AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 17, 1999
Registration No. 333-_____________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
---------------------------------
SENSE HOLDINGS, INC.
(Name of Small Business Issuer in Its Charter)
<TABLE>
<CAPTION>
Florida 334110 82-0326560
<S> <C> <C>
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Number) Identification No.)
</TABLE>
7300 West McNab Road, Suite 117
Tamarac, FL 33321
(954) 726 - 1422
(Address and Telephone Number of Principal Executive Offices)
-------------------------
Dore Scott Perler, President
7300 West McNab Road, Suite 117
Tamarac, FL 33321
(954) 726 - 1422
(Name, Address and Telephone Number of Agent For Service)
------------------------------
Copies of all communications to:
Steven I. Weinberger, Esq.
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, FL 33301
Telephone: (954) 763-1200
Facsimile No. (954) 766-7800
Approximate Date of Proposed Sale to the Public: As soon as practicable after
the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Each Maximum Maximum
Class of Securities Amount to be Offering Price Aggregate Amount of
to be Registered Registered Per Security Offering Price Registration Fee
- -------------------- --------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.10 per share(1) 1,241,734 $1.00 $1,241,734 $345.20
-------
Total Registration Fee $345.20
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457. Based upon the average of the closing bid and
asked prices for the common stock on September 13, 1999.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
securities act of 1933, as amended, or until the registration statement shall
become effective on such date as the Commission, acting pursuant to said section
8(a), may determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
ii
<PAGE>
Subject to Completion September 17, 1999
PROSPECTUS
SENSE HOLDINGS, INC.
1,241,734 Shares of Common Stock
($.10 par value per share)
This prospectus covers the 1,271,734 shares of common stock, $.10 par
value per share, of Sense Holdings, Inc. being offered by certain selling
securityholders. We will not receive any proceeds from the sale of the shares by
the selling securityholders.
Our common stock is traded in the National Quotation Bureau's "Pink
Sheets" under the trading symbol "SEHO" (previously CTSMD). On June 30, 1999,
the last day on which a trade in our common stock was reported, the closing
price was $1.00. There is currently only a limited trading market in our common
stock and we do not know whether an active trading market will develop. See
"Risk Factors" beginning on Page 7.
--------------------------------
This investment involves a high degree of risk. You should purchase
shares only if you can afford a complete loss of your investment. See "Risk
Factors" beginning on page 7.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
--------------------------------
The date of this prospectus is ____________, 1999
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AVAILABLE INFORMATION
Following the effective date of the registration statement relating to
this prospectus, we will file annual, quarterly and special reports with the
United States Securities and Exchange Commission (the "SEC"). You may read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York, and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings will be publicly available through the SEC's web site on the Internet at
http://www.sec.gov.
This prospectus does not contain all of the information set forth in
the registration statement and the exhibits thereto. Descriptions of any
contract or other document referred to in this prospectus are not necessarily
complete. In each instance, reference is made to the copy of such contract or
other document filed as an exhibit to the registration statement for a more
complete description of the matter involved, each such statement being qualified
in its entirety by such reference. At your written or telephonic request, we
will provide you, without charge, a copy of any of the information that is
incorporated by reference (excluding exhibits to the information that is
incorporated by reference unless the exhibits are themselves specifically
incorporated by reference). Please direct your request to the Company at Sense
Holdings, Inc., 7300 West McNab Road, Suite 117, Tamarac, Florida 33321,
Attention: Chief Executive Officer, telephone (954) 726-1422.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including information contained under the caption "Risk Factors",
"Business" and Financial Statements, including the notes thereto, appearing
elsewhere in this prospectus.
This prospectus contains forward-looking statements that involve risks
and uncertainties. Our actual results may differ materially from the results
discussed in the forward-looking statements. You are urged to read this
prospectus carefully and in its entirety.
THE COMPANY
Sense Holdings, Inc. is a Florida corporation. We design, develop,
manufacture and sell security identification systems designed to assist
employers by integrating functions such as:
o authenticating the identity of employees when they arrive at
and leave work;
o gathering data, including the time each employee attends work;
o performing calculations based on the data that is gathered,
and exporting this information electronically, to third-party
payroll software, such as that provided by ADP, so that
automated payroll checks can be produced;
o granting access to locked buildings, offices or other secured
areas; and
o producing logs and reports related to the foregoing.
Our systems use a person's fingerprint as the method of verifying his
or her identity, and authenticating his or her attendance at work. The use of
unique physical traits such as fingerprints, retina lines, voice waves and palm
prints to verify a persons' identity, is known as "biometric" identification. We
believe that fingerprint identification is far more effective in authenticating
employees' actual attendance at work than is traditional time clock
verification. We also believe that fingerprint verification is more widely
accepted and more cost effective than other available forms of biometric
identification systems.
We currently have one security identification system, which we call
"CheckPoint T/A(TM)". CheckPoint T/A(TM) has hardware and software components
that identify an employee by comparing his or her fingerprint to the fingerprint
on file with the employer, while gathering time and attendance data each time
the employee's fingerprint is read. The data can be transmitted to
3
<PAGE>
widely-recognized payroll services such as ADP, so that payroll checks may be
prepared directly from the attendance data gathered by our system. CheckPoint
T/A(TM) data can also be used to produce a variety of logs, reports and user
histories.
We have completed the production of pilot versions of CheckPoint
T/A(TM), and have built 15 prototypes that will be field tested over the next
three months. We commenced marketing systems in July 1999 and, to date, have
sold and shipped six CheckPoint T/A(TM) systems, and have firm orders for an
additional 19 systems, six of which are scheduled for August shipment. We expect
to generate revenue from sales of CheckPoint T/A(TM) systems, add-on modules to
accommodate employers with large numbers of employees, sales of software
upgrades and sales of maintenance and service contracts.
We are also developing a modified version of CheckPoint T/A(TM), to be
known as CheckPoint A/C(TM). CheckPoint A/C(TM) will incorporate "access
control" functions into our CheckPoint T/A(TM) system. These functions will
provide user access to buildings, offices and other secure areas, based upon
authentication of the user's fingerprint. The program can incorporate different
levels of security to permit access to places based upon the level of the user's
security clearance. We intend to market CheckPoint A/C(TM) at a higher price
than CheckPoint T/A(TM), to provide for the increased level of technology and
functionality provided by CheckPoint A/C(TM) .
Initially, we will market CheckPoint T/A(TM) to manufacturers and
retailers with at least 15 employees. We plan to sell CheckPoint T/A(TM) and
future products through an in-house sales force who will use telemarketing lead
generation, direct marketing programs, trade show participation, and local,
regional and national advertising campaigns to generate sales.
To date, we have only generated minimal revenues from operations. For
the year ended December 31, 1998, and the six months ended June 30, 1999, we
incurred losses of $(174,629) and $(373,718), respectively. We recently
completed a private offering of our common stock, and received approximately
$700,000 from that offering.
Our fiscal year end is December 31. Our executive offices are located
at 7300 West McNab Road, Suite 117, Tamarac, Florida 33321, and our telephone
number there is (954) 726- 1422.
See "Risk Factors", "Management", "Business" and "Certain Transactions"
for a discussion of certain factors which should be considered in evaluating the
Company and its business.
4
<PAGE>
<TABLE>
<CAPTION>
THE OFFERING
<S> <C>
Common Stock Offered by
Selling Securityholders........................................ 1,241,734 shares(1)
Common Stock Outstanding:
Prior to the Offering .................................... 6,071,736
After the Offering ...................................... 6,071,636
Trading Symbol for Common Stock................................ SEHO (previously CTSMD)(2)
Risk Factors .................................................. The offering involves a high degree of
risk. See "Risk Factors".
</TABLE>
- ---------------------------
(1) The selling securityholders are offering up to 1,241,734 shares of our
common stock that they presently own. The shares will be sold in
transactions that may be effected by them from time-to-time. We have
not arranged for any broker or underwriter to sell the shares on behalf
of the selling securityholders. See "Description of Securities".
(2) Our common stock is currently listed in the National Quotation Bureau's
"Pink Sheets". Following the effective date of the registration
statement, we intend to apply for listing on the National Association
of Securities Dealers, Inc.'s "OTC Bulletin Board". See "Risk Factors".
5
<PAGE>
SELECTED FINANCIAL DATA
The following summary of our financial information has been derived
from our financial statements that are included in this prospectus. The
information for the year ended December 31, 1998 is derived from our audited
financial statements. The information for the six months ended June 30, 1999 is
derived from our unaudited financial statements. See "Financial Statements" and
"Management's Discussion and Analysis or Plan of Operation".
<TABLE>
<CAPTION>
(in 000's, except per share data)
Year ended Six Months Ended
December 31, 1998 June 30, 1998
----------------- ---------------------
(unaudited)
<S> <C> <C>
Revenues $ - 0 - $ - 0 -
Operating Expenses $ 174,629 $ 373,718
Net (Loss) $(174,629) $(373,718)
Net (Loss) Per Share $(.04) $(.08)
</TABLE>
<TABLE>
<CAPTION>
December 31, 1998 June 30, 1999
----------------- --------------
(unaudited)
<S> <C> <C>
Working Capital
(Deficit) $ (124,643) $553,024
Total Assets $ 23,378 $612,079
Current Liabilities $ 139,424 $ 46,968
Long-Term Note Payable $ - 0 - $ - 0 -
Shareholder's Equity
(Deficit) $ (116,046) $565,111
</TABLE>
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RISK FACTORS
An investment in the securities offered hereby is speculative in nature
and involves a high degree of risk. In addition to the other information
contained in this prospectus, the following factors should be considered
carefully in evaluating the Company and its business before purchasing the
securities offered hereby. This prospectus contains, in addition to historical
information, forward-looking statements that involve risks and uncertainties.
The Company's actual results may differ materially from the results discussed in
the forward- looking statements. Factors that might cause or contribute to such
differences include, but are not limited to, those discussed below, and
elsewhere in this prospectus.
Net Losses
For the fiscal year ended December 31, 1998, and the six months ended
June 30, 1999, we experienced net losses of $(174,629) and $(373,718),
respectively. Our operating results for future periods will include significant
expenses, including product and service development expenses, sales and
marketing costs, programming and administrative expenses and acquisition costs,
and will be subject to numerous uncertainties. As a result, we are unable to
predict whether we will achieve profitability in the future.
We May Need Additional Capital
We recently received net proceeds from the sale of shares of our common
stock of approximately $700,000. However, our operations are capital intensive
and our growth will consume a substantial portion of our available working
capital. Therefore, depending upon the timing and rate at which we are able to
generate revenues from operations, we may require additional capital in order to
fund our operations. We cannot predict whether additional financing will be
available to us on acceptable terms.
Competition
We do not believe that intense competition currently exists for
biometric security systems for use in the private sector. However, the demand
for more reliable security systems is high and we expect that additional
competition will develop as others develop technologies for applications similar
to ours. Our ability to compete successfully will depend on many factors,
including our ability to adapt to changing technologies and meet the needs of
the marketplace on a price competitive and timely basis.
Competition may come from companies using biometric fingerprint
technology, as well as from companies using other biometric identification
methods. Competition is likely to include companies with longer operating
histories and greater financial and other resources than we have. Our inability
to compete successfully will have a material adverse effect on our financial
condition and results of our operations.
7
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Important Contract Could Terminate
We have an agreement with a company which licenses software that
enables the data gathered by CheckPoint T/A(TM) systems to be formatted and
transmitted to third party payroll services. That agreement may be terminated by
either party on ninety days' prior written notice.
If this agreement is terminated, our ability to continue to produce and
market CheckPoint T/A(TM), and, therefore, our financial results of operations,
will be adversely affected.
We Have Only a Limited Operating History
We were recently formed and have only conducted limited operations. We
have no operating history that permits you to evaluate our business and our
prospects based on prior performance. You must consider your investment in light
of the risks, uncertainties, expenses and difficulties that are usually
encountered by companies in their early stages of development, particularly
those engaged in emerging technologies such as biometrics.
We Have Performed No Market or Research Studies
Our success will be dependent on our ability to successfully market our
security identification systems and support services, end-users, distributors
and resellers. We have not commissioned a formal market or research study to
determine whether sufficient demand for our products and services exists to
enable us to sustain operations, expand or achieve profitability.
There are Risks to Our Operations
Some of the factors that could significantly affect our operations are:
o our ability to attract new customers and maintain existing
customers;
o the emergence of new technology that becomes more desirable
than ours;
o the emergence of price competition, as well as competition
from other types of security identification systems;
o our ability to instill consumer confidence in the price and
performance of our products;
o our ability to upgrade and develop our infrastructure to
accommodate growth;
o our ability to attract qualified personnel;
8
<PAGE>
o the amount and timing of capital expenditures related to
sustaining and expanding our operations;
o our ability to keep our technology up to date so that we may
compete effectively; and
o general economic conditions.
There is Only a Limited Trading Market for Our Stock
Our common stock is traded in the "Pink Sheets" and there is currently
only a limited trading market for our shares. Therefore, prospective investors
should not view historic market prices as indicative of the prices at which our
shares can be bought or sold. Following the effective date of the registration
statement, we will be required to file periodic reports with the Securities and
Exchange Commission. At that time, we anticipate that we will become eligible to
have our shares listed on the Over-the Counter Bulletin Board, an electronic
trading system maintained by the National Association of Securities Dealers.
There is no assurance that our shares will be listed on the Bulletin Board or
even if they are, that more than a limited trading market will develop.
We May Have Difficulty Managing Growth
Further expansion of our operations will be required to address
potential growth of our customer base and market opportunities. Expansion will
place a significant strain on our management, operational and financial
resources. Currently, we have only a limited number of employees to do this, and
will need to improve existing and implement new transaction processing,
operational and financial systems, procedures and controls, and to expand, train
and manage our employee base. We also will be required to expand our finance,
administrative and operations staff. Furthermore, we intend to enter into
relationships with various strategic partners, including product manufacturers
and distributors and other service providers and other third parties necessary
to our business. Our failure to manage growth effectively could have a damaging
effect on our business, results of operations and financial condition.
Failure Of Our Internal Systems May Also Damage Our Operations
We use internally developed systems to operate our service and for
transaction processing, including billing and collections processing. We must
continually improve these systems in order to meet the level of use.
Furthermore, in the future, we may add additional features and functionality to
our products and services that may cause us to develop or license additional
technologies.
Our inability to:
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o add additional software and hardware
o develop and upgrade existing technology, transaction
processing systems and network infrastructure to meet
increased volume through our processing systems or
o provide new features or functionality
may cause system disruptions, slower response times, reductions in levels of
customer service, decreased quality of the user's experience, and delays in
reporting accurate financial information. Our inability to meet these needs
would have a negative effect on our business, results of operations and
financial condition.
We Run The Risk Of Rapid Technological Changes
The market in which we compete faces rapidly changing technology,
evolving industry standards, frequent new service and product introductions and
changing customer demands. Accordingly, our future success will depend on our
ability to adapt to rapidly changing technologies and to adapt our services to
evolving industry standards. We also need to continually improve the
performance, features and reliability of our products and services in response
to competition and the evolving demands of the marketplace.
We Are Dependent On Certain Key Executive Officers
We are depending greatly on Dore Scott Perler, Andrew Goldrich and
Shawn Tartaglia, who are our key executives. While we have entered into
contractual agreements with them, the loss of any of their services would be
highly damaging to us. At this point, we do not have key- man insurance on their
lives.
Securities and Exchange Commission Rules On "Penny Stocks" Could Greatly Affect
the Market for Our Common Stock
The Securities and Exchange Commission has adopted regulations which
generally define a "penny stock" to be any equity security that has a market
price (as defined) of less than $5.00 per share, subject to certain exceptions.
Depending on market fluctuations, our common stock could be considered to be a
"penny stock". As a result, it may be subject to rules that impose additional
sales practice requirements on broker/dealers who sell these securities to
persons other than established customers and accredited investors, unless the
common stock is listed on The Nasdaq SmallCap Market. For transactions covered
by these rules, the broker-dealer must make a special suitability determination
for the purchase of these securities. In addition he must receive the
purchaser's written consent to the transaction prior to the purchase. He must
also provide certain written disclosures to the purchaser. Consequently, the
"penny stock" rules may restrict the ability of broker/dealers to sell our
securities, and may negatively affect the ability of holders of shares of our
common stock to resell them. While we intend at some future date to list
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our common stock on the Nasdaq SmallCap Market, when we satisfy their various
criteria, we cannot predict whether we will ever be able to qualify.
It Is Not Likely That We Will Pay Dividends On Our Common Stock for the
Foreseeable Future
We have no present intention of paying cash dividends on our common
stock in the foreseeable future, as we intend to follow a policy of retaining
our earnings, if any, for use in our business.
Shares Eligible for Future Sale May Negatively Affect the Market for Our Common
Stock
The sale, or availability for sale, of a substantial number of shares
of common stock in the public market subsequent to the offering under Rule 144
under the Securities Act or this prospectus or otherwise, could have a major
negative effect on the market price of our common stock. It could also limit our
ability to raise additional capital from the sale of our equity securities or
debt financing. There are currently 5,339,715 shares of our outstanding common
stock that are "restricted securities", including 1,241,734 shares registered
for sale by this prospectus. All of these "restricted" shares may, in the
future, be sold. If we do not have a substantial market for our shares, a
significant number of shares being sold could greatly affect the market and
cause a decline in the price of our common stock.
Year 2000 Risk
We have implemented a Year 2000 date conversion program to ensure that
our computer systems and applications will function properly beyond 1999. We
believe that we have allocated adequate resources for this purpose and expect
our Year 2000 date conversion program to be successfully completed on a timely
basis. We cannot be sure, however, that this will be the case. We do not expect
to incur significant expenditures to address this issue. The ability of third
parties with whom we transact business to adequately address their respective
Year 2000 issues is outside of our control. We cannot be certain that our
failure or the failure of these third parties to adequately address Year 2000
issues will not have a negative effect on our business, financial condition,
cash flows and results of operations.
It is not possible to foresee all risks which may affect us. Moreover,
we cannot predict whether we will successfully effectuate our current business
plan. Each prospective purchaser is encouraged to carefully analyze the risks
and merits of an investment in the Shares and should take into consideration
when making such analysis, among others, the Risk Factors discussed above.
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CAPITALIZATION
The following table sets forth our capitalization as of June 30, 1999.
The table does not reflect the exercise of any options. The table should be read
in conjunction with the Consolidated Financial Statements and related notes
included elsewhere in this prospectus.
June 30, 1999
-------------
Shareholder's equity:
Common Stock, $.10 par value,
10,000,000 shares authorized,
5,836,566 shares issued and
outstanding actual $583,657
Additional paid-in capital 529,801
Accumulated deficit (548,347)
Total shareholder's equity $565,111
-----------
Total capitalization $565,111
===========
USE OF PROCEEDS
We will not receive any proceeds upon the sale of shares by the selling
securityholders.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our shares of common stock are listed in the National Quotation
Bureau's "Pink Sheets" under the symbol "SEHO" (previously CTSMD). There is
currently a limited trading market for our shares and we do not know whether an
active market will develop The reported high and low bid prices for the common
stock are shown below for the period from July 1, 1997 through June 30, 1999. An
"*" indicates that no trades were reported during the quarter. The quotations,
which were provided by the research department of the Nasdaq Stock Market, Inc.,
reflect inter-dealer prices, without retail mark-up, mark-down or commission,
and may not represent actual transactions.
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Period High Low
- ------ ---- ---
Third Quarter ended 9/30/97 * *
Fourth Quarter ended 12/31/97 * *
First Quarter ended 3/31/98 $.09375 $.0625
Second Quarter ended 6/30/99 * *
Third Quarter ended 9/30/98 * *
Fourth Quarter ended 12/31/98 * *
First Quarter ended 3/31/99 $3.50 $1.00
Second Quarter ended 6/30/99 $1.00 $.75
We have never paid cash dividends on our common stock. We intend to
keep future earnings, if any, to finance the expansion of our business, and we
do not anticipate that any cash dividends will be paid in the foreseeable
future. The future dividend policy will depend on our earnings, capital
requirements, expansion plans, financial condition and other relevant factors.
FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus discuss future expectations
or state other forward-looking information. Those statements are subject to
known and unknown risks, uncertainties and other factors that could cause our
actual results to differ materially from those contemplated by the statements.
Factors that might cause a difference include, but are not limited to, those
discussed in "Risk Factors" and elsewhere in this prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
During the twelve month period immediately following the date of this
prospectus, our goal is to design, produce and market our biometric security
devices. In order to accomplish our goal, we must create, with the assistance of
various consultants, a computer network which will allow our clients to receive
our services and purchase our products.
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Results of Operations - July 13, 1998 (Inception) - December 31, 1999
- ---------------------------------------------------------------------
Operating Expenses
Operating expenses were $174,629 for the period ended December 31,
1998. These expenses consisted mainly of general and administrative expenses of
$99,611, primarily attributable to salaries, advertising and professional fees,
and research and development expenses of $71,510, consisting of software
purchased for use in the production of security systems.
Results of Operations - January 1, 1999 - June 30, 1999 (Unaudited)
- -------------------------------------------------------------------
Operating Expenses
Operating expenses were $373,718 for the period ending June 30, 1999.
These expenses consisted mainly of general and administrative expenses of
$210,992 primarily attributable to salaries and professional fees, non-cash
compensation expenses of $91,250, and research and development expenses of
$66,907, consisting of software purchased for use in the production of security
systems.
Liquidity and Capital Resources
We have financed our growth and cash requirements through capital
contributions from existing shareholders. We do not currently have any credit
facilities from financial institutions or private lenders.
We believe that cash to be generated from our future levels of
operations will be sufficient to meet working capital requirements over the
balance of the current year. We continue to seek opportunities for growth, and
in connection therewith, may require additional cash in the form of equity, bank
debt or debt financing. Additional financing may not be available to us on
acceptable terms.
Year 2000 Compliance
Many currently installed computer systems and software products are
coded to accept only two-digit entries to represent years in the date code
field.. Computer systems and products that do not accept four-digit year entries
will need to be upgraded or replaced to accept four-digit year entries to
distinguish years beginning with 2000 from prior years. Management has completed
the process of becoming compliant with the Year 2000 requirements at an
approximate cost of $1,000. Our products are Year 2000 compliant because of a
special "Real Time Clock" board used to keep perfect time and date. There can be
no assurance, however, that computer systems operated by third parties,
including customers, vendors, credit card transaction processors, and financial
institutions, with which our management information system interface will
continue to properly interface with our system and will otherwise be compliant
on a timely
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basis with Year 2000 requirements. We are currently developing a plan to
evaluate the Year 2000 compliance status of third parties with which our system
interfaces. Any failure of the systems of third parties to timely achieve Year
2000 compliance could have a material adverse effect on our business, financial
condition and operating results.
BUSINESS
We design, develop, manufacture and sell security identification
systems designed to assist employers by integrating functions such as:
o authenticating the identity of employees when they arrive at
and leave work
o gathering data, including the time each employee attends work
o coordinating the data that is gathered, tax information
provided by the employee and third-party payroll software,
such as that provided by ADP, so that automated payroll
checks can be produced
o producing logs and reports related to the foregoing.
Our systems use a person's fingerprint as the method of verifying his
or her identity, and authenticating his or her attendance at work.
Industry
The use of unique physical traits such as fingerprints, iris and retina
lines, voice waves and palm prints to verify a persons' identity, is known as
"biometric" identification. Biometric technology has been used for decades in
government and law enforcement applications. But, until recently, these systems
were too expensive to manufacture to make retail marketing realistic. With the
introduction of more powerful computers and the development of more advanced
software applications, biometric identification techniques can be adapted for
commercial purposes on an economically feasible basis.
We believe that fingerprint identification is far more effective in
authenticating employees' actual attendance at work than traditional time clock
verification. We also believe that fingerprint verification is less intrusive,
more widely accepted and more cost effective than other available forms of
biometric identification systems.
Products
We currently have one security identification system, which we call
"CheckPoint T/A(TM)". CheckPoint T/A(TM) has hardware and software components
that identify an employee by comparing his or her fingerprint to the fingerprint
on file with the employer, while gathering time
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and attendance data each time the employee's fingerprint is read. The user's
fingerprint is scanned by means of an optical reader with sensors that scan and
capture the image of the fingerprint. Software technology then permits the image
to be converted into data that can be stored in the employer's computer database
as a reference for user access. The data is stored in the employer's computer
and can be transmitted to widely-recognized payroll services such as ADP, so
that payroll checks may be prepared directly from the attendance data gathered
by our system. CheckPoint T/A(TM) data can also be used to produce a variety of
logs, reports and user histories.
We have completed the production of pilot versions of CheckPoint
T/A(TM), and have built 15 prototypes that will be field tested over the next
three months. We commenced marketing systems in July 1999 and, to date, have
sold and shipped six CheckPoint T/A(TM) systems, and have firm orders for an
additional 19 systems, six of which are scheduled for August shipment. We expect
to generate revenue from sales of CheckPoint T/A(TM) systems, add-on modules to
accommodate employers with large numbers of employees, sales of software
upgrades and sales of maintenance and service contracts.
We are also developing a modified version of CheckPoint T/A(TM), to be
known as CheckPoint A/C(TM). CheckPoint A/C(TM) will incorporate "access
control" functions into our CheckPoint T/A(TM) system. These functions will
provide user access to buildings, offices and other secure areas, based upon
authentication of the user's fingerprint. The program can incorporate different
levels of security to permit access to places based upon the level of the user's
security clearance. We intend to market CheckPoint A/C(TM) at a higher price
than CheckPoint T/A(TM), to provide for the increased level of technology and
functionality provided by CheckPoint A/C(TM) .
Product Development, Manufacturing and Assembly
A CheckPoint T/A(TM) system consists of an optical fingerprint scanner
with sensors, a custom-built Pentium-based computer with VGA color display and
our proprietary software.
The software portion of CheckPoint T/A(TM) has been developed by our
in-house computer programmers and software engineers. The source code for the
software is our proprietary property. This software enables CheckPoint T/A(TM)
to gather, filter and sort data, generate reports from the data and compute
payroll information for transmission to third party payroll services.
We obtain most of the hardware components for CheckPoint T/A(TM)
off-the-shelf, from various vendors. However, certain hardware components are
designed to our specifications and manufactured exclusively for us by Test
Systems Engineering.
We have entered into a license agreement with SAC Technologies, Inc.
Under this agreement, we have the exclusive right to include SAC's technology in
our identification systems. This technology consists of the optical fingerprint
scanner with sensors and related
16
<PAGE>
software that converts a fingerprint image into data that is stored in
CheckPoint T/A(TM)'s database. We have agreed to pay SAC a one time license fee
of $100,000 for the right to use its technology and manufacture and market
CheckPoint T/A(TM) under our name. We also agreed to pay royalties to SAC of $50
per system sold, with annual minimum royalties of $50,000. We have paid SAC
$37,500 and must pay the balance to SAC in three quarterly payments. Our
agreement with SAC continues until December 21, 2002, but as long as we are not
in default of our obligations, the license agreement will be renewed annually
provided that we increase our purchases from SAC by at least 20% over the
preceding year.
We have entered into an agreement with Integrated Design, Inc. under
which Integrated Design has agreed to develop a software program to enable the
payroll data produced by CheckPoint T/A(TM) to be transferred to third party
payroll services such as ADP and Paychex. We have agreed to license the software
from Integrated Design and pay license fees aggregating at least $100,000 during
the first two years of the agreement. We have also agreed to pay Integrated
Design a $10,000 software development fee. The agreement is for a term of five
years, with five year renewal terms, but may be canceled by either party on 90
days written notice. The agreement also provides us access to the software and
allows us to continue to use Integrated Design's software in the event of their
dissolution, bankruptcy or similar events.
We have entered into a strategic alliance with Test Systems
Engineering, one of our significant shareholders. Pursuant to this alliance,
Test Systems Engineering will design, engineer, configure and assemble the
hardware components of CheckPoint T/A(TM), in consultation with us, and to our
specifications. All product testing and assembly will be performed at Test
Systems Engineering's facilities, in order to maintain quality control. Our
agreement with Test Systems Engineering terminates on December 31, 2005, but, as
long as we remain in compliance with our obligations under the agreement, it
will be automatically renewed for consecutive one year terms. For its services,
Test Systems Engineering receives a fee payable at the rate of $75 per hour. We
are dependent on Test Systems Engineering for its services in producing
CheckPoint T/A(TM).
Sales and Marketing
We intend to market CheckPoint T/A(TM) systems for base prices ranging
from $5,995 to $7,995, depending on the number of employees who will be tracked
on the system. Expansion modules can be added in one hundred employee
increments, for $495. We will also offer software updates and on-site service
contracts for additional fees.
Initially, we will market CheckPoint T/A(TM) to manufacturers and
retailers with at least 15 employees. We plan to sell CheckPoint T/A(TM) and
future products through an in-house sales force who will use telemarketing lead
generation, direct marketing programs, trade show participation, and local,
regional and national advertising campaigns to generate sales. We are also
evaluating whether our biometric technology can be used to conduct secure
commerce over the Internet.
17
<PAGE>
We have also engaged independent sales representatives to market our
products in the Atlanta, New York, Miami and Los Angeles markets. We intend to
engage sales representatives to cover additional territories over the next 12
months. Initially, we intend to seek penetration of the retail merchandise, home
and business security, food processing facilities, textile manufacturing and
trucking and transport distribution markets through the services of these
representatives. Sales representatives are generally compensated by a commission
based upon the sales prices of systems sold by them.
Intellectual Property
We have developed our own software and we claim common law ownership of
our software. We also intend to enhance our ownership by filing for copyright
protection for our software with the United States Patent and Trademark Office.
We are also investigating whether our CheckPoint T/A(TM) system configuration of
hardware and software may be the subject of a successful patent application.
Whether or not we obtain formal protection for our software, hardware
or CheckPoint T/A(TM) system, we intend to vigorously protect our ownership
rights. However, protection of our rights will not prevent others from
developing similar technology on their own or developing other products that may
be used for purposes similar to ours. If these events occur, others may become
our competitors and our financial condition and the results of our operations
may be adversely affected.
Employees
We currently employ nine people, six of whom are full-time employees,
in the following capacities: three executive officers, one administrative
employee, three sales and marketing personnel and two programmers. Our employees
are not represented by a collective bargaining unit. We believe that the
relations with our employees are good.
Legal Proceedings
We are not a party to any material legal proceeding, nor are any of our
officers, directors or affiliates a party adverse to us in any legal proceeding.
Description of Property
We currently lease approximately 1,300 square feet of office space at
our Tamarac, Florida headquarters. The lease is with an unaffiliated party. Our
monthly lease payments range from approximately $1,166 to $1,285 over the lease
term. The lease expires in July 2002 and provides that we may not assign or
sublet the premises without the landlord's prior written consent.
18
<PAGE>
MANAGEMENT
Directors and Executive Officers
The following table includes the names, positions held and ages of our
executive officers and directors. All directors serve for one year and until
their successors are elected and qualify. Officers are elected by the Board and
their terms of office are, except as otherwise stated in employment contracts,
at the discretion of the Board.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Dore Scott Perler 39 Chief Executive Officer, President
and Director
Andrew Goldrich 38 Vice President and Director
Shawn Tartaglia 30 Chief Technical Officer and Director
Julie Slater 40 Director
</TABLE>
Dore Scott Perler has served as the Chief Executive Officer and
President of the Company, and a member of its Board of Directors, since July
1998. From May 1993 to July 1998, Mr. Perler was a founder, Director, and Vice
President of Sales covering the Southeast United States and Latin America, for
Latinrep, Inc., a manufacturer's representative organization. He assisted in the
formation of Latin Channels, a trade show for Latin American distributors.
Andrew Goldrich has served as the Vice President of the Company, and a
member of its Board of Directors, since July 1998. From January 1984 to July
1998, Mr. Goldrich was Vice President of Sales and Finance for Sassy Knitting
Mills, Inc., a privately-held garment manufacturer. He was a founder of Sassy
Knitting Mills, where he implemented a national salesforce and was responsible
for overall financial and marketing activities.
Shawn Tartaglia has served as the Chief Technical Officer of the
Company, and a member of its Board of Directors, since July 1998. From November
1997 to July 1998, Mr. Tartaglia was Manager of Information Systems for
CompScript, Inc., a privately-held pharmaceutical provider. From February 1993
to November 1997, he was employed by Solopak Pharmaceuticals, a privately-held
pharmaceutical supplier, as its Systems and Telecommunications Manager.
Julie Slater has served on the Company's Board of Directors, since
January 1999. From 1984 and continuing until the present, Ms. Slater is Vice
President of All Eyes Optical, a privately-held optometry and retail eye wear
provider.
19
<PAGE>
We have also engaged several consultants who we believe are significant
to our business. They are:
Doug Kilarski is our Operations Director, Business Operations. Mr.
Kilarski has served as a consultant to us since July 1998. From 1994 to the
present he is the Vice President, Analyst for Aspen Business Development, a
privately-held business development organization.
Alex Schlinkmann is our Operations Director, Hardware Engineering and
Manufacturing. Mr. Schlinkmann has been employed by us since July 1998. From
1991 to the present he serves a President and Design Engineer for Test Systems
Engineering, a privately-held manufacturer of automated assembly machines.
Jamie Schlinkmann is our Operations Director, Hardware Design. Mr.
Schlinkmann is the brother of Alex Schlinkmann, and has been a consultant to us
since July 1998. From 1991 to the present, he serves as Vice President and
Design Engineer for Test Systems Engineering, a privately-held manufacturer of
automated assembly machines.
Board Committees: We do not as yet have an audit committee or a
compensation committee. However, once we elect independent directors, we expect
to organize these committees.
Employment Agreements. In March 1999, we entered into employment
agreements with each of Dore Scott Perler, Andrew Goldrich and Shawn Tartaglia.
Each agreement provides for employment at our discretion, and may be terminated
at any time, for any reason not prohibited by law. The agreements require each
employee to devote all of his work time and attention to our business, and
contain confidentiality provisions prohibiting the employee from divulging
information concerning our business to any third party. Each employee is
entitled to participate in our stock option plan, and in all other benefit
programs established by the board of directors for the benefit of our employees.
We pay Messrs. Perler and Goldrich annual salaries at the rate of $67,600 per
year, and Mr. Tartaglia at the rate of $65,000 per year.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information relating to the compensation
we paid during the past three fiscal years to: (i) our President and Chief
Executive Officer; and (ii) each of our executive officers who earned more than
$100,000 during the fiscal year ended December 31, 1998:
<TABLE>
<CAPTION>
Fiscal Other Annual LTIP All Other
Name and Principal Position Year Salary Bonus Compensation Options/ (#) Payouts Compensation
- --------------------------- ---- ------ ----- ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dore Scott Perler, CEO 1998 - - - - - --
</TABLE>
20
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth information concerning our grant of
options to purchase shares of our common stock during the fiscal year ended
December 31, 1998 to (i) our President and Chief Executive Officer; and (ii)
each of our executive officers who earned more than $100,000 during the fiscal
year ended December 31, 1998.
<TABLE>
<CAPTION>
Percent of
Number of Total Options/
Securities SARs Granted
Underlying To Employees Exercise Or
Options/SARs In Fiscal Base Price
Name Granted (#) Year ($/Sh) Expiration Date
---- ----------- ---- ------ ---------------
<S> <C> <C> <C> <C>
Dore Scott Perler, CEO - - - --
</TABLE>
Incentive and Non-Qualified Stock Option Plan
On July 19, 1999, the board of directors adopted our 1999 stock option
plan. We have reserved 1,500,000 shares of common stock for issuance upon
exercise of options granted from time to time under the 1999 stock option plan.
The 1999 stock option plan is intended to assist us in securing and retaining
key employees, directors and consultants by allowing them to participate in our
ownership and growth through the grant of incentive and non-qualified options.
Under the stock option plan we may grant incentive stock options only
to key employees and employee directors, or we may grant non-qualified options
to our employees, officers, directors and consultants. The 1999 stock option
plan is currently administered by our board of directors.
Subject to the provisions of the stock option plan, the board will
determine who shall receive options, the number of shares of common stock that
may be purchased under the options, the time and manner of exercise of options
and exercise prices. The term of options granted under the stock option plan may
not exceed ten years or five years for an incentive stock option granted to an
optionee owning more than 10% of our voting stock. The exercise price for
incentive stock options will be equal to or greater than 100% of the fair market
value of the shares of the common stock at the time granted. However, the
incentive stock options granted to a 110% holder of our voting stock are
exercisable at a price equal to or greater than 10% of the fair market value of
the common stock on the date of the grant. The exercise price for non-qualified
options will be set by the board, in its discretion, but in no event shall the
exercise price be less than 75% of the fair market value of the shares of common
stock on the date of grant. The exercise price may be payable in cash or, with
the approval of the board, by delivery of shares or by a combination of cash and
shares. Shares of common stock received upon exercise of options will be subject
to restrictions on sale or transfer. As of the date of this prospectus, we have
not granted any options under the 1999 stock option plan.
21
<PAGE>
Option Exercises and Holdings
The following table contains information with respect to the exercise
of options to purchase shares of common stock during the fiscal year ended
December 31, 1998 to (i) our President and Chief Executive Officer; and (ii)
each of our executive officers who earned more than $100,000 during the fiscal
year ended December 31, 1998.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Shares Unexercised In-The-Money
Acquired Options/SARs Options/SARs
On Value At FY-End (#) At FY-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Dore Scott Perler, CEO - - - --
</TABLE>
Long-Term Incentive Plans Awards in Last Fiscal Year
<TABLE>
<CAPTION>
Number Performance
of Shares or Other Estimated Future Payouts Under
Units or Period Until Non-Stock Price-Based Plans
Other Rights Maturation Threshold Target Maximum
Name (#) or Payout ($or #) ($or #) ($ or #)
---- -------------------- --------- ------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Dore Scott Perler, CEO - - - - --
</TABLE>
Limitation on Liability and Indemnification Matters
As authorized by the Florida Business Corporation Law, our Articles of
Incorporation provide that none of our directors shall be personally liable to
us or our shareholders for monetary damages for breach of fiduciary duty as a
director, except liability for:
o any breach of the director's duty of loyalty to our company
or its shareholders;
o acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
o unlawful payments of dividends or unlawful stock redemptions
or repurchases; and
o any transaction from which the director derived an improper
personal benefit.
22
<PAGE>
This provision limits our rights and the rights of our shareholders to
recover monetary damages against a director for breach of the fiduciary duty of
care except in the situations described above. This provision does not limit our
rights or the rights of any shareholder to seek injunctive relief or rescission
if a director breaches his duty of care. These provisions will not alter the
liability of directors under federal securities laws.
Our Articles of Incorporation further provide for the indemnification
of any and all persons who serve as our director, officer, employee or agent to
the fullest extent permitted under Florida law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the SEC, this indemnification is against public policy as expressed
in the securities laws, and is, therefore unenforceable.
CERTAIN TRANSACTIONS
Corporate History
We were organized in Idaho on February 5, 1968 under the name Century
Silver Mines, Inc. Originally, we developed mining properties, but by 1998 we
had ceased those operations. In January 1999, we reduced the shares of our stock
that were outstanding by combining each 7.74 shares that were outstanding, into
one share. Then in January 1999, we acquired Sense Technologies, Inc., and we
issued 4,026,700 of our shares to the shareholders of Sense Technologies, Inc.
We now own and operate Sense Technologies, Inc. as our wholly-owned subsidiary.
All numbers of shares in this prospectus reflect the "reverse split". In June
1999, we changed our corporate domicile from Idaho to Florida and changed our
name to Sense Holdings, Inc.
PRINCIPAL SHAREHOLDERS
The following table sets forth information known to us relating to the
beneficial ownership of shares of common stock by: each person who is known by
us to be the beneficial owner of more than five percent of the outstanding
shares of common stock; each director; each executive officer; and all executive
officers and directors as a group.
Unless otherwise indicated, the address of each beneficial owner in the
table set forth below is care of Sense Holdings, Inc., 7300 West McNab Road,
Suite 117, Tamarac, Florida 33321.
23
<PAGE>
We believe that all persons named in the table have sole voting and
investment power with respect to all shares of common stock beneficially owned
by them.
Under securities laws procedures, a person is considered to be the
beneficial owner of securities that can be acquired by him within 60 days from
the date of this prospectus upon the exercise of options, warrants or
convertible securities. We determine a beneficial owner's percentage ownership
by assuming that options, warrants or convertible securities that are held by
him, but not those held by any other person and which are exercisable within 60
days of the date of this prospectus, have been exercise or converted.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership of Class
---------------- -------------------- --------
<S> <C> <C>
Dore S. Perler 1,344,725 22.1%
9400 S.W. 49th Place
Cooper City, FL 33328
Andrew Goldrich 1,284,519 22.1%
21653 Marigot Drive
Boca Raton, FL 33428
Shawn Tartaglia 193,585 3.2%
6888 Ashburn Road
Lake Worth, FL 33467
Julie Slater 38,703 1.0%
402 N.W. 118th Terrace
Coral Springs, FL 33071
Officers and Directors 2,861,532 47.1%
as a group (4 persons)
</TABLE>
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 10,000,000 shares of common
stock, $.10 par value per share. As of the date of this prospectus, there are
6,071,736 shares of common stock issued and outstanding, which are held of
record by approximately 800 holders.
Common Stock
Holders of common stock are entitled to one vote for each share on all
matters submitted to a shareholder vote. Holders of common stock do not have
cumulative voting rights.
24
<PAGE>
Therefore, holders of a majority of the shares of common stock voting for the
election of directors can elect all of the directors. Holders of common stock
are entitled to share in all dividends that the board of directors, in its
discretion, declares from legally available funds. In the event of our
liquidation, dissolution or winding up, each outstanding share entitles its
holder to participate in all assets that remain after payment of liabilities and
after providing for each class of stock, if any, having preference over the
common stock.
Holders of common stock have no conversion, preemptive or other
subscription rights, and there are no redemption provisions for the common
stock. The rights of the holders of common stock are subject to any rights that
may be fixed for holders of preferred stock, when and if any preferred stock is
authorized and issued. All outstanding shares of common stock are, and the
shares underlying all option and warrants will be, duly authorized, validly
issued, fully paid an non-assessable upon our issuance of these shares.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American
Securities Transfer and Trust, 12039 West Alameda Parkway, Suite Z-2, Lakewood,
Colorado 80228, and its telephone number is (303) 986-5400.
Reports to Securityholders
We intend to furnish our stockholders with annual reports containing
audited financial statements. We may disseminate such other unaudited interim
reports to securityholders as we deem appropriate.
SELLING SECURITYHOLDERS
The following table sets forth (1) the name of each selling
securityholder, (2) the number or shares of common stock beneficially owned by
each selling securityholder as of the date of this prospectus, giving effect to
the exercise of the selling securityholders' warrants into shares of common
stock and (3) the number of shares being offered by each selling securityholder.
The shares of common stock being offered are being registered to permit public
sales and the selling securityholders may offer all or part of the shares for
resale from time to time. All expenses of the registration of the common stock
on behalf of the selling securityholder are being borne by the Company. The
Company will receive none of the proceeds of this offering.
<TABLE>
<CAPTION>
Shares Owned Shares Available Shares Percent of
Prior to this Pursuant to Owned after Class
Selling Securityholder Offering this Prospectus Offering after Offering
- ---------------------- -------- --------------- -------- --------------
<S> <C> <C> <C> <C>
Austin Gleason 66,667 66,667 - -
Eugene Graves 66,667 66,667 - -
25
<PAGE>
Leon Hertzon 10,000 10,000 - -
Bill Hickey 66,667 66,667 - -
Earl Hingson, Jr. 10,000 10.000 - -
Ivy Entertainment 15,000 15,000 - -
Michael Janis 33,333 33,333 - -
Joyce Westmoreland 33,333 33,333 - -
Alan Silverberg 10,000 10,000 - -
Andrew Astrove 10,000 10,000 - -
Lisa Battaglia 4,000 4,000 - -
David Baum 13,500 13,500 - -
545775 BC Ltd. 10,000 10,000 - -
Adam Childers 40,000 40,000 - -
James Corrado 24,000 24,000 - -
Richard David 133,333 133,333 - -
Gerard Kearns 57,333 57,333 - -
William Kearns 5,000 5,000 - -
Philip Kendall 50,000 50,000 - -
Herbert Meislich 66,667 66,667 - -
Robert Murray 5,000 5,000 - -
Schneider Fuel Pension 20,000 20,000 - -
Josette Pieroni 13,333 13,333 - -
Marty Powell 7,000 7,000 - -
Thomas Ralston 1,000 1,000 - -
Jeffrey Rappaport 15,000 15,000 - -
Dan Rosen 3,000 3,000 - -
Brian Ross 20,000 20,000 - -
Charlotte Sundquist 1,734 1,734 - -
Michael Schift 4,000 4,000 - -
Scott Schift 4,000 4,000 - -
Alvin Siegel 20,000 20,000 - -
Mitchell Thomas 5,000 5,000 - -
George Thompson 66,667 66,667 - -
Brian Wallach 6,667 6,667 - -
Warren Struhl Fam. Part. 33,333 33,333 - -
26
<PAGE>
Jeff Weiss 6,667 6,667 - -
David Zakala 12,000 12,000 - -
John Zale 26,667 26,667 - -
William Zimmerman 10,000 10,000 - -
Mel Goldstein 1,000 1,000 - -
Jack Blanco 500 500 - -
Fred Banner 5,333 5,333 - -
Adam Rovner 3,333 3,333 - -
lst Level Capital 225,000 225,000 - -
--------- --------- -- --
TOTAL 1,241,734 1,241,734 - --
========= =========
</TABLE>
- ------------------------
(a) Less than one percent
The information contained in the foregoing table is derived from our
books and records, as well as from our transfer agent.
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be distributed from time to
time by the selling securityholders in one or more transactions that may take
place on the over-the-counter market. These include ordinary broker's
transactions, privately-negotiated transactions or through sales to one or more
broker-dealers for resale of these shares as principals, at market prices
existing at the time of sale, at prices related to existing market prices,
through Rule 144 transactions or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the selling
securityholders in connection with sales of securities.
The selling securityholders may sell the securities in one or more of
the following methods:
(a) a block trade in which a broker or dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as principals
to facilitate the transaction;
(b) purchasers by a broker or dealer as principal and resale by the
broker or dealer for its account under this prospectus;
(c) ordinary brokerage transactions and transactions which the broker
solicits purchases, and
27
<PAGE>
(d) face-to-face transactions between sellers and purchasers without a
broker-dealer.
In making sales, brokers or dealers used by the selling securityholders
may arrange for other brokers or dealers to participate. The selling
securityholders and others through whom such securities are sold may be
"underwriters" within the meaning of the Securities Act for the securities
offered, and any profits realized or commission received may be considered
underwriting compensation.
At the time a particular offer of the securities is made by or on
behalf of a selling securityholder, to the extent required, a prospectus is to
delivered. The prospectus will include the number of shares of common stock
being offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, the purchase price paid by any underwriter for
the shares of common stock purchased from the selling securityholder, and any
discounts, commissions or concessions allowed or reallowed or paid to dealers,
and the proposed selling price to the public.
We have told the selling securityholders that the anti-manipulative
rules under the Securities Exchange Act of 1934, including Regulation M, may
apply to their sales in the market. We have provided each of the selling
securityholders with a copy of these rules. We have also told the selling
securityholders of the need for delivery of copies of this prospectus in
connection with any sale of securities that are registered by this prospectus.
Sales of securities by us and the selling securityholders or even the
potential of these sales may have a negative effect on the market price of the
shares of common stock offered hereby.
SHARES ELIGIBLE FOR FUTURE SALE
At the date of this prospectus, we will have 6,071,736 shares of common
stock issued and outstanding of which 732,021 shares are freely tradeable
without restriction or further registration under the Securities Act, except for
any shares purchased by an affiliate of ours. This does not include 1,500,000
shares that will be received upon exercise of options granted under our stock
option plan. They may be resold by their holders as long as they are covered by
a current registration statement.
All of the remaining 5,339,715 shares of common stock currently
outstanding are restricted securities. Of these restricted shares, 1,241,734
shares will be immediately eligible for sale. The remaining restricted shares
will become eligible for sale at various times provided that they have been held
for at least one year.
We cannot predict the effect, if any, that market sales of common stock
or the availability of these shares for sale will have on the market price of
the shares from time to time. Nevertheless, the possibility that substantial
amounts of common stock may be sold in the public
28
<PAGE>
market could negatively damage affect market prices for the common stock and
could damage our ability to raise capital through the sale of our equity
securities.
LEGAL MATTERS
The validity of the securities offered by this prospectus will be
passed upon for us by Atlas, Pearlman, Trop & Borkson, P.A., 200 East Las Olas
Boulevard, Suite 1900, Fort
Lauderdale, FL 33301, Florida.
EXPERTS
The consolidated financial statements as of December 31, 1998, and for
the year then ended, appearing in this prospectus and registration statement
have been audited by Feldman Sherb Horowitz & Co., P.C., independent auditors,
as set forth in their report thereon appearing elsewhere in this prospectus, and
are included in reliance upon this report given on the authority of such firm as
experts in auditing and accounting.
ADDITIONAL INFORMATION
We have filed with the SEC the registration statement on Form SB-2
under the Securities Act for the common stock offered by this prospectus. This
prospectus, which is a part of the registration statement, does not contain all
of the information in the registration statement and the exhibits filed with it,
portions of which have been omitted as permitted by SEC rules and regulations.
For further information concerning us and the securities offered by this
prospectus, we refer to the registration statement and to the exhibits filed
with it. Statements contained in this prospectus as to the content of any
contract or other document referred to are not necessarily complete. In each
instance, we refer you to the copy of the contracts and/or other documents filed
as exhibits to the registration statement, and these statements are qualified in
their entirety by reference to the contract or document The registration
statement, including all exhibits, may be inspected without charge at the SEC's
Public Reference Room at 450 Fifth Street, N.W. Washington, D.C. 20549, and at
the SEC's regional offices located at Seven World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of these materials may also be obtained from the
SEC's Public Reference at 450 Fifth Street, N.W., Room 1024, Washington D.C.
20549, upon the payment of prescribed fees. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In
addition, registration statements and other filings made with the SEC through
its Electronic Data Gathering, Analysis and Retrieval Systems are publicly
available through the SEC's site on the World Wide Web located at
http//www.sec.gov. The registration statement, including all exhibits and
schedules and amendments, has been filed with the SEC through the Electronic
Data Gathering, Analysis and Retrieval system.
29
<PAGE>
Upon the closing of this offering, we will become subject to the
reporting requirements of the Exchange Act and in accordance with these
requirements, will file reports, and other information with the SEC. We intend
to furnish our shareholders with annual reports containing audited financial
statements and other periodic reports as we think appropriate or as may be
required by law.
30
<PAGE>
SENSE HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
REPORT ON AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
FROM JULY 13, 1998 (INCEPTION) THROUGH DECEMBER 31, 1998
<PAGE>
<TABLE>
<CAPTION>
SENSE HOLDINGS, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<S> <C>
Independent Auditors' Report....................................................................................F-2
Consolidated Balance Sheets.....................................................................................F-3
Consolidated Statements of Operations...........................................................................F-4
Consolidated Statements of Stockholders' (Deficit) Equity.......................................................F-5
Consolidated Statements of Cash Flows...........................................................................F-6
Notes to Consolidated Financial Statements...............................................................F-7 - F-12
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Sense Holdings, Inc. and Subsidiary
Sunrise, Florida
We have audited the accompanying consolidated balance sheet of Sense
Holdings, Inc. and Subsidiary (A Development Stage Enterprise) as of December
31, 1998, and the related consolidated statements of operations, stockholders'
(deficit) equity, and cash flows for the period July 13, 1998 (Inception)
through December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amount and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Sense
Holdings, Inc. and Subsidiary (A Development Stage Enterprise) as of December
31, 1998, and the results of its operations and its cash flows for the period
July 13, 1998 (Inception) through December 31, 1998, in conformity with
generally accepted accounting principles.
Feldman Sherb Horowitz & Co., P.C.
Certified Public Accountants
New York, New York
July 2, 1999
F-2
<PAGE>
<TABLE>
<CAPTION>
SENSE HOLDINGS, INC. AND SUBSIDIARY
-----------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(A Development Stage Enterprise)
--------------------------------
December 31, June 30,
1998 1999
---- ----
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 13,147 $ 527,149
Inventory - 33,709
Prepaid expenses - 37,500
Other current assets 1,634 1,634
------------ ----------
TOTAL CURRENT ASSETS 14,781 599,992
PROPERTY AND EQUIPMENT, net 8,597 12,087
------------ ----------
$ 23,378 $ 612,079
============ ==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses 28,924 $ 46,968
Common stock to be issued 110,500 -
------------ ----------
TOTAL CURRENT LIABILITIES 139,424 46,968
------------ ----------
STOCKHOLDERS' (DEFICIT) EQUITY:
Common stock, $.10 par value, 10,000,000 shares authorized;
288,300 and 5,836,566 shares issued and outstanding, respectively 28,830 583,657
Additional paid-in capital 29,753 529,801
Accumulated (deficit) equity (174,629) (548,347)
------------ ----------
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY (116,046) 565,111
------------ ----------
$ 23,378 $ 612,079
============ ==========
</TABLE>
See notes to consolidated financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
SENSE HOLDINGS, INC. AND SUBSIDIARY
-----------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(A Development Stage Enterprise)
--------------------------------
From July 13, Six Months From July 13,
1998 (Inception) Ended 1998 (Inception)
to December 31, June 30, to June 30,
1998 1999 1999
------------------- ------------------ ----------------------
(unaudited) (unaudited)
<S> <C> <C> <C>
OPERATING EXPENSES:
Depreciation $ 858 $ 850 $ 1,708
Rent 2,650 3,789 6,439
Research and development 71,510 66,907 138,417
Non-cash compensation - 91,250 91,250
General and administrative 99,611 210,922 310,533
------------------- ------------------ ----------------------
174,629 373,718 548,347
------------------- ------------------ ----------------------
NET LOSS $ 174,629 $ 373,718 $ 548,347
=================== ================== ======================
Net loss per common share $ 0.04 $ 0.08 $ 0.12
=================== ================== ======================
Weighted Average
Number of shares outstanding 4,315,000 4,498,102 4,664,483
=================== ================== ======================
</TABLE>
See notes to consolidated financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
SENSE HOLDINGS, INC. AND SUBSIDIARY
-----------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
---------------------------------------------------------
(A Development Stage Enterprise)
--------------------------------
Common Stock
------------------------------ Additional Total
Number of Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit (Deficit) Equity
-------------- ------------ -------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Balance, July 13, 1998 (Inception) 288,300 $ 28,830 $ (28,830) $ - $ -
Capital contribution - - 58,583 - 58,583
Net loss - - - (174,629) (174,629)
-------------- ------------ -------------- ------------------ ------------------
Balance, December 31, 1998 288,300 28,830 29,753 (174,629) (116,046)
Issuance of common stock pursuant
to share exchange agreement (unaudited) 4,026,700 402,670 (402,670) - -
Capital contribution (unaudited) - - 141,200 141,200
Cancellation of common stock (unaudited) (50,000) (5,000) 5,000 - -
Issuance of Common Stock (unaudited) 1,256,566 125,657 696,768 - 822,425
Issuance of Common Stock
for services rendered (unaudited) 315,000 31,500 59,750 - 91,250
Net loss (unaudited) - - - (373,718) (373,718)
-------------- ------------ -------------- ------------------ ------------------
Balance, June 30, 1999 (unaudited) 5,836,566 $ 583,657 $ 529,801 $ (548,347) $ 565,111
============== ============ ============== ================== ==================
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
SENSE HOLDINGS, INC. AND SUBSIDIARY
-----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(A Development Stage Enterprise)
--------------------------------
From July 13, Six Months From July 13,
1998 (Inception) Ended 1998 (Inception)
to December 31, June 30, to June 30,
1998 1999 1999
--------------------- ---------------- ---------------------
(unaudited) (unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (174,629) $ (373,718) $ (548,347)
--------------------- ---------------- ---------------------
Adjustments to reconcile net loss to net cash
provided by (used in) operations:
Depreciation 858 850 1,708
Non-cash compensation - 91,250 91,250
Changes in assets and liabilities:
Increase in inventory - (33,709) (33,709)
Increase in prepaid and other current assets (1,634) (37,500) (39,134)
Increase in accounts payable and accrued expenses 28,924 18,044 46,968
--------------------- ---------------- ---------------------
Total adjustments 28,148 38,935 67,083
--------------------- ---------------- ---------------------
CASH USED IN OPERATIONS (146,481) (334,783) (481,264)
--------------------- ---------------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (9,455) (4,340) (13,795)
--------------------- ---------------- ---------------------
CASH FLOWS USED IN INVESTING ACTIVITIES (9,455) (4,340) (13,795)
--------------------- ---------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock to be issued 110,500 (110,500) -
Proceeds from the sale of common stock - 822,425 822,425
Capital contribution 58,583 141,200 199,783
--------------------- ---------------- ---------------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 169,083 853,125 1,022,208
--------------------- ---------------- ---------------------
NET INCREASE IN CASH 13,147 514,002 527,149
CASH - beginning of period - 13,147 -
--------------------- ---------------- ---------------------
CASH - end of period $ 13,147 $ 527,149 $ 527,149
===================== ================ =====================
</TABLE>
See notes to consolidated financial statements
F-6
<PAGE>
SENSE HOLDINGS, INC. AND SUBSIDIARY
-----------------------------------
(A Development Stage Enterprise)
--------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
FOR THE PERIOD JULY 13, 1998 (Inception) THROUGH DECEMBER 31, 1998
------------------------------------------------------------------
Sense Technologies, Inc. ("Sense")was formed on July 13, 1998 to design,
develop, manufacture and sell security identification systems.
On January 19, 1999, Sense was acquired by Century Silver Mines, Inc. ("CSM"),
an Idaho corporation, for 4,026,700 shares of CSM stock (the "Exchange"). The
Exchange was completed pursuant to the Agreement and Plan of Reorganization
between Sense and CSM. The Exchange has been accounted for as a reverse
acquisition under the purchase method for business combinations. Accordingly,
the combination of the two companies is recorded as a recapitalization of Sense,
pursuant to which Sense is treated as the continuing entity. In August 1999,
pursuant to the approval of the Board of Directors of CSM, the name of the
company changed to Sense Holdings, Inc. (the "Company").
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
A. Principles of consolidation - The financial statements include
the accounts of the Company and its wholly-owned subsidiary.
All material intercompany transactions have been eliminated.
B. Equipment - Equipment is carried at cost. Depreciation is
computed using the straight-line method over the estimated
useful lives of the various assets.
C. Inventories - Inventories are stated at the lower of average
cost or market.
D. Income Taxes - Income taxes are accounted for under Statement
of Financial Accounting Standards No. 109, "Accounting for
Income Taxes," which is an asset and liability approach that
requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events
that have been recognized in the Company's financial
statements or tax returns.
E. Fair Value of Financial Instruments - The carrying amounts
reported in the balance sheet for cash, receivables, and
accounts payable approximate their fair market value based on
the short-term maturity of these instruments.
F. Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could
differ from those estimates.
F-7
<PAGE>
G. Impairment of long-lived assets - The Company reviews
long-lived assets for impairment whenever circumstances and
situations change such that there is an indication that the
carrying amounts may not be recovered. At December 31, 1998,
the Company believes that there has been no impairment of its
long-lived assets.
H. Comprehensive Income - The Company has adopted Statement of
Financial Accounting Standards No. 130 ("SFAS 130) "Reporting
Comprehensive Income". Comprehensive income is comprised of
net loss and all changes to the statements of stockholders'
equity, except those due to investments by stockholders,
changes in paid-in capital and distribution to stockholders.
For the period ended December 31, 1998, the Company had deemed
comprehensive income to be negligible.
I. Research and Development - Research and development costs are
expensed as incurred. These costs primarily consists of fees
paid for the development of the Company's software. Research
and development costs for the period ended December 31, 1998
were $71,510.
J. Stock Based Compensation - The Company accounts for stock
transactions in accordance with APB No. 25, "Accounting for
Stock Issued to Employees." In accordance with Statement of
Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation," the Company adopted
the pro forma disclosure requirements of SFAS 123.
K. New Accounting Pronouncements - The Company will adopt
Statement of Financial Accounting Standards No. 131
"Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131") for the period ended December
31, 1998. SFAS No. 131 requires the Company to report selected
information about operating segments in its financial
statements. It also establishes standards for related
disclosures about products and services, geographic areas, and
major customers. The application of the new pronouncement is
not expected to have a material impact on the Company's
disclosures.
The Company will adopt Statement of Financial
Accounting Standards No. 132 ("SFAS No. 132"), "Employers'
Disclosures about Pensions and Other Postretirement Benefits"
for the period ended December 31, 1998. SFAS 132 revises
employers' disclosures about pension and other postretirement
benefit plans. The application of the new pronouncement is not
expected to have a material impact on the financial
statements.
L. Licensing Agreements - Licensing agreements are stated at
cost, less accumulated amortization. Amortization is computed
using the straight-line method over an estimated life of ten
years based upon management's expectations relating to the
life of the technology and current competitive market
conditions. The estimated life is reevaluated each year based
upon changes in these factors.
F-8
<PAGE>
M. Earnings Per Share - The Company has adopted the provisions of
Financial Accounting Standards No. 128, "Earnings Per Share".
Basic net loss per share is based on the weighted average
number of shares outstanding. Potential common shares included
in the computation are not presented in the financial
statements as their effect would be anti-dilutive.
2. EQUIPMENT
---------
Equipment is as follows:
Computer equipment 9,455
Less: Accumulated depreciation 858
------------
$ 8,597
============
3. COMMITMENTS
-----------
A. Rent - The Company leases office space under operating leases
commencing September 1998. The lease expires September 1999.
Minimum rental commitments are as follows:
1999 $ 8,268
================
B. License Agreement -The Company entered into a licensing
agreement with a software development company. Under this
agreement, the Company has exclusive rights to include the
software company's technology in its identification systems.
The Company has agreed to pay $100,000 for the right to use
this technology. The Company has also agreed to pay royalties
of $50 per system sold, with annual minimum royalties of
$50,000. As of June 30, 1999, the Company has paid $37,500 and
must pay the balance in three quarterly installments. The
license can be renewed annually .
C. Employment Agreements - In March 1999 the Company entered into
one-year employment agreements with three officers. The total
commitment to the Company for these agreements will aggregate
$200,200.
4. INCOME TAXES
------------
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"). SFAS No. 109 requires the recognition of deferred tax assets and
liabilities for both the expected impact of differences between the
financial statements and tax basis of assets and liabilities, and for
the expected future tax benefit to be derived from tax loss and tax
credit carryforwards. SFAS No. 109
F-9
<PAGE>
additionally requires the establishment of a valuation allowance to
reflect the likelihood of realization of deferred tax assets.
The provision (benefit) for income taxes differs from the amounts
computed by applying the statutory federal income tax rate to income
(loss) before provision for income taxes, the reconciliation is as
follows:
Taxes benefit computed at statutory rate $ (59,000)
Income tax benefit not utilized 59,000
---------------
Net income tax benefit $ -
===============
The Company has a net operating loss carryforward for tax purposes
totaling approximately $175,000 at December 31, 1998 expiring in the
year 2013.
Listed below are the tax effects of the items related to the Company's
net tax liability:
Tax benefit of net operating loss carryforward $ 59,000
Valuation Allowance (59,000)
---------------
Net deferred tax asset recorded $ -
===============
5. STOCKHOLDERS' EQUITY
--------------------
On January 15, 1999 the Company declared a 1 for 7.74 reverse
stock split. The financial statements for all periods
presented have been retroactively adjusted for the stock
split.
On January 19, 1999, the Company issued 4,026,700 shares of
common stock to former shareholders of Sense Technologies,
Inc., in connection with the Company's acquisition of all of
the issued and outstanding shares of Sense Technologies, Inc.
The Company also received cash of $141,200 relating to the
acquisition.
In January 1999, the Company issued an aggregate of 290,000
shares of common stock to various consultants, in
consideration of services rendered to the Company. Such shares
were valued at an aggregate of $72,500 or approximately $.25
per share. Such issuance was recorded as non-cash compensation
expense.
In March 1999, the Company issued an aggregate of 240,000
shares of common stock to various people, for an aggregate of
$60,000 or approximately $.25 per share.
In June 1999, the Company issued 25,000 shares of common stock
to various consultants, in consideration of services rendered
to the Company. Such shares were valued at an aggregate of
$18,750 or approximately $.75 per share. Such issuance was
recorded as non-cash compensation expense.
F-10
<PAGE>
6. SUBSEQUENT EVENTS (Unaudited)
-----------------------------
A. Issuance of Common Stock - In July 1999, the Company issued
225,000 shares of common stock to various consultants, in
consideration of services rendered to the Company. Such shares
were valued at an aggregate of $168,750 or approximately $.75
per share.
From April to August 1999, the Company issued an aggregate of
1,026,733 shares of common stock for an aggregate purchase
price of $770,050 or approximately $.75 per share.
B. Stock Option Plan - On July 19, 1999, the board of directors
adopted the Company's 1999 stock option plan. The company has
reserved 1,500,000 shares of common stock for issuance upon
exercise of options granted from time to time under the 1999
stock option plan. The 1999 stock option plan is intended to
assist us in securing and retaining key employees, directors
and consultants by allowing them to participate in the
ownership and growth through the grant of incentive and
non-qualified options.
Under the stock option plan we may grant incentive stock
options only to key employees and employee directors, or we
may grant non-qualified options to our employees, officers,
directors and consultants. The 1999 stock option plan is
currently administered by the Company's board of directors.
Subject to the provisions of the stock option plan, the board
will determine who shall receive options, the number of shares
of common stock that may be purchased under the options, the
time and manner of exercise of options and exercise prices.
The term of the options granted under the stock option plan
may not exceed ten years or five years for an incentive stock
option granted to an optionee owning more than 10% of our
voting stock. The exercise price for incentive stock options
will be equal to or greater than 100% of the fair market value
of the shares of the common stock at the time granted.
However, the incentive stock options granted to a 10% holder
of the Company's voting stock are exercisable at a price equal
to or greater than 110% of the fair market value of the common
stock at the date of the grant. The exercise price for
non-qualified options will be set by the board, in its
discretion, but in no event shall the exercise price be less
than 75% f the fair market value of the shares of common stock
on the date of grant. The exercise price may be payable in
cash or, with the approval of the board, by delivery of shares
or a combination of cash and shares. Shares of common stock
received upon exercise of options will be subject to
restrictions on sale or transfer. As June 30, 1999, the
Company has not granted any options under the 1999 stock
option plan
C. Licensing Agreement - The Company intends to enter into an
agreement with another software development company. The
Company has agreed to license the software from the software
development company and pay license fees of at least $100,000
per
F-11
<PAGE>
year during the first two years of the agreement. The Company
has also agreed to pay the software development company a
$10,000 software development fee. The agreement is for a term
of five years, with five year renewal terms, but may be
canceled by either party on 90 days written notice. The
Company intends to enter into the agreement with the software
development company once the Company reaches an agreement on
obtaining the right to continue the software development
company's software in the event of their dissolution,
bankruptcy or similar events.
F-12
<PAGE>
No dealer, sales representative or any other person has been authorized to give
any information or to make any representations other than those contained in
this prospectus and, if given or made, such information or representation must
not be relied upon as having been authorized by the company or any of the
underwriters. This prospectus does not constitute an offer of any securities
other than those to which it relates or an offer to sell, or a solicitation of
any offer to buy, to any person in any jurisdiction where such an offer or
solicitation would be unlawful. Neither the delivery of this prospectus nor any
sale made hereunder shall, under any circumstances, create an implication that
the information set forth herein is correct as of any time subsequent to the
date hereof.
TABLE OF CONTENTS
Page
----
Available Information
Prospectus Summary
Risk Factors
Capitalization
Use of Proceeds
Price Range of Common Stock
and Dividend Policy
Forward-Looking Statements
Management's Discussion and
Analysis or Plan of Operation
Business
Management
Executive Compensation
Certain Transactions
Principal Shareholders
Description of Securities
Selling Securityholders
Plan of Distribution
Shares Eligible for Future Sale
Legal Matters
Experts
Additional Information
Financial Statements
1,241,734 SHARES
SENSE HOLDINGS, INC.
PROSPECTUS
________________, 1999
Until _________, 199___ (25 days after the date of this Prospectus),
all dealers effecting transactions in the registered securities, whether or not
participating in this distri bution, may be required to deliver a Prospectus.
This delivery requirement is in addition to the obligations of dealers to
deliver a Prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
<PAGE>
PART TWO
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Florida Business Corporation Act (the "Corporation Act") permits
the indemnification of directors, employees, officers and agents of Florida
corporations. The Company's Articles of Incorporation (the "Articles") and
Bylaws provide that the Company shall indemnify its directors and officers to
the fullest extent permitted by the Corporation Act.
The provisions of the Corporation Act that authorize indemnification do
not eliminate the duty of care of a director, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Florida law. In addition, each director will continue to
be subject to liability for (i) violations of criminal laws, unless the director
had reasonable cause to believe his conduct was lawful or had no reasonable
cause to believe his conduct was unlawful, (ii) deriving an improper personal
benefit from a transaction, (iii) voting for or assenting to an unlawful
distribution and (iv) willful misconduct or conscious disregard for the best
interests of the Company in a proceeding by or in the right of a shareholder.
The statute does not affect a director's responsibilities under any other law,
such as the Federal securities laws.
The effect of the foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against such persons
in their official capacities if such person acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the act and is therefore unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by the Company in connection with the
distribution of the securities being registered are as follows:
<TABLE>
<CAPTION>
<S> <C>
SEC Registration and Filing Fee................................................. $ 345
Legal Fees and Expenses*........................................................ 20,000
II-1
<PAGE>
Accounting Fees and Expenses*................................................... 15,000
Financial Printing*............................................................. 3,000
Transfer Agent Fees*............................................................ 1,500
Blue Sky Fees and Expenses*..................................................... 500
Miscellaneous*.................................................................. 4,655
TOTAL................................................................. $45,000
</TABLE>
* Estimated
None of the foregoing expenses are being paid by the selling securityholders.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On or about January 19, 1999, the Company issued 4,026,700 shares of
common stock to the 38 former shareholders of Sense Technologies, Inc., in
connection with the Company's acquisition of all of the issued and outstanding
shares of Sense Technologies, Inc. The former shareholders of Sense
Technologies, Inc. had access to financial statements and other relevant
information concerning the Company and this transaction was exempt from the
registration requirement of the Securities Act of 1933, as amended (the "Act")
by reason of Rule 506 of Regulation D and/or Section 4(2) of the Act, and the
rules and regulations thereunder.
In January 1999, the Company issued an aggregate of 290,000 shares of
common stock to four persons, in consideration of consulting services rendered
to the Company. Such shares were valued at an aggregate of $43,500 or
approximately $.15 per share. These shares were issued pursuant to Rule 504 of
Regulation D under the Act.
In March 1999, the Company issued an aggregate of 240,000 shares of
common stock to 7 persons, for an aggregate purchase price of $60,000 or
approximately $.25 per share. These shares were issued pursuant to Rule 504 of
Regulation D under the Act.
From April to August 1999, the Company issued an aggregate of 1,016,734
shares of common stock to 44 persons, for an aggregate purchase price of
$700,000 or approximately $.69 per share. These shares were issued pursuant to
Rule 504 of Regulation D under the Act. To the extent that these shares were
sold subsequent to April 6, 1999, the shares that were issued contained a legend
restricting their transferability absent registration under the Act or the
availability of an applicable exemption therefrom.
In June 1999, the Company issued 25,000 shares of common stock to 9
employees, consultants and/or professional advisors to the Company. The
employees, consultants and advisors had a preexisting business relationship with
the Company, had access to financial statements and other relevant information
concerning the Company and the shares that were issued contained a legend
restricting their transferability absent registration under the Act or the
II-2
<PAGE>
availability of an applicable exemption therefrom. Accordingly, this transaction
was exempt from the registration requirement of the Securities Act of 1933, as
amended (the "Act") by reason of Rule 506 of Regulation D and/or Section 4(2) of
the Act, and the rules and regulations thereunder.
In July 1999, the Company issued 225,000 shares of common stock to a
consultant, in consideration for services rendered to the Company. The
consultant had a preexisting business relationship with the Company, had access
to financial statements and other relevant information concerning the Company
and the shares that were issued contained a legend restricting their
transferability absent registration under the Act or the availability of an
applicable exemption therefrom. Accordingly, this transaction was exempt from
the registration requirement of the Securities Act of 1933, as amended (the
"Act") by reason of Rule 506 of Regulation D and/or Section 4(2) of the Act, and
the rules and regulations thereunder.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Exhibit No. Description of Document
- ----------- -----------------------
<S> <C>
2 Agreement and Plan of Merger between Century Silver Mines, Inc. and Sense
Holdings, Inc.
3.1(a) Articles of Incorporation of Sense Holdings, Inc.
3.1(b) Articles of Merger of Century Silver Mines, Inc. into Sense Holdings, Inc. (FL)
3.1(c) Articles of Merger of Century Silver Mines, Inc. into Sense Holdings, Inc. (ID)
3.2 Bylaws
5 Opinion and Consent of Atlas, Pearlman, Trop & Borkson, P.A.
10.1 Stock Option Plan
10.2 Employment Agreement between the Company and Dore Scott Perler
10.3 Employment Agreement between the Company and Andrew Goldrich
10.4 Employment Agreement between the Company and Shawn Tartaglia
10.5 Technology License Agreement, as amended, with SAC Technologies, Inc.
10.6 Lease for Tamarac Office
10.11 Manufacturing and Non-Compete Agreement with Test Systems Engineering
10.12 Sales Agreement with Integrated Design, Inc.
21 Subsidiaries of Registrant
23(i) Consent of Atlas, Pearlman, Trop & Borkson, P.A. (see Exhibit 5)
23(ii) Consent of Feldman Sherb Horowitz & Co. P.C.
27 Financial Data Schedule
</TABLE>
- -------------------------
II-3
<PAGE>
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to
participating broker-dealers, at the closing, certificates in such denominations
and registered in such names as required by the participating broker-dealers, to
permit prompt delivery to each purchaser.
The undersigned Registrant also undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission (the "Commission") such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the
II-4
<PAGE>
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
preceding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned Registrant also undertakes that it will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as a part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant under Rule 424(b)(1), or (4) or 497(h) under
the Securities Act as part of this registration statement as of the time the
Commission declared it effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Tamarac, Florida on September 16, 1999.
SENSE HOLDINGS, INC.
By: /s/ Dore Scott Perler
--------------------------
Dore Scott Perler
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Form
SB-2 registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Dore Scott Perler Chief Executive Officer, September 16, 1999
- ------------------------------------ President and Director
Dore Scott Perler (Principal Executive Officer
and Principal Accounting
Officer)
/s/ Andrew Goldrich Vice President and Director September 16, 1999
- ------------------------------------
Andrew Goldrich
/s/ Shawn Tartaglia Chief Technical Officer September 16, 1999
- ------------------------------------ and Director
Shawn Tartaglia
/s/ Julie Slater Director September 16, 1999
- ------------------------------------
Julie Slater
</TABLE>
AGREEMENT AND PLAN OF MERGER
THIS PLAN AND AGREEMENT OF MERGER, dated as of July 20, 1999 (the
"Agreement"), is entered into between CENTURY SILVER MINES, INC., an Idaho
corporation ("IDAHO"), and SENSE HOLDINGS, INC., a Florida corporation
("FLORIDA").
A. IDAHO has an aggregate authorized capital of 10,000,000 shares of
capital stock, consisting of 10,000,000 shares of common stock, $.10 par value
per share (the "Idaho Common Stock").
B. FLORIDA has an aggregate authorized capital of 10,000,000 shares of
capital stock, consisting of 10,000,000 shares of common stock, $.10 par value
per share (the "Florida Common Stock").
C. The respective Boards of Directors of IDAHO and FLORIDA believe that
it is in the best interests of IDAHO and FLORIDA and their respective
shareholders to merge IDAHO with and into FLORIDA under and pursuant to the
provisions of this Agreement, the Idaho Business Corporation Act and the Florida
Business Corporation Act.
AGREEMENT
In consideration of the Recitals and of the mutual agreements contained
in this Agreement, the parties hereto agree as set forth below.
1. MERGER. IDAHO shall be merged with and into FLORIDA (the "Merger").
2. EFFECTIVE DATE. The Merger shall become effective immediately upon
the filing of articles of merger with the Secretary of State of Idaho in
accordance with the Idaho Business Corporation Act ("IBCA") and the filing of
articles of merger with the Secretary of State of Florida in accordance with the
Florida Business Corporation Act (the "FBCA"); PROVIDED, HOWEVER, that if such
articles of merger specify a later time, then the Merger shall become effective
upon such specified later time. The time of such effectiveness is hereinafter
called the "Effective Date."
3. SURVIVING CORPORATION. FLORIDA shall be the surviving corporation of
the Merger and shall continue to be governed by the laws of the State of
Florida. On the Effective Date, the separate corporate existence of IDAHO shall
cease.
4. ARTICLES OF INCORPORATION. The Articles of Incorporation of FLORIDA
as they exist on the Effective Date (including any amendments thereto
implemented on the Effective Date) shall be the Articles of Incorporation of
FLORIDA following the Effective Date, unless and until the same shall thereafter
be amended or repealed in accordance with the laws of the State of Florida.
1
<PAGE>
5. BYLAWS. The Bylaws of FLORIDA as they exist on the Effective Date
shall be the Bylaws of FLORIDA following the Effective Date, unless and until
the same shall be amended or repealed in accordance with the provisions thereof
and the laws of the State of Florida.
6. BOARD OF DIRECTORS AND OFFICERS. The members of the Board of
Directors and the officers of IDAHO immediately prior to the Effective Date
shall be the members of the Board of Directors and the officers of FLORIDA
following the Effective Date, and such persons shall serve in such offices for
the terms provided by law or in FLORIDA's Articles of Incorporation and Bylaws,
or until their respective successors are elected and qualified.
7. RETIREMENT OF OUTSTANDING IDAHO STOCK. Upon the Effective Date, each
of the shares of the IDAHO Common Stock presently issued and outstanding shall
be retired, and no shares of IDAHO Common Stock or other securities of IDAHO
shall be issued in respect thereof.
8. CONVERSION OF OUTSTANDING IDAHO STOCK. Upon the Effective Date, each
issued and outstanding share of IDAHO Common Stock and all rights in respect
thereof shall be converted into one fully-paid and non-assessable share of
FLORIDA Common Stock, and each certificate representing shares of IDAHO Common
Stock shall on the Effective Date for all purposes be deemed to evidence the
ownership of the same number of shares of FLORIDA Common Stock as are set forth
in such certificate. After the Effective Date, each holder of an outstanding
certificate representing shares of IDAHO Common Stock may, at such shareholder's
option, surrender the same to FLORIDA's registrar and transfer agent for
cancellation, and each such holder shall be entitled to receive in exchange
therefor a certificate evidencing the ownership of the same number of shares of
FLORIDA Common Stock as are represented by the IDAHO certificate surrendered to
FLORIDA's registrar and transfer agent.
9. CONDITIONS TO CONSUMMATION OF THE MERGER. Consummation of the
Merger is subject to the satisfaction prior to the Effective Date of the
following conditions: (a) This Agreement and the Merger shall have been adopted
and approved by the affirmative vote of the holders of a majority of the votes
represented by the shares of IDAHO Common Stock outstanding on the record date
fixed for determining the shareholders of IDAHO entitled to vote thereon; and
(b) IDAHO and FLORIDA shall have received all consents, orders and approvals and
satisfaction of all other requirements prescribed by law that are necessary for
the consummation of the Merger.
10. STOCK OPTIONS, WARRANTS AND CONVERTIBLE DEBT. Upon the
Effective Date, each stock option, stock warrant, convertible debt instrument
and other right to subscribe for or purchase shares of IDAHO Common Stock shall
be converted into a stock option, stock warrant, convertible debt instrument or
other right to subscribe for or purchase the same number of shares of FLORIDA
Common Stock and each certificate, agreement, note or other document
representing such stock option, stock warrant, convertible debt instrument or
other right to subscribe for or purchase shares of IDAHO Common Stock shall for
all purposes be deemed to
2
<PAGE>
evidence the ownership of a stock option, stock warrant, convertible debt
instrument or other right to subscribe for or purchase shares of FLORIDA Common
Stock.
11. RIGHTS AND LIABILITIES OF FLORIDA. At and after the Effective Date,
and all in the manner of and as more fully set forth in Section 607.1106 of the
FBCA and Section 30-1- 1106 of the IBCA, the title to all real estate and other
property, or any interest therein, owned by each of IDAHO and FLORIDA shall be
vested in FLORIDA without reversion or impairment; FLORIDA shall succeed to and
possess, without further act or deed, all estates, rights, privileges, powers
and franchises, both public and private, and all of the property, real, personal
and mixed, of each of IDAHO and FLORIDA without reversion or impairment; FLORIDA
shall thenceforth be responsible and liable for all the liabilities and
obligations of each of IDAHO and FLORIDA; any claim existing or action or
proceeding pending by or against IDAHO or FLORIDA may be continued as if the
Merger did not occur or FLORIDA may be substituted for IDAHO in the proceeding;
neither the rights of creditors nor any liens upon the property of IDAHO or
FLORIDA shall be impaired by the Merger; and FLORIDA shall indemnify and hold
harmless the officers and directors of each of the parties hereto against all
such debts, liabilities and duties and against all claims and demands arising
out of the Merger.
12. TERMINATION. This Agreement may be terminated and abandoned by
either or both of the parties hereto, subject to any contractual rights, without
further shareholder action, in the manner determined by the respective Board of
Directors of IDAHO and FLORIDA at any time prior to the Effective Date.
13. AMENDMENT. The Boards of Directors of the parties hereto may amend
this Agreement at any time prior to the Effective Date; provided, that an
amendment made subsequent to the approval of this Agreement by the shareholders
of either of the parties hereto shall not: (a) change the amount or kind of
shares, securities, cash, property or rights to be received in exchange for or
on conversion of all or any of the shares of the parties hereto, (b) change any
term of the Articles of Incorporation of FLORIDA, or (c) change any other terms
or conditions of this Agreement if such change would adversely affect the
holders of any capital stock of either party hereto.
14. INSPECTION OF AGREEMENT. Executed copies of this Agreement will be
on file at the principal place of business of FLORIDA at 10871 N.W. 52nd Street,
Sunrise, FL 33351. A copy of this Agreement shall be furnished by FLORIDA, on
request and without cost, to any shareholder of either IDAHO or FLORIDA.
15. GOVERNING LAW. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Florida.
16. SERVICE OF PROCESS. On and after the Effective Date, FLORIDA agrees
that it may be served with process in IDAHO in any proceeding for enforcement of
any obligation of IDAHO or FLORIDA arising from the Merger.
3
<PAGE>
17. DESIGNATION OF IDAHO SECRETARY OF STATE AS AGENT FOR SERVICE OF
PROCESS. On and after the Effective Date, FLORIDA irrevocably appoints the
Secretary of State of Idaho as its agent to accept service of process in any
suit or other proceeding to enforce the rights of any shareholders of IDAHO or
FLORIDA arising from the Merger. The Idaho Secretary of State is requested to
mail a copy of any such process to FLORIDA at 10871 N.W. 52nd Street, Sunrise,
FL 33351, Attention: President.
18. REMEDIES. Any rights and remedies belonging to IDAHO or FLORIDA and
arising in connection with the actions contemplated by this Agreement shall be
pursued solely against IDAHO or FLORIDA, and not against their respective
officers, directors or employees. In the event that any officer, director or
employee of IDAHO or FLORIDA becomes involved in any capacity in any action,
proceeding or investigation in connection with the Merger or this Agreement,
IDAHO and/or FLORIDA shall advance to such person(s) all reasonable legal and
other expenses incurred in connection therewith and shall also indemnify such
person(s) against any losses, claims, damages or liabilities to which such
person(s) may become subject in connection with the Merger or this Agreement,
except to the extent that such indemnification is prohibited by law.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement and Plan of Merger to be executed on its behalf by its officers duly
authorized, all as of the date first above written.
CENTURY SILVER MINES, INC.,
an Idaho corporation
By: /s/ Dore Scott Perler
---------------------
Dore Scott Perler, President
SENSE HOLDINGS, INC., a Florida
corporation
By: /s/ Dore Scott Perler
---------------------
Dore Scott Perler, President
4
ARTICLES OF INCORPORATION
OF
SENSE HOLDINGS, INC.
The undersigned, a natural person competent to contract, does hereby
make, subscribe and file these Articles of Incorporation for the purpose of
organizing a corporation under the laws of the State of Florida.
ARTICLE I
CORPORATE NAME
The name of this Corporation shall be: SENSE HOLDINGS, INC.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
The principal office and mailing address of the Corporation is 10871
Northwest 52nd Street, Suite 3, Sunrise, Florida 33351.
ARTICLE III
NATURE OF CORPORATE BUSINESS AND POWERS
The general nature of the business to be transacted by this Corporation
shall be to engage in any and all lawful business permitted under the laws of
the United States and the State of Florida.
STEVEN I. WEINBERGER, ESQ., FL BAR # 0135585
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, FL 33301
Phone No.: (954) 763-1200
1
<PAGE>
ARTICLE IV
CAPITAL STOCK
The maximum number of shares of stock that this Corporation shall be
authorized to issue and have outstanding at any one time shall be ten million
(10,000,000) shares of Common stock, $.10 par value per share.
ARTICLE V
TERM OF EXISTENCE
This Corporation shall have perpetual existence.
ARTICLE VI
REGISTERED AGENT AND
INITIAL REGISTERED OFFICE IN FLORIDA
The Registered Agent and the street address of the initial Registered
Office of this Corporation in the State of Florida shall be:
Andrew Goldrich
10871 NW 52nd Street, Suite 3
Sunrise, FL 33351
ARTICLE VII
BOARD OF DIRECTORS
This Corporation shall have one (1) to seven (7) Directors, as
determined by the Board.
ARTICLE VIII
INCORPORATOR
The name and address of the person signing these Articles of
Incorporation as the Incorporator is Steven I. Weinberger, 200 East Las Olas
Blvd., Fort Lauderdale, Florida 33301.
2
<PAGE>
ARTICLE IX
INDEMNIFICATION
This Corporation may indemnify any director, officer, employee or agent
of the Corporation to the fullest extent permitted by Florida law.
ARTICLE X
AFFILIATED TRANSACTIONS
This Corporation expressly elects not to be governed by Section
607.0901 of the Florida Business Corporation Act, as amended from time to time,
relating to affiliated transactions.
ARTICLE X
CONTROL SHARE ACQUISITIONS
This Corporation expressly elects not to be governed by Section
607.0902 of the Florida Business Corporation Act, as amended from time to time,
relating to control share acquisitions.
IN WITNESS WHEREOF, the undersigned Incorporator has executed the
foregoing Articles of Incorporation on the 19th day of July 1999.
/s/ Steven I. Weinberger
------------------------
Steven I. Weinberger, Incorporator
3
<PAGE>
CERTIFICATE DESIGNATING REGISTERED AGENT
AND OFFICE FOR SERVICE OF PROCESS
SENSE HOLDINGS, INC., a corporation existing under the laws of the
State of Florida with its principal office and mailing address at 10871
Northwest 52nd Street, Suite 3, Sunrise, Florida 33351, has named Andrew
Goldrich whose address is 10871 Northwest 52nd Street, Suite 3, Sunrise, Florida
33351, as its agent to accept service of process within the State of Florida.
ACCEPTANCE:
Having been named to accept service of process for the above named
Corporation, at the place designated in this Certificate, I hereby accept the
appointment as Registered Agent, and agree to comply with all applicable
provisions of law. In addition, I hereby am familiar with and accept the duties
and responsibilities as Registered Agent for said Corporation.
/s/ Andrew Goldrich
-------------------
Andrew Goldrich
4
ARTICLES OF MERGER
OF
CENTURY SILVER MINES, INC.,
(an Idaho corporation)
INTO
SENSE HOLDINGS, INC.,
(a Florida corporation)
Pursuant to Section 607.1105 of the Florida Business Corporation Act,
the undersigned corporations adopt the following Articles of Merger:
FIRST: The plan of merger is as follows:
1. Merger. CENTURY SILVER MINES, INC., an Idaho corporation
("Acquisition") shall be merged (the "Merger") with and into SENSE HOLDINGS,
INC., a Florida corporation bearing Document #P99000063834 ("Sense").
Acquisition and Sense are sometimes hereinafter collectively referred to as the
"Constituent Corporations." Sense shall be the surviving corporation of the
Merger (the "Surviving Corporation"), effective upon the date when these
Articles of Merger are filed with the Department of State of the State of
Florida (the "Effective Date").
2. Articles of Incorporation and By-Laws. The Articles of Incorporation
and ByLaws of Sense, as same shall exist from and after the Effective Date,
shall be the Articles of Incorporation and By-Laws of the Surviving Corporation
following the Effective Date, unless and until the same shall be amended or
repealed in accordance with the provisions thereof or applicable law, which
power to amend or repeal is hereby expressly reserved, and all rights or powers
of whatsoever nature conferred in such Articles of Incorporation and By-Laws of
the Surviving Corporation, shall constitute the Articles of Incorporation and
By-Laws of the Surviving Corporation separate and apart from these Articles of
Merger.
3. Succession. On the Effective Date, Sense shall continue its
corporate existence under the laws of the State of Florida, and the separate
existence and corporate organization of Acquisition, except insofar as it may be
continued by operation of law, shall be terminated and cease.
4. Conversion of Shares. On the Effective Date, by virtue of the Merger
and without any further action on the part of the Constituent Corporations or
their shareholders, each outstanding share of Acquisition's common stock, $.10
par value per share, and each outstanding option to purchase common stock of
Sense, shall be converted into the consideration set forth in Section 8 and
Section 10, respectively, of the Agreement and Plan of Merger (the "Plan of
Merger") between Acquisition and Sense.
SECOND: The Effective Date of the Merger is the date upon which these Articles
of Merger are filed with the Department of State of the State of Florida.
1
<PAGE>
THIRD: The Plan of Merger was adopted by the boards of directors of Acquisition
and Sense on the 20th day of July 1999, and by holders of a majority of the
issued and outstanding shares of common stock of Acquisition, on the 20th day of
August 1999. No shares of Sense are issued or outstanding.
Signed this 20th day of August 1999.
Century Silver Mines, Inc., Sense Holdings, Inc.,
an Idaho corporation a Florida corporation
By: /s/ Dore Scott Perler By: /s/ Dore Scott Perler
- ------------------------- -------------------------
Dore Scott Perler, President Dore Scott Perler, President
2
ARTICLES OF MERGER
Merging
CENTURY SILVER MINES, INC.,
(an Idaho corporation)
with and into
SENSE HOLDINGS, INC.,
(a Florida corporation)
Pursuant to the provisions of Section 30-1-1105 of the Idaho Business
Corporation Act (the "IBCA"), the undersigned corporations adopt the following
Articles of Merger for the purpose of effecting a merger in accordance with the
provisions of Section 30-1-1101 of the IBCA.
ARTICLE I
An executed copy of an Agreement and Plan of Merger (the "Plan of
Merger") dated July 20, 1999 by and among Century Silver Mines, Inc., an Idaho
corporation (the "Merging Corporation"), and Sense Holdings, Inc., a Florida
corporation (the "Surviving Corporation") that provides for the merger of the
Merging Corporation with and into the Surviving Corporation is attached hereto,
and is on file at the principal place of business of the Surviving Corporation
at 10871 N.W. 52nd Street, Sunrise, FL 33351 and will be furnished, on request
and without cost, to any shareholder of any domestic corporation that is a party
to the merger.
ARTICLE II
As to the Merging Corporation, the approval of whose shareholders is
required, the number of shares outstanding and entitled to vote on the Plan of
Merger is as follows: 6,061,976 shares of common stock, par value $.10 per
share. As to the Surviving Corporation, the approval of its shareholders is not
required inasmuch as no shares of the Surviving Corporation are issued or
outstanding.
ARTICLE III
The Surviving Corporation will be responsible for the payment of all
fees and franchise taxes of the Merging Corporation and will be obligated to pay
such fees and franchise taxes if the same are not timely paid.
ARTICLE IV
As to the Merging Corporation, the approval of whose board of directors
and shareholders is required, all members of the Board of Directors have signed
a consent in
1
<PAGE>
writing, pursuant to the IBCA, adopting the Plan of Merger, and the holders of a
majority of the shares of common stock outstanding and entitled to vote thereon,
by a special meeting, have approved and voted for adoption of the Plan of
Merger.
As to the Surviving Corporation, the approval of whose board of
directors is required, all members of the Board of Directors have signed a
consent in writing, pursuant to the Florida Business Corporation Act, adopting
the Plan of Merger.
ARTICLE V
The Plan of Merger and the performance of its terms was duly authorized
by all action required by the laws of the State of Idaho, the state under which
the Merging Corporation is organized, and by its constituent documents. The Plan
of Merger and the performance of its terms was duly authorized by all action
required by the laws of the State of Florida, the state under which the
Surviving Corporation is organized, and by its constituent documents.
Executed on August 20, 1999.
CENTURY SILVER MINES, INC.,
an Idaho corporation
By:/s/ Dore Scott Perler
------------------------
Dore Scott Perler, President
SENSE HOLDINGS, INC., a
Florida corporation
By:/s/ Dore Scott Perler
------------------------
Dore Scott Perler, President
2
BY-LAWS
OF
SENSE HOLDINGS, INC.
a Florida corporation
<PAGE>
<TABLE>
<CAPTION>
INDEX
ARTICLE I
Offices
<S> <C>
Section 1.01 Principal Office........................................................ 1
Section 1.02 Registered Office....................................................... 1
Section 1.03 Other Offices........................................................... 1
ARTICLE II
Meetings of Shareholders
Section 2.01 Annual Meeting.......................................................... 1
Section 2.02 Special Meetings........................................................ 2
Section 2.03 Shareholders' List for Meeting.......................................... 2
Section 2.04 Record Date............................................................. 3
Section 2.05 Notice of Meetings and Adjournment...................................... 3
Section 2.06 Waiver of Notice........................................................ 4
ARTICLE III
Shareholder Voting
Section 3.01 Voting Group Defined.................................................... 5
Section 3.02 Quorum and Voting Requirements for
Voting Groups........................................................... 5
Section 3.03 Action by Single and Multiple Voting
Groups.................................................................. 5
Section 3.04 Shareholder Quorum and Voting; Greater
or Lesser Voting Requirements........................................... 6
i
<PAGE>
Section 3.05 Voting for Directors; Cumulative Voting................................. 6
Section 3.06 Voting Entitlement of Shares............................................ 7
Section 3.07 Proxies................................................................. 8
Section 3.08 Shares Held by Nominees................................................. 9
Section 3.09 Corporation's Acceptance of Votes....................................... 10
Section 3.10 Action by Shareholders Without Meeting.................................. 11
ARTICLE IV
Board of Directors and Officers
Section 4.01 Qualifications of Directors............................................. 11
Section 4.02 Number of Directors..................................................... 11
Section 4.03 Terms of Directors Generally............................................ 12
Section 4.04 Staggered Terms for Directors........................................... 12
Section 4.05 Vacancy on Board........................................................ 12
Section 4.06 Compensation of Directors............................................... 12
Section 4.07 Meetings................................................................ 13
Section 4.08 Action by Directors Without a Meeting................................... 13
Section 4.09 Notice of Meetings...................................................... 13
Section 4.10 Waiver of Notice........................................................ 13
Section 4.11 Quorum and Voting....................................................... 14
Section 4.12 Committees.............................................................. 14
Section 4.13 Loans to Officers, Directors and
Employees; Guaranty of Obligations...................................... 15
ii
<PAGE>
Section 4.14 Required Officers....................................................... 15
Section 4.15 Duties of Officers...................................................... 16
Section 4.16 Resignation and Removal of Officers..................................... 16
Section 4.17 Contract Rights of Officers............................................. 16
Section 4.18 General Standards for Directors......................................... 16
Section 4.19 Director Conflicts of Interest.......................................... 17
Section 4.20 Resignation of Directors................................................ 18
ARTICLE V
Indemnification of Directors, Officers,
Employees and Agents
Section 5.01 Directors, Officers, Employees
and Agents.............................................................. 18
ARTICLE VI
Office and Agent
Section 6.01 Registered Office and Registered Agent.................................. 22
Section 6.02 Change of Registered Office or Registered
Agent; Resignation of Registered Agent.................................. 23
ARTICLE VII
Shares, Option, Dividends and Distributions
Section 7.01 Authorized Shares....................................................... 24
Section 7.02 Terms of Class or Series Determined
by Board of Directors................................................... 24
Section 7.03 Issued and Outstanding Shares........................................... 25
Section 7.04 Issuance of Shares...................................................... 25
iii
<PAGE>
Section 7.05 Form and Content of Certificates........................................ 26
Section 7.06 Shares Without Certificates............................................. 27
Section 7.07 Restriction on Transfer of Shares
and Other Securities.................................................... 27
Section 7.08 Shareholder's Pre-emptive Rights........................................ 27
Section 7.09 Corporation's Acquisition of its
Own Shares.............................................................. 28
Section 7.10 Share Options........................................................... 28
Section 7.11 Terms and Conditions of Stock Rights
and Options............................................................. 28
Section 7.12 Share Dividends......................................................... 29
Section 7.13 Distributions to Shareholders........................................... 29
ARTICLE VIII
Amendment of Articles and Bylaws
Section 8.01 Authority to Amend the Articles of
Incorporation........................................................... 31
Section 8.02 Amendment by Board of Directors......................................... 31
Section 8.03 Amendment of Bylaws by Board of
Directors............................................................... 32
Section 8.04 Bylaw Increasing Quorum or Voting
Requirements for Directors.............................................. 32
ARTICLE IX
Records and Report
Section 9.01 Corporate Records....................................................... 33
Section 9.02 Financial Statements for Shareholders................................... 34
iv
<PAGE>
Section 9.03 Other Reports to Shareholders........................................... 34
Section 9.04 Annual Report for Department of State................................... 35
ARTICLE X
Miscellaneous
Section 10.01 Definition of the "Act"................................................. 35
Section 10.02 Application of Florida Law.............................................. 36
Section 10.03 Fiscal Year............................................................. 36
Section 10.04 Conflicts with Articles of
Incorporation........................................................... 36
</TABLE>
v
<PAGE>
ARTICLE I
Offices
Section 1.01. Principal Office.
The principal office of the corporation in the State of Florida shall
be established at such places as the board of directors from time to time
determine.
Section 1.02. Registered Office.
The registered office of the corporation in the State of Florida shall
be at the office of its registered agent as stated in the articles of
incorporation or as the board of directors shall from time to time determine.
Section 1.03. Other Offices.
The corporation may have additional offices at such other places,
either within or without the State of Florida, as the board of directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
Meetings of Shareholders
Section 2.01. Annual Meeting.
(1) The corporation shall hold a meeting of shareholders annually, for
the election of directors and for the transaction of any proper business, at a
time stated in or fixed in accordance with a resolution of the board of
directors.
(2) Annual shareholders' meeting may be held in or out of the State of
Florida at a place stated in or fixed in accordance with a resolution by the
board of directors or, when not inconsistent with the board of directors'
resolution stated in the notice of the annual meeting. If no place is stated in
or fixed in accordance with these bylaws, or stated in the notice of the annual
meeting, annual meetings shall be held at the corporation's principal office.
(3) The failure to hold the annual meeting at the time stated in or
fixed in accordance with these bylaws or pursuant to the Act does not affect the
validity of any corporate action and shall not work a forfeiture of or
dissolution of the corporation.
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Section 2.02. Special Meeting.
(1) The corporation shall hold a special meeting of shareholders:
(a) On call of its board of directors or the person or persons
authorized to do so by the board of directors; or
(b) If the holders of not less than 10% of all votes entitled
to be cast on any issue proposed to be considered at the proposed special
meeting sign, date and deliver to the corporation's secretary one or more
written demands for the meeting describing the purpose or purposes for which it
is to be held.
(2) Special shareholders' meetings may be held in or out of the State
of Florida at a place stated in or fixed in accordance with a resolution of the
board of directors, or, when not inconsistent with the board of directors'
resolution, in the notice of the special meeting. If no place is stated in or
fixed in accordance with these bylaws or in the notice of the special meeting,
special meetings shall be held at the corporation's principal office.
(3) Only business within the purpose or purposes described in the
special meeting notice may be conducted at a special shareholders' meeting.
Section 2.03. Shareholders' List for Meeting.
(1) After fixing a record date for a meeting, a corporation shall
prepare a list of the names of all its shareholders who are entitled to notice
of a shareholders' meeting, in accordance with the Florida Business Corporation
Act (the "Act"), or arranged by voting group, with the address of, and the
number and class and series, if any, of shares held by, each.
(2) The shareholders' list must be available for inspection by any
shareholder for a period of ten days prior to the meeting or such shorter time
as exists between the record date and the meeting and continuing through the
meeting at the corporation's principal office, at a place identified in the
meeting notice in the city where the meeting will be held, or at the office of
the corporation's transfer agent or registrar. A shareholder or his agent or
attorney is entitled on written demand to inspect the list (subject to the
requirements of Section 607.1602(3) of the Act), during regular business hours
and at his expense, during the period it is available for inspection.
(3) The corporation shall make the shareholders' list available at the
meeting, and any shareholder or his agent or attorney is entitled to inspect the
list at any time during the meeting or any adjournment.
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Section 2.04. Record Date.
(1) The board of directors may set a record date for purposes of
determining the shareholders entitled to notice of and to vote at a
shareholders' meeting; however, in no event may a record date fixed by the board
of directors be a date preceding the date upon which the resolution fixing the
record date is adopted.
(2) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to demand a special meeting is the date
the first shareholder delivers his demand to the corporation. In the event that
the board of directors sets the record date for a special meeting of
shareholders, it shall not be a date preceding the date upon which the
corporation receives the first demand from a shareholder requesting a special
meeting.
(3) If no prior action is required by the board of directors pursuant
to the Act, and, unless otherwise fixed by the board of directors, the record
date for determining shareholders entitled to take action without a meeting is
the date the first signed written consent is delivered to the corporation under
Section 607.0704 of the Act. If prior action is required by the board of
directors pursuant to the Act, the record date for determining shareholders
entitled to take action without a meeting is at the close of business on the day
on which the board of directors adopts the resolution taking such prior action.
(4) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to notice of and to vote at an annual or
special shareholders' meeting is the close of business on the day before the
first notice is delivered to shareholders.
(5) A record date may not be more than 70 days before the meeting or
action requiring a determination of shareholders.
(6) A determination of shareholders entitled to notice of or to vote at
a shareholders' meeting is effective for any adjournment of the meeting unless
the board of directors fixes a new record date, which it must do if the meeting
is adjourned to a date more than one 120 days after the date fixed for the
original meeting.
Section 2.05. Notice of Meetings and Adjournment.
(1) The corporation shall notify shareholders of the date, time and
place of each annual and special shareholders' meeting no fewer than 10 or more
than 60 days before the meeting date. Unless the Act requires otherwise, the
corporation is required to give notice only to shareholders entitled to vote at
the meeting. Notice shall be given in the manner provided in Section 607.0141 of
the Act, by or at the direction of the president, the secretary, of the officer
or persons calling the meeting. If the notice is mailed at least 30
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days before the date of the meeting, it may be done by a class of United States
mail other than first class. Notwithstanding Section 607.0141, if mailed, such
notice shall be deemed to be delivered when deposited in the United Statement
mail addressed to the shareholder at his address as it appears on the stock
transfer books of the corporation, with postage thereon prepaid.
(2) Unless the Act or the articles of incorporation requires otherwise,
notice of an annual meeting need not include a description of the purpose or
purposes for which the meeting is called.
(3) Notice of a special meeting must include a description of the
purpose or purposes for which the meeting is called.
(4) If an annual or special shareholders meeting is adjourned to a
different date, time, or place, notice need not be given of the new date, time,
or place if the new date, time or place is announced at the meeting before
adjournment is taken, and any business may be transacted at the adjourned
meeting that might have been transacted on the original date of the meeting. If
a new record date is or must be fixed under Section 607.0707 of the Act,
however, notice of the adjourned meeting must be given under this section to
persons who are shareholders as of the new record date who are entitled to
notice of the meeting.
(5) Notwithstanding the foregoing, no notice of a shareholders' meeting
need be given if: (a) an annual report and proxy statements for two consecutive
annual meetings of shareholders, or (b) all, and at least two checks in payment
of dividends or interest on securities during a 12-month period, have been sent
by first-class United States mail, addressed to the shareholder at his address
as it appears on the share transfer books of the corporation, and returned
undeliverable. The obligation of the corporation to give notice of a
shareholders' meeting to any such shareholder shall be reinstated once the
corporation has received a new address for such shareholder for entry on its
share transfer books.
Section 2.06. Waiver of Notice.
(1) A shareholder may waive any notice required by the Act, the
articles of incorporation, or bylaws before or after the date and time stated in
the notice. The waiver must be in writing, be signed by the shareholder entitled
to the notice, and be delivered to the corporation for inclusion in the minutes
or filing with the corporate records. Neither the business to be transacted at
nor the purpose of any regular or special meeting of the shareholders need be
specified in any written waiver of notice.
(2) A shareholder's attendance at a meeting: (a) Waives objection to
lack of notice or defective notice of the meeting, unless the shareholder at the
beginning of the
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meeting objects to holding the meeting or transacting business at the meeting;
or (b) waives objection to consideration of a particular matter at the meeting
that is not within the purpose or purposes described in the meeting notice,
unless the shareholder objects to considering the matter when it is presented.
ARTICLE III
Shareholder Voting
Section 3.01. Voting Group Defined.
A "voting group" means all shares of one or more classes or series that
under the articles of incorporation or the Act are entitled to vote and be
counted together collectively on a matter at a meeting of shareholders. All
shares entitled by the articles of incorporation or the Act to vote generally on
the matter are for that purpose a single voting group.
Section 3.02. Quorum and Voting Requirements for Voting Groups.
(1) Shares entitled to vote as a separate voting group may take action
on a matter at a meeting only if a quorum of those shares exists with respect to
that matter. Unless the articles of incorporation or the Act provides otherwise,
a majority of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.
(2) Once a share is represented for any purpose at a meeting, 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.
(3) If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
articles of incorporation or the Act requires a greater number of affirmative
votes.
Section 3.03. Action by Single and Multiple Voting Groups.
(1) If the articles of incorporation or the Act provides for voting by
a single voting group on a matter, action on that matter is taken when voted
upon by that voting group as provided in Section 3.02 of these bylaws.
(2) If the articles of incorporation or the Act provides for voting by
two or more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately as provided in
Section 3.02 of these bylaws.
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Action may be taken by one voting group on a matter even though no action is
taken by another voting group entitled to vote on the matter.
Section 3.04. Shareholder Quorum and Voting; Greater or Lesser Voting
Requirements.
(1) A majority of the shares entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of shareholders, but in no
event shall a quorum consist of less than one-third of the shares entitled to
vote. When a specified item of business is required to be voted on by a class or
series of stock, a majority of the shares of such class or series shall
constitute a quorum for the transaction of such item of business by that class
or series.
(2) An amendment to the articles of incorporation that adds, changes or
deletes a greater or lesser quorum or voting requirement must meet the same
quorum requirement and be adopted by the same vote and voting groups required to
take action under the quorum and voting requirements then in effect or proposed
to be adopted, whichever is greater.
(3) If a quorum exists, action on a matter, other than the election of
directors, is approved if the votes cast by the holders of the shares
represented at the meeting and entitled to vote on the subject matter favoring
the action exceed the votes cast opposing the action, unless a greater number of
affirmative votes or voting by classes is required by the Act or the articles of
incorporation.
(4) After a quorum has been established at a shareholders' meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment
thereof.
(5) The articles of incorporation may provide for a greater voting
requirement or a greater or lesser quorum requirement for shareholders (or
voting groups of shareholders) than is provided by the Act, but in no event
shall a quorum consist of less than one-third of the shares entitled to vote.
Section 3.05. Voting for Directors; Cumulative Voting.
(1) Directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which a quorum is
present.
(2) Each shareholder who is entitled to vote at an election of
directors has the right to vote the number of shares owned by him for as many
persons as there are directors to be elected and for whose election he has a
right to vote. Shareholders do not
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have a right to cumulate their votes for directors unless the articles of
incorporation so provide.
Section 3.06. Voting Entitlement of Shares.
(1) Unless the articles of incorporation or the Act provides otherwise,
each outstanding share, regardless of class, is entitled to one vote on each
matter submitted to a vote at a meeting of shareholders. Only shares are
entitled to vote.
(2) The shares of the corporation are not entitled to vote if they are
owned, directly or indirectly, by a second corporation, domestic or foreign, and
the first corporation owns, directly or indirectly, a majority of shares
entitled to vote for directors of the second corporation.
(3) This section does not limit the power of the corporation to vote
any shares, including its own shares, held by it in a fiduciary capacity.
(4) Redeemable shares are not entitled to vote on any matter, and shall
not be deemed to be outstanding, after notice of redemption is mailed to the
holders thereof and a sum sufficient to redeem such shares has been deposited
with a bank, trust company, or other financial institution upon an irrevocable
obligation to pay the holders the redemption price upon surrender of the shares.
(5) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the bylaws of the
corporate shareholder may prescribe or, in the absence of any applicable
provision, by such person as the board of directors of the corporate shareholder
may designate. In the absence of any such designation or in case of conflicting
designation by the corporate shareholder, the chairman of the board, the
president, any vice president, the secretary, and the treasurer of the corporate
shareholder, in that order, shall be presumed to be fully authorized to vote
such shares.
(6) Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee.
(7) Shares held by or under the control of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by him without the transfer thereof into his name.
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(8) If a share or shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety, or otherwise, or if two or more persons have
the same fiduciary relationship respecting the same shares, unless the secretary
of the corporation is given notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, then acts with respect to voting have the following effect:
(a) If only one votes, in person or in proxy, his act binds
all;
(b) If more than one vote, in person or by proxy, the act of
the majority so voting binds all;
(c) If more than one vote, in person or by proxy, but the vote
is evenly split on any particular matter, each faction is entitled to vote the
share or shares in question proportionally;
(d) If the instrument or order so filed shows that any such
tenancy is held in unequal interest, a majority or a vote evenly split for
purposes of this subsection shall be a majority or a vote evenly split in
interest;
(e) The principles of this subsection shall apply, insofar as
possible, to execution of proxies, waivers, consents, or objections and for the
purpose of ascertaining the presence of a quorum;
(f) Subject to Section 3.08 of these bylaws, nothing herein
contained shall prevent trustees or other fiduciaries holding shares registered
in the name of a nominee from causing such shares to be voted by such nominee as
the trustee or other fiduciary may direct. Such nominee may vote shares as
directed by a trustee or their fiduciary without the necessity of transferring
the shares to the name of the trustee or other fiduciary.
Section 3.07. Proxies.
(1) A shareholder, other person entitled to vote on behalf of a
shareholder pursuant to Section 3.06 of these bylaws, or attorney in fact may
vote the shareholder's shares in person or by proxy.
(2) A shareholder may appoint a proxy to vote or otherwise act for him
by signing an appointment form, either personally or by his attorney in fact. An
executed telegram or cablegram appearing to have been transmitted by such
person, or a photographic, photostatic, or equivalent reproduction of an
appointment form, is a sufficient appointment form.
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(3) An appointment of a proxy is effective when received by the
secretary or other officer or agent authorized to tabulate votes. An appointment
is valid for up to 11 months unless a longer period is expressly provided in the
appointment form.
(4) The death or incapacity of the shareholder appointing a proxy does
not affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
(5) An appointment of a proxy is revocable by the shareholder unless
the appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest. Appointments coupled with an interest
include the appointment of: (a) a pledgee; (b) a person who purchased or agreed
to purchase the shares; (c) a creditor of the corporation who extended credit to
the corporation under terms requiring the appointment; (d) an employee of the
corporation whose employment contract requires the appointment; or (e) a party
to a voting agreement created in accordance with the Act.
(6) An appointment made irrevocable under this section becomes
revocable when the interest with which it is coupled is extinguished and, in a
case provided for in Subsection 5(c) or 5(d), the proxy becomes revocable three
years after the date of the proxy or at the end of the period, if any, specified
herein, whichever is less, unless the period of irrevocability is renewed from
time to time by the execution of a new irrevocable proxy as provided in this
section. This does not affect the duration of a proxy under subsection (3).
(7) A transferee for value of shares subject to an irrevocable
appointment may revoke the appointment if he did not know of its existence when
he acquired the shares and the existence of the irrevocable appointment was not
noted conspicuously on the certificate representing the shares or on the
information statement for shares without certificates.
(8) Subject to Section 3.09 of these bylaws and to any express
limitation on the proxy's authority appearing on the face of the appointment
form, a corporation is entitled to accept the proxy's vote or other action as
that of the shareholder making the appointment.
(9) If an appointment form expressly provides, any proxy holder may
appoint, in writing, a substitute to act in his place.
Section 3.08. Shares Held by Nominees.
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(1) The corporation may establish a procedure by which the beneficial
owner of shares that are registered in the name of a nominee is recognized by
the corporation as the shareholder. The extent of this recognition may be
determined in the procedure.
(2) The procedure may set forth (a) the types of nominees to which it
applies; (b) the rights or privileges that the corporation recognizes in a
beneficial owner; (c) the manner in which the procedure is selected by the
nominee; (d) the information that must be provided when the procedure is
selected; (e) the period for which selection of the procedure is effective; and
(f) other aspects of the rights and duties created.
Section 3.09. Corporation's Acceptance of Votes.
(1) If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the corporation if acting in good
faith is entitled to accept the vote, consent waiver, or proxy appointment and
give it effect as the act of the shareholder.
(2) If the name signed on a vote, consent, waiver, or proxy appointment
does not correspond to the name of its shareholder, the corporation if acting in
good faith is nevertheless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the shareholder if: (a) the
shareholder is an entity and the name signed purports to be that of an officer
or agent of the entity; (b) the name signed purports to be that of an
administrator, executor, guardian, personal representative, or conservator
representing the shareholder and, if the corporation requests, evidence of
fiduciary status acceptable to the corporation has been presented with respect
to the vote, consent, waiver, or proxy appointment; (c) the name signed purports
to be that of a receiver, trustee in bankruptcy, or assignee for the benefit of
creditors of the shareholder and, if the corporation requests, evidence of this
status acceptable to the corporation has been presented with respect to the
vote, consent, waiver, or proxy appointment; (d) the name signed purports to be
that of a pledgee, beneficial owner, or attorney in fact of the shareholder and,
if the corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder has been presented with
respect to the vote, consent, waiver, or proxy appointment; or (e) two or more
persons are the shareholder as covenants or fiduciaries and the name signed
purports to be the name of at least one of the co-owners and the person signing
appears to be acting on behalf of all the co-owners.
(3) The corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the secretary or other officer or agent authorized to
tabulate votes, acting in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's authority to sign for
the shareholder.
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(4) The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance with
the standards of this section are not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(5) Corporate action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
Section 3.10. Action by Shareholders Without Meeting.
(1) Any action required or permitted by the Act to be taken at any
annual or special meeting of shareholders of the corporation may be taken
without a meeting, without prior notice and without a vote, if the action is
taken by the holders of outstanding stock of each voting group entitled to vote
thereon having not less than the minimum number of votes with respect to each
voting group that would be necessary to authorize or take such action at a
meeting at which all voting groups and shares entitled to vote thereon were
present and voted. In order to be effective, the action must by evidenced by one
or more written consents describing the action taken, dated and signed by
approving shareholders having the requisite number of votes of each voting group
entitled to vote thereon, and delivered to the corporation by delivery to its
principal office in this state, its principal place of business, the corporate
secretary, or another office or agent of the corporation having custody of the
book in which proceedings of meetings of shareholders are recorded. No written
consent shall be effective to take the corporate action referred to therein
unless, within 60 days of the date of the earliest dated consent is delivered in
the manner required by this section, written consent signed by the number of
holders required to take action is delivered to the corporation by delivery as
set forth in this section.
(2) Within 10 days after obtaining such authorization by written
consent, notice in accordance with Section 607.0704(3) of the Act must be given
to those shareholders who have not consented in writing.
ARTICLE IV
Board of Directors and Officers
Section 4.01. Qualifications of Directors.
Directors must be natural persons who are 18 years of age or older but
need not be residents of the State of Florida or shareholders of the
corporation.
Section 4.02. Number of Directors.
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(1) The board of directors shall consist of not less than one nor more
than nine individuals.
(2) The number of directors may be increased or decreased from time to
time by amendment to these bylaws.
(3) Directors are elected at the first annual shareholders' meeting and
at each annual meeting thereafter unless their terms are staggered under Section
4.04 of these bylaws.
Section 4.03. Terms of Directors Generally.
(1) The terms of the initial directors of the corporation expire at the
first shareholders' meeting at which directors are elected.
(2) The terms of all other directors expire at the next annual
shareholders' meeting following their election unless their terms are staggered
under Section 4.04 of these bylaws.
(3) A decrease in the number of directors does not shorten an incumbent
director's term.
(4) The term of a director elected to fill a vacancy expires at the
next shareholders' meeting at which directors are elected.
(5) Despite the expiration of a director's term, he continues to serve
until his successor is elected and qualifies or until there is a decrease in the
number of directors.
Section 4.04. Staggered Terms for Directors.
The directors of any corporation organized under the Act may, by the
articles of incorporation, or by amendment to these bylaws adopted by a vote of
the shareholders, be divided into one, two or three classes with the number of
directors in each class being as nearly equal as possible; the term of office of
those of the first class to expire at the annual meeting next ensuing; of the
second class one year thereafter; at the third class two years thereafter; and
at each annual election held after such classification and election, directors
shall be chosen for a full term, as the case may be, to succeed those whose
terms expire. If the directors have staggered terms, then any increase or
decrease in the number of directors shall be so apportioned among the classes as
to make all classes as nearly equal in number as possible.
Section 4.05. Vacancy on Board.
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(1) Whenever a vacancy occurs on a board of directors, including a
vacancy resulting from an increase in the number of directors, it may be filled
by the affirmative vote of a majority of the remaining directors.
(2) A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
Section 4.06. Compensation of Directors.
The board of directors may fix the compensation of directors.
Section 4.07. Meetings.
(1) The board of directors may hold regular or special meetings in or
out of the State of Florida.
(2) A majority of the directors present, whether or not a quorum
exists, may adjourn any meeting of the board of directors to another time and
place. Notice of any such adjourned meeting shall be given to the directors who
were not present at the time of the adjournment and, unless the time and place
of the adjourned meeting are announced at the time of the adjournment, to the
other directors.
(3) Meetings of the board of directors may be called by the chairman of
the board or by the president.
(4) The board of directors may permit any or all directors to
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all directors participating may
simultaneously hear each other during the meeting. A director participating in a
meeting by this means is deemed to be present in person at the meeting.
Section 4.08. Action by Directors Without a Meeting.
(1) Action required or permitted by the Act to be taken at a board of
directors' meeting or committee meeting may be taken without a meeting if the
action is taken by all members of the board or of the committee. The action must
be evidenced by one or more written consents describing the action taken and
signed by each director or committee member.
(2) Action taken under this section is effective when the last director
signs the consent, unless the consent specifies a different effective date.
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(3) A consent signed under this section has the effect of a meeting
vote and may be described as such in any document.
Section 4.09. Notice of Meetings.
Regular and special meetings of the board of directors may be held
without notice of the date, time, place, or purpose of the meeting.
Section 4.10. Waiver of Notice.
Notice of a meeting of the board of directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and a waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting or promptly upon
arrival at the meeting, any objection to the transaction of business because the
meeting is not lawfully called or convened.
Section 4.11. Quorum and Voting.
(1) A quorum of a board of directors consists of a majority of the
number of directors prescribed by the articles of incorporation or these bylaws.
(2) If a quorum is present when a vote is taken, the affirmative vote
of a majority of directors present is the act of the board of directors.
(3) A director of a corporation who is present at a meeting of the
board of directors or a committee of the board of directors when corporate
action is taken is deemed to have assented to the action taken unless:
(a) He objects at the beginning of the meeting (or promptly
upon his arrival) to holding it or transacting specified business at the
meeting; or
(b) He votes against or abstains from the action taken.
Section 4.12. Committees.
(1) The board of directors, by resolution adopted by a majority of the
full board of directors, may designate from among its members an executive
committee and one or more other committees each of which, to the extent provided
in such resolution, shall have and may exercise all the authority of the board
of directors, except that no such committee shall have the authority to:
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(a) Approve or recommend to shareholders actions or proposals
required by the Act to be approved by shareholders.
(b) Fill vacancies on the board of directors or any committee
thereof.
(c) Adopt, amend, or repeal these bylaws.
(d) Authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the board of directors.
(e) Authorize or approve the issuance or sale or contract for
the sale of shares, or determine the designation and relative rights,
preferences, and limitations of a voting group except that the board of
directors may authorize a committee (or a senior executive officer of the
corporation) to do so within limits specifically prescribed by the board of
directors.
(2) The sections of these bylaws which govern meetings, notice and
waiver of notice, and quorum and voting requirements of the board of directors
apply to committees and their members as well.
(3) Each committee must have two or more members who serve at the
pleasure of the board of directors. The board, by resolution adopted in
accordance herewith, may designate one or more directors as alternate members of
any such committee who may act in the place and stead of any absent member or
members at any meeting of such committee.
(4) Neither the designation of any such committee, the delegation
thereto of authority, nor action by such committee pursuant to such authority
shall alone constitute compliance by any member of the board of directors not a
member of the committee in question with his responsibility to act in good
faith, in a manner he reasonably believes to be in the best interests of the
corporation, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances.
Section 4.13. Loans to Officers, Directors, and Employees; Guaranty of
Obligations.
The corporation may lend money to, guaranty any obligation of, or
otherwise assist any officer, director, or employee of the corporation or of a
subsidiary, whenever, in the judgment of the board of directors, such loan,
guaranty, or assistance may reasonably be expected to benefit the corporation.
The loan, guaranty, or other assistance may be with or without interest and may
be unsecured or secured in such manner as the board of directors shall approve,
including, without limitation, a pledge of shares of stock of the corporation.
Nothing in this section shall be deemed to deny, limit, or restrict the powers
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of guaranty or warranty of any corporation at common law or under any statute.
Loans, guaranties, or other types of assistance are subject to section 4.19.
Section 4.14. Required Officers.
(1) The corporation shall have such officers as the board of directors
may appoint from time to time.
(2) A duly appointed officer may appoint one or more assistant
officers.
(3) The board of directors shall delegate to one of the officers
responsibility for preparing minutes of the directors' and shareholders'
meetings and for authenticating records of the corporation.
(4) The same individual may simultaneously hold more than one office in
the corporation.
Section 4.15. Duties of Officers.
Each officer has the authority and shall perform the duties set forth
in a resolution or resolutions of the board of directors or by direction of any
officer authorized by the board of directors to prescribe the duties of other
officers.
Section 4.16. Resignation and Removal of Officers.
(1) An officer may resign at any time by delivering notice to the
corporation. A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date and the corporation accepts the future effective date, the board of
directors may fill the pending vacancy before the effective date if the board of
directors provides that the successor does not take office until the effective
date.
(2) The board of directors may remove any officer at any time with or
without cause. Any assistant officer, if appointed by another officer, may
likewise be removed by the board of directors or by the officer which appointed
him in accordance with these bylaws.
Section 4.17. Contract Rights of Officers.
The appointment of an officer does not itself create contract rights.
Section 4.18. General Standards for Directors.
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(1) A director shall discharge his duties as a director, including his
duties as a member of a committee:
(a) In good faith;
(b) With the care an ordinarily prudent person in a like
position would exercise under similar circumstances; and
(c) In a manner he reasonably believes to be in the best
interests of the corporation.
(2) In discharging his duties, a director is entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, if prepared or presented by:
(a) One or more officers or employees of the corporation whom
the director reasonably believes to be reliable and competent in the matters
presented;
(b) Legal counsel, public accountants, or other persons as to
matters the director reasonably believes are within the persons' professional or
expert competence; or
(c) A committee of the board of directors of which he is not a
member if the director reasonably believes the committee merits confidence.
(3) In discharging his duties, a director may consider such factors as
the director deems relevant, including the long-term prospects and interests of
the corporation and its shareholders, and the social, economic, legal, or other
effects of any action on the employees, suppliers, customers of the corporation
or its subsidiaries, the communities and society in which the corporation or its
subsidiaries operate, and the economy of the state and the nation.
(4) A director is not acting in good faith if he has knowledge
concerning the matter in question that makes reliance otherwise permitted by
subsection (2) unwarranted.
(5) A director is not liable for any action taken as a director, or any
failure to take any action, if he performed the duties of his office in
compliance with this section.
Section 4.19. Director Conflicts of Interest.
No contract or other transaction between a corporation and one or more
interested directors shall be either void or voidable because of such
relationship or interest, because such director or directors are present at the
meeting of the board of directors or a
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committee thereof which authorizes, approves or ratifies such contract or
transaction, or because his or their votes are counted for such purpose, if:
(1) The fact of such relationship or interest is disclosed or known to
the board of directors or committee which authorizes, approves or ratifies the
contract or transactions by a vote or consent sufficient for the purpose without
counting the votes or consents of such interested directors;
(2) The fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
(3) The contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the board, a committee or the
shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at the meeting of the board of directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
For the purpose of paragraph (2) above, a conflict of interest
transaction is authorized, approved or ratified if it receives the vote of a
majority of the shares entitled to be counted under this subsection. Shares
owned by or voted under the control of a director who has a relationship or
interest in the conflict of interest transaction may not be counted in a vote of
shareholders to determine whether to authorize, approve or ratify a conflict of
interest transaction under paragraph (2). The vote of those shares, however, is
counted in determining whether the transaction is approved under other sections
of the Act. A majority of the shares, whether or not present, that are entitled
to be counted in a vote on the transaction under this subsection constitutes a
quorum for the purpose of taking action under this section.
Section 4.20. Resignation of Directors.
A director may resign at any time by delivering written notice to the
board of directors or its chairman or to the corporation.
A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date, the board of directors may fill the pending vacancy before the
effective date if the board of directors provides that the successor does not
take office until the effective date.
ARTICLE V
Indemnification of Directors, Officers,
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Employees and Agents
Section 5.01. Directors, Officers, Employees and Agents.
(1) The corporation shall have power to indemnify any person who was or
is a party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against liability
incurred in connection with such proceeding, including any appeal thereof, if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any proceeding by judgment, order, settlement,
or conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in, or not opposed to, the best
interests of the corporation or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(2) The corporation shall have power to indemnify any person, who was
or is a party to any proceeding by or in the right of the corporation to procure
a judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses and amounts paid in settlement not exceeding, in the judgment of the
board of directors, the estimated expense of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification shall be made under this
subsection in respect of any claim, issue, or matter as to which such person
shall have been adjudged to be liable unless, and only to the extent that, the
court in which such proceeding was brought, or any other court of competent
jurisdiction, shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which such court shall
deem proper.
(3) To the extent that a director, officer, employee, or agent of the
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsections (1) or (2), or in defense of any claim,
issue, or matter therein, he shall be indemnified against expenses actually and
reasonably incurred by him in connection therewith.
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(4) Any indemnification under subsections (1) or (2), unless pursuant
to a determination by a court, shall be 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 because he
has met the applicable standard of conduct set forth in subsections (1) or (2).
Such determination shall be made:
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if obtainable,
by majority vote of a committee duly designated by the board of directors (in
which directors who are parties may participate) consisting solely of two or
more directors not at the time parties to the proceeding;
(c) By independent legal counsel:
(i) Selected by the board of directors prescribed in
paragraph (a) or the committee prescribed in paragraph (b); or
(ii) If a quorum of the directors cannot be obtained
for paragraph (a) and the committee cannot be designed under paragraph (b),
selected by majority vote of the full board of directors (in which directors who
are parties may participate); or
(d) By the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such proceeding or, if no
such quorum is obtainable, by a majority vote of shareholders who were not
parties to such proceeding.
(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by paragraph (4)(c)
shall evaluate the reasonableness of expenses and may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if he is ultimately found not to
be entitled to indemnification by the corporation pursuant to this section.
Expenses incurred by other employees and agents may be paid in advance upon such
terms or conditions that the board of directors deems appropriate.
(7) The indemnification and advancement of expenses provided pursuant
to this section are not exclusive, and the corporation may make any other or
further
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indemnification or advancement of expenses of any of its directors, officers,
employees, or agents, under any bylaw, agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
However, indemnification or advancement of expenses shall not be made to or on
behalf of any director, officer, employee, or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute:
(a) A violation of the criminal law, unless the director,
officer, employee, or agent had reasonable cause to believe his conduct was
lawful or had no reasonable cause to believe his conduct was unlawful;
(b) A transaction from which the director, officer, employee,
or agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the
liability provisions of Section 607.0834 under the Act are applicable; or
(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder.
(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person, unless otherwise provided when authorized or ratified.
(9) Notwithstanding the failure of the corporation to provide
indemnification, and despite any contrary determination of the board or of the
shareholders in the specific case, a director, officer, employee, or agent of
the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
On receipt of an application, the court, after giving any notice that it
considers necessary, may order indemnification and advancement of expenses,
including expenses incurred in seeking court-ordered indemnification or
advancement of expenses, if it determines that:
(a) The director, officer, employee, or agent if entitled to
mandatory indemnification under subsection (3), in which case the court shall
also order the corporation to pay the director reasonable expenses incurred in
obtaining court-ordered indemnification or advancement of expenses;
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(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the exercise
by the corporation of its power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is fairly and
reasonably entitled to indemnification or advancement of expenses, or both, in
view of all the relevant circumstances, regardless of whether such person met
the standard of conduct set forth in subsection (1), subsection (2) or
subsection (7).
(10) For purposes of this section, the term "corporation" includes, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger, so that
any person who is or was a director, officer, employee, or agent of a
constituent corporation, or is or was serving at the request of a constituent
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, is in the same position
under this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(11) For purposes of this section:
(a) The term "other enterprises" includes employee benefit
plans;
(b) The term "expenses" includes counsel fees, including those
for appeal;
(c) The term "liability" includes obligations to pay a
judgment, settlement, penalty, fine (including an excise tax assessed with
respect to any employee benefit plan), and expenses actually and reasonably
incurred with respect to a proceeding;
(d) The term "proceeding" includes any threatened, pending, or
completed action, suit or other type of proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the corporation"
includes any service as a director, officer, employee, or agent of the
corporation that imposes duties on such persons, including duties relating to an
employee benefit plan and its participants or beneficiaries; and
(g) The term "not opposed to the best interest of the
corporation" describes the actions of a person who acts in good faith and in a
manner he reasonably believes to be in the best interests of the participants
and beneficiaries of an employee benefit plan.
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(12) The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this section.
ARTICLE VI
Office and Agent
Section 6.01. Registered Office and Registered Agent.
(1) The corporation shall have and continuously maintain in the State
of Florida:
(a) A registered office which may be the same as its place of
business; and
(b) A registered agent, who, may be either:
(i) An individual who resides in the State of Florida
whose business office is identical with such registered office; or
(ii) Another corporation or not-for-profit
corporation as defined in Chapter 617 of the Act, authorized to transact
business or conduct its affairs in the State of Florida, having a business
office identical with the registered office; or
(iii) A foreign corporation or not-for-profit foreign
corporation authorized pursuant to chapter 607 or chapter 617 of the Act to
transact business or conduct its affairs in the State of Florida, having a
business office identical with the registered office.
Section 6.02. Change of Registered Office or Registered Agent; Resignation
of Registered Agent.
(1) The corporation may change its registered office or its registered
agent upon filing with the Department of State of the State of Florida a
statement of change setting forth:
(a) The name of the corporation;
(b) The street address of its current registered office;
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(c) If the current registered office is to be changed, the
street address of the new registered office;
(d) The name of its current registered agent;
(e) If its current registered agent is to be changed, the name
of the new registered agent and the new agent's written consent (either on the
statement or attached to it) to the appointment;
(f) That the street address of its registered office and the
street address of the business office of its registered agent, as changed, will
be identical;
(g) That such change was authorized by resolution duly adopted
by its board of directors or by an officer of the corporation so authorized by
the board of directors.
ARTICLE VII
Shares, Options, Dividends and Distributions
Section 7.01. Authorized Shares.
(1) The articles of incorporation prescribe the classes of shares and
the number of shares of each class that the corporation is authorized to issue,
as well as a distinguishing designation for each class, and prior to the
issuance of shares of a class the preferences, limitations, and relative rights
of that class must be described in the articles of incorporation.
(2) The articles of incorporation must authorize:
(a) One or more classes of shares that together have unlimited
voting rights, and
(b) One or more classes of shares (which may be the same class
or classes as those with voting rights) that together are entitled to receive
the net assets of the corporation upon dissolution.
(3) The articles of incorporation may authorize one or more classes of
shares that have special, conditional, or limited voting rights, or no rights,
or no right to vote, except to the extent prohibited by the Act;
(a) Are redeemable or convertible as specified in the articles
of incorporation;
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(b) Entitle the holders to distributions calculated in any
manner, including dividends that may be cumulative, non-cumulative, or partially
cumulative;
(c) Have preference over any other class of shares with
respect to distributions, including dividends and distributions upon the
dissolution of the corporation.
(4) Shares which are entitled to preference in the distribution of
dividends or assets shall not be designated as common shares. Shares which are
not entitled to preference in the distribution of dividends or assets shall be
common shares and shall not be designated as preferred shares.
Section 7.02. Terms of Class or Series Determined by Board of Directors.
(1) If the articles of incorporation so provide, the board of directors
may determine, in whole or part, the preferences, limitations, and relative
rights (within the limits set forth in Section 7.01) of:
(a) Any class of shares before the issuance of any shares of
that class, or
(b) One or more series within a class before the issuance of
any shares of that series.
(2) Each series of a class must be given a distinguishing designation.
(3) All shares of a series must have preferences, limitations, and
relative rights identical with those of other shares of the same series and,
except to the extent otherwise provided in the description of the series, of
those of other series of the same class.
(4) Before issuing any shares of a class or series created under this
section, the corporation must deliver to the Department of State of the State of
Florida for filing articles of amendment, which are effective without
shareholder action, in accordance with Section 607.0602 of the Act.
Section 7.03. Issued and Outstanding Shares.
(1) A corporation may issue the number of shares of each class or
series authorized by the articles of incorporation. Shares that are issued are
outstanding shares until they are reacquired, redeemed, converted, or canceled.
(2) The reacquisition, redemption, or conversion of outstanding shares
is subject to the limitations of subsection (3) and to Section 607.06401 of the
Act.
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(3) At all times that shares of the corporation are outstanding, one or
more shares that together have unlimited voting rights and one or more shares
that together are entitled to receive the net assets of the corporation upon
dissolution must be outstanding.
Section 7.04. Issuance of Shares.
(1) The board of directors may authorize shares to be issued for
consideration consisting of any tangible or intangible property or benefit to
the corporation, including cash, promissory notes, services performed, promises
to perform services evidenced by a written contract, or other securities of the
corporation.
(2) Before the corporation issues shares, the board of directors must
determine that the consideration received or to be received for shares to be
issued is adequate. That determination by the board of directors is conclusive
insofar as the adequacy of consideration for the issuance of shares relates to
whether the shares are validly issued, fully paid, and non-assessable. When it
cannot be determined that outstanding shares are fully paid and non-assessable,
there shall be a conclusive presumption that such shares are fully paid and
non-assessable if the board of directors makes a good faith determination that
there is no substantial evidence that the full consideration for such shares has
not been paid.
(3) When the corporation receives the consideration for which the board
of directors authorized the issuance of shares, the shares issued therefor are
fully paid and non-assessable. Consideration in the form of a promise to pay
money or a promise to perform services is received by the corporation at the
time of the making of the promise, unless the agreement specifically provides
otherwise.
(4) The corporation may place in escrow shares issued for a contract
for future services or benefits or a promissory note, or make other arrangements
to restrict the transfer of the shares, and may credit distributions in respect
of the shares against their purchase price, until the services are performed,
the note is paid, or the benefits received. If the services are not performed,
the shares escrowed or restricted and the distributions credited may be canceled
in whole or part.
Section 7.05. Form and Content of Certificates.
(1) Shares may but need not be represented by certificates. Unless the
Act or another statute expressly provides otherwise, the rights and obligations
of shareholders are identical whether or not their shares are represented by
certificates.
(2) At a minimum, each share certificate must state on its face:
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(a) The name of the issuing corporation and that the
corporation is organized under the laws of the State of Florida;
(b) The name of the person to whom issued; and
(c) The number and class of shares and the designation of the
series, if any, the certificate represents.
(3) If the shares being issued are of different classes of shares or
different series within a class, the designations, relative rights, preferences,
and limitations applicable to each class and the variations in rights,
preferences, and limitations determined for each series (and the authority of
the board of directors to determine variations for future series) must be
summarized on the front or back of each certificate. Alternatively, each
certificate may state conspicuously on its front or back that the corporation
will furnish the shareholder a full statement of this information on request and
without charge.
(4) Each share certificate:
(a) Must be signed (either manually or in facsimile) by an
officer or officers designated by the board of directors, and
(b) May bear the corporate seal or its facsimile.
(5) If the person who signed (either manually or in facsimile) a share
certificate no longer holds office when the certificate is issued, the
certificate is nevertheless valid.
(6) Nothing in this section may be construed to invalidate any share
certificate validly issued and outstanding under the Act on July 1, 1990.
Section 7.06. Shares Without Certificates.
(1) The board of directors of the corporation may authorize the issue
of some or all of the shares of any or all of its classes or series without
certificates. The authorization does not affect shares already represented by
certificates until they are surrendered to the corporation.
(2) Within a reasonable time after the issue or transfer of shares
without certificates, the corporation shall send the shareholder a written
statement of the information required on certificates by the Act.
Section 7.07. Restriction on Transfer of Shares and Other Securities.
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(1) The articles of incorporation, these bylaws, an agreement among
shareholders, or an agreement between shareholders and the corporation may
impose restrictions on the transfer or registration of transfer of shares of the
corporation. A restriction does not affect shares issued before the restriction
was adopted unless the holders of such shares are parties to the restriction
agreement or voted in favor of the restriction.
(2) A restriction on the transfer or registration of transfer of shares
is valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this section, and effected in compliance with the
provisions of the Act, including having a proper purpose as referred to in the
Act.
Section 7.08. Shareholder's Pre-emptive Rights.
The shareholders of the corporation do not have a pre-emptive right to
acquire the corporation's unissued shares.
Section 7.09. Corporation's Acquisition of its Own Shares.
(1) The corporation may acquire its own shares, and, unless otherwise
provided in the articles of incorporation or except as provided in subsection
(4), shares so acquired constitute authorized but unissued shares of the same
class but undesignated as to series.
(2) If the articles of incorporation prohibit the reissue of acquired
shares, the number of authorized shares is reduced by the number of shares
acquired, effective upon amendment of the articles of incorporation.
(3) Articles of amendment may be adopted by the board of directors
without shareholder action, shall be delivered to the Department of State of the
State of Florida for filing, and shall set forth the information required by
Section 607.0631 of the Act.
(4) Shares of the corporation in existence on June 30, 1990, which are
treasury shares under Section 607.004(18), Florida Statutes (1987), shall be
issued, but not outstanding, until canceled or disposed of by the corporation.
Section 7.10. Share Options.
(1) Unless the articles of incorporation provide otherwise, the
corporation may issue rights, options, or warrants for the purchase of shares of
the corporation. The board of directors shall determine the terms upon which the
rights, options, or warrants are issued, their form and content, and the
consideration for which the shares are to be issued.
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(2) The terms and conditions of stock rights and options which are
created and issued by the corporation, or its successor, and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized by unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions, or conditions that preclude or limit the exercise, transfer,
receipt, or holding of such rights or options by any person or persons,
including any person or persons owning or offering to acquire a specified number
or percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
Section 7.11. Terms and Conditions of Stock Rights and Options.
The terms and conditions of the stock rights and options which are
created and issued by the corporation [or its successor], and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized but unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions or conditions that preclude or limit the exercise, transfer,
receipt or holding of such rights or options by any person or persons, including
any person or persons owning or offering to acquire a specified number or
percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
Section 7.12. Share Dividends.
(1) Shares may be issued pro rata and without consideration to the
corporation's shareholders or to the shareholders of one or more classes or
series. An issuance of shares under this subsection is a share dividend.
(2) Shares of one class or series may not be issued as a share dividend
in respect of shares of another class or series unless:
(a) The articles of incorporation so authorize,
(b) A majority of the votes entitled to be cast by the class
or series to be issued approves the issue, or
(c) There are no outstanding shares of the class or series to
be issued.
(3) If the board of directors does not fix the record date for
determining shareholders entitled to a share dividend, it is the date of the
board of directors authorizes the share dividend.
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Section 7.13. Distributions to Shareholders.
(1) The board of directors may authorize and the corporation may make
distributions to its shareholders subject to restriction by the articles of
incorporation and the limitations in subsection (3).
(2) If the board of directors does not fix the record date for
determining shareholders entitled to a distribution (other than one involving a
purchase, redemption, or other acquisition of the corporation's shares), it is
the date the board of directors authorizes the distribution.
(3) No distribution may be made if, after giving it effect:
(a) The corporation would not be able to pay its debts as they
become due in the usual course of business; or
(b) The corporation's total assets would be less than the sum
of its total liabilities plus (unless the articles of incorporation permit
otherwise) the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
(4) The board of directors may base a determination that a distribution
is not prohibited under subsection (3) either on financial statements prepared
on the basis of accounting practices and principles that are reasonable in the
circumstances or on a fair valuation or other method that is reasonable in the
circumstances. In the case of any distribution based upon such a valuation, each
such distribution shall be identified as a distribution based upon a current
valuation of assets, and the amount per share paid on the basis of such
valuation shall be disclosed to the shareholders concurrent with their receipt
of the distribution.
(5) Except as provided in subsection (7), the effect of a distribution
under subsection (3) is measured;
(a) In the case of distribution by purchase, redemption, or
other acquisition of the corporation's shares, as of the earlier of:
(i) The date money or other property is transferred
or debt incurred by the corporation, or
(ii) The date the shareholder ceases to be a
shareholder with respect to the acquired shares;
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(b) In the case of any other distribution of indebtedness, as
of the date the indebtedness is distributed;
(c) In all other cases, as of:
(i) The date the distribution is authorized if the
payment occurs within 120 days after the date of authorization, or
(ii) The date the payment is made if it occurs more
than 120 days after the date of authorization.
(6) A corporation's indebtedness to a shareholder incurred by reason of
a distribution made in accordance with this section is at parity with the
corporation's indebtedness to its general, unsecured creditors except to the
extent subordinated by agreement.
(7) Indebtedness of the corporation, including indebtedness issued as a
distribution, is not considered a liability for purposes of determinations under
subsection (3) if its terms provide that payment of principal and interest are
made only if and to the extent that payment of a distribution to shareholders
could then be made under this section. If the indebtedness is issued as a
distribution, each payment of principal or interest is treated as a
distribution, the effect of which is measured on the date the payment is
actually made.
ARTICLE VIII
Amendment of Articles and Bylaws
Section 8.01. Authority to Amend the Articles of Incorporation.
(1) The corporation may amend its articles of incorporation at any time
to add or change a provision that is required or permitted in the articles of
incorporation or to delete a provision not required in the articles of
incorporation. Whether a provision is required or permitted in the articles of
incorporation is determined as of the effective date of the amendment.
(2) A shareholder of the corporation does not have a vested property
right resulting from any provision in the articles of incorporation, including
provisions relating to management, control, capital structure, dividend
entitlement, or purpose or duration of the corporation.
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Section 8.02. Amendment by Board of Directors.
The corporation's board of directors may adopt one or more amendments
to the corporation's articles of incorporation without shareholder action:
(1) To extend the duration of the corporation if it was incorporated at
a time when limited duration was required by law;
(2) To delete the names and addresses of the initial directors;
(3) To delete the name and address of the initial registered agent or
registered office, if a statement of change is on file with the Department of
State of the State of Florida;
(4) To delete any other information contained in the articles of
incorporation that is solely of historical interest;
(5) To change each issued and unissued authorized share of an
outstanding class into a greater number of whole shares if the corporation has
only shares of that class outstanding;
(6) To delete the authorization for a class or series of shares
authorized pursuant to Section 607.0602 of the Act, if no shares of such class
or series have been issued;
(7) To change the corporate name by substituting the word
"corporation," "incorporated," or "company," or the abbreviation "corp.," Inc.,"
or Co.," for a similar word or abbreviation in the name, or by adding, deleting,
or changing a geographical attribution for the name; or
(8) To make any other change expressly permitted by the Act to be made
without shareholder action.
Section 8.03. Amendment of Bylaws by Board of Directors.
The corporation's board of directors may amend or repeal the
corporation's bylaws unless the Act reserves the power to amend a particular
bylaw provision exclusively to the shareholders.
Section 8.04. Bylaw Increasing Quorum or Voting Requirements for Directors.
(1) A bylaw that fixes a greater quorum or voting requirement for the
board of directors may be amended or repealed:
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(a) If originally adopted by the shareholders, only by the
shareholders;
(b) If originally adopted by the board of directors, either by
the shareholders or by the board of directors.
(2) A bylaw adopted or amended by the shareholders that fixes a greater
quorum or voting requirement for the board of directors may provide that it may
be amended or repealed only by a specified vote of either the shareholders or
the board of directors.
(3) Action by the board of directors under paragraph (1)(b) to adopt or
amend a bylaw that changes the quorum or voting requirement for the board of
directors must meet the same quorum requirement and be adopted by the same vote
required to take action under the quorum and voting requirement then in effect
or proposed to be adopted, whichever is greater.
ARTICLE IX
Records and Reports
Section 9.01. Corporate Records.
(1) The corporation shall keep as permanent records minutes of al
meetings of its shareholders and board of directors, a record of all actions
taken by the shareholders or board of directors without a meeting, and a record
of all actions taken by a committee of the board of directors in place of the
board of directors on behalf of the corporation.
(2) The corporation shall maintain accurate accounting records.
(3) The corporation or its agent shall maintain a record of its
shareholders in a form that permits preparation of a list of the names and
addresses of all shareholders in alphabetical order by class of shares showing
the number and series of shares held by each.
(4) The corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
(5) The corporation shall keep a copy of the following records:
(a) Its articles or restated articles of incorporation and all
amendments to them currently in effect;
(b) Its bylaws or restated bylaws and all amendments to them
currently in effect;
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(c) Resolutions adopted by the board of directors creating one
or more classes or series of shares and finding their relative rights,
preferences, and limitations, if shares issued pursuant to those resolutions are
outstanding;
(d) The minutes of all shareholders' meetings and records of
all action taken by shareholders without a meeting for the past three years;
(e) Written communications to all shareholders generally or
all shareholders of a class or series within the past three years, including the
financial statements furnished for the past three years;
(f) A list of the names and business street addresses of its
current directors and officers; and
(g) Its most recent annual report delivered to the Department
of State of the State of Florida.
Section 9.02. Financial Statements for Shareholders.
(1) Unless modified by resolution of the shareholders within 120 days
of the close of each fiscal year, the corporation shall furnish its shareholders
annual financial statements which may be consolidated or combined statements of
the corporation and one or more of its subsidiaries, as appropriate, that
include a balance sheet as of the end of the fiscal year, an income statement
for that year, and a statement of cash flows for that year. If financial
statements are prepared for the corporation on the basis of generally-accepted
accounting principles, the annual financial statements must also be prepared on
that basis.
(2) If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the president or the person responsible for the
corporation's accounting records:
(a) Stating his reasonable belief whether the statements were
prepared on the basis of generally-accepted accounting principles and, if not,
describing the basis of preparation; and
(b) Describing any respects in which the statements were not
prepared on a basis of accounting consistent with the statements prepared for
the preceding year.
(3) The corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the corporation
to prepare its financial statements, if for reasons beyond the corporation's
control, it is unable to prepare its
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financial statements within the prescribed period. Thereafter, on written
request from a shareholder who was not mailed the statements, the corporation
shall mail him the latest annual financial statements.
Section 9.03. Other Reports to Shareholders.
(1) If the corporation indemnifies or advances expenses to any
director, officer, employee or agent otherwise than by court order or action by
the shareholders or by an insurance carrier pursuant to insurance maintained by
the corporation, the corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next shareholders'
meeting, or prior to such meeting if the indemnification or advance occurs after
the giving of such notice but prior to the time such meeting is held, which
report shall include a statement specifying the persons paid, the amounts paid,
and the nature and status at the time of such payment of the litigation or
threatened litigation.
(2) If the corporation issues or authorizes the issuance of shares for
promises to render services in the future, the corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders' meeting.
Section 9.04. Annual Report for Department of State.
(1) The corporation shall deliver to the Department of State of the
State of Florida for filing a sworn annual report on such forms as the
Department of State of the State of Florida prescribes that sets forth the
information prescribed by Section 607.1622 of the Act.
(2) Proof to the satisfaction of the Department of State of the State
of Florida on or before July 1 of each calendar year that such report was
deposited in the United States mail in a sealed envelope, properly addressed
with postage prepaid, shall be deemed in compliance with this requirement.
(3) Each report shall be executed by the corporation by an officer or
director or, if the corporation is in the hands of a receiver or trustee, shall
be executed on behalf of the corporation by such receiver or trustee, and the
signing thereof shall have the same legal effect as if made under oath, without
the necessity of appending such oath thereto.
(4) Information in the annual report must be current as of the date the
annual report is executed on behalf of the corporation.
(5) Any corporation failing to file an annual report which complies
with the requirements of this section shall not be permitted to maintain or
defend any action in any court of this state until such report is filed and all
fees and taxes due under the Act are paid
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and shall be subject to dissolution or cancellation of its certificate of
authority to do business as provided in the Act.
ARTICLE X
Miscellaneous
Section 10.01. Definition of the "Act".
All references contained herein to the "Act" or to sections of the
"Act" shall be deemed to be in reference to the Florida Business Corporation
Act.
Section 10.02. Application of Florida Law.
Whenever any provision of these bylaws is inconsistent with any
provision of the Florida Business Corporation Act, Statutes 607, as they may be
amended from time to time, then in such instance Florida law shall prevail.
Section 10.03. Fiscal Year.
The fiscal year of the corporation shall be determined by resolution of
the board of directors.
Section 10.04. Conflicts with Articles of Incorporation.
In the event that any provision contained in these bylaws conflicts
with any provision of the corporation's articles of incorporation, as amended
from time to time, the provisions of the articles of incorporation shall prevail
and be given full force and effect, to the full extent permissible under the
Act.
36
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
September 16, 1999
Sense Holdings, Inc.
10871 N.W. 52nd Street
Sunrise, FL 33351
Re: Registration Statement on Form SB-2; Sense Holdings, Inc. (the
"Company")
Gentlemen:
This opinion is submitted pursuant to the applicable rules of the
Securities and Exchange Commission with respect to the registration for public
sale of 1,241,734 shares (the "Shares") of Common Stock, $.10 par value ("Common
Stock").
In connection therewith, we have examined and relied upon original,
certified, conformed, photostat or other copies of (i) the Articles of
Incorporation, as amended, and Bylaws of the Company; (ii) resolutions of the
Board of Directors of the Company authorizing the offering and related matters;
(iii) the Registration Statement and the exhibits thereto; and (iv) such other
matters of law as we have deemed necessary for the expression of the opinion
herein contained. In all such examinations, we have assumed the genuineness of
all signatures on original documents, and the conformity to originals or
certified documents of all copies submitted to us as conformed, photostat or
other copies. In passing upon certain corporate records and documents of the
Company, we have necessarily assumed the correctness and completeness of the
statements made or included therein by the Company, and we express no opinion
thereon. As to the various questions of fact material to this opinion, we have
relied, to the extent we deemed reasonably appropriate, upon representations or
certificates of officers or directors of the Company and upon documents, records
and instruments furnished to us by the Company, without independently checking
or verifying the accuracy of such documents, records and instruments.
Based upon the foregoing, we are of the opinion that the Shares have
been legally issued and are fully paid and non-assessable.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to use our name under the caption "Legal Matters" in
the prospectus comprising part of the Registration Statement.
Sincerely,
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
/s/ Atlas, Pearlman, Trop & Borkson, P.A.
SENSE HOLDINGS, INC.
1999 STOCK OPTION PLAN
SECTION 1. PURPOSE; DEFINITIONS
The purpose of the Plan is to give the Company a competitive advantage
in attracting, retaining and motivating officers and employees and to provide
the Company and its subsidiaries with a stock plan providing incentives more
directly linked to the profitability of the Company's businesses and increases
in shareholder value.
For purposes of the Plan, the following terms are defined as set forth
below:
(a) "Affiliate" means a corporation or other entity controlled by the
Company and designated by the Committee from time to time as such.
(b) "Award" means an award of Stock Appreciation Rights or Stock
Options.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means (1) conviction of a participant for committing a
felony under federal law or the law of the state in which such action occurred,
(2) dishonesty in the course of fulfilling a participant's employment duties,
(3) willful and deliberate failure on the part of a participant to perform his
employment duties in any material respect, (4) breach on the part of a
participant of any employment agreement between such participant and the Company
or any of its Subsidiaries, or (5) such other events as shall be determined by
the Committee. The Committee shall have the sole discretion to determine whether
"Cause" exists, and its determination shall be final. Notwithstanding the
foregoing, if an optionee has an employment agreement with the Company which
provides for a definition of "Cause", then such definition shall be the
definition for purposes of this Plan.
(e) "Change in Control" and "Change in Control Price" have the meanings
set forth in Sections 8(b) and (c), respectively.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(g) "Commission" means the Securities and Exchange Commission or any
successor agency.
(h) "Committee" means the Committee referred to in Section 2.
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(i) "Common Stock" means common stock, par value $.10 per share, of the
Company.
(j) "Company" means SENSE HOLDINGS, INC., a Florida corporation.
(k) "Disability" means permanent and total disability as determined
under Company procedures in effect on the effective date of the Plan or as
otherwise established by the Committee for purposes of the Plan. Notwithstanding
the foregoing, if an optionee has an employment agreement with the Company which
provides for a definition of "Disability", then such definition shall be the
definition for purposes of this Plan.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
(m) "Fair Market Value" means, as of any given date, the mean between
the highest and lowest reported sales prices of the Common Stock on any national
securities exchange or automated quotation system on which the Common Stock is
listed or, if not listed on any such exchange or system, the mean of the closing
bid and ask price for the Common Stock on the NASD OTC Bulletin Board. If there
is no regular public trading market for such Common Stock, the Fair Market Value
of the Common Stock shall be determined by the Committee in good faith.
(n) "Incentive Stock Option" or "ISO" means any Stock Option designated
as, and qualified as, an "incentive stock option" within the meaning of Section
422 of the Code.
(o) "Non-Employee Director" means a member of the Board who qualifies
as a "Non-Employee Director" as defined in Rule 16b-3(b)(3), as promulgated by
the Commission under the Exchange Act, or any successor definition adopted by
the Commission.
(p) "Non-qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(q) "Plan" means the SENSE HOLDINGS, INC. 1999 Stock Option Plan, as
set forth herein and as hereinafter amended from time to time.
(r) "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission
under Section 16(b) of the Exchange Act, as amended from time to time.
(s) "Stock Appreciation Right" means a right granted under Section 6.
(t) "Stock Option" means an option granted under Section 5.
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(u) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(v) "Termination of Employment" means the termination of the
participant's employment with the Company and any Subsidiary or Affiliate. A
participant employed by a Subsidiary or an Affiliate shall also be deemed to
incur a Termination of Employment if the Subsidiary or Affiliate ceases to be
such a Subsidiary or an Affiliate, as the case may be, and the participant does
not immediately thereafter become an employee of the Company or another
Subsidiary or Affiliate. Temporary absences from employment because of illness,
vacation or leave of absence and transfers among the Company and it Subsidiaries
and Affiliates shall not be considered Terminations of Employment.
In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.
SECTION 2. ADMINISTRATION
The Plan shall be administered by the Board or a committee designated
by the Board.
The Committee shall have plenary authority to grant Awards pursuant to
the terms of the Plan to officers and employees of the Company and its
Subsidiaries and Affiliates.
Among other things, the Committee shall have the authority, subject to
the terms of the Plan:
(a) To select the officers and employees to whom Awards may from time
to time be granted;
(b) Determine whether and to what extent Incentive Stock Options,
Non-qualified Stock Options, Stock Appreciation Rights or any combination
thereof are to be granted hereunder;
(c) Determine the number of shares of Common Stock to be covered by
each Award granted hereunder;
(d) Determine the terms and conditions of any Award granted hereunder
(including, but not limited to, the option price (subject to Section 5(a)), any
vesting condition, restriction or limitation and any acceleration of vesting or
waiver of forfeiture regarding any Award and the shares of Common Stock relating
thereto, based on such factors as the Committee shall determine; provided,
however, that the terms and conditions of any Award intended to qualify as
"performance-based" compensation as described in Section 162(m)(4)(C) of the
Code shall include, but not be limited to, such terms and
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<PAGE>
conditions as may be necessary to meet the applicable provisions of Section
162(m)(4)(C) of the Code;
(e) Subject to the provisions of Section 9, modify, amend or adjust the
terms and conditions of any Award, at any time or from time to time; and
(f) Determine to what extent and under what circumstances Common Stock
and other amounts payable with respect to an Award shall be deferred.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the Committee may (1) authorize the delegation to designated
officers or employees of the Company such of its powers and authority under the
Plan as it deems appropriate (provided that no such authorization may be made
that would cause Awards or other transactions under the Plan to fail to be
exempt from Section 16(b) of the Exchange Act) and (2) authorize any one or more
of the members of the Committee or any designated officer or employee of the
Company to execute and deliver documents on behalf of the Committee.
Any determination made by the Committee or pursuant to delegated
authority pursuant to the provisions of the Plan with respect to any Award shall
be made in the sole discretion of the Committee or such delegate(s) at the time
of the grant of the Award or, unless in contravention of any express terms of
the Plan, at any time thereafter. All decisions made by the Committee or any
appropriately delegated officer(s) or employee(s) pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company and
Plan participants.
SECTION 3. COMMON STOCK SUBJECT TO PLAN
(a) Optioned stock authorized. Subject to the provisions hereof, the
total number of shares of Common Stock reserved and available for issuance
pursuant to Stock Options under the Plan shall be One Million Five Hundred
Thousand Shares (1,500,000) (the "Plan Maximum"). However, except for purposes
of determining the number of shares available for issuance pursuant to Incentive
Stock Options (which shall not exceed such number), the Plan Maximum shall be
increased by (i) the number of shares of Common Stock used to pay the exercise
price of Stock Options and (ii) the number of Stock Options which have
terminated upon expiration, cancellation, forfeiture or otherwise, subject to
the limitations
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of Section 3(b) of the Plan. Shares subject to an Award under the Plan may be
authorized and unissued shares or may be treasury shares.
(b) Adjustments upon changes in capitalization or merger. In the event
of any change in corporate capitalization, such as a stock split or a corporate
transaction, such as any merger, consolidation, separation, including a
spin-off, or other distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within the definition
of such term in Section 368 of the Code) or any partial or complete liquidation
of the Company, the Committee or Board may make such substitution or adjustments
in the aggregate number and kind of shares reserved for issuance under the Plan,
in the aggregate limit on grants to individuals, in the number, kind and Option
Price of shares subject to outstanding Stock Options and Stock Appreciation
Rights, and/or such other equitable substitution or adjustments as it may
determine to be appropriate in its sole discretion; provided, however, that the
number of shares subject to any Award shall always be a whole number.
SECTION 4. ELIGIBILITY
All officers, directors, employees and consultants of the Company, its
Subsidiaries and Affiliates are eligible to be granted Awards under the Plan.
SECTION 5. STOCK OPTIONS
Stock Options may be granted alone or in addition to other Awards
granted under the Plan and may be of two types: Incentive Stock Options and
Non-qualified Stock Options. Any Stock Option granted under the Plan shall be in
such form as the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-qualified Stock Options or both types of Stock Options (in
each case with or without Stock Appreciation Rights); provided, however, that an
Incentive Stock Option may be granted to an optionee if the Fair Market Value at
the date of grant of shares with respect to which such option would first become
exercisable in any calendar year, when added to the Fair Market Value at the
date of grant of any other shares with respect to which an Incentive Stock
Option granted to such optionee under the Plan (or any other incentive stock
option plan maintained by the Company, its parent or any Subsidiary) first
becomes exercisable in such calendar year, would exceed $100,000; and provided
further, however, that Incentive Stock Options may be granted only to employees
of the Company and its Subsidiaries. To the extent that any Stock Option is not
designated as an Incentive Stock Option or even if so designated does not
qualify as an Incentive Stock Option, it shall constitute a Non-qualified Stock
Option.
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<PAGE>
Stock Options shall be evidenced by option agreements, the terms and
provisions of which may differ. An option agreement shall indicate on its face
whether it is intended to be an agreement for an Incentive Stock Option or a
Non-qualified Stock Option. The grant of a Stock Option shall occur on the date
the Committee, by resolution, selects an individual to be a participant in any
grant of a Stock Option, determines the number of shares of Common Stock to be
subject to such Stock Option to be granted to such individual and specifies the
terms and provisions of the Stock Option. The Company shall notify a participant
of any grant of a Stock Option, and a written option agreement or agreements
shall be duly executed and delivered by the Company to the participant. Such
agreement or agreements shall become effective upon execution by the Company and
the participant.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered nor shall any discretion or authority granted under the Plan be
exercised so as to disqualify the Plan under Section 422 of the Code or, without
the consent of the optionee affected, to disqualify any Incentive Stock Option
under such Section 422.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable:
(a) Option Price. The option price per share of Common Stock
purchasable under a Stock Option shall not be less than the Fair Market Value of
the Common Stock subject to the Stock Option on the date of grant; provided,
however, that in the case of an Incentive Stock Option granted to an optionee
who, immediately before the grant of such Incentive Stock Option, owns shares
representing more than 10% of the total combined voting power of all classes of
shares of the Company, its parent or Subsidiary, in no event shall the per share
option price be less than 110% of the Fair Market Value per share of Common
Stock on the date of grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten 10
years after the date the Stock Option is granted; provided, however, that in the
case of an Incentive Stock Option granted to an optionee who, immediately before
the grant of such Incentive Stock Option, owns shares representing more than 10%
of the total combined voting power of all classes of shares of the Company, its
parent or Subsidiary, in no event shall the Incentive Stock Option by its terms
be exercisable more than five (5) years after the date such Incentive Stock
Option is granted.
(c) Exercisability. Except as otherwise provided herein, Stock Options
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee provides
that any Stock Option is
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<PAGE>
exercisable only in installments, the Committee may at any time waive such
installment exercise provisions, in whole or in part, based on such factors as
the Committee may determine. In addition, the Committee may at any time
accelerate the exercisability of any Stock Option.
(d) Method of Exercise. Subject to the provisions of this Section 5,
Stock Options may be exercised, in whole or in part, at any time during the
option term by giving written notice of exercise to the Company specifying the
number of shares of Common Stock subject to the Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the Company may
accept. Unless otherwise determined by the Committee, such payment may also be
made in full or in part in the form of unrestricted Common Stock already owned
by the optionee of the same class as the Common Stock subject to the Stock
Option (based on the Fair Market Value of the Common Stock on the date the Stock
Option is exercised); provided, however, that, (i) any Common Stock used to make
such payment shall have been held for at least six (6) months, and (ii) in the
case of an Incentive Stock Option, the right to make payment in the form of
already owned shares of Common Stock may be authorized only at the time the
Stock Option is granted.
The Company may make loans to such participants as the Committee, in
its discretion, may determine (including a participant who is a director or
officer of the Company) in connection with the exercise of Stock Options in an
amount up to the exercise price of the Stock Option to be exercised plus any
applicable withholding taxes. In no event may any such loan exceed the Fair
Market Value, at the date of exercise, of the shares covered by the Stock
Option, or portion thereof, exercised by the participant. Such loans shall be
subject to such terms and conditions as the Committee shall determine. Every
loan shall comply with all applicable laws, regulations and rules of the Federal
Reserve Board and any other governmental agency having jurisdiction.
Unless otherwise determined by the Committee, payment for any shares
subject to a Stock Option may also be made by delivering a properly executed
exercise notice to the Company, together with a copy of irrevocable instructions
to a broker to deliver promptly to the Company the amount of sale or loan
proceeds to pay the purchase price, and, if requested, by the amount of any
federal, state, local or foreign withholding taxes. To facilitate the foregoing,
the Company may enter into agreements for coordinated procedures with one or
more brokerage firms.
No shares of Common Stock shall be issued until full payment therefor
has been made. An optionee shall have all of the rights of a shareholder of the
Company holding the class or series of Common Stock that is subject to such
Stock Option (including, if applicable, the right to vote the shares and the
right to receive dividends), when the
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optionee has given written notice of exercise, has paid in full for such shares
and, if requested, has given the representation described in Section 11(a).
(e) Nontransferabilitv of Stock Options. No Stock Option shall be
transferable by the optionee other than (1) by will or by the laws of descent
and distribution; (2) in the case of a Non-qualified Stock Option, pursuant to a
qualified domestic relations order (as defined in the Code or title 1 of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder); or (3) as otherwise determined by the Committee (provided that no
such determination may be made that would cause Awards or other transactions
under the Plan to fail to be exempt under Section 16(b) of the Exchange Act).
All Stock Options shall be exercisable, subject to the terms of this Plan,
during the optionee's lifetime, only by the optionee or by the guardian or legal
representative of the optionee, or, in the case of a Non-qualified Stock Option,
its alternative payee pursuant to such qualified domestic relations order, or
the recipient of a transfer of such Stock Option permitted pursuant to clause
(3) of the preceding sentence, it being understood that the terms "holder" and
"optionee" include the guardian and legal representative of the optionee named
in the option agreement and any permitted transferee thereof.
(f) Termination by Reason of Death. Unless otherwise determined by the
Committee, if an optionee's employment terminates by reason of death, any Stock
Option held by such optionee may thereafter be fully exercised (whether or not
the Stock Option was fully exercisable) by the estate of the optionee, or by a
person who acquired the right to exercise the Stock Option by bequest or
inheritance, or otherwise by reason of the death of the Optionee, for a period
of one (1) year from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter.
(g) Termination by Reason of Disability. Unless otherwise determined by
the Committee, if an optionee's employment terminates by reason of Disability,
any Stock Option held by such optionee may thereafter be fully exercised by the
optionee "whether or not the Stock Option was fully exercisable, unless provided
otherwise in the option agreement) for a period of one (1) year from the date of
such termination of employment or until the expiration of the stated term of
such Stock Option, whichever period is the shorter. If following the optionee's
termination of employment by reason of Disability the optionee dies, the Stock
Option may be exercised by the classes of persons identified in Section 5(f). In
the event of termination of employment by reason of Disability, if an Incentive
Stock Option is exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock Option will thereafter
be treated as a Non-qualified Stock Option.
(h) Other Termination. Unless otherwise determined by the Committee:
(1) if an optionee incurs a Termination of Employment for Cause, all Stock
Options held by such optionee shall thereupon terminate; and (2) if an optionee
incurs a Termination of Employment for any reason other than death, Disability
or Cause, any Stock Option held
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by such optionee, to the extent then exercisable, or on such accelerated basis
as the Committee may determine, may be exercised for the lesser of three (3)
months from the date of such Termination of Employment or the balance of such
Stock Option's term; provided, however, that if the optionee dies within such
three (3) month period, any unexercised Stock Option held by such optionee
shall, notwithstanding the expiration of such three (3) month period, continue
to be exercisable to the extent to which it was exercisable at the time of death
for a period of one (1) year from the date of such death or until the expiration
of the stated term of such Stock Option, whichever period is the shorter. In the
event of Termination of Employment, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Stock Option will thereafter be treated as a Non-qualified
Stock Option.
(i) Change in Control Cash-Out. Notwithstanding any other provision of
the Plan, during the 60-day period from and after a Change of Control (the
"Exercise Period"), unless the Committee shall determine otherwise at the time
of grant, an optionee shall have the right, whether or not the Stock Option is
fully exercisable and in lieu of the payment of the exercise price for the
shares of Common Stock being purchased under the Stock Option and by giving
notice to the Company, to elect (within the Exercise Period) to surrender all or
part of the Stock Option to the Company and to receive cash, within 30 days of
such notice, in an amount equal to the amount by which the Change in Control
Price per share of Common Stock on the date of such election shall exceed the
exercise price per share of Common Stock under the Stock Option (the "Spread")
multiplied by the number of shares of Common Stock granted under the Stock
Option as to which the right granted under this Section 5(i) shall have been
exercised.
SECTION 6. STOCK APPRECIATION RIGHTS
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-qualified Stock Option, such rights maybe granted either at or
after the time of grant of such Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of grant of such Stock
Option. A Stock Appreciation Right shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option.
A Stock Appreciation Right may be exercised by an optionee in
accordance with Section 6(b) by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the Committee.
Upon such exercise and surrender, the optionee shall be entitled to receive an
amount determined in the manner prescribed in Section 6(b). Stock Options which
have been so surrendered shall no longer be exercisable to the extent the
related Stock Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions as shall be determined by the Committee, including the
following:
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(i) Stock Appreciation Rights shall be exercisable only at
such time or times and to the extent that the Stock Options to which they relate
are exercisable in accordance with the provisions of Section 5 and this Section
6.
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive an amount in cash shares of Common Stock
or both, equal in value to the excess of the Fair Market Value of one share of
Common Stock as of the date of exercise over the Option Price per share
specified in the related Stock Option multiplied by the number of shares in
respect of which the Stock Appreciation Right shall have been exercised, with
the Committee having the right to determine the form of payment.
(iii) Stock Appreciation Rights shall be transferable only to
permitted transferees of the underlying Stock Option in accordance with Section
5(e).
SECTION 7. DEFERRAL
The Committee may establish procedures whereby participants may elect
to defer the receipt of shares or cash in settlement of Awards for a specified
period or until a specified event.
SECTION 8. CHANGE IN CONTROL PROVISIONS
(a) Impact of Event. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in Control, any Stock Options and Stock
Appreciation Rights outstanding as of the date such Change in Control is
determined to have occurred, and which are not then exercisable and vested,
shall become fully exercisable and vested to the full extent of the original
grant.
(b) Definition of Change in Control. For purposes of the Plan, a
"Change in Control" shall mean the happening of any of the following events:
(1) An acquisition after the effective date of the Plan by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the
then outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); excluding, however, the
following: (i) any acquisition directly from the Company, other than an
acquisition by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from the Company, (ii)
any acquisition by the Company, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any company
controlled by the Company, or (iv) any
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acquisition by any company pursuant to a transaction which complies with clauses
(A), (B) and (C) of Subsection (3) of this Section 8(b); or
(2) A change in the composition of the Board such that the
individuals who, as of the effective date of the Plan, constitute the Board
(such Board shall be hereinafter referred to as the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided, however,
for purposes of this Section 8(b), that any individual who becomes a member of
the Board subsequent to the effective date of the Plan, whose election, or
nomination for election by the Company's shareholders, was approved by a vote of
at least a majority of those individuals who are members of the Board and who
were also members of the Incumbent Board (or who shall be deemed to be such by
election pursuant to this proviso) shall be considered as though such individual
were a member of the Incumbent Board; but, provided, further, that any such
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board shall not be so considered as a member of the Incumbent Board; or
(3) The approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company ("Corporate Transaction") or, if
consummation of such Corporate Transaction is subject, at the time of such
approval by shareholders, to the consent of any government or governmental
agency, obtaining of such consent (either explicitly or implicitly by
consummation); excluding, however, such a Corporate Transaction pursuant to
which (A) all or substantially all of the individuals and entities who are the
beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 60% of,
respectively, the outstanding shares of common stock, and the combined voting
power of the outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting from
such Corporate Transaction (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (B) no Person (other than the
Company, any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Corporate Transaction) will beneficially own,
directly or indirectly, 20% or more of, respectively, the outstanding shares of
common stock of the corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding voting securities of such corporation
entitled to vote generally in the election of directors except to the extent
that such ownership existed prior to the Corporate Transaction, and (C)
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individuals who were members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of the corporation resulting
from such Corporate Transaction; or
(4) The approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(c) Change in Control Price. For purposes of the Plan, "Change in
Control Price" means the higher of (1) the highest reported sales price, regular
way, of a share of Common Stock in any transaction reported on any national
exchange on which such shares are listed or, if not listed on any such exchange,
as quoted on the Nasdaq National Market during the 60-day period prior to and
including the date of a Change in Control or (2) if the Change in Control is the
result of a tender or exchange offer or a Corporate Transaction, the highest
price per share of Common Stock paid in such tender or exchange offer or
Corporate Transaction; provided, however, that in the case of Incentive Stock
Options and Stock Appreciation Rights relating to Incentive Stock Options, the
Change in Control Price shall be in all cases the Fair Market Value of the
Common Stock on the date such Incentive Stock Option or Stock Appreciation Right
is exercised. To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other noncash
consideration, the value of such securities or other noncash consideration shall
be determined in the sole discretion of the Board.
SECTION 9. AMENDMENT AND TERMINATION
The Plan will terminate on July 18, 2009. Awards outstanding as of the
date of any such termination shall not be affected or impaired by the
termination of the Plan.
The Board may amend, alter, or discontinue the Plan to the extent it
deems appropriate in the best interest of the Company, but no amendment,
alteration or discontinuation shall be made which would (1) impair the rights of
an optionee under a Stock Option or a recipient of a Stock Appreciation Right
theretofore granted without the optionee's or recipient's consent, except such
an amendment which is necessary to cause any Award or transaction under the Plan
to qualify, or to continue to qualify, for the exemption provided by Rule 16b-3,
or (2) disqualify any Award or transaction under the Plan from the exemption
provided by Rule 16b-3. In addition, no such amendment shall be made without the
approval of the Company's shareholders to the extent such approval is required
by law or agreement.
The Committee may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the rights of any holder without the holder's consent except such an
amendment which is necessary to cause any Award or transaction under the Plan to
qualify, or to continue to qualify, for the exemption provided by Rule 16b-3.
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Subject to the above provisions, the Board shall have authority to
amend the Plan to take into account changes in law and tax and accounting rules
as well as other developments, and to grant Awards that qualify for beneficial
treatment under such rules without shareholder approval.
SECTION 10. UNFUNDED STATUS OF PLAN
It is presently intended that the Plan constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or make payments; provided, however, that
unless the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 11. GENERAL PROVISIONS
(a) The Committee may require each person purchasing or receiving
shares pursuant to an Award to represent to and agree with the Company in
writing that such person is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
Notwithstanding any other provision of the Plan or agreements
made pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock under the Plan prior to
fulfillment of all of the following conditions:
(1) Any registration or other qualification (or exemption
therefrom) of such shares of the Company under any state or federal law or
regulation, or the maintaining in effect of any such registration or other
qualification which the Committee shall, in its absolute discretion upon the
advice of counsel, deem necessary or advisable; and
(2) Obtaining any other consent, approval, or permit from any
state or federal governmental agency which the Committee shall, in its absolute
discretion after receiving the advice of counsel, determine to be necessary or
advisable.
(b) Nothing contained in the Plan shall prevent the Company or any
Subsidiary or Affiliate from adopting other or additional compensation
arrangements for its employees.
(c) Adoption of the Plan shall not confer upon any employee any right
to continued employment, nor shall it interfere in any way with the right of the
Company or any Subsidiary or Affiliate to terminate the employment of any
employee at any time.
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(d) No later than the date as of which an amount first becomes
includable in the gross income of the participant for federal income tax
purposes with respect to any Award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Company regarding the
payment of, any federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Company, withholding obligations may be settled with Common Stock, including
Common Stock that is part of the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditional
on such payment or arrangements, and the Company and its Affiliates shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the participant. The Committee may establish such
procedures as it deems appropriate, including making irrevocable elections, for
the settlement of withholding obligations with Common Stock.
(e) The Committee shall establish such procedures as it deems
appropriate for a participant to designate a beneficiary to whom any amounts
payable in the event of the participant's death are to be paid or by whom any
rights of the participant, after the participant's death, may be exercised.
(f) In the case of a grant of an Award to any employee of a Subsidiary
of the Company, the Company may, if the Committee so directs, issue or transfer
the shares of Common Stock, if any, covered by the Award to the Subsidiary, for
such lawful consideration as the Committee may specify, upon the condition or
understanding that the Subsidiary will transfer the shares of Common Stock to
the employee in accordance with the terms of the Award specified by the
Committee pursuant to the provisions of the Plan.
(g) Notwithstanding the foregoing, if any right to receive cash granted
pursuant to this Plan would make a Change in Control transaction ineligible for
pooling-of-interests accounting under APB No. 16 that but for the nature of such
grant would otherwise be eligible for such accounting treatment, the Committee
shall have the ability to substitute for such cash Common Stock with a Fair
Market Value equal to the cash that would otherwise be payable hereunder.
(h) The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Florida,
without reference to principles of conflict of laws.
(i) The Committee may grant Awards to employees who are subject to the
tax laws of nations other than the United States, which Awards may have terms
and conditions that differ from other Awards granted under the Plan for the
purposes of complying with foreign tax laws. The Committee may grant Stock
Appreciation Rights to employees without the grant of an accompanying Stock
Option if the employees are subject at the time of grant to the laws of a
jurisdiction that prohibits them from owning common stock. The
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Stock Appreciation Rights shall permit the employees to receive cash at the time
of any exercise thereof.
(j) Any transaction effected pursuant to this Plan that is deemed to be
a "Discretionary Transaction" (as defined in Rule 16b-3) that occurs within six
(6) months of an "opposite way" discretionary transaction (as described in Rule
16b-3(f) thereunder) is automatically voided and will be deferred until six (6)
months have elapsed from the date of the most recent "opposite way"
discretionary transaction under any Plan of the Company. If any provision of the
Plan is found not to be in compliance with Florida or other applicable law, such
provision shall be deemed null and void to the extent required to permit the
Plan to comply with Florida or such other applicable law.
(k) Notwithstanding any provision of this Plan to the contrary, the
number of shares of Common Stock issuable upon the exercise of Stock Options
granted under this Plan shall at all times be subject to there being sufficient
authorized but unissued shares of Common Stock available to permit such
exercise. The Company agrees to take appropriate corporate action, by amending
its Certificate of Incorporation or otherwise, so that the Company will have
sufficient authorized but unissued Common Stock to permit full implementation of
this Plan.
SECTION 12. LIMITATIONS APPLICABLE TO PERFORMANCE-BASED COMPENSATION
Notwithstanding any other provision of this Plan, any Award intended to
qualify as performance-based compensation as described in Section 162(m)(4)(C)
of the Code shall be subject to any additional limitations set forth in Section
162(m) of the Code (including any amendment to Section 162(m) of the Code) or
any regulations or rulings issued thereunder that are requirements for
qualification as performance-based compensation as described in Section
162(m)(4)(C) of the Code, and this Plan shall be deemed amended to the extent
necessary to conform to such requirements.
SECTION 13. EFFECTIVE DATE OF PLAN
The Plan shall be effective on July 19, 1999; provided, however, that to the
extent required by the Code, this Plan shall be approved, confirmed and ratified
by the Company's stockholders within twelve (12) months from such date.
15
EMPLOYMENT AGREEMENT
This Agreement made and entered into this _26___ day of _March____, _1999_, by
and between Sense Technologies, Inc. ("employer"), and _Dore Perler___
("employee").
The parties recite that:
A. Employer is engaged in Biometric Time and Attendance Computer Systems and
maintains business premises at 10871 NW 52 Street, Sunrise, FL.
B. Employee is willing to be employed by employer, and employer is willing to
employ employee, on the terms and conditions hereinafter set forth. For the
reasons set forth above, and in consideration of the mutual covenants and
promises of the parties hereto, employer and employee covenant and agree as
follows:
1. AGREEMENT TO EMPLOY AND BE EMPLOYED Employer hereby employs employee at the
above-mentioned premises, and employee hereby accepts and agrees to such
employment.
2. DESCRIPTION OF EMPLOYEE'S DUTIES Subject to the supervision and pursuant to
the orders, advice, and direction of employer, employee shall perform such
duties as are customarily performed by one holding such position in other
businesses or enterprises of the same or similar nature as that engaged in
by employer. Employee shall additionally render such other and unrelated
services and duties as may be assigned to him/her from time to time by
employer.
3. MANNER OF PERFORMANCE OF EMPLOYEE'S DUTIES Employee shall at all times
faithfully, industriously, and to the best of their ability, experience,
and talent, perform all duties that may be required of and from them
pursuant to the express and implicit terms hereof, to the reasonable
satisfaction of employer. Such duties shall be rendered at the above
mentioned premises and at such other place or places as employer shall in
good faith require or as the interests, needs, business, and opportunities
of employer shall require or make advisable.
4. COMPENSATION; REIMBURSEMENT Employer shall pay employee and employee agrees
to accept from employer, in full payment for employee's services hereunder,
compensation at the rate of Sixty Seven Thousand Six Hundred Dollars
($67,600.00) per annum, payable semi-monthly. In addition to the foregoing,
employer will reimburse employee for any and all necessary, customary, and
usual expenses incurred by him while traveling for and on behalf of the
employer pursuant to employer's directions. In addition to the above
compensation, the Employee may be entitled to the following "fringe
benefits" as determined by the employer. A) Stock options to be named later
B) Health insurance C) Car allowance D) Car insurance allowance E)
Corporate Credit Card Usage for gas and travel related expenses F)
Corporate bonus program(s).
5. EMPLOYEE'S LOYALTY TO EMPLOYER'S INTERESTS Employee shall devote all of
their time, attention, knowledge, and skill solely and exclusively to the
business and interests of employer, and employer shall be entitled to all
benefits, emoluments, profits, or other issues arising from or incident to
any and all work, services, and advice of employee. Employee expressly
agrees that during the term hereof he/she will not be interested, directly
or indirectly, in any form, fashion, or manner, as partner, officer,
director, stockholder, advisor, employee, or in any other form or capacity,
in any other business similar to employer's business or any allied trade,
except that nothing herein contained shall be deemed to prevent or limit
the right of employee to invest any of their surplus funds in the capital
stock or other securities of any corporation whose stock or securities are
publicly owned or are regularly traded on any public exchange, nor shall
anything herein contained by deemed to prevent employee from investing or
limit employee's right to invest their surplus funds in real estate.
6. NONDISCLOSURE OF INFORMATION CONCERNING BUSINESS Employee will not at any
time, in any fashion, form, or manner, either directly or indirectly
divulge, disclose, or communicate to any person, firm, or corporation in
any manner whatsoever any information of any kind, nature, or description
concerning any matters affecting or relating to the business of employer,
including, without limitation, the names of any its customers, the prices
it obtains or has obtained, or at which it sells or has sold its products,
or any other information concerning the business of employer, its manner of
operation, or its plans, processes, or other date of any kind, nature, or
description without regard to whether any or all of the foregoing matters
would be deemed confidential, material, or important. The parties hereby
stipulate that, as between them, the foregoing matters are important,
material, and confidential, and gravely affect the effective and successful
conduct of the business of employer, and its good will, and that any breach
of the terms of this section is a material breach of this agreement.
7. OPTION TO TERMINATE ON PERMANENT DISABILITY OF EMPLOYEE Not withstanding
anything in this agreement to the contrary, employer is hereby given the
option to terminate this agreement in the event that during the term hereof
employee shall become permanently disabled, as the term "permanently
disabled" is hereinafter fixed and defined. Such option shall be exercised
by employer giving notice to employee by registered mail, addressed to him
in care of employer at the above stated address, or at such other address
as employee shall designate in writing, of its intention to terminate this
agreement on the last day of the month during which such notice is mailed.
On the giving of such notice this agreement and the term hereof shall cease
and come to an end on the last day of the month in which the notice is
mailed, with the same force and effect as if such last day of the month
were the date originally set forth as the termination date. For purposes of
this agreement, employee shall be deemed to have become permanently
disabled if, during any year of the term hereof, because of ill health,
physical or mental disability, or for other causes beyond their control,
he/she shall have been continuously unable or unwilling or have failed to
perform their duties hereunder for thirty (30) consecutive days, or if,
during any year of the term hereof, he/she shall have been unable or
unwilling or have failed to perform their duties for a total period of
thirty (30) days, whether consecutive or not. For the purposes hereof, the
term "any year of the term hereof" is defined to mean any period of 12
calendar months.
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8. DISCONTINUANCE OF BUSINESS AS TERMINATION OF EMPLOYMENT Anything herein
contained to the contrary notwithstanding, in the event that employer shall
discontinue operations at the premises mentioned above, then this agreement
shall cease and terminate as of the last day of the month in which
operations cease with the same force and effect as if such last day of the
month were originally set forth as the termination date hereof.
9. EMPLOYEE'S COMMITMENTS BINDING ON EMPLOYER ONLY ON WRITTEN CONSENT Employee
shall not have the right to make any contracts or other commitments for or
on behalf of employer without the written consent of employer.
10. CONTRACT TERMS TO BE EXCLUSIVE This written agreement contains the sole and
entire agreement between the parties, and supersedes any and all other
agreements between them. The parties acknowledge and agree that neither of
them has made any representation with respect to the subject matter of this
agreement or any representations inducing the execution and delivery hereof
except such representations as are specifically set forth herein, and each
party acknowledges that he/she or it has relied on their or its own
judgment in entering into the agreement. The parties further acknowledge
that any statements or representations that may have heretofore been made
by either of them to the other are void and of no effect and that neither
of them has relied thereon in connection with their or its dealings with
the other.
11. WAIVER OR MODIFICATION INEFFECTIVE UNLESS IN WRITING No waiver or
modification of this agreement or of any covenant, condition, or limitation
herein contained shall be valid unless in writing and duly executed by the
party to be charged therewith. Furthermore, no evidence of any waiver or
modification shall be offered or received in evidence in any proceeding,
arbitration, or litigation between the parties arising out of or affecting
this agreement, or the rights or obligations of any party hereunder, unless
such waiver or modification is in writing, duly executed as aforesaid. The
provisions of this paragraph may not be waived except as herein set forth.
12. CONTRACT GOVERNED BY LAW This agreement and performance hereunder shall be
construed in accordance with the laws of the State of Florida.
13. BINDING EFFECT OF AGREEMENT This agreement shall be binding on and inure to
the benefit of the respective parties and their respective heirs, legal
representatives, successors, and assigns.
14. ARBITRATION Any controversy or claim arising out of or relating to this
contract, or the breach thereof, shall be settled by arbitration in
accordance of the rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) shall be entered in
any court having jurisdiction thereof. For that purpose, the parties hereto
consent to the jurisdiction and venue of an appropriate court located in
Broward County, State of Florida. In the event that litigation results from
or arises out of this Agreement or the performance thereof, the parties
agree to reimburse the prevailing party's reasonable attorney's fees, court
costs, and all other expenses, whether or not taxable by the court as
costs, in addition to any other relief to which the prevailing party may be
entitled. In such event, no action shall be entertained by said court or
any court of competent jurisdiction if filed more than one year subsequent
to the date the cause(s) of action actually accrued regardless of whether
damages were otherwise as of said time calculable.
15. VALIDITY In the event that any provision of this Agreement shall beheld to
be invalid, the same shall not affect in any respect whatsoever the
validity of the remainder of this Agreement.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement on the day
__26__of _March___________________, __1999____ .
__/s/ Andy Goldrich____________________, for Employer
__/s/ Dore Perler______________________, as Employee
2
EMPLOYMENT AGREEMENT
This Agreement made and entered into this _26___ day of _March____, _1999_, by
and between Sense Technologies, Inc. ("employer"), and _Andy Goldrich___
("employee").
The parties recite that:
A. Employer is engaged in Biometric Time and Attendance Computer Systems and
maintains business premises at 10871 NW 52 Street, Sunrise, FL.
B. Employee is willing to be employed by employer, and employer is willing to
employ employee, on the terms and conditions hereinafter set forth. For the
reasons set forth above, and in consideration of the mutual covenants and
promises of the parties hereto, employer and employee covenant and agree as
follows:
1. AGREEMENT TO EMPLOY AND BE EMPLOYED Employer hereby employs employee at the
above-mentioned premises, and employee hereby accepts and agrees to such
employment.
2. DESCRIPTION OF EMPLOYEE'S DUTIES Subject to the supervision and pursuant to
the orders, advice, and direction of employer, employee shall perform such
duties as are customarily performed by one holding such position in other
businesses or enterprises of the same or similar nature as that engaged in
by employer. Employee shall additionally render such other and unrelated
services and duties as may be assigned to him/her from time to time by
employer.
3. MANNER OF PERFORMANCE OF EMPLOYEE'S DUTIES Employee shall at all times
faithfully, industriously, and to the best of their ability, experience,
and talent, perform all duties that may be required of and from them
pursuant to the express and implicit terms hereof, to the reasonable
satisfaction of employer. Such duties shall be rendered at the above
mentioned premises and at such other place or places as employer shall in
good faith require or as the interests, needs, business, and opportunities
of employer shall require or make advisable.
4. COMPENSATION; REIMBURSEMENT Employer shall pay employee and employee agrees
to accept from employer, in full payment for employee's services hereunder,
compensation at the rate of Sixty Seven Thousand Six Hundred Dollars
($67,600.00) per annum, payable semi-monthly. In addition to the foregoing,
employer will reimburse employee for any and all necessary, customary, and
usual expenses incurred by him while traveling for and on behalf of the
employer pursuant to employer's directions. In addition to the above
compensation, the Employee may be entitled to the following "fringe
benefits" as determined by the employer. A) Stock options to be named later
B) Health insurance C) Car allowance D) Car insurance allowance E)
Corporate Credit Card Usage for gas and travel related expenses F)
Corporate bonus program(s).
5. EMPLOYEE'S LOYALTY TO EMPLOYER'S INTERESTS Employee shall devote all of
their time, attention, knowledge, and skill solely and exclusively to the
business and interests of employer, and employer shall be entitled to all
benefits, emoluments, profits, or other issues arising from or incident to
any and all work, services, and advice of employee. Employee expressly
agrees that during the term hereof he/she will not be interested, directly
or indirectly, in any form, fashion, or manner, as partner, officer,
director, stockholder, advisor, employee, or in any other form or capacity,
in any other business similar to employer's business or any allied trade,
except that nothing herein contained shall be deemed to prevent or limit
the right of employee to invest any of their surplus funds in the capital
stock or other securities of any corporation whose stock or securities are
publicly owned or are regularly traded on any public exchange, nor shall
anything herein contained by deemed to prevent employee from investing or
limit employee's right to invest their surplus funds in real estate.
6. NONDISCLOSURE OF INFORMATION CONCERNING BUSINESS Employee will not at any
time, in any fashion, form, or manner, either directly or indirectly
divulge, disclose, or communicate to any person, firm, or corporation in
any manner whatsoever any information of any kind, nature, or description
concerning any matters affecting or relating to the business of employer,
including, without limitation, the names of any its customers, the prices
it obtains or has obtained, or at which it sells or has sold its products,
or any other information concerning the business of employer, its manner of
operation, or its plans, processes, or other date of any kind, nature, or
description without regard to whether any or all of the foregoing matters
would be deemed confidential, material, or important. The parties hereby
stipulate that, as between them, the foregoing matters are important,
material, and confidential, and gravely affect the effective and successful
conduct of the business of employer, and its good will, and that any breach
of the terms of this section is a material breach of this agreement.
7. OPTION TO TERMINATE ON PERMANENT DISABILITY OF EMPLOYEE Not withstanding
anything in this agreement to the contrary, employer is hereby given the
option to terminate this agreement in the event that during the term hereof
employee shall become permanently disabled, as the term "permanently
disabled" is hereinafter fixed and defined. Such option shall be exercised
by employer giving notice to employee by registered mail, addressed to him
in care of employer at the above stated address, or at such other address
as employee shall designate in writing, of its intention to terminate this
agreement on the last day of the month during which such notice is mailed.
On the giving of such notice this agreement and the term hereof shall cease
and come to an end on the last day of the month in which the notice is
mailed, with the same force and effect as if such last day of the month
were the date originally set forth as the termination date. For purposes of
this agreement, employee shall be deemed to have become permanently
disabled if, during any year of the term hereof, because of ill health,
physical or mental disability, or for other causes beyond their control,
he/she shall have been continuously unable or unwilling or have failed to
perform their duties hereunder for thirty (30) consecutive days, or if,
during any year of the term hereof, he/she shall have been unable or
unwilling or have failed to perform their duties for a total period of
thirty (30) days, whether consecutive or not. For the purposes hereof, the
term "any year of the term hereof" is defined to mean any period of 12
calendar months.
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<PAGE>
8. DISCONTINUANCE OF BUSINESS AS TERMINATION OF EMPLOYMENT Anything herein
contained to the contrary notwithstanding, in the event that employer shall
discontinue operations at the premises mentioned above, then this agreement
shall cease and terminate as of the last day of the month in which
operations cease with the same force and effect as if such last day of the
month were originally set forth as the termination date hereof.
9. EMPLOYEE'S COMMITMENTS BINDING ON EMPLOYER ONLY ON WRITTEN CONSENT Employee
shall not have the right to make any contracts or other commitments for or
on behalf of employer without the written consent of employer.
10. CONTRACT TERMS TO BE EXCLUSIVE This written agreement contains the sole and
entire agreement between the parties, and supersedes any and all other
agreements between them. The parties acknowledge and agree that neither of
them has made any representation with respect to the subject matter of this
agreement or any representations inducing the execution and delivery hereof
except such representations as are specifically set forth herein, and each
party acknowledges that he/she or it has relied on their or its own
judgment in entering into the agreement. The parties further acknowledge
that any statements or representations that may have heretofore been made
by either of them to the other are void and of no effect and that neither
of them has relied thereon in connection with their or its dealings with
the other.
11. WAIVER OR MODIFICATION INEFFECTIVE UNLESS IN WRITING No waiver or
modification of this agreement or of any covenant, condition, or limitation
herein contained shall be valid unless in writing and duly executed by the
party to be charged therewith. Furthermore, no evidence of any waiver or
modification shall be offered or received in evidence in any proceeding,
arbitration, or litigation between the parties arising out of or affecting
this agreement, or the rights or obligations of any party hereunder, unless
such waiver or modification is in writing, duly executed as aforesaid. The
provisions of this paragraph may not be waived except as herein set forth.
12. CONTRACT GOVERNED BY LAW This agreement and performance hereunder shall be
construed in accordance with the laws of the State of Florida.
13. BINDING EFFECT OF AGREEMENT This agreement shall be binding on and inure to
the benefit of the respective parties and their respective heirs, legal
representatives, successors, and assigns.
14. ARBITRATION Any controversy or claim arising out of or relating to this
contract, or the breach thereof, shall be settled by arbitration in
accordance of the rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) shall be entered in
any court having jurisdiction thereof. For that purpose, the parties hereto
consent to the jurisdiction and venue of an appropriate court located in
Broward County, State of Florida. In the event that litigation results from
or arises out of this Agreement or the performance thereof, the parties
agree to reimburse the prevailing party's reasonable attorney's fees, court
costs, and all other expenses, whether or not taxable by the court as
costs, in addition to any other relief to which the prevailing party may be
entitled. In such event, no action shall be entertained by said court or
any court of competent jurisdiction if filed more than one year subsequent
to the date the cause(s) of action actually accrued regardless of whether
damages were otherwise as of said time calculable.
15. VALIDITY In the event that any provision of this Agreement shall beheld to
be invalid, the same shall not affect in any respect whatsoever the
validity of the remainder of this Agreement.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement on the day
__26__of _March___________________, __1999____ .
__/s/ Dore Perler____________________, for Employer
__/s/ Andy Goldrich______________________, as Employee
2
EMPLOYMENT AGREEMENT
This Agreement made and entered into this _26___ day of _March____, _1999_, by
and between Sense Technologies, Inc. ("employer"), and _Shawn Tartaglia________
("employee").
The parties recite that:
A. Employer is engaged in Biometric Time and Attendance Computer Systems and
maintains business premises at 10871 NW 52 Street, Sunrise, FL.
B. Employee is willing to be employed by employer, and employer is willing to
employ employee, on the terms and conditions hereinafter set forth. For the
reasons set forth above, and in consideration of the mutual covenants and
promises of the parties hereto, employer and employee covenant and agree as
follows:
1. AGREEMENT TO EMPLOY AND BE EMPLOYED Employer hereby employs employee at the
above-mentioned premises, and employee hereby accepts and agrees to such
employment.
2. DESCRIPTION OF EMPLOYEE'S DUTIES Subject to the supervision and pursuant to
the orders, advice, and direction of employer, employee shall perform such
duties as are customarily performed by one holding such position in other
businesses or enterprises of the same or similar nature as that engaged in
by employer. Employee shall additionally render such other and unrelated
services and duties as may be assigned to him/her from time to time by
employer.
3. MANNER OF PERFORMANCE OF EMPLOYEE'S DUTIES Employee shall at all times
faithfully, industriously, and to the best of their ability, experience,
and talent, perform all duties that may be required of and from them
pursuant to the express and implicit terms hereof, to the reasonable
satisfaction of employer. Such duties shall be rendered at the above
mentioned premises and at such other place or places as employer shall in
good faith require or as the interests, needs, business, and opportunities
of employer shall require or make advisable.
4. COMPENSATION; REIMBURSEMENT Employer shall pay employee and employee agrees
to accept from employer, in full payment for employee's services hereunder,
compensation at the rate of Sixty Five Thousand Dollars ($65,000.00) per
annum, payable semi-monthly. In addition to the foregoing, employer will
reimburse employee for any and all necessary, customary, and usual expenses
incurred by him while traveling for and on behalf of the employer pursuant
to employer's directions. In addition to the above compensation, the
Employee may be entitled to the following "fringe benefits" as determined
by the employer. A) Stock options to be named later B) Health insurance C)
Car allowance D) Car insurance allowance E) Corporate Credit Card Usage for
gas and travel related expenses F) Corporate bonus program(s).
5. EMPLOYEE'S LOYALTY TO EMPLOYER'S INTERESTS Employee shall devote all of
their time, attention, knowledge, and skill solely and exclusively to the
business and interests of employer, and employer shall be entitled to all
benefits, emoluments, profits, or other issues arising from or incident to
any and all work, services, and advice of employee. Employee expressly
agrees that during the term hereof he/she will not be interested, directly
or indirectly, in any form, fashion, or manner, as partner, officer,
director, stockholder, advisor, employee, or in any other form or capacity,
in any other business similar to employer's business or any allied trade,
except that nothing herein contained shall be deemed to prevent or limit
the right of employee to invest any of their surplus funds in the capital
stock or other securities of any corporation whose stock or securities are
publicly owned or are regularly traded on any public exchange, nor shall
anything herein contained by deemed to prevent employee from investing or
limit employee's right to invest their surplus funds in real estate.
6. NONDISCLOSURE OF INFORMATION CONCERNING BUSINESS Employee will not at any
time, in any fashion, form, or manner, either directly or indirectly
divulge, disclose, or communicate to any person, firm, or corporation in
any manner whatsoever any information of any kind, nature, or description
concerning any matters affecting or relating to the business of employer,
including, without limitation, the names of any its customers, the prices
it obtains or has obtained, or at which it sells or has sold its products,
or any other information concerning the business of employer, its manner of
operation, or its plans, processes, or other date of any kind, nature, or
description without regard to whether any or all of the foregoing matters
would be deemed confidential, material, or important. The parties hereby
stipulate that, as between them, the foregoing matters are important,
material, and confidential, and gravely affect the effective and successful
conduct of the business of employer, and its good will, and that any breach
of the terms of this section is a material breach of this agreement.
7. OPTION TO TERMINATE ON PERMANENT DISABILITY OF EMPLOYEE Not withstanding
anything in this agreement to the contrary, employer is hereby given the
option to terminate this agreement in the event that during the term hereof
employee shall become permanently disabled, as the term "permanently
disabled" is hereinafter fixed and defined. Such option shall be exercised
by employer giving notice to employee by registered mail, addressed to him
in care of employer at the above stated address, or at such other address
as employee shall designate in writing, of its intention to terminate this
agreement on the last day of the month during which such notice is mailed.
On the giving of such notice this agreement and the term hereof shall cease
and come to an end on the last day of the month in which the notice is
mailed, with the same force and effect as if such last day of the month
were the date originally set forth as the termination date. For purposes of
this agreement, employee shall be deemed to have become permanently
disabled if, during any year of the term hereof, because of ill health,
physical or mental disability, or for other causes beyond their control,
he/she shall have been continuously unable or unwilling or have failed to
perform their duties hereunder for thirty (30) consecutive days, or if,
during any year of the term hereof, he/she shall have been unable or
unwilling or have failed to perform their duties for a total period of
thirty (30) days, whether consecutive or not. For the purposes hereof, the
term "any year of the term hereof" is defined to mean any period of 12
calendar months.
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<PAGE>
8. DISCONTINUANCE OF BUSINESS AS TERMINATION OF EMPLOYMENT Anything herein
contained to the contrary notwithstanding, in the event that employer shall
discontinue operations at the premises mentioned above, then this agreement
shall cease and terminate as of the last day of the month in which
operations cease with the same force and effect as if such last day of the
month were originally set forth as the termination date hereof.
9. EMPLOYEE'S COMMITMENTS BINDING ON EMPLOYER ONLY ON WRITTEN CONSENT Employee
shall not have the right to make any contracts or other commitments for or
on behalf of employer without the written consent of employer.
10. CONTRACT TERMS TO BE EXCLUSIVE This written agreement contains the sole and
entire agreement between the parties, and supersedes any and all other
agreements between them. The parties acknowledge and agree that neither of
them has made any representation with respect to the subject matter of this
agreement or any representations inducing the execution and delivery hereof
except such representations as are specifically set forth herein, and each
party acknowledges that he/she or it has relied on their or its own
judgment in entering into the agreement. The parties further acknowledge
that any statements or representations that may have heretofore been made
by either of them to the other are void and of no effect and that neither
of them has relied thereon in connection with their or its dealings with
the other.
11. WAIVER OR MODIFICATION INEFFECTIVE UNLESS IN WRITING No waiver or
modification of this agreement or of any covenant, condition, or limitation
herein contained shall be valid unless in writing and duly executed by the
party to be charged therewith. Furthermore, no evidence of any waiver or
modification shall be offered or received in evidence in any proceeding,
arbitration, or litigation between the parties arising out of or affecting
this agreement, or the rights or obligations of any party hereunder, unless
such waiver or modification is in writing, duly executed as aforesaid. The
provisions of this paragraph may not be waived except as herein set forth.
12. CONTRACT GOVERNED BY LAW This agreement and performance hereunder shall be
construed in accordance with the laws of the State of Florida.
13. BINDING EFFECT OF AGREEMENT This agreement shall be binding on and inure to
the benefit of the respective parties and their respective heirs, legal
representatives, successors, and assigns.
14. ARBITRATION Any controversy or claim arising out of or relating to this
contract, or the breach thereof, shall be settled by arbitration in
accordance of the rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) shall be entered in
any court having jurisdiction thereof. For that purpose, the parties hereto
consent to the jurisdiction and venue of an appropriate court located in
Broward County, State of Florida. In the event that litigation results from
or arises out of this Agreement or the performance thereof, the parties
agree to reimburse the prevailing party's reasonable attorney's fees, court
costs, and all other expenses, whether or not taxable by the court as
costs, in addition to any other relief to which the prevailing party may be
entitled. In such event, no action shall be entertained by said court or
any court of competent jurisdiction if filed more than one year subsequent
to the date the cause(s) of action actually accrued regardless of whether
damages were otherwise as of said time calculable.
15. VALIDITY In the event that any provision of this Agreement shall beheld to
be invalid, the same shall not affect in any respect whatsoever the
validity of the remainder of this Agreement.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement on the day
__26__of _March___________________, __1999____ .
__/s/ Dore Perler____________________, for Employer
__/s/ Shawn Tartaglia___________________________________, as Employee
2
Technology License Agreement
between
SAC Technologies, Inc.
4620 S. Valley View Blvd., Suite A
Las Vegas, NV 89103
(Referred to hereafter as SAC)
and
Sense Technologies, Inc.
----------------------
10871 N.W. 52nd Street #3
----------------------
Sunrise, Florida 33351
----------------------
(Referred to hereafter as Licensee)
Effective date of this Agreement: _______________________________
Preamble
Whereas, SAC has originated and owns exclusive licensing rights to the
Technology described in Exhibit A of this agreement (referred to as Licensed
Technology hereafter), and whereas, SAC and Licensee desire that Licensee obtain
certain rights from SAC with respect to the Licensed Technology to the actual
benefit of SAC and Licensee, and whereas the Licensee is in the business of
producing and/or reselling a biometric product which will utilize the Licensed
Technology, and therefore, in consideration of the above promise, SAC and
Licensee agree to the following:
Agreement
1. License
a) SAC hereby grants to Licensee a nonexclusive license to reproduce,
distribute, export, sublicense, and upgrade the Licensed
Technology for use with the Licensee's manufactured or purchased
equipment. SAC hereby agrees that it shall not offer or contract
to offer an exclusive license for a time clock application to any
other parties during the term(s) of this agreement. The Licensed
Technology is specifically licensed for use in the Licensee's
manufactured or
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<PAGE>
purchased equipment. It may not be sublicensed, sold, or otherwise
distributed separately. Each copy of the Licensed Technology is to
be used with a single matched serialized Chip Set provided by SAC
(i.e.; multiple copies of the technology will not be used with a
single Chip Set.)
b) The Licensee shall not authorize other parties to reproduce,
copy, or otherwise manufacture the Licensed Technology without the
written permission of SAC which will not be unreasonably withheld.
c) The Licensed Technology shall contain SAC's copyright message
imbedded in the code as well as - in systems with appropriate
display - visibly displayed when the Licensed Technology is
initially powered up. The Licensee will receive a serialized Chip
Set and Copyright Label from SAC for the license fee set forth in
Exhibit A for each copy of the Licensed Technology, produced or
otherwise duplicated. Further, the Licensee will place this
Copyright Label in a place that is clearly visible when the
Licensed Technology is installed.
d) All rights relating to the Licensed Technology, that are not
provided for specifically in this agreement, shall be retained by
SAC.
e) As a condition precedent to this agreement, SAC shall ensure
that all products and services sold to Licensee hereunder, shall
at all times during the term(s) of this agreement, qualitatively
and technologically meet the prevailing standards for such
products and services in the community of other businesses
marketing similar products throughout the U.S. and Canada.
2. Documents and Materials
a) SAC shall deliver the documents and materials listed in Exhibit
A to Licensee for the purpose of producing, manufacturing, or
modifying the Licensed Technology. This material shall be
delivered within 30 days following the execution of this
agreement, unless a different time is provided for, specifically
in Exhibit A.
b) The Licensee has the right to test the material, using
appropriate methods.
c) Licensee shall accept or reject the material provided by SAC
within thirty (30) working days of their receipt, and, if
rejected, shall provide the reason in writing to SAC within the
30-day period. If no written notice is received by SAC within the
30-day period, the material shall be deemed acceptable by
Licensee.
d) In the event of rejection, SAC shall have 30 days to provide a
reasonable remedy, acceptable to Licensee. If no reasonable remedy
can be provided within the 30- day period, this agreement shall be
void and all moneys paid to SAC shall be returned to Licensee
within an additional 15 days thereafter.
3. Title
a) Title and full ownership rights to the Licensed Technology
shall remain with SAC and/or its suppliers. The Licensed
Technology contains SAC's and/or its suppliers
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<PAGE>
proprietary information and trade secrets, whether or not any
portion thereof is or may be copyrighted or patented.
4. Licensee Expenses
a) Costs and expenses incurred by the Licensee relating to
marketing, distribution, promotion, and advertising of the
Licensed Technology, or any other costs not agreed upon
specifically in writing, shall be the express responsibility of
the Licensee.
5. Payment
a) For the rights granted by this agreement, the Licensee agrees
to pay the amount provided for in Exhibit A to SAC. Due dates and
conditions are provided in Exhibit A.
b) Each and every copy of the Licensed Technology produced,
manufactured, or otherwise distributed by the Licensee shall have
thereon a Copyright Label and shall include a serialized Chip Set.
Orders will be delivered within 10 working days.
c) The Copyright Label must be legible and the label must be
identifiable as a legitimate SAC Copyright Label.
d) No moneys are refundable unless provided for specifically in
this agreement.
e) The amounts listed for initial licensing payments and payments
for royalties do not include any federal, state, local, or other
governmental taxes, or other tariffs which may be imposed now or
in the future on the sale, transportation, production, storage, or
export of the Licensed Technology. Any and all such taxes and
costs shall be paid by the Licensee; SAC, its agents and
distributors shall have no liability therefor.
6. Technology Maintenance
a) SAC agrees to repair errors or defects in the Licensed
Technology for the period of twelve (12) months after delivery of
each specific release of the licensed technology, unless otherwise
provided for in Exhibit A, according to the conditions listed
below.
b) The Licensee shall, promptly upon discovery, notify SAC in
writing of any errors or defects in the Licensed Technology that
it wants SAC to repair. The error must be consistently
demonstrable and repeatable behavior of the Licensed Technology
which does not meet the standard of the Licensed Technology.
c) Upon receiving a written error report from Licensee, SAC shall
have ten (10) working days in which to either acknowledge that the
error exists or to deny verification. In the event that the error
exists, SAC shall have thirty (30) working
3
<PAGE>
days in which to correct the error, and if such error cannot be
corrected, provided that such error is significant to OEM's use of
the technology, then OEM may elect to terminate this agreement.
7. Modifications by Licensee
a) Any upgrades, additions, adaptations, or modifications to the
Licensed Technology made by the Licensee will remain the sole
property and responsibility of the Licensee. The Licensee is not
obligated to disclose its modifications to SAC or any other party.
The Licensee shall have the right to obtain copyrights of its
upgrades and shall have the responsibility of defending them.
However, any modifications to the Licensed Technology shall not
imply any ownership rights to the Licensed Technology by Licensee
(see paragraph 3). Such modified Technology remains under the
license conditions agreed to in this contract.
b) The Licensee shall hold SAC blameless for any errors or defects
that arise from modification, upgrades, additions, adaptations, or
other changes made by the Licensee to the Licensed Technology. SAC
shall not be required to maintain or otherwise repair any
components other than those included in the original Licensed
Technology.
c) This Licensed Technology shall contain SAC's Copyright Notice
imbedded in the code and displayed in the source code. SAC's
Copyright Notice must be visibly displayed when the Technology is
initialized if a display device is available for such display, and
the Licensed Technology must have the Copyright Label attached as
described in Paragraph 1c of this agreement.
8. Source Code
a) This agreement does not include license rights to the source
code. Further, the Licensee shall not disassemble, reverse
compile, or otherwise reverse engineer the software or firmware
portion of the Licensed Technology or cause or allow another party
to do so. In case Exhibit A includes delivery of source codes, all
rights and ownership of such delivered source codes remain with
SAC.
b) SAC and Licensee hereby agree that as partial consideration for
the instant agreement, SAC covenants and agrees that in the event
it files or is subject to voluntary or involuntary bankruptcy,
Licensee shall be accorded uninterrupted access to the source code
so as to allow Licensee to continue to enjoy its rights as
provided herein. To ensure such access, SAC shall deposit the
source code with a third party who will act as escrow agent, which
escrow agent shall be instructed to release the source code in the
event of bankruptcy without further notice.
c) SAC Technologies will include certain portions of Active-X and
DLL source code as determined appropriate by SAC.
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<PAGE>
9. Marketing
a) Licensee may use SAC's copyrighted or trademarked names, logos
and other identification including the use of the name of SAC
Technologies, Inc., Bio-KeyTM, SACManTM, SACcatTM, SAC_RemoteTM,
etc. in any marketing collateral materials. Licensee will receive
within 30 working days of the execution of this licensing
agreement, a disk containing all SAC logos for use in licensee's
collateral materials. No modification of copyrighted or
trademarked logos, images or names may be made without written
approval by SAC.
b) Any awards, citations, or other recognition given SAC may be
used in licensee's marketing collateral materials, subject to
restrictions, and approved in writing by SAC.
d) SAC will provide to licensee, when applicable, leads or
inquiries relating to licensee's product.
e) SAC may provide marketing support in the form of co-op
advertising assistance, joint collateral material production,
trade shows representation, etc. subject to advertising resource
availability. Requests for marketing support from licensee shall
be in writing to the appropriate SAC representative.
10. Warranties
a) SAC warrants that it has no knowledge that any part of the
Licensed Technology infringes or otherwise makes use of any
copyrights, trademark, trade secret, or other proprietary right of
any party. In the event that a court of competent jurisdiction
rules that SAC has in fact infringed upon the copyright of a third
party, SAC shall be required to either obtain license from that
third party, or modify the Licensed Technology code so that it is
not infringing, but still functions as represented in this
agreement. In the event that SAC cannot obtain license or make the
necessary modifications to be non-infringing, the Licensee shall
be entitled to a full refund of all moneys paid to SAC for the
Licensed Technology and OEM may elect immediate termination of the
agreement.
11. Warranty Disclaimer
a) The Licensed Technology and any and all updates to the same are
licensed 'As Is' with the exception of the warranties specifically
provided herein. SAC does not claim and does not warrant that the
Licensed Technology will operate error free. With the exception of
the warranties provided herein, SAC disclaims all warranties,
either expressed or implied, regarding the Licensed Technology,
its merchantability or its fitness for any particular purpose. SAC
will not be liable for indirect, incidental, or consequential
damages resulting from the Licensee's or its customers' use of the
Licensed Technology or for any error or defect in the Licensed
Technology. In case of an adaptation of the Licensed Technology to
the
5
<PAGE>
hardware of the Licensee by SAC, the functionality of the Licensed
Technology is limited to the operation with the hardware as
provided by the Licensee.
12. Indemnity
a) The Licensee shall indemnify SAC and hold it harmless from any
and all liabilities, claims, costs, losses, and expenses
including, but not limited to, reasonable attorney's fees and cost
of suit incurred by SAC as a result of or arising from Licensee's
misuse, modification, or alteration of the Licensed Technology.
13. Confidentiality
a) SAC will not disclose any information, obtained from the
Licensee and marked as proprietary or confidential, which relates
to the Licensee's operations, future plans, or other information,
which is marked as proprietary or confidential, without prior
written approval of the Licensee.
b) The Licensee hereby acknowledges that the Licensed Technology
and the source code contain valuable and proprietary information
belonging to SAC. Licensee also acknowledges that disclosure of
this information would cause irreparable damage to SAC. The
Licensee agrees to use its best effort not to release, disclose,
or otherwise permit access to such confidential information, or to
use the information in such a way that other parties can gain
unauthorized access.
c) SAC and Licensee agree to clearly mark written materials as
'CONFIDENTIAL', if they are to be treated as confidential in
nature. Verbal communications that are confidential in nature,
will be identified as so before, during, or immediately after the
communication. Licensee will include all copyright, trade secret,
and proprietary notices on all of its permitted copies of the
Licensed Technology in the same manner as provided on the
materials comprising the Licensed materials received from SAC.
d) Licensee warrants that all those individuals, having access to
the Licensed Technology under this agreement will observe and
perform this non-disclosure covenant.
14. Books and Records, Audit.
a) For each year hereof, Licensee agrees to maintain, until seven
years after such year, compete books, records and accounts relevant to
computation and accounting for amounts payable. Licensee agrees to
allow a representative of SAC the right to audit and examine such
books, records and accounts during Licensee's normal business hours no
more than once per year upon reasonable notice to verify the accuracy
of the reports and payments made to SAC. If such examination leads to
a determination that Licensee has not paid all amount properly payable
under this Agreement, Licensee agrees to pay, in addition to any
6
<PAGE>
damages to which SAC might be entitled, the amount of shortfall
plus the costs incurred by SAC in respect to the audit.
15. Termination of Agreement
a) The term of the license will commence on the date of signed
acceptance by SAC and will continue for the period of time
specified in Exhibit A or until this agreement is terminated by
mutual agreement, for default, and/or as otherwise provided
herein. Unless written notice of termination is given by either
party 3 months before expiration, this agreement extends for a
term of one year and from year to year thereafter.
b) In case either SAC or Licensee becomes insolvent, this
agreement may be terminated by providing the other party 30 days
written notice.
c) In the event of termination all rights granted by this
agreement shall revert to SAC. In addition the Licensee shall
immediately pay any moneys due to SAC. Upon termination of the
license herein granted, the Licensee will deliver to SAC all
materials and documentation, furnished by SAC and pertaining to
the Licensed Technology, and will also warrant that all copies
thereof have been returned to SAC or destroyed, except for those
properly distributed by Licensee prior to the date of termination.
d) In the event of termination of this agreement, Licensee and SAC
shall remain obligated to this agreement for transactions that
have already been completed and to those parts of this agreement
relating to confidentiality of information.
16. Completeness
a) Licensee and SAC agree that this agreement with its exhibits
constitutes the complete agreement and understanding between the
parties. This agreement supersedes all prior agreements,
understandings, and negotiations whether written or verbal. This
agreement can only be modified by a written provision signed by
both parties.
17. Notices
a) Notices shall be sent by registered or certified mail to the
addresses specified in the first paragraph of this agreement or to
such other address as each party shall designate from time to
time.
18. Export Regulation
a) Licensee understands that export administration regulations may
prohibit the export of the Licensed Technology to certain countries
and agrees to conform to
7
<PAGE>
those regulations. The Licensee also agrees to use its best
efforts to cause its dealers, resellers, distributors, and other
customers to conform to these regulations. The Licensee shall
indemnify SAC against any loss related to Licensee's failure to
conform to these regulations.
19. Governing Law
a) This agreement shall be governed by and constructed in
accordance with the law of the State of Nevada.
20. Attorneys' Fees
a) In the event of any legal action or other proceeding that is
brought about to enforce this agreement, the prevailing or
successful party shall be entitled to recover attorneys' fees as
well as other costs incurred in that action or proceeding from the
unsuccessful party in addition to any compensation to which it may
be entitled as a result.
21. Disputes
a) Place of performance and legal venue is Clark County, Nevada.
b) In the event that parts of this agreement become void or
impractical, the remainder of this agreement shall not be
affected.
c) Any disputes regarding this agreement shall be resolved by
binding arbitration, pursuant to the rules and procedures then
prevailing of the American Arbitration Association. Any resulting
award may be enforced by formal action of court or otherwise as
provided by law.
22. Signatures
SAC Technologies, Inc. Sense Technologies, Inc.
/s/ Barry Wendt /s/ Dore Perler
------------------------ ---------------------------
Signature Signature
Barry Wendt Dore Perler
------------------------ ---------------------------
Name (typed or printed) Name (typed or printed)
CEO President
------------------------ ---------------------------
Title Title
12/21/1998 12/21/1998
------------------------ ---------------------------
Date Date
8
<PAGE>
Exhibit-A
As used in this agreement, the term "Licensed Technology" shall be interpreted
to include all products and/or services described by the agreement and/or sold
by SAC to Licensee during the term(s) hereof. Such products and/or services
shall include, but are not limited to the following:
1.0 Product Specifications for SAC_RemoteTM OEM
SAC Technologies, Inc. will provide Manufacturing Tooling and design
documentation to the OEM for two embedded versions of SAC's access control
products which meets the following product specifications:
0.1 Version-A
-100 Mhz-486 cpu
-LCD-VGA Display Interface
-SAC Fingerprint Identification Reader Interface
-SAC Voice recognition Interface, voice-in, audio-out (can be used
for door entry Intercom system).
-SAC Facial Recognition Interface (requires SAC certified camera;
can be used for door entry surveillance and tele-conferencing with
optional VGA display, camera and software).
-DRAM/SIMM socket which supports up to 32 Meg.
-Keyboard Interface PC-101 type.
-3 X 4 Keypad Interface.
- Com-Ports / Quantity-2 / RS-232
o Comm-port-A can be configured as a Mag-Stripe
or Smart -Card
Reader Interface.
o Comm-port-B can be configured as an infra-red front
panel communications port for remote programming
( ie; security programming via a note-book computer
at a door entry).
-Parallel Printer Port
-Flash Disk for non-volatile program and data storage -Wiegand
Interface ( 26 bit).
-I/O Control Interface ( 2 optically isolated inputs, 2 optically
isolated outputs for controlling door locks, lights, etc.). -OEM Panel
Interface ( 4 TTL inputs, 4 TTL outputs for custom OEM applications
such as controlling LEDS or sensing option switches, etc.).
-Windows CE OS environment.
9
<PAGE>
2.1 Version-B
Add:
-Ethernet Interface
-IDE Disk Drive Interface
-Floppy Disk Interface
2.2 Product Specification notes:
- SAC will provide an optics assembly which images a minimum of
.6" x .6" fingerprint area to address print positioning issues.
- SAC will embed new generation technology to address anti-spoof
and dry finger issues.
- SAC will provide Active-X control development tools which
provide for Visual Basic development environment support.
- Version-A is designed to fit in a standard double duplex outlet
box.
- Version-B is designed to fit on a 4" X 6" circuit card.
- Displays, Keypads, Card Readers, Power Supplies, Product
Enclosures, Packaging, Surveillance Cameras, Microphones,
Keyboards and Keypads are external to the core product and must
meet SAC provided guidelines for proper interfacing and
operation.
1.02 Licensee Applications:
This license agreement includes but is not limited to the following products.
Additional products developed by licensee to be covered by the terms of this
agreement must be approved in writing by SAC prior to production.
All BioClockTM custom applications as Licensee's main focus of business, and any
products including software and hardware created for the purposes of
facilitating Sense Technologies, Inc. as a going concern as a secondary market
focus consisting of all access control markets and applications including, but
not limited to, the control of access to buildings, apartments, offices and
other facilities (including consumer, commercial or industrial), appliances,
information resources, computers, computer networks and personnel identification
applications. The following shall be explicitly excluded from the definition of
Markets: credit card clearing, check verification, automated teller machines,
law enforcement, national identification systems, immigration control,
automobile access, medical patient identification systems; and personnel
identification systems for federal and state government applications. In the
event that SAC's defined markets for its products
10
<PAGE>
are expanded beyond the above definition, the Market definition hereunder shall
be expanded accordingly for Licensee.
3.0 Pricing/Payment Terms:
Licensee projects monthly sales volume of 500-1,000 units of developed product
to be sold at per unit cost of $5,995. Licensee anticipates producing other
versions of product to be sold at lower price points, which, may or may not,
exceed projected sales volume of initial product.
In consideration of a one-year, renewable, technology manufacturing licensing
agreement, licensee agrees to a one-time licensing fee of $100,000 with a
minimum annual pre- purchase (non-refundable) requirement of 1,000.
<TABLE>
<CAPTION>
<S> <C>
Licensing fee: $100,000
On-going Royalty: $50/unit + SN-CHIP*
Minimum annual pre-purchase royalties required: 1,000
Total initial amount of license agreement: $150,000
License Deposit: $18,750.00 upon signing
$18,750.00 due within 30-
days of signing
Remaining balance: Three quarterly payments
Maintenance Fee: Waived for first year
</TABLE>
*The SN-CHIP (Serialized Control Chip) provided by SAC will cost from $5 to $16
depending on the product.
When licensee exceeds minimum requirement of 1,000, additional royalty payments
will be due the following quarterly payment period.
Certain bundled software applications may be purchased separately as required at
the following rates:
Application Bundling Fee/per unit
- ----------- ---------------------
1. Workstation-Logon $15
11
<PAGE>
Network-Logon
Screen-Saver Lockout
2. Voice Verification $25
3. Facial Recognition $25
4. Teleconferencing $15
5. SACSecureTM $1 Password-Entry Level,
$10 Biometric Secure
Bundled software applications, royalty payments, maintenance fees, and other
fees will be reviewed and may be renegotiated on an annual basis.
3.1 Credit terms:
Quarterly invoice, Net 15. SAC reserves the right to cancel this
licensing agreement without notice should past due accounts exceed 90
days and add a penalty not to exceed 5% of the balance due.
4.0 SAC Deliverables:
4.1 All required schematics necessary to modify and support Product
Design as provided by SAC Technologies, Inc.
4.2 All required Firmware necessary to support Product Design as
provided by SAC Technologies, Inc.
4.3 All required Software and Development Tools other than 'core
technology' source code to modify and support Product Design as
provided by SAC Technologies, Inc.
4.4 (1,000) serialized Chip Sets and Copyright Labels.
4.5 Listing of available vendors for component parts.
4.6 SAC copyrighted/trademarked logos, images, names, etc. on disk for
marketing purposes.
4.7 All materials specified in section (1.0) are to be provided to OEM
within 30 days of signing.
5.0 License Term:
12
<PAGE>
The term of this license is for one (1) year and may be mutually
extended for periods of one year thereafter.
6.0 Counterparts:
This Exhibit may be executed in one or more counterparts, each of which
shall be deemed an original, but together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties agree hereto have executed this EXHIBIT-A as of
this 21 day of December, 1998.
For: SAC Technologies, Inc. For: Sense Technologies, Inc.
By:/s/ Barry Wendt By: /s/ Dore Perler
- ------------------ --------------------
Barry Wendt/CEO Dore Perler
13
<PAGE>
Amendment to Technology License Agreement
between
SAC Technologies, Inc.
4620 S. Valley View Blvd., Suite A
Las Vegas, NV 89103
(Referred to hereafter as SAC)
and
Sense Technologies, Inc.
------------------------
10871 N.W. 52nd Street #3
------------------------
Sunrise, Florida 33351
------------------------
(Referred to hereafter as Licensee)
Effective date of this Agreement: _______________________________
Preamble
Whereas, SAC and Licensee are parties to that certain Technology License
Agreement, and Addendum #1 thereto, dated December 21, 1998, and wish to amend
certain provisions therein
NOW, THEREFORE, in consideration of the mutual promises contained herein and
other valuable consideration, the sufficiency of which the parties acknowledge,
SAC and Licensee agree to the following amendment(s), the same to be considered
part of and in place of the appropriate section(s) and subsection(s) in the
original Technology License Agreement:
Amendment
1. Subsection b) of Section 1 of the Technology License Agreement is
amended as follows:
b) The Licensee shall not authorize other parties to reproduce, copy,
or otherwise manufacture the Licensed Technology without the prior
permission of SAC, which will not be unreasonably withheld. A
written request for such authorization shall be submitted by
Licensee in the form attached hereto as Appendix I.
1
<PAGE>
2. Section 15 of the Technology License Agreement is amended as follows:
a) The term of the license will commence on December 21, 1998, and
will continue for the period of time specified in Exhibit A, or
until this agreement is terminated by mutual agreement, for
default, and/or as otherwise provided herein. Except as otherwise
expressly provided herein, this agreement may not be unilaterally
terminated by either party.
b) Either party may terminate this agreement for a material
default by the other party which remains uncured for a period of
thirty (30) days after notice of default is given in writing.
Notwithstanding the foregoing, if the nature of the default is
such that it cannot be cured, or if the default relates to
Licensee's failure to make timely payments hereunder, termination
shall be effective immediately upon written notice of default.
c) To the extent permitted by law, this agreement may be terminated
by either party upon 30 days written notice in the event the other
party becomes insolvent.
d) In the event of termination all rights granted by this
agreement shall revert to SAC, and Licensee shall immediately pay
to SAC any amounts owed by Licensee hereunder as of the effective
date of termination. Upon termination of the license herein
granted, the Licensee will deliver to SAC all material and
documentation furnished by SAC and pertaining to the Licensed
Technology, and will also warrant that all copies thereof have
been returned to SAC or destroyed, except for those properly
distributed by Licensee prior to the date of termination.
e) In the event of termination of this agreement, Licensee and SAC
shall remain bound by the terms of this agreement with respect to
transactions that have been completed prior to termination. The
terms of this agreement relating to confidentiality of information
shall survive termination of this agreement.
3. Exhibit "A", Section 4.0 of the Technology License Agreement, is
amended as follows:
4.0 SAC Deliverables:
4.1 All available schematics necessary to modify and
support Product design as provided by SAC Technologies,
Inc.
4.2 All available Firmware necessary to support Product
Design as provided by SAC Technologies, Inc.
4.3 Except as otherwise noted in Section 4.4 below, the
parties acknowledge that all required Software and
Development Tools other than 'core technology' source
code to modify and support Product Design provided by
SAC Technologies, Inc., have been provided to Licensee
2
<PAGE>
4.4 Remaining deliverables to be provided as follows:
a) One copy of Unlimited Database and related
documentation for development and testing purposes
(delivered).
1) SAC will modify its database search engine for
Sense use with 'Time Clock Applications' to
support an unlimited size database with a search
speed goal of 2,000 records a second on a Pentium
II 450Mhz based system (Oct-99)
b) Version 3.0 Active-X SDK for Visual Basic will
support the following properties:
1) Ability to store / retrieve print models in SAC
integrated database or user defined external
database.
2) Ability to use the internal simplified user
interface, for registration and lookup or user
defined custom interface. All routines to
register, lookup, and manage prints will be
exposed in either interface (all return parameters
which are used as part of the low level interface
for model build or lookup will be made available
in the Active-X high level interface, including
scan window size and positioning). Sense will
contribute input for the new user interface (with
on-going releases and a target goal of locking
down the new user interface by Nov-99).
3) A model quality feature, which provides
information on the quality of data in a print for
use in determining if a live scanned print has
enough information for subsequent registration and
lookup.
c) Software drivers compatible with sixth generation
reader for rotated image working with Version 3.0
Active-X SDK (Oct-99). Includes capability to work
with modified 5th generation product seamlessly.
d) Software drivers for facial verification for use
with sixth generation reader (Oct-99).
e) B.O.M., schematics, manufacturing tooling, manuals
for SACMAN fifth generation reader (Sep-99).
3
<PAGE>
f) B.O.M., schematics, manufacturing tooling, manuals
for SAC_Remote (Sep-99).
g) B.O.M., schematics, manufacturing tooling, manuals
for IDME reader (Oct-99).
h) B.O.M., schematics, manufacturing tooling, manuals
for SAC_Remote_OEM (Dec-99).
4. Exhibit "A", Section 5.0 of the Technology License Agreement, is
amended as follows:
Subject to termination as provided in the agreement, the initial term
of this license shall be four (4) years running from December 21, 1998.
Upon expiration, this license shall be automatically renewed on the
same terms and conditions for successive periods of one (1) year each
as long as Licensee's unit purchases during twelve-month period
immediately preceding the expiration exceed by at least twenty percent
(20%) Licensee's unit purchases during the twelve-month period ending
one year prior to the expiration.
5. In all other respects, the terms of the Technology License Agreement,
and Addendum #1 thereto, dated December 21, 1998, are hereby confirmed.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Technology License Agreement, this 4th day of September, 1999.
SAC Technologies, Inc. Sense Technologies, Inc.
/s/ Barry Wendt /s/ Dore Perler
----------------------------- -----------------------------
Signature Signature
Barry Wendt Dore Perler
----------------------------- -----------------------------
Name (typed or printed) Name (typed or printed)
CEO President
----------------------------- -----------------------------
Title Title
9/4/1999 9/4/1999
----------------------------- -----------------------------
Date Date
4
<PAGE>
APPENDIX I
(Request for Authorization to Release Licensed Technology)
Pursuant to Section 1(b) of the Technology License Agreement dated
December 21, 1998, and the Amendment thereto dated _____________, Sense
Technologies, Inc., hereby requests authorization to release certain components
of the Licensed Technology described below to:
<TABLE>
<CAPTION>
<S> <C>
Company Name:_________________________________________________________________________________
Address:______________________________________________________________________________________
City and State:__________________________________________ Zip:_____________________________
Phone: (________)______________________________ FAX: (________)______________________
Email:___________________________________________ URL:_____________________________________
Description of Business:______________________________________________________________________
______________________________________________________________________________________________
Years in Business:_______________________________ No. of Employees:________________________
Business Form (Corp., LLC, Partnership, Sole Prop.):__________________________________________
Organized Under the Laws of___________________________________________________________________
Components of Licensed Technology to be Released:_____________________________________________
______________________________________________________________________________________________
Authorized Use:
Reproduction or copying (describe)____________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
Manufacture (describe)________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
SENSE TECHNOLOGIES, INC.
By:______________________________
Title:
Date:_____________________
</TABLE>
STANDARD OFFICE BUILDING LEASE
This Agreement, entered into this 3rd day of July AD, 1999 between Wilshire Oil
Company of Texas hereinafter called Landlord, and Sense Technologies, INC.,
hereinafter called Tenant, IS TO WINTNESS: That Landlord does this day lease
unto Tenant:
7300 WEST MCNAB RAOD, SUITE 117/118
TAMARAC, FL 33321
(SEE EXHIBIT "A")
TO HAVE AND TO HOLD said premises for the term of 3 years, beginning September
1, 1999 and ending July 31, 2002, at and for the agreed total base rental of
Forty one thousand six hundred thirteen and no/xx Dollars ($41,613>00) (see
exhibit "D"):
SECURITY
- --------
IT IS FURTHER AGREED AND COVENANTED BY AND BETWWEN THE PARTIES HERETO AS
FOLLOWS:
1. Tenant concurrently with the execution of this Lease, has deposited
with Landlord the sum of One thousand one hundred Dollars, ($1,100.00), the
receipt of which is hereby acknowledged by Landlord, which sum shall be retained
by Landlord as security for the payment by Tenant of the rents herein agreed to
be paid by Tenant and for the faithful performance by Tenant of the terms and
covenants of this Lease. It is agreed that Landlord at Landlord's option, bay at
any time apply said sum or any part thereof towards the payment of the rents and
all other sums payable by Tenant under the Lease, and towards the performance of
each and every of Tenant's covenants under this Lease, but such covenants and
Tenant's liability under this Lease shall thereby be discharged only pro tanto;
that Tenant shall remain liable for any amounts that such sum shall be
insufficient to pay; that Landlord may exhaust any or all rights and remedies
against Tenant before resorting to said sum, but nothing herein contained shall
require or be deemed to require Landlord so to do; that, in the event this
deposit shall not be utilized for any such purposes, then such deposit shall b e
returned by Landlord to Tenant within ten (10) days next after the expiration of
the term of this Lease. Landlord shall not be required to pay Tenant an interest
on said security deposit.
PREPAID RENT
- ------------
2. Tenant shall pay first and last months rent plus sales tax upon or
before occupancy in the amount of Two thousand four hundred fifty one and 52/xx
Dollars ($2,451.52).
USE
- ---
3. The Tenant will use and occupy the premises for; executive business
offices and for no other purpose.
ASSIGNMENT
- ----------
4. Without the written consent of Landlord first obtained in each case,
said approval not to be unreasonably withheld, Tenant shall not assign,
transfer, mortgage, pledge, or otherwise encumber or dispose of this Lease for
the term hereof, or underlet the as Tenant of a release of the Tenant from the
further observance no performance b the Tenant of the covenants herein
contained.
1
<PAGE>
SERVICE AND MAINTENANCE BY LANDLORD
- -----------------------------------
5. Landlord will provide services at all times but will not be liable
for damages or loss of any kind or nature by reason of Landlord's failure to
furnish any Common Area Services when such failure is caused by accident,
breakage, repairs, strikes, lockout or other such labor disturbances or disputes
of any character, or by any other cause beyond the reasonable control of
Landlord. Services supplied will include, public stairs, electricity for
exterior/common area, lighting and incidentals, water for drinking, lavatory
toilet purposes, A/C maintenance, roof and the exterior structure of the
Premises.
Such services shall be given as long as the Tenant is not in default
under any of the covenants of this Lease, subject to strikes, accidents,
breakdowns, catastrophes, national or local emergencies, acts of God, and
conditions and causes beyond he control of the Landlord and upon such happening,
no claim for damages or abatement of rent for failure to furnish any such
services shall be made by the Tenant or allowed by the Landlord.
EXAMINATION OF PREMISES
- -----------------------
6. Tenant having examined premises is familiar with the condition
thereof and relying solely on such examination will take them in their present
condition, unless otherwise expressly agreed upon in writing (see Exhibit "B").
REPAIR/MAINTENANCE AND ALTERATIONS BY TENANT
- --------------------------------------------
7. Tenant shall at all times keep and maintain the Premises (including
entrances, all glass, show window, moldings and store fronts), and all
partitions, door, fixtures, equipment and appurtenances thereof and improvements
thereto, (including lighting, plumbing fixtures and equipment and wiring), in
good order, condition and repair and shall replace or repair any of the same as
reasonably required by Landlord, including, but not limited to plate glass
windows, doors, door closure devices and other exterior openings; window and
door frames, molding, locks and hardware; special storefronts; lighting,
plumbing and other electrical, mechanical and electromotive installation,
equipment and fixtures, and signs, placards, decoration or advertising media of
any type; and interior painting or other treatment of exterior walls. Tenant
shall provide its own electric service.
Tenant will make no alterations, additions or improvements in or to the premises
without the written consent of Landlord, which shall not be unreasonably
withheld, and all additions, fixtures, or improvements, except only office
furniture and fixtures which shall be readily removable without injury to the
premises, shall be and remain a part of the premises at the expiration of this
Lease. And it is further agreed that this Lease is made by the Landlord and
accepted by the Tenant with the distinct understanding and agreement that the
Landlord shall have the right and privilege to make and build additions to the
building of which demised space is a part, and make such alterations and repairs
to said building as it any deem wise and advisable without any liability to the
Tenant thereof.
DELAY OF POSSESSION
- -------------------
8. If the Landlord is unable to give possession of the demised premises on the
date of the commencement of the aforesaid term by reason of the holding over of
any prior Tenant or Tenants or for any other reasons; an abatement or diminution
of the rent to be paid hereunder shall be allowed Tenant under such
circumstances, but nothing herein shall operate to extend the term of the lease
beyond the agreed expiration date; and said abatement in rent shall be the full
extent of Landlord's liability to Tenant or any loss damage to Tenant on account
2
<PAGE>
of said delay in obtaining possession of the premises. If Landlord is unable to
give possession of the demised premises to Tenant within ninety days next after
the commencement of the term of this lease, then Tenant shall have the right to
cancel this lease upon written notice thereof delivered to Landlord within ten
day after the lapse of said ninety day period; and, ujpon such cancellation,
Landlord and Tenant shall each be released and discharged from all liability on
this lease.
CHARGES FOR SERVICES
- --------------------
9. It is understood and agreed upon between he parties hereto that any
charges against Tenant by Landlord for services or for work done on the premises
by order of the Tenant, or otherwise accruing under this lease, shall be
considered as rent due and shall be included in any lien for rent.
LIABILITY INSURANCE
- -------------------
10. Tenant shall, at Tenant's expense, obtain and keep in force during
the term of this Lease a policy of comprehensive public liability insurance
insuring Landlord, Landlord's agents and Tenant against any liability arising
out of the ownership, use, occupancy or maintenance of the Premises and all
areas appurtenant thereto. Such insurance shall be in the amount of not less
than One Million ($1,000,000.00) Dollars for injury or death of one person in
any one accident or any one occurrence. Such insurance shall further insure
Landlord and Tenant against liability for property damage of at least One
Million ($1,000,000.00) Dollars. The limit of any such insurance shall not limit
the liability of the Tenant hereunder. Tenant may provide this insurance under a
blanket policy, provided that said insurance shall have a Landlord's protective
liability endorsement attached thereto. If Tenant fails to procure and maintain
said insurance. Landlord may, but shall not be required to, procure and maintain
same, but at the expense of Tenant. Insurance required hereunder shall be in
companies rated A:XIII or better in "Best's Key Rating Guide". Tenant shall
deliver to Landlord, prior to right of entry copies of policies of liability
insurance required herein with loss payable clauses satisfactory to Landlord. No
policy shall be cancelable or subject to reduction of coverage. All such
policies shall name Landlord and its agent as additional insured, shall be
written as primary policies not contributing with and not in excess of coverage
which Landlord may carry and shall be written with any insurance carrier
satisfactory to Landlord. Tenant shall at Tenant's expense obtain and keep in
full force during the term of this Lease a policy for plate glass insurance.
FIRE
- ----
11. Tenant shall maintain in full force and effect on all of its
fixtures, equipment and other personal property on the Premises a policy or
policies of fire and extended coverage insurance with standard coverage
endorsement to the extent of at least eighty (80%) percent of their insurable
value. During the terms of this lease, the proceeds form any such policy or
policies of insurance shall be used for the repair or replacement of fixtures,
equipment and other personal property so insured. Landlord shall have no
interest in the insurance upon Tenant's equipment, fixtures and other personal
property and will sign all documents reasonably necessary or proper in
connection with the settlement of anhy claim or loss by Tenant. Landlord will
not carry insurance on Tenant's possessions. Tenant shall furnish Landlord with
a certificate evidencing such policy and whenever required shall satisfy
Landlord that such policy is in full force and effect.
REGULATIONS AND INSURANCE
- -------------------------
12. Tenant shall promptly execute and comply with all statutes,
ordinances, rules, orders, regulations and requirements of the Federal, State,
County and City Government and of any and all their Departments and Bureaus,
applicable to said premises for the correction, prevention, and abatement of
nuisances or other grievances, in, upon or connected with said premises, during
3
<PAGE>
said, term and shall also promptly comply with and execute all rules, orders and
regulations of the Southeastern Underwriters Association for the prevention of
fires, at Tenant's own cost and expense. Tenant agrees to pay any increase in
the amount of insurance premiums over and above the rate now in force that may
be caused by Tenant's use or occpancy of the premises.
NON-PAYMENT
- -----------
13. Tenant agrees: That Tenant will promptly pay said rent at the times
and place stated above; that Tenant will pay all charges for overtime air
conditioning, excess utility charges, charges for work performed on order of
Tenant, and any other charges that accrue under this Lease; that, if any part of
the rent or above mentioned charges shall remain due and unpaid for seven days
next after the same shall be come due and payable, Landlord shall have the
option of declaring the balance of the entire rent for the entire rental term of
this Lease to be immediately due and payable, and Landlord may then proceed to
collect all of the unpaid rent called for by this Lease by distress or
otherwise.
ABANDONMENT
- -----------
14. If during the term of the lease Tenant shall abandon, vacate or
remove from the premises the major portion of the goods, wares, equipment or
furnishings usually kept on said premises, or shall cease doing business in said
premises, or shall suffer the rent to be in arrears, Landlord may, at its
option, cancel this lease, in the manner stated in Paragraph 13 hereof, or
Landlord may enter said premises as the agent of Tenant, by force or otherwise,
without being liable in any way therefor, and relet the premises with or without
any furniture that may be therein, as the agent of Tenant, at such price and
upon such terms and for such duration of time as Landlord may determine, and
receive the rent therefor, applying the same to the payment of the rent due by
these presents, and if the full rental herein provided shall not be realized by
Landlord over and above the expenses to Landlord of such reletting, Tenant shall
pay any deficiency.
BANKRUPTCY
- ----------
15. If the Tenant defaults in the performance of any of the covenants
of this lease and by reason thereof the Landlord employs the services of any
attorney to enforce performance of the covenants by the Tenant , to evict the
Tenant, to collect money's due by the Tenant, or to perform any service based
upon said default, then in any of said events the Tenant does agree to pay a
reasonable attorney's fee and all expenses and cost incurred by the Landlord
pertaining thereto and in enforcement of any remedy available to the Landlord
ASSIGNMENT OF CHATTELS
- ----------------------
16. Tenant hereby pledges and assigns to Landlord all the furniture,
fixtures, goods and chattels of Tenant which shall or may be brought or put on
said premises as security for the payment of said rent, and Tenant agrees that
said lien may be enforced by distress, foreclosure or otherwise, at the election
of the Landlord. Tenant hereby expressly waives and renounces for himself and
family any and all homestead and exemption rights he may have now, or hereafter,
under or by virtue of the constitution and laws of the State of Florida or of
any other state, or of the United States, as against the payment of said rental
or any other obligation or damage that may accrue under the terms of this
agreement.
4
<PAGE>
WAVIER
- ------
17. No waiver of any condition or covenant of this lease by Landlord
shall be deemed to imply or constitute a further waiver by Landlord of any other
condition or covenant of this Lease. The rights and remedies created by this
Lease are cumulative and the use of one remedy shall not be taken to exclude or
waive the right to use of another.
RIGHT OF ENTRY
- --------------
18. Landlord, or any of his agents, shall have the right to enter said
premises during all reasonable hours to examine the same or to make such
repairs, additions or alterations as may be deemed necessary for the safety,
comfort, or preservation thereof, or of said building, or to exhibit said
premises at any time within thirty days before the expiration of this Lease.
Said right of entry shall likewise exist for the purpose of removing placards,
signs, fixtures, alterations, or additions which do not conform to this
agreement.
PERSONAL PROPERTY
- -----------------
19. All personal property placed or moved in the premises above
described shall be at the risk of tenant or the owner thereof, and Landlord
shall no be liable to Tenant for any damage to said personal property, or to
Tenant, arising from the bursting or leaking of water pipes or from any act of
negligence of any co-tenant or occupants of the building or of any other person
whomsoever
INDEMNIFY LANDLORD
- ------------------
20. In consideration of said premises being leased to Tenant for the
above rental, Tenant agrees: That Tenant, at all times, will indemnify and keep
harmless Landlord from losses, damage liabilities and expenses, which may arise
or be claimed against Landlord and be in favor of any person, firm or
corporation, for any injuries or damages to the person or property of any
person, firm, or corporation, consequent upon or arising from the use or
occupancy of said premises by Tenant, or consequent upon arising from any acts,
omissions, neglect or fault of Tenant (his agents, servants, employees,
licensees, customers, or invitees), or consequent upon or arising from Tenant's
failure to comply with the aforesaid laws, statutes, ordinances or regulations;
that Landlord shall not be liable to Tenant for any damage, losses or injuries
to the persons or property of Tenant which may be caused by the acts, neglect,
omissions or faults of any person, firm or corporation, except when such injury,
loss or damage results from negligence of Landlord, his Agents or Employees, and
tat Tenant will indemnify and keep harmless Landlord from all damages,
liabilities, losses, injuries, or expenses which may arise or be claimed against
Landlord and be in favor of any person, firm or corporation, for any injuries or
damages to the person or property of any person, firm or corporation, where said
injuries or damages arose about or upon said premises, as a result of negligence
of Tenant, his Agent, Employees and Invitees
RIGHT TO MORTGAGE OR LEASE
- --------------------------
21. Tenant's rights shall be subject to any bona fide mortgage which
now covers said premises and which may hereafter be placed on said premises by
Landlord, or underlying lease now or later covering the entire property.
NOTICES
- -------
22. It is understood and agreed between the parties hereto that written
notice addressed to Tenant and mailed or delivered to the remises leased
hereunder shall constitute sufficient notice to the Tenant, and written notice
addressed to Landlord and mailed or delivered to the office of Landlord shall
constitute sufficient notice to the Landlord to comply with the terms of this
lease.
5
<PAGE>
RULES AND REGULATIONS
- ---------------------
23. It is mutually agreed that all the Rules and Regulations printed
upon the back of this instrument shall be and are hereby made a part of this
lease and Tenant covenants and agrees that it and is servants and agents will at
all times observe, perform and abide by said rules and regulations.
WRITTEN AGREEMENT
- -----------------
24. This Lease contains the entire agreement between the parties hereto
and all previous negotiations leading thereto, and it may be modified only by an
agreement in writing signed and sealed by Landlord and Tenant. No surrender of
the demised premises, or of the remainder of the terms of this Lease, shall be
valid unless accepted by Landlord in writing.
TIME
- ----
25. It is understood and agreed between the parties hereto that time is
the essence of all of the terms and provisions of this lease.
HEIRS AND ASSIGNS
- -----------------
26. This Lease and all provisions, covenants and conditions thereof
shall be binding upon and inure to the benefit of the heirs, legal
representatives, successors and assigns of the parties hereto, except that no
person, firm, corporation, or court officer holding under or through Tenant in
violation of any of the terms, provisions or conditions of this Lease, shall
have any right, interest or equity in or to its lease, the terms of this Lease
or the premises covered by this Lease.
PEACEFUL POSSESION
- ------------------
27. Subject to the terms, conditions and covenants of this Lease,
Landlord agrees that Tenant shall and may peaceably have, hold and enjoy the
premises above described, without hindrance or molestation by Landlord.
28. The terms Landlord and Tenant herein contained shall include
singular and/or plural, masculine, feminine, and/or neuter, heirs, successors,
executors, and administrators, personal representatives and/or assigns wherever
the context so requires or admits.
EMIINENT DOMAIN
- ---------------
29. In the event any portion of said leased premises is taken by any
condemnation or eminent domain proceedings the (minimum) monthly rental herein
specified to be paid shall be ratably reduced according to the leased premises
which is taken, and Tenant shall be entitled to no other consideration by reason
of such taking, and any damages suffered by Tenant on account of the taking of
any portion of said leased premises and any damages to any structures erected on
said leased premises, respectively, that shall be awarded to Tenant in said
proceedings shall be paid to and received by Landlord and Tenant shall no right
therein or thereto or to any part hereof, and Tenant does hereby relinquish and
assign to Landlord all of Tenant's rights and equities in and to any such
damages. Any rental based upon the percentage of gross sales specified in this
lease to be paid shall in no way be reduced of affected by the taking of any
portion of the premises by condemnation or eminent domain proceedings. Should
all of the leased premises be taken by eminent domain, then and in that event
Tenant shall be entitled to no damages or any consideration by reason of such
taking, except the cancellation and termination of this lease as of the date of
said taking.
6
<PAGE>
SURRENDER PREMISES
- ------------------
30. Tenant agrees to surrender to Landlord, at the end of the term of
this Lease and/or upon any cancellation of this Lease, said leased premises in
as good condition as said premises were at the beginning of the term of this
lease, ordinary wear and tear, and damage by fire and windstorm or other acts of
God, excepted. Tenant agrees that, if Tenant does not surrender to Landlord, at
the end of the term of this Lease, or upon any cancellation of the term of this
Lease, said leased premises, the Tenant will pay to Landlord all damages that
Landlord may suffer on account of Tenant's failure to so surrender to Landlords
possession of said leased premises, and will indemnify and save Landlord
harmless form and against all claims made by any succeeding tenant of said
premises against Landlord on account of delay of Landlord in delivering
possession of said remises to said succeeding tenant so far as such delay is
occasioned by failure of Tenant to so surrender said premises.
LIENS
- -----
31. Tenant further agrees that Tenant will pay all lies of contractors,
subcontractors, mechanics, laborers, materialmen, and other items of like
character, and will indemnify Landlord against all legal costs and charges, bond
premiums for release of liens, including counsel fees reasonably incurred in and
about the defense of any suit in discharging the said remises or any part
thereof from any liens, judgements, or encumbrances caused or suffered by
Tenant. It is understood and agreed between the parties hereto that the costs
and charges above referred to shall be considered as rent due and be included in
any lien for rent.
The Tenant herein shall not have any authority to create any liens for labor or
material on the Landlord's interest in the above described property, and all
persons, contracting with the Tenant for the destruction or removal of any
building or for the erection, installation, alteration, or repair of any
building or other improvements on the above described premises, and all
materialmen, contractors, mechanics, and laborers, are hereby charged with
notice that they must look to the Tenant and to the Tenant's interests only in
the above described property to secure the payment of any bill for work done or
material furnished during the rental period created b this Lease.
TRANSFER BY LANDLORD
- --------------------
32. In the event that the interest or estate of Landlord in the Leased
Premises shall terminate by operation of law or by bona fide sale of the
premises or by execution or foreclosure sale, or for any other reason, then and
in any such event Landlord shall be released and relieved from all reliability
an responsibility thereafter accruing to Tenant under this Lease or otherwise.
In such event Landlord's successor, by acceptance of rent from Tenant hereunder,
shall, become liable and responsible to Tenant in respect to all obligation of
Landlord under this lease.
PARKING
- -------
33. Landlord reserves the right to designate parking spaces to be
assigned to Tenant, and to control all the parking areas with meters, gates,
patrolmen or any other method at Landlord's sole discretion, and to levy charges
thereof for an space not allocated to Tenant.
7
<PAGE>
RENT PAYMENT AND LATE CHARGES
- -----------------------------
34. All rent and other charges payable to Landlord under any provision
of this Leases shall be paid to Landlord, or as Landlord may otherwise
designate, in lawful money of the United States at the address of Landlord's
Authorized Agent or at such other place as Landlord in writing may designate,
without any setoff or deduction whatsoever, and without any prior demand
therefore. In addition to the payment of the Rent and other charges, Tenant
shall also pay to Landlord, at the time of payment of such Rent and other
charges, all sales, se or occupancy taxes payable by virtue of any of such
payments.
Tenant shall pay the rent in equal installments in advance, without notice or
demand therefore and without any abatement, deduction, counterclaim or setoff
for any reason whatsoever, on the first day of each calendar month included in
the Lease Term. Tenant acknowledges that late payment by Tenant to Landlord or
Rent or other sums due hereunder will cause Landlord to incur costs not
contemplated by this Lease. Therefore, in the event any installment of Rent or
any sum due hereunder is not paid within ten (10) days after such amount is due,
Tenant shall pay to Landlord as Additional Rent a Late charge equal to five
percent (5%) of each installment or other sum. Acceptance of Rent or of a late
charge by Landlord shall I no event constitute a waiver of Tenant's default with
resect to such overdue amount, no prevent Landlord from exercising any of the
rights sand remedies granted pursuant to the terms of this Lease ($25.00) will
be paid by Tenant to Landlord for each returned check. Tenant shall pay a charge
of Seventy-five Dollars($75.00) for preparation of demand for delinquent rent.
IN WITNESS WHEREOF, the parties hereto, have signed, sealed and delivered this
lease in triplicate at Broward County, Florida, on the day and year first above
written.
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------- -----------------------------------------------------
Signed sealed and delivered in the presence of: Landlord: Wilshire Oil Company of Texas
- ------------------------------------------------------- -----------------------------------------------------
By:/s/ Kathryn MacCurdy By: Coldwell Banker Commercial/Brenner
Real Estate Group as Agent
- ------------------------------------------------------- -----------------------------------------------------
Kathryn MacCurdy By:/s/ Scott Brenner
- ----------------------------- -----------------------------
Print Name Above Scott Brenner, President
- ------------------------------------------------------- -----------------------------------------------------
By:/s/ Caroline Bousquet Date: 8/2/1999
- ------------------------------------------------------- -----------------------------------------------------
Caroline Bousquet
- -----------------------------
Print Name Above
- ------------------------------------------------------- -----------------------------------------------------
By:/s/ Maryann Hampson
- ------------------------------------------------------- -----------------------------------------------------
TENANT: SENSE TECHNOLOGIES, INC
Maryann Hampson
- -----------------------------
Print Name Above By:/s/ Dore Perler
- ------------------------------------------------------- -----------------------------------------------------
Dore Perler
By:/s/ Andrew Goldrich
- ------------------------------------------------------- -----------------------------------------------------
Title: President
Andrew Goldrich Date: 7/31/99
- -----------------------------
Print Name Above
- ------------------------------------------------------- -----------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT "B"
WORK LETTER
BETWEEN
WILSHIRE OIL COMPANY OF TEXAS
AND
SENSE TECHNOLOGIES, INC.
Pursuant to Section 6 of the above-referenced Lease between the
parties, Landlord and Tenant have attached hereto an approved Space Place. A
description of the work to be performed by Landlord to the premises is as
follows:
1. Space plan is attached
2. Carpet and paint the Premises.
3. Replace any damaged/stained ceiling tiles.
4. Replace toilet seats.
5. Replace balasts and bulbs
6. Add 3 light fixtures
7. Paint front door
8. Add one wall in east front area.
9. Remove 2 or 3 walls.
10. Add 2 interior windows.
11. Secure all doors.
12. Remove paint from windows.
13. Leave all shelving and tables in back room
14. Deliver Air Condition in good working order.
15. Deliver entire space in good clean condition
16.
No verbal agreements made to Tenant will be honored and this Lease and Addendum
shall govern and supersede any non-written agreements.
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------- -----------------------------------------------------
Signed, sealed and delivered in the presence of: Landlord: Wilshire Oil Company of Texas
By: Coldwell Banker Commercial/
Brenner Real Estate Group as Agent
- ------------------------------------------------------- -----------------------------------------------------
By:/s/ Kathryn MacCurdy By:/s/ Scott Brenner
- ------------------------------------------------------- -----------------------------------------------------
Scott Brenner, Pres.
Kathryn MacCurdy
- ----------------------------
Print Name Above Date:8/2/1999
- ------------------------------------------------------- -----------------------------------------------------
By:/s/ Caroline Bousquet
- ------------------------------------------------------- -----------------------------------------------------
TENANT: SENSE TECHNOLOGIES, INC.
Caroline Bousquet
- ------------------------------------------------------ By:/s/ Dore Perler
Print Name Above ------------------
Dore Perler
Title: President
Date: 7/31/99
- ------------------------------------------------------- -----------------------------------------------------
By:/s/ Andrew Goldrich
- ------------------------------------------------------- -----------------------------------------------------
Andrew Goldrich
- ------------------------------------------------------- -----------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT "C"
ADDENDUM TO LEASE DATED
BETWEEN
WILSHIRE OIL COMPANY OF TEXAS
AND
SENSE TECHNOLOGIES, INC.
Landlord and Tenant hereby acknowledge each to the other that the Lease Term has
commenced or shall commence on September 1, 1999 and that the Lease Term shall
expire on August 31, 1999 that the Tenant is in possession of the Premises and
is paying the Rent and all other charges hereunder; that the Tenant has no
claims, defenses, set-offs or counterclaims against the Landlord; that all work
to be performed by Landlord per First Addendum of the Lease has been completed,
and that all other aspects of the Premises are in satisfactory condition with
any exceptions attached hereto (the exceptions must be in writing, attached
hereto, and signed by Landlord or Landlord's Agent and Tenant); and that the
Tenant is responsible for maintaining the Premises in accordance with the lease
agreement.
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------- -----------------------------------------------------
Signed, sealed and delivered in the presence of: Landlord: Wilshire Oil Company of Texas
By: Coldwell Banker Commercial/
Brenner Real Estate Group as Agent
- ------------------------------------------------------- -----------------------------------------------------
By:/s/ Kathryn MacCurdy By:/s/ Scott Brenner
- ------------------------------------------------------- -----------------------------------------------------
Scott Brenner, Pres.
Kathryn MacCurdy
- ----------------------------
Print Name Above Date:8/2/1999
- ------------------------------------------------------- -----------------------------------------------------
By:/s/ Caroline Bousquet
- ------------------------------------------------------- -----------------------------------------------------
TENANT: SENSE TECHNOLOGIES, INC.
Caroline Bousquet
- ------------------------------------------------------ By:/s/ Dore Perler
Print Name Above --------------------------
Dore Perler
- ------------------------------------------------------- -----------------------------------------------------
By:/s/ Andrew Goldrich Title: President
- ------------------------------------------------------- -----------------------------------------------------
Andrew Goldrich Date: 7/31/99
- ------------------------------------------------------
Print Name Above
- ------------------------------------------------------- -----------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT "D"
RENT AND OTHER RENTAL CHARGES
BETWEEN
WILSHIRE OIL COMPANY OF TEXAS
AND
SENSE TECHNOLOGIES, INC.
A. Year One Rental Charges Yearly Monthly
----------------------- ------ -------
Base Rent $13,200.00 $1,100.00
Sales Tax 792.00 66.00
Total Amount Due: $13,992.00 $1,166.00
B. Year Two Rental Charges Yearly Monthly
----------------------- ------ -------
Base Rent $13,860.00 $1,155.00
Sales Tax 831.60 69.30
Total Amount Due: $14,691.60 $1,224.30
C. Year Three Rental Charges Yearly Monthly
------------------------- ------ -------
Base Rent $14,553.00 $1,212.75
Sales Tax 873.18 72.77
Total Amount Due: $15,426.18 $1,285.52
MANUFACTURING AND NON-COMPETE AGREEMENT
FOR CONSIDERATION RECEIVED, this agreement made this 1st day of NOVEMBER,
1998, by and between SENSE TECHNOLOGIES, INC (hereinafter referred to as the
"principal") and TEST SYSTEMS ENGINEERING (hereinafter referred to as the
"Consultant") WHEREAS, the Principal desires to engage the services of the
Consultant to assist the Principal in the operation of its business, it is
agreed as follows:
1. Purpose. The Principal engages the Consultant to assist the Principal in
the manufacture of its primary business products. TSE is under contract to
Design, Engineer, Configure and Assemble the CheckPoint T/A system and all
revisions to the product for the term stated in item number 2. TSE has
committed to do all manufacturing with the ability to produce up to 500 units
/ month out of TSE's current facility based on sales needs of Sense
Technologies.
2. Term. This agreement shall commence on NOVEMBER 1st, 1998 and shall
terminate on DECEMBER 31st, 2005. This agreement will self renew on a yearly
basis after the initial term period. Sense Technologies, throughout the term
of this agreement has the right to source other manufacturing firms to assist
in the production of all Sense products.
3. TSE will deliver product ordered by Sense Technologies within 30 days,
given that TSE is given 30 days notice by Sense purchase order.
4. Disclosure of Information. The Consultant acknowledges that the list of
the Principal's customers and or core technology relating to the fingerprint
identification business as it may exist from time to time is valuable,
special and unique asset of the Principal's business. The Consultant shall
not, during or after the term of this agreement, disclose the list of the
Principal's customers and or core technology or any part thereof to any
person, firm, corporation, association or other entity for any reason or
purpose whatsoever. In the event of a breach or threatened breach by the
Consultant of the provisions of this paragraph, the Principal shall be
entitled to an injunction restraining the Consultant from disclosing, in
whole or in part, the list of the Principal's customers and or fingerprint
technology or from rendering any services to any person, firm, corporation,
association or other entity to whom such list, in whole or in part, has been
disclosed or is threatened to be disclosed. Nothing herein shall be construed
as prohibiting the Principal from pursuing any other remedies available to
the Principal for such breach or threatened breach, including the recovery of
damages from the Consultant.
1
<PAGE>
5. Notices. Any notice required or desired to be given under this agreement
shall be deemed given if in writing sent by certified mail to his or her
residence in the case of the Consultant or to its principal office in the
case of the Principal.
6. Assignment. The Consultant acknowledges that the services to be rendered
by him or her are unique and personal. Accordingly, the Consultant may not
assign any of his or her rights or delegate any of his or her duties or
obligations under this agreement unless expressly agreed to by Sense
Technologies. The rights and obligations of the Principal under this
agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Principal.
7. Status of Consultant. The Consultant is engaged as an independent
contractor and shall be treated as such for all purposes, including, but not
limited to, federal and state taxation, withholding, unemployment insurance
and worker's compensation. The Consultant will not be considered an employee
for any purpose.
8. All Products and Designs, engineered and manufactured by Test Systems
Engineering for Sense Technologies are the exclusive property and are solely
owned by Sense Technologies, Inc.
9. Entire Agreement. This agreement contains the entire understanding of the
parties. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this agreement the day and year
first above written.
/s/ Dore Perler /s/ Alex Schlinkmann
------------------------ ------------------------
Dore Perler Alex Schlinkmann
Sense Technologies, Inc Test Systems Engineering
Principal Consultant
WITNESS: _____________________________
2
<PAGE>
SENSE TECHNOLOGIES, INC.
10871 NW 52nd Street
Sunrise, Florida 33351
Phone: 954-747-1422
Fax: 954-747-0722
Toll Free: 1-877-SENSEME (736-7363)
09/08/99
To Whom it May Concern,
This letter states that Sense Technologies, Inc. has contracted Test Systems
Engineering to perform various services including the design, manufacture,
assembly and testing of products for Sense Technologies, Inc.
For this service, Sense agrees to pay Test Systems Engineering a fee of $75.00
per hour for work performed on behalf of Sense.
This letter amends the agreement between Sense Technologies and Test Systems
Engineering dated November 1st, 1998.
/s/ Dore Perler /s/ Alex Schlinkmann
- --------------- --------------------
Dore Perler Alex Schlinkmann
President President
Sense Technologies, Inc. Test Systems Engineering
Sales Agreement Between
Sense Technologies Integrated Design, Inc.
10871 NW 52nd St. 1194 Oak Valley Drive
Sunrise, FL 33351 Ann Arbor, MI 48108
Recitals
Sense Technologies, Inc ("Reseller") and Integrated Design, Inc. ("IDI") are
engaged in the sale of computer software. IDI wishes to have Reseller sell IDI
software products to Reseller customers. Reseller wishes to sell IDI software
products in addition to its own products.
Agreement
Sense Technologies and IDI agree as follows:
Section 1. Definitions.
1.1 "Time Bank Software" is all computer programs created by IDI which
transfer data between Sense Technologies software products and other systems,
and which are sold by IDI to Sense Technologies to resell too end-users. Time
Bank Software does not include maintenance services and custom configuration
services.
1.2 "Dealer Price" is the standard price published by IDI at which Time
Bank Software is sold by IDI to resellers.
Section 2. Obligations of Reseller.
2.1 Reseller will recommend and offer to sell licenses to operate the
Time Bank Software to its customers who purchase time and attendance products.
As needed, Reseller will purchase such licenses from IDI at the then current
Dealer Price.
2.2 In consideration of this agreement, and for the term of this
agreement, Reseller will not recommend or sell to its customers in the U.S. and
Canada, any payroll interface product which is directly competitive with the
Time Bank Software products listed under attachment A. Payroll interface
products are considered competitive only if they operate under the MS-DOS,
Win95, Windows 98, or Windows NT operating systems and provide essentially
identical functions as the Time Bank Software. Reseller is free to develop
payroll interface products that operate on other operating systems and which
provide additional functionality beyond Time Bank Software. Reseller will sell
and recommend exclusively Time Bank Software to customers and resellers who send
or receive data from the payroll services sold by Automatic Data Processing and
Ceridian Corporation.
2.3 Reseller will provide suggestions to IDI for improving the Time
Bank Software to better address the market served by Reseller. IDI, at its
option, may elect to incorporate these suggestions in IDI products. If IDI
declines to incorporate such suggestions, Reseller, at its option, may elect to
use alternate products/methods to deliver those suggested improvements to
Reseller's served market.
2.4 Reseller will train its sales and technical staff concerning IDI's
products and services, and will encourage them to promote and support same.
Reseller representatives will provide direct support to Reseller customers for
problems and questions concerning Time Bank products.
1
<PAGE>
2.5 Reseller will order Time Bank products and services from IDI using
forms and procedures supplied by IDI. Reseller also agrees to pay IDI invoices
according to the terms of Net 30 days. All invoices not paid within 30 days will
be assessed with a Finance Charge of 1.5% (.015) per month. (18% APR). IDI
reserves the right to withhold shipments and support services from resellers who
have not paid overdue invoices.
2.6 Reseller will cooperate with IDI to establish a standard file
format to be created by the Reseller time and attendance products and read by
the Time Bank. Reseller will give IDI 60 days advance notice of the release of
new time and attendance products which will require a change in the standard
file format.
2.7 Reseller will provide IDI with a working copy of the Reseller
software product to be used for testing purposes only.
2.8 Reseller agrees to pay a one time development fee of Ten Thousand
Dollars ($10,000.00).
2.9 Reseller agrees to provide IDI with a minimum sales volume of One
Hundred Thousand Dollars ($100,000.00) during the first two years of this
agreement. To assure that sales volume, Reseller agrees to pre-pay a minimum
amount of software license fees according to the following schedule.
<TABLE>
<CAPTION>
========================================================================================================================
Event Development Fees Prepaid License Fees
========================================================================================================================
<S> <C> <C>
(1) Execution of this agreement 4,000 0
(2) Delivery of working copy of Time Bank 4,000 0
Software to Reseller
(3) Signed acceptance of Time Bank Software 2,000 10,000
by Reseller
(4) Six months after (3) above 0 25,000
(5) Twelve months after (3) above 0 30,000
(6) Eighteen months after (3) above 0 35,000
Total Fees from events 1 through 6 10,000 100,000
========================================================================================================================
</TABLE>
Sales of Time Bank Software by Reseller will be charged against the pre-paid
balance until it is offset. Sales greater than the pre-paid balance will be
invoiced to Reseller on the standard terms included in this agreement. If the
total revenue to IDI from Reseller during the first two years following
completion of the Reseller version of The Time Bank is less than $100,000, the
remaining pre-paid balance will become the property of IDI in consideration for
IDI's development and costs.
Section 3. Obligations of IDI.
3.1 In consideration of this agreement, and for the term of this
agreement, IDI agrees to develop and maintain a version of its Time Bank
interface product which will support the Reseller Time and Attendance program.
The Time Bank will accept standard hours files from the Reseller Time &
Attendance program and convert them to payroll input files for supported payroll
systems. IDI will provide Reseller with a demonstration copy of The Time Bank
for Reseller's internal use.
3.2 IDI will sell operating licenses for Time Bank products to Reseller
at Dealer Price. A copy of the price list effective January 1, 1997 is attached
to this agreement for reference purposes only. IDI may change prices at any time
after providing 30 days advance written notice to Reseller.
2
<PAGE>
Section 4. Term and Termination.
4.1 This agreement shall remain in effect for five years, unless
terminated earlier by either party according to the conditions described below.
4.2 Either party to this agreement may terminate the agreement after
providing 90 days advance written notice to the other.
4.3 The obligations of both parties shall cease upon termination of
this agreement with the exception of obligations or refunds owed by one party to
the other prior to termination, the payment of outstanding invoices owed by
Reseller to IDI, and the obligations under Section 7, 8, and 10. Any such
obligation or refund amount shall be paid within 30 days of termination of this
agreement.
4.4 This agreement will be automatically renewed on the five year
anniversaries of its execution. Either Reseller or IDI may prevent the automatic
renewal of this agreement by providing written notification to the other before
the end of the then current year's agreement.
Section 5. Taxes
5.1 Reseller shall be responsible for payment of sales, use, or other
taxes levied against the sale/sub licensing of Time Bank Software, when Reseller
makes the sale.
Section 6. Patent and Copyright Indemnification
6.1 IDI agrees to defend, and indemnify Reseller for, any actions based
on a claim that the Time Bank Software infringes any patent, copyright,
trademark or other proprietary right of any third party. Reseller agrees to give
IDI prompt notice of any such claim and Reseller agrees to cooperate in its
defense. If the Time Bank Software becomes, or is likely to become, the subject
of such a claim, IDI may, at its option, (a) secure Reseller' rights to continue
using the Time Bank Software; (b) replace or modify it to make it non-infringing
but equivalent in performance, or (c) discontinue the Time Bank Software and
Reseller' rights under this agreement.
Section 7. Warranty
7.1 IDI warrants that the Time Bank Software will perform according to
IDI's written Time Bank payroll control system manual for ninety (90) days after
delivery. In the event of a failure to so perform, IDI agrees to promptly repair
or replace the Time Bank Software, so that it does so conform. In addition, IDI
agrees to updates, if any, free of charge, during the ninety (90) day period.
Section 8. Limitation of Liability
8.1 IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY LOST PROFITS OR
CONSEQUENTIAL OR INCIDENTAL DAMAGES.
Section 9. Confidentiality
9.1 During execution of this agreement, Reseller and IDI will disclose
to each other certain information ("Information") pertaining to their software
products which Information is proprietary and highly confidential to Reseller
and IDI This agreement, and the terms contained within it are considered
confidential and are included in "Information". The sole purpose in divulging
Information is to enable Reseller and IDI to establish a relationship for the
use and sale of software products. Accordingly, and in order to induce the
disclosure, Reseller and IDI agree that Information shall be used only for the
purpose expressed and shall be used for no other purpose, including but not
limited to any competitive purpose. The information shall be treated
3
<PAGE>
and maintained in strict confidence, and shall not be disclosed in any fashion
to anyone other than the employees and contract workers of Reseller and IDI who
have a need to know same, and who shall be advised of the confidentiality
thereof.
9.2 Upon termination of this agreement, Reseller and IDI agree that
Information shall be returned and any copies thereof as well as notes, memoranda
or other writings which contain or pertain to Information or any portion thereof
will be immediately destroyed. Reseller and IDI further specifically agree that
in such event none of Information or anything ascertained as a result thereof
will be used in any fashion for a period of three years thereafter; but Reseller
and IDI shall have no obligation with respect to any documentation or
information which:
1. is already known to Reseller or IDI; or
2. is or becomes publicly known through no wrongful act of
Reseller or IDI; or
3. is rightfully received from a third party without similar
restriction and without breach of this Agreement; or
4. is independently developed by Reseller or IDI; or
5. is furnished to a third party by Reseller or IDI without
similar restriction on the third party's rights; or
6. is approved for release by written authorization of Reseller
or IDI; or
7. is disclosed pursuant to the requirements of a governmental
agency or disclosure is permitted by operation of law.
9.3 During the term of this agreement, and for one year after the
termination of this agreement, Reseller shall not use the Software or any
confidential supporting materials for aiding or creating a directly competitive
payroll interface program as defined in Section 2.2.
9.4 IDI publishes the Software and supporting materials, together with
demonstration versions of the Software and sales materials, all with copyright
and trademark notices. Reseller shall not do anything that would affect or
impair the protection afforded by such notices. Further, Reseller shall not
remove or obscure any copyright, trademark or other proprietary notice from any
copy of the Software, or any screen, disk, user manual or other item of material
associated with the Software.
Section 10. General
10.1 Non-Waiver. Failure of either party to assert any of its rights on
any one occasion under this agreement shall in no way be construed as a waiver
of such rights on any other occasion nor shall a waiver of any right of either
party constitute or be deemed a waiver of any other right.
10.2 Amendment. The terms of this agreement may be amended by a written
instrument signed on behalf of both parties.
10.3 Severability. If any provision of this agreement shall be invalid
or unenforceable, the remainder of this agreement shall not be affected thereby.
10.4 Governing Law. The terms of this agreement shall be governed by
the laws of the State of Michigan.
10.5 Assignment. Neither party may assign its rights hereunder without
the prior written consent of the other party. Any attempt to assign the rights,
duties, or obligations arising out of this agreement without prior written
consent shall be considered void.
10.6 Entire Agreement. This agreement constitutes the entire
understanding between the parties relating to the subject matter of this
agreement.
4
<PAGE>
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT.
Integrated Design, Inc. Sense Technologies, Inc.
By /s/ James H. Carroll By /s/ Dore Perler
- ----------------------- --------------------
Name: James H. Carroll Name Dore Perler
- ----------------------- --------------------
Title: President Title President
- ----------------------- --------------------
Date 9/8/1999 Date 9/9/1999
- ----------------------- --------------------
5
<PAGE>
THE TIME BANK LICENSE AGREEMENT - (Sample end user license)
AGREEMENT made this____day of_____________, _____, by and between Integrated
Design, Inc., a Michigan corporation ("Licensor"), 2101 Commonwealth, Ann Arbor,
MI 48105 and__________________("Licensee") of__________________________________.
1. GRANT OF LICENSE. Licensor hereby grants to the Licensee a nonexclusive,
nontransferrable limited license to use Licensor's THE TIME BANKTM, user
manuals and related materials ("Software"). Licensee may use the Software
only on a single computer, a computer network, or its temporary
replacement, or on a subsequent computer or network. A multi-user license
from Licensor is required for use of the Software by multiple concurrent
users.
2. LICENSE FEE. In consideration of the license, Licensee has paid, or
arranged for payment of, the development fee established by Licensor.
3. PROTECTION OF PROPRIETARY RIGHTS. Licensee agrees not to engage in, or
permit third parties to engage in, any of the following:
A. Providing or permitting use of or disclosing the Software to third
parties;
B. Providing use of the Software in a computer service
business, network, timesharing, multiple CPU, or multiple user
arrangement, or by telecommunications to third parties who are not
individually licensed by Licensor;
C. Removing or obscuring the copyright and other proprietary notices
from any of the programs, screens, disks, or user manuals;
D. Deactivating or bypassing any security device supplied with the
Software;
E. Reverse engineering the Software or marketing programs which
perform the same functions;
F. Attempting to disassemble or decompile the Software; G. Granting
sublicenses, leases, or other rights in the Software to others; H.
Making copies, or verbal or other media translations, of the user
manual.
4. OWNERSHIP OF THE SOFTWARE AND TRADE SECRETS. Licensee agrees that all
ownership rights in the Software, including any derivative works thereof,
are Licensor's sole and exclusive property. In accepting this Agreement,
Licensee agrees that it does not become the owner of the Software, but does
have the right to use the Software in accordance with this Agreement.
Licensee agrees that the Software contains valuable unpublished,
confidential information and proprietary trade secrets. Licensee agrees to
protect the confidential nature of the Software by not lending, disclosing,
or sharing the Software with or to anyone for any purpose other than for
usage in support of Licensee's business. Licensee agrees to take necessary
steps to prevent the Software from being acquired by unauthorized persons,
and will promptly notify Licensor in the event any unauthorized person has
or gains access to the Software.
6
<PAGE>
5. COPIES. Licensee may make one (1) backup copy of the Software diskette
for its own use only. Licensee shall place a label containing the words
"Copyright, 1990-1997, Integrated Design, Inc. -- All rights reserved" on
any backup diskette. All other copies of the Software diskette, and any
copies of the user manual, are in violation of the terms of this agreement.
6. LIMITED WARRANTY. Licensor warrants for a period of one year from the
acquisition of the Software by Licensee that the magnetic diskettes and
printed materials are not defective, that the programs are properly
recorded on the diskettes and that the user manuals are substantially
complete and contain all the information which Licensor deems necessary for
the use of the Software. Licensor also warrants that the Software will
perform substantially as documented in the user manual.
If Licensee discovers what it considers to be a significant logic
error in the Software that prevents its operation as described in the user
manual, Licensee should send a written, detailed description of the error
to Licensor. Licensor will attempt to correct or bypass any actual,
reproducible error that prevents the Software from operating as represented
in the user manual within a reasonable time, by providing Licensee with
corrective or workaround instructions, a corrected copy of the Software or
manual substitute pages. If Licensor cannot use one of the above methods to
correct the logic error, a refund of the license fee shall be made.
Licensee agrees that any modification of the Software by any
person other than Licensor or any use of the Software in conjunction with
infringing software or data will void Licensor's affirmative duties under
this section. Licensee further agrees that this warranty does not cover
Software which has been altered by Licensee, or that this warranty will
require Licensor to customize its programs, develop new features, or modify
Licensee's copy for different hardware or operating systems software. This
paragraph shall constitute Licensee's exclusive Reseller for any problems
with the Software. No dealer, company, or person is authorized to expand or
alter either these warranties or this Agreement, and any such
representation will not bind Licensor.
EXCEPT FOR THE LIMITED WARRANTY DESCRIBED ABOVE, THERE ARE NO
WARRANTIES TO LICENSEE OR ANY OTHER PERSON OR ENTITY FOR THE SOFTWARE,
EXPRESSED OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.
It is the responsibility of the Licensee to test the Software and
accept the results of the acceptance testing before relying on the Software
for any reason.
7. INDEMNIFICATION. Licensor agrees to indemnify and defend Licensee
against all claims that Software infringes on any patent, copyright,
trademark, or trade secrets rights of a third party.
8. LIABILITY. Licensee agrees that regardless of the form of any claim it
may have, Licensor's liability for any damages shall not exceed the license
fee paid for the Software.
7
<PAGE>
LICENSOR WILL NOT BE RESPONSIBLE FOR ANY DIRECT, INDIRECT,
INCIDENTAL, OR CONSEQUENTIAL DAMAGES FROM THE USE OF THE SOFTWARE OR ANY
SERVICES PROVIDED IN CONNECTION THEREWITH.
9. TERM. This License Agreement is effective immediately, and continues in
effect for fifty (50) years.
Licensor reserves the right to terminate this License early if
there is a violation of its terms or other default by Licensee. Upon
termination for any reason, all copies of the Software and documentation
must be immediately returned to Licensor, and Licensee will be liable to
Licensor for any and all damages, including reasonable costs and attorney
fees, suffered as a result of the violation or default.
10. GENERAL. The parties agree that this Agreement constitutes the complete
and exclusive statement of the rights of both parties regarding the
Software, superseding all prior agreements and understanding, including
oral representations, between the parties relating to the Software, and any
updates, backups, or merged or partial copies of the Software. In case of
any discrepancy between this License Agreement and other documents of
similar content, the terms of the License Agreement shall prevail.
This Agreement will be governed by Michigan law. If any provision
herein is held to be unenforceable, that provision will be deemed deleted,
but will not affect the validity of any other provision, each provision
being severable and independent.
This License may only be modified in a written amendment signed by
an authorized officer of Licensor. No action may be brought for any breach
of warranty more than one (1) year following the warranty expiration.
Either party's delay to enforce any provision herein will not waive that
party's rights.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
LICENSOR LICENSEE
INTEGRATED DESIGN, INC.
Name: ________________________ Name: _________________________
Title: ________________________ Title: _________________________
Date: __________________________ Date: ___________________________
8
Subsidiaries of the Registrant
<TABLE>
<CAPTION>
Name Under Which
Name of Subsidiary Jurisdiction of Organization Business Conducted
- ------------------ ---------------------------- ------------------
<S> <C> <C>
Sense Technologies, Inc. Florida Sense Technologies
</TABLE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement on Form SB-2 of
our report dated July 2, 1999, relating to the financial statements of Sense
Holdings, Inc. and Subsidiary for the period July 13, 1998 (Inception) through
December 31, 1998, and the reference to our firm under the caption "Experts" in
this Registration Statement.
/s/ Feldman Sherb Horowitz & Co., P.C.
--------------------------------------
FELDMAN SHERB HOROWITZ & CO., P.C.
Certified Public Accountants
New York, New York
September 17, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jul-13-1998
<PERIOD-END> Dec-31-1998
<CASH> 13,147
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,781
<PP&E> 9,455
<DEPRECIATION> 858
<TOTAL-ASSETS> 23,378
<CURRENT-LIABILITIES> 139,424
<BONDS> 0
0
0
<COMMON> 28,830
<OTHER-SE> (144,876)
<TOTAL-LIABILITY-AND-EQUITY> 23,378
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 75,018
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (174,629)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
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<CHANGES> 0
<NET-INCOME> (174,629)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Jun-30-1999
<CASH> 527,149
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 33,709
<CURRENT-ASSETS> 599,992
<PP&E> 13,795
<DEPRECIATION> 1,708
<TOTAL-ASSETS> 612,079
<CURRENT-LIABILITIES> 46,968
<BONDS> 0
0
0
<COMMON> 583,657
<OTHER-SE> (18,546)
<TOTAL-LIABILITY-AND-EQUITY> 565,111
<SALES> 0
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<OTHER-EXPENSES> 161,946
<LOSS-PROVISION> 0
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<INCOME-PRETAX> (373,718)
<INCOME-TAX> 0
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<CHANGES> 0
<NET-INCOME> (373,718)
<EPS-BASIC> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
