SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Synergx Systems Inc.
(f/k/a Firetector Inc.)
(File No. 0-17580)
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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/ / 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.
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Synergx Systems Inc.
209 Lafayette Drive
Syosset, New York 11791
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of the
Stockholders of Synergx Systems Inc., a Delaware corporation ("Synergx" or the
"Company") to be held at the offices of Dolgenos Newman & Cronin LLP, 96 Spring
Street, 8th Floor, New York, New York 10012, on March 26, 2003 at 11:00 a.m.
At the meeting you will be asked to consider and vote upon (a) the
election of seven (7) Directors to Synergx's Board of Directors; (b) the
acquisition of 25% of the equity of Avante Technology Partners, a Canadian
partnership ("Tech") being organized to develop and market state-of-the-art
wireless technology (c) the acquisition of 25% of the Class B Participating
Units of Re:Port Business Solutions ("Re:Port") ; (d) the appointment of Marcum
& Kliegman LLP as Synergx's Auditors for the fiscal year ending September 30,
2003; and (e) any other business that properly comes before the meeting or any
adjournments or postponements thereof.
Your vote is important. We urge you to complete, sign, date and return
the enclosed proxy card promptly in the accompanying prepaid envelope. You may,
of course, attend the Meeting and vote in person, even if you have previously
returned your proxy card.
Sincerely yours,
Joseph Vitale,
President and Chief
Operating Officer
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on March 26, 2003
To the Stockholders of
Synergx Systems Inc.
Notice is hereby given that the Annual Meeting of Stockholders of
Synergx Systems Inc., a Delaware corporation ("Synergx" or the "Company") will
be held at 11:00 a.m., local time, on March 26, 2003 at the offices of Dolgenos
Newman & Cronin LLP, 96 Spring Street, 8th Floor, New York, New York, for the
following purposes:
(1) To consider and vote upon the election of the Board of Directors
consisting of seven (7) persons to serve until the next annual meeting of the
stockholders;
(2) To consider and vote upon the investment in 25% of the equity of
Avante Technology Partners, a Canadian partnership ("Tech") being organized to
develop and market state-of-the-art wireless technology, from Nafund
Inc.("Nafund") in exchange for (i) 225,000 shares of Common Stock; (ii) warrants
to purchase 25,000 shares of Common Stock at $2.00 per share for 24 months and
(iii) agreeing to provide secured loans up to Cdn$300,000 to Tech against the
satisfaction of certain development milestones.
(3) To consider and vote upon the investment in 25% of the Class B
Participating Units of Re:Port Business Solutions ("Re:Port") from Nafund in
exchange for (i) 175,000 shares of Common Stock and (ii) warrants to purchase
25,000 shares of Common Stock at $2.00 per share for 24 months.
(4) To consider and vote upon a proposal to ratify the selection of
Marcum & Kliegman LLP as Synergx's independent auditors for the fiscal year
ending September 30, 2003;
(5) To conduct such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
Only record holders of Common Stock at the close of business on
February 27, 2003 are entitled to notice of and to vote at the Annual Meeting
and any adjournments or postponements thereof.
To ensure that your vote will be counted, please complete, sign, date
and return the Proxy in the enclosed prepaid envelope whether or not you plan to
attend the Annual Meeting. You may revoke your proxy by notifying the secretary
of the company in writing at any time before it has been voted at the Annual
Meeting.
By Order of the Board of Directors
John A. Poserina
Secretary, Synergx Systems Inc.
February 28, 2003
Syosset, New York
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING.
SYNERGX SYSTEMS INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 26, 2003
THE ACCOMPANYING PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SYNERGX SYSTEMS Inc.
If properly signed and returned and not revoked, the proxy will be voted in
accordance with the instructions it contains. The persons named in the
accompanying proxy will vote the proxy for the Board of Director's slate of
directors and for the other matters listed on the proxy as recommended by the
Board of Directors unless contrary instructions are given. At any time before it
is voted, each proxy granted may be revoked by the stockholder by a later dated
proxy, by written revocation addressed to the Secretary of Synergx Systems Inc.
at the address below or by voting by ballot at the Annual Meeting.
The Company's principal executive offices are located at 209 Lafayette
Drive, Syosset, New York 11791. This proxy statement and the accompanying proxy
are being sent to stockholders on or about February 28, 2003. ANY PROXY MAY BE
REVOKED IN PERSON AT THE ANNUAL MEETING, BY SUBMITTING A PROXY DATED LATER THAN
THE PROXY TO BE REVOKED OR BY NOTIFYING THE SECRETARY OF THE COMPANY IN WRITING
AT ANY TIME PRIOR TO THE TIME THE PROXY IS VOTED.
VOTING SECURITIES
The Board has fixed the close of business on February 27, 2003 as the
record date (the "Record Date") for determination of stockholders entitled to
receive notice of and to vote at the Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on the Record Date will be
entitled to notice of and to vote at the Annual Meeting. At the close of
business on the Record Date, the Company had outstanding 1,874,425 shares of
Common Stock. The Common Stock is entitled to vote on the election of members of
the Board of Directors, ratification of the appointment of independent auditors
and other business as may properly come before the meeting or any adjournment
thereof. In addition, the Board is seeking the approval of a majority its
stockholders to approve the equity investment in (a) Avante Technology Partners
("Tech") and (b) Re:Port Business Solutions. The holders of a majority of the
Common Stock constitute a quorum for those portions of the Annual Meeting where
action is required of holders of Common Stock.
ACTION TO BE TAKEN UNDER PROXY
All proxies for holders of Common Stock in the accompanying form that
are properly executed and returned will be voted at the Annual Meeting and any
adjournments thereof in accordance with any specifications thereon or, if no
specifications are made, will be voted for the election of the seven nominees
described herein, for the investment in Avante Technology Partners, for the
investment in Re:Port Business Solutions and for ratification of the appointment
of independent auditors.
SUMMARY TERM SHEETS
Avante Technology Partners:
Equity 25% equity interest
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Technology 1. Exclusive for North America, transit
applications
License 2. Exclusive NY, NJ and CT for
all applications
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225,000 shares of Common Stock
Consideration 25,000 warrants exercisable for 24 months at
$2.00 per share
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Development Loan (secured) up to Cdn$300,000 against development
milestones
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Re:Port Business Solutions:
Investment 25% Class B Participating Units
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175,000 shares of Common Stock
Consideration 25,000 warrants exercisable for 24 months at
$2.00 per share
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Seven (7) directors will be elected to hold office duly until the next
Annual Meeting of Stockholders and until their successors have been elected and
duly qualified. The persons named on the accompanying proxy will vote all shares
for which they have received proxies for the election of the nominees named
below unless contrary instructions are given. In the event that any nominee
should become unavailable, shares will be voted for a substitute nominee unless
the number of directors constituting a full board is reduced. Directors are
elected by plurality vote.
There were three meetings of the Board of Directors of the Company during
the fiscal year ended September 30, 2002 (actions were taken by unanimous
consent). All directors attended 75% or more meetings of the Board of Directors.
Directors are not compensated for their service.
NOMINEES
The name, age and position with the Company of each nominee for director of
the Company is listed below, followed by summaries of the background and
principal occupations.
DATE SERVICE
NAME AGE OFFICE COMMENCED
Daniel S. Tamkin 43 Chairman, Chief October 1990
Executive Officer,
General Counsel,
Director, and
Audit Committee
Joseph Vitale 56 President, Chief May 1994
Operating Officer
and Director
John A. Poserina 62 Treasurer, Vice January 1997
President, Chief
Financial Officer,
Secretary and
Director
Dennis P. McConnell 49 Director and January 1997
Audit Committee
Henry Schnurbach 51 Director and October 1988
Audit Committee
J. Ian Dalrymple 51 Director May 2002
Mark I. Litwin 40 Director May 2002
Information Concerning Current Directors and Nominees for Director
Mr. Tamkin has a J.D. degree from New York University School of Law and an
A.B. degree from Columbia University. Mr. Tamkin has been Chief Executive
Officer since March 15, 1996, prior to which Mr. Tamkin was Vice President and
General Counsel of the Company from October 1990. Also since October 1990, Mr.
Tamkin has been Executive Vice President of Forum Financial Corporation, a
Toronto based merchant banking organization. Since November 1998, Mr. Tamkin has
been a Director and Chief Operating Officer of Ntex Incorporated, a manufacturer
of textile products. Mr. Tamkin is presently Counsel to Dolgenos Newman & Cronin
LLP, counsel to the Company.
Mr. Vitale has been President of the Company since March 15, 1996. Mr.
Vitale has been active in the fire/communications industry with Casey Systems
Inc. since 1982. Mr. Vitale has been President of Casey since 1993 and has held
the positions of Director of Engineering, Vice President - Engineering and
Executive Vice President. Mr. Vitale holds a Bachelor of Science degree in
Engineering from C.W. Post College and a Master of Science degree in Electrical
Engineering from New York University.
Mr. Poserina joined the Company as Treasurer, Vice President, Chief
Financial Officer and Director as of January 1, 1997. From December 1995 until
he joined the Company, Mr. Poserina was an independent financial consultant.
Also, from July 1996 to September 1996, Mr. Poserina was Chief Financial Officer
of Happiness Express Inc. Mr. Poserina was Chief Financial Officer of Dorne and
Margolin Inc. from November 1994 to December 1995. Prior to that, Mr. Poserina
spent 15 years as Vice President, Treasurer and Chief Financial Officer of
Chryon Corporation, which was a NYSE listed company registered under the
Securities Exchange Act of 1934 (the "Exchange Act"). Mr. Poserina holds a
Bachelor of Science degree in accounting from the University of Rhode Island and
is a Certified Public Accountant.
Mr. McConnell is a partner in the firm of Dolgenos Newman & Cronin LLP,
counsel to the Company. Prior to being associated with Dolgenos Newman & Cronin
LLP, he was associated with Varet & Fink P.C. from 1989 to March 1993. Mr.
McConnell holds a J.D. degree from New York Law School.
Mr. Schnurbach has a Bachelor of Commerce degree from Sir George Williams
University and is a Certified Management Accountant in Ontario. Since October
1991, Mr. Schnurbach has been Chief Executive Officer of Cantar/Polyair
Corporation ("CPC"). Since February 1996, Mr. Schnurbach has also served as
President of Polyair Inter Pack Inc., an Ontario corporation registered under
the Exchange Act and traded on the Toronto and American Stock Exchanges, and the
holding company of CPC.
Mr. Dalrymple has a Bachelor of Commerce degree and a Masters of Arts in
Economics from the University of Toronto. Since 1990, Mr. Dalrymple has been a
director of Nigel Stephens Counsel Inc., an Ontario corporation, which provides
investment and portfolio management services; NSC Holdings Inc., an Ontario
corporation which provides investment research and client administrative
services; and Fordal Holdings Inc., an Ontario corporation which provides
trading, settlement and related services to portfolio management firms. Mr.
Dalrymple is also a director of Cornerstone 52 Foundation, a charitable
foundation with focus on children's charities. In addition, Mr. Dalrymple has
been, since 1993, a director of Nafund Inc., an Ontario investment corporation
and, since 1996, a director of Nafund Administrators Inc., an Ontario
corporation originating merchant banking investments and advisory services.
Mr. Litwin has a B.A. and an M.B.A. from York University in Toronto,
Canada. Since 1990, Mr. Litwin has been the President, Chief Executive Officer
and a director of Mirtronics Inc. an Ontario corporation which is registered
under the Exchange Act. Mirtronics is the largest stockholder of Synergx.
There are no family relationships between any Director or Executive Officer
of Synergx and any other Director or Executive Officer of Synergx.
Directors hold office for a period of one year from the Annual Meeting of
Stockholders at which they are elected or until their successors are duly
elected and qualified. Officers are appointed by the Board of Directors and hold
office at the will of the Board. There is no nominating or compensation
committee of the Board of Directors nor is there any committee performing
similar functions. Messrs. Tamkin, Schnurbach and McConnell comprise the audit
committee of the Board of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Registrant is not aware of any Section 16(a) filing deficiencies. In
making these statements, the Company has relied on the written representations
of its directors and officers and copies of the reports that they and 10%
holders have filed with the Commission.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding beneficial ownership of the Company's outstanding Common Stock at
February 10, 2003 of (i) each beneficial owner of more than five percent of the
Common Stock, (ii) each of the Company's Directors, and (iii) all Officers and
Directors of the Company as a group.
Common Stock Beneficially Owned At February 10, 2003
Number of Shares Percent of Shares
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Mirtronics Inc.(1) 896,311 41.0%
Investors Money Management(10) 340,000 16.6%
Genterra Capital Corporation(7) 152,167 8.1%
Daniel S. Tamkin (2) 127,733 6.8%
Joseph Vitale (3, 4) 17,125 nil
Henry Schnurbach (4) 5,167 nil
John A. Poserina (3, 5) 17,167 nil
Dennis P. McConnell (4, 6) 4,167 nil
Mark Litwin (8) 1,048,478 48.0%
J. Ian Dalrymple (9) 0 nil
All Executive Officers and
Directors as a Group (7 Persons) 1,219,837 54.7%
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(1) Includes 310,000 shares of Common Stock issuable upon exercise of
warrants which are convertible into shares of Common Stock. See "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS". Address is 106 Avenue Road, Toronto,
Ontario.
(2) Includes 10,833 shares of Common Stock issuable upon exercise of
options granted by the Company. Address is 96 Spring Street, New York, NY.
(3) Address is 209 Lafayette Drive, Syosset, NY 11791.
(4) Issuable upon exercise of options granted by the Company.
(5) Includes 9,667 shares of Common Stock issuable upon exercise of options
granted by the Company.
(6) Address is 96 Spring Street, New York, NY.
(7) Address is 106 Avenue Road, Toronto, Ontario.
(8) By virtue of his position as an officer and/or director of such
entities, Mr. Litwin may be considered the beneficial owner of shares owned by
Mirtronics Inc. and Genterra Capital Corporation. Mr. Litwin expressly disclaims
such beneficial ownership. Address is 106 Avenue Road, Toronto, Ontario.
(9) Address is 1200 Sheppard Avenue East, Willowdale, Ontario.
(10) Includes 170,000 shares of Common Stock issuable upon exercise of
warrants.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1985, Casey Systems Inc, a wholly owned subsidiary of the Company,
entered into a royalty agreement with Joseph Vitale, prior to his becoming the
President and Chief Operating Officer of the Company. The agreement pays Mr.
Vitale a royalty on certain systems marketed and serviced by Casey. In fiscal
year ended September 30, 2002, Casey paid $75,852 pursuant to the terms of the
agreement.
Management believes the foregoing transaction was entered into on terms at
least as favorable as could be obtained from unrelated parties negotiating at
arms-length.
MANAGEMENT
The following table sets forth certain information with respect to the
Executive Officers of the Company:
DATE SERVICE
NAME AGE OFFICE COMMENCED
Daniel S. Tamkin 43 Chairman, Chief October 1990
Executive Officer,
General Counsel,
Director, and
Audit Committee
Joseph Vitale 56 President, Chief May 1994
Operating Officer
and Director
John A. Poserina 62 Treasurer, Vice January 1997
President, Chief
Financial Officer,
Secretary and
Director
Mr. Tamkin's biographical information is included under "Information
Concerning Current Directors and Nominees for Directors" in this Proxy
Statement.
Mr. Vitale's biographical information is included under "Information
Concerning Current Directors and Nominees for Directors" in this Proxy
Statement.
Mr. Poserina's biographical information is included under "Information
Concerning Current Directors and Nominees for Directors" in this Proxy
Statement.
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
compensation paid or accrued by the Company for services rendered to it for each
of the three fiscal years ended September 30, 2002, as to Daniel S. Tamkin, the
Company's present Chief Executive Officer, Joseph Vitale, the Company's
President and Chief Operating Officer, and John A. Poserina, the Company's Chief
Financial Officer and Secretary; none of the Company's other Executive Officers
had aggregate remuneration in excess of $100,000.
SUMMARY COMPENSATION TABLE
LONG
ANNUAL COMPENSATION TERM COMPENSATION
All Other
Year Salary ($) Bonus($) Other($) Option/SAR Compensation
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Daniel S. Tamkin
2002 $97,000 $5,600 --
2001 87,000 $20,000 5,600 (1) --
2000 74,000 20,000 5,600 --
Joseph Vitale
2002 $140,000 $6,000 --
2001 130,000 $30,000 6,000 (2) --
2000 113,000 30,000 6,000 --
John A. Poserina
2002 $151,000 $5,600 --
2001 141,000 $30,000 5,600 --
2000 124,000 30,000 5,600 --
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(1) Options to purchase 4,167 shares of Common Stock, at a price of $1.03 per
share were issued to Mr. Tamkin in December, 2000.
(2) Options to purchase 7,959 shares of Common Stock, at a price of $1.03 per
share were issued to Mr. Vitale in December, 2000.
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The following table details, as of September 30, 2002, the value of
unexercised in-the-money options held by Daniel S. Tamkin, Joseph Vitale and
John A. Poserina:
Number of Securities Value of Unexercised
Underlying Unexercised Options In-The-Money Options (1)
Exercisable Unexercisable Exercisable Unexercisable
---------- ------------ ----------- -------------
Daniels S. Tamkin 8,833 2,000 $ 792 $ 250
Joseph Vitale 14,367 2,758 3,001 417
John A. Poserina 7,667 2,000 1,542 250
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(1) Net value, calculated as the difference between the exercise price and the
market price reported for September 30, 2002.
In December 1995, the Board of Directors voted to institute a 401(k) plan
for nonunion employees to be effective January 1, 1996. The plan includes a
profit sharing provision at the discretion of the Board of Directors. No profit
sharing contributions were authorized in 2002. In 2001, the Board of Directors
approved a payment totaling $44,000 for participants of the non-union and union
401(k) plans.
Directors do not receive any compensation for their service. Out-of-pocket
expenses for travel, meals and miscellaneous expenses incurred in the course of
the Director's activities on behalf of the Company are reimbursed at cost.
On April 30, 1997, the Company and its shareholders adopted a nonqualified
stock option plan ("1997 Plan"), which was to expire September 30, 2002 and
extended to December 31, 2005; see below, except as to options then outstanding
under the 1997 Plan. Under the 1997 Plan, the Board of Directors may grant
options to eligible employees at exercise prices not less than 100% of the fair
market value of the common shares at the time the option is granted. The number
of shares of Common Stock that may be issued shall not exceed an aggregate of up
to 10% of its issued and outstanding shares from time to time. Options vest at a
rate of 20% per year commencing one year after date of grant. Issuances under
the 1997 Plan are to be reduced by options outstanding under a 1990 nonqualified
stock option plan (replaced by the 1997 Plan). Effective September 30, 1998, all
outstanding employee stock options were reset to an exercise price of $1.00 per
share.
On September 30, 2002, options on 24,083 of Common Stock were extended to
December 31, 2005 and the option exercise price remained $1.00 per share.
On December 29, 2000, options on 43,375 shares of Common Stock were
extended for five more years and the option price was reset from $1.00 to $1.03
per share.
The Company currently has issued and outstanding options to purchase
101,791 shares of its Common Stock, at various exercise prices ranging between
$1.00 and $1.125 per share, to certain of its officers, Directors and employees.
See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
AUDIT COMMITTEE
The Corporation has established a three-member audit committee within the
Board of Directors which currently consists of Messrs. Daniel S. Tamkin, Dennis
P. McConnell and Henry Schnurbach.
The Board of Directors has determined that each of Messrs. McConnell and
Schnurbach is an "independent director," as such term is defined by Rule
4200(a)(15) of the National Association of Securities Dealers' listing
standards.
The audit committee has reviewed and discussed the Corporation's audited
financial statements with management.
The audit committee has discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61 (SAS 61),
"Communication with Audit Committees," as amended, by the Auditing Standards
Board of the American Institute of Certified Public Accountants.
The audit committee has received the written disclosures and the letter
from the independent accountants required by Independence Standards Board No. 1,
"Independence Discussions with Audit Committees," as amended, and has discussed
with the independent accountant the independent accountant's independence.
The Board has considered whether the provision of non-audit services is
compatible with maintaining the external accountant's independence. After
discussing this matter among themselves, with management, and with the
independent auditors, the Board believes that the provision of the specified
non-audit services is compatible with maintaining the external auditor's
independence.
Based on the review and discussions referred to above, the audit committee
has recommended to the Board of Directors that the audited financial statements
be included in the Corporation's Annual Report on Form 10-KSB for the last
fiscal year.
The following table summarizes fees for professional services rendered by
the principal accountant for the most recent fiscal year:
Audit Fees.................................................. $53,500
Financial Information System Design and Implementation
Fees...................................................... 0
All Other Fees.............................................. 30,900
PROPOSAL NUMBER 2
INVESTMENT IN 25% OF THE EQUITY OF AVANTE TECHNOLOGY PARTNERS
The affirmative vote of the holders of a majority of the Shares as of the
record date is required for the approval of the investment in 25% of the equity
of Avante Technology Partners. Abstentions and broker non-votes will have the
same effect as a vote against the proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NUMBER 2 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND THE STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" THE APPROVAL AND
RATIFICATION THEREOF.
SUMMARY TERM SHEET
Equity 25% equity interest
--------------------------------------------------------------------------------
Technology 1. Exclusive for North America, transit
applications
License 2. Exclusive NY, NJ and CT for
all applications
--------------------------------------------------------------------------------
225,000 shares of Common Stock
Consideration 25,000 warrants exercisable for 24 months at
$2.00 per share
--------------------------------------------------------------------------------
Development Loan (secured) up to Cdn$300,000 against development
milestones
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Terms of the Transaction
Since 1996, Avante Security Inc. ("Avante"), a Toronto corporation, has
designed, developed and installed boutique security systems and devices in
Canada. Utilizing the wireless technology of the very popular BlackBerry(TM)
wireless handheld system, developed by Research In Motion, Inc, (RIM), Avante
has developed its Secure 7-24(the "Secure 7-24"). The Secure 7-24 uses wireless
technology to transmit alarm information from a secured site to the Avante
Command Centre and either a client's RIM handheld device or cellular phone. In
turn, the RIM pager will automatically email up to five different email
addresses informing the alarm details instantly. Applications are seen to range
from transit, security response vehicles, corporate facilities management,
manufacturing, distribution, secured neighborhoods and resident owners. Avante
will organize Avante Technology Partners, a Canadian partnership ("Tech") to
exploit the Secure 7-24 technology solution.
Nafund Inc., a Toronto based private equity fund ("Nafund") has entered into an
agreement with Avante to jointly capitalize Tech and receive 50% of its equity.
Nafund, or its assigns, will provide up to Cdn$800,000 in a combination of debt
and equity.
Synergx and Nafund in turn have agreed that Nafund will sell to Synergx 25% of
Tech's equity in exchange for (a) 225,000 shares of Common Stock; (ii) warrants
to purchase 25,000 shares of Common Stock at $2.00 per share for 24 months and
(iii) agreeing to provide secured loans up to Cdn$300,000 to Tech, against Tech
satisfying certain development milestones and pari passu with equity and/or debt
contributions by Nafund. Nafund will contribute Cdn$400,000 of equity and
provide up to Cdn$100,000 secured loans to Tech and retain 25% of Tech's equity,
with the balance to be held by Avante.
Synergx will also secure licenses for Tech's proprietary wireless technology for
(i) North America for transit applications (with three year exclusivity subject
to certain minimum thresholds) and (ii) the Tri-State area (New York, New
Jersey, and Connecticut) with exclusivity for any application development funded
by Synergx. Pursuant to these licenses, Tech would, if requested by Synergx,
develop enhancements to the Secure 7-24 to apply to Synergx's markets and/or
integrate with Synergx's products. Tech has agreed to costs not to exceed
specified amounts for specified work and a fixed cost for boards and air
(transmission) time.
The reason this transaction is being presented for the approval of Stockholders
is because two Directors of Synergx, Messrs. Litwin and Dalrymple, are Directors
of Nafund. Moreover, Mr. Litwin is the president of Nafund and Mr. Dalrymple is
on its investment advisory board (but hold no ownership interest in Nafund).
Messrs. Litwin and Dalrymple recused themselves from the vote by the Board of
Directors.
The source of the funds to be provided by Synergx (when, as and if required as
per above) will be the proceeds of the equity private placement closed by
Synergx on September 30, 2002 and not operating cash flow.
Synergx feels the investment in Tech will give it exposure to and participation
in the entire North American security and communication market (a hedge against
our concentration in New York) including markets that will not be marketed or
serviced by Synergx {e.g. residential and small commercial}. In addition, the
transaction gives Synergx a significant time and cost advantage against
competitors in introducing wireless technology to its various products and
systems applied to transit, life safety, security and audio-visual. Finally, the
investment in Tech will link Synergx with a quality R&D group who can be
contracted to develop and enhance products for Synergx (in Canadian dollars)
without Synergx having to add to its own overhead.
Synergx may hold its interest in Tech in one or more Canadian or US subsidiaries
or a Canadian partnership organized with Nafund.
Tech is a new entity to be organized with all the commensurate risks. There are
no historical financial statements for Tech or any predecessor business. There
can be no assurance that Tech and/or Synergx's investment in Tech will be
successful or retain or enhance value.
A total of 225,000 shares of Common Stock and warrants to purchase 25,000 shares
of Common Stock will be issued by Synergx in consideration for the equity
interests in Tech.
The impact of the consummation of the investment in Tech will be to increase the
issued and outstanding number of shares of Common Stock to 2,099,425, without
the exercise of warrants, and 2,124,425 if the warrants are fully exercised.
The shares of Common Stock to be issued upon the closing of the transactions and
the shares of Common Stock underlying the warrants will be identical in rights,
privileges and preferences to those shares of the Registrant's Common Stock
already issued and outstanding.
The shares of Common Stock issuable in the transaction described above, and the
shares of Common Stock underlying the warrants to be issued, will be entitled to
one -time "piggyback" registrations rights whereby Synergx will include such
shares in any registration statement it files with the Securities and Exchange
Commission. Synergx may consider the filing of a registration statement to
register these shares and others previously issued with similar rights.
THERE CAN BE NO ASSURANCE THAT THE INVESTMENT DESCRIBED IMMEDIATELY ABOVE WILL
BE CONSUMMATED OR THAT SAID INVESTMENT WILL PROVE TO BE PROFITABLE TO SYNERGX.
THIS INVESTMENT IS SUBJECT TO THE COMPLETION OF A DUE DILIGENCE INVESTIGATION TO
THE SATISFACTION OF SYNERGX, AND THE NEGOTIATION AND EXECUTION OF DEFINITIVE
DOCUMENTATION SATISFACTORY TO SYNERGX; UNTIL SAID INVESTIGATION AND DEFINITIVE
DOCUMENTATION IS COMPLETED AND EXECUTED, SYNERGX'S BOARD OF DIRECTORS RETAINS
THE RIGHT TO WITHDRAW FROM THE TRANSACTION.
PROPOSAL 3
INVESTMENT IN 25% OF THE CLASS B PARTICIPATING UNITS
OF RE:PORT BUSINESS SOLUTIONS
The affirmative vote of the holders of a majority of the Shares as of the
record date is required for the approval of the investment in 25% of the Class B
Participating Units of Re:Port Business Solutions ("Re:Port").
THE BOARD OF DIRECTORS DEEMS PROPOSAL NUMBER 3 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND THE STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" THE APPROVAL AND
RATIFICATION THEREOF.
Investment 25% Class B Participating Units
--------------------------------------------------------------------------------
175,000 shares of Common Stock
Consideration 25,000 warrants exercisable for 24 months at
$2.00 per share
--------------------------------------------------------------------------------
Terms of the Transaction
Nafund has entered into an agreement with NSC Holdings Inc.("NSCH"), a Toronto
based financial services group, to form Re:Port as an operating partnership.
Re:Port will provide software to the independent international investment
counseling, portfolio management and brokerage community. Located in Toronto,
Ontario, Re:port software will link external or outsourced trading, custodian,
broker and bank systems to internal diverse security and asset management system
and contact information systems and electronic filing and documentation systems.
Utilizing the software and systems it is developing which will be scaleable and
able to provide cost-effective solutions, Re:Port will offer the types of back
office services that have previously been available only to the largest
investment counselors and money managers.
In exchange for its investment of Cdn$1,750,000, Nafund will own 100% of the "A"
Units representing the preferred cash flow of Re:Port and 50% of the "B" Units
representing the residual business equity interests. In exchange for (i) 175,000
shares of Common Stock and (ii) warrants to purchase 25,000 shares of Common
Stock at $2.00 per share for 24 months, Synergx will acquire 25% of the Class B
Participating Units from Nafund. Nafund will retain 25% of the Class B Units
with the balance to be held by NSCH. All free cash flow of Re:Port shall go to
redeem the Class A Units plus a cumulative return of 6.25% per quarter. Class B
Units will receive distributions of all free cash flow after the Class A Units
are redeemed, subject to Re:Port retaining sufficient capital for liquidity.
NSCH will enter into a contract with Re:Port pursuant to which Re:Port will earn
fees based on a combination of per transaction cost and fixed monthly amount.
Re:Port will be the sole provider of trading, research information and
technological services solutions to NSCH. Re:Port will pay NSCH a management fee
of 20% of gross revenues subject to maintaining minimum preferred cash flow on
the Class A Units which funds will be used by NSCH to market Re:Port's services
to other firms. Re:Port will have a secured fixed charge on all of NSCH's assets
to secure payments (subject to bank loans). Nafund will have a secured charge on
all assets of Re:Port's (subject to bank loans) to secure the preferred cash
flows on the Class A Units. Re:Port and Nafund will have the benefit of various
affirmative and negative covenants by NSCH.
The reason this transaction is being presented for the approval of Stockholders
is because two Directors of Synergx, Messrs. Litwin and Dalrymple, are Directors
of Nafund. Moreover, Mr. Litwin is the president of Nafund and Mr. Dalrymple is
on its investment advisory board (but hold no ownership interest in Nafund). In
addition, Mr. Dalrymple is the principal of NSCH. Messrs. Litwin and Dalrymple
recused themselves from the vote by the Board of Directors.
Synergx feels the investment in Re:Port is a significant financial opportunity
in data communication and is synergistic to its other communication products and
services inasmuch as Re:Port will focus on marketing to the tech/operation units
of financial firms including hedge funds, investment banks, clearing firms,
money management firms, trust companies which are significant purchasers of the
types of sophisticated security, audio-visual, life safety and communication
products, systems and services marketed by Synergx.
Synergx may hold its interest in Re:Port in one or more Canadian or US
subsidiaries or a Canadian partnership organized with Nafund.
Re:Port is a new entity to be organized with all the commensurate risks. There
are no historical financial statements for Re:Port or any predecessor business.
There can be no assurance that Re:Port and/or Synergx's investment in Re:Port
will be successful or retain or enhance value.
A total of 175,000 shares of Common Stock and warrants to purchase 25,000 shares
of Common Stock will be issued by Synergx in consideration for the equity
interests in Re:Port.
The impact of the consummation of the investment in Re:Port will be to increase
the issued and outstanding number of shares of Common Stock to 2,049,425,
without the exercise of warrants, and 2,074,425 if the warrants are fully
exercised.
The shares of Common Stock to be issued upon the closing of the transactions and
the shares of Common Stock underlying the warrants will be identical in rights,
privileges and preferences to those shares of the Registrant's Common Stock
already issued and outstanding.
The shares of Common Stock issuable in the transaction described above, and the
shares of Common Stock underlying the warrants to be issued, will be entitled to
one -time "piggyback" registrations rights whereby Synergx will include such
shares in any registration statement it files with the Securities and Exchange
Commission. Synergx may consider the filing of a registration statement to
register these shares and others previously issued with similar rights.
THERE CAN BE NO ASSURANCE THAT THE INVESTMENT DESCRIBED IMMEDIATELY ABOVE WILL
BE CONSUMMATED OR THAT SAID INVESTMENT WILL PROVE TO BE PROFITABLE TO SYNERGX.
THIS INVESTMENT IS SUBJECT TO THE COMPLETION OF A DUE DILIGENCE INVESTIGATION TO
THE SATISFACTION OF SYNERGX, AND THE NEGOTIATION AND EXECUTION OF DEFINITIVE
DOCUMENTATION SATISFACTORY TO SYNERGX; UNTIL SAID INVESTIGATION AND DEFINITIVE
DOCUMENTATION IS COMPLETED AND EXECUTED, SYNERGX'S BOARD OF DIRECTORS RETAINS
THE RIGHT TO WITHDRAW FROM THE TRANSACTION.
PROPOSAL NO. 4
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors of Synergx selected Marcum & Kliegman LLP as
auditors for the fiscal year ending September 30, 2003, subject to stockholder
approval by ratification. Marcum & Kliegman LLP has been since September 2000,
the independent auditors for Synergx. A representative of Marcum & Kliegman LLP
is expected to be present at the Annual Meeting, at which time he or she will be
afforded an opportunity to make a statement, and will be available to respond to
questions.
The Board of Directors of Synergx may, in its discretion, direct
appointment of new independent auditors at any time during the fiscal year if
the Board believes such change would be in the best interests of Synergx and its
stockholders. No such change is anticipated.
The Board of Directors of Synergx recommends a vote FOR the ratification of
Marcum & Kliegman LLP for the fiscal year ending September 30, 2003.
OTHER BUSINESS
The proxy confers discretionary authority on the proxies with respect to
any other business which may come before the Annual Meeting. The Board of
Directors of Synergx knows of no other matters to be presented at the Annual
Meeting. The persons named in the proxy will vote the shares for which they hold
proxies according to their best judgment if any matters not included in this
Proxy properly come before the meeting, unless the contrary is indicated.
STOCKHOLDER PROPOSALS
Any stockholder proposal to be included in the proxy statement and form of
proxy relating to the 2004 Annual Meeting of Synergx Stockholders must be
received by the close of business on December 23, 2003 and must comply in all
other respects with the rules and regulations of the Securities and Exchange
Commission. Proposals should be addressed to: Corporate Secretary, Synergx
Systems Inc., 209 Lafayette Drive, Syosset, NY 11791
SHARES SYNERGX SYSTEMS INC. PROXY NO.
209 Lafayette Drive, Syosset, New York 11791
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Daniel S. Tamkin and Dennis P. McConnell as
Proxies, each with the power to appoint his substitute and hereby authorizes
them to represent and to vote, as designated below and on the reverse hereof,
all shares of common stock of Synergx Systems Inc. ("Synergx") held of record by
the undersigned on February 27, 2003 at the annual meeting of stockholders of
Synergx to be held on March 26, 2003 or any adjournments thereof. The
undersigned hereby revokes any proxies heretofore given to vote said shares.
The undersigned hereby acknowledges receipt of Synergx's Annual Report for
2002 and of the Notice of Annual Meeting of Stockholders and attached Proxy
Statement dated February 28, 2003.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Proposals 1, 2, 3 and 4.
Please sign exactly as your name appears to the left hereof.
When signing as corporate officer, partner, attorney,
administrator, trustee or guardian, please give your full
title as such.
Dated , 2003
Authorized Signature
Title Please mark boxes on reverse hereof in blue or black ink. Please
date, sign and return this Proxy Card promptly using the enclosed envelope. -
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1. Election of Directors. For all nominees o Withhold Authority o listed below
(except as to vote for all nominees marked to the contrary listed below below)
(Instruction: To withhold authority to vote for any individual nominee strike a
line through the nominee's name below.)
Daniel S. Tamkin Dennis P. McConnell Henry Schnurbach Joseph Vitale
John A. Poserina Mark I. Litwin J. Ian Dalrymple
2. To ratify the investment in Avante Technology Partners
For o Against o Abstain o
3. To ratify the investment in Re:Port Business Solutions
For o Against o Abstain o
4. To ratify the appointment of Marcum & Kliegman LLP as independent public
accountants for Synergx for the fiscal year ending September 30, 2003.
For o Against o Abstain o