IRREVOCABLE PROXY AND STOCK OPTION AGREEMENT
IRREVOCABLE PROXY AND STOCK OPTION AGREEMENT (this "Agreement"), dated
as of March 2, 1998, among Huhtamaki Oy, a corporation organized under the laws
of Finland ("Parent"), Seal Acquisition Corporation, a Delaware corporation and
wholly-owned subsidiary of Parent (the "Purchaser") and the other parties
signatory hereto (individually and collectively, the "Stockholder").
W I T N E S S E T H:
WHEREAS, Purchaser, Parent and Sealright Co. Inc., a Delaware
corporation (the "Company"), have entered into an Agreement and Plan of Merger
(as such agreement may be amended from time to time, the "Merger Agreement";
capitalized terms used and not defined herein have the respective meanings
assigned to them in the Merger Agreement) pursuant to which Purchaser will be
merged with and into the Company (the "Merger");
WHEREAS, the Stockholder owns, of record and beneficially, 4,455,115
shares of common stock of the Company (together with all other shares of common
stock of the Company acquired or otherwise received by the Stockholder on or
after the date of this Agreement, the "Shares");
WHEREAS, in order to induce Purchaser and Parent to execute the Merger
Agreement, the Stockholder has agreed to grant to Purchaser the Proxy (as
hereinafter defined), the Option (as hereinafter defined) and the other rights
herein provided;
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. IRREVOCABLE PROXY.
(a) Grant of Proxy. The Stockholder hereby constitutes and appoints
Xxxx Xxxxxxx, Xxxx Xxx and Xxxx Xxxxxxx, and each of them (the "Proxyholders"),
each with the power of substitution, as the lawful proxies for the Stockholder
to vote all of the Shares which the Stockholder is entitled to vote, for and in
the name, place and stead of the Stockholder, at any annual, special or other
meeting of the stockholders of the Company and at any adjournment thereof, or
pursuant to any consent in lieu of a meeting, at which meeting or in connection
with which consent action shall be taken (i) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
of the terms thereof and each of the other actions contemplated by the Merger
Agreement and this Agreement and any actions required in furtherance thereof and
hereof; (ii) against any action or agreement that would result in a breach in
any respect of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement or this Agreement; and
(iii) against the following actions (other than the Merger and the transactions
contemplated by the Merger Agreement): (A) any extraordinary corporation
transaction, such as a merger, consolidation or other business combination
involving the Company or its subsidiaries; (B) a sale, lease or transfer of a
material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C)(1) any change in a majority of the persons who constitute
the board of directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of Company's Certificate of
Incorporation or Bylaws; (3) any other material change in the Company's
corporate structure or business; or (4) any other action involving the Company
or its subsidiaries which is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone, or materially adversely affect the
Merger and the transactions contemplated by this Agreement and the Merger
Agreement (the "Proxy"). The Stockholder shall not enter into any agreement or
understanding the effect of which would be to violate the provisions and
agreements contained in this Section 1(a).
(b) Irrevocability of Proxy. The Proxy granted by the preceding
paragraph (a) is coupled with an interest and is therefore not revocable by the
Stockholder without the consent of Purchaser. Notwithstanding the foregoing,
such Proxy shall terminate upon the termination of this Agreement.
2. OPTION.
(a) Grant of Option. The Stockholder hereby grants to Purchaser an
irrevocable option (the "Option") to purchase the Shares in the manner and at
the purchase price set forth below.
(b) Exercise of Option. The Option may be exercised by Purchaser, in
whole or in part, at any time, or from time to time, after the occurrence of any
of the following events: (i) the Stockholder fails to vote or cause to be voted
all the Shares in favor of the Merger and the Merger Agreement pursuant to
Section 6 hereof; (ii) the Stockholder attempts to revoke the Proxy or otherwise
acts in violation of Section 1(a) hereof; (iii) there occurs an Acquisition
Proposal; or (iv) the Board of Directors determines that a proposal to acquire
the Company is a Superior Proposal (as defined in the Merger Agreement). If
Purchaser wishes to exercise the Option, Purchaser shall send a written notice
to the Stockholder specifying the number of Shares to be purchased upon such
exercise and a date (not less than five nor more than sixty days from the date
such notice is given, which date shall be postponed as appropriate to obtain any
necessary consents or approvals or to allow termination of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvement Act of 0000 (xxx "XXX Xxx") waiting period) for the
closing of such purchase (the "Option Closing"). Such Option Closing shall take
place at 10:00 A.M., local time, on the date specified in such notice at the
offices of Xxxxxx X. Xxxx Group, Inc., Twelve Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx
Xxxx, Xxxxxxxx 00000, or at such other place and time as the parties may
mutually agree. For purposes hereof, an "Acquisition Proposal" shall occur when
during the term of this Agreement, (x) any Person or Persons make an offer to
acquire any shares of the Company's common stock at a price in excess of $14.43
per share, including the value of stock of Flexible Company which is deemed to
be $3.43 for each of the Shares, either by means of a tender offer, an offer to
merge or consolidate or any other form of corporate reorganization, or (y) the
Company or any of its Representatives shall take any action to, directly or
indirectly, encourage, initiate or engage in discussions or negotiations with,
or provide any information to any Person or group of Persons, in violation of
the Merger Agreement, other than Purchaser, concerning any purchase of the
Company's common stock or any merger, consolidation or sale of substantial
assets or similar transaction involving the Company.
(c) Purchase Price. At the Option Closing, the Stockholder will
deliver to Purchaser a certificate or certificates representing the Shares being
purchased. Purchaser will purchase such Shares from the Stockholder by
delivering as consideration therefor the lesser of (i) the amount proposed to be
paid in connection with a Superior Proposal, and (ii) $14.43 per share in cash
in immediately available funds; provided, however, that if the Flexible Shares
are not distributed as part of the Redemption Consideration, such price will be
$11.00 plus the cash paid as part of the Redemption Consideration. If Purchaser
sells the Shares purchased from the Stockholder after the occurrence of an
Acquisition Proposal to the person making such Acquisition Proposal, then
Purchaser shall pay to the Stockholder one-half of the amount of the aggregate
net proceeds received by Purchaser in excess of $14.43 per Share. If at any time
the outstanding shares of the Company's capital stock are changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment or if a stock dividend thereon is declared with a record date prior
to the termination of this Agreement, then the number of shares of the Company's
common stock subject to the Option and the per share consideration to be paid by
Purchaser upon exercise of the Option shall be appropriately adjusted.
(d) HSR Filing. Purchaser and the Stockholder agree to file with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice all required pre-merger notification and report forms and
other documents and exhibits required to be filed under the HSR Act to permit
the purchase contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
hereby represents and warrants to Parent and Purchaser as follows:
(a) Ownership of Shares. The Stockholder is the record and beneficial
owner of the number of Shares set forth opposite such Stockholder's name on
Schedule I hereto. On the date hereof, the Shares set forth opposite such
Stockholder's name on Schedule I hereto constitute all of the Shares owned by
such Stockholder, except those shares of the Company's common stock received as
Director compensation. The Stockholder has sole voting power and sole power to
issue instructions with respect to the matters set forth in Sections 1, 2 and 6
hereof, sole power of disposition, sole power of conversion, sole power to
demand appraisal rights and sole power to agree to all of the matters set forth
in this Agreement, in each case with respect to all of the Shares set forth
opposite Stockholder's name on Schedule I hereto, with no limitations,
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement; provided, however, certain of the Shares
are pledged to secure loans as noted on Schedule I.
(b) Power; Binding Agreement. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by such Stockholder will not violate any other agreement to which
the Stockholder is a party including, without limitation, any voting agreement,
stockholders agreement or voting trust, except as may be restricted under the
Pledge Agreement described on Schedule I. This Agreement has been duly and
validly executed and delivered by the Stockholder and constitutes a valid and
binding agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which the Stockholder is trustee
whose consent is required for the execution and delivery of this Agreement or
the consummation by the Stockholder of the transactions contemplated hereby.
(c) No Conflict. Except for filings and approvals under the HSR Act,
the antitrust laws or the securities laws, if applicable, and the Pledge
Agreement described on Schedule I, (A) no filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by such Stockholder
and the consummation by such Stockholder of the transactions contemplated hereby
and (B) none of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such Stockholder with any of the provisions
hereof shall (1) conflict with or result in any breach of any applicable
organizational documents applicable to such Stockholder, (2) result in a
violation or breach of, or constitute (with or without notice of lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which such Stockholder is a party or by which such
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of such Stockholder's properties or
assets.
(d) No Finder's Fees. Except as disclosed in the Merger Agreement, no
broker, investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of such Stockholder.
(e) No Encumbrances. The Stockholder's Shares and the certificates
representing such Shares are now, and at all times during the term hereof will
be, held by such Stockholder, or by a nominee or custodian for the benefit of
such Stockholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever, except for any such encumbrances or proxies
arising hereunder and as noted on Schedule I.
(f) Reliance by Parent. The Stockholder understands and acknowledges
that Parent is entering into, and causing Purchaser to enter into, the Merger
Agreement in reliance upon the Stockholder's execution and delivery of this
Agreement.
4. REPRESENTATIONS OF PURCHASER. Purchaser represents and warrants to
the Stockholder that: (i) such entity is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation with full corporate power and authority to execute and deliver
this Agreement to perform its obligations hereunder; (ii) the execution and
delivery of this Agreement by such entity and the performance by it of its
obligations hereunder have been duly authorized by all necessary corporate
action on the part of such entity: (iii) this Agreement constitutes the legal,
valid and binding obligation of such entity enforceable against such entity in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally or by general principles, of equity; and (iv) any Shares acquired upon
exercise of the Option will not be acquired by Purchaser with a view to the
public distribution thereof and will not be transferred except pursuant to a
transaction which complies with the Securities Act of 1933, as amended, and
applicable state securities laws.
5. COVENANTS OF THE STOCKHOLDER. The Stockholder covenants and agrees
as follows:
(a) No Solicitation. During the term of this Agreement, the
Stockholder shall not (and shall not permit its Representatives to), in its
capacity as such, directly or indirectly, initiate, solicit (including by way of
furnishing information), encourage or respond to or take any other action
knowingly to facilitate, any inquiries or the making of any proposal by any
person or entity (other than Parent or any affiliate of Parent) with respect to
the Company that constitutes or reasonably may be expected to lead to, an
Acquisition Proposal, or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain any Acquisition Proposal, or agree to or endorse any Acquisition
Proposal, or authorize or permit any Person or entity acting on behalf of the
Stockholder to do any of the foregoing; provided, however, nothing in this
Agreement shall prevent Stockholder or its representatives from taking any
action in conformity with fiduciary duties as permitted in the Merger Agreement.
If the Stockholder receives any inquiry or proposal regarding any Acquisition
Proposal, the Stockholder shall promptly inform Parent of that inquiry or
proposal and the details thereof.
(b) Restriction on Transfer, Proxies and Non-Interference. During the
term of this Agreement, the Stockholder shall not (and shall not permit the
Stockholder's Representatives to): (i) directly or indirectly, offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Stockholder's Shares or any interest therein, except as may be permitted or
required under the Pledge Agreement described on Schedule I; (ii) except as
contemplated by this Agreement, grant any proxies or powers of attorney, deposit
any Shares into a voting trust or enter into a voting agreement with respect to
any Shares; or (iii) take any action that would make any representation or
warranty of such Stockholder contained herein untrue or incorrect or have the
effect of preventing or disabling the Stockholder from performing the
Stockholder's obligations under this Agreement.
(c) Waiver of Appraisal Rights. The Stockholder hereby irrevocably
waives any rights of appraisal or rights to dissent from the Merger that the
Stockholder may have.
(d) Stop Transfer. The Stockholder agrees with, and covenants to,
Parent and Purchaser that the Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Stockholder's Shares, unless
such transfer is made in compliance with this Agreement.
6. APPROVAL OF MERGER. The Stockholder agrees that, if requested by
the Proxyholders, the Stockholder will vote or cause to be voted all the Shares
in favor of the Merger and the Merger Agreement (and the documents and
transactions related thereto) at any meeting of the shareholders of the Company
held for the purpose of approving the Merger Agreement and the Merger.
7. FURTHER ASSURANCE AND ADJUSTMENTS. The Stockholder shall, upon the
reasonable request of Purchaser, execute and deliver any additional documents
necessary or desirable to effect any of the terms and provisions of this
Agreement. If at any time the Shares are changed into a different number of
Shares or a different class by reason of any reclassification, recapitalization,
split-up, combination, exchange of Shares or readjustment of the Company's
capital stock or if a stock dividend thereon is declared with a record date
prior to the termination of this Agreement, then the number of Shares subject to
the Proxy granted hereby and the voting rights to be exercised upon exercise
thereof shall be appropriately adjusted.
8. SPECIFIC PERFORMANCE. The parties hereto agree that if for any
reason the Stockholder failed to perform any of the Stockholder's obligations
under this Agreement, Purchaser would be irreparably damaged and money damages
would not constitute an adequate remedy. Accordingly, Purchaser shall be
entitled to specific performance and injunctive and other equitable relief to
enforce the performance of such obligations by the Stockholder. This provision
is without prejudice to any other rights Purchaser may have against the
Stockholder for failure to perform any of the Stockholder's obligations under
this Agreement.
9. TERM. This Agreement shall commence on the date hereof and the
Option shall end on the earlier of (i) ninety (90) days following the
termination of Merger Agreement in accordance with its terms or (ii) the
Effective Time (as defined in the Merger Agreement), except that, if the
Effective Time occurs, the obligations under Section 5(c) hereof shall terminate
on the first anniversary of the Effective Time. The Proxy shall terminate upon
termination of the Merger Agreement in accordance with its terms.
10. BINDING AGREEMENT. All authority and rights herein conferred or
agreed to be conferred by the Stockholder shall survive the death or incapacity
of the Stockholder. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, personal representatives,
successors and assigns.
11. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be hand delivered, delivered by courier
with receipt acknowledged or mailed first class, certified mail, with postage
prepaid, as follows:
If to Parent or Purchaser, to:
x/x Xxxxxxxxx Xx
Xxxxxxxxxxxxxx 0
00000 XXXXX, XXXXXXX
Attention: Xxxx Xxx
With a copy to:
White & Case
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
If to the Stockholder, to:
G. Xxxxxxx Xxxx
Xxxxxx X. Xxxx Group, Inc.
Twelve Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
With a copy to:
Xxxxxx X. Xxx Xxxx
Xxxxx Xxxx LLP
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxx 00000
12. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
the principles of conflicts of law thereof.
13. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which, taken together, shall
constitute one instrument.
14. SEVERABILITY. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby, unless the provisions held invalid shall
substantially impair the benefits of the remaining portions of this Agreement.
15. ENTIRE AGREEMENT. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreement and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
16. AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the relevant
parties with respect to any one or more Stockholders hereto provided that
Schedule I hereto may be supplemented by Purchaser or Parent by adding the name
and other relevant information concerning any shareholder of the Company who
agrees to be bound by the terms of this Agreement without the agreement of any
other party hereto, and thereafter such added shareholder shall be treated as a
Stockholder for all purposes of this Agreement.
17. NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof shall not constitute a waiver by such party of
its right to exercise any such or other right, power or remedy or to demand such
compliance.
18. DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, Parent, Purchaser and each Stockholder have caused
this Agreement to be duly executed as of the day and year first written above.
HUHTAMAKI OY XXXXXX X. XXXX GROUP, INC.
______________________________ ______________________________
Name: Name:
Title: Title:
HUHTAMAKI OY THE G. XXXXXXX XXXX
REVOCABLE TRUST DATED
2/28/89, AS AMENDED 12/8/94
______________________________ ______________________________
Name: Name:
Title: Title:
SEAL ACQUISITION CORPORATION THE XXXXXXX X. XXXXXX
TRUST DATED JULY 9, 1996
______________________________ ______________________________
Name: Name:
Title: Title:
SCHEDULE I
NAME OF STOCKHOLDER NUMBER OF SHARES
Xxxxxx X. Xxxx Group, Inc. 3,412,500
The G. Xxxxxxx Xxxx Revocable Trust 742,615
dated 2/28/89, as amended 12/8/94
The Xxxxxxx X. Xxxxxx Trust dated 300,000(1)
July 9, 1996
------------
4,455,115
-------------------
(1) These shares are pledged to NationsBank to secure certain loans
pursuant to a Pledge Agreement.
