SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM 10-KSB/A
|X| Annual Report pursuant to Section 13 or 15(d) of the
Securities Act of 1934 (fee required)
For the fiscal year ended December 31, 1997, or
|_| Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (no fee required)
For the transition period from ____________ to ______________.
Commission File No. 0-12575
ARIZONA INSTRUMENT CORPORATION
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(Name of small business issuer as specified in its charter)
Delaware 86-0410138
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4114 East Wood Street, Phoenix, AZ 85040
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (602) 470-1414
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01
par value
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
|X| Yes |_| No
As of April 27, 1998, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $8,202,876.867. The aggregate market value
is computed with reference to the average bid and asked price of $1.3282 as
reported on the Nasdaq SmallCap Market for April 27, 1998. Shares of Common
Stock held by each officer and director and by each person who owns 10% or more
of the outstanding Common Stock have been excluded in that such persons may be
deemed to be affiliates. This determination of affiliate status is not
necessarily conclusive.
|_| Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or
any amendment to this Form 10-KSB.
<PAGE>
As of April 27, 1998, 6,819,582 shares of Common Stock ($.01 par value)
were outstanding.
Arizona Instrument Corporation (the "Company") hereby amends its Report
on Form 10-KSB for the year ended December 31, 1997 by adding thereto Items 9,
10, 11, and 12, as set forth below, by amending Item 13 thereto, and by adding
thereto the signature of the Company's principal accounting officer.
Item 9. Directors, Executive Officers, Promoters and Control Persons.
The names of the directors and certain executive officers of the
Company, and certain information about them, are set forth below.
<TABLE>
<CAPTION>
Name Age Principal Occupation
- ---- --- --------------------
<S> <C> <C>
George G. Hays 42 Chairman of the Board, President and Chief Executive
Officer of the Company. Director of the Company
since November 1997. Mr. Hays joined the Company
in March 1997 as Vice President of Finance, Chief
Financial Officer and Vice President of Manufacturing
of the Company. In November 1997, Mr. Hays was
elected President and Chief Executive Officer of the
Company. In January 1998, Mr. Hays was elected
Chairman of the Board of Directors. Prior to joining
the Company, Mr. Hays was president and founder of
Hays Financial Group, Inc., an investment banking
firm, since 1986. Mr. Hays is still President of Hays
Financial Group, Inc.
Walfred R. Raisanen 63 Vice President of Engineering and Treasurer of the
Company. Director of the Company since 1981. He
served as Chairman of the Board of Directors from the
inception of the Company in 1982 until his resignation
in January 1998. From 1986 until January 1998 he
served as Vice President of Research and
Development, and became Vice President of
Engineering in January 1998. From 1981 until 1986 he
was the President and Treasurer of the Company. Mr.
Raisanen was re-elected Treasurer in 1991. From June
1976 until January 1981 he was President and a
Director of Motorola Process Control, Inc., the
predecessor to the Company.
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
S. Thomas Emerson 57 Director of the Company since 1989. Independent
Management Consultant. Chairman of Xantel
Corporation, a private company engaged in computer
communications, from August 1992 to January 1998.
Dr. Emerson was Chief Executive Officer of Syntellect
Incorporated, a manufacturer of voice response
systems, from 1984 to April 1992. Prior to founding
Syntellect in 1984, Dr. Emerson was a founder of
Periphonics Corporation of Bohemia, New York where
he served for 14 years in various executive capacities.
Harold D. Schwartz 72 Director of the Company since January 1998.
President of Chez & Schwartz, Incorporated, a
marketing and sales consulting firm, since 1973. Mr.
Schwartz currently serves on the Board of Directors of
Cobra Electronics Corporation, a public company.
Steven G. Zylstra 43 Director of the Company since 1996. Director of
Business Development for Simula Technologies, Inc.,
(a new subsidiary, formerly a division of Simula
Government Products, Inc.) of Phoenix, Arizona, since
1995. The company specializes in the development and
production of high-tech transportation seating and
safety systems, composite technologies, and ballistic
armor systems. From 1984 to 1995, Mr. Zylstra
served as General Manager of General Pneumatics
Corporation, Western Research Center, of Scottsdale,
Arizona. He is a Co-Founder and Member of the
Governor's Arizona Science and Technology Council,
Co-Founder and Director of the Arizona Innovation
Network and Director of the Arizona Technology
Incubator, among other outside activities.
Susan Berry 49 Secretary of the Company. Ms. Berry was named
Secretary of the Company in early 1989. She has
served as Human Resources Manager for the Company
since 1985. Prior to her position with the Company,
Ms. Berry was in corporate administration for Inter-
Tel, Inc.
Linda Shepherd 46 Controller and Chief Accounting Officer of the
Company. Ms. Shepherd was named Controller and
Chief Accounting Officer in mid-1997. Ms. Shepherd
has been an accountant for the Company since 1984.
Prior to her position with the Company, she served as
an accountant for a local trucking firm for nine years.
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Allen D. Porter 40 Vice President of Marketing of the Company. Allen
D. Porter was named Vice President of Marketing in
1996. Mr. Porter has been with the Company since
1985, working in sales, sales management and product
management. Prior to his position with the Company,
he was program director for an Arizona-based
behavioral health agency.
</TABLE>
Compliance With Section 16(a) Reporting Requirements
Under the securities laws of the United States, the Company's
directors, its executive officers, and any persons holding more than 10% of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established and the Company is required to disclose any failure to file by
these dates. All of these filing requirements were satisfied during the year
ended December 31, 1997, except that Quinn Johnson, a director of the Company
until January 1998, reported a December disposition of shares on a Form 5 dated
February 3, 1998.
Additionally, the Company has not received copies of ownership reports
due from Bridge Capital Investors II, which formerly beneficially owned greater
than 10% of the Company's outstanding Common Stock, and thus has no information
regarding whether such reports have been filed or filed on a timely basis with
the Commission. In making these disclosures, the Company has relied solely on
written representations of its directors and executive officers and copies of
the reports that they have filed with the Commission.
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<PAGE>
Item 10. Executive Compensation
SUMMARY COMPENSATION TABLE
The following table sets forth, with respect to the years ended December 31,
1995, 1996 and 1997, compensation awarded to, earned by or paid to the Company's
Chief Executive Officer and each of the Company's other executive officers who
were serving as an executive officer at December 31, 1997 and whose salary and
bonus aggregated at least $100,000 for services rendered to the Company during
fiscal 1997.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------ --------------------------
Pay-
----
Awards outs
--------------------------- ----
Other Re- Securities
Annual stricted Underlying LTIP
Compen- Stock Options/ Pay- All Other
sation Awards SARs outs Compen-
Name and Principal Position Year Salary($) Bonus ($) (#) (#)(2) ($) sation($)
- --------------------------- ---- --------- ----- ------------ ------------- -------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George G. Hays, 1997 113,749 6,300 4,050(1) 0 75,000 0 1,228(4)
President and Chief
Executive Officer (5)
John P. Hudnall, Former 1997 157,700 18,750 4,950(1) 0 0 0 1,762(4)
President and Chief 1996 161,666 56,000 5,400(1) 0 0 0 1,603(4)
Executive Officer (6) 1995 154,400 0 5,400(1) 0 120,000(3) 0 1,518(4)
Walfred R. Raisanen, 1997 166,740 29,250 0 0 0 0 4,981(4)
Vice President of 1996 153,622 42,000 0 0 0 0 4,309(4)
Engineering 1995 147,262 0 0 0 100,000(3) 0 3,771(4)
Allen D. Porter, Vice 1997 114,192 0 0 0 0 0 650(4)
President of Marketing 1996 105,762 0 0 0 55,000 0 0
1995 87,040 0 0 0 15,000 0 0
</TABLE>
(1) Automobile allowance.
(2) Consists entirely of stock options.
(3) Represents 24,520 and 52,760 new option grants to Messrs. Hudnall and
Raisanen respectively, in 1995. All remaining options shown in this
table as granted in 1995 represent repricing of options granted in
prior
years.
(4) Life insurance premium payments.
(5) Mr. Hays commenced his employment with the Company on March 10, 1997.
(6) Mr. Hudnall's employment with the Company was terminated on November
15, 1997.
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<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
The following table sets forth information about stock option grants
during the last fiscal year to the executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------------
Number of % of Total
Securities Option/SARs
Underlying Granted
Options/SARs to Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Pricing ($/Sh) Date
- -------------- ----------- ----------- ---------------- ----------
<S> <C> <C> <C> <C>
George G. Hays (2) 75,000(3) 94% $1.81 5/2/2007
John P. Hudnall (4) 0 -- -- --
Walfred R. Raisanen 0 -- -- --
Allen D. Porter 0 -- -- --
</TABLE>
- ----------------------
(1) Consists entirely of stock options.
(2) Mr. Hays commenced his employment with the Company on March 10, 1997.
(3) Vest in five equal installments with the first installment vesting on
May 2, 1998.
(4) Mr. Hudnall's employment with the Company was terminated on November
15, 1997.
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<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth information with respect to the
executive officers named in the Summary Compensation Table concerning option
exercises during 1997 and the number and value of options outstanding at the end
of the last fiscal year.
<TABLE>
<CAPTION>
Number of Unexercised
Options/SARs at Fiscal Value of Unexercised in-the-
---------------------- Money Options/SARs at
Year-End (#)(1) Fiscal Year End ($)(3)
--------------- ----------------------
Exercisable Unexercisable Exercisable Unexercisable
Shares ----------- ------------- ----------- -------------
Acquired Value
on Realized
Name Exercise(#) ($)(2)
- --------------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
George G. Hays (4) 0 0 0 75,000 (6) (6)
John P. Hudnall (5) 0 0 24,000 72,000 (6) (6)
Walfred R. Raisanen 0 0 40,000 60,000 (6) (6)
Allen D. Porter 0 0 17,000 53,000 (6) (6)
</TABLE>
(1) No SARs are outstanding.
(2) Calculated based on the closing price as reported on the Nasdaq
SmallCap Market for the date of exercise minus the exercise price,
multiplied by the number of shares acquired on exercise.
(3) Value as of December 31, 1997 is based upon the average bid and asked
price of $0.90 as reported on the Nasdaq SmallCap Market for December
31, 1997, minus the exercise price, multiplied by the number of shares
underlying the
options.
(4) Mr. Hays commenced his employment with the Company on March 10, 1997.
(5) Mr. Hudnall's employment with the Company was terminated on November
15, 1997.
(6) None of these options were in-the-money on December 31, 1997.
Employment/Change of Control Arrangements
Effective January 1, 1998, the Company entered into an employment
agreement with George G. Hays pursuant to which Mr. Hays agreed to serve as
President and Chief Executive Officer. The agreement provides for a base annual
salary of $165,000, subject to merit increases, plus an annual incentive bonus
of at least 30% of annual salary based on an incentive bonus plan administered
by the Board of Directors. Mr. Hays is also entitled to participate in any
benefit arrangements available to executive officers of the Company. Upon
termination of the employment agreement without cause, Mr. Hays is entitled to
receive an amount equal to the compensation due him over the balance of the term
of the employment agreement, and to participate in applicable benefit programs
for the balance of the term
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<PAGE>
of the employment agreement. The agreement terminates on March 31, 2000, and
will automatically renew for additional one-year terms until notice of
non-renewal by the Company. This agreement replaces Mr. Hays' previous
employment agreement with the Company dated April 1, 1998, pursuant to which he
was employed as Vice President and Chief Financial Officer.
Effective November 5, 1992, the Company entered into a five-year
employment agreement with Walfred R. Raisanen pursuant to which Mr. Raisanen
agreed to serve as Vice President of Research and Development for a base annual
salary of $120,000, which is to be adjusted annually for cost-of-living
increases. Mr. Raisanen's employment agreement has been renewed according to its
terms effective November 5, 1997. Mr. Raisanen is also entitled to participate
in any benefit arrangements available to executive officers of the Company. Upon
termination of the employment agreement by the Company without cause, Mr.
Raisanen is entitled to receive a cash payment equal to the compensation due him
over the balance of the term of the employment agreement, and to participate in
applicable benefit programs for the balance of the term of the employment
agreement
Effective June 3, 1996, the Company entered into a three-year
employment agreement with John P. Hudnall, the Company's former President and
Chief Executive Officer. The Board of Directors terminated Mr. Hudnall's
employment on November 15, 1997. The agreement provided for a base annual salary
of $165,542, which was to be adjusted annually for cost-of-living increases. Mr.
Hudnall was also entitled to participate in any benefit arrangements available
to executive officers of the Company. Upon termination of the employment
agreement by the Company without cause, Mr. Hudnall was entitled to receive an
amount equal to the compensation due him over the balance of the term of the
employment agreement, and to participate in applicable benefit programs for the
balance of the term of the employment agreement.
The Company's 1991 Option Plan provides that options granted to any
executive officer or director of the Company will become immediately exercisable
and vested in full upon the occurrence, before the expiration or termination of
such option, of (a) delivery of written notice of a stockholders' meeting at
which the stockholders will consider a proposed merger, sale of assets or other
reorganization of the Company, (b) the acquisition by any person of securities
representing 25% or more of the total number of votes entitled to be case for
the election of directors of the Company, (c) commencement of a tender offer for
the stock of the Company, or (d) failure, at any annual or special meeting of
stockholders following an election contest, of any of the persons nominated by
the Company to win election seats on the board of directors.
The Company's 1991 Option Plan further provides that subject to the
above provisions, in the event a merger or similar reorganization that the
Company does not survive, a sale of all or substantially all of the assets of
the Company, or the dissolution and liquidation of the Company, shall cause
every option outstanding under the 1991 Option Plan to terminate, to the extent
not then exercised, except to the extent that any surviving entity agrees to
assume the 1991 Option Plan and/or the obligations under any such option.
Compensation of Directors
Outside directors are currently paid $1,000 plus expenses per Board or
committee meeting attended. Pursuant to the 1991 Stock Option Plan, non-employee
directors are automatically granted options exercisable for 2,500 shares at the
market price on the date of grant upon joining the Board and on each January 1
thereafter. The options become exercisable six months after grant and expire two
years
-8-
<PAGE>
after termination of Board service. Directors who are employees are only paid
their expenses (if any) for attendance at meetings.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock at April 27, 1998 with respect to (i)
each director and director nominee of the Company, (ii) each executive officer
named in the Summary Compensation Table set forth herein, (iii) all directors
and executive officers as a group, and (iv) each person known by the Company to
be the beneficial owner of more than 5% of the outstanding shares of the
Company's Common Stock:
Shares of Common Stock Beneficially Owned (1)
---------------------------------------------
Number Percent
Name and Address (2) of Shares of Total
- -------------------- --------- --------
George G. Hays (6) 92,000 1.3%
Walfred R. Raisanen (3) 216,400 3.1%
S. Thomas Emerson (3) 40,000 (4)
John P. Hudnall (7) 58,000 (4)
Harold D. Schwartz (3)(8) 154,350 2.2%
Steven G. Zylstra (3) 8,100 (4)
Allen D. Porter (3) 35,671 (4)
All directors and executive 643,647 9.4%
officers as a group (3) (5)
(9 persons)
- ----------------------------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC") and generally includes
voting or investment power with respect to securities. In accordance
with SEC rules, shares which may be acquired upon exercise of stock
option which are currently exercisable or which become exercisable
within 60 days of the date of the table are deemed beneficially owned
by the optionee. Except as indicated by footnote, and subject to
community property laws where applicable, the persons or entities named
in the table above have sole voting and investment power with respect
to all shares of Common Stock shown as beneficially owned by them.
(2) Unless otherwise indicated, the beneficial owner's address is:
c/o the Company, 4114 East Wood Street, Phoenix, Arizona 85040.
(3) Includes shares issuable upon exercise of options which are currently
exercisable or become exercisable within 60 days of May 13, 1997 as
applicable for each of the following individuals:
Hays 90,000 shares
Raisanen 60,000 shares
Emerson 20,000 shares
Hudnall 48,000 shares
Schwartz 2,500 shares
Zylstra 7,500 shares
Porter 26,000 shares
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<PAGE>
(4) Less than one percent.
(5) Includes 39,000 shares issuable upon exercise of options (in addition
to shares issuable upon exercise of options indicated in note 3).
(6) Mr. Hays commenced his employment with the Company on March 10, 1997.
(7) Mr. Hudnall's employment with the Company was terminated on November
15, 1997.
(8) Mr. Schwartz joined the Company's Board of Directors on January 14,
1998.
Item 12. Certain Relationships and Related Transactions
Settlement Agreement. On December 9, 1997, Horizon Engineering and
Testing, Inc. ("Horizon"), the Company and Quinn Johnson, entered into a
Settlement Agreement (the "Settlement Agreement") pursuant to which the parties
thereto released each other from all claims arising under the Merger Agreement
and Employment Agreement described below, and agreed to disburse 12,331 of the
49,030 shares of the Company's Common Stock held in escrow pursuant to the
Merger Agreement to the Company, with the remaining shares being disbursed to
Mr. Johnson as agent for the Horizon shareholders. Mr. Johnson was President of
Horizon until his resignation from that position in September 1996, and was a
Director of the Company until his resignation from that position in January
1998.
Merger Agreement. On September 30, 1992, Horizon was merged (the
"Merger") into a wholly-owned subsidiary of the Company pursuant to an Agreement
of Merger (the "Merger Agreement"). Shareholders of Horizon received cash
consideration of $190,000 and shares of the Company's Common Stock. Quinn
Johnson held 90% of the outstanding stock of Horizon at the time of the Merger
and received 529,328 shares of Common Stock in connection with the Merger. The
Company agreed to register the shares of the Company's Common Stock issued
pursuant to the Merger Agreement under applicable federal and state securities
laws at any time after April 1, 1993 upon the request of holders of 25% of such
shares and to keep such registration effective through September 30, 1995. Mr.
Johnson has agreed to indemnify Horizon and the Company against certain
liabilities in connection with the Company's acquisition of Horizon, and has
placed 49,030 shares of the Company's Common Stock in escrow in connection
therewith. The parties have agreed to release the escrowed shares pursuant to
the Settlement Agreement described above.
Employment Agreement. Mr. Johnson served as President of Horizon
pursuant to an Employment Agreement dated September 30, 1992. The Employment
Agreement provided for a base salary of $125,000 over its four-year term, with
annual adjustments tied to increases in the Consumer Price Index. The Employment
Agreement also provided for an annual bonus equal to (i) 15% of Horizon's pretax
profit (as defined) with respect to pretax profit representing up to 15% of
Horizon's gross revenues; and (ii) 20% of Horizon's pretax profit on that
portion of the pretax profit in excess of 15% of gross revenues, with a maximum
bonus over the term of the four-year agreement equal to $700,000. In the event
of termination of the Employment Agreement by the Company without cause, Mr.
Johnson was entitled to receive (i) the difference between $700,000 and bonus
payments prior to termination; plus (ii) an amount equal to the then-applicable
annual base salary.
Non-Competition Agreement. Pursuant to a Non-Competition Agreement
dated September 30, 1993, and in consideration of a cash payment of $350,000,
Mr. Johnson agreed to refrain from competing with Horizon until the later of
September 30, 1998 or two years after leaving the employment of Horizon, subject
to earlier termination under certain circumstances.
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<PAGE>
Stock Registration. Pursuant to registration rights previously granted,
the Company filed a shelf registration statement with the Securities and
Exchange Commission ("SEC") relating to 3,781,003 shares of its Common Stock
issued in connection with private placements in September 1992 and November 1993
and in connection with the acquisition of Horizon in September 1992. Also
included in the registration are 209,000 shares of Common Stock issuable upon
the exercise of warrants issued to Cruttenden & Co., Inc. ("Cruttenden") and its
assignees in connection with Cruttenden's activities as placement agent for the
November 1993 private placement. The registration statement was declared
effective by the SEC in February 1994. The Company has agreed that it will
maintain the effectiveness of the registration statement (i) until November
1996, with respect to the shares issued in the November 1993 private placement;
(ii) until September 1995, with respect to the shares issued in the September
1992 private placement and the Horizon acquisition; and (iii) until two years
after exercise, with respect to shares issuable upon exercise of the warrants
referred to above. The registration statement as originally filed included
465,001 shares beneficially owned by Quinn Johnson, which shares were acquired
by Mr. Johnson in connection with the acquisition of Horizon by the Company in
September 1992. In connection with the registration, Mr. Johnson agreed that his
registered and other sales of the Company's Common Stock shall not exceed the
volume limitations set forth in Rule 144 under the Securities Act of 1933, as
amended, subject to certain exceptions. The registration statement also includes
20,000 shares and 20,000 shares beneficially owned by S. Thomas Emerson, a
director of the Company, and Stanley Weiss, a former director of the Company,
which shares were acquired in the November 1993 private placement. The Company
and the holders of the shares of Common Stock included in the registration have
agreed to indemnify each other against certain liabilities.
Other.
------
During September 1993, the Company loaned $45,000 to Walfred R.
Raisanen, a director and executive officer of the Company. The loan bears
interest at 10% per annum, is collateralized by a pledge of 15,000 shares of the
Company's Common Stock and $30,000 of the cash value of a life insurance policy
covering Mr. Raisanen. During 1996, a $10,000 principal payment was made on this
loan, leaving a remaining balance of $35,000. The note inducing this loan bears
interest at 10% and was due in December 1997. This loan has been paid in full.
During April 1994, the Company loaned $10,000 to John P. Hudnall, the
former President and Chief Executive Officer of the Company. The note evidencing
this loan bears interest at 10% and was due in December 1997. This loan has been
paid in full by mutual agreement of the Company and Mr. Hudnall out of Mr.
Hudnall's severance payments pursuant to the termination of his employment
agreement. See "Employment/Change in Control Arrangements."
Item 13. Exhibits and Reports on Form 8-K.
Financial Statements. The following is a list of the consolidated financial
statements of Arizona Instrument Corporation and its subsidiaries included in
Item 8 of Part II of the Company's Form 10-KSB filed on March 31, 1998.
Independent auditors' report.
Consolidated balance sheets - December 31, 1997 and 1996.
Consolidated statements of operations - Years ended December 31, 1997, 1996 and
1995
Consolidated statements of shareholders' equity - Years ended December 31, 1997,
1996 and 1995
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<PAGE>
Consolidated statements of cash flows - Years ended December 31, 1997, 1996 and
1995
Notes to consolidated financial statements
(a) The following exhibits are incorporated by reference or are filed with
this Form 10-KSB, as indicated:
3.1 Composite of Certificate of Incorporation of Registrant, as amended
through July 5, 1994. Incorporated by reference from Registrant's Form
8-A filed on June 26, 1996 (the "June 1996 8-A")
3.2 Bylaws of Registrant, as amended. Incorporated by reference from the
June 1996 8-A.
10.1* Registrant's 1985 Stock Option Plan. Incorporated by reference from
Registrant's Form 10-KSB for the year ended December 31, 1985 filed in
March 1986.
10.2* Registrant's 1985 Stock Purchase Plan. Incorporated by reference from
Registrant's Form S-8 filed on August 5, 1996.
10.3* Registrant's 1991 Stock Option Plan. Incorporated by reference from
Registrant's Form S-8 filed on June 28, 1996.
10.4 Amended and Restated Export-Import Guaranteed Business Loan Agreement
between Registrant and Silicon Valley Bank dated February 1993.
Incorporated by reference from Registrant's Form 10-KSB for the year
ended December 31, 1992 filed in March 1993 (the "1992 10-KSB").
10.5 Warrant Purchase Agreement between Registrant and Silicon Valley Bank
dated December 14, 1991. Incorporated by reference from the 1992
10-KSB.
10.6 Loan Modification Agreement between Registrant and Silicon Valley Bank
dated November 7, 1995. Incorporated by reference to Registrant's Form
10-KSB for the year ended December 31, 1995 filed on March 29, 1996
(the "1995 10-KSB").
10.7 Promissory Note between Registrant and Silicon Valley Bank dated
November 7, 1995. Incorporated by reference to the 1995 10-KSB.
10.8 Loan Modification Agreement between Registrant and Silicon Valley Bank
dated March 24, 1997. Incorporated by reference to Registrant's Form
10-KSB for the year ended December 31, 1997 filed on March 31, 1998
(the "1997 10-KSB").
10.9 Promissory Note between Registrant and Classic Syndicate, Inc. dated
April 15, 1996. Incorporated by reference to the 1995 10-KSB.
10.10 Warrant Agreement between Registrant and Cruttenden & Co., Inc. dated
November 30, 1993. Incorporated by reference from Registrant's Form
10-QSB for the quarter ended September 30, 1993 filed on November 30,
1993 (the "September 1993 10-QSB").
10.11 Lease Agreement between Registrant and Wood Street Limited Partnership
dated September 1, 1993. Incorporated by reference from the September
1993 10-QSB.
10.12* Employment Agreement between Registrant and Walfred R. Raisanen dated
November 5, 1992. Incorporated by reference to the 1992 10-KSB.
10.13* Employment Agreement between Registrant and George G. Hays dated April
1, 1997. Incorporated by reference from Registrant's Form 10-QSB for
the quarter ended March 31, 1997 filed on May 15, 1997.
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<PAGE>
10.14* Employment Agreement between Registrant and George G. Hays dated
January 1, 1998. Incorporated by reference to the 1997 10-KSB.
10.15 Settlement Agreement among Registrant, Horizon Acquisition Co. and
Horizon Engineering and Testing, Inc. Filed herewith.
11.1 Statement re computation of per share earnings. Incorporated by
reference to the 1997 10-KSB.
21.1 Subsidiaries of Registrant. Incorporated by reference to the 1997
10-KSB.
23.1 Consent of Deloitte & Touche. Incorporated by reference to the 1997
10-KSB.
27. Financial Data Schedule. Incorporated by reference to the 1997 10-KSB.
- ----------------------
* Management contract or compensatory plan or arrangement required to be filed
pursuant to Item 13(a) of Form 10- KSB.
(b) The following Form 8-K was filed by Registrant during the last quarter
of the period covered by this Form 10- KSB:
Form 8-K filed November 26, 1997 reporting under Item 5 that George G.
Hays had been appointed President and Chief Executive Officer of
Registrant, and John P. Hudnall had resigned from the Board of
Directors and his employment as President and Chief Executive Officer
of Registrant had been terminated.
-13-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934 the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ARIZONA INSTRUMENT CORPORATION
Date: April 28, 1998 By: /s/ George G. Hays
-------------------
George G. Hays
President and Chief Executive Officer
By: /s/ Linda Shepherd
-------------------
Linda Shepherd
(Principal Accounting Officer)
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SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT ("SETTLEMENT AGREEMENT") is entered into this
9th day of December, 1997, between HORIZON ACQUISITION CO., an Arizona
Corporation ("HAC"), ARIZONA INSTRUMENT CORPORATION, a Delaware Corporation
("AZI"), HORIZON ENGINEERING AND TESTING, INC., an Arizona Corporation
("Horizon") and Quinn Johnson, an individual ("Johnson").
R E C I T A L S
A. AZI, HAC, Horizon and Johnson are parties to an Agreement of Merger
and an Escrow Agreement, each of which are dated September 30, 1992; and HAC and
Johnson are parties to an Employment Agreement of the same date (collectively,
the "Acquisition Agreements").
B. Pursuant to the Agreement of Merger and Escrow Agreement, 49,030
(Forty-Nine Thousand and Thirty) shares of AZI's common stock in certificate
number AZI 7642 were placed into escrow (the "Escrowed Shares") with Charles E.
Davis (the "Escrow Agent").
C. AZI, HAC, Horizon and Johnson have agreed to settle, discharge and
release all claims and causes of action which they may have against each other
as hereinafter identified.
D. AZI, HAC, Horizon and Johnson have also agreed to disburse the
Escrowed Shares as described herein.
E. HAC is a wholly-owned subsidiary of AZI.
NOW, THEREFORE, for valuable consideration, it is acknowledged and
agreed as follows:
1. Tax Treatment. The parties agree that the disbursement of the
Escrowed Shares, as described in Paragraph 7, does not constitute wages or
compensation for services. To the parties' knowledge, the disbursement of the
Escrowed Shares does not constitute a taxable transaction for any party hereto.
2. Horizon and Johnson Release of HAC and AZI. In consideration of the
Escrowed Shares being disbursed as described in Paragraph 1, and for other good
and valuable considera tion, the receipt, validity and sufficiency of which is
hereby acknowledged, Horizon and Johnson on their own behalf, respectively, and
on behalf of their respective officers, directors, shareholders, principals,
heirs, successors and assigns, do hereby release and discharge, fully and
without any limitation whatsoever, HAC and AZI and their respective insurers,
subsidiaries, divisions, affiliates, partners, partnerships, principals,
directors, officers, agents, representatives,
<PAGE>
employees, shareholders, successors and assigns (the "AZI Released Parties"), of
and from all liabilities, claims and of and from all manner of actions and
causes of action of every kind and nature whatsoever, both legal and equitable,
which Horizon or Johnson has, ever had or may hereafter have, both known and
unknown, arising out of or in any way pertaining to the Acquisition Agreements.
3. AZI release of Horizon and Johnson. In consideration of the Escrowed
Shares being disbursed as described in Paragraph 1, and for other good and
valuable consideration, the receipt, validity and sufficiency of which is hereby
acknowledged, AZI, on its own behalf and on behalf of its officers, directors,
successors and assigns, and on behalf of HAC, does hereby release and discharge,
fully and without any limitation whatsoever, Horizon and its insurers,
subsidiaries, divisions, affiliates, partners, partnerships, principals,
directors, officers, agents, representatives, employees, shareholders,
successors and assigns (the "Horizon Released Parties"), and Johnson, of and
from all liabilities, claims and of and from all manner of actions and causes of
action of every kind and nature whatsoever, both legal and equitable, which AZI
has, ever had or may hereafter have, both known and unknown, arising out of or
in any way pertaining to the Acquisition Agreements.
4. Limitation on AZI and HAC Actions. Except with respect to any
breaches of this SETTLEMENT AGREEMENT or any default hereunder, AZI and HAC
further covenant and agree to not file any complaint or claim against the
Horizon Released Parties and/or Johnson arising out of or in any way pertaining
to the Acquisition Agreements, and to indemnify the Horizon Released Parties
and/or Johnson from any and all loss, harm, damages and costs, including
attorneys' fees, that the Horizon Released Parties and/or Johnson may incur in
consequence of any complaint or claim filed by or on behalf of AZI or HAC in
contravention of this SETTLEMENT AGREEMENT.
5. Limitation of Horizon Actions. Except with respect to any breaches
of this SETTLEMENT AGREEMENT or any default hereunder, Horizon covenants and
agrees to not file any complaint or claim against the AZI Released Parties
arising out of or in any way pertaining to the Acquisition Agreements, and to
indemnify the AZI Released Parties from any and all loss, harm, damages and
costs, including attorneys' fees, that the AZI Released Parties may incur in
consequence of any complaint or claim filed by or on behalf of Horizon in contra
vention of this SETTLEMENT AGREEMENT.
6. Limitation on Johnson Actions. Except with respect to any breaches
of this SETTLEMENT AGREEMENT or any default hereunder, Johnson covenants and
agrees to not file any complaint or claim against the AZI Released Parties
arising out of or in any way pertaining to the Acquisition Agreements, and to
indemnify the AZI Released Parties from any and all loss, harm, damages and
costs, including attorneys' fees, that the AZI Released Parties may incur in
consequence of any complaint or claim filed by or on behalf of Johnson in
contraven tion of this SETTLEMENT AGREEMENT.
2
<PAGE>
7. Concurrent Signing of Escrow Instructions. The parties further
covenant and agree to sign escrow instructions concurrent with executing this
SETTLEMENT AGREEMENT, instructing the Escrow Agent to disburse immediately
12,331 (Twelve thousand, three hundred and thirty-one) of the Escrowed Shares to
AZI, and the remaining Escrowed Shares to Johnson as agent for the shareholders
of Horizon. AZI further agrees at its full cost and expense to cause any legends
which would restrict or inhibit the trading or sale of the Escrowed Shares to be
removed from the Escrowed Shares, provided that Johnson provides AZI with a
certificate indicating that any sale of such shares by Johnson will comply with
the applicable federal and state laws and regulations, including but not limited
to Rule 144.
8. Scope of this SETTLEMENT AGREEMENT. The execution of this SETTLEMENT
AGREEMENT is not an admission of any kind by the parties hereto, or any one of
them, but rather represents a compromise and settlement of disputed claims,
liability for which is expressly denied by the parties hereto. With the
exception of the Acquisition Agreements described herein, this SETTLEMENT
AGREEMENT does not impact the rights and obligations of the parties with regard
to any agreements between any of them, including but not limited to a
Confidentiality Agreement and a Non-Competition Agreement between Johnson and
HAC, each dated September 30, 1992.
9. Authorized Signers. Each signatory warrants that he is authorized by
his principal to sign this SETTLEMENT AGREEMENT on that principal's behalf.
10. Severability. If any provision of this SETTLEMENT AGREEMENT is
found to be unenforceable by a court of competent jurisdiction, such finding
shall not affect the enforce ability of any other provision(s).
11. Governing Law. This SETTLEMENT AGREEMENT shall be interpreted in
accordance with the laws of the State of Arizona.
12. Consideration. It is expressly understood and agreed that this
document sets forth the entire consideration for this SETTLEMENT AGREEMENT, and
that said consideration for this SETTLEMENT AGREEMENT is contractual and not a
mere recital.
13. Entire Agreement. This SETTLEMENT AGREEMENT embodies, merges and
integrates all prior and current agreements and understandings of the parties
hereto, and may not be modified, clarified, changed or amended, except in
writing signed by each and every one of the signatories hereto, or their
authorized representatives. There are no oral agreements between the parties.
14. Construction. This SETTLEMENT AGREEMENT is a negotiated agreement
and any documents delivered pursuant hereto shall be construed without regard to
the identity of the persons who drafted the various provisions thereof. Every
provision of this SETTLEMENT
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<PAGE>
AGREEMENT and such other settlement documents shall be construed as though all
parties participated equally in the drafting thereof. Any legal rule of
construction that a document is to be construed against the drafting party shall
not be applicable and is expressly waived.
15. Contractual Terms. The terms of this SETTLEMENT AGREEMENT are
contractual and not mere recitals.
16. Captions. The captions used in this SETTLEMENT AGREEMENT are
inserted for convenience only and shall not affect the meaning or construction
of this SETTLEMENT AGREEMENT.
17. Counterparts. This SETTLEMENT AGREEMENT may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
DATED as of the date first written above.
ARIZONA INSTRUMENTS CORPORATION
By: /s/ George G. Hays
------------------------------
Title: President
---------------------------
Printed Name: George G. Hays
--------------------
HORIZON ACQUISITION CO.
By: /s/ George G. Hays
------------------------------
Title: President
---------------------------
Printed Name: George G. Hays
--------------------
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<PAGE>
HORIZON ENGINEERING AND TESTING, INC.
By: George G. Hays
------------------------------
Title: President
---------------------------
Printed Name: George G. Hays
--------------------
QUINN JOHNSON
/s/ Quinn Johnson
- -----------------------
QUINN JOHNSON
SPOUSE:
/s/ Margaret Johnson
- -----------------------
MARGARET JOHNSON
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