Exhibit 10.9
Agreement and Plan of Exchange
between
Seal Holdings Corporation,
a Delaware corporation
and
OH, Inc.,
a Florida corporation
Dated: December 21, 1998
Table of Contents
ARTICLE
EXCHANGE
1.1 Exchange Result.
1.2 Capital Amendment.
1.3 Resignation of Officers and Directors
ARTICLE
CLOSING
2.1 Closing.
2.2 Deliveries.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SEAL
3.1 Organization of Seal and Seal Subsidiaries.
3.2 Capital Stock of Seal.
3.3 Authorization.
3.4 No Conflict or Violation.
3.5 Consents and Approvals.
3.6 Litigation.
3.7 Title to Assets
3.8 Contracts, Obligations and Commitments
3.9 Employee Benefit Plans; ERISA
3.10 No Brokers
3.11 Financial Statements; SEC Reports
3.12 Absence of Undisclosed Liabilities
3.13 Recent Events.
3.14 Tax Matters
3.15 No Violation of Law
3.16 Environmental Matters
3.17 No Stockholder Approval
3.18 Books of Account
ARTICLE 4
4.1 Organization of Oakridge and Subsidiaries.
4.2 Oakridge Shares
4.3 Authorization.
4.4 No Conflict or Violation.
4.5 Consents and Approvals.
4.6 Litigation.
4.7 Title to Assets
4.8 Contracts, Obligations and Commitments
4.9 Employee Benefit Plans; ERISA
4.10 No Brokers
4.11 Financial Statements
4.12 Absence of Undisclosed Liabilities
4.13 Recent Events.
4.14 Tax Matters
4.15 No Violation of Law
4.16 Environmental Matters
4.17 Books of Account
ARTICLE 5
ACTIONS BY SEAL AND OAKRIDGE PRIOR TO THE CLOSING
5.1 Maintenance of Business.
5.2 Certain Prohibited Transactions.
5.3 Investigation by Parties.
5.4 Consents and Best Efforts.
5.5 Notification of Certain Matters.
5.6 Exclusivity
5.7 Lock-Up Letters; Right of Refusal
5.8 NASDAQ Matters.
5.9 Series A Preferred Stock.
5.10 Fairness Opinion.
5.11 Services Agreements.
ARTICLE 6
CONDITIONS TO OAKRIDGE'S OBLIGATIONS
6.1 Representations, Warranties and Covenants.
6.2 Consents.
6.3 No Governmental Proceeding or Litigation.
6.4 Performance
6.5 Lock-Up Letters
6.6 Sale of Class B Common Stock.
6.7 Services Agreements
6.8 Seal Resignations.
6.9 Fairness Opinion.
6.10 Capital Amendment; Voting.
ARTICLE 7
CONDITIONS TO SEAL'S OBLIGATIONS
7.1 Representations, Warranties and Covenants.
7.2 No Governmental Proceeding or Litigation.
7.3 Performance
7.4 Fairness Opinion
7.5 Services Agreements
7.6 Oakridge Capitalization
ARTICLE 8
ACTIONS BY SEAL AND OAKRIDGE
AS OF AND AFTER THE CLOSING
8.1 Books and Records.
8.2 Further Assurances.
ARTICLE 9
TERMINATION
9.1 Termination
9.2 Effect of Termination
9.3 Waiver
9.4 Limited Termination Fee.
ARTICLE 10
MISCELLANEOUS
10.1 Survival of Representations
10.2 Assignment.
10.3 Notices
10.4 Expenses
10.5 Choice of Law
10.6 Publicity and Filings
10.7 Confidential Information
10.8 Entire Agreement; Amendments and Waivers
10.9 Invalidity.
10.10 Counterparts
Exhibits
Exhibit "A" Securities and Exchange Agreement
Exhibit "B" Form of Resignation
Exhibit "C" Certificate for Seal
Exhibit "D" Seal Opinion of Counsel
Exhibit "E" Certificate for Oakridge
Exhibit "F" Oakridge Opinion of Counsel
Exhibit "G" Series A Convertible Preferred Stock
Statement of Designation
Exhibit "H-1" ▇▇▇▇▇▇▇▇ Employment Agreement
Exhibit "H-2" ▇▇▇▇▇▇▇ Employment Agreement
Exhibit "H-3" Stanford Consulting Agreement
Schedules
Schedule 3.1 Seal Subsidiaries
Schedule 3.2 Subsidiary Capitalization
Schedule 3.5 Seal Consents and Filings
Schedule 3.6 Pending Actions
Schedule 3.7 Title to Assets
Schedule 3.8 Seal Contracts
Schedule 3.9 Seal Employee Benefit Plans; ERISA
Schedule 3.12 Undisclosed Liabilities
Schedule 3.13 Recent Events
Schedule 3.15 Seal-No Violation of Law
Schedule 3.16 Seal Environmental Matters
Schedule 4.1 Oakridge Subsidiaries
Schedule 4.2 Oakridge Subsidiary Capitalization
Schedule 4.4 Oakridge Conflicts
Schedule 4.5 Oakridge Consents
Schedule 4.6 Oakridge Litigation
Schedule 4.7 Oakridge Title to Assets
Schedule 4.8 Oakridge Contracts
Schedule 4.9 Oakridge Employee Benefit Plans; ERISA
Schedule 4.10 Oakridge-No Brokers
Schedule 4.12 Oakridge Undisclosed Liabilities
Schedule 4.15 Oakridge-No Violations of Law
Schedule 4.16 Oakridge Environmental Matters
Schedule 10.8 Amendments and Waivers
AGREEMENT AND PLAN OF EXCHANGE
This Agreement and Plan of Exchange ("Agreement") is dated as of December
21, 1998, by and among Seal Holdings Corporation, a Delaware corporation
("Seal"), and OH, Inc., a Florida corporation ("Oakridge"), with reference to
the following facts:
RECITALS
A. Seal desires to exchange shares of its Class A Common Stock (the
"Class A Shares") and shares of a new series of preferred stock, with such
relative rights, preferences and privileges as described herein (the "Series
A Preferred Shares" and, collectively with the Class A Series, the "Seal
Shares") for all of the issued and outstanding shares of common stock of
Oakridge (the "Oakridge Shares") (the "Exchange").
B. The parties shall carry out the intents and purposes of the Exchange
as set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
EXCHANGE
1.1 Exchange Result. As a result of and immediately following
the Exchange contemplated hereby (a) M. ▇▇▇ ▇▇▇▇▇▇, M.D., or an entity
designated by him ("▇▇▇▇▇▇"), shall own and be issued 10,318,419 Class A
Shares and 2,000,000 Series A Preferred Shares convertible into an additional
20,000,000 Class A Shares, and (b) Seal shall own all of the issued and
outstanding Oakridge Shares, with Oakridge becoming a wholly-owned subsidiary
of Seal. The Seal Shares issued to ▇▇▇▇▇▇ hereunder shall be equivalent to
91% of the total combined issued and outstanding shares of Class A Common
Stock and Class A common Stock Equivalents (as hereafter defined), on a
fully diluted basis. The Exchange contemplated hereby is intended to qualify
as a tax-free transaction as described in Section 351 of the Internal Revenue
code of 1986, as amended (the "Code"). The Exchange shall be consummated on
an individual basis at the Closing 9as herein defined) with ▇▇▇▇▇▇ pursuant
to that certain Securities Exchange Agreement ("Exchange Agreement"), in the
form attached hereto and incorporated herein as Exhibit "A." For purposes
of this Agreement the term "Class A Common Stock Equivalents" means shares of
Class A Common Stock issuable upon (i) the exercise of outstanding options,
warrants or rights to subscribe for the Class A Common Stock or (ii) the
conversion of outstanding shares of preferred stock, debt or other convertible
instruments, in either case, whether or not then currently exercisable or
convertible.
1.2 Capital Amendment. The parties acknowledge that Seal
presently has insufficient shares of Class A Common Stock available for
issuance upon the conversion of the Series A Shares and, prior to Closing,
the Board of Directors of Seal shall recommend the adoption of an amendment
to its certificate of incorporation to increase its authorized shares of Class
A Common Stock to at least 50,000,000 shares (the "Capital Amendment"). The
parties further acknowledge that it is their intent that Seal shall seek
stockholder approval of the Capital Amendment at the next annual meeting of
stockholders of Seal (expected to be held not later than April 30, 1999).
1.3 Resignation of Officers and Directors . All of the officers
and directors of Seal, other than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") in his
capacity as a director, shall submit their resignations as such pursuant to
the form of Resignation, attached hereto and incorporated herein as Exhibit
"B." The resignations of Seal's directors shall be presented serially, such
that as each Seal director resigns one of the persons hereinafter designated
by Oakridge shall be elected to fill the vacancy created thereby by the
remaining Seal directors. It is anticipated that the present officers and
directors of Oakridge or its subsidiaries shall be elected to comparable
positions at Seal.
ARTICLE 2
CLOSING
2.1 Closing. The parties to the Agreement shall use their best
efforts to close the transactions contemplated herein on or before March 31,
1999 at the Florida offices of Proskauer Rose, LLP, but in no event later than
April 30, 1999, unless extended by mutual consent of the parties (the
"Closing Date").
2.2 Deliveries. To effect the Exchange, on or before the
Closing Date, as appropriate, the parties hereto shall deliver the following:
(a) Seal shall deliver, or cause to be delivered, the
following to Oakridge or ▇▇▇▇▇▇:
(i) the written resignations of all of the officers and
directors of Seal, other than ▇▇▇▇▇▇▇▇ in the manner contemplated by Section
1.3 hereof;
(ii) a counterpart of the Exchange Agreement executed by
Seal;
(iii) a certificate of Seal, in the form of Exhibit "C"
attached hereto and incorporated herein, attesting to the fact that all of
the representations and warranties of Seal are true and correct as of the
Closing Date, and that all conditions to the obligations of such party to be
performed by it have been performed as at the Closing Date;
(iv) a certificate of good standing for Seal from its
state of incorporation;
(v) certified copies of corporate resolutions or other
corporate proceedings taken by Seal to authorize the execution, delivery and
performance of the transactions contemplated under and by this Agreement;
(vi) an opinion of Seal's counsel substantially in the
form attached hereto and incorporated herein as Exhibit "D";
(vii) stock certificates registered in the name of ▇▇▇▇▇▇
representing the Class A Shares and the Series A Preferred Shares; and
(viii) any other such documents or certificates as
reasonably requested by Oakridge.
(b) Oakridge shall deliver, or cause to be delivered, the following
to Seal:
(i) a counterpart of the Exchange Agreement executed by
▇▇▇▇▇▇;
(ii) a certificate of Oakridge, in the form of Exhibit
"E" attached hereto and incorporated herein, attesting to the fact that all
of the representations and warranties of Oakridge are true and correct as of
the Closing Date, and that all conditions to the obligations of Oakridge to
be performed by Oakridge have been performed as at the Closing Date;
(iii) a certificate of good standing for Oakridge from
its state of formation;
(iv) certified copies of resolutions or other proceedings
taken by Oakridge to authorize the execution, delivery and performance of the
transaction contemplated under and by this Agreement;
(v) an opinion of Oakridge's counsel substantially in
the form attached hereto and incorporated herein as Exhibit "F"; and
(vi) any other such documents or certificates as
reasonably requested by Seal.
(c) Seal and the parties identified in Section 5.11 hereof shall
execute and deliver to Oakridge the Service Agreements contemplated by such
Section.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SEAL
Seal hereby represents and warrants to Oakridge as follows:
3.1 Organization of Seal and Seal Subsidiaries. Set forth in
Schedule 3.1 is a complete listing of each subsidiary or other business entity
owned in whole or in part by Seal, together with their respective states of
incorporation or organization (the "Seal Subsidiaries"). Seal and each of
its Seal Subsidiaries is duly organized, validly existing and in good
standing under the laws of the state of its incorporation, has full corporate
power and authority to conduct its business as it is presently being conducted,
and to own and exploit all of its properties and assets. Seal and each of its
Seal Subsidiaries is duly qualified to do business and is in good standing in
each other jurisdiction (if any) in which such qualification is necessary under
applicable law as a result of the conduct of its business or the ownership of
its properties or assets. The copies of the Certificate of Incorporation
and By-laws of Seal and each of its Seal Subsidiaries delivered to Oakridge
are true, correct and complete in all respects. Since July 1979, and to Seal's
knowledge for the period from inception to July 1979, the minute books of Seal
(including its predecessors) contain true and complete records and consents,
in lieu of meetings of its Board of Directors, and accurately reflect all
transactions referred to therein.
3.2 Capital Stock of Seal. Seal has authorized Fourteen Million
Nine Hundred Seventy-Five Thousand (14,975,000) shares of Class A Common Stock,
$.20 par value, One Million Two Hundred Eighteen Thousand Five Hundred Twenty
Five (1,218,525) shares of which are issued and outstanding, Twenty-Five
Thousand (25,000) shares of Class B Common Stock, $.20 par value, all of which
are issued and outstanding and owned by First Magnum Corporation ("Magnum"),
and Three Million (3,000,000) shares of preferred stock, $.001 par value, none
of which are issued and outstanding. Except as set forth on Schedule 3.2,
there are no outstanding options, warrants or other rights to acquire any
shares of the capital stock of Seal or any of its Seal Subsidiaries nor
agreements or commitments to issue such options, warrants or rights in the
future. All of the outstanding shares of capital stock or other ownership
interests of Seal and each Subsidiary have been duly authorized, are
validly issued, are fully paid and are non-assessable. There are no agreements,
commitments or restrictions relating to ownership or voting of any shares of
Seal or any Seal Subsidiary. Except as set forth on Schedule 3.2, all of the
outstanding shares of capital stock of the Seal Subsidiaries are owned by Seal.
3.3 Authorization. Seal has all necessary corporate power and
authority to enter into this Agreement and has taken all corporate action
necessary to consummate the transactions contemplated hereby and to perform
its obligations hereunder. This Agreement has been duly executed and
delivered by Seal and is a legal, valid and binding obligation of it,
enforceable against it in accordance with its terms. The Board of Directors
approved the transactions contemplated by the Agreement with the understanding
and knowledge that the issuance of the Seal Shares will result in ▇▇▇▇▇▇
becoming an owner of more than fifteen percent (15%) of the voting stock of
Seal and with the intent that, as a result of such authorization, ▇▇▇▇▇▇
would be exempt from the provisions of Section 203 of the Delaware General
Corporation Law.
3.4 No Conflict or Violation. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will result in (a) a violation of or a conflict with any provision of the
Certificate of Incorporation or By-laws of Seal or any Seal Subsidiary, (b)
a breach of, or a default under, any term or provision of any contract,
agreement, indebtedness, lease, encumbrance, commitment, license, franchise,
permit, authorization or concession to which Seal or any Seal Subsidiary is a
party or by which its properties or assets are bound, which breach or default
would have a material adverse effect on the business or financial condition
of Seal, or its ability to consummate the transactions contemplated hereby
(a "Seal Material Adverse Effect"), (c) a violation by Seal or any Seal
Subsidiary of any statute, rule, regulation, ordinance, code, order,
judgement, writ, injunction, decree or award, which violation would have
a Seal Material Adverse Effect, or (d) imposition of any lien, encumbrance,
restriction or charge on the business of Seal or any Seal Subsidiary, or on
any of their respective assets.
3.5 Consents and Approvals. Except as set forth on Schedule 3.5,
no consent, approval or authorization of, or declaration, filing or
registration with, any governmental, regulatory, licensing or other authority,
or any other person or entity, is required to be made or obtained by Seal or
any Seal Subsidiary in connection with the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby.
3.6 Litigation. Except as set forth on Schedule 3.6 (the "Seal
Pending Actions"), there is no action, order, writ, injunction, judgment or
decree outstanding, or claim, suit, litigation, proceeding, labor dispute,
arbitral action or investigation (collectively, the "Seal Actions") pending
or, to the knowledge of Seal or its officers, threatened relating to or
affecting (i) Seal or any Seal Subsidiary, (ii) any benefit plan of Seal or
any Seal Subsidiary, (iii) any asset of Seal or any Seal Subsidiary, or (iv)
the transactions contemplated by this Agreement. Neither Seal nor any Seal
Subsidiary is in default with respect to any judgement, order, writ, injunction
or decree of any court or governmental, regulatory, licensing or other
authority, and there are no unsatisfied judgments against any of them or the
business or activities of any of them which would, individually or in the
aggregate, have a Seal Material Adverse Effect. To the knowledge of Seal,
each of the Seal Pending Actions is fully covered by insurance except as
otherwise specified on Schedule 3.6. There is not a reasonable likelihood of
an adverse determination of Seal Pending Actions which would, individually
or in the aggregate, have a Seal Material Adverse Effect.
3.7 Title to Assets . Seal and each of its Seal Subsidiaries has
good title to all of its leasehold interests and other properties, as
reflected in the most recent balance sheet included in Seal's Financial
Statements, except for properties and assets that have been disposed of in
the ordinary course of business since the date of such balance sheet, free
and clear of all mortgages, liens, pledges, charges or encumbrances of any
nature whatsoever, except (i) the lien for current Taxes (as hereinafter
defined), payments of which are not yet delinquent and other statutory liens,
(ii) such imperfections in title and easements and encumbrances, if any, as
are not material in character, amount or extent and do not materially and
adversely affect the value or interfere with the present use of the property
subject thereto or affected thereby, or otherwise materially impair Seal's
business operations or prospects, (iii) as disclosed in Schedule 3.7, or (iv)
for such matter which, singly or in the aggregate, could not reasonably be
expected to have a Seal Material Adverse Effect. All leases under which Seal
leases real or personal property have been delivered to Oakridge and are in
good standing, valid and effective in accordance with their respective terms,
and there is not, under any of such leases, any existing default or, to
the knowledge of Seal, event which with notice or lapse of time or both
would become a default other than defaults under such leases which in the
aggregate will not have a Seal Material Adverse Effect.
3.8 Contracts, Obligations and Commitments. Schedule 3.8 sets
forth an accurate and complete list of all material contracts, agreements,
options, leases, commitments and instruments of Seal or its Seal Subsidiaries
either: (a) entered into, amended or otherwise modified since August 14, 1996
(or January 1, 1996 with respect to any material contract, agreement, option,
lease, commitment or instrument with Hvide Marine Incorporated or an
affiliate thereof); or (b) pursuant to which Seal or any of the Seal
Subsidiaries has any continuing obligation (contingent or otherwise, including
without limitation any indemnification obligation), or which is otherwise not
yet fully performed by any of the parties thereto ("Seal Contract"). Seal and
its Seal Subsidiaries have provided Oakridge with complete and correct copies of
all such items listed in Schedule 3.8. Except for such items listed in Schedule
3.8, there are no other material contracts or other arrangement under which
goods, equipment or services are provided, leased or rendered by, or are to be
provided, leased or rendered to, Seal or any of its Seal Subsidiaries. Except
as specifically disclosed in Schedule 3.8: (a) the Seal Contracts have not been
modified, pledged, assigned or amended in any material respect, are legally
valid, binding and enforceable in accordance with their respective terms and are
in full force and effect: (b) to the knowledge of Seal there are no material
defaults by Seal or any of its Seal Subsidiaries or any other party to the Seal
Contracts: (c) neither Seal nor any of its Seal Subsidiaries have received
notice of any material default, offset, counterclaim or defense under any Seal
Contract; (d) to the knowledge of Seal no condition or event has occurred which
with the passage of time or the giving of notice or both would constitute a
default or breach by Seal or any of its Seal Subsidiaries of the terms of any
Seal Contract, except for any consents required to consummate the transactions
contemplated by this Agreement; and (e) there does not now, and at Closing will
not, exist any material security interest, mortgage, pledge, restriction,
charge, lien, encumbrance or claim of others on any interest created under any
Seal Contract. None of the Seal Contracts is subject to termination from and
after the Closing Date and prior to the expiration of its stated term by any
party to such Seal Contract, except as stated in each such Seal Contract. For
purposes of this Section 3.8, the "knowledge of Seal" shall include after
inquiry of J. ▇▇▇▇ ▇▇▇▇▇ with respect to any Seal Contract to which Hvide Marine
Incorporated or any affiliate thereof is a party.
3.9 Employee Benefit Plans; ERISA.
(a) Schedule 3.9 contains an accurate and complete list of all
"employee benefit plans," within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("ERISA Plans"),
and any other bonus, profit sharing, pension, severance, savings, deferred
compensation, fringe benefit, insurance, welfare, health, post-retirement
benefit, life, stock option, disability, accident, sick pay, vacation,
individual employment, consulting, incentive, change in control, or other plan,
agreement, policy, trust fund, or arrangement (whether written or unwritten,
insured or self-insured) ("Other Plan"):
(i) established, maintained, sponsored, or contributed to
(or with respect to which any obligation to contribute has been undertaken)
within the last six (6) years for any ERISA Plan that is or was subject to Title
IV of ERISA or is or was intended to be qualified under Section 401(a) of the
Code (a "Qualified Plan") and since August 1996 for any Other Plan and any ERISA
Plan which is not a Qualified Plan by Seal, the Seal Subsidiaries or any entity
that would be deemed a "single employer" with Seal under Section 414(b), (c),
(m), or (o) of the Code or Section 4001 of ERISA (an "ERISA Affiliate") on
behalf of any employee, director, or consultant of Seal or a Seal Subsidiary
(whether current, former, or retired) or their beneficiaries; or
(ii) with respect to which Seal, the Seal Subsidiaries or
any ERISA Affiliate has or has within the last six (6) years for any Qualified
Plan and since August 1996 for any Other Plan and any ERISA Plan which is not a
Qualified Plan had any obligation on behalf of any such employee, director,
consultant or beneficiary of Seal or a Seal Subsidiary (each a "Scheduled Seal
Plan" and, collectively, the "Scheduled Seal Plans"). True and complete copies
of each of the Scheduled Seal Plans which is intended to qualify under Section
401(a) of the Code and each other Scheduled Seal Plan which Seal, the Seal
Subsidiaries or any ERISA Affiliate has or could reasonably be expected to have
a current or future actual or potential liability, and the material documents
relating thereto (including, without limitation, any summary plan description,
annual reports, and communications from the Internal Revenue Service ("IRS") or
any other government entity) have been provided to Oakridge.
None of the Scheduled Seal Plans (nor, to Seal's knowledge, any Other Plan or
ERISA Plan which is not a Qualified Plan with respect to the period commencing
six (6) years ago and ending August, 1996) is: (A) a "multi-employer plan," as
defined in Section 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code;
(B) otherwise subject to Title IV of ERISA; or (C) subject to Section 412 of the
Code. With respect to each employee pension benefit plan subject to Title IV of
ERISA or Section 412 of the Code (other than the Seal Plans) maintained or
contributed to by an ERISA Affiliate, (A) there is no actual or contingent
material liability of Seal or any Seal Subsidiary under Title IV of ERISA or
Section 412 of the Code to such Plan, the Pension Benefit Guaranty Corporation
or other governmental authority, and (B) the assets of Seal or any Seal
Subsidiary have not been subject to a lien under ERISA or the Code.
(b) Except where failures to comply with each of the following
representations has not or could not reasonably be expected to result,
individually and in the aggregate, in a Seal Material Adverse Effect, with
respect to each of the Scheduled Seal Plans (and, to Seal's knowledge, with
respect to the period commencing six (6) years ago and ending August, 1996, each
Other Plan and each ERISA Plan which is not a Qualified Plan):
(i) each such Plan intended to qualify under Section 401(a)
of the Code is qualified and has received a determination letter under Revenue
Procedure 93B39 or subsequent IRS guidance to the effect that such Plan is
qualified under Section 401 of the Code and any trust maintained pursuant
thereto is exempt from federal income taxation under Section 501 of the Code and
nothing has occurred or is expected to occur through the date of the Closing
that caused or could reasonably be expected to cause the loss of such
qualification or exemption or the imposition of any penalty or tax liability;
(ii) all payments required by any such Plan, any collective
bargaining agreement or other agreement, or by law (including, without
limitation, all contributions, insurance premiums, or inter-company charges)
with respect to all periods through the date of the Closing shall have been made
prior to the Closing or accrued on the Seal Financial Statements in accordance
with GAAP (as defined in Section 3.11 hereof);
(iii) no claim, lawsuit, arbitration or other action has
been threatened, asserted, instituted, or anticipated against such Plans, any
trustee or fiduciaries thereof, Seal, any Seal Subsidiary, any ERISA Affiliate,
any director, officer, or employee thereof, or any of the assets of any trust of
such Plans;
(iv) each such Plan has been maintained and administered at
all times in compliance with its terms and all applicable laws, rules and
regulations, including, without limitation, ERISA and the Code;
(v) no "prohibited transaction," within the meaning of
Section 4975 of the Code and Section 406 of ERISA, has occurred or is expected
to occur with respect to such Plan;
(vi) no such Plan is or is expected to be under audit or
investigation by the IRS, Department of Labor, or any other governmental
authority and no such completed audit, if any, has resulted in the imposition of
any tax or penalty; and
(vii) with respect to each such Plan that is funded mostly
or partially through an insurance policy, none of Seal, the Seal Subsidiaries or
any ERISA Affiliate has any liability in the nature of retroactive rate
adjustment, loss sharing arrangement or other actual or contingent liability
arising wholly or partially out of events occurring on or before the Closing.
(c) The consummation of the transactions contemplated by this
Agreement will not give rise to any material liability, including, without
limitation, liability for severance pay, unemployment compensation, termination
pay, or withdrawal liability, or accelerate the time of payment or vesting or
increase the amount of compensation or benefits due to any employee, director,
shareholder, or beneficiary of Seal or any Seal Subsidiary (whether current,
former, or retired) or their beneficiaries solely by reason of such
transactions. No amounts payable under any Scheduled Seal Plan (or, to Seal's
knowledge, under any Other Plan or ERISA Plan which is not a Qualified Plan with
respect to the period commencing six (6) years ago and ending August 1996) will
fail to be deductible for federal income tax purposes by virtue of Section 280G
or 162(m) of the Code. None of Seal, any Seal Subsidiary or any ERISA Affiliate
maintains, contributes to, or in any way provides for any benefits of any kind
whatsoever (other than under Section 498B of the Code, the Federal Social
Security Act, or a plan qualified under Section 401(a) of the Code) to any
current or future retiree or terminee. None of Seal, any Seal Subsidiary or any
ERISA Affiliate has any unfunded liabilities pursuant to any Scheduled Seal Plan
(nor, to Seal's knowledge, under any Other Plan or ERISA Plan which is not a
qualified Plan, with respect to the period commencing six (6) years ago and
ending August 1996) that is not intended to be qualified under Section 401(a)
of the Code.
3.10 No Brokers. Seal has not entered into any agreement,
arrangement or understanding of any kind or nature with any person or entity
which may result in the obligation of Oakridge or Seal to pay any finder's fee,
broker's fee, brokerage commission or similar payment in connection with any of
the transactions contemplated hereby.
3.11 Financial Statements; SEC Reports.
(a) The financial statements of Seal (including, without
limitation, the audited financial statements for the year ended December 31,
1997 and the unaudited financial statements for the nine months ended September
30, 1998) delivered to Oakridge are true, complete and correct in all material
respects and have been prepared in accordance with Seal's books and records.
The audited financial statements of Seal are sometimes referred to herein as the
"Seal Audited Financial Statements" and the unaudited financial statements are
sometimes referred to herein as the "Seal Unaudited Financial Statements." The
Seal Audited Financial Statements and Seal Unaudited Financial Statements are
sometimes collectively referred to herein as the "Seal Financial Statements."
All of the Seal Financial Statements together present fairly the financial
position, results of operations and changes in financial position of Seal as at
the dates and for the periods indicated thereon, and are in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis,
subject, in the case of the Seal Unaudited Financial Statements, to (i) the
absence of certain notes, and (ii) normal year-end audit adjustments. Seal and
its officers and agents have not made any illegal or improper payments to, or
provided any illegal or improper benefit or inducement for, any governmental or
other official, supplier, customer, or any other person, or attempted to
influence any person to take or refrain from taking any action against Seal.
(b) Seal heretofore has delivered or made available to Oakridge
true and complete copies of (i) its Annual Reports on Form 10-KSB for the fiscal
years ended December 31, 1995, 1996 and 1997, respectively, (ii) all proxy
statements relating to Seal's meetings of stockholders (whether annual or
special) held since June 13, 1995, (iii) all other Forms 10BKSB and 10BQSB filed
by it with the Securities and Exchange Commission (the ASEC@) since June 13,
1995, and (iv) all amendments and supplements to all such reports and
registration statements filed by Seal with the SEC (the documents referred to in
clauses (i), (ii), (iii) and (iv) being hereinafter referred to as the "Seal
Reports"). As of their respective dates, the Seal Reports complied in all
material respects with all applicable requirements of the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (including without limitation,
Regulation SBB with respect to the Seal Financial Statements included therein),
and did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.12 Absence of Undisclosed Liabilities. Except as disclosed in
Schedule 3.12, neither Seal nor any of its Seal Subsidiaries had at September
30, 1998, or has incurred since that date, any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of any nature, except: (a)
liabilities, obligations or contingencies (i) which are accrued or reserved
against Seal's Financial Statements or reflected in the notes thereto, or (ii)
which were incurred after September 30, 1998 and were incurred in the ordinary
course of business and consistent with past practices and in any event not
involving amounts greater than $10,000; (b) liabilities, obligations or
contingencies which (i) would not, in the aggregate, have a Seal Material
Adverse Effect, or (ii) have been discharged or paid in full prior to the date
hereof; and (c) liabilities and obligations which are of a nature not required
to be reflected in the consolidated financial statements of Seal and the Seal
Subsidiaries prepared in accordance with generally accepted accounting
principles consistently applied and which were incurred in the ordinary course
of business.
3.13 Recent Events. Except as set forth on Schedule 3.13, since
September 30, 1998, Seal has operated its business diligently and only in the
ordinary course of business as theretofore conducted, and there has been no (a)
material adverse change in its business, properties, assets, liabilities,
commitments, earnings, financial condition or prospects, or (b) any action
which, if taken or omitted hereafter, would conflict in any material respect
with any representation and warranty set forth in this Article.
3.14 Tax Matters.
(a) Seal and its Seal Subsidiaries have (i) duly filed with the
appropriate governmental authorities all Tax Returns required to be filed by
them for all periods ending on or prior to the Closing Date, other than those
Tax Returns the failure of which to file would not have a Seal Material Adverse
Effect, and such Tax Returns are true, correct and complete in all material
respects, and (ii) duly paid in full or made adequate provision in the Seal
Financial Statements for the payment of all Taxes due for all periods ending at
or prior to the Closing Date (whether or not shown on any Tax Return), except
where the failure to pay such Taxes would not have a Seal Material Adverse
Effect. The liabilities and reserves for Taxes reflected in the Seal balance
sheet included in the most recent Seal Financial Statements are adequate to
cover all Taxes for all periods ending at or prior to the Closing Date and there
are no material liens for Taxes upon any property or asset of Seal or any Seal
Subsidiary thereof, except for liens for Taxes not yet due. There are no
unresolved issues of law or fact arising out of a notice of deficiency, proposed
deficiency or assessment from the IRS or any other governmental taxing authority
with respect to Taxes of Seal or any of its Seal Subsidiaries which, if decided
adversely, singly or in the aggregate, would have a Seal Material Adverse
Effect. Neither Seal nor any of its Seal Subsidiaries is a party to any
agreement providing for the allocation or sharing of Taxes with any entity that
is not, directly or indirectly, a wholly-owned Subsidiary of Seal other than
agreements the consequences of which are fully and adequately reserved for in
the Seal Financial Statements. Neither Seal nor any of the Seal Subsidiaries
has, with regard to any assets or property held, acquired or to be acquired by
any of them, filed a consent to the application of Section 341(f) of the Code.
(b) For purposes of this Agreement, the term "Taxes" shall mean all
taxes, including, without limitation, income, gross receipts, excise, property,
sales, withholding, social security, occupation, use, service, service use,
license, payroll, franchise, transfer and recording taxes, fees and charges,
windfall profits, severance, customs, import, export, employment or similar
taxes, charges, fees, levies or other assessments imposed by the United States,
or any state, local or foreign government or subdivision or agency thereof,
whether computed on a separate, consolidated, unitary, combined or any other
basis, and such term shall include any interest, fines, penalties or additional
amounts and any interest in respect of any additions, fines or penalties
attributable or imposed or with respect to any such taxes, charges, fees, levies
or other assessments.
(c) For purposes of this Agreement, the term "Tax Return" shall
mean any return, report or other document or information required to be supplied
to a taxing authority in connection with Taxes.
3.15 No Violation of Law. Except as disclosed in Schedule 3.15,
neither Seal nor any of the Seal Subsidiaries is in violation of, or has been
given notice or been charged with any violation of, any law, statute, order,
rule, regulation, ordinance, or judgment (including, without limitation, any
applicable environmental law, ordinance or regulation) of any governmental or
regulatory body or authority, except for violations which, in the aggregate,
could not reasonably be expected to have a Seal Material Adverse Effect. To the
knowledge of Seal, no investigation or review by any governmental or regulatory
body or authority is pending or threatened, nor has any governmental or
regulatory body or authority indicated to Seal an intention to conduct the same,
other than, in each case, those the outcome of which, as far as reasonably can
be foreseen, will not have a Seal Material Adverse Effect. Seal and its Seal
Subsidiaries have all permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, consents and approvals necessary
to conduct their businesses as presently conducted (collectively, the "Seal
Permits"), except for permits, licenses, franchises, variances, exemptions,
orders, authorizations, consents and approvals the absence of which, alone or in
the aggregate, would not have a Seal Material Adverse Effect. Neither Seal nor
any of the Seal Subsidiaries is in violation of the terms of any Seal Permit,
except for delays in filing reports or violations which, alone or in the
aggregate, would not have a Seal Material Adverse Effect.
3.16 Environmental Matters.
(a) To Seal's knowledge and except as disclosed in Schedule 3.16:
(i) Seal and each of the Seal Subsidiaries have conducted their respective
businesses in compliance with all applicable Environmental Laws (as defined in
Section 3.16(b)), including, without limitation, having all permits, licenses
and other approvals and authorizations necessary for the operation of their
respective businesses as presently conducted, (ii) none of the properties owned,
leased or operated by Seal or any of the Seal Subsidiaries contains any
Hazardous Substance (as defined in Section 3.16(c)) as a result of any activity
of Seal or any of the Seal Subsidiaries in amounts exceeding the levels
permitted by applicable Environmental Laws, (iii) neither Seal nor any of the
Seal Subsidiaries has received any notices, demand letters or requests for
information from any Federal, state, local or foreign governmental entity or
third party indicating that Seal or any of the Seal Subsidiaries may be in
violation of, or liable under, any Environmental Law in connection with the
ownership or operation of their businesses, (iv) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings, investigations or
proceedings pending or threatened against Seal or any of the Seal Subsidiaries
relating to any violation, or alleged violation, of any Environmental Law, (v)
no reports have been filed, or are required to be filed, by Seal or any of the
Seal Subsidiaries concerning the release of any Hazardous Substance or the
threatened or actual violation of any Environmental Law, (vi) no Hazardous
Substance has been disposed of, released or transported in violation of any
applicable Environmental Law from any properties owned, leased or operated by
Seal or any of the Seal Subsidiaries as a result of any activity of Seal or any
of the Seal Subsidiaries during the time such properties were owned, leased or
operated by Seal or any of the Seal Subsidiaries, (vii) there have been no
environmental investigations, studies, audits, tests, reviews or other analyses
regarding compliance or noncompliance with any applicable Environmental Law or
the condition of any properties owned, leased or operated by Seal or any of the
Seal Subsidiaries conducted by or which are in the possession of Seal or the
Seal Subsidiaries relating to the activities of Seal or the Seal Subsidiaries,
(viii) there are no underground storage tanks on, in or under any properties
owned, leased or operated by Seal or any of the Seal Subsidiaries and no
underground storage tanks have been closed or removed from any of such
properties during the time such properties were owned, leased or operated by
Seal or any of the Seal Subsidiaries, and (ix) neither Seal, the Seal
Subsidiaries nor any of their respective properties are subject to any material
liabilities or expenditures (fixed or contingent) relating to any suit,
settlement, court order, administrative order, regulatory requirement, judgment
or claim asserted or arising under any Environmental Law, except for violations
of the foregoing clauses (i) through (ix) that, singly or in the aggregate,
would not reasonably be expected to have a Seal Material Adverse Effect.
(b) For purposes of this Agreement, "Environmental Law" means any
Federal, state, local or foreign law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, legal doctrine, order,
judgment, decree, injunction, requirement or agreement with any governmental
entity relating to (x) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface land, subsurface land, plant and
animal life or any other natural resource) or to human health or safety or (y)
the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of Hazardous Substances, in each case as amended and as in effect on the Closing
Date. The term Environmental Law includes, without limitation,
(i) the Federal Comprehensive Environmental Response Compensation and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act, the
Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the
Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Federal Occupational Safety and
Health Act of 1970, each as amended and as in effect on the Closing Date, or any
state counterpart thereof, and
(ii) any common law or equitable doctrine (including, without limitation,
injunctive relief and tort doctrines such as negligence, nuisance, trespass and
strict liability) that may impose liability or obligations for injuries, damages
or penalties due to, or threatened as a result of, the presence of, effects of
or exposure to any Hazardous Substance.
(c) For purposes of this Agreement, "Hazardous Substance" means any
substance presently or hereafter listed, defined, designated or classified as
hazardous, toxic, radioactive, or dangerous, or otherwise regulated, under any
Environmental Law. Hazardous Substance includes any substance to which exposure
is regulated by any government authority or any Environmental Law including,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial substance
or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos or asbestos containing material, urea formaldehyde foam
insulation, lead or polychlorinated biphenyls.
3.17 No Stockholder Approval. No Seal stockholder approval of the
Exchange or the related transactions contemplated by this Agreement is required,
other than the Capital Amendment.
3.18 Books of Account. The books of account of Seal and its Seal
Subsidiaries accurately and fairly reflect, in reasonable detail and in all
material respects, Seal's and its Seal Subsidiaries' transactions and the
disposition of their assets. All notes and accounts receivable of Seal and its
Seal Subsidiaries are reflected in accordance with generally accepted accounting
principles on their books and records, are valid receivables subject to no
material setoffs or counterclaims, are current and collectible and will be
collected in accordance with their terms at their recorded amounts subject only
to normal adjustments in the ordinary course of business and the reserves for
contractual allowances and bad debts set forth on the face of the balance sheet
contained in the most recent Seal Financial Statements as adjusted for the
passage of time through the Closing Date in accordance with past custom and
practice of Seal and its Seal Subsidiaries. Seal and its Seal Subsidiaries have
filed all reports and returns required by any material law or regulation to be
filed by them, and have paid all taxes, duties and charges due on the basis of
such reports and returns.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OAKRIDGE
Oakridge hereby represents and warrants to Seal as follows:
4.1 Organization of Oakridge and Subsidiaries. Set forth in
Schedule 4.1 is a complete listing of each subsidiary or other business entity
owned in whole or in part by Oakridge, together with their respective states of
incorporation or organization (the "Oakridge Subsidiaries"). Oakridge is duly
organized and validly existing under the laws of the State of Delaware, has full
power and authority to conduct its business as it is presently being conducted,
and to own and exploit all of its properties and assets. The copies of the
Articles of Incorporation and Bylaws and other governing documents of Oakridge
and the Oakridge Subsidiaries delivered to Seal are true, correct and complete
in all respects.
4.2 Oakridge Shares. All of Oakridge's outstanding shares of
capital stock have been duly authorized, are validly issued, are fully paid and
are non-assessable and are owned by ▇▇▇▇▇▇. All of the outstanding shares of
capital stock or other ownership interests of each Oakridge Subsidiary have been
duly authorized, are validly issued, are fully paid and are non-assessable.
Except as set forth on Schedule 4.2, there are no agreements, commitments or
restrictions relating to ownership or voting of any interest or shares of
Oakridge or any Oakridge Subsidiary. Except as set forth on Schedule 4.2, all
of the outstanding shares of capital stock or member interests of the Oakridge
Subsidiaries are owned by Oakridge.
4.3 Authorization. Oakridge has all necessary corporate power and
authority to enter into this Agreement and has taken all action necessary to
consummate the transactions contemplated hereby and to perform its obligations
hereunder. This Agreement has been duly executed and delivered by Oakridge and
is a legal, valid and binding obligation of it, enforceable against it in
accordance with its terms.
4.4 No Conflict or Violation. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will result in (a) a violation of or a conflict with any provision of the
Articles of Incorporation or Bylaws, or other governing instruments of Oakridge
or any Oakridge Subsidiary, (b) a breach of, or a default under, any term or
provision of any contract, agreement, indebtedness, lease, encumbrance,
commitment, license, franchise, permit, authorization or concession to which
Oakridge or any Oakridge Subsidiary is a party or by which its properties or
assets are bound, which breach or default would have a material adverse effect
on the business or financial condition of Oakridge, or its ability to consummate
the transactions contemplated hereby (a "Oakridge Material Adverse Effect"), (c)
a violation by Oakridge or any Oakridge Subsidiary of any statute, rule,
regulation, ordinance, code, order, judgment, writ, injunction, decree or award,
which violation would have a Oakridge Material Adverse Effect, or (d) an
imposition of any lien, encumbrance, restriction or charge on the business of
Oakridge or any Oakridge Subsidiary, or on any of their respective assets.
4.5 Consents and Approvals. Except as set forth on Schedule 4.5
hereto, no consent, approval or authorization of, or declaration, filing or
registration with, any governmental, regulatory, licensing or other authority,
or any other person or entity, is required to be made or obtained by Oakridge or
any Oakridge Subsidiary in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
4.6 Litigation. Except as set forth on Schedule 4.6, there is no
action, order, writ, injunction, judgment or decree outstanding, or claim, suit,
litigation, proceeding, labor dispute, arbitral action or investigation
(collectively, the "Oakridge Actions") pending or, to the knowledge of Oakridge
or its officers, threatened relating to or affecting (i) Oakridge or any
Oakridge Subsidiary, (ii) any benefit plan of Oakridge or any Oakridge
Subsidiary, (iii) any asset of Oakridge or any Oakridge Subsidiary, or (iv) the
transactions contemplated by this Agreement. Neither Oakridge nor any Oakridge
Subsidiary is in default with respect to any judgment, order, writ, injunction
or decree of any court or governmental, regulatory, licensing or other
authority, and there are no unsatisfied judgments against any of them or the
business or activities of any of them which would, individually or in the
aggregate, have a Oakridge Material Adverse Effect. There is not a reasonable
likelihood of an adverse determination of any pending Oakridge Actions which
would, individually or in the aggregate, have a Oakridge Material Adverse
Effect.
4.7 Title to Assets. Oakridge and each of its Subsidiaries has
good title to all of its leasehold interests and other properties, as reflected
in the most recent balance sheet included in Oakridge's Financial Statements,
except for properties and assets that have been disposed of in the ordinary
course of business since the date of such balance sheet, free and clear of all
mortgages, liens, pledges, charges or encumbrances of any nature whatsoever,
except (i) the lien for current Taxes, payments of which are not yet delinquent
and other statutory liens, (ii) such imperfections in title and easements and
encumbrances, if any, as are not material in character, amount or extent and do
not materially and adversely affect the value or interfere with the present use
of the property subject thereto or affected thereby, or otherwise materially
impair Oakridge's business operations or prospects, (iii) as disclosed in
Schedule 4.7, or (iv) for such matters which, singly or in the aggregate, could
not reasonably be expected to have a Oakridge Material Adverse Effect. Except
as set forth on Schedule 4.7, all leases under which Oakridge leases real or
personal property have been delivered to Seal and are in good standing, valid
and effective in accordance with their respective terms, and there is not, under
any of such leases, any existing default or, to the knowledge of Oakridge, event
which with notice or lapse of time or both would become a default other than
defaults under such leases which in the aggregate will not have a Oakridge
Material Adverse Effect.
4.8 Contracts, Obligations and Commitments. Schedule 4.8 sets
forth an accurate and complete list of all material contracts, agreements,
options, leases, commitments and instruments entered into by Oakridge or any
Oakridge Subsidiary ("Oakridge Contracts"). Oakridge and the Oakridge
Subsidiaries have provided Seal with complete and correct copies of all such
items listed in Schedule 4.8. Except for such items listed in Schedule 4.8,
there are no other material contracts or other arrangements under which goods,
equipment or services are provided, leased or rendered by, or are to be
provided, leased or rendered to, Oakridge or any of its Subsidiaries. Except as
set forth in Schedule 4.8: (a) the Oakridge Contracts have not been modified,
pledged, assigned or amended in any material respect, are legally valid, binding
and enforceable in accordance with their respective terms and are in full force
and effect; (b) to the knowledge of Oakridge there are no material defaults by
Oakridge or any of its Oakridge Subsidiaries or any other party to the Oakridge
Contracts; (c) neither Oakridge nor any of its Oakridge Subsidiaries have
received notice of any material default, offset, counterclaim or defense under
any Oakridge Contract; (d) to the knowledge of Oakridge no condition or event
has occurred which with the passage of time or the giving of notice or both
would constitute a default or breach by Oakridge or any of its Oakridge
Subsidiaries of the terms of any Oakridge Contract, except for any consents
required to consummate the transactions contemplated by this Agreement; and (e)
there does not now, and at Closing will not, exist any material security
interest, mortgage, pledge, restriction, charge, lien, encumbrance or claim of
others on any interest created under any Oakridge Contract. None of the
Oakridge Contracts is subject to termination from and after the Closing Date and
prior to the expiration of its stated term by any party to such Oakridge
Contract, except as stated in each such Oakridge Contract.
4.9 Employee Benefit Plans; ERISA.
(a) Schedule 4.9 contains an accurate and complete list of all
"employee benefit plan," within the meaning of Section 3(3) of ERISA and any
other bonus, profit sharing, pension, severance, savings, deferred compensation,
fringe benefits, insurance, welfare, health, post-retirement benefit, life,
stock option, disability, accident, sick pay, vacation, individual employment,
consulting, incentive, change in control, or other plan, agreement, policy,
trust fund, or arrangement (whether written or unwritten, insured or
self-insured):
(i) established, maintained, sponsored, or contributed to (or
with respect to which any obligation to contribute has been undertaken) within
the last six years by Oakridge, the Oakridge Subsidiaries or any entity that
would be deemed a "single employer" with Oakridge under Section 414(b), (c),
(m), or (o) of the Code or Section 4001 of ERISA (an "ERISA Affiliate") on
behalf of any employee, director, or consultant of Oakridge or an Oakridge
Subsidiary (whether current, former, or retired) or their beneficiaries or
(ii) with respect to which Oakridge, the Oakridge Subsidiaries
or any ERISA Affiliate has or has within the last six years had any obligation
on behalf of any such employee, director, consultant or beneficiary of Seal or a
Seal Subsidiary (each an "Oakridge Plan" and, collectively, the "Oakridge
Plans"). True and complete copies of each of the Oakridge Plans which is
intended to qualify under Section 401 (a) of the Code and each other Oakridge
Plan which Oakridge, the Oakridge Subsidiaries or any ERISA Affiliate has or
could reasonably be expected to have a current or future actual or potential
liability, and the material documents relating thereto (including, without
limitation, any summary plan description, annual reports, and communications
from the IRS or any other government entity) have been provided to Seal.
None of the Oakridge Plans is (A) a "multi-employer plan," as defined in Section
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code, (B) otherwise
subject to Title IV of ERISA or (C) subject to Section 412 of the Code. With
respect to each employee pension benefit plan subject to Title IV of ERISA or
Section 412 of the Code (other than the Oakridge Plans) maintained or
contributed to by an ERISA Affiliate, (A) there is no actual or contingent
material liability of Oakridge or any Oakridge Subsidiary under Title IV of
ERISA or Section 412 of the Code to such plan, the Pension Benefit Guaranty
Corporation or other governmental authority and (B) the assets of Oakridge or
any Oakridge Subsidiary have not been subject to a lien under ERISA or the Code.
(b) Except where failures to comply with each of the following
representations has not or could not reasonably be expected to result,
individually and in the aggregate, in an Oakridge Material Adverse Effect, with
respect to each of the Oakridge Plans on Schedule 4.9:
(i) except as set forth on Schedule 4.9, each Oakridge Plan
intended to qualify under Section 401(a) of the Code is qualified and has
received a determination letter under Revenue Procedure 93B39 or subsequent IRS
guidance to the effect that the Oakridge Plan is qualified under Section 401 of
the Code and any trust maintained pursuant thereto is exempt from federal income
taxation under Section 501 of the Code and nothing has occurred or is expected
to occur through the date of the Closing that caused or could reasonably be
expected to cause the loss of such qualification or exemption or the imposition
of any penalty or tax liability;
(ii) all payments required by any Oakridge Plan, any collective
bargaining agreement or other agreement, or by law (including, without
limitation, all contributions, insurance premiums, or inter-company charges)
with respect to all periods through the date of the Closing shall have been made
prior to the Closing or accrued on the Oakridge Financial Statements in
accordance with GAAP;
(iii) no claim, lawsuit, arbitration or other action has been
threatened, asserted, instituted, or anticipated against the Oakridge Plans, any
trustee or fiduciaries thereof, Oakridge, any Oakridge Subsidiary, any ERISA
Affiliate, any director, officer, or employee thereof, or any of the assets of
any trust of the Oakridge Plans;
(iv) the Oakridge Plan has been maintained and administered at
all times in compliance with its terms and all applicable laws, rules and
regulations, including, without limitation, ERISA and the Code;
(v) no "prohibited transaction," within the meaning of Section
4975 of the Code and Section 406 of ERISA, has occurred or is expected to occur
with respect to the Oakridge Plan;
(vi) no Oakridge Plan is or is expected to be under audit or
investigation by the IRS, Department of Labor, or any other governmental
authority and no such completed audit, if any, has resulted in the imposition of
any tax or penalty; and
(vii) with respect to each Oakridge Plan that is funded mostly
or partially through an insurance policy, none of Oakridge, Oakridge
Subsidiaries or any ERISA Affiliate has any liability in the nature of
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring on or
before the Closing.
(c) The consummation of the transactions contemplated by this
Agreement will not give rise to any material liability, including, without
limitation, liability for severance pay, unemployment compensation, termination
pay, or withdrawal liability, or accelerate the time of payment or vesting or
increase the amount of compensation or benefits due to any employee, director,
shareholder, or beneficiary of Oakridge or any Oakridge Subsidiary (whether
current, former, or retired) or their beneficiaries solely by reason of such
transactions. No amounts payable under any Oakridge Plan will fail to be
deductible for federal income tax purposes by virtue of Section 280G or 162(m)
of the Code. None of Oakridge, any Oakridge Subsidiary or any ERISA Affiliate
maintains, contributes to, or in any way provides for any benefits of any kind
whatsoever (other than under Section 4980B of the Code, the Federal Social
Security Act, or a plan qualified under Section 401(a) of the Code) to any
current or future retiree or terminee. None of Oakridge, any Oakridge
Subsidiary or any ERISA Affiliate has any unfunded liabilities pursuant to any
Oakridge Plan that is not intended to be qualified under Section 401(a) of the
Code.
4.10 No Brokers. Except as set forth on Schedule 4.10, Oakridge
has not entered into any agreement, arrangement or understanding of any kind or
nature with any person or entity which may result in the obligation of Oakridge
or Seal to pay any finder's fee, broker's fee, brokerage commission or similar
payment in connection with any of the transactions contemplated hereby.
4.11 Financial Statements. Except as described below, the
consolidated financial statements of Oakridge for the period ended October 31,
1998, and delivered to Seal are true, complete and correct in all material
respects, and have been prepared in accordance with Oakridge's books and
records. The financial statements of Oakridge are sometimes referred to herein
as the "Oakridge Financial Statements." Subject to the next sentence, all of
the Oakridge Financial Statements together present fairly the financial
position, results of operations and changes in financial position of Oakridge as
at the dates and for the periods indicated thereon, and are in accordance with
GAAP, applied on a consistent basis, subject to (i) the absence of certain
notes, and (ii) normal year-end audit adjustments. The Oakridge Financial
Statements reflect the consolidation of a predecessor entity to Oakridge,
Comprehensive Outpatient Centers of Florida, Inc. ("COCF"), as though COCF had
been a subsidiary of Oakridge since its inception. COCF will become a
subsidiary of Oakridge on or before December 31, 1998. Oakridge and its
officers and agents have not made any illegal or improper payments to, or
provided any illegal or improper benefit or inducement for, any governmental or
other official, supplier, customer, or any other person, or attempted to
influence any person to take or refrain from taking any action against Oakridge.
4.12 Absence of Undisclosed Liabilities. Except as disclosed in
Schedule 4.12, neither Oakridge nor any Oakridge Subsidiaries had at October 31,
1998, or has incurred since that date, any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of any nature, except: (a)
liabilities, obligations or contingencies (i) which are accrued or reserved
against Oakridge's Financial Statements or reflected in the notes thereto, or
(ii) which were incurred after October 31, 1998 and were incurred in the
ordinary course of business and consistent with its business plan; (b)
liabilities, obligations or contingencies which (i) would not, in the aggregate,
have a Oakridge Material Adverse Effect, or (ii) have been discharged or paid in
full prior to the date hereof; and (c) liabilities and obligations which are of
a nature not required to be reflected in the consolidated financial statements
of Oakridge and the Oakridge Subsidiaries prepared in accordance with generally
accepted accounting principles consistently applied and which were incurred in
the ordinary course of business.
4.13 Recent Events. Since October 31, 1998, Oakridge has operated
its business diligently and only in the ordinary course of business and there
has been no (a) material adverse change in its business, properties, assets,
liabilities, commitments, financial condition or prospects (it being understood
that the business plan of Oakridge contemplates significant additional
liabilities, commitments and losses beyond the Closing Date), or (b) any action
which, if taken or omitted hereafter, would conflict in any material respect
with any representation and warranty set forth in this Article.
4.14 Tax Matters. Oakridge and the Oakridge Subsidiaries have (i)
duly filed with the appropriate governmental authorities all Tax Returns
required to be filed by them for all periods ending on or prior to the Closing
Date, other than those Tax Returns the failure of which to file would not have a
Oakridge Material Adverse Effect, and such Tax Returns are true, correct and
complete in all material respects, (ii) duly paid in full or made adequate
provision in the Oakridge Financial Statements for the payment of all Taxes due
for all periods ending at or prior to the Closing Date (whether or not shown on
any Tax Return), except where the failure to pay such Taxes would not have a
Oakridge Material Adverse Effect. The liabilities and reserves for Taxes
reflected in the Oakridge balance sheet included in the most recent Oakridge
Financial Statements are adequate to cover all Taxes for all periods ending at
or prior to the Closing Date and there are no material liens for Taxes upon any
property or asset of Oakridge or any Oakridge Subsidiary, except for liens for
Taxes not yet due. There are no unresolved issues of law or fact arising out of
a notice of deficiency, proposed deficiency or assessment from the IRS or any
other governmental taxing authority with respect to Taxes of Oakridge or any of
the Oakridge Subsidiaries which, if decided adversely, singly or in the
aggregate, would have a Oakridge Material Adverse Effect. Neither Oakridge nor
any of the Oakridge Subsidiaries is a party to any agreement providing for the
allocation or sharing of Taxes with any entity that is not, directly or
indirectly, a wholly-owned Subsidiary of Oakridge other than agreements the
consequences of which are fully and adequately reserved for in the Oakridge
Financial Statements. Neither Oakridge nor any of the Oakridge Subsidiaries
has, with regard to any assets or property held, acquired or to be acquired by
any of them, filed a consent to the application of Section 341(f) of the Code.
4.15 No Violation of Law. Except as disclosed in Schedule 4.15,
neither Oakridge nor any of the Oakridge Subsidiaries is in violation of, or has
been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance, or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any governmental
or regulatory body or authority, except for violations which, in the aggregate,
could not reasonably be expected to have a Oakridge Material Adverse Effect. To
the knowledge of Oakridge, no investigation or review by any governmental or
regulatory body or authority is pending or threatened, nor has any governmental
or regulatory body or authority indicated to Oakridge an intention to conduct
the same, other than, in each case, those the outcome of which, as far as
reasonably can be foreseen, will not have a Oakridge Material Adverse Effect.
Oakridge and its Subsidiaries have all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
necessary to conduct their businesses as presently conducted (collectively, the
"Oakridge Permits"), except for permits, licenses, franchises, variances,
exemptions, orders, authorizations, consents and approvals the absence of which,
alone or in the aggregate, would not have a Oakridge Material Adverse Effect.
Neither Oakridge nor any of the Oakridge Subsidiaries is in violation of the
terms of any Oakridge Permit, except for delays in filing reports or violations
which, alone or in the aggregate, would not have a Oakridge Material Adverse
Effect.
4.16 Environmental Matters. To Oakridge's knowledge and except as
disclosed in Schedule 4.16, (i) Oakridge and each of the Oakridge Subsidiaries
have conducted their respective businesses in compliance with all applicable
Environmental Laws (as defined in Section 4.16(b)), including, without
limitation, having all permits, licenses and other approvals and authorizations
necessary for the operation of their respective businesses as presently
conducted, (ii) none of the properties owned, leased or operated by Oakridge or
any of the Oakridge Subsidiaries contains any Hazardous Substance (as defined in
Section 3.16(c)) as a result of any activity of Oakridge or any of the Oakridge
Subsidiaries in amounts exceeding the levels permitted by applicable
Environmental Laws, (iii) neither Oakridge nor any of the Oakridge Subsidiaries
has received any notices, demand letters or requests for information from any
Federal, state, local or foreign governmental entity or third party indicating
that Oakridge or any of the Oakridge Subsidiaries may be in violation of, or
liable under, any Environmental Law in connection with the ownership or
operation of their businesses, (iv) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings, investigations or
proceedings pending or threatened against Oakridge or any of the Oakridge
Subsidiaries relating to any violation, or alleged violation, of any
Environmental Law, (v) no reports have been filed, or are required to be filed,
by Oakridge or any of the Oakridge Subsidiaries concerning the release of any
Hazardous Substance or the threatened or actual violation of any Environmental
Law, (vi) no Hazardous Substance has been disposed of, released or transported
in violation of any applicable Environmental Law from any properties owned,
leased or operated by Oakridge or any of the Oakridge Subsidiaries as a result
of any activity of Oakridge or any of the Oakridge Subsidiaries during the time
such properties were owned, leased or operated by Oakridge or any of the
Oakridge Subsidiaries, (vii) there have been no environmental investigations,
studies, audits, tests, reviews or other analyses regarding compliance or
noncompliance with any applicable Environmental Law or the condition of any
properties owned, leased or operated by Oakridge or any of the Oakridge
Subsidiaries conducted by or which are in the possession of Oakridge or the
Oakridge Subsidiaries relating to the activities of Oakridge or the Oakridge
Subsidiaries, (viii) there are no underground storage tanks on, in or under any
properties owned, leased or operated by Oakridge or any of the Oakridge
Subsidiaries and no underground storage tanks have been closed or removed from
any of such properties during the time such properties were owned, leased or
operated by Oakridge or any of the Oakridge Subsidiaries, and (ix) neither
Oakridge, the Oakridge Subsidiaries nor any of their respective properties are
subject to any material liabilities or expenditures (fixed or contingent)
relating to any suit, settlement, court order, administrative order, regulatory
requirement, judgment or claim asserted or arising under any Environmental Law,
except for violations of the foregoing clauses (i) through (ix) that, singly or
in the aggregate, would not reasonably be expected to have a Oakridge Material
Adverse Effect.
4.17 Books of Account. The books of account of Oakridge and its
Subsidiaries accurately and fairly reflect, in reasonable detail and in all
material respects, Oakridge's and its Subsidiaries' transactions and the
disposition of their assets. All notes and accounts receivable of Oakridge and
its Subsidiaries are reflected in accordance with generally accepted accounting
principles on their books and records, are valid receivables subject to no
material setoffs or counterclaims, are current and collectible and will be
collected in accordance with their terms at their recorded amounts subject only
to normal adjustments in the ordinary course of business and the reserves for
contractual allowances and bad debts set forth on the face of the balance sheet
contained in the most recent Oakridge Financial Statements as adjusted for the
passage of time through the Closing Date in accordance with past custom and
practice of Oakridge and its Subsidiaries. Oakridge and its Subsidiaries have
filed all reports and returns required by any material law or regulation to be
filed by them, and have paid all taxes, duties and charges due on the basis of
such reports and returns.
ARTICLE 5
ACTIONS BY SEAL AND OAKRIDGE PRIOR TO THE CLOSING
Seal and Oakridge covenant and agree, as appropriate, as follows for the period
from the date hereof through the Closing Date:
5.1 Maintenance of Business. Each of Seal and Oakridge shall
diligently carry on its business in the ordinary course consistent with either
past practice or its business plan. The parties acknowledge that on or before
December 31, 1998, Oakridge will acquire the outstanding capital stock of COCF
and intends to merge Oakridge Membership Holdings LLC with and into Oakridge,
with Oakridge being the survivor.
5.2 Certain Prohibited Transactions. Seal shall not, without the
prior written consent of Oakridge:
(a issue or enter into binding commitments to issue any shares of
capital stock or any other securities, or any securities or rights convertible
into shares of capital stock or other securities, other than as contemplated by
the Exchange;
(b pay or incur any obligation to pay any dividend or other
distribution on capital stock or otherwise or make or incur any obligation to
make any distribution or redemption with respect to capital stock;
(c borrow money, incur debts or liabilities or make any
expenditures other than in the ordinary course of business consistent with past
practices;
(d make any investment of a capital nature, either by purchase of
stock or securities, contributions to capital, property transfer or otherwise,
or by the purchase of any property or assets of any other individual,
partnership, firm or corporation;
(e enter into or terminate any material contract or agreement, or
make any material change in any of its leases and contracts;
(f enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees, except
in the ordinary course and consistent with past practice;
(g adopt, enter into or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation, health
care, employment or other employee benefit plan, agreement, trust, fund or
arrangement for the benefit or welfare of any employee or retiree, except as
required to comply with changes in applicable law; and
(h take any other action which would cause any representation or
warranty of Seal in this Agreement to be or become untrue in any material
respect.
5.3 Investigation by Parties. Seal and Oakridge shall allow one
another, during regular business hours, through employees, agents and
representatives, to make such investigation of the business, properties, books
and records of the other, and to conduct such examination of the conditions of
the other, as each deems necessary or advisable to familiarize itself with such
business, properties, books, records, condition and other matters, and to verify
the representations and warranties of the other party hereunder. All such
access shall be subject to the terms of that certain Confidentiality Agreement
dated June 16, 1998 between Seal and Oakridge (the "Confidentiality Agreement").
5.4 Consents and Best Efforts. Each party shall, as soon as
possible, commence to take all action required to obtain any and all consents,
approvals and agreements of, and to give all notices and make all other filings
with, any third parties, including governmental, regulatory, licensing or other
authorities, necessary to authorize, approve or permit the full and complete
exchange, conveyance, assignment or transfer of stock and membership interests
contemplated hereby, and each shall cooperate with the other with respect
thereto. In addition, subject to the terms and conditions herein provided, each
of the parties covenants and agrees to use its reasonable best efforts to take,
or cause to be taken, all action, or do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated hereby and to cause
the fulfillment of the parties' obligations hereunder.
5.5 Notification of Certain Matters. Seal and Oakridge shall give
prompt notice to one another of (i) the occurrence, or failure to occur, of any
event the occurrence or failure of which to occur would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect any time from the date hereof to the Closing
Date, and (ii) any material failure of any person to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by him or it
hereunder, and each party shall use all reasonable efforts to remedy same.
5.6 Exclusivity. Neither Seal nor any of its officers, directors,
employees or agents shall, directly or indirectly, without the prior written
consent of Oakridge, contact, respond to, negotiate with or initiate or hold
discussions with, solicit or entertain offers from, any corporation,
partnership, person or other entity (other than Oakridge) regarding (i) the
sale, issuance or other disposition of any equity interest in Seal, (ii) the
sale or disposition of all or any substantial portion of the assets of Seal, or
(iii) the merger, consolidation or reorganization of Seal with or into any other
entity. Seal agrees to immediately advise, in reasonable detail, Oakridge
regarding any offer, proposal or related inquiry which it, its officers,
directors, employees or agents may hereafter receive from any other corporation,
partnership, person or other entity.
5.7 Lock-Up Letters; Right of Refusal. Seal shall use its best
efforts to obtain from each of the holders of Class A Common Stock Equivalents
(which were exercisable for an aggregate of 1,780,000 shares of Class A Common
Stock as of the date of this Agreement), a written agreement in favor of Seal
and Oakridge, in form and substance satisfactory to Oakridge ("Lock-Up
Letters"), whereby such holders agree as follows:
(a Restrictions on Transfer, Generally. Until the earlier of
April 30, 1999, or the date upon which the Capital Amendment is filed and
becomes effective with the Delaware Secretary of State (the "Exercise Date")
that
(i such holders shall not exercise, convert, sell, transfer or
otherwise dispose of any Class A Common Stock or Class A Common Stock
Equivalents beneficially owned by them (the "Restricted Securities"), and
(ii Seal need not reserve any shares of Class A Common Stock for
issuance in connection with such Class A Common Stock Equivalents; and (iii0
they will vote their shares of Seal's capital stock in favor of the Capital
Amendment. To the extent requested by Oakridge, such later undertaking will be
evidenced by an irrevocable proxy in favor of such person as may hereinafter be
designated by Oakridge.
Notwithstanding the foregoing provisions of this Section 5.7(a), such holders
may collectively exercise, sell or transfer Class A Common Stock Equivalents for
not more than 100,000 shares in the aggregate prior to the Exercise Date.
(b Restrictions on Transfer, Specifically. From and after the
Exercise Date, the following additional restrictions on the sale, transfer or
other disposition ("transfer") of the Restricted Securities shall also apply as
follows:
(i) with regard to Restricted Securities beneficially owned by
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (including for purposes of this Section 5.7, shares owned of
record by Magnum):
(A) no Restricted Securities shall be transferred until the
earlier of the date upon which the Class A Common Stock is admitted for trading
on the Nasdaq SmallCap Market and one year after the Exercise Date;
(B) if the Class A Common Stock is admitted for trading on the
Nasdaq Small Cap Market before one year after the Exercise Date, then for each
remaining calendar quarter thereafter within such one-year period (or portion
thereof if such period constitutes at least 45 days), ▇▇▇▇▇▇▇▇ may transfer up
to 20,000 shares of Restricted Securities per quarter, and
(C) commencing one year after the Exercise Date, up to 40,000
shares of Restricted Securities may be transferred per quarter until the end of
the eighteenth (18th) month following the Exercise Date, at which time such
volume restriction shall cease;
(ii) with regard to Restricted Securities beneficially owned by
Messrs. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇:
(A) for the one-year period after the Closing Date, each may
transfer up to 20,000 shares of Restricted Securities per remaining calendar
quarter (or portion thereof if such period constitutes at least 45 days), and
(B) commencing one year after the Closing Date, each may
transfer up to 40,000 shares of Restricted Securities per calendar quarter until
the end of the eighteenth (18th) month after the Closing Date, at which time
such volume restriction shall cease;
(iii) with regard to Restricted Securities beneficially owned by
Messrs. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and J. ▇▇▇▇ ▇▇▇▇▇ (including for purposes of this
Section 5.7 shares owned of record by Hvide Marine Incorporated), for the one
year period after the Closing Date, each may transfer up to one-third of the
Restricted Securities now beneficially owned by each such person per remaining
calendar quarter (or portion thereof if such period constitutes at least 45
days). Upon expiration of the foregoing one-year period, such volume
restrictions shall cease.
(c Restrictions Not Cumulative. To the extent any permitted number
of shares of Restricted Securities are not transferred within a particular
calendar quarter in this Section 5.7 and particularly, Section 5.7(b), such
shares may not be cumulated with the permissible number of shares which may be
transferred in subsequent calendar quarters. The Lock-Up Letters shall
acknowledge and authorize Seal to (i) provide stop transfer instructions to its
transfer agent consistent with the terms of such Lock-Up Letters and (ii) place
appropriate restricted legends upon any stock certificate now owned or
hereinafter issued to any of such holders.
(d Right of First Refusal.
(i With regard to a proposed transfer by any of the persons
described in Section 5.7(b) on or before the earlier of (A) three (3) years from
the Closing Date, or (B) the date upon which the "Market Value Public Float" (as
hereinafter defined) shall exceed $100 million, such person (the "Offeror")
shall provide written notice to Seal (c/o Oakridge) in conformity with Section
10.3 hereof of the Offeror's proposed transfer of shares of Restricted
Securities (the "Offered Shares") together with the price per share at which the
Offeror proposes to sell such Restricted Securities (the "Offer Price"). For
purposes of this Section 5.7(d), "Market Value of the Public Float" is defined
as shares that are not held directly or indirectly by any officer or director of
Seal and by any other person who is the beneficial owner of more than 10 percent
of the total shares outstanding multiplied by the bid price of each share of
Seal Class A Common Stock.
(ii Seal shall have three (3) business days from receipt of
such notice to provide written notice to the Offeror that it elects to purchase
all or part of the Offered Shares.
(iii If Seal does not give written notice of exercise of the
foregoing repurchase right as to all of the Offered Shares, then as to any
Offered Shares not being repurchased, the Offeror may, for a period of thirty
(30) days thereafter, sell such Offered Shares at a price per share not below
ninety-five percent (95%) of the Offer Price. If all of the Offered Shares are
not sold within the foregoing 30-day period, then any transfer thereafter shall
again be subject to the foregoing right of first refusal.
(iv Unless otherwise agreed upon by Seal and the Offeror, the
closing of any repurchase of Offered Shares shall be held at 10:00 a.m. at
Seal's then principal office on the third business day after notice of Seal's
election to purchase any Offered Shares. At the closing described in this
Section 5.7(d)(iv), Seal shall pay the applicable purchase price for such
Offered Shares and the Offeror shall deliver, free and clear of any and all
security interests, mortgages, pledges, restrictions, charges, liens,
encumbrances or claims of others, a certificate evidencing the Offered Shares,
in proper form and executed for transfer.
(e Any transfer or sale of any Restricted Securities in
contravention of this Section 5.7 shall be deemed null and void and be of no
force or effect.
5.8 NASDAQ Matters. Seal shall promptly commence all manner of
action, and use its best efforts, with the cooperation and assistance of
Oakridge, to obtain a favorable determination from The NASDAQ Stock Market, Inc.
("NASDAQ") to list the Class A Common Stock on the NASDAQ SmallCap Market as
soon as practicable.
5.9 Series A Preferred Stock. Seal shall take all manner of action
necessary to adopt, and authorize the issuance of, the Series A Shares with such
rights, preferences and limitations as set forth in the Statement of Designation
for Series A Convertible Preferred Stock attached hereto as Exhibit AG,@
including without limitation, the filing of a Preferred Stock Designation with
the Delaware Secretary of State which shall amend its Certificate of
Incorporation.
5.10 Fairness Opinion. Seal shall engage an investment banker
acceptable to Oakridge for the purpose of providing an opinion to Seal and its
Board of Directors that the transactions contemplated by this Agreement are fair
and equitable to the stockholders of Seal from a financial point of view (the
"Fairness Opinion"). The fees and expenses of the investment banker shall be
paid by Seal.
5.11 Services Agreements. Effective on the Closing, Seal shall
enter into (i) an employment agreement with each of Messrs. ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇, and (ii) a consulting agreement with First Stanford Corporation ("First
Stanford"). Each employment agreement shall have a term of one (1) year.
▇▇▇▇▇▇▇▇'▇ employment agreement shall provide for compensation of $97,500 per
annum, and ▇▇▇▇▇▇▇'▇ employment agreement, will provide for compensation of
$12,000 per annum. The consulting agreement with First Stanford shall be for a
period of one (1) year and shall provide for a consulting fee of $180,000 per
annum. Each employment agreement and the consulting agreement shall otherwise
be on terms and in form substantially as set forth in Exhibits AHB1,@ AHB2" and
AHB3,@ with such changes thereto as are acceptable to Oakridge, First Stanford
and Messrs. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇, as appropriate (the "Services Agreements"). As
of the Closing, the Services Agreements shall be the only employment or other
compensation arrangements to which Seal or any Seal Subsidiary is a party.
ARTICLE 6
CONDITIONS TO OAKRIDGE'S OBLIGATIONS
The obligations of Oakridge hereunder are subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions:
6.1 Representations, Warranties and Covenants. All representations
and warranties of Seal contained in this Agreement shall be true and correct in
all material respects at and as of the Closing Date, as if such representations
and warranties were made at and as of the Closing Date, and Seal shall have
performed in all material respects all agreements and covenants required hereby
to be performed by it prior to or at the Closing Date.
6.2 Consents. All consents, approvals and waivers from
governmental, regulatory, licensing or other authorities and other parties
necessary to permit Oakridge and Seal to consummate the transactions
contemplated hereby shall have been obtained, unless the failure to obtain same
has no material adverse effect.
6.3 No Governmental Proceeding or Litigation. No suit, action,
investigation, inquiry or other proceeding by any governmental, regulatory,
licensing or other authority or other person or entity shall have been
instituted or threatened which questions the validity or legality of the
transactions contemplated hereby and which could reasonably be expected to
materially damage Seal if the transactions contemplated hereunder are
consummated.
6.4 Performance. Seal shall have performed and complied, or shall
perform and comply simultaneously, in all material respects with the agreements,
covenants and conditions required hereunder. Each of the deliveries
contemplated by Section 2.2(a) and (c) shall have been satisfied.
6.5 Lock-Up Letters. The holders of the Restricted Securities
shall have executed and delivered the Lock-Up Letters pursuant to Section 5.7
hereof.
6.6 Sale of Class B Common Stock. The purchase and sale of all of
the issued and outstanding shares of Seal's Class B Common Stock from First
Magnum Corporation to Lauderdale Holdings, Inc. or another person or entity
designated by ▇▇▇▇▇▇ as contemplated by that certain Stock Purchase Agreement of
even date between such parties shall have been consummated.
6.7 Services Agreements. The Services Agreements shall have been
executed and delivered.
6.8 Seal Resignations. Each of the resignations of the officers
and directors of Seal shall have been received as contemplated by Section 1.3
hereof.
6.9 Fairness Opinion. A favorable Fairness Opinion shall have been
rendered with respect to the transactions contemplated by this Agreement as
contemplated by Section 5.10 hereof.
6.10 Capital Amendment; Voting. As a result of the consummation of
the transactions contemplated hereby, there shall be no restrictions on the
ability of ▇▇▇▇▇▇ to vote the Seal Shares in favor of the Capital Amendment.
The transaction contemplated hereby, including the Capital Amendment, shall be
structured such that ▇▇▇▇▇▇ is exempt from the requirements of Section 203 of
the Delaware General Corporation Law.
ARTICLE 7
CONDITIONS TO SEAL'S OBLIGATIONS
The obligations of Seal hereunder are subject to the satisfaction, on or prior
to the Closing Date, of each of the following conditions:
7.1 Representations, Warranties and Covenants. All representations
and warranties of Oakridge contained in this Agreement shall be true and correct
in all material respects at and as of the Closing Date as if such
representations and warranties were made at and as of the Closing Date, and
Oakridge shall have performed in all material respects all agreements and
covenants required hereby to be performed by either of them prior to or at the
Closing Date.
7.2 No Governmental Proceeding or Litigation. No suit, action,
investigation, inquiry or other proceeding by any governmental, regulatory,
licensing or other authority or other person or entity shall have been
instituted or threatened which questions the validity or legality of the
transactions contemplated hereby and which could reasonably be expected to
materially damage Oakridge if the transactions contemplated hereunder are
consummated.
7.3 Performance. Oakridge shall have performed and complied, or
shall perform and comply simultaneously, in all material respects with the
agreements, covenants and conditions required hereunder, including Section
2.2(b) hereof.
7.4 Fairness Opinion. A favorable Fairness Opinion shall have been
rendered with respect to the transactions contemplated by this Agreement as
contemplated by Section 5.10 hereof.
7.5 Services Agreements. The Services Agreements shall have been
executed and delivered.
7.6 Oakridge Capitalization. There shall have been contributed to
the capital of Oakridge and the Oakridge Subsidiaries (including for purposes
hereof COCF, the outstanding capital stock of which will be contributed to
Oakridge on or before the Closing Date) a minimum of Twenty Million Dollars
($20,000,000) in the aggregate from the inception date of Oakridge (including
COCF, as its predecessor) through the Closing Date.
ARTICLE 8
ACTIONS BY SEAL AND OAKRIDGE
AS OF AND AFTER THE CLOSING
8.1 Books and Records. At or promptly following the Closing, Seal
shall deliver to Oakridge all books, records and files relating to the business,
properties, assets or operations of Seal. Each party (at its expense) shall
have the right to inspect and to make copies of the other's relevant books and
records at any time during business hours for any proper purpose.
8.2 Further Assurances. On and after the Closing Date, each of the
parties shall take all appropriate action and execute all documents, instruments
or conveyances of any kind or nature which may be reasonably necessary or
advisable in the other's opinion to carry out any of the provisions hereof,
including, without limitation, placing Oakridge in possession and control of
Seal.
ARTICLE 9
TERMINATION
9.1 Termination. This Agreement may be terminated by the mutual
consent of the parties or at any time prior to the Closing Date, as follows:
(a Seal shall have the right to terminate this Agreement:
(i)if the Closing has not occurred by April 30, 1999, other than
on account of delay or a breach of the representations and warranties or a
failure to comply with a covenant or agreement contained in this Agreement on
the part of Seal;
(ii)if transactions contemplated by this Agreement are enjoined
by a final, unappealable court order not entered at the request or with the
support of Seal or its affiliates;
(iii) if Oakridge (A) breaches any representation and warranty
or fails to comply with any covenant or agreement contained in this Agreement,
and (B) does not cure such breach or failure within ten business days after
written notice of such default is given to Oakridge (except that such 10
business day cure period shall not be applicable for a breach which cannot be
cured); or
(iv) if the conditions set forth in Article 7 have not been
satisfied (unless waived by Seal).
(b Oakridge shall have the right to terminate this Agreement:
(i) if the Closing has not occurred by April 30, 1999, other
than on account of delay or a breach of the representations and warranties or a
failure to comply with a covenant or agreement contained in this Agreement on
the part of Oakridge;
(ii) if the transactions contemplated by this Agreement are
enjoined by a final, unappealable court order not entered at the request or with
the support of Oakridge or any of its affiliates;
(iii) if Seal (A) breaches any representation and warranty or
fails to comply with any covenant or agreement contained in this Agreement, and
(B) does not cure such breach or failure within 10 business days after written
notice of such default is given to Seal by Oakridge (except that such 10
business day cure period shall not be applicable for a breach which cannot be
cured); or
(iv) if the conditions set forth in Article 6 have not been
satisfied (unless waived by Oakridge).
(c Any termination of this Agreement pursuant to this Section 9.1
shall be effective immediately upon delivery of written notice of termination by
the terminating party to the other parties hereto.
9.2 Effect of Termination. In the event of termination of this
Agreement by either Seal or Oakridge as provided in Section 9.1, this Agreement
shall forthwith become void and there shall be no further obligation on the part
of Seal, Oakridge or their respective officers, managers or directors (except
for the last sentence of Section 5.3, which shall survive the termination).
Nothing in this Section 9.2 shall relieve any party from liability for any
breach of this Agreement.
9.3 Waiver. At any time prior to the Closing Date, the parties
hereto may by written agreement (a) extend the time for the performance of any
of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any such waiver shall not be deemed
to be continuing or to apply to any future obligation or requirement of any
party hereto provided herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid if set forth in an instrument in
writing signed on behalf of such party.
9.4 Limited Termination Fee. In the event that this Agreement is
terminated by Seal pursuant to any of subclauses (ii), (iii) or (iv) of Section
9.1(a) or by Oakridge pursuant to any of subclauses (i), (ii) or (iv) of Section
9.1(b) (and provided in any of such events Seal is otherwise in compliance with,
and not in breach of, its obligations hereunder), then Oakridge shall pay to
Seal the sum of Twenty Five Thousand Dollars ($25,000.00) to help defray the
costs and expenses of Seal relating to the transactions contemplated by this
Agreement.
ARTICLE 10
MISCELLANEOUS
10.1 Survival of Representations. All statements contained in any
certificate or instrument of conveyance delivered by or on behalf of the parties
pursuant to this Agreement or in connection with the transactions contemplated
hereby shall be deemed to be additional representations and warranties of the
parties making such disclosure. All representations and warranties shall
terminate, and shall not survive, on the Closing Date.
10.2 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by either party without the prior written
consent of the other party hereto; provided, however, Oakridge may assign its
rights and obligations hereunder to an entity controlled by, or under common
control with, ▇▇▇▇▇▇. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, and no other person shall have any right, benefit or
obligation hereunder.
10.3 Notices. All notices or other communications in connection
with this Agreement shall be in writing and shall be considered given when
personally delivered or when mailed by registered or certified mail, postage
prepaid, return receipt requested, or when sent via commercial courier or
telecopier, directed as follows:
If to Seal:
Seal Holdings Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Oakridge:
OH, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇.▇▇▇.▇▇▇▇
with a copy to:
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
and
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. "Rocky" ▇▇▇▇▇▇▇▇, II, Esq.
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
10.4 Expenses. Except as set forth in Section 9.4 and the last
sentence of Section 9.2 hereof, each party shall be liable for its own fees,
costs and expenses incurred in connection with the negotiation, preparation,
execution or performance of this Agreement. Immediately prior to the Closing,
the net liabilities of Seal, including liabilities for fees, costs and expenses
relating to this Agreement (but exclusive of contingent liabilities relating to
Seal Pending Actions identified on Schedule 3.6 to this Agreement), shall not
exceed $50,000.
10.5 Choice of Law. This Agreement and all transactions
contemplated by this Agreement shall be governed by, and construed and enforced
in accordance with, the internal laws of the State of Delaware without regard to
principles of conflicts of laws.
10.6 Publicity and Filings. Promptly after the execution of this
Agreement, Seal shall issue a press release with respect to the Exchange, which
press release shall be subject to the prior written approval of Oakridge. Other
than such press release, neither party shall issue any other press releases or
make any public statement regarding the transactions contemplated hereby,
without the prior approval of the other party. Seal shall also file a Form 8BK
with the SEC with respect to the Exchange.
10.7 Confidential Information. The parties acknowledge that the
transactions described herein are of a confidential nature and shall not be
disclosed except to consultants, advisors and affiliates, or as required by law,
until such time, if any, as the parties make a public announcement regarding the
transaction as provided in Section 10.6. No party shall make any public
disclosure of the specific terms of this Agreement, except as required by law.
10.8 Entire Agreement; Amendments and Waivers. Except as provided
herein with respect to the Confidentiality Agreement, this Agreement, together
with all exhibits and schedules hereto, constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties, including without limitation the Letter of Intent. No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
10.9 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein shall for any reason be held to be invalid, illegal or unenforceable in
any respect, then such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement or any other such instrument.
10.10 Counterparts. This Agreement may be executed in one or more
counterparts, each one of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of this Agreement via telephone facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or have
caused this Agreement to be duly executed on their respective behalf by their
respective officers hereunto duly authorized, as of the day and year first above
written.
"SEAL"
SEAL HOLDINGS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman/CEO
"OAKRIDGE"
OH, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President