<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of
the Commission Only (as
permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SEAL HOLDINGS CORPORATION
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0- 11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
SEAL HOLDINGS CORPORATION
5601 NORTH DIXIE HIGHWAY, SUITE 411
FORT LAUDERDALE, FLORIDA 33334 (954) 771-5402
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
You are invited to attend the 1999 Annual Meeting of Stockholders of Seal
Holdings Corporation (the "Company"), which will be held at in the lobby of The
Oakridge Comprehensive Outpatient Center, 1000 Northeast 56th Street , Fort
Lauderdale, Florida 33334, on Thursday, June 17, 1999 at 4:00 p.m., Florida
time.
At the Annual Meeting, you will be asked to consider and approve the following:
1. To elect four Directors to serve until the 2000 Annual Meeting of
Stockholders;
2. To increase the number of authorized shares of the Company's (i) Class A
Common Stock from 14,975,000 shares to 99,975,000 shares and (ii) Preferred
Stock from 3,000,000 shares to 25,000,000 shares;
3. To adopt the Company's 1999 Long-Term Incentive Plan;
4. To ratify Ernst & Young LLP as independent accountants for the fiscal year
ending December 31, 1999; and
5. To act upon any other matters properly coming before the Annual Meeting or
any adjournment thereof.
Attendance at the Annual Meeting is limited to Stockholders as of the record
date of May 3, 1999 (or their authorized representatives) and to guests of the
Company. If your shares are registered in your name and you plan to attend the
Annual Meeting, please mark the appropriate box on the enclosed Proxy Card and
you will be pre-registered for the Annual Meeting (if your shares are held of
record by a broker, bank or other nominee and you plan to attend the meeting,
you must also pre-register by returning the registration card forwarded to you
by your bank or broker). A list of the Stockholders entitled to vote at the
Annual Meeting may be examined by any Stockholder at the Company's corporate
offices at 5601 North Dixie Highway, Suite 411, Fort Lauderdale, Florida 33334.
The enclosed proxy is solicited by the Board of Directors of the Company. The
Notice of the Annual Meeting and Proxy Statement on the following pages contain
information concerning the business to be considered at the Annual Meeting.
Please give these proxy materials your careful attention. It is important that
your shares be represented and voted at the Annual Meeting regardless of the
size of your holdings. Your vote is important. Whether you plan to attend the
Annual Meeting or not, please complete, date, sign and return the enclosed Proxy
Card promptly. If you attend the Annual Meeting and prefer to vote in person,
you may do so. The return of the enclosed proxy card will not affect your right
to revoke your proxy or to vote in person if you do attend the Annual Meeting.
By order of the Board of Directors
/s/ M. Lee Pearce, M.D.
-----------------------------------
M. Lee Pearce, M.D.
Chairman of the Board
June 5, 1999
Fort Lauderdale, Florida
IN ORDER TO AVOID ADDITIONAL SOLICITING EXPENSE TO THE COMPANY, PLEASE SIGN,
DATE AND MAIL YOUR PROXY PROMPTLY IN THE RETURN ENVELOPE PROVIDED, EVEN IF YOU
PLAN TO ATTEND THE MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS
USE AT THE ANNUAL MEETING BY GIVING WRITTEN NOTICE OF REVOCATION, BY SIGNING AND
DELIVERING TO THE SECRETARY OF THE COMPANY A PROXY BEARING A LATER DATE OR BY
PERSONALLY VOTING AT THE MEETING.
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1999 ANNUAL MEETING OF STOCKHOLDERS
OF
SEAL HOLDINGS CORPORATION
--------------------
PROXY STATEMENT FOR THE ANNUAL MEETING
--------------------
The 1999 Annual Meeting of Stockholders ("Annual Meeting") of Seal Holdings
Corporation ("Seal/Company") will be held in the lobby of The Oakridge
Comprehensive Outpatient Center, 1000 Northeast 56th Street, Fort Lauderdale,
Florida 33334, on Thursday, June 17, 1999 at 4:00 p.m., Florida time, or at any
adjournments or postponements of the Annual Meeting.
We will begin sending this Proxy Statement, the attached Notice of Annual
Meeting and the enclosed Proxy Card on June 5, 1999 to all Stockholders
entitled to vote. Stockholders who owned Common Stock and Preferred Stock at the
close of business on May 3, 1999 (the "Record Date") are entitled to vote. On
the Record Date, there were 11,641,894 shares of Common Stock and 2,000,000
shares of Series A Preferred Stock outstanding. Seal's principal executive
offices are located at 5601 North Dixie Highway, Suite 411, Fort Lauderdale,
Florida 33334, Telephone Number (954) 771-5402.
WHY WAS THIS PROXY STATEMENT SENT?
This Proxy Statement and the enclosed Proxy Card were sent to you because the
Company's Board of Directors is soliciting the proxies from Stockholders of the
Company's (i) Class A Common Stock, par value $.20 per share ("Class A Common
Stock"), (ii) Class B Common Stock, par value $.20 per share ("Class B Common
Stock and together with Class A Common Stock, "Common Stock" ), and (iii) Series
A Convertible Preferred Stock, par value $.001 per share ("Series A Preferred
Stock" and together with Common Stock, "Company Stock") entitled to vote at the
Annual Meeting. There are (i) two classes of Common Stock: (A) Class A Common
Stock, and (B) Class B Common Stock, and (ii) one series of Preferred Stock,
which is the Series A Preferred Stock. The Class A Common Stock, Class B Common
Stock and Series A Preferred Stock are each entitled to vote at the Annual
Meeting, as described herein. This Proxy Statement summarizes the information
you need to know to vote intelligently at the Annual Meeting. However, you do
not need to attend the Annual Meeting to vote your shares. Instead, you may
simply complete, sign and return the enclosed Proxy Card.
WHAT IS BEING VOTED ON?
The following proposals are being voted on at the Annual Meeting:
o To elect four Directors to serve until the 2000 Annual Meeting of
Stockholders or until their respective successors are elected and qualified;
o To approve an increase in the number of authorized shares of the Company's
(i) Class A Common Stock from 14,975,000 shares to 99,975,000, shares and
(ii) Series A Preferred Stock from 3,000,000 shares to 25,000,000 shares;
o To approve the Company's 1999 Long-Term Incentive Plan;
o To ratify Ernst & Young LLP as independent accountants for the Company for
the fiscal year ending December 31, 1999; and
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o To act upon any other matters properly coming before the Annual Meeting or
any adjournment thereof.
WHO MAY VOTE?
Stockholders who owned Class A Common Stock, Class B Common Stock and Series A
Preferred Stock at the close of business on May 3, 1999 (the Record Date) are
entitled to vote at the Annual Meeting.
HOW MANY VOTES DO I HAVE?
Each share of Class A Common Stock that you own entitles you to one vote.
Holders of Class B Common Stock are entitled to one vote for each share of Class
B Common Stock. Holders of Series A Preferred Stock are entitled to ten votes
for each share of Series A Preferred Stock and are voted along with the Class A
Common Stock.
HOW MANY VOTES ARE NEEDED FOR A QUORUM?
As of May 3, 1999, the following shares were outstanding (i) 11,616,894 shares
of Class A Common Stock, (ii) 25,000 shares of Class B Common Stock, and (iii)
2,000,000 shares of Series A Preferred Stock. The Annual Meeting will be held if
a majority of the outstanding shares of (i) Class A Common Stock, (ii) Class B
Common Stock and (iii) Series A Preferred Stock entitled to vote is represented
at the Annual Meeting. This means that (i) 5,808,448 shares of Class A Common
Stock and 1,000,001 shares of Series A Preferred Stock, voting as a single
class, and (ii) 12,501 shares of Class B Common Stock are required for a quorum.
If you have returned the Proxy or attend the Annual Meeting in person, your
Company Stock will be counted for the purpose of determining whether a quorum
exists, even if you wish to abstain from voting on some or all matters
introduced at the Meeting. "Broker non-votes" also count for quorum purposes. If
you hold your Class A Common Stock through a broker, bank, or other nominee,
generally the nominee may only vote the Class A Common Stock which it holds for
you in accordance with your instructions. We do not count abstentions and
"broker non-votes" as votes for or against any proposal.
If a quorum is not present or represented at the Annual Meeting, the
Stockholders who do attend the Annual Meeting in person or who are represented
by Proxy have the power to adjourn the Annual Meeting until a quorum is present
or represented. At any adjournment of the Annual Meeting at which a quorum is
present or represented, any business may be transacted that might have been
transacted at the original Annual Meeting.
HOW DOES A STOCKHOLDER VOTE BY PROXY?
Whether you plan to attend the Annual Meeting or not, we urge you to complete,
sign and date the enclosed Proxy Card and return it promptly in the envelope
provided. No postage is needed if the Proxy Card is mailed in the United States.
Returning the Proxy Card will not affect your right to attend the Annual Meeting
and vote. If you properly fill in your Proxy Card and send it to us in time to
vote, your "Proxy" (one of the individuals named on your Proxy Card) will vote
your shares as you have directed. If you sign the Proxy Card but do not make
specific choices, your Proxy will vote your shares as recommended by the Board
of Directors as follows:
o "FOR" electing four Directors to serve until the 2000 Annual Meeting of
Stockholders or until their respective successors are elected and qualified;
o "FOR" approving an increase in the number of authorized shares of the
Company's (i) Class A Common Stock from 14,975,000 shares to 99,975,000
shares and (ii) Preferred Stock from 3,000,000 shares to 25,000,000 shares;
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<PAGE>
o "FOR" approving the Company's 1999 Long-Term Incentive Plan; and
o "FOR" ratifying Ernst & Young LLP as independent accountants for the Company
for the fiscal year ending December 31, 1999.
If any other matter is presented, your Proxy will vote in accordance with his
best judgment. At the time this Proxy Statement went to press, we knew of no
matter which needed to be acted on at the Annual Meeting, other than those
discussed in this Proxy Statement.
MAY A PROXY BE REVOKED?
If you give a Proxy, you may revoke it at any time before it is exercised. You
may revoke your Proxy in one of three ways. First, you may send in another Proxy
with a later date. Second, you may notify Seal's Secretary in writing before the
Annual Meeting that you have revoked your Proxy. Third, you may vote in person
at the Annual Meeting.
HOW DOES A STOCKHOLDER VOTE IN PERSON?
If you plan to attend the Annual Meeting and vote in person, we will give you a
ballot when you arrive. However, if your shares are held in the name of your
broker, bank or other nominee, you must bring an account statement or letter
from the nominee indicating that you are the beneficial owner of the shares on
May 3, 1999 (the Record Date).
WHAT VOTE IS REQUIRED TO APPROVE THE PROPOSALS?
Proposal 1:
Electing Four Directors Holders of Class B Common Stock are entitled to
elect a simple majority (three) of the Board of
Directors and holders of the Class A Common Stock are
entitled to elect the remaining one Director. The
persons nominated as the "Class A Directors" will be
elected if they receive the affirmative vote of a
plurality of the outstanding shares of Class A Common
Stock. Similarly, the "Class B Directors" will be
elected if they receive the affirmative vote of a
plurality of the outstanding shares of Class B Stock.
"Plurality" means that individuals who receive the
largest number of votes cast are elected as directors
up to the maximum number of directors to be elected.
Cumulative voting is not permitted. If you do not
vote for a particular nominee, or you indicate
"withhold authority to vote" for a particular nominee
on your proxy card, your vote will not count either
"for" or "against" the nominee. A "broker non-vote"
will also have no effect on the outcome since only a
plurality of votes actually cast is required to elect
a Director.
Proposal 2:
Approving Amendments
to the Certificate to
increase the authorized
shares The affirmative vote of a majority of the votes cast
by the holders of the Class A Common Stock, Class B
Common Stock and Series A Preferred Stock, each
voting as a separate class, at the Annual Meeting is
required to approve the amendments to the
Certificate. If you "abstain" from voting, it has the
same effect as if you voted "against" this proposal.
Broker non-votes will have no effect on the vote.
<PAGE>
Proposal 3:
Approving the Company's
1999 Long-Term
Incentive Plan The affirmative vote of a majority of the votes cast
by the holders of the Class A Common Stock, Class B
Common Stock and Series A Preferred Stock, voting
together as a single class, at the Annual Meeting is
required to approve the Company's 1999 Long-Term
Incentive Plan. If you "abstain" from voting, it has
the same effect as if you voted "against" this
proposal. Broker non-votes will have no effect on the
votes.
Proposal 4:
Ratify Selection
of Accountants The affirmative vote of a majority of the votes cast
by the holders of the Class A Common Stock, Class B
Common Stock and Series A Preferred Stock, voting
together as a single class, at the Annual Meeting is
required to ratify and approve the appointment of
Ernst & Young LLP as the Company's independent
accountants for the fiscal year ended December 31,
1999. If you "abstain" from voting, it has the same
effect as if you voted "against" this proposal.
Broker non-votes will have no effect on the votes.
IS VOTING CONFIDENTIAL?
Yes. Proxy Cards, ballots and voting tabulations that identify individual
Stockholders are confidential. Only the inspectors of election and certain Seal
employees associated with processing Proxy Cards and counting the votes have
access to your card. Additionally, all comments directed to Seal management
(whether written on the Proxy Card or elsewhere) remain confidential, unless you
ask that your name be disclosed.
WHO PAYS THE COST OF SOLICITING THE PROXIES?
The Company will pay the cost of this Proxy solicitation, which includes
preparing, assembling and mailing the Notice of Annual Meeting, the Proxy
Statement and the Proxy Card. In addition to soliciting proxies by mail, we
expect that a number of our employees will solicit Stockholders for the same
type of Proxy, personally and by telephone. None of these employees will receive
any additional or special compensation for doing this. We will, upon request,
reimburse brokers, banks and other nominees for their expenses in sending Proxy
material to their principals and obtaining their proxies.
HOW DOES A STOCKHOLDER OBTAIN A COPY OF THE ANNUAL REPORT?
A COPY OF OUR ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1998 IS ENCLOSED
ALONG WITH THIS PROXY STATEMENT.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows, as of April 23, 1999, the Common Stock owned
beneficially by (i) each Director of the Company, (ii) each Executive Officer,
(iii) all Directors and Executive Officers as a group, and (iv) each person
known by the Company to be the "beneficial owner" of more than five percent (5%)
of such Common Stock. "Beneficial ownership" is a technical term broadly defined
by the Securities and Exchange Commission to mean more than ownership in the
usual sense. For example, you "beneficially" own Common Stock not only if you
hold it directly, but also if you indirectly (through a relationship, a position
as a Director or trustee, or a contract or understanding), have (or share the
power to vote the stock, or sell it) the right to acquire it within 60 days.
Except as disclosed in the footnotes below, each person has sole voting and
investment power over his or her shares. As of April 23, 1999, there were
11,616,894 shares of Class A Common Stock issued and outstanding and 1,557
holders of record, and 25,000 shares of Class B Common Stock issued and
outstanding and one holder of record. In addition, there are 2,000,000 shares of
Series A Preferred Stock that are convertible into 20,000,000 shares of Class A
Common Stock at such time as the Company's stockholders approve an amendment
(the "Capital Amendment") to the Company's Certificate of Incorporation to
increase the number of authorized shares of Class A Common Stock and such
amendment is filed with and accepted by the Delaware Secretary of State. See
Proposal No. 2 of this Proxy Statement.
<TABLE>
<CAPTION>
Shares Percentage
Beneficially Beneficially
Name (1) Current Title Owned Owned
<S> <C> <C> <C>
M. Lee Pearce, M.D.(2) Class B Director, Chairman of the 30,168,419 95.5%
Board of Directors
Robert G. Tancredi, M.D. Class B Director, Chief Executive -- --
Officer
John J. Rydzewski(3) Class B Director 150,000 1.3%
Rudy J. Noriega (4) (4) (4)
Cecilio M. Rodriguez Treasurer and Secretary -- --
Thomas M. Ferguson(5) Class A Director 1,072,675 8.7%
All Directors and Executive 31,391,094 96.9%
Officers as a Group (6 Persons)
</TABLE>
- -------------
*Less than 1%.
(1) The address for each of the persons and entities listed above is 5601 N.
Dixie Highway, Suite 411, Fort Lauderdale, Florida 33334.
(2) The shares beneficially owned by Dr. Pearce (i) include 10,168,419 shares of
Class A Common Stock, (ii) include 25,000 shares of Class B Common Stock,
which are owned by Lauderdale Holdings, Inc., a Florida corporation, of
which Dr. Pearce is the sole shareholder, and (iii) assume the conversion of
2,000,000 shares of Series A Preferred Stock into 20,000,000 shares of Class
A Common Stock. Such Series A Preferred Stock automatically converts into
shares of Class A Common Stock at such time as the Company's stockholders
approve the Capital Amendment to increase the number of authorized shares of
Class A Common Stock to 99,975,000 shares and such amendment is filed with
and accepted by the Delaware Secretary of State. See Shareholder Proposal
No. 2. Each share of Series A Preferred Stock is entitled to ten votes for
each one share held. Once converted, each share of Class A Common Stock is
entitled to one vote for each one share held.
(3) Includes 100,000 shares of Class A Common Stock owned by Benedetto, Gartland
& Company, Inc., a New York corporation, of which Mr. Rydzewski is a
director and shareholder. The calculation of Mr. Rydzewski's beneficial
ownership percentage does not take into account the shares of Class A Common
Stock issuable to Dr. Pearce upon conversion of the Series A Preferred Stock
nor the exercise of outstanding options held by third parties, including the
options held by Mr. Ferguson.
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(4) Mr. Noriega is the President of certain of the Company's operating
subsidiaries. Mr. Noriega has certain arrangements with affiliates of Dr.
Pearce where he has certain rights to a small minority participation
interest in Dr. Pearce's investment in the Company.
(5) Includes (i) options to purchase up to 800,000 shares of Class A Common
Stock, all of which are fully vested and exercisable and (ii) 157,675 shares
held by First Magnum Corporation. As sole stockholder of First Magnum
Corporation, Mr. Ferguson has voting and investment power over First Magnum
Corporation's shares of Common Stock of the Company. The calculation of Mr.
Ferguson's beneficial ownership percentage does not take into account the
shares of Class A Common Stock issuable to Dr. Pearce upon conversion of the
Series A Preferred Stock nor the exercise of outstanding options held by
third parties.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors has selected the following persons as nominees for
election to the Board of Directors. Holders of Class A Common Stock may withhold
authority from the proxyholders to vote for the Class A nominees. The officers
and directors of LHI, the holder of all of the outstanding shares of Class B
Common Stock and the only stockholder to vote for the slate of Class B
Directors, has indicated that LHI intends to vote "FOR" electing the slate of
Class B Directors. Although management has no reason to believe that the
nominees will be unable or unwilling to serve, if any nominee withdraws or
otherwise becomes unavailable to serve, the proxyholders will vote for any
substitute nominee designated by the Board of Directors. Certain information
concerning the nominees is provided below.
NOMINEES FOR CLASS A DIRECTORS
Name Age Current Position Since
Thomas M. Ferguson 59 Class A Director April 2, 1999(1)
John J. Rydzewski 46 Class A Director April 2, 1999
(1) Mr. Ferguson served as a Class B Director from August 1996 to April 2, 1999.
Thomas M. Ferguson has been a Director of the Company since August 1996 and was
the Company's Chairman from February 7, 1997 to April 2, 1999, and President and
Chief Executive Officer from August 14, 1996 to April 2, 1999. Since 1992, he
has been a director, Chairman and President of First Stanford Corporation, a
private advisory company engaged in providing services principally with respect
to maritime transactions and the development of strategic business and financial
plans for national and international companies. Mr. Ferguson serves as a
director of Camber Companies, LLC. Mr. Ferguson is the sole stockholder of First
Magnum Corporation, and its sole director and officer. Mr. Ferguson received a
B.A. degree from Florida State University.
John J. Rydzewski has served as a Class B Director of the Company since April
1999. Since 1993, Mr. Rydzewski has been an investment banker specializing in
health care finance and has been a principal of Benedetto, Gartland & Company,
Inc., an investment banking firm. Mr. Rydzewski was previously a Vice President
in the Health Care Finance Group of Kidder, Peabody & Co. and a manager at Price
Waterhouse & Co. Mr. Rydzewski previously served as Chairman of the Board of ARV
Assisted Living, Inc. (Nasdaq: ARVI) and as a director of United Medical and
Maxim Healthcare Corporations. Mr. Rydzewski received a Master of Business
Administration Degree and a Bachelor of Science Degree from The Wharton School
of the University of Pennsylvania.
NOMINEES FOR CLASS B DIRECTORS
Name Age Current Position Since
M. Lee Pearce, M.D. 68 Chairman of the Board April 5, 1999
Class B Director April 5, 1999
Robert G. Tancredi, M.D. 61 Chief Executive Officer April 15, 1999
Class B Director April 2, 1999
M. Lee Pearce, M.D. has served as a Class B Director and Chairman of the Board
of Directors and a principal stockholder of the Company since April 1999. Dr.
Pearce has over 40 years of experience in the health care industry. For the
majority of his health care career, he has been the Chairman and Chief Executive
Officer of health care services companies which he founded. From February 1993
to January 1997, Dr. Pearce served as a director of OrNda Health Corporation
("OrNda") (NYSE:ORN), the third largest investor-owned hospital management
system in the United States which operated 48 acute care medical-surgical
hospitals, ambulatory surgical centers, and numerous outpatient and specialty
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clinics. From 1989 to February 1997, he served as a director of IVAX Corporation
(AMEX:IVX), a manufacturer of pharmaceuticals, personal care products and
diagnostic devices. In 1991, entities in which Dr. Pearce was a substantial
owner included Golden Glades Regional Medical Center in Miami which was later
restructured and sold. From 1987 through 1989, Dr. Pearce was at first a
significant shareholder (1987) and then a Director (1988) of American Medical
International, Inc. (NYSE: AMI). Between 1969 and 1985, he was the Chairman and
Chief Executive Officer of American Hospital Management Corp., a healthcare
management and consulting company. Dr. Pearce is a member of the Board of
Fellows of the Harvard Medical School and serves as a pro-bono consultant to the
Mayo Foundation and the Mayo Medical Ventures. He also serves on the Board of
Trustees of the University of Miami where he is also a member of the George E.
Merrick Society. In addition to Dr. Pearce's medical degrees, he also received a
J.D. degree from the University of Miami and is a member of the Florida Bar and
the American Bar Association.
Robert G. Tancredi, M.D. has served as a Class B Director and Chief Executive
Officer of the Company since April 1999. Dr. Tancredi has also served as the
Chief Executive Officer and as a Manager of OH, Inc., a wholly owned subsidiary
of the Company since April 1999. From 1985 to 1992, Dr. Tancredi was the Vice
Chairman of the Board of Governors of the Mayo Clinic, Rochester, Minnesota.
From 1985 to 1996, Dr. Tancredi was a member of the Board of Trustees of the
Mayo Foundation. From 1987 until 1992, Dr. Tancredi was a member of the American
College of Cardiology. From December 1991 until his retirement as of December
31, 1996, Dr. Tancredi was Chairman of the Board of Governors of the Mayo
Clinic, Scottsdale, Arizona. From October 1997 until April 2, 1999, Dr. Tancredi
provided consulting services to certain affiliates of the Company and of Dr.
Pearce.
All Class A Directors are elected by holders of the Class A Common Stock and all
Class B Directors are elected by holders of the Class B Common Stock at the
annual meeting of the stockholders of the Company and hold office following
election or until their successors are elected and qualified. The bylaws permit
the Board of Directors to fill any vacancy and such Director may serve until the
next annual meeting. The Officers of the Company are appointed by and serve at
the discretion of the Company's Board of Directors.
To the best knowledge of the Company, other than as stated above, no Director of
the Company is a Director of any other company with a class of securities
registered under Section 12 of the Securities Exchange Act of 1934 or subject to
the requirements of Section 15(d) of that Act or any company registered under
the Investment Company Act of 1940.
Meetings and Committees of the Board of Directors
The Company's Board of Directors held six meetings during the fiscal year ended
December 31, 1998. At December 31, 1998, the Company had a Compensation
Committee consisting of Donald L. Caldera and J. Erik Hvide. During fiscal year
1998, the Compensation Committee held no meetings. The Compensation Committee
reviews existing and proposed compensation plans, programs and arrangements both
for officers of the Company and for certain non-officer employees. The Committee
also grants stock options and awards restricted stock to key employees,
including officers and members of the Board, in accordance with the terms of the
Company's stock option plans. The full Board of Directors, and not the
Committee, is authorized to grant or award compensation, options or restricted
stock to any officer or employee who is also a Director and a member of the
Compensation Committee. On April 2, 1999, Mr. Caldera and Mr. Hvide resigned as
Directors and as members of the Compensation Committee, in connection with the
Agreement and Plan of Exchange between the Company and OHI, now a wholly-owned
Florida subsidiary of the Company. See Shareholder Proposal No. 2 for a summary
of the Agreement and Plan of Exchange.
Due to the close working relationship among the members of the Company's Board
of Directors, the Company disbanded its Executive Committee and Audit Committee
in August 1996. In conjunction with the Agreement and Plan of Exchange, on April
15, 1999, the Board of Directors reorganized an Audit Committee and appointed
John J. Rydzewski and Thomas M. Ferguson, each of whom are outside Directors, as
members of both Company's Compensation Committee and Audit Committee. The Audit
Committee will review the scope of the accountants' engagement, including the
remuneration to be paid, and will review the independence of the accountants.
The Audit Committee, with the assistance of the Company's Treasurer, Chief
Financial Officer and other appropriate personnel, will review the Company's
annual financial statements and the independent auditor's report, including
significant reporting and operational issues; corporate policies and procedures
as they relate to accounting and
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financial reporting and financial controls; litigation in which the Company is a
party; and use by the Company's Executive Officers of expense accounts and other
non-monetary perquisites, if any. The Audit Committee may direct the Company's
legal counsel, independent auditors and internal audit staff to inquire into and
report to it on any matter having to do with the Company's accounting or
financial procedures or reporting.
No Director attended fewer than 75% of the meetings of the Board of Directors or
of any committee on which such Director served during the fiscal year ended
December 31, 1998.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" ELECTING THE SLATE OF TWO
CLASS A DIRECTORS AND TWO CLASS B DIRECTORS TO SERVE UNTIL THE 2000 ANNUAL
MEETING OF SHAREHOLDERS OR UNTIL THEIR RESPECTIVE SUCCESSORS ARE ELECTED
AND QUALIFIED
EXECUTIVE OFFICERS
The following table sets forth the names, ages and positions held with respect
to each Executive Officer of the Company as of April 23, 1999. Certain
biographical information concerning the Company's Executive Officers is
presented under "Election of Directors."
Name Age Current Position Since
Robert G. Tancredi, M.D. 61 Chief Executive Officer, April 15, 1999
Class B Director April 2, 1999
Rudy J. Noriega 62 (1) (1)
Cecilio M. Rodriguez 39 Treasurer, April 2, 1999
Secretary April 2, 1999
(1) Mr. Noriega is the President of certain of the Company's operating
subsidiaries since January 1998.
Rudy J. Noriega has served as an executive officer of a number of the Company's
subsidiaries since January 1998. Mr. Noriega has been a health care executive
for the last 35 years. Since 1991, he has served as the President and Chief
Executive Officer of Health Care Resource Consultants, Inc. ("HRCI"), a health
care management consulting firm. HRCI also served as a consultant to
Comprehensive Outpatient Centers of Florida, Inc., a Delaware corporation
("COCF") until July 1998. Mr. Noriega has also served as the President and a
Director of several other affiliates of the Company and Dr. Pearce, including
VAE, Inc., a construction company, and Oakridge Medical Group Realty, Inc.,
which owns a physician medical office building. From March 1993 to September
1995, Mr. Noriega was employed by OrNda as a Senior Vice President of OrNda of
South Florida, Inc. From 1991 to 1993, he was the Chief Executive Officer of
Golden Glades Regional Medical Center. Mr. Noriega is currently a fellow of the
American College of Healthcare Executives.
Cecilio M. Rodriguez, CPA has served as the Secretary and Treasurer of the
Company since April 1999. Mr. Rodriguez has served as an executive officer of a
number of the Company's subsidiaries since January 1998. From October 1996 to
January 1998, Mr. Rodriguez served as Senior Vice President and Chief Financial
Officer of First Financial Acceptance, Inc., a consumer finance company. From
April 1991 until its sale in October 1996, Mr. Rodriguez was a Senior Vice
President and Chief Financial Officer of Bank of North America. Bank of North
America was controlled by Dr. Pearce. Mr. Rodriguez has been licensed in Florida
as a Certified Public Accountant since 1982.
There are no family relationships between any of the Company's Executive
Officers and Directors. All Class A Directors are elected by holders of the
Class A Common Stock and all Class B Directors are elected by holders of the
Class B Common Stock at the Annual Meeting of the Stockholders of the Company
and hold office following election or until their successors are elected and
qualified. The bylaws permit the Board of Directors to fill any vacancy and such
9
<PAGE>
Director may serve until the next annual meeting. The officers of the Company
are appointed by and serve at the discretion of the Company's Board of
Directors.
EXECUTIVE COMPENSATION
The following table provides information as to the compensation paid by the
Company and its subsidiaries, for the three fiscal years ended December 31,
1998, to its Chief Executive Officer. No other executive officer's remuneration
(i.e.
annual salary and bonus) exceeded $100,000.
Cash Compensation
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
Other Annual
Name and Bonus Compen- Securities Underlying
Principal Position Year Salary($) ($) sation ($)(1) Options/SARs (#)
<S> <C> <C> <C> <C> <C>
Thomas M. Ferguson(2) 1998 26,529 -0- 3,171 445,000
Chairman, President and 1997 64,000 -0- 3,171 355,000
Chief Executive Officer 1996 18,138 -0- -0- -0-
</TABLE>
(1) Except for stock options issued pursuant to the Company's 1996, 1997 and
1998 Stock Option Plans, the Company has not provided any long-term
compensation plan, stock appreciation rights, defined benefit or actuarial
plan, employment contract or termination of employment or change in control
agreements with any executive officer. "Other Annual Compensation" includes
the value of life insurance in excess of regulation amounts provided by the
Company.
(2) Mr. Ferguson was appointed as President and CEO of the Company on August 14,
1996 and resigned as President and CEO effective April 2, 1999, when the
Company acquired 100% of OHI, in exchange for 91% of the outstanding voting
capital of the Company pursuant to an Agreement and Plan of Exchange. Mr.
Ferguson continues to serve as a Director of the Company.
Option Grants During Fiscal Year 1998
The following table shows all grants during the fiscal year ended December 31,
1998 of stock options to the Chief Executive Officer.
<TABLE>
<CAPTION>
% of Total
Options
Number of Granted to Market
Shares Employees Exercise or Price on
Underlying in Fiscal Date of Base Price Date of Expiration
Name Options(# ) Year(1) Grant ($/Share) Grant Date
<S> <C> <C> <C> <C> <C> <C>
Thomas M. Ferguson 225,000(2) 49% July 13, 1998 $1.75 $1.38 July 13, 2003
220,000(3) July 13, 1998 $1.75 $1.38 July 13, 2003
</TABLE>
(1) Represents all options granted during fiscal year 1998 to employees,
officers, Directors and one outside consultant.
(2) Issued pursuant to the Seal Fleet, Inc. Incentive Option Plan ("1997 Plan").
(3) Issued pursuant to the Seal Holdings Corporation 1998 Incentive Option Plan
("1998 Plan").
10
<PAGE>
Employment Contracts
As of December 31, 1998, the Company had no written employment agreements with
Thomas M. Ferguson, the Company's former Chief Executive Officer, President, and
Chairman.
The Company intends to enter into a definitive employment agreement (the
"Trancredi Employment Agreement") in the near future with Robert G. Tancredi,
M.D., the Company's Chief Executive Officer. Dr. Tancredi will be paid $300,000
per year, which shall be increased each April 1st, commencing in 2000 based upon
Dr. Tancredi's and the Company's performance results and the Company's annual
executive performance and salary reviews. Dr. Tancredi will also be entitled to
guaranteed minimum bonuses as follows: (i) $270,000 on April 15, 2000, (ii)
$180,000 on April 15, 2001 and (iii) $90,000 on April 15, 2002 (each,
respectively, a "Minimum Bonus"). With respect to each calendar year from and
after January 1, 2001, the Board shall award Dr. Tancredi an additional bonus,
as determined in the discretion of the Board, based upon the Company achieving
certain operational and financial requirements. Dr. Tancredi will also be
entitled to reimbursement for reasonable expenses incurred by him in connection
with his and his family's relocation to Florida. Dr. Tancredi will also be
eligible to receive stock option awards as part of the Company's annual review
of executive salaries and performance and to participate in any other stock
option plan instituted by the Company. Dr. Tancredi is subject to certain
restrictive covenants during the term of his employment with the Company and for
a period of one year thereafter unless Dr. Tancredi's employment terminates for
certain specified reasons, including following a Change of Control (as defined
in the Tancredi Employment Agreement).
Option Exercises and Year End Option Values
The following table shows the aggregate number of unexercised options granted
with respect to the Class A Common Stock of the Company under the 1996 Plan, the
1997 Plan, and the 1998 Plan to the Chief Executive Officer.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying In-the-Money Options
Acquired on Value Options/at FY End(#) at FY-End ($)
Name Exercise (#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Thomas M. Ferguson -0- -0- 800,000/-0- $900,000/-0-
</TABLE>
The Company's Stock Option Plans.
Currently, the Company has three stock options in plans: (i) the Seal Holdings
Corporation 1998 Incentive Option Plan adopted in 1998 ("1998 Plan"), (ii) the
Seal Fleet, Inc. Incentive Option Plan adopted in 1997 ("1997 Plan"), and (iii)
the Seal Fleet, Inc. Long-Term Incentive Plan adopted August 14, 1996, as
amended March 21, 1997 ("1996 Plan"). All options under the 1998 Plan, the 1997
Plan and the 1996 Plan have been granted. The Company is also proposing to adopt
the Seal Holdings Corporation Long Term Incentive Plan, at its 1999 Annual
Meeting of Stockholders. See Proposal No. 3 for a description of the 1999 Plan.
The 1998 Plan
Number of Shares Subject to the 1998 Plan. The 1998 Plan reserves for
issuance up to 500,000 shares of the Company's Class A Common Stock pursuant to
the exercise of options granted under such plan. The number of shares is subject
to adjustment for any future stock dividends, splits, mergers, combinations, or
other changes in capitalization as described in the 1998 Plan. The market value
of the Company's Class A Common Stock as reported on the National Daily
Quotation Service ("Pink Sheets") as of April 9, 1998, was $0.69 per share.
In order to comply with the requirements for deductibility under
Section 162(m) of the Internal Revenue Code ("Code"), the maximum number of
shares which may be granted to an individual under the 1998 Plan during the full
ten-year term of the 1998 Plan is 250,000 shares.
Administration and Duration of the 1998 Plan. Authority to administer
the 1998 Plan and to grant awards rests with the Board of Directors, although
the Board may delegate its authority to grant awards to a Committee of the
Board. The 1998 Plan will terminate on March 27, 2008, but the Board retains the
right to suspend, terminate or amend the plan at any time. On termination of the
plan, outstanding awards remain in effect until they expire by their terms, are
forfeited or otherwise terminate.
Eligibility for Participation. Options may be granted under the 1998
Plan to executive Officers, key employees, consultants and Directors of the
Company and any subsidiary of the Company. Management estimates that as of
December 31, 1998, as many as two of its present employees are currently
eligible to receive awards under the 1998 Plan. However, depending upon numerous
factors, awards may be granted to a significantly larger or to a smaller number
of employees. Management is not able to estimate the number of consultants that
may be eligible for the grant of options.
11
<PAGE>
Terms of Options. Options granted to employees may be either incentive
stock options ("ISOs") which satisfy the requirements of Code Section 422 or
nonstatutory options ("NSOs") which are not intended to satisfy such
requirements. Options granted to Outside Directors and consultants may only be
NSOs. The option exercise price of ISOs may not be less than the fair market
value of the Company's Class A Common Stock on the date of grant of the ISO. The
option exercise price of NSOs is within the discretion of the Board. Payment of
the exercise price may be made in cash, by certified check, promissory note, or
other shares of the Company's Class A Common Stock. The term of an ISO may not
exceed ten years. The term of an NSO may not exceed the period determined by the
Board in the grant of the option. Options may be made exercisable under such
conditions as the Board or its delegate may establish, such as if the optionee
remains employed until a specified date, or if specified performance goals have
been met. If an optionee's employment terminates because of misconduct, such
option terminates immediately. If an optionee's employment terminates for any
reason other than misconduct, the option remains exercisable for a fixed period
of three months (twelve months where employment has terminated because of death
or disability) or a longer period to be fixed by the Board or its delegate up to
the remainder of the option's term. In no case may an option be exercised after
the expiration of the option term. An option may be exercised by the optionee or
his guardian or legal representative.
Federal Tax Consequences--Nonstatutory Options. No taxable income is
recognized by an optionee upon the grant of an NSO. The optionee generally will
recognize ordinary income in the year in which the option is exercised equal to
the excess of the fair market value of the purchased shares at the date of
exercise price, and the optionee will be required to satisfy the tax withholding
requirements applicable to such income which the optionee may elect to satisfy
by having the Company withhold shares from the shares otherwise due or by
delivering a sufficient number of previously owned shares of the Company's Class
A Common Stock to the Company. On ultimate sale of the shares, the optionee will
generally recognize as capital gain or loss the difference between the fair
market value on the date of exercise and the ultimate sales price.
Federal Tax Consequences--Incentive Stock Options. No taxable income is
recognized by the optionee at the time of the grant of an ISO and, except in
determining alternative minimum tax, no taxable income is recognized at the time
the ISO is exercised. The optionee will, however, recognize taxable income or
loss in the year in which the purchased shares are sold or otherwise made the
subject of disposition.
For federal tax purposes, dispositions of ISOs are divided into two
categories: qualifying and non-qualifying. The optionee will make a qualifying
disposition of the purchased shares if the sale or other taxable disposition of
such shares is made more than two years after the grant date of the option and
more than one year after the exercise date. If the optionee fails to satisfy
either of these two holding periods prior to the sale or other disposition of
the purchased shares, then a non-qualifying disposition will result. Upon a
qualifying disposition of the shares, the optionee generally will recognize
long-term capital gain in an amount equal to the excess of (i) the amount
realized upon the sale or other disposition over (ii) the option price paid for
the shares. If there is a non-qualifying disposition of the shares, then the
excess of (i) the fair market value of the shares at the date of exercise (or,
if lower, the fair market value of the shares on the date of disposition) over
(ii) the option price paid therefor will be taxable as ordinary income. Any
additional gain recognized upon the disposition will be a capital gain, and such
gain will be long-term if the shares have been held for more than one year
following exercise of the option.
Alternative Minimum Tax. The difference between the fair market value
of shares subject to an ISO on the date of exercise and the exercise price of
such shares is an adjustment to income for purposes of the alternative minimum
tax (the "AMT"). The AMT (imposed to the extend it exceeds the taxpayer's
regular tax) is 26% of an individual taxpayer's alternative minimum taxable
income (28% in the case of alternative minimum taxable income in excess of
$175,000). Alternative minimum taxable income is determined by adjusting regular
taxable income for certain items, increasing that income by certain tax
preference items (including the difference between the fair market value of the
shares subject to the ISO on the date of exercise and the exercise price) and
reducing this amount by the applicable exemption amount ($45,000 in case of a
joint return, subject to reduction under certain circumstances). If a
disqualifying disposition of the shares subject to an ISO occurs in the same
calendar year as exercise of the ISO, there is no AMT adjustment with respect to
those shares. Also, upon a sale of such shares that is a qualifying disposition,
alternative minimum taxable income is reduced in the year of sale by the excess
of the fair market value of the shares subject to the ISO at exercise over the
amount paid for such shares.
12
<PAGE>
Deduction to the Company. The Company will be entitled to an income tax
deduction equal to the amount of ordinary income recognized by the optionee in
connection with the exercise of an NSO. The deduction generally will be allowed
for the taxable year of the Company in which occurs the last day of the calendar
year in which the optionee recognizes ordinary income in connection with such
exercise. If the optionee makes a disqualifying disposition of the shares
purchased on exercise of an ISO, then the Company will be entitled to an income
tax deduction for the taxable year in which such disposition occurs, equal to
the amount which is taxable to the employee as ordinary income. In no other
instance will the Company be allowed a deduction with respect to the optionee's
disposition of the shares purchased upon exercise of an ISO.
Under Section 162(m) of the Code, the Company is not entitled to a
deduction for certain executive compensation in excess of $1,000,000. This
limitation applies to compensation paid to the Company's Chief Executive Officer
and to each of its next four most highly compensated executive Officers. Amounts
treated as compensation pursuant to the exercise of stock options are subject to
the deduction limit, unless the option exercise price is at least equal to the
fair market value of the underlying stock on the date of grant or is made
subject to objective performance criteria. In addition, the grant of options
must be made by a committee of at least two "outside Directors" as defined under
Code Section 162(m).
As of December 31, 1998, there were 500,000 options granted pursuant to the 1998
Plan outstanding.
1997 Plan
The 1997 Plan is substantially similar to the 1998 Plan, with the
following differences:
Number of Shares Subject to the 1997 Plan. The 1997 Plan reserves for
issuance up to 1,200,000 shares of the Company's Class A Common Stock pursuant
to the exercise of options granted under such plan. The market value of the
Company's Class Stock as reported on the Pink Sheets as of February 2, 1997 was
$0.50 per share.
In order to comply with the requirements for deductibility under
Section 162(m) of the Code, the maximum number of shares which may be granted to
an individual under the 1998 Plan during the full ten-year term of the 1997 Plan
is 600,000 shares.
Administration and Duration of the 1997 Plan. The 1997 Plan will
terminate on March 27, 2007, but the Board retains the right to suspend,
terminate or amend the plan at any time. On termination of the plan, outstanding
awards remain in effect until they expire by their terms, are forfeited or
otherwise terminate.
As of December 31, 1998, there were 1,200,000 options granted pursuant to the
1997 Plan outstanding.
1996 Plan
The 1996 Plan is substantially similar to the 1996 Plan, with the
following differences:
Number of Shares Subject to the 1996 Plan. The 1996 Plan reserves for
issuance up to 600,000 shares of the Company's Class A Common Stock pursuant to
the exercise of options granted under such plan. The market value of the
Company's Class A Common Stock as reported on the Pink Sheets, calculated based
upon the average closing bid price of the Common Stock of Seal Fleet, Inc. for
the five trading days immediately preceding August 14, 1996, was $0.50 per
share.
The 1996 Plan has no maximum number of shares that may be granted to an
individual in order to comply with the requirements for deductibility under
Section 162(m) of the Code.
Administration and Duration of the 1996 Plan. The 1996 Plan will
terminate on April 14, 2006, but the Board retains the right to suspend,
terminate or amend the plan at any time. On termination of the plan, outstanding
awards remain in effect until they expire by their terms, are forfeited or
otherwise terminate.
Terms of Options. Options granted to employees shall be exercisable for
common stock. The 1996 Plan does not distinguish between ISOs and NQSOs. Any
restricted shares awarded and later forfeited are again subject to award under
13
<PAGE>
the 1996 Plan. The option price for an option shall be the fair market value of
the common stock underlying the option on the date of grant. Except in special
circumstances, each option shall expire on the 10th anniversary of the date of
its grant. If an optionee ceases, other than by reason of death or retirement,
to be employed or associated with the Company, 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. 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.
Change of Control. 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.
As of December 31, 1998, there were 80,000 options granted pursuant to the 1996
outstanding. Subsequently, during the first quarter of 1999, 60,000 of these
remaining options were exercised.
1999 Long-Term Incentive Plan
The Company is seeking stockholder approval at the Annual Meeting for
the 1999 Plan, which is described in Proposal No. 3.
Compensation of Directors
As of December 31, 1998, the Directors are compensated at the rate of $500 for
regular meetings and $250 for each special meeting which they attend, and are
also reimbursed for expenses. During fiscal 1998, the following options were
granted to Directors of the Company (certain of whom no longer serve in that
capacity and will not stand for re-election. The initial terms of these option
grants are summarized below:
<TABLE>
<CAPTION>
Fair Market Date
Number Grant Value at Date of of Initial Expiration
Director of Shares Price Grant Grant Date(2)
-------- ---------- ----- ---------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Thomas M. Ferguson 225,000(1) $1.75 $1.38 July 13, 1998 July 13, 2003
220,000(2) $1.75 $1.38 July 13, 1998 July 13, 2003
Donald L. Caldera 100,000(2) $1.75 $1.38 July 13, 1998 July 13, 2008
J. Erik Hvide 50,000(2) $1.75 $1.38 July 13, 1998 July 13, 2008
</TABLE>
(1) Issued pursuant to the 1997 Plan.
(2) Issued pursuant to the 1998 Plan.
14
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following describes certain transactions or relationships between the
Company and its officers, directors and certain related parties in which any of
them had or is to have a direct or indirect material interest. Except as
otherwise specifically set forth herein, for purposes of this section "Certain
Relationships and Related Transactions," the term "Company" also includes each
of the Company's subsidiaries.
Except as otherwise stated below, all transactions between and among the Company
and its subsidiaries described below, its executive officers and the
subsidiaries and each of their respective affiliates have been entered into
without the benefit of arm's length bargaining and may involve conflicts of
interest. The Company believes that transactions with affiliates have been made
on terms no less favorable to the Company than those available from unaffiliated
parties. In addition, the structure and proposed method of operations of the
Company may create certain inherent conflicts between the Company and its
affiliates.
Association of Directors and Officers
All of the Company's directors and officers who performed such functions prior
to the closing of the transactions contemplated by the Agreement and Plan of
Exchange dated December 21, 1998 between Seal Holdings Corporation and OHI were
associated with other firms or occupations involving other business activities.
Because of these affiliations and because these individuals devoted only part
time to the affairs of the Company, there were potential inherent conflicts of
interest in their acting as directors and officers of the Company and of other
entities. All of the Company's directors and officers who served as directors or
controlling stockholders of other entities were engaged in a variety of
businesses which may have had various transactions with the Company.
Agreement with First Stanford Corporation
Effective April 2, 1999, the Company entered into a consulting agreement ("FSC
Agreement") with First Stanford Corporation ("First Stanford"), whose sole
stockholder, officer and director is Thomas M. Ferguson, a Class A Director of
the Company (as of April 2, 1999) and the former Chief Executive Officer,
President and Class B Director of the Company (to April 2, 1999). Under the
terms of the FSC Agreement, First Stanford will provide advisory services with
respect to strategic and financial planning, marketing programs, corporate
organization and structure and other general corporate matters. The FSC
Agreement commenced on April 2, 1999 and will continue for a one year period. In
connection with the performance of its services, First Stanford will receive
$15,000 per month (for a total of $180,000 during the term of the FSC
Agreement). The terms and conditions of the FSC Agreement were with the benefit
of arm's length negotiations.
M. Lee Pearce, M.D.
M. Lee Pearce M.D., the Company's Chairman of the Board and its majority
stockholder, directly or indirectly, owns a number of entities with which the
Company, through its wholly-owned subsidiaries, does or will do business. In
particular, Dr. Pearce (i) is the beneficial owner of North Ridge Va., Ltd.
("VAL"), the entity which owns the building where a comprehensive
state-of-the-art medical facility called the "Oakridge Comprehensive Outpatient
Center" (the "Center") is located in Fort Lauderdale, Florida and is operated
and leased by subsidiaries of the Company, (ii) is the beneficial owner of a
substantial majority of North Ridge Medical Plaza, Ltd. ("NRMP"), which owns the
building where the Company leases certain office suites for physician and
executive offices, as well as will lease space for a cardiac catheterization
laboratory ("Cath Lab") that will be operated by one of the Company's
subsidiaries, and (iii) is the beneficial owner of Oakridge Medical Group
Realty, Inc. ("Realty"), a Florida corporation that is controlled by an
affiliate of the Company, which owns two buildings that house the offices of
certain physician employees of a subsidiary of the Company.
Rudy J. Noriega
Mr. Noriega has certain arrangements with affiliates of the Company pursuant to
which Mr. Noriega has certain rights to invest for a small minority position in
certain affiliates, including VAL and NRMP. VAL owns the building in which the
Center is located and NRMP owns the building where the Company leases certain
office suites for physician and executive offices and will lease space to the
Cath Lab.
15
<PAGE>
Agreements Among Subsidiaries
A number of the Company's subsidiaries have or will enter into agreements
between and/or among one another to perform certain management and other
services.
Lease Agreements between the Subsidiaries and Certain Affiliates of Dr. Pearce
The Company intends to enter into certain lease agreements between certain
operating subsidiaries of the Company, as lessees, and certain affiliates of Dr.
Pearce, as lessor. Currently, the Company intends to enter into a definitive
lease agreement with VAL, the owner of the Center. It is anticipated that the
lease will be a triple-net lease, however, the specific terms of the lease are
in the process of being negotiated. It is anticipated that the annual rental
under such lease will be based on fair market rates and that the balance of the
material terms will be no less favorable than could be obtained by the Company
from unaffiliated parties in an arm's length transaction.
The Company also expects to enter into a written lease agreement with NRMP for
the Cath Lab to consist of approximately 5,700 square feet. While the agreement
has not been fully negotiated or executed, the Company expects to do so within
the near future. It is anticipated that the annual rental under such lease will
be based on fair market rates and that the balance of the material terms will be
no less favorable than could be obtained by the Company from unaffiliated
parties in an arm's length transaction.
Lease of Administrative and Physician Offices
Through one or more of its subsidiaries, the Company currently leases four
suites from NRMP. These suites are used for administrative and physician
offices. The office suites each lease for approximately $18 per square foot and
are on a month-to-month basis, which is consistent with the amount paid by and
terms of arrangements between NRMP and non-affiliated tenants. The Company has
not yet entered into a definitive written agreement with NRMP but intends to do
so in the near future. It is anticipated that the annual rental under such lease
will be based on fair market rates and that the balance of the material terms
will be no less favorable than could be obtained by the Company from
unaffiliated parties in an arm's length transaction.
Through its subsidiaries, the Company also leases approximately 16,000 square
feet at $18 per square foot, on a month to month basis for this space from
Realty. These rates were established by an independent appraisal firm. The
Company has not yet entered into a definitive written agreement with Realty.
Credit Support of Certain Company Obligations
The Company has entered into lease and loan agreements relating to computer
hardware and software, office equipment and medical equipment used or to be used
by the Company's subsidiaries. The total amount of the lease and loan
obligations is approximately $9.0 million. In connection with these lease and
loan obligations, Dr. Pearce has provided credit support for the issuance of
letters of credit in favor of the lessors and creditors. The amounts of the
letters of credit have been 20% of the value of the leased equipment or the
loan, as applicable, for a total of approximately $1.8 million. The Company
expects that in the near future, through its subsidiaries, the Company will
replace an approximately $200,000 letter of credit that is currently supported
by Dr. Pearce with a letter of credit supported by the Company's own collateral
and/or guarantees.
Guarantees of other Contractual Obligations
Certain affiliates of Dr. Pearce have provided limited guarantees of certain
contractual obligations of the Company, including, among other items, agreements
with certain employees entered into before any significant capitalization of the
Company.
16
<PAGE>
PROPOSAL NO. 2
TO RATIFY AND APPROVE AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF (A) COMMON STOCK FROM 15,000,000 TO
100,000,000 AND (B) PREFERRED STOCK FROM THREE MILLION TO TWENTY-FIVE MILLION
Background
On April 15, 1999, the Board of Directors unanimously adopted a resolution
setting forth proposed amendments (the "Amendments") to the Company's
Certificate of Incorporation ("Certificate")
1. authorizing an amendment to Paragraph IV.A. of the Certificate to increase
the total authorized shares from 18 million shares to 125,000,000 million
shares, of which
o 99,975,000 shares shall be designated as Class A Common Stock (increased
from 14,975,000 shares of Class A Common Stock),
o 25,000 shall continue to be designated as Class B Common Stock, and
o 25,000,000 shares shall be designated as Preferred Stock (increased from
three million shares of Preferred Stock); and
2. directing that the Amendments be submitted to the Stockholders for their
review, adoption and approval at the Company's 1999 Annual Meeting of
Stockholders.
As of the Record Date, there were
o 14,975,000 million shares of Class A Common Stock authorized, of which
11,616,894 shares of Class A Common Stock were issued and outstanding,
o 25,000 shares of Class B Common Stock authorized, of which 25,000 shares of
Class B Common Stock were issued and outstanding, and
o 3,000,000 shares of Preferred Stock authorized, of which 2,000,000 Shares
were designated Series A Preferred Stock, of which 2,000,000 shares were
issued and outstanding.
The Class A Common Stock and Class B Common Stock
The Class A Common Stock and Class B Common Stock are substantially identical,
except that holders of the Class B Common Stock are entitled to nominate and
elect a simple majority of all of the Directors of the Company and the holders
of the Class A Common Stock are entitled to nominate and elect the remaining
Directors.
The Series A Preferred Stock
The Series A Preferred Stock is automatically convertible into Class A Common
Stock at such time as this Proposal No. 2 is approved, based upon a conversion
rate ("Conversion Rate") of ten shares for each one share of Series A Preferred
Stock held (subject to adjustments in the event of stock splits, subdivisions,
and stock dividends payable in common stock). Until such time as the Series A
Preferred Stock is converted, holders of the Series A Preferred Stock are
entitled to ten (10) votes for each one share of Series A Preferred Stock held.
Commencing June 30, 1999, dividends will accrue at $.90 per share per annum on
each September 30, December 31, March 31 and June 30 and will be payable
quarterly in arrears, and the first payment being due on November 15, 1999. In
the event of any liquidation, dissolution or winding up of the Company, the
holders of the Series A Preferred Stock are entitled to receive, prior and in
preference to any distribution of any of the assets to the holders of the Class
A Common Stock or Class B Common Stock, an amount equal to (i) $1.00 per share
multiplied by the then applicable Conversion Rate, plus (ii) an amount equal to
all accrued dividends.
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The Agreement and Plan of Exchange
On December 21, 1998, the Company entered into an Agreement and Plan of Exchange
(the "Exchange Agreement") with OHI, a company then controlled by Dr. M. Lee
Pearce ("Pearce"). The transactions contemplated by the Exchange Agreement were
completed on April 2, 1999. In exchange for 10,318,419 shares of Class A Common
Stock and 2,000,000 shares of Series A Preferred Stock, which are convertible
into an additional 20,000,000 shares of Class A Stock (for a total of 30,318,419
shares of Class A Common Stock), the Company received all of the issued and
outstanding shares of OHI, with OHI becoming a wholly-owned subsidiary of the
Company. At April 2, 1999, the shares of the Company Stock issued to Pearce
represented approximately 91% of the total combined issued and outstanding
shares of Class A Common Stock (taking into consideration Class A Common Stock
issuable upon the exercise of all outstanding options, and giving effect to the
conversion of the 2,000,000 shares of Series A Preferred Stock into 20,000,000
shares of Class A Common Stock).
In a related transaction that also closed on April 2, 1999, Lauderdale Holdings,
Inc., a Florida corporation also controlled by Pearce ("LHI"), purchased all of
the shares of the Class B Common Stock owned by First Magnum Corporation. Such
shares represented all of the Company's issued and outstanding shares of Class B
Stock.
Reasons for Increasing the Number of Authorized Shares
Of the 14,975,000 shares of Class A Common Stock currently authorized for
issuance under the Certificate, as of the Record Date there were 11,616,894
shares of Class A Common Stock issued and outstanding. As a result, the Company
currently does not have a sufficient number of shares of Class A Common Stock
into which the Series A Preferred Stock may automatically be converted. In order
to effectuate the automatic conversion of the Series A Preferred Stock into
Class A Common Stock prior to such time when dividends will commence accruing to
the holders of the Series A Preferred Stock, the Board of Directors has
submitted this Proposal to the Stockholders for approval.
The Amendment will also authorize an increase in the number of authorized shares
of Preferred Stock from three million shares to 25,000,000 shares, on terms
which may be fixed by the Board of Directors without further Stockholder action.
As of the Record Date, two million shares have been designated as Series A
Preferred Stock, all of which are issued and outstanding. The terms of any new
series of Preferred Stock, which may include priority claims to assets and
dividends and voting rights, could adversely affect the rights of holders of the
Common Stock. However, the Company has no present plans to issue shares of
Preferred Stock.
Increasing the number of authorized shares of Class A Common Stock will obviate
the need for the Company to pay dividends to the holders of the Series A
Preferred Stock. Increasing the number of authorized shares of Class A Common
Stock and Preferred Stock will also allow the Company's Board of Directors to
have the flexibility to act promptly to meet future business needs as such needs
arise. Sufficient shares should be readily available for general corporate
purposes, including for maintaining the Company's financial and capital raising
flexibility, in the event of stock splits or stock dividends, for acquisitions
and mergers, in connection with employee benefit plans and for other proper
business purposes.
Furthermore, by having additional shares readily available, the Board of
Directors will be able to act expeditiously without spending the time and
incurring the expense of soliciting proxies and holding additional special
Stockholders' meetings. The Board however, may issue additional shares of Common
Stock and Preferred Stock without action on the part of the Stockholders only if
the action is permissible under Delaware Law, and the rules of the exchange on
which the Class A Common Stock may be listed. Moreover, the additional
authorized shares of Class A Common Stock and Preferred Stock may be used to
discourage persons from attempting to gain control of the Company by diluting
the voting power of shares then outstanding or increasing the voting power of
persons who would support the Board of Directors in opposing a takeover bid or a
solicitation in opposition to management. These shares may also be used by the
Board of Directors in a public or a private sale, merger or similar transaction
by increasing the number of outstanding shares and thereby diluting the equity
interest and voting power of a party attempting to obtain control of the
Company. The Company is not currently aware of any effort to obtain control of
the Company and has no plans to use the new shares for purposes of discouraging
any such effort. Similarly, the Company has no present plans, agreements,
commitments or understandings to issue or use these proposed additional shares
of Common Stock or Preferred Stock in connection with any acquisitions,
financing transactions, or other corporate transactions, however, it make do so
in the foreseeable future.
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Effect of the Increase in Authorized Shares
Each of the additional authorized shares of Class A Common Stock will have the
same rights and privileges as the currently authorized Class A Common Stock. The
additional authorized Preferred Stock may be issued by resolutions of a majority
of the Board of Directors of the Company in one or more series with such
designations, powers, preferences and relative, participating, option and other
rights, including without limitation, dividend rights, conversion rights, voting
rights, redemption terms and liquidation preferences and such qualifications and
limitations as the Board of Directors shall determine. Assuming the Amendment is
approved, no further Stockholder approval is required for the issuance of
authorized Common Stock or Preferred Stock.
If Proposal No. 2 is approved, Paragraph A. to Section IV. of the Certificate
will read as follows:
A. This Corporation is authorized to issue three classes of stock to be
designated, respectively, "Class A Common Stock," "Class B Common
Stock," and "Preferred Stock." The total number of shares which the
Corporation is authorized to issue is one hundred twenty-five million
(125,000,000) shares. Ninety nine million, nine hundred seventy-five
thousand (99,975,000) shares shall be Class A Common Stock, which shall
have a par value of twenty cents ($.20) per share, twenty-five thousand
(25,000) shares will be Class B Common Stock, which shall have a par
value of twenty cents ($.20) per share, and twenty-five million
(25,000,000) shares shall be Preferred Stock, which shall have a par
value of one-tenth of one cent ($.001) per share.
If Stockholder approval is obtained, the Amendment in substantially the form
attached hereto as Exhibit "A" becomes effective once it is filed with Secretary
of State of the State of Delaware, which is expected to occur as soon as
possible after the Stockholders approve the Amendment.
THE BOARD OF DIRECTORS RECOMMEND THAT YOU VOTE "FOR" APPROVING AN AMENDMENT
TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF (A) CLASS A COMMON STOCK FROM 15,000,000 TO 99,975,000 AND
(B) PREFERRED STOCK FROM THREE MILLION TO 25,000,000.
PROPOSAL NO. 3
TO APPROVE THE COMPANY'S 1999 LONG-TERM INCENTIVE PLAN
The Stockholders of the Company are asked to approve the adoption of the
Company's 1999 Long-Term Incentive Plan (the "Plan"). The Board approved the
establishment of the Plan at a meeting of the Board on April 15, 1999, subject
to approval of the Stockholders. The affirmative vote of the holders of at least
a majority of the outstanding shares of Common Stock and Series A Preferred
Stock, voting together as a single class, present and entitled to vote at the
annual meeting is required to approve the adoption of the Plan. The Board
recommends that the stockholders vote their shares for the proposal to approve
the adoption of the Plan.
The following is a brief summary of the principal provisions of the Plan. This
summary does not purport to be complete and is qualified in its entirety by
reference to the text of this Plan set forth as Exhibit "B" hereto.
Summary of the Plan.
Purpose. The purpose of the Plan is to enhance the profitability and
value of the Company and its affiliates for the benefit of their stockholders by
enabling the Company (i) to offer stock-based incentives to employees of, and
consultants to, the Company and its affiliates thereby creating a means to raise
the level of stock ownership by such individuals in order to attract, retain and
reward such individuals and strengthen the mutuality of interests between such
individuals and stockholders and (ii) to grant nondiscretionary, nonqualified
stock options to Non-Employee Directors thereby attracting, retaining and
rewarding such Non-Employee Directors and strengthening the mutuality of
interests between Non-Employee Directors and stockholders.
Administration. The Plan is administered by a committee or subcommittee
of the Board (the "Committee") that is appointed from time to time by the Board
and which is intended to consist of two or more non-employee directors, each of
whom will be, to the extent required by Rule 16b-3 under the Exchange Act ("Rule
16b-3) and Section 162(m) of the
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Code, a non-employee director as defined in Rule 16b-3 and an outside director
as defined under Section 162(m) of the Code (the "Committee"). If for any reason
the appointed Committee does not meet the requirements of Rule 16b-3 of the
Exchange Act or Section 162(m) of the Code, the validity of the awards, grants,
interpretation or other actions of the Committee will not be affected.
The Committee will have the full authority to administer and interpret
the Plan (except that with respect to awards to non-employee directors, the Plan
will be administered by the Board), to grant discretionary awards under the
Plan, to determine the persons to whom discretionary awards will be granted, to
determine the types of discretionary awards to be granted, to determine the
terms and conditions of each discretionary award, to determine the number of
shares of Common Stock to be covered by each discretionary award, to prescribe
the form or forms of instruments evidencing awards and to make all other
determinations in connection with the Plan and the awards thereunder as the
Committee (or the Board, in the case of non-employee directors' awards), in its
sole discretion, deems necessary or desirable.
The terms and conditions of individual awards will be set forth in
written agreements which will be consistent with the terms of the Plan. Awards
under the Plan may not be made on or after the tenth anniversary of the earlier
of the adoption of the Plan or the date of stockholder approval, but awards
granted prior to such date may extend beyond that date.
Eligibility. All employees of, and consultants to, the Company and its
affiliates (including prospective employees and consultants) are eligible to be
granted nonqualified stock options, stock appreciation rights and other
performance-based awards. In addition, employees of the Company and employees of
the Company's affiliates that qualify as subsidiaries or parent corporations
(within the meaning of Section 424 of the Code) are eligible to be granted
incentive stock options ("ISOs") under the Plan. Non-Employee Directors (as
defined in the Plan) of the Company are eligible to receive nondiscretionary
grants of nonqualified stock options.
Types of Awards Under the Plan.
Options. The Company has reserved 3,000,000 shares under the Plan.
Employees and Consultants. Options may be in the form of ISOs or non-qualified
stock options. The Committee will, with regard to each option, determine the
number of shares subject to the option, the term of the option (which shall not
exceed ten years, provided, however, that the term of an ISO granted to a 10%
stockholder of the Company shall not exceed five years), the exercise price per
share of stock subject to the option, the vesting schedule (if any), and the
other material terms of the option. No ISO may have an exercise price less
than the Fair Market Value (as defined in the Plan) of the Common Stock at the
time of grant (or, in the case of an ISO granted to a 10% stockholder of the
Company, 110% of the Fair Market Value of the Common Stock). The Committee has
the authority to issue nonqualified stock options to employees and consultants
with an exercise price of less than Fair Market Value.
Non-Employee Director Option Grants. The Plan provides that on or
before the initial date upon which options are granted to Non-Employee Directors
(as defined in the Plan), the Board or the Committee (as defined in the Plan)
shall adopt the terms of a formula plan for such Directors whereby each
Non-Employee Director will be granted options to purchase shares of Common Stock
as of the date the Non-Employee Director begins service as a Non-Employee
Director on the Board (or with respect to Non-Employee Directors then on the
Board at the time of adoption of the formula plan terms, the date of such
adoption). In addition, the Non-Employee Directors shall receive options to
purchase a designated number of shares of Common Stock as of the first day of
the month following the annual meeting of stockholders of the Company, provided
he or she has not experienced a Termination of Directorship (as defined in the
Plan). The option price per share for such Non-Employee Directors shall be
determined by the Board at the time of grant but shall not be less than 100% of
the Fair Market Value of the shares of Common Stock. The term of the options and
the vesting requirements shall be as determined by the Board or the Committee at
the time of adoption of the terms of the formula plan. All options granted to
Non-Employee Directors and not previously exercisable will become fully
exercisable immediately upon a Change in Control (as defined in the Plan). Such
options may be exercised in whole or part at any time and from time to time
during the option term.
Stock Appreciation Rights ("SARs"). The Committee may grant SARs either
with an option ("Tandem SARs") or independent of an option ("Non-Tandem SARs").
An SAR is a right to receive a payment either in cash or Common Stock as the
Committee may determine, equal in value to the excess of the fair market value
of a share of Common Stock on the date of exercise over the reference price per
share of Common Stock established in connection with the grant of the
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SAR. The reference price per share covered by an SAR will be the per share
exercise price of the related option in the case of a Tandem SAR and will be the
per share fair market value of common stock on the date of the grant in the case
of a Non-Tandem SAR. The Committee may also grant "limited SARs," either as
Tandem SARs or Non-Tandem SARs, which may become exercisable only upon the
occurrence of a Change in Control (as defined in the Plan) or such other event
as the Committee may, in its sole discretion, designate at the time of grant or
thereafter.
Performance-Based Awards. The Committee may award Common Stock and
other awards that are valued in whole or in part by reference to, or are payable
in or otherwise based on, Common Stock either alone or in addition to or in
tandem with options or SARs. Such awards shall be subject to such terms and
conditions as the Committee may prescribe.
Amendment and Termination. The Plan provides that it may be amended, in
whole or in part, suspended or terminated by the Board, except that no such
amendment, suspension or termination, without stockholder approval to the extent
such approval is required by applicable state law, the applicable provisions of
Rule 16b-3 of the Exchange Act or for the exception for performance-based
compensation under Section 162(m) of the Code or to the extent applicable to
ISOs, Section 422 of the Code, may increase the aggregate number of shares of
Common Stock reserved for awards or the maximum individual limits, change the
classification of employees eligible to receive awards, decrease the minimum
exercise price of any option, extend the maximum option period under the Plan or
to make any other amendment that would require stockholder approval under the
Code, Rule 16b-3 of the Exchange Act or the rules of any exchange or system on
which the Company's securities are listed or traded.
Share and Other Limitations. The maximum number of shares of Common
Stock that may be issued under the Plan is 3,000,000. In addition, in any fiscal
year of the Company, a participant may be granted options for up to 3,000,000
shares of Common Stock (subject to the aggregate limitation under the Plan). The
same limits apply to the grant of SARs. As described in the next paragraph,
these limitations are subject to adjustment by the Committee. If an SAR or a
limited SAR is granted in tandem with a option, it shall apply against the
individual limits for both options and SARs, but only once against the maximum
number of shares available under the Plan. To the extent that shares of Common
Stock for which options or SARs are permitted to be granted to a recipient
during a calendar year are not covered by a grant of an option or an SAR during
the calendar year, such shares of Common Stock shall be available for grant or
issuance to the recipient in any subsequent calendar year during the term of
this Plan.
The Committee may make appropriate adjustments to the number of shares
available for awards and the terms of outstanding awards under the Plan to
reflect any change in the Company's capital structure or business, stock
dividend, stock split, recapitalization, reorganization, merger, consolidation
or sale of all or substantially all the assets of the Company.
Change in Control. Unless determined otherwise by the Committee at the
time of grant of an award to an employee or consultant, upon a Change in Control
(as defined in the Plan differently for employees and consultants and
Non-Employee Directors), all vesting and forfeiture conditions, restrictions and
limitations in effect with respect to any outstanding award will immediately
lapse and any unvested awards will automatically become 100% vested.
Miscellaneous. Although awards will generally be nontransferable
(except by will or the laws of descent and distribution), the Committee may
determine at the time of grant or thereafter that a non-qualified stock option
(other than those granted to Non-Employee Directors) that is otherwise
nontransferable is transferable in whole or in part and in such circumstances,
and under such conditions, as specified by the Committee.
Material Federal Income Tax Consequences Relating to the Plan
The rules concerning the federal income tax consequences with respect
to options granted and to be granted pursuant to the Plan are quite technical.
Moreover, the applicable statutory provisions are subject to change, possibly
with retroactive effect, as are their interpretations and applications which may
vary in individual circumstances. The following summary is designed to provide a
general understanding of the material federal income tax consequences relating
to the Plan:
ISOs. In general, an employee will not realize taxable income upon
either the grant or the exercise of an ISO and the Company will not realize an
income tax deduction at either time. If the recipient does not sell the common
stock received pursuant to the exercise of an ISO within either (1) two years
after the date of the grant of the ISO or (2) one year after the
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<PAGE>
date of exercise, a subsequent sale of the common stock will result in long-term
capital gain or loss to the recipient and will not result in a tax deduction to
the Company. Capital gains rates may be reduced in the case of a longer holding
period.
If the recipient disposes the common stock acquired upon exercise of
the ISO within either of the above-mentioned time periods, the recipient will
generally realize as ordinary income an amount equal to the lesser of: (1) the
fair market value of the common stock on the date of exercise over the exercise
price, or (2) the amount realized upon disposition over the exercise price.
In this event, the Company generally will be entitled to an income tax
deduction equal to the amount recognized as ordinary income. Any gain in excess
of the amount realized by the recipient as ordinary income will be taxed at the
rates applicable to short-term or long-term capital gains, depending on the
holding period.
Nonqualified Stock Options. A recipient will not realize any taxable
income upon the grant of a nonqualified stock option and the Company will not
receive a deduction at the time of grant unless the option has a readily
ascertainable fair market value at the time of grant. Upon the exercise of a
nonqualified stock option, the recipient generally will realize ordinary income
in an amount equal to the excess of the fair market value of the common stock on
the date of exercise over the exercise price. Upon a subsequent sale of the such
common stock by the recipient, the recipient will recognize short-term or
long-term capital gain or loss depending upon his or her holding period for the
common stock. The Company will generally be allowed a deduction equal to the
amount recognized by the recipient as ordinary income. Any officers and
directors of the Company subject to Section 16(b) of the Exchange Act may also
be subject to special tax rules regarding the income tax consequences concerning
their nonqualified stock options,
All Options. With regard to both ISOs and nonqualified stock options,
in the event that the exercisability or vesting of any award is accelerated
because of a change of control, payments relating to the awards (or a portion
thereof), either alone or together with certain other payments, may constitute
parachute payments under Section 280G of the Code, which excess amounts may be
subject to excise taxes.
In addition, any entitlement to a tax deduction on the part of the
Company is subject to the applicable tax rules (including, without limitation,
Section 162(m) of the Internal Revenue Code regarding a $1,000,000 limitation on
deductible compensation). In general, Section 162(m) of the Internal Revenue
Code denies a publicly held corporation a deduction for federal income tax
purposes for compensation in excess of $1,000,000 per year per person to its
chief executive officer and the four other officers whose compensation is
disclosed in its proxy statement, subject to certain exceptions. Options will
generally qualify under one of these exceptions if: (1) they are granted under a
plan that states the maximum number of shares with respect to which options may
be granted to any recipient during a specified period, (2) the exercise price is
no less than fair market value at the time of the grant, (3) the plan under
which the options are granted is approved by stockholders, and (4) the plan is
administered by a compensation committee comprised of outside directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE "FOR" APPROVING THE COMPANY'S 1999 LONG-TERM INCENTIVE PLAN
PROPOSAL NO. 4
RATIFYING THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP to serve as the Company's
independent accountants for the fiscal year ending December 31, 1999. In the
event the appointment of Ernst & Young LLP for 1999 is ratified, it is expected
that Ernst & Young LLP will also audit the books and accounts of the Company's
subsidiaries at the close of their current fiscal years. A representative of
Ernst & Young LLP will be present at the Annual Meeting and will have the
opportunity to make a statement, if such person desires to do so, and to respond
to appropriate questions.
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The proposal to ratify the appointment of Ernst & Young LLP will be approved by
the Stockholders if it receives the affirmative vote of a majority of the votes
cast by the holders of Class A Common Stock, Class B Common Stock and Series A
Preferred Stock, voting together as a single class. If a proxy card is
specifically marked as abstaining from voting on the proposal, the shares
represented thereby will not be counted as having been voted for or against the
proposal. Unless otherwise instructed, the persons named on the proxy card
intend to vote shares as to which a proxy is received in favor of the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
RATIFYING THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT ACCOUNTANTS.
OTHER BUSINESS
The Company knows of no other business to be brought at the Annual Meeting. If,
however, any other business should be properly brought up before the Annual
Meeting, those persons named in the accompanying Proxy will vote proxies as in
their discretion they may deem appropriate, unless you direct them to do
otherwise in your Proxy.
OTHER MATTERS
Stockholder Proposals
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended,
Stockholders may present proper proposals for inclusion in the Company's proxy
statement and for consideration at the next Annual Meeting of Stockholders by
submitting such proposals to the Company in a timely manner. In order to be so
included for the 2000 Annual Meeting, Stockholder proposal must be received by
the Company no later than December 12, 1999 and must otherwise comply with the
requirements of Rule 14a-8.
If notice of a Stockholder's proposal has not been submitted for inclusion in
the Company's proxy statement and is not received by the Company on or before
April 21, 2000 or such date which is 45 days before the date this proxy is
mailed, the persons named in the enclosed form of proxy will have discretionary
authority to vote with respect thereto in accordance with their best judgment.
If notice of the proposal is not timely served, the person in the form proxy may
not exercise their discretionary authority as to the proxy.
The cost of solicitation of proxies for use at the Annual Meeting will be borne
by the Company. Solicitations will be made primarily by mail or by facsimile,
but regular employees of the Company may solicit proxies personally or by
telephone.
Other Information
The Company's Annual Report on Form 10-KSB for fiscal year 1998 [filed before
the date of the Annual Meeting is incorporated herein by reference/is included
herein along with this Proxy Statement.] All subsequent Quarterly Reports on
Form 10-QSB filed before the date of the Annual Meeting are incorporated by
reference in this Proxy Statement. The Company will provide to any Stockholder,
upon written request and without charge, a copy (without exhibits) of all
information incorporated by reference in this Proxy Statement. Requests should
be addressed to Seal Holdings Corporation, Investor Relations, 5601 North Dixie
Highway, Suite 411, Fort Lauderdale, Florida 33334 (954) 771-5402.
By Order of The Board of Directors
/s/ M. Lee Pearce, M.D.
------------------------------------
M. Lee Pearce, M.D.
Chairman of the Board
23
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EXHIBIT "A"
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
SEAL HOLDINGS CORPORATION
SEAL HOLDINGS CORPORATION, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by unanimous
written consent, adopted the following resolution:
RESOLVED, that the Certificate of Incorporation of the corporation be
amended by changing Paragraph A of Section IV so that, as amended, said
Paragraph A of this Section shall be and read as follows:
"IV.
A. This Corporation is authorized to issue three classes of stock to
be designated, respectively, "Class A Common Stock", "Class B
Common Stock", and "Preferred Stock". The total number of shares
which the Corporation is authorized to issue is one hundred
twenty-five million (125,000,000) shares. Ninety-nine million nine
hundred seventy-five thousand (99,975,000) shares shall be Class A
Common Stock, which shall have a par value of twenty cents ($.20)
per share, twenty-five thousand (25,000) shares shall be Class B
Common Stock, which shall have a par value of twenty cents ($.20)
per share, and twenty-five million (25,000,000) shares shall be
Preferred Stock, which shall have a par value of one-tenth of one
cent ($.001) per share."
SECOND: That the said amendment has been consented to and authorized by
the holders of all of the issued and outstanding stock entitled to vote by a
written consent given in accordance with the provisions of Section 228 of the
General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 228 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by its __________________ this ___ day of _________, 1999.
Seal Holdings Corporation
By:
--------------------------------
<PAGE>
EXHIBIT "B"
<PAGE>
SEAL HOLDINGS CORPORATION
1999 LONG-TERM INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1. PURPOSE..........................................................1
ARTICLE 2. DEFINITIONS......................................................1
ARTICLE 3. ADMINISTRATION...................................................6
ARTICLE 4. SHARE AND OTHER LIMITATIONS......................................9
ARTICLE 5. ELIGIBILITY.....................................................11
ARTICLE 6. STOCK OPTIONS...................................................12
ARTICLE 7. STOCK APPRECIATION RIGHTS.......................................14
ARTICLE 8. PERFORMANCE-BASED AWARDS........................................16
ARTICLE 9. NON-TRANSFERABILITY AND TERMINATION PROVISIONS..................17
ARTICLE 10. NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS.......................19
ARTICLE 11. CHANGE IN CONTROL PROVISIONS....................................23
ARTICLE 12. TERMINATION OR AMENDMENT OF THE PLAN............................24
ARTICLE 13. UNFUNDED STATUS OF PLAN.........................................25
ARTICLE 14. GENERAL PROVISIONS..............................................25
ARTICLE 15. APPROVAL OF BOARD AND STOCKHOLDERS..............................28
ARTICLE 16. TERM OF PLAN....................................................28
ARTICLE 17. NAME OF PLAN....................................................28
<PAGE>
Seal Holdings Corporation
1999 Long-Term Incentive Plan
ARTICLE 1.
PURPOSE
The purpose of this Seal Holdings Corporation 1999 Long-Term Incentive
Plan (the "Plan") is to enhance the profitability and value of the Company and
its Affiliates for the benefit of its stockholders by enabling the Company to
(i) offer employees of and Consultants to the Company and its Affiliates, stock
based incentives and other equity interests in the Company, thereby creating a
means to raise the level of stock ownership by employees and Consultants in
order to attract, retain and reward such individuals and strengthen the
mutuality of interests between such individuals and the Company's stockholders,
and (ii) to make equity based awards to Non-Employee Directors, thereby creating
a means to attract, retain and reward such Non-Employee Directors and strengthen
the mutuality of interests between Non-Employee Directors and the Company's
stockholders.
ARTICLE 2.
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
2.1. "Acquisition Event" has the meaning set forth in Section
4.2(d).
2.2. "Affiliate" shall mean other than the Company, (i) any
Subsidiary, (ii) any Parent, (iii) any corporation in an unbroken chain
of corporations ending with the Company which owns stock possessing 50%
or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain, (iv) any corporation,
trade or business (including, without limitation, a partnership or
limited liability company) which is controlled 50% or more (whether by
ownership of stock, assets or an equivalent ownership interest or
voting interest) by the Company or one of its Affiliates, or (v) any
other entity, approved by the Committee as an Affiliate under the Plan,
in which the Company or any of its Affiliates has a material equity
interest.
2.3. "Award" shall mean any award under this Plan of any Stock
Option, Stock Appreciation Right, or Performance-Based Award. All
Awards, shall be granted by, confirmed by, and subject to the terms of,
a written agreement executed by the Company and the Participant.
2.4. "Board" or "Board of Directors" shall mean the Board of
Directors of the Company.
<PAGE>
2.5. "Cause" shall mean, with respect to a Participant's
Termination of Employment or Termination of Consultancy: (i) in the
case where there is no employment agreement, consulting agreement,
change in control agreement or similar agreement in effect between the
Company or an Affiliate and the Participant at the time of the relevant
grant or Award, or where there is an employment agreement, consulting
agreement, change in control agreement or similar agreement in effect
at the time of the relevant grant or Award but such agreement does not
define "cause" (or words of like import), termination due to a
Participant's dishonesty, fraud, insubordination, willful misconduct,
refusal to perform services (for any reason other than illness or
incapacity) or materially unsatisfactory performance of his or her
duties for the Company or an Affiliate or (ii) in the case where there
is an employment agreement, consulting agreement, change in control
agreement or similar agreement in effect between the Company or an
Affiliate and the Participant at the time of the relevant grant or
Award that defines "cause" (or words of like import) and a "cause"
termination would be permitted under such agreement at that time,
termination that is or would be deemed to be for "cause" (or words of
like import) as defined under such agreement; provided, that with
regard to any agreement that conditions "cause" on occurrence of a
change in control, such definition of "cause" shall not apply until a
change in control actually takes place and then only with regard to a
termination thereafter. With respect to a Participant's Termination of
Directorship, "Cause" shall mean an act or failure to act that
constitutes "cause" for the removal of a director under applicable
Delaware law.
2.6. "Change in Control" shall have the meaning set forth in
Article 9 or Article 11, as applicable.
2.7. "Code" shall mean the Internal Revenue Code of 1986, as
amended. Any reference to any section of the Code shall also be a
reference to any successor provision.
2.8. "Committee" shall mean the Compensation Committee of the
Board or such other committee or subcommittee appointed from time to
time by the Board, which shall be intended to consist of two (2) or
more non-employee directors, each of whom shall be, to the extent
required by Rule 16b-3 (as defined herein), a "non-employee director"
as defined in Rule 16b-3 and, to the extent required by Section 162(m)
of the Code and any regulations thereunder, an "outside director" as
defined under Section 162(m) of the Code. Notwithstanding the
foregoing, if and to the extent that no Committee exists which has the
authority to administer the Plan, the functions of the Committee shall
be exercised by the Board. If for any reason the appointed Committee
does not meet the requirements of Rule 16b-3 or Section 162(m) of the
Code, such noncompliance with the requirements of Rule 16b-3 or Section
162(m) of the Code shall not affect the validity of the Awards, grants,
interpretations or other actions of the Committee.
2.9. "Common Stock" means the Company's Class A common stock,
$.20 par value per share, of the Company.
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2.10. "Company" means Seal Holdings Corporation, a Delaware
corporation, and its successors by merger, consolidation or otherwise.
2.11. "Consultant" means any advisor or consultant to the
Company or its Affiliates as defined in the instructions to Form S-8
under the Securities Act.
2.12. "Disability" shall mean, with respect to an Eligible
Employee, a permanent and total disability as defined in Section
22(e)(3) of the Code. A Disability shall only be deemed to occur at the
time of the determination by the Committee or the Board, as the case
may be, of the Disability.
2.13. "Effective Date" shall mean June 17, 1999, subject to
Article 15.
2.14. "Eligible Employees" shall mean the employees of the
Company and its Affiliates who are eligible pursuant to Article 5 to be
granted Awards under this Plan.
2.15. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended. Any references to any section of the Exchange Act
shall also be a reference to any successor provision.
2.16. "Fair Market Value" shall mean, for purposes of this
Plan, unless otherwise required by any applicable provision of the Code
or any regulations issued thereunder, as of any date, the last sales
price for the Common Stock on the applicable date: (i) as reported on
the principal national securities exchange on which it is then traded
or the Nasdaq Stock Market, Inc. or (ii) if not traded on any such
national securities exchange or the Nasdaq Stock Market, Inc. as quoted
on an automated quotation system sponsored by the National Association
of Securities Dealers. If the Common Stock is not readily tradable on a
national securities exchange, the Nasdaq Stock Market, Inc. or any
automated quotation system sponsored by the National Association of
Securities Dealers, Inc., its Fair Market Value shall be set in good
faith by the Committee. Notwithstanding the foregoing, the Committee
may, in its sole discretion, establish the "Fair Market Value" in good
faith based on reasonable methods set forth under Section 422 of the
Code and the regulations thereunder including, without limitation, a
method utilizing the average of prices of the Common Stock reported on
the principal national securities exchange the Nasdaq Stock Market,
Inc., or any automated quotation system sponsored by the National
Association of Securities Dealers, Inc. on which it is then traded
during a reasonable period designated by the Committee. For purposes of
the grant of any Stock Option, the applicable date shall be the date
for which the last sales price is available at the time of grant. For
purposes of the exercise of any Stock Appreciation Right, the
applicable date shall be the date a notice of exercise is received by
the Committee or, if not a day on which the applicable market is open,
the next day that it is open.
2.17. "Incentive Stock Option" shall mean any Stock Option
awarded under this Plan intended to be and designated as an "Incentive
Stock Option" within the meaning of Section 422 of the Code.
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2.18. "Limited Stock Appreciation Right" shall mean an Award
made pursuant to Section 7.5 of the Plan which may be a Tandem Stock
Appreciation Right or a Non-Tandem Stock Appreciation Right.
2.19. "Non-Employee Director" a director of the Company who is
not an active employee of the Company or an Affiliate and who is not an
officer, director or employee of (i) any entity which, directly or
indirectly, beneficially owns or controls 5% or more of the combined
voting power of the then outstanding voting securities of the Company
or any Subsidiary or Parent entitled to vote generally in the election
of directors of the Company or, if applicable, the Subsidiary or Parent
or (ii) any entity controlling, controlled by or under common control
(within the meaning of Rule 405 of the Securities Act) with any such
entity.
2.20. "Non-Qualified Stock Option" shall mean any Stock Option
awarded under this Plan that is not an Incentive Stock Option.
2.21. "Non-Tandem Stock Appreciation Right" means a Stock
Appreciation Right entitling a Participant to receive an amount in cash
or Common Stock (as determined by the Committee in its sole discretion)
equal to the excess of: (i) the Fair Market Value of a share of Common
Stock as of the date such right is exercised, over (ii) the aggregate
exercise price of such right.
2.22. "Parent" means any parent corporation of the Company
within the meaning of Section 424(e) of the Code.
2.23. "Participant" means any Eligible Employee or Consultant
to whom an Award has been made under this Plan and each Non-Employee
Director of the Company; provided, however, that a Non-Employee
Director shall be a Participant for purposes of the Plan solely with
respect to awards of Stock Options pursuant to Article XIII.
2.24. "Performance-Based Award" shall mean an Award made
pursuant to Article 8 of this Plan of the right to receive awards of
Common Stock and other Awards that are valued in whole or in part by
reference to, or are payable in or otherwise based on, Common Stock.
2.25. "Performance Period" shall have the meaning set forth in
Section 8.1.
2.26. "Plan" means this Seal Holdings Corporation 1999
Long-Term Incentive Plan, as amended from time to time.
2.27. "Retirement" means a Termination of Employment or
Termination of Consultancy without Cause by a Participant at or after
age 65 or such earlier date after age 50 as may be approved by the
Committee with regard to such Participant. With respect to a
Participant's Termination of Directorship, Retirement shall mean the
failure to stand for reelection or the failure to be reelected at or
after a Participant has attained age 65 or, with the consent of the
Board, before age 65 but after age 50.
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2.28. "Rule 16b-3" shall mean Rule 16b-3 under Section 16(b)
of the Exchange Act as then in effect or any successor provisions.
2.29. "Securities Act" means the Securities Act of 1933, as
amended. Any reference to any section of the Securities Act shall also
be a reference to any successor provision.
2.30. "Stock Appreciation Right" shall mean the right pursuant
to an Award granted under Article 7.
2.31. "Stock Option" or "Option" shall mean any option to
purchase shares of Common Stock granted to Eligible Employees or
Consultants under Article 6 or to Non-Employee Directors under Article
10.
2.32. "Subsidiary" shall mean any subsidiary corporation of
the Company within the meaning of Section 424(f) of the Code.
2.33. "Tandem Stock Appreciation Right" shall mean the right
to surrender to the Company all (or a portion) of a Stock Option in
exchange for an amount in cash or Common Stock (as determined by the
Committee in its sole discretion) equal to the excess of (i) the Fair
Market Value, on the date such Stock Option (or such portion thereof)
is surrendered, of the Common Stock covered by such Stock Option (or
such portion thereof), over (ii) the aggregate exercise price of such
Stock Option (or such portion thereof).
2.34. "Ten Percent Stockholder" shall mean a person owning
stock of the Company possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or
its Subsidiaries or Parent.
2.35. "Termination of Consultancy" means, with respect to a
Consultant, that the Consultant is no longer acting as a consultant to
the Company or an Affiliate. In the event an entity shall cease to be
an Affiliate, there shall be deemed a Termination of Consultancy of any
individual who is not otherwise a Consultant to the Company or another
Affiliate at the time the entity ceases to be an Affiliate.
2.36. "Termination of Directorship" means, with respect to a
Non-Employee Director, that the Non-Employee Director has ceased to be
a member of the Board. A Non-Employee Director shall not be deemed to
have incurred a Termination of Directorship solely because he or she no
longer qualifies as a Non-Employee Director while remaining a member of
the Board but will no longer be entitled to further grants under the
Plan in the capacity of a Non-Employee Director.
2.37. "Termination of Employment" shall mean (i) a termination
of service (for reasons other than a military or personal leave of
absence granted by the Company) of a Participant from the Company and
its Affiliates or (ii) when an entity which is employing
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a Participant ceases to be an Affiliate, unless the Participant
thereupon becomes employed by the Company or another Affiliate.
2.38. "Transfer" or "Transferred" or "Transferable" shall mean
anticipate, alienate, attach, sell, assign, pledge, encumber, charge,
hypothecate or otherwise transfer.
ARTICLE 3.
ADMINISTRATION
3.1. The Committee. The Plan shall be administered and
interpreted by the Committee. If for any reason the appointed Committee does not
meet the requirements of Rule 16b- 3 or Section 162(m) of the Code, such
noncompliance with the requirements of Rule 16b-3 and Section 162(m) of the Code
shall not affect the validity of Awards, grants, interpretations or other
actions of the Committee.
3.2. Awards. The Committee shall have full authority to grant
to Eligible Employees and Consultants, pursuant to the terms of this Plan: (i)
Stock Options, (ii) Stock Appreciation Rights, (iii) Tandem Stock Appreciation
Rights and Non-Tandem Stock Appreciation Rights, and (iv) Performance-Based
Awards. All Awards shall be granted by, confirmed by and subject to the terms of
a written agreement executed by the Company and the Participant. In particular,
the Committee shall have the authority:
(a) to select the Eligible Employees and Consultants
to whom Awards may from time to time be granted hereunder;
(b) to determine whether and to what extent Awards or
any combination thereof, are to be granted hereunder to one or more
Eligible Employees or Consultants;
(c) to determine, in accordance with the terms of
this Plan, the number of shares of Common Stock to be covered by each
Award granted hereunder;
(d) to determine the terms and conditions, not
inconsistent with the terms of this Plan, of any Award granted
hereunder (including, but not limited to, the exercise or purchase
price, any restriction or limitation, any vesting schedule or
acceleration thereof, or any forfeiture restrictions or waiver thereof,
regarding any Stock Option or other Award, and the shares of Common
Stock relating thereto, based on such factors, if any, as the Committee
shall determine, in its sole discretion);
(e) to determine whether and under what circumstances
a Stock Option may be settled in cash and/or Common Stock under Section
6.3(d) or, with respect to Stock Options granted to Non-Employee
Directors, Section 10.4(d);
(f) to determine whether, to what extent and under
what circumstances to provide loans (which may be on a recourse basis
and shall bear interest at the rate the
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Committee shall provide) to Eligible Employees and Consultants in order
to exercise Stock Options under this Plan;
(g) to determine whether a Stock Option is an
Incentive Stock Option or Non-Qualified Stock Option, whether a Stock
Appreciation Right is a Tandem Stock Appreciation Right or Non-Tandem
Stock Appreciation Right or whether an Award is intended to satisfy
Section 162(m) of the Code;
(h) to determine whether to require an Eligible
Employee or Consultant, as a condition of the granting of any Award,
not to sell or otherwise dispose of shares of Common Stock acquired
pursuant to the exercise of an Option or an Award for a period of time
as determined by the Committee, in its sole discretion, following the
date of the acquisition of such Option or Award;
(i) to modify, extend or renew an Award, subject to
Article 12 herein, provided, however, that if an Award is modified,
extended or renewed and thereby deemed to be the issuance of a new
Award under the Code or the applicable accounting rules, the exercise
price of an Award may continue to be the original exercise price even
if less than the Fair Market Value of the Common Stock at the time of
such modification, extension or renewal;
(j) to offer to buy out an Option previously granted,
based on such terms and conditions as the Committee shall establish and
communicate to the Participant at the time such offer is made; and
(k) to determine whether a Stock Appreciation Right
is a Tandem Stock Appreciation Right or Non-Tandem Stock Appreciation
Right.
3.3. Guidelines. Subject to Article 12 hereof, the Committee
shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing this Plan and perform all acts, including the
delegation of its administrative responsibilities, as it shall, from time to
time, deem advisable; to construe and interpret the terms and provisions of this
Plan and any Award issued under this Plan (and any agreements relating thereto);
and to otherwise supervise the administration of this Plan. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in this
Plan or in any agreement relating thereto in the manner and to the extent it
shall deem necessary to carry this Plan into effect but only to the extent any
such action would be permitted under the applicable provisions of Rule 16b-3 and
Section 162(m) of the Code. The Committee may adopt special guidelines and
provisions for persons who are residing in, or subject to, the taxes of,
countries other than the United States to comply with applicable tax and
securities laws and may impose any limitations and restrictions that it deems
necessary to comply with the applicable tax and securities laws of such
countries other than the United States. To the extent applicable, the Plan is
intended to comply with the applicable requirements of Rule 16b-3 and the
exception for performance-based compensation under Section 162(m) of the Code
with regard to Options and Stock Appreciation Rights and shall be limited,
construed and interpreted in a manner so as to comply therewith.
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3.4. Decisions Final. Any decision, interpretation or other
action made or taken in good faith by or at the direction of the Company, the
Board, or the Committee (or any of its members) arising out of or in connection
with the Plan shall be within the absolute discretion of all and each of them,
as the case may be, and shall be final, binding and conclusive on the Company
and all employees and Participants and their respective heirs, executors,
administrators, successors and assigns.
3.5. Reliance on Counsel. The Company, the Board or the
Committee may consult with legal counsel, who may be counsel for the Company or
other counsel, with respect to its obligations or duties hereunder, or with
respect to any action or proceeding or any question of law, and shall not be
liable with respect to any action taken or omitted by it in good faith pursuant
to the advice of such counsel.
3.6. Procedures. If the Committee is appointed, the Board
shall designate one of the members of the Committee as chairman and the
Committee shall hold meetings, subject to the By-Laws of the Company, at such
times and places as it shall deem advisable. A majority of the Committee members
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of the members present. Any decision or determination reduced to
writing and signed by all the Committee members in accordance with the By-Laws
of the Company, shall be fully as effective as if it had been made by a vote at
a meeting duly called and held. The Committee shall keep minutes of its meetings
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
3.7. Designation of Consultants/Liability.
(a) The Committee may designate employees of the
Company and professional advisors to assist the Committee in the
administration of the Plan and may grant authority to officers to
execute agreements or other documents on behalf of the Committee.
(b) The Committee may employ such legal counsel,
consultants, appraisers and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion received from
any such counsel, appraiser or consultant and any computation received
from any such consultant, appraiser or agent. Expenses incurred by the
Committee in the engagement of any such counsel, consultant or agent
shall be paid by the Company. The Board, the Committee, its members and
any employee of the Company designated pursuant to paragraph (a) above
shall not be liable for any action or determination made in good faith
with respect to the Plan. To the maximum extent permitted by applicable
law, no employee of the Company or member or former member of the
Committee or of the Board shall be liable for any action or
determination made in good faith with respect to the Plan or any Award
granted under it. To the maximum extent permitted by applicable law and
the Certificate of Incorporation and By-Laws of the Company and to the
extent not covered by insurance, each employee of the Company and
member or former member of the Committee or of the Board shall be
indemnified and held harmless by the Company against any cost or
expense (including reasonable fees of counsel reasonably acceptable to
the Company) or liability (including any sum paid in settlement of a
claim with the approval of
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the Company), and advanced amounts necessary to pay the foregoing at
the earliest time and to the fullest extent permitted, arising out of
any act or omission to act in connection with the Plan, except to the
extent arising out of such officer's, employee's, member's or former
member's own fraud or bad faith. Such indemnification shall be in
addition to any rights of indemnification the officers, employees,
directors or members or former officers, directors or members may have
under applicable law or under the Certificate of Incorporation or
By-Laws of the Company or Affiliates. Notwithstanding anything else
herein, this indemnification will not apply to the actions or
determinations made by an individual with regard to Awards granted to
him or her under this Plan.
ARTICLE 4.
SHARE AND OTHER LIMITATIONS
4.1. Shares.
(a) General Limitation. The aggregate number of
shares of Common Stock which may be issued or used for reference
purposes under this Plan or with respect to which all Awards may be
granted shall not exceed 3,000,000 shares (subject to any increase or
decrease pursuant to Section 4.2) with respect to al types of Awards.
If any Stock Option or Stock Appreciation Right granted under this Plan
expires, terminates or is canceled for any reason without having been
exercised in full, the number of shares of Common Stock underlying any
unexercised Stock Appreciation Right or Stock Option shall again be
available for the purposes of Awards under the Plan. If a Tandem Stock
Appreciation Right or a Limited Stock Appreciation Right is granted in
tandem with an Option, such grant shall only apply once against the
maximum number of shares of Common Stock which may be issued under this
Plan.
(b) Individual Participant Limitations.
(i) The maximum number of shares of Common
Stock subject to any Option which may be granted under this
Plan during any fiscal year of the Company shall be 3,000,000
shares (subject to any increase or decrease pursuant to
Section 4.2). If a Tandem Stock Appreciation Right is granted
or a Limited Stock Appreciation Right is granted in tandem
with a Stock Option, it shall apply against the Eligible
Employee's or Consultant's individual share limitations for
both Stock Appreciation Rights and Stock Options.
(ii) The maximum number of shares of Common
Stock subject to any Stock Appreciation Right which may be
granted under this Plan during any fiscal year of the Company
to each Eligible Employee or Consultant shall be 3,000,000
shares (subject to any increase or decrease pursuant to
Section 4.2). If a Tandem Stock Appreciation Right or Limited
Stock Appreciation Right is granted in tandem
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with an Option it shall apply against individual share
limitations for both Stock Appreciation Rights and Options.
(iii) The individual Participant limitations
set forth in this Section 4.1(b) shall be cumulative; that is,
to the extent that shares of Common Stock for which Awards are
permitted to be granted to an Eligible Employee or a
Consultant during a fiscal year are not covered by an Award to
such Eligible Employee or Consultant in a fiscal year, the
number of shares of Common Stock available for Awards to such
Eligible Employee or Consultant shall automatically increase
in the subsequent fiscal years during the term of the Plan
until used.
4.2. Changes.
(a) The existence of the Plan and the Awards granted
hereunder shall not affect in any way the right or power of the Board
or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of the
Company or its Affiliates, any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting Common Stock, the
dissolution or liquidation of the Company or its Affiliates, any sale
or transfer of all or part of its assets or business or any other
corporate act or proceeding.
(b) Subject to the provisions of Section 4.2(d), in
the event of any such change in the capital structure or business of
the Company by reason of any stock dividend or distribution, stock
split or reverse stock split, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares,
distribution with respect to its outstanding Common Stock or capital
stock other than Common Stock, reclassification of its capital stock,
conversion of the Company's preferred stock, issuance of warrants or
options to purchase any Common Stock or securities convertible into
Common Stock, any sale or transfer of all or part of the Company's
assets or business, or any similar change affecting the Company's
capital structure or business, then the aggregate number and kind of
shares which thereafter may be issued under this Plan, the number and
kind of shares or other property (including cash) to be issued upon
exercise of an outstanding Option or other Awards granted under this
Plan and the purchase price thereof shall be appropriately adjusted
consistent with such change in such manner as the Committee may deem
equitable to prevent substantial dilution or enlargement of the rights
granted to, or available for, Participants under this Plan, and any
such adjustment determined by the Committee in good faith shall be
final, binding and conclusive on the Company and all Participants and
employees and their respective heirs, executors, administrators,
successors and assigns.
(c) Fractional shares of Common Stock resulting from
any adjustment in Options or Awards pursuant to Section 4.2(a) or (b)
shall be aggregated until, and eliminated at, the time of exercise by
rounding-down for fractions less than one-half (1/2) and rounding-up
for fractions equal to or greater than one-half (1/2). No cash
settlements shall be made with respect to fractional shares eliminated
by rounding. Notice of any adjustment shall be given by the Committee
to each Participant whose Award has been adjusted and
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such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of the Plan.
(d) In the event of a merger or consolidation in
which the Company is not the surviving entity or in the event of any
transaction that results in the acquisition of substantially all of the
Company's outstanding Common Stock by a single person or entity or by a
group of persons and/or entities acting in concert, or in the event of
the sale or transfer of all or substantially all of the Company's
assets (all of the foregoing being referred to as "Acquisition
Events"), then the Committee may, in its sole discretion, terminate all
outstanding Options and Stock Appreciation Rights, effective as of the
date of the Acquisition Event, by delivering notice of termination to
each such Participant at least twenty (20) days prior to the date of
consummation of the Acquisition Event; provided, that during the period
from the date on which such notice of termination is delivered to the
consummation of the Acquisition Event, each such Participant shall have
the right to exercise in full all of his or her Options and Stock
Appreciation Rights that are then outstanding (without regard to any
limitations on exercisability otherwise contained in the Option or
Award Agreements) but contingent on occurrence of the Acquisition
Event, and, provided that, if the Acquisition Event does not take place
within a specified period after giving such notice for any reason
whatsoever, the notice and exercise shall be null and void.
If an Acquisition Event occurs, to the extent the Committee does not
terminate the outstanding Options and Stock Appreciation Rights pursuant to this
Section 4.2(d), then the provisions of Section 4.2(b) shall apply.
4.3. Purchase Price. Notwithstanding any provision of this
Plan to the contrary, if authorized but previously unissued shares of Common
Stock are issued under this Plan, such shares shall not be issued for a
consideration which is less than as permitted under applicable law.
ARTICLE 5.
ELIGIBILITY
5.1. General Eligibility. All Eligible Employees and
Consultants and future Eligible Employees of and Consultants to the Company and
its Affiliates are eligible to be granted Non-Qualified Stock Options, Stock
Appreciation Rights, other Performance-Based Awards and awards providing
benefits similar to each of the foregoing. Eligibility for the grant of an Award
and actual participation in this Plan shall be determined by the Committee in
its sole discretion. The vesting and exercise of Awards granted to a prospective
employee or Consultant are conditioned upon such individual actually becoming an
Eligible Employee or Consultant.
5.2. Incentive Stock Options. All Eligible Employees of the
Company, its Subsidiaries and its Parent (if any) are eligible to be granted
Incentive Stock Options under this Plan. Eligibility for the grant of an Award
and actual participation in this Plan shall be determined by the Committee in
its sole discretion.
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5.3. Non-Employee Directors. Non-Employee Directors are only
eligible to receive an Award of Stock Options in accordance with Article 10 of
the Plan.
ARTICLE 6.
STOCK OPTIONS
6.1. Options. Each Stock Option granted hereunder shall be one
of two types: (i) an Incentive Stock Option intended to satisfy the requirements
of Section 422 of the Code or (ii) a Non-Qualified Stock Option.
6.2. Grants. The Committee shall have the authority to grant
to any Eligible Employee one or more Incentive Stock Options, Non-Qualified
Stock Options, or both types of Stock Options (in each case with or without
Stock Appreciation Rights). To the extent that any Stock Option does not qualify
as an Incentive Stock Option (whether because of its provisions or the time or
manner of its exercise or otherwise), such Stock Option or the portion thereof
which does not qualify, shall constitute a separate Non-Qualified Stock Option.
Notwithstanding any other provision of this Plan to the contrary or any
provision in an agreement evidencing the grant of an Option to the contrary, any
Option granted to an Eligible Employee of an Affiliate (other than one described
in Section 2.1(i) or (ii)) shall be a Non-Qualified Stock Option.
6.3. Terms of Options. Options granted under Article 6 of this
Plan shall be subject to Article 10 and the following terms and conditions, and
shall be in such form and contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem desirable:
(a) Option Price. The exercise price per share of
Common Stock purchasable under an Incentive Stock Option or a Stock
Option intended to be "performance-based" for purposes of Section
162(m) of the Code shall be determined by the Committee at the time of
grant, but shall not be less than 100% of the Fair Market Value of the
share of Common Stock at the time of grant; provided, however, that if
an Incentive Stock Option is granted to a Ten Percent Stockholder, the
exercise price shall be no less than 110% of the Fair Market Value of
the Common Stock. The exercise price per share of Common Stock
purchasable under a Non-Qualified Stock Option shall be determined by
the Committee.
(b) Stock Option Term. The term of each Stock Option
shall be fixed by the Committee, but no Stock Option shall be
exercisable more than ten (10) years after the date the Option is
granted; provided, however, that the term of an Incentive Stock Option
granted to a Ten Percent Stockholder may not exceed five (5) years.
(c) Exercisability. Stock Options shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at grant. If the
Committee provides, in its discretion, that any Stock Option is
exercisable subject to certain limitations (including, without
limitation, that it is exercisable only in installments or within
certain time periods), the Committee may waive such limitations on
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the exercisability at any time at or after grant in whole or in part
(including, without limitation, that the Committee may waive the
installment exercise provisions or accelerate the time at which Options
may be exercised), based on such factors, if any, as the Committee
shall determine, in its sole discretion.
(d) Method of Exercise. Subject to whatever
installment exercise and waiting period provisions apply under
subsection (c) above, Stock Options may be exercised in whole or in
part at any time during the Option term, by giving written notice of
exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the
purchase price as follows: (i) in cash or by check, bank draft or money
order payable to the order of Company, (ii) if the Common Stock is
traded on a national securities exchange, the Nasdaq Stock Market, Inc.
or quoted on a national quotation system sponsored by the National
Association of Securities Dealers, through a "cashless exercise"
procedure whereby the Participant delivers irrevocable instructions to
a broker to deliver promptly to the Company an amount equal to the
purchase price, (iii) by payment in full or part in the form of Common
Stock owned by the Participant for a period of at least (six) 6 months
(and for which the Participant has good title free and clear of any
liens and encumbrances) based on the Fair Market Value of the Common
Stock on the payment date as determined by the Committee or the Board
or (iv) on such other terms and conditions as may be acceptable to the
Committee or the Board, as applicable. No shares of Common Stock shall
be issued until payment therefor, as provided herein, has been made or
provided for.
(e) Incentive Stock Option Limitations. To the extent
that the aggregate Fair Market Value (determined as of the time of
grant) of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by an Eligible Employee
during any calendar year under the Plan and/or any other stock option
plan of the Company or any Subsidiary or Parent exceeds $100,000, such
Options shall be treated as NonQualified Stock Options. In addition, if
an Eligible Employee does not remain employed by the Company, any
Subsidiary or Parent at all times from the time the Option is granted
until three (3) months prior to the date of exercise (or such other
period as required by applicable law), such Option shall be treated as
a Non-Qualified Stock Option.
Should any provision of this Plan not be necessary in order
for the Stock Options to qualify as Incentive Stock Options, or should
any additional provisions be required, the Committee may amend the Plan
accordingly, without the necessity of obtaining the approval of the
stockholders of the Company.
Without the written consent of the Company, no Common Stock
acquired by a Participant upon the exercise of an Incentive Stock
Option granted hereunder may be disposed of by the Participant within
two (2) years from the date such Incentive Stock Option was granted,
nor within one (1) year after the transfer of such Common Stock to the
Participant; provided, however, that a transfer to a trustee, receiver,
or other fiduciary in any insolvency proceeding, as described in
Section 422(c)(3) of the Code, shall not be deemed to be such a
disposition.
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(f) Form, Modification, Extension and Renewal of
Stock Options. Subject to the terms and conditions and within the
limitations of this Plan, Stock Options shall be evidenced by such form
of agreement or grant as is approved by the Committee, and the
Committee may (i) modify, extend or renew outstanding Stock Options
granted under this Plan (provided that the rights of a Participant are
not reduced without his consent), and (ii) accept the surrender of
outstanding Stock Options (up to the extent not theretofore exercised)
and authorize the granting of new Stock Options in substitution
therefor (to the extent not theretofore exercised).
(g) Other Terms and Conditions. Options may contain
such other provisions, which shall not be inconsistent with any of the
foregoing terms of the Plan, as the Committee shall deem appropriate
including, without limitation, permitting "reloads." With regard to
such "reloads", the Committee shall have the authority (but not an
obligation) to include within any Option agreement a provision
entitling the optionee to a further Option (a "Reload Option") if the
optionee exercises the Option evidenced by the Option agreement, in
whole or in part, by surrendering other shares of the Company held by
the optionee for at least six (6) months prior to such date of
surrender in accordance with the Plan and the terms and conditions of
the Option agreement. Any Reload Option shall not be an Incentive Stock
Option, shall be for a number of shares equal to the number of
surrendered shares, the exercise price thereof shall be equal to the
Fair Market Value of the Common Stock on the date of exercise of such
original Option, shall become exercisable if the purchased shares are
held for a minimum period of time established by the Committee, and
shall be subject to such other terms and conditions as the Committee
may determine.
ARTICLE 7.
STOCK APPRECIATION RIGHTS
7.1. Tandem Stock Appreciation Rights. Stock Appreciation
Rights may be granted in conjunction with all or part of any Stock Option (a
"Reference Stock Option") granted under this Plan ("Tandem Stock Appreciation
Rights"). In the case of a Non-Qualified Stock Option, such rights may be
granted either at or after the time of the grant of such Reference Stock Option.
In the case of an Incentive Stock Option, such rights may be granted only at the
time of the grant of such Reference Stock Option. Consultants shall not be
eligible for a grant of Tandem Stock Appreciation Rights granted in conjunction
with all or part of an Incentive Stock Option.
7.2. Terms and Conditions of Tandem Stock Appreciation Rights.
Tandem Stock Appreciation Rights granted hereunder shall be subject to such
terms and conditions, not inconsistent with the provisions of this Plan, as
shall be determined from time to time by the Committee, including Article 9 and
the following:
(a) Term. A Tandem Stock Appreciation Right or
applicable portion thereof granted with respect to a Reference Stock
Option shall terminate and no longer be exercisable upon the
termination or exercise of the Reference Stock Option, except that,
unless otherwise determined by the Committee, in its sole discretion,
at the time of grant, a
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Tandem Stock Appreciation Right granted with respect to less than the
full number of shares covered by the Reference Stock Option shall not
be reduced until and then only to the extent the exercise or
termination of the Reference Stock Option causes the number of shares
covered by the Tandem Stock Appreciation Right to exceed the number of
shares remaining available and unexercised under the Reference Stock
Option.
(b) Exercisability. Tandem Stock Appreciation Rights
shall be exercisable only at such time or times and to the extent that
the Reference Stock Options to which they relate shall be exercisable
in accordance with the provisions of Article 6 and Article 7.
(c) Method of Exercise. A Tandem Stock Appreciation
Right may be exercised by a Participant by surrendering the applicable
portion of the Reference Stock Option. Upon such exercise and
surrender, the Participant shall be entitled to receive an amount
determined in the manner prescribed in this Section 7.2. Stock Options
which have been so surrendered, in whole or in part, shall no longer be
exercisable to the extent the related Tandem Stock Appreciation Rights
have been exercised.
(d) Payment. Upon the exercise of a Tandem Stock
Appreciation Right a Participant shall be entitled to receive up to,
but no more than, an amount in cash and/or Common Stock (as chosen by
the Committee in its sole discretion) equal in value to the excess of
the Fair Market Value of one share of Common Stock over the Option
price per share specified in the Reference Stock Option multiplied by
the number of shares in respect of which the Tandem Stock Appreciation
Right shall have been exercised, with the Committee having the right to
determine the form of payment.
(e) Deemed Exercise of Reference Stock Option. Upon
the exercise of a Tandem Stock Appreciation Right, the Reference Stock
Option or part thereof to which such Stock Appreciation Right is
related shall be deemed to have been exercised for the purpose of the
limitation set forth in Article 4 of the Plan on the number of shares
of Common Stock to be issued under the Plan.
7.3. Non-Tandem Stock Appreciation Rights. Non-Tandem Stock
Appreciation Rights may also be granted without reference to any Stock Options
granted under this Plan.
7.4. Terms and Conditions of Non-Tandem Stock Appreciation
Rights. Non-Tandem Stock Appreciation Rights granted hereunder shall be subject
to such terms and conditions, not inconsistent with the provisions of this Plan,
as shall be determined from time to time by the Committee, including Article 9
and the following:
(a) Term. The term of each Non-Tandem Stock
Appreciation Right shall be fixed by the Committee, but shall not be
greater than ten (10) years after the date the right is granted.
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(b) Exercisability. Non-Tandem Stock Appreciation
Rights shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee at grant.
If the Committee provides, in its discretion, that any such right is
exercisable subject to certain limitations (including, without
limitation, that it is exercisable only in installments or within
certain time periods), the Committee may waive such limitation on the
exercisability at any time at or after grant in whole or in part
(including, without limitation, that the Committee may waive the
installment exercise provisions or accelerate the time at which rights
may be exercised), based on such factors, if any, as the Committee
shall determine, in its sole discretion.
(c) Method of Exercise. Subject to whatever
installment exercise and waiting period provisions apply under
subsection (b) above, Non-Tandem Stock Appreciation Rights may be
exercised in whole or in part at any time during the option term, by
giving written notice of exercise to the Company specifying the number
of Non-Tandem Stock Appreciation Rights to be exercised.
(d) Payment. Upon the exercise of a Non-Tandem Stock
Appreciation Right a Participant shall be entitled to receive, for each
right exercised, up to, but no more than, an amount in cash and/or
Common Stock (as chosen by the Committee in its sole discretion) equal
in value to the excess of the Fair Market Value of one share of Common
Stock on the date the right is exercised over the Fair Market Value of
one (1) share of Common Stock on the date the right was awarded to the
Participant.
7.5. Limited Stock Appreciation Rights. The Committee may, in
its sole discretion, grant Tandem and Non-Tandem Stock Appreciation Rights
either as a general Stock Appreciation Right or as a Limited Stock Appreciation
Right. Limited Stock Appreciation Rights may be exercised only upon the
occurrence of a Change in Control or such other event as the Committee may, in
its sole discretion, designate at the time of grant or thereafter. Upon the
exercise of Limited Stock Appreciation Rights, except as otherwise provided in
an Award agreement, the Participant shall receive in cash or Common Stock, as
determined by the Committee, an amount equal to the amount (i) set forth in
Section 7.2(d) with respect to Tandem Stock Appreciation Rights or (ii) set
forth in Section 7.4(d) with respect to Non-Tandem Stock Appreciation Rights.
ARTICLE 8.
PERFORMANCE-BASED AWARDS
8.1. Performance-Based Awards. Awards of Common Stock and
other Awards that are valued in whole or in part by reference to, or are payable
in or otherwise based on, Common Stock ("Performance-Based Awards") may be
granted either alone or in addition to or in tandem with Stock Options or Stock
Appreciation Rights.
Subject to the provisions of this Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such
Awards shall be made, the number of shares of Common Stock to be awarded
pursuant to such Awards, and all other conditions of the Awards.
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The Committee may also provide for the grant of Common Stock under such Awards
upon the com pletion of a specified Performance Period.
8.2. Terms and Conditions. Performance-Based Awards made
pursuant to this Article 8 shall be subject to the following terms and
conditions:
(a) Dividends. Unless otherwise determined by the
Committee at the time of Award, subject to the provisions of the Award
agreement and this Plan, the recipient of an Award under this Article 8
shall be entitled to receive, currently or on a deferred basis,
dividends or dividend equivalents with respect to the number of shares
of Common Stock covered by the Award, as determined at the time of the
Award by the Committee, in its sole discretion.
(b) Vesting. Any Award under this Article 8 and any
Common Stock covered by any such Award shall vest or be forfeited to
the extent so provided in the Award agreement, as determined by the
Committee, in its sole discretion.
(c) Waiver of Limitation. In the event of the
Participant's Retirement, Disability or death, or in cases of special
circumstances, the Committee may, in its sole discretion, waive in
whole or in part any or all of the limitations imposed hereunder (if
any) with respect to any or all of an Award under this Article.
(d) Purchase Price. Subject to Section 4.3, Common
Stock issued on a bonus basis under this Article 8 may be issued for no
cash consideration; Common Stock purchased pursuant to a purchase right
awarded under this Article 8 shall be priced as determined by the
Committee.
ARTICLE 9.
NON-TRANSFERABILITY AND TERMINATION PROVISIONS
The terms and conditions of this Article 9 shall apply to Awards under
this Plan as follows:
9.1. Nontransferability. No Stock Option, Stock Appreciation
Right, or Performance-Based Award shall be Transferable by the Participant
otherwise than by will or by the laws of descent and distribution. All Stock
Options and all Stock Appreciation Rights shall be exercisable, during the
Participant's lifetime, only by the Participant or his or her legal guardian or
representative. Tandem Stock Appreciation Rights shall be Transferable, solely
to the extent permitted above, only with the underlying Stock Option. In
addition, except as provided above, no Stock Option shall be Transferred
(whether by operation of law or otherwise), and no Stock Option shall be subject
to execution, attachment or similar process. Upon any attempt to Transfer any
Stock Option, or in the event of any levy upon any Stock Option by reason of any
execution, attachment or similar process contrary to the provisions hereof, such
Stock Option shall immediately terminate and become null and void. No Award
shall, except as otherwise specifically provided by law or herein, be
Transferable in any manner, and any attempt to Transfer any such Award shall be
void,
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and no such Award shall in any manner be liable for or subject to the debts,
contracts, liabilities, engagements or torts of any person who shall be entitled
to such Award, nor shall it be subject to attachment or legal process for or
against such person.
Notwithstanding the foregoing, the Committee may determine at
the time of grant or thereafter that a Non-Qualified Stock Option granted
pursuant to Article 6 (other than a NonQualified Stock Option granted to a
Non-Employee Director) that is otherwise not Transferable pursuant to this
Article 9 is Transferable in whole or in part and in such circumstances, and
under such conditions, as specified by the Committee.
9.2. Termination of Employment or Termination of Consultancy.
Unless otherwise determined by the Committee at grant or, if no rights of the
Participant are reduced, thereafter, the following rules apply with regard to
the Termination of Employment or Termination of Consultancy of a Participant:
(a) Termination by Reason of Death. If a
Participant's Termination of Employment or Termination of Consultancy
is by reason of death, any Stock Option or Stock Appreciation Right
held by such Participant, unless otherwise determined by the Committee
at grant or, if no rights of the Participant's estate are reduced,
thereafter, may be exercised, to the extent exercisable at the
Participant's death, by the legal representative of the estate, at any
time within a period of one (1) year from the date of such death, but
in no event beyond the expiration of the stated term of such Stock
Option or Stock Appreciation Right.
(b) Termination by Reason of Retirement or
Disability. If a Participant's Termination of Employment or Termination
of Consultancy is by reason of Retirement or Disability, any Stock
Option or Stock Appreciation Right held by such Participant, unless
otherwise determined by the Committee at grant or, if no rights of the
Participant are reduced, thereafter, may be exercised, to the extent
exercisable at the Participant's termination, by the Participant (or
the Participant's legal representative to the extent permitted under
Section 14.11 or the legal representative of the Participant's estate
if the Participant dies after termination) at any time within a period
(the "Retirement or Disability Period") which is the longer of (i) up
to ten (10) years after the date of grant of such Stock Option or Stock
Appreciation Right, such period to be set on a case by case basis by
the Committee, or (ii) three (3) years from the date of such
termination; provided, however, that, if the Participant dies within
such Retirement or Disability Period, any unexercised Stock Option or
Stock Appreciation Right held by such Participant shall thereafter be
exercisable, to the extent to which it was exercisable at the time of
death, for a period of one (1) year (or such other period as the
Committee may specify at grant or, if no rights of the Participant's
estate are reduced, thereafter) from the date of such death, but in no
event beyond the expiration of the stated term of such Stock Option or
Stock Appreciation Right.
(c) Voluntary Resignation or Involuntary Termination
Without Cause. If a Participant's Termination of Employment or
Termination of Consultancy is due to a voluntary resignation or by
involuntary termination without Cause and such termination occurs prior
to, or more than ninety (90) days after, the occurrence of an event
which would
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be grounds for Termination of Employment or Termination of Consultancy
by the Company for Cause (without regard to any notice or cure period
requirements), any Stock Option or Stock Appreciation Right held by
such Participant, unless otherwise determined by the Committee at grant
or, if no rights of the Participant are reduced, thereafter, may be
exercised, to the extent exercisable at termination, by the Participant
at any time within a period of thirty (30) days from the date of such
termination, but in no event beyond the expiration of the stated term
of such Stock Option or Stock Appreciation Right.
(d) Termination for Cause. Unless otherwise
determined by the Committee at grant or, if no rights of the
Participant are reduced, thereafter, if a Participant's Termination of
Employment or Termination of Consultancy is for Cause for any reason,
any Stock Option or Stock Appreciation Right held by such Participant
shall thereupon terminate and expire as of the date of termination. In
the event the termination is an involuntary termination without Cause
or is a voluntary resignation within ninety (90) days after occurrence
of an event which would be grounds for Termination of Employment or
Termination of Consultancy by the Company for Cause (without regard to
any notice or cure period requirement), any Stock Option or Stock
Appreciation Right held by the Participant at the time of occurrence of
the event which would be grounds for Termination of Employment or
Termination of Consultancy by the Company for Cause shall be deemed to
have terminated and expired upon occurrence of the event which would be
grounds for Termination of Employment or Termination of Consultancy by
the Company for Cause.
(e) Termination of Employment or Termination of
Consultancy for Performance-Based Awards. Subject to the applicable
provisions of the Award agreement and this Plan, upon a Participant's
Termination of Employment or Termination of Consultancy for any reason,
the Performance-Based Award in question will vest or be forfeited in
accordance with the terms and conditions established by the Committee
at grant or thereafter.
ARTICLE 10.
NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS
10.1. Stock Options. The terms of this Article XIII shall
apply only to Stock Options granted to Non-Employee Directors.
10.2. Grants. On or before the date of the initial grant of
Stock Options to a Non-Employee Director under this Plan, the Board or the
Committee shall by resolution adopt a formula plan (the "Formula Plan
Resolutions"), pursuant to which at all times thereafter, without further action
by the Board or the stockholders of the Company, each Non-Employee Director
shall, subject to the terms of the Plan, be granted:
(a) Stock Options to purchase that number of shares
of Common Stock set forth in the Formula Plan Resolutions as of the
earlier of (i) the date the Non-Employee Director begins service as a
Non-Employee Director on the Board or (ii) with regard to any
Non-Employee Director then on the Board at the time of adoption of the
Formula Plan Resolutions, the date of adoption of the Formula Plan
Resolutions; and
(b) In addition to the Stock Options granted pursuant
to (a) above, Stock Options to purchase that number of shares of Common
Stock set forth in the Formula Plan Resolutions as of the first day of
the month
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following the annual meeting of stockholders of the Company (commencing
with the annual meeting specified in the Formula Plan Resolutions),
provided he or she has not, as of such day, experienced a Termination
of Directorship.
10.3. Non-Qualified Stock Options. Stock Options granted under
this Article 10 shall be Non-Qualified Stock Options.
10.4. Terms of Stock Options. Stock Options granted under this
Article 10 shall be subject to the following terms and conditions, and shall
be in such form and contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Board shall deem desirable:
(a) Stock Option Price. The Stock Option price per
share of Common Stock purchasable under a Stock Option shall be
determined by the Board at the time of grant but shall not be less than
100% of the Fair Market Value of the share of Common Stock at the time
of grant.
(b) Stock Option Term. The term of each Stock Option
shall be as set forth in the Formula Plan Resolutions.
(c) Exercisability. Stock Options granted to
Non-Employee Directors pursuant to Section 10.2 shall vest and become
exercisable at the times and in the manner specified in the Formula
Plan Resolutions.
(d) Method of Exercise. Subject to any applicable
waiting period provisions under subsection (c) above, Stock Options may
be exercised in whole or in part at any time and from time to time
during the Stock Option term, by giving written notice of exercise to
the Company specifying the number of shares to be purchased. Such
notice shall be accompanied by payment in full of the purchase price as
follows: (i) in cash or by check, bank draft or money order payable to
the Company; (ii) if the Common Stock is traded on a national
securities exchange, through a "cashless exercise" procedure whereby
the Participant delivers irrevocable instructions to a broker to
deliver promptly to the Company an amount equal to the purchase price;
or (iii) such other arrangement for the satisfaction of the purchase
price, as the Board may accept. If and to the extent determined by the
Board in its sole discretion at or after grant, payment in full or in
part may also be made in the form of Common Stock owned by the
Participant for at least 6 months (and for which the Participant has
good title free and clear of any liens and encumbrances) based on the
Fair Market Value of the Common Stock on the payment date. No shares of
Common Stock shall be issued until payment, as provided herein,
therefor has been made or provided for.
(e) Form, Modification, Extension and Renewal of
Stock Options. Subject to the terms and conditions and within the
limitations of the Plan, a Stock Option shall be evidenced by such form
of agreement or grant as is approved by the Board, and the Board may
modify, extend or renew outstanding Stock Options granted under the
Plan (provided that the rights of a Participant are not reduced without
his consent).
10.5. Termination of Directorship. The following rules apply
with regard to Stock Options upon the Termination of Directorship:
(a) Termination of Directorship by Reason of Death,
Disability or Otherwise Ceasing to be a Director. Except as otherwise
provided herein, upon the Termination of Directorship by reason of
death, Disability, resignation, failure to stand for reelection or
failure to be reelected or otherwise, all outstanding Stock Options
exercisable and not exercised shall remain exercisable by the
Participant or, in the case of death, by the Participant's estate, or
by the person given authority to exercise such Stock Options by his or
her will or by operation of law, at any time within a period of one
year from the date of such Termination of Directorship, but in no event
beyond the expiration of the stated term of such Stock Option.
(b) Cancellation of Options. Except as provided in
(a) above, Stock Options that were not exercisable as of the date of
Termination of Directorship shall not thereafter become exercisable
upon a Termination of Directorship for any reason or no reason
whatsoever, and such Stock Options shall terminate and become null and
void upon a Termination of Directorship. If a Non-Employee Director's
Termination of Directorship
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is for Cause, all Stock Options held by the Non-Employee Director shall
thereupon terminate and expire as of the date of termination.
10.6. Acceleration of Exercisability. All Stock Options
granted to Non-Employee Directors and not previously exercisable shall become
fully exercisable immediately upon a Change in Control (as defined herein).
Unless otherwise determined by the Committee at grant or, if no rights of the
Participant are reduced thereafter, a "Change in Control" shall be deemed to
have occurred upon:
(a) An acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(1) of the Exchange
Act) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than 80% of the combined
voting power of the then outstanding voting securities of Company
entitled to vote generally in the election of directors, including, but
not limited to, by merger, consolidation or similar corporate
transaction or by purchase; excluding, however, the following: (x) any
acquisition by the Company, any Subsidiary or any Parent, or (y) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company, any Subsidiary or any Parent; or
(b) the approval of the stockholders of the Company
of (i) a complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of more than 80% of the gross assets of the
Company and its Subsidiaries and Parent (if any) on a consolidated
basis (determined under generally accepted accounting principles in
accordance with prior practice); excluding, however, such a sale or
other disposition to a corporation with respect to which, following
such sale or other disposition, (x) more than 20% of the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors
will be then beneficially owned, directly or indirectly, by the
individuals and entities who were beneficial owners of the outstanding
shares of Common Stock immediately prior to such sale or other
disposition, (y) no person (other than the Company, its Subsidiaries
and Parent (if any), and any employee benefit plan (or related trust)
of the Company, any Subsidiary or any Parent or such corporation or any
person (or affiliate thereof within the meaning of Rule 12b-2 of the
Exchange Act) beneficially owning, immediately prior to such sale or
other disposition, directly or indirectly, 20% or more of the
outstanding shares of Common Stock) will beneficially own, directly or
indirectly 20% or more of the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election or directors, and (z) individuals who were
members of the incumbent board immediately prior to the sale or other
disposition will constitute at least a majority of the members of the
board of directors of such corporation.
10.7. Changes.
(a) The Awards to a Non-Employee Director shall be
subject to Sections 4.2(a), (b) and (c) of the Plan and this Section
10.7, but shall not be subject to Section 4.2(d).
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(b) If the Company shall not be the surviving
corporation in any merger or consolidation, or if the Company is to be
dissolved or liquidated, then, unless the surviving corporation assumes
the Stock Options or substitutes new Stock Options which are determined
by the Board in its sole discretion to be substantially similar in
nature and equivalent in terms and value for Stock Options then
outstanding, upon the effective date of such merger, consolidation,
liquidation or dissolution, any unexercised Stock Options shall expire
without additional compensation to the holder thereof; provided, that,
the Board shall deliver notice to each Non-Employee Director at least
30 days prior to the date of consummation of such merger,
consolidation, dissolution or liquidation which would result in the
expiration of the Stock Options and during the period from the date on
which such notice of termination is delivered to the consummation of
the merger, consolidation, dissolution or liquidation, such Participant
shall have the right to exercise in full, effective as of such
consummation, all Stock Options that are then outstanding (without
regard to limitations on exercise otherwise contained in the Stock
Options) but contingent on occurrence of the merger, consolidation,
dissolution or liquidation, and, provided that, if the contemplated
transaction does not take place within a 90 day period after giving
such notice for any reason whatsoever, the notice, accelerated vesting
and exercise shall be null and void and, if and when appropriate, new
notice shall be given as aforesaid.
ARTICLE 11.
CHANGE IN CONTROL PROVISIONS
11.1. Benefits. In the event of a Change in Control of the
Company (as defined below), except as otherwise provided by the Committee upon
the grant of an Award (and except as provided in Section 10.6), the Participant
shall be entitled to the following benefits:
(a) All outstanding Stock Options and the related
Tandem Stock Appreciation Rights and Non-Tandem Stock Appreciation
Rights of such Participant, if any, granted prior to the Change in
Control shall be fully vested and immediately exercisable in their
entirety.
(b) All unvested Performance-Based Awards shall
become fully vested upon a Change in Control, including without
limitation, the conditions required for vesting of any unvested
Performance-Based Awards shall be deemed to be satisfied upon such
Change in Control.
11.2. Change in Control. Unless otherwise determined by the
Committee at grant of an Award, a "Change in Control" shall mean the occurrence
of any of the following:
(a) any person (as defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and 14(d) thereof),
excluding the Company, any subsidiary of the Company, any employee
benefit plan sponsored or maintained by the Company or any subsidiary
of the Company (including any trustee of any such plan acting in his
capacity as trustee) and M. Lee Pearce, or any of his affiliates (as
such term is defined in Rule 12b-2 of the Exchange Act), becoming the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
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of securities of the Company representing thirty percent (30%) of the
total combined voting power of the Company's then outstanding
securities;
(b) the merger, consolidation or other business
combination of the Company (a "Transaction"), other than (A) a
Transaction involving only the Company and one or more of its
subsidiaries, or (B) a Transaction immediately following which the
stockholders of the Company immediately prior to the Transaction
continue to have a majority of the voting power in the resulting entity
and no person (other than those covered by the exceptions in (a) above)
becomes the beneficial owner of securities of the resulting entity
representing more than twenty-five percent (25%) of the voting power in
the resulting entity; or
(c) the approval by the stockholders of the Company
of any plan of complete liquidation of the Company or an agreement for
the sale of all or substantially all of the Company's assets other than
the sale of all or substantially all of the assets of the Company to a
person or persons who beneficially own, directly or indirectly, at
least fifty percent (50%) or more of the combined voting power of the
outstanding voting securities of the Company at the time of such sale.
ARTICLE 12.
TERMINATION OR AMENDMENT OF THE PLAN
Notwithstanding any other provision of this Plan, the Board may at any
time, and from time to time, amend, in whole or in part, any or all of the
provisions of the Plan, or suspend or terminate it entirely, retroactively or
otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Participant with respect to Awards
granted prior to such amendment, suspension or termination, may not be impaired
without the consent of such Participant and, provided further, without the
approval of the stockholders of the Company in accordance with the laws of the
State of Delaware, to the extent required by the applicable provisions of Rule
16b-3 or Section 162(m) of the Code, or, with regard to Incentive Stock Options,
Section 422 of the Code,
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no amendment may be made which would (i) increase the aggregate number of shares
of Common Stock that may be issued under this Plan or the maximum individual
Participant limitations under Section 4.1(b), (ii) change the classification of
employees eligible to receive Awards under this Plan, (iii) decrease the minimum
option price of any Stock Option, (iv) extend the maximum option period under
Section 6.3, or (v) require stockholder approval in order for the Plan to
continue to comply with the applicable provisions of Rule 16b-3 or Section
162(m) of the Code, or, with regard to Incentive Stock Options, Section 422 of
the Code. In no event may the Plan be amended without the approval of the
stockholders of the Company in accordance with the applicable laws or other
requirements to increase the aggregate number of shares of Common Stock that may
be issued under the Plan, decrease the minimum option price of any Stock Option,
or to make any other amendment that would require stockholder approval under the
rules of any exchange or system on which the Company's securities are listed or
traded at the request of the Company.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Article 4 above or as otherwise
specifically provided herein, no such amendment or other action by the Committee
shall impair the rights of any holder without the holder's consent.
ARTICLE 13.
UNFUNDED STATUS OF PLAN
This Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments as to which a Participant has a fixed
and vested interest but which are not yet made to a Participant by the Company,
nothing contained herein shall give any such Participant any rights that are
greater than those of a general creditor of the Company.
ARTICLE 14.
GENERAL PROVISIONS
14.1. Legend. The Committee may require each person receiving
shares of Common Stock pursuant to an Award under the Plan to represent to and
agree with the Company in writing that the Participant is acquiring the shares
without a view to distribution thereof, and that any subsequent offer for sale
or sale of any such shares of Common Stock shall be made either pursuant to (i)
a registration statement on an appropriate form under the Securities Act of
1933, which registration statement shall have become effective and shall be
current with respect to the shares of Common Stock being offered and sold, or
(ii) a specific exemption from the registration requirements of the Securities
Act of 1933, and that in claiming such exemption the Participant will, prior to
any offer for sale or sale of shares of Common Stock, obtain a favorable written
opinion, satisfactory in form and substance to the Company, from counsel
acceptable to the Company as to the availability of such exception. In addition
to any legend required by this Plan, the certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on Transfer.
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All certificates for shares of Common Stock delivered under
the Plan shall be subject to such stock transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed or any national securities association
system upon whose system the Common Stock is then quoted, any applicable Federal
or state securities law, and any applicable corporate law, and the Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
14.2. Other Plans. Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to stockholder approval if such approval is required; and, such
arrangements may be either generally applicable or applicable only in specific
cases.
14.3. No Right to Employment/Consultancy. Neither this Plan
nor the grant of any Award hereunder shall give any Participant or other
employee or Consultant any right with respect to continuance of employment by
the Company or any Affiliate, nor shall there be a limitation in any way on the
right of the Company or any Affiliate by which an employee is employed or a
Consultant is retained to terminate his employment or Consultancy at any time.
14.4. Withholding of Taxes. The Company shall have the right
to deduct from any payment to be made to a Participant, or to otherwise require,
prior to the issuance or delivery of any shares of Common Stock or the payment
of any cash hereunder, payment by the Participant of, any Federal, state or
local taxes required by law to be withheld. Upon making an election under
Section 83(b) of the Code, a Participant shall pay all required withholding to
the Company.
At the discretion of the Committee, any such withholding
obligation with regard to any Participant may be satisfied by reducing the
number of shares of Common Stock otherwise deliverable or by delivering shares
of Common Stock already owned. Any fraction of a share of Common Stock required
to satisfy such tax obligations shall be disregarded and the amount due shall be
paid instead in cash by the Participant.
14.5. Listing and Other Conditions.
(a) As long as the Common Stock is listed on a
national securities exchange or system sponsored by a national
securities association, the issue of any shares of Common Stock
pursuant to an Award shall be conditioned upon such shares being listed
on such exchange or system. The Company shall have no obligation to
issue such shares unless and until such shares are so listed, and the
right to exercise any Option with respect to such shares shall be
suspended until such listing has been effected.
(b) If at any time counsel to the Company shall be of
the opinion that any sale or delivery of shares of Common Stock
pursuant to an Award is or may in the circumstances be unlawful or
result in the imposition of excise taxes on the Company under the
statutes, rules or regulations of any applicable jurisdiction, the
Company shall have no obligation to make such sale or delivery, or to
make any application or to effect or to
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maintain any qualification or registration under the Securities Act, or
otherwise with respect to shares of Common Stock or Awards, and the
right to exercise any Option shall be suspended until, in the opinion
of said counsel, such sale or delivery shall be lawful or will not
result in the imposition of excise taxes on the Company.
(c) Upon termination of any period of suspension
under this Section 14.5, any Award affected by such suspension which
shall not then have expired or terminated shall be reinstated as to all
shares available before such suspension and as to shares which would
otherwise have become available during the period of such suspension,
but no such suspension shall extend the term of any Option.
14.6. Governing Law. This Plan shall be governed and construed
in accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).
14.7. Construction. Wherever any words are used in this Plan
in the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form they shall be construed as though
they were also used in the plural form in all cases where they would so apply.
14.8. Other Benefits. No Award payment under this Plan shall
be deemed compensation for purposes of computing benefits under any retirement
plan of the Company or its Affiliates nor affect any benefits under any other
benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation.
14.9. Costs. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock pursuant to
any Awards hereunder.
14.10. No Right to Same Benefits. The provisions of Awards
need not be the same with respect to each Participant, and such Awards to
individual Participants need not be the same in subsequent years.
14.11. Death/Disability. The Committee may in its discretion
require the transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require the agreement of the transferee to be bound by all of
the terms and conditions of the Plan. If the Committee shall find, without any
obligation or responsibility of any kind to do so, that any person to whom
payment is payable under this Plan is unable to care for his or her affairs
because of disability, illness or accident, any payment due may be paid to such
person's duly appointed legal representative in such manner and proportions as
the Committee may determine, in it sole discretion. Any such payment shall be a
complete discharge of the liabilities of the Committee and the Board under this
Plan.
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14.12. Section 16(b) of the Exchange Act. All elections and
transactions under the Plan by persons subject to Section 16 of the Exchange Act
involving shares of Common Stock are intended to comply with any applicable
exemptive condition under Rule 16b-3. The Committee may establish and adopt
written administrative guidelines, designed to facilitate compliance with
Section 16(b) of the Exchange Act, as it may deem necessary or proper for the
administration and operation of the Plan and the transaction of business
thereunder.
14.13. Severability of Provisions. If any provision of the
Plan shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof, and the Plan shall be construed
and enforced as if such provisions had not been included.
14.14. 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.
ARTICLE 15.
APPROVAL OF BOARD AND STOCKHOLDERS
The Plan shall not be effective unless and until approved by the Board
and, solely to the extent required by any applicable law (including without
limitation, approval required under Rule 16b-3, Section 162(m) of the Code or
Section 422 of the Code) or regulation or stock exchange rule, approved by the
stockholders of the Company in the manner set forth in such law, regulation or
rule.
ARTICLE 16.
TERM OF PLAN
No Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the earlier of the date the Plan is adopted or the date of
stockholder approval (if applicable), but Awards granted prior to such tenth
anniversary may extend beyond that date.
ARTICLE 17.
NAME OF PLAN
This Plan shall be known as the Seal Holdings Corporation 1999
Long-Term Incentive Plan.
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SEAL HOLDINGS CORPORATION
5601 North Dixie Highway, Suite 411
Fort Lauderdale, Florida 33334
Telephone No. (954) 771-5402
1999 ANNUAL MEETING OF SHAREHOLDERS - JUNE 17, 1999
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Robert G. Tancredi, M.D. and Cecilio M.
Rodriguez and either of them acting alone or, in the event of their inability or
unwillingness to serve, such other individuals as the Board of Directors may
designate, as proxyholders, each with full power of substitution and
resubstitution, and hereby authorizes any proxyholder to represent and vote, as
designated below, all of the shares of Common Stock of the Company that the
undersigned held on the Record Date at the Annual Meeting to be held on June 17,
1999, which includes any continuation of such meeting pursuant to any
adjournment of it to another time. Terms beginning with initial capital letters
that are used but not defined in this Proxy Card have the meanings given to them
in the Proxy Statement for the Annual Meeting.
The undersigned also hereby revokes previous proxies and acknowledges receipt of
the Company's Notice of Annual Meeting and Proxy Statement.
The Board recommends a vote FOR for Items 1-4. IF YOU DO NOT SPECIFY HOW YOU
INTEND TO VOTE, THIS PROXY WILL BE VOTED "FOR" EACH PROPOSAL. The proxies or
substitutes may vote accordingly in their discretion upon any other business
that may properly come before the Annual Meeting or any adjournments or
postponements of the Annual Meeting.
1. To elect Four Directors
a. Election of Class A Directors (to be elected by holders of the Class A
Common Stock Only).
THOMAS M. FERGUSON JOHN J. RYDZEWSKI
___ FOR THE NOMINEES LISTED ABOVE ___ WITHHOLD AUTHORITY TO VOTE FOR THE
NOMINEES LISTED ABOVE
List Exceptions:
b. Election of Class B Directors (to be elected by holders of the Class B
Common Stock Only).
M. LEE PEARCE, M.D. ROBERT G. TANCREDI, M.D.
___ FOR THE NOMINEES LISTED ABOVE ___ WITHHOLD AUTHORITY TO VOTE FOR THE
NOMINEES LISTED ABOVE
List Exceptions:
2. To amend the Certificate of Incorporation to increase the number of
authorized shares of the Company's (A) Class A Common Stock from 14,975,000
shares to 99,975,000 shares and (B) Preferred Stock from 3,000,000 shares to
25,000,000 shares:
___ FOR ___ AGAINST ___ ABSTAIN
3. To approve the Company's 1999 Long-Term Incentive Plan:
___ FOR ___ AGAINST ___ ABSTAIN
<PAGE>
4. To ratify the appointment of Ernst & Young LLP as the Company's independent
accountants for the fiscal year ended December 31, 1999:
___ FOR ___ AGAINST ___ ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the 1999 Stockholders' Annual Meeting
________________________________________________________________________________
________________________________________________________________________________
NOTE: Please sign this Proxy as your name appears hereon, including the title
"Executor," "Trustee," etc. if such is indicated. If a joint account, each joint
owner should each sign. If stock is held by a corporation, this Proxy should be
executed by a proper officer thereof.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
Dated: ______________________, 199__
____________________________________
Stockholder
____________________________________
Co-owner, if applicable
