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:
[ ] Preliminary Proxy Statement [X] 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:
---------------------------------------------
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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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
----------------------------------------
4) Date Filed:
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<PAGE>
SYNAPTX WORLDWIDE, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 3, 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, on March 3, 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 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 22,
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 three proposals, which proposals are described in more detail in the
attached Proxy Statement.
By order of the Board of Directors
William E. Morris,
Secretary
February 4, 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>
SYNAPTX WORLDWIDE, INC.
---------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF SHAREHOLDERS
MARCH 3, 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, on March 3, 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 February 5, 1999.
VOTING SECURITIES AND VOTE REQUIRED
Only shareholders of record at the close of business on January 22,
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, 6,584,452 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 present and voting
will be required to approve the amendment of the 1996 Stock Option Plan (the
"1996 Option Plan") 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").
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
<PAGE>
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 or the amendment of the Option Plan, 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 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.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND NOMINEES
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
Nature of
Name and Address Status of Beneficial
of Beneficial Owner* Beneficial Owner Ownership(1) Percent(2)
- ------------------- ---------------- ------------ ---------
Ronald L. Weindruch President, Chief 1,730,387(3) 26.0%
Executive Officer,
Chairman and Director
Webbmont Holdings 5% holder 411,567(4) 6.1%
1355 Peachtree St.,
Suite 1100
Atlanta, GA 30309
William N. Kashul, Sr. Director 239,794(5) 3.5%
Peter B. Atwal Director 176,509(6) 2.6%
James L. McGovern Director 185,304(7) 2.7%
John D. Foster Nominee -- --
Kenneth W. Horn Nominee -- --
All executive officers
and directors as a
group (7 persons in
group) 3,158,781(8) 41.8%
3
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* 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 6,584,342 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) 68,506 shares underlying options held by Mr. Weindruch and
(ii) 44,024 shares held in the names of Mr. Weindruch's children, as to
which shares Mr. Weindruch disclaims beneficial ownership.
(4) Includes 196,429 shares underlying warrants held by Webbmont Holdings.
(5) Includes 223,285 shares underlying options held by Mr. Kashul
(6) Includes 176,509 shares underlying options held by Mr. Atwal.
(7) Includes (i) 158,255 shares underlying options and warrants held by Mr.
McGovern and (ii) 6,604 shares held in the names of Mr. McGovern's
children.
(8) Includes (i) 974,271 shares underlying options and warrants held by the
Company's directors and executive officers and (ii) 132,436 shares
beneficially owned by family members of the officers and directors.
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, subject to
approval of the Reorganization, one effect of which being a classification of
the directors. The Board of Directors currently consists of six persons, Messrs.
Weindruch, Atwal, Kashul, McGovern, D. Mike Maxwell and William P. O'Reilly.
Messrs. Maxwell and O'Reilly each has declined to continue serving as a director
following the Meeting. The management slate consists of the four continuing
directors plus Messrs. Foster and Horn who have been nominated for the two other
directorships. 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:
Position With Year Became
Name Age the Company Director
- ---- --- ------------- -----------
Ronald L. Weindruch 51 President and Chief 1996
Executive Officer
of the Company
Peter B. Atwal 42 Chief Technical Offic er 1996
of ISR Global Telecom
4
<PAGE>
John D. Foster 55 President, Vedra --
International Associates,
Inc.
Kenneth W. Horn 58 Retired, Vice President --
of Nortel Networks
William N. Kashul, Sr. 65 Vice President of Sales
for Home Wireless Networks 1996
James L. McGovern 56 Retired, Former Executive 1998
Vice President of Norstan
The terms of the directors will expire at the next annual meeting and until
their successors are elected and qualified. However, if Proposal No. 2, the
Reincorporation of the Company in Delaware, is approved, 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 and approval of the Reincorporation Messrs.
Horn and Kashul will be designated as Class I directors, Messrs. Atwal and
McGovern will be designated as Class II directors and Messrs. Foster 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 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. Foster is President of Vedra International Associates, Inc., which he
founded in 1996. For more than 30 years prior thereto, he held various
management, marketing and operational positions at AT&T, with his last position
being President and Managing Director, AT&T Communications Services Group -
Europe, from 1992 to 1996. Mr. Foster holds a B.S. in Physics from Purdue
University and a Master's Degree in Physics from the University of Illinois. He
is a director of Aerial Communications, Inc. and Able Telecom Holding Corp.
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
since1981, 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
5
<PAGE>
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.
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.
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 $100,000 for
services rendered to the Company (the "Named Executive Officers").
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<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------ ------------
OTHER ANNUAL
PRINCIPAL SALARY BONUS COMPENSATION OPTIONS
NAME POSITION YEAR ($) ($) ($) (#)
- ---- --------- ---- ------ ----- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Ronald L. Weindruch President 1998 122,292 3,000 81,700 67,500
and CEO 1997 108,000 -0- 126,000 11,006
1996 18,000 -0- 110,500 --
D. Mike Maxwell Executive 1998 139,242 3,000 -0- 62,500
Vice President 1997 130,500 -0- -0- 11,006
1996 -0- -0- -0- --
</TABLE>
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.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
NUMBER OF % OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE OR BASE EXPIRATION
NAME GRANTED(#) FISCAL YEAR PRICE ($/SH) DATE
- ---- ---------- ------------- ---------------- -----------
Ronald L. Weindruch 67,500 4.6% 2.81-3.70 11/1/02-5/18/02
D. Mike Maxwell 62,500 4.3% 2.55-3.36 11/1/02-5/18/02
The following table sets forth information regarding each exercise of stock
options rights during the last fiscal year by each Named Executive Officer and
the fiscal year-end value of unexercised options and stock appreciation rights
provided on an aggregate basis.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
-----------------------------------------------
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END($) FY-END($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE/ UNEXERCISABLE/
- ---- --------------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Ronald L. Weindruch -0- -0- -0- -0-
D. Mike Maxwell -0- -0- -0- -0-
</TABLE>
7
<PAGE>
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.
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.
Transactions
Late Untimely Known Failures to
Reporting 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
WWATT, 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:
Year Ended
-------------------------------------
August 31, 1998 August 31, 1997
--------------- ---------------
Total incurred for: $81,700 $111,400
Consulting and commission
Expense reimbursement $42,900 $46,500
Accrued expenses:
Consulting and commission expenses $4,250 $34,800
Expense reimbursements -0- $12,800
8
<PAGE>
During the fiscal year ended August 31, 1998, various related parties have
advanced the Company funds to meet cash flow needs. The individuals who advanced
the company funds were:
R. Weindruch, Chairman & CEO $140,000
O. Ray Strickland, employee 30,100
R. Hanik, former CFO, and spouse 95,000
--------
$265,100
========
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 $210,100 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
February 5, 1999, due entirely to Mr. Weindruch.
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.
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. The note was subsequently paid off,
releasing Synaptx as guarantor.
PROPOSAL NO. 2
REINCORPORATION TO THE STATE OF DELAWARE.
GENERAL
As of January 19, 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
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<PAGE>
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").
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. As of the effective date of the Reincorporation, Paladyne
will send a notice to holders of Common Stock 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
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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. Foster, Horn, Kashul, Atwal, McGovern 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.
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.
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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.
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
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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 corporation'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 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
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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 and
Nominees."
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 securiies 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 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
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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
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
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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 Reincorporation 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 1,035,448 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.
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.
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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 1,035,448 shares of Common Stock
were outstanding under the 1996 Option Plan exercisable at prices ranging from
$0.09 to $3.70 per share expiring from October 1999 to November 2003 held by 127
persons. The closing bid price of the Common Stock on the OTC Bulletin Board on
February 3, 1999 was $1.00 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 anyyear
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.
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,
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when the shares are sold 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. The participant may be subject to the alternative
minimum tax on the spread.
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.
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
SECRETARY, SYNAPTX WORLDWIDE, INC., 615 CRESCENT EXECUTIVE COURT, SUITE 128,
LAKE MARY, FLORIDA 32746.
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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 October 8, 1999.
A representative of BDO Seidman LLP, the Company's independent accountants
for the fiscal year ended August 31, 1998, is 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.
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
February 4, 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
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shares, and in lieu of 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
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any other party, if the court finds 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 19, 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 11, 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.
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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
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<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 1,730,387 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,
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<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: /s/ Ronald L. Weindruch
---------------------------
Name: Ronald L. Weindruch
Title: President
SYNAPTX WORLDWIDE, INC.
(a Utah corporation)
By: /s/ Ronald L. Weindruch
---------------------------
Name: Ronald L. Weindruch
Title: President
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<PAGE>
PROXY SYNAPTX WORLDWIDE, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS - MARCH 3, 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 March 3, 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 [ ] WITHHOLD AUTHORITY to vote
(except as indicated below) for all nominees listed
below
Ronald L. Weindruch, Peter B. Atwal, John D. Foster, Kenneth W. Horn,
William N. Kashul, Sr., and James L. McGovern.
(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 19,
1999 by and between the Company and Paladyne Corp., pursuant to which,
among other things the Company will be merged with and into Paladyne
and reincorporated in the State of Delaware.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of amendment to 1996 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. 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 February 4, 1999, together with the exhibits and schedules
attached thereto.
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
TWO OTHER PROPOSALS.
<PAGE>
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
------------------------------------------------
