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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 27, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934
April 12, 1999
Date of Report (Date of earliest event reported)
INTERNATIONAL MEDIA HOLDINGS, INC.
==================================
(Exact Name of registrant as Specified in its Charter)
FLORIDA 333-42499 59-3307487
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
9799 Old St. Augustine Road
Jacksonville, Florida 32257
(Address of principal executive offices)
(904) 886-2985
Registrant's telephone number, including area code
Success Development International, Inc.
(Former name or former address, if changed since last report)
===============================================================================
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to the Merger described in Item 2 below, the
management and ownership of International Media Holdings, Inc., a Florida
corporation ("IMH") has changed effective as of April 12, 1999 in accordance
with the information set forth in the sections entitled "Executive Officers and
Directors," "Security Ownership of Directors, Executive Officers & Principal
Shareholders," and "Security Ownership of Directors, Executive Officers &
Principal Shareholders if the Merger is Consummated" (pages 8 through 12) of
Schedule 14A filed with the Securities and Exchange Commission on March 1,
1999. Prior to the Merger, the directors and executive officers of IMH as a
group (6 persons as listed on page 11 of Schedule 14A) were the beneficial
owners of 43.26% of the outstanding shares and vested options for shares of
common stock ("Shares") of IMH. After the consummation of the Merger, the
directors and executive officers of IMH as a group (9 persons as listed on page
12 of Schedule 14A) are the beneficial owners of 68.45% of the outstanding
Shares and vested options for Shares of IMH. The consideration for the issuance
of additional Shares of IMH to the shareholders of Great Wisdom Publishing,
Inc., a Delaware corporation ("GWP"), the corporation acquired pursuant to the
Merger, is the acquisition by IMH of all of the assets of GWP, which became a
wholly-owned subsidiary of IMH as described in Item 2(a) below.
(b) The information required by Item 403(c) of Regulation S-B is
contained in pages 11 and 12 of Schedule 14A, as described in Item 1(a) above.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) Effective as of April 12, 1999 (the date of filing the
Articles of Merger with the Secretary of State of Delaware), IMH acquired all
of the assets of GWP in a non-taxable reverse triangular reorganization, as
described in the sections entitled "The Merger," "About SDI," and "About GWP"
(pages 4 through 8) of Schedule 14A, pursuant to the Agreement and Plan of
Merger attached hereto as Exhibit A. IMH formed a new wholly owned subsidiary,
GWP Target, Inc., a Florida corporation ("Target"), effective as of February
23, 1999 (the date of filing the Articles of Incorporation with the Secretary
of State of Florida). Pursuant to the Articles of Merger described above, GWP
merged into Target. Thereafter, the separate corporate existence of Target
ceased, and GWP continued as the surviving corporation, as a wholly-owned
subsidiary of IMH. The consideration for the acquisition of GWP was the
issuance of Shares of IMH to the shareholders of GWP at the Exchange Ratio
defined in page 5 of Schedule 14A (11,327.299 Shares of IMH for each share of
common stock of GWP). The amount of consideration was determined based upon a
fairness opinion (attached hereto as Exhibit B) dated March 23, 1999, issued by
Sheldrick, McGehee & Kohler, Inc., to the effect that as of the date of the
opinion, IMH and GWP were of substantially equal value from a financial point
of view, from the perspective of the shareholders of both IMH and GWP. Any
material relationships between GWP, its officers, directors, affiliates or
associates and IMH, its officers, directors, affiliates or associates are
disclosed in the sections entitled "Executive Officers and Directors,"
"Security Ownership of Directors, Executive Officers & Principal Shareholders,"
and "Security Ownership of Directors, Executive Officers & Principal
Shareholders if the Merger is Consummated" (pages 8 through 12) of Schedule
14A.
ITEM 5. OTHER EVENTS
Effective as of March 16, 1999 (the date of filing of the Articles of
Amendment to the Articles of Incorporation of Success Development
International, Inc. with the Secretary of State of Florida), the name of the
registrant was changed from Success Development International, Inc. to
International Media Holdings, Inc. The rationale for the name change is
described in the subsection entitled "The Name Change" (page 2) of Schedule
14A.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired. Audited financial
statements of GWP are not available as of the date of filing of this Form. The
most current unaudited consolidated financial statements of GWP and its
subsidiaries for the fiscal year ending June 30, 1997, the fiscal year ending
June 30, 1998, and the five-month interim period ending November 30, 1998 were
attached as Exhibit "E" to Schedule 14A. Audited financial statements of GWP
will be filed as an amendment to this Form as soon as practicable, but not
later than June 28, 1999.
(b) Pro forma financial information. The most current available
pro forma financial information of IMH and GWP was included in the section
entitled "Financial Statements and Other Financial Information" (page 15) of
Schedule 14A. Pro forma financial information as required by Item 310(d) of
Regulation S-B will be filed as an amendment to this Form as soon as
practicable, but not later than June 28, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
<TABLE>
<S> <C>
INTERNATIONAL MEDIA HOLDINGS, INC.
Date: April 27, 1999 By: /s/ JOSE A. ALVAREZ
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JOSE A. ALVAREZ
Executive Vice President & Chief Financial Officer
</TABLE>
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EXHIBIT "A"
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of the
8th day of March, 1999, by and between GREAT WISDOM PUBLISHING, INC., a
Delaware corporation (the "Company"), GWP TARGET, INC. (the "Merger Sub" or
"GWP Target"), and SUCCESS DEVELOPMENT INTERNATIONAL, INC., a Florida
corporation ("SDI").
P R E A M B L E
The respective Boards of Directors of the Company, Merger Sub, a
wholly-owned subsidiary of SDI, and SDI have approved, as in the best interests
of the respective corporations and their shareholders, this Agreement and the
transactions described herein. This Agreement provides for the acquisition of
the Company by SDI through the merger of the Merger Sub with and into the
Company (the "Merger'), upon the terms and subject to the conditions
hereinafter set forth, in which shares of the Company's Common Stock (as
defined in Section 4.01(b)(i) hereof) and the Company Stock Options (as defined
in Section 4.01(b)(ii) hereof) will be converted into the right to receive the
consideration set forth in Article V hereof.
ACCORDINGLY, in consideration of the mutual representations,
warranties and covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties agree as follows:
ARTICLE I
DEFINITIONS; ETC.
1.01 CERTAIN DEFINED TERMS. All capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings set forth in
Appendix A attached to this Agreement.
1.02 RULES OF CONSTRUCTION. The use of any gender shall include
all other genders. The singular shall include the plural and the plural shall
include the singular. The word "or" is not exclusive and the use of the word
"and" may be conjunctive or disjunctive. The use of the word "including" shall
not mean an exclusive or limiting list of items. The terms "hereof," "herein,"
"hereunder" and similar terms shall refer to this Agreement as a whole and not
to any particular provision of this Agreement.
1.03 HEADINGS. The Article headings and the section, subsection
and paragraph titles hereof are inserted for convenience of reference only, and
shall in no way alter or modify the text or substance of such Articles,
sections, subsections and paragraphs.
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ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.01 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 2.03 hereof), GWP
Target shall be merged with and into the Company in accordance with the
provisions of Section 607.1101 of the Florida Business Corporation Act (the
"FBCA"). The separate corporate existence of the Merger Sub shall cease and the
Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation") under the corporate name of "Great Wisdom Publishing,
Inc." and shall continue to be governed by the Laws of the State of Delaware.
2.02 PLACE AND TIME OF CLOSING. Unless this Agreement is
terminated pursuant to Section 10.01 hereof, the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at (a) the
offices of Milam Otero Larsen Dawson & Traylor, P.A., 50 North Laura Street,
Suite 2750, Jacksonville, Florida 32202, at 4:00 p.m., March 8, 1999, or as
soon as practicable after the satisfaction or, where permissible, waiver, of
the conditions set forth in Article X of this Agreement occurs, or (b) such
other time, place and/or date (after the satisfaction or waiver of such
conditions) as the Parties may agree to in writing (the "Closing Date").
2.03 EFFECTIVE TIME. The Merger shall become effective on the date
and at the time on which articles of merger containing the provisions required
by, and executed in accordance with, Section 607.1105 of the FBCA (the
"Articles of Merger") shall have been accepted for filing by the Secretary of
State of the State of Florida, or such later date and time as may be specified
in the Articles of Merger (the "Effective Time").
2.04 EFFECT OF THE MERGER. The Merger shall have the effect
provided therefor by the FBCA and, upon the effectiveness of the Merger, the
Surviving Corporation shall possess, without limitation, all the rights,
privileges, powers and franchises, and be subject to all the restrictions,
disabilities and duties, of each of the Merger Sub and the Company
(collectively, the "Constituent Corporations"). Any and all of the rights,
privileges, powers and franchises of each of the Constituent Corporations, and
all property, real, personal and mixed, tangible and intangible, and all debts
due to either of the Constituent Corporations on whatever account, shall be
vested in the Surviving Corporation. All property, rights, privileges, powers
and franchises, and all and every other interest of either of the Constituent
Corporations shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporations, and the title to any
real estate vested by deed or otherwise in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of the
Merger. All rights of creditors and all liens upon any property of either of
the Constituent Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of either of the Constituent Corporations shall
thenceforth attach to the Surviving Corporation, and may be enforced against it
to the same extent as if said debts, liabilities and duties had been incurred
or contracted by it.
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ARTICLE III
ARTICLES, BYLAWS, DIRECTORS AND
OFFICERS OF THE SURVIVING CORPORATION
3.01 ARTICLES OF INCORPORATION. The articles of incorporation of
the Company in effect immediately prior to the consummation of the Merger shall
be the articles of incorporation of the Surviving Corporation from and after
the Effective Time, until thereafter amended or repealed in accordance with the
provisions thereof and as provided by the laws of Delaware.
3.02 BYLAWS. The bylaws of the Company in effect immediately prior
to the consummation of the Merger shall be the bylaws of the Surviving
Corporation from and after the Effective Time, until thereafter amended or
repealed in accordance with the provisions thereof and as provided by the laws
of Delaware.
3.03 DIRECTORS AND OFFICERS. The initial directors of the
Surviving Corporation shall be the directors of the Company immediately prior
to the Effective Time, in each case until their successors are duly elected and
qualified, and the officers of the Company immediately prior the Effective
Time, in each case until their successors are duly elected and qualified.
ARTICLE IV
MANNER OF CONVERTING SHARES
4.01 CONVERSION. Subject to the provisions of this Article IV, at
the Effective Time, by virtue of the Merger and without any action on the part
of the holders thereof, the shares of Common Stock (and in the case of the
Company, the options to purchase such Common Stock) of the Merger Sub and
Company shall be converted as follows:
(a) Merger Sub. Each share of common stock, par value
$.001 per share, of the Merger Sub issued and outstanding immediately
prior to the Effective Time shall automatically be cancelled and shall
cease to exist, and each certificate previously representing any such
shares of Merger Sub common stock shall be converted into one (1)
share of Company Common Stock.
(b) The Company.
(i) Common Stock. Except (A) as set forth in
Section 4.02 of this Agreement and (B) for any Dissenting
Shares (as defined in Section 4.03 hereof), each share of the
Company's common stock, $.001 par value (the "Company Common
Stock"), that is issued and outstanding immediately prior to
the Effective Time shall be converted into 11,327.299 shares
of common stock, par value $.001 per share, of SDI ("SDI
Stock"), provided that any fractional shares resulting from
such multiplication will be rounded to the nearest whole
share.
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(ii) Stock Options. Each option to purchase
shares of Company Common Stock (individually, a "Company
Stock Option" and collectively, the "Company Stock Options")
that is issued and outstanding immediately prior to the
Effective Time, whether or not then vested or exercisable,
shall be canceled and the holder thereof shall be entitled to
the same option agreement previously entered into for shares
of SDI's common stock to replace the shares of Company Common
Stock subject to such option. The shares of Company Common
Stock subject to any options to purchase shall be converted
into an option to purchase 11,327.299 shares of common stock,
par value $.001 per share, of SDI, provided that any
fractional shares resulting from such multiplication will be
rounded to the nearest whole share. The exercise price per
share of SDI common stock under the new option will be equal
to the exercise price per share of Company Common Stock under
the original option immediately prior to the Effective Time
divided by 11,327.299, provided that such exercise price will
be rounded to the nearest whole cent.
4.02 CANCELLATION OF TREASURY STOCK. Each share of Company Common
Stock that may be held in the treasury by the Company shall be cancelled and
retired and no Common Stock of the Surviving Corporation, cash or other
consideration shall be paid or delivered in exchange therefor.
4.03 DISSENTING SHARES. Notwithstanding anything herein to the
contrary, each of the shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and that are held by shareholders, if
any, who are entitled to assert a right under the Delaware General Business
Corporation Act to dissent from the Merger and who validly perfect their rights
under the Delaware General Business Corporation Act to receive the fair value
of their shares with respect to the Merger (the "Dissenting Shares") shall not
be converted into or be exchangeable for the right to receive the per share
purchase price, but the holders of such shares of Company Common Stock shall be
entitled solely to payment of the fair value of such shares in accordance with
the provisions of the Delaware General Business Corporation Act; provided,
however, that:
(a) if such demand for payment of fair value shall be
withdrawn upon the consent of the Surviving Corporation;
(b) if this Agreement shall be terminated or the Merger
shall not be consummated;
(c) if no demand or petition for the determination of
fair value by a court shall have been made or filed within the time
provided in the provisions of the Delaware General Business
Corporation Act; or
(d) if a court of competent jurisdiction shall determine
that such holder of Dissenting Shares is not entitled to the relief
provided by the provisions of the Delaware General Business
Corporation Act:
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then the right of such holder of Dissenting Shares to be paid the fair value of
such holder's shares of the Company Common Stock shall cease and, with respect
to clauses (a), (c) and (d) above, such Dissenting Shares shall thereupon be
deemed to have been converted into and to have become exchangeable for, as of
the Effective Time, the right to receive the amount into which such shares
would have been converted in the Merger in accordance with Sections 4.01(b)(i)
and (ii) hereof, without any interest thereon, and, with respect to clause (b)
above, the status of such shareholder shall be restored retroactively without
prejudice to any corporate proceeding that may have been taken during the
interim.
4.04 TRANSFERS. At the Effective Time, the stock transfer book of
the Merger Sub shall be closed as to holders of the Merger Sub Common Stock and
Company Stock Options immediately prior to the Effective Time and no transfers
of the Company Common Stock by any such holder shall thereafter be made or
recognized. If, after the Effective Time, certificates representing Company
Common Stock or Company Stock Options (collectively, "Certificates") are
properly presented in accordance with Article V of this Agreement to the
Exchange Agent (as defined in Section 5.01 hereof), such Certificates shall be
canceled and exchanged for checks representing the amount of cash into which
the Company Common Stock and Company Stock Options represented thereby were
converted in the Merger.
ARTICLE V
EXCHANGE OF SHARES
5.01 PURCHASER STOCK. SDI and the Company agree that Jose A.
Alvarez shall be the exchange agent for the Merger (the "Exchange Agent"). SDI
shall deposit, or cause to be deposited, with the Exchange Agent at the
Effective Time Twelve Million Five Hundred Fifty Thousand Six Hundred
Forty-seven (12,550,647) shares of SDI Stock (the "Payment Fund"). As soon as
practicable after the Effective Time, SDI shall cause the Exchange Agent to
forward to each holder of record of a Certificate or Certificates a form letter
of transmittal (which shall specify that a delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for SDI Stock into which the shares
of Company Common Stock represented by such Certificate or Certificates shall
have been converted pursuant to this Agreement. Upon surrender of a Certificate
for exchange and cancellation to the Exchange Agent, together with such letter
of transmittal, duly executed, holders of Company Common Stock so converted
shall be entitled to receive therefor a stock certificate representing the
shares of SDI Stock being paid for the aggregate number of shares of Company
Common Stock previously represented by the Certificates surrendered. SDI Stock
delivered to the stockholders of the Company upon the surrender of Certificates
in accordance with the terms hereof shall be deemed to have been fully paid,
issued and distributed in full satisfaction of all rights of the stockholders
of the Company in the shares of Company Common Stock.
5.02 LOST OR STOLEN CERTIFICATES. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such
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Certificate to be lost, stolen or destroyed and, if required by SDI, the
posting by such Person of a bond (the term of which bond shall not be for a
period of time greater than one (1) year) in such amount as SDI may direct (but
in no event greater than the aggregate per share purchase price to be paid to
such holder with respect to the Certificate) as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed Certificate the
cash deliverable in respect thereof pursuant to this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to SDI, with such exceptions and
qualifications as are stated in this Article VI or are as set forth in the
schedules attached to this Agreement and made a part hereof and incorporated
herein by this reference, as follows:
6.01 ORGANIZATION, STANDING, AND AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware. The Company has the corporate power and
authority to own, lease and operate all of its Assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the Assets owned or leased by it makes such
licensing or qualification necessary, except where the failure to be so
licensed or qualified will not have, or is not reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Condition of
the Company or its ability to consummate the transactions contemplated by this
Agreement. The Company has delivered to SDI accurate and complete copies of its
articles of incorporation and bylaws as in effect on the date of this
Agreement.
6.02 AUTHORIZATION OF TRANSACTION. Except as set forth on Schedule
6.02, the Company has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby, subject
to the approval of the Company's shareholders to the extent required by
applicable Law. The execution and delivery of this Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of the Company and,
except for the approval and adoption of the Merger by the Company's
shareholders, no other corporate proceedings on the part of the Company are
necessary to authorize the Merger provided in this Agreement and the
transactions contemplated hereby. This Agreement has been duly and validly
executed by the Company and, assuming this Agreement constitutes a valid and
binding agreement of SDI, represents a valid and legally binding obligation of
the Company enforceable against the Company in accordance with its terms,
subject to the Bankruptcy Exception and subject, as to enforceability, to
general principles of equity, whether applied in a proceeding in equity or at
law.
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6.03 CAPITALIZATION OF THE COMPANY.
(a) The authorized Common Stock of the Company consists
of three thousand (3,000) shares of Company Common Stock of which, at
the close of business on February 22, 1999, one thousand one hundred
eight (1,108) shares were issued and outstanding and one thousand nine
hundred seventy-two (1,972) shares were treasury shares. All of the
issued and outstanding shares of the Company Common Stock are duly and
validly issued and are fully paid and nonassessable. None of the
outstanding shares of the Company Common Stock has been issued in
violation of any preemptive rights.
(b) As of the date of this Agreement, the Company had
outstanding and unexercised Company Stock Options and restricted stock
covering one hundred forty-six (146) shares of the Company Common
Stock.
(c) Except as set forth in Sections 6.03(a) and (b)
herein, there are no shares of stock or other equity securities of the
Company outstanding and no outstanding options, warrants, rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the stock of the Company or Contracts by which the
Company is or may be bound to issue additional shares of its stock or
options, warrants or rights to purchase or acquire any additional
shares of its stock. Except as set forth in Schedule 6.03(c), there
are no Contracts by which the Company is or may be bound to transfer
any shares of the common stock of the Company, and there are no
Contracts relating to the right of the Company to vote or to dispose
of such shares.
6.04 FINANCIAL STATEMENTS. The Company has delivered to SDI copies
of its consolidated balance sheets and the related consolidated statements of
income as of and for the periods ended November 30, 1998, June 30, 1998, and
June 30, 1997 (collectively, with the financial statements to be delivered by
the Company to SDI, the "Company Financial Statements"). The Company Financial
Statements (a) are, or will be, prepared in accordance with GAAP consistently
applied during such periods, (b) are, or in the case of the Company Financial
Statements dated as of dates after the date of this Agreement will be, in
accordance with the Books and Records of the Company and that are or will be,
as the case may be, complete and correct and that have been or will have been,
as the case may be, maintained in accordance with good business practices, and
(c) present or will present, as the case may be, fairly the financial position
and the results of operations of the Company as of the dates indicated in
accordance with GAAP consistently applied during such periods.
6.05 SUBSIDIARIES.
(a) Except as set forth in Schedule 6.05, the Company
has no direct or indirect Subsidiaries. The Company owns beneficially
and of record all the issued and outstanding stock of each of its
Subsidiaries, free and clear of all liens, claims, security interests
or other encumbrances. All of such stock was validly issued and is
fully paid and nonassessable. Except for shares of such Subsidiaries
registered in the name of the
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Company, no shares of stock or other equity securities of the
Company's Subsidiaries are or may become required to be issued by
reason of any options, warrants, rights to subscribe to, call or
commitments of any character whatsoever related to, or securities or
rights convertible into or exchangeable for, shares of the stock of
any of the Company's Subsidiaries, and there are no Contracts by which
any of the Company's Subsidiaries is or may be bound to issue
additional shares of its stock or options, warrants or rights to
purchase or acquire any additional shares of its stock. Except as set
forth in Schedule 6.03(c), there are no Contracts by which the Company
or any of its Subsidiaries is or may be bound to transfer any shares
of the stock of any such Subsidiary, and there are no Contracts
relating to the right of the Company or any such Subsidiary to vote or
to dispose of such shares.
(b) Each of the Company's Subsidiaries (i) is a
corporation duly organized, validly existing and in good standing
under the Laws of the jurisdiction of its incorporation, (ii) has the
corporate power and authority to own, lease and operate all of its
Assets and to carry on its business as it is now being conducted,
(iii) is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or
the character or location of the Assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to
be so licensed or qualified will not have, or is not reasonably likely
to have, individually or in the aggregate, a material adverse effect
on the Condition of such Subsidiary or the Company. The Company has
delivered to SDI accurate and complete copies of the articles of
incorporation and bylaws of each of its Subsidiaries, as in effect on
the date of this Agreement.
(c) Each of the representations and warranties made by
the Company in Sections 6.06 - 6.20 of this Agreement with respect to
the Company shall be deemed to have been made by the Company with
respect to each of the Company's Subsidiaries.
6.06 NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement by the Company, the consummation by the Company of the transactions
contemplated hereby nor the compliance by the Company with any of the
provisions herein will:
(a) conflict with or result in a breach of any provision
of the Company's articles of incorporation or bylaws;
(b) constitute or result in a violation or breach of any
term, condition or provision of, or constitute a default with or
without notice of lapse of time or both under, or give rise to any
right of termination, cancellation or acceleration of any obligation
or the loss of a benefit with respect to, or result in the creation of
any lien upon any of the Assets of the Company pursuant to, any
Contract to which the Company is a party or by which it or any of its
Assets may be subject, except for such violations, breaches, defaults,
terminations, cancellations, accelerations or creations that will not
have, or are not reasonably likely to have, individually or in the
aggregate, a material adverse effect on the Condition of the Company;
or
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(c) subject SDI to the required receipt of the Requisite
Regulatory Approvals (as hereinafter defined), violate any Law, Order
or Authorization applicable to the Company or any of its Assets.
6.07 CONSENTS. Except as set forth in Schedule 6.07, no Consent of
any Person is necessary to be obtained or made by the Company in connection
with the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby, other
than:
(a) Consents of the Governmental Entity having
jurisdiction with respect to the business of the Company in each state
in which the Company is doing business;
(b) the approval of the Company's shareholders;
(c) the filing of the Articles of Merger with the
Secretary of State of the State of Florida; and
(d) Consents that, if not obtained, will not have, or
are not reasonably likely to have, individually or in the aggregate, a
material adverse effect on the ability of the Company to consummate
the transactions contemplated hereby.
6.08 ABSENCE OF UNDISCLOSED LIABILITIES. To the Company's
knowledge, the Company has no undisclosed Liabilities that will have, or are
reasonably likely to have, individually or in the aggregate, a material adverse
effect on the Condition of the Company, except for material Liabilities that:
(a) are accrued or reserved against in the consolidated
balance sheet of the Company as of November 30, 1998, included in the
Company financial statements or reflected in the notes thereto;
(b) were incurred after November 30, 1998, in the
ordinary course of business consistent with past practice; or
(c) incurred in connection with the Merger or as
otherwise contemplated or permitted by this Agreement.
6.09 TAX MATTERS.
(a) Except as set forth on Schedule 6.09, the Company
has (i) timely filed all Tax Returns (or requests for extensions
thereof) required to be filed by it on or before the date hereof, and
all such Tax Returns were true, complete and accurate in all material
respects, and (ii) timely paid in full, or made adequate provision on
the Company Financial Statements delivered prior to the date of this
Agreement for the payment of, all Taxes that are due and payable with
respect to such Tax Returns. There is no audit, examination,
deficiency or refund Litigation with respect to any Taxes that will
result, or
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is reasonably likely to result in, a determination that would have a
material adverse effect on the Condition of the Company, except as
reserved against the Company Financial Statements delivered prior to
the date of this Agreement.
(b) The Company has not received any written notice of
deficiency or assessment (or other written notice) from any Taxing
Authority with respect to Liabilities for Taxes that have not been
fully paid or finally settled.
(c) The Company has not executed any extension or waiver
that is currently in effect of any statute of limitation on the
assessment or collection of any Tax (excluding such statutes that
relate to years currently under examination by the IRS or other
applicable Taxing Authorities).
(d) All Taxes that the Company is required by Law to
withhold or to collect for payment have been duly withheld and
collected, and all such Taxes that are required to be paid or remitted
to any Taxing Authority have been paid or remitted to the proper
Taxing Authority, other than those Taxes, the failure of which to be
so withheld, collected or remitted will not have, or are not
reasonably likely to have, individually or in the aggregate, a
material adverse effect on the Condition of the Company.
(e) There are no Liens with respect to Taxes upon any of
the Assets of the Company other than for Taxes not yet due and
payable.
6.10 ASSETS. The Company has good and marketable title, free and
clear of all Liens that are material to the Condition of the Company, to all
its Assets that are material to the Condition of the Company, and that are
reflected in the Company Financial Statements as being owned by the Company as
of the date hereof.
6.11 COMPLIANCE WITH LAWS.
(a) The Company holds all Authorizations of all
Governmental Entities that are required in order to permit it to carry
on its business in all material respects as it is presently conducted,
except where failure to hold such Authorizations will not have, or is
not reasonably likely to have, individually or in the aggregate, a
material adverse effect on the Condition of the Company. The Company,
and the business of the Company, is in compliance with all Laws,
Orders or Authorizations, except for possible violations that will not
have, or are not reasonably likely to have, individually or in the
aggregate, a material adverse effect on the Condition of the Company.
(b) The Company has not received any written
notification or communication from any Governmental Entity (i)
asserting that the Company is not in compliance with any Law that such
Governmental Entity enforces, that will have, or is reasonably likely
to have, individually or in the aggregate, a material adverse effect
on the Condition of the Company, or (ii) threatening to revoke any
Authorization, the revocation of which will
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<PAGE> 14
have, or is reasonably likely to have, individually or in the
aggregate, a material adverse effect on the Condition of the Company.
6.12 COMMITMENTS AND CONTRACTS.
(a) Except as set forth on Schedule 6.12, the Company is
not a party to or subject to any Contract:
(i) with any present or former officer,
director or employee, other than those that are terminable at
will by the Company without liability (other than Liability
for services already rendered) at any time prior to Closing.
(ii) for the lease of real property by the
Company;
(iii) between the Company and any of its
Affiliates;
(iv) relating to the borrowing of money or the
guarantee by the Company of any such obligation; or
(vi) containing noncompetition covenants that
limit the ability of the Company to compete in any line of
business or that involve any restriction of the geographical
area in which the Company may carry on its business (other
than such limitations or restrictions as may be required by
Law or applicable Governmental Entities).
(b) The Company has made available to SDI certain copies
of material Contracts relating to financing and/or employment. With
respect to each Contract:
(i) the Contract is valid, binding and in full
force and effect;
(ii) the Company has not repudiated or waived
any material provision of any such Contract; and
(iii) no other party to any such Contract is, to
the Knowledge of the Company, in default in any respect
thereunder.
(c) With respect to any lease of real property:
(i) all rents and other amounts currently due
thereunder have been paid and no waiver or indulgence or
postponement of any obligation thereunder has been granted by
any lessor or sub-lessor; and
(ii) the Company has not entered into any
sublease or assignment with respect to its interest in such
lease.
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<PAGE> 15
6.13 MATERIAL CONTRACT DEFAULTS. The Company is not and has not
received any written notice and has no Knowledge that it is in default in any
respect under any Contract to which it or by which its Assets, business or
operations thereof may be bound or affected or under which it or its Assets,
business or operations receive benefits except for those defaults, that either
alone or when combined with all similar liabilities, that would have a material
adverse effect on the Condition of the Company, and there has not occurred any
event that with the lapse of time or the giving of notice or both would
constitute such a default.
6.14 LEGAL PROCEEDINGS. There is no Litigation pending or, to the
Knowledge of the Company, threatened against the Company, as to which there is
a reasonable possibility of an adverse determination and that, if adversely
determined, will have, or is reasonably likely to have, individually or in the
aggregate, a material adverse effect on the Condition of the Company, nor is
there any Order imposed on the Company that will have, or is reasonably likely
to have, individually or in the aggregate, such a material adverse effect.
6.15 STATEMENTS TRUE AND CORRECT.
(a) The representations and warranties of the Company
set forth in this Agreement, and in the documents delivered by the
Company to SDI pursuant hereto, are, as of the date hereof, and will
be, as of the Effective Time, true and correct in all respects (except
as otherwise contemplated herein).
(b) All documents that the Company is responsible for
filing with any Governmental Entity in connection with the
transactions contemplated hereby will comply as to form in all
material respects with the provisions of applicable Law.
6.16 BROKERS AND FINDERS. Neither the Company nor any of its
officers, directors or employees has employed any broker or finder or incurred
any material liability for any financial advisory fees, brokerage fees,
commissions or finder's fees, and no broker or finder has acted directly or
indirectly for the Company in connection with this Agreement or the
transactions contemplated hereby.
6.17 EMPLOYEE BENEFIT PLANS. The Company represents and warrants
that it has no employee pension or profit sharing plans.
6.18 ENVIRONMENTAL MATTERS. To the Knowledge of the Company, the
Company is, and has been, in compliance with all applicable Environmental Laws,
except for violations that will not have, or are not reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Condition of
the Company and there is no Litigation pending or threatened, before any court,
Governmental Entity or other forum in which the Company has been or, with
respect to threatened Litigation, may be, named as a defendant (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law, or
(ii) relating to the release into the environment of any Hazardous Material or
oil whether or not occurring at or on a site owned, leased or operated by the
Company, nor to the Knowledge of the Company, is there any reasonable basis for
any such Litigation.
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<PAGE> 16
6.19 LABOR MATTERS. The Company is not a party to, or bound by,
any collective bargaining agreement or other Contract with a labor union or
labor organization, nor is it the subject of any material Litigation asserting
that it has committed an unfair labor practice (within the meaning of the
National Labor Relations Act or comparable state Laws) or seeking to compel it
to bargain with any labor organization as to wages or conditions of employment
nor is there any strike or other labor dispute involving it pending or, to its
Knowledge, threatened, any of which will have, or is reasonably likely to have,
a material adverse effect on the Condition of the Company.
6.20 INSURANCE. The Company is insured with reputable insurers
against such risks and in such amounts normally insured against by companies of
the same type and in the same line of business. All of the insurance policies,
binders or bonds maintained by the Company is in full force and effect and the
Company is not in default thereunder. All claims thereunder have been filed in
due and timely fashion and all such policies, binders and bonds will remain in
full force and effect after the Closing Date, unaffected by the transactions
contemplated hereby.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF SDI
SDI represents and warrants to the Company as follows:
7.01 ORGANIZATION, STANDING, AND AUTHORITY. SDI is, and the Merger
Sub upon its formation will be, a corporation duly organized, validly existing
and in good standing under the Laws of its jurisdiction of incorporation. SDI
has the corporate power and authority to own, lease and operate all of its
Assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature
of the business conducted by it or the character or location of the Assets
owned or leased by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified will not have, or is not
reasonably likely to have, a material adverse effect on the Condition of SDI or
its ability to consummate the transactions contemplated in this Agreement.
7.02 AUTHORIZATION OF TRANSACTION. SDI has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of SDI and no other corporate proceeding on the part of SDI is necessary
to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed by SDI and, assuming this Agreement constitutes a
valid and binding agreement of the Company, represents a valid and legally
binding obligation of SDI enforceable against SDI in accordance with its terms,
subject to the Bankruptcy Exception and subject, as to enforceability, to
general principles of equity, whether applied in a proceeding in equity or at
law.
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<PAGE> 17
7.03 CAPITALIZATION OF SDI.
(a) The authorized capital stock of SDI consists of
Twenty-five Million (25,000,000) shares of SDI Common Stock of which,
at the close of business on February 9, 1999, Eleven Million Three
Hundred Sixteen Thousand Five Hundred Ninety-three (11,316,593) shares
were issued and outstanding. All of the issued and outstanding shares
of SDI Common Stock are duly and validly issued and are fully paid and
nonassessable.
(b) As of the date of this Agreement, SDI had
outstanding stock options, restricted stock and convertible debentures
in the amount of Two Million Eight Hundred Eighty-seven Thousand Eight
Hundred Forty (2,887,840) shares of SDI Common Stock.
(c) Except as set forth in Sections 7.03(a) and (b)
herein, there are no shares of stock or other equity securities of SDI
outstanding and no outstanding options, warrants, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of
the stock of SDI or Contracts by which SDI is or may be bound to issue
additional shares of its stock or options, warrants or rights to
purchase or acquire any additional shares of its stock.
7.04 FINANCIAL STATEMENTS. SDI has delivered to Company copies of
its consolidated balance sheets and the related consolidated statements of
income as of and for the periods ended September 30, 1998 (collectively, with
the financial statements to be delivered by SDI to Company, the "SDI Financial
Statements"). The SDI Financial Statements (a) are, or will be, prepared in
accordance with GAAP, consistently applied during such periods, (b) are, or in
the case of SDI's Financial Statements dated as of dates after the date of this
Agreement will be, in accordance with the Books and Records of SDI and that are
or will be, as the case may be, maintained in accordance with good practices,
and (c) present or will present, as the case may be, fairly the financial
position and the results of operations of SDI as of the dates indicated in
accordance with GAAP, consistently applied during such periods.
7.05 SUBSIDIARIES.
(a) Except as set forth in Schedule 7.05, SDI has no
direct or indirect Subsidiaries. SDI owns beneficially and of record
all the issued and outstanding stock of each of its Subsidiaries, free
and clear of all liens, claims, security interests or other
encumbrances. All of such stock was validly issued and is fully paid
and nonassessable. Except for shares of such Subsidiaries registered
in the name of SDI, no shares of stock or other equity securities of
SDI's Subsidiaries are or may become required to be issued by reason
of any options, warrants, rights to subscribe to, call or commitments
of any character whatsoever related to, or securities or rights
convertible into or exchangeable for, shares of the stock of any of
SDI's Subsidiaries. There are no Contracts by which SDI or any of its
Subsidiaries is or may be bound to transfer any shares of the stock of
any
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<PAGE> 18
such Subsidiary, and there are no Contracts relating to the right of
SDI or any such Subsidiary to vote or to dispose of such shares.
(b) Each of SDI's Subsidiaries (i) is a corporation duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation, (ii) has the corporate power and
authority to own, lease and operate all of its Assets and to carry on
its business as it is now being conducted, (iii) is duly licensed or
qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the
Assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified
will not have, or is not reasonably likely to have, individually or in
the aggregate, a material adverse effect on the Condition of such
Subsidiary or SDI.
(c) Each of the representations and warranties made by
SDI in Sections 7.06 - 7.20 of this Agreement with respect to SDI
shall be deemed to have been made by SDI with respect to each of SDI's
Subsidiaries.
7.06 NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement by SDI, the consummation by SDI of the transactions contemplated
hereby nor the compliance by SDI with any of the provisions herein will:
(a) conflict with or result in a breach of any provision
of SDI's articles of incorporation or bylaws;
(b) constitute or result in a violation or breach of any
term, condition or provision of, or constitute a default with or
without notice of lapse of time or both under, or give rise to any
right of termination, cancellation or acceleration of any obligation
or the loss of a benefit with respect to, or result in the creation of
any lien upon any of the Assets of SDI pursuant to, Contract to which
SDI is a party or by which it or any of its Assets may be subject,
except for such violations, breaches, defaults, terminations,
cancellations, accelerations or creations that will not have, or are
not reasonably likely to have, individually or in the aggregate, a
material adverse effect on the Condition of SDI; or
(c) subject to receipt of the Requisite Regulatory
Approvals, violate any Law, Order or Authorization applicable to SDI
or any of its Assets.
7.07 CONSENTS. No Consent of any Person is necessary to be
obtained or made by SDI in connection with the execution and delivery of this
Agreement by SDI or the consummation by SDI of the transactions contemplated
hereby, other than:
(a) Consents of the Governmental Entity having
jurisdiction with respect to the business of SDI in each state in
which the Company is doing business;
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<PAGE> 19
(b) the filing of the Articles of Merger with the
Secretary of State of the State of Florida; and
(c) Consents that, if not obtained, will not have, or
are not reasonable likely to have, individually or in the aggregate, a
material adverse effect on the ability of SDI to consummate the
transactions contemplated hereby.
7.08 ABSENCE OF UNDISCLOSED LIABILITIES. To SDI's knowledge, SDI
has no undisclosed Liabilities that will have, or are reasonably likely to
have, individually or in the aggregate, a material adverse effect on the
Condition of SDI, except for material Liabilities that:
(a) are accrued or reserved against in the consolidated
balance sheet of SDI as of September 30, 1998, included in SDI's
financial statements or reflected in the notes thereto;
(b) were incurred after September 30, 1998, in the
ordinary course of business consistent with past practice; or
(c) incurred in connection with the Merger or as
otherwise contemplated or permitted by this Agreement.
7.09 TAX MATTERS.
(a) Except as set forth on Schedule 7.09, SDI has (i)
timely filed all Tax Returns (or requests for extensions thereof)
required to be filed by it on or before the date hereof, and all such
Tax Returns were true, complete and accurate in all material respects,
and (ii) timely paid in full, or made adequate provision on SDI's
Financial Statements delivered prior to the date of this Agreement for
the payment of, all Taxes that are due and payable with respect to
such Tax Returns. There is no audit, examination, deficiency or refund
Litigation with respect to any Taxes that will result, or is
reasonably likely to result in, a determination that would have a
material adverse effect on the Condition of SDI, except as reserved
against SDI's Financial Statements delivered prior to the date of this
Agreement.
(b) SDI has not received any written notice of
deficiency or assessment (or other written notice) from any Taxing
Authority with respect to Liabilities for Taxes that have not been
fully paid or finally settled.
(c) SDI has not executed any extension or waiver that is
currently in effect of any statute of limitation on the assessment or
collection of any Tax (excluding such statutes that relate to years
currently under examination by the IRS or other applicable Taxing
Authorities).
(d) All Taxes that SDI is required by Law to withhold or
to collect for payment have been duly withheld and collected, and all
such Taxes that are required to be
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<PAGE> 20
paid or remitted to any Taxing Authority have been paid or remitted to
the proper Taxing Authority, other than those Taxes, the failure of
which to be so withheld, collected or remitted will not have, or are
not reasonably likely to have, individually or in the aggregate, a
material adverse effect on the Condition of SDI.
(e) There are no Liens with respect to Taxes upon any of
the Assets of SDI other than for Taxes not yet due and payable.
7.10 ASSETS. Except as disclosed in SDI's Financial Statements,
SDI has good and marketable title, free and clear of all Liens that are
material to the Condition of SDI, to all its Assets that are material to the
Condition of SDI, and that are reflected in SDI's Financial Statements as being
owned by SDI as of the date hereof.
7.11 COMPLIANCE WITH LAWS.
(a) SDI holds all Authorizations of all Governmental
Entities that are required in order to permit it to carry on its
business in all material respects as it is presently conducted, except
where failure to hold such Authorizations will not have, or is not
reasonably likely to have, individually or in the aggregate, a
material adverse effect on the Condition of SDI. SDI, and the business
of SDI, is in compliance with all Laws, Orders or Authorizations,
except for possible violations that will not have, or are not
reasonably likely to have, individually or in the aggregate, a
material adverse effect on the Condition of SDI.
(b) SDI has not received any written notification or
communication from any Governmental Entity (i) asserting that SDI is
not in compliance with any Law that such Governmental Entity enforces,
that will have, or is reasonably likely to have, individually or in
the aggregate, a material adverse effect on the Condition of SDI, or
(ii) threatening to revoke any Authorization, the revocation of which
will have, or is reasonably likely to have, individually or in the
aggregate, a material adverse effect on the Condition of SDI.
7.12 COMMITMENTS AND CONTRACTS.
(a) Except as set forth on Schedule 7.12, SDI is not a
party to or subject to any Contract:
(i) with any present or former officer,
director or employee, other than those that are terminable at
will by SDI without liability (other than Liability for
services already rendered) at any time prior to Closing.
(ii) for the lease of real property by SDI; or
(iii) containing noncompetition covenants that
limit the ability of SDI to compete in any line of business
or that involve any restriction of the geographical area in
which SDI may carry on its business (other than such
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<PAGE> 21
limitations or restrictions as may be required by Law or
applicable Governmental Entities).
(b) SDI has made available to the Company copies of all
material Contracts. With respect to each Contract:
(i) the Contract is valid, binding and in full
force and effect;
(ii) SDI has not repudiated or waived any
material provision of any such Contract; and
(iii) no other party to any such Contract is, to
the Knowledge of SDI, in default in any respect thereunder.
(c) With respect to any lease of real property:
(i) all rents and other amounts currently due
thereunder have been paid and no waiver or indulgence or
postponement of any obligation thereunder has been granted by
any lessor or sub-lessor; and
(ii) SDI has not entered into any sublease or
assignment with respect to its interest in such lease.
7.13 MATERIAL CONTRACT DEFAULTS. SDI is not and has not received
any written notice and has no Knowledge that it is in default in any respect
under any Contract to which it or by which its Assets, business or operations
thereof may be bound or affected or under which it or its Assets, business or
operations receive benefits except for those defaults, that either alone or
when combined with all similar liabilities, that would have a material adverse
effect on the Condition of SDI, and there has not occurred any event that with
the lapse of time or the giving of notice or both would constitute such a
default.
7.14 LEGAL PROCEEDINGS. Except as set forth on Schedule 7.14,
there is no Litigation pending or, to the Knowledge of SDI, threatened against
SDI, as to which there is a reasonable possibility of an adverse determination
and that, if adversely determined, will have, or is reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Condition of
SDI, nor is there any Order imposed on SDI that will have, or is reasonably
likely to have, individually or in the aggregate, such a material adverse
effect.
7.15 STATEMENTS TRUE AND CORRECT.
(a) The representations and warranties of SDI set forth
in this Agreement, and in the documents delivered by SDI to the
Company pursuant hereto, are, as of the date hereof, and will be, as
of the Effective Time, true and correct in all respects (except as
otherwise contemplated herein).
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<PAGE> 22
(b) None of the information supplied by SDI for
inclusion in the proxy statement will, at the time the proxy statement
is mailed, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading or, at the time of
the Shareholder Meeting or at the Effective Time, as then amended or
supplemented, omit any information necessary to correct any statement
that has become materially false or misleading in any earlier
communication with respect to the solicitation of any proxy for such
meeting.
(c) All documents that SDI is responsible for filing
with any Governmental Entity in connection with the transactions
contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
7.16 BROKERS AND FINDERS. Neither SDI nor any of its officers,
directors or employees has employed any broker or finder or incurred any
material liability for any financial advisory fees, brokerage fees, commissions
or finder's fees, and no broker or finder has acted directly or indirectly for
SDI in connection with this Agreement or the transactions contemplated hereby.
7.17 INVESTMENT REPRESENTATION. SDI is acquiring the Company
through the Merger for investment purposes only and not with a view to, or for
sale in connection with, any distribution of the stock of the Surviving
Corporation, or with any present intention of selling all or part of the shares
of stock of the Surviving Corporation.
7.18 ENVIRONMENTAL MATTERS. To the Knowledge of SDI, SDI is, and
has been, in compliance with all applicable Environmental Laws, except for
violations that will not have, or are not reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Condition of
SDI and there is no Litigation pending or threatened, before any court,
Governmental Entity or other forum in which SDI has been or, with respect to
threatened Litigation, may be, named as a defendant (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law, or
(ii) relating to the release into the environment of any Hazardous Material or
oil whether or not occurring at or on a site owned, leased or operated by SDI,
nor to the Knowledge of SDI, is there any reasonable basis for any such
Litigation.
7.19 LABOR MATTERS. Except as set forth on Schedule 7.19, SDI is
not a party to, or bound by, any collective bargaining agreement or other
Contract with a labor union or labor organization, nor is it the subject of any
material Litigation asserting that it has committed an unfair labor practice
(within the meaning of the National Labor Relations Act or comparable state
Laws) or seeking to compel it to bargain with any labor organization as to
wages or conditions of employment nor is there any strike or other labor
dispute involving it pending or, to its Knowledge, threatened, any of which
will have, or is reasonably likely to have, a material adverse effect on the
Condition of SDI.
7.20 INSURANCE. SDI is insured with reputable insurers against
such risks and in such amounts normally insured against by companies of the
same type and in the same line of business. All of the insurance policies,
binders or bonds maintained by SDI is in full force and
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<PAGE> 23
effect and SDI is not in default thereunder. All claims thereunder have been
filed in due and timely fashion and all such policies, binders and bonds will
remain in full force and effect after the Closing Date, unaffected by the
transactions contemplated hereby.
7.21 EMPLOYEE BENEFIT PLANS. SDI represents and warrants that it
has no employee pension or profit sharing plans.
ARTICLE VIII
COVENANTS OF THE PARTIES
8.01 BEST EFFORTS AND FURTHER ASSURANCES. Each of the Parties
shall use its best efforts (a) to take, or cause to be taken, all actions
necessary to comply promptly with all legal requirements that may be imposed on
such Party with respect to the transactions contemplated by this Agreement and,
subject to the conditions set forth in Article IX hereof, to consummate the
transactions contemplated by this Agreement, (b) to obtain (and to cooperate
with each other Party to obtain) any Consent of any Person that is required to
be obtained or made by such Party in connection with the transactions
contemplated by this Agreement and (c) to take, or cause to be taken, all other
actions necessary, proper or advisable to consummate the transactions
contemplated by this Agreement.
8.02 PRE-CLOSING COVENANTS. During the period from the
date of this Agreement and continuing until the Closing Date, except as
expressly contemplated or permitted by this Agreement or with the prior written
consent of the Company, SDI, shall carry on its business in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted.
SDI shall use its best efforts to (x) preserve its business organization
intact, (y) keep available the present services of its employees and (z)
preserve the goodwill of its customers and others with whom business
relationships exist. Without limiting the generality of the foregoing, and
except as otherwise contemplated by this Agreement or consented to in writing
by the Company, SDI shall not:
(a) declare or pay any dividends on, or make other
distributions in respect of the SDI Common Stock (other than regular
dividends due) prior to the Closing Date;
(b) issue, sell, redeem, or purchase any of its stock or
other equity securities of any kind or grant or issue any additional
options or other rights to acquire any of its equity securities;
(c) other than activities in the ordinary course of
business consistent with prior practice, sell, lease, encumber, assign
or otherwise dispose of, or agree to sell, lease, encumber, assign or
otherwise dispose of, any of its Assets;
(d) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for borrowed
money, assume, guarantee, endorse or otherwise as
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<PAGE> 24
an accommodation become responsible for the obligations of any other
Person, or make any loan or advance to any Person;
(e) accelerate, create, renew, amend or terminate or
give notice of a proposed renewal, amendment or termination of, any
material Contract to which SDI is a party or by which SDI or its
Assets is bound;
(f) make any change in accounting principles or methods
from those currently employed, except as required by GAAP or by
applicable Law;
(g) grant any Lien, or permit any Lien to be placed on,
any of its Assets other than in the ordinary course of business;
(h) take any action, or fail to take any action, that is
intended or may reasonably be expected to result in a breach or
violation of any of the representations and warranties of SDI
contained in this Agreement or would cause any condition to the
transactions contemplated hereby not to be satisfied, except, in every
case, as may be required by Law; or
(i) agree to do any of the foregoing.
8.03 PRE-CLOSING COVENANTS OF SDI. During the period from the date
of this Agreement and continuing until the Closing Date, except as otherwise
contemplated by this Agreement or consented to in writing by the Company, SDI
will not take, or fail to take, any action that (a) would delay or adversely
affect the ability of the Parties to obtain any Requisite Regulatory Approvals,
(b) is intended or may reasonably be expected to result in a breach or
violation of any of the representations and warranties of the Company contained
in this Agreement or would cause any condition to the transactions contemplated
hereby not to be satisfied, except, in every case, as may be required by Law or
(c) otherwise adversely affect its ability to consummate the Merger and the
other transactions contemplated hereby.
8.04 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable
Laws relating to the exchange of information, SDI shall afford to the
officers, employees, accountants, counsel and other representatives of
the Company access, during normal business hours during the period
prior to the Closing Date, to all of SDI's material Assets, Books and
Records and, during such period, SDI shall make available to the
Company (i) a copy of each report, schedule and other document filed
or received by it during such period from any Governmental Entity
(other than reports or documents that such Party is not permitted to
disclose under applicable Law) and (ii) all other information
concerning the Assets, business and personnel of SDI as the Company
may reasonably request; provided, however, that in no event shall any
information, analyses, draft documents, notes or other material
relating to the Merger, whether in the possession of the Company or
any of its representatives (collectively, the "Transaction
Information"), be made available at any
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<PAGE> 25
time, whether prior to or after the Closing, to the Company or its
representatives and all such Transaction Information shall remain at
all times prior to the Closing the proprietary and confidential
information of SDI.
(b) All information furnished by one of the Parties to
the other Party or any of its representatives pursuant to this Section
8.04 shall be treated as the sole property of the Party furnishing
such information and, if the Closing shall not occur, the Party
receiving such information and its representatives shall return to the
Party furnishing such information all of such written information and
all documents or other materials containing, reflecting or referring
to such information. The Party receiving such information shall, and
shall use its best efforts to cause its representatives to, keep
confidential all such information, and shall not directly or
indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information
confidential shall continue for five (5) years from the date this
Agreement is terminated and shall not apply to (i) any information
that (A) was already in the recipient's possession prior to the
disclosure thereof by the Party furnishing such information (whether
such information was furnished pursuant to this Agreement), (B) was
then generally known to the public, or (C) was disclosed to the Party
receiving such information by a third party not bound by an obligation
of confidentiality, or (ii) disclosures made as required by Law. It is
further agreed that, if in the absence of a protective order or the
receipt of a waiver hereunder the Party receiving information pursuant
to this Section 8.04 is nonetheless, in the opinion of its counsel,
compelled to disclose information concerning the Party furnishing such
information to any Governmental Entity or else stand liable for
contempt or suffer other censure or penalty, the Party receiving such
information may disclose such information to such Governmental Entity
without Liability hereunder.
8.05 REGULATORY APPROVALS.
(a) The Parties shall cooperate with each other and use
their best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and
filings, and to obtain as promptly as practicable all Consents of all
Governmental Entities that are necessary or advisable to consummate
the Merger and the other transactions contemplated by this Agreement.
Each Party shall have the right to review in advance, and to the
extent practicable each will consult the other on, in each case
subject to applicable Laws relating to the exchange of information,
all the information relating to such Party that appears in any filing
made with, or written materials submitted to, any Governmental Entity
in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the Parties shall act
reasonably and as promptly as practicable. The Parties agree that they
will consult with each other with respect to the obtaining of all
Consents necessary or advisable to consummate the transactions
contemplated by this Agreement and each Party will keep the other
apprised of the status of matters relating to the completion of the
transactions contemplated herein.
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<PAGE> 26
(b) Each Party shall, upon request, furnish each other
with all information concerning itself, its directors, officers and
stockholders and such other matters as may be reasonably necessary or
advisable in connection with any statement, filing, notice or
application made by or on behalf of SDI or the Company to any
Governmental Entity in connection with the transactions contemplated
by this Agreement.
(c) Each Party shall promptly furnish each other with
copies of written communications received by it or any of its
Affiliates from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the transactions contemplated
hereby.
8.06 PRESS RELEASES. Subject to the requirements of applicable Law
and, if applicable, the rules of NASDAQ/NMS, each of SDI and the Company shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any of the
transactions contemplated hereby.
8.07 NON-SOLICITATION OF EMPLOYEES. If this Agreement is
terminated, SDI agrees that for a period of two (2) years following the date of
termination it shall not, and shall not permit its officers, employees,
representatives or agents to, directly or indirectly, encourage, solicit,
continue or initiate discussions or negotiations with, or provide offers of
employment to persons who currently are, or who become prior to the date of
such termination, executive employees of the Company.
8.08 SHAREHOLDER APPROVAL. The Company shall take all action
necessary in accordance with the Laws of the State of Delaware and its articles
of incorporation and bylaws to call, give notice of and convene a meeting or
take action by written consent under the Laws of the State of Delaware (the
"Shareholder Meeting") of its shareholders to consider and vote upon the
approval and adoption of this Agreement and the Merger for such other purposes
as may be necessary or desirable. The Board of Directors of the Company has
determined that the Merger is advisable and in the best interests of the
shareholders of the Company and, subject to its fiduciary obligations as
advised in writing by counsel or its investment bankers, shall recommend that
the Company's shareholders vote to approve and adopt this Agreement and the
Merger and any other matters to be submitted to the Company's shareholders in
connection therewith. The Company shall, subject as aforesaid, use its best
efforts to solicit and secure from shareholders of the Company such approval
and adoption.
8.09 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to SDI, and SDI shall give prompt notice to the Company, of (a)
the occurrence, or failure to occur, of any event that such Party believes
would be likely to cause any of its representations or warranties contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof to the Effective Time and (b) any material failure of the
Company or SDI, as the case may be, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that failure to
give such notice shall not constitute a waiver of any defense that may be
validly asserted with respect to such failure.
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<PAGE> 27
8.10 INDEMNIFICATION.
(a) After the Effective Time, the Surviving Corporation
shall indemnify and hold harmless (and shall also advance expenses as
incurred to the fullest extent permitted under applicable Law to) each
Person who is now, or has been prior to the date hereof or who becomes
prior to the Effective Time, an officer or director of the Company
(the "Indemnified Parties") against (i) all losses, claims, damages,
costs, expenses (including without limitation, counsel fees and
expenses), settlement payments or liabilities arising out of or in
connection with any claim, demand, action, suit, proceeding or
investigation based in whole or in part on, or arising in whole or in
part out of, the fact that such Person is or was an officer or
director of the Company, whether or not pertaining to any matter
existing or occurring at or prior to the Effective Time and whether or
not asserted or claimed prior to or at or after the Effective Time
("Indemnified Liabilities") and (ii) all Indemnified Liabilities based
in whole or in part on, or arising in whole or in part of, or
pertaining to this Agreement or the transactions contemplated hereby
or, in each case to the fullest extent required or permitted under
applicable Law or under the Surviving Corporation's articles of
incorporation or bylaws or any indemnification agreements in effect on
the date hereof (to the extent consistent with applicable Law). Any
determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth
under applicable Law or the Surviving Corporation's articles of
incorporation or bylaws shall be made by independent counsel mutually
acceptable to the Surviving Corporation and the Indemnified Party. The
Parties intend, to the extent not prohibited by applicable Law, that
the indemnification provided for in this Section 8.10 shall apply
without limitation to negligent acts or omissions by an Indemnified
Party. The Surviving Corporation's articles of incorporation and
bylaws shall not be amended in a manner that adversely affects the
rights of any Indemnified Party thereunder or under this Section 8.10,
unless otherwise required by applicable Law.
(b) If SDI or the Surviving Corporation, or any of their
successors and assigns, (i) shall consolidate with or merge into
another corporation or entity and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or
(ii) shall transfer all or substantially all of its Assets to any
individual, corporation or other entity, then, and in each case, SDI
shall cause proper provision to be made so that the successors and
assignees of SDI or the Surviving Corporation shall assume the
obligations set forth in this Section 8.10.
ARTICLE IX
CONDITIONS
9.01 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each of the Company and SDI to effect the transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing of the following conditions:
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<PAGE> 28
(a) Consents. Other than the filing of the Articles of
Merger contemplated by Section 2.03 hereof, all Consents of any
Governmental Entity that are prescribed by Law as necessary for the
consummation of the transactions contemplated hereby (including the
lapse of any waiting periods imposed by Law), other than Consents, the
failure to obtain which would have a no material adverse effect on the
consummation of the transactions contemplated hereby, shall have been
obtained (all such Consents and the lapse of all such waiting periods
being referred to a the "Requisite Regulatory Approvals"), as the case
may be, and all such Requisite Regulatory Approvals shall be in full
force and effect.
(b) Injunctions. No Order issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the transactions
contemplated hereby shall be in effect, nor shall any Litigation by
any Governmental Entity seeking any such Injunction be pending. No Law
or Order shall have been enacted, entered, promulgated or enforced by
any Governmental Entity that prohibits, restricts or makes illegal
consummation of the transactions contemplated hereby.
(c) Shareholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the holders of the
outstanding Company Common Stock entitled to vote in accordance with
Delaware law and the Company's articles of incorporation and bylaws.
9.02 CONDITIONS TO OBLIGATIONS OF SDI. The obligations of SDI to
effect the transactions contemplated hereby shall be subject to the fulfillment
or waiver at or prior to Closing or the following additional conditions:
(a) Representations and Warranties. The representations
and warranties of the Company set forth in this Agreement shall be
true and correct in all material respects as of the date of this
Agreement and as of the Closing Date (as though made on and as of the
Closing Date except to the extent any of such representations and
warranties are by their express provisions made as of a specified
date); provided, however, that notwithstanding anything herein to the
contrary, this Section 9.02(a) shall be deemed to have been satisfied
even if such representations and warranties are not true and correct
unless the failure of any of the representations or warranties to be
so true and correct, will have, or are reasonably likely to have,
individually or in the aggregate, a material adverse effect on the
Condition of the Company or on the ability of the Company to
consummate the transactions contemplated hereby.
(b) Performance of Obligations. The Company shall have
performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to Closing, and SDI
shall have received a certificate signed by a duly authorized officer
of the Company to that effect; provided, however, that notwithstanding
anything herein to the contrary, this Section 9.02(b) shall be deemed
to have been satisfied even if such failure to perform the obligations
will have, or are reasonably likely to have, individually or in the
aggregate, a material adverse effect on the Condition of the
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<PAGE> 29
Company or on the ability of the Company to consummate the
transactions contemplated hereby.
(c) Fairness Opinion. The transactions contemplated
herein are conditioned upon the receipt of a fairness opinion of
Sheldrick, McGehee & Kohler, Inc.
9.03 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of
the Company to effect the transactions contemplated hereby shall be subject to
the fulfillment or waiver at or prior to Closing of the following additional
conditions:
(a) Representations and Warranties. The representations
and warranties of SDI set forth in this Agreement shall be true and
correct in all material respects of as of the date of this Agreement
and as of the Closing Date (as though made on and as of the Closing
Date except to the extent any of such representations and warranties
are by their express provisions made as of a specified date) and the
Company shall have received a certificate signed by a duly authorized
officer of SDI to that effect; provided, however, that notwithstanding
anything herein to the contrary, this Section 9.03(a) shall be deemed
to have been satisfied even if such representations or warranties are
not true and correct unless the failure of any of the representations
or warranties to be so true and correct, will have, or are reasonably
likely to have, individually or in the aggregate, a material adverse
effect on the ability of SDI to consummate the transactions
contemplated hereby.
(b) Performance of Obligations. SDI shall have performed
in all material respects all obligations required to be performed by
it under this Agreement at or prior to Closing, and the Company shall
have received a certificate signed by a duly authorized officer of SDI
to that effect; provided, however, that notwithstanding anything
herein to the contrary, this Section 9.03(b) shall be deemed to have
been satisfied even if such failure to perform the obligations will
have, or are reasonably likely to have, individually or in the
aggregate, a material adverse effect on the ability of SDI to
consummate the transactions contemplated hereby.
ARTICLE X
TERMINATION
10.01 Termination. This Agreement may be terminated and the
transaction contemplated hereby abandoned at any time prior to Closing:
(a) by the mutual consent of the Company and SDI;
(b) by either Party, if there shall have been any
material breach by the other Party of any of its covenants or
agreements contained herein and such breach shall not have been
remedied, or cannot be remedied, within thirty (30) days after written
notice specifying the nature of such breach and requesting that it be
remedied has been delivered to the breaching Party;
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<PAGE> 30
(c) by either Party, if the Closing Date shall not have
occurred on or prior to March 31, 1999, unless the failure of such
occurrence shall be due to the failure of the Party seeking to
terminate this Agreement to perform or observe its or their agreements
as set forth in this Agreement required to be performed or observed by
such Party on or before the Closing Date;
(d) by either Party upon written notice to the other
Party that (i) any Requisite Regulatory Approval shall have been
denied, or (ii) any Governmental Entity of competent jurisdiction
shall have issued a final nonappealable Order enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreement;
(e) by either Party (provided that the terminating Party
is not then in material breach of any of its representation, warranty,
covenant or other agreement contained herein), if the stockholders of
SDI fail to approve the Merger at the Shareholder meeting; and
(f) by SDI, if the Board of Directors shall have
withdrawn or modified in a manner adverse to the Company its approval
or recommendation of the Merger in order to approve the execution by
SDI of a definitive agreement providing for the acquisition of SDI or
its Assets by merger or other business combination or in order to
approve a tender offer for SDI's Common Stock by a third party, in
either case, as determined by SDI's Board of Directors, on terms more
favorable to SDI's stockholders than the Merger.
10.02 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.01, this Agreement shall
become void and have no effect and no Party shall have any obligation to the
other Party with respect to this Agreement, except that (i) the provisions of
Section 8.04(b), 8.07, 8.08 and this Section 10.02 shall survive any such
termination and abandonment, and (ii) no Party shall be relieved or released
from any Liability arising out of any willful and intentional breach of any
provision of this Agreement.
10.03 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
FOLLOWING THE EFFECTIVE TIME. Except for Article III and Section 8.10 of this
Agreement, none of the respective representations, warranties, covenants,
agreements or other obligations of the Parties shall survive the Effective
Time. Such representations, warranties, covenants, agreements or other
obligations of the Parties that survive the Effective Time shall be for the
benefit of the shareholders of the Company.
ARTICLE XI
MISCELLANEOUS
11.01 NOTICES. Notices shall be given to a Party hereunder shall be
in writing, and delivered either (a) personally, (b) by facsimile transmission,
or (c) by depositing the same in the
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<PAGE> 31
United States mail, certified, return receipt requested, postage prepaid or by
courier or overnight carrier, and addressed to such Party at the following
addresses, or at such other address as such Party may notify in writing to the
other Party:
<TABLE>
<S> <C>
If to the Company: Great Wisdom Publishing, Inc.
3904 Airport Road
Plant City, Florida 33567
Attention: Jose Alvarez
If to SDI: Success Development International, Inc.
9799 Old St. Augustine Road
Jacksonville, Florida 32257
Attention: Mr. Daniel S. Pena, Sr.
With a copy to: Milam Otero Larsen Dawson & Traylor, P.A.
50 North Laura Street, Suite 2750
Jacksonville, Florida 32202
Attention: Peter O. Larsen, Esquire
</TABLE>
Notices delivered personally or by courier or overnight carrier to a Party
shall be effective upon delivery, notices delivered by facsimile transmission
shall be effective upon confirmation of receipt (either telephonically or by
confirmation sheet) and notices delivered by mail shall be effective upon the
earlier of (x) their acceptance or rejection by the Party to whom they are
addressed or (y) five (5) days after the proper posting thereof.
11.02 AMENDMENT. This Agreement may be amended only by an
instrument in writing executed by all Parties.
11.03 ASSIGNMENT. Neither Party may assign any of its rights or
delegate any of its obligations hereunder to any other Person without the
written consent of the other party and any such purported assignment or
delegation shall be void and of no effect.
11.04 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.05 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Florida.
11.06 ENTIRE AGREEMENT. This Agreement, together with any
appendices, exhibits and schedules, including, without limitation, the
schedules, set forth the entire agreement and understanding among the Parties
with respect to the subject matter hereof and supersede any prior arrangements,
negotiations or understandings, whether written or oral, among the Parties with
respect to the subject matter hereof.
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<PAGE> 32
11.07 WAIVERS.
(a) Prior to or at the Effective Time, SDI, acting
through its Board of Directors, chief executive officer or other
authorized officer, shall have the right to waive any default in the
performance of any term of this Agreement by the Company, to waive or
extend the time for the compliance or fulfillment by the Company of
any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of SDI under
this Agreement, except any condition that, if not satisfied, would
result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of SDI.
(b) Prior to or at the Effective Time, the Company,
acting through its Board of Directors, chief executive officer or
other authorized officer, shall have the right to waive any default in
the performance of any term of this Agreement by SDI, to waive or
extend the time for the compliance or fulfillment by SDI of any and
all of its obligations under this Agreement, and to waive any or all
of the conditions precedent to the obligations of the Company under
this Agreement, except any condition that, if not satisfied, would
result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of the Company.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect
the right of such Party at a later time to enforce the same or any
other provision of this Agreement. No waiver of any condition or of
the breach of any term contained in this Agreement in one or more
instances shall be deemed to be construed as a further or continuing
waiver of such condition or breach or a waiver of any other condition
or of the breach of any other term of this Agreement.
11.08 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation
hereof.
11.09 EXPENSES. Each Party shall pay all expenses incurred by it in
connection with the negotiation, execution and performance of this Agreement,
whether or not the transactions contemplated herein are consummated, including
the fees and expenses of the counsel and accountants of each; provided,
however, that nothing contained in this Section 11.09 shall limit any Party's
liability arising out of any willful and intentional breach of any provision of
this Agreement.
11.10 STRICT CONSTRUCTION. The language used in this Agreement
shall be deemed to be the language chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied for or
against any party by reason of such Party being deemed the draftsman hereof.
11.11 LEGAL REPRESENTATION. The parties acknowledge that Milam
Otero Larsen Dawson & Traylor, P.A., legal counsel to SDI (hereinafter referred
to as "Legal Counsel"),
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<PAGE> 33
prepared this Agreement on behalf of and in the course of said Legal Counsel's
representation of SDI and that:
(a) the Company understands that it is not separately
represented by Legal Counsel;
(b) the Company has been advised by Legal Counsel of its
right to seek the advice of separate legal counsel; and
(c) the Company has been advised of its lack of legal
counsel with respect to this transaction.
Notwithstanding the foregoing, the parties hereby consent to Legal
Counsel's representation as set forth hereinabove. The parties acknowledge and
agree that the Company may obtain separate legal counsel at any time, but that
Legal Counsel shall be permitted to continue its representation of SDI.
ARTICLE XII
INDEMNIFICATION
12.01 INDEMNIFICATION. Subject to the conditions and provisions
herein set forth, each party to this Agreement agrees to indemnify, defend and
hold the other parties harmless from and against:
(a) any and all liabilities or obligations of and claims
against another party;
(b) any and all losses, damages, costs, diminution in
value, or deficiencies resulting from any misrepresentation, breach of
warranty, breach of covenant, or failure to perform undertakings by
any party to this Agreement contained in or made pursuant to this
Agreement;
(c) any and all claims, litigation, and potential claims
and litigation against a party with respect to incidents, omissions,
or other matters that occurred prior to the Closing Date; and
(d) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, or expenses, including
attorney's fees, incident to any of the foregoing.
Any party to this Agreement, as the case may be, shall notify the other
parties, in writing, within ninety (90) days of a party's receipt of any claim
made against it with respect to the obligations indemnified against herein.
12.2 PAYMENT DUE. Any amount owed to another party under Section
12.1 that is not paid within thirty (30) days after demand therefore shall bear
interest from the date of such
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<PAGE> 34
demand until paid at a rate equal to the prime rate of interest announced or
published from time to time by NationsBank, N.A., or its successors.
ARTICLE XIII
MANAGEMENT OF SDI
(a) POST-MERGER. The parties hereto agree that the directors and
officers of SDI after the effective date of the merger shall be as follows:
<TABLE>
<S> <C>
Daniel S. Pena, Sr. -- Chairman and Director
Shawn M. Casey -- Vice Chairman and Director
David A. Reecher -- CEO, President and Director
Raymond Rach -- Director
Jose A. Alvarez -- CFO/COO/Executive Vice President/Director
Hugh L. Carey -- Director
Ted Nicholas -- Director
Robert Stone -- Director
Jarrell D. Ormand -- Director
</TABLE>
(b) OPERATIONS. The parties agree that the Company will be in
charge of running the combined merged entities. Company management will be
hiring a manager to run the individual SDI operations in Jacksonville, Florida.
(c) EMPLOYMENT AGREEMENTS. SDI shall be required to enter into
employment agreements with David A. Reecher and Jose A. Alvarez effective as of
the Effective Time.
IN WITNESS WHEREOF, the Parties have executed this Agreements of the
day and year first above written.
SUCCESS DEVELOPMENT
INTERNATIONAL, INC.
By: /s/ Raymond Rach
---------------------------------------
Raymond Rach
Its: Authorized Agent
GREAT WISDOM PUBLISHING, INC.
By: /s/ David A. Reecher
---------------------------------------
David A. Reecher
President and CEO
GWP TARGET, INC.
By: /s/ Raymond Rach
---------------------------------------
Raymond Rach
Vice-President
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<PAGE> 35
APPENDIX A
"Affiliate" of a Person shall mean: (i) any other Person directly or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person; (ii) any officer, director, partner,
employer or direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person; or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger, as amended
or supplemented from time to time. References to Articles, Sections, Schedules,
Exhibits and the like refer to the Articles, Sections, Schedules, Exhibits and
the like of this Agreement unless otherwise indicated.
"Articles of Merger" shall have the meaning set forth in Section 2.03
of this Agreement.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued
or contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the
Books and Records of such Person.
"Authorization" shall mean any approval, authorization, certificate,
easement, filing, franchise, license, notice or permit of, or notice to or
filing with, any Governmental Entity, or other similar right, that is or may be
binding upon or inure to the benefit of any Person or its Assets or business.
"Balance Sheet" shall mean the Closing Balance Sheet.
"Bankruptcy Exception" shall mean applicable bankruptcy, insolvency
and similar Laws affecting creditors' rights generally.
"Books" shall mean, with respect to any Person, the general ledger of
such Person and any related subsidiary ledger.
"Certificates" shall have the meaning assigned thereto in Section 4.04
of this Agreement.
"Closing" shall mean the closing of the transactions contemplated by
this Agreement.
"Closing Date" shall mean the date on which the Closing shall take
place as provided by Section 2.02 of this Agreement.
"Code" means the Internal Revenue of 1986, as amended.
"Company" shall mean Great Wisdom Publishing, Inc., a Delaware
corporation.
Page 1 of 5 Pages, Appendix A
<PAGE> 36
"Company Common Stock" shall have the meaning assigned thereto in
Section 4.01(b)(i) of this Agreement.
"Company Financial Statements" shall have the meaning assigned thereto
in Section 6.04 of this Agreement.
"Company Stock Option" and "Company Stock Options" shall have the
meanings set forth in Section 4.01(b)(iii) of this Agreement.
"Condition" shall mean, as to any Person, the business, financial
condition, results of operations or prospects of such Person and its
Subsidiaries, taken as a whole.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by, or notice to or filing with, any
Person pursuant to any Contract, Law, Order or Authorization.
"Constituent Corporations" shall mean the Merger Sub and the Company,
as parties to the Merger.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or undertaking of any kind or
character, or other document (other than an Order or Authorization) to which
any Person is a party or that is binding on any Person.
"Dissenting Shares" shall have the meaning assigned thereto in Section
4.03 of this Agreement.
"Effective Time" shall have the meaning assigned thereto in Section
2.03 of this Agreement.
"Environmental Laws" shall mean all Laws relating to the protection of
the environment, human health, safety, or natural resources, or to emissions,
discharges, or releases of Hazardous Materials into the environment including
without limitation, air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Agent" shall have the meaning assigned thereto in Section
5.01 of this Agreement.
"FBCA" shall mean the Florida Business Corporation Act, Chapter 607,
Florida Statutes (1998), as amended from time to time.
"GAAP" shall mean generally accepted accounting principles.
Page 2 of 5 Pages, Appendix A
<PAGE> 37
"Governmental Entity" shall mean any governmental department,
commission, board, bureau, agency, instrumentality, judicial, administrative or
regulatory body, or any foreign, federal, state or local government, or
political subdivision thereof, having jurisdiction over the matter or matters
in question.
"Hazardous Material" shall mean any pollutant, contaminant, or
hazardous substance under the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss.9601 et seq., or a or any similar
state Law.
"Indemnified Liabilities" shall have the meaning assigned thereto in
Section 8.10(a) hereof.
"Indemnified Parties" shall have the meaning assigned thereto in
Section 8.10(a) hereof.
"Injunction" shall mean any order, injunction or decree issued by any
court or agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the transactions contemplated
hereby.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" as used with respect to a Person shall mean the actual
knowledge after due inquiry of the Chairman, President, Chief Financial
Officer, Chief Accounting Officer, General Counsel, any Assistant or Deputy
General Counsel, or any Vice President of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule or statute applicable to a Person or its Assets,
Liabilities or business.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including,
without limitation, costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for collection or
deposit in the ordinary course of business) of any type, whether accrued,
absolute or contingent, liquidated or unliquidated, matured or unmatured, or
otherwise.
"Lien" shall mean, with respect to any asset of any Person, any
mortgage, deed of trust, pledge, security interest, hypothecation, assignment,
deposit arrangement, charge, encumbrance, lien (statutory or other), priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever with respect to such asset (including, without limitation, any
conditional sale or other title retention agreement, any financing statement
under the Uniform Commercial Code or comparable Law if any jurisdiction), other
than (a) Liens for current property Taxes not yet due and payable, (b) Liens
incurred in the ordinary course of business, and (c) other Liens that will not
or are not reasonably likely to have, individually or in the aggregate, a
material adverse effect on the Condition of the Person in question.
Page 3 of 5 Pages, Appendix A
<PAGE> 38
"Litigation" shall mean any action, arbitration, claim, complaint,
criminal prosecution, governmental or other examination or investigation,
hearing, inquiry, or administrative or other proceeding, commenced against or
with respect to a Person or its Assets.
"Material Adverse Change," "Material Adverse Effect," Material Adverse
Impact," Material," "Materially," or any similar terms are used in this
Agreement (whether in the representations set forth in Article VI or in Article
VII, the closing conditions contained in Article IX or otherwise) with respect
to the Condition of the Company or SDI (in each case whether individually or
together with its Subsidiaries), as the case may be, the following expenses and
adjustments shall be excluded in determining whether a material adverse change,
effect or impact has occurred: (i) all out-of-pocket fees and expenses
(including legal, accounting, investigatory, and other fees and expenses)
incurred in connection with the consummation of the transactions contemplated
by this Agreement; (ii) any effect resulting from any change in Law, or GAAP,
that impacts entities such as the Company generally; and (iii) any effect
resulting from compliance by any Party with the terms of this Agreement.
"Merger" shall mean the merger of the Merger Sub with and into the
Company, all as set forth in Section 2.01 of this Agreement.
"Merger Sub" shall mean the Subsidiary of SDI utilized to effect the
Merger.
"NASDAQ/NMS" shall mean the National Association of Securities Dealers
Automated Quotation System.
"Net Worth" shall mean, at any date, the amount equal to the
stockholder's equity reflected on the Balance Sheet at such date.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal or any Governmental Entity.
"Party" shall mean either the Company, the Merger Sub or SDI and
"Parties" shall mean the Company, SDI and Merger Sub.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Person" shall mean any natural person, any legal or commercial
entity, including without limitation a corporation, partnership, joint venture,
association, joint-stock company, trust or unincorporated organization, any
group acting in concert, any person acting in a representative capacity, or any
Governmental Entity.
"SDI" shall mean Success Development International, Inc., a Florida
corporation.
"Record" or "Records" shall mean any and all records of the Company,
including without limitation, all papers, microfiche, microfilm and computer
records (including but not limited to,
Page 4 of 5 Pages, Appendix A
<PAGE> 39
magnetic tape, disc storage, card forms and printed copy) generated or
maintained by the Company.
"Requisite Regulatory Approvals" shall have the meaning assigned
thereto in Section 9.01(a) of this Agreement.
"Shareholder Meeting" shall have the meaning assigned thereto in
Section 8.08(a) of this Agreement.
"Subsidiary" shall mean, with respect to any Person, any other Person
(whether now existing or hereafter organized) for which at least a majority of
the securities or other ownership interests having ordinary voting power for
the election of directors or other managers (other than contingency) are at the
time owned or controlled by such first Person or one or more Subsidiaries of
such first Person or any combination thereof.
"Surviving Corporation" shall have the meaning assigned thereto in
Section 2.01 of this Agreement.
"Tax Return" shall mean any report, statement or other written
information required to be supplied to a Taxing Authority in connection with
Taxes, including information returns, payee statements and specified
information reporting requirements as defined in Section 6724(d) of the Code.
"Taxes" shall mean all taxes, levies or other like assessments,
charges, or fees (including estimated taxes, charges and fees), including,
without limitation, net income, gross income, gross receipts, transfer, excise,
property, ad valorem, stamp, documentary stamp, sales, use, value-added,
license, payroll, pay as you earn ("PAYE"), withholding, emergency excise,
social security and franchise or other governmental taxes or similar charges,
imposed by any Taxing Authority, including any interest, penalties or additions
to tax attributable to such taxes, and including any penalties for failure to
comply with the information reporting of Section 6721 through 6724 of the Code.
"Taxing Authority" shall mean the United States of America, or any
state, county, local or foreign government or subdivision or agency thereof.
"Transaction Information" shall the meaning assigned thereto in
Section 8.04(a) of this Agreement.
Page 5 of 5 Pages, Appendix A
<PAGE> 40
SCHEDULE 6.02
AUTHORIZATION OF TRANSACTION
1. Capital Fund, Inc.
2. Riviera Finance, Inc.
Page 1 of 1 Page, Schedule 6.02
<PAGE> 41
SCHEDULE 6.03(C)
CONTRACTS FOR CAPITAL STOCK
1. Option Agreement with Capital Fund, Inc. dated February 12, 1998 for
125 shares of common stock for a per share price of $100 divided by
the number of shares issuable under the option.
2. Kip Lykins (Lake Shore Capital) -- options for 13 shares of common
stock.
3. Employee Pool -- restricted stock for various Company employees for a
total of 8 shares of Company Common Stock based upon length of
employment.
4. Capital Fund, Inc. -- Anti-dilution provisions that may require
additional issuance of Stock.
5. Publishers Distribution Service, Inc. (John Lindberg) -- In the event
of significant transaction, Mr. Lindberg may exercise put rights to
purchase his stock. During the 30-day period following the third,
fourth and fifth anniversaries of September 19, 1996, Mr. Lindberg may
require the Company to purchase 1/3 of the shares for the sum of
$200,000. Such rights are not cumulative and are lost if not timely
exercised.
Page 1 of 1 Page, Schedule 6.03(c)
<PAGE> 42
SCHEDULE 6.05
SUBSIDIARIES
1. Small Press Express, Inc.
2. Access Publishers Network, Inc.
3. Advanced Communications, Inc.
4. Astro Communications Services, Inc.
Page 1 of 1 Page, Schedule 6.05
<PAGE> 43
SCHEDULE 6.07
CONSENTS
1. Capital Fund, Inc.
2. Riviera Finance, Inc.
Page 1 of 1 Page, Schedule 6.07
<PAGE> 44
SCHEDULE 6.09
TAX MATTERS
1. Various state tax returns may be delinquent (no extensions filed) in
Michigan, California, Connecticut and New Jersey.
Page 1 of 1 Page, Schedule 6.09
<PAGE> 45
SCHEDULE 6.12
COMMITMENTS AND CONTRACTS
1. Riviera Finance Company -- Guarantee on all of Company's assets.
2. Capital Fund, Inc. -- Subordinated Lender
3. Michelsen/Simm's Family Trust -- Security interest from purchase of
Astro Communication Services, Inc.
4. Publishers Distribution Services, Inc. (John Lindberg) -- Right to
convert existing shares of Company stock owned into a promissory note.
During the 30-day period following the third, fourth and fifth
anniversaries of September 19, 1996, Mr. Lindberg may require the
Company to purchase 1/3 of the shares for the sum of $200,000. Such
rights are not cumulative and are lost if not timely exercised.
5. Lease Agreement between Access Publishers Network and John Lindberg.
6. Employment Agreement with Maria Simms
7. Employment Agreement with John Lindberg
8. Employment Agreement with Maritha Pottenger
9. Lease Agreement between Company and Jose A. Alvarez
Page 1 of 1 Page, Schedule 6.12
<PAGE> 46
SCHEDULE 7.05
SUBSIDIARIES
1. SDI Direct Corporation
2. Results Publishing, Inc.
3. SDI Internet Services, Inc.
4. Telstar, Inc.
5. The LeGrand Group
Page 1 of 1 Page, Schedule 7.05
<PAGE> 47
SCHEDULE 7.09
TAX MATTERS
1. SDI has a potential sales tax liability. SDI collected the sales tax
and failed to remit payment to the Florida Department of Revenue.
Action is being taken through negotiations with the Florida Department
of Revenue to limit any penalties.
2. SDI has not filed federal (Form 1120) and Florida (Form F-1120) for
December 31, 1997.
Page 1 of 1 Page, Schedule 7.09
<PAGE> 48
SCHEDULE 7.12
CONTRACTS
1. Severance Package for Vickie Sessions
2. Employment Agreement and Speaker Agreement with Shawn Casey
3. SDI currently pays the mortgage on its office space at 9799 Old St.
Augustine Road, Jacksonville, Florida. The LeGrand Group, a subsidiary
of SDI is the beneficial owner of such property through a Land Trust.
Page 1 of 1 Page, Schedule 7.12
<PAGE> 49
SCHEDULE 7.14
LITIGATION
1. SDI is a defendant in a civil action filed by The Marketing Group,
Inc. in Kansas. The Market Group has alleged breach of contract. The
amount claimed to be due is $105,000.
2. Received correspondence from attorney on behalf of Gary Quaintance.
Allegations include failure to negotiate in good faith and disclosure
of transaction through a press release with Designed Marketing Group,
Inc. in Reno, Nevada. No lawsuit has been filed at this time.
3. Mr. Epstein lawsuit. Former employee has sued SDI. Allegation includes
religious discrimination.
Page 1 of 1 Page, Schedule 7.14
<PAGE> 50
SCHEDULE 7.19
LABOR MATTERS
1. Mr. Epstein lawsuit. Please see Schedule 7.14 for description.
Page 1 of 1 Page, Schedule 7.19
<PAGE> 51
EXHIBIT "B"
[SMK LETTERHEAD]
March 23, 1999
The Board of Directors
Success Development International, Inc.
9799 Old St. Augustine Road
Jacksonville, Florida 32257
The Board of Directors
Great Wisdom Publishing, Inc.
3904 Airport Road
Plant City, Florida 33567
RE: Fairness Opinion of Proposed Merger of
Success Development International Inc. & Great Wisdom Publishing, Inc.
Dear Board Members:
Sheldrick, McGehee & Kohler, Inc. ("SMK") has been retained by the Board of
Directors of Success Development International Inc. ("SDI") and the Board of
Directors of Great Wisdom Publishing, Inc. ("GWP") to issue a fairness opinion,
regarding the proposed merger of these companies from a financial point of
view, to the shareholders of SDI and GWP. This fairness opinion is limited to
an assessment of the relative range of value for SDI and GWP and a comparison
thereof.
It is our understanding that SDI and GWP have entered into a non-binding letter
of intent covering major terms and conditions of a proposed merger, pursuant to
which GWP will merge with a newly created wholly-owned subsidiary of SDI
("NewSub"), and GWP will be the surviving corporation. SDI, NewSub and GWP will
enter into an Agreement and Plan of Merger ("Merger Agreement") pursuant to
which GWP will merge with NewSub in a non-taxable reverse triangular
reorganization. The separate corporate existence of NewSub will cease and GWP
will continue as the surviving corporation after the merger and will be a wholly
owned subsidiary of SDI. This sequence of transactions is hereafter referred to
as the "Merger" and the surviving corporation and subsidiary is hereafter
referred to as the "Post-Merger Corporation".
You have asked us whether in our opinion, SDI and GWP are of substantially
equal value, from a financial point of view, from the perspective of the
shareholders of both companies. In rendering this opinion, our engagement was
limited to comparing the relevant range of value for SDI and GWP on a minority
interest basis in aggregate.
<PAGE> 52
In arriving at our opinion, we have, among other things:
1. Reviewed certain publicly available business and financial information
relating to SDI and certain private financial information relating to
GWP that we deemed to be relevant;
2. Reviewed certain information, including financial forecasts for SDI and
GWP, as well as prospects of each company, furnished to SMK by the
management of each company, respectively;
3. Considered management's estimates regarding the synergies, strategic
fit, cost savings and related expenses expected to result from the
Merger;
4. Considered management's assessment of SDI's and GWP's current financial
position and performance subsequent to the most recently completed
financial statements at the date of our analysis;
5. Reviewed the pricing history of SDI's publicly held shares;
6. Reviewed the results of operations of SDI and GWP;
7. Reviewed copies of SDI's most recent 10-QSB, as well as DEF 14A
regarding the proposed Merger;
8. Reviewed other financial studies and analyses as we deemed necessary,
including our assessment of general economic and industry conditions,
as well as relative risk and return expectations in SDI, GWP and
alternative investments;
9. Developed a relevant range of value for SDI and GWP using generally
accepted investment valuation methodologies and our conclusions from
clauses 1 through 8 above; and
10. Compared the relevant range of value of SDI and GWP, with consideration
given to the confidence of these ranges and the relative risks of
investing in SDI and GWP.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied to SMK or made available to us, either
publicly available or otherwise. We have not assumed any responsibility for
independently verifying such information and we have not undertaken an
independent valuation or appraisal of any of the assets or liabilities of SDI or
GWP or been furnished with any such valuations or appraisals.
In the course of this valuation, SMK made certain estimates and projections
regarding the future performance of SDI and GWP which may include, but are not
limited to, revenues, sustainable earnings and earnings growth. These estimates
and projections are based on our analysis of the history and outlook for SDI and
GWP, financial projections provided by SDI's and GWP's management, our
experience pertaining to financial projections, coupled with the industry
outlook and economic conditions. Although SMK considered the uncertainty
associated with these projections in the risk analysis and relevant range of
value, SMK makes no warranties or assurances that these projections will be
achieved. With respect to the financial forecast information and the expected
synergies furnished to, or discussed with us, by the management
2
<PAGE> 53
of SDI or GWP, we have assumed that they have been reasonably prepared and
reflect the best currently available estimates and judgment of SDI's and GWP's
management as to the expected future financial performance of the SDI, GWP, or
the post merger Company, as the case may be. We express no opinion as to the
likelihood of achieving these forecasts or synergies.
We understand that the Merger will be treated as a tax-free exchange. We have
not considered the tax ramifications to SDI, GWP or the individual shareholders
pertaining to the Merger.
SMK assumes no responsibility, and is not qualified to make an independent
investigation, regarding: 1) the legal description or title considerations
pertaining to the subject interest being appraised; 2) hazardous materials or
environmental risks of SDI or GWP; 3) compliance with applicable federal, state
and local regulations and laws; and 4) SDI's and GWP's maintenance of required
or necessary licenses, certificates and consents. SMK assumes SDI and GWP are
and will continue to be in full compliance with applicable federal, state and
local regulations and laws, including continued maintenance all licenses,
certificates and consents, either required or necessary. We have assumed that in
the course of obtaining the necessary regulatory or other consents or approvals
(contractual or otherwise) for the Merger, no restrictions, including any
divestiture requirements or amendments or modifications, will be imposed that
will have a material adverse effect on the contemplated benefits of the
Post-Merger Corporation.
SMK is acting in a consulting capacity, with an assignment limited to rendering
a fairness opinion regarding the relative range of value of SDI and GWP, from a
financial point of view, as retained by Board of Directors of SDI and GWP. As
consultants, we have analyzed the potential range of value for SDI and GWP, but
this does not constitute a business valuation for either company.
We have no present or prospective interest in SDI or GWP, and we have no
personal interest or bias with respect to the parties involved. SMK does not
regularly act as an intermediary regarding the sale or acquisition of
businesses or business interests, nor have we acted as an intermediary in this
transaction.
Our compensation for performing this appraisal is not contingent on an action
or event resulting from the analyses, opinions, or conclusions in, or the use
of, this report.
This opinion is for the use and benefit of the Board of Directors of SDI and
GWP. Our opinion does not address the merits of the underlying decision by SDI
or GWP to engage in the Merger, or the decisions by SDI and GWP to enter into
the Merger. Our opinion does not constitute a recommendation to any shareholder
as to how such shareholder should vote on either the proposed Merger if given
the opportunity to vote thereon, or any matter related to the Merger. A
fairness opinion is no guarantee for the Board of Directors or the shareholders
that the proposed deal is the best possible deal.
We are not expressing any opinion herein as to (i) the prices at which the
Post-Merger Corporation's shares, or SDI's shares will trade following the
announcement or consummation of the Merger or (ii) the absolute fair market
value of SDI or GWP as going concerns, or under liquidation or (iii) the
conversion ratio or factor on a per share basis necessary to consummate the
Merger in accordance with our opinion regarding the relative range of value of
SDI and GWP.
3
<PAGE> 54
Based on review, analysis and conclusions, we are of the opinion that, as of
the date hereof, SDI and GWP are of substantially equal value from a financial
point of view, from the perspective of the shareholders of both SDI and GWP.
Our reported analyses, opinions and conclusions are limited only by the
reported assumptions and limiting conditions as stated in this letter, and they
represent our unbiased professional analyses, opinion and conclusions.
Sincerely,
SHELDRICK McGEHEE & KOHLER, INC.
/s/ Sheldrick, McGehee & Kohler, Inc.
---------------------------------
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