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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SUCCESS DEVELOPMENT INTERNATIONAL, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock
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(2) Aggregate number of securities to which transaction applies:
12,000,623
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
$1.66658 per share based upon value of transaction
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(4) Proposed maximum aggregate value of transaction:
$2,000,000.00
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(5) Total fee paid:
$400.00
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LETTERHEAD OF SUCCESS DEVELOPMENT INTERNATIONAL, INC.]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 27, 1999
DEAR SHAREHOLDERS:
The Board of Directors of Success Development International, Inc. has
called the annual meeting of shareholders to be held at SDI's office at 9799 Old
St. Augustine Road, Jacksonville, Florida, on March 9, 1999 at 2:00 p.m. for the
following purposes:
- To remove an existing director.
- To elect directors to fill two expiring director positions,
the unexpired term of one director, and three additional
positions as authorized by the Board of Directors.
- To approve amendments to SDI's Articles of Incorporation that
will (i) change SDI's name to International Media Holdings,
Inc., (ii) increase the number of $.001 par value shares of
common stock which SDI is authorized to issue from 25,000,000
to 500,000,000, and (iii) change the required shareholder vote
for purposes of approving certain business combinations from
80% to 51%.
- To approve an amendment to SDI's Long Term Incentive Plan
allocating an additional 7,500,000 shares to the Plan.
- To conduct any other business properly before the shareholders
at the annual meeting, or any adjournments or postponements of
the annual meeting.
The Board of Directors has fixed the close of business on February 9,
1999 as the record date for determining shareholders entitled to vote at the
annual meeting. Only shareholders of record at the close of business on that
date are entitled to vote at this annual meeting, including any adjournments or
postponements.
Whether or not you plan to attend the annual meeting, please complete
the enclosed proxy and return it promptly so that your shares will be
represented. Sending in your proxy will not prevent you from voting in person at
the annual meeting.
By order of the Board of Directors,
-----------------------------------
Daniel S. Pena, Sr.
Chief Executive Officer
February 27, 1999
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SUCCESS DEVELOPMENT INTERNATIONAL, INC.
9799 OLD ST. AUGUSTINE ROAD
JACKSONVILLE, FLORIDA 32257
PHONE: (904) 886-2985
PROXY STATEMENT
FOR MARCH 9, 1999
ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement (this "Statement") and the enclosed proxy are
being furnished by the Board of Directors (the "Board") of Success Development
International, Inc., a Florida corporation ("SDI") to the holders of outstanding
shares ("Shares") of SDI's common stock, par value $.001 per share (the "Common
Stock"), in connection with the solicitation of proxies to be voted at the
annual meeting of shareholders of SDI to be held Tuesday, March 9, 1999 (the
"Annual Meeting") and any adjournments or postponements thereof. This Statement
and the accompanying proxy are being distributed to shareholders on or about
February 27, 1999.
The purposes of the Annual Meeting are (i) to remove an existing
director (the "Removal"); (ii) to elect six directors, two of whom will fill the
expiring terms of two directors, one of whom will fill the unexpired term of an
existing director, and three of whom will fill three newly created director
positions (the "Election of Directors"); (iii) to approve an amendment to the
Articles of Incorporation of SDI to effect the change of SDI's name to
International Media Holdings, Inc. (the "Name Change Amendment"); (iv) to
approve an amendment of the Articles of Incorporation of SDI to increase the
number of $.001 par value shares of Common Stock which SDI is authorized to
issue from 25,000,000 to 500,000,000 (the "Additional Shares Authorization");
(v) to approve an amendment to SDI's Long Term Incentive Plan allocating an
additional 7,500,000 shares to the Plan (the "LTIP Allocation"); (vi) to approve
an amendment to the Articles of Incorporation of SDI to change the required
shareholder vote for purposes of approving certain business combinations (the
"Required Shareholder Vote Reduction"); and (vii) to conduct any other business
properly before the shareholders at the annual meeting.
The Board unanimously supports these proposals and recommends that the
shareholders vote in favor of the proposals either in person or by proxy.
SUMMARY OF PROPOSALS
THE REMOVAL.
Ralph E. Vroman, Jr. is presently a director of SDI. Mr. Vroman was the
Chief Financial Officer of SDI from September 1997 through December 3, 1998. His
employment with SDI was terminated on December 3, 1998. Pursuant to the Bylaws
of SDI, the Board of Directors recommend that Mr. Vroman, whose term expires
next year, be removed as a director.
YOUR BOARD OF DIRECTORS SUPPORTS THE REMOVAL OF RALPH E. VROMAN, JR. AS
A DIRECTOR. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE REMOVAL.
THE ELECTION OF DIRECTORS.
The Board of Directors of SDI presently consists of six members who are
elected to staggered three-year terms. Two of such members' terms expire as of
the Annual Meeting. The two members whose terms expire are Jarrell D. Ormand and
Hugh L. Carey. If approved by the shareholders, Ralph E. Vroman, Jr., whose term
expires in 2000, will be removed as a director and a new director will be
elected to fill the unexpired term. In addition, as approved by the Board of
Directors pursuant to the Articles of Incorporation of SDI, three new director
positions have been created,
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expanding the Board from six members to nine. The directors who fill these
positions will be elected to staggered terms. One of the three new members will
be elected initially for a one-year term to expire in 2000; a second new member
will be elected initially for a two-year term to expire in 2001; and the third
new member will be elected to a three-year term to expire in 2002. The Board of
Directors recommends that Hugh L. Carey be elected to fill the unexpired term of
Mr. Vroman, and that Jarrell D. Ormand be elected to the new one-year term. The
Board of Directors further recommends that Bob Stone be elected to the new
two-year term, and that David A. Reecher, Jose A. Alvarez and Ted Nicholas be
elected to the new and vacant three-year terms. (See Executive Officers and
Directors for more information about Messrs. Carey, Ormand, Stone, Reecher,
Alvarez, and Nicholas.)
YOUR BOARD OF DIRECTORS SUPPORTS THE ELECTION OF THE NAMED INDIVIDUALS
TO THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
ELECTION OF THESE INDIVIDUALS.
THE PROPOSED CHANGES TO ARTICLES:
THE NAME CHANGE.
Subject to shareholder approval, the Board of Directors has
approved an amendment to Article I of SDI's Amended and Restated
Articles of Incorporation (the "Articles") that would change the name
of SDI to International Media Holdings, Inc. The Board of Directors
believes that the new corporate name will more accurately reflect the
nature and the diversity of the businesses that SDI will directly or
indirectly operate.
THE ADDITIONAL SHARES AUTHORIZATION.
Subject to shareholder approval, the Board of Directors has
approved an amendment to Article V of the Articles that would increase
the maximum number of $.001 par value Shares which the corporation is
authorized to issue from the current 25,000,000 to 500,000,000.
THE REQUIRED SHAREHOLDER VOTE REDUCTION.
Subject to shareholder approval, the Board of Directors has
approved an amendment to Sections 1 and 5 of Article VIII of the
Articles that would eliminate the requirements for a "super majority"
vote of the holders of at least 80% of the Shares in order to (i)
authorize any merger, consolidation, or other "business combination"
(as defined in the Articles) with any owner of 10% or more of the
Common Stock, or anyone able to control the company, and (ii) amend
Article VIII, and would instead require only the affirmative vote of
the holders of at least 51% of the Shares. A vote of the holders of at
least 80% of the Shares is now required in order to amend these
provisions.
EFFECTIVE DATE OF PROPOSED CHANGES TO ARTICLES.
The Name Change, Additional Shares Authorization, and Required
Shareholder Vote Reduction (collectively, the "Proposed Changes to
Articles") will become effective on the date of filing Articles of
Amendment to the Articles ("Amendment") with the Secretary of State of
Florida, Division of Corporations. If the Proposed Changes to Articles
are approved and management determines to proceed with the same,
management will use its discretion to determine when to file the
Amendment(s) effectuating each of the Proposed Changes to Articles. The
Board of Directors reserves the right to abandon all or any of the
Proposed Changes to Articles without further action by the shareholders
at any time before the filing of the Amendment(s) with the Secretary of
State of Florida, Division of Corporations, notwithstanding
authorization of the Proposed Changes to Articles by the shareholders.
Management expects to file the Amendment(s) effectuating the Proposed
Changes to Articles in connection with the Merger (described below),
provided the Proposed Changes to Articles are approved by the
shareholders. (See The Merger for more information about the proposed
merger.) A copy of the Articles is attached to this proxy statement as
Exhibit A.
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YOUR BOARD OF DIRECTORS SUPPORTS THE PROPOSED CHANGES TO ARTICLES. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED CHANGES TO ARTICLES.
THE LTIP ALLOCATION.
Subject to shareholder approval, the Board of Directors has approved an
amendment to Section 1.6 of SDI's Long Term Incentive Plan ("LTIP") that would
increase the number of Shares allocated to the Plan from 7,500,000 to
15,000,000. (For more information about the LTIP, see Long Term Incentive Plan.)
YOUR BOARD OF DIRECTORS SUPPORTS THE LTIP ALLOCATION. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" THE LTIP ALLOCATION.
THE ANNUAL MEETING
RECORD DATE AND VOTING SECURITIES.
The Board has fixed the close of business on February 9, 1999 as the
record date for the Annual Meeting. As of such record date, SDI had outstanding
11,316,593 Shares. Each Share entitles its record holder to one vote on each
matter submitted to a vote at the Annual Meeting. The Shares do not have
cumulative voting rights.
The attendance, in person or by proxy, of the holders of a majority of
the Shares entitled to vote is necessary to constitute a quorum at the Annual
Meeting. If a quorum exists at the Annual Meeting, each proposal will be
approved by the affirmative vote of a majority of the Shares represented at the
meeting and entitled to vote on each proposal, with the exception of the
Required Shareholder Vote Reduction which will be approved by the affirmative
vote of at least 80% of the Shares entitled to vote. Under Florida law,
abstentions and shares referred to as broker or nominee non-votes (i.e., shares
held by brokers or nominees as to which instructions have not been received from
the beneficial owners or persons entitled to vote and the broker or nominee does
not have discretionary authority to vote on a particular matter) are treated as
Shares that are present and entitled to vote for purposes of determining the
presence of a quorum. For purposes of determining the outcome of any matter as
to which the proxies reflect abstentions or broker or nominee non-votes, Shares
represented by such proxies are treated as not present and not entitled to vote
on that subject matter, and therefore will not be considered when counting votes
cast on the matter (even though those Shares are considered entitled to vote for
quorum purposes and may be entitled to vote on other matters.) If less than a
majority of the outstanding Shares is represented at the Annual Meeting, a
majority of the Shares so represented may adjourn the Annual Meeting from time
to time without further notice. As of the record date for the Annual Meeting,
SDI directors and executive officers held approximately 33.25% of the
outstanding Shares entitled to vote (excluding Shares that may be received upon
exercise of stock options).
PROXIES.
Shares represented by properly executed proxies received at or prior to
the Annual Meeting will be voted at the Annual Meeting in the manner specified
by the holders of such shares. PROPERLY EXECUTED PROXIES WHICH DO NOT CONTAIN
VOTING INSTRUCTIONS WILL BE VOTED FOR APPROVAL AND ADOPTION OF THE PROPOSALS
UNLESS SHAREHOLDERS SPECIFY TO THE CONTRARY IN THEIR PROXIES OR SPECIFICALLY
ABSTAIN FROM VOTING ON THIS MATTER.
SOLICITATION OF PROXIES; REVOCATION.
The cost of the solicitation of proxies will be borne by SDI. In
addition to solicitation by mail, directors, officers and other employees of SDI
may, without additional compensation, solicit proxies by mail, in person, by
telephone and facsimile or by other electronic means.
The giving of a proxy does not preclude the right to vote in person at
the Annual Meeting should any shareholder giving the proxy so desire.
Shareholders may revoke their proxy at any time prior to the exercise thereof,
either in person at the Annual Meeting or by filing with the Secretary of SDI,
at SDI's principal executive office, a
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written revocation or duly executed proxy bearing a later date; however, no such
revocation will be effective until written notice of the revocation is received
by SDI at or prior to the Annual Meeting.
OTHER MATTERS.
SDI is not aware of any other matters to come before the Annual
Meeting. If any other business should come before the Annual Meeting, the
persons named in the enclosed proxy will have discretionary authority to vote
such proxy in accordance with their best judgment.
SHAREHOLDER PROPOSALS.
The deadline for submitting shareholder proposals for the 2000 Annual
Meeting is September 30, 1999.
RIGHTS OF DISSENTING SHAREHOLDERS.
SDI is a Florida corporation and the rights of its shareholders are
governed by the Florida Business Corporation Act ("FBCA") and the Articles of
Incorporation and By-Laws of SDI. Sections 607.1301, 607.1302 and 607.1320 of
the FBCA (copies of which are attached to this proxy statement as Exhibit B) set
forth the rights of dissenting shareholders in certain transactions. Dissenting
shareholders rights under the FBCA are not applicable to the proposals described
above.
COMMON STOCK
The current authorized capital stock of SDI consists of 25,000,000
Shares of Common Stock, $0.001 par value (the "Common Stock"), of which
11,316,593 Shares were issued and outstanding on February 9, 1999. There were
173 holders of the Common Stock as of February 9, 1999. The Additional Shares
Authorization, if approved by the shareholders, will authorize the issuance of
475,000,000 additional Shares of Common Stock for the purposes of effectuating
the Merger and to allow potential increased capitalization of SDI in the future.
Holders of the Common Stock are entitled to one vote per Share on all
matters submitted to a vote of shareholders of SDI and may not cumulate votes
for the election of directors. Holders of the Common Stock have the right to
receive dividends when, as, and if declared by the Board of Directors from funds
legally available therefor. Upon liquidation of the Company, holders of the
Common Stock are entitled to share pro rata in any assets available for
distribution to shareholders after payment of all obligations of the Company.
Holders of Common Stock have no preemptive rights and have no rights to convert
their Common Stock into any other securities. All shares of Common Stock have
equal rights and preferences. All shares of Common Stock now outstanding are
fully paid for and non-assessable.
THE MERGER
TERMS.
As of the date of this Proxy Statement, SDI and Great Wisdom
Publishing, Inc. ("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 (the "Merger"). SDI, New Sub and GWP will
enter into an Agreement and Plan of Merger ("Merger Agreement") pursuant to
which GWP will merge with NewSub pursuant to 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. The Merger is conditioned upon, among other things, the
receipt by SDI of a fairness opinion of Sheldrick, McGehee & Kohler, Inc. to the
effect that SDI and GWP are of substantially equal value. In addition, if the
Merger is consummated, the present shareholders of GWP will
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indemnify SDI against any losses that may arise if any of the representations
and warranties made by GWP in the Merger Agreement is untrue or incorrect.
ANTICIPATED BENEFITS.
The Board of Directors has determined that the consolidation of the
businesses of SDI and GWP presents exciting opportunities for synergy and
enhanced growth for SDI and its shareholders. The proposed Merger will allow SDI
to diversity the services that it provides to the public beyond the seminar
industry. The largest shareholder of SDI is now responsible for generating a
substantial portion of SDI's income. The diversification of SDI's interests into
the publishing industry would dilute the potential impact upon SDI's future
revenues of this shareholder's ability to continue generating products for sale
to the public. Further, the consolidation of the businesses of SDI and GWP will
consolidate the management teams and reduce the overhead of both entities on a
going forward basis. GWP's stock of informational products in niche categories
complements and expands SDI's core business of providing informational and
financial services, while its established and growing sales, marketing, and
distribution network provides a platform for marketing and disseminating both
companies' products.
ISSUANCE OF ADDITIONAL SHARES.
In order to effectuate the Merger and to allow for potential increased
capitalization of SDI, the Board of Directors, subject to shareholder approval,
has authorized the issuance of 475,000,000 additional shares of SDI's Common
Stock. The Merger will not affect the par value of the Common Stock, which will
remain at $.001 par value per share. The Merger will become effective once all
the conditions set forth in the Merger Agreement have been satisfied or waived
(the "Merger Effective Date"). The form of Merger Agreement is attached as
Exhibit C to this proxy statement.
On the Merger Effective Date, automatically by virtue of the Merger and
without any action on the part of any party or any GWP shareholder, each share
of GWP Common Stock issued and outstanding will be converted into the right to
receive 10,830.887 shares (the "Exchange Ratio") of GWP Common Stock. On the
Merger Effective Date, each option granted by GWP to purchase GWP stock that is
outstanding and unexercised immediately prior to the Merger Effective Date will
cease to represent a right to acquire shares of GWP and will be converted
automatically into an option to purchase shares of SDI in an amount and at an
exercise price determined as provided below (and otherwise, subject to the terms
of the stock plans of GWP under which they were issued and the agreements
evidencing grants thereunder):
(i) the number of shares of SDI Common Stock to be subject to the
new option will be equal to the product of the number of
shares of GWP Common Stock subject to the original option
immediately prior to the Merger Effective Date and the
Exchange Ratio, provided that any fractional shares of GWP
Common Stock resulting from such multiplication will be
rounded to the nearest whole share; and
(ii) the exercise price per share of SDI Common Stock under the new
option will be equal to the exercise price per share of GWP
Common Stock under the original option immediately prior to
the Merger Effective Date divided by the Exchange Ratio,
provided that such exercise price will be rounded to the
nearest whole cent.
There are presently 1,108 shares of GWP common stock outstanding. Based
upon the Exchange Ratio, these shares would represent 12,000,623 SDI Shares. In
addition, GWP has granted options for 146 shares, which would 1,581,310 SDI
Shares.
THE CONTRIBUTION.
SDI owns 100% of the stock of five operating subsidiaries: The LeGrand
Group, Inc., Results Publishing, Inc., Telstar Consulting, Inc., SDI Direct
Corporation, and SDI Internet Service. Subject to shareholder approval of the
Additional Shares Authorization, SDI will contribute all the stock of these five
operating subsidiaries to the capital of
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GWP immediately after the Merger (the "Contribution"). After the Contribution,
SDI will own 100% of GWP, and GWP will own 100% of these five operating
subsidiaries as well as the three operating subsidiaries it currently owns. (See
About SDI for more information on SDI's existing subsidiaries. See About GWP for
more information about GWP's existing subsidiaries.)
FEDERAL INCOME TAX CONSEQUENCES.
The following general description of the federal income tax
consequences is based on the Internal Revenue Code of 1986, as amended, the
applicable Treasury regulations promulgated thereunder, judicial authority, and
current administrative rulings and practices as in effect on the date of this
proxy statement, all of which are subject to change and any such change could
apply retroactively. This discussion is for general information only and does
not purport to deal with all aspects of federal income taxation that may be
relevant to the holders of Shares and does not discuss the consequences which
may apply to special classes of taxpayers (e.g., non-resident aliens,
broker-dealers, tax exempt organizations, banks or insurance companies).
The Merger and the Contribution should be tax-free transactions, and no
gain or loss should be recognized by SDI or its shareholders as a result of
either transaction.
THIS DISCUSSION SHOULD NOT BE CONSIDERED AS TAX OR INVESTMENT ADVICE,
AND THE TAX CONSEQUENCES OF THE MERGER AND CONTRIBUTION MAY NOT BE THE SAME FOR
ALL SHAREHOLDERS. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
ASCERTAIN THEIR INDIVIDUAL FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES.
ABOUT SDI
Success Development International, Inc. was incorporated in Florida in
1995 to serve as a holding company for its five operating subsidiaries, The
LeGrand Group, Inc. ("LGI"), Results Publishing, Inc. ("RPI"), Telstar
Consulting, Inc. ("TCI"), SDI Direct Corporation ("SDC") and SDI Internet
Services, Inc. ("SIS").
LGI was founded in 1989 and incorporated in Florida in 1991 for the
purpose of marketing and distributing information about real estate investment.
RPI was incorporated in Nevada in 1995 for the purpose of sponsoring
workshops and seminars about LGI's financial products and business
opportunities.
TCI was incorporated in Nevada in 1995 for the purpose of supplying
telemarketing sales for LGI and other third party products and services.
SDC was incorporated in 1998 as a wholly owned subsidiary of SDI. SDC
was formed to create and market products and services primarily through
television infomercials. SDC developed and began testing its first infomercial
during the third quarter of 1998.
SIS was incorporated in 1998 as a wholly owned subsidiary of SDI. SIS
services was formed to create an Internet presence for SDI through the web site
at www.success-di.com. The web site provides information to interested parties
about SDI's products and services. SIS also provides web site creation and
hosting for other companies.
SDI provides information, education, financial and other services to
small businesses and their owners. The services offered by SDI include a
magazine, a variety of seminars, conferences, home study courses, hands-on
training events in the areas of real estate investment and management,
marketing, business structuring and planning, and income tax planning.
Additional specialty services include mortgage lending, equipment leasing,
factoring accounts receivable and business lines of credit. The products and
services provided by SDI are designed to enable its customers to create,
increase and maintain financial wealth.
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SDI strives to provide business consumers with information that can be
used independently or, at the purchaser's option, with assistance from workshop
leaders. SDI believes that its ability to teach this information in an
understandable, easy-to-follow format together with its ongoing support system
for customers has enabled it to enhance its current financial position.
Maintaining its commitment to quality customer support and building ongoing
relationships with customers is necessary, in SDI's opinion, to achieve rapid
expansion and long-term profitability.
SDI sells its products and services to a broad spectrum of individuals
and entities from beginning entrepreneurs seeking skills to achieve financial
independence to experienced entrepreneurs looking to enhance their existing
plans and protect existing assets. The products and services are sold through
several mediums, including direct mail, telemarketing, Internet, periodical
advertising, radio, television, direct sales and customer referral.
SDI's executive offices are located at 9799 Old St. Augustine Road,
Jacksonville, Florida 32257, and its telephone number is (904) 886-2985.
ABOUT GWP
Great Wisdom Publishing, Inc. ("GWP") was formed in 1996 with the
objective of building a large publishing (information) company with capabilities
to create and acquire informational products in niche subject categories that
can be sole through its established and developing sales, marketing, and
distribution network. GWP has formulated a unique acquisition and consolidation
strategy to acquire publishers who have identifiable niche market strengths and
fit certain established criteria.
In 1996, GWP acquired the assets of Publishers Distribution Service,
Inc. ("PDS"), one of ten master distributors in the country, through a
wholly-owned subsidiary of GWP named Access Publishers Network, Inc. ("APN"), to
gain distribution volume and expertise. This acquisition allowed GWP to obtain
immediate access to buyers from national chains and major customers. Buyers from
large companies only allot certain time to visit with publishers with sufficient
product to be cost effective. As a master distributor, APN provides a
"consolidation" effect for smaller publishers with a nationwide sales force,
customer credibility, and consolidated invoicing and accounts. In addition, APN
produces a viable catalog for each season for sale purposes and helps coordinate
co-op advertising among its services.
In 1998, GWP acquired the stock of Astro Communications Services,
Inc.("ACS"), a San Diego based publisher of "New Age" information. ACS was
established over 25 years ago and is a leader in astrological publications,
software and computer reports, including a software program that is considered
the leading reference material in the astrological community. GWP successfully
consolidated ACS's warehouse and back room functions, and began a successful
start-up venture in London with a (pound)40 million mail order company. GWP is
currently negotiating a potential purchase of a New Age publisher with $4
million in annual revenues. This would provide GWP with a strong footing in the
area of New Age, as well as the resources to grow this niche subject in the
future.
GWP's product and growth interest lies within four primary niche
subject categories: business information (marketing, self-help, leadership &
management, career, etc.), recreation (hunting, fishing, hiking, travel, etc.),
New Age (spiritual, astrology, alternative medicine, etc.), and home/hobby (lawn
& garden, cooking, sewing, woodworking, do-it-yourself projects, etc.). Each
niche subject area is fast growing (mainly fueled by the increased maturity of
the baby boomer market) and is an easily identifiable market. These markets are
large in size and scope and are largely controlled by smaller independent
publishers. The goal of GWP is to consolidate and build critical mass within
these four areas by acquiring and developing new and larger distribution
channels which connect directly to its market. GWP's acquisition and
consolidation strategy to build a publisher through a master book distributor
affords it a stronger platform and better economics than merely acquiring and
consolidating publishers on their own.
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GWP and its subsidiaries finished their full fiscal year on June 30,
1998 with an annualized revenue of over $6 million. GWP projects annual revenues
of $7 million for its fiscal year ending in June, 1999. The acquisition
potential among this highly fragmented industry of more than 42,000 publishers
is promising.
GWP's executive offices are located at 3904 Airport Road, Plant City,
Florida 33567 and its telephone number is (813) 752-3743.
EXECUTIVE OFFICERS AND DIRECTORS
Directors of SDI serve staggered three-year terms, so that two
directors are elected each year. The following persons are the current executive
officers and directors of SDI:
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
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Daniel S. Pena, Sr. 53 Director/Chairman/President/CEO/Secretary 1995
Shawn M. Casey 39 Director & Vice Chairman (1) 1995
Raymond Rach 64 Director & Vice President (2) 1995
Ralph E. Vroman, Jr. 39 Director (3) 1998
Jarrell D. Ormand 80 Director (4) 1996
Hugh L. Carey 79 Director (4) 1996
</TABLE>
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(1) Resigned as CEO, President and Secretary on February 15, 1999
(2) Member of Audit Committee
(3) Terminated as CFO on December 3, 1998
(4) Member of Compensation Committee
The following persons will be the new executive officers and directors
of SDI if the Election of Directors proposal is adopted by the shareholders:
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE TERM TO EXPIRE
- ---- --- -------- -------------- --------------
<S> <C> <C> <C> <C>
Daniel S. Pena, Sr. 53 Director & Chairman 1995 2001
Shawn M. Casey 39 Director & Vice Chairman 1995 2000
David A. Reecher 39 Director & CEO/President ---- 2002
Jose A. Alvarez 49 Director & Executive V.P./CFO/COO ---- 2002
Raymond Rach 64 Director & Vice President 1995 2001
Ted Nicholas 64 Director ---- 2002
Bob Stone 80 Director ---- 2001
Jarrell D. Ormand 80 Director 1996 2000
Hugh L. Carey 79 Director 1996 2000
</TABLE>
BACKGROUND OF CURRENT OFFICERS AND DIRECTORS.
Following is a brief description of the background of the current
officers and directors of SDI based on information provided by them to SDI.
DANIEL S. PENA, SR., joined The LeGrand Group, Inc. in early 1995 as a director
and Chairman of the Board. He became a director of SDI in April 1995,and
Chairman of the Board of SDI in November 1995. Since 1992, Mr. Pena has been the
controlling shareholder and chairman of Great Western Development Corporation, a
publishing company. Mr. Pena founded Great Western Resources ,a publicly held
natural resources company, in 1982 and served as its Chief Executive Officer and
Chairman until 1992. From 1979 to 1982, Mr. Pena was chairman and
- 9 -
<PAGE> 11
CEO of JPK Industries, a natural resources company. From 1977 until 1979, Mr.
Pena held the position of Vice President at the investment banking firm of Bear
Stearns and Co. in Los Angeles, California, and from 1975 until 1977, that of
Director of Financial Planning at Paine Webber Jackson & Curtis in Los Angeles,
California. He was until recently a member of the board of trustees, California
State University, Northridge, where he graduated in 1971 with a B.S. in Business
Administration.
SHAWN M. CASEY, ESQ., joined The LeGrand Group, Inc. as General Counsel and
Conference Director in January 1995. From November, 1995 to February 15, 1999,
he served as President and Chief Executive Officer and Secretary of SDI. He
became a director of SDI in April, 1995. In August 1997, he was elected
Vice-Chairman of the Board of Directors. From 1989 until 1994, Mr. Casey
conducted a solo law practice in Pittsburgh, PA. focused primarily on real
estate and business matters. At the same time, he was shareholder and President,
was a shareholder and President of Emerald Settlement Services, Inc., a title
insurance agency in Pittsburgh, Pennsylvania. He founded Dream Development
Corporation in 1993 to sponsor and promote seminars, workshops and information
products. He graduated from the University of Scranton in Pennsylvania with a
B.A. in Communications in 1981, and received his Juris Doctor degree from
Duquesne University in 1985.
RAYMOND RACH joined The LeGrand Group, Inc., as President in January 1993. Mr.
Rach served as President of SDI from April 1995 until November 1995, when he
became President of Telstar Consulting, Inc., SDI's telemarketing subsidiary,
and a Vice President of SDI. He has served as a director of SDI since April
1995. Before joining The LeGrand Group, Inc., Mr. Rach spent five years, from
1987 to 1992, as Executive Vice President with Budd Mayer Corporation, one of
the nation's largest regional food brokerage firms.
RALPH E. VROMAN, JR. joined SDI in January 1997 as Controller. In September
1997, he was promoted to Chief Financial Officer and served in that position
until he was terminated on December 3, 1998. Mr. Vroman was elected to the Board
of Directors in July 1998. Before joining SDI, Mr. Vroman served as Controller
for Dixie Sales Company, an international wholesale distributor for Polaroid
Corporation, in Jacksonville, Florida, from 1994 to 1997. From 1986 to 1994, Mr.
Vroman was a financial consultant with FLC Associates, in Tampa, Florida. He
consulted to General Electric, General Motors, Publix, Schnucks and other large
corporations. He is a Chartered Financial Analyst with multiple degrees in
Business Administration, Finance, Economics, Computers and German from Saint
Ambrose University in Davenport, Iowa.
JARRELL D. ORMAND joined SDI in July, 1996 as a Director. From 1963 to 1990, Mr.
Ormand was the Chairman and Chief Executive of Ormand Industries, Inc., a
publicly-traded American Stock Exchange company whose interests included
advertising, container manufacturing, apparel, auto leasing, and electronics.
From 1955 to 1958, Mr. Ormand was on the Board of Directors of the American
Petroleum Institute of the Permian Basin (West Texas and New Mexico). Mr. Ormand
is currently a director of Centinela Hospital, a nonprofit hospital based in
California. Since 1990, Mr. Ormand has been retired.
GOVERNOR HUGH L. CAREY joined SDI in August 1996 as a Director. From November
1974 to November 1982, Mr. Carey served as governor of the State of New York.
From 1982 to December 31, 1995, Mr. Carey was an Executive of W.R. Grace & Co.,
a holding company. From January 1, 1996 to the present, Mr. Carey is Of Counsel
to the law firms of Whitman Breed Abbott & Morgan and Heinrich Gordon Hargrove
Weihe & James, P.A.
KEY EMPLOYEE: RON LEGRAND, 51, founded The LeGrand Group, Inc., in 1989. He was
President and a Director of The LeGrand Group, Inc., until January, 1995 and
President, Secretary, Treasurer and a Director of Results Publishing, Inc.,
until November 1995. He resigned as a Director of SDI in March, 1996. An active
real estate entrepreneur, Mr. LeGrand has bought and sold more than 1,100 single
family houses over the last 13 years. Based upon this personal experience, Mr.
LeGrand developed many of the courses and programs offered by SDI today. In
addition, Mr. LeGrand speaks nationally, teaching his real estate investing and
management methodology at SDI's programs.
- 10 -
<PAGE> 12
BACKGROUND OF NOMINEES.
Following is a brief description of the background of the nominees for
director positions (not otherwise disclosed above) based on information provided
by them to SDI.
DAVID A. REECHER is the founder, President and Chief Executive Officer of GWP.
Prior to founding GWP, he was Vice President and co-owner of TOWERS Club Press,
Inc., a publisher and advertising agency. Mr. Reecher is co-founder and former
President of Aviation Surplus Sales, Inc., an aircraft parts company; and is the
founder, Chairman and majority owner of Little Mountain Promotions, Inc., an
advertising distribution service. Mr. Reecher has also been involved with the
advertising and marketing of a variety of businesses which include restaurants,
insurance companies, mail order companies, and chiropractors. He has been
leading large organizations for over a decade, including the Powerplant Programs
for both Presidential Airways and Discovery Airways, and the production facility
for Aerotest, a large southern California aircraft repair facility.
JOSE A. ALVAREZ is a C.P.A. who founded his own accounting firm in 1975 and grew
it to over 30 employees with nearly $2 million in revenues before selling it in
1996. In addition to running his practice, he was a college accounting professor
for six years. In 1996 Mr. Alvarez joined GWP as its Chief Financial Officer and
Director. Mr. Alvarez is a consultant on business growth, financial, tax and
management advice, mergers, sales and acquisitions, estate and gift tax
considerations, and company valuations. He graduated from the University of
South Florida in 1971 with a B.A. in accounting.
TED NICHOLAS is an author, copywriter, public speaker and direct marketing
expert. He is the President of Nicholas Direct, Inc., which markets his books,
audio and video tapes, newsletters, seminars, and other information products,
and publisher of the "Direct Marketing Success Letter." Since 1956 he has
founded 22 companies in such fields as candy and ice cream manufacturing and
retailing, franchising, real estate, machinery and food. He has written 14 best
sellers and published 53 books by other authors.
BOB STONE is cofounder and Chairman Emeritus of Stone & Adler, now a Young &
Rubican direct marketing company, which he started in 1966. He is currently
Professor of Direct Marketing at Northwestern University and the University f
Missouri. He is a member of the Direct Marketing Hall of Fame and is the only
direct marketer to win the Best in Industry Award eight times. He has written
over 200 articles on direct marketing which have appeared in Advertising Age
magazine since 1967.
BOARD OF DIRECTORS MEETINGS.
During fiscal year 1998, the Board of Directors held one regularly
scheduled and special meeting. None of the directors attended fewer than 75% of
the Board meetings during fiscal year 1998.
DIRECTOR COMPENSATION.
SDI has no standard arrangements pursuant to which directors of SDI are
compensated, nor was there any other arrangement pursuant to which any director
was compensated during SDI's last fiscal year. SDI has no plans to pay
directors' compensation.
(Remainder of page intentionally left blank.)
- 11 -
<PAGE> 13
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS & PRINCIPAL SHAREHOLDERS
The table below presents certain information regarding beneficial
ownership of SDI Common Stock (SDI's only voting security) as of February 9,
1999, by (i) each shareholder known to SDI to own, or have the right to acquire
within 60 days, more than 5% of the outstanding shares of Common Stock, (ii)
each executive officer and director of SDI, and (iii) all executive officers and
directors as a group.
<TABLE>
<CAPTION>
===================================================================================================================
NO. OF SHARES
WHICH MAY BE TOTAL SHARES
NUMBER OF ACQUIRED W/IN 60 BENEFICIALLY
NAME SHARES OWNED DAYS OWNED PERCENT OF CLASS
===================================================================================================================
<S> <C> <C> <C> <C>
Ron LeGrand (a) 5,586,982 0 5,586,982 47.79%
- -------------------------------------------------------------------------------------------------------------------
Daniel S. Pena (b) 2,250,000 0 2,250,00 19.24%
- -------------------------------------------------------------------------------------------------------------------
Raymond Rach (a) 723,179 0 723,179 6.19%
- -------------------------------------------------------------------------------------------------------------------
Shawn Casey (a) 550,000 0 550,000 4.70%
- -------------------------------------------------------------------------------------------------------------------
Hugh L. Carey (c) 120,000 0 120,000 1.03%
- -------------------------------------------------------------------------------------------------------------------
Jarrell D. Ormand (d) 120,000 0 120,000 1.03%
- -------------------------------------------------------------------------------------------------------------------
Ralph E. Vroman (e) 0 250,000 250,000 2.14%
===================================================================================================================
All Directors and Executive 3,763,179 250,000 4,013,179 34.33%
Officers as a Group
===================================================================================================================
Total Shares Outstanding / Vested 11,316,593 375,000 11,691,593 100.00%
Options
===================================================================================================================
</TABLE>
(a) Business Address: 9799 Old St. Augustine Road, Jacksonville, FL 32257
(b) Business Address: 575 Esplanada #301, Redondo Beach, VA 90277
(c) Business Address: 200 Park Avenue, New York, NY 10166
(d) Home Address: 577 Perugia Way, Los Angeles, CA 90077
(e) Home Address: 3800 South University Boulevard, Jacksonville, FL
32216
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS & PRINCIPAL SHAREHOLDERS IF
THE MERGER IS CONSUMMATED
Merger, by (i) each shareholder known to SDI to own, or have the right
to acquire within 60 days, more than 5% of the outstanding shares of Common
Stock, (ii) each executive officer and director of SDI, and (iii) all executive
officers and directors as a group.
- 12 -
<PAGE> 14
<TABLE>
<CAPTION>
===================================================================================================================
NO. OF SHARES
WHICH MAY BE TOTAL SHARES
NUMBER OF ACQUIRED W/IN BENEFICIALLY
NAME SHARES OWNED 60 DAYS OWNED PERCENT OF CLASS
===================================================================================================================
<S> <C> <C> <C> <C>
Daniel S. Pena 6,040,810 0 6,040,810 25.91%
- -------------------------------------------------------------------------------------------------------------------
Ron LeGrand 5,586,982 0 5,586,982 23.96%
- -------------------------------------------------------------------------------------------------------------------
David A. Reecher (a) 5,415,444 0 5,415,444 23.23%
- -------------------------------------------------------------------------------------------------------------------
Jose A. Alvarez (b) 1,516,324 0 1,516,324 6.50%
- -------------------------------------------------------------------------------------------------------------------
Raymond Rach 723,179 0 723,179 3.10%
- -------------------------------------------------------------------------------------------------------------------
Shawn M. Casey 550,000 0 550,000 2.36%
- -------------------------------------------------------------------------------------------------------------------
Ted Nicholas (a) 541,544 0 541,544 2.32%
- -------------------------------------------------------------------------------------------------------------------
Bob Stone (a) 433,235 0 433,235 1.86%
- -------------------------------------------------------------------------------------------------------------------
Hugh L. Carey 120,000 0 120,000 0.51%
- -------------------------------------------------------------------------------------------------------------------
Jarrell D. Ormand 120,000 0 120,000 0.51%
- -------------------------------------------------------------------------------------------------------------------
All Directors and Executive 15,460,536 0 15,460,536 66.31%
Officers as a Group
- -------------------------------------------------------------------------------------------------------------------
Total Shares Outstanding / Vested
Options 23,317,216 0 23,317,216 100.00%
===================================================================================================================
</TABLE>
(a) Business Address: 3904 Airport Road, Plant City, FL 33567
(b) Business Address: 9799 Old St. Augustine Road, Jacksonville, FL 32257
EXECUTIVE COMPENSATION
For the fiscal years set forth below, the following executive officers
were the most highly compensated executive officers of SDI:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION AWARDS
- ----------------------------------------------------------------------------------------------------------------------
Securities
Name / Principal Other Annual Restricted Underlying
Position Year Salary Bonus Compensation Stock Awards Options/SARs
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shawn Casey, 1998 $108,272 - 0 - $214,886*
President/CEO
- ----------------------------------------------------------------------------------------------------------------------
1197 $134,539 - 0 - $147,010*
- ----------------------------------------------------------------------------------------------------------------------
1996 $ 70,968 - 0 - $285,459*
- ----------------------------------------------------------------------------------------------------------------------
Raymond Rach, 1998 - 0 - - 0 - $244,374
Vice President
- ----------------------------------------------------------------------------------------------------------------------
1997 - 0 - - 0 - $166,548
- ----------------------------------------------------------------------------------------------------------------------
1996 - 0 - - 0 - $261,908
- ----------------------------------------------------------------------------------------------------------------------
Ron LeGrand, 1998 $231,801 - 0 - - 0 -
Founder
- ----------------------------------------------------------------------------------------------------------------------
1997 $115,216 - 0 - - 0 -
- ----------------------------------------------------------------------------------------------------------------------
1996 - 0 - - 0 - $227,400*
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- 13 -
<PAGE> 15
* See contractual arrangements described in Certain Transactions.
EMPLOYMENT AGREEMENTS.
SDI does not currently have any employment agreements with its
employees.
LONG TERM INCENTIVE PLAN.
In November 1995, SDI adopted the Long Term Incentive Plan ("LTIP")
under which the Board of Directors has discretion to grant qualified and
nonqualified stock options and award restricted stock to any employee of SDI or
its subsidiaries, and to award restricted stock to directors and independent
contractors of SDI or its subsidiaries. As amended in July 1996, a total of
7,500,000 shares of Common Stock, as may be adjusted for stock splits,
consolidations or other changes in capitalization, have been reserved for
issuance under the LTIP. As of February 9, 1999, 1,877,500 shares of Common
Stock remain available for new grants under the LTIP. The exercise price of
options granted under the LTIP may be no less than the fair market value of the
Common Stock on the date of grant. The Board of Directors has discretion to
determine at the time of grant the term of options, timing and conditions for
vesting of options, lapse of restrictions on restricted stock, and permissible
forms of payment of the exercise price. Upon a change in control (as defined in
the LTIP), all options will become immediately exercisable and all restrictions
on restricted stock will lapse. The LTIP maybe amended from time to time without
shareholder approval; provided, however, that shareholder approval is required
to increase the number of shares reserved for issuance under the LTIP, to change
the class of eligible employees, or to take any action that would cause the LTIP
to no longer comply with the federal securities laws or certain other state or
federal statutory or regulatory requirements. In addition, the employee's
consent is required to adversely alter the terms of any outstanding grant held
by such employee. The LTIP is Exhibit 10.5 to Form 10-QSB, which is attached to
this proxy statement as Exhibit D.
CERTAIN TRANSACTIONS.
Shawn M. Casey, SDI's Chief Executive Officer, is the sole shareholder
and president of Dream Development Corporation ("DDC"). Under an oral contract
with SDI, DDC receives 70% of the gross sales price of its products sold at
Company events at which Mr. Casey is a speaker and 49% of the gross sales price
of its products otherwise sold by SDI. DDC is responsible for paying Mr. Casey's
travel expenses (except for travel to certain conferences, which are paid by
SDI), product costs, event costs and shipping and related costs. DDC earned from
SDI, pursuant to this arrangement, $285,459 in fiscal year 1996, $147,010 in
fiscal year 1997, and $214,886 in fiscal year 1998.
Ron LeGrand, who is beneficially the owner of 5,586,982 SDI Shares, is
the sole shareholder and president of Northside Funding, Inc. ("NFI"). Under an
oral contract with SDI which terminated in December 1996, NFI received 40% of
the gross sales price of certain products sold at an Company events at which Mr.
LeGrand was a speaker. NFI has earned from SDI, pursuant to this arrangement,
$227,400 in fiscal year 1996. All products or services which Mr. LeGrand has
created, or will create, during his employment with SDI are the exclusive
property of SDI. In addition to creating new products for SDI, Mr. LeGrand
creates and maintains the material included in the "Cash Flow Systems" and "Boot
Camps," described in "Business--Our Current Products and Services," teaches all
the "Boot Camps," assists in creating and planning marketing campaigns, and
speaks on behalf of SDI at many workshops and seminars throughout the United
States and Canada.
All future transactions between SDI and its officers, directors, and
principal shareholders and their affiliates will be approved by a majority of
the disinterested directors, who do not have an interest in the transaction and
who had access, at SDI's expense, to SDI's or independent legal counsel, and
will be on terms no less favorable to SDI than could be obtained from unrelated
third parties.
- 14 -
<PAGE> 16
LEGAL PROCEEDINGS
There a no material legal proceedings to which SDI is a party or in
which SDI's property is the subject, other than the matter described below:
SDI is the defendant in the civil action titled The Marketing Group,
Inc. v. Success Development International, Inc., Case Number
98-2582-GTV, filed on October 28, 1998 and currently pending in the
United States District Court for the District of Kansas. In that action
the plaintiff, The Marketing Group, Inc. (the "Marketing Group") has
alleged that SDI breached a contract which called for the Marketing
Group to provide creative services and develop a marketing plan for
SDI. The amount claimed to be due to the Marketing Group in the action
is $105,000.00, but the Marketing Group has informally indicated that
it may be willing to settle its claim for a smaller sum. SDI denies the
Marketing Group's allegations and is vigorously defending the action.
SDI maintains that there was no final contract and that the Marketing
Group is not entitled to be compensated for any work that it did
perform because such work was not of acceptable quality.
There are no material legal proceedings to which any director, officer
or affiliate of SDI is a party adverse to SDI or has a material interest adverse
to SDI. There are no material legal proceedings to which any owner of record or
beneficially of more than 5% of any class of voting securities of SDI is a party
adverse to SDI or has a material interest adverse to SDI.
INDEPENDENT PUBLIC ACCOUNTANTS
SDI's independent public accountant is James Moore & Co, P.L. of Holly
Hill, Florida. A representative of the independent public accountant is not
expected to be present and the Annual Meeting. If the Merger is consummated a
decision would be made on whether to continue to use James Moore & Co., P.L. or
BDO Siedman L.L.P. of Grand Rapids, Michigan. During the past two fiscal years,
there have been no changes in or disagreements with SDI's independent accountant
on accounting and financial disclosure matters.
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
Financial statements for the 10-KSB form that SDI is required to file
with the Securities and Exchange Commission have not yet been prepared. The
10-KSB is not due until March 31, 1999. If the Merger is consummated, SDI plans
to change its fiscal year end to June 30 commencing on June 30, 1999.
The most current financial statements and other financial information
(including supplementary financial information, management's discussion and
analysis of financial condition and results of operations, and quantitative and
qualitative disclosures about market risk) which are available for SDI are
contained in the 10-QSB for the quarter ended September 30, 1998. A copy of this
10-QSB is attached to this proxy statement as Exhibit D.
Unaudited 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 are attached to this proxy
statement as Exhibit E.
LIST OF MATERIALS INCORPORATED BY REFERENCE
1. Financial statements and other financial information -
incorporated by reference to attached Form 10-QSB for the
quarter ended September 30, 1998
- 15 -
<PAGE> 17
LIST OF EXHIBITS
A. Amended and Restated Articles of Incorporation of SDI
B. Florida Business Corporation Act Sections 607.1301, 607.1302
and 607.1320, F.S.
C. Agreement and Plan of Merger between SDI, GWP and NewSub
D. Form 10-QSB for the quarter ended September 30, 1998
E. Unaudited Financial Statements of GWP and its subsidiaries for
fiscal year ending June 30, 1997, fiscal year ending June 30,
1998, and interim period ending November 30, 1998
LIST OF APPENDICES
1. Form of Proxy
2. Long Term Incentive Plan of SDI
- 16 -
<PAGE> 18
EXHIBIT "A"
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SUCCESS DEVELOPMENT INTERNATIONAL, INC.
The above corporation (the "Corporation") existing pursuant to the
Florida Business Corporation Law, desiring to give notice of corporate action
effectuating the restatement of its Articles of Incorporation, sets forth the
following facts:
1. The name of the Corporation is SUCCESS DEVELOPMENT
INTERNATIONAL, INC.
2. The Articles of Incorporation are hereby restated in their
entirety to read as follows:
AMENDED & RESTATED
ARTICLES OF INCORPORATION
OF
SUCCESS DEVELOPMENT INTERNATIONAL, INC.
ARTICLE I. NAME AND DURATION
The name of the Corporation is Success Development International, Inc.
The duration of the Corporation is perpetual.
ARTICLE II. PRINCIPAL OFFICE
The address of the principal office of the Corporation in the State of
Florida is 9799 St. Augustine Road, Jacksonville, Florida 32257.
ARTICLE III. REGISTERED OFFICE AND AGENT
The address of the registered office in the State of Florida is c/o
Mahoney Adams & Criser, P.A., 50 North Laura Street, 3400 Barnett Center, in the
City of Jacksonville, County of Duval. The name of the registered agent at such
address is RAX CO.
<PAGE> 19
ARTICLE IV. CORPORATE PURPOSES, POWERS AND RIGHTS
1. The nature of the business to be conducted or promoted and the
purposes of the Corporation are to engage in any lawful act or activity for
which corporations may be organized under the Florida Business Corporation Act.
2. In furtherance of its corporate purposes, the Corporation
shall have all the general and specific powers and rights granted to and
conferred on a corporation by the Florida Business Corporation Act.
ARTICLE V. CAPITAL STOCK
The total number of shares of capital stock which the Corporation has
the authority to issue is Twenty-Five Million (25,000,000) shares of Common
Stock ("Common Stock") $.001 par value per share.
ARTICLE VI. BOARD OF DIRECTORS
1. The number of directors of the Corporation shall be not less than three
nor more than nine. Within the limits specified above, the number of directors
shall be determined from time to time by the Board of Directors. The directors
hall be divided into three classes, Class I, Class II and Class III, which shall
be as nearly equal in number as possible. Each director shall serve for a term
ending on the date of the third annual meeting of shareholders following the
annual meeting of shareholders at which such director was elected; provided,
however, that each director in Class I indicated below shall hold office until
the 1996 annual meeting of shareholders; each director in Class II indicated
below shall hold office until the 1997 annual meeting of shareholders and
initial director in Class III indicated below shall hold office until its
successors are elected and qualified. In the case of any increase in the number
of directors of the Corporation, the additional directors shall be so classified
that all classes of directors shall be increased equally as nearly as possible.
The provisions of this Article with respect to the sole power of the Board of
Directors to determine the number of directors which will constitute the entire
Board and with respect to the classified Board of Directors shall not be
amended, repealed or otherwise altered without the approval of eighty percent
(80%) of the outstanding voting stock of the Corporation.
2. If any vacancy occurs in the Board of Directors during a term,
the remaining directors, by affirmative vote of a majority thereof, may elect a
director to fill the vacancy until the next annual meeting of shareholders.
3. The names and mailing addresses of the persons who shall serve
as directors of the Corporation until the annual meeting of shareholders
indicated above are as follows:
-2-
<PAGE> 20
<TABLE>
<CAPTION>
CLASS I
-------
Name Address
- ---- -------
<S> <C>
Shawn M. Casey 12377 Fisherman's Wharf Court
Jacksonville, Florida 32223
Ross Wagner 1722 Valencia Drive
Jacksonville, Florida 32207
<CAPTION>
CLASS II
--------
Name Address
- ---- -------
<S> <C>
Raymond Rach 4110 Cambrian Garden Lane
Jacksonville, Florida 32257
Daniel S. Pena, Sr. 55 Crest Road East
Rolling Hills, California 90274
<CAPTION>
CLASS III
---------
Name Address
- ---- -------
<S> <C>
Jarrell D. Ormand 577 Perugia Way
Los Angeles, California 90077
Hugh Carey Cambridge Partners
Park Avenue Tower
65 East 55th Suite 3300
New York, New York 10022-3219
</TABLE>
ARTICLE VII. GREATER QUORUM OR VOTING REQUIREMENT
If the shareholders have adopted or amended a provision of these
Articles of Incorporation or the Corporation's Bylaws that fixes a greater
quorum or voting requirement for shareholders or voting groups of shareholders
than is required by Florida law, the adoption or amendment of such provision of
these Articles or the Corporation's Bylaws that adds, changes or deletes such a
greater quorum or voting requirement for shareholders must meet the same quorum
requirement and be adopted by the same vote and voting groups required to take
action under the quorum and voting requirements then in effect or proposed to be
adopted, whichever is greater. Any provision of the Corporation's Bylaws which
fixes a greater quorum or voting
-3-
<PAGE> 21
requirement for shareholders may not be adopted, amended or repealed by the
Board of Directors.
ARTICLE VIII. FAIR PRICE PROVISION
(1)(A) In addition to any affirmative vote required by law or these
Articles of Incorporation, and except as otherwise expressly provided in
paragraph 2 of this Article, any Business Combination (as defined in
subparagraph (B) of this paragraph 1) shall require the affirmative vote of the
holders of at least eighty percent (80%) of the outstanding Common Stock
entitled to vote thereon (the "Voting Stock"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that a lesser
percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(B) The term "Business Combination" as used in this
Article shall mean any of the following transactions:
(i) any merger or consolidation of the
Corporation or any Subsidiary (as hereinafter defined) with
(a) any Interested Shareholder (as hereinafter defined) or (b)
any other corporation (whether or not itself an Interested
Shareholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an
Interested Shareholder; or
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series
of transaction) to or with any Interested Shareholder or any
Affiliate of any Interested Shareholder of any assets of the
Corporation or any Subsidiary having an aggregate Fair Market
Value (as hereinafter defined) of $1,000,000 or more; or
(iii) the issuance or transfer by the Corporation
(in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any
Interested Shareholder or any Affiliate of any Interested
Shareholder in exchange for cash, securities or to her
property (or a combination thereof) having an aggregate Fair
Market Value of $1,000,000 or more; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or
on behalf of an Interested Shareholder or any Affiliate of any
Interested Shareholder; or
(v) any reclassification of securities
(including any reverse stock split), or recapitalization of
the Corporation, or any merger or consolidation of the
Corporation with any Subsidiary or any other transaction
(whether or not with or into or otherwise involving an
Interested Shareholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the
outstanding
-4-
<PAGE> 22
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
owned by an Interested Shareholder or any Affiliate of any
Interested Shareholder.
(2) The provisions of paragraph 1 of this Article shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only such affirmative vote as is required by law and any other
provision of these Articles of Incorporation, if all of the conditions specified
in either of the following subparagraphs (A) and (B) are met:
(A) The Business Combination shall have been approved by
a majority of the Disinterested Directors (as hereinafter defined).
(B) All of the following conditions shall have been met:
(i) The aggregate amount of (x) cash and (y)
Fair Market Value as of the date of the consummation of the
Business Combination of consideration other than cash, to be
received per share by holders of the Corporation's Common
Stock in such Business Combination shall be at least equal to
the highest amount determined under subclauses (a) and (b)
below:
(a) (if applicable) the highest per
share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by
the Interested Shareholder for any share of Common
Stock acquired by it (1) within the two-year period
immediately prior to the first public announcement of
the proposal of the Business Combination (the
"Announcement Date") or (2) in the transaction in
which it became an Interested Shareholder, whichever
is higher;
(b) The Fair Market Value per share of
Common Stock on the Announcement Date or on the date
on which the Interested Shareholder became an
Interested Shareholder (such latter date referred to
in this Article as the "Determination Date"),
whichever is higher.
(ii) The consideration to be received by holders
of Voting Stock shall be in cash or in the same form as the
Interested Shareholder has previously paid for shares of
Voting Stock. If the Interested Shareholder has paid for
shares of Voting Stock with varying forms of consideration,
the form of consideration for such Voting Stock shall be
either cash or the form used to acquire the largest number of
shares of Voting Stock previously acquired by it.
(iii) After such Interested Shareholder has become
an Interested Shareholder and prior to the consummation of
such Business Combination: (a) there shall have been (1) no
reduction in the annual rate of dividends paid on the
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<PAGE> 23
Common Stock (except as necessary to reflect any subdivision
of the Common Stock), except as approved by a majority of the
Disinterested Directors, and (2) an increase in such annual
rate of dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization,
reorganization or any similar transaction which has the effect
of reducing the number of outstanding shares of the Common
Stock, unless the failure so to increase such annual rate is
approved by a majority of the Disinterested Directors; and (b)
such Interested Shareholder shall not have become the
beneficial owner of any additional shares of Voting Stock
except as part of the transaction which results in such
Interested Shareholder becoming an Interested Shareholder.
(iv) After such Interested Shareholder has become
an Interested Shareholder, such Interested Shareholder shall
not have received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances,
guaranties, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such Business
Combination or otherwise.
(v) A proxy or information statement describing
the proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934, as
amended (together with any successor thereto, the "Exchange
Act") and the rules and regulations thereunder shall be mailed
to any public shareholders of the Corporation at least thirty
(30) days prior to the consummation of such Business
Combination (whether or not such proxy or information
statement is required to be mailed pursuant to the Exchange
Act).
(3) For the purposes of this Article:
(A) The term "Affiliate" shall have the meaning given to
it in Rule 12b-2 of the Exchange act.
(B) A person shall be a "beneficial owner" of any Voting
Stock (i) which such person or any of its Affiliates beneficially owns, directly
or indirectly; or (ii) which such person or any of its Affiliates has (x) the
right to acquire (whether such right is exercisable immediately or only after
the passage of time), pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants or options, or
otherwise, or (y) the right to vote pursuant to any agreement, arrangement or
understanding; or (iii) which is beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates has any
agreement, arrangement or understanding or the purpose of acquiring, holding,
voting or disposing of any such share of Voting Stock. For the purposes of
determining whether a person is an Interested Shareholder pursuant to
subparagraph (E) of this paragraph 3, the number of shares of Voting Stock
deemed to be outstanding shall include shares deemed owned
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<PAGE> 24
through application of subparagraph (E) of this paragraph 3 but shall
not include any other shares of Voting Stock which may be issuable
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
(C) The term "Disinterested Director" means any member of
the Board of Directors who is unaffiliated with the Interested
Shareholder and was a member of the Board of Directors prior to the
time that the Interested Shareholder became an Interested Shareholder,
and any successor of a Disinterested Director who is unaffiliated with
the Interested Shareholder and is recommended to succeed a
Disinterested Director by a majority of Disinterested Directors then on
the Board of Directors.
(D) The term "Fair Market Value" means: (i) in the case
of stock, the highest closing sale price during the thirty (30) day
period immediately preceding the date in question of a share of such
stock on the principal United States securities exchange registered
under the Exchange Act on which such stock is listed, or, if such stock
is not listed on any such exchange, the highest closing bid quotation
with respect to a share of such stock during the thirty (30) day period
preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system then
in use, or if no such quotations are available, the fair market value
on the date in question of a share of such stock as determined in good
faith by a majority of the Disinterested Directors; and (ii) in the
case of property other than cash or stock, the fair market value of
such property on the date in question as determined in good faith by a
majority of disinterested Directors.
(E) The term "Interested Shareholder" (other than the
Corporation, any Subsidiary, the Corporation or any Subsidiary acting
as a Trustee or in a similar fiduciary capacity, or any person who
would have met the definition of an Interested Shareholder as of July
29, 1996) means any person who or which (a) is the beneficial owner of
more than 10% of the voting power of the outstanding Voting Stock; or
(b) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question was the
beneficial owner of 10% of more of the voting power of the then
outstanding Voting Stock; or (c) is an assignee of or has otherwise
succeeded to any shares of Voting Stock which were at any time within
the two-year period immediately prior to the date in question
beneficially owned by any Interested Shareholder, if such assignment or
succession shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the meaning of
the Securities Act of 1993, as amended.
(F) In the event of any Business Combination in which the
Corporation survives, the phrase "other consideration to be received"
as used in subparagraph (B)(i) of paragraph 2 of this Article shall
include the shares of Common Stock retained by the holders of such
shares.
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<PAGE> 25
(G) The term "subsidiary" means any corporation of which
a majority of any class of equity security is owned, directly or
indirectly, by the Corporation unless owned by the Corporation as
trustee or in a similar fiduciary capacity; provided, however, that for
the purposes of the definition of Interested Shareholder set forth in
subparagraph (E) of this paragraph, the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity security
is owned, directly or indirectly, by the Corporation.
(4) Nothing contained in this Article shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by law.
(5) Notwithstanding any other provisions of these Articles of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, these Articles of
Incorporation or the Bylaws of the Corporation), the affirmative vote of the
holders of eighty percent (80%) or more of the shares of Voting Stock shall be
required to alter, amend or adopt any provisions inconsistent with, or to
repeal, this Article.
ARTICLE IX. AMENDMENT
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Articles of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon shareholders
herein are granted subject to this reservation.
ARTICLE X. BYLAWS
The power to adopt, amend or repeal bylaws for the management of this
Corporation shall be vested in the Board of Directors or the shareholders, but
the Board of Directors may not amend or repeal any bylaw adopted by the
shareholders if the shareholders specifically provide that such bylaw is not
subject to amendment or repeal by the Board of Directors.
ARTICLE XI. INDEMNIFICATION
The Corporation shall indemnify any incorporator, officer or director,
or any former incorporator, officer or director, to the full extent permitted by
law.
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<PAGE> 26
3. The foregoing restatement contains amendments requiring
shareholder approval and was adopted by (a) all of the members of the Board of
Directors, and (b) the holders of outstanding Common Stock of the Corporation
entitled to cast a majority of the votes of the sole voting group which would be
entitled to vote on and adopt the amendments at a meeting at which all voting
groups and shareholders entitled to vote thereon were present and voted. The
holders of the Common Stock of the Corporation constitute the only voting group
of the shareholders entitled to vote on the amendment. Minutes of the Special
Meeting of the Shareholders and Board of Directors dated July 29, 1996, were
executed by the Directors and holders of the Common Stock of the Corporation to
cast a majority of votes, and such majority is sufficient for approval by that
voting group.
4. The duly adopted Amended and Restated Articles of
Incorporation supersede the original Articles of Incorporation and all
amendments to them.
IN WITNESS WHEREOF, the undersigned President of the aforesaid
corporation has executed these Amended and Restated Articles of Incorporation
this 11 day of September, October 1996.
SUCCESS DEVELOPMENT INTERNATIONAL, INC.
By: /s/ Shawn M. Casey
-------------------------------------
Shawn M. Casey, President
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<PAGE> 27
EXHIBIT B
CHAPTER 607, FLORIDA STATUTES
FLORIDA BUSINESS CORPORATION ACT
DISSENTERS' RIGHTS
607.1301 DISSENTERS' RIGHTS; DEFINITIONS.--The following definitions
apply to ss. 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value
of the shares as of the close of business on the day prior to the shareholders'
authorization date, excluding any appreciation or depreciation in anticipation
of the corporate action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on which
the corporation received written consents without a meeting from the requisite
number of shareholders in order to authorize the action, or, in the case of a
merger pursuant to s. 607.1104, the day prior to the date on which a copy of the
plan of merger was mailed to each shareholder of record of the subsidiary
corporation.
607.1302 RIGHT OF SHAREHOLDERS TO DISSENT.--
(1) Any shareholder of a corporation has the right to dissent
from, and obtain payment of the fair value of his or her shares in the event of,
any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its
parent under s. 607.1104, and the shareholders would have been entitled to vote
on action taken, except for the applicability of s. 607.1104;
(b) Consummation of a sale or exchange of all, or substantially
all, of the property of the corporation, other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange pursuant to s. 607.1202, including a sale in dissolution but not
including a sale pursuant to court order or a sale for cash pursuant to a plan
by which all or substantially all of the net proceeds of the sale will be
distributed to the shareholders within 1 year after the date of sale;
(c) As provided in s. 607.0902(11), the approval of a
control-share acquisition;
(d) Consummation of a plan of share exchange to which the
corporation is a party as the corporation the shares of which will be acquired,
if the shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the
shareholder is entitled to vote on the amendment and if such amendment would
adversely affect such shareholder by:
1. Altering or abolishing any preemptive rights attached to any
of his or her shares;
2. Altering or abolishing the voting rights pertaining to any of
his or her shares, except as such rights may be affected by the voting rights of
new shares then being authorized of any existing or new class or series of
shares;
3. Effecting an exchange, cancellation, or reclassification of
any of his or her shares, when such exchange, cancellation, or reclassification
would alter or abolish the shareholder's voting rights or alter his or her
percentage of equity in the corporation, or effecting a reduction or
cancellation of accrued dividends or other arrearages in respect to such shares;
4. Reducing the stated redemption price of any of the
shareholder's redeemable shares, altering or abolishing any provision relating
to any sinking fund for the redemption or purchase of any of his or her shares,
or making any of his or her shares subject to redemption when they are not
otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of any of
the shareholder's preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of the
shareholder's preferred shares; or
7. Reducing any stated preferential amount payable on any of the
shareholder's preferred shares upon voluntary or involuntary liquidation; or
(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his or her shares.
(2) A shareholder dissenting from any amendment specified in
paragraph (1)(e) has the right to dissent only as to those of his or her shares
which are adversely affected by the amendment.
<PAGE> 28
(3) A shareholder may dissent as to less than all the shares
registered in his or her name. In that event, the shareholder's rights shall be
determined as if the shares as to which he or she has dissented and his or her
other shares were registered in the names of different shareholders.
(4) Unless the articles of incorporation otherwise provide, this
section does not apply with respect to a plan of merger or share exchange or a
proposed sale or exchange of property, to the holders of shares of any class or
series which, on the record date fixed to determine the shareholders entitled to
vote at the meeting of shareholders at which such action is to be acted upon or
to consent to any such action without a meeting, were either registered on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc., or held of record by not fewer than 2,000 shareholders.
(5) A shareholder entitled to dissent and obtain payment for his
or her shares under this section may not challenge the corporate action creating
his or her entitlement unless the action is unlawful or fraudulent with respect
to the shareholder or the corporation.
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.--
(1)(a) If a proposed corporate action creating dissenters' rights
under s. 607.1302 is submitted to a vote at a shareholders' meeting, the meeting
notice shall state that shareholders are or may be entitled to assert
dissenters' rights and be accompanied by a copy of ss. 607.1301, 607.1302, and
607.1320. A shareholder who wishes to assert dissenters' rights shall:
1. Deliver to the corporation before the vote is taken written
notice of the shareholder's intent to demand payment for his or her shares if
the proposed action is effectuated, and
2. Not vote his or her shares in favor of the proposed action. A
proxy or vote against the proposed action does not constitute such a notice of
intent to demand payment.
(b) If proposed corporate action creating dissenters' rights under
s. 607.1302 is effectuated by written consent without a meeting, the corporation
shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to each shareholder
simultaneously with any request for the shareholder's written consent or, if
such a request is not made, within 10 days after the date the corporation
received written consents without a meeting from the requisite number of
shareholders necessary to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his or her shares pursuant to
paragraph (1)(a) or, in the case of action authorized by written consent, to
each shareholder, excepting any who voted for, or consented in writing to, the
proposed action.
(3) Within 20 days after the giving of notice to him or her, any
shareholder who elects to dissent shall file with the corporation a notice of
such election, stating the shareholder's name and address, the number, classes,
and series of shares as to which he or she dissents, and a demand for payment of
the fair value of his or her shares. Any shareholder failing to file such
election to dissent within the period set forth shall be bound by the terms of
the proposed corporate action. Any shareholder filing an election to dissent
shall deposit his or her certificates for certificated shares with the
corporation simultaneously with the filing of the election to dissent. The
corporation may restrict the transfer of uncertificated shares from the date the
shareholder's election to dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder
shall thereafter be entitled only to payment as provided in this section and
shall not be entitled to vote or to exercise any other rights of a shareholder.
A notice of election may be withdrawn in writing by the shareholder at any time
before an offer is made by the corporation, as provided in subsection (5), to
pay for his or her shares. After such offer, no such notice of election may be
withdrawn unless the corporation consents thereto. However, the right of such
shareholder to be paid the fair value of his or her shares shall cease, and the
shareholder shall be reinstated to have all his or her rights as a shareholder
as of the filing of his or her notice of election, including any intervening
preemptive rights and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the interim,
if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a
court has been made or filed within the time provided in this section; or
<PAGE> 29
(d) A court of competent jurisdiction determines that such
shareholder is not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which
shareholders may file their notices of election to dissent, or within 10 days
after such corporate action is effected, whichever is later (but in no case
later than 90 days from the shareholders' authorization date), the corporation
shall make a written offer to each dissenting shareholder who has made demand as
provided in this section to pay an amount the corporation estimates to be the
fair value for such shares. If the corporate action has not been consummated
before the expiration of the 90-day period after the shareholders' authorization
date, the offer may be made conditional upon the consummation of such action.
Such notice and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date and not more than
12 months prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the
12-month period ended on the date of such balance sheet or, if the corporation
was not in existence throughout such 12-month period, for the portion thereof
during which it was in existence.
(6) If within 30 days after the making of such offer any
shareholder accepts the same, payment for his or her shares shall be made within
90 days after the making of such offer or the consummation of the proposed
action, whichever is later. Upon payment of the agreed value, the dissenting
shareholder shall cease to have any interest in such shares.
(7) If the corporation fails to make such offer within the period
specified therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30 days
thereafter, then the corporation, within 30 days after receipt of written demand
from any dissenting shareholder given within 60 days after the date on which
such corporate action was effected, shall, or at its election at any time within
such period of 60 days may, file an action in any court of competent
jurisdiction in the county in this state where the registered office of the
corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination, is
entitled to receive payment for his or her shares. If the corporation fails to
institute the proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders (whether or not
residents of this state), other than shareholders who have agreed with the
corporation as to the value of their shares, shall be made parties to the
proceeding as an action against their shares. The corporation shall serve a copy
of the initial pleading in such proceeding upon each dissenting shareholder who
is a resident of this state in the manner provided by law for the service of a
summons and complaint and upon each nonresident dissenting shareholder either by
registered or certified mail and publication or in such other manner as is
permitted by law. The jurisdiction of the court is plenary and exclusive. All
shareholders who are proper parties to the proceeding are entitled to judgment
against the corporation for the amount of the fair value of their shares. The
court may, if it so elects, appoint one or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. The appraisers
shall have such power and authority as is specified in the order of their
appointment or an amendment thereof. The corporation shall pay each dissenting
shareholder the amount found to be due him or her within 10 days after final
determination of the proceedings. Upon payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares.
(8) The judgment may, at the discretion of the court, include a
fair rate of interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be
determined by the court and shall be assessed against the corporation, but all
or any part of such costs and expenses may be apportioned and assessed as the
court deems equitable against any or all of the dissenting shareholders who are
parties to the proceeding, to whom the corporation has made an offer to pay for
the shares, if the court finds that the action of such shareholders in failing
to accept such offer was arbitrary, vexatious, or not in good faith. Such
expenses shall include reasonable compensation for, and reasonable expenses of,
the appraisers, but shall exclude the fees and expenses of counsel for, and
experts employed by, any party. If the fair value of the shares, as determined,
materially exceeds the amount which the corporation offered to pay therefor or
if no offer was made, the court in its discretion may award to any shareholder
who is a party to the proceeding such sum as the court determines to be
reasonable compensation to any attorney or expert employed by the shareholder in
the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the
agreed value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
authorized but unissued shares of the corporation, except that, in the case of a
merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of such
dissenting shareholders would have been converted had they assented to the
merger shall have the status of authorized but unissued shares of the surviving
corporation.
<PAGE> 30
EXHIBIT "C"
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of the
5th 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
(the "Purchaser").
PREAMBLE
The respective Boards of Directors of the Company, Merger Sub, a
wholly-owned subsidiary of the Purchaser, and the Purchaser 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 the Purchaser 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 Capital Stock
(as defined in Section 4.01(b)(ii) hereof) and the Company Stock Options (as
defined in Section 4.01(b)(iii) 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.
<PAGE> 31
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 5, 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 efffectually 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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<PAGE> 32
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 capital stock (and in the case of the
Company, the options to purchase such capital 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, $.01 par value (the "Company Common
Stock"), that is issued and outstanding immediately prior to
the Effective Time shall be converted into 10,830.887 shares
of common stock, par value $.001 per share, of the Purchaser.
(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
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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 Purchaser'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 10,830.887 shares of
common stock, par value $.001 per share, of the Purchaser.
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 capital 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 Capital 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:
then the right of such holder of Dissenting Shares to be paid the fair value of
such holder's shares of the Company Capital 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.
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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
Capital 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
cancelled and exchanged for checks representing the amount of cash into which
the Company Capital Stock and Company Stock Options represented thereby were
converted in the Merger.
ARTICLE V
EXCHANGE OF SHARES
5.01 PURCHASER STOCK. The Purchaser and the Company agree that Jose
Alvarez shall be designated as the exchange agent for the Merger (the "Exchange
Agent"). The Purchaser shall deposit, or cause to be deposited, with the
Exchange Agent at the Effective Time Twelve Million Six Hundred Twenty-two and
79/100 (12,000,622.79) shares of Purchaser Stock (the "Payment Fund"). As soon
as practicable after the Effective Time, the Purchaser 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 the Purchaser 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 Purchaser Stock being paid for the
aggregate number of shares of Company Common Stock previously represented by the
Certificates surrendered. The Purchaser 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 Certificate to be lost, stolen or
destroyed and, if required by the Purchaser, 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 the Purchaser 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.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser, 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 the Purchaser 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. 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 as set forth in Section 8.09 hereof, 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 the Purchaser, 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.
6.03 CAPITALIZATION OF THE COMPANY.
(a) The authorized capital stock of the Company consists
of three thousand (3,000) shares of Company Common Stock of which, at
the close of business on February 9, 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 Capital 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.
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<PAGE> 36
(b) As of the date of this Agreement, the Company had
outstanding and unexercised Company Stock Options 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 capital 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 capital 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 the
Purchaser copies of its consolidated balance sheets and the related consolidated
statements of income, consolidated statements of changes in shareholders' equity
and consolidated statements of the cash flows (including related notes and
schedules) as of and for the periods ended June 30, 1998, and December 31, 1997,
1996 and 1995 (collectively, with the financial statements to be delivered by
the Company to the Purchaser pursuant to Section 8.02(b) hereof, the "Company
Financial Statements"). The Company Financial Statements (as of the dates
thereof and for the periods covered thereby and including the notes thereto) (a)
are, or will be, prepared in accordance with GAAP, consistently applied during
such periods (subject to any exceptions as to consistency specified therein or
as may be indicated in the notes thereto and, in the case of interim periods,
normal recurring year-end adjustments and except for the absence of certain
footnote information in the unaudited statements), (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 and the results of operations, changes in shareholders' equity,
and cash flows of the Company for the periods indicated, in accordance with
GAAP, consistently applied during such periods (subject to any exceptions as to
consistency specified therein or as may be indicated in the notes thereto and,
in the case of interim periods, normal recurring year-end adjustments and except
for the absence of certain footnote information in the unaudited statements).
6.05 SUBSIDIARIES.
(a) Except as set forth in Schedule 6.05, the Company has
not direct or indirect Subsidiaries. The Company owns beneficially and
of record all the issued and outstanding capital stock of each of its
Subsidiaries, free and clear of all liens, claims, security interests
or other encumbrances. All of such capital stock was validly issued and
is fully paid and nonassessable. Except for shares of such Subsidiaries
registered in the name of the Company, no shares of capital stock or
other equity securities of the Company's Subsidiaries are or may become
required to be issued by reason of any
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<PAGE> 37
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 capital 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 the Purchaser 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.
Section 6.06 NON-CONTRAVENTION. None of the execution and delivery of
this Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby or 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
(c) subject the Purchaser to the required receipt of the
Requisite Regulatory Approvals (as defined in Section 9.01(a) hereof),
violate any Law, Order or Authorization applicable to the Company or
any of its Assets.
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<PAGE> 38
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 dong 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. The Company has no
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 June 30, 1998, included in the
Company financial Statements or reflected in the notes thereto;
(b) were incurred after June 30, 1998, in the ordinary
course of business consistent with past practice and that are set forth
on Schedule 6.08(b); or
(c) incurred in connection with the Merger or as
otherwise contemplated or permitted by this Agreement.
6.09 TAX MATTERS.
(a) 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 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.
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<PAGE> 39
(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) All Tax Returns of the Company have been audited by
the appropriate Taxing Authority or are closed by the applicable
statute of limitations for all taxable periods through December 31,
1994.
(d) 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).
(e) 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.
(f) 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,
have 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 have, or is reasonably likely to have,
individually or in the aggregate, a material adverse effect on the
Condition of the Company.
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<PAGE> 40
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 on or after Closing.
(ii) providing for payments in excess of Three
Hundred Thousand and No/100 Dollars ($300,000) per annum or in
excess of Five Hundred Thousand and No/100 Dollars
($500,000.00) for the remaining term of the Contract;
(iii) for the lease of real property by the
Company;
(iv) between the Company and any of its
Affiliates;
(v) relating to the borrowing of money or the
guarantee by the Company of any such obligation; or
(vi) containing noncompetition covenants that
limits 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 the Purchaser a
correct and complete copy of any material Contracts. 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;
(iii) all amounts due and payable by the Company
through the Closing Date have been or will be paid or will be
adequately reserved against on the Closing Balance Sheet, and
there will be no amounts due after the Closing Date that
relate to the period prior to the Closing for which adequate
reserves will not be established on the Closing Balance Sheet;
and
(iv) 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:
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<PAGE> 41
(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 sublessor; and
(ii) the Company has not entered into any
sublease or assignment with respect to its interest in such
lease.
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. Except as set forth in Schedule 6.14, 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 the Purchaser 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 or 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 benefit 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,
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<PAGE> 42
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.
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 THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
7.01 ORGANIZATION, STANDING, AND AUTHORITY. The Purchaser 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. The Purchaser 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 the Purchaser or its ability to consummate the transactions
contemplated in this Agreement.
7.02 AUTHORIZATION OF TRANSACTION. The Purchaser 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 the Purchaser and no other corporate proceeding on the part of the
Purchaser is necessary to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed by the Purchaser and, assuming this
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Agreement constitutes a valid and binding agreement of the Company, represents a
valid and legally binding obligation of the Purchaser enforceable against the
Purchaser 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.
7.03 NON-CONTRAVENTION. None of the execution and delivery of this
Agreement by the Purchaser, the consummation by the Purchaser of the
transactions contemplated hereby or the compliance by the Purchaser with any of
the provisions herein will:
(a) conflict with or result in a breach of any provision
of the Purchaser'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 Purchaser pursuant to, Contract to
which the Purchaser 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 Purchaser;
or
(c) subject to receipt of the Requisite Regulatory
Approvals, violate any Law, Order or Authorization applicable to the
Purchaser or any of its Assets.
7.04 CONSENTS. No Consent of any Person is necessary to be obtained
or made by the Purchaser in connection with the execution and delivery of this
Agreement by the Purchaser or the consummation by the Purchaser of the
transactions contemplated hereby, other than:
(a) Consents of the Governmental Entity having
jurisdiction with respect to the business of the Purchaser in each
state in which the Company is doing business, including, but not
limited to, the Florida Department of Insurance, if required;
(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 the Purchaser to consummate
the transactions contemplated hereby.
7.05 STATEMENTS TRUE AND CORRECT.
(a) The representations and warranties of the Purchaser
set forth in this Agreement, and in the documents delivered by the
Purchaser 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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(b) None of the information supplied by the Purchaser 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 the Purchaser 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.
7.06 BROKERS AND FINDERS. Neither the Purchaser 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 Purchaser in connection with this Agreement or the
transactions contemplated hereby.
7.07 INVESTMENT REPRESENTATION. The Purchaser 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 capital stock of the
Surviving Corporation, or with any present intention of selling all or part of
the shares of capital stock of the Surviving Corporation.
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 OF THE COMPANY.
(a) Operation of the Company. 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 Purchaser, the Company shall carry on its
business in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted. The Company 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
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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 Purchaser, the Company shall not:
(i) declare or pay any dividends on, or make
other distributions in respect of the Company Common Stock
(other than regular dividends due) prior to the Closing Date;
(ii) issue, sell, redeem, or purchase any of its
capital 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;
(iii) except for increases in the ordinary course
of business consistent with past practice:
(A) increase in any manner the
compensation or fringe benefits of any director,
officer or employee or pay any benefit not required
by any plan or agreement as in effect as of the date
hereof (including, without limitation, the granting
of stock options, stock appreciation rights,
restricted stock, restricted stock units or
performance units or shares); or
(B) enter into, modify or renew any
Contract providing for the payment to any director,
officer or employee of compensation or benefits
contingent, or the terms of which are materially
altered, upon the occurrence of any of the
transactions contemplated by this Agreement;
(iv) 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;
(v) other than in the ordinary course of
business consistent with past practice, incur any indebtedness
for borrowed money, assume, guarantee, endorse or otherwise as
an accommodation become responsible for the obligations of any
other Person, or make any loan or advance to any Person;
(vi) accelerate, create, renew, amend or
terminate or give notice of a proposed renewal, amendment or
termination of, any material Contract to which the Company is
a party or by which the Company or its Assets is bound;
(vii) make any change in accounting principles or
methods from those currently employed, except as required by
GAAP or by applicable Law;
(viii) grant any Lien, or permit any Lien to be
placed on, any of its Assets other than in the ordinary course
of business;
(ix) 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
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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
(x) agree to do any of the foregoing.
(b) Financial Statements. The Company will deliver to the
Purchaser promptly upon the completion thereof copies of its monthly
consolidated balance sheets and the related consolidated statements of
income, consolidated statements of changes in shareholders' equity and
consolidated statements of the cash flows (including related notes and
schedules) prepared subsequent to the execution of this Agreement. All
material expenses of the Company relating to this Agreement and the
consummation of the transactions contemplated hereby, as well as the
effect of the exercise of unqualified Company Stock Options or the
accrual for the effect of the surrender and cancellation of such
options pursuant to the terms and conditions of this Agreement, shall
be accrued or otherwise reflected in such Financial Statements.
8.03 PRE-CLOSING COVENANTS OF THE PURCHASER. 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, the Purchaser 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, the Company shall afford to
the officers, employees, accountants, counsel and other representatives
of the Purchaser access, during normal business hours during the period
prior to the Closing Date, to all of the Company's material Assets,
Books and Records and, during such period, the Company shall make
available to the Purchaser (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 the
Company as the Purchaser 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 time, whether
prior to or after the Closing, to the Purchaser or its representatives
and all such Transaction Information shall remain at all times prior to
the Closing the proprietary and confidential information of the
Company.
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(b) All information furnished by one of the Parities 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.
(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 the Purchaser or the Company to any
Governmental Entity in connection with the transactions contemplated by
this Agreement.
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(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 the Purchaser 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 EMPLOYEE MATTERS.
(a) Compensation and Benefits. Following the Effective
Time, the Purchaser shall cause the Surviving Corporation to provide
generally to its officers and employees who, immediately prior to the
Effective Time, had been officers and employees of the Company,
employee benefits, including, without limitation, health and welfare
benefits, life insurance and vacation and severance arrangements, on
terms and conditions that, when taken as a whole, are not substantially
less than those currently provided by the Company to such officers and
employees.
(b) Contracts and Vested Benefits. Following the
Effective Time, the Purchaser shall cause the Surviving Corporation to
honor in accordance with their terms all employment, severance,
consulting and other compensation Contracts between the Company and any
current or former director, officer and employee thereof, and all
provisions for vested benefits or other vested amounts earned or
accrued through the Effective Time under the Company Benefit Plans.
8.08 NON-SOLICITATION OF EMPLOYEES. If this Agreement is
terminated, the Purchaser 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.
8.09 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 (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.
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8.10 ACQUISITION PROPOSALS. The Purchaser shall not, directly or
indirectly, and shall instruct and otherwise use its best efforts to cause its
officers, directors, employees, agents or advisors or other representatives or
consultants (collectively, the "Company's Representatives") not to, directly or
indirectly, (a) solicit or initiate any proposals or offers from any Persons
relating to any acquisition or purchase of all or a material amount of the
assets of, or any securities of, or any merger, consolidation or business
combination with the Purchaser (such transactions are referred to herein as
"Acquisition Transactions") or (b) except to the extent that the Board of
Directors reasonably believes it is required, in the exercise of its fiduciary
duties in accordance with applicable Law, to participate or cause the
Purchaser's Representatives to participate in any discussions or negotiations
regarding, or furnish to any other Person any information with respect to, an
Acquisition Transaction; PROVIDED, however, that nothing contained in this
Section 8.10 shall restrict or prohibit any disclosure by the Purchaser that is
required under applicable Law. The Purchaser will immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing. The Purchaser
will notify the Company if any such inquiries or proposals are received by, any
such information is required from, or any such negotiations or discussions are
sought to be initiated or continued with the Purchaser. The Board may, but is
not required to, rely on the written opinion of counsel to the Board in
determining whether its fiduciary duties require it to participate or cause the
Purchaser's Representatives to participate in any discussions or negotiations
regarding, or furnish to any other Person, any information respect to an
Acquisition Transaction.
8.11 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to the Purchaser, and the Purchaser 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 the Purchaser, 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.
Without limiting the generality of the foregoing, the Purchaser shall promptly
notify the Company of any material adverse change with respect to any Financing
Agreement or otherwise. Within 30 days of the occurrence of such material
adverse chance, the Purchaser shall arrange for alternative Financing
Agreements, or other arrangements reasonably satisfactory to the Company, in an
amount and upon terms and conditions sufficient to provide the Purchaser with
adequate funds to consummate the transactions contemplated hereby.
8.12 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
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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 Corporations' 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 8.12 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 8.12, unless otherwise required by applicable Law.
(b) If the Purchaser 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, the
Purchaser shall cause proper provision to be made so that the
successors and assignees of the Purchaser or the Surviving Corporation
shall assume the obligations set forth in this Section 8.12.
ARTICLE IX
CONDITIONS
9.01 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each of the Company and the Purchaser to effect the transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing of the following conditions:
(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
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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 Capital Stock entitled to vote in accordance with
Delaware law and the Company's articles of incorporation and bylaws.
9.02 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligations of
the Purchaser 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 Article VII of this
Agreement, respectively, 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) and the Purchaser 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(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 the
Purchaser 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 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 by Purchaser of a fairness
opinion of Sheldrick, McGehee & Kohler, Inc. to the effect that
Purchaser and Company are of substantially equal value.
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:
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(a) Representations and Warranties. The representations
and warranties of the Purchaser set forth in Article VII hereof 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 the Purchaser 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 the
Purchaser to consummate the transactions contemplated hereby.
(b) Performance of Obligations. The Purchaser 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 the Purchaser 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 the Purchaser 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 the
Purchaser;
(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 30 days after written notice
specifying the nature of such breach and requesting that it be remedied
has been delivered to the breaching Party;
(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
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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
the Company fail to approve the Merger at the Shareholder meeting; and
(f) by the Purchaser, 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 the Purchaser of a definitive agreement providing for the
acquisition of the Purchaser or its Assets by merger or other business
combination or in order to approve a tender offer for the Purchaser's
Common Stock by a third party, in either case, as determined by the
Purchaser's Board of Directors, on terms more favorable to the
Purchaser'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), 8.08, 8.09 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 Sections 8.07 and 8.12
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 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:
If to the Company: Great Wisdom Publishing, Inc.
3904 Airport Road
Plant City, Florida 33567
Attention: Jose Alvarez
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If to the Purchaser: 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
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. To the extent that the provisions of this
Agreement conflict with the provisions of the Confidentiality Agreement, the
provisions of this Agreement shall govern.
11.07 WAIVERS.
(a) Prior to or at the Effective Time, the Purchaser,
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 the Purchaser
under this Agreement, except any condition
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<PAGE> 55
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 Purchaser.
(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 the Purchaser, to waive or
extend the time for the compliance or fulfillment by the Purchaser 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 the Purchaser (hereinafter
referred to as "Legal Counsel"), prepared this Agreement on behalf of and in the
course of said Legal Counsel's representation of the Purchaser and that:
(a) the Company has been advised that a conflict of
interest exists among its individual interests;
(b) the Company has been advised by Legal Counsel of its
right to seek the advice of separate legal counsel; and
-26-
<PAGE> 56
(c) the Company has been advised of Legal Counsel's
conflict of interest with respect to its representation of the
Purchaser and advising the Company with respect to this Agreement.
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 the
Purchaser.
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 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.
-27-
<PAGE> 57
IN WITNESS WHEREOF, the Parties have executed this Agreements of the
day and year first above written.
SUCCESS DEVELOPMENT
INTERNATIONAL, INC.
By:
----------------------------------
Daniel S. Pena, Sr.
CEO
GREAT WISDOM PUBLISHING, INC.
By:
----------------------------------
David A. Reecher
President and CEO
GWP TARGET, INC.
By:
----------------------------------
Daniel S. Pena, Sr.
President
-28-
<PAGE> 58
APPENDIX A
"Acquisition Transactions" shall have the meaning assigned thereto in
Section 8.10 of this Agreement.
"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 Balance Sheet" shall mean an unaudited consolidated balance
sheet of the Company as of the month-end immediately preceding the Closing Date,
which Closing Balance Sheet shall be prepared in accordance with GAAP consistent
with the accounting principles used in the preparation of the June Balance
Sheet.
Page 1 of 5 Pages, Appendix A)
<PAGE> 59
"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.
"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.
"Company's Representatives" shall have the meaning assigned thereto in
Section 8.10 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.
Page 2 of 5 Pages, Appendix A)
<PAGE> 60
"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.
"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 8.12(a) hereof.
"Indemnified Parties" shall have the meaning assigned thereto in
Section 8.12(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,
Page 3 of 5 Pages, Appendix A)
<PAGE> 61
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.
"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 the Purchaser (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 the Purchaser 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 the Purchaser
and "Parties" shall mean the Company, the Purchaser and Merger Sub.
"Payment Fund" shall have the meaning assigned thereto in Section 5.01
of this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
Page 4 of 5 Pages, Appendix A)
<PAGE> 62
"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.
"Purchaser" 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, 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 8.09(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> 63
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 -- options for various Company employees for a
total of 8 shares of Company common stock based upon length of
employment.
Page 1 of 1 Page, Schedule 6.03(c)
<PAGE> 64
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> 65
SCHEDULE 6.07
CONSENTS
None.
Page 1 of 1 Page, Schedule 6.07
<PAGE> 66
SCHEDULE 6.08(B)
UNDISCLOSED LIABILITIES
None.
Page 1 of 1 Page, Schedule 6.08(b)
<PAGE> 67
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. PDS, Inc. (John Lindberg) -- Right to convert existing shares
of Company stock owned into a promissory note.
5. Lease Agreement between Access Publishers Network and John
Lindberg.
Page 1 of 1 Page, Schedule 6.12
<PAGE> 68
SCHEDULE 6.14
LEGAL PROCEEDINGS
None.
Page 1 of 1 Page, Schedule 6.14
<PAGE> 69
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SUCCESS DEVELOPMENT INTERNATIONAL, INC.,
TO BE VOTED AT THE MARCH 9, 1999 ANNUAL MEETING OF SHAREHOLDERS
The undersigned, a holder of shares of common stock, par value $.001
("Shares"), of Success Development International, Inc. ("SDI"), acting with
respect to all of the Shares held by the undersigned at the close of business on
February 9, 1999 (the "Record Date"), hereby acts as follows concerning the
proposals set forth below.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR"
EACH OF THE FOLLOWING PROPOSALS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
I. REMOVAL OF DIRECTOR:
Ralph E. Vroman, Jr. [ ] FOR [ ] AGAINST [ ] ABSTAIN
II. ELECTION OF DIRECTORS:
Name Term Ending
---- -----------
Daniel S. Pena, Sr. 2001 [ ] FOR [ ] AGAINST [ ] ABSTAIN
Shawn M. Casey 2000 [ ] FOR [ ] AGAINST [ ] ABSTAIN
David A. Reecher 2002 [ ] FOR [ ] AGAINST [ ] ABSTAIN
Jose A. Alvarez 2002 [ ] FOR [ ] AGAINST [ ] ABSTAIN
Raymond Rach 2001 [ ] FOR [ ] AGAINST [ ] ABSTAIN
Ted Nicholas 2002 [ ] FOR [ ] AGAINST [ ] ABSTAIN
Bob Stone 2001 [ ] FOR [ ] AGAINST [ ] ABSTAIN
Jarrell D. Ormand 2000 [ ] FOR [ ] AGAINST [ ] ABSTAIN
Hugh L. Carey 2000 [ ] FOR [ ] AGAINST [ ] ABSTAIN
ALL OF THE ABOVE [ ] FOR [ ] AGAINST [ ] ABSTAIN
III. NAME CHANGE:
Amend Article I of the Amended and Restated Articles of Incorporation of
SDI (the "Articles") to change the name of the corporation from Success
Development International, Inc. to "International Media Holdings, Inc."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. ADDITIONAL SHARES AUTHORIZATION:
Amend Article V of the Articles to increase the maximum number Shares
which SDI is authorized to issue from the current 25,000,000 to
500,000,000. [ ] FOR [ ] AGAINST [ ] ABSTAIN
V. REQUIRED SHAREHOLDER VOTE REDUCTION:
Amend Sections 1 and 5 of Article VIII of the Articles to reduce the vote
required to (i) authorize any merger, consolidation, or other "business
combination" (as defined therein) with any owner of 10% or more of the
Shares, or anyone able to control the corporation, and (ii) amend Article
VIII, from the current 80% of the holders of Shares to 51% of the holders
of Shares. [ ] FOR [ ] AGAINST [ ] ABSTAIN
VI. LTIP ALLOCATION:
Amend Section 1.6 of SDI's Long Term Incentive Plan to increase the
number of Shares allocated to the Plan from the current 7,500,000 to
15,000,000. [ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
IMPORTANT INSTRUCTIONS - PLEASE READ CAREFULLY:
Please indicate your support of a proposal by marking the box beside
"FOR" and signing, dating and mailing this proxy promptly, using the enclosed,
postage paid envelope. If you need additional proxy forms or assistance, please
call SDI at (904) 886-2985.
UNLESS OTHERWISE INDICATED ABOVE, THIS PROXY REVOKES ALL PRIOR PROXIES
GIVEN WITH RESPECT TO THE PROPOSALS SET FORTH HEREIN.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE PROXY STATEMENT OF
SDIE, DATED FEBRUARY 27, 1999, IN CONNECTION WITH THE MARCH 9, 1999 ANNUAL
MEETING OF SHAREHOLDERS. UNLESS OTHERWISE SPECIFIED, BY SIGNING AND DELIVERING
THIS PROXY TO SDI, THE UNDERSIGNED WILL BE DEEMED TO HAVE VOTED "FOR" THE
PROPOSALS.
Date: , 1999
- ------------------------------------------ ----------------
Signature (title, if any)
Date: , 1999
- ------------------------------------------ -----------------
Signature (if held jointly)
Please sign your name above and date the proxy. When shares are
registered in the names of more than one person, the proxy should be signed by
all named holders. When signing as an attorney, executor, administrator,
trustee, or guardian, please indicate your title. If a corporation, please sign
in full corporate name by president or authorized officer. If a partnership,
please sign in partnership name by authorized person.
