SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")
Date of Report: (Date of earliest reported event:) August 3, 1998
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SYNAPTIX SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Colorado 33-15097-D 84-1045715
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
18333 Egret Bay Boulevard, Suite 270, Houston Texas 77058
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (281) 335-4964
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SYNAPTIX SYSTEMS CORPORATION
CURRENT REPORT ON FORM 8-K
TABLE OF CONTENTS
Page
Number
PART II. OTHER INFORMATION
Item 2 Acquisition of Assets.....................................3
Item 4. Changes in Registrant's Certifying Accountants............3
Signatures................................................4
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Item 2. Acquisition of Assets
Synaptix Systems Corporation, doing business as Affiliated Resources
Corporation ("Affiliated") (SYTS:OTC Electronic Bulletin Board) entered into a
Plan and Agreement of Reorganization on July 8, 1998 with CobolTexas, Inc., a
Texas corporation, and E. Lyle Flinn, Robert Burnside, Gabriel C. Cox and Robert
G. Oliver (the "Shareholders"). Affiliated acquired from the shareholders all of
the issued and outstanding shares of the capital stock of CobolTexas, Inc, in
exchange solely for shares of voting stock of Affiliated. The consideration
consisted entirely of 641,026 shares of the Company's common stock. Under the
Plan, CobolTexas, Inc. became a subsidiary of Affiliated. In connection with
this Plan and Agreement of Reorganization, Affiliated entered into a Contractors
Agreement with E. Lyle Flinn, Robert Burnside, Gabriel C. Cox, an Robert G.
Oliver., a copy of which is attached hereto and incorporated herein as Exhibit
10.
Item 4. Changes in Registrant's Certifying Accountants
The Company appointed the firm of Weinstein and Spira, Inc., 2200 Five
Greenway Plaza, Houston, Texas 77046, as its Independent Accountants, effective
as of July 14, 1998. Smith & Co., Inc., the Company's Independent Accountants
for more than the past two years, who are located in Salt Lake City, Utah,
resigned effective as of August 3, 1998. There were no disagreements between the
Company or its accountants.
The reports of Smith & Company on the financial statements of the
Registrant for each of the two fiscal years in the period ended June 30, 1997
did not contain any adverse opinion or disclaimer of opinion and were not
qualified or modified as to audit scope or accounting principles. They did
contain a going concern paragraph.
During the Registrant's most two recent fiscal years and all subsequent
interim periods preceding the change in auditors, there was no disagreement with
Smith & Company on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which if not resolved to
the satisfaction of Smith & Company, would have caused them to make a reference
to the subject matter of the disagreements in connection with their report; nor
has Smith & Company ever presented a written report, or otherwise communicated
in writing to the Registrant or its Board of Directors the existence of any
"disagreement" or "reportable event" within the meaning of Item 304 of
Regulation S-K.
Item 7. (c) Exhibits
Exhibit No. Exhibit
2 Plan and Agreement of Reorganization between Synaptix
Systems Corporation, CobolTexas, Inc., E. Lyle Flinn,
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Robert Burnside, Gabriel C. Cox, and Robert G. Oliver,
dated July 8, 1998.
10 Contractor's Agreement between CobolTexas, Inc. and E.
Lyle Flinn, Robert Burnside, Gabriel C. Cox, and Robert
G. Oliver, Jr.
16 Letter from Smith & Company
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, thereunto duly authorized.
SYNAPTIX SYSTEMS CORPORATION
Dated: August 3, 1998 By: /s/ Peter C. Vanucci
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Peter C. Vanucci, Chairman and
Chief Executive Officer
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Exhibit 2
PLAN AND AGREEMENT OF REORGANIZATION
This Plan and Agreement of Reorganization ("Agreement") is entered into
in Harris County, Texas as of the 8th day of July, 1998 between SYNAPTIX SYSTEMS
CORPORATION, a Colorado corporation doing business as Affiliated Resources
Corporation, ("Purchaser"), COBOLTEXAS, INC., a Texas corporation, ("Acquired
Corporation") and E. Lyle Flinn ("Flinn"), Robert Burnside ("Burnside"), Gabriel
C. Cox ("Cox"), and Robert G. Oliver, Jr. ("Oliver") (Flinn, Burnside, Cox and
Oliver are collectively the ("Shareholders").
This Plan specifies a reorganization within the meaning of Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. Purchaser will
acquire from the Shareholders all of the issued and outstanding shares of
capital stock of the Acquired Corporation, in exchange solely for shares of
voting stock of Purchaser. Under this Plan, the Acquired Corporation will become
a subsidiary of Purchaser.
In order to consummate this Agreement, Purchaser, the Acquired
Corporation and the Shareholders, in consideration of the mutual covenants and
on the basis of the representations and warranties set forth, agree as follows:
ARTICLE 1
EXCHANGE OF CAPITAL STOCK
1.01. Subject to the terms and conditions of this Agreement, the Shareholders
will transfer and deliver to Purchaser on the Closing Date all of their
certificates for shares of Capital Stock of Acquired Corporation, duly endorsed
in blank with signatures guaranteed.
1.02. In exchange for the shares transferred by the Shareholders pursuant to
Paragraph 1.01, Purchaser will issue and cause to be delivered to the
Shareholders on the Closing Date the following shares of Common Stock of
Purchaser.
Shares of Purchaser Name of Shareholder Receiving Shares
240385 Flinn
240385 Burnside
128205 Cox
32051 Oliver
1.03. Subject to the conditions precedent set forth in this Agreement, and the
other obligations of the parties set forth in this Agreement, the Plan of
Reorganization shall be consummated at the offices of Short & Ketchand, L.L.P.,
11 Greenway Plaza, Suite 1520, Houston, Texas 77046, on July 14, 1998, at the
hour of 10 a.m. or at any other place and date as the parties fix by mutual
consent. Consummation shall include the delivery by the Shareholders of all of
their shares of Capital Stock of the Acquired Corporation, as provided in
Paragraph 1.01 of this Agreement, and the delivery by Purchaser of its shares of
Common Stock, as provided in Paragraph 1.02 of this Agreement. The date of the
consummation of this Agreement is referred to as the "Closing Date."
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1.04. On the Closing Date the Shareholders and the Acquired Corporation will
enter into an agreement which shall provide as follows:
a. For each of the first 12 thirty day periods following the Closing
Date, the Shareholders shall receive on a noncumulative basis twenty percent
(20%) of the collected gross revenue of the Acquired Corporation for the
applicable thirty day period, provided however, that the sums payable to the
Shareholders pursuant to this provision shall not exceed $30,000 for any of such
thirty day periods and all sums payable to the Shareholders pursuant to this
provision shall be allocated among the Shareholders in proposition to the shares
of stock provided for in Paragraph 1.02 of this Agreement.
b. The Shareholders are independent contractors and the Shareholders
will operate and maintain operation of the System at no cost to the Acquired
Corporation; provided, however, that if the T-1 service is required to be
upgraded, the cost of that upgrade will be paid proportionately by the
Shareholders and the Purchaser on a mutually agreed basis.
c. The term of such agreement shall be 360 days from the Closing Date
subject to extension by mutual agreement.
d. The Shareholders will not compete with the Acquired Corporation or
the Purchaser for a period of 18 months from the Closing Date with regard to
Year 2000 conversion applications utilizing or based on the System.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF
ACQUIRED CORPORATION AND SHAREHOLDERS
2.01. Acquired Corporation is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Texas, with corporate power
to own property and carry on its business as it is now being conducted. Copies
of the articles of incorporation of Acquired Corporation, that have been
certified by the Secretary of State of Texas and delivered to Purchaser, are
complete and accurate as of the date of this Agreement.
2.02. Acquired Corporation has an authorized capitalization of 1000 shares of
capital stock, with no par value, and as of the date of this Agreement 1000
shares are issued and outstanding, fully paid, and nonassessable. There are no
outstanding subscriptions, options, contracts, commitments, or demands relating
to the authorized but unissued stock of Acquired Corporation or other agreements
of any character under which Acquired Corporation would be obligated to issue or
purchase shares of its capital stock. There are no voting trusts, proxies, or
other agreements or understandings to which either Acquired Corporation or any
of the Shareholders is a party or which is binding on either the Acquired
Corporation or any of the Shareholders with respect to the voting of any shares
of capital stock of Acquired Corporation other than this Agreement and Plan of
Reorganization and any other agreement pursuant hereto.
2.03. Since its incorporation, Acquired Corporation has not, and prior to the
Closing Date will not have:
(a) Issued or sold any stock, bond, or other corporate securities.
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(b) Incurred any absolute or contingent obligation, including long-term
debt.
(c) Acquired or created any subsidiaries
(d) Mortgaged, pledged, or subjected to lien any of its assets.
(e) Sold or transferred any of its tangible assets, or canceled any
debts or claims, or waived any rights of substantial value.
(f) Sold, assigned, or transferred any patents, formulas, trademarks,
trade names, copyrights, licenses, or other intangible assets.
(g) Incurred any materially adverse losses or damage, or become
involved in any strikes or other labor disputes.
(h) Entered into any transaction other than in the ordinary course of
business, except for the transaction that is the subject matter of this
Agreement.
(i) Entered into any contracts.
(j) Made any capital expenditures.
2.04. (a) The Acquired Corporation has good and marketable title to all
its assets including without limitation the following
("System"):
(1) The name Cobol Texas Inc.
(2) The Internet domain called "coboltexas.com" which is registered
with InterNIC Registration Services Baltimore, MD, with registration paid from
10 Feb 1998 to 10 Feb 2000.
(3) The http://www.coboltexas.com web site that physically resides on
the Cobol Texas computer located at 12000 Richmond Ave. S100, Houston, Texas
77082. The website currently has the following interlinked pages:
a. Cobol Texas Online COBOL Converter...
b. Sample Estimate/Convert/Validate...
c. Registration page...
d. Free Trial...online test any five programs...
(4) The Cobol Texas computer systems which consists of:
a. DELL Intel Pentium II computer with 4gb SCSI commercial
grade disk, 128 MB SDRAM ECC Error Correcting main memory, SCSI CD ROM
and other components.
b. RedHat LINUX operating system.
c. SendMail email handling system.
d. Cobol Texas COBOL parsing module.
e. Cobol Texas PL/1 parsing module (currently under development)
f. Other utilities and report modules.
g. The "methodology" of a 100% automated client interface.
All such assets are not subject to any mortgage, pledge, lien, charge,
security interest, encumbrance, or restriction.
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(b) The System is capable of all operations described in paragraph 2.04
(a)(3) of this Agreement with respect to both hardware and software. The System
will work on all standard Cobol programs.
2.05. (a) Neither Acquired Corporation or any Shareholder of Acquired
Corporation is a party to, nor has it been threatened with, any litigation or
governmental proceeding that, if decided adversely to it, would have a material
adverse effect on the transaction contemplated by this Agreement, or on the
financial condition, net worth, prospects, or business of Acquired Corporation
or any Shareholder of Acquired Corporation. There are no facts that might result
in any action, suit, or other proceeding that would result in any material
adverse change in the business or financial condition of Acquired Corporation or
any Shareholder of Acquired Corporation.
(b) Acquired Corporation is not infringing on or otherwise acting
adversely to any copyrights, trademark rights, patent rights, or licenses owned
by any other person, and there is no pending claim or threatened action with
respect to such rights. Acquired Corporation is not obligated to make any
payments in the form of royalties, fees, or otherwise to any owner or licensor
of any patent, trademark, trade name, or copyright.
(c) The business operation of Acquired Corporation has been and is
being conducted in accordance with all applicable laws, rules, and regulations
of all authorities. Acquired Corporation is not in violation of, or in default
under, any term or provision of its Articles of Incorporation, its Bylaws, or of
any lien, mortgage, lease, agreement, instrument, order, judgment, or decree, or
any other type of restriction that would prevent consummation of the exchange of
securities contemplated by this Agreement.
(d) No declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by the
Acquired Corporation or the consummation by the Acquired Corporation of any of
the transactions contemplated hereby.
2.06. All negotiations on the part of the Shareholders related to this Agreement
have been accomplished solely by the Shareholders without the assistance of any
person employed as a broker or finder. The Shareholders have done nothing to
give rise to any valid claims against Purchaser or Acquired Corporation for a
brokerage commission, finder's fee, or any similar charge.
2.07. As of the Closing Date the Acquired Corporation and Shareholders will have
disclosed all events, conditions, and facts materially affecting the business
and prospects of Acquired Corporation. Neither the Shareholders nor the Acquired
Corporation has withheld knowledge of any events, conditions, and facts that
they have reasonable ground to know may materially affect the business and
prospects of Acquired Corporation. None of the representations and warranties
made by the Shareholders or Acquired Corporation in this Agreement or set forth
in any other instrument furnished to Purchaser contain any untrue statement of a
material fact, or fails to state a material fact.
ARTICLE 3
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REPRESENTATIONS AND WARRANTIES OF
PURCHASER
3.01. Purchaser is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Colorado, with corporate power to own
property and carry on its business as it is now being conducted. Copies of the
articles of incorporation of Purchaser, that have been certified by the
Secretary of State of Colorado and delivered to the Acquired Corporation, are
complete and accurate as of the date of this Agreement. Purchaser is qualified
to transact business as a foreign corporation and is in good standing in all
jurisdictions in which its principal properties are located.
3.02. Purchaser has an authorized capitalization of twenty-five million
(25,000,000) shares of common stock of the par value of $0.003 per share, of
which fifteen million six hundred sixty-five thousand four hundred ninety-two
(15,665,492) shares are issued, outstanding, and fully paid as of the date of
this Agreement. Except for two million (2,000,000) shares of authorized but
unissued stock that are reserved for stock options there are no outstanding
options, contracts, calls, commitments, or demands relating to the authorized
but unissued stock of Purchaser.
3.03. The shares of stock of Purchaser that are to be issued and delivered to
Shareholders of Acquired Corporation pursuant to the terms of this agreement
will be validly authorized and issued, and will be fully paid and nonassessable.
No shareholder of Purchaser will have any preemptive right of subscription or
purchase with respect to the shares to be transferred.
3.04. The execution and performance of this Agreement have been duly authorized
by all requisite corporate action. This Agreement constitutes a valid and
binding obligation of Purchaser in accordance with its terms. No provision of
the Purchaser 's Articles of Incorporation, Bylaws, minutes, share certificates,
or contracts prevents Purchaser from delivering good title to its shares of such
capital stock in the manner contemplated by this Agreement.
3.05. Purchaser has not retained nor otherwise utilized the services of any
broker or finder in connection with the transaction contemplated by this
agreement. Purchaser has done nothing to give rise to any valid claims against
the Acquired Corporation for a brokerage commission, finder's fee, or any
similar charge.
3.06. Purchaser has filed all federal income tax returns and, in each state
where qualified or incorporated, all state income tax or franchise tax returns
that are required to be filed, and has paid all taxes as shown on the returns as
they have become due.
3.07. As of the Closing Date Purchaser will have disclosed to the Acquired
Corporation all events, conditions, and facts materially affecting the business
and prospects of Purchaser. Purchaser has not withheld knowledge of any events,
conditions, or facts it has reasonable ground to know may materially affect the
business and prospects of Purchaser. None of the representations and warranties
made by Purchaser in this Agreement or set forth in any other instrument
furnished to the Acquired Corporation contain any untrue statement of a material
fact, or fails to state a material fact.
ARTICLE 4
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CONDUCT OF BUSINESS OF ACQUIRED
CORPORATION PENDING CLOSING
DATE
4.01. Acquired Corporation will carry on its business in substantially the same
manner as previous to the date of execution of this Agreement, and will:
(a) Continue in full force the amount and scope of insurance
coverage carried prior to that date;
(b) Maintain its business organization and keep it intact, to retain
its present employees, and to maintain its goodwill with suppliers, customers,
and others having business relationships with it;
(c) Exercise due diligence in safeguarding and maintaining confidential
reports and data used in its business;
(d) Maintain its assets and properties in good condition and repair,
and not sell or otherwise dispose of any of its assets or properties, except
sales of inventory in the ordinary course of business.
4.02. (a) Acquired Corporation will afford the officers and representatives of
Purchaser , from the date of this Agreement until consummation of the Plan of
Reorganization, full access during normal business hours to all properties,
books, accounts, contracts, commitments, and any other records of any kind of
Acquired Corporation. Sufficient access shall be allowed to provide Purchaser
with full opportunity to make any investigation it desires to make of Acquired
Corporation, and to keep itself fully informed of the affairs of Acquired
Corporation.
(b) In addition, Acquired Corporation will permit Purchaser to make
extracts or copies of all such books, accounts, contracts, commitments, and
records, and to furnish to Purchaser, within ten (10) days after demand, any
further financial and operating data of the corporation as Purchaser reasonably
requests.
(c) Purchaser will use any information obtained under this Paragraph
only for its own purposes in connection with the consummation of the transaction
contemplated by this Agreement, and will not divulge the information to any
other person.
4.03. Except with the prior written consent of Purchaser, Acquired Corporation
will not:
(a) Incur any liabilities other than current liabilities incurred
in the ordinary course of business;
(b) Incur any mortgage, lien, pledge, hypothecation, charge,
encumbrance, or restriction of any kind;
(c) Become a party to any contract, or renew, extend, or modify any
existing contract, except in the ordinary course of business;
(d) Make any capital expenditures, except for ordinary repairs,
maintenance, and replacement;
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(e) Declare or pay any dividend on or make any other distribution
to shareholders;
(f) Purchase, retire, or redeem any shares of its capital stock;
(g) Issue or sell additional shares of its capital stock, whether or
not such shares have been previously authorized or issued;
(h) Issue or sell any warrants, rights, or options to acquire any
shares of its capital stock;
(i) Amend its Articles of Incorporation or Bylaws;
(j) Pay or agree to pay any bonus, increase in compensation, pension,
or severance pay to any director, stockholder, officer, consultant, agent, or
employee;
(k) Discharge or satisfy any lien or encumbrance, nor pay any
obligation or liability, except current liabilities incurred in the ordinary
course of business since that date;
(l) Merge or consolidate with any other entity;
(m) Enter into any transactions or take any acts that would constitute
a breach of the representations, and warranties contained in this Agreement; or
(n) Institute, settle, or agree to settle any action or proceeding
before any court or governmental body.
4.04. Acquired Corporation will consult with Purchaser at all times until the
Closing Date with respect to the operation and conduct of Acquired Corporation's
business.
ARTICLE 5
CONDUCT OF BUSINESS OF PURCHASER PENDING CLOSING DATE
5.01. Purchaser will carry on its business in substantially the same manner as
before the date of execution of this Agreement.
5.02. Purchaser will use its best efforts to satisfy all conditions precedent
contained in this Agreement.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED CORPORATION
6.01. The obligations of the Acquired Corporation to consummate the
Plan of Reorganization in this Agreement shall be subject to the conditions
precedent specified in this Article 6.
6.02. The representations and warranties of Purchaser contained in this
Agreement shall be true as of the Closing Date with the same effect as though
made on the Closing Date. Purchaser shall have performed all obligations and
comply with all covenants required by this Agreement to be performed or complied
with by it prior to the Closing Date. Purchaser shall deliver to the Acquired
Corporation a certificate dated as of the Closing Date and signed by the
President or a Vice President and the Secretary or an Assistant Secretary of
Purchaser, certifying the truth of the representations and warranties.
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6.03. No action or proceeding by any governmental body or agency shall have been
threatened, asserted, or instituted to prohibit the consummation of the
transactions contemplated by this Agreement.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
7.01. The obligations of Purchaser to consummate the Plan of Reorganization in
this Agreement shall be subject to the conditions precedent specified in this
Article 7.
7.02. The representations and warranties of the Shareholders and the Acquired
Corporation contained in this Agreement shall be true as of the Closing Date,
with the same effect as though made on the Closing Date. The Shareholders and
the Acquired Corporation shall perform all obligations and comply with all
covenants required by this Agreement to be performed or complied with by them
prior to the closing date. The Shareholders shall each deliver a signed and
notarized certificate dated the Closing Date, certifying the truth of the
representations and warranties. The Acquired Corporation shall deliver to
Purchaser a certificate dated the Closing Date and signed by an officer of the
Acquired Corporation, certifying the truth of the representations and
warranties.
7.03. To the extent requested by Purchaser, the form and substance of all papers
and proceedings under this Agreement shall be acceptable to counsel for
Purchaser .
7.04. There shall be delivered to Purchaser the written resignations of the
officers and directors of Acquired Corporation.
7.05. Each shareholder of Acquired Corporation shall deliver to Purchaser an
executed written statement or investment letter as specified in Paragraph 9.01
of this Agreement and in form and substance acceptable to counsel for Purchaser.
7.06. No action or proceeding by any governmental body or agency shall
be threatened, asserted, or instituted that prohibits the consummation of the
transactions contemplated by this Agreement.
7.07. Acquired Corporation shall not terminate any contracts prior to the
Closing Date that in the aggregate would materially and adversely affect its
business.
7.08. At the Closing Date the machinery, equipment, inventory, or other tangible
property of Acquired Corporation shall not be damaged by fire, flood, accident,
labor strife, act of war, or any other cause beyond the reasonable power and
control of the Acquired Corporation to an extent that substantially affects the
value of the property and assets.
ARTICLE 8
SURVIVAL OF WARRANTIES
AND LIABILITY
8.01. All statements of fact contained in this Agreement shall be deemed
representations and warranties made by any such party, respectively, to each
other party under this Agreement. The covenants, representations, and warranties
of the parties and the Shareholders shall survive the
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Closing Date, and all inspections, examinations, or audits on behalf of the
parties and the Shareholders.
8.02. The Acquired Corporation shall pay its own expenses incurred by them
arising out of this Agreement and the transactions contemplated in this
Agreement, including but not limited to all fees and expenses of their counsel
and accountants. Whether or not this Agreement is terminated, each of the
parties shall bear all expenses incurred by it in connection with this Agreement
and in the consummation of the transactions contemplated by and in preparation
for the Agreement.
ARTICLE 9
COMPLIANCE WITH SECURITIES LAWS
9.01. (a) Each Shareholder of the Acquired Corporation acknowledges that the
shares of Purchaser's Stock to be delivered to the Shareholder pursuant to this
Agreement have not been registered under the Federal Securities Act of 1933, as
amended, referred to in this Agreement as the "1933 Act," and that therefore the
stock is not fully transferable except as permitted under various exemptions
contained in the 1933 Act and the rules of the Securities and Exchange
Commission interpreting the Act. The provisions contained in this Paragraph 9.01
are intended to ensure compliance with the 1933 Act.
(b) Each Shareholder of the Acquired Corporation represents and
warrants to Purchaser that the Shareholder is acquiring the shares of
Purchaser's Common Stock under this Agreement for the Shareholder's own account
for investment, and not for the purpose of resale or any other distribution of
the shares. Each Shareholder also represents and warrants that the Shareholder
has no present intention of disposing of all or any part of such shares at any
particular time, for any particular price, or on the happening of any particular
circumstances. Each Shareholder acknowledges that Purchaser is relying on the
truth and accuracy of the warranties and representations set forth in this
Paragraph in issuing the shares without first registering the shares under the
1933 Act.
(c) Each Shareholder of the Acquired Corporation covenants and
represents that none of the shares of Acquired Corporation's Capital Stock that
will be issued to the Shareholder pursuant to this Agreement, will be offered,
sold, assigned, pledged, transferred, or otherwise disposed of except after full
compliance with all of the applicable provisions of the 1933 Act and the rules
and regulations of the Securities and Exchange Commission under the 1933 Act.
Therefore, each Shareholder agrees not to sell or otherwise dispose of any of
the shares of Purchaser's Common Stock received pursuant to this Agreement
unless the Shareholder:
(i) Has delivered to Purchaser a written legal opinion in form
and substance satisfactory to counsel for Purchaser to the effect that the
disposition is permissible under the terms of the 1933 Act and regulations
interpreting the Act;
(ii) Has complied with the registration and prospectus
requirements of the 1933 Act relating to such a disposition; or
(iii) Has presented Purchaser satisfactory evidence that such
a disposition is exempt from registration under Section 4(1) of the Act.
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Purchaser shall place a stop transfer order against transfer of shares until one
of the conditions set forth in this subparagraph has been met.
(d) Each Shareholder of the Acquired Corporation agrees that the
certificates evidencing the shares the Shareholder will receive under this
Agreement will contain the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND HAVE BEEN
TAKEN FOR INVESTMENT. THE SECURITIES MAY NOT BE SOLD OR
OFFERED FOR SALE UNLESS A REGISTRATION STATEMENT UNDER THE
FEDERAL SECURITIES ACT OF 1933, AS AMENDED, IS IN EFFECT FOR
THE SECURITIES, OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT IS IN FACT APPLICABLE TO SUCH OFFER
OR SALE.
(e) If at any time in the future any of the Shareholders of the
Acquired Corporation sell or otherwise dispose of any of such shares of Common
Stock received from Purchaser without registration under the 1933 Act or any
similar federal statute that may then be in effect, such Shareholder agrees to
indemnify and hold harmless Purchaser against any claims, liabilities,
penalties, costs, and expenses that may be asserted against or suffered by
Purchaser as a result of such disposition.
(f) If within three (3) years after the Closing Date, Purchaser
decides to file a registration statement under the 1933 Act, covering a sale by
Purchaser or a Shareholder of Purchaser of shares of Purchaser's Common Stock
for cash, Purchaser will mail to each Shareholder written notice of its intent
to file such a registration statement. If a Shareholder delivers a written
request to Purchaser within twenty (20) days after the mailing of such notice
setting forth the number of shares of Common Stock the Shareholder intends to
dispose of, Purchaser agrees to use its best efforts to include such shares of
each Shareholder in the registration statement. However, Purchaser shall not be
so obligated to register the shares if in the opinion of counsel for Purchaser
such shares may be disposed of without compliance with the registration and
prospectus requirements of the 1933 Act. If, in spite of the best efforts of the
Purchaser, the inclusion of all of the shares that each Shareholder intends to
sell is not acceptable to the managing underwriter or underwriters of the
offering, Purchaser may limit the number of shares of each Shareholder to be
sold to ten percent (10%) of the total number of shares being offered in the
registration statement. If the offering is not completed within ninety (90) days
after the effective date of the registration statement, Purchaser shall be
entitled to deregister any unsold portion of such shares. The manner and conduct
of any such registration, including the contents of such registration statement
and of any related underwriting or other agreements shall be entirely in the
control and discretion of Purchaser. Each Shareholder agrees to cooperate with
Purchaser in the preparation and filing of any registration statement prepared
and filed under this Subparagraph. Purchaser shall bear all out-of-pocket
expenses except for registration fees incurred in performing the obligations
under this Subparagraph except that each Shareholder shall make the
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customary agreements, representations, warranties, and indemnifications to the
underwriters in any such offering with respect to any shares included at the
Shareholder's request.
9.02. Purchaser will file a registration statement in accordance with Paragraph
9.01(f) hereof with regard to the shares transferred to Shareholders pursuant to
Paragraph 1.02 hereof if the collected gross revenues of the Acquired
Corporation for the first 365 days after the Closing Date are greater than
$300,000.00. If the collected gross revenues of the Acquired Corporation for the
first 365 days after the Closing Date are equal to or less than $300,000.00,
unless the parties agree to extend the 365 day time period the Shareholders will
transfer and deliver to Purchaser all of the shares of Common Stock of Purchaser
delivered to the Shareholders on the Closing Date and the Purchaser will
transfer and deliver to the Shareholders all of the shares of Capital Stock of
the Acquired Corporation delivered to the Purchaser on the Closing Date. All
certificates for shares will be duly endorsed in blank with signatures
guaranteed.
ARTICLE 10
TERMINATION
10.01. (a) Purchaser or Acquired Corporation may, on or at any time prior to the
Closing Date, terminate this Agreement by notice to the other party in the
event:
(i) The other party has defaulted by failing to perform
any of its covenants and agreements contained in this Agreement; and
(ii) Such default has not been fully cured within five (5)
days after receipt of the notice specifying particularly the nature of the
default.
10.02. If consummation of the transaction specified in this Agreement has not
occurred by 11:59 p.m. local time in Houston, Texas, on July 31, 1998, any party
that is not in default in the timely performance of any of its covenants and
conditions may terminate this Agreement subsequent to that time by giving
written notice of termination to the other party. The written notice of
termination shall be effective upon the delivery of the notice in person to an
officer of the party or, if served by mail, upon the receipt of the notice by
such party.
10.03. Purchaser may at its option terminate this Agreement prior to the Closing
Date if Acquired Corporation has suffered any damage, destruction, or loss,
whether or not covered by insurance, that materially and adversely affects the
property, business, or financial condition of Acquired Corporation.
ARTICLE 11
MISCELLANEOUS
11.01. This Agreement may be amended or modified at any time and in any manner
only by an instrument in writing executed by the Chairman of Purchaser and the
President of Acquired Corporation provided it has been properly approved
according to the corporate law governing the respective parties.
11.02. Either Purchaser or Acquired Corporation may, in writing:
(a) Extend the time for the performance of any of the obligations
of any other party
Page 11 of 14
<PAGE>
to the Agreement.
(b) Waive any inaccuracies and misrepresentations contained in this
Agreement or any document delivered pursuant to the Agreement made by any other
party to the Agreement.
(c) Waive compliance with any of the covenants or performance of any
obligations contained in this Agreement by any other party to the Agreement.
(d) Waive the fulfillment of any condition precedent to the
performance by any other party to the Agreement.
11.03. (a) Neither this entire Agreement nor any right created by the Agreement
shall be assignable by either the Acquired Corporation or Purchaser without the
prior written consent of the other,
(b) Except as limited by the provisions of subparagraph (a), this
Agreement shall be binding on and inure to the benefit of the respective
successors and assigns of the parties, as well as the parties.
(c) Nothing in this Agreement, expressed or implied, is intended to
confer upon any person, other than the parties and their successors, any rights
or remedies under this Agreement.
11.04. Any notice or other communication required or permitted by this Agreement
must be in writing and shall be deemed to be properly given when delivered in
person to an officer of the other party, when deposited in the United States
mails for transmittal by certified or registered mail, postage prepaid, or when
deposited with a public telegraph company for transmittal, charges prepaid,
provided that the communication is addressed:
(a) In the case of Purchaser , to: with a copy to:
Synaptix Systems Corporation Short & Ketchand, L.L.P.
18333 Egret Bay Blvd., Suite 270 11 Greenway Plaza, Suite 1520
Houston, Texas 77058 Houston, Texas 77046
Attn: Peter C. Vanucci, Chairman Attn: Keith Short
or to such other person or address designated by Purchaser to receive notice.
(b) In the case of the Shareholders and Acquired Corporation, to:
CobolTexas, Inc.
1200 Richmond Avenue, Suite 100
Houston, Texas 77082
or to such other person or address designated by Acquired Corporation to receive
notice.
11.05. Paragraph and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Page 12 of 14
<PAGE>
11.06. This instrument and the exhibits and schedules to this instrument contain
the entire Agreement between the parties with respect to the transaction
contemplated by the Agreement. It may be executed in any number of counterparts
but the aggregate of the counterparts together constitute only one and the same
instrument.
11.07. In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provisions of this Agreement, but this Agreement shall be
constructed as if it never contained any such invalid, illegal, or unenforceable
provisions.
11.08. The validity, interpretation, and performance of this agreement shall be
controlled by and construed under the laws of the State of Texas, the state in
which this Agreement is being executed.
11.09 If any action at law or in equity, including an action for declaratory
relief, is brought to enforce or interpret the provisions of this Agreement, the
prevailing party shall be entitled to recover reasonable attorney's fees from
the other party. The attorney's fees may be ordered by the court in the trial of
any action described in this Paragraph or may be enforced in a separate action
brought for determining attorney's fees.
11.10 The parties declare that it is impossible to measure in money the damages
that will accrue to a party or its successors as a result of the other parties'
failure to perform any of the obligations under this Agreement. Therefore, if a
party or its successor institutes any action or proceeding to enforce the
provisions of this Agreement, any party opposing such action or proceeding
agrees that specific performance may be sought and obtained for any breach of
this Agreement.
Executed as of the date above stated at Houston, Texas.
PURCHASER
SYNAPTIX SYSTEMS CORPORATION
By: ____________________________
Peter C. Vanucci
Chairman
ACQUIRED CORPORATION
COBOLTEXAS, INC.
By: ____________________________
E. Lyle Flinn
President
Page 13 of 14
<PAGE>
- ------------------------ ------------------------
E. Lyle Flinn Robert Burnside
4818 Avenue O 2750 Wallingford Dr., #1412
Galveston Texas 77551 Houston, Texas 77042
SSN# ###-##-#### SSN# ###-##-####
- ------------------------ ------------------------
Gabriel C. Cox Robert G. Oliver, Jr.
9809 Richmond Ave, #E-15 747 Red Rock Canyon
Houston, Texas 77042 Katy, Texas 77450
SSN# ###-##-#### SSN# ###-##-####
Page 14 of 14
<PAGE>
Exhibit 10
CONTRACTORS AGREEMENT
This CONTRACTORS AGREEMENT (the "Agreement") dated July 14, 1998 between
COBOLTEXAS INC., a Texas corporation (the "Company"), and E. LYLE FLINN
("Flinn"), ROBERT BURNSIDE ("Burnside"), GABRIEL C. COX ("Cox"), and ROBERT G.
OLIVER, JR. ("Oliver") (Flinn, Burnside, Cox and Oliver are collectively the
"Contractors") is made and entered into on the following terms and conditions:
I.
The Company owns the following ("System"):
(1) The name CobolTexas Inc.
(2) The internet domain called "coboltexas.com" which is
registered with InterNIC Registration Services Baltimore, MD,
with registration paid from 10 Feb 1998 to 10 Feb 2000.
(3) The http://www.coboltexas.com web site that physically
resides on the CobolTexas computer located at 12000 Richmond
Ave, S100, Houston, Texas 77082. The web site currently has
the following interlinked pages:
a. Cobol Texas Online COBOL Converter...
-------------------------------------
b. Sample Estimate/Convert/Validate...
-----------------------------------
c. Registration page...
--------------------
d. Free Trial...online test any five programs..
--------------------------------------------
(1) The Cobol Texas computer systems which consists of:
a. DELL Intel Pentium II computer with 4gb SCSI
commercial grade disk, 128 MB SDRAM ECC Error
Correcting main memory, SCSI CD ROM and other
components. b. RedHat LINUX operating system. c.
SendMail email handling system. d. CobolTexas COBOL
parsing module. e. CobolTexas PL/1 parsing module
(currently under development). f. Other utilities and
report modules. g. A system which allows COBOL
programs to be sent on the internet as email
attachments to [email protected] and the system
parses the programs and generates a report of Year
2000 date-sensitive issues with a time estimate which
it emails back to the sender.
- -1-
<PAGE>
II.
The Contractors warrant as follows to the Company concerning the
System:
(a) The System is not subject to any mortgage,
pledge, lien, charge, security interest, encumbrance,
or restriction. (b) The System is capable of all
operations described in Article I of this Agreement
with respect to both hardware and software. The
System will work on all standard Cobol programs. (c)
The System comes as-is-where-is.
III.
(a) For each of the first 12 thirty day periods
following the date hereof, the Contractors shall
receive on a noncumulative basis twenty percent (20%)
of the collected gross revenue of the Company for the
applicable thirty day period, provided however, that
the sums payable to the Contractors pursuant to this
provision shall not exceed $30,000.00 for any of such
thirty day periods and all sums payable to the
Contractors pursuant to this provision shall be
allocated among the Contractors in the following
proportions:
Flinn 37.5%
------ -----
Burnside 37.5%
-------- -----
Cox 20%
--- ---
Oliver 5%
------ ---
(b) The Contractors are independent contractors and
the Contractors and the Company agree that for the
term of this Agreement the Contractors will operate
and maintain operation of the System hardware and
software at no cost to the Company. The Contractors
will not be liable for any claims with regard to the
use or performance of the System unless resulting
from the fraud, misrepresentation or negligence of
the Contractors.
(c) The term of this Agreement shall be 360 days from
the date hereof subject to extension by mutual
agreement.
(d) The Contractors will not compete with the Company
or its parent, Synaptix Systems Corporation, a
Colorado corporation doing business as Affiliated
Resources Corporation ("Affiliated") for a period of
18 months after the date hereof with regard to Year
2000 conversion applications utilizing or based on
the System.
(e) If the Company sells the System to another
entity within 18 months after the
- -2-
<PAGE>
date hereof, the Contractors shall receive the
greater of $200,000.00 or 20% of the purchase price
which shall be allocated among the Contractors in the
proportions stated in Paragraph III (a) hereof.
IV.
Contractors shall devote the time necessary to properly and adequately
operate and maintain operation of the System. All matters pertaining to the
employment, supervision, compensation, promotion and discharge of any person
engaged by Contractors to assist in the operation and maintenance of the System
are the responsibility of Contractors who shall fully comply with all applicable
laws and regulations having to do with workmen's compensation, social security,
unemployment insurance, hours of labor, wages, and working conditions. This
Agreement is not one of agency by Contractor for the Company but one with
Contractors engaged with respect to the functions undertaken by Contractors
under this Agreement independently in the business of operating the System on
their own behalf as independent contractors.
Contractors acknowledge that the Company is not providing any benefits
to Contractors other than the compensation described above. Contractors shall be
responsible for providing for health insurance, disability insurance, life
insurance, and any other insurance desired by Contractors and for providing for
Contractors' retirement. In the event of sickness, injury, disability or death
of Contractors, the Company shall have no responsibility to Contractors.
V.
Contractors acknowledge that the list of the Company's customers, as
the Contractors may determine from time to time, and items 4d and e of the
System are trade secrets and are valuable, special, and unique assets of the
Company's business. The Contractors shall not, during and after the term of this
Agreement, disclose all or any part of the list of customers or items 4d and e
of the System to any person, firm, corporation, association, or other entity for
any reason or purpose. The Company may pursue all remedies available to the
Company for such breach or threatened breach, including the recovery of damages
from the Contractor.
VI.
To protect the goodwill and the proprietary aspects of the System,
Contractors agree as follows:
(a) If the Contractors breach the covenant not to
compete stated in Section III (d), the term of the
covenant not to compete is tolled until a Court
enters a final judgment ordering compliance with the
covenant (as reformed, if reformed)
- -3-
<PAGE>
or until the Contractors voluntarily comply following
the demand of the Company.
(b) The Company is deemed to have asked a Court to
reform any portion of the covenant not to compete
stated in Section III (d) found to be unenforceable
and to sever from this Agreement those provisions
that are unenforceable and not capable of reform.
(c) In the event of the Contractors' actual breach of
the covenant not to compete stated in Section III
(d), the Company shall be entitled to damages,
injunctive relief or both damages and injunctive
relief and shall be entitled to retain any sum
otherwise payable under Paragraph III (a) that has
not been paid.
VII.
(a) Each Paragraph of this Agreement constitutes a
separate agreement between the parties. In the event
that any provision of this Agreement is deemed to be
invalid or unenforceable in its face, or is implied,
then such provision shall be deemed severed herefrom
to the extent invalid and unenforceable.
(b) Any notice required or desired to be given under
this Agreement shall be deemed given if in writing
sent by certified mail to the Contractors' addresses
stated below or to the Company's principal office, as
the case may be.
(c) The Company's waiver of a breach of any provision
of this Agreement by the Contractors shall not
operate or be construed as a waiver of any subsequent
breach by the Contractors. No waiver shall be valid
unless in writing and signed by an authorized officer
of the Company.
(d) The Contractors acknowledge that Contractors'
services are unique and personal. Accordingly, the
Contractors may assign, subject to the provisions of
Article IV hereof, Contractors' rights or delegate
Contractors' duties or obligations under this
Agreement. The Company's rights and obligations under
this Agreement shall inure to the benefit of and
shall be binding upon the Company's successors and
assigns.
(e) This Agreement contains the entire understanding
of the parties. It may not be changed orally but only
by an agreement in writing signed by the party
against whom enforcement of any waiver, change,
modification, extension, or discharge is sought.
In witness whereof the parties have executed this Agreement effective
the date first above stated.
- -4-
<PAGE>
COBOLTEXAS INC.
By:____________________________
Name:_______________________
Title:______________________
-------------------------------
E. LYLE FLINN
4818 Avenue O
Galveston, Texas 77551
-------------------------------
ROBERT BURNSIDE
2750 Wallingford Drive, #1412
Houston, Texas 77042
-------------------------------
GABRIEL C. COX
9809 Richmond Avenue, #E-15
Houston, Texas 77042
------------------------------
ROBERT G. OLIVER, JR.
747 Red Rock Canyon
Katy, Texas 77450
- -5-
<PAGE>
Exhibit 16
SMITH & COMPANY
A PROFESSIONAL CORPORATION OF
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: 10 WEST 100 SOUTH, SUITE 700
AMERICAN INSTITUTE OF SALT LAKE CITY, UTAH 84101
CERTIFIED PUBLIC ACCOUNTANTS TELEPHONE: (801) 575-8297
UTAH ASSOCIATION OF FACSIMILE: (801) 575-8306
CERTIFIED PUBLIC ACCOUNTANTS E-MAIL: [email protected]
- --------------------------------------------------------------------------------
August 3, 1998
Mr. Peter C. Vanucci, Chairman
Synaptix Systems Corporation
18333 Egret Bay Boulevard, Suite 270
Houston, Texas 77058
Dear Mr. Vanucci:
This is to confirm that the client-auditor relationship between Synaptix Systems
Corporation (SEC File No. 33-15097-D) and Smith & Company has ceased, effective
August 3, 1998, when we were informed by your 8-K that we had been replaced.
This also confirms that we have read Item 4 of the Current Report on Form 8-K
dated August 3, 1998 for Synaptix Systems Corporation and agree with the
comments contained therein.
Very truly yours,
Smith & Company
By: William R. Denney
cc: SECPS LETTER FILE
U.S. SECURITIES & EXCHANGE COMMISSION
MAIL STOP 9-5
450 FIFTH STREET, NORTHWEST
WASHINGTON, DC 20549
