SCHEDULE 14C INFORMATION
Preliminary Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
|X| Preliminary Information Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
|_| Definitive Information Statement
SECURED DIVERSIFIED INVESTMENT, LTD.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
|X| No Fee Required.
|_| Fee Computed on Table Below Per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of Each Class of Securities to Which Transaction Applies: None
(2) Aggregate Number of Securities to Which Transaction Applies: None
(3) Per Unit Price or Other Underlying Value of Transaction Computed Pursuant to
Exchange Act Rule 0-11 (Set Forth the Amount on Which the Filing Fee Is
Calculated and State How It Was Determined.):
(4) Proposed Maximum Aggregate Value of Transaction: $-0-
(5) Total fee paid:
|_| Fee paid previously with preliminary materials
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: n/a
(2) Form, Schedule, or Registration Statement No: n/a
(3) Filing Party: n/a
(4) Date Filed: n/a
SECURED DIVERSIFIED INVESTMENT, LTD.
Notice of Annual Meeting of Shareholders
To be Held on February 23, 2005
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Secured
Diversified Investment, Ltd. (the "Company"), will be held at held at 12:00 p.m.
on February 23, 2005 at 4940 Campus Drive, Newport Beach, to consider and act
upon the following matters:
1. To amend the Articles of Incorporation of the Company to provide for
a staggered Board of Directors comprised of three classes of
Directors;
2. To elect seven (7) members to the Board of Directors and to place
them into one of the three classes;
3. To approve the appointment of Kabani & Co., Inc. as independent
auditors of the Company; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only Shareholders of record on the books of the Company at the close of
business on January 3, 2005 will be entitled to notice of and to vote at the
meeting or any adjournment thereof.
February 3, 2005
By Order of the Board of Directors
Clifford L. Strand, President
SECURED DIVERSIFIED INVESTMENT, LTD.
INFORMATION STATEMENT
For the Annual Meeting of Shareholders
To be Held February 23, 2005
This Information Statement is furnished in connection with matters to be
voted on at the Annual Meeting of Shareholders (the "Annual Meeting") of SECURED
DIVERSIFIED INVESTMENT, LTD. (the "Company") to be held at 12:00 p.m. (PST), on
February 23, 2005, at the Company's executive offices located at 4940 Campus
Drive, Newport Beach, California 92660 and at any and all adjournments thereof
with respect to the matters referred to in the accompanying notice. This
Information Statement is first being mailed to Shareholders on or about February
3, 2005.
Management of the Company, including the current members of the Board of
Directors, is the direct or indirect record or beneficial owner of approximately
_________ shares of capital stock (representing approximately __% of the
outstanding capital stock). It is management's intention to vote all of its
shares in favor of each matter to be considered by the Shareholders. As a
result, the Company anticipates that each of the Proposals will be approved and
adopted at the meeting. The Company is required by applicable law to submit each
of the matters to be considered to the vote of all Shareholders. There are no
dissenter's rights applicable with respect to any matter to be considered by the
Shareholders.
The Company has asked brokers and other custodians, nominees and
fiduciaries to forward this information statement to the beneficial owners of
the common stock held of record by such persons and will reimburse such persons
for out-of-pocket expenses incurred in forwarding such material.
The Company has determined January 3, 2005 as the record date with respect
to the determination of Shareholders entitled to vote at the Annual Meeting of
Shareholders.
In conjunction with the shareholder Action adopting the Amendment to the
Articles of Incorporation, the Board of Directors intends to adopt Amended and
Restated Bylaws of the Company. No shareholder action is required with respect
to the Amended and Restated Bylaws.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
1
MATTERS TO BE CONSIDERED AND VOTED UPON AT
THE ANNUAL MEETING OF SHAREHOLDERS
Amendment of Articles of Incorporation
The Board of Directors of the Company has approved two amendments to the
Articles of Incorporation. The first amendment increases the number of
authorized shares of Common Stock from 100,000,000 to 300,000,000. This increase
permits the Board of Directors to issue and sell additional shares of Common
Stock. The second amendment creates a "staggered" Board of Directors. The Board
of Directors will be divided into three classes and each Director will be
assigned into a class. One class of Directors will stand for election at each
Annual Meeting of the Shareholders of the Company.
Election of Directors
At the Annual Meeting, Shareholders will be asked to consider and to take
action on the election of seven (7) members to the Board of Directors and to
appoint each Director into a class (see "Election of Directors").
Approval of Independent Auditors
At the Annual Meeting, Shareholders will be asked to approve the
appointment of Kabani & Co, as independent auditors to the Company.
Other Business
To transact such other business as may properly come before the Annual
Meeting or any postponements or adjournments thereof. Management does not know
of any other matters that are likely to be brought before the Annual Meeting of
Shareholders. However, in the event any other matters properly come before the
Annual Meeting of Shareholders, such matters will be acted upon accordingly.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company has four (4) classes of voting securities entitled to vote at
the Annual Meeting, Common Stock, Series A Preferred Stock and Series B
Preferred Stock. Although Series C Preferred Stock has been created, no shares
are outstanding. At the record date for the Annual Meeting there were 15,019,456
shares of Common Stock outstanding held by approximately 422 shareholders of
record. Each share of Common Stock is entitled to one vote on each matter to be
considered. There were also outstanding at the record date 7,078,350 shares of
Series A Preferred Stock held of record by approximately 162 shareholders. Each
share of Series A Preferred Stock is entitled to one vote on each matter to be
considered. There were 160,861 shares of Series B Preferred Stock held of record
by six shareholders. There were also 250,000 shares of Series C Preferred Stock
held of record by one shareholder. Each share of Series B Preferred Stock and
Series C Preferred Stock is entitled to one vote on each matter to be
considered.
2
The presence in person of the holders of a majority of the outstanding
voting shares is necessary to constitute a quorum at the Annual Meeting.
The Company has determined January 3, 2005, as the record date with
respect to the determination of Shareholders entitled to vote at the Annual
Meeting of Shareholders.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information about the beneficial ownership
of the Company's capital stock at January 3, 2005 by:
o each person or entity who is known by us to own beneficially more
than 5.0% of our outstanding stock;
o each of the persons named in the Summary Compensation Table;
o each of our directors; and
o all directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Unless otherwise indicated, the principal
address of each of the shareholders below is c/o Secured Diversified Investment,
Ltd., 4940 Campus Drive, Newport Beach, California 92660. Except as described in
the footnotes to this table, and subject to applicable community property laws,
the persons named in the table have sole voting and investment power with
respect to all shares of Common Stock and Preferred Stock held by them.
Name and Address of Amount and Nature of
Beneficial Owner Title of Class Beneficial Owner Percent of Class
---------------- -------------- ---------------- ----------------
Wayne Sutterfield (1) Common Stock
Series A Preferred Stock
Clifford L. Strand (2) Common Stock
Series A Preferred Stock
Sumiye Onodera Leonard (3) Common Stock
Series A Preferred Stock
Robert J. Leonard (4) Common Stock
P.O. Box 2089 Series A Preferred Stock
Huntington Beach, CA 92647
Anthony Giangrande (5) Common Stock
Series A Preferred Stock
William S. Biddle (6) Common Stock
Series A Preferred Stock
Series B Preferred Stock
Gernot Trolf (7) Common Stock
Series A Preferred Stock
Munjit Johal (9) Common Stock
Pamela Padgett (9) Common Stock
Series A Preferred Stock
Jay Kister Common Stock
Series A Preferred Stock
Ron Robinson Common Stock
Bruce Duquette Common Stock
All Officer and Directors as a Common Stock
group (nine persons) Series A Preferred Stock
Series B Preferred Stock
3
* Less than one percent.
(2) Includes 332,000 shares of Common Stock held through REIT, LLC. Includes
100,000 shares of restricted stock agreed to be issued upon approval of the 2003
Non-Employee Director Stock Incentive Plan. Includes options to purchase 125,000
shares immediately exercisable or exercisable within sixty days.
(3) Includes 334,000 shares of Common Stock held through REIT, LLC. Includes
500,000 shares of restricted stock agreed to be issued upon approval of the 2003
Employee Stock Incentive Plan. Includes options to purchase 250,000 shares
immediately exercisable or exercisable within sixty days.
(4) Ms. Leonard is the spouse of Robert J. Leonard, an owner of more than 5% of
the outstanding capital stock of the Company. Includes 500,000 shares of Common
Stock held through REIT, LLC. Includes 100,000 shares of restricted stock agreed
to be issued upon approval of the 2003 Non-Employee Director Stock Incentive
Plan. Includes options to purchase 125,000 shares immediately exercisable or
exercisable within sixty days.
(5) Includes 500,000 shares of Common Stock held through REIT, LLC.
(6) Includes _______ shares of Common Stock held of record by Anthony Giangrande
Family Trust, _____ shares held of record by Palo Verde Center and _________
shares held by Kellogg Business Center, over which Mr. Giangrande may have
voting control but of which he disclaims beneficial ownership.
(7) Includes 334,000 shares of Common Stock held through REIT, LLC. Includes
250,000 shares of restricted stock agreed to be issued upon approval of the 2003
Employee Stock Incentive Plan. Includes options to purchase 125,000 shares
immediately exercisable or exercisable within sixty days.
(8) Includes 218,529 shares of Common Stock and 443,679 shares of Series A
Preferred Stock held owned indirectly through Seashore Diversified Investment
Company. Includes 100,000 shares of restricted stock agreed to be issued upon
approval of the 2003 Employee Stock Incentive Plan. Includes options to purchase
125,000 shares immediately exercisable or exercisable within sixty days.
(9) Includes 250,000 shares of restricted stock agreed to be issued upon
approval of the 2003 Employee Stock Incentive Plan. Includes options to purchase
125,000 shares immediately exercisable or exercisable within sixty days.
(10) Includes 10,542 shares of Common Stock and 21,402 shares of Series A
Preferred Stock held owned indirectly through Seashore Diversified Investment
Company. Includes 100,000 shares of restricted stock agreed to be issued upon
approval of the 2003 Non-Employee Director Stock Incentive Plan. Includes
options to purchase 125,000 shares immediately exercisable or exercisable within
sixty days.
4
(11) Includes 100,000 shares of restricted stock agreed to be issued upon
approval of the 2003 Non-Employee Director Stock Incentive Plan. Includes
options to purchase 125,000 shares immediately exercisable or exercisable within
sixty days.
PROPOSAL NO.1 -AMENDMENT OF THE ARTICLES OF INCORPORATION
The Board of Directors has adopted resolutions advising the amendment of
the Company's Articles of Incorporation and called for approval by a vote of the
stockholders of the Company.
The following is a summary comparison of the major changes proposed to be
made to the Articles of Incorporation of the Company. A copy of the Certificate
of Amendment is attached to this Information Statement as Exhibit A. Where
relevant, a brief discussion is included explaining the purpose of the change
and its effect on stockholders, both positive and negative.
The overall effect of the changes to the Articles of Incorporation of the
Company is to make more difficult the accomplishment of mergers or the
assumption of control by a principal stockholder, and thus to make more
difficult the removal of management.
Subject Matter of Change Current Articles of Incorporation Proposed Amendment to
Articles of Incorporation
1. Authorized Capital Stock 100,000,000 300,000,000
Purpose: To permit the Board of Directors to issue and sell additional shares of Common Stock.
Effect: Increases the potential dilution to existing shareholders.
One initial director; bylaws provide with each class to be as
2. Number and Term for one to seven directors as nearly equal number
Board of Directors as determined by the Board. possible, as specified by
Each director serves a term resolution of the board of
of one year. directors or, if the
directors in office
constitute fewer than a
quorum of the board of
directors, by affirmative
vote of a majority of the
directors in office. Term of
office of directors is as
follows: First Class -
expires at first annual
meeting of shareholders.
Second Class - expires at
second annual meeting of
shareholders. Third Class -
expires at third annual
meeting of shareholders.
Thereafter, the directors by
class shall hold staggered
terms of three years.
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Purpose: To set the term of office of each director and to
stagger the terms of the directors to ensure the continuity of the board of
directors and management
Effect: A staggered board of directors affects every election of directors.
The staggered system of electing directors makes it more difficult for
shareholders to change the majority of directors even when the only reason
for the change may be the performance of the present directors. Changing
the majority of directors under the staggered system requires three
separate annual meetings, while under the current system of electing
directors only one annual meeting is necessary to change all of the of
directors. As an anti-takeover measure, the effect is to prevent insurgent
shareholders from immediately seizing control of the board of directors,
either through stock acquisitions or a proxy contest.
PROPOSAL NO.2 --ELECTION OF DIRECTORS
At the Annual Meeting, Shareholders will be asked to consider and to take
action on the election of seven persons to the Board of Directors. Each of the
seven persons named below is a nominee for election as a director and all
nominees are currently serving as directors of the Company. If any such nominee
cannot be a candidate for election at the Annual Meeting, then it is
management's intention to vote its shares voted either for a substitute nominee
designated by the Board of Directors or for the election only of the remaining
nominees.
Each nominee will be elected to a class of Directors. Two Class I
Directors will be elected for a term of one year and will be subject to
re-election at the Annual Meeting of Shareholders in 2006. Two Class II
Directors will be elected for a term of two years and will be subject to
re-election at the Annual Meeting of Shareholders in 2007. Three Class III
Directors will be elected for a term of three years and will be subject to
re-election at the Annual Meeting of Shareholders in 2008. The Directors will be
divided as nearly equally as possible into classes.
6
Vote Required
The election of the director nominees will require the affirmative vote of
a plurality of the votes cast by the stockholders entitled to vote. "Plurality"
means that the individuals who receive the largest number of votes cast are
elected as Directors up to the maximum number of Directors to be chosen at the
meeting. Consequently, any shares not voted (whether by abstentions, broker
nonvotes or otherwise) have no impact in the election of Directors, except to
the extent the failure to vote for an individual results in another individual
receiving a larger number of votes. The election of Directors will be
accomplished by determining the seven nominees receiving the highest total
votes.
Information Regarding Directors and Executive Officers
The following table sets forth information regarding director nominees of the
Company. A summary of the background and experience of each of these individuals
is set forth after the table.
Director Nominees
Name Age Position Dates of Service Proposed Class
- ---- --- -------- ---------------- --------------
Clifford L. Strand 58 Chairman Of The Board, Since September 2002 III
Chief Executive Officer And
President
William S. Biddle 74 Vice President and Director Since September 2002 II
Wayne Sutterfield 67 Director Since January 2003 II
Pamela Padgett 48 Director Since September 2002 III
Jay Kister 29 Director Since September 2002 III
Ronald Robinson __ Director Since December 2004* I
Bruce E. Duquette __ Director Since December 2004 I
- --------
* Previously served on the Board of Directors from 2003 until October 2004.
Clifford L. Strand. Chairman of the Board of Directors and President. Mr.
Strand has 35 years experience in the real estate industry as a broker, investor
and strategist. Since January 2001, Mr. Strand has served as Senior Vice
President, Interim President and President of Seashore Diversified Investment
Company, a Maryland real estate investment trust, where he has been primarily
responsible for managing and directing the affairs of the Company. Seashore
specialized in the acquisition, disposition and management of real estate and
investment properties. From 1984 to 2001, Mr. Strand was self-employed as an
independent real estate broker. During that time, Mr. 1 Strand represented a
diverse clientele consisting of banks, savings and loan institutions,
universities, celebrities and corporations. From 1979 to 1984, Mr. Strand served
as president of Capital Newport Mortgage Company, which became part of the
Capital Companies. Mr. Strand has a Certificate in Real Estate from East Los
Angeles Community College.
7
William S. Biddle. Director and Vice President, Marketing. Mr. Biddle has
over 37 years experience in the real estate industry, he is a member of the
Society of Exchange Counselors. Mr. Biddle is a past recipient of the Clifford
P. Weaver Memorial Award a national award for the most creative exchange. He is
also a past president of National Exchange Counselors. In 1979, he received the
designation of Certified Commercial Investment Member from the National
Association of Realtors. Mr. Biddle previously owned two brokerages. He
purchased Commercial Brokers, a commercial real estate brokerage firm in Las
Vegas, Nevada, in 1993. He founded Friendly Hills Realty, a brokerage
specializing in high end residential real estate in 1987. Friendly Hills
Realty's principal office was located in Whittier, California.
Wayne Sutterfield. Director. For the past 35 years Mr. Sutterfield has
been self employed in the real estate industry as a manager, property owner and
contractor. Mr. Sutterfield has owned and managed properties in Arizona,
California and North Dakota. Mr. Sutterfield is a member of the Contractors
Association of America and the Plumbing, Heating and Cooling Contractors
Association. Mr. Sutterfield is a graduate of California L.A. Technical
College-Mechanical Engineering, Construction.
Pamela Padgett. Director. Since 1994, Ms. Padgett has worked as a real
estate broker. Since March 2002, Ms. Padgett has been affiliated with The
Phoenix Group Realtors as an independent real estate agent. From 2000 through
March 2002, she was affiliated as Keller Williams Realty. Ms. Padgett also works
as an independent agent for Uncommon Sense Enterprises a company she founded in
1994 and continues to own.
Jay Kister. Director. Since June 2001, Mr. Kister has been employed with
Blossom Valley Mortgage, Inc. Mr. Kister currently serves as a Loan Broker. From
April 1999 to June 2001, Mr. Kister was a Personal Banker for San Diego National
Bank. He was primarily responsible opening and servicing commercial accounts and
commercial loans. From May 1998 to April 1999, Mr. Kister worked for Bank of
America performing essentially the same functions as he performed for San Diego
National Bank. Mr. Kister earned a Bachelor of Arts degree in Spanish from Weber
State University in Ogden, Utah in August 1997.
Ronald Robinson.
Bruce E. Duquette. Director. Mr. Duquette was elected to the Board of
Directors in December 2004. Mr. Duquette is a Vice President and Financial
Consultant with US Bancorp Investments and Insurance, Newport Beach, California,
and has been an employee of US Bancorp since May 1999. Since 1985, Mr. Duquette
has also been a licensed Realtor with Century 21 Advantage, Cypress, California.
Mr. Duquette has served as the Vice President of the Orange County Multiple
Listing Service from 1992 to 1994. He currently serves as the State Director of
the California Association of Realtors. Mr. Duquette received a BS in Management
from Pepperdine University.
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Executive Officers
Name Age Position Date of Service
---- --- -------- ---------------
Munjit Johal 48 Chief Financial Officer Since September 2002
Gernot Trolf 60 Chief Operating Officer Since September 2002
Munjit Johal. Chief Financial Officer and Secretary. Mr. Johal has broad
experience in accounting, finance and management in the public sector. Since
1998, Mr. Johal has served as the Chief Financial Officer for Diffy Foods, Inc.
Mr. Johal held the same position with Bengal Recycling from 1996 to 1997. As the
Chief Financial Officer for these companies, Mr. Johal was primarily responsible
for overseeing the financial affairs of these entities and ensuring that their
financial statements of these were accurate and complete and complied with all
applicable reporting requirements. From 1990 to 1995, Mr. Johal serves as the
Executive VP for Pacific Heritage Bank in Torrance, California. Mr. Johal earned
his MBA degree from the University of San Francisco in 1980. He received his BS
degree in History from the University of California in Los Angeles in 1978.
Gernot Trolf. Vice President and Chief Operating Officer. Since 1996, Mr.
Trolf has served as the Chief Operating Officer of Seashore Diversified
Investment Company, a real estate investment trust. As the Chief Operating
Officer, Mr. Trolf was primarily responsible for overseeing the day-to-day
operations of the company. In 1993, he founded and continues to own AATIC a
private commodity brokerage. From 1994 to 1997, Mr. Trolf owned The Stagecoach
Restaurant a continental restaurant specializing in Austrian, German and
continental fare in Alpine, California. From 1994 to 1996, Mr. Trolf was the
Director of Food and Beverage for the Algonquin Hotel in New York and held to
same position at the Regency Hotel in New York from 1991 to 1994. Mr. Trolf was
the General Manager of the Nova Park Hotel in New York from 1979 to 1982. Mr.
Trolf is a former vice president of the Food & Beverage Association of America
and a member of the Board of Directors of The 400,000 Committee for Austrians
living abroad. Mr. Trolf speaks German, French, English, Spanish and Norwegian.
Meetings and Committees of the Board of Directors
During the fiscal year ended December 31, 2004, the Board of Directors of
the Company met __ times, in person or by telephonic conference. Each incumbent
Director attended at least 75% of the meetings.
Audit Committee. The Company's Board of Directors has appointed an Audit
Committee to oversee the financial reporting and auditing matters of the
Company. The Audit Committee is responsible for reviewing and making
recommendations concerning the selection of outside auditors, reviewing the
scope, results and effectiveness of the annual audit of the Company's financial
statements and other services provided by the Company's independent public
accountants. The Audit Committee also reviews the Company's internal accounting
controls, practices and policies. The members of the Audit Committee are Jay
Kister, Wayne Sutterfield and Pamela Padgett. The Company does not currently
have a written audit committee charter. Mr. Kister and Ms. Padgett are deemed to
be independent directors is that term is defined in Rule 4200(a)(14) of the
NASD's listing standards.
9
The Audit Committee did met ___ times during the fiscal year ended
December 31, 2004. Each Committee member attended at least 75% of such meetings.
Compensation Committee. The Company's Board of Directors has
appointed a Compensation Committee to oversee the compensation and other
employment matters relating to the executive officers and employee of the
Company. The Compensation Committee is responsible for reviewing and determining
the appropriate compensation levels, incentive stock and other bonuses payable
to employees, particularly members of senior management. The members of the
Audit Committee are Jay Kister, Wayne Sutterfield and Pamela Padgett. The
Company does not currently have a written compensation committee charter. Mr.
Kister and Ms. Padgett are deemed to be independent directors is that term is
defined in Rule 4200(a)(14) of the NASD's listing standards.
Other Committees. The Company's Board of Directors does not maintain
a standing nominating committee or other committees performing similar
functions.
Report on Executive Compensation
Director Compensation
Non-Employee Directors of the Company receive $500 per each meeting
attended, whether in person or by telephone and are reimbursed all out-of-pocket
travel, food and entertainment expenses related to attendance. The non-employee
Directors have each been granted 100,000 shares of Common Stock and options to
purchase 500,000 shares of Common Stock pursuant to the 2003 Non-Employee
Director Stock Incentive Plan. Such shares vest immediately and the options vest
as described below under "2003 Non-Employee Stock Incentive Plan."
Executive Compensation
SUMMARY COMPENSATION TABLE
10
Annual Compensation Long Term Compensation
------------------- ----------------------
Fiscal Securities
Year Salary ($) Bonus Other Annual Restricted underlying
Name and Principal Position Ended (1) ($) Compensation (2) Stock Awards Options
--------------------------- ----- --- --- ---------------- ------------ -------
Luis Leon, CEO 2003 0 0 0
2004 34,000 0 17,000(3)
Clifford L. Strand, President 2003 70,833 0 64,500 500,000 1,000,000
2004 115,000 0 171,667
William Biddle, Vice President 2003 37,500 0 40,000 250,000 500,000
2004 60,000 0 140,000
Gernot Trolf, Chief Operating Officer 2003 29,000 0 37,667 100,000 500,000
2004 48,000 0 65,333
Munjit Johal, Chief Financial Officer 2003 36,000 0 3,833 250,000 500,000
2004 69,000 0 28,000
(1) Actual amounts paid.
(2) Salary due under employment agreements but agreed to be deferred by
the employee.
(3) Paid as a consultant prior to engagement as the CEO.
Employment Agreements
The Company has entered into the following employment agreements.
Clifford L. Strand. The employment agreement has a term of three years
with annual salaries of $180,000, $360,000 and $510,000 for the three years,
respectively. Mr. Strand may elect to receive all or any portion of his annual
salary in shares of common stock at the then current fair market value, less the
amount required to pay withholding and other taxes. Additionally, Mr. Strand has
been awarded (i) 500,000 shares of restricted common stock vested immediately,
(ii) an additional 100,000 shares of common stock for each year the company
increases net assets by at least 20% and (iii) granted an option to purchase
1,000,000 shares of common stock at an exercise price of $0.15 per share that
will also vest 25% immediately and the remainder annually over the term of the
agreement. The agreement also provides for customary vacation pay, health
insurance and expense reimbursement.
William S. Biddle. The employment agreement has a term of three years with
annual salaries of $120,000, $240,000 and $360,000 for the three years,
respectively. Mr. Biddle may elect to receive all or any portion of his annual
salary in shares of common stock at the then current fair market value, less the
amount required to pay withholding and other taxes. Additionally, Mr. Biddle has
been awarded (i) 250,000 shares of restricted common stock vested immediately,
(ii) an additional 50,000 shares of common stock for each year the company
increases net assets by at least 20% and (iii) granted an option to purchase
500,000 shares of common stock at an exercise price of $0.15 per share that will
vest 25% immediately and the remainder over the term of the agreement. The
agreement also provides for customary vacation pay, health insurance and expense
reimbursement.
11
Gernot Trolf. The employment agreement has a term of three years with
annual salaries of $100,000, $120,000 and $140,000 for the three years,
respectively. Mr. Trolf may elect to receive all or any portion of his annual
salary in shares of common stock at the then current fair market value, less the
amount required to pay withholding and other taxes. Additionally, Mr. Trolf has
been awarded (i) 250,000 shares of restricted common stock vested immediately,
(ii) an additional 50,000 shares of common stock for each year the company
increases net assets by at least 20% and (iii) granted an option to purchase
500,000 shares of common stock at an exercise price of $0.15 per share that will
vest 25% immediately and the remainder over the term of the agreement. The
agreement also provides for customary vacation pay, health insurance and expense
reimbursement.
Munjit Johal. The Company has delivered, but Mr. Johal has not yet
signed, the employment agreement. The employment agreement is proposed to have a
term of three years with annual salaries of $80,000, $120,000 and $250,000 for
the three years, respectively. Mr. Johal may elect to receive all or any portion
of his annual salary in shares of common stock at the then current fair market
value, less the amount required to pay withholding and other taxes.
Additionally, Mr. Johal will be awarded (i) 250,000 shares of restricted common
stock vested immediately and (ii) granted an option to purchase 500,000 shares
of common stock at an exercise price of $0.15 per share that will also vest over
the term of the agreement. The agreement will also provide for customary
vacation pay, health insurance and expense reimbursement.
The employment contracts provide certain payments to the employee because of his
resignation, retirement, or other termination of such person's employment with
our company or its subsidiaries, or any change in control of our company, or a
change in the person's responsibilities following a change in control of our
company. Such provisions may have the effect of discouraging any acquisition of
our company or result in a lower purchase price.
Option Grants and Exercises in Last Fiscal Year
During the fiscal year ended December 31, 2004, the Company did not grant
options to any officers or employees of the Company except as follows. Bruce E.
Duquette, as a newly appointed Director was eligible to receive the automatic
initial grant of options to purchase 500,000 shares of Common Stock and an
initial award of 100,000 shares of Common Stock. Mr. Duquette has not yet
accepted such options and awards due to potential prohibitions from his current
employer.
Compliance with Sections 16(A) of The Securities Exchange Act Of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and Directors and persons who
own more than ten percent (10%) of the Company's Common Stock to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, Directors and greater than ten percent (10%) owners are also required
by the Securities and Exchange Commission regulations to furnish the Company
with copies of all Section 16(a) forms they file.
12
Based solely on the Company's review of the copies of such forms received
by it, the Company believes that, during the fiscal year ended December 31,
2004, Directors failed to file or filed on an untimely basis three Form 3s, and
__ Form 4s required under Section 16(a). Additionally, two Director and two non
affiliated persons failed to file Form 13D or 13G.
Family Relationships
There are no family relationships between or among the directors,
executive officers or persons nominated to become directors.
Legal Proceedings
No person listed above has been convicted in a criminal proceeding during
the past five years (excluding traffic violations or similar misdemeanors). As
of the date hereof, it is the opinion of management that there is no material
proceeding to which any director, officer or affiliate of the registrant, any
owner of record or beneficially of more than five percent of any class of voting
securities of the registrant, or any associate of any such director, officer,
affiliate of the registrant, or security holder is a party adverse to the
registrant or any of its subsidiaries or has a material interest adverse to the
registrant or any of its subsidiaries.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Board Recommendation
The Board of Directors recommends a vote FOR each nominee to the Board of
Directors.
PROPOSAL NO. 3 -- APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Kabani & Co. as independent public
accountants to audit the consolidated financial statements of the Company for
the fiscal year ending December 31, 2004, and to perform other accounting
services as requested by the Company. The Company anticipates that such aidit
will be performed and filed on a timely basis.
Although not required to do so, the Board of Directors is submitting the
appointment of that firm for ratification at the Annual Meeting. A
representative of Kabani & Co. is expected to be present at the Annual Meeting,
will have the opportunity to make a statement if he or she desires to do so, and
is expected to be available to respond to appropriate questions.
13
Vote Required
The affirmative vote of a majority of the shares of Common Stock is
required to approve the proposed ratification of the appointment of Kabani & Co.
as the Company's independent accountants for the fiscal year ending December 31,
2004.
Audit Fees
The Company did not engage Cacciamatta Accountancy Corporation to perform
an audit on the financial statements for the fiscal year ended December 31,
2003. The Company paid its former auditors, Cacciamatta Accountancy Corporation,
a total of $_____ for the audit and review fees for fiscal year 2003. Since
December 31, 2003, for 2004 fiscal year the Company has prepared and filed
Quarterly Reports of Form 10-QSB and has had such quarterly financial statements
reviewed by Kabani & Co. and has paid $______ for audit fees for services
rendered for the review for the financial statements.
Audit Related Fees
During the last two fiscal years ended December 31, 2004, the Company did
not engage its independent public accountants to perform any audit related
functions and did not pay the accountants any fees not included in Audit Fees
above.
Tax Fees
During the last two fiscal years ended December 31, 2004, the Company did
not engage its independent public accountants to perform any tax compliance,
advice or consulting and did not pay any fees for tax related services.
All Other Fees of Independent Public Accounts
During the last two fiscal years ended December 31, 2004, no other fees
were paid to the Company's independent public accountants. While there were no
non-audit related fees during such period, the Audit Committee has considered
whether non-audit services are consistent with maintaining the auditor's
independence.
FINANCIAL AND OTHER INFORMATION
The Company has prepared and filed the Annual Report on Form 10-KSB for
the fiscal year ended December 31, 2003, and Quarterly Reports on Form 10-QSB
for the fiscal quarters ended March 31, June 30 and September 30, 2004. The
Company is sending to shareholders the Annual Report for the most recent fiscal
year.
Where You Can Find More Information
14
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and, in accordance therewith, files reports
and other information with the Securities and Exchange Commission (the "SEC").
You can read and copy any materials that the Company files with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C., 20549.
You can obtain information about the operation of the SEC's Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website that
contains information the Company files electronically with the SEC, which you
can access over the Internet at http://www.sec.gov. Copies of these materials
may also be obtained by mail from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C., 20549 at prescribed rates.
SHAREHOLDER PROPOSALS
Proposals by Shareholders intended to be presented at the next Annual
Meeting of Shareholders must be received by the Secretary of the Company on or
before January 1, 2006, in order to be included in the information statement for
that meeting. Proposals should be directed to Clifford L. Strand, President.
Secured Diversified Investment, Ltd.
By Order of the Board of Directors
- -----------------------------
Clifford L. Strand, President February 3, 2005
15
EXHIBIT A
Certificate of Amendment
------------------------
[SEAL] DEAN HELLER
Secretary of State
204 North Carson Street, Suite 1
Carson City, Nevada 89701-4299
(775) 684 5708
Website: secretaryofstate.biz
====================================
Certificate of Amendment
(PURSUANT TO NRS 78.385 and 78.390)
====================================
Important: Read attached instructions before completing form.
ABOVE SPACE IS FOR OFFICE USE ONLY
Certificate of Amendment to Artibles of Incorporation
-----------------------------------------------------
For Nevada Profit Corporations
------------------------------
(Pursuant to NRS NRS 78.385 and 78.390 - After Issuance of Stock)
1. Name of corporation: Secured Diversified Investment, Ltd.
- --------------------------------------------------------------------------------
2. The articles have been amended as follows (provide article numbers, if
available):
See attached page.
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a vote
by classes or series, or as may be required by the provisions of the articles of
incorporation have noted in favor of the amendment is: a majority.
4. Effective date of filing (optional): ________________________________________
(must not be later than 90 days after the certificate is filed)
5. Officer Signature (required): /s/ Clifford L. Strand, President
* If any proposed amendment would alter or change any preference or any
relative or other right given to any class or series of outstanding shares, then
the amendment must be approved by the vote, in addition to the affirmative vote
otherwise required, of the holders of shares representing a majority of the
voting power of each class or series affected by the amendment regardless of
limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and submit the proper
fees may cause this filing to be rejected.
SUBMIT IN DUPLICATE
This form must be accompanied by appropriate fees. See attached fee schedule.
Nevada Secretary of State AM 78.385 Amend 2003
Revised on: 11/30/03
Article III. A. is hereby amended to read in its entirety as follows:
"A. COMMON STOCK
The total number of shares of Common Stock the Corporation is authorized to
issue is THREE HUNDRED MILLION (300,000,000) shares $.001 par value per share."
Article IV is hereby amended to read in its entirety as follows:
"ARTICLE IV
GOVERNING BOARD
A. Number of Directors. The Board of Directors shall be composed of not less
than one nor more than seven Directors. Except with respect to the initial
Director, the specific number of Directors shall be set by resolution of the
Board of Directors or, if the Directors in office constitute fewer than a quorum
of the Board of Directors, by the affirmative vote of a majority of all the
Directors in office. The number of Directors of this corporation may be
increased or decreased from time to time in the manner provided herein, but no
decrease in the number of Directors shall have the effect of shortening the term
of any incumbent Director.
B. Classification of Directors. The Directors shall be divided into three
classes, with each class to be as nearly equal in number as possible, as
specified by resolution of the Board of Directors or, if the Directors in office
constitute fewer than a quorum of the Board of Directors, by the affirmative
vote of a majority of all the Directors in office. The term of office of
Directors of the first class shall expire Directors of the second class shall
expire at the second annual meeting after their election. The term of office of
Directors of the third class shall expire at the third annual meeting after
their election. At each annual meeting after such classification, a number of
Directors equal to the number of the class whose term expires at the time of
such meeting shall be elected to hold office until the third succeeding annual
meeting. Absent his or her death, resignation or removal, a Director shall
continue to serve despite the expiration of the Director's term until his or her
successor shall have been elected and qualified or until there is a decrease in
the number of Directors."