SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-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:
[X] Preliminary Proxy Statement [_] Confidential, For Use of the
[_] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
________________________________________________________________________________
1) Title of each class of securities to which transaction applies:
Common Stock
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
74,290,411
________________________________________________________________________________
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):
Inapplicable - calculated under Rule 0-11(c)(1)(ii)
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid: $125.00
[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
SIONIX CORPORATION
Notice of 2002 Annual Meeting of Shareholders
October 23, 2002
To The Shareholders:
NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Shareholders of
Sionix Corporation, a Utah corporation (the "Company"), will be held on October
23, 2002, at 10:00 a.m., Pacific Time, at the Irvine Hyatt Regency Hotel, 17900
Jamboree Road, Irvine, CA 92614 for the following purposes.
1. To elect four directors to serve for the ensuing year and until
their successors are elected and qualified;
2. To authorize the reincorporation of the Company in the state of
Nevada; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on October , 2002
are entitled to notice of and to vote at the meeting.
Attendance at the Annual Meeting will be limited to shareholders and
guests of the Company. Shareholders may be required to furnish proof of
ownership of the Company's Common Stock before being admitted to the meeting.
Shareholders holding shares in the name of a broker or other nominee are
requested to bring a statement from the broker or nominee confirming their
ownership of the Company's Stock.
To ensure your representation at the meeting, you are urged to vote,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Shareholders attending the
meeting may vote in person even if they have returned a proxy.
By Order of the Board of Directors
Joan C. Horowitz, Secretary
Irvine, California
October , 2002
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card,
date and sign it, and return it in the envelope provided, which is addressed for
your convenience. No postage is required if mailed in the United States.
PLEASE MAIL YOUR PROXY AS PROMPTLY AS POSSIBLE
SIONIX CORPORATION
9272 Jeronimo Road Suite 108, Irvine, California 92618
PROXY STATEMENT
2002 ANNUAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of Sionix
Corporation (the "Company"), for use at the 2002 Annual Meeting of Shareholders
or any adjournment thereof (the "Annual Meeting"). The purposes of the Annual
Meeting are set forth below and in the accompanying Notice of 2002 Annual
Meeting of Shareholders. The Annual Meeting will be held on the 23rd of October
2002, at 10:00 a.m., Pacific Standard Time, at the Irvine Hyatt Regency Hotel
and Convention Center, 17900 Jamboree Road, Irvine, CA 92614.
RECORD DATE
Shareholders of record at the close of business on October , 2002 (the "Record
Date") are entitled to notice of and to vote at the meeting.
REVOCABILITY OF PROXY
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person.
SOLICITATION
The cost of solicitation will be borne by the Company. The Company's directors
and officers may solicit proxies personally or by telephone, facsimile or
telegram but will receive no additional compensation for doing so.
VOTING SECURITIES
OUTSTANDING SHARES
The Company has only one class of stock outstanding, the Company's Common
Stock, $.001 par value per share (the "Common Stock"). At the Record Date,
74,290,411 shares of the Company's Common Stock were issued and outstanding.
VOTING RIGHTS
Under the Utah Revised Business Corporation Act and the Company's Certificate of
Incorporation and Bylaws, each shareholder is entitled to one vote for each
share of Common Stock held at the Record Date for all matters, including the
election of directors. Pursuant to Section 16-10a-728 of the Utah Revised
Business Corporation Act, there is no cumulative voting. The required quorum for
the transaction of business at the Annual Meeting is a majority of the votes
eligible to be cast by holders of shares of common stock issued and outstanding
on the Record Date. Shares that are voted "FOR," "AGAINST," "WITHHELD" or
"ABSTAIN" are treated as being present at the Annual Meeting for the purposes of
establishing a quorum and are also treated as shares entitled to vote at the
Annual Meeting with respect to such matter.
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VOTING PROXIES
The shares of Common Stock represented by all properly executed proxies received
in time for the meeting will be voted in accordance with the directions given by
the shareholders. If no instructions are given, the shares will be voted FOR
each of the nominees named herein as directors, or their respective substitutes
as may be appointed by the Board of Directors, and FOR the proposal to
reincorporate the Company in Nevada.
BUSINESS TO BE TRANSACTED
ELECTION OF DIRECTORS
NOMINEES
The Company's Bylaws provide for not less than three nor more than eleven
directors. There are presently four directors, and it is contemplated that a
Board of four directors will be elected at the meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for
management's nominees named below, all of whom are currently directors of the
Company. In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them in such
a manner as will ensure the election of as many of the nominees listed below as
possible. It is not expected that any nominee will be unable or will decline to
serve as a director. The term of office of each director is until the Company's
next annual meeting of shareholders and until such person's successor has been
elected and qualified. The names of the four nominees and certain information
about them set forth below:
Name Of Nominee Age Principal Occupation Director Since
- --------------- --- -------------------- --------------
James J. Houtz 63 President and Chief Operating Officer 1998
Joan C. Horowitz 60 Secretary and Treasurer, Office Manager 1998
Robert E. McCray 66 Chief Financial Officer 1998
Rodney Anderson 75 Director 2001
BRIEF DESCRIPTION OF NOMINEES
Mr. Houtz has been President and Chief Operating Officer of the Company since
March 1998. For more than five years prior to that time he was a self-employed
consultant in the areas of engineering and new product development.
Mr. McCray has been Chief Financial Officer of the Company since July 1998.
Prior to that time he was employed by San Clemente Hospital and Medical Center,
as Supervisor-Accounts Payable and Supervisor-Data Processing
Ms. Horowitz has been Secretary/Treasurer and Office Manager of the Company
since April 1998. Prior to that time she was employed by Coldwell Banker in
office management.
Mr. Anderson has been President of R.J. Metal Products, Anaheim, California, for
the past 20 years, and has been engaged in the engineering and manufacturing of
metal products for 50 years. He has also served on the board of directors of
three corporations.
COMPENSATION OF DIRECTORS
The directors receive no compensation for acting as directors.
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SECTION 16(a) COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership (Forms 3, 4 and 5) with the
Securities and Exchange Commission. Officers, directors and
greater-than-ten-percent shareholders are required to furnish the Company with
copies of all such forms filed by them.
To the Company's knowledge, based solely on the Company's review of such reports
or representations from certain reporting persons that no Section 16(a) forms
were required to be filed by those persons, the Company believes that during the
year ended September 30, 2001, all filing requirements applicable to its
officers, directors, and other persons subject to Section 16 of the Exchange Act
were complied with.
EXECUTIVE COMPENSATION
The following table sets forth certain compensation awarded or paid by the
Company to its three highest paid persons who are officers or directors during
the fiscal years ended September 30, 1999, 2000, and 2001, respectively.
LONG-TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------- ----------------------- ----------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING
NAME AND FISCAL COMPEN- STOCK OPTIONS/ LTIP OTHER
PRINCIPAL POSITION YEAR SALARY BONUS SATION AWARDS SARs PAYOUTS
James J. Houtz, President 1999 $107,667 -0- -0- $ 344,272 -0- -0- -0-
2000 $115,679 -0- -0- $ 989,352 -0- -0- -0-
2001 $101,136 -0- -0- -0- 6,171,000 shrs -0- -0-
Robert McCray, Chief..... 1999 $ 44,713 -0- -0- $ 16,191 -0- -0- -0-
Financial Officer 2000 $ 55,080 -0- -0- $ 88,895 -0- -0- -0-
2001 $ 54,238 -0- -0- -0- 583,200 shrs -0- -0-
Joan Horowitz, Secretary.. 1999 $ 25,000 -0- -0- $ 18,406 -0- -0- -0-
2000 $ 21,565 -0- -0- $ 54,739 -0- -0- -0-
2001 $ 21,275 -0- -0- -0- 279,940 shrs -0- -0-
The following able sets forth certain information regarding stock
options granted to the named Executive Officers during the twelve months ended
September 30, 2001:
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES
OPTIONS IN FISCAL EXERCISE
NAME YEAR GRANTED YEAR PRICE EXPIRATION DATE
---- ---- ------- ---- ----- ---------------
James J. Houtz..... 2001 6,171,000 87.7% $.15 April 19, 2010
Robert McCray...... 2001 583,200 8.3% .15 April 19, 2010
Joan Horowitz...... 2001 279,940 4.0% .15 April 19, 2010
The following table sets forth certain information as of September 30,
2001 with respect to options held by the Named Executive Officers. The Company
has no outstanding stock appreciation rights, either freestanding or in tandem
with options.
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OPTION VALUES AS OF SEPTEMBER 30, 2001
--------------------------------------------
SHARES NUMBER OF UNEXERCISED VALUE OF
ACQUIRED ON VALUE OPTIONS AT IN-THE-MONEY OPTIONS AT
EXERCISE REALIZED SEPTEMBER 30, 2001 SEPTEMBER 30, 2001(1)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------- --- --- ------------------------- ------------------------
James J. Houtz..... N/A -0- 617,100/5,553,900 $24,684 /$222,156
Robert McCray...... N/A -0- 58,320 /524,880 $2,333 /$20,995
Joan Horowitz...... N/A -0- 27,994/251,946 $1,120 /$10,078
(1) Assumes that a share of Common Stock was valued at $.19 per share on
September 30, 2001. Amounts reflected are based on this assumed price minus
the exercise price and do not indicate that shares were sold.
THE SIONIX CORPORATION 2001 STOCK OPTION PLAN
In April 2001 the Board of Directors adopted the Sionix Corporation
2001 Stock Option Plan (the "Plan"). The Plan authorizes the granting of options
to purchase up to a maximum of 6,500,000 shares of Common Stock to qualified
officers, key employees, and directors. The Plan will terminate in 2011, unless
sooner terminated by the Board of Directors.
The Plan provides only for the grant of nonqualified stock options.
Options granted under the Plan generally have a term of not more that 10 years
and include vesting provisions.
At the time the Plan was adopted, the Board of Directors granted
options to purchase 6,500,000 shares to the Company's executive officers and, of
which 5,100,000 were granted to James R. Houtz, 500,000 were granted to Robert
McCray, and 400,000 were granted to Joan Horowitz. These options vest on a
quarterly basis over a period of five years, and were issued at an exercise
price of $.16 per share, the fair market value as of the date of grant.
STRUCTURE AND FUNCTION OF THE BOARD OF DIRECTORS
During the last fiscal year, the Company's Board of Directors held five
regular and special meetings. All directors attended all of the meetings. The
Board has no Audit Committee, Nominating Committee or Compensation Committee.
The Board of Directors, meeting as a whole, consults with the Company's
independent auditors concerning their engagement and audit plan, and thereafter
concerning the auditor's report and management letter and with the assistance of
the independent auditors, also monitors the adequacy of the Company's internal
accounting controls. With respect to compensation, the Board of Directors,
acting as a whole, determines the compensation of corporate officers, and will
determine the persons entitled to participate in stock option, bonus and other
similar plans. The Board of Directors also meets as a whole to nominate the
individuals to be proposed by the Board of Directors for election as directors
of the Company.
There is no family relationship between any nominee and any other
nominee or executive officer of the Company, except that James R. Houtz is
married to Joan Horowitz.
APPROVAL OF REINCORPORATION OF COMPANY
The Board of Directors believes that the best interests of the Company
and its shareholders will be served by changing the Company's state of
incorporation from Utah to Nevada (the "Reincorporation"). The Board of
Directors has approved the Reincorporation, subject to approval of the
shareholders. The Reincorporation, if approved by the shareholders, will be
accomplished by merging the Company into a newly formed Nevada subsidiary, also
named Sionix Corporation ("Sionix Nevada").
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PRINCIPAL REASONS FOR THE PROPOSED REINCORPORATION
The Company was originally incorporated as a Utah corporation in 1985
under the name "Coronado Capital Corporation," by persons not associated with
the current management of the Company. The Company's management does not know
why Utah was selected as the jurisdiction for incorporation; the Company has no
other significant connection with the State of Utah. Once management of the
Company determined to reincorporate, it began surveying other states to
determine a suitable state for reincorporation. Management considered several
alternatives, but ultimately concluded that reincorporation in Nevada would best
suit the needs of the Company. Over the years, the state of Nevada, principally
through legislative action, has developed a comprehensive and flexible body of
corporate law that is responsive to the needs of modern business. Many of the
largest and most successful corporations in the United States have either chosen
Nevada as their initial state of incorporation or reincorporated there. The
large number of corporations seeking incorporation in the state of Nevada has
caused Nevada's legislative, executive, and judicial branches to take
affirmative steps to encourage corporations to establish themselves in the state
of Nevada, including reduced filing fees and corporate taxes, expedited filing
procedures, and flexible policies. The Company's Board of Directors believes
that the advantages offered by the corporate laws of Nevada will make the
Company a more manageable corporation for effecting its business activities.
MECHANICS AND EFFECT OF REINCORPORATION
Following shareholder approval of the reincorporation, the Company will
cause Sionix (Nevada) to be organized as a wholly-owned subsidiary of the
Company. The Company will then be merged into Sionix Nevada pursuant to the
terms of the proposed Plan and Agreement of Merger (the "Merger Agreement,") a
copy of which may be obtained from the Secretary of the Company. Upon the
completion of the merger, the owner of each outstanding common share of the
Company will automatically own one share of Common Stock of Sionix (Nevada).
Each outstanding certificate representing a Company common share or shares will
continue to represent the same number of shares in Sionix Nevada. Thus, it will
NOT be necessary for shareholders of the Company to exchange their existing
share certificates. The Common Stock of the Company will continue to be traded
on the OTC Bulletin Board market under the same symbol, SINX, subsequent to the
reincorporation. The Reincorporation and the merger will effect a change in the
legal domicile of the Company and other changes of a legal nature, the most
significant of which are described in this Proxy Statement. However, the
Reincorporation and merger will not result in any change in the name, business,
management, location of the Company's principal executive offices, assets,
liabilities, or net worth or accounting practices.
The Articles of Incorporation of Sionix (Nevada)and its By-laws (the
"Nevada Charter Documents") will be the governing instrument following the
transactions. Set forth below is a discussion of some of the effects of the
reincorporation of the Company in the state of Nevada that management believes
to be material. The summary of the provisions of the new Articles of
Incorporation and changes to the existing Articles of Incorporation of the
Company set forth below is not intended to be complete and is qualified by the
provisions of the Articles of Incorporation. A copy of the current Articles of
Incorporation, as well as a copy of the Nevada Charter Documents, may be
obtained by a written request addressed to the Company.
In connection with the reincorporation of the Company in the state of
Nevada, the bylaws of Sionix (Nevada) will become the bylaws of the Company and
will thereafter govern the corporate affairs of the Company. There are no
material differences between the bylaws of the Company and the bylaws of Sionix
(Nevada), other than the changes to conform to Nevada corporate law. Copies of
the current bylaws and the proposed bylaws may be obtained by written request
addressed to the Company.
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CORPORATE LAWS OF NEVADA AND UTAH-COMPARISON
The Nevada General Corporation Law (the "Nevada Code") differs from the
Utah Revised Business Corporation Act (the "Utah Code") in certain respects. It
is impractical to describe all such differences, but the following is a summary
description of the more significant differences. This summary description is
qualified in its entirety by reference to the Nevada Code and the Utah Code.
ELECTION AND REMOVAL OF DIRECTORS
NEVADA. Any director, or the entire Board, may be removed with or
without cause, but only by the vote of not less than two thirds 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 will hold office until
the next annual meeting of shareholders and until his or her successor is
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
NEVADA. Under Nevada law, any stockholder of record of a corporation
for at least six months immediately preceding the demand, or any person holding
at least 5% of all of its outstanding shares, is entitled to inspect, upon at
least 5 days written demand, and during normal business hours, the company's
stock ledger, a list of its stockholders, and its other books and records, and
to make copies or extracts therefrom.
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
NEVADA. Under Nevada law, contracts or transactions in which a director
or officer is financially interested are not automatically void or voidable if
(i) the fact of the common directorship, office or financial interest is known
to the board of directors or committee, and the board or committee authorizes,
approves or ratifies the contract or transactions in good faith by a vote
sufficient for the purpose, without counting the vote or votes of the common or
interested director or directors, or (ii) the contract or transaction, in good
faith, is ratified or approved by the holders of a majority of the voting power,
(iii) the fact of common directorship, office or financial interest known to the
director or officer at the time of the transactions is brought before the board
of directors for actions, or (iv) the contract or transaction is fair to the
corporation at the time it is authorized or approved. Common or interested
directors may be counted to determine presence of a quorum and if the votes of
the common or interested directors are not counted at the meeting, then a
majority of directors may authorize, approve or ratify a contract or
transactions.
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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 shareholders 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
NEVADA. Nevada law provides for discretionary indemnification made by
the corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances. The determination must be made either: (i) by the
stockholders; (ii) by the board of directors by majority vote of a quorum
consisting of directors who were not parties to the actions, suit or proceeding;
(iii) if a majority vote of a quorum consisting of directors who were not
parties to the actions, suit or proceeding so orders, by independent legal
counsel in a written opinion; or (iv) If a quorum consisting of directors who
were not parties to the actions, suit or proceeding cannot be obtained, by
independent legal counsel in a written opinion. The Articles of Incorporation,
the bylaws or an agreement made by the corporation may provide that the expenses
of officers and directors incurred in defending a civil or criminal action, suit
or proceeding must be paid by the corporation as they are incurred and in
advance of the final disposition of the actions, suit or proceeding, upon
receipt of an undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the corporation. The provisions do
not affect any right to advancement of expenses to which corporate personnel
other than directors or officers may be entitled under any contract or otherwise
by law. The indemnification and advancement of expenses authorized in or ordered
by a court pursuant to Nevada law does not exclude any other rights to which a
person seeking indemnification or advancement of expenses may be entitled under
the Articles of Incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding office, except that
indemnification, unless ordered by a court or for the advancement of expenses,
may not be made to or on behalf of any director or officer if his acts or
omissions involved intentional misconduct, fraud or a knowing violation of the
law and was material to the cause of action. In addition, indemnification
continues for a person who has ceased to be a director, officer, employee or
agent and inures to the benefit of the heirs, executors and administrators of
such a person.
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 actions taken or any failure to take actions 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
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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.
VOTING RIGHTS WITH RESPECT TO EXTRAORDINARY CORPORATE TRANSACTIONS
NEVADA. 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 articles of
incorporation, no vote of stockholders of the corporation surviving a merger is
necessary if: (i) the merger does not amend the articles 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
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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
Nevada 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, Nevada law
generally does not require class voting, except in certain transactions
involving an amendment to the articles of incorporation that adversely affects a
specific class of shares.
SHAREHOLDERS' CONSENT WITHOUT A MEETING
NEVADA. Unless otherwise provided in the articles of incorporation or
the bylaws, any actions required or permitted to be taken at a meeting of the
stockholders may be taken without a meeting if, before or after taking the
actions, a written consent is signed by the stockholders holding at least a
majority of the voting power, except that if a different proportion of voting
power is required for such an actions at a meeting, then that proportion of
written consent is required. In no instance where actions is authorized by
written consent need a meeting of the stockholders be called or notice given.
UTAH. Unless otherwise provided in the articles of incorporation,
actions 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
actions 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 must be provided to the shareholders who did not consent at least ten
days before the consummation of the transactions, actions or event authorized by
the shareholders). However, any written consent for the election of directors
must be unanimous.
SHAREHOLDER VOTING REQUIREMENTS
NEVADA. Unless the articles of incorporation or bylaws provide for
different proportions, a majority of the voting power, which includes the voting
power that is present in person or by proxy, regardless of whether the proxy has
authority to vote on all matters, constitutes a quorum for the transactions of
business. 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 must 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 voting power of the class or
series that is present or by proxy, regardless of whether the proxy has
authority to vote on all matters, constitutes a quorum for the transaction of
business. An act by the stockholders of each class or series is approved if a
majority of the voting power of a quorum of the class or series votes for the
actions.
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 actions 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
10
articles of incorporation provide otherwise, if a quorum exists, actions 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. 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.
DIVIDENDS
NEVADA. A corporation is prohibited from making a distribution to its
stockholders 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).
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).
ANTITAKEOVER PROVISIONS
UTAH. The Utah Control Share Acquisitions Act provides, among other
things, that, when any person obtains shares (or the power to direct the voting
shares) of "an issuing public corporation" such that the person's voting power
equals or exceeds any of three levels (20%, 33 1/3% or 50%), the ability to vote
(or to direct the voting of) the "control shares" is conditioned on approval by
a majority of the corporation's shares (voting in voting groups, if applicable),
excluding the "interested shares". Shareholder approval may occur at the next
annual meeting of the shareholders, or, if the acquiring person requests and
agrees to pay the associated costs of the corporation, at a special meeting of
the shareholders (to be held within 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. (The Company's
current Articles of Incorporation have no such provision). If the shareholders
grant voting rights to the control shares, and if the acquiring person obtained
a majority of the voting power, shareholders may be entitled to dissenters'
rights under the Utah Code. An acquisition of shares does not constitute a
control share acquisition if (i) the corporation's articles of incorporation or
bylaws provide that this Act does not apply, (ii) the acquisition is consummated
pursuant to a merger in accordance with the Utah Code or (iii) under certain
other specified circumstances.
NEVADA. Nevada's "Acquisition of Controlling Interest Statute" applies
to Nevada corporations that have at least 200 shareholders, with at least 100
shareholders of record being Nevada residents, and that do business directly or
indirectly in Nevada. (At present, the Company has fewer than 100 Nevada
residents as record shareholders). Where applicable, the statute prohibits an
acquiror from voting shares of a target company's stock after exceeding certain
threshold ownership percentages, until the acquiror provides certain information
to the company and a majority of the disinterested shareholders vote to restore
the voting rights of the acquiror's shares at a meeting called at the request
and expense of the acquiror. If the voting rights of such shares are restored,
11
shareholders voting against such restoration may demand payment for the "fair
value" of their shares (which is generally equal to the highest price paid in
the transaction subjecting the stockholder to the statute).The Nevada Code also
restricts a "business combination" with "interested shareholders", unless
certain conditions are met, with respect to corporations which have at least 200
shareholders of record. A "combination" includes (a) any merger with an
"interested stockholder," or any other corporation which is or after the merger
would be, an affiliate or associate of the interested stockholder, (b) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of assets, to
an "interested stockholder," having (i) an aggregate market value equal to 5% or
more of the aggregate market value of the corporation's assets; (ii) an
aggregate market value equal to 5% or more of the aggregate market value of all
outstanding shares of the corporation; or (iii) representing 10% or more of the
earning power or net income of the corporation, (c) any issuance or transfer of
shares of the corporation or its subsidiaries, to the "interested stockholder,"
having an aggregate market value equal to 5% or more of the aggregate market
value of all the outstanding shares of the corporation, (d) the adoption of any
plan or proposal for the liquidation or dissolution of the corporation proposed
by the "interested stockholder," (e) certain transactions which would result in
increasing the proportionate percentage of shares of the corporation owned by
the "interested stockholder," or (f) the receipt of benefits, except
proportionately as a stockholder, of any loans, advances or other financial
benefits by an "interested stockholder." An "interested stockholder" is a person
who, together with affiliates and associates, beneficially owns (or within the
prior three years, did beneficially own) 10% or more of the corporation's voting
stock. A corporation to which this statute applies may not engage in a
"combination" within three years after the interested stockholder acquired its
shares, unless the combination or the interested stockholder's acquisition of
shares was approved by the board of directors before the interested stockholder
acquired the shares. If this approval was not obtained, then after the three
year period expires, the combination may be consummated if all applicable
statutory requirements are met and either (a) (i) the board of directors of the
corporation approves, prior to such person becoming an "interested stockholder",
the combination or the purchase of shares by the "interested stockholder" or
(ii) the combination is approved by the affirmative vote of holders of a
majority of voting power not beneficially owned by the "interested stockholder"
at a meeting called no earlier than three years after the date the "interested
stockholder" became such or (b) (i) the aggregate amount of cash and the market
value of consideration other than cash to be received by holders of common
shares and holders of any other class or series of shares meets certain minimum
requirements set forth in the statutes and (ii) prior to the consummation of the
"combination", except in limited circumstances, the "interested stockholder"
will not have become the beneficial owner of additional voting shares of the
corporation.
APPRAISAL RIGHTS; DISSENTERS' RIGHTS
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 is
to 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 anything 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.
12
NEVADA. Nevada Law similarly limits dissenters rights, when the shares
of the corporation are listed on a national securities exchange included in the
National Market System established by the National Association of Securities
Dealers, Inc. or are held by at least 2,000 shareholders of record, unless the
shareholders are required to accept in exchange for their shares anything other
than cash or (i) shares in the surviving corporation, (ii) shares in another
entity that is publicly listed or held by more than 2,000 shareholders, or (iii)
any combination of cash or shares in an entity described in (i) or (ii). Also,
the Nevada Code does not provide for dissenters' rights in the case of a sale of
assets.
SPECIAL MEETINGS OF SHAREHOLDERS
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.
NEVADA. The Nevada Code provides that a special meeting of shareholders
may be called by: (i) a corporation's board of directors; (ii) the persons
authorized by the articles of incorporation or bylaws; or (iii) the holders of
not less than 10% of all votes entitled to be cast on any issue to be considered
at the proposed special meeting. A corporation's articles of incorporation may
require a higher percentage of votes, up to a maximum of 50% to call a special
meeting of shareholders. The Company's current Articles of Incorporation do not
include any such provision. The current Bylaws of the Company provide that a
special meeting of shareholders may be called by the Chairman of the Board of
Directors, the Board of Directors, the President, or a majority of the
shareholders of record of all shares entitled to vote.
SHAREHOLDERS' CONSENT WITHOUT A MEETING
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.
NEVADA. The Nevada Code permits corporate action without a meeting of
shareholders upon the written consent of the holders of that number of shares
necessary to authorize the proposed corporate action being taken, unless the
certificate of incorporation or articles of incorporation, respectively,
expressly provide otherwise. In the event such proposed corporate action is
taken without a meeting by less than the unanimous written consent of
shareholders, the Nevada Code requires notice of the taking of such action be
sent to those shareholders who have not consented in writing within ten days of
the date such shareholder authorization is granted.
13
DISSENTERS' RIGHTS AS A RESULT OF THE REINCORPORATION MERGER
Shareholders of the Company will have dissenters' rights under Utah law
as a result of the proposed Reincorporation. Shareholders who oppose the
Reincorporation will have the right to receive payment for the value of their
shares as set forth in sections 16-10(a)-1301 et. seq. of the Utah Code. A copy
of these sections is attached hereto as Appendix A to this Proxy Statement. The
material requirements for a shareholder to properly exercise his or her rights
are summarized below. However, these provisions are very technical in nature,
and the following summary is qualified in its entirety by the actual statutory
provisions that should be carefully reviewed by any shareholder wishing to
assert such rights.
Under the Utah Code, such dissenters' rights will be available only to
those shareholders of the Company who (i) object to the proposed Reincorporation
in writing prior to or at the Special Meeting before the vote on the matter is
taken (a negative vote will not itself constitute such a written objection); and
(ii) do not vote any of their shares in favor of the proposed Reincorporation at
the Special Meeting. Within ten days after the effective date of the
Reincorporation, Sionix (Nevada) will send to each shareholder who has satisfied
both of the foregoing conditions a written notice in which Sionix (Nevada) will
notify such shareholders of their right to demand payment for their shares and
will supply a form for dissenting shareholders to demand payment. Shareholders
will have 30 days to make their payment demands or lose such rights. If required
in the notice, each dissenting shareholder must also certify whether or not he
or she acquired beneficial ownership of such shares before or after the date of
the first announcement to the news media of the proposed transaction. Upon
receipt of each demand for payment, Sionix (Nevada) will pay each dissenting
shareholder the amount that Sionix (Nevada) estimates to be the fair value of
such shareholder's shares, plus interest from the date of the completion of the
Reincorporation to the date of payment. With respect to any dissenting
shareholder who does not certify that he or she acquired beneficial ownership of
the shares prior to the first public announcement of the transaction, Sionix
(Nevada) may, instead of making payment, offer such payment if the dissenter
agrees to accept it in full satisfaction of his or her demand. "Fair value"
means the value of the shares immediately before the effectuation of the
Reincorporation, excluding any appreciation or depreciation in anticipation of
such events. Any dissenter who does not wish to accept the payment or offer made
by Sionix (Nevada) must notify Sionix (Nevada) in writing of his or her own
estimate of the fair value of the shares within 30 days after the date Sionix
(Nevada) makes or offers payment. If the dissenting shareholder and Sionix
(Nevada) are unable to agree on the fair value of the shares, then Sionix
(Nevada) will commence a proceeding with the Utah courts within 60 days after
receiving the dissenter's notice of his or her own estimate of fair value. If
Sionix (Nevada) does not commence such a proceeding within the 60-day period, it
must pay each dissenter whose demand remains unresolved the amount demanded by
such dissenter. If a proceeding is commenced, the court will determine the fair
value of the shares and may appoint one or more appraisers to help determine
such value. All dissenting shareholders must be a party to the proceeding, and
all such shareholders will be entitled to judgment against Sionix (Nevada) for
the amount of the fair value of their shares, to be paid on surrender of the
certificates representing such shares. The judgment will include an allowance
for interest (at a rate determined by the court) to the date of payment. The
costs of the court proceeding, including the fees and expenses of any
appraisers, will be assessed against Sionix (Nevada) unless the court finds that
the dissenters acted arbitrarily, vexatiously or not in good faith in demanding
payment at a higher amount than that offered by Sionix (Nevada). Both Sionix
(Nevada) and the dissenters must bear their own respective legal fees and
expenses, unless the court requires one party to pay such legal fees and
expenses because of the conduct of such party. The loss or forfeiture of
appraisal rights simply means the loss of the right to receive a cash payment
from Sionix (Nevada) in exchange for shares. In such event the shareholder would
still hold the appropriate number of shares of Sionix (Nevada).
14
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based
on the Internal Revenue Code of 1986, as amended (the "Code"), and applicable
Treasury regulations promulgated thereunder. This summary does not address the
tax treatment of special classes of shareholders, such as banks, insurance
companies, tax-exempt entities and foreign persons. Stockholders desiring to
know their individual federal, state, local and foreign tax consequences should
consult their own tax advisors.
The Reincorporation is intended to qualify as a tax-free
reorganization under Section 368(a)(1)(F) or 368(a)(1)(A) of the Code. Assuming
such tax treatment, no taxable income, gain, or loss will be recognized by the
Company or the shareholders as a result of the exchange of shares of Company
Common Stock for shares of Sionix (Nevada) Common Stock upon consummation of the
transaction. The combination and change of each share of the Company's Common
Stock into one share of Sionix (Nevada) Common Stock will be a tax-free
transaction, and the holding period and tax basis of Common Stock will be
carried over to the Sionix (Nevada) Common Stock received in exchange therefor.
ABANDONMENT
Notwithstanding a favorable vote of the shareholders, the Company
reserves the right by action of the Board of Directors to abandon the
Reincorporation prior to effectiveness of the Reincorporation if it determines
that such abandonment is in the best interests of the Company. The Board of
Directors has made no determination as to any circumstances which may prompt a
decision to abandon the Reincorporation. Approval by shareholders of the
Reincorporation will constitute approval of the Merger Agreement, the Articles
of Incorporation of Sionix(Nevada), and the Bylaws of Sionix (Nevada).
RECOMMENDATION OF THE BOARD OF DIRECTORS
Under the Company's Articles of Incorporation and pursuant to the Utah
Code, the proposal to reincorporate the Company in Nevada pursuant to the
Reincorporation must be approved by the affirmative vote of at least a majority
of the shares of Common Stock present in person or by proxy at the Annual
Meeting and entitled to vote at the Meeting. THE BOARD OF DIRECTORS OF THE
COMPANY UNANIMOUSLY RECOMMENDS A VOTE "FOR" ITEM 2.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth ownership information as of August 31, 2002 with
respect to all officers and directors and promoters, and each shareholder who
beneficially owns more than 5% of the outstanding shares:
Name and Address No. of Shares Percentage
---------------- ------------- ----------
James J. Houtz 8,848,117 (1) 11.9%
9272 Jeronimo Road, Suite 108
Irvine, CA 92618
Robert E. McCray 487,833 (2) .6%
9272 Jeronimo Road, Suite 108
Irvine, CA 92618
Joan C. Horowitz 345,043 (3) .5%
9272 Jeronimo Road, Suite 108
Irvine, CA 92618
All Directors and Officers 9,680,993 13.0%
as a Group (3 Persons)
15
(1) Includes 1,851,300 shares issuable upon exercise of options that become
exercisable within 60 days.
(2) Includes 174,960 shares issuable upon exercise of options that become
exercisable within 60 days.
(3) Includes 83,982 shares issuable upon exercise of options that become
exercisable within 60 days.
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy statement and
form of proxy relating to the Company's next annual meeting of shareholders,
proposals by the Company's shareholders intended to be presented at such annual
meeting must be received by the Company no later than ,2003.
ANNUAL REPORT ON FORM 10-KSB
The Company's Annual Report on Form 10-KSB, which includes audited financial
statements for the Company's fiscal year ended September 30, 2001, is being
mailed to shareholders with this proxy statement.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual Meeting. If
any other matters properly come before the meeting, the persons named in the
accompanying form of Proxy will vote, in their discretion, the shares they
represent.
Dated: October , 2002
16
PROXY
SIONIX CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
OCTOBER 23, 2002
The undersigned, a stockholder of SIONIX CORPORATION (the "Company"),
does hereby appoint JAMES J. HOUTZ and ROBERT McCRAY, as the attorneys and
proxies of the undersigned, with power of substitution, for and on behalf of the
undersigned, and to attend the Annual Meeting of Stockholders of the Company to
be held at 10:00 a.m., Pacific Time, at the Irvine Hyatt Regency Hotel, 17900
Jamboree Road, Irvine, California, on October 23, 2002 and any adjournment or
adjournments thereof (the "Annual Meeting"), to represent the undersigned at the
Annual Meeting, and there to vote all the shares of Common Stock of the Company
which the undersigned is entitled to vote at the Annual Meeting, in any manner
and with the same effect as if the undersigned were personally present at the
Annual Meeting, and the undersigned hereby authorizes and instructs the above
named proxies to vote as specified below.
The shares represented by this Proxy will be voted only if this Proxy
is properly executed and timely returned. In that event, such shares will be
voted in the manner directed herein. If no direction is made on how you desire
your shares to be voted, the Proxy holder will have complete discretion in
voting the shares on any matter voted on at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE FOLLOWING:
The shares represented by this Proxy shall be voted in the following
manner:
FOR ELECTION AS DIRECTORS FOR AGAINST WITHHOLD
- ------------------------- --- ------- --------
JAMES J. HOUTZ [ ] [ ] [ ]
ROBERT E. MC CRAY [ ] [ ] [ ]
JOAN C. HOROWITZ [ ] [ ] [ ]
RODNEY ANDERSON [ ] [ ] [ ]
REINCORPORATION IN NEVADA [ ] [ ] [ ]
The undersigned does hereby revoke any Proxy previously given with
respect to the shares represented by this Proxy.
NOTE: As to shares held in joint names, each joint owner should sign.
If the signer is a corporation, please sign full corporate name by a duly
authorized officer. If a partnership, please sign in partnership name by an
authorized person. If signing as attorney, executor, administrator, trustee,
guardian, or in other representative capacity, please give full title as such.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROPERLY RETURN IT USING
THE ENCLOSED ENVELOPE.
Number of Shares Owned: _________________________________
Dated: ____________________ ____________________________________
Signature
------------------------------------
Name (typed or printed)
------------------------------------
Address
Dated: ____________________ ____________________________________
Signature
------------------------------------
Name (typed or printed)
------------------------------------
Address
APPENDIX A
UTAH REVISED BUSINESS CORPORATION ACT
PART 13
16-10A-1301. DEFINITIONS. For purposes of Part 13:
(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 16-10A-1302 and who exercises that right when and
in the manner required by Sections 16-10A-1320 through 16-10A-1328.
(4) "Fair value" with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the statutory rate set forth in Section
15-1-1, compounded annually.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent the beneficial owner
is recognized by the corporation as the shareholder as provided in Section
16-10A-723.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
16-10A-1302. RIGHT TO DISSENT. (1) A shareholder, whether or not entitled to
vote, is entitled to dissent from, and obtain payment of the fair value of
shares held by him in the event of, any of the following corporate actions:
(a) consummation of a plan of merger to which the corporation is a party
if:
(i) shareholder approval is required for the merger by Section 16-10A-1103
or the articles of incorporation; or
(ii) the corporation is a subsidiary that is merged with its parent under
Section 16-10A-1104;
(b) consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired;
(c) consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of the corporation for which a shareholder
vote is required under Subsection 16-10A-1202(1), but not including a sale for
cash pursuant to a plan by which all or substantially all of the net proceeds of
the sale will be distributed to the shareholders within one year after the date
of sale; and
(d) consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of an entity controlled by the corporation
if the shareholders of the corporation were entitled to vote upon the consent of
the corporation to the disposition pursuant to Subsection 16-10A-1202(2).
(2) A shareholder is entitled to dissent and obtain payment of the fair
value of his shares in the event of any other corporate action to the extent the
articles of incorporation, bylaws, or a resolution of the board of directors so
provides.
A-1
(3) Notwithstanding the other provisions of this part, except to the extent
otherwise provided in the articles of incorporation, bylaws, or a resolution of
the board of directors, and subject to the limitations set forth in Subsection
(4), a shareholder is not entitled to dissent and obtain payment under
Subsection (1) of the fair value of the shares of any class or series of shares
which either were listed on a national securities exchange registered under the
federal Securities Exchange Act of 1934, as amended, or on the National Market
System of the National Association of Securities Dealers Automated Quotation
System, or were held of record by more than 2,000 shareholders, at the time of:
(a) the record date fixed under Section 16-10A-707 to determine the
shareholders entitled to receive notice of the shareholders' meeting at which
the corporate action is submitted to a vote;
(b) the record date fixed under Section 16-10A-704 to determine
shareholders entitled to sign writings consenting to the proposed corporate
action; or
(c) the effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
(4) The limitation set forth in Subsection (3) does not apply if the
shareholder will receive for his shares, pursuant to the corporate action,
anything except:
(a) shares of the corporation surviving the consummation of the plan of
merger or share exchange;
(b) shares of a corporation which at the effective date of the plan of
merger or share exchange either will be listed on a national securities exchange
registered under the federal Securities Exchange Act of 1934, as amended, or on
the National Market System of the National Association of Securities Dealers
Automated Quotation System, or will be held of record by more than 2,000
shareholders;
(c) cash in lieu of fractional shares; or
(d) any combination of the shares described in Subsection (4), or cash in
lieu of fractional shares.
(5) A shareholder entitled to dissent and obtain payment for his shares
under this part may not challenge the corporate action creating the entitlement
unless the action is unlawful or fraudulent with respect to him or to the
corporation.
16-10A-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS. (1) A record shareholder
may assert dissenters' rights as to fewer than all the shares registered in his
name only if the shareholder dissents with respect to all shares beneficially
owned by any one person and causes the corporation to receive written notice
which states the dissent and the name and address of each person on whose behalf
dissenters' rights are being asserted. The rights of a partial dissenter under
this subsection are determined as if the shares as to which the shareholder
dissents and the other shares held of record by him were registered in the names
of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(a) the beneficial shareholder causes the corporation to receive the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) the beneficial shareholder dissents with respect to all shares of which
he is the beneficial shareholder.
A-2
(3) The corporation may require that, when a record shareholder dissents
with respect to the shares held by any one or more beneficial shareholders, each
beneficial shareholder must certify to the corporation that both he and the
record shareholders of all shares owned beneficially by him have asserted, or
will timely assert, dissenters' rights as to all the shares unlimited on the
ability to exercise dissenters' rights. The certification requirement must be
stated in the dissenters' notice given pursuant to Section 16-10A-1322.
16-10A-1320. NOTICE OF DISSENTERS' RIGHTS. (1) If a proposed corporate action
creating dissenters' rights under Section 16-10A-1302 is submitted to a vote at
a shareholders' meeting, the meeting notice must be sent to all shareholders of
the corporation as of the applicable record date, whether or not they are
entitled to vote at the meeting. The notice shall state that shareholders are or
may be entitled to assert dissenters' rights under this part. The notice must be
accompanied by a copy of this part and the materials, if any, that under this
chapter are required to be given the shareholders entitled to vote on the
proposed action at the meeting. Failure to give notice as required by this
subsection does not affect any action taken at the shareholders' meeting for
which the notice was to have been given.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10A-1302 is authorized without a meeting of shareholders pursuant to
Section 16-10A-704, any written or oral solicitation of a shareholder to execute
a written consent to the action contemplated by Section 16-10A-704 must be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this part, by a copy of this
part, and by the materials, if any, that under this chapter would have been
required to be given to shareholders entitled to vote on the proposed action if
the proposed action were submitted to a vote at a shareholders' meeting. Failure
to give written notice as provided by this subsection does not affect any action
taken pursuant to Section 16-10A-704 for which the notice was to have been
given.
16-10A-1321. DEMAND FOR PAYMENT -- ELIGIBILITY AND NOTICE OF INTENT. (1) If a
proposed corporate action creating dissenters' rights under Section 16-10A-1302
is submitted to a vote at a shareholders' meeting, a shareholder who wishes to
assert dissenters' rights:
(a) must cause the corporation to receive, before the vote is taken,
written notice of his intent to demand payment for shares if the proposed action
is effectuated; and
(b) may not vote any of his shares in favor of the proposed action.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10A-1302 is authorized without a meeting of shareholders pursuant to
Section 16-10A-704, a shareholder who wishes to assert dissenters' rights may
not execute a writing consenting to the proposed corporate action.
(3) In order to be entitled to payment for shares under this part, unless
otherwise provided in the articles of incorporation, bylaws, or a resolution
adopted by the board of directors, a shareholder must have been a shareholder
with respect to the shares for which payment is demanded as of the date the
proposed corporate action creating dissenters' rights under Section 16-10A-1302
is approved by the shareholders, if shareholder approval is required, or as of
the effective date of the corporate action if the corporate action is authorized
other than by a vote of shareholders.
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(4) A shareholder who does not satisfy the requirements of Subsections (1)
through (3) is not entitled to payment for shares under this part. 16-10A-1322.
DISSENTERS' NOTICE. (1) If proposed corporate action creating dissenters' rights
under Section 16-10A-1302 is authorized, the corporation shall give a written
dissenters' notice to all shareholders who are entitled to demand payment for
their shares under this part.
(2) The dissenters' notice required by Subsection (1) must be sent no later
than ten days after the effective date of the corporate action creating
dissenters' rights under Section 16-10A-1302, and shall:
(a) state that the corporate action was authorized and the effective date
or proposed effective date of the corporate action;
(b) state an address at which the corporation will receive payment demands
and an address at which certificates for certificated shares must be deposited;
(c) inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(d) supply a form for demanding payment, which form requests a dissenter to
state an address to which payment is to be made;
(e) set a date by which the corporation must receive the payment demand and
by which certificates for certificated shares must be deposited at the address
indicated in the dissenters' notice, which dates may not be fewer than 30 nor
more than 70 days after the date the dissenters' notice required by Subsection
(1) is given;
(f) state the requirement contemplated by Subsection 16-10A-1303(3), if the
requirement is imposed; and
(g) be accompanied by a copy of this part.
16-10A-1323. PROCEDURE TO DEMAND PAYMENT. (1) A shareholder who is given a
dissenters' notice described in Section 16-10A-1322, who meets the requirements
of Section 16-10A-1321, and wishes to assert dissenters' rights must, in
accordance with the terms of the dissenters' notice:
(a) cause the corporation to receive a payment demand, which may be the
payment demand form contemplated in Subsection 16-10A-1322(2)(d), duly
completed, or may be stated in another writing;
(b) deposit certificates for his certificated shares in accordance with the
terms of the dissenters' notice; and
(c) if required by the corporation in the dissenters' notice described in
Section 16-10A-1322, as contemplated by Section 16-10A-1327, certify in writing,
in or with the payment demand, whether or not he or the person on whose behalf
he asserts dissenters' rights acquired beneficial ownership of the shares before
the date of the first announcement to news media or to shareholders of the terms
of the proposed corporate action creating dissenters' rights under Section
16-10A-1302.
(2) A shareholder who demands payment in accordance with Subsection (1)
retains all rights of a shareholder except the right to transfer the shares
until the effective date of the proposed corporate action giving rise to the
exercise of dissenters' rights and has only the right to receive payment for the
shares after the effective date of the corporate action.
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(3) A shareholder who does not demand payment and deposit share
certificates as required, by the date or dates set in the dissenters' notice, is
not entitled to payment for shares under this part.
16-10A-1324. UNCERTIFICATED SHARES. (1) Upon receipt of a demand for payment
under Section 16-10A-1323 from a shareholder holding uncertificated shares, and
in lieu of the deposit of certificates representing the shares, the corporation
may restrict the transfer of the shares until the proposed corporate action is
taken or the restrictions are released under Section 16-10A-1326.
(2) In all other respects, the provisions of Section 16-10A-1323 apply to
shareholders who own uncertificated shares.
16-10A-1325. PAYMENT. (1) Except as provided in Section 16-10A-1327, upon the
later of the effective date of the corporate action creating dissenters' rights
under Section 16-10A-1302, and receipt by the corporation of each payment demand
pursuant to Section 16-10A-1323, the corporation shall pay the amount the
corporation estimates to be the fair value of the dissenter's shares, plus
interest to each dissenter who has complied with Section 16-10A-1323, and who
meets the requirements of Section 16-10A-1321, and who has not yet received
payment.
(2) Each payment made pursuant to Subsection (1) must be accompanied by:
(a) (i) (A) the corporation's balance sheet as of the end of its most
recent fiscal year, or if not available, a fiscal year ending not more than 16
months before the date of payment;
(B) an income statement for that year;
(C) a statement of changes in shareholders' equity for that year and a
statement of cash flow for that year, if the corporation customarily provides
such statements to shareholders; and
(D) the latest available interim financial statements, if any;
(ii) the balance sheet and statements referred to in Subsection (i) must be
audited if the corporation customarily provides audited financial statements to
shareholders;
(b) a statement of the corporation's estimate of the fair value of the
shares and the amount of interest payable with respect to the shares;
(c) a statement of the dissenter's right to demand payment under Section
16-10A-1328; and
(d) a copy of this part.
16-10A-1326. FAILURE TO TAKE ACTION. (1) If the effective date of the corporate
action creating dissenters' rights under Section 16-10A-1302 does not occur
within 60 days after the date set by the corporation as the date by which the
corporation must receive payment demands as provided in Section 16-10A-1322, the
corporation shall return all deposited certificates and release the transfer
restrictions imposed on uncertificated shares, and all shareholders who
submitted a demand for payment pursuant to Section 16-10A-1323 shall thereafter
have all rights of a shareholder as if no demand for payment had been made.
(2) If the effective date of the corporate action creating dissenters'
rights under Section 16-10A-1302 occurs more than 60 days after the date set by
the corporation as the date by which the corporation must receive payment
demands as provided in Section 16-10A-1322, then the corporation shall send a
new dissenters' notice, as provided in Section 16-10A-1322, and the provisions
of Sections 16-10A-1323 through 16-10A-1328 shall again be applicable.
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16-10A-1327. SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER ANNOUNCEMENT
OF PROPOSED CORPORATE ACTION. (1) A corporation may, with the dissenters' notice
given pursuant to Section 16-10A-1322, state the date of the first announcement
to news media or to shareholders of the terms of the proposed corporate action
creating dissenters' rights under Section 16-10A-1302 and state that a
shareholder who asserts dissenters' rights must certify in writing, in or with
the payment demand, whether or not he or the person on whose behalf he asserts
dissenters' rights acquired beneficial ownership of the shares before that date.
With respect to any dissenter who does not certify in writing, in or with the
payment demand that he or the person on whose behalf the dissenters' rights are
being asserted, acquired beneficial ownership of the shares before that date,
the corporation may, in lieu of making the payment provided in Section
16-10A-1325, offer to make payment if the dissenter agrees to accept it in full
satisfaction of his demand.
(2) An offer to make payment under Subsection (1) shall include or be
accompanied by the information required by Subsection 16-10A-1325(2).
16-10A-1328. PROCEDURE FOR SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER. (1) A
dissenter who has not accepted an offer made by a corporation under Section
16-10A-1327 may notify the corporation in writing of his own estimate of the
fair value of his shares and demand payment of the estimated amount, plus
interest, less any payment made under Section 16-10A-1325, if:
(a) the dissenter believes that the amount paid under Section 16-10A-1325
or offered under Section 16-10A-1327 is less than the fair value of the shares;
(b) the corporation fails to make payment under Section 16-10A-1325 within
60 days after the date set by the corporation as the date by which it must
receive the payment demand; or
(c) the corporation, having failed to take the proposed corporate action
creating dissenters' rights, does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated shares as required
by Section 16-10A-1326.
(2) A dissenter waives the right to demand payment under this section
unless he causes the corporation to receive the notice required by Subsection
(1) within 30 days after the corporation made or offered payment for his shares.
16-10A-1330. JUDICIAL APPRAISAL OF SHARES -- COURT ACTION. (1) If a demand for
payment under Section 16-10A-1328 remains unresolved, the corporation shall
commence a proceeding within 60 days after receiving the payment demand
contemplated by Section 16-10A-1328, and petition the court to determine the
fair value of the shares and the amount of interest. If the corporation does not
commence the proceeding within the 60-day period, it shall pay each dissenter
whose demand remains unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in Subsection
(1) in the district court of the county in this state where the corporation's
principal office, or if it has no principal office in this state, the county
where its registered office is located. If the corporation is a foreign
corporation without a registered office in this state, it shall commence the
proceeding in the county in this state where the registered office of the
domestic corporation merged with, or whose shares were acquired by, the foreign
corporation was located.
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(3) The corporation shall make all dissenters who have satisfied the
requirements of Sections 16-10A-1321, 16-10A-1323, and 16-10A-1328, whether or
not they are residents of this state whose demands remain unresolved, parties to
the proceeding commenced under Subsection (2) as an action against their shares.
All such dissenters who are named as parties must be served with a copy of the
petition. Service on each dissenter may be by registered or certified mail to
the address stated in his payment demand made pursuant to Section 16-10A-1328.
If no address is stated in the payment demand, service may be made at the
address stated in the payment demand given pursuant to Section 16-10A-1323. If
no address is stated in the payment demand, service may be made at the address
shown on the corporation's current record of shareholders for the record
shareholder holding the dissenter's shares. Service may also be made otherwise
as provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced
under Subsection (2) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them, or in any amendment to it. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding commenced under
Subsection (2) is entitled to judgment:
(a) for the amount, if any, by which the court finds that the fair value of
his shares, plus interest, exceeds the amount paid by the corporation pursuant
to Section 16-10A-1325; or
(b) for the fair value, plus interest, of the dissenter's after-acquired
shares for which the corporation elected to withhold payment under Section
16-10A-1327.
16-10A-1331. COURT COSTS AND COUNSEL FEES. (1) The court in an appraisal
proceeding commenced under Section 16-10A-1330 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
that the dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under Section 16-10A-1328.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the requirements
of Sections 16-10A-1320 through 16-10A-1328; or
(b) against either the corporation or one or more dissenters, in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this part.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to those counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
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