SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Definitive Proxy Statement
[ ] Definitive Additional Materials [ ] Soliciting Materials
[ ] Confidential, for use of the Pursuant to S.240.14a-11(c)
Commission Only (as permitted or S.240.14a-12
by Rule 14a-6(e)(2))
Synaptx Worldwide, 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
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies:
---------------------------------------------
2) Aggregate number of securities to which transaction
applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
amount on which the filing fee is calculated and
state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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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:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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PRELIMINARY COPIES
SYNAPTX WORLDWIDE, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY __, 1999
________
Notice is hereby given that the Annual Meeting of
Shareholders (the "Meeting") of Synaptx Worldwide, Inc., a Utah
corporation (the "Company"), will be held at the Company's
principal executive offices at 615 Crescent Executive Court,
Suite 128, Lake Mary, Florida 32746, on February __, 1999, at
9:00 a.m., local time, for the following purposes:
1. To elect six directors to serve for the following year
and until their successors have been elected.
2. To approve an Agreement and Plan of Merger pursuant to
which the Company would change its state of
incorporation from Utah to Delaware through the merger
of the Company with and into Paladyne Corp., a Delaware
corporation and a wholly-owned subsidiary of the
Company.
3. To approve an amendment to the Company's 1996 Stock
Option Plan increasing the number of shares of Common
Stock authorized for options thereunder to 2,500,000
shares.
4. To ratify the appointment of BDO Seidman LLP as the
independent auditors of the Company for the fiscal year
ending August 31, 1999.
5. To act upon such other matters as may properly come
before the Meeting or any adjournments thereof.
Only shareholders of record at the close of business on
January __, 1999 will be entitled to notice of and to vote at the
Meeting or any adjournments thereof. All shareholders are
cordially invited to attend the Meeting in person. Pursuant to
the Utah Revised Business Corporation Act, shareholders are
entitled to appraisal rights with respect to Proposal No. 2 by
filing with the Company a written Notice of Dissent prior to the
vote of shareholders on such Proposal, and any such shareholder
must refrain from voting on such Proposal. The right of dissent
is described in greater detail in the attached Proxy Statement
and Appendix I thereto.
The Board of Directors of the Company unanimously recommends
a vote "FOR" the four proposals, which proposals are described in
more detail in the attached Proxy Statement.
By order of the Board of Directors
William E. Morris,
Secretary
January __, 1999
Lake Mary, Florida
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WISH YOUR
SHARES OF COMMON STOCK TO BE VOTED, YOU ARE REQUESTED TO SIGN AND
MAIL PROMPTLY THE ENCLOSED PROXY WHICH IS BEING SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS. A RETURN ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED
FOR THAT PURPOSE.
<PAGE>
PRELIMINARY COPIES
SYNAPTX WORLDWIDE, INC.
_______________
PROXY STATEMENT
________________
ANNUAL MEETING OF SHAREHOLDERS
February __, 1999
INTRODUCTION
This Proxy Statement is furnished in connection with the
solicitation of the enclosed proxy by the Board of Directors of
Synaptx Worldwide, Inc., a Utah corporation (the "Company"), for
use at the 1999 Annual Meeting of Shareholders of the Company
(the "Meeting") to be held at the Company's principal executive
offices at 615 Crescent Executive Court, Suite 128, Lake Mary,
Florida 32746, on February __, 1999, at 9:00 a.m., local time,
and at any and all adjournments thereof, for the purposes set
forth in the accompanying Notice of Annual Meeting of
Shareholders ("Notice of Meeting").
This Proxy Statement, Notice of Meeting and accompanying
proxy are first being mailed to shareholders on January __, 1999.
VOTING SECURITIES AND VOTE REQUIRED
Only shareholders of record at the close of business on
January 27, 1999 (the "Record Date") are entitled to notice of
and to vote the shares of common stock, $.001 par value (the
"Common Stock"), and the Series A Convertible Preferred Stock,
$.001 par value (the "Series A Preferred Stock"), of the Company
held by them on such date at the Meeting or any and all
adjournments thereof. As of the Record Date, __________ shares
of Common Stock and [137,143] shares of the Series A Preferred
were issued and outstanding. There was no other class of voting
securities outstanding at that date.
Each share of Common Stock and Series A Preferred Stock held
by a shareholder entitles such shareholder to one vote on each
matter that is voted upon at the Meeting or any adjournments
thereof.
The presence, in person or by proxy, of the holders of
majority of the outstanding shares of Common Stock and Series A
Preferred Stock is necessary to constitute a quorum at the
Meeting. Assuming that a quorum is present, (i) a plurality of
votes cast will be required for the election of directors, (ii)
the affirmative vote of the holders of a majority of the shares
of present and voting will be required to approve the amendment
of the 1996 Stock Option Plan (the "1996 Option Plan") and to
ratify the selection of auditors, and (iii) the affirmative vote
of the holders of a majority of the outstanding shares of Common
Stock and Series A Preferred Stock will be required to approve
the merger (the "Reincorporation") of the Company with and into
Paladyne Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Paladyne").
<PAGE>
With regard to the election of directors, votes may be cast
in favor or withheld; votes that are withheld will be excluded
entirely from the vote and will have no effect, except that votes
withheld will be counted toward determining the presence of a
quorum for the transaction of business. Abstentions and broker
"non-votes" (i.e., shares identified as held by brokers or
nominees as to which instructions have not been received from the
beneficial owners or persons entitled to vote that the broker or
nominee does not have discretionary power to vote on a particular
matter) will be counted toward determining the presence of a
quorum for the transaction of business. Abstentions may be
specified on all proposals except the election of directors. A
broker "non-vote" will have no effect on the outcome of the
election of directors, the amendment of the Option Plan or the
selection of auditors, but broker "non-votes" could affect the
outcome of the Reincorporation proposal because the Company must
obtain approval of this proposal from the holders of a majority
of the outstanding shares of Common Stock and Series A Preferred
Stock.
If the accompanying proxy is properly signed and returned to
the Company and not revoked, it will be voted in accordance with
the instructions contained therein. Unless contrary instructions
are given, the persons designated as proxy holders in the
accompanying proxy will vote "FOR" the Board of Directors' slate
of nominees, "FOR" the amendment to the Option Plan, "FOR" the
selection of auditors, "FOR" the Reincorporation and as
recommended by the Board of Directors with regard to any other
matters which may properly come before the Meeting or if no such
recommendation is given, in their own discretion. Each proxy
granted by a shareholder may be revoked by such shareholder at
any time thereafter by writing to the Secretary of the Company
prior to the Meeting, or by execution and delivery of a
subsequent proxy or by attendance and voting in person at the
Meeting, except as to any matter or matters upon which, prior to
such revocation, a vote shall have been cast pursuant to the
authority conferred by such proxy.
The cost of soliciting these proxies, consisting of the
printing, handling, and mailing of the proxy and related
material, and the actual expense incurred by brokerage houses,
custodians, nominees and fiduciaries in forwarding proxy material
to the beneficial owners of stock, will be paid by the Company.
In order to assure that there is a quorum present at the
Meeting, it may be necessary for certain officers, directors,
regular employees and other representatives of the Company to
solicit proxies by telephone or telegraph or in person. These
persons will receive no extra compensation for their services.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding the
beneficial ownership of the Common Stock of the Company as of the
Record Date by (i) persons known to the Company to be the
beneficial owners of more than 5% of the outstanding Common
Stock, (ii) by each director and nominee for director and (iii)
by all directors and officers as a group.
Amount and
Status of Nature of
Name and Address of Beneficial Beneficial Percent
Beneficial Owner* Owner Ownership (1) (2)
------------------ --------- ------------- ------
Ronald L. Weindruch President, [______] (3) [____]
Chief
Executive
Officer,
Chairman and
Director
D. Mike Maxwell Executive Vice [______] (4) [____]
President
Webbmont Holdings 5% holder [______] (5) [____]
William N. Kashul, Sr. Director [______] (6) [____]
Peter B. Atwal Director [______] (7) [____]
James L. McGovern Director [______] (8) [____]
William P. O'Reilly Director [______] (9) [____]
Kenneth W. Horn Nominee ___ ___
All executive officers [_____] (10) [____]
and directors as a
group (7 persons in
group)
* Unless otherwise indicated, the address is c/o Synaptx,
Inc., 615 Crescent Executive Court, Suite 128, Lake Mary,
Florida 32746.
(1) Unless otherwise indicated in the footnotes below, the
Company has been advised that each person above has sole
voting and investment power over the shares indicated above.
The number of shares beneficially owned includes shares
which each beneficial owner has the right to acquire within
sixty days of the Record Date.
(2) Based upon [_________] shares of Common Stock outstanding on
the Record Date. Percentage ownership is calculated
separately for each person on the basis of the actual number
of outstanding shares as of the Record Date, and assumes the
exercise of certain stock options and warrants held by such
person (but not by anyone else) exercisable within sixty
days of the Record Date.
(3) Includes (i) [______] shares underlying options held by Mr.
Weindruch and (ii) [______] shares held in the names of Mr.
Weindruch's children, as to which shares Mr. Weindruch
disclaims beneficial ownership.
(4) Includes (i) [_______] shares underlying options and
warrants held by Mr. Maxwell, (ii) [_______] shares held by
Mr. Maxwell's wife and (iii) [______] shares held by Mr.
Maxwell's children and their spouses, including [5,503]
shares underlying options held by Mrs. Maxwell. Mr. Maxwell
disclaims any beneficial ownership of shares by his wife and
his children and their spouses.
(5) Includes [_______] shares underlying warrants held by
Webbmont Holdings.
(6) Includes [_______] shares underlying options held by Mr.
Kashul.
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(7) Includes [_______] shares underlying options held by Mr.
Atwal.
(8) Includes (i) [_______] shares underlying options and
warrants held by Mr. McGovern and (ii) [6,604] shares held
in the names of Mr. McGovern's children.
(9) Includes [_______] shares underlying options and warrants
held by Mr. O'Reilly.
(10) Includes (i) [________] shares underlying options and
warrants held by the Company's directors and executive
officers and (ii) [_________] shares beneficially owned by
family members of the officers and directors.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
INFORMATION ABOUT NOMINEES
At the Meeting, six directors will be elected to serve until
the next annual meeting and until their successors are elected
and qualified. The Board of Directors currently consists of six
persons, Messrs. Weindruch, Atwal, Kashul, Maxwell, McGovern, and
O'Reilly. Mr. Maxwell has declined to continue serving as a
director following the Meeting and Mr. Horn will be nominated for
such directorship. The Board of Directors will vote all proxies
received by them in the accompanying form for the nominees listed
below. It is not contemplated that any of the nominees will be
unable or unwilling to serve as a director, but if that should
occur, the persons designated as proxies will vote for a
substitute nominee or nominees designated by the Board of
Directors.
The following table sets forth certain information about
each nominee for election to the Board of Directors:
Year
Position With the Became
Name Age Company Director
---- --- ----------------- --------
Ronald L. Weindruch 51 President and Chief 1996
Executive Officer of
the Company
Peter B. Atwal 42 Chief Technical 1996
Officer of ISR Global
Telecom
Kenneth W. Horn 58 Retired, Vice N/A
President of Nortel
Networks
William N. Kashul, 65 Vice President of 1996
Sr. Sales for Home
Wireless Networks
James L. McGovern 56 Retired, Former 1998
Executive Vice
President of Norstan
William P. O'Reilly 53 Chairman and Chief 1998
Executive Officer of
Eltrax Systems, Inc.
The terms of the directors will expire at the next annual
meeting and until their successors are elected and qualified. If
the Reincorporation of the Company is Delaware is approved as
Proposal No. 2, the Board of Directors of Paladyne, as the
surviving corporation, will be divided into three classes, with
one class to be elected annually. Assuming the election of
management's slate of nominees at the Meeting, Messrs. Horn and
Kashul will be designated as Class I directors, Messrs. Atwal and
McGovern will be designated as Class II directors and Messrs.
O'Reilly and Weindruch will be designated as Class III directors,
see "Proposal No. 2, Reincorporation to the State of Delaware -
Directors and Officers." The Company's officers are elected by
the Board of Directors and hold office at the will of the Board
of Directors. These is no family relationship between any of the
nominees.
Mr. Weindruch has been the Chairman, President and Chief
Executive Officer of the Company since the March 1997 merger of
Worldwide Applied Telecom Technology, Inc. ("WWATT") into the
Company. Mr. Weindruch was a founder of WWATT in 1994. From
1984 to 1994, he held a variety of senior management positions
with Siemens including Senior Vice-President of Operations at
Siemens Stromberg-Carlson. Prior thereto, from 1974 to 1984, Mr.
Weindruch served as Director of Marketing for the Nortel
(formerly Northern Telecom) DMS 100 switching system and as Group
Director of Business Development for Nortel's digital switching
group. From 1993 to 1996, Mr. Weindruch served as Chairman of
the Board of the Orlando-Sanford Airport. Mr. Weindruch holds a
B.S. from the University of Illinois and an M.B.A. from George
Washington University.
Mr. Atwal is a co-founder and has been Chief Technical
Officer and a director of ISR Global Telecom, Inc. since its
formation in 1992. From 1985 to 1991, he was a R&D Manager for
5
<PAGE>
Seimens, and from 1977 to 1985, he worked as a consultant for
Logica Inc., advising communication companies on corporate and
public network design and implementation. Mr. Atwal holds a BSC
(Hons.) from London University.
Mr. Horn is currently the managing director of KNH
Associates, a consulting company, having recently retired from
Nortel Networks, a maker of telecommunications network
infrastructure equipment, where he had been employed since 1981,
having held various positions culminating as Vice President -
Independents. For ten years prior thereto, he was employed by
Huyck Corporation, and held various vice presidential positions,
including VP, General Manager of its largest division. Mr. Horn
holds a B.S. in Electrical Engineering from Villanova University
and an M.B.A. from Iona University.
Mr. Kashul has been President of Kashul Consulting, Inc., a
Chicago-based telecommunications consulting company since 1994
and has been Vice President of Sales for Home Wireless Networks
since 1997. From 1972 to 1994, Mr. Kashul was employed in
various positions at Northern Telecom, Inc., including regional
Vice-President, Central Region, and Vice-President, Strategic
Account Development, North America. Mr. Kashul began his
telecommunications career in the U.S. Army in 1953. He joined
GTE Automatic Electric as an engineer in 1956 and went to ITT
Kellogg as a project engineer in 1959. He joined Stromberg-
Carlson as a senior sales engineer in 1967 before going to
Northern Telecom in 1972. Mr. Kashul holds a B.A. from the
Illinois Institute of Technology and an M.B.A. from the
University of Chicago.
Mr. McGovern is President of McGovern & Associates, having
retired from Norstan in 1996 where he was Executive Vice
President and General Manager for the Communications Systems
Division, having been associated with Norstan since 1981. From
1969 to 1981, Mr. McGovern held a number of key sales management
and General Manager positions at Xerox Corporation. Mr. McGovern
holds a B.S. from Northeastern University.
Mr. O'Reilly has been Chief Executive Officer of Eltrax
Systems, Inc. and Chairman of its Board of Directors since August
1995. For the past 15 years, Mr. O'Reilly has been a private
investor and entrepreneur. In 1989, Mr. O'Reilly formed a group
of investors to acquire Military Communications Center, Inc.
(MCC), where he served as Chairman of the Board and Chief
Executive Officer from 1989 to 1994 when MCC was sold to
Worldcom. In 1986, Mr. O'Reilly founded Digital Signal, Inc., a
provider of fiber optic capacity to long distance carriers in the
telecommunications industry. Mr. O'Reilly also founded Lexitel
Corporation, a long distance carrier (which was subsequently
acquired by ALC Communications, Inc.), where he served as
Chairman of the Board and Chief Executive Officer from 1980 to
1984. Mr. O'Reilly is currently a director of Charter
Communications, Inc., a builder and operator of international
communication networks, and World Access, Inc., and international
provider of sophisticated telecommunications equipment.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of eight
meetings during the fiscal year ended August 31, 1998. No
director attended fewer than 75% of the aggregate number of
meetings of the Board of Directors and meetings of the committees
of the Board on which he serves.
The Audit Committee of the Board of Directors presently
consist of Messrs. Atwal and McGovern. The Audit Committee held
one meeting during the last fiscal year which was in conjunction
with a regular meeting of the Board of Directors. The Audit
Committee recommends engagement of the Company's independent
auditors and is primarily responsible for approving the services
performed by the Company's independent accountants and for
reviewing and evaluating the Company's accounting principles and
its system of internal accounting controls.
The Compensation Committee of the Board of Directors
presently consists of Messrs. Kashul and O'Reilly and held one
meeting during the last fiscal year which was in conjunction with
a regular meeting of the Board of Directors. The Compensation
Committee makes recommendations to the Board of Directors
regarding the Company's executive compensation policy.
6
<PAGE>
COMPENSATION OF DIRECTORS
Non-employee members of the Board of Directors are
reimbursed for costs of attending Board and Committee meetings.
In addition, non-employee members of the Board of Directors
receive options to purchase shares of the Company's Common Stock
pursuant to its 1996 Stock Option Plan, as amended (the "1996
Option Plan").
Directors who are employees of the Company do not receive
any additional remuneration for their services as directors.
Each nonemployee director was granted stock options as
follows:
Date of Number of Exercise
Grant Shares Price
----- ------ -----
June 1, 1996 16,509 $0.91
Nov. 1, 1997 10,000 3.36
May 18, 1998 150,000 2.25
The exercise price for the 1996 grant was based upon a
contemporaneous private placement by the Company and the exercise
prices for the 1997 and 1998 were based upon the average of the
bid and asked prices of the Common Stock for the five trading
days immediately preceding the dates of grant. The 1998 grant
was outside of the 1996 Option Plan.
EXECUTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
The following table sets forth all cash compensation for the
fiscal year ended August 31, 1998 of the Company's Chief
Executive Officer and the most highly compensated executive
officers whose compensation exceeded $100,000 for services
rendered to the Company (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------
PRINCIPAL SALARY
NAME POSITION YEAR ($)
---------------------------------------------------------------
Ronald L. Weindruch President and 1998 122,292
CEO 1997 108,000
1996 18,000
D. Mike Maxwell Executive Vice 1998 139,242
President 1997 130,500
1996 -0-
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
OTHER ANNUAL
BONUS COMPENSATION OPTIONS
NAME YEAR ($) ($) (#)
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Ronald L. Weindruch 1998 3,000 81,700 67,500
1997 -0- 126,000 11,006
1996 -0- 110,500 --
D. Mike Maxwell 1998 3,000 -0- 62,500
1997 -0- -0- 11,006
1996 -0- -0- --
The following table sets forth individual grants of stock
options made by the Company during the fiscal year ended August
31, 1998 to the Named Executive Officers.
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OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
INDIVIDUAL GRANTS
% OF TOTAL OPTIONS
NUMBER OF SECURITIES GRANTED TO EMPLOYEES
UNDERLYING OPTIONS IN
NAME GRANTED (#) FISCAL YEAR
---------------------------------------------------------------
Ronald L. Weindruch 67,500 4.6%
D. Mike Maxwell 62,500 4.3%
==============================================================
EXERCISE OR BASE EXPIRATION
NAME PRICE ($/SH) DATE
-------------------------------------------------------------
Ronald L. Weindruch 2.81-3.70 11/1/02-5/18/02
D. Mike Maxwell 2.55-3.36 11/1/02-5/18/02
=============================================================
The following table sets forth information regarding each
exercise of stock options rights during the last fiscal year by
each Named Executive Officer and the fiscal year-end value of
unexercised options and stock appreciation rights provided on an
aggregate basis.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
------------------------------------
SHARES ACQUIRED
NAME ON EXERCISE (#) VALUE REALIZED ($)
---------------------------------------------------------------
Ronald L. Weindruch -0- -0-
D. Mike Maxwell -0- -0-
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END ($) FY-END ($)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE/ UNEXERCISABLE/
----------------------------------------------------------------
Ronald L. Weindruch -0- -0-
D. Mike Maxwell -0- -0-
EMPLOYMENT CONTRACTS
The Company has an employment agreement with Mr. Weindruch
as President and Chief Executive officer for a term ending August
31, 1999, subject to automatic one year renewals, at an annual
compensation of $122,500 for the fiscal year ending August 31,
1999, plus a bonus to be determined by the Compensation
Committee. If the Company terminates the employment without
cause, the Company would be obligated to pay as termination an
amount equal to twice the then base compensation. [expand]
SECTION 16(A) COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's executive officers and directors, and
persons who own more than 10% of the Company's Common Stock, to
file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and any national
securities exchange or quotation system on which such class of
equity securities is listed. Officers, directors and greater
than 10% shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms filed. Based
solely on the Company's review of the copies of such forms
received by it, or on written representation from certain
reporting persons, the following table lists the directors,
officers and beneficial owners of more than 10% of the
outstanding Common Stock (each, a "Reporting Person") that failed
to file on a timely basis reports required by Section 16(a)
during the most recent fiscal year, the number of late reports,
the number of transactions that were not reported on a timely
basis and any known failure to file a required form by each
Reporting Person.
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Transactions
Reporting Late Untimely Known Failures to
Person Reports Reported File Required Form
------ ------- ---------- ------------------
James L. McGovern 1 -0- 1
William O'Reilly 2 1 2
William Kashul 2 1 2
Ronald Weindruch 1 -0- -0-
D. Mike Maxwell 2 1 1
All late and missing reports noted above will be filed
shortly.
The Company has taken steps to ensure that all Reporting
Persons are aware of applicable filing requirements, and expects
full compliance with respect to future reportable transactions.
CERTAIN TRANSACTIONS
Pursuant to the February 1997 merger (the "Merger") between
the Company and WWAT, the Company exchanged 3,600,000 shares of
its Common Stock for all the previously issued and outstanding
shares of WWATT. The shares were issued on a proportionate basis
to the existing shareholders of WWATT, including 1,661,881 shares
to Ronald L. Weindruch, Chairman, President and Chief Executive
of the Company, and 466,098 shares to D. Mike Maxwell, Executive
Vice President and a director of the Company. As a result of the
Merger, WWATT was merged with and into the Company with the
Company being the surviving corporation, and the Company changed
its corporate name to Synaptx Worldwide, Inc.
In June 1996, the Company issued 269,642 shares of its
Common Stock to Mr. Weindruch, in exchange for his 50% ownership
in Access Synaptx, Inc. Mr. Weindruch also provides a
significant amount of consulting services to the Company, for
which he was paid or an accrual was made for services provided
and expenses incurred, as follows:
Total incurred for: August 31, 1998 August 31, 1997
--------------- ---------------
Consulting and commission $81,700 $111,400
Expense reimbursement $42,900 $46,500
Accrued expenses:
Consulting and commission $4,250 $34,800
expenses
Expense reimbursements -0- $12,800
During the fiscal year ended August 31, 1998, various
related parties [name them and amount each advanced] have
advanced the Company funds to meet cash flow needs. These
advances ranged in term from one month to two years and bear
interest rates ranging from 10% to 12%. The total amount of
funds advanced was $265,100, of which $210,000 was outstanding as
of August 31, 1998. Subsequent to August 31, 1998, an additional
$70,100 was repaid leaving a balance due of $140,000 at ______
1998 [update?].
A company controlled by D. Mike Maxwell, an officer and
director of the Company served as the primary contractor for the
leasehold improvements on the Company's office space located in
Elgin, Illinois. Materials and labor for services totaled
approximately $31,000 of which $4,320 has been paid by issuance
of 2,470 shares of the Company's Common Stock and the remainder
will be paid as cash flow allows.
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<PAGE>
The Company through its acquisition of Impulse is also
acting as guarantor of a personal note to a bank given by Mr.
Maxwell and his wife, a shareholder. This note which bears
interest at 10.99% and is due on October 17, 2001 had a balance
of $109,600 as of August 31, 1998, [and $________ was outstanding
as of January __, 1999].
PROPOSAL NO. 2
REINCORPORATION TO THE STATE OF DELAWARE.
GENERAL
As of January __, 1999, the Board of Directors authorized an
Agreement and Plan of Merger (the "Merger Agreement") between the
Company and Paladyne pursuant to which the Company will merge
with and into Paladyne, the Company's newly-formed wholly-owned
subsidiary and a Delaware corporation. As a result of such
merger, the state of incorporation of the Company will be changed
from Utah to Delaware (the "Reincorporation"), and the merger
will have certain other characteristics as set forth herein. The
discussion contained herein is qualified in its entirety by
reference to the Merger Agreement, a copy of which is attached
hereto as Exhibit A.
By voting for the Reincorporation, a shareholder would not
be deemed to waive any claims he may have against the Company or
its officers and directors (excluding a claim seeking dissenter's
appraisal rights), and the Company would not use such a vote as a
defense to any such action.
PRINCIPAL REASONS FOR THE REINCORPORATION
The Company was formed in 1981 when some of its then
principals were located in the State of Utah and it was engaged
in the acquisition and development of mineral resource prospects.
By 1997, the Company was basically a "shell" corporation with no
active operations, when WWATT was merged into the Company. The
Company has continued the operations of WWATT which are
supporting the customer management functions of clients in the
telecommunications, data communications and cable television
industries, and the management of the Company is comprised
primarily of former WWATT management. The Company does not
presently conduct any operations in Utah and Utah is not the
state of formation of many public companies. Accordingly, for
the reasons mentioned below, management has considered changing
the Company's state of incorporation and chose Delaware.
Delaware is generally considered to be among the most modern
jurisdictions in terms of its corporate law. The State of
Delaware has, over the years, undertaken to maintain a modern and
flexible corporation law which is frequently revised to meet
changing business conditions. As a result, Delaware has become a
preferred domicile for many major American public corporations.
By reincorporating in Delaware, the Company will be able to make
use of the increased flexibility afforded by the General
Corporation Law of Delaware. Because of Delaware's significance
as the state of incorporation of major corporations, the Delaware
judiciary has become particularly familiar with matters of
corporate law, and a substantial body of court decisions has
developed construing Delaware corporate law. As a consequence,
Delaware corporate law has been, and is likely to continue to be,
interpreted and explained in a number of significant court
decisions, a circumstance which may provide greater
predictability with respect to the Company's corporate legal
affairs and greater marketability of the Company's securities.
CONVERSION OF SHARES OF COMMON STOCK AND SERIES A PREFERRED STOCK
Upon consummation of the Reincorporation, each outstanding
share of Common Stock will automatically be converted into one
share of Paladyne common stock, $.001 par value (the "Paladyne
Common Stock"), and each outstanding share of the Company's
Series A Preferred Stock will automatically be converted into one
share of Paladyne Series A Convertible Preferred Stock, $.001 par
value (the "Paladyne Series A Preferred Stock"). As a result,
the existing shareholders of the Company will become stockholders
of Paladyne, and they will maintain their pro-rata share of the
outstanding and issued shares of the Paladyne Common Stock and
Paladyne Series A Preferred Stock that they held of the
outstanding shares of the Company's Common Stock and Series A
Preferred Stock (sometimes collectively, the "capital stock").
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CERTIFICATES FOR SHARES OF COMMON STOCK AND SERIES A PREFERRED
STOCK
Following the Reincorporation, stock certificates
representing shares of the Company's Common Stock will be
accepted for transfer, but must first be exchanged for
certificates representing shares of Paladyne Common Stock. Upon
presentation to the Company's transfer agent, stock certificates
representing shares of the Company's Common Stock may, following
the Reincorporation, be exchanged for stock certificates
representing an equal number of shares of Paladyne Common Stock.
Interstate Transfer Co., the transfer agent for the Common Stock,
will send a notice to holders of Common Stock as of the effective
date of the Reincorporation a letter of transmittal advising them
of the procedure for the exchange of stock certificates.
Following the Reincorporation, Paladyne will contact the
holders of the Series A Preferred Stock advising them how to
exchange their certificates.
BUSINESS AND FINANCIAL CONDITION
The Reincorporation will not result in any change in the
physical location, business, properties, management, assets,
liabilities or net worth of the Company. As a result of the
Reincorporation, the name will become Paladyne Corp., Paladyne
will succeed to all the business, properties, assets and
liabilities of the Company, and the shareholders of the Company
will become the stockholders of Paladyne. The issued and
outstanding shares of capital stock of Paladyne will be the same
as the number of outstanding shares of the Company's capital
stock at the effective date of the Merger.
Paladyne has an authorized capitalization of 25,000,000
shares of Common Stock and 10,000,000 shares of Preferred Stock,
which is the same as the authorized capitalization of the
Company. Paladyne will assume all obligations of the Company,
including all outstanding options and warrants to purchase shares
of the Company's Common Stock. All such options and warrants
will be exercisable for shares of Paladyne Common Stock.
Paladyne has established a 1999 Stock Option Plan (the
"Plan") providing for the grant of options to purchase up to
2,500,000 shares of its Common Stock to employees, officers,
directors and consultants of Paladyne and its subsidiaries. The
options may be either incentive stock options (as defined under
the Internal Revenue Code of 1986, as amended) which may only be
granted to employees, or non-qualified options which may be
granted to eligible optionees. The Paladyne Plan will be
administered by a Compensation Committee to be selected by
Paladyne's Board of Directors. The exercise price of each share
of common stock subject to an option, the method of payment and
the vesting and duration of the option will be fixed by the
Compensation Committee, but the exercise price shall not be less
than the fair market value of the common stock on the date of
grant. No options have been granted under the Paladyne Plan.
Assuming approval of the Reincorporation, outstanding options
under the Company's 1996 Option Plan will be exchanged for
identical options under the Paladyne Plan, see Proposal No. 3 -
"Amendment of 1996 Option Plan."
DIRECTORS AND OFFICERS
Following the Meeting, but prior to the Reincorporation, the
Company, in its capacity as the sole stockholder of Paladyne, if
necessary, will elect as the six directors of Paladyne, the same
individuals who are elected as directors of the Company at the
Meeting. The Paladyne Board of Directors is divided into three
classes, each class shall serve for a term of three years
commencing upon its election subsequent to the Reincorporation.
Initially, the Class I directors will serve until the 2000 annual
meeting, the Class II directors will serve until the 2001 annual
meeting and the Class III directors will serve until the 2002
annual meeting. Assuming Messrs. Horn, Kashul, Atwal, McGovern,
O'Reilly and Weindruch are elected directors of the Company at
the Meeting, the first two persons would be Class I directors of
Paladyne, the next two persons would be Class II directors, and
the last two persons would be Class III directors. Therefore,
the persons who are serving as directors of the Company
immediately prior to the Reincorporation will constitute the
entire Board of Directors of Paladyne immediately after the
Reincorporation.
It is anticipated that the directors of Paladyne will elect
as officers of Paladyne the same persons who are elected as
officers of the Company following the Meeting.
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FEDERAL INCOME TAX EFFECTS
The Reincorporation is intended to be a tax free
reorganization under the Internal Revenue Code of 1986, as
amended (the "Code"). Assuming the Reincorporation qualifies as
a reorganization, no gain or loss will be recognized to the
holders of Common Stock or Series A Preferred Stock of the
Company as a result of consummation of the Reincorporation, and
no gain or loss will be recognized by the Company or Paladyne.
Each former holder of capital stock of the Company will have the
same basis in the capital stock of the Paladyne received by such
holder pursuant to the Reincorporation as such holder has in the
capital stock of the Company held by such holder at the time of
consummation of the Reincorporation. Each shareholder's holding
period with respect to the Paladyne Common Stock will include the
period during which such holder held the corresponding Company
Common Stock, provided the latter was held by such holder as a
capital asset at the time of consummation of the Reincorporation.
The Company is not seeking a ruling from the Internal Revenue
Service or an opinion of legal or tax counsel with respect to the
tax consequences of the Reincorporation.
The foregoing is only a summary of certain federal income
tax consequences. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISERS REGARDING THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE
PROPOSED REINCORPORATION, INCLUDING THE APPLICABILITY OF THE LAWS
OF ANY STATE OR OTHER JURISDICTION.
RIGHTS OF DISSENTING SHAREHOLDERS
Pursuant to the Utah Revised Business Corporation Act (the
"Utah RBCA"), the Company's shareholders are entitled to dissent
from the proposed Reincorporation of the Company and obtain from
the Company the fair value of all shares of Common Stock
beneficially owned by such dissenting shareholder. A shareholder
who wishes to so dissent must file with the Company, prior to the
vote, a written notice of intention to demand that the
shareholder be paid fair value for such shareholder's shares of
his Common Stock in the event that the proposed Reincorporation
is effectuated. Any such dissenting shareholder must refrain
from approving the proposed Reincorporation. In the event that
the Merger Agreement is approved by the shareholders, the Company
will deliver notice to those shareholders who have dissented
providing instructions on how to surrender their certificates and
to be compensated therefor. Thereafter, the Company would send
to dissenting shareholders who had deposited their stock
certificates for payment the estimated fair value of their
shares. In determining the fair value of the shares, the Company
would primarily take into account the market value of the
Company's Common Stock immediately prior to the effectuation of
the Reincorporation, excluding any appreciation or depreciation
in anticipation of the Reincorporation. If a dissenting
shareholder does not agree with the Company's determination of
fair value and a resolution cannot be reached as to fair value,
the Company would file a proceeding in a Utah state court
requesting the court to determine the fair value. Reference is
made to Sections 16-10a-1301 through 16-10a-1331 of the Utah
RBCA, which govern the rights of shareholders to dissent and seek
appraisal, a copy of which sections is attached hereto as
Appendix I.
The Merger Agreement between the Company and New Synaptx
permits the Company to terminate the Merger Agreement in the
event that shareholders holding more than five percent (5%) of
the issued and outstanding shares of Common Stock dissent and
assert their appraisal rights.] In the event that the Company
terminates the Merger Agreement, those shareholders who have
dissented will not be able to exercise their dissenters right to
receive the fair value of their shares of Common Stock and will
continue as shareholders of the Company.
CHANGES IN THE COMPANY'S CERTIFICATE OF INCORPORATION AND BY-LAWS
TO BE EFFECTED BY THE REINCORPORATION
Paladyne will be governed by Delaware corporate law and by
its certificate of incorporation (the "Delaware Certificate") and
by-laws (the "Delaware By-Laws"), which will result in some
changes in the rights of shareholders. The major difference
between the Delaware Certificate and the Delaware By-Laws and the
Articles of Incorporation and By-Laws of the Company is that
Paladyne will have a classified Board of Directors. The
shareholders of the Company will become subject to the Delaware
General Corporation Law (the "Delaware GCL") and to the Paladyne
charter and by-law provisions upon the effective date of the
Reincorporation.
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CERTAIN DIFFERENCES BETWEEN DELAWARE AND UTAH CORPORATION LAW
Delaware law differs in certain respects from Utah law.
Although it is not practical to compare all the differences
between the laws governing corporations of Utah and Delaware, the
following discussion provides a summary of the material
differences which may significantly affect the rights of
shareholders. Such differences can be determined in full by
reference to the Utah RBCA and to the Delaware GCL. In addition,
both Utah and Delaware law provide that some of the statutory
provisions as they affect various rights of holders may be
modified by provisions in the certificate of incorporation or by-
laws of the corporation.
Shareholder Appraisal Rights. Shareholder appraisal rights
are statutory rights of dissenting shareholders to demand that,
upon consummation of certain reorganizations, the corporation
purchase their shares at an appraised fair market value.
Delaware law provides rights of appraisal to stockholders in the
event of a merger or consolidation, except (a) a merger by a
corporation, the shares of which are either listed on a national
securities exchange or widely held (by more than 2,000
stockholders of record) if such stockholders receive shares of
the surviving corporation or of a listed or widely held
corporation, and (b) a merger, if the corporation in which the
dissenter is a stockholder survives the merger and no vote of
such corporation's stockholders is required to approve the
merger. Under Delaware law, no vote of the stockholders of a
corporation surviving a merger is required if the number of
shares to be issued in the merger does not exceed 20% of the
shares of the surviving corporation outstanding immediately prior
to such issuance and if certain other conditions are met.
Delaware law provides that any corporation may stipulate in its
certificate of incorporation that appraisal rights shall be
available for shares of its stock as a result of an amendment to
its certificate of incorporation, any merger in which the
corporation is a constituent corporation, or the sale of all or
substantially all of the assets of the corporation. The Delaware
Certificate does not provide for such appraisal rights.
The Utah law grants shareholder appraisal rights with many
of its rights and exceptions similar to those under the Delaware
law. A copy of the Utah Dissenter's Right statute is attached
hereto as Appendix I.
Payment of Dividends and Repurchase of Shares of Stock.
Under Delaware law, a corporation may pay dividends only out of
surplus (generally, the stockholders' equity of the corporation
less the par value of the capital stock outstanding) or, if there
exists no surplus, out of the net profits of the corporation for
the fiscal year in which the dividend is declared and/or the
preceding fiscal year. If the capital of the corporation has
diminished to an amount less than the aggregate amount of capital
represented by issued and outstanding stock having a liquidation
preference, the corporation may not declare and pay out of its
net profits any dividends to the holders of its common stock
until the deficiency has been repaired.
In general, Delaware law provides that shares of a corpora-
tion's capital stock may only be repurchased or redeemed by the
corporation out of surplus. To determine the surplus, assets and
liabilities are valued at their current fair market value.
Assuming that such assets have a fair market value greater than
their book value and that liabilities have not increased in value
to a greater extent, such revaluation will increase the surplus
of the corporation and thereby permit the corporation to pay an
increased dividend and/or to repurchase a greater number of
shares.
Under Utah law, a corporation is prohibited from making a
distribution to its shareholders if, after giving effect to the
distribution, the corporation would not be able to pay its debts
as they become due in the usual course of business or the
corporation's total assets would be less than its total
liabilities (plus any amounts necessary to satisfy any
preferential rights).
It is the present policy of the Board of Directors to retain
any earnings for use in the Company's business.
Acquisition of Significant Shares of Stock. As a result of
the Reincorporation, the Company will become subject to Section
203 of the Delaware GCL which regulates certain business
combinations, including tender offers. Section 203 may have the
effect of significantly delaying certain stockholders' ability to
acquire a significant equity interest in the Company if such
acquisition is not approved by the Board of Directors. In
general, Section 203 prevents an "Interested Stockholder"
(defined generally as a person with 15% or more of a
corporation's outstanding voting stock) of a Delaware corporation
from engaging in a "Business Combination" (defined to include
mergers and a variety of other transactions such as transfers of
assets, loans, and transactions that would increase the
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Interested Stockholder's proportionate share of stock) with a
Delaware corporation for three years following the date such
person became an Interested Stockholder unless, among other
things, before such person became an Interested Stockholder the
board of directors of the corporation approved the Business
Combination or the transaction which resulted in the stockholder
becoming an Interested Stockholder. Under Section 203, the
restrictions described above do not apply to certain Business
Combinations proposed by an Interested Stockholder following the
announcement or notification of one of certain extraordinary
transactions involving the corporation and a person who had not
been an Interested Stockholder during the previous three years or
who became an Interested Stockholder with the approval of a
majority of the corporation's directors. In addition, the
restrictions under Section 203 do not apply if the corporation's
original certificate of incorporation contains a provision
expressly electing not to be governed by Section 203. The
Delaware Certificate does not contain such a provision.
The Board of Directors of Paladyne has approved Ronald L.
Weindruch becoming a significant stockholder of that corporation
as a result of the Reincorporation. Accordingly, Mr. Weindruch
will not be deemed an Interested Stockholder for the purposes of
Section 203, and Mr. Weindruch will be permitted to pursue
further Business Combinations with Paladyne should he desire to
do so in the future. No other Business Combinations have been
proposed or are contemplated. See "Security Ownership of Certain
Beneficial Owners, Directors and Executive Officers."
The Utah Control Share Acquisitions Act provides, among
other things, that, when any person obtains shares (or the power
to direct the voting shares) of "an issuing public corporation"
such that the person's voting power equals or exceeds any of
three levels (20%, 33 1/3% or 50%), the ability to vote (or to
direct the voting of) the "control shares" is conditioned on
approval by a majority of the corporation's shares (voting in
voting groups, if applicable), excluding the "interested shares".
Shareholder approval may occur at the next annual meeting of the
shareholders, or, if the acquiring person requests and agrees to
pay the associated costs of the corporation, at a special meeting
of the shareholders (to be held within fifty (50) days of the
corporation's receipt of the request by the acquiring person).
If authorized by the articles of incorporation or the Bylaws, the
corporation may redeem "control shares" at the fair market value
if the acquiring person fails to file an "acquiring person
statement" or if the shareholders do not grant voting rights to
control shares. If the shareholders grant voting rights to the
control shares, and if the acquiring person obtained a majority
of the voting power, shareholders may be entitled to dissenters'
rights under the Utah RBCA. An acquisition of shares does not
constitute a control share acquisition if (i) the corporation's
articles of incorporation or bylaws provide that this Act does
not apply, (ii) the acquisition is consummated pursuant to a
merger in accordance with the Utah RBCA or (iii) under certain
other specified circumstances.
Voting Rights with Respect to Extraordinary Corporate
Transactions. Under Delaware law, approval of mergers and
consolidations and sales, leases or exchanges of all or
substantially all of the property or assets of a corporation,
requires the affirmative vote or consent of the holders of a
majority of the outstanding shares entitled to vote, except that,
unless required by the certificate of incorporation, no vote of
shareholders of the corporation surviving a merger is necessary
if: (i) the merger does not amend the certificate of
incorporation of the corporation; (ii) each outstanding share
immediately prior to the merger is to be an identical share after
the merger and (iii) either no common stock of the corporation
and no securities or obligations convertible into common stock
are to be issued in the merger, or the common stock to be issued
in the merger plus that initially issuable on conversion of other
securities issued in the merger does not exceed 20% of the common
stock of the corporation outstanding immediately before the
merger. Under Utah law, a merger, share exchange or sale of all
or substantially all of the assets of a corporation (other than a
sale in the ordinary course of the corporation's business)
requires the approval of a majority (unless the articles of
incorporation, the Bylaws or a resolution of the board of
directors requires a greater number) of the outstanding shares of
the corporation (voting in separate voting groups, if
applicable). No vote of the shareholders of the surviving
corporation in a merger is required if: (i) the articles of
incorporation of the surviving corporation will not be changed;
(ii) each shareholder of the surviving corporation whose shares
were outstanding immediately before the effective date of the
merger will hold the same number of shares, with identical
designations, preferences, limitations and relative rights,
immediately after the merger; (iii) the number of voting shares
outstanding immediately after the merger, plus the number of
voting shares issuable as a result of the merger (either by the
conversion of securities issued pursuant to the merger or the
exercise of rights and warrants issued pursuant to the merger),
will not exceed by more than 20% of the total number of voting
shares of the surviving corporation outstanding immediately
before the merger; and (iv) the number of participating shares
(shares that entitle their holder to participate without
limitation in distributions) outstanding immediately after the
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merger, plus the number of participating shares issuable as a
result of the merger (either by the conversion of securities
issued pursuant to the merger or the exercise of rights and
warrants issued pursuant to the merger), will not exceed by more
than 20% the total number of participating shares of the
surviving corporation outstanding immediately before the merger.
Shareholders Consent Without a Meeting. Under Delaware law,
unless otherwise provided in the certificate of incorporation,
action requiring the vote of stockholders, including the removal
and election of directors, may be taken without a meeting,
without prior notice and without a vote, by the written consent
of stockholders having not less than the minimum number of votes
that would be necessary to take such action at a meeting at which
all shares entitled to vote thereon were present and acted.
Under Utah law, unless otherwise provided in the articles of
incorporation, action requiring the vote of shareholders may be
taken without a meeting and without prior notice by one or more
written consents of the shareholders having not less than the
minimum number of votes that would be necessary to take such
action at a meeting at which all shares entitled to vote thereon
were present and voted (if shareholder action is by less than
unanimous written consent, notice shall be provided to the
shareholders who did not consent at least ten (10) days before
the consummation of the transaction, action or event authorized
by the shareholders). However, any written consent for the
election of directors must be unanimous and the shareholders of
any corporation in existence prior to July 1, 1992, are required
to adopt a resolution permitting action by less than unanimous
written consent otherwise, the shareholders are only permitted to
act by unanimous written consent.
Special Meetings of Shareholders. Under Delaware law,
stockholders generally do not have the right to call meetings of
stockholders unless such right is granted in the certificate of
incorporation or bylaws. The Paladyne By-Laws provides that
holders of at least 30% of shares eligible to vote for election
of directors may call a special meeting of stockholders.
However, if a corporation fails to hold its annual meeting within
a period of 30 days after the date designated therefor, or if no
date has been designated for a period of 13 months after its last
annual meeting, the Delaware Court of Chancery may order a
meeting to be held upon the application of a shareholder.
Under Utah law, special meetings of the shareholders may be
called by: (i) the board of directors (ii) the person or persons
authorized by the Bylaws to call a special meeting, or (iii) the
holders of shares representing at least 10% of all votes entitled
to be cast on any issue proposed to be considered at the special
meeting. The corporation shall give notice of the date, time and
place of the meeting no fewer than ten (10) and no more than
sixty (60) days before the meeting. Notice of a special meeting
must include a description of the purposes for which the special
meeting is called. A special meeting of shareholders of the
Company may be called as provided for in the statute.
Inspection of Books and Records. Under Delaware law, any
stockholder of record, upon written demand under oath stating the
purpose thereof, has the right during the usual hours for
business to inspect for any proper purpose, the corporation's
stock ledger, a list of its stockholders and its other books and
records and to make copies or extract therefrom. Under Utah law,
upon providing the corporation with a written demand at least
five business days before the date the shareholder wishes to make
an inspection, a shareholder and his agent and attorneys are
entitled to inspect and copy, during regular business hours, (i)
the articles of incorporation, bylaws, minutes of shareholders
meetings for the previous three years, written communications to
shareholders for the previous three years, names and business
addresses of the officers and directors, the most recent annual
report delivered to the State of Utah, and financial statements
for the previous three years and (ii) if the shareholder is
acting in good faith and for a proper purpose, excerpts from the
records of the board of directors and shareholders (including
minutes of meetings, written consents and waivers of notices),
accounting records and shareholder lists.
Transactions with Officers and Directors. Under Delaware
law, contracts or transactions in which a director or officer is
financially interested are not automatically void or voidable, if
approved by the stockholders or the directors under substantially
the same circumstances as in Utah. Approval by the shareholders,
however, requires only a simple majority. Board approval must be
by a majority of the disinterested directors, but interested
directors may be counted for purposes of establishing a quorum.
Utah law provides that every director who is in any way, directly
or indirectly, interested in a proposed contract or transaction
with the Company is liable to account to the Company for any
profit made as a consequence of the Company entering into such
transaction unless such person (a) disclosed his or her interest
at the meeting of directors where the proposed transaction was
first considered, and, after his or her disclosure, the
transaction was approved by the a majority of the disinterested
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directors; (b) disclosed his or her interest prior to a meeting
or written consent of shareholders and, after his or her
disclosure, the transaction was approved by the a majority of the
disinterested shares; or (c) can show that the contract or
transaction was fair and reasonable to the Company.
Limitation on Liability of Directors; Indemnification of
Officers and Directors. Under Delaware law permits a corporation
to adopt provisions in its certificate of incorporation
eliminating or limiting the personal liability of a director to
the corporation or its shareholders for monetary damages for
breach of fiduciary duty as a director, with the following
exceptions: (a) a breach of the director's duty of loyalty; (b)
payment of an unlawful stock dividend or making an unlawful stock
repurchase or redemption; (c) acts or omissions not in good faith
or involving intentional misconduct or a knowing violation of
law; or (d) in any transaction in which the director derived an
improper personal benefit. The Paladyne Certificate of
Incorporation contains a provision limiting the liability of
directors as permitted by the Delaware GCL.
Under Utah law, a corporation may, if so provided in its
articles of incorporation, its bylaws or in a shareholder
resolution, eliminate or limit the personal liability of a
director to the corporation or its shareholders for monetary
damages due to any action taken or any failure to take action as
a director, except liability for: (a) improper financial benefits
receive by a director; (b) intentional infliction of harm on the
corporation or its shareholders; (c) payment of dividends to
shareholders making the corporation insolvent; and (d)
intentional violations of criminal law. The Company never
adopted any provision covering this area.
The Delaware and Utah laws contain basically similar
provisions governing indemnification of officers and directors.
AMENDMENT TO THE MERGER AGREEMENT; TERMINATION
The Merger Agreement may be terminated and the Reincorpora-
tion abandoned, notwithstanding shareholder approval, by the
Board of Directors of the Company at any time before consummation
of the Merger if (i) shareholders holding more than five percent
(5%) of the issued and outstanding shares of the Company's Common
Stock dissent and seek appraisal rights; or (ii) the Board of
Directors of the Company determines that in its judgment the
Reincorporation does not appear to be in the best interests of
the Company or its shareholders.
In the event the Merger Agreement is terminated or the
shareholders fail to approve the Reincorporation, the Company
would remain as a Utah corporation; however, the Board of
Directors would consider calling a Special Meeting of
Shareholders for the purposes of changing the corporate name to
Paladyne Corp.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE REINCORPORATION OF THE
COMPANY IN THE STATE OF DELAWARE.
PROPOSAL NO. 3
AMENDMENT OF 1996 STOCK OPTION PLAN
The Company's 1996 Stock Option Plan was initially adopted
by the Board of Directors in September 1996 and approved by the
stockholders in January 1997, and amended in October 1997. An
aggregate of 1,450,000 shares of Common Stock are currently
reserved for issuance under the 1996 Option Plan, of which
options for [893,749] shares are presently outstanding. The
Company also has granted options for [784,039] shares outside of
the 1996 Option Plan. The Board of Directors believes that the
availability of an adequate number of shares in the share reserve
of the 1996 Option Plan is an important factor in attracting,
retaining and motivating qualified employees essential to the
success of the Company and its subsidiaries, and also believes
that it is beneficial that the options to such persons be granted
under an approved plan. Accordingly, the Board of Directors has
adopted, subject to shareholder approval, an increase in the
number of shares of Common Stock underlying the 1996 Option Plan
to 2,500,000 shares.
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Paladyne has adopted a 1999 Stock Option Plan (the "Paladyne
Plan") which is identical to the Company's 1996 Option Plan and
which provides for the grant of options for 2,500,000 shares of
Paladyne Common Stock. No options have been granted under the
Paladyne Plan; however, assuming approval of the Reorganization,
all outstanding options under the Company's option plan as well
as options granted by the Company to employees or directors
outside the 1996 Option Plan will be exchanged for identical
options under the Paladyne Plan and the Company 1996 Option Plan
will terminate.
SUMMARY OF OPTION PLAN TERMS
The following summary of the 1996 Option Plan is qualified
in its entirety by the specific language of the Option Plan, a
copy of which will be available to any shareholder upon written
request.
Eligibility. All employees of the Company (including
officers and directors who are employees), as well as
consultants, advisors, or other independent contractors to the
Company, and prospective employees of the Company to whom options
are granted in connection with written offers of employment with
the Company may, in the discretion of the Board of Directors or
the Committees (as defined below) be granted options under the
Plan. As of December 31, 1998, options for the purchase of an
aggregate of ______ shares of Common Stock were outstanding under
the 1996 Option Plan exercisable at prices ranging from $_______
to $________ per share expiring from _________ to __________ held
by ______ persons. The closing bid price of the Common Stock on
the OTC Bulletin Board on January __, 1999 was $______ per share.
Administration. The 1996 Option Plan is administered by the
Compensation Committee (the "Committee"). The Committee is
responsible for determining the recipients of awards under the
1996 Option Plan and the size and nature of each award.
Recipients of stock options will have the terms of their options
set forth in stock option agreements between these recipients and
the Company.
Stock Options. Incentive stock options ("ISOs") and non-
qualified stock options ("NQSOs") may be granted under the Option
Plan. The option price per share under an option must equal or
exceed the fair market value of a share of Common Stock on the
date the option is granted, or, in the case of an ISO granted to
a holder of more than 10% of the voting power of all classes of
stock of the Company (a "10% Stockholder"), 110% of such fair
market value. In any year an eligible employee may not receive
ISOs that permit him to first exercise an option in any calendar
year for Common Stock with a fair market value on the date the
ISO is granted of more than $100,000. Options granted under the
Option Plan become exercisable at such time or times as may be
determined by the Committee and as set forth in an employee's
stock option agreement.
An option terminates on the date established in the option
agreement, which may not be more than 10 years after issuance or,
in the case of ISOs granted to a 10% Stockholder, five years.
The options are non-transferable. The rights of an employee in
outstanding options upon termination of his employment because of
death, disability, discharge for cause or voluntary departure are
determined by the Committee and set forth in an employee's stock
option agreement.
Termination and Amendment. The Board may suspend,
terminate, modify or amend the 1996 Option Plan; provided,
however, that any amendment that would increase the aggregate
number of shares of Common Stock that may be issued, materially
increase the benefits accruing to participants or materially
modify the requirements as to eligibility for participation will
be subject to stockholder approval to the extent required by Rule
16b-3 adopted by the SEC pursuant to Section 16(b) of the
Securities Exchange Act of 1934. No suspension, termination,
modification or amendment of the 1996 Option Plan may be made
which would adversely affect an employee's rights under the award
theretofore granted without the consent of the employee.
FEDERAL INCOME TAX ASPECTS
The following is a brief summary of the Federal income tax
consequences of awards made under the 1996 Option Plan based upon
the Federal income tax laws in effect on the date hereof. This
summary is not intended to be exhaustive, and does not describe
state or local tax consequences.
17
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Incentive Stock Options. No taxable income is realized by
the participant upon the grant or exercise of an ISO. If a
participant does not sell the stock received upon the exercise of
an ISO ("ISO Shares") until the later of (a) two years from the
date of grant and (b) within one year from the date of exercise,
when the shares are sole any gain (loss) realized will be long-
term capital gain (loss). In such circumstances, no deduction
will be allowed to the Company for Federal income tax purposes.
If ISO Shares are disposed of prior to the expiration of the
holding periods described above, the participant generally will
realize ordinary income at that time equal to the excess, if any,
of the fair market value of the shares at exercise (or, if less,
the amount realized on the disposition of the shares) over the
price paid for such ISO shares. The Company will be entitled to
deduct any such recognized amount. Any further gain or loss
realized by the participant will be taxed as short-term or long-
term capital gain or loss. Subject to certain exceptions for
disability or death, if an ISO is exercised more than three
months following the termination of the participant's employment,
the option will generally be taxed as a non-qualified stock
option.
Non-Qualified Stock Options. No income is realized by the
participant at the time a NQSO is granted. Generally upon
exercise of a NQSO, the participant will realize ordinary income
in an amount equal to the difference between the price paid for
the shares and the fair market value of the shares on the date of
exercise. The Company will be entitled to a tax deduction in the
same amount. Any appreciation (or depreciation) after date of
exercise will be either short-term or long-term capital gain or
loss, depending upon the length of time that the participant has
held the shares.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THIS PROPOSAL.
PROPOSAL NO. 4
RATIFY SELECTION OF ACCOUNTANTS
The Board of Directors of the Company has selected BDO
Seidman LLP ("BDO Seidman") as the independent accountants for
the fiscal year ending August 31, 1999, subject to ratification
by shareholders. BDO Seidman has acted as the independent
accountants of the Company for the last three fiscal years.
Services provided to the Company by BDO Seidman included
examination of the Company's consolidated financial statements,
limited reviews of quarterly reports and consultation on tax
matters. Assuming shareholders approve the Reorganization and
ratify the selection of accountants at the Meeting, BDO Seidman
would serve as the accountants of Paladyne for its fiscal year
ending August 31, 1999.
A representative of BDO Seidman is [not] expected to be
present at the Meeting [and will have the opportunity to make a
statement and may be available to respond to appropriate
questions.]
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THIS PROPOSAL.
1999 ANNUAL REPORT
All shareholders of record as of the Record Date have or are
currently being sent a copy of the Company's 1998 Annual Report
for the fiscal year ended August 31, 1998, which includes
financial statements for the fiscal year ended August 31, 1998.
Such Report is deemed to be part of the material for the
solicitation of proxies.
This Proxy Statement incorporates by reference the financial
information contained in the Company's 1998 Annual Report.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH BENEFICIAL
HOLDER OF ITS COMMON STOCK ON THE RECORD DATE WHO DID NOT RECEIVE
A COPY OF THE COMPANY'S ANNUAL REPORT, ON THE WRITTEN REQUEST OF
ANY SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-KSB FOR THE FISCAL YEAR ENDED AUGUST 31, 1998 AS FILED WITH
THE SEC. ANY SUCH REQUEST SHOULD BE MADE IN WRITING TO THE
18
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SECRETARY, SYNAPTX WORLDWIDE, INC., 615 CRESCENT EXECUTIVE COURT,
SUITE 128, LAKE MARY, FLORIDA 32746.
OTHER MATTERS
Stockholder proposals must be received by the Secretary of
the Company for inclusion in the Company's proxy materials
relating to the 2000 Annual Meeting of Shareholders by
, 1999.
----------------
As of the date of this Proxy Statement, the Company knows of
no business that will be presented for consideration at the
Meeting other than that which has been referred to above. As to
other business, if any, that may come before the Meeting, it is
intended that proxies in the enclosed form will be voted in
respect thereof in accordance with the judgment of the person or
persons voting the proxies.
By order of the Board of Directors
William E. Morris,
Secretary
January __, 1999
SHAREHOLDERS ARE URGED TO DATE, SIGN AND RETURN THE ENCLOSED
PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND
YOUR COOPERATION WILL BE APPRECIATED.
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APPENDIX I
UTAH REVISED BUSINESS CORPORATION ACT
SECTIONS 16-10a-1301 THROUGH 16-10a-1331
PART 13
DISSENTERS' RIGHTS
16-10a-1301. DEFINITIONS. For purposes of Part 13:
(1) "Beneficial shareholder" means the person who is a
beneficial owner of shares held in a voting trust or by a
nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action, or the surviving or
acquiring corporation by merger or share exchange of that
issuer.
(3) "Dissenter" means a shareholder who is entitled to
dissent from corporate action under Section 16-10a-1302 and
who exercises that right when and in the manner required by
Sections 16-10a-1320 through 16-10a-1328.
(4) "Fair value" with respect to a dissenter's shares,
means the value of the shares immediately before the
effectuation of the corporate action to which the dissenter
objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(5) "Interest" means interest from the effective date of
the corporate action until the date of payment, at the
statutory rate set forth in Section 15-1-1, compounded
annually.
(6) "Record shareholder" means the person in whose name
shares are registered in the records of a corporation or the
beneficial owner of shares that are registered in the name
of a nominee to the extent the beneficial owner is
recognized by the corporation as the shareholder as provided
in Section 16-10a-723.
(7) "Shareholder" means the record shareholder or the
beneficial shareholder.
16-10a-1302. RIGHT TO DISSENT. (1) A shareholder, whether or
not entitled to vote, is entitled to dissent from, and
obtain payment of the fair value of shares held by him in
the event of, any of the following corporate actions:
(a) consummation of a plan of merger to which the
corporation is a party if:
(i) shareholder approval is required for the merger by
Section 16-10a-1103 or the articles of incorporation;
or
(ii) the corporation is a subsidiary that is merged
with its parent under Section 16-10a-1104;
(b) consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will
be acquired;
(c) consummation of a sale, lease, exchange, or other
disposition of all, or substantially all, of the property of
the corporation for which a shareholder vote is required
under Subsection 16-10a-1202(1), but not including 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 one year after the date of sale; and
(d) consummation of a sale, lease, exchange, or other
disposition of all, or substantially all, of the property of
an entity controlled by the corporation if the shareholders
of the corporation were entitled to vote upon the consent of
the corporation to the disposition pursuant to Subsection
16-10a-1202(2).
(2) A shareholder is entitled to dissent and obtain payment
of the fair value of his shares in the event of any other
corporate action to the extent the articles of
incorporation, bylaws, or a resolution of the board of
directors so provides.
(3) Notwithstanding the other provisions of this part,
except to the extent otherwise provided in the articles of
incorporation, bylaws, or a resolution of the board of
directors, and subject to the limitations set forth in
Subsection (4), a shareholder is not entitled to dissent and
obtain payment under Subsection (1) of the fair value of the
shares of any class or series of shares which either were
listed on a national securities exchange registered under
the federal Securities Exchange Act of 1934, as amended, or
on the National Market System of the National Association of
Securities Dealers Automated Quotation System, or were held
of record by more than 2,000 shareholders, at the time of:
(a) the record date fixed under Section 16-10a-707 to
determine the shareholders entitled to receive notice of the
shareholders' meeting at which the corporate action is
submitted to a vote;
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(b) the record date fixed under Section 16-10a-704 to
determine shareholders entitled to sign writings consenting
to the proposed corporate action; or
(c) the effective date of the corporate action if the
corporate action is authorized other than by a vote of
shareholders.
(4) The limitation set forth in Subsection (3) does not
apply if the shareholder will receive for his shares,
pursuant to the corporate action, anything except:
(a) shares of the corporation surviving the consummation of
the plan of merger or share exchange;
(b) shares of a corporation which at the effective date of
the plan of merger or share exchange either will be listed
on a national securities exchange registered under the
federal Securities Exchange Act of 1934, as amended, or on
the National Market System of the National Association of
Securities Dealers Automated Quotation System, or will be
held of record by more than 2,000 shareholders;
(c) cash in lieu of fractional shares; or
(d) any combination of the shares described in Subsection
(4), or cash in lieu of fractional shares.
(5) A shareholder entitled to dissent and obtain payment
for his shares under this part may not challenge the
corporate action creating the entitlement unless the action
is unlawful or fraudulent with respect to him or to the
corporation.
16-10a-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS. (1) A
record shareholder may assert dissenters' rights as to fewer
than all the shares registered in his name only if the
shareholder dissents with respect to all shares beneficially
owned by any one person and causes the corporation to
receive written notice which states the dissent and the name
and address of each person on whose behalf dissenters'
rights are being asserted. The rights of a partial
dissenter under this subsection are determined as if the
shares as to which the shareholder dissents and the other
shares held of record by him were registered in the names of
different shareholders.
(2) A beneficial shareholder may assert dissenters' rights
as to shares held on his behalf only if:
(a) the beneficial shareholder causes the corporation to
receive the record shareholder's written consent to the
dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(b) the beneficial shareholder dissents with respect to all
shares of which he is the beneficial shareholder.
(3) The corporation may require that, when a record
shareholder dissents with respect to the shares held by any
one or more beneficial shareholders, each beneficial
shareholder must certify to the corporation that both he and
the record shareholders of all shares owned beneficially by
him have asserted, or will timely assert, dissenters' rights
as to all the shares unlimited on the ability to exercise
dissenters' rights. The certification requirement must be
stated in the dissenters' notice given pursuant to Section
16-10a-1322.
16-10a-1320. NOTICE OF DISSENTERS' RIGHTS. (1) If a proposed
corporate action creating dissenters' rights under Section
16-10a-1302 is submitted to a vote at a shareholders'
meeting, the meeting notice must be sent to all shareholders
of the corporation as of the applicable record date, whether
or not they are entitled to vote at the meeting. The notice
shall state that shareholders are or may be entitled to
assert dissenters' rights under this part. The notice must
be accompanied by a copy of this part and the materials, if
any, that under this chapter are required to be given the
shareholders entitled to vote on the proposed action at the
meeting. Failure to give notice as required by this
subsection does not affect any action taken at the
shareholders' meeting for which the notice was to have been
given.
(2) If a proposed corporate action creating dissenters'
rights under Section 16-10a-1302 is authorized without a
meeting of shareholders pursuant to Section 16-10a-704, any
written or oral solicitation of a shareholder to execute a
written consent to the action contemplated by Section 16-
10a-704 must be accompanied or preceded by a written notice
stating that shareholders are or may be entitled to assert
dissenters' rights under this part, by a copy of this part,
and by the materials, if any, that under this chapter would
have been required to be given to shareholders entitled to
vote on the proposed action if the proposed action were
submitted to a vote at a shareholders' meeting. Failure to
give written notice as provided by this subsection does not
affect any action taken pursuant to Section 16-10a-704 for
which the notice was to have been given.
16-10a-1321. DEMAND FOR PAYMENT -- ELIGIBILITY AND NOTICE OF
INTENT. (1) If a proposed corporate action creating
dissenters' rights under Section 16-10a-1302 is submitted to
a vote at a shareholders' meeting, a shareholder who wishes
to assert dissenters' rights:
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(a) must cause the corporation to receive, before the vote
is taken, written notice of his intent to demand payment for
shares if the proposed action is effectuated; and
(b) may not vote any of his shares in favor of the proposed
action.
(2) If a proposed corporate action creating dissenters'
rights under Section 16-10a-1302 is authorized without a
meeting of shareholders pursuant to Section 16-10a-704, a
shareholder who wishes to assert dissenters' rights may not
execute a writing consenting to the proposed corporate
action.
(3) In order to be entitled to payment for shares under
this part, unless otherwise provided in the articles of
incorporation, bylaws, or a resolution adopted by the board
of directors, a shareholder must have been a shareholder
with respect to the shares for which payment is demanded as
of the date the proposed corporate action creating
dissenters' rights under Section 16-10a-1302 is approved by
the shareholders, if shareholder approval is required, or as
of the effective date of the corporate action if the
corporate action is authorized other than by a vote of
shareholders.
(4) A shareholder who does not satisfy the requirements of
Subsections (1) through (3) is not entitled to payment for
shares under this part.
16-10a-1322. DISSENTERS' NOTICE. (1) If proposed corporate
action creating dissenters' rights under Section 16-10a-1302
is authorized, the corporation shall give a written
dissenters' notice to all shareholders who are entitled to
demand payment for their shares under this part.
(2) The dissenters' notice required by Subsection (1) must
be sent no later than ten days after the effective date of
the corporate action creating dissenters' rights under
Section 16-10a-1302, and shall:
(a) state that the corporate action was authorized and the
effective date or proposed effective date of the corporate
action;
(b) state an address at which the corporation will receive
payment demands and an address at which certificates for
certificated shares must be deposited;
(c) inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment
demand is received;
(d) supply a form for demanding payment, which form
requests a dissenter to state an address to which payment is
to be made;
(e) set a date by which the corporation must receive the
payment demand and by which certificates for certificated
shares must be deposited at the address indicated in the
dissenters' notice, which dates may not be fewer than 30 nor
more than 70 days after the date the dissenters' notice
required by Subsection (1) is given;
(f) state the requirement contemplated by Subsection 16-
10a-1303(3), if the requirement is imposed; and
(g) be accompanied by a copy of this part.
16-10a-1323. PROCEDURE TO DEMAND PAYMENT. (1) A shareholder
who is given a dissenters' notice described in Section 16-
10a-1322, who meets the requirements of Section 16-10a-1321,
and wishes to assert dissenters' rights must, in accordance
with the terms of the dissenters' notice:
(a) cause the corporation to receive a payment demand,
which may be the payment demand form contemplated in
Subsection 16-10a-1322(2)(d), duly completed, or may be
stated in another writing;
(b) deposit certificates for his certificated shares in
accordance with the terms of the dissenters' notice; and
(c) if required by the corporation in the dissenters'
notice described in Section 16-10a-1322, as contemplated by
Section 16-10a-1327, certify in writing, in or with the
payment demand, whether or not he or the person on whose
behalf he asserts dissenters' rights acquired beneficial
ownership of the shares before the date of the first
announcement to news media or to shareholders of the terms
of the proposed corporate action creating dissenters' rights
under Section 16-10a-1302.
(2) A shareholder who demands payment in accordance with
Subsection (1) retains all rights of a shareholder except
the right to transfer the shares until the effective date of
the proposed corporate action giving rise to the exercise of
dissenters' rights and has only the right to receive payment
for the shares after the effective date of the corporate
action.
(3) A shareholder who does not demand payment and deposit
share certificates as required, by the date or dates set in
the dissenters' notice, is not entitled to payment for
shares under this part.
16-10a-1324. UNCERTIFICATED SHARES. (1) Upon receipt of a
demand for payment under Section 16-10a-1323 from a
shareholder holding uncertificated shares, and in lieu of
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the deposit of certificates representing the shares, the
corporation may restrict the transfer of the shares until
the proposed corporate action is taken or the restrictions
are released under Section 16-10a-1326.
(2) In all other respects, the provisions of Section 16-
10a-1323 apply to shareholders who own uncertificated
shares.
16-10a-1325. PAYMENT. (1) Except as provided in Section
16-10a-1327, upon the later of the effective date of the
corporate action creating dissenters' rights under Section
16-10a-1302, and receipt by the corporation of each payment
demand pursuant to Section 16-10a-1323, the corporation
shall pay the amount the corporation estimates to be the
fair value of the dissenter's shares, plus interest to each
dissenter who has complied with Section 16-10a-1323, and who
meets the requirements of Section 16-10a-1321, and who has
not yet received payment.
(2) Each payment made pursuant to Subsection (1) must be
accompanied by:
(a) (i) (A) the corporation's balance sheet as of the end
of its most recent fiscal year, or if not available, a
fiscal year ending not more than 16 months before the date
of payment;
(B) an income statement for that year;
(C) a statement of changes in shareholders' equity for that
year and a statement of cash flow for that year, if the
corporation customarily provides such statements to
shareholders; and
(D) the latest available interim financial statements, if
any;
(ii) the balance sheet and statements referred to in
Subsection (i) must be audited if the corporation
customarily provides audited financial statements to
shareholders;
(b) a statement of the corporation's estimate of the fair
value of the shares and the amount of interest payable with
respect to the shares;
(c) a statement of the dissenter's right to demand payment
under Section 16-10a-1328; and
(d) a copy of this part.
16-10a-1326. FAILURE TO TAKE ACTION. (1) If the effective date
of the corporate action creating dissenters' rights under
Section 16-10a-1302 does not occur within 60 days after the
date set by the corporation as the date by which the
corporation must receive payment demands as provided in
Section 16-10a-1322, the corporation shall return all
deposited certificates and release the transfer restrictions
imposed on uncertificated shares, and all shareholders who
submitted a demand for payment pursuant to Section 16-10a-
1323 shall thereafter have all rights of a shareholder as if
no demand for payment had been made.
(2) If the effective date of the corporate action creating
dissenters' rights under Section 16-10a-1302 occurs more
than 60 days after the date set by the corporation as the
date by which the corporation must receive payment demands
as provided in Section 16-10a-1322, then the corporation
shall send a new dissenters' notice, as provided in Section
16-10a-1322, and the provisions of Sections 16-10a-1323
through 16-10a-1328 shall again be applicable.
16-10a-1327. SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED
AFTER ANNOUNCEMENT OF PROPOSED CORPORATE ACTION. (1) A
corporation may, with the dissenters' notice given pursuant
to Section 16-10a-1322, state the date of the first
announcement to news media or to shareholders of the terms
of the proposed corporate action creating dissenters' rights
under Section 16-10a-1302 and state that a shareholder who
asserts dissenters' rights must certify in writing, in or
with the payment demand, whether or not he or the person on
whose behalf he asserts dissenters' rights acquired
beneficial ownership of the shares before that date. With
respect to any dissenter who does not certify in writing, in
or with the payment demand that he or the person on whose
behalf the dissenters' rights are being asserted, acquired
beneficial ownership of the shares before that date, the
corporation may, in lieu of making the payment provided in
Section 16-10a-1325, offer to make payment if the dissenter
agrees to accept it in full satisfaction of his demand.
(2) An offer to make payment under Subsection (1) shall
include or be accompanied by the information required by
Subsection 16-10a-1325(2).
16-10a-1328. PROCEDURE FOR SHAREHOLDER DISSATISFIED WITH PAYMENT
OR OFFER. (1) A dissenter who has not accepted an offer
made by a corporation under Section 16-10a-1327 may notify
the corporation in writing of his own estimate of the fair
value of his shares and demand payment of the estimated
amount, plus interest, less any payment made under Section
16-10a-1325, if:
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(a) the dissenter believes that the amount paid under
Section 16-10a-1325 or offered under Section 16-10a-1327 is
less than the fair value of the shares;
(b) the corporation fails to make payment under Section 16-
10a-1325 within 60 days after the date set by the
corporation as the date by which it must receive the payment
demand; or
(c) the corporation, having failed to take the proposed
corporate action creating dissenters' rights, does not
return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares as required by
Section 16-10a-1326.
(2) A dissenter waives the right to demand payment under
this section unless he causes the corporation to receive the
notice required by Subsection (1) within 30 days after the
corporation made or offered payment for his shares.
16-10a-1330. JUDICIAL APPRAISAL OF SHARES -- COURT ACTION. (1)
If a demand for payment under Section 16-10a-1328 remains
unresolved, the corporation shall commence a proceeding
within 60 days after receiving the payment demand
contemplated by Section 16-10a-1328, and petition the court
to determine the fair value of the shares and the amount of
interest. If the corporation does not commence the
proceeding within the 60-day period, it shall pay each
dissenter whose demand remains unresolved the amount
demanded.
(2) The corporation shall commence the proceeding described
in Subsection (1) in the district court of the county in
this state where the corporation's principal office, or if
it has no principal office in this state, the county where
its registered office is located. If the corporation is a
foreign corporation without a registered office in this
state, it shall commence the proceeding in the county in
this state where the registered office of the domestic
corporation merged with, or whose shares were acquired by,
the foreign corporation was located.
(3) The corporation shall make all dissenters who have
satisfied the requirements of Sections 16-10a-1321, 16-10a-
1323, and 16-10a-1328, whether or not they are residents of
this state whose demands remain unresolved, parties to the
proceeding commenced under Subsection (2) as an action
against their shares. All such dissenters who are named as
parties must be served with a copy of the petition. Service
on each dissenter may be by registered or certified mail to
the address stated in his payment demand made pursuant to
Section 16-10a-1328. If no address is stated in the payment
demand, service may be made at the address stated in the
payment demand given pursuant to Section 16-10a-1323. If no
address is stated in the payment demand, service may be made
at the address shown on the corporation's current record of
shareholders for the record shareholder holding the
dissenter's shares. Service may also be made otherwise as
provided by law.
(4) The jurisdiction of the court in which the proceeding
is commenced under Subsection (2) is plenary and exclusive.
The court may appoint one or more persons as appraisers to
receive evidence and recommend decision on the question of
fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The
dissenters are entitled to the same discovery rights as
parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding commenced
under Subsection (2) is entitled to judgment:
(a) for the amount, if any, by which the court finds that
the fair value of his shares, plus interest, exceeds the
amount paid by the corporation pursuant to Section 16-10a-
1325; or
(b) for the fair value, plus interest, of the dissenter's
after-acquired shares for which the corporation elected to
withhold payment under Section 16-10a-1327.
16-10a-1331. COURT COSTS AND COUNSEL FEES. (1) The court in an
appraisal proceeding commenced under Section 16-10a-1330
shall determine all costs of the proceeding, including the
reasonable compensation and expenses of appraisers appointed
by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against
all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds that the dissenters
acted arbitrarily, vexatiously, or not in good faith in
demanding payment under Section 16-10a-1328.
(2) The court may also assess the fees and expenses of
counsel and experts for the respective parties, in
amounts the court finds equitable:
(a) against the corporation and in favor of any or all
dissenters if the court finds the corporation did not
substantially comply with the requirements of Sections 16-
10a-1320 through 16-10a-1328; or
(b) against either the corporation or one or more
dissenters, in favor of any other party, if the court finds
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that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by this part.
(3) If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters
similarly situated, and that the fees for those services
should not be assessed against the corporation, the court
may award to those counsel reasonable fees to be paid out of
the amounts awarded the dissenters who were benefitted.
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EXHIBIT A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated January __, 1999
(the "Agreement"), between SYNAPTX WORLDWIDE, INC., a Utah
corporation ("Synaptx"), and PALADYNE CORP., a Delaware
corporation ("Paladyne") (Synaptx and Paladyne are sometimes
referred to herein collectively as the "Constituent
Corporations").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Paladyne was incorporated in the State of
Delaware on January __, 1999, and is a wholly-owned subsidiary of
Synaptx; and
WHEREAS, the Board of Directors of Synaptx believes
that it is in the best interest of Synaptx to reincorporate in
the State of Delaware by merging with and into Paladyne pursuant
to this Agreement.
NOW, THEREFORE, in consideration of the foregoing
premises, the mutual agreements and undertakings herein given and
other good and valuable consideration, the parties hereto agree,
in accordance with the applicable provisions of the statutes of
Utah and Delaware, respectively, which permit such merger,
Synaptx shall be, and hereby is, merged with and into Paladyne,
at the Effective Time (as herein defined), and that the terms and
conditions of the merger hereby agreed to (the "Merger") shall be
as hereinafter set forth:
ARTICLE ONE
Principal Terms of Merger
Section 1.01. Merger. At the Effective Time (as herein
------
defined), Synaptx shall merge with and into Paladyne provided
that this Agreement has not been terminated pursuant to Section
4.02 herein.
Section 1.02. Effective Time of Merger. The Merger
------------------------
shall become effective as of the completion of all filing
requirements specified in Sections 4.03 and 4.04 of this
Agreement, and such date and time is hereinafter referred to as
the "Effective Time."
ARTICLE TWO
Certificate of Incorporation, By-Laws and Directors
Section 2.01. Certificate of Incorporation. The
----------------------------
Certificate of Incorporation of Paladyne in effect at the
Effective Time of the Merger shall be the Certificate of
Incorporation of Paladyne, to remain unchanged until amended as
provided by law.
<PAGE>
Section 2.02. By-Laws. The By-Laws of Paladyne in
-------
effect at the Effective Time of the Merger shall be the By-Laws
of Paladyne, to remain unchanged until amended as provided by
law.
Section 2.03. Directors. Synaptx, in its capacity as
---------
sole shareholder of Paladyne, shall elect as directors of
Paladyne those individuals elected by the shareholders of Synaptx
prior to the Effective Time of the Merger, and such persons shall
serve as directors of Paladyne until the next annual meeting of
the stockholders of Paladyne.
ARTICLE THREE
Exchange and Cancellation of Shares
At the Effective Time of the Merger, all issued and
outstanding shares of Synaptx common stock, $.001 par value (the
"Old Common Stock"), and all issued and outstanding shares of
Synaptx's Series A Convertible Preferred Stock, $.001 par value
(the "Old Preferred Stock"), shall be canceled and the corporate
existence of Synaptx, shall cease. Shares of Paladyne's common
stock, par value $.001 per share (the "New Common Stock"), and
shares of Paladyne's Series A Convertible Preferred Stock, $.001
par value (the "New Preferred Stock"), shall be issued to the
shareholders of Synaptx as a result of the Merger as herein
provided.
Section 3.01. The Surviving Corporation Stock. Each
-------------------------------
share of Old Common Stock which is outstanding prior to the
Effective Time of the Merger shall be converted into one issued
and outstanding share of New Common Stock and, from and after the
Effective Time of the Merger, the holders of all of said issued
and outstanding shares of Old Common Stock shall automatically be
and become holders of shares of New Common Stock upon the basis
above specified, whether or not certificates representing said
shares are then issued and delivered. Each share of Old
Preferred Stock which is outstanding prior to the Effective Time
of the Merger shall be converted into one issued and outstanding
share of New Preferred Stock and, from and after the Effective
Time of the Merger, the holders of all of said issued and
outstanding shares of Old Preferred Stock shall automatically be
and become holders of shares of New Preferred Stock upon the
basis above specified, whether or not certificates representing
said shares are then issued and delivered.
Section 3.02. Cancellation of Old Common Stock and Old
----------------------------------------
Preferred Stock. After the Effective Time of the Merger, each
---------------
holder of record of any outstanding certificate or certificates
theretofore representing shares of Old Common Stock or Old
Preferred Stock may surrender the same to American Stock Transfer
& Trust Company, New York, New York, and such holder shall be
entitled upon such surrender to receive in exchange therefor a
certificate or certificates representing an equal number of
shares of New Common Stock or New Preferred Stock. Until so
surrendered, each outstanding certificate which, prior to the
Effective Time of the Merger, represented one or more shares of
Old Common Stock or Old Preferred Stock shall be deemed for all
corporate purposes to evidence ownership of an equal number of
shares of New Common Stock or New Preferred Stock, respectively.
Upon the surrender of a certificate or certificates representing
shares of Old Common Stock or Old Preferred Stock, a proper
officer of Paladyne shall cancel said certificate or
certificates.
-2-
<PAGE>
ARTICLE FOUR
Adoption and Termination
Section 4.01. Submission to Vote of Shareholders. This
----------------------------------
Agreement shall be submitted to the shareholders of Synaptx, as
provided by applicable law, and shall take effect, and be deemed
to be the Agreement and Plan of Merger of the Constituent
Corporations, upon the approval or adoption thereof by said
shareholders of Synaptx in accordance with the requirements of
the laws of the State of Utah.
Section 4.02. Termination of Agreement. Anything herein
------------------------
or elsewhere to the contrary notwithstanding, this Agreement may
be abandoned by Synaptx by an appropriate resolution of its Board
of Directors at any time prior to the Effective Time of the
Merger if such Board of Directors believes that the Merger is not
in the best interests of Synaptx or in the event that the
shareholders who hold more than five (5%) percent of the
outstanding and issued shares of Old Common Stock [and Old
Preferred Stock] dissent from the Merger and seek appraisal
rights pursuant to Sections 16-10a-1301 through 16-10a-1331 of
the Utah Revised Business Corporation Act.
Section 4.03. Filing of Articles of Merger in the State
-----------------------------------------
of Utah. As soon as practicable after the requisite shareholder
-------
approval referenced in Section 4.01 herein, Articles of Merger to
effectuate the terms of this Agreement shall be executed and
acknowledged by Paladyne and thereafter delivered to the Division
of Corporations and Commerical Code (the "Division") of the State
of Utah for filing and recording in accordance with applicable
law, unless this Agreement has been terminated pursuant to
Section 4.02 herein.
Section 4.04. Filing of Certificates of Merger in the
---------------------------------------
State of Delaware. As soon as practicable after the requisite
-----------------
shareholder approval referenced in Section 4.01 herein, a
Certificate of Merger to effectuate the terms of this Agreement
shall be executed by each of the Constituent Corporations and
thereafter delivered to the Secretary of State of the State of
Delaware for filing and recording in accordance with applicable
law, unless this Agreement has been terminated pursuant to
Section 4.02 herein.
ARTICLE FIVE
Effect of Merger
Section 5.01. Effect of Merger. At the Effective Time
----------------
of the Merger, the Constituent Corporations shall be a single
corporation, which shall be Paladyne, and the separate existence
of Synaptx shall cease except to the extent provided by the laws
of the States of Utah and Delaware. Paladyne shall thereupon and
thereafter possess all the rights, privileges, immunities and
franchises, of both a public and private nature, of each of the
Constituent Corporations; and all property, real, personal and
mixed, and all debts due on whatever account, including
subscriptions to shares, and all other choses in action, and all
and every other interest of, or belonging to, or due to each of
the Constituent Corporations, shall be taken and deemed to be
vested in Paladyne without further act or deed; and the title to
all real estate, or any interest therein, vested in either of the
Constituent Corporations shall not revert or be in any way
impaired by reason of the Merger. Paladyne shall thenceforth be
responsible and liable for all of the liabilities and obligations
of each of the Constituent Corporations and any claim existing or
action or proceeding pending by or against either of the
-3-
<PAGE>
Constituent Corporations may be prosecuted to judgment as if the
Merger had not taken place, or the Surviving Corporation may be
substituted in its place, and neither the rights of creditors nor
any liens upon the property of either of the Constituent
Corporations shall be impaired by the Merger. Paladyne shall
assume any stock option or similar employee benefits plan of
Synaptx, and all contractual rights of Synaptx for the issuance
of shares of the Old Common Stock and Old Preferred Stock, and
such issuances or reserves for issuances shall be of shares of
New Common Stock and New Preferred Stock on an as-converted basis
as set forth in Section 3.01 hereof.
Section 5.02. Business Combinations with Ronald E.
------------------------------------
Weindruch. Paladyne hereby acknowledges that Ronald E. Weindruch,
---------
beneficially owns _____________ shares of Old Common Stock at the
date of this Agreement and further recognizes that, as a result
of such stock ownership, Mr. Weindruch could be deemed to be an
Interested Stockholder (as that term is defined under Section 203
of the General Corporation Law of the State of Delaware) of
Paladyne after the consummation of the Merger. Paladyne hereby
represents and warrants to Synaptx that the Board of Directors of
Paladyne has considered the stock ownership that Mr. Weindruch
will have in Paladyne at the Effective Time of the Merger in
approving this Agreement. Paladyne hereby represents and
warrants to Synaptx that the Board of Directors of Paladyne has
approved such stock acquisition.
ARTICLE SIX
Post Merger Undertakings
Section 6.01 Service of Process. Paladyne hereby agrees
------------------
that it may be served with process within the State of Utah in
any proceeding for the enforcement of any obligation of Synaptx
and in any proceeding for the enforcement of the rights of any
dissenting shareholder of Synaptx.
Section 6.02 Authorization of Service of Process.
-----------------------------------
Paladyne hereby authorizes service of process on it pursuant to
Section 6.01 herein by registered or certified mail return
receipt requested to its principal office as set forth in the
Articles of Merger to be filed pursuant to Section 4.03 herein or
as changed by notice to the Division.
Section 6.03 Payments to Dissenting Shareholders.
-----------------------------------
Paladyne shall promptly pay to any shareholders of Synaptx who
dissent from the Merger the amount, if any, to which such
dissenting shareholders shall be entitled with respect to the
Merger pursuant to applicable law.
ARTICLE SEVEN
Miscellaneous
Section 7.01 Further Actions. Each of the Constituent
---------------
Corporations shall take or cause to be taken all action, or do,
or cause to be done, all things necessary, proper or advisable
under the laws of the States of Utah and Delaware to consummate
and make effective the Merger following approval of the Merger by
the shareholders of Synaptx in accordance with the laws of said
States.
Section 7.02. Amendments. At any time prior to the
----------
Effective Time of the Merger (notwithstanding any shareholder
approval), if authorized by their respective Board of Directors,
-4-
<PAGE>
the parties hereto may, by written agreement, amend or supplement
any of the provisions of this Agreement. Any written instrument
or agreement referred to in this section shall be validly and
sufficiently authorized for the purposes of this Agreement if
signed on behalf of each of the Constituent Corporations by a
person authorized to sign this Agreement.
Section 7.03. Counterparts. This Agreement may be
------------
executed in any number of counterparts, each of which shall be
deemed to be an original instrument, but all such counterparts
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Constituent Corporations,
pursuant to the approval and authority duly given by resolutions
adopted by their respective Board of Directors have caused this
Agreement and Plan of Merger to be executed by an authorized
officer of each party hereto, and the corporate seal affixed on
the date above first written.
PALADYNE CORP.
(a Delaware corporation)
By:
---------------------------
Name:
Title:
SYNAPTX WORLDWIDE, INC.
(a Utah corporation)
By:
---------------------------
Name:
Title:
-5-
<PAGE>
PRELIMINARY COPIES
PROXY SYNAPTX WORLDWIDE, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS - JANUARY __ 1999.
The undersigned hereby appoints Ronald L. Weindruch and
William E. Morris as proxies, each with the power to appoint his
substitute, and hereby authorizes them, and each of them, to
represent and vote, as designated below, all the shares of Common
Stock of Synaptx Worldwide, Inc., a Utah corporation (the
"Company"), which the undersigned is entitled to vote at the 1999
Annual Meeting of Stockholders on February __, 1999, and any
adjournment thereof, with all the powers the undersigned would
possess if personally present, and hereby revoking any proxy
hereby given, upon the matters noted below:
1. Election of directors
[ ] FOR all nominees listed below
(except as indicated below)
[ ] WITHHOLD AUTHORITY to vote
for all nominees listed below
Ronald L. Weindruch, Peter B. Atwal, Kenneth W. Horn,
William N. Kashul, Sr., James L. McGovern and William P.
O'Reilly.
(Instruction: To withhold authority to vote for any
individual nominee or nominees, write such nominee's or
nominees' name(s) in the space provided below).
2. Adoption of the Agreement and Plan of Merger dated as
of January __, 1999 by and between the Company and
Paladyne Corp., pursuant to which, among other things
the Company will be merged with and into Paladyne,
whereby the Company will be reincorporated in the State
of Delaware.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of amendment to 1996 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratification of the appointment of BDO Seidman LLP as
the auditors for the 1999 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before
the Meeting.
The undersigned acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement, dated January __, 1999, together
with the exhibits and schedules attached thereto.
<PAGE>
This proxy, when properly executed, will be voted in the manner
directed by the undersigned stockholder. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE MANAGEMENT
SLATE OF DIRECTORS AND FOR THE ADOPTION OF THE THREE OTHER
PROPOSALS.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
Please sign exactly as name appears below.
When shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by an
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
-----------------------------------------
Signature
-----------------------------------------
Signature if held jointly
Dated:_____________________________, 1999
