SCHEDULE 14A
(RULE 13a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SYMPHONY TELECOM INTERNATIONAL, INC.
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(Name of Registrant as Specified In Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14-a6(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 the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid: None
[_] 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: None
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed: ____, 2001
[Symphony Telecom International, Inc. Letterhead]
April 25, 2001
Dear Shareholder:
On behalf of the Board of Directors and management of Symphony Telecom
International, Inc. (the "Company"), I invite you to our Annual Meeting (the
"Meeting") of Shareholders to be held on May 14, 2001, 2:00 p.m. EDT at 2 the
Company's headquarters offices at 41 George Street South, Brampton, Ontario,
Canada. L6Y 2E1.
I encourage the Company's shareholders to take an active role in the
Company's affairs. You are invited to join us for refreshments, as well as a
tour of our new headquarters building. I hope that it will be possible for you
to attend. At the Annual Meeting you will be asked to consider and approve the
following proposals (the "Proposal"):
(1) The election of directors;
(2) To increase the number of directors from three to five members;
(3) Ratification of the selection of Gerstel, Rosen & Simonet, LLC as
the Company's independent auditors;
(4) A corporate reorganization, the principal features of which include
transferring the Company's legal domicile from Utah to Delaware, changing the
Company's name to Symphony Telecom Corp. and authorizing preferred stock;
(5) The adoption of the Company's 2001 Stock Option and Incentive Plan
for Key Employees, Consultants, and Professional Service Providers; and
(6) All other matters as may be brought before such Meeting.
The meeting also will include an update of our key business milestones
for the last year and discussion of our vision and plan for the coming years.
The Board of Directors has approved the Proposals and determined that
they are advisable, fair to and in the best interests of the shareholders of the
Company. The Board of Directors recommends that you vote FOR approval of the
Proposals.
Approval of Porposal 1 will require a plurality of the votes cast by
the shares entitled to vote in the election, with each share of Common Stock of
the Company entitled to one vote. Approval of Proposals 2-6 will require the
affirmative vote of the holders of a majority of the votes cast, with each share
of Common Stock of the Company entitled to one vote.
Details of the Proposals are set forth in the attached proxy statement.
Please give this material your careful attention.
I strongly encourage you to ensure that your shares are represented at
the Annual Meeting whether or not you plan to attend. You can be sure your
shares are voted at the meeting in accordance with your preferences by properly
completing, signing and returning your proxy card in the enclosed envelope as
soon as possible.
Yours sincerely,
/s/ Gilles A. Trahan
-----------------------------
Gilles A. Trahan
Chairman & CEO
SYMPHONY TELECOM INTERNATIONAL, INC.
Notice of Annual Meeting of Shareholder
to be held May 14, 2001
To the Shareholders of Symphony Telecom International, Inc.:
PLEASE TAKE NOTICE that the Annual Meeting of the Shareholders of
Symphony Telecom International, Inc. will be held on Monday, May 14, at the
offices of the Company, located at 41 George Street South, Brampton, Ontario,
Canada L6Y 2E1. The meeting will convene at 2:00 PM EDT for the following
purposes:
1. For the election of directors;
2. To increase the number of directors from three to five;
3. To ratify the selection of Gerstle, Rosen & Simonet LLC,
Certified Public Accountants, as independent auditor for fiscal
year ended June 30, 2001;
4. To ratify a Merger Agreement and Plan of Reorganization approved
by the Board of Directors on February 12, 2001, which provides,
inter alia, for the change of the Company's legal domicile from
Utah to Delaware; authorization of preferred stock; and the change
in the name of the Company to Symphony Telecom Corp.;
5. To adopt the Company's 2001 Stock Option and Incentive Plan for
Key Employees, Consultants, and Professional Service Providers;
and
6. The transaction of such other business as may properly come before
this meeting.
The transfer books of the Company will not be closed, but only
stockholders of record at the close of business on March 30, 2001 will be
entitled to vote at the meeting.
By Order of the Board of Directors
/s/Daniel G. Cullen
-----------------------------------
Daniel G. Cullen
Secretary
SYMPHONY TELECOM INTERNATIONAL, INC.
41 George Street South
Brampton, Ontario, Canada L6Y 2E1
PROXY STATEMENT
Mailing Date: April 25, 2001
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 2001
DATE; TIME AND PLACE; MATTERS TO BE CONSIDERED
The following information is furnished to shareholders of Symphony
Telecom International, Inc. ("Symphony" or the "Company") in connection with the
solicitation by the Board of Directors of the Company of proxies to be used at
the Annual Meeting (the "Meeting") of Shareholders to be held on Monday, May 14,
2001 and at any adjournment thereof. All properly executed proxies will be voted
in accordance with the instructions contained thereon, and if no choice is
specified, the proxies will be voted for the election of all the directors named
and in favor of each proposal set forth in the Notice of Meeting.
Any Symphony shareholder has the power to revoke his Proxy before its
exercise at the Meeting or any adjournment thereof by: (1) giving written notice
of revocation to the Secretary of the Company, Daniel G. Cullen, 41 George
Street South, Brampton, Ontario, Canada L6Y 2E1, prior to the Meeting; (2)
giving written notice of revocation to the Secretary at the Meeting; or (3)
signing and delivering a Proxy bearing a later date. However, the mere presence
at the Meeting of a stockholder who has executed and delivered a valid Proxy
will not revoke such a Proxy.
There are no dissenters' rights of appraisal. Neither the By-laws nor
corporate law of the Company's state of Incorporation call for any dissenters'
rights of appraisal.
This proxy statement will be transmitted to shareholders on or about
April 15, 2001.
The Board of Directors has approved the PROPOSALS and determined that they are
advisable, fair to and in the best interests of the shareholders of the Company.
The Board of Directors recommends that you vote FOR approval of the PROPOSALS.
RECORD DATE; QUORUM AND VOTING AT THE MEETING
The voting securities of the Company consist of shares of its Class A
common stock, $.001 par value (the "Common Stock"). Holders of record of the
Common Stock at the close of business on May 14, 2001 will be entitled to vote
at the Meeting. Each share of Common Stock entitles its owner to one vote.
Cumulative voting is not allowed. The number of shares outstanding of the Common
Stock at the close of business on May 14, 2001 was 19,443,809 shares.
The holders of record of one third of the outstanding shares of the
Common Stock, represented in person or by proxy, will constitute a quorum for
the transaction of business at the Meeting, but if a quorum should not be
present, the Meeting may adjourn from time to time until a quorum is obtained.
A majority of the shares represented and entitled to vote at the
meeting are required for an affirmative vote. An abstained vote will be counted
in determining a quorum, but will not be counted as a vote either for or against
the issue.
REVOCATION OF PROXIES AND VOTING INSTRUCTIONS
A holder of Common Stock of the Company may revoke a proxy card given
pursuant to this solicitation at any time before the proxy card is voted by
returning a subsequently dated proxy card to the Secretary of the Company, by
filing an instrument in writing with the Secretary of the Company revoking the
proxy card, or by voting in person at the Meeting. Attendance at the Meeting
will not in and of itself revoke a proxy card.
Holders of Common Stock of the Company who are entitled to revoke their
proxy card may do so via facsimile at (905) 457-5506. Any beneficial owner of
Common Stock of the Company whose shares are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to revoke
should contact the registered holder promptly and instruct the registered holder
to revoke on his behalf. There can be no assurance that the registered holder
will have sufficient time prior to the Meeting to deliver a revocation upon
instruction by the beneficial owner.
PROXY SOLICITATION
The Company will pay its own expenses incurred in connection with this
Proxy Statement and the Meeting, including the disbursements of legal counsel
and accountants. In addition to solicitation by mail, proxies may be solicited
by directors, officers and employees of the Company in person or by telephone,
facsimile or other means of communication. The directors, officers and employees
will not be additionally compensated, but will be reimbursed for reasonable
out-of-pocket expenses, in connection with their solicitation. Arrangements will
also be made with custodians, nominees and fiduciaries for forwarding of proxy
solicitation materials to beneficial owners of shares held of record by the
custodians, nominees and fiduciaries, and the Company will reimburse the
custodians, nominees and fiduciaries for reasonable expenses incurred in
connection therewith.
SHAREHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THEIR PROXY CARDS.
PROPOSAL 1: ELECTION OF DIRECTORS
At the Meeting three (3) directors are to be elected who shall hold
office until the next following Annual Meeting of Shareholders or until their
successors are duly elected and qualified. In the absence of instructions to the
contrary, it is the intention of the persons named in the enclosed form of proxy
to vote such proxy for the election of the nominees named below. If any of the
nominees named below are unable or unwilling to serve as a director (an event
which the Company does not anticipate), the persons designated as proxies will
vote for the remaining nominees and for such other persons as they may select.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The following table sets forth the names of the Board of Directors'
nominees for election as directors and sets forth the names of all executive
officers and advisory board members. Also set forth is certain other information
with respect to each such person's age, principal occupation(s) during the past
five years and positions currently held with the Company.
Name Age Position
- ---- --- --------
Gilles Trahan 29 CEO, Treasurer and Director
Daniel G. Cullen 55 President, COO, Secretary and Director
Ross Campbell 68 Nominee
The Board of Directors of the Company is comprised of only one class of
directors. Each director is elected to hold office until the next annual meeting
of shareholders and until his successor has been elected and qualified. Officers
are appointed by the Board of Directors and hold office until their successors
are duly elected and qualified.
Directors
- ---------
Gilles A. Trahan. Mr. Trahan is the Chairman of the Board, Treasurer and Chief
Executive Officer of the Company. His experience has primarily evolved around
investment banking practices. He was involved in real estate as a developer of
commercial properties since 1991 and has served as President and CEO of Lexton
Fuller Corp, an investment Banking firm in Toronto, Canada where his
responsibilities included the structuring of corporate financing, mergers, and
acquisitions. He was instrumental in the creation of Symphony Telecom, Inc.
Daniel G. Cullen, P. Eng. Mr. Cullen is the Director, President and Chief
Operating Officer of the Company. He obtained his engineering degree from the
University of Waterloo in 1970 He was employed by Bell Canada, Computer
Communications Group, as a design engineer and subsequently with Northern
Telecom (Nortel Networks) where he enjoyed a 20 year career in product
management, sales and marketing management. Thereafter he was president of
Comtel Canada Inc., a venture providing business telecommunications systems,
software and engineering services into Saudi Arabia, concurrently founded a
telecommunications software Company providing PC-based switches to the emerging
long distance resellers, and, with the advent of equal access in Canada, became
President of InteleLink, an alternative long distance service provider.
Ross Campbell. Mr. Campbell retired from Nortel Networks in 1992 after a
distinguished 37 year career. Commencing as Engineering Department Manager Mr.
Campbell headed the introduction of PCM equipment in Northern Electric Company
and the conversion of carrier systems from tubes to solid state devices. From
1967 to 1974 he was Operations Manager for Netas in Istanbul, a Nortel joint
venture with the Turkish PTT. He served as Division General Manager for the
Analog and Radio Division manufacturing voice frequency transmission equipment
and digital microwave radio including the world's first 64QUAM system; Group
Vice President for transmission with global responsibility within Nortel for all
transmission systems including the introduction of fibre optic systems; Group
Vice President Subscriber Equipment, which included divisions responsible for
development and manufacturing of PBX (SL-1, Meridian 1), key systems (Norstar),
and telephone terminals; Executive Vice President, Administration, Bell Northern
Research; and executive Vice President, Northern Telecom Canada, where he was
responsible for all headquarters functions including Personnel. Manufacturing
Engineering, Purchasing, Legal and Public Relations.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE
FOR THE FOREGOING NOMINEES.
BOARD AND COMMITTEE MEETINGS
At the first meeting of directors held after the annual general
meeting, the Company will establish a compensation committee which consists of
all of the Directors of the Company then elected. The Compensation Committee is
responsible for setting the annual and long-term performance goals for the Chief
Executive Officer, evaluating his performance against these goals, and
recommending his salary, bonus and long-term incentives. The Compensation
Committee reviews the performance of all of the other executive officers of the
Company and recommends to the Board, from time to time, the amount and form of
all compensation of executive officers of the Company and its subsidiaries.
Compensation for 2000 was determined by the current Board of Directors. The
Board of Directors for 2000 consisted of Mr. Trahan and Mr. Cullen.
The Company will establish an audit committee which will consist of all
of the Directors of the Corporation then elected. The audit committee is
responsible for contracting the audit firm, review of reports and correspondence
with the firm, resolution of any issues on the year-end and quarterly reports,
and to insure the highest of quality and integrity of the reporting to the
shareholders.
In the event that the shareholders voting at the Annual General Meeting
Ratify the 2001 Stock Option and Incentive Plan for Key Employees, Consultants,
and Professional Service Providers (the "Plan"), the Company will establish a
Stock Option Committee, as required by the Plan, which will consist of all of
the Directors then elected. The Stock Option Committee is responsible for
setting the annual and long-term performance goals for the Key Employees of the
Company (as defined in the Plan) and certain other persons, evaluating their
performance against these goals, and recommending the extent of each person's
participation in the Plan.
MANAGEMENT
All of the Company's executive officers are elected or appointed by the
directors to serve a term of one year or until their successors are elected or
appointed and qualified. The officers of the corporation to be elected by the
directors shall be elected at the first meeting of directors held after the
annual general meeting. The following table sets forth certain information with
respect to the executive officers of the Company:
Name Age Position
- ---- --- --------
Gilles Trahan 29 CEO, Treasurer, Chief Executive Officer and Director
Daniel G. Cullen 55 President, Chief Operating Officer, Secretary and
Director
See Election of Directors for biographical information.
EXECUTIVE COMPENSATION
The following table shows the annual compensation for the officers of
Symphony Telecom International, Inc.:
Securities
Restricted Stock Underlying All other
Name and Principal Position Year Salary($) Award(s) ($) Options/SARs(#) Compensation(s)
- --------------------------- ---- --------- ---------------- --------------- ---------------
Gilles A. Trahan 2000 $ 8,275 $0 ___ $0
Chairman of the 2001 $80,400
Board, C.E.O.
Daniel Cullen, 2000 $20,689 $0 ___ $0
Director, 2001 $80,400
President
All compensation and other arrangements between the Company and its
officers and directors are to be approved by the Compensation Committee.
Directors are compensated 10,000 shares of restricted common stock annually, and
reimbursed for reasonable out-of-pocket travel and related expenses.
COMPENSATION COMMITTEE REPORT
At present the executive officers of the Company, Gilles A. Trahan and
Daniel G. Cullen, do not have employment contracts with the Company. Employment
contracts will be reviewed at the first meeting of the Compensation Committee
after the Monday, May 14, 2001 meeting.
AUDIT REPORT
The entire Board of Directors which consists of Mr. Trahan and Mr.
Cullen oversees the responsibility regarding the quality and integrity of the
accounting, auditing and financial reporting practices of the Company. In
discharging its oversight responsibilities regarding the audit process, the
Board of Directors:
(1) reviewed and discussed the audited financial statements with
management;
(2) discussed with the independent auditors the material required to be
discussed by Statement on Auditing Standards No. 61; and
(3) reviewed the written disclosures and the letter from the
independent auditors required by the Independence Standards Board's Standard No.
1, and discussed with the independent auditors any relationships that may impact
their objectivity and independence.
Based upon the review and discussions referred to above, the Board of
Directors determined that the audited financial statements should be included in
the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
2000, as filed with the Securities and Exchange Commission.
AUDIT FEES
Gerstle, Rosen & Simonet LLC billed the Company $82,845 for the audit
of the Company's annual financial statements for the past fiscal year and the
reviews of the financial statements included in the Company's Quarterly Reports
on Form 10-QSB. Gerstle, Rosen & Simonet LLC performed no other services for the
Company during the past fiscal year.
OWNERSHIP OF SHARES
The following table sets forth certain information known to the Company
regarding the beneficial ownership of common stock as of April 15, 2001, by each
Director of the Company, each executive officer of the Company, all directors
and executive officers as a group, and each person known to the Company to be
the beneficial owner of more than 5% of its outstanding shares of common stock.
Percentage of ownership is based on 19,443,809 shares of common stock issued and
outstanding as of May 14, 2001
Directors and Executive Officers Shares Owned Percentage of Total Issued
- ----------------------------------- ------------ --------------------------
Gilles Trahan 4,000,000 20.6%
Daniel G. Cullen 4,000,000 20.6%
All current directors and Executive 8,000,000 41.1%
officers of the Company as a group
(2 persons)
Five Percent Shareholders
- -------------------------
Fidelity Merchant Bank & Trust 1,000,000 5.1%
#5 Frederick St.
Box CB 12337
(1) Information is supplied based upon identity as a shareholder of
record without any verification of beneficial ownership, which may or may not
apply as to the identified party.
PROPOSAL 2: EXPANSION OF THE BOARD
The Board of Directors further recommends that the number of Directors
of the corporation for the following year be set at five (5) directors and that
the three directors elected at the meeting be authorized to seek suitable
candidates and to elect directors, to fill the vacancies so created, to hold
office until the next annual general meeting of the shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE
FOR THE APPROVAL OF THE EXPANSION OF THE BOARD.
PROPOSAL 3: RATIFICATION OF THE SELECTION OF AUDITORS
The Board of Directors recommends that the shareholders ratify the
selection of Gerstle, Rosen & Simonet LLC, Certified Public Accountants, to
auditors for the Company for its fiscal year ended June 30, 2001. Representative
of Gerstle, Rosen & Simonet LLC are expected to be present at the Meeting to
respond to shareholders' questions and will have the opportunity to make a
statement if they so desire. The ratification of the appointment of the auditors
must be approved by a majority of the shares represented and entitled to vote at
the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE
FOR THE RATIFICATION OF THE SELECTED AUDITORS.
PROPOSAL 4: PROPOSED REINCORPORATION OF THE COMPANY IN DELAWARE
INTRODUCTION
The Board of Directors believes that the best interests of the Company
and its shareholders will be served by changing the state of incorporation of
the Company from Utah to Delaware (the "Reincorporation"). In order to
accomplish the Reincorporation, the Company proposes to merge with and into its
wholly-owned subsidiary, Symphony Telecom Corp., a Delaware corporation ("SYMY
Delaware"). Under the terms of the merger, SYMY Delaware will be the surviving
corporation, and all shareholders of the Company will automatically become
stockholders of SYMY Delaware. The certificate of incorporation and by-laws of
SYMY Delaware will become the governing instruments of the surviving
corporation. The Board of Directors believes that the Reincorporation is in the
best interests of the Company and its shareholders because it will allow the
Company to benefit from the greater measure of flexibility and predictability in
corporate governance afforded by Delaware law.
In the judgement of the Board of Directors, the change of Company's
corporate name is desirable in view of the proposed reincorporation of the
Company in Delaware.
The name change will become effective upon the filing with the
acceptance by the Delaware Secretary of State of the Certificate of Merger,
which will occur on or about May 15, 2001.
EFFECTIVE DATE OF REINCORPORATION
The Reincorporation will become effective upon the filing with and
acceptance by the Delaware Secretary of State of the Certificate of Merger,
which is expected to be on or about May 15, 2000, unless the Reincorporation is
extended or abandoned by the Company.
THE MERGER
SYMY Delaware will be the surviving corporation of the merger with the
Company. The terms and conditions of the Reincorporation are set forth in the
Agreement and Plan of Merger (the "Merger Agreement") attached to this
Information Statement as Exhibit A, and the summary of the terms and conditions
of the Reincorporation set forth below is qualified by reference to the full
text of the Merger Agreement. Upon consummation of the Reincorporation, SYMY
Delaware will continue to exist in its present form under the name "Symphony
Telecom International Inc." and the Company will cease to exist. The
Reincorporation will change the legal domicile of the Company, but will not
result in a change in the principal offices, business, management,
capitalization, assets or liabilities of the Company. By operation of law, SYMY
Delaware will succeed to all of the assets and assume all of the liabilities of
the Company. The Board of Directors of SYMY Delaware will be comprised of the
same individuals who presently are members of the Board of Directors of the
Company. It is anticipated that the directors of SYMY Delaware will elect as
officers of SYMY Delaware the same individuals who presently serve as officers
of the Company. The rights of stockholders and the corporate affairs of SYMY
Delaware will be governed by the Delaware General Corporation Law ("DGCL") and
by the certificate of incorporation and bylaws of SYMY Delaware, instead of the
Utah Revised Business Corporation Act and the articles of incorporation and
bylaws of the Company. Certain material differences are discussed below under
"Comparison of Shareholders Rights under Delaware and Utah Corporate Law and
Charter Documents". The articles of incorporation and bylaws of the Company and
the certificate of incorporation and bylaws of SYMY Delaware are available for
inspection by shareholders of the Company at the principal offices of the
Company located 41 George Street South Brampton, Ontario, Canada L6Y2E1, (905)
457-4300.
The Company's current Articles of Incorporation authorize the issuance
of up to 50,000,000 shares of common stock, par value $.001 per share. The
Certificate of Incorporation of SYMY Delaware increases the authorized number of
shares of capital stock to 200,000,000 shares, of which 100,000,000 shall be
designated common stock par value $.0001 per share and $1,000,000,000 par value
shall be designated as preferred stock $.0001 par value per share.
Upon the effectiveness of the Reincorporation, each outstanding share
of the Company's Common Stock will be automatically converted into one fully
paid and nonassessable share of the Common Stock of SYMY Delaware. Also, each
share of SYMY Delaware Common Stock issued and outstanding immediately prior to
the merger shall be cancelled and returned to the status of authorized but
unissued shares. Each outstanding certificate representing shares of the
Company's Common Stock will represent the same number of shares of SYMY Delaware
Common Stock. Certificates evidencing shares of the Company's Common Stock may
be exchanged for certificates evidencing SYMY Delaware's Common Stock at any
time after the Reincorporation is completed.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The Reincorporation pursuant to the Merger Agreement will be a tax-free
reorganization under the Internal Revenue Code of 1986, as amended. Accordingly,
a holder of the common stock of the Company will not recognize gain or loss with
respect to that stock as a result of the Reincorporation. The holder's basis in
a share of common stock of SYMY Delaware will be the same as the holder's basis
in the corresponding share of common stock of the Company held immediately prior
to the Reincorporation. The holder's holding period for each share of SYMY
Delaware will include the period during which the holder held the corresponding
share of common stock of the Company, provided the holder held the corresponding
share as a capital asset at the time of the Reincorporation. In addition,
neither the Company nor SYMY Delaware will recognize gain or loss as a result of
the Reincorporation, and SYMY Delaware will generally succeed, without
adjustment, to the tax attributes of the Company. Upon Reincorporation, however,
SYMY Delaware will be subject to Delaware franchise tax, which is based on the
total asset value of the corporation. The foregoing summary of federal income
tax consequences is included for general information only and does not address
all income tax consequences to all of the shareholders of the Company. The
shareholders of the Company are urged to consult their own tax advisors as to
the specific tax consequences of the Reincorporation with respect to the
application and effect of state, local and foreign income and other tax laws.
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 PROPOSAL TO REINCORPORATE IN DELAWARE
INCLUDING THE APPLICABILITY OF THE LAWS OF ANY STATE OR OTHER JURISDICTION.
SECURITIES ACT CONSEQUENCES
Pursuant to Rule 145(a)(2) under the Securities Act of 1933, as amended
(the "Securities Act"), a merger that has the sole purpose of changing an
issuer's domicile within the United States does not involve a sale of securities
for the purposes of the Securities Act. Accordingly, separate registration of
shares of common stock of SYMY Delaware will not be required.
DESCRIPTION OF CAPITAL STOCK AND VOTING RIGHTS
The authorized capital stock of SYMY Delaware at the time the
Reincorporation becomes effective will consist of 100,000,000 shares of common
stock, par value $.0001 per share and 100,000,000 shares of preferred stocks,
$0.0001 par value. As of the Record Date, 19,443,809 shares of the Company's
common stock were issued and outstanding. Each share of common stock has, for
all purposes, one vote per share.
COMPARISON OF SHAREHOLDER RIGHTS OF HOLDERS OF STOCK UNDER DELAWARE AND
UTAH CORPORATE LAW AND CHARTER DOCUMENTS
GENERAL
Upon Reincorporation, the Company will change its domicile to Delaware
and shall thereafter be governed by Delaware law and by the Delaware Certificate
of Incorporation and the Delaware Bylaws (the "Delaware Charter Documents").
Upon the filing with and acceptance by the Secretary of State of Delaware of a
Certificate of Merger in Delaware and upon the effective date of the Articles of
merger, but not prior to the filing date with the Secretary of State of Utah,
the Company will cease to exist in the State of Utah and will become SYMY
Delaware and the outstanding shares of the common stock of the Company will be
deemed for all purposes to evidence ownership of, and to represent, shares of
the common stock of SYMY Delaware. The Delaware Charter Documents will replace
the Articles of Incorporation and Bylaws of the Company. If the Reincorporation
is consummated, holders of the common stock of the Company (and holders of
options, warrants or other securities exchangeable for or convertible into
common stock of the Company) will become holders of the common stock of SYMY
Delaware, which will result in their rights as stockholders being governed by
the laws of the State of Delaware and the Delaware Charter Documents. It is not
practical to describe all of the differences between the laws of Utah and
Delaware or the Utah and Delaware Charter Documents. The following is a summary
of some of the significant rights of the holders of stock under Utah and
Delaware law and under the Utah and Delaware Charter Documents. This summary is
qualified in its entirety by reference to the full text of such documents and
laws.
AUTHORIZED CAPITAL STOCK
The authorized capital stock of SYMY Delaware, upon closing of the
merger with the Company, will consist of 100,000,000 shares of common stock,
$0.0001 par value and 100,000,000 shares of preferred stocks, $0.0001 par value.
Each share of the common stock of SYMY Delaware will have one vote per share,
and the right to notice of stockholders' meetings and to vote upon the election
of directors or upon any other matter as to which approval of the common
stockholders is required or requested. Stockholders will not have a right to
cumulate their votes for the election of directors.
VOTING RIGHTS WITH RESPECT TO EXTRAORDINARY CORPORATE TRANSACTIONS
DELAWARE. Approval of mergers and consolidations and sales, leases or
exchanges of all or substantially all of the property or assets of a
corporation, whether or not in the ordinary course of business, 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 stockholders 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.
UTAH. A merger, share exchange or sale of all or substantially all of
the assets of a corporation (other than a sale in the ordinary course of the
corporation's business) requires the approval of a majority (unless the articles
of incorporation, the bylaws or a resolution of the Board of Directors requires
a greater number) of the outstanding shares of the corporation (voting in
separate voting groups, if applicable). No vote of the shareholders of the
surviving corporation in a merger is required if: (i) the articles of
incorporation of the surviving corporation will not be changed; (ii) each
shareholder of the surviving corporation whose shares were outstanding
immediately before the effective date of the merger will hold the same number of
shares, with identical designations, preferences, limitations and relative
rights,. immediately after the merger; (iii) the number of voting shares
outstanding immediately after the merger, plus the number of voting shares
issuable as a result of the merger (either by the conversion of securities
issued pursuant to the merger or the exercise of rights and warrants issued
pursuant to the merger), will not exceed by more than 20% of the total number of
voting shares of the surviving corporation outstanding immediately before the
merger; and (iv) the number of participating shares (shares that entitle their
holder to participate without limitation in distributions) outstanding
immediately after the 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.
Both Utah and Delaware law require that a sale of all or substantially all of
the assets of a corporation be approved by a majority of the outstanding voting
shares of the corporation transferring such assets. With certain exceptions,
Utah law also requires certain sales of assets and similar transactions be
approved by a majority vote of each class of shares outstanding. In contrast,
Delaware law generally does not require class voting, except in certain
transactions involving an amendment to the certificate of incorporation that
adversely affects a specific class of shares.
SHAREHOLDERS' CONSENT WITHOUT A MEETING
DELAWARE. 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.
UTAH. Unless otherwise provided in the articles of incorporation,
action requiring the vote of shareholders may be taken without a meeting and
without prior notice by one or more written consents of the shareholders having
not less than the minimum number of votes that would be necessary to take such
action at a meeting at which all shares entitled to vote thereon were present
and voted (if shareholder action is by less than unanimous written consent,
notice shall be provided to the shareholders who did not consent at least ten
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. The Company's original charter pre-dates July 1,
1992 and on October 10, 2000, the shareholders of the Company elected to allow
shareholders to approve, ratify and effect actions of the Company by majority
written shareholder consent as permitted under Utah law.
SHAREHOLDER VOTING REQUIREMENTS
DELAWARE. The certificate of incorporation or bylaws of any corporation
authorized to issue stock may specify the number of shares and/or the amount of
other securities having voting power, the holders of which shall be present or
represented by proxy at any meeting in order to constitute a quorum for, and the
votes that shall be necessary for, the transaction of any business. However, in
no event shall a quorum consist of less than one-third of the shares entitled to
vote at the meeting, except that, where a separate vote by a class or series or
classes or series is required, a quorum shall consist of no less than one third
of the shares of such class or series or classes or series. In the absence of
such specification in the certificate of incorporation or bylaws of the
corporation, a majority of the shares entitled to vote, present in person or
represented by proxy, shall constitute a quorum at a meeting of stockholders. In
all matters other than the election of directors, the affirmative vote of the
majority of shares present in person or represented by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the stockholders.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. where a separate vote by a class or series or classes or
series is required, a majority of the outstanding shares of such class or series
or classes or series, present in person or represented by proxy shall constitute
a quorum entitled to take action with respect to that vote on that matter and
the affirmative vote of the majority of shares of such class or series or
classes or series present in person or represented by proxy at the meeting shall
be the act of such class or series or classes or series.
UTAH. Unless the articles or incorporation provide otherwise, a
majority of the votes entitled to be cast on a matter by the voting group
constitutes a quorum of that voting group for action on that matter. Once a
share is represented for any purpose at a meeting, including the purpose of
determining that a quorum exists, it is deemed present for quorum purposes for
the remainder of the meeting and for any adjournment of that meeting, unless a
new record date is or must be set for that adjourned meeting. Unless the
articles of incorporation provide otherwise, if a quorum exists, action on a
matter, other than the election of directors, by a voting group is approved if
the votes cast within the voting group favoring the action exceed the votes cast
within the voting group opposing the action. Unless otherwise provided in the
articles of incorporation, directors are elected by a plurality of the votes
cast by the shares entitled to vote in the election, at a meeting of
shareholders at which a quorum is present. Shareholders do not have a right to
cumulate their votes for the election of directors unless the articles of
incorporation provide for such cumulation of votes. Shares entitled to vote
cumulatively may be voted cumulatively at each election of directors unless the
articles of incorporation provide alternative procedures for the exercise of
cumulative voting.
DISSENTERS' RIGHTS
DELAWARE. Stockholders are entitled to demand appraisal of their shares
in the case of mergers or consolidations, except where: (i) they are
stockholders of the surviving corporation and the merger did not require their
approval under Delaware law; (ii) the corporation's shares are either listed on
a national securities exchange or designated as a national market system
security on an interdealer quotation system by The National Association of
Securities Dealers, Inc.; or (iii) the corporation's shares are held of record
by more than 2,000 stockholders. Appraisal rights are available in either (i),
(ii) or (iii) above. However, if the stockholders are required by the terms of
the merger or consolidation to accept any consideration other than (a) stock of
the corporation surviving or resulting from the merger or consolidation, (b)
shares of stock of another corporation which are either listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. or held of record by more than 2,000 shareholders, (c) cash in lieu of
fractional shares, or (d) any combination of the foregoing, appraisal rights are
not available. Appraisal rights are not available in the case of a sale, lease,
exchange or other disposition by a corporation of all or substantially all of
its property and assets.
UTAH. In connection with a merger, share exchange or sale, lease,
exchange or other disposition of all or substantially all of the assets of a
corporation (other than in the ordinary course of the corporation's business), a
dissenting shareholder, after complying with certain procedures, is entitled to
payment from the corporation-of the fair value of the shareholder's shares. The
fair value is estimated by the corporation. However, if the shareholder is
unwilling to accept the corporation's estimate, the shareholder may provide the
corporation with an estimate of the fair value and demand payment of that
amount. If the corporation is unwilling to pay that amount, the corporation
shall apply for judicial determination of the fair value. Unless the articles of
incorporation, bylaws or a resolution of the Board of Directors provide
otherwise, shareholders are not entitled to dissenters rights when the shares
are listed on a national securities exchange or the National Market System of
NASDAQ, or are held of record by more than 2,000 holders. However, this
exception does not apply if, pursuant to the corporate action, the shareholder
will receive nothing except (i) shares of the surviving corporation, (ii) shares
of a corporation that is or will be listed on a national securities exchange,
the National Market System of NASDAQ, or held of record by more than 2,000
holders, (iii) cash in lieu of fractional shares or (iv) any combination of the
foregoing. A copy of the relevant portions of Utah's Revised Business
Corporation Act is attached to this Information Statement as Exhibit B.
DIVIDENDS
DELAWARE. Dividends may be paid either (i) out of surplus (the excess
at any time of the net assets of the corporation over the amount of its
capital), or (ii) in case there is no surplus, out of the corporation's net
profits for the fiscal year in which the dividend is declared and/or its net
profits for the preceding fiscal year. A corporation may redeem or repurchase
its shares only if the capital of the corporation is not impaired and such
redemption or repurchase would not impair the capital of the corporation.
UTAH. 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).
ANTI-TAKEOVER STATUTES
DELAWARE. Except under certain circumstances, Delaware law prohibits a
"business combination" between the corporation and an "interested stockholder"
within three years of the stockholder becoming an "interested stockholder."
Generally, an "interested stockholder" is a person or group that directly or
indirectly, controls 15% or more of the outstanding voting stock or is an
affiliate or associate of the corporation and was the owner of 15% or more of
such voting stock at any time within the previous three years. A "business
combination" includes a merger, consolidation, sale or other disposition of
assets having an aggregate value in excess of 10% of the aggregate market value
of the consolidated assets of the corporation or its outstanding stock, and
certain transactions that would increase the interested shareholders'
proportionate share ownership in the Board of Directors prior to the date the
interested stockholder became an interested stockholder under Delaware law. Such
business combinations between a corporation and an interested stockholder are
prohibited unless (a) prior to the date the person became an interested director
the Board of Directors approved either the business combination or the
transaction which resulted in the person becoming an interested stockholder; (b)
the interested stockholder acquired at least 85% of the outstanding voting stock
of the corporation in the transaction in which the stockholder became an
interested stockholder excluding, for purposes of determining the number of
shares outstanding, shares held by persons who are directors and also officers
and by employee stock plans in which participants do not have the right to
determine confidentially where shares held subject to the plan will be tendered;
(c) the business combination is approved by a majority of the Board of Directors
and by the affirmative vote of two-thirds of the votes entitled to be cast by
disinterested stockholders at an annual or special meeting, (d) the corporation
does not have a class of voting stock that is listed on a national securities
exchange, authorized for quotation on an interdealer quotation system of a
registered national securities association, or held by more than 2,000
stockholders unless any of the foregoing results from action taken, directly or
indirectly, by an interested stockholder or (e) the corporation has opted out of
this provision. The Delaware Certificate of Incorporation opts SYMY Delaware out
of this provision.
UTAH. The Utah Control Share Acquisitions Act, set forth in Sections
61-6-1 through 61-6-12 of the Utah Code Annotated, 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 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 Utah law. 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 Utah law, or (iii) under
certain other specified circumstances.
QUORUM OF DIRECTORS
DELAWARE. Unless a greater or lesser number is required for a quorum by
the certificate of incorporation or bylaws (but in no event less than one-third
of the votes of the entire board or committee), a majority of the directors then
in office shall constitute a quorum. Under the Delaware Bylaws, the act of a
majority of directors present at a meeting duly held shall be the act of the
Board once a quorum is present.
UTAH. A quorum of the Board of Directors consists of a majority of the
fixed number of directors if the corporation has a fixed board size, or if the
corporation's bylaws provide for a variable board size, a majority of the number
of directors prescribed, or if no number is prescribed, the number in office.
However, the articles of incorporation or the bylaws may establish a higher or
lower number of directors to constitute a quorum, but in no event may the number
be less than one-third of the number of directors.
DERIVATIVE SUITS
DELAWARE. The plaintiff must have been a stockholder of the corporation
at the time of the transaction of which he complains or his stock thereafter
must have devolved upon him by operation of law.
UTAH. A shareholder may not commence a derivative action unless the
shareholder was a shareholder of the corporation at the time when the
transactions complained of occurred (unless the person became a shareholder
through transfer by operation of law from a person who was a shareholder at the
time) and fairly and adequately represents the interests of the corporation. The
complaint must be verified and allege with particularity the demand made on the
Board of Directors to obtain action. If a court finds that the proceeding was
commenced (i) without reasonable cause, the court may require the plaintiff to
pay the defendant's reasonable expenses, including counsel fees; (ii) with
reasonable cause, the court may order the corporation to pay the plaintiff's
reasonable expenses, including counsel fees.
SPECIAL MEETING OF SHAREHOLDERS
DELAWARE. Stockholders generally do not have the right to call meetings
of stockholders unless such right is granted in the certificate of incorporation
or bylaws. However, if a corporation falls 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
stockholder. The Delaware Bylaws permit a special meeting to be called at ally
time by a majority of the Board of Directors, the Chairman of the Board, the
president of SYMY Delaware, or the holders of more than fifty percent (50%) of
SYMY Delaware's issued and outstanding Common Stock entitled to vote thereat.
UTAH. 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 10 and no more than 60 days before the meeting.
Notice of a special meeting must include a description of the purposes for which
the special meeting is called.
AMENDMENTS TO CHARTER
DELAWARE. Amendments to the certificate of incorporation require the
affirmative vote of the holders of a majority of the outstanding stock entitled
to vote thereon except that if the certificate of incorporation requires the
vote of a greater number or proportion of the directors or of the holders of any
class of stock than is required by the DGCL with respect to any matter, the
provision of the certificate of incorporation may not be amended, altered or
repealed by SYMY Delaware except by such greater vote.
UTAH. The Board of Directors may propose amendments to the articles of
incorporation for submission to the shareholders. Notice of a regular or special
meeting at which a proposed amendment is to be considered must include a notice
of such purpose and be accompanied by a discussion or copy of the proposed
amendment. For an amendment to be adopted, (i) the Board of Directors must
recommend the amendment to the shareholders (unless the board determines that
because of a conflict of interest or other special circumstances it should not
make a recommendation and communicates the basis for its determination to the
shareholders), and (ii) unless the articles of incorporation, the bylaws (if
authorized by the articles of incorporation) or a resolution of the Board of
Directors require a greater number, the amendment must be approved by (a) a
majority of the votes entitled to be cast on the amendment by any voting group
as to which the amendment would create dissenters, rights, (b) a majority of the
votes entitled to be cast on the amendment by any voting group as to which the
amendment would materially and adversely affect the voting group's rights in
shares (including preferential rights, rights in redemption, preemptive rights,
voting rights or rights in certain reverse splits), and (c) a majority of the
votes cast for all other voting groups (voting separately, as applicable, with
shares constituting a quorum present for each voting group).
NOTICE, ADJOURNMENT AND PLACE OF SHAREHOLDERS' MEETINGS
DELAWARE. There is no specific statutory requirement under Delaware law
with regard to advance notice of director nominations and stockholder proposals.
Absent a bylaw restriction, director nominations and stockholder proposals may
be made without advance notice at the annual meeting. However, federal
securities laws generally provide that stockholder proposals that the proponent
wishes to include in SYMY Delaware's proxy materials must be received not less
than 120 days in advance of the date stated in the proxy statement released in
connection with the previous year's annual meeting.
UTAH. The Utah law and Utah Charter Documents require that notice of
shareholders, meetings be given between 10 and 60 days before a meeting unless
the shareholders waive or reduce the notice period by unanimous consent in
writing. Both Utah and Delaware law provide for adjournments of shareholders,
meetings. The Utah Charter Documents require notice of the adjournment if the
adjournment is for 30 days or more or if a new record date is fixed. Delaware
law and the Delaware Charter Documents require that if the adjournment is for
more than 30 days or if a new record date is fixed, notice must be given to the
shareholders as for an original meeting. Both Delaware and Utah law permit
meetings of shareholders to be held at such place as is designated by or in the
manner provided in the Bylaws. If not so designated, Delaware law requires that
the meeting be held at the registered office of the Delaware corporation, while
Utah law provides for the principal office of the corporation.
DIRECTORS
DELAWARE. The Delaware Bylaws provide that the number of members of the
Delaware Board shall be not less than one nor more than fifteen. A majority of
the number of directors then in office constitutes a quorum for the transaction
of business. In the absence of a quorum, a majority of the directors present-may
adjourn any meeting from time to time until a quorum is present, The initial
directors shall serve until the 2001 annual meeting of stockholders or until
their successors and assigns have been duly elected and taken office. Directors
shall be elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors.
UTAH. The Utah Bylaws provide that the Board consists of not less than
three directors with the actual number being determined by resolutions adopted
by the Board or the holders of the Company's common stock. Currently, the
Company has two directors. A majority of the number of directors constitutes a
quorum for the transaction of business. The Utah Bylaws provide that a vacancy
among the directors may be filled for the unexpired term by the affirmative vote
of a majority of the shareholders or a majority of the remaining directors in
office, though less than a quorum. Unless otherwise provided in the articles of
incorporation, directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election, at a meeting of shareholders at which a
quorum is present.
ELECTION AND REMOVAL OF DIRECTORS
DELAWARE. The Delaware Bylaws provide that directors shall hold office
until the next annual meeting of stockholders following their election. Any
director, or the entire Board, may be removed with or without cause, but only by
the vote of a majority of the voting power of the Company at a meeting called
for that purpose. The directors may fill vacancies on the board.
UTAH. The Utah Bylaws provide that each director shall hold office
until the next annual meeting of shareholders and until his or her successor
shall have been elected and qualified. Under Utah law and the Utah Charter
Documents, directors may be removed by a majority vote of shareholders, with or
without cause. The directors or the shareholders may fill vacancies on the
board.
INSPECTION OF BOOKS AND RECORDS
DELAWARE. Under Delaware law, any stockholder of record, in person or
by attorney or other agent, shall, upon written demand under oath stating the
purpose thereof delivered to the company's principal place of business, have the
right during the usual hours for business to inspect for any proper purpose the
company's stock ledger, a list of its stockholders, and its other books and
records, and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent shall be the person who seeks the
right to inspection, the demand under oath shall be accompanied by a power of
attorney or such other writing that authorizes the attorney or other agent to so
act on behalf of the shareholder.
UTAH. Upon providing the company 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 directly connected to 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
DELAWARE. 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 shareholders or the directors under substantially
the same. circumstances as in Utah. Approval by the stockholders, 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. Utah law provides that every director who, directly or
indirectly, is party to, has beneficial interest in or is closely linked to a
proposed corporate transaction that is financially significant to the director
is liable to account to the corporation for any profit made as a consequence of
the corporation entering into such transaction unless such person (a) disclosed
his or her interest at the meeting of directors where the proposed transaction
was considered and thereafter the transaction was approved by a majority of the
disinterested directors; (b) disclosed his or her interest prior to a meeting or
written consent of stockholders and thereafter the transaction was approved by a
majority of the disinterested shares; or (c) can show that the transaction was
fair and reasonable to the corporation.
LIMITATION ON LIABILITY OF DIRECTORS; INDEMNIFICATION OF OFFICERS AND
DIRECTORS
DELAWARE. 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 stockholders for monetary damages for breach
of fiduciary duty as a director, with the following exceptions: (a) a breach of
the director's duty of loyalty; (b) payment of an unlawful stock dividend or
making an unlawful stock repurchase or redemption; (c) acts or omissions not in
good faith or involving intentional misconduct or a knowing violation of law; or
(d) in any transaction in which the director derived an improper personal
benefit. The Delaware Certificate of Incorporation eliminates the liability of
directors of the corporation for monetary damages to the fullest extent
permissible under Delaware law. Delaware law permits a corporation to indemnify
its current and former directors, officers, employees and other agents under
circumstances similar to those for which the Utah Charter Documents provide. The
Delaware Bylaws require SYMY Delaware to indemnify all such persons whom it has
the power to indemnify to the fullest extent legally permissible by the Delaware
law. The Delaware Bylaws permit SYMY Delaware to advance expenses to any
indemnitee, provided that the indemnitee undertakes to repay amounts advanced if
it is ultimately determined that such person is not entitled to indemnification,
and subject to such other conditions as the Board may impose. Indemnification
rights under Delaware law are not exclusive. Accordingly, SYMY Delaware's Bylaws
specifically permit SYMY Delaware to indemnify its directors, officers,
employees and other agents pursuant to an agreement, bylaw provision,
stockholder vote or vote of disinterested directors or otherwise, any or all of
which may provide indemnification rights broader than those currently available
under the Utah or Delaware indemnification statutes.
UTAH. Utah law permits a corporation, if so provided in its articles of
incorporation, its bylaws or in a shareholder resolution, to 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 received by a
director; (b) intentional inflictions 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. Under Utah law, a
corporation may indemnify its current and former directors, officers, employees
and other agents made party to any proceeding because of their relationship to
the corporation against expenses, judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with such proceeding if
that person acted in good faith and reasonably believed his or her conduct to be
in the corporation's best interests, and, in the case of a criminal proceeding,
had no reasonable cause to believe his or her conduct was unlawful. Utah law
also permits a corporation to indemnify its directors, officers, employees and
other agents in connection with a proceeding by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that the
person is such an agent of the corporation, against expenses actually and
reasonably incurred by such person in connection with the proceeding. Utah law
prohibits the indemnification of an agent in connection with a proceeding by or
in the right of the corporation in which the director, officer, employee or
agent was adjudged liable to the corporation, or in connection with any other
proceeding in which the agent is adjudged liable on the basis that the agent
derived an improper personal benefit. The Utah Charter Documents permit
indemnification of all such persons whom it has the power to indemnify to the
fullest extent legally permissible under Utah law. Utah law permits a
corporation to advance expenses incurred by a director, officer, employee or
agent who is a party to a proceeding in advance of final disposition of the
proceeding if that person provides (a) a written affirmation of his good faith
belief that he acted in good faith, in the corporation's best interests and, in
the case of a criminal proceeding, had no reasonable cause to believe his
conduct was unlawful; (b) a written undertaking by or on behalf of that person
to repay the advance if it is ultimately determined that such person's conduct
did not meet the statutory standard required for indemnification; and (c) the
corporation determines under the facts then known that indemnification would not
be precluded. The Utah Charter Documents permit such advances. Both the Delaware
Charter Documents and Utah Charter Documents provide that SYMY Delaware and the
Company, respectively, may purchase insurance on behalf of those persons
entitled to be indemnified by the corporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY SHAREHOLDERS VOTE
FOR APPROVAL OF THE REORGANIZATION.
PROPOSAL 5: ADOPTION OF 2001 STOCK OPTION AND INCENTIVE PLAN
On February 9, 2001, the Company's Board of Directors approved the
Company's 2001 Stock Option and Incentive Plan for Key Employees, Consultants
and Professional Service Providers (the "2001 Plan"). The purpose of the 2001
Plan is to advance the interests of the Company, and its subsidiaries, by
providing an additional incentive to attract and retain qualified and competent
providers of management and other key services upon whose efforts and judgment
the success of the Company and its subsidiaries is largely dependent, through
the encouragement of stock purchases in the Company by such persons. The full
text of the 2001 Plan appears as Exhibit B to this Proxy Statement and the
description of the 2001 Plan herein is qualified by reference to Exhibit B.
DESCRIPTION OF THE 2001 PLAN
The 2001 Plan provides for the grant to directors, officers, employees
and consultants of the Company (including its subsidiaries) of options to
purchase up to an aggregate of 10,000,000 shares of Common Stock. The 2001 Plan
may be administered by the Board of Directors or a committee of the Board of
Directors (in either case, the "Committee"), which has complete discretion to
select the optionees and to establish the terms and conditions of each option,
subject to the provisions of the 2001 Plan. Options granted under the 2001 Plan
may be "incentive stock options" as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or nonqualified options.
The exercise price of incentive stock options may not be less than
33-1/3% of the fair market value of the Common Stock as of the date of grant
(110% of the fair market value if the grant is to an employee who owns more than
10% of the total combined voting power of all classes of capital stock of the
Company). The Code currently limits to $100,000 the aggregate value of Common
Stock that may be acquired in any one year pursuant to incentive stock options
under the 2001 Plan or any other option plan adopted by the Company.
Nonqualified options may be granted under the 2001 Plan at an exercise price of
not less than 100% of the fair market value of the Common Stock on the date of
grant. Nonqualified options also may be granted without regard to any
restriction on the amount of Common Stock that may be acquired pursuant to such
options in any one year.
Subject to the limitations contained in the 2001 Plan, options granted
under the 2001 Plan will become exercisable at such times and in such
installments as the Committee shall provide in the terms of each individual
stock option agreement. The Committee must also provide in the terms of each
stock option agreement when the option expires and becomes unexercisable, and
may also provide the option expires immediately upon termination of employment
for any reason. No option held by directors, executive officers or other persons
subject to Section 16 of the Securities Exchange Act of 1934, as amended, may be
exercised during the first six months after such option is granted.
Unless otherwise provided in the applicable stock option agreement,
upon termination of employment of an optionee, all options that were then
exercisable would terminate three months (one year in the case of termination by
reason of death or disability) following termination of employment. Any options
which were not exercisable on the date of such termination would immediately
terminate concurrently with the termination of employment.
The Board of Directors may at any time amend, alter, suspend or
terminate the Plan. No amendment, alteration, suspension or termination of the
2001 Plan will impair the rights of any optionee, unless mutually agreed
otherwise between the optionee and the Committee, which agreement must be in
writing and signed by the optionee and the Company. Termination of the 2001 Plan
will not affect the Committee's ability to exercise the powers granted to it
hereunder with respect to options granted under the 2001 Plan prior to the date
of such termination.
Options granted under the 2001 Plan may not be exercised more than ten
years after the grant (five years after the grant if the grant is an incentive
stock option to an employee who owns more than 10% of the total combined voting
power of all classes of capital stock of the Company). Options granted under the
2001 Plan are not transferable and may be exercised only by the respective
grantees during their lifetime or by their heirs, executors or administrators in
the event of death. Under the 2001 Plan, shares subject to cancelled or
terminated options are reserved for subsequently granted options. The number of
options outstanding and the exercise price thereof are subject to adjustment in
the case of certain transactions such as mergers, recapitalizations, stock
splits or stock dividends. The 2001 Plan is effective for ten years, unless
sooner terminated or suspended.
MARKET VALUE OF UNDERLYING SECURITIES
On April 2, 2001, the closing sale price for the Company's Common Stock
on the OTC Electronic Bulletin Board was $0.28.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Incentive stock options granted under the 2001 Plan will be afforded
favorable federal income tax treatment under the Code. If an option is treated
as an incentive stock option, the optionee will recognize no income upon grant
or exercise of the option unless the alternative minimum tax rules apply. Upon
an optionee's sale of the shares (assuming that the sale occurs at least two
years after grant of the option and at least one year after exercise of the
option), any gain will be taxed to the optionee as long-term capital gain. If
the optionee disposes of the shares prior to the expiration of the above holding
periods, then the optionee will recognize ordinary income in an amount generally
measured as the difference between the exercise price and the lower of the fair
market value of the shares at the exercise date or the sale price of the shares.
Any gain or loss recognized on such a premature sale of the shares in excess of
the amount treated as ordinary income will be characterized as capital gain or
loss.
All other options granted under the 2001 Plan will be nonstatutory
stock options and will not qualify for any special tax benefits to the optionee.
An optionee will not recognize any taxable income at the time he or she is
granted a nonstatutory stock option. However, upon exercise of the nonstatutory
stock option, the optionee will recognize ordinary income for federal income tax
purposes in an amount generally measured as the excess of the then fair market
value of each share over its exercise price. Upon an optionee's resale of such
shares, any difference between the sale price and the fair market value of such
shares on the date of exercise will be treated as capital gain or loss and will
generally qualify for long-term capital gain or loss treatment if the shares
have been held for more than one year. Recently enacted legislation provides for
reduced tax rates for long-term capital gains based on the taxpayer's income and
the length of the taxpayer's holding period.
The foregoing does not purport to be a complete summary of the federal
income tax considerations that may be relevant to holders of options or to the
Company. It also does not reflect provisions of the income tax laws of any
municipality, state or foreign country in which an optionee may reside, nor does
it reflect the tax consequences of an optionee's death.
PARTICIPATION IN THE 2001 PLAN
All of the Company's executive officers, directors and employees of the
Company and its subsidiaries will be eligible to participate in the 2001 Plan.
The Company has not granted any options pursuant to the 2001 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT COMPANY SHAREHOLDERS VOTE FOR
APPROVAL OF 2001 STOCK OPTION AND INCENTIVE PLAN.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to Shareholders for the fiscal year ended June 30,
2000 is being mailed to the shareholders concurrently herewith, but such Report
is not incorporated in this Proxy Statement and is not deemed to be part of the
proxy solicitation materials.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before
this Annual Meeting. However, if other matters should come before the Meeting,
it is the intention of each person named in the proxy to vote such proxy in
accordance with his judgment on such matters.
DOCUMENTS INCORPORATED BY REFERENCE
The Company is currently subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission. Such reports, proxy statements and other
information may be inspected at the public reference facilities of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549; at
its New York Regional Office, Suite 1300, 7 World Trade Center, New York, New
York 10048; and its Chicago Regional Office, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and copies of such materials can be obtained from
the Public Reference Section of the Commission at its principal office in
Washington, D.C., at prescribed rates. In addition, such materials may be
accessed electronically at the Commission's site on the World Wide Web, located
at http://www.sec.gov.
The Commission allows the Company to "incorporate by reference"
information into this proxy statement, which means that the Company can disclose
important information by referring its shareholders to another document filed
separately with the Commission. The information incorporated by reference is
deemed to be part of this proxy statement. This proxy statement incorporates by
reference the documents set forth below that the Company has previously filed
with the Commission. These documents contain important information about the
Company and its finances.
o Quarterly report on Form 10-QSB for the quarter ended September 30, 2000.
o Quarterly report on Form 10-QSB for the quarter ended December 30, 2000.
o Annual Reports on Form 10-KSB for the fiscal year ended June 30, 2000.
SHAREHOLDER PROPOSALS
Any interested shareholder may submit a proposal concerning the Company
to be considered by the Board of Directors of the Company for inclusion in the
proxy statement and form of proxy relating to next year's Annual Meeting of the
Shareholders. In order for any proposal to be so considered by the Board for
inclusion in the proxy statement, all proposals must be in writing in proper
form and received by the Company on or before June 30, 2001. Any stockholder so
interested may do so by submitting such proposal to: Symphony Telecom
International, Inc., 41 George Street South, Brampton, Ontario, Canada L6Y 2E1
PROXY SOLICITATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY. THE SOLICITATION WILL BE BY MAIL.
The entire expense of preparing, assembling, printing and mailing the
proxy form and the material used in the solicitation of proxies will be paid by
the Company. The Company will request banks and brokers to solicit their
customers who beneficially own the Company's Common Stock listed in the names of
nominees and will reimburse said banks and brokers for any reasonable
out-of-pocket expenses of such solicitation. In addition to the use of the
mails, solicitation may be made by the employees of the Company by telephone,
telegraph, cable and personal interview. The Company does not expect to pay any
compensation to such persons, other than their regular compensation, for their
services in the solicitation of the proxies.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Gilles A. Trahan
---------------------------
Gilles Trahan
Chief Executive Officer
Brampton, Ontario, Canada
April 25, 2001
EXHIBIT INDEX
EXHIBIT A Agreement and Plan of Merger
EXHIBIT B 2001 Stock Option and Incentive Plan for Key Employees,
Consultants and Professional Service Providers
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY, STOCKHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING AND WISH THEIR STOCK TO BE VOTED ARE URGED TO DATE,
SIGN AND MAIL THE ACCOMPANYING PROXY TO THE FOLLOWING ADDRESS.
PROXY
SYMPHONY TELECOM INTERNATIONAL, INC.
41 George Street South
Brampton, Ontario, Canada L6Y 2E1
(905) 457-4300
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints Gilles Trahan, Daniel G. Cullen, and
Mario Giangioppo or any of them (with full power to act along and to designate
substitutes), proxies of the undersigned, with authority to vote and act with
respect to all shares of the Common Stock of Symphony Telecom International,
Inc. that the undersigned would be entitled to vote if personally present at the
Annual Meeting of Shareholders to be held on Monday, May 14, 2001 at 2:00PM
Eastern Standard Time at the offices of the Company at the above address and at
any adjournment thereof, upon the matters noted below and upon any other matters
that may properly come before the Meeting or any adjournment thereof. Said
proxies are directed to vote as checked below upon the following matters, and
otherwise in their discretion. An abstained vote will be counted in determining
a quorum, but will not be counted as a vote either for or against the issues.
(1) To elect as directors, the following nominees: Gilles A. Trahan; Daniel
G. Cullen; L. Ross Campbell
[ ] For all of the foregoing nominees
[ ] WITHHOLD AUTHORITY to vote for all of the foregoing nominees
[ ] ABSTAIN
NOTE: TO WITHHOLD AUTHORITY FOR AN INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THAT NOMINEE'S NAME. UNLESS AUTHORITY TO VOTE FOR ALL OF THE FOREGOING NOMINEES
IS WITHHELD, THIS PROXY WILL BE DEEMED TO CONFER AUTHORITY TO VOTE FOR EACH
NOMINEE WHOSE NAME IS NOT STRUCK.
(2) To increase the number of directors of the corporation holding office for
the following year from three directors.
[ ] Vote FOR
[ ] Vote AGAINST
[ ] ABSTAIN
(3) To ratify the selection of Gerstle, Rosen & Simonet LLC, Certified Public
Accountants, as the independent auditors for the fiscal year ended June 30,
2001.
[ ] Vote FOR
[ ] Vote AGAINST
[ ] ABSTAIN
(4) To ratify a Merger Agreement and Plan of Reorganization approved by the
Board of Directors on February 9, 2001, which provides, inter alia, for the
change of the Company's legal domicile from Utah to Delaware; and the change in
the name of the Company to Symphony Telecom Group, Inc.;
[ ] Vote FOR
[ ] Vote AGAINST
[ ] ABSTAIN
(5) To adopt the Company's 2001 Stock Option and Incentive Plan for Key
Employees, Consultants, and Professional Service Providers;
[ ] Vote FOR
[ ] Vote AGAINST
[ ] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IN THE ABSENCE OF SPECIFIC DIRECTIONS, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS NAMED AND FOR THE
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS. If any further
business is transacted at the Meeting, this Proxy will be voted in accordance
with the best judgment of the proxies. The Board of Directors recommends a vote
FOR each of the listed propositions. This Proxy may be revoked prior to its
exercise.
Note: Please sign exactly as name(s) appear on the stock certificate. An
attorney, executor, administrator, trustee or guardian or other fiduciary should
sign as such. ALL JOINT OWNERS MUST SIGN.
Dated: __________ _______________________________________
Signature of Shareholder(s)
_______________________________________
Signature of Shareholder(s)