UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (date of earliest event reported): May 31, 1999
PALADYNE CORP.
(Exact name of Registrant as Specified in its Charter)
DELAWARE 0-22969 87-0375342
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(State or Other (Commission (IRS Employer
Jurisdiction) File Number) Identification Number
615 Crescent Executive Court, Suite 128, Lake Mary, Florida 32746
(Address of principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code:(407) 333-2488
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FORM 8-K
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Effective as of May 31, 1999 Paladyne Corp. (the "Company") closed a
"Business Assets Sales Contract" ("Agreement") with WG Technologies, Inc. an
Illinois Corporation, ("WGT") for the disposition by the Company of
substantially all the assets of WG Controls, Inc. ("WG Controls"), the Company's
wholly-owned subsidiary. WGT is headed by Randall R. Thompson who had been the
President of WG Controls for approximately the past year prior to the sale. WGT
was formed for the purpose of acquiring the assets of WG Controls and has no
affiliation with the Company.
WG Controls is a sales representative firm that provides field sales
and business development support for specified product lines and territories for
clients in the cable TV and telecommunications (both voice and data networking)
industry. The Company has made a strategic decision that sales representative
firms no longer are part of its central focus.
The total sales price of the transaction is $479,539.98, consisting of
$275,000 payable as follows: $100,000 upon signing the agreement, which was paid
at the closing, $150,000 prior to June 15, 1999, and $25,000 together with
accrued interest on or before June 1, 2001, and WGT assumed the debt payable to
the original owners of WG Controls in the amount of $204,539.98. All debt
holders agreed to this assumption of debt by WGT.
Additionally, WGT agreed to hire all existing employees of WG Controls
as employees of WG Technologies, Inc. The Company and key employees mutually
released each other from any existing employment and non-competition agreements
with no harm to either party.
The Company expects to recognize a loss on the sale of this
transaction of approximately $395,000, calculated as follows: goodwill
amortization of approximately $625,000, the book value of the assets acquired of
$250,000 offset by the consideration paid of approximately $480,000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Proforma financial statements required by this item
will be filed with an amendment to this Form 8-K within
the specified time period.
(c) Exhibits included herewith:
Exhibit 10.1 Business Assets Sales Contract by and between Paladyne
Corp. and WG Technologies, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PALADYNE CORP.
Date: June 15,1999 /s/ Ronald L. Weindruch
RONALD L. WEINDRUCH, President and
Chief Executive Officer
Business Assets Sales Contract
BY THIS AGREEMENT, WG Technologies, Inc., an Illinois Corporation, hereinafter
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referred to as the 'Purchaser', hereby agrees to purchase from Paladyne Corp.
(DBA "WG Controls, Inc." and "WG Telecom, Inc."), hereinafter referred to as the
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'Seller', who hereby agrees to sell to the Purchaser, certain of the assets of
the business known as WG Controls, Inc. and WG Telecom, Inc., located at 168 E.
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Highland Ave., Suite 300, Elgin, IL 60120, including (if any), goodwill,
equipment, tools, furniture, fixtures, trade/business names, trademarks,
copyrights, leases, service contracts, outstanding Manufacturer Rep Agreements,
accounts receivable, telephone numbers. (See Exhibit A).
1) SPECIFIC INCLUSIONS - Specifically included as assets of the business for
purposes of this agreement are the following: all right and title to the
trade names "WG Controls, Inc." and WG Telecom, Inc.", "WG Controls" and WG
Telecom"; computers and software and customer data contained therein.
2) SPECIFIC EXCLUSIONS - Specifically excluded as assets of the business for
purposes of this agreement are the following: the capital stock of the
corporate entities "WG Controls, Inc." and "WG Telecom, Inc.", cash on hand
at closing, and office furniture of Randall Thompson listed on Exhibit B.
3) CONSIDERATION -
A) The Purchaser shall pay $275,000.00 as follows:
i) $100,000 at closing
ii) $150,000 concurrently with the full and final payment, by Seller,
of (i) all employee expenses through May 28, 1999, (ii) the debt
payment due on May 31, 1999 as discussed below, and (iii) all
employee sales commissions earned through March 31, 1999, and
(iv) true-up of Randall Thompson's bonus through May 31, 1999.
Seller commits to meeting these final obligations no later than
June 15, 1999. If, upon full payment by Seller of its obligations
Purchaser is unable to make its payment of $150,000, the
Purchaser agrees to a penalty of $500 per week for each portion
of a week it does not make payment. If Purchaser is unable to
make payment by July 1, 1999, Seller will refund Purchaser's
$100,000 down payment, net of a $10,000 penalty, the amount of
which the Seller agrees to, and the transaction will be deemed
null and void.
iii) $25,000 in accordance with a promissory note payable to seller in
full on June 1, 2001 with interest at the rate of 8% per annum.
(Exhibit C)
B) Purchaser further agrees to assume any amounts due to the Estate
of James M. Gleason, Shirley D. Gleason, James D. Gammon, and
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Michael S. Concialdi. Such amounts are due to these individuals
as a result of the original purchase of WG Controls, Inc. and WG
Telecom, Inc. by Paladyne Corp (known then as Synaptx Worldwide,
Inc.) on January 1, 1998. The specific amounts due are as
follows:
(i) Estate of James M. Gleason and
Shirley D. Gleason $175,539.98
(ii) James D. Gammon $ 14,500.00
(iii) Michael S. Concialdi $ 14,500.00
The amount due to the Estate of James M. Gleason and Shirley
D. Gleason assumes seller makes its contractually obligated
payment on May 31, 1999, which Seller agrees to do.
Such assumption by Purchaser will be evidenced by separate
agreements with each party and countersigned by the
purchaser (Exhibits D, E, F).
4) CASH FLOW - Purchaser shall have the right to collect and retain all sums
paid to WG Technologies, WG Controls and WG Telecom for amounts
attributable to June receipts and beyond. Specifically, Seller is entitled
to the next commission payment from each of the Principals detailed on
Exhibit G.
5) CLOSING - Closing shall take place on, or about May 28, 1999 or as further
agreed to, at the offices of the Seller, or at a place further agreed to.
Seller agrees to deliver possession of all of the business assets provided
for herein at closing.
6) RESTRICTIVE COVENANT - Seller agrees not to compete with the business which
is the subject of this contract or to use a similar name for a similar
business within the State of Illinois for a period of 4 years, either as an
owner, operator, director, officer, manager, salesman or otherwise, without
specific permission of the Purchaser.
7) LEASE - The parties agree to enter into a sub-lease agreement subsequent to
closing, but no later than June 11, 1999 for office space currently
occupied by the subject business. (Exhibit H).
8) PRORATIONS - Purchaser and Seller agree to prorate any mutually agreeable
bills for operating expenses received subsequent to the closing date.
9) DAMAGE TO ASSETS - If prior to closing, any of the fixtures, equipment or
other property to be conveyed under this contract shall be destroyed or
materially damaged by fire or other casualty, or taken by eminent domain,
this contract, at the option of the Purchaser, shall become null and void.
Any risk of loss to any property to be conveyed under this contract shall
be borne by the Seller until closing.
10) NOTICES - All notices herein required shall be in writing. Notice to the
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attorney representing either party shall be acceptable as notice upon the
parties themselves. Notice may be delivered by US Mail or by electronic
facsimile transmission. Facsimile transmissions shall be acceptable as the
original for purposes of notice herein.
11) CONTINUATION OF BUSINESS ACTIVITIES - Until closing, the Seller shall
continue to operate the business in the manner in which it is being
operated at the date of the offer to purchase, shall maintain the goodwill
of the business, and shall maintain all other business assets in the same
condition as they existed at the time of the offer to purchase, ordinary
wear and tear excepted.
12) ADDITIONAL REQUIRED DOCUMENTS - The Seller shall provide to the Purchaser:
A) A Bill of Sale vesting title in the Purchaser in and to all of the
assets being sold hereunder, free and clear of all encumbrances and
liabilities, and containing the usual warranties of title (Exhibit I)
when purchaser fulfills his obligations under Section 3, A, (ii).
13) SELLER'S REPRESENTATIONS - Seller represents, warrants and agrees:
A) that the Seller has paid or will pay all employees of WG Controls,
Inc./WG Telecom, Inc. all commissions due to them through and
including March 31, 1999. Seller may make any payments due to
employees from the proceeds at closing.
B) that Seller has good title and authority to sell the assets of the
business and enter into the execution of this contract.
C) that the Seller has not been notified by any governmental agency of
any defects in the business premises that would interfere with the
lawful operation of the business by the Purchaser, and that the Seller
will advise the Purchaser in writing of any such defects that come to
the Seller's attention prior to the completion of the sale, and that
all of the business assets are now and will be at the time of closing
in a condition satisfactory for the use intended in the operation of
the business.
D) that the business assets to be transferred are free of any liens or
encumbrances, and that the Seller shall obtain any governmental
approvals and give any notices required by law or otherwise necessary
to avoid liens upon the business assets. If necessary, Seller may pay
any creditors from the proceeds of the sale of the business assets to
the Purchaser.
E) that the Seller has not entered into any contracts, leases or other
agreements with respect to the business that have not been disclosed
in writing to the Purchaser.
F) that there are no suits, claims or other proceedings in law or equity
pending, or to the Seller's knowledge threatened, against the Seller
or the assets to be transferred, and there are no judgements
outstanding against the Seller or the assets to be transferred.
G) that the Seller does not have a power of attorney outstanding with
respect to the business.
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H) that the Seller shall indemnify and hold harmless the Purchaser and
the Purchaser's successors and assigns from all demands, claims,
actions assessments, losses damages and attorney's fees and costs
resulting from the operation of the business prior to closing. Randall
Thompson, as former President of WG, Controls, Inc., asserts that he
is unaware of any potential claims and/or pending or threatened
actions.
14) HEADINGS - The headings herein contained are for reference purposes only
and shall not be considered as part of or in construing this agreement.
15) MISCELLANEOUS - Seller agrees to release all employees of the business from
non-compete contracts and employment agreements with no harm to either
party. (Exhibits J and K). Purchaser expressly agrees to hire all current
employees of WG Controls and WG Telecom as listed on Exhibit L. Listed
employees will cease to be employees of Paladyne Corporation or any of its
subsidiaries on June 1, 1999.
Executed this 27th day of May, 1999.
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Purchaser Seller
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WG Technologies, Inc. Paladyne Corp.
by:/s/ Randall R. Thompson by:/s/ Ronald L. Weindruch
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Randall R. Thompson, its President Ronald L. Weindruch, President & CEO
