<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1997
[ ] Transition Report Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
Commission file number 0-5667
Seal Fleet, Inc.
(Exact name of registrant as specified in its charter)
Nevada 74-1670096
(State of Incorporation) (IRS Employer ID No.)
125 Worth Avenue, Suite 314, Palm Beach, Florida 33480
(Address of principal executive offices) (Zip Code)
(561) 833-5111
(issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Class A common stock, par value $.10 per share, 2,502,405 shares
outstanding as of May 14, 1997.
Class B common stock, par value $.10 per share, 50,000 shares
outstanding as of May 14, 1997
Transitional Small Business Disclosure Format (Check one):
Yes ( ) No (X)
<PAGE>
INDEX
Page
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of
Operations 5
Condensed Consolidated Statements of Cash
Flows 6
Notes to Condensed Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on 8-K 9
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SEAL FLEET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31 December 31
1997 1996
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents (Note B) $ 2,236 $ 2,437
Other receivables 2 14
Prepaid Expenses 11 8
Net assets of discontinued operations
(Note C) 113 64
-------- --------
Total current assets 2,362 2,523
PROPERTY AND EQUIPMENT
Furniture and equipment 67 58
Less accumulated depreciation (55) (53)
-------- --------
Property and equipment, net 12 5
OTHER ASSETS
Assets held for resale (Note D) 154 154
Other assets 4 4
-------- --------
TOTAL ASSETS $ 2,532 $ 2,686
======== ========
</TABLE>
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<PAGE>
SEAL FLEET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31 December 31
1997 1996
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accts. payable & accrued exp $ 29 $ 54
-------- --------
Total current liabilities 29 54
-------- --------
Total liabilities 29 54
SHAREHOLDERS' EQUITY
Class A common stock, $.10 par
value; 3,700,000 shares author-
ized and 2,432,248 shares
issued in 1997 and 1996 243 243
Class B common stock, $.10 par
value; 50,000 shares author-
ized, issued and outstanding 5 5
Additional paid-in capital 4,475 4,475
Accumulated deficit (2,171) (2,042)
Class A common stock held in
treasury at cost; 169,843 and
447,621 shares in 1997 and 1996,
respectively ( 49) ( 49)
-------- --------
Shareholders' equity 2,503 2,632
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,532 $ 2,686
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
SEAL FLEET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31
1997 1996
-------- --------
<S> <C> <C>
Income from continuing
operations $ ( 129) $
Income (loss) from
discontinued operations
(less applicable income
tax) 101
------- -------
Net income (loss) $ ( 129) $ 101
NET INCOME (LOSS) PER SHARE
From continuing operations $ (.06) .00
From discontinued operations $ .00 $ .05
WEIGHTED AVERAGE
SHARES OUTSTANDING 2,312,405 2,034,627
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
SEAL FLEET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31
1997 1996
------ ------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (129) $ 101
Adjustments to reconcile net income
(loss) to net cash provided by operating activities:
Depreciation and amortization 2 117
Changes in operating assets
Accounts and notes receivable 9
Accounts payable - trade (25)
Changes in net assets of discontinued
operations (49) 330
-------- --------
Net cash provided (required) by
operating activities (192) 548
INVESTING ACTIVITIES
Purchase of property and equipment (9) (3)
-------- --------
Net cash provided (required)
by investing activities (9) (3)
FINANCING ACTIVITIES
Decrease in long-term debt of discontinued
operations (97)
-------- --------
Net cash required by financing activities (97)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (201) 448
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 2,437 1,055
-------- --------
CASH AND CASH EQUIVALENTS AT
MARCH 31, 1997 AND 1996 $ 2,236 $ 1,503
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
SEAL FLEET, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-B. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals and the presentation of prior year's results as
discontinued operations - See Note B), considered necessary for a fair
presentation have been included. These financial statements, footnotes
and discussions should be read in conjunction with audited financial
statements and related footnotes in the Company's annual report on Form
10-K for the year ended December 31, 1996 filed with the Securities
and Exchange Commission. Operating results for the three month period
ended March 31, 1997 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1997.
NOTE B - CASH AND CASH EQUIVALENTS
The Company's Cash and Cash Equivalents at March 31, 1997 consisted
of money market and demand deposits of $354, Certificates of Deposit
of $387, and US Government agency bonds of $1,495. All maturities
are of less than 90 days.
NOTE C - SALE OF DISCONTINUED OPERATIONS
On August 14, 1996, the Company sold all marine assets and ceased all
activities which were related to ownership, management, brokerage, and
operation of offshore supply ships. All related activities for the
quarter ended March 31, 1996 have been presented in the accompanying
financial statements as discontinued operations.
NOTE D - ASSETS HELD FOR RESALE
At March 31, 1997, the Company owned a tract of unimproved land in
Brazoria County, Texas which was recorded at its estimated fair market
value of $154,000. Subsequent to March 31, 1997, this land was sold to
the United States Department of the Interior's Fish and Wildlife Service
for the stated fair market value. Payment was received during April.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company continues its transition from the offshore marine business
to a new line of business to be determined by the Board of Directors,
as more fully described in the Proxy Statement dated June 17, 1996,
and the Current Report on Form 8-K dated August 27, 1996, and amended
October 28, 1996.
RESULTS OF THE QUARTER ENDED MARCH 31, 1997
The ongoing activities of the Company during the quarter were related
to the evaluation of investment alternatives and positioning the
Company for future growth through establishing Seal Holdings
Corporation, preparation for the reverse/forward split of the
Company's common stock, and the development of the 1997 Incentive Option
Plan; all reflected in the proxy statement dated April 11, 1997.
The major elements of expense, offset by interest income from short-term
investments, reflected in the net loss of $129 include:
<TABLE>
<CAPTION>
<S> <C>
Salaries and Benefits $ 33
Contract Labor 8
Legal and Audit 38
Business Travel & Entertainment 35
Shareholder Relations 14
Office Rent and Supplies 6
Other 24
-----
Sub-Total $ 158
Interest and Dividend Income 31
Other Non-operating items ( 2)
-----
Net Income (Loss) $(129)
</TABLE>
During the three month period ended March 31, 1997, the Company
continued to wind down the discontinued operations. There was
no impact on earnings from discontinued operations in that an allowance
was set up at December 31, 1996 to cover the estimated future impact
of discontinued operations.
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<PAGE>
PART II. Other Information
Item 1. Legal Proceedings
The Company is not a party to any material pending legal proceeding,
other than ordinary routine litigation incidental to the discontinued
business.
Item 2. Changes in Securities
On March 25, 1997, the Company sold 240,000 shares of its Class A
common stock to Thomas M. Ferguson for $0.50 per share. The shares
were not registered under the Securities Act of 1933 based upon an
exemption from the registration requirements of the Act for
transactions not involving public offerings. Mr. Ferguson's status
as an officer and director of the Company and the fact that no public
solicitation was involved in the sale were relied upon by the Company
in selling the shares pursuant to the exemption. No commissions were
paid, no discounts were granted, and no underwriters or brokers
were involved. Mr. Ferguson purchased the shares through the exercise
of a nonqualified stock option granted to him by the Company under
its 1996 Long-Term Incentive Plan. The Company loaned $120,000 to
Mr. Ferguson which he utilized to pay the purchase price for the shares.
Item 5. Other Information
On May 14, 1997, at the annual shareholders meeting, all proposals
described in the proxy statement dated April 11, 1997 were approved.
The approvals include:
(a) a reincorporation whereby the Company's state of incorporation will
be changed from Nevada to Delaware; the number of authorized shares of
Class A Common Stock will be increased from 1,850,000 shares, par value
$.20, following the stock split, to 14,975,000 shares, par value $.20;
the authorization of 3,000,000 shares of a class of Preferred Stock,
par value $.001; and the merger of the Company into its wholly-owned
subsidiary, Seal Holdings Corporation, a Delaware Corporation.
(b) a reverse-forward split of the Company's Class A and Class B
Common Stock on a 1 share for 2 shares basis, such reverse stock split
to be accomplished by an initial reverse stock split on a 1 share for
50 share basis, followed by a forward stock split on a 25 shares to 1
share basis. The aggregate number of authorized Class A Common Stock
will be 1,850,000, and the aggregate number of Class B Common Stock will
be 25,000. Both classes of Common Stock will have a par value of $.20.
- 9 -
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.1 Secured Promissory Note dated March 25, 1997, made by
Thomas M. Ferguson in favor of Seal Fleet, Inc.,
attached as Exhibit 1 to Amendment No. 1 to Report on
Schedule 13D dated Maarch 21, 1997, filed by First
Magnum Corporation is hereby incorporated by reference.
10.2 Stock Pledge Agreement dated March 25, 1997, made by
Thomas M. Ferguson in favor of Seal Fleet, Inc., attached
as Exhibit 2 to Amendment No. 1 to Report on Schedule
13D dated March 21, 1997, filed by First Magnum
Corporation is hereby incorporated by reference.
10.3 1996 Long-Term Incentive Plan, as amended.
10.4 1997 Incentive Option Plan attahced to the proxy
statement for the annual meeting of stockholders held
May 14, 1997, is hereby incorporated herein by reference.
27 Financial Data Statement
(b) Reports on Form 8-K.
None
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SEAL FLEET, INC. (Registrant)
Date: May 14, 1997 By /s/ James S. Goodner
- - - - - - - - - - - - - -
James S. Goodner
Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
10.1 Secured Promissory Note dated March 25, 1997, made by
Thomas M. Ferguson in favor of Seal Fleet, Inc., attached
as Exhibit 1 to Amendment No. 1 to Report on Schedule 13D
dated March 21, 1997, filed by First Magnum Corporation is
hereby incorporated herein by reference.
10.2 Stock Pledge Agreement dated March 25, 1997, made by Thomas
M. Ferguson in favor of Seal Fleet, Inc., attached as Exhibit
2 to Amendment No. 1 to Report on Schedule 13D dated March
21, 1997, filed by First Magnum Corporation is hereby
incorporated herein by reference.
10.3 1996 Long-Term Incentive Plan, as amended.
10.4 1997 Incentive Option Plan attached to the proxy statement
for the annual meeting of stockholders held may 14, 1997,
is hereby incorporated herein by reference.
27 Financial Data Schedule
</TABLE>
<PAGE>
SEAL FLEET, INC.
AMENDED 1996 LONG-TERM INCENTIVE PLAN
Adopted by the Board of Directors on August 14, 1996,
Amended March 21, 1997
1. Purpose
The 1996 Long-Term Incentive Plan (the "Plan") is intended to promote
the interests of Seal Fleet, Inc. ("Seal Fleet") by offering those directors,
executive officers, key employees and outside consultants of Seal Fleet
who are primarily responsible for the management, growth and success
of the business of Seal Fleet, the opportunity to participate in a long-term
incentive plan designed to reward them for their services and to encourage
them to continue in the employ of or to provide services to Seal Fleet.
2. Definitions
For all purposes of this Plan, the following terms shall have the following
meanings:
"Common Stock" means Seal Fleet common stock, $.10 par value.
"Non-Statutory Options" means stock options not qualified under Section
422 of the Internal Revenue Code of 1986, as amended.
"Restricted Shares" means shares of Common Stock which have not
been registered under federal securities law.
"Retirement" means a Participant's termination of employment or
association after attaining age 62.
"Subsidiary" means any company which Seal Fleet owns, directly
or indirectly, the majority of the combined voting power of all classes
of stock.
3. Administration
The Plan shall be administered by a Committee (the "Committee") of not
less than two non-employee directors of Seal Fleet selected by, and serving
at the pleasure of, Seal Fleet's Board of Directors (the "Seal Fleet Board").
To qualify as a "non-employee director," a person must be a member of
the Seal Fleet Board who (i) is not currently an officer or employee of
eal Fleet or any Subsidiary, (ii) has not received compensation for serving
as a consultant or in any other non-director capacity or had an interest in
any transaction with Seal Fleet or any Subsidiary that exceeds $60,000,
or (iii) has not been engaged through another party in a business relationship
with Seal Fleet (such as that of a lawyer or investment banker). Non-
<PAGE>
employee directors shall qualify as such as provided under Rule 16b-3(b)(3)
of the Securities Exchange Act of 1934 ("Exchange Act"). In the event
that Seal Fleet does not have two non-employee directors, the Plan shall
be administered by the Seal Fleet Board.
Initially, the Company or Subsidiary will recommend to the Committee
persons to whom awards may be granted. The Committee then shall have
the authority, subject to the terms of the Plan, to determine, based upon
recommendations, the persons to whom awards shall be granted
("Participants"), the number of shares covered by each award, the time
or times at which awards shall be granted, the timing of when awards shall
vest, and the terms and provisions of the instruments by which awards
shall be evidenced, and to interpret the Plan and make all determinations
necessary or advisable for its administration. The Committee shall notify
the Seal Fleet Board of all decisions concerning awards granted to
Participants under the Plan, the interpretation thereof, and determinations
concerning its administration.
Notwithstanding the foregoing, (i) the initial awards of Non-Statutory
Options under this Plan and the terms of such awards shall be as set
forth in "Schedule A" attached hereto and incorporated herein by this
reference, and such awards shall not be modified or amended except
in accordance with Section 9 or with the consent of the respective
Participants, and (ii) other than the initial awards, any additional
awards to members of the committee must also be approved in
advance by a majority of the disinterested members of the Seal Fleet
Board.
4. Eligibility
Only persons who are employees, outside consultants, officers or
directors of Seal Fleet or of any Subsidiary shall be granted awards.
5. Stock Subject to the Plan
The stock from which awards may be granted shall be shares of
Common Stock. When Restricted Shares are vested or when
options are exercised, Seal Fleet may either issue authorized but
unissued Common Stock or Seal Fleet may transfer issued Common
Stock held in its treasury. Each of the respective boards of Seal Fleet
and Subsidiaries will fund the Plan to the extent so required to provide
Common Stock for the benefit of Participants. The total number of
shares of Common Stock which may be granted as Restricted Shares
or stock options shall not exceed, in the aggregate, 600,000 shares in
total. Any Restricted Shares awarded and later forfeited are again
subject to award under the Plan. If an option expires, or is otherwise
terminated prior to its exercise, the shares of Common Stock covered
by such an option immediately prior to such expiration or other
termination shall continue to be available for grant under the Plan.
<PAGE>
6. Granting of Options
The date of grant of options to Participants under the Plan will be the
date on which the options are awarded by the Committee. The grant
of any option to any Participant shall neither entitle nor disqualify such
Participant from participating in any subsequent grant of options.
7. Terms and Conditions of Options
Options shall be designated Non-Statutory Options and shall be
evidenced by written instruments approved by the Committee. Such
instruments shall conform to the following terms and conditions:
7.1 OPTION PRICE
The option price per share for an option shall be the fair market
value of the Common Stock underlying the option on the day the
option is granted. Fair market value shall be an amount equal to
the average closing bid price of the Common Stock for the five trading
days immediately preceding the day of grant as reported on the National
Daily Quotation Service ("Pink Sheets") or the last reported sale price
of the Common Stock on the day of grant on any stock exchange on
which the Common Stock may be listed from time to time, or if there
was no such sale price on the day of grant, on the day next preceding
the day of grant on which there was such a sale. The option price
shall be paid (i) in cash, or (ii) in Common Stock, including Common
Stock underlying the option being exercised, having a fair market value
equal to such option price or (iii) in a combination of cash and Common
Stock, including Common Stock underlying the option being exercised.
The fair market value of Common Stock delivered to Seal Fleet
pursuant to the immediately preceding sentence shall be determined
on the average closing bid price of the Common Stock for the five
trading days immediately preceding the day of exercise as reported
on the Pink Sheets or the last reported sale price of the Common Stock
on the day of exercise on any stock exchange on which the Common
Stock may be listed from time to time, or, if there was no such sale
price on the day of exercise, on the day next preceding the day of
exercise on which there was such a sale.
7.2 TERM AND EXERCISE OF OPTIONS
Except in special circumstances, each option shall expire on the tenth
anniversary of the date of its grant and shall be exercisable according
to a vesting schedule to be determined by the Committee. However
the Committee may include in any option instrument, initially or by
amendment at any time, a provision making any installment or
installments exercisable at a date earlier than initially established,
if the Committee deems such provision to be in the interests of Seal
Fleet or necessary to realize the reasonable expectation of the optionee.
<PAGE>
After becoming exercisable, each installment shall remain exercisable
until expiration or termination of the option. After becoming exercisable
an option may be exercised by the optionee from time to time, in whole
or part, up to the total number of shares with respect to which it is
then exercisable. The Committee may provide that payment of the
option exercise price may be made following delivery of the certificate
for the exercised shares.
Upon the exercise of a stock option, the purchase price will be payable
in full in cash or Common Stock, or a combination thereof, as provided
in Paragraph 7.1. Any shares of Common Stock so assigned and delivered
to Seal Fleet or the Subsidiary, as applicable, in payment or partial payment
of the purchase price will be valued at fair market value on the exercise
date. Upon the exercise of an option, Seal Fleet or a Subsidiary, as
applicable, shall withhold from the shares of Common Stock to be issued to the
Participant the number of shares necessary to satisfy Seal Fleet's or the
Subsidiary's, as applicable, obligation to withhold federal taxes, such
determination to be based on the shares' fair market value on the date
of exercise.
7.3 TERMINATION OF EMPLOYMENT OR ASSOCIATION
If an optionee ceases, other than by reason of death or Retirement,
to be employed or associated with Seal Fleet, all options granted to
such optionee and exercisable on the date of termination of employment
or association shall expire on the earlier of (i) the tenth anniversary
after the date of grant, or (ii) three months after the day such optionee's
employment or association ends.
In the event of optionee's Retirement, all options granted to such optionee,
and exercisable on the date of such optionee's Retirement shall expire on
the earlier of (i) the tenth anniversary after the date of grant, or (ii) the
second anniversary of the day of such optionee's Retirement.
Any installment not exercisable on the date of such termination or
Retirement shall expire and be thenceforth unexercisable. Whether
authorized leave of absence or absence in military or governmental
service may constitute employment for the purposes of the Plan shall
be conclusively determined by the Committee.
Any award under this Plan to a Participant who suffers a termination
of employment or association may be accelerated, paid or continued
if the Committee, in the exercise of its absolute discretion, determines
that such action is in the best interests of Seal Fleet and equitable to
the Participant. The portion of any award exercisable in the event of
continuation or the amount of any payment due under a continued
award may be adjusted by the Committee to reflect the Participant's
period of service from the date of grant through the date of the
Participant's termination of employment or such other factors as
the Committee determines are relevant to its decision to continue
the award.
<PAGE>
7.4 EXERCISE UPON DEATH OF OPTIONEE
If an optionee dies, the option may be exercised, to the extent of
the number of shares that the optionee could have exercised on
the date of such death, by the optionee's estate, personal representative
or beneficiary who acquires the option by will or by the laws of
descent and distribution. Such exercise may be made at any time prior
to the earlier of (i) the tenth anniversary after the date of grant, or (ii)
the first anniversary of such optionee's death. On the earlier of such
dates, the option shall terminate.
7.5 ASSIGNABILITY
No option shall be assignable or transferable by the optionee except
by will or by the laws of descent and distribution and during the
lifetime of the optionee the option shall be exercisable only by such
optionee; provided, however, that an optionee may assign the option
to another Participant with the prior written consent of the Seal Fleet
Board.
8. Restricted Share Awards
8.1 GRANT OF RESTRICTED SHARE AWARDS
The Committee will determine for each Participant the time or times
when Restricted Shares shall be awarded and the number of shares
of Common Stock to be covered by each Restricted Share award.
8.2 RESTRICTIONS
Shares of Common Stock issued to a Participant as a Restricted Share
award will be subject to the following restrictions ("Share Restrictions"):
(a) Except as set forth in Paragraphs 8.4 and 8.5, upon the termination of
employment or association of a participant, all of the Restricted Shares
subject to a Restricted Share award will be forfeited and returned to
Seal Fleet or, in the event such Restricted Shares were provided to
the Participant from shares of Common Stock purchased by the Subsidiary,
then the Restricted Shares will be forfeited and returned to the Subsidiary.
In either case, all rights of the Participant to such Restricted Shares will
erminate without any payment of consideration by Seal Fleet or the
Subsidiary with which the Participant is employed or associated, unless
the Participant maintains his or her employment or association (including
membership on the Seal Fleet Board or consulting arrangements) with
Seal Fleet or a Subsidiary for a period of time determined by the Committee.
(b) During the longer of the restriction period ("Restriction Period")
relating to a Restricted Share award or a period of six months and one day
from the date of the award, none of the Restricted Shares subject to such
award may be sold, assigned, bequeathed, transferred, pledged,
hypothecated or otherwise disposed of in any way by the Participant.
<PAGE>
(c) The Committee may require the Participant to enter into an escrow
agreement providing that the certificates representing Restricted Shares
sold or granted pursuant to the Plan will remain in the physical custody
of Seal Fleet or the employing Subsidiary or an escrow holder during
the Restriction Period.
(d) Each certificate representing a Restricted Share sold or granted pursuant
to the Plan will bear a legend making appropriate reference to the
restrictions imposed on the Restricted Share.
(e) The Committee may impose other restrictions on any Restricted Shares
sold pursuant to the Plan as it may deem advisable, including without
limitation, restrictions under the Securities Act of 1933, as amended,
under the requirements of any stock exchange upon which such share
or shares of the same class are then listed and under any state securities
laws or other securities laws applicable to such shares.
8.3 RIGHTS AS A STOCKHOLDER
Except as set forth in Paragraph 8.2(b), the recipient of a Restricted
Share award will have all of the rights of a stockholder of Seal Fleet
with respect to the Restricted Shares, including the right to vote the
Restricted Shares and to receive all dividends or other distributions
made with respect to the Restricted Shares.
8.4 LAPSE OF RESTRICTIONS AT TERMINATION OF EMPLOYMENT
In the event of the termination of employment or association of a
Participant during the Restriction Period by reason of death, total
and permanent disability, Retirement, or discharge from employment
or association other than a discharge for cause, the Committee may,
at its discretion, remove Share Restrictions on Restricted Shares subject
to a Restricted Share award.
Restricted Shares to which the Share Restrictions have not so lapsed
will be forfeited and returned to Seal Fleet as provided in Paragraph 8.2(a).
8.5 LAPSE OF RESTRICTIONS AT DISCRETION OF THE COMMITTEE
The Committee may shorten the Restriction Period or remove any
or all Share Restrictions if, in the exercise of its absolute discretion,
it determines that such action is in the best interests of Seal Fleet
and equitable to the Participant.
8.6 LISTING AND REGISTRATION OF SHARES
Seal Fleet may, in its reasonable discretion, postpone the issuance
and/or delivery of Restricted Shares until completion of stock exchange
listing, or registration, or other qualification of such Restricted Shares
under any law, rule or regulation.
<PAGE>
8.7 DESIGNATION OF BENEFICIARY
A Participant may, with the consent of the Committee, designate a
person or persons to receive, in the event of death, any Restricted
Shares to which such Participant would then be entitled. Such designation
will be made upon forms supplied by and delivered to the Committee and
may be revoked in writing by the Participant. If a Participant fails
effectively to designate a beneficiary, then such Participant's estate
will be deemed to be the beneficiary.
8.8 WITHHOLDING OF TAXES FOR RESTRICTED SHARES
When the Participant, as holder of the Restricted Shares, recognizes
income, either on the date of grant or the date the restrictions lapse,
Seal Fleet or a Subsidiary, as applicable, shall withhold from the shares
of Common Stock, the number of shares necessary to satisfy Seal
Fleet's or the Subsidiary's, as applicable, obligation to withhold federal
taxes, such determination to be based on the shares' fair market value
as of the date income is recognized.
9. Capital Adjustments
The number and price of Common Stock covered by each award of
options and/or Restricted Shares and the total number of shares that
may be granted or sold under the Plan shall be proportionally adjusted
to reflect, subject to any required action by stockholders, any stock
dividend or split, recapitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares or other similar
corporate change.
10. Change of Control
Notwithstanding the provisions of Section 9, in the event of a change
of control, all share restrictions on all Restricted Shares will lapse
and vesting on all unexercised stock options will accelerate to the
change of control date. For purposes of this plan, a "change of control"
of Seal Fleet shall be deemed to have occurred at such time as (a) any
"person" (as that term is used in Section 13(d) and 14(d) of the
Exchange Act), becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities
of Seal Fleet representing 25.0% or more of the combined voting
power of Seal Fleet's outstanding securities ordinarily having the right
to vote at the election of directors; or (b) individuals who constitute
the Seal Fleet Board on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date hereof
whose election was approved by at least a majority of the directors
comprising the Incumbent Board, or whose nomination or election
was approved by a majority of the Seal Fleet Board serving under
an Incumbent Board, shall be, for purposes of this clause (b),
considered as if he or she were a member of the Incumbent Board;
or (c) merger, consolidation or sale of all or substantially all the
<PAGE>
assets of Seal Fleet occurs, unless such merger or consolidation
shall have been affirmatively recommended to Seal Fleet's
stockholders by a majority of the Incumbent Board; or (d) a proxy
statement soliciting proxies from stockholders of Seal Fleet, by
someone other than the current management of Seal Fleet seeking
stockholder approval of a plan of reorganization, merger or
consolidation of Seal Fleet with one or more corporations as a result
of which the outstanding shares of Seal Fleet's securities are actually
exchanged for or converted into cash or property or securities not
issued by Seal Fleet unless the reorganization, merger or consolidation
shall have been affirmatively recommended to Seal Fleet's stockholders
by a majority of the Incumbent Board.
11, Approvals
The issuance of shares pursuant to this Plan is expressly conditioned
upon obtaining all necessary approvals from all regulatory agencies
from which approval is required, including gaming regulatory agencies.
12. Effective Date of Plan
The effective date of the Plan is August 14, 1996.
13. Term and Amendment of Plan
This Plan shall expire on August 14, 2006 (except to options and
Restricted Shares outstanding on that date). The Seal Fleet's Board
may terminate or amend the Plan in any respect at any time, except
that, no change may be made which would cause any award under
the Plan not to comply with Rule 16b-3 of the Exchange Act. No
action of the Seal Fleet Board or Seal Fleet's stockholders, however,
may, without the consent of an optionee or Restricted Shares grantee,
alter or impair such Participant's rights under any option or
Restricted Shares previously granted.
14. No Right of Employment
Neither the action of Seal Fleet in establishing this Plan, nor any
action taken by any Board of Seal Fleet or any Subsidiary or the
Committee, nor any provision of the Plan itself, shall be construed
to limit in any way the right of Seal Fleet to terminate a Participant's
employment or association at any time; nor shall it be evidence of
any agreement or understanding, expressed or implied, that Seal Fleet
will employ an employee in any particular position nor ensure
participation in any future compensation or stock purchase program.
<PAGE>
15. Withholding Taxes
Seal Fleet or the Subsidiary, as applicable, shall have the right to
deduct withholding taxes from any payments made pursuant to the
Plan or to make such other provisions as it deems necessary or
appropriate to satisfy its obligations to withhold federal, state or
local income or other taxes incurred by reason of payments or the
issuance of Common Stock under the Plan. Whenever under the Plan,
Common Stock is to be delivered upon vesting of Restricted Shares or
exercise of an option, the Committee shall be entitled to require as a
condition of delivery that the Participant remit or provide for the
withholding of an amount sufficient to satisfy all federal, state and
other government withholding tax requirements related thereto.
16. Plan not a Trust
Nothing contained in the Plan and no action taken pursuant to the
Plan shall create or be construed to create a trust of any kind, or a
fiduciary relationship, between Seal Fleet and any Participant, the
executor, administrator or other personal representative, or designated
beneficiary of such Participant, or any other persons. If and to the
extent that any Participant or such Participant's executor, administrator
or other personal representative, as the case may be, acquires a right
to receive any payment from Seal Fleet pursuant to the Plan, such
right shall be no greater than the right of an unsecured general creditor
of Seal Fleet.
17. Notices
Each Participant shall be responsible for furnishing the Committee
with the current and proper address for the mailing of notices and
delivery of agreements, Common Stock and cash pursuant to the Plan.
Any notices required or permitted to be given shall be deemed given
if directed to the person to whom addressed at such address and mailed
by regular United States mail, first-class and prepaid. If any item mailed
to such address is returned as undeliverable to the addressee, mailing
will be suspended until the Participant furnishes the proper address.
This provision shall not be construed as requiring the mailing of any
notice or notification if such notice is not required under the terms
of the Plan or any applicable law.
18. Severability of Provisions
If any provision of this Plan shall be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other provisions
hereof, and this Plan shall be construed and enforced as if such provisions
had not been included.
<PAGE>
19. Payment to Minors, etc.
Any benefit payable to or for the benefit of a minor, an incompetent
person or other person incapable of receipting therefor shall be deemed
paid when paid to such person's guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such
payment shall fully discharge the Committee, Seal Fleet and other parties
with respect thereto.
20. Headings and Captions
The headings and captions herein are provided for reference and
convenience only, shall not be considered part of the Plan, and shall
not be employed in the construction of the Plan.
21. Controlling Law
This Plan shall be construed and enforced according to the laws of
the State of Nevada to the extent not preempted by federal law, which
shall otherwise control.
22. Enforcement of Rights
In the event Seal Fleet or a Participant is required to bring any action
to enforce the terms of this Plan, the prevailing party shall be reimbursed
by the non-prevailing party for all costs and fees, including actual
attorney fees, for bringing and pursuing such action.
<PAGE>
SCHEDULE A
Seal Fleet, Inc.
1996 Long-Term Incentive Plan
Initial Option Grants
Type of Options: Non-Statutory
Exercise Price of Options *
Vesting Schedule of Options 100% on August 14, 1996
Grantee Number of Shares
- ------- ----------------
J. Erik Hvide 40,000
Donald L. Caldera 40,000
James S. Goodner 80,000
Thomas M. Ferguson 240,000
* The exercise price shall be calculated based upon the average closing
bid price of the Common Stock of Seal Fleet, Inc. for the five trading
days immediately preceding the day of grant or August 14, 1995.
<PAGE>
SCHEDULE B
Seal Fleet, Inc.
1996 Long-Term Incentive Plan ("1996 LTIP")
Non-Statutory Stock Option Grant
Participant: Date of Grant:
Grant No.: Option Exercise Price:
Type of Option: Non-Qualified
Option Shares:
Subject to the terms of the 1996 LTIP and pursuant to this stock
option grant, Seal Fleet, Inc. (the "Company") hereby grants the
option to purchase the above described number of shares of Seal
Fleet Class A Common Stock exercisable at the Option Exercise
Price stated above.
Options granted thereunder shall be exercisable only to the extent
of "vesting." Vesting occurs when the Participant remains
continuously employed or associated with the company or its
subsidiaries on the date upon which options are scheduled to vest
in order to have any right to exercise such options which are scheduled
to vest thereafter. If the Participant has failed to remain continuously
employed or associated with the Company or its subsidiaries on a date
upon which options are scheduled to vest, the Participant shall have
no right to nor be entitled to exercise those options or any other options
which may be scheduled to vest thereafter. The stock options under
this stock option grant shall vest 100% as of the Date of Grant.
Except as may be otherwise provided in the 1996 LTIP, vested
options granted thereunder shall expire the earlier of either: (i)
ten (10) years after the Date of Grant; (ii) two (2) years after the
Participant's retirement from the Company or any of its subsidiaries
after the Employee attains the age of 62 years; (iii) one (1) year
after the date of the Participant's death; or (iv) three (3) months
after the Employee's termination from the Company or any of its
subsidiaries for reasons other than death or retirement after attaining
the age of 62 years.
This grant is made pursuant to the terms of conditions of the 1996
LTIP, a copy of which is attached hereto as Exhibit "A," and by this
reference made a part hereof.
In witness whereof, the undersigned executes this stock option grant
as of the first date set forth herein:
SEAL FLEET, INC.
By:
--------------------------
Its:
-------------------------
Accepted and agreed to as of the Date of Grant:
Name: Social Security No.:
------------------------ ---------------
Residence Address:
-------------------------------------------------
<PAGE>
SCHEDULE C ELECTION TO EXERCISE OPTION
To:
The undersigned hereby irrevocably elects to purchase ______ shares of
common stock ("Common Stock") of Seal Fleet, Inc. (the "Company") issuable
upon the exercise of the attached non-statutory stock option (the "Option"),
and requests that certificates for such shares be issued
in the name of and delivered to the address of the undersigned, at the
address stated below and, if said number of shares shall not be all the
shares which may be purchased pursuant to the Option, that a new
option evidencing the right to purchase the balance of such shares
be registered in the name of, and delivered to, the undersigned at
the address stated below. [The undersigned hereby agrees with and
represents to the Company that said shares of Common Stock are
acquired for investment and not with a view to, or for sale in
connection with, any distribution or public offering thereof within
the meaning of the Securities Act of 1933.]
Payment enclosed in the amount of $
------------------
Dated:
-----------------------------------------
Signature:
-------------------------------------
Address:
---------------------------------------
---------------------------------------
<PAGE>
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0
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