc., a Delaware corporation and
Biomade Plastics, Inc., a Minnesota corporation.
5 Opinion of Wallace, Bauman, Legon, Fodiman & Shannon, P.A.,
regarding the legality of the Common Stock.
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Wallace, Bauman, Legon, Fodiman & Shannon,
P.A.(included in Exhibit 5 above).
24 Power of Attorney (included on signature page of registration
statement).
ITEM 17. UNDERTAKINGS.
(a) The 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 Act;
(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; and
(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) above do not apply
if the information required to the included in a post-effective amendment by
those Paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities and Exchange Act of
1934, as amended (the "Exchange Act'), that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any
liability under the Act, each such
post-effective amendment shall be deemed to be a
new registration statement
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<PAGE> 17
relating to the securities offered therein, and
the offering of such securities at that time
shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities
being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Act, each
filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under
the Act may be permitted to directors, officers and
controlling persons of the registrant has been advised
that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against
such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person
in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Act and will be governed by
the final adjudication of such issue.
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<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Miami Lakes, State of
Florida, on the 27th day of November, 1998.
MED/WASTE, INC., a Delaware corporation
By: /s/ DANIEL A. STAUBER
---------------------------------------
DANIEL A. STAUBER
President/Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following person in the capacities and
on the dates indicated.
POWER OF ATTORNEY
We, the undersigned, do hereby severally constitute and appoint
DANIEL A. STAUBER and MICHAEL D. ELKIN, and each or either of time, our true and
lawful attorneys and agents, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments or post-effective amendments to this Registration Statement
(including post-effective amendments or any abbreviated registration statement,
and any amendments thereto, filed pursuant to Rule 462(b) increasing the amount
of securities for which registration is being sought), and to file the same with
all exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys and agents, and
each of either of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys and agents, and each of them, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ MILTON J. WALLACE Chairman of the Board November 27, 1998
- --------------------------------------------
Milton J. Wallace
/s/ DANIEL A. STAUBER Director, President and Chief Executive November 27, 1998
- -------------------------------------------- Officer
Daniel A. Stauber
/s/ MICHAEL D. ELKIN Vice President and Chief Financial Officer November 27, 1998
- --------------------------------------------
Michael D. Elkin
/s/ WILLIAM F. BONHAM Director November 27, 1998
- --------------------------------------------
William F. Bonham
/s/ RICHARD GREEN Director November 27, 1998
- --------------------------------------------
Richard R. Green
/s/ KENDRICK MEEK Director November 27, 1998
- --------------------------------------------
Kendrick Meek
/s/ ARTHUR G. SHAPIRO, M.D. Director November 27, 1998
- --------------------------------------------
Arthur G. Shapiro, M.D.
/s/ WILLIAM DOLAN, D.D.S Director November 27, 1998
- --------------------------------------------
William Dolan, D.D.S.
</TABLE>
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<PAGE> 1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") entered into as
of the 20th day of May, 1998 between SAFETY DISPOSAL SYSTEM, INC., a Florida
corporation, MED/WASTE, INC., a Delaware corporation and BIOMADE PLASTICS, INC.,
a Minnesota corporation.
R E C I T A L S
A. The Company owns reusable molds of plastic containers, lids
and products and accessories together with Intangible Rights used in the
disposal of sharps medical waste;
B. Buyer desires to purchase certain of the Company's assets and
the Company desires to sell such assets, upon the terms and subject to the
conditions set forth herein.
C. The Company desires to make certain representations,
warranties and agreements in connection with this Agreement and also to
prescribe various conditions to the agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
benefits to be derived therefrom and of the respective mutual covenants and
agreements hereinafter set forth and such other good and valuable consideration,
the adequacy and receipt of which is hereby acknowledged, the parties hereto do
hereby agree as follows:
ARTICLE 1. - DEFINITIONS
All capitalized terms used in this Agreement are used as defined
in this Article I or elsewhere in this Agreement.
1.1 BUSINESS - shall mean the management and disposal of sharps
medical waste, using reusable products and handlers manufactured for the Company
with molds owned by the Company, together with the transportation, opening,
emptying and washing of reusable sharps containers the services related thereto
and the marketing thereof.
1.2 BUYER - shall mean SAFETY DISPOSAL SYSTEM, INC., a Florida
corporation.
1.3 CLOSING DATE - shall mean June 20, 1998, or such other date
as may be agreed upon in writing by the parties hereto.
1.4 COLLATERAL AGREEMENTS - shall mean and include any and all
agreements, instruments, certificates or documents required or expressly
provided for in this Agreement to be executed and delivered in connection with
the transaction contemplated by this Agreement.
1.5 COMPANY - shall mean BIOMADE PLASTICS, INC., a Minnesota
corporation.
1.6 CONTRACTS - shall mean and include any and all contracts,
agreements understandings, arrangements, leases, licenses, registrations,
authorizations, easements, servitudes, rights of way, mortgages, bonds, notes,
guaranties, liens, indebtedness, approvals, or other instruments or undertaking
to which such person is a party or to which or by which such person or the
property of such person is subject or bound, excluding any Permits.
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<PAGE> 2
1.7 DAMAGES - shall mean any and all damages, liabilities,
obligations, penalties, fines, judgments, claims, deficiencies, losses, costs,
expenses and assessments, including all attorneys' fees and costs, and interest
accruing on such Damages.
1.8 DISCLOSURE SCHEDULE - shall mean the Disclosure Schedule
prepared by the Company, which includes the disclosures, exhibits and schedules
required by the Company in accordance with this Agreement.
1.9 ENVIRONMENTAL CLAIM - shall mean any investigation, notice,
violation, demand, allegation, action, suit, injunction, judgment, order,
consent, decree, penalty, fine, lien, proceeding, or claim (whether
administrative, judicial or private in nature) arising (a) pursuant to, or in
connection with, an actual or alleged violation of any Environmental Law, (b) in
connection with any Hazardous Material, Medical Waste or actual or alleged
Hazardous Material Activity, (c) from any abatement, removal, remedial,
corrective or other response action in connection with a Hazardous Material or
Medical Waste, Environmental law or other order of a Governmental Authority, or
(d) from any actual or alleged damage, injury, threat or harm to health, safety,
natural resources or the environment.
1.10 ENVIRONMENTAL LAW - shall mean any current or future legal
requirement pertaining to (a) the protection of health, safety and the indoor or
outdoor environment, (b) the conservation, management or use of natural
resources and wildlife, (c) the protection or use of surface water and
groundwater, (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, Release, threatened
Release, abatement, removal, remediation or handling of, or exposure to, any
Hazardous Material (e) the management, treatment, disposal or handling of
Medical Waste, or (e) pollution (including any Release to air, land, surface
water, and groundwater), and includes, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. SECTION
9601, et seq., Solid Waste Disposal Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. SECTION 6901, et seq., Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. SECTION 1251,
et seq., Clean Air Act of 1966, as amended, 42 U.S.C. SECTION 7401, et seq.,
Toxic Substance Control Act of 1976, 15 U.S.C. SECTION 2601, et seq., Hazardous
material Transportation Act, 49 U.S.C. App. SECTION 1801, et seq., Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. SECTION 651, et seq., Oil
Pollution act of 1990, 33 U.S.C. SECTION 2701, et seq., Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. SECTION 11001, et seq., National
Environmental Policy Act of 1969, 42 U.S.C. SECTION 4321, et seq., Safe Drinking
Water Act of 1974, as amended, 42 U.S.C. SECTION 300(f), et seq., any similar,
implementation or successor law, and any amendment, rule, regulation, order or
directive issued thereunder.
1.11 ERISA - shall mean the Federal Employment Retirement Income
Security Act of 1974, as amended.
1.12 FINANCIAL STATEMENTS - shall mean the Company's unaudited
financial statements with respect to the Business consisting of balance sheets
as of December 31, 1997 and March 31, 1998 and statements of income and expenses
for the year ended December 31, 1997, and for the three months ended March 31,
1998, respectively, all as attached to the Disclosure Schedule.
1.13 GOVERNMENTAL AUTHORITY - shall mean and include any nation,
country (including, but not limited to the United States of America)
commonwealth, state, territory or possession thereof and any political
subdivision of any of the foregoing, including, but not limited to courts,
departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities.
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<PAGE> 3
1.14 HAZARDOUS MATERIAL - shall mean any substance, chemical,
compound, product, solid, gas, liquid, waste, byproduct, pollutant, contaminant,
or material which is hazardous or toxic, and includes, without limitation, (a)
any medical waste, (b) asbestos, polychlorinated biphyenls and petroleum
(including crude oil or any fraction thereof) and (c) any such material
classified or regulated as "hazardous" or "toxic" pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund amendments and Reauthorization Act of 1986, 42 U.S.C. SECTION
9601, et seq., Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous an Solid Waste Amendments of 1984, 42
U.S.C. SECTION 6901, et seq., Federal Water Pollution Control Act, as amended by
the Clean Water Act of 1977, 33 U.S.C. SECTION 1251, et seq., Clean Air Act of
1966, as amended, 42 U.S.C. SECTION 7401, et seq., Toxic substances Control Act
of 1976, 15 U.S.C. SECTION 2601, et seq., or Hazardous Materials Transportation
Act, 49 U.S.C. App. SECTION 1801, et seq.
1.15 HAZARDOUS MATERIAL ACTIVITY - shall mean any activity, event
or occurrence involving a Hazardous Material, including, without limitation, the
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, Release, threatened Release, abatement, removal, remediation,
handling of or corrective or response action to any Hazardous Material.
1.16 INTANGIBLE RIGHTS - shall mean and include any and all
information, trade secrets, patents, copyrights, trademarks, trade names and
other intangible properties that are necessary or customarily used by the
Company in the operation of its BusineSECTION
1.17 LAST REPORTED SALE PRICE - shall mean the last reported sale
price of MWI Common Stock as reported by the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), or if the MWI Common Stock is not
reported on the NASDAQ System, on such securities exchange on which sales of MWI
Common Stock are thereafter reported, on the date the determination of such
price is required in accordance with the terms of this Agreement.
1.18 MARKET VALUE - shall mean the product of (a) the Last
Reported Sales Price of the MWI Common Stock, as reported by NASDAQ on the five
(5) business days preceding the Closing Date, times (b) the number of shares to
be issued to the Company in accordance with Section 3.1. herein.
1.19 MEDICAL WASTE - shall mean and include any waste which may
cause an infectious disease or can reasonably be suspected of harboring
pathogenic organisms, including predominately all materials that come in contact
with human and animal body fluids.
1.20 MWI - shall mean MED/WASTE, INC., a Delaware corporation.
1.21 MWI COMMON STOCK - shall mean the common stock, $.001 par
value of MWI as described in MWI's Certificate of Incorporation, as presently
amended.
1.22 ORDINARY COURSE OF BUSINESS - shall mean the conduct and
operation of the business of the Company only in the manner in which it
conducted and operated such Business during the twelve months prior to the
execution of this Agreement, following its usual and ordinary accounting
practices, making ordinary accruals, incurring ordinary liabilities and
expenditures, and making ordinary commitments for merchandise, insurance,
rentals, and other ordinary Business purposes as reflected in the Financial
Statements.
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1.23 PERMITS - shall mean and include any and all permits,
licenses, agencies, orders or contracts granted by any Governmental Authority
necessary or used in the operation of the Business as presently conducted.
1.24 RELEASE - shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the indoor or outdoor environment, including, without
limitation, the abandonment or discarding of barrels, drums, containers, tanks
and other receptacles containing or previously containing any Hazardous Material
or Medical Waste.
1.25 TAXES - shall mean any federal, state, local or foreign,
income, gross receipt, license, payroll, employment, excise, communications,
severance, stamp, occupation, premium, windfall profits, environmental, customs,
duties, capital stock, franchise profits, withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transaction, transfer, registration, value added, alternative, estimated or
other tax of any kind whatsoever, including any interest, penalty or addition
thereto.
ARTICLE 2. - SALE AND PURCHASE OF ASSETS
2.1 SALE AND PURCHASE OF ASSETS - On the terms and subject to the
conditions of this Agreement, on the Closing Date the Company shall sell,
convey, assign, transfer, and deliver to Buyer, and Buyer shall purchase,
acquire, and accept delivery of, the following assets and properties owned by
the Company as of the Closing Date and used by the Company in its Business:
(a) Twelve molds for the manufacture of reusable
sharps containers, lids and accessories as listed on Schedule 2.1(b) to the
Disclosure Schedule, including all governmental approvals received in connection
therewith;
(b) All license agreements related to the
Business and which are listed on Schedule 2.1(b) to the Disclosure Schedule
together with any License Agreement executed by the Company following the date
of this Agreement in accordance with the provisions of this Agreement (the
"License Agreements");
(c) All product in inventory and other materials
related to the Business, including all inventory in transit or on order and not
yet delivered as of five (5) days prior to the Closing Date;
(d) All proprietary knowledge, patents, 510k
approvals, trade secrets, referral lists, technical information, quality control
data, processes (whether secret or not), methods and other similar know how or
rights used in the conduct of the Business;
(e) The "Sharps Away" trade name, Permits,
licenses, customer and vendor telephone numbers and addresses, customer lists,
vendor lists, contracts, advertising material and data, and accounts
receivables, if any;
(f) All other Intangible Rights used in
connection with the Business. The aforesaid assets and properties to be
transferred to Buyer hereunder are hereinafter collectively referred to as the
"Assets."
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2.2 METHOD OF CONVEYANCE - The sale, transfer, conveyance,
assignment, and delivery by the Company of the Assets to the Buyer in accordance
with Section 2.1 hereof shall be through the delivery of a duly executed Bill of
Sale in form and substance satisfactory to the Buyer, as well as various
assignments of License Agreements, leases, contracts and other matters.
2.3 NO LIENS - The Company shall transfer good and marketable
title to the Assets to Buyer free and clear of all liens, charges, claims,
security interests, adverse interests, and encumbrances of any kind whatsoever
owed to, owed by, accrued to, or in favor of any person or party whatsoever.
2.4 NO LIABILITIES - The Buyer shall not assume any liabilities of
the Company. The Company shall be responsible for all liabilities of the
Business incurred prior to the Closing Date including: (a) the Company's payroll
expenses; (b) the Company's indebtedness for borrowed money; (c) any liability
of the Company for Taxes; (d) any liability of the Company in connection with
any employee benefit plan or program including, without limitation, any
liability of the Company under ERISA; (e) any liability of the Company under any
Federal, state or local law, rule, regulation, ordinance, program or permit
relating to health, safety, Hazardous Waste and other Environmental matters; (f)
any product liabilities pertaining to any products sold, manufactured or
otherwise performed or services rendered prior to the Closing Date, (g) any
claims by any Governmental Authority; or (h) any liability for services provided
by the Company, under any Contract or otherwise, arising prior to the Closing
Date. The Company agrees to satisfy and discharge, as the same shall become due,
all obligations and liabilities of the Company not specifically assumed by Buyer
hereunder.
ARTICLE 3. - PURCHASE PRICE AND METHOD OF PAYMENT
3.1 PURCHASE PRICE - As consideration for the Assets purchased by
the Buyer, and subject to compliance by the Company, with its warranties and
undertakings contained in this Agreement, Buyer shall pay the purchase price of
$1,188,000, payable as set forth below (the "Purchase Price"):
3.1.1 CASH - Buyer shall pay to the Company aggregate
cash consideration of $638,000 on the Closing Date, provided however, that
payments aggregating $125,000 referred to in Section 3.2 herein, shall be
credited toward the cash portion of the purchase price; and further provided
that Buyer shall receive a credit in the amount of $88,000 against the cash
portion of the Purchase Price for modification of the reusable sharps, lids and
delidding machine.
3.1.2 MWI COMMON STOCK - MWI shall cause to be issued to
the Company on the Closing Date that number of shares of MWI's unregistered and
previously unissued MWI Common Stock with an aggregate Market Value of $550,000.
3.2 OPTION PAYMENT - The parties agree and acknowledge that MWI
has previously paid to the Company an option payment of $25,000 which is to be
credited to the purchase price herein. Upon full execution of this Agreement,
MWI shall pay to the Company an additional option payment of $100,000. The
option payments made shall be fully credited against the cash consideration
required under Section 3.1.1 herein. Such option payments shall be refunded to
MWI by the Company only in the event that the transaction is not consummated in
accordance with Section 4.4.2.
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3.3 REGISTRATION RIGHTS. MWI shall file a registration statement
with the Securities and Exchange Commission ("SEC"), within ninety (90) days
following the Closing Date, for the purpose of registering the MWI Common Stock
issued pursuant to Section 3.1.2 herein. MWI shall use its best efforts to have
the registration statement declared effective within one hundred fifty (150)
days following the Closing Date. MWI shall pay all costs associated with such
registration, other than counsel fees of the Company or its selling expenses. If
such registration statement is not declared effective by the SEC within one
hundred fifty (150) days following the Closing Date, the Company shall have a
right to "put" the MWI Common Stock to MWI for an aggregate purchase price of
$550,000. Such "put" shall be payable in cash and must be exercised within
thirty (30) days following the expiration of the one hundred fifty (150) day
period. The "put" may only be exercised in whole, not in part.
3.4 INVESTMENT RESTRICTIONS - All MWI Common Stock to be acquired
by the Company shall be "Restricted Securities" as that term is defined pursuant
to the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "1933 Act"). The Company hereby represents that the
MWI Common Stock is being acquired for investment purposes only and not with a
view to the distribution thereof except as may be permitted by the 1933 Act.
Certificates representing MWI Common Stock when issued shall contain a
restrictive legend to the effect that the MWI Common Stock have not been
registered pursuant to the 1933 Act or any state having jurisdiction thereof and
may not be sold, transferred or otherwise disposed of except in compliance with
the 1933 Act or unless the MWI receives an opinion of counsel reasonably
satisfactory to it that an exemption from registration is available. A stop
transfer order shall be placed on the MWI Common Stock with MWI's transfer
agent.
ARTICLE 4. - CLOSING
4.1 CLOSING - Subject to the terms and conditions of this
Agreement, the Closing shall take place at 9:30 a.m. on the Closing Date, or
such other date as is mutually agreed between the parties. The Closing shall
take place at the offices of Wallace, Bauman, Legon, Fodiman & Shannon, P.A.,
2222 Ponce de Leon Boulevard, 6th Floor, Coral Gables, Florida 33134.
4.2 COMPANY PERFORMANCE AT CLOSING - At or prior to the Closing,
the Company shall deliver, or cause to be delivered, to Buyer:
4.2.1 a duly executed Bill of Sale;
4.2.2 a certificate duly executed by the president of the
Company to the effect that:
(a) all of the representations and warranties
made by the Company in this Agreement are true and correct in all material
respects as of the Closing Date;
(b) none of the covenants made by the Company in
this Agreement have been breached in any material respect as of the Closing
Date;
(c) there have been no material adverse changes
in the condition of the Business since the date of the Financial Statements,
whether financial or otherwise, through the Closing Date;
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4.2.3 all approvals and consents of all appropriate
Governmental Authorities, if any;
4.2.4 assignments of each License Agreement;
4.2.5 assignments of all Intangible Rights;
4.2.6 a certified copy of the corporate actions taken by
the Company authorizing and approving this Agreement and the transactions
contemplated by it;
4.2.7 a certificate of incumbency duly executed by the
Company's secretary;
4.2.8 duly executed Non-Competition Agreement by the
Company, Ark Industries, Inc. and their respective officers, directors and
employees (other than Edward Prout, Jr., a director of the Company) in form
substantially similar to Section 9.4 herein;
4.2.9 An investment letter in a form acceptable to
counsel for Buyer signed by the Company pertaining to the MWI Common Stock;
4.2.10 Possession of the Assets and all originals and
copies of all agreements, instruments, documents, deeds, books, records, files
and other data and information within the possession of the Company pertaining
to the Business ;
4.2.11 Any and all assignments or other instruments of
conveyance necessary to vest good, marketable and complete title in and to the
Assets in Buyer;
4.2.12 an opinion of counsel in form and substance
satisfactory to Buyer and its counsel that:
(a) The Company has been duly incorporated and
is validly existing and in good standing under the laws of the State of
Minnesota and is duly qualified to do business and is in good standing in each
jurisdiction in which the character and location of the properties owned by it
or the nature of the business transacted by it makes such qualification
necessary.
(b) The Company has the full power to conduct
its business as presently conducted and to execute and deliver this Agreement
and to perform its obligations hereunder; and has authorized the execution,
delivery and performance of the Agreement by all necessary corporate and
shareholder action.
(c) The execution and delivery of the Agreement,
performance by the Company of its obligations under the Agreement and the
exercise by the Company of the rights created by the Agreement do not (i)
violate the Company's Articles of Incorporation or by-laws; (ii) constitute a
breach of or a default under any agreement or instrument to which the Company is
a party or by which they or their assets are bound, or result in the creation of
a mortgage, security interest or other encumbrance upon the assets of the
Company; (iii) violate any judgment, decree or order of any court or
administrative tribunal; (iv) require the consent of any bankruptcy court; or
(v) any Federal or state law, rule or regulation;
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<PAGE> 8
(d) No further notice, report or other filing or
registration with, and no further consent, approval or authorization of, any
Governmental Authority is required to be submitted, made or obtained by the
Company in connection with the execution, delivery and performance of the
Agreement.
(e) The Agreement is a valid and binding
obligation of the Company enforceable against the Company under the laws of the
State of Florida and the Federal law of the United States.
(f) There are no pending or threatened legal
proceedings, actions, claims, investigations or other proceedings against the
Company pertaining to the Business.
(g) The Company has good and marketable title to
all of the Assets free and clear of all liens, mortgages, pledges, conditional
sales agreements, security interests, restrictions, judgments, options, charges,
claims or encumbrances of any kind.
(h) The instruments of conveyance and assignment
delivered by the Company to Buyer in accordance with their terms will have
vested in Buyer all right, title, and interest to the Assets;
(i) The Company is in compliance with all
federal, state and local laws regarding the operation of the Business;
4.3 BUYER'S PERFORMANCE AT CLOSING - At or prior to Closing, Buyer
and MWI, as the case may be, shall deliver or cause to be delivered to the
Company the following:
4.3.1 The cash to close as required in Section 3.1.1,
subject to the provisions of Section 3.2 herein;
4.3.2 A certificate representing the MWI Common Stock
issued in the name of the Company, as required in Section 3.1.2 herein;
4.3.3 a certificate executed by an officer of Buyer to
the effect that all of the representations and warranties made by Buyer in this
Agreement are true and correct as of the Closing Date;
4.3.4 written evidence that Buyer's board of directors
approved consummation of the transaction.
4.4 TERMINATION IN ABSENCE OF CLOSING -
4.4.1 TERMINATION. If by the close of business on the
Closing Date, the Closing has not occurred, then any party may thereafter
terminate this Agreement by written notice to the other parties hereto, without
liability of or to any other party to this Agreement, unless the reason for
closing having not occurred is (i) such party's breach of any of its
obligations, representations, warranties or covenants or other provisions of
this Agreement; or (ii) the failure of such party to perform its obligations
hereunder. The defaulting party shall be liable to all other parties for all
Damages incurred by the non-defaulting parties, including but not limited to all
expenses, costs and attorney fees incurred in due
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diligence, negotiation of this Agreement, the drafting of this Agreement and all
Collateral Agreements and otherwise representing such non-defaulting parties.
4.4.2 TERMINATION BY BUYER. This Agreement and the
transaction contemplated herein may be terminated and abandoned at any time on
or prior to the Closing Date by Buyer, if:
(a) any representation or warranty made herein
by the Company for the benefit of Buyer or any certificate, schedule or document
furnished by the Company to Buyer pursuant to this Agreement is untrue; or
(b) the Company shall have defaulted in any
respect in the performance of any obligation under this Agreement;
(c) a material adverse change has occurred to
the Business. In the event that Buyer terminates this Agreement in accordance
with the provisions contained in this Section 4.4.2, then the Company shall be
liable to Buyer for all Damages incurred by Buyer including, but not limited to,
all expenses, costs and attorney's and accounting fees incurred in the due
diligence, negotiation and drafting of this Agreement in contemplation of the
transaction contained herein. In addition, the $125,000 paid by MWI in
accordance with Section 3.2 herein shall be reimbursed by the Company to MWI
immediately upon such termination.
ARTICLE 5. - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer and MWI that the
representations and warranties contained in this Article 5 are true and correct
as of the date hereof (except for such items that will be cured by the Closing
Date) and as of the Closing Date:
5.1 ORGANIZATION OF COMPANY - The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota. The Company has the corporate power to own, manage, lease and hold
its assets and engage in its businesses where such assets are located, is duly
qualified to do business and is in good standing in each jurisdiction in which
the character and location of the properties owned by it or the nature of the
business transacted by it makes such qualification necessary.
5.2 AUTHORITY - The Company has full power and authority to enter
into this Agreement and to consummate the transaction contemplated hereby. This
Agreement and any Collateral Agreement executed in connection with the Closing
constitutes, or upon execution and delivery will constitute, the legal, valid
and binding obligations of such parties enforceable in accordance with their
terms. No consent of any Federal, state, municipal or other Governmental
Authority is required for the execution, delivery or performance of this
Agreement.
5.3 FINANCIAL STATEMENTS - The Financial Statements attached to
the Disclosure Statement are correct and complete and present fairly the
financial condition of the Business as of the date of such Financial Statements
and the results of its operations for the periods of such statements of
operations and have been prepared on a consistent basis with all prior periods
and in accordance with generally accepted accounting principles ("GAAP"). Since
the date of the Financial Statements,
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there has been no material adverse change in the assets, liabilities, business,
operations or condition, financial or otherwise, of the Business from that shown
on the Financial Statements.
5.4 TITLE TO ASSETS - The Disclosure Schedule contains a list of
all Assets owned by the Company and related to the Business. The Company has
good and marketable title to the Assets, free and clear of any and all liens,
mortgages, pledges, conditional sales assignments, security interests,
judgments, options, adverse claims, encumbrances or other restrictions or
limitations whatsoever. The Assets listed on the Disclosure Schedule represent
all of the assets necessary to operate the Business in the same manner as
operated prior to the date hereof and for the balance of their estimated useful
lives will be suitable and sufficient for the conduct of the Business in the
same manner as presently conducted.
5.5 CONTRACTS AND COMMITMENTS - Except as set forth on the
Disclosure Schedule, the Company is not a party to, or bound or affected by any
contract, lease, agreement, covenant, license, instrument or commitment (whether
written or oral) of any type, including the following:
5.5.1 contracts for the employment or compensation of any
officer or individual employee, not terminable without further liability at any
time:
5.5.2 contracts with any labor union;
5.5.3 continuing contracts for the future purchase of
materials, supplies or equipment;
5.5.4 continuing contracts for the future provision of
its services;
5.5.5 distribution or agency contracts, License
Agreements, franchise contracts, or advertising commitments;
5.5.6 pension, profit sharing, deferred compensation,
retirement or stock option or stock purchase plans in effect with respect to
officers, employees or others;
5.5.7 leases under which it is lessor or lessee;
5.5.8 underwriting agreements or agreements with a broker
or finder;
5.5.9 consulting agreements;
5.5.10 contracts for the acquisition of a business, or
substantially all of the property, assets, or stock of a business under which
there are any continuing or unperformed obligations on the part of any of the
parties thereto; or
5.5.11 Any other contract, agreement, or commitment
involving $1,000 or more or which is not terminable without further liability to
the Company upon no more than thirty (30) days' notice.
There have been delivered to Buyer true and correct copies of each of the
Contracts, listed in the Disclosure Schedule. All Contracts are valid, binding
and in full force and effect and are enforceable in accordance with their terms
against all other parties to such Contracts. The Company have
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performed all obligations required to be performed by it to date and is not in
default in any material respect under any Contract to which it is a party. None
of the Contracts were arrived at, or otherwise reflect, less than arms length
negotiations or bargaining.
5.5 INSPECTION OF RECORDS - The Company has made, or will make,
available for inspection by Buyer full and complete information concerning the
Company's customers, suppliers, vendors and all aspects of the Company's
Business, including complete copies of any customer, vendor, or supplier
contracts.
5.5 INVENTORIES - The inventory of the Company as of the Closing
Date shall, in all material respects, consist of items of a quality, condition
and quantity consistent with normal inventory levels of the Company and be
useable and saleable in the Ordinary Course of Business for the purposes for
which intended. Such inventory is carried on the Company's books of account in
accordance with GAAP, consistently applied.
5.5 EQUIPMENT AND OTHER TANGIBLE PROPERTY - The Company's tangible
personal property related to the Business and included in the Assets shall, as
of the Closing Date, be in all material respects suitable for the purposes for
which intended and in good operating condition and repair consistent with normal
industry standards, except for reasonable and ordinary wear and tear.
5.6 AUTHORIZATIONS - The Company has all material and relevant
authorizations necessary to own, operate, use and/or maintain its Assets and the
Business in all locations where the Company conduct such Business, all of which
are listed on the Disclosure Schedule. The reusable products manufactured for
the Company from the molds owned by the Company and included in the Assets have
been authorized to be to be marketed in the United States by the United States
Federal Food and Drug Administration ("FDA") pursuant to the Federal Food, Drug
and Cosmetic Act ("FFDCA"). No proceeding is pending or threatened to modify,
suspend, revoke, withdraw, terminate or otherwise limit any authorizations which
could adversely affect the ability of the Company own, operate, use or conduct
the Business currently operated. No assignment or approval by any Governmental
Authority is necessary to vest all rights to sell or market the Assets with
Buyer as they pertain to FDA approval.
5.7 INTANGIBLE RIGHTS - Listed on the Disclosure Schedule is all
of the Intangible Rights owned or used by the Company in the Business. The
Company is the legal and equitable owner or has the right to use all of the
Intangible Rights listed on the Disclosure Schedule. The conduct of the Business
does not infringe or conflict with, and has not in the past infringed or
conflicted with, and the Company are not in receipt of any notice or complaint
of conflict with or infringement of, the asserted rights of others in any
Intangible Rights of others.
5.8 LITIGATION - There are no actions, suits, proceedings or
investigations, either ad ministrative or judicial (whether or not on behalf of
the Company) pending or, threatened against or affecting the Company or the
Assets. The Company is not in default with respect to any order, writ,
injunction or decree of any court or Governmental Authority. The Company is in
compliance in all material respects with all laws, rules, regulations and orders
materially applicable to its Business.
5.9 COMPLIANCE WITH LAWS - The Company is and has been in
compliance in all respects with any and all laws, regulations, ordinances,
rules, orders or decrees applicable to the Company , including, but not limited
to all Environmental Laws, the FFDCA and any regulations thereunder. The Company
has not received or entered into any citation, complaints, consent order,
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compliance agreements or other similar enforcement order or received written
notice from any Governmental Authority that would indicate that the Company is
not currently in compliance with all such laws, regulations, ordinances, rules,
orders or decrees.
5.10 ABSENCE OF MATERIAL CHANGES - Except as set forth in the
Disclosure Schedule, from the date of the Financial Statements to the date
hereof, the Company has not:
5.10.1 incurred any obligations or liabilities (absolute
or contingent) except current liabilities incurred, and obligations under
Contracts entered into, in the Ordinary Course of Business;
5.10.2 discharged or satisfied any lien or encumbrance or
paid any obligation or liability (absolute or contingent) other than obligations
or liabilities discharged or satisfied in the Ordinary Course of Business;
5.10.3 mortgaged, pledged, or subjected to any lien,
charge, or other encumbrance, any of its assets, tangible or intangible, other
than liens for taxes not yet due or which are being contested in good faith by
appropriate proceedings;
5.10.4 sold or transferred any of its tangible assets or
canceled any debts or claims, except in each case in the Ordinary Course of
Business;
5.10.5 sold, assigned, or transferred any Intangible
Rights;
5.10.6 suffered any material operating or extraordinary
loss or waived any right of substantial value;
5.10.7 entered into any transaction other than in the
Ordinary Course of Business;
5.10.8 received any notice of termination of any
contract, lease or other Agreement;
5.10.9 entered into any Contracts for which the Company
expects to incur a loss from the provision of services.
5.11 TAX RETURNS - The Company is a wholly-owned subsidiary of
BioMed, Inc. ("BioMed") and files a consolidated tax return with BioMed as its
parent. BioMed was recently reorganized under Chapter 11 of the United States
Bankruptcy Code. As part of its reorganization, BioMed entered into an agreement
with the U.S. Internal Revenue Service ("IRS") establishing all of its tax
liabilities through the date of its plan confirmation (May 1, 1998). A copy of
the agreement by and between BioMed and the IRS (the "IRS Agreement") will be
provided to the Buyer by the Company. The Company represents and warrants that
it and BioMed have made in full all payments required to be made to date, under
the IRS Agreement; and is not required to make any estimated payments. The IRS
Agreement does not in any way limit or prohibit the performance of the Company
under the terms of this Agreement. As part of the BioMed consolidated group, the
company has the benefit of a significant net operating loss carry forward which
the Company expects will shelter it from the payment for any federal income
taxes otherwise payable in the near future. With regard to Taxes accruing after
May 1, 1998, the Company shall timely remit all withholding, 1099's, 1120's,
employment, sales, ad valorem, personal property and estimated income taxes due
and payable to date and which becomes due prior to, or on, the Closing Date.
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5.12 ACCOUNTS RECEIVABLE - The accounts receivable and other
receivables shown on the Financial Statements or thereafter acquired prior to
the Closing Date arose from bona fide transactions in the Ordinary Course of
Business and the goods and services involved have been sold, delivered and
performed for the Company's customers as covered by the account obligor. No
further goods are required to be provided and no services are required to be
rendered in order to complete the sales and to entitle the Company to collect
the accounts receivable. None of the accounts receivable are subject to set-off
or counterclaim. Since the date of the Financial Statements, there has been no
reduction in the accounts receivable and other receivables of the Company.
5.13 COMPLIANCE WITH INSTRUMENTS - The consummation of the
transaction contemplat ed by this Agreement will not result in a breach or
violation of any of the terms, provisions or conditions of, or constitute a
default under, or result in the creation of any lien, charge or encumbrance on
any property or assets of the Company pursuant to its Articles of Incorporation,
all amendments thereto, By-Laws, any provision of law, judgment, decree,
indenture, Agreement or instrument to which the Company is a party or by which
it is bound.
5.14 BROKERS' COMMISSIONS - The Company has not entered into any
agreement or understanding with any person, firm or entity or have become
indirectly a party to any agreement for the payment or any commission, finders
or brokerage fee in connection with this Agreement and the transaction
contemplated hereof. The Company, hereby agrees to indemnify and hold harmless
the Buyer and MWI from any claims for a commission, finder's or broker's fee.
5.15 BOOKS AND RECORDS - The books of account and other records of
the Company are materially complete and correct and in the aggregate present and
reflect all of the transactions entered into by it or to which it is a party.
The Company has no knowledge of any condition whether pending or threatened
which would have a material adverse effect upon the Business of the Company or
prevent such Business from being carried on in substantially the same manner in
which it is presently carried on.
5.16 ACCURACY OF INFORMATION - All information provided to Buyer
by the Company as an inducement to Buyer and MWI to enter into this Agreement or
in compliance with the provisions of this Agreement are accurate and complete
and do not contain any untrue statement of a material fact or omit any material
fact necessary to make the information provided not misleading. All information
relating to the Company or the Business which is known to, or would on
reasonable inquiry be known to the Company and which may be material to an
intending purchaser for value, has been disclosed to Buyer and MWI.
5.17 ENVIRONMENTAL LAWS - The Business and the Company are in
compliance with all applicable federal, state and local Environmental Laws and
regulations governing the environment, public health and safety and employee
health and safety (including all provisions of the Occupational Safety and
Health Act) and no Environmental Claim has been filed or commenced against the
Company alleging any failure to comply with any such Environmental Law or
regulation. The Company nor any of its affiliates, agents or licensees have
engaged in the storage, Release, holding, emission, discharge, generation,
processing, disposition, handling or transportation of any substance or material
designated as a Hazardous Material or Medical Waste in violation of any
Environmental Law, ordinance or regulation. There are no Hazardous Materials or
Medical Waste at, on or in any of the Company's properties in violation of any
Environmental Laws, ordinances or regulations and there is no proceeding
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<PAGE> 14
or inquiry pending or threatened by any federal, state or local Governmental
Authority with respect thereto.
ARTICLE 6. - REPRESENTATIONS AND WARRANTIES OF BUYER AND MWI
Buyer and MWI represent and warrant to the Company that:
6.1 ORGANIZATION - Buyer is duly organized and validly existing as
a corporation in good standing under the laws of the State of Florida and has
full corporate power to carry on its business as now conducted and is entitled
to own or lease its properties and to carry on its business as now conducted in
the places where such properties are now leased, owned or operated or such
business is now conducted.
6.2 ORGANIZATION - MWI is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware and has
full corporate power to carry on its business as now conducted and is entitled
to own or lease its properties and to carry on its business as now conducted in
the places where such properties are now leased, owned or operated or such
business is now conducted.
6.3 AUTHORITY - Buyer and MWI have full power and authority to
enter into this Agreement and the consummation of the transaction contemplated
by this Agreement will not result in any breach of any of the terms, provisions,
or conditions of, or constitute a default under, or result in the creation of,
any lien, charge, or encumbrance of any property or assets of Buyer or MWI
pursuant to their respective Articles of Incorporation, By-Laws or any
indenture, Agreement, instrument, order, judgment, or decree to which they are a
party or by which they are bound.
6.4 FINANCIAL STATEMENTS - The financial statements contained in
MWI's Form 10-KSB for the fiscal year ended December 31, 1997 and in MWI's Form
10-QSB for the quarter ended March 31, 1998 with the Securities and Exchange
Commission (the SEC") are, and any other filing with the SEC following the date
hereof through the Closing Date will be, correct and complete and present fairly
the financial condition of MWI as of the dates of such balance sheets and the
results of its operations for the periods of such statements of operations and
have been prepared on a basis consistent with all prior periods and in
accordance with generally accepted accounting principles. Since March 31, 1998,
there has been no material adverse change in the assets, liabilities, business,
operations or financial condition of MWI as shown on the financial statements
contained in the Form 10-KSB.
6.5 ABSENCE OF MATERIAL CHANGES - From March 31, 1998 to the date
hereof, except as may be disclosed in its Form 10-KSB or Form 10-QSB as a
subsequent event, MWI has not:
(a) suffered any material operating or extraordinary loss
or waived any right of substantial value;
(b) had any union or labor difficulties or work stoppage;
(c) received any notice of termination of any contract,
lease, or other agreement which in the aggregate would have a Material Adverse
Effect on MWI.
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<PAGE> 15
ARTICLE 7. - OBLIGATIONS PRIOR TO CLOSING
7.1 OPERATION OF BUSINESS - The Company agrees that, from the date
hereof to the Closing Date, the Company shall conduct its Business and affairs
only in the Ordinary Course of Business.
7.2 ACCESS TO BOOKS AND RECORDS - From and after the date hereof,
the Company shall (a) afford to the officers, employees and representatives of
Buyer and MWI full and free access to its assets, personnel, properties, records
and books of account at all reasonable times during business hours, (b) to
furnish to such officers, employees and representatives such other information
as Buyer and MWI may reasonably request, and (c) to authorize its accountants
and auditors to permit Buyer's and MWI's independent public accountants and
representatives to examine all records pertaining to the Company's Financial
Statements and other books and records of the Company. Buyer and MWI agree to
treat all such material as confidential and not make use of such materials
except for the purposes expressed in this Agreement unless such use comes into
the public domain.
7.3 NEGATIVE COVENANTS - The Company covenants that from and after
the date hereof and through the Closing Date, without the prior written consent
of Buyer and MWI, the Company will not:
7.3.1 enter into any written or oral contract, agreement,
or commitment of any type pertaining to the Assets of the Business.
7.3.2 mortgage, pledge or subject to any lien, charge or
other encumbrance any of its tangible or intangible Assets;
7.3.3 dispose of any of its Assets;
7.3.4 enter into any other transaction, other than in the
Ordinary Course of Business.
7.4 AFFIRMATIVE COVENANTS - The Company covenants that from and
after the date hereof and through the Closing Date, the Company will:
7.4.1 keep the Assets insured consistent with prior
practices in respect thereto;
7.4.2 perform in the Ordinary Course of Business all of
its obligations under Contracts and documents relating to or affecting the
Assets and Business;
7.4.3 materially preserve intact its Business,
organization, and goodwill, to the end that the Buyer shall continue to operate
the Assets as a going business as now constituted, after the consummation of the
transaction contemplated hereunder.
7.5 CONSUMMATION OF TRANSACTIONS - Upon the terms and subject to
the conditions of this Agreement, each of the parties hereto shall use its best
efforts to take, or cause to be taken, all such actions and to do, or cause to
be done, all other things necessary to carry out its obligations hereunder and
to consummate and make effective, as soon as reasonably practicable, the
transactions contemplated by this Agreement, including satisfying the conditions
to the obligations of the other party and obtaining all waivers, permits,
consents and approvals and effecting all registrations, filings and notices with
or to third parties or governmental or public bodies or authorities which are
necessary in
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<PAGE> 16
connection with the transactions contemplated by this Agreement; provided that
this Section 7.5 shall not require either party to waive any condition for its
benefit or any performance hereunder by the other party or to make any payment
to any third party, whether private or governmental, or to expend any funds or
incur any economic burden in connection with obtaining the consent of any third
party, whether private or governmental; and provided further that this Section
7.5 shall not require any party to take any action the result of which, in its
reasonable judgment, would be to impose material limitations on its ability to
consummate and retain the full benefits of the transactions contemplated hereby.
7.6 NO NEGOTIATIONS - Except in the furtherance of the
transactions contemplated hereby, prior to the Closing Date, the Company agrees
that (a) neither it nor any of its affiliates shall, and each of them shall
direct and use its best efforts to cause its respective directors, officers,
employees, representatives or agents (including, without limitation, any
investment banker, attorney or accountant retained by it or any of its
affiliates) not to, directly or indirectly, initiate, solicit or encourage any
inquiries or the making or implementation of any proposal or offer (including,
without limitation, any proposal or offer to its stockholders), with respect to
any merger, acquisition, consolidation, share exchange, business combination or
other transaction involving, or which would result in, (i) the acquisition of a
majority of the outstanding capital stock in the Company, or (ii) the
acquisition of a material part of the Assets of the Company (any such proposal
or offer being hereinafter referred to as an "Acquisition Proposal"), or engage
in any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any person or entity relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; (b) it shall immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing, and it shall
take the necessary steps to inform any such parties of the obligations
undertaken in this Section 7.6; and (c) it shall notify Buyer immediately if any
such inquiries or proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to be initiated or
continued with, it.
7.7 DAMAGE OR DESTRUCTION OF ASSETS - In the event that any loss
or damage to or destruction of any of the Assets shall occur prior to the
Closing, Buyer shall have the option of either (a) terminating this Agreement,
in which case neither Buyer nor the Company shall have any further obligations
or rights hereunder other than for the Company's obligations to reimburse MWI
for the option payments made in accordance with Section 3.2 herein, or (b)
reducing the Purchase Price by the replacement cost of such Assets.
7.8 COMPANY EMPLOYEES - The Company shall terminate the employment
of all employees of the Business listed in Schedule 5.12 of the Disclosure
Schedule at the close of business on the day immediately prior to the Closing
Date. The Buyer shall have the right, but not the obligation to offer employment
to all such terminated employees. All claims of the employees arising out of
their employment by the Company before the Closing Date or termination thereof
whether or not hired by Buyer shall be the sole liability of the Company and the
Company will indemnify and hold the Buyer harmless from all claims or damages
arising therefrom. The Company will directly pay all terminated employees,
including any employees thereafter hired by the Buyer for earned and unused
vacation, in accordance with the Company's prior practices.
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<PAGE> 17
ARTICLE 8. - CONDITIONS PRECEDENT TO THE CLOSING
8.1 CONDITIONS TO OBLIGATIONS OF BUYER AND MWI- The obligations of
Buyer and MWI to consummate this Agreement shall be subject to, and be
conditioned upon, each of the following conditions:
8.1.1 PROPERTIES INTACT - No Assets of the Company shall
have suffered any
destruction or damage by fire, accident or other casualty or act of God
affecting in a material way the conduct of the Business of the Company.
8.1.2 REPRESENTATIONS AND WARRANTIES - The
representations and warranties made by the Company in Article 5 hereof shall be
correct in all respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date; none of the covenants of the Company contained in this
Agreement shall have been breached in any respect as of the Closing Date.
8.1.3 NO ADVERSE CHANGES - That since the date of the
Financial Statements there has been no adverse change in the condition of the
Company, financial or otherwise, from that set forth in the Financial
Statements.
8.1.4 APPROVALS AND CONSENTS - All consents, approvals,
authorizations or orders of any individual, entity, court or Governmental
Authority or administrative body, if any, shall have been obtained and in effect
on the Closing Date, which are required for the consummation of the transaction
be contemplated by this Agreement.
8.1.5 AUTHORIZATION OF AGREEMENT BY THE COMPANY - All
actions of the Company's Board of Directors and their shareholders necessary to
authorize the execution, delivery and performance of this Agreement by the
Company shall have been duly and validly taken.
8.1.6 NO LITIGATION - No claim, proceeding,
investigation, or litigation, either administrative or judicial, shall be
threatened or be pending against the Buyer, MWI or the Company which, in the
opinion of counsel for Buyer, presents a reasonable probability that the
transaction contemplated by this Agreement would be enjoined or prevented or
that the right of Buyer to continue the operations of the Business would be
materially affected.
8.1.7 DUE DILIGENCE - Buyer shall have completed its due
diligence investigation and the results thereof shall not have revealed that any
of the representations, warranties or covenants made by the Company in this
Agreement are untrue or incorrect in any material respect or otherwise be
unsatisfactory to Buyer.
8.1.8 NO CHANGE IN LAW - There shall have not been
proposed or enacted (including without limitation, any threatened proposal or
enactment of) any statute, rule, regulation, policy, guideline, or official
interpretation, or any modification in or to any existing statute, rule,
regulation, policy or guideline, which prohibits or delays or threatens to
prohibit or delay, the performance of the transaction contemplated by this
Agreement or which changes, or threatens to change, in an adverse manner, the
Business, financial condition, revenues, income, liabilities (whether absolute,
contingent or otherwise) reserves or prospects of the Company from that
reflected in the Financial Statements.
8.1.9 NO LIENS - Buyer shall have received written
evidence in form and substance satisfactory to it of the termination of any and
all liens that encumber any of the Assets.
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<PAGE> 18
8.1.10 NO VIOLATIONS OF LAW - At the Closing Date, there
shall exist no violations of any Federal, state or local law, ordinance or
regulation affecting the Assets or Business of the Company.
8.1.11 PERFORMANCE BY THE COMPANY - All of the terms and
conditions of this Agreement to be complied with and performed by the Company on
or before the Closing Date shall have been complied with and performed.
8.1.12 PROCEEDINGS AND INSTRUMENTS SATISFACTORY - All
proceedings, corporate or other to be taken in connection with the transaction
contemplated by the Agreement and all documents incident thereto, including any
Collateral Agreement, shall be satisfactory in form and substantive to Buyer and
Buyer's counsel.
8.1.13 NON-COMPETITION AGREEMENT - Each person set forth
in the Disclosure Schedule shall have executed the Non-Competition Agreements as
required in Section 4.2 herein.
8.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY - The obligations of
the Company to consummate this Agreement are subject to and shall be conditioned
upon each of the following conditions:
8.2.1 REPRESENTATIONS AND WARRANTIES - The
representations and warranties made by Buyer and MWI herein shall be correct in
all material respects on and as of the Closing Date with the same force and
effect as though such representations had been made on and as of the Closing
Date. The covenants of Buyer and MWI contained herein shall not have been
breached in any material respects as of the Closing Date.
8.2.2 PERFORMANCE BY BUYER AND MWI - All of the terms,
covenants and conditions of this Agreement to be complied with and performed by
Buyer and MWI on or before the Closing Date shall have been complied with and
performed.
8.2.3 CONSENTS AND APPROVALS - No consent, approval,
authorization or order of any individual, entity, court or governmental agency
or administrative body not obtained and in effect on the Closing Date shall be
required for the consummation of the transaction contemplated by this Agreement.
8.2.4 NO ADVERSE CHANGES - That since March 31, 1998
there has been no adverse change in the condition of MWI, financial or
otherwise, from that set forth in MWI's Form 10- QSB for the quarter ended March
31, 1998.
8.2.5 AUTHORIZATION OF AGREEMENT BY THE BUYER AND MWI -
All actions of the Buyer's and MWI's respective Boards of Directors and their
shareholders, if applicable, necessary to authorize the execution, delivery and
performance of this Agreement by Buyer and MWI shall have been duly and validly
taken.
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<PAGE> 19
ARTICLE 9. - POST-CLOSING OBLIGATIONS
9.1 SURVIVAL OF THE CLOSING - All covenants, agreements,
representations, and warranties made hereunder and in any certificates delivered
at the Closing pursuant hereto shall be deemed to have been relied upon by
Buyer, MWI and the Company, and shall survive the Closing for the applicable
statute of limitation period.
9.2 FURTHER ASSURANCES - Following the Closing, each of the
Company, MWI and Buyer shall execute and deliver such documents, and take such
other action as shall be reasonably requested by any other party hereto to carry
out the transaction contemplated by this Agreement.
9.3 INDEMNIFICATION BY COMPANY - The Company agrees to indemnify,
reimburse and hold Buyer and MWI harmless against and from:
9.3.1 All Damages suffered, incurred, or sustained by
Buyer or MWI as a result of (i) the existence on or before the Closing Date of
any liabilities, absolute or contingent, of the Company which were not paid by
the Company; (ii) the untruth of any representation or the breach of any
warranty made in this Agreement; (iii) the untruth of any certificate required
under this Agreement to be delivered by the Company to Buyer or MWI on the
Closing Date; (iv) the breach of this Agreement by the Company.
9.3.2 Buyer and MWI shall give the Company prompt notice
of any claim to indemnification it may wish to assert pursuant to this Article 9
as soon as reasonably practicable. Before being required to make any payments
pursuant to this Section 9.3, the Company may, in their discretion and at their
expense, take all necessary steps properly to contest any claim or liability or
action in respect thereof involving third parties, or to prosecute such contest
or action to conclusion or settlement satisfactory to Buyer and the Company.
Buyer and MWI shall cooperate fully with the Company in the reasonable conduct
of any such contest or action, legal proceedings, negotiation, or settlement and
will not permit compromise voluntarily or settle any such contest, action, legal
proceeding, claim or demand without prior notice to the Company.
9.3.3 Upon the payment to Buyer or MWI by the Company of
any amount which Buyer or MWI is entitled to receive by way of indemnification
under this Section 9.3, Buyer and MWI shall forthwith assign to the Company all
of its right, title, and interest in any item for which indemnification shall so
be made, including claims against third parties relating therewith.
9.3.4 In the event that the Company shall dispute the
right of Buyer or MWI to be indemnified under this Section 9.3, or any item with
respect to which Buyer or MWI shall so request indemnification, or if the
Company shall dispute the amount which Buyer or MWI shall be entitled to receive
with respect to such item by way of indemnification, such dispute shall be
submitted to arbitration in the City of Miami, in accordance with the rules then
in effect of the American Arbitration Association.
9.4 NON-COMPETITION AGREEMENT. The Company hereby agrees as
follows:
9.4.1 The Company will not, for a period of five (5)
years from the Closing Date without the prior written consent of Buyer, be an,
independent contractor, agent, director, stockholder or owner (except of not
more than one percent (1%) of the securities of a publicly traded entity),
partner, consultant, financial backer, creditor or be otherwise directly or
indirectly connected with or participate in the management, operation or control
of any business, firm, proprietorship, corporation, partnership, association,
entity or venture engaged in a business similar to the Business within the
United States.
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<PAGE> 20
9.4.2 The Company covenants and agrees that for a period
of five (5) years from the Closing Date without the prior written consent of
Buyer, they will not contact, call upon, solicit business from, sell or render
services to any customer of the Business with respect to the provision of any
services or supplies similar to the Business or otherwise directly or indirectly
aid or assist any other person, firm or entity to do any of the aforesaid acts,
except on behalf of the Buyer or its subsidiaries or affiliates.
9.4.3 The Company covenants and agrees that for a period
of five (5) years from the Closing Date without the prior written consent of
Buyer, they will not directly or indirectly as principal, agent, owner, partner,
stockholder, officer, director, employee, independent contractor or consultant
or in any individual or representative capacity for itself or on behalf of any
business firm, corporation, partnership, association or proprietorship enter
into any agreements with or solicit, or directly or indirectly cause others to
solicit, the employment of any officer or other employee of the Buyer or any of
its subsidiaries and affiliates for the purpose of causing said officer or
employee to terminate employment with the Buyer or its subsidiaries and
affiliates.
9.4.4 The Company agrees that it shall not at any time
disclose directly or indirectly to any person, firm or entity any confidential
information about the Business or any information concerning their respective
financial condition, customers, sources of patients and methods of obtaining
business or any other methods generally of doing and operating the Business,.
9.4.5 It is recognized and acknowledged by the parties
hereto that a breach, threatened breach, or violation by the Company of any of
the covenants and agreements contained in Section 9.4 may cause irreparable harm
and Damage to the Buyer and the Business in a monetary amount which may be
impossible to ascertain. The Company agree that the Buyer and MWI shall be
entitled to an injunction from any court of competent jurisdiction enjoining or
restraining any breach or violation of any or all of the covenants and
agreements contained in this Section 9.4 and that such right to injunction shall
be cumulative and in addition to whatever other rights or remedies the Buyer or
MWI may possess hereunder at law or in equity.
9.5 PUBLICITY - The Company shall not issue or make, or cause to
have made, any public release or announcement concerning this Agreement or the
transaction contemplated hereby, without the advance written approval of the
form and substance by Buyer.
ARTICLE 10. - MISCELLANEOUS
10.1 COSTS AND EXPENSES - Except as otherwise provided herein in
this Agreement, if this Agreement is terminated in accordance with Section 4.4,
each of the parties to this Agreement shall bear their own expenses incurred in
connection with the negotiation, preparation, execution and closing of this
Agreement and the transaction contemplated hereby, including but not limited to,
transfer taxes, legal fees and accounting fees.
10.2 REMEDIES - The right and remedies provided by this Agreement
are cumulative, and the use of any one right or remedy by any party hereto shall
not preclude or constitute a waiver of its right to use any and all other
remedies. Such rights and remedies are given in addition to any other rights and
remedies a party may have by law, statute or otherwise.
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<PAGE> 21
10.3 DISCLOSURE SCHEDULE - The Disclosure Schedule shall in each
instance, include the Schedules and the Exhibits referred to herein and therein.
The Disclosure Schedule shall be deemed an integral part hereof and is
incorporated herein by this reference.
10.4 ATTORNEYS' FEES - In the event of any litigation or
arbitration arising out of this Agreement, the prevailing party shall be
entitled to an award of its attorneys' fees and costs (including any fees and
costs incurred in Appellate proceedings) against the losing party.
10.5 RISK OF LOSS - Prior to the Closing, the risk of loss, damage
to, or destruction of any assets of the Company shall remain with the Company.
10.6 ASSIGNMENT AND AMENDMENT OF AGREEMENT - This Agreement shall
not be assignable by any of the parties hereto except with the written consent
of the other party. This Agreement may not be amended except by written
agreement executed by all of the parties hereto.
10.7 NOTICES - Any notice or communication given pursuant hereto
by either party to the other party shall be in writing and delivered or mailed
by certified mail, return receipt requested, postage prepaid, as follows:
If to Buyer or MWI: MED/WASTE, INC.
6175 N.W. 153rd Street, Suite 324
Miami Lakes, Florida 33014
Attention: Daniel A. Stauber, President
Copy to: Wallace, Bauman, Legon, Fodiman & Shannon, P.A.
2222 Ponce de Leon Boulevard, 6th Floor
Coral Gables, Florida 33134
Attention: Bryan W. Bauman, Esq.
If to the Company: BIOMADE PLASTICS, INC.
4459 West Swamp Road
Doyletown, Pennsylvania 18901
Attention: Thomas Kilmer, President
Copy to: Angel & Frankel
460 Park Avenue
New York, New York 10022-1906
Attention: Joshua Angel, Esq.
or at such other address as hereafter shall be furnished in writing by any party
hereto to the other parties.
10.8 ENTIRE AGREEMENT - This Agreement, together with the
Disclosure Schedule, is the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written of the
parties. No other agreement not specifically referred to herein, oral or
otherwise, shall be deemed to exist or to bind any of the parties. No officer or
employee of any party has any authority to make any representation or promise
not contained in this Agreement and each of the parties agrees that it has not
executed this agreement in reliance upon any such representation or promise.
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<PAGE> 22
10.9 WAIVER - Any forbearance, failure or delay by any of the
parties hereto to exercise any right, power or remedy hereunder shall not be
deemed a waiver of such right, power or remedy and any single or partial
exercise of any such right, power or remedy hereunder shall not preclude the
further exercise thereof and every right, power or remedy of either party shall
continue in full force and effect unless waived specifically by an instrument in
writing executed by such party.
10.10 GOVERNING LAW - This Agreement shall be construed in
accordance with the laws of the State of Florida.
10.11 COUNTERPARTS - This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
10.12 CAPTIONS - The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
10.13 SUCCESSORS AND ASSIGNS - All of the terms of this Agreement
shall be binding upon and inure to the benefit of, and be enforceable by and
against the parties and their respective successors and assigns.
10.14 INTERPRETATION - Handwritten provisions inserted in this
Agreement, initialed in ink, shall control all typewritten provisions in
conflict therewith. This Agreement shall not be construed more strongly against
or in favor of any party, regardless of who is responsible for its preparation.
10.15 SEVERABILITY - In the event any provision of this Agreement
or the application of such provision to any part shall be held by a court of
competent jurisdiction to be contrary to any rule of law or public policy, the
remaining provisions of this Agreement shall remain in full force and effect.
10.16 RIGHTS OF THIRD PARTIES - Except as may otherwise be
specifically provided in this Agreement, nothing expressed or implied in this
Agreement is intended, or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
shareholders, any rights or remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement and
Plan of Reorganization as of the date set forth above.
MED/WASTE, INC., a Delaware corporation
By: /s/ DANIEL A. STAUBER
-------------------------------------
DANIEL A. STAUBER, President
SAFETY DISPOSAL SYSTEM, INC., a Florida
corporation
By: /s/ DANIEL A. STAUBER
-------------------------------------
Name: DANIEL A. STAUBER
-------------------------------------
Title: PRESIDENT
-------------------------------------
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<PAGE> 23
BIOMADE PLASTICS, INC., a Minnesota
corporation
By: /s/ THOMAS KILMER
-------------------------------------
THOMAS KILMER, President
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<PAGE> 1
EXHIBIT 5
[LETTERHEAD OF WALLACE, BAUMAN, LEGON, FODIMAN & SHANNON, P.A.]
November 27, 1998
Med/Waste, Inc.
6175 N.W. 153rd Street, Suite 324
Miami Lakes, Florida 33014
Re: MED/WASTE, INC.
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as counsel to Med/Waste, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing of
the registration statement on Form S-3 (the "Registration Statement"), with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act") and the prospectus contained therein with
respect to the public offering of up to 75,992 shares of the Company's common
stock, par value $0.001 per share (the "Shares"). All of the Shares are being
offered on behalf of a certain selling stockholder (the "Selling Stockholder").
In connection with the registration of the Shares, you have requested our
opinion with respect to the matters set forth below.
For purposes of this opinion, we have reviewed the Registration
Statement. In addition, we have examined the originals or copies certified or
otherwise identified to our satisfaction of: (i) the Company's Certificate of
Incorporation, as amended to date; (ii) the By-laws of the Company, as amended
to date; (iii) records of the corporate proceedings of the Company as we deemed
necessary or appropriate as a basis for the opinions set forth herein; and (iv)
those matters of law as we have deemed necessary or appropriate as a basis for
the opinions set forth herein. We have not made any independent review or
investigation of the organization, existence, good standing, assets, business or
affairs of the Company, or of any other matters. In rendering our opinion, we
have assumed without inquiry the legal capacity of all natural persons, the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies and the authenticity of the originals of
these documents submitted to us as copies.
We have not undertaken any independent investigation to determine
facts bearing on this opinion, and no inference as to the best of our knowledge
of facts based on an independent investigation should be drawn from this
representation. Further, our opinions, as hereinafter expressed, are subject to
the following exceptions, limitations and qualifications: (i) the effect of
bankruptcy, insolvency, fraudulent conveyance, reorganization, arrangement,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors; and (ii) the effect of general
principles of equity, whether enforcement is considered in a proceeding in
equity or at law and the discretion of the court before which any proceeding
therefore may be brought.
<PAGE> 2
Med/Waste, Inc.
November 27, 1998
Page 2
We are admitted to the practice of law only in the State of
Florida and, accordingly, we do not purport to be experts on the laws of any
other jurisdiction nor do we express an opinion as to the laws of jurisdictions
other than the laws of the State of Florida and the General Corporation Law of
the State of Delaware, as currently in effect.
On the basis of, and in reliance upon, the foregoing, and subject
to the qualifications contained herein, we are of the opinion that:
1. The 75,992 shares of common stock being sold by the selling
shareholder has been duly authorized, is presently outstanding and legally
issued, and fully paid and none assessable.
We hereby consent to your filing this opinion as an exhibit to
the Registration Statement and to the reference to our firm contained under the
heading "Legal Matters."
This opinion is rendered only to you and is solely for your
benefit in connection with the transactions covered hereby. This opinion may not
be relied upon by you for any other purpose or furnished, or quoted to, or
relied upon by any other person, firm or corporation for any purpose without our
prior express written consent.
Respectfully submitted,
WALLACE, BAUMAN, LEGON,
FODIMAN & SHANNON, P.A.
BRYAN W. BAUMAN
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Med/Waste, Inc. and Subsidiaries
Miami, Florida
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated March
25, 1998, relating to the consolidated financial statements of Med/Waste, Inc.
and Subsidiaries appearing in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1997.
We also consent to the reference to us under the caption "Experts" in
the Prospectus.
Miami, Florida
November 30, 1998 BDO Seidman, LLP
