SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 9, 1998
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Date of Report (Date of earliest event reported)
MICROPOINT, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 0-24368 33-0615178
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(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
6906 South 300 West
Midvale, UT 84047
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(Address of principal executive offices
801-568-5111
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(Registrant's telephone Number, including area code)
NANOTECH CORPORATION
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Former Name
2409 Dana Pt Harbor, Suite 200
Dana Pt., CA 92629
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Former address
<PAGE>
ITEM 1: Changes in Control of Registrant
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On April 9, 1998, Micropoint, Inc. (the "Company") consummated an Agreement
and Plan of Reorganization (the "Agreement) with Sensitron, Inc., a Utah
corporation ("Sensitron") pursuant to which Sensitron became a wholly owned
subsidiary of Company. As a result of the Agreement, the former shareholders
of Sensitron have become controlling stockholders of the Company and the
officers and directors of Sensitron have become the officers and directors of
the Company. As a condition to consummation of the Agreement, the Company
effected a 3 for 1 stock split and changed its name from Nanotech Corporation
to Micropoint, Inc.
Sensitron, Inc. ("Sensitron") was incorporated in January, 1995 in Utah to
serve as a holding company. Sensitron has two operating subsidiaries,
Flexpoint, Inc. ("Flexpoint") and Technology and Machine Company, Inc.
("Tamco").
Sensitron was organized in January, 1995 and acquired all of the outstanding
stock of Flexpoint Incorporated, a California corporation, in April, 1995.
Sensitron has since January, 1995 and Flexpoint Incorporated, its subsidiary
has since September 3, 1993 been engaged in the research and development of a
patented sensor technology (the "Technology"). Two patents and two patents
pending in the United States and a foreign application under a Patent
Cooperation Treaty on the Technology are held by Sensitron and licensed to
Flexpoint. The Technology measures changes in deflection and allows for
electronic devices to respond to such changes by registering a signal or other
response. The Company has entered into an exclusive agreement to use and sell
and sublicense the technology with Ohio Art, Inc. (manufacturers of Etch-A-
Sketch) with respect to the toy industry. The Company believes the Technology
has a wide variety of potential applications, including automobile horn
assemblies, seat sensors, instrument controls, eye surgical equipment and in
other electronic products.
Tamco is an operating manufacturing and machining company which machines metal
parts and injection molds based on custom orders for third parties.
Generally, Tamco receives orders for molds and tools then used by Tamco's
customers to produce a final product. The Company uses Tamco to perform
machining and manufacturing for Flexpoint Products. Tamco also operates its
third party business to the extent that excess capacity remains after
servicing Flexpoint.
The Company's principal executive officers are now located at 6906 South 300
West, Midvale, Utah 84047. Its telephone number is (801) 568-5111.
All of the Company's current executive officers and directors were appointed
to their positions with the Company upon closing of the Agreement. The
Company's executive officers and directors are as follows:
Name Age Position
- ----------- ------ ----------------------
Douglas M. Odom 38 President, CEO, Director
Jeffrey A. Coleman 37 Director
Donald M. Jackson, Jr. 63 Director
Douglas M. Odom has served as President and Chief Executive Officer of
Flexpoint since July 1995 and of Sensitron since April 30, 1996. From 1993 to
1995, Mr. Odom served as the Marketing and Sales Manufacturing Director of
Xymox Technologies Inc. Xymox is one of the world's largest manufacturers of
membrane switches and related electronic interface devices. Prior to Xymox,
Mr. Odom was a key executive in the reorganization of EEC Inc. from a public
company in bankruptcy to private company posting profits and positive cash
flow. Mr. Odom from 1985 to 1990 was Vice president of Operations of Comptec
Inc., a world-wide plastic injection molder and electronic device corporation.
From 1983 to 1985, Mr. Odom was the manager of manufacturing engineering at
AMP keyboard Technologies. Mr. Odom received a bachelors degree in General
Science/Chemistry from Grinnell College, Grinnell, Iowa in 1982. He completed
his masters studies at the American Graduate School of International
Management in Glendale, Arizona and furthered graduate studies at Harvard
University, Cambridge, MA.
Jeffrey A. Coleman has served as a director of Sensitron since January
10, 1998. Mr. Coleman has been managing member of Coleman Capital Partners, a
private equity investment group, since 1996. From 1985 to 1997 he was
Director of Operations for the Pyramid Group, a national real estate
development, investment and management firm. From 1982 to 1983 he was a
consultant in the Management Information Consulting Division of Arthur
Andersen & Co. Mr. Coleman received an MBA from the Amos Tuck School of
Business at Dartmouth College and a BA (honors) from Stanford University.
Donald M. Jackson, Jr. has served as a director of Sensitron since
January 10, 1998. Mr. Jackson founded Global Semi-conductor Technology, LLC
in May 1995 and has been President and Chairman since inception of that
company. From August 1992 to May 1995 he was President and Chief Executive
Officer of Westech Systems and President and COO of IPEC which merged with
Westech. From January 1992 to July 1992 he was COO of Brockson Investment
Corporation. From 1990 to 1992 he was President and CEO of the Arana Group,
Inc. and President and CEO of Microelectronic Packaging, Inc. from 1987 to
1990. From 1989 to 1987 he was President and CEO of Superwave Technology,
Inc. and was Founder and President of Advanced Semiconductor Materials
America, Inc. From 1976 to 1984 from 1959 to 1976 he held various research
and management positions in the semiconductor industry. Mr. Jackson is a
director of M & I Thunderbird Bank and Advanced Control Technologies and
received a Ph.d. in Physics from Iowa State University.
Employment Agreement with Douglas M. Odom
Flexpoint entered into an Employment Agreement dated December 31, 1997,
with Douglas M. Odom as its Chief Executive Officer. Under the Employment
Agreement, Flexpoint pays Mr. Odom an annual base salary of $120,000, plus
such annual bonuses as may be approved by the Board of Directors. The
Employment Agreement has an initial term of three years and will be
automatically renewed for one or more successive one-year terms (the "Renewal
Terms") unless terminated by either party. If the Company terminates the
Employment Agreement without cause, it must pay Mr. Odom one year's base
salary as severance. Mr. Odom is entitled to other basic employee benefits,
including three weeks annual vacation. Pursuant to the Employment Agreement,
Mr. Odom received options under the Sensitron Omnibus Stock Option Plan which
now represent the right to acquire 780,000 Common Shares of the Company at
prices ranging from $.15 to $.77 per share. As of the date of this report,
390,000 of such options are currently vested, 65,000 will vest on each of the
next three anniversaries of the Employment Agreement if Mr. Odom is still
employed by Flexpoint and an additional 65,000 will vest on each of the next
three anniversaries of the employment agreement based on meeting certain
performance criteria.
Stock Option Plans
Sensitron had adopted an Omnibus Stock Option Plan (the "Plan") for the
benefit of officers, directors, and consultants of Sensitron, which has been
assumed by the Company. The Plan is intended to comply with Section 422(a) of
the Internal Revenue Code of 1986, as amended. An aggregate of 3,900,000
authorized but unissued shares of Common Shares of the Company are reserved
for issuance pursuant to the Plan. At the time of the merger, there were
outstanding options to purchase an aggregate of 1,137,500 Common Shares of the
Company. The Plan will be administered by the Compensation Committee of the
Board of Directors, which will select optionees and determine the number of
shares of Common Shares subject to each option. The Plan provides that no
option which is to be a qualified option may be granted to an exercise price
less than the fair market value of the Common Shares of the Company on the
date of a grant. The Company has also assumed Sensitron's outstanding non-
plan vested options to purchase 3,189,550 shares and 1,391,260 warrants, and
there are 246,051 shares issuable for cancellation of debt of $234,755. The
exercise price of the warrants and options is generally in the $.27 to $.77
range.
ITEM 2: Acquisition or Disposition of Assets
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As described above, on April 9, 1998 the Agreement was consummated whereby a
wholly owned subsidiary of the Company was merged into Sensitron and Sensitron
became a wholly owned subsidiary of the Company. Following the transaction,
the officers and directors of Sensitron became the officers and directors of
the Company and the business of Sensitron became the business of the Company.
The Company anticipates that the acquisition will be accounted for as a so-
called "reverse acquisition", i.e., as a recapitalization of Sensitron to
reflect the shares held by the Company's previous stockholders as being issued
for the net assets and liabilities of the Company.
Historic financial statements of Sensitron and pro forma statements reflecting
the transaction will be filed herewith as exhibits.
BUSINESS OF SENSITRON
The Sensor Business
Sensing devices are used to measure or sense changes in deflection and are
typically used to trigger an electronic device when the sensor is activated.
The current standard used in the industry include heat sensors and light
sensors. However, these types of sensors cannot be used in the products being
marketed and proposed to be marketed by the Company. Force transducer sensors
and certain fiber optic sensors are comparable to the Company's bend sensors.
However, Force transducer sensors are not as reliable nor do they measure
range of motion as the bend sensor and the fiber optic sensors are not as cost
effective as the Bend Sensor TM technology.
The worldwide market for sensing devices has grown significantly as a result
of better technology and new applications for sensing technology. This growth
has resulted in a corresponding increase in demand for high performance
sensing products. The Company believes this growth will continue.
The Company believes the potential market for the Technology includes using
the Technology to replace or upgrade devices used in automobile horn
assemblies, smart airbag systems, instrument switches, computer switch
devices, transmissions and commercial vending devices. The Company has not
determined what market may exist for other applications for its products
The sensor can also be used to adjust devices in a reaction to changes in
temperature. The Company also believes the sensor could be used to more
effectively measure wear and effectiveness of brakes on cars.
The Company's principal strategy is to identify specific applications of the
Technology and to develop products utilizing the Technology addressing such
needs. Further, the Company intends to diversify its field of application and
customers. The Company believes that its combination of innovative product
features, OEM relationships and technical support will position the Company to
take advantage of the sensor market.
The Company is not currently manufacturing any sensor products in marketable
quantities. Consistent with its strategy of integrating emerging technologies
with innovative products, the Company intends to continue its research and
development efforts on new products.
The Bend Sensor TM Potentiometer
The Bend Sensor TM potentiometer is a product consisting of a coated substrate
such as plastic that changes in electrical conductivity as it is bent.
Electronic systems can connect to the sensor and measure with fine detail the
amount of bending or movement that occurs. A movement of only one inch can
yield over 200,000 data points. The Bend Sensor TM potentiometer has been
patented as well as for other applications such as automobile horn switches.
Other patents such as accelerometers, automobile seat sensors and functions
controls are pending.
An example of an application is one where a sensor is attached to a door. As
the door is opened one can measure how far the door has opened and how fast it
is moving. The sensor is light weight, small, easily packaged and very
reliable. The breadth of the applications for the Bend Sensor TM product is
limited only by the customer's imagination
A typical potentiometer functions through the means of metal contacts swiping
or rubbing across a resistive element. The Bend Sensor TM potentiometer is a
single layer with no mechanical assembly making it more reliable,
significantly smaller and lighter weight than mechanical potentiometers.
There are applications that can be improved by utilizing the Bend Sensor TM
products and there are new products only possible with the Bend Sensor TM
technology.
Process Overview
The Bend Sensor coating is applied utilizing a screen printing process.
Screen printing is used in many industries from microelectronics to tee-
shirts. A woven material with tiny openings similar to a screen door is put
under tension. The sensor coating material is placed on the screen then
pushed through the screen with a squeegee onto a substrate. Once the coatings
are applied to a substrate the material is then cut to its final shape.
Various cutting methods including lasers, soft and hard tooling will be used
to convert the materials.
Once the material is cut, the Bend Sensor TM device is essentially complete.
However, each application may demand different components such as connectors,
springs and/or electronics. The proper packaging of the Bend Sensor TM
product into a system is paramount. Flexpoint has and will maintain a strong
engineering staff to support the overall design. It is expected that some
customers may require that they control the design, while others will contract
with Flexpoint to design the system.
Research and Development
The applications and requirements of the Bend Sensor TM product are wide
spread. The Bend Sensor TM coatings can be applied to many different
substrates from metal wire to plastic film. Industries with potential
applications range from aerospace to toys.
Although Sensitron holds the patent to the base Bend Sensor TM product as well
as other applications there will be others working to develop competing
technologies. To stay on the forefront of the technology, and to serve the
needs of the customer, Sensitron will need to aggressively pursue improvements
to existing systems and develop new systems as well.
The Bend Sensor TM device on the surface is very simple, but the coatings are
very advanced so replication will be difficult. However, new coatings will
need to be developed to fit emerging customer needs and to stay ahead of the
competition. All the current coatings are manufactured by Flexpoint.
Production Contracts and Specific Applications
Currently the Bend Sensor TM has been chosen for use in a new line of plush
toys. The first product for production will be interactive plush toys to be
sold in 1998. A major toy company has executed and paid for a limited
exclusive license to use and sell the Bend Sensor TM in toy products. Based
upon estimates from customers, management currently projects that over
3,000,000 sensors will be purchased in 1998 for toys alone, representing over
$600,000 in revenue. The Company does not have firm orders for such quantity,
and many factors could affect actual sales, such as demand for the end
products and unanticipated production delays.
The Company has targeted the automobile industry as a major potential user of
the Technology. As of the date of this Report the Company had not entered
into any firm agreement to supply Bend SensorsJ. Although management is
highly confident that significant contracts can obtained, there can be no
assurance as to future sales levels of the Company.
Business Strategy
The Company believes that its success will depend upon its ability to
coordinate its product design, manufacturing, distribution and service
strategies in a long-term business model. The Company's immediate product
strategy is to incorporate initial products into completed value-added
assemblies as much as possible. Development of other Flexpoint products will
focus on replacing old single flexible film switch and potentiometer products
with Flexpoint products. The Company will sell primarily to OEMs initially in
the United States and eventually worldwide. For the international and smaller
volume domestic customers, the Company will contract, sell and distribute its
devices through various manufacturer representatives and distributors.
Since the Company's intended customers are typically high level technology
companies, the design phase of the sales cycle is extremely important.
Typically, the OEM will approach the Company with a conceptual input device
which will then require the Company to produce a prototype. The prototype
will then be tested in the environment in which the ultimate product will be
placed. During this process, customer contact with the Company's application
engineers and internal sales support individuals will be critical for a
successful design to occur.
In the long term the Company will attempt to add value to Flexpoint Product
applications allowing cross selling of the customer base through features of
similar complementary electronic components or parts. These product lines,
when combined, create a much larger value added profit margin. Eventually, by
adding circuit boards, enclosures, etc., the Company will integrate to a
complete final product line.
Marketing, Distribution, Sales and Customers
The Company will principally market its products to OEMs. The Company's
primary marketing objectives are to generate demand for its products, enhance
name recognition and support OEMs. The Company believes that the successful
use of its products by OEMs will create additional demand for higher quantity
of existing products. The Company also anticipates that the success of its
existing products will allow the Company to successfully introduce new
products to the market.
The Company will seek to support OEMs through telephone access to the
Company's in-house sales force and regular mailing of product. The Company
will also seek to generate interests and explore additional applications to
its Technology through attendance and participation at trade shows and
publicity in trade magazines.
The Company believes that its relationship with OEMs is an important part of
its overall sales strategy. Currently, the Company has only sold test
products to its OEMs. The Company believes that the OEMs will initiate
purchase orders for the Initial Products. The loss of any of the major OEMs
with which the Company has developed a relationship could have a significant
adverse effect on its results of operations until alternative distribution
channels could be established. The Company would consider contractual
commitments to OEMs in exchange for fees and royalties. In addition, because
the Company does not sell directly to end users, the Company is dependent, in
part, on its OEM for information about retail product sales. Accordingly, any
rapid cessation of purchases or switch to other companies' products by end
users may not be immediately evident to the Company, and could result in
increased product returns.
The Company intends to develop a field sales force to generate OEM customers.
The size of the sales force will depend on sales. The Company currently has
no field sales force.
Manufacturing and Suppliers
The Company intends to purchase equipment to enable it to commence its own
manufacturing. This equipment will enable the Company to manufacture up to 25
million finger size or 750,000 auto seat size Bend Sensors per year.
The Company purchases all components used in its products, except sensor ink,
from outside suppliers. The Company intends to establish long-term
contractual relationship with certain strategic suppliers which require these
suppliers to maintain increased inventory levels of materials provided to the
Company. In keeping with the Company's goal of producing quality products at
a low cost, the Company will also work with its strategic suppliers to
minimize component cost.
The Company uses standard components for its products and has taken steps to
eliminate dependence on components which can be obtained from only single or a
limited number of sources. Currently, all components necessary to manufacture
the Products, other than ink, are standard components available from several
sources. The sensor ink used for the sensor products has been available in
the past from only one supplier. Ink is no longer available from that
supplier. However, Flexpoint has developed its own proprietary inks for the
Flexpoint Products.
Certain domestic and international organizations set recognized standards for
production quality and certify manufacturers who are able to comply with those
standards. Those standards are commonly known in the industry as
International Standards of Organization ("ISO"). There are different ISO
levels. The automotive industry has embraced the ISO standards but the
organization has augmented these requirements. The organization developed
what is known as QS 9000 compliance for automotive suppliers. The Company is
seeking QS 9000 quality certifications for its manufacturing facilities and
those of its contract manufacturers. In order to obtain an QS 9000
certification, the Company must apply to the organization that sets those
standards and prove to the organization that those standards have been met.
The Company believes it has built its operating foundation on such principles
and will be able to obtain the appropriate certification within 18 months.
However, there is no guarantee the Company will obtain the required
certification.
Competition
Competition in the sensor industry generally is intense and is expected to
increase in the future. The Company competes only indirectly in the sensor
industry in that its Technology is not currently in use by any competitor.
The Company believes that its products will be sufficiently distinguishable
from the existing products and that it will not compete directly with existing
sensor products. A majority of all sensing devices require physical contacts.
The Company is aware of one other manufacturer who utilizes similar technology
but is not aware of any other bend sensing device. Certain force transducer
sensors and fiber optic sensors are comparable to the Company's bend sensors.
However, the force transducer sensor is not as reliable as the Company's bend
sensor and the fiber optic sensors are not as cost effective as the bend
sensor. As this new area grows, additional manufacturers may attempt to
introduce similar products and competition could intensify.
In the sensor industry the Company's principal competitor in its technology is
Interlink. In the auto horn field the Company's competitors are membrane
switch and mechanical switch manufacturers. In the medical electronics field
the Company's competitors are potentiometer manufacturers. In the auto seat
field the Company's competitors are capacitive, piezo, infrared, and
ultrasonic sensors.
The Company intends to compete on the basis of early entry into the market
with its products, enhanced features, performance, ease of use, compatibility,
reliability, price, marketing, distribution, quality and support. The Company
also believes its intellectual property provides it an advantage over its
competitors. Although the Company believes that its products will be well
received in its markets because of innovative features, performance
characteristics and cost-effective pricing, there can be no assurance that
comparable or superior products incorporating more advanced technology or
other features or having better price/performance characteristics will not be
introduced by competitors.
Intellectual Property
The Company regards certain of its product designs, such as patents for bend
sensors and horn sensors, as proprietary and attempts to protect them with
patents, trade secret laws and restrictions on disclosures. The Company has
two issued United States patents, two additional United States patent
applications pending, and a related foreign patent pending protecting the bend
sensor and horn sensor technology. The United States patents were issued on
May 3, 1994 and October 20, 1992, respectively and will expire 17 years after
those dates. The patent applications were filed between October 1992 and
March 1994 respectively. Of the applications filed, only two applications are
presently pending. The Company previously filed two applications that are
parent applications to the presently pending applications and are now
abandoned in favor of the two pending applications. Application 08/219,016,
filed March 29, 1995, entitled Flexpoint Potentiometer In a Horn Control
Circuit, is a continuation of application 08/060,346, which issued as Patent
5,309,135. The application is presently subject to a restriction requirement
whereby the Examiner has requested that a divisional application be filed for
the elected invention, which generally relate to the control circuit. The
divisional application was filed on or about May 17, 1995. Application
08/293,674, filed August 18, 1995, entitled Flexible Potentiometer, is a
continuation of application 08/184,787, which is a continuation of application
07/963,855, which is a continuation of application 07/522,575, which issued as
Patent 5,157,372. In application 08/184,787, the Examiner indicated allowable
subject matter. Application 08/293,674 leaves open the possibility of
obtaining additional patent coverage. The foreign application for the airbag
horn assembly was filed under a Patent Cooperation Treaty (the "PCT
Application") on April 21, 1995. An objection has been entered as to a
portion of the PCT Application. The patents and patent applications were
originally owned by Gordon Langford and assigned to the Company in August
1995.
The Company believes that the patents and patent applications have been timely
filed and are valid and enforceable. However, as with any patent or
intellectual property right, the Company could find it necessary to spend
substantial sums defending or enforcing its rights to a particular technology
or other intellectual property rights. In addition, the Company may receive
in the future infringement claims from third parties relating to the Company's
products or technologies. In response to these claims, the Company could
incur substantial costs in redesigning its products or in defending any legal
action taken against it. The Company has not received any infringement claims
to date.
The Company believes that, because of the rapid pace of technological change
in its markets, legal protection of its proprietary information is less
significant to the Company's competitive position than factors such as
continuing product innovation in response to evolving industry standards,
technical and cost-effective manufacturing expertise, effective product
marketing strategies and customer service. Without legal protection, however,
it may be possible for unauthorized third parties to exploit commercially the
proprietary aspects of the Company's products.
Business of Tamco
Tamco is an operating manufacturing and machining company. It derives its
revenue from contracting machining services to third parties. Generally,
Tamco receives orders for molds and tools used by Tamco's customers to produce
final products. The Company uses Tamco to perform machining and manufacturing
for Flexpoint products and to outside parties to the extent excess capacity
remains. Tamco receives approximately 200 to 250 orders in a twelve-month
period. Approximately 50% of the orders come from repeat customers. Tamco's
business is extremely competitive. Competitors range from small part-time
shops to large shops with significantly greater resources. Tamco has no sales
staff. Marketing is generally by word-of-mouth.
Employees
As of April 17, 1998, the Company and its subsidiaries had 11 full-time
employees, of which 0 were employed by Sensitron, 2 by Tamco and 9 by
Flexpoint. On that date, the Company and its subsidiaries were also utilizing
5 temporary employees, including 1 in engineering, 1 in accounting and 3 in
manufacturing.
Although there is competition for qualified personnel in the business operated
by the Company, to date the Company has not had significant problems
recruiting and retaining qualified personnel. None of the Company's employees
are subject to collective bargaining agreements, and the Company has
experienced no work stoppages. Management believes that its employee
relations are good.
Facilities
The Company leases from a third party 13,000 square feet of manufacturing and
office space, for a lease that expires in October 1999, with two one year
renewal options. The monthly lease payment is $4900 per month. It is
anticipated such facilities can accommodate the manufacture up to 12 million
Bend Sensor units per year.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information relating to the beneficial
ownership of Company Common Stock, by those persons beneficially holding more
than 5% of the Company's capital stock, by each of the Company's directors and
officers, and by all of the Company's directors and officers as a group.
Name Number of Shares Percent of Class
- ------------------ ---------------- ----------------
Douglas Odom 390,000(1) 2.4%
Jeffrey A. Coleman 195,000(2) 1.2%
Donald M. Jackson, Jr. 0 0%
All officers and directors as
a group (3 persons) 585,000 3.6%
Bull Ventures, Ltd.
Katerina Court
101 E Hill Place
Nassau, Bahamas 1,957,111 12.3%
Jehu Hand
24901 Dana Point Harbor Dr.
Dana Point, CA 92629 996,200 6.3%
Northridge Investment, LLC
47 E. 7200 South, #221
Midvale, UT 84047 1,982,500(3) 12.5%
John Sindt
47 E. 7200 South, #221
Midvale, UT 84047 1,998,360(3) 12.6%
Jules A. deGreef
47 E. 7200 South, #201
Midvale, UT 84047 2,443,792(3) 21.2%
(1) Includes vested options to purchase 390,000 shares.
(2) Includes 195,000 shares owned by a limited liability company
controlled by Coleman Capital Partners, of which Mr. Coleman is a partner.
(3) Includes 1,982,500 shares held by Northridge Investment, LLC, which
is controlled by Mr. de Greef and Mr. Sindt and is thus deemed to be
beneficially owned by both of them. Mr. Sindt's ownership includes warrants
to purchase 15,860 shares held by him and Mr. deGreef's ownership includes
options and warrants to purchase 1,170,000 shares held by him.
LEGAL PROCEEDINGS
On February 13, 1998, Private Equity Partners LLC ("PEP") filed suit against
Sensitron in the Third Judicial District Court in Salt Lake County, Utah. PEP
alleges, among other things, that Sensitron owes PEP investment banking fees
and warrants with respect to the Agreement, and that Sensitron's refusal to
pay such fees constitutes fraud. The suit seeks to obtain investment banking
fees equal to 6.5% of all money raised by Sensitron, warrants to purchase 2%
of Sensitron's equity, punitive damages of $5,000,000 and other relief. The
Company intends to vigorously defend this action.
In October, 1996, John Clayton and Blaine Taylor filed suit against Sensitron,
Flexpoint and certain of their officers in the Third Judicial District Court
in Salt Lake County, Utah. The suit alleges, among other things, that the
plaintiffs had a binding agreement pursuant to which the bend sensor
technology of Gordon Langford would be transferred to a public shell company
for which the plaintiffs would raise investment capital. The plaintiffs seek
a declaratory judgement that they own a 21.72% interest in the company that
owns the Langford technology, or actual and punitive damages. Sensitron has
responded that there was no binding agreement with the plaintiffs, and that in
any event the plaintiffs failed to perform. The suit is not being actively
prosecuted. If the plaintiffs begin actively pursuing the suit, the Company
intends to vigorously defend the action.
CHANGES IN SECURITIES
On October 24, 1998, the Company filed a Certificate of Amendment to its
Certificate of Incorporation pursuant to which the following occurred:
(1) The Company's name was changed from Nanotech Corporation to
Micropoint, Inc.
(2) The Company's authorized capitalization was increased to
100,000,000 shares of common stock, $.001 par value and 1,000,000 shares of
preferred stock, $.001 par value.
In connection with the Agreement, the Company declared a 3:1 forward
stock split of its outstanding common stock.
ITEM 7: Financial Statements and Exhibits
The following financial statements will be filed by amendment:
(a) Historical financial statements of Sensitron at December 31,
1996 and 1997 and for the three years then ended.
(c) Unaudited pro forma financial statements.
The following exhibits are filed herewith:
2.1 Agreement and Plan of Reorganization (Schedules omitted)
3.1 Certificate of Amendment
10.1 Employment Agreement with Douglas M. Odom
10.2 Lease Agreement
10.3 Ohio Art Agreement (Portions of this exhibit have been
omitted, for which Confidential Treatment has been requested by the Company).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized
MICROPOINT, INC.
Date: April 22, 1998 By /s/ Douglas M. Odom
---------------------------
Douglas M. Odom, President
Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is dated
December 30, 1997, and is by and between Nanotech Corporation, a Delaware
corporation (the "Company"), Sensitron Acquisition Corp, a Utah Corporation
("SAQ"), and Sensitron Inc., a Utah corporation ("Sensitron").
R E C I T A L S
WHEREAS, the shareholders of Sensitron ("Shareholders") own the shares of
capital stock of Sensitron as set forth in Schedule 1 attached hereto,
constituting all of the issued and outstanding stock of Sensitron (the
"Sensitron Shares");
WHEREAS, the Company is a public company, required to file reports under
Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act");
WHEREAS, the Company is the owner of all of the outstanding shares of
SAQ; and
WHEREAS, the Board of Directors of the Company, SAQ and Sensitron deem it
advisable that the acquisition by the Company of Sensitron be effected through
the merger (the "Merger") of Sensitron and SAQ pursuant to this Agreement and
Articles of Merger; and
WHEREAS, the Company desires to acquire all of the outstanding Sensitron
shares for shares of Common Stock of the Company, in a transaction that
qualifies under Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, the Boards of Directors of the Company, SAQ and Sensitron intend
that the Merger constitute a "reorganization" under Section 368(a)(2)(E) of
the Code, and the infusion of assets to be a tax-free transfer under Section
351 of the Code and the rules and regulations of the Internal Revenue Service
(the "IRS") promulgated thereunder, have approved and adopted this Agreement
as a "plan of reorganization" within the meaning of Section 368 of the Code,
and the rules and regulations of the IRS promulgated thereunder, and intend
that the Merger be treated as a tax free merger under the Code and the rules
and regulations of the IRS promulgated thereunder.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in reliance upon the representations and warranties
hereinafter set forth, the parties agree as follows:
I. MERGER
1.01 Merger. SAQ shall merge with and into Sensitron pursuant to the
Utah Revised Business Corporation Act (the "Merger") and in accordance with
the Articles of Merger among the Company, SAQ and Sensitron (the "Articles of
Merger"), a copy of which is attached hereto as Exhibit 2. The Merger shall
be effective on the date on which the Articles of Merger, or a conformed copy
thereof, in substantially the form annexed hereto as Exhibit 2, has been filed
with the Division of Corporations and Commercial Code of Utah, which filing
shall take place upon Closing.
1.02. Closing. The Closing of the transaction contemplated by this
Agreement (the "Closing") shall take place at the offices of Hand & Hand
within 3 business days after the completion of the minimum offering described
in Section 6.01. At Closing, and pursuant to the Articles of Merger, all
outstanding Sensitron Shares shall be cancelled and in lieu thereof the
Shareholders shall receive an aggregate of 9,827,779 shares of Company Common
Stock (the "Company Shares"). The Merger shall be a "Reverse Triangular
Merger" pursuant to Section 368 (a)(2)(E) of the Internal Revenue Code.
1.03. Deliveries. Upon Closing, the parties are delivering the
following documents:
1.03(a). The items and documents set forth in Sections 1.01 and 1.02.
1.03(b). The Company Shares described in Section 1.02
1.03(c). The Company shall deliver the resignations of all of its
current officers and directors, and a board resolution electing Doug Odom,
Jeff Coleman and Donald M. Jackson, Jr. to the Board of Directors of the
Company.
1.04. Filings. Following with the Closing, the Company shall file
the following documents:
1.04(a). A Current Report on Form 8-K with the U.S. Securities and
Exchange Commission, reporting the transactions set forth in this Agreement,
any change of auditors, or other events required to be reported in such
report.
1.04(b). A Form 3 report of beneficial ownership with the U.S.
Securities and Exchange Commission with respect to each director, executive
officer or greater than 10% holder of Company Shares, signed by such director,
executive officer or shareholder, as the case may be.
1.04(c). A Schedule 13D with the U.S. Securities and Exchange
Commission for each person who is required to file such form as a result of
obtaining greater than 5% beneficial ownership of the Company's Common Stock
as a result of the transactions contemplated by this Agreement.
1.04(d). A Certificate of Amendment to the Certificate of
Incorporation of the Company with the Delaware Secretary of State changing the
name of the Company to "Sensitron, Inc." or a similar name as may be
determined by the Board of Directors.
II. REPRESENTATIONS AND WARRANTIES OF SENSITRON
Sensitron represents and warrants to the Company as follows, as of the
date of this Agreement and as of the Closing:
2.01. Organization.
2.01(a). Sensitron is a corporation duly organized, validly existing
and in good standing under the laws of the State of Utah; Sensitron has the
corporate power and authority to carry on its business as presently conducted;
and Sensitron is qualified to do business in all jurisdictions where the
failure to be so qualified would have a material adverse effect on its
business.
2.02. Capitalization.
2.02(a). The authorized capital stock and the issued and outstanding
shares of Sensitron is as set forth on Exhibit 2.02(a). All of the issued and
outstanding shares of Sensitron are duly authorized, validly issued, fully
paid and nonassessable.
2.02(b). Except as set forth in Exhibit 2.02(b) there are no
outstanding options, warrants, or rights to purchase any securities of
Sensitron.
2.03. Subsidiaries and Investments. Sensitron does not own any
capital stock or have any interest in any corporation, partnership or other
form of business organization, except as described in Exhibit 2.03 hereto.
2.04. Financial Statements. The unaudited financial statements of
Sensitron as of and for the period inception to October 31, 1997, including
the unaudited balance sheet as of October 31, 1997 and the related unaudited
statement of operations for the period then ended (the "Financial Statements")
present fairly the financial position and results of operations of Sensitron,
on a consistent basis. The financial records of Sensitron are of such a
character and quality that an unqualified (except as to going concern) audit
of the Sensitron Financial Statements may be performed within 75 days of the
Closing.
2.05. No Undisclosed Liabilities. To the best knowledge of
Sensitron, other than as described in Exhibit 2.05 attached hereto, Sensitron
is not subject to any material liability or obligation of any nature, whether
absolute, accrued, contingent, or otherwise and whether due or to become due,
which is not reflected or reserved against in the Financial Statements, except
those incurred in the normal course of business.
2.06. Absence of Material Changes. Since October 31, 1997, except as
described in any Exhibit attached hereto or as required or permitted under
this Agreement, there has not been:
2.06(a). any material adverse change in the condition (financial or
otherwise) of the properties, assets, liabilities or business of Sensitron,
except changes in the ordinary course of business which, individually and in
the aggregate, have not been materially adverse;
2.06(b). any redemption, purchase or other acquisition of any shares
of the capital stock of Sensitron, or any issuance of any shares of capital
stock or the granting, issuance or exercise of any rights, warrants, options
or commitments by Sensitron relating to their authorized or issued capital
stock; or
2.06(c). any change or amendment to the Articles of Incorporation of
Sensitron.
2.07. Litigation. Except as set forth in Exhibit 2.07 attached
hereto, to the best knowledge of Sensitron there is no litigation, proceeding
or investigation pending or threatened against Sensitron affecting any of its
properties or assets against any officer, director, or stockholder of
Sensitron that might result, either in any case or in the aggregate, in any
material adverse change in the business, operations, affairs or condition of
Sensitron or its properties or assets, or that might call into question the
validity of this Agreement, or any action taken or to be taken pursuant
hereto.
2.08. Title To Assets. Sensitron has good and marketable title to
all of its assets and properties now carried on its books including those
reflected in the balance sheets contained in the Financial Statements, free
and clear of all liens, claims, charges, security interests or other
encumbrances, except as described in Exhibit 2.08 attached hereto or any other
Exhibit.
2.09. Transactions with Affiliates, Directors and Shareholders.
Except as set forth in Exhibit 2.09 attached hereto, there are and have been
no contracts, agreements, arrangements or other transactions between
Sensitron, and any officer, director, or stockholder of Sensitron, or any
corporation or other entity controlled by the Shareholders, a member of the
Shareholders' families, or any affiliate of the Shareholders.
2.10. No Conflict. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will not conflict
with or result in a breach of any term or provision of, or constitute a
default under, the Articles of Incorporation or Bylaws of Sensitron, or any
agreement, contract or instrument to which Sensitron is a party or by which it
or any of its assets are bound.
2.11. Disclosure. To the actual knowledge of Sensitron, neither this
Agreement, the Financial Statements nor any other agreement, document,
certificate or written or oral statement furnished to the Company by or on
behalf of Sensitron in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact or when taken as a whole
omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading.
2.12. Authority. Sensitron has full power and authority to enter
into this Agreement and to carry out the transactions contemplated herein.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, have been duly authorized and approved by
the Board of Directors of Sensitron and, other than the approval by the
Shareholders of Sensitron described in Section 6.04, no other corporate
proceedings on the part of Sensitron are necessary to authorize this Agreement
and the transactions contemplated hereby.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Sensitron as follows, as of
the date of this Agreement and as of the Closing:
3.01. Organization.
3.01(a). The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware; has
the corporate power and authority to carry on its business as presently
conducted; and is qualified to do business in all jurisdictions where the
failure to be so qualified would have a material adverse effect on the
business of the Company.
3.01(b). The copies of the Certificate of Incorporation, of the
Company, as certified by the Secretary of State of Delaware, and the Bylaws of
the Company are complete and correct copies of the Certificate of
Incorporation and the Bylaws of the Company as amended and in effect on the
date hereof. All minutes of meetings and actions in writing without a meeting
of the Board of Directors and shareholders of the Company are contained in the
minute book of the Company and no minutes or actions in writing without a
meeting have been included in such minute book since such delivery to
Sensitron that have not also been delivered to Sensitron.
3.02. Capitalization of the Company. The authorized capital stock of
the Company consists of 20,000,000 shares of Common Stock, par value $.001 per
share, of which 666,666 shares are outstanding, (including the convertible
note mentioned in Section 6.02) and 1,000,000 shares of preferred stock, none
of which is outstanding. The Company shareholders have approved an increase
in the authorized common stock up to 100,000,000 shares. All outstanding
shares are duly authorized, validly issued, fully paid and non-assessable.
Following the merger issuance of Company Shares, a forward stock split
described in Section 6.02, and the placement described in Section 6.01, the
capitalization of the Company shall be 15,827,779 shares of common stock.
3.03. Subsidiaries and Investments. Other than SAQ, the Company does
not own any capital stock or have any interest in any corporation,
partnership, or other form of business organization. SAQ is newly organized
and has no liabilities or assets.
3.04. Authority. The Company has full power and authority to enter
into this Agreement and to carry out the transactions contemplated herein.
The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, and the issuance of the Company Shares in
accordance with the terms hereof, have been duly authorized and approved by
the Board of Directors of the Company and no other corporate proceedings on
the part of Company are necessary to authorize this Agreement, the
transactions contemplated hereby and the issuance of the Company Shares in
accordance with the terms hereof.
3.05. No Undisclosed Liabilities. Other than as described in Exhibit
3.05 attached hereto, the Company is not subject to any material liability or
obligation of any nature, whether absolute, accrued, contingent, or otherwise
and whether due or to become due.
3.06. Litigation. There is no litigation, proceeding or
investigation pending or to the knowledge of the Company, threatened against
the Company affecting any of its properties or assets, or, to the knowledge of
the Company, against any officer, director, or stockholder of the Company that
might result, either in any case or in the aggregate, in any material adverse
change in the business, operations, affairs or condition of the Company or any
of its properties or assets, or that might call into question the validity of
this Agreement, or any action taken or to be taken pursuant hereto.
3.07. Title To Assets. The Company has good and marketable title to
all of its assets and properties now carried on its books including those
reflected in the balance sheet contained in the Company's financial
statements, free and clear of all liens, claims, charges, security interests
or other encumbrances, except as described in the balance sheet included in
the Company's financial statements or on any Exhibits attached hereto.
3.08. Contracts and Undertakings. Exhibit 3.08 attached hereto
contains a list of all contracts, agreements, leases, licenses, arrangements,
commitments and other undertakings to which the Company is a party or by which
it or its property is bound. Each of said contracts, agreements, leases,
licenses, arrangements, commitments and undertakings is valid, binding and in
full force and effect. The Company is not in material default, or alleged to
be in material default, under any contract, agreement, lease, license,
commitment, instrument or obligation and, to the knowledge of the Company, no
other party to any contract, agreement, lease, license, commitment, instrument
or obligation to which the Company is a party is in default thereunder nor, to
the knowledge of the Company, does there exist any condition or event which,
after notice or lapse of time or both, would constitute a default by any party
to any such contract, agreement, lease, license, commitment, instrument or
obligation.
3.09. Underlying Documents. Copies of all documents described in any
Exhibit attached hereto (or a summary of any such contract, agreement or
commitment, if oral) have been made available to Sensitron and are complete
and correct and include all amendments, supplements or modifications thereto.
3.10. Transactions with Affiliates, Directors and Shareholders.
Except as set forth in Exhibit 3.10 hereto, there are and have been no
contracts, agreements, arrangements or other transactions between the Company,
and any officer, director, or 5% stockholder of the Company, or any
corporation or other entity controlled by any such officer, director or 5%
stockholder, a member of any such officer, director or 5% stockholder's
family, or any affiliate of any such officer, director or 5% stockholder.
3.11. No Conflict. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will not conflict
with or result in a breach of any term or provision of, or constitute a
default under, the Certificate of Incorporation or Bylaws of the Company, or
any agreement, contract or instrument to which the Company is a party or by
which it or any of its assets are bound.
3.12. Disclosure. To the actual knowledge of the Company, neither
this Agreement nor any other agreement, document, certificate or written or
oral statement furnished to Sensitron and the Shareholders by or on behalf of
the Company in connection with the transactions contemplated hereby, contains
any untrue statement of a material fact or when taken as a whole omits to
state a material fact necessary in order to make the statements contained
herein or therein not misleading.
3.13. Financial Statements. The financial statements of the Company
set forth in its Form 10K-SB for the year ended March 31, 1997 and its Form
10-QSB for the quarter ended September 30, 1997 present fairly the financial
position and results of operations of the Company, on a consistent basis.
3.14. Absence of Material Changes. Since September 30, 1997, except
as described in any Exhibit hereto or as required or permitted under this
Agreement, there has not been:
3.14(a). any material change in the condition (financial or otherwise)
of the properties, assets, liabilities or business of Company, except changes
in the ordinary course of business which, individually and in the aggregate,
have not been materially adverse.
3.14(b). any redemption, purchase or other acquisition of any shares
of the capital stock of the Company, or any issuance of any shares of capital
stock or the granting, issuance or exercise of any rights, warrants, options
or commitments by Sensitron relating to their authorized or issued capital
stock.
3.14(c). any amendment to the Certificate of Incorporation of the
Company.
3.15 Securities Law Compliance
3.15(a) The Company's common stock is registered under Section
12(g) of the Exchange Act pursuant to a Form 10-SB which became effective on
August 16, 1994. The Company has filed all reports and other material
required to be filed by it with the SEC pursuant to Section 13 or other
provisions of the Exchange Act. Such filed reports and materials do not
contain any misstatements of material facts, nor do they omit any material
information required to be stated therein or necessary to prevent the
statements therein from becoming misleading.
3.15(b) The currently outstanding common stock of the Company was
issued pursuant to valid exemptions from registration under the Securities Act
of 1933 pursuant to Regulations D or S promulgated thereunder. The currently
outstanding common stock of the Company was issued pursuant to valid
exemptions from registration under the securities laws of the states and
foreign jurisdictions where the offerings of such common stock occurred.
3.15(c) To the best knowledge of the Company, all officers,
directors and 5% or greater beneficial owners of the Company have complied
with their obligations under Sections 13(d) and 16 of the Exchange Act, and
have done so in a timely fashion since April 1, 1995.
3.15(d) To the best knowledge of the Company, neither the Company
nor any promoter, officer, director or 5% or greater beneficial owner of the
Company is subject to the disqualifications described in Section 230.262 of
Regulation A promulgated under the Securities Act of 1933, nor are proceedings
pending or threatened which would, if adversely decided, result in any such
disqualification.
IV. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
All representations, warranties and covenants of the Company and
Sensitron contained herein shall survive the consummation of the transactions
contemplated herein and remain in full force and effect.
V. CONDITIONS TO CLOSING
5.01. Conditions to Obligation of Sensitron. The obligations of
Sensitron under this Agreement shall be subject to each of the following
conditions:
5.01(a). The representations and warranties of the Company herein
contained shall be true in all material respects at the Closing with the same
effect as though made at such time. The Company shall have performed in all
material respects all obligations and complied in all material respects, to
its actual knowledge, with all covenants and conditions required by this
Agreement to be performed or complied with by it at or prior to the Closing.
5.01(b). No injunction or restraining order shall be in effect, and no
action or proceeding shall have been instituted and, at what would otherwise
have been the Closing, remain pending before a court to restrain or prohibit
the transactions contemplated by this Agreement.
5.01(c). All statutory requirements for the valid consummation by the
Company of the transactions contemplated by this Agreement shall have been
fulfilled. All authorizations, consents and approvals of all governments and
other persons required to be obtained in order to permit consummation by the
Company of the transactions contemplated by this Agreement shall have been
obtained.
5.01(d). The fulfillment of the obligations of the Company
(including the sale of the minimum offering of 2,666,666 shares) set forth in
Sections 6.01. and 6.03.
5.02. Conditions to Obligations of the Company. The obligation of
the Company under this Agreement shall be subject to the following conditions:
5.02(a). The representations and warranties of Sensitron herein
contained shall be true in all material respects as of the Closing, and shall
have the same effect as though made at the Closing; Sensitron shall have
performed in all material respects all obligations and complied in all
material respects, to its actual knowledge, with all covenants and conditions
required by this Agreement to be performed or complied with by it prior to the
Closing.
5.02(b). No injunction or restraining order shall be in effect
prohibiting this Agreement, and no action or proceeding shall have been
instituted and, at what would otherwise have been the Closing, remain pending
before the court to restrain or prohibit the transactions contemplated by this
Agreement.
5.02(c). All statutory requirements for the valid consummation by
Sensitron of the transactions contemplated by this Agreement shall have been
fulfilled. All authorizations, consents and approvals of all governments and
other persons required to be obtained in order to permit consummation by
Sensitron of the transactions contemplated by this Agreement shall have been
obtained.
5.02(d) The fulfillment of the obligations of Sensitron set forth
in Section 6.04.
VI. CERTAIN AGREEMENTS
6.01. Transfer of Assets. The Company shall immediately commence the
preparation of a private placement memorandum to issue or sell 4,000,000
shares of Common Stock, at a (post-split) net price of $.75 per share, which
one half of the shares may be subscribed for with shares of a public company
acceptable to Sensitron (the "Securities"). The infusion of cash and
securities in this placement is intended to qualify as a tax-free transaction
under Section 351 of the Code. The minimum offering shall be for 2,666,000
Shares, of which no less than 2,000,000 shall have been sold for cash. The
Company and Sensitron intend to use these funds to pay indebtedness
($800,000), pay accrued taxes of $160,000, purchase equipment ($450,000) and
for technology development ($1,590,000). The Company shall rely on
information provided by Sensitron in the preparation of such private placement
memorandum. Sensitron agrees to indemnify the Company and persons who control
the Company for any false statement of a material fact or the omission of any
material fact required to be included to make the statements made in the
memorandum not misleading, related to Sensitron; provided that such statement
or omission was made in reliance on information provided in writing. The
Company agrees to indemnify Sensitron and persons who control Sensitron for
any false statement of a material fact or the omission of any material fact
required to be included to make the statements made in the memorandum not
misleading, related to the Company; provided that such statement or omission
was made in reliance on information provided in writing. The parties
acknowledge, however, that it is the position of the Securities and Exchange
Commission that indemnification for liabilities under the federal securities
laws is against public policy and is unenforceable.
6.02. Forward Stock Split. Immediately prior to the Closing, Jehu
Hand shall convert his note payable into 242,066 (pre-split) shares of common
stock and the Company shall effect a 3 for 1 forward stock split, resulting in
approximately 2,000,000 Shares outstanding.
6.03. Reporting Requirements. The Company shall file all reports
required by Section 13 of the Securities Exchange Act of 1934 and shall
maintain its books and records in accordance with Sections 12 and 13 thereof.
The parties agree that the failure of the Company to make such filings with
the Securities and Exchange Commission shall constitute a material breach of
this Agreement.
6.04. Shareholder Approval. Sensitron shall submit the Merger to its
Shareholders for approval, and the Company shall approve the Merger as the
sole shareholder of SAQ. The Closing is subject to not more than 10% of the
Sensitron shareholders electing dissentor's rights under the Utah Revised
Business Corporation Act. The Board of Directors of Company, prior to the
Closing, will reserve sufficient shares of Company Common Stock for issuance
pursuant to the terms of the Articles of Merger and take such other action as
is necessary in connection therewith.
6.05. Escrow. As described above, Company Shares may be subscribed
for in the private placement for Securities rather than cash (the "Contingent
Shares"). The Company and Sensitron agree that the Contingent Shares shall
not be deemed issued unless the Company realizes at least the private
placement price of $.75 per Contingent Share on sale of the Securities. The
Securities and the Contingent Shares shall be placed in an escrow at a
mutually agreeable location. On request of the investors from time to time,
Securities shall be released from escrow to the Company to be sold within 48
hour of their release. The Company shall notify the escrow agent of the net
proceeds received from such sale, and the Contingent Shares shall be released
to the investors on the basis of $.75 of net proceeds per Contingent Share.
Any Securities remaining in escrow after release of all the Contingent Shares
shall be returned to the investors. Any Contingent Shares remaining in escrow
after the sale of all the Securities shall be cancelled. In the event that
the escrow account contains both unsold Securities and Contingent Shares on
February 15, 1998, the Company, may in its absolute discretion, either (i)
sell the Securities and issue Contingent Shares to the investors on the basis
of $.75 of net proceeds per Contingent Share, or (ii) retain the Securities at
their market value (which shall be deemed to be the closing bid price of the
Securities on February 13, 1998) and release or cancel the remaining
Contingent Shares as if the Securities had been sold at such market price.
Unless otherwise agreed by the investors, any release or cancellation of
Contingent Shares shall be prorated among all investors tendering Securities
of a given issuer.
VII. MISCELLANEOUS
7.01. Finder's Fees, Investment Banking Fees. Neither Sensitron nor
the Company have retained or used the services of any person, firm or
corporation in such manner as to require the payment of any compensation as a
finder or a broker in connection with the transactions contemplated herein.
7.02. Tax Treatment. The transactions contemplated hereby are
intended to qualify as a so-called "tax-free" reorganization under the
provisions of Section 368 of the Code and as a tax free transfer under Section
351 of the Code. The Company and Sensitron acknowledge, however, that they
each have been represented by their own tax advisors in connection with this
transaction; that neither has made any representation or warranty to the other
with respect to the treatment of such transaction or the effect thereof under
applicable tax laws, regulations, or interpretations; and that no attorney's
opinion or private revenue ruling has been obtained with respect to the
effects thereof under the Internal Revenue Code of 1986, as amended.
7.03. Further Assurances. From time to time, at the other party's
request and without further consideration, each of the parties will execute
and deliver to the others such documents and take such action as the other
party may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
7.04. Parties in Interest. Except as otherwise expressly provided
herein, all the terms and provisions of this Agreement shall be binding upon,
shall inure to the benefit of and shall be enforceable by the respective
heirs, beneficiaries, personal and legal representatives, successors and
assigns of the parties hereto.
7.05. Entire Agreement; Amendments. This Agreement, including the
Schedules, Exhibits and other documents and writings referred to herein or
delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings
other than those expressly set forth herein or therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to its subject matter. This Agreement may be amended only by a
written instrument duly executed by the parties or their respective successors
or assigns.
7.06. Headings, Etc. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretations of this Agreement.
7.07. Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the person, persons, entity or entities may require.
7.08. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
7.09. Governing Law. This Agreement shall be governed by the laws of
the State of California (excluding conflicts of laws principles) applicable to
contracts to be performed in the State of California.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto as the date first above written.
NANOTECH CORPORATION SENSITRON, INC.
By: /s/ Jehu Hand By: /s/ Douglas M. Odom
------------- -------------------
Name: Jehu Hand Name: Douglas M. Odom
Title: President Title: President
SENSITRON ACQUISITION CORP.
By: /s/ Jehu Hand
-------------
Name: Jehu Hand
Title: President
Exhibit 3.1
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
NANOTECH CORPORATION
(a Delaware corporation)
==============================================================================
NANOTECH CORPORATION, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware:
DOES HEREBY CERTIFY:
FIRST: The following resolution has been unanimously adopted by the
board of directors and a majority of the stockholders of the Corporation in
accordance with Section 242 of the Delaware General Corporation Law for the
purpose of amending the corporation's Certificate of Incorporation. The
resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of the Corporation
be amended by changing the Articles thereof numbered "FIRST" and "FOURTH" so
that, as amended, said Articles shall be and read as follows:
FIRST: The name of the corporation is Micropoint, Inc.
FOURTH: The total number of shares of all classes which the Corporation
is authorized to have outstanding is One Hundred and One Million (101,000,000)
shares of which stock One Hundred Million (100,000,000) shares in the par
value of $.001 each, amounting in the aggregate of One Hundred Thousand
Dollars ($100,000) shall be common stock and of which One Million (1,000,000)
shares in the par value of $.001 each, amounting in the aggregate to One
Thousand Dollars ($1,000) shall be preferred stock.
The board of directors is authorized, subject to limitations
prescribed by law, to provide for the issuance of the authorized shares of
preferred stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series and the qualifications,
limitations or restrictions thereof. The authority of the board with respect
to each series shall include, but not be limited to, determination of the
following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if so, the
terms and conditions of such conversion, including provision for adjustment of
the conversion rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the date or date
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions, and
at different redemption rates;
(f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;
(g) The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the corporation, and the
relative rights of priority, if any, of payment of shares of that series;
(h) Any other relative rights, preferences and limitations of that series,
unless otherwise provided by the certificate of determination.
SECOND: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Law of the State of Delaware.
IN WITNESS WHEREOF, NANOTECH CORPORATION has caused this certificate to
be signed by its duly authorized officer, this 5th day of January, 1998.
NANOTECH CORPORATION
/s/ Jehu Hand
- ----------------------------------
Jehu Hand, President and Secretary
Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated December 31, 1997, (the "Effective Date"), by
and between Flexpoint, Inc., a Utah corporation and Sensitron, Inc., a Utah
corporation (collectively "Company") and Doug Odom ("Executive"). The Company
desires to engage the services of the Executive as President of the Company on
the terms and subject to the conditions of this Agreement, and Executive
desires to accept such employment.
In consideration of the terms and mutual covenants contained in this
Agreement, the Company and Executive agree as follows:
1. Employment. The Company hereby engages the services of Executive
as President of the Company with powers and duties consistent with such
position, and Executive hereby accepts such engagement. During the terms of
this Agreement, Executive shall perform such additional duties and accept
election or appointment to such additional offices or positions of the Company
or its affiliates of an executive nature as may be specified by the Board of
Directors of the Company. Executive shall perform his obligations to the
Company and it subsidiaries pursuant to this Agreement under the direction of
the Board of Directors of the Company, and Executive shall devote
approximately all of his business time and efforts to such performance.
2. Term. This Agreement shall continue in full force and effect for
a term of three years beginning on the Effective Date, unless sooner
terminated pursuant to the provisions contained herein (the "Initial Term").
Unless terminated, this Agreement will be renewed automatically for one or
more successive one-year terms (the "Renewal Terms"), unless Executive or the
Company gives its written notice of non-renewal to the other party not less
than ninety (90) days prior to the expiration of the then-current term.
Executive's period of employment hereunder, including the Initial Term and all
Renewal Terms, shall constitute and be hereinafter referred to as the "Term"
of this Agreement.
3. Compensation. For services rendered pursuant to this Agreement,
Executive shall receive, commencing on the Effective Date, the following
compensation: (i) a base salary of One Hundred Twenty Thousand Dollars
($120,000.00) in fiscal year 1998, One Hundred Twenty Thousand Dollars
($120,000.00) in fiscal year 1999, and One Hundred Twenty Thousand Dollars
($120,000.00) in fiscal year 2000; and (ii) such bonuses and/or increases as
from time to time as referenced herein or as authorized by the Board of
Directors in their sole discretion. Executive's base salary shall be paid in
equal bi-monthly installments.
4. Incentive Bonus. In addition to the base salary, Executive shall
be eligible for an incentive bonus ("Incentive Bonus") each year in the amount
as identified herein. The Incentive Bonus shall be based upon the operating
results for that year of the Company and shall be issued, if earned, within
thirty days after such operating results have been determined by the companies
accountants. The criteria upon which the Incentive Bonus is awarded shall be
set by the Board of Directors.
5. Employment Benefits. Executive shall be entitled to three weeks
of paid vacation each calendar year, beginning January 1, 1998. Unused
vacation time shall not accrue or carry over to future years, so that three
weeks will be the maximum amount of paid vacation to which Executive shall be
entitled hereunder during any calendar year.
During the term of this Agreement, the Company will provide to Executive
the following benefits:
(a) Insurance. Medical, dental, and short- and long-term disability
insurance programs for the benefit of Executive and his immediate family;
(b) Automobile. Payment of reasonable automobile expenses related to
Executive's use of his personal automobile for purposes related to the
Company's business, including reimbursement at the maximum rate per mile
allowable by the Internal Revenue Service for all mileage incurred in
connection with Company business; and
(c) Other Benefits. Executive shall also receive, on the same plans
as other applicable employees, such other employment benefits as are approved
for key employees or employees generally by the Company's Board of Directors
from time to time, including (without limitation) participation in any stock
option plans, insurance plans, profit-sharing plans and retirement plans.
(d) Life Insurance. Life insurance of no less than $1,000,000 with
Company as 50% beneficiary and Executive's assignee as the remaining 50%.
(e) Bonus. If the performance goals are met for the selected fiscal
years referenced below, Executive shall be granted stock options that shall be
exercisable as follows:
Stock Options Stock Options
------------- -------------
If Employed <F1> Based Upon Performance <F2>
----------- ----------------------
Fiscal Year 1998 5,000 5,000
Fiscal Year 1999 5,000 5,000
Fiscal Year 2000 5,000 5,000
<F1> In accordance with and subject to the Sensitron Omnibus Stock Option
Plan, the stock option shall be for a share purchase price of $5.00 per share
and shall be vested on the first day of the fiscal year.
<F2> In accordance with and subject to the Sensitron Omnibus Stock Option
Plan, the stock option shall be for a share purchase price of $5.00 per share
and if specific performance goals are not as outlined in paragraph.
6. Reimbursement of Future Expenses. Executive shall be reimbursed
by the Company for all reasonable out-of-pocket expenses documented and
incurred by Executive in performance of his duties under this Agreement.
7. Annual Plan. Executive shall submit to the Board of Directors for
its approval, not later than 60 days before the beginning of each calendar
year, an annual business plan for the Company (the "Annual Plan"). The Annual
Plan shall be revised by Executive and submitted to the Board of Directors for
its review (and approval in the case of material changes from the approved
Annual Plan) from time to time during each year to reflect changes in the
Annual Plan because of operations or otherwise. Each Annual Plan shall
include the following information:
(a) an annual forecast of income and expenses for the operation of
the Company;
(b) a cash flow budget, estimate of profit, and source and use of
cash statements for the operation of the Company;
(c) a payroll and staffing plan and budget for the operation of the
Company; and
8. Termination. Executive's employment will terminate upon the first
to occur of the following:
(a) Termination by the Company for "cause," as reasonably determined
by the Company's Board of Directors in good faith. For the purposes of this
Section 8, "cause" shall mean:
(i) misfeasance or negligence in the performance of his duties
hereunder;
(ii) engagement by Executive in dishonest or illegal conduct that is
injurious to the Company; or
(iii) a breach of the Company's policy and procedure as reasonably
established from time to time by the Board of Directors of the Company that is
not cured within 30 days of notice being sent by the Company.
Executive shall be given 30 days notice of any anticipated termination of
his employment for cause, and a 30 days opportunity to rectify or correct the
alleged problem. Immediately upon termination of the Executive under this
Section 8 , the Company shall have no further obligations to Executive under
this Agreement other than the continuation of insurance policies to the extent
required by law.
(b) Termination by the Company (in its sole discretion) in the event
of Executive's disability. "Disability" will be deemed to exist if Executive
has substantially failed to perform his duties hereunder for 90 consecutive
days for reasons of mental or physical health and is no longer able to perform
his duties hereunder with or without reasonable accommodations by the Company,
or if a physician selected in good faith by the Company examines Executive
(and Executive agrees to permit such examinations at the Company's expense)
and advises the Company that Executive will not be able to perform his duties
hereunder with or without reasonable accommodations by the Company for the
following 90 consecutive days. In determining what are reasonable
accommodations, the Company shall comply with the Americans with Disabilities
Act. If the Company terminates Executive's employment for disability,
Executive shall receive compensation due under Section 3 of this Agreement and
the employee benefits due under Section 4 of this Agreement through the date
of termination and the company will have no further obligation under this
Agreement other than the continuation of insurance policies to the extent
required by law.
(c) Executive's death. In the event of the Executive's death,
Executive's estate or surviving spouse, as applicable, shall receive all
compensation due to Executive under this Agreement through the date of death
and the Company will have no further obligation under this Agreement other
than the continuation of insurance policies to the extent required by law and
continuation of other benefits under this Agreement for six months following
the date of death.
(d) Termination by the Company at its discretion. Upon such
termination, Executive shall receive all compensation due him under this
Agreement and the employee benefits due under this Agreement for a period of
twelve months after termination. The Company will have no further obligation
under this Agreement other than the continuation of insurance policies to the
extent required by law.
9. Notice of Termination. Any termination of Executive's employment
under this Agreement shall be communicated by a written Notice of Termination
to the other party hereto, which notice shall specify the particular
termination provision in this Agreement relied upon by the terminating party
and shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination under such provision.
10. Executive's Devotion of Time. Executive hereby agrees to devote
his full time, abilities and energy to the faithful performance of the duties
assigned to him or her and to the promotion and forwarding of the business
affairs of the Company, and not to divert any business opportunities from the
Company to himself or to any other person or business entity.
11. Agreement Not to Compete. In the event that this Agreement
expires in accordance with its terms or is terminated for any reason,
Executive covenants and agrees that for a period of two years after his
employment under this Agreement expires or is so terminated, he will not
directly or indirectly (whether as employee, director, owner, 5% or greater
stockholder, consultant, partner (limited or general) or otherwise) engage in
or have any interest in any business that competes with the business of the
Company or its subsidiaries provided, however, that nothing herein will
prevent Executive from owning up to 5% of the outstanding stock of a
corporation, so long as Executive does not participate in the business of such
corporation other than as a passive investor.
The Company may, in its discretion, give Executive written approval(s) to
personally engage in any activity or render any services referred to in this
Section if Company secures written assurances (satisfactory to the Company and
its counsel) from the Executive and any prospective employer(s) of Executive
that the integrity of the Company's Confidential or Proprietary Information
will not in any way be jeopardized by such activities, provided that the
burden of so establishing the foregoing to the satisfaction of the Company and
its counsel shall be upon the executive and prospective employer(s).
12. Agreement Not to Solicit Employees, Customers, or Others.
Executive covenants and agrees that, for a period of two years after this
Agreement is terminated, he will not, directly or indirectly, (i) solicit,
induce or hire away, or assist any third party in soliciting, diverting or
hiring away, any employee of the Company or its subsidiaries, whether or not
the employee's employment is pursuant to a written agreement and whether or
not such employment is for a specified term or is at will, or (ii) induce or
attempt to induce any customer, supplier, dealer, lender, licensee,
consultant, or other business relation of the Company or its subsidiaries to
cease doing business with the Company or its subsidiaries.
13. Inventions and Improvements. Executive agrees that all
inventions, innovations, or improvements in the Company's or its subsidiaries'
products or methods of conducting its business (including new combinations,
applications, improvements, ideas, and discoveries, whether or not
copyrightable or patentable) conceived or made by him while he is employed by
the Company or its subsidiaries and all reports, data, writings or technical
information prepared by him while he is employed by the Company belong to the
Company or its subsidiaries. Executive will promptly disclose such
inventions, innovations or improvements to the Board of Directors of the
Company and perform all actions reasonably requested to establish or confirm
the ownership of the Company or its subsidiaries thereof.
14. Ownership, Non-Disclosure and Non-Use of Confidential or
Proprietary Information.
(a) Executive covenants and agrees that while he is employed by the
Company and after termination of employment he will not, directly or
indirectly:
(i) give any person not authorized by Company to receive it or use
it, except for the sole benefit of the Company or its subsidiaries, any of the
Company's or subsidiaries' proprietary data or information whether relating to
products, ideas, designs, processes, research, marketing, customers,
management, know-how, patents or otherwise; or
(ii) give to any person not authorized by the Company to receive it
any specifications, reports, or technical information or the like owned by the
Company or its subsidiaries; or
(iii) give to any person not authorized by the Company to receive it
any information that is not generally known outside the Company or that is
designated by the Company or its subsidiaries as limited, private, or
confidential.
(b) If Executive is employed in a sales capacity, Executive will not
render services, directly or indirectly, to any competitor of the Company or
its subsidiaries in connection with the development, marketing, sales,
merchandising, leasing, servicing, or promotion of any product sold by the
Company or its subsidiaries.
(c) Executive covenants and agrees that he will keep himself informed
of the Company's policies and procedures for safeguarding the Company property
including proprietary data and information and will strictly comply therewith
at all times. Executive will return to the Company or its subsidiaries
immediately upon termination of his employment all Company or its subsidiaries
property in his possession or control.
15. Limitations. The parties agree that in the event any court of
competent jurisdiction should determine that the term or restrictions set
forth herein is unreasonable in scope, then in such event the court shall fix
the term or restrictions so as to be reasonable, enforceable and consistent
with the intent of this Agreement.
16. Independent Agreements: Survival. Executive and Company agree
that the covenants made in Sections 8 through and including 13 herein shall be
construed as agreements independent of any other provision of this Agreement,
and shall survive the termination of this Agreement. Moreover, the existence
of any claim or cause of action of Executive against the Company, or the
Company against Executive, whether or not predicated upon the terms of this
Agreement, shall not constitute a defense to the enforcement of any of these
covenants against Executive by Company, or against Company by Executive,
respectively. Any reference to the Company in Sections 7 through and
including 12 shall include the Company and its subsidiaries where applicable.
17. Complete Agreement. This Agreement embodies the complete
agreement and understanding between the parties and supersedes any prior
understandings, agreements, or representations by or among the parties,
whether written or oral, concerning the subject matter hereof in any way.
18. Amendments: Waivers. This Agreement may not be amended except
by a writing signed by both the Company and Executive. Any waiver by a party
hereof of any right hereunder shall be effective only if evidenced by a signed
writing, and only to the extent set forth in such writing.
19. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, heirs, and assigns, except that Executive may not
assign any of his obligations hereunder without the prior written consent of
the Company.
20. Remedies. Each of the parties to this Agreement will be entitled
to specifically enforce its rights under this Agreement, to recover damages by
reason of any breach of any provisions of this Agreement and to exercise all
other rights to which it may be entitled. The parties agree and acknowledge
that money damages may not be an adequate remedy for breach of the provision
of the Agreement and accordingly, each party hereby agrees and consents that
in the event of any material breach of this Agreement by it, the non-breaching
party may obtain appropriate injunctive relief or an order for specific
performance, in order to enforce or prevent any violations of the provisions
of this Agreement.
21. Governing Law. In the event of any dispute arising under this
Agreement, it is agreed between the parties that the laws of the State of Utah
will govern the interpretation, validity, and effect of this Agreement without
regard to the place of execution or performance hereof.
22. Dispute Resolution. In the event of a dispute between the
parties arising out of or related to this Agreement, the parties agree to use
the following procedure prior to either party pursuing other available
remedies:
(a) A meeting shall be hold promptly between the parties, attended
by representatives having decision-making authority regarding the dispute, to
attempt in good faith to negotiate a resolution of the dispute.
(b) If, within thirty (30) days after such meeting, the parties have
not succeeded in negotiating a resolution of the dispute, they will jointly
appoint a mutually acceptable neutral person not affiliated with either of the
parties (the "Neutral"), seeking assistance in such regard from the American
Arbitration Association, Center for Public Resources, or other mutually
agreed-upon organization if they have been unable to agree upon such
appointment within forty (40) days from the initial meeting. The fees of, and
authorized costs incurred by, the Neutral shall be shared equally by the
parties.
(c) In consultation with the Neutral, the parties will select or
devise an alternative dispute resolution procedure ("ADR") by which they will
attempt to resolve the dispute, and a time and place for the ADR to be held,
with the Neutral making the decision as to the procedure, and/or place and
time, if the parties have been unable to agree on any of such matters within
twenty (20) days after initial consultation with the Neutral. In any case,
the ADR shall be held no later than sixty (60) days after selection of the
Neutral.
(d) The parties agree to participate in good faith in the ADR to its
conclusion. If the parties are not successful in resolving the dispute
through the ADR, then either party may pursue other available remedies upon
seven (7) days written notice to the other party specifying its intended
course of action.
23. Notices. Any notice to be given hereunder shall be in writing
and shall be effective when personally delivered or sent to the other party by
registered or certified mail, return receipt requested, or overnight courier,
postage prepaid, or otherwise when received by the other party, at the address
set forth at the end of this Agreement.
24. Severability. Any provision of this Agreement that is deemed
invalid, illegal, or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this section, be ineffective to the extent of such
invalidity, illegality or unenforceablity, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any
other provisions of this Agreement invalid, illegal, or unenforceable in any
other jurisdiction. If the covenant should be deemed invalid, illegal, or
unenforceable because its scope is considered excessive, such covenant shall
be modified so that the scope of the covenant is reduced only to the minimum
extent necessary to render the modified covenant valid, legal and enforceable.
25. Attorney Fees. In the event any action or proceeding is brought
by any party, against any other party, to enforce the provisions of this
Agreement, the prevailing party shall be entitled to recover its costs and
reasonable attorney fees, whether such sums are expended with or without suit,
at trial or on appeal.
26. Taxes. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law.
27. Construction. This Agreement shall not be construed against the
party preparing it, and shall be construed without regard to the identity of
the person who drafted it or the party who caused it to be drafted and shall
be construed as if all parties had jointly prepared this Agreement and it
shall be deemed their joint work product, and each and every provision of this
Agreement shall be construed as though all the parties hereto participated
equally in the drafting hereof; and any uncertainty or ambiguity shall not be
interpreted against any one party. As a result of the foregoing, any rule of
construction that a document is to be construed against the drafting party
shall not be applicable.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
FLEXPOINT, INC. EXECUTIVE
By /s/ Jules A. deGreef /s/ Doug Odom
---------------------- --------------------------
Name: Jules A. DeGreef Doug Odom
----------------
Title: Sec. Address:__________________________
-----------
SENSITRON, INC.
By: /s/ Jules A. deGreef
----------------------
Name: Jules A. deGreef
--------------------
Title: Sec.
--------------------
Exhibit 10.2
COMMERCIAL/INDUSTRIAL LEASE
LEASE OF SPACE AT 6906 SOUTH 300 WEST, MIDVALE, UTAH 84047.
DATED AS OF September 16, 1996.
1. TERMS DEFINED
Each reference in this Lease to any of the following terms shall mean:
1.1 Lessor. Seventy Second South Partnership, a Utah Limited Partnership.
1.2 Lessor's Address. 179 West 4750 North, Provo, Utah 84604
1.3 Lessee. Flexpoint, Incorporated, a Utah corporation
1.4 Lessee's Address. 6906 South 300 West, Midvale, Utah 84047
1.5 Building Address. 6906 South 300 West, Midvale, Utah 84047
1.6 Lessee's Floor Space ("Premises"). 100% percent of building.
1.7 Total Rentable Floor Space. 10,500 square feet.
1.8 Lease Term. Commencing on the Scheduled Term Commencement Date and
ending on October 31, 1999.
a. Scheduled Term Commencement Date. October 15, 1996.
1.9. Rent.
1.9.1 Prepaid Rent. $2,723.00 (See Exhibit "D")
1.9.2 Monthly Rent. $4,965.00 (includes Imposition Base
and Operating Expense
Base)
1.9.3 Lessee's Share of Imposition. 100%
1.9.4 Imposition Base. $356.00 Per month
1.9.5 Lessee's Share of Operating Expense. 100%
1.9.6 Operating Expense Base. $127.00 Per month
(Operating Expense Base does not include
trash removal costs and does not include
snow removal costs).
1.9.7 Security Deposit. $6,000.00
1.10 Permitted Uses. General officing, warehousing, distribution,
research, development, and manufacturing.
1.11 Acknowledgment of Ground Lease. Parties hereto acknowledge the
existence of a ground lease executed between Joffs, Inc. and Seventy Second
South Partnership on March 21, 1979.
1.12 Limits of Comprehensive Liability Insurance: For injury or death to a
single person and property damage - $1,000,000 combined coverage.
1.13 Exhibits: The following are attached hereto and incorporated herein
by reference:
EXHIBIT A - Building/Lot Plan (as highlighted)
EXHIBIT B - Improvements to be made by Lessor
EXHIBIT C - Services to be performed by Lessor
EXHIBIT D - Rider to Lease
.2 PREMISES AND TERMS
2.1 Premises. Lessor hereby leases to Lessee, subject to and with the
benefit of the provisions of this lease, Lessee's Floor Space ("Premises") in
the Building.
2.2 Common Area. Lessee shall have, as appurtenant to the Premises,
rights to use in common, subject to reasonable rules from time to time made by
Lessor of which Lessee is given notice:
2.3 Land Common Area: Common walkways, sidewalks, and driveways necessary
for access to the Building, landscaping and parking spaces or area, from time
to time maintained on the real property upon which the building is situated
("Lot"), and to the extent from time to time arranged by Lessor, on adjacent
property at Lessor's own discretion.
2.4 Lessor's Reserved Rights in Common Area. Lessor reserves the right
from time to time, without unreasonable interference with Lessee's use, to
alter and relocate any common facility; provided however, that the
substitutions are substantially equivalent or better in quality.
2.5 Term. The Lease Term shall commence on the Scheduled Term
Commencement Date and shall continue until the end of the Lease Term, unless
extended pursuant to Section 4.1 or unless sooner terminated as herein
provided.
3. RENT
3.1 Rent, Monthly Payment. Lessee shall pay Lessor Monthly Rent, in
advance on the first day of each calendar month, for each full calendar month
of the Lease Term and for the appropriate fraction of a calendar month at the
beginning and end of the Lease Term.
3.2 Rent Escalation. See Exhibit "D"
3.3. Rental Tax; Cost and Expenses. Lessee shall pay when due, taxes
levied or assessed against Lessor by reason of this Lease on the rent or any
other payment required to be made hereunder whether said taxes are assessed
solely on the rental payment hereunder or jointly with other rentals collected
pursuant to law or ordinance existing or hereafter enacted (other than taxes
levied on the net income to Lessor derived therefrom as part of a state or
federal income tax law applicable to Lessor's income generally).
3.4 Operating Expense Escalation. Lessee shall pay Lessor, as additional
rent, Lessee's Share of Operating Expense, multiplied by the amount, if any,
by which the Operating Expenses increase over the Operating Expense Base. The
amount due Lessor hereunder if any shall be estimated by Lessor annually and
such estimate shall be payable to Lessor in monthly installments over such
year. At year end, the actual Operating Expenses incurred during that year
shall be determined by Lessor, and any adjustment in such estimate shall be
made, with additional payments by or refunds to Lessee, as appropriate.
"Operating Expense" shall include reasonable and necessary expenses incurred
by Lessor for the insurance of the Building and the , maintenance and
insurance of the Land Common Area.
3.5 Imposition Escalation; Personal Property Taxes. Lessee shall pay to
Lessor, as additional rent, Lessee's Share of Imposition multiplied by the
amount, if any, by which the Imposition increases over the Imposition Base.
The amount due Lessor hereunder, if any, shall be estimated by Lessor
annually, and such estimate shall be payable to Lessor in monthly installments
over such year. At year end the actual imposition shall be determined by
Lessor, and any adjustment in such estimate shall be made, with appropriate
additional payments by or refunds to Lessee, as appropriate. "Imposition"
shall mean any form of real estate tax, assessment, license fee, levy penalty
or tax (other than inheritance, rental, income, or estate taxes) imposed by
any authority or agency having the direct or indirect power to tax. Lessee
shall also pay all personal property taxes in full for its personal property
on the Premises or used in connection therewith.
3.6 Proration First and Last Year. If the first or the final Lease years
shall contain less than twelve months, the additional rent payable under
Section 3.3, 3.4 and 3.5 for such lease years shall be prorated. Lessee's
obligation to pay additional rent for the final lease year shall survive the
expiration of the term of this Lease.
3.7 Late Charges. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent or other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by terms of any mortgage or trust deed covering the premises.
Accordingly, if any monthly rent, additional rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designee within ten (10)
days after that said amount is due, then Lessee shall pay to Lessor a late
charge equal to ten (10) percent of such overdue amount, plus any attorney's
fees incurred by Lessor by reason of Lessee's failure to pay rent and/or other
charges when due hereunder. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the cost that Lessor will incur
by reason the late payment by Lessee. Acceptance of such late charge by the
Lessor shall in no event constitute a waiver of Lessee's default with respect
to such overdue amount, nor prevent Lessor from exercising any of the other
rights and remedies granted hereunder.
3.8 Security Deposit. The Security Deposit deposited by Lessee with
Lessor shall be held by Lessor as security for the faithful performance by
Lessee of all the terms, covenants and conditions of this Lease to be kept and
performed by Lessee during the term hereof. If Lessee defaults with respect to
any provision of this Lease, including, but not limited to the provisions
relating to the payment of rent, Lessor may (but shall not be required to )
use, apply or retain all or any part of this security deposit for the payment
of any rent or any other sum in default, or for the payment of any amount
which Lessor may spend or become obligated to spend by reason of Lessee's
default, or to compensate Lessor for any other loss or damage which Lessor may
incur by reason of Lessee's default. If any portion of said deposit is so
used or applied, Lessee shall, within five (5) days after written demand
therefore, deposit cash with Lessor in an amount sufficient to restore the
security deposit to its original amount and Lessee's failure to do so shall be
a default under this Lease. Lessor shall not be required to keep this
security deposit separate from its general funds and Lessee shall not be
entitled to interest on such deposit. If Lessee shall fully and faithfully
perform every provision of this Lease to be performed by it, the security
deposit, or any balance thereof shall be returned to Lessee, or at Lessor's
option, to the last assignee of Lessee's interest hereunder) within ten (10)
days following expiration of the Lease Term. In the event of assignment of
Lessor's interest in this Lease, Lessor shall transfer said deposit to
Lessor's successor in interest.
4. ALTERATIONS/CONSTRUCTION
4.1 Lessor's Improvements. The Lessor shall not be required to make any
alterations, improvements or additions in or about the Premises, unless, and
only to the extent specifically listed on Exhibit "B" hereto.
4.2 Completion. In the event Lessor is so required to improve the
Premises as listed on Exhibit "B" , Lessor agrees to use due diligence to have
the Premises ready for occupancy on or before the Scheduled Term Commencement
Date. In case of delays due to inclement weather, governmental regulation,
inability to obtain labor or materials, labor difficulties, casualty, acts of
God or other causes beyond Lessor's reasonable control, the Scheduled Term
Commencement Date and the Lease Term shall be extended by a period equal to
such delays without liability on the part of Lessor. If the Premises are not
ready for occupancy at the end of said extension, Lessee's sole right shall be
to terminate this Lease and Lessor shall in no case be liable for failure to
have the Premises ready for occupancy.
4.3 Lessee's Alterations; Trade Fixtures.
a. The Lessee shall not make any alterations, improvements, additions or
utility installations (including power panels) in or about the Premises
without the prior consent of the Lessor in writing, which shall not be
unreasonably withheld. If consented to by the Lessor, those alterations,
improvements, additions or utility installations shall be performed at the
sole cost and expense of the Lessee in compliance with all applicable
statutes, ordinances and regulations. Upon expiration of the term of the
Lease, they shall be considered a part of the Building and remain therein
unless the Lessor shall request their removal, in which event they shall be
promptly removed by the Lessee and the Premises replaced in the condition
existing on the date of the commencement of the term of this Lease.
b. Trade fixtures, equipment or other personal property which are installed
in the Premises by the Lessee and are not permanently affixed to the walls,
ceilings, floors or other part thereof shall remain the property of the Lessee
and, providing that the Lessee is not in default in performance of this Lease,
they may be removed by the Lessee at any time during the term of this Lease.
(Lessee shall have the right to install swamp coolers on the roof at Lessee's
own expense, which swamp coolers shall become a permanent part of the premises
and not be removed by Lessee. However, in order to not void the Lessor's
responsibility to maintain the roof throughout the term of the Lease, the
Lessee shall contract with Lessor's roofer, at Lessee's expense, to oversee
Lessee's installation. The Lessee shall also have the right to upgrade the
existing electrical panels, provided that such upgrade shall comply with all
existing building codes and shall be at the sole cost and expense of the
Lessee.)
4.4 No Liens. Lessee shall within five (5) days after the attachment of
any lien or claim, pay and discharge or secure the release from the Building
and/or the Lot or any lien or claim of lien arising out of or in connection
with construction work by or for the account of Lessee; and Lessee shall
promptly indemnify Lessor from and against all loss, cost, damage, injury, or
expense in connection with any such lien or claim of lien, including, without
limitation, reasonable attorneys' fees.
5. SERVICE AND REPAIRS
5.1 Basic Services and Repairs. Lessor shall furnish the services
described in Exhibit "C" hereto.
5.2 Interruption. There shall be no rental abatement. Lessor shall not be
liable for interruption of any service due to accident, making of repairs,
alterations or improvements, unusually severe weather, unusual difficulty or
inability in obtaining services or supplies from sources usually used for the
Building, labor difficulties, governmental regulations, or other cases beyond
Lessor's reasonable control.
5.3 Trash Service, Rubbish and Snow Removal. Lessor shall designate a
contractor or agent for the removal of trash, rubbish and snow from the
Premises. Such contractor or agent shall not be under the direction or
control of Lessee. Lessee shall deposit all rubbish in the manner and
location designated by Lessor. Lessee shall pay Lessor, as additional rent,
upon demand, for said removal pursuant to Exhibit "C" hereto.
5.4 Maintenance and Repair. Except for those services to be performed by
Lessor as listed on Exhibit "C" hereto, Lessee shall keep the Premises in
good order and repair, including (without limitation) replacement of broken
window glass and door glass, irrespective of cause, including all replacement
of light bulbs, tubes, ballasts and starters within a reasonable time after
they burn out.
5.5 Service Contracts. Lessee shall keep all mechanical systems, (heating,
air conditioning, etc.) which exclusively serve the Premises in good order
and repair, and in order to meet such obligation, Lessee agrees to obtain, and
maintain in effect throughout the Lease Term, service contracts acceptable to
Lessor providing for periodic inspection, repair and maintenance of such
mechanical systems. Lessee shall notify Lessor of the name and address of the
Service contractor(s) and of the terms and conditions of such contract(s). If
Lessee shall fail to so obtain service contractor(s) and so notify Lessor, or
if the contracts are not being reasonably performed, Lessor shall have the
right to cure such default and obtain such service contracts, at the expense
of Lessee as provided in Section 8.3 hereof.
6. LESSEE'S COVENANTS
6.1 Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone service and other service metered to the Premises. Lessee shall pay
its pro rata share (as determined by the percentage of the Building used by
Lessee) of all water, gas, heat, light, power, telephone service and other
services not separately metered to the Premises, but generally metered to the
Building. Lessor further reserves the right to install separate meters for
any public utility servicing the Premises for which a meter is not presently
installed, in which event Lessee shall make payments when due directly to the
public utility involved. If separate meters are installed by Lessee, the
cost, deposit and installation shall be at Lessee's expense. If Lessee uses
water service which is not separately metered to Lessee for other than
restroom purposes, the resulting increased monthly water charge may, at the
option of the Lessor, be charged to Lessee. Lessor shall have no liability
and this lease shall not be terminated for failure of such utility services
for any reason beyond Lessor's reasonable control.
6.2 No Sublease or Assignment. Without on each occasion obtaining a prior
written consent of Lessor, not to be unreasonably withheld, Lessee shall not
assign this Lease, or make any sublease (any purported assignment or sublease
without such consent shall be void). Lessee shall reimburse Lessor promptly
for reasonable legal and other expenses incurred by Lessor in connection with
any request for such a consent. Consent to any such assignment or subletting
shall not relieve or release Lessee of Lessee's responsibilities under this
lease unless specifically agreed to in writing by Lessor.
6.3 Indemnity. Lessee shall indemnify Lessor from and against any liability
for injury, loss, accident, or damage to any person or property and from any
claims, actions, proceedings and costs in connection therewith, including
reasonable attorney's fees arising from omission, fault, negligence or other
misconduct of Lessee, or arising from any use made or things done or occurring
in the Premises, and to keep all Lessee's employees working in the Premises
covered by workman's compensation insurance, furnishing Lessor with
certificates thereof.
6.4 Comprehensive Liability Insurance. Lessee shall keep and maintain with
insurance carriers acceptable to Lessor, comprehensive liability insurance
applying to the activities of Lessee in and in connection with the Premises,
with limits of liability of not less than the amount set forth in Section
1.12. hereof, for injury to or death of a single person, per occurrence, and
for property damage. Said insurance shall cover the alterations and
improvements to the premises by the Lessee both prior to the scheduled term
commencement date and thereafter and shall cover claims under Worker's
Compensation Laws. Lessee shall furnish Lessor with a certificate of such
insurance which shall name Lessor and any mortgagee of the Lot and/or
Building, as an additional insured and shall provide for non-cancellation
without thirty (30) days prior written notice to Lessor and said mortgagee.
Failure on the part of the Lessee to renew such insurance at least thirty days
prior to the expiration date thereof, from time to time, shall constitute an
event of default equivalent to failure to pay an installment of Monthly Rent
due hereunder.
6.5 Insurance. Lessor shall maintain insurance on the Building (excluding
any fixtures and items installed or paid for by Lessee which Lessee is
entitled to or required to remove, which insurance Lessee shall provide)
against damage by fire and the perils now specified in the current standard
extended coverage endorsement in an amount equal to at least one hundred
percent (100%) of replacement cost of the Building as determined by Lessor,
and shall include six month rent loss coverage.
6.6 Insurance Subrogation. Any insurance carried by either party with
respect to the Premises and property therein or occurrence thereon shall
include a clause or endorsement denying to the insurer right of subrogation
against the other party to the extent rights have been waived by the insured
prior to the occurrence of injury or loss. Each party, not withstanding any
provisions of this Lease to the contrary, hereby waives any rights of recovery
against the other for injury or loss due to hazards covered by insurance
containing such clause or endorsement to the extent of the injury or loss
covered thereby.
6.7 Signs. Lessee shall not, without the prior written consent of Lessor
which shall not be unreasonably withheld (a) paint or place any signs on the
Premises or anywhere on or in the Building or (b) place any curtains, blinds,
shades, awnings, aerials or flagpoles, or the like, in the Premises or
anywhere on or in the Building visible from outside the Premises. Lessor
reserves the right to disapprove of signs, curtains, blinds, shades, and
awnings on wholly aesthetic grounds. Lessee shall pay the expenses involved
in the erection of any sign and obtaining of a permit therefor. Lessee
warrants that it shall obtain all necessary permits prior to erecting any such
sign and the Lessee shall remove said sign on the termination of this lease.
6.8 Entry and Inspection. Lessee shall permit Lessor and Lessor's agents to
examine the Premises at reasonable times, and if Lessor shall so elect, to
make any repairs or replacements Lessor may deem necessary. Lessor may show
the Premises to prospective purchasers and tenants during the ninety 90) days
preceding expiration of the Lease term and Lessor may place a sign in front of
the building during the forty-five (45) days preceding the expiration of the
Lease Term.
6.9 Permitted Uses and Hazardous Substances. Lessee shall use the Premises,
Lot and/or Building for the Permitted Use only. Lessee agrees not to commit,
or allow to be committed, waste on the Premises, not to injure, overload or
deface the Premises, the Lot or the Building, nor to permit any auction sale,
storage of flammable fluids or chemicals, nuisances, or the emission of any
objectional noise or odor in the Premises, nor to permit any use of the
Premises which is offensive or liable to invalidate or increase the premiums
for any insurance on the Building or its contents or liable to render
necessary any alteration or additions to the Building.
Notwithstanding anything herein to the contrary, the Lessee may store and use
chemicals and flammable fluids as required for the manufacturing and
development of the Lessee's process provided that such use and disposal of
said chemicals and flammable fluids shall be within the guidelines of the EPA.
The Lessor represents that to the best information, belief and present
knowledge of the Lessor's representatives, there are no violations of state
and federal environmental laws on the premises.
Lessee shall comply with all laws, ordinances, orders or regulations of any
public authority for any use made by Lessee, and Lessee shall procure all
licenses and permits so required for such use. Lessee shall not interfere
with the quiet enjoyment of other lessees in the Building or in other
buildings on the adjacent lots nor shall Lessee undertake any activity nor
pursue any practice likely to result in picketing of the Building or any part
thereof.
Without limiting the foregoing, Lessee shall comply with all governmental
rules and regulations pertaining to hazardous or toxic substances and the sale
or storage thereof, and further agrees as follows:
(1) Lessee shall not violate any Federal, State (including, but not limited to
Utah Code Annotated Section 26-14e-101 et seq (1953 as amended) relating to
Underground Storage Tanks), or local law, ordinance, or regulation relating to
industrial hygiene or to the environmental conditions on, under, or about the
Premises including, but not limited to, soil and groundwater or dispose of on,
under or about the Premises or transport to or from the Premises any flammable
explosives, radioactive materials, hazardous wastes, toxic substances, or
related materials, ("Hazardous Materials"). Hazardous Materials shall
include, but shall not be limited to, substances defined as "hazardous
substances" in the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Sec 9601-9657, the Hazardous
Materials Transportation Act of 1975, 49 U.S.C. Sec 1801-1812, and the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sec 6901-6987.
(2) Lessee shall not release or threaten release of hazardous wastes on,
from, or under the Premises, except as may have previously been disclosed
to and consented by Lessor in writing.
(3) Lessee shall immediately advise Lessor in writing of (i) any and all
enforcement, cleanup, remedial, removal, or other governmental or
regulatory actions instituted, completed, or threatened pursuant to any
applicable federal, state or local laws, ordinances, or regulations relating
to any Hazardous Materials affecting the Premises, and (ii) all claims made or
threatened by any third party against Lessee in regard to the Premises
relating to damage, contribution, cost recovery compensation, loss or injury
resulting from any Hazardous Materials.
(4) Lessee indemnifies and holds Lessor harmless from any cost, loss or
damage arising from any Hazardous Waste brought onto the Premises by or for
Lessee or under Lessee's control, including attorney's fees and court costs
incurred in defense of any action for such cost, loss or damage.
(5) Lessee's agreement under this subparagraph shall survive any foreclosure
of Lessee's interests in the Premises.
7. CASUALTY AND TAKING
7.1 Termination or Reconstruction. If during the Lease Term, the Premises,
Building or Lot, or any substantial part thereof are damaged materially by
fire or other casualty thereof, or receive compensable damage by reason of
anything lawfully done under color of public or other authority, this Lease
shall terminate at Lessor's election by written notice given thirty (30) days
after the casualty or taking has occurred. In case of damage to or taking
part of the Premises, (a) if the remainder is insufficient for use of Lessee's
purposes, or (b) in case of such damage or taking if the time needed to do the
construction work necessary to put the Premises or such remainder in proper
condition for use and occupation is reasonably estimated by Lessor to exceed
six (6) months, or (c) Lessor does not commence within sixty (60) days after
the damage or the surrender of the part taken and proceed with reasonable
diligence, to do such work, Lessee's sole right shall be the option to
terminate this Lease, without penalty, by notice given to Lessor within thirty
(30) days after the right to terminate arises.
In the event of a termination by Lessor or Lessee hereunder, monthly rent and
additional rent shall be apportioned as of the date of the right to terminate
arises.
If in any such case the Lease is not so terminated, a just proportion of the
rent according to the nature and extent of the injury shall be abated until
the Premises (or in case of taking what may remain thereof), excluding any
fixtures or items installed or paid for by Lessee which Lessee is entitled or
required to remove pursuant hereto, shall have been put by Lessor into proper
condition. In case of a taking which permanently reduces the area of Lessee's
Floor Space, a just proportion of the Monthly Rent shall be abated for the
remainder of the Lease Term and Lessee's Share of Operating Expenses and
Lessee's Share of Imposition shall be adjusted as determined by Lessor.
7.2 Lessor Reserves Compensation. Lessor reserves all rights to compensation
for damage to the Premises, the Building, the Lot and the leasehold hereby
created, accruing by reason of exercise of eminent domain or by reason of
anything lawfully done by public authority; provided, however, nothing herein
shall be deemed to give Lessor any interest in or require Lessee to assign to
Lessor any award made to Lessee for the taking of personal property or
fixtures belonging to Lessee and removable by Lessee on termination of this
Lease, for interruption of damage to Lessee's business, or for Lessee's moving
expense.
8. DEFAULT
8.1 Events of Default. The occurrence of any of the following events shall
constitute an event of default on the part of the Lessee:
a. Vacation or abandonment of the Premises unless the Lessee continues
to pay rent and perform all of its other obligations under the Lease.
b. Failure to pay any installment of Monthly Rent or other monies due
and payable hereunder, said failure continuing for a period of three (3) days
after receipt of written notice of such default.
c. Default in the performance of any of Lessee's covenants, agreements
or obligations hereunder, said default (except default in the payment of any
installment of Monthly Rent, or other monies) continuing for thirty (30) days
after written notice thereof from Lessor to Lessee.
d. A general assignment by Lessee for the benefit of creditors.
c. The filing of a voluntary petition in bankruptcy by Lessee, the
filing of a voluntary petition for an arrangement, the filing of a petition
voluntary or involuntary, for reorganization, or the filing of an involuntary
petition by Lessee's creditor, said involuntary petition remaining
undischarged for a period of sixty(60) days.
e. Receivership, attachment or other judicial seizure of substantially
all of Lessee's assets or the Premises, such attachments or other seizure
remaining undismissed or undischarged for a period of sixty (60) days after
the levy thereof.
8.2 Lessor's Remedies.
a. Damages: In the event of any such default by Lessee, then in
addition to any other remedies available to Lessor at law or in equity, Lessor
shall have the immediate option to terminate this Lease and all rights of
Lessee hereunder. In the event that Lessor terminates this lease then Lessor
may recover from Lessee:
b. The worth at the time of award of any unpaid Rent which had been
earned at the time of such termination; plus
c. The worth at the time of award of the amount by which the unpaid Rent
which would have been earned after termination until the time of award exceeds
the amount of such rental loss Lessee proves could have been reasonably
avoided, plus
d. The worth at the time of award of the amount by which the unpaid Rent
for the balance of the term after the time of award exceeds the amount of such
rental loss that Lessee proves could be reasonably avoided; plus
e. any other amount necessary to compensate Lessor for all the damage
caused by Lessee's failure to perform it's obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom;
plus
f. such reasonable attorney's fees and court costs incurred by Lessor
prior to suit, after suit, on appeal, or in protection of Lessor's rights in
any bankruptcy proceeding; and
g. interest on such sums at ten percent (10% per annum).
The term "Rent", as used herein, shall be deemed to be and to mean the monthly
rent, additional rent and all other sums required to be paid by Lessee
pursuant to the terms of this Lease.
h. Re-entry. In the event of any such default by Lessee, Lessor shall
also have the right, with or without terminating this Lease to re-enter the
Premises and remove all persons and property from the Premises; such property
may be removed and stored in a public warehouse or elsewhere at the cost of
and for the account of the Lessee.
i. Election. In the event of the vacation or abandonment of the
Premises by Lessee or in the event that Lessor shall elect to re-enter as
provided in paragraph 8.2.2 above or shall take possession of the Premises
pursuant to legal proceeding or pursuant to any notice provided by law, then
Lessor may from time to time, without terminating this Lease, either recover
all rental as it becomes due or relet the Premises or any part thereof for
such term or terms and at such rental or rentals and upon such other terms and
conditions as Lessor in its sole discretion may deem advisable with the right
to make alterations and repairs to the Premises.
In the event that Lessor shall elect to so relet, then rentals received by
Lessor from such reletting shall be applied; first, to reasonable attorney's
fees and court costs incurred by Lessor as a result of such default, and costs
in the event suit is filed by Lessor to enforce such remedies, second to the
payment of any indebtedness other than rent due hereunder from Lessee to
Lessor; third to the payment of any cost of such reletting, fourth to the
payment of the cost of any alterations and repairs to the Premises; fifth to
the payment of Rent; and the residue, if any, shall be held by Lessor and
applied in payment of future Rent as the same may become due and payable
hereunder. Should that portion of such rentals received from such reletting
during any month, which is applied by the payment of Rent hereunder, be less
than the Rent payable during the month by Lessee hereunder, then Lessee shall
pay such deficiency to Lessor. Such deficiency shall be calculated and paid
monthly. Lessee shall also pay to Lessor, as soon as ascertained, any costs
and expenses incurred by Lessor in such reletting or in making such
alterations and repairs not covered by the rentals received from such
reletting.
j. Termination. No re-entry or taking possession of the Premises by
Lessor pursuant to this Article shall be construed as an election to terminate
this Lease unless a written notice of such intention be given to Lessee or
unless the termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Lessor
because of any default by Lessee, Lessor may at any time after such reletting
elect to terminate this Lease for any such default.
8.3 Right to Cure. In addition to the foregoing remedies and so long as
this Lease is not terminated, Lessor shall have the right but not the
obligation to remedy any default of Lessee and to add to the Monthly Rent
payable hereunder all of Lessor's reasonable costs in so doing, with interest
at the rate of eighteen percent (18%) per annum from the date of such
expenditure until the same is repaid.
8.4 Remedies Cumulative. The rights, privileges, elections and remedies
of Lessor in this Article 8 are cumulative and not alternative.
9. MISCELLANEOUS
9.1 Holding Over. Should Lessee, or any of its successors in interest,
hold over the Premises, or any part thereof, after the expiration of the term
of this Lease, unless otherwise agreed in writing, such holding over shall
constitute and be construed as tenancy from month to month only, at a rent
equal to the Monthly Rent, plus fifty percent (50%) of said Monthly Rent.
This inclusion of the preceding sentence shall not be construed as Lessor's
permission for Lessee to hold over.
9.2 Surrender. Upon the expiration of the Term or early termination
thereof, Lessee shall promptly surrender the Premises in good and clean
condition, and remove any signs, fixtures, or equipment and improvements as
provided in Section 4.2 hereof.
9.3 Notices. Whenever any notice, approval, consent, request or election
is given or made pursuant to this Lease it shall be in writing sent by
certified mail, return receipt requested, or it shall be delivered personally.
Notices and payments shall be addressed to Lessor's Address and Lessee's
Address or at such other source as may have been specified by prior notice.
9.4 Successors and Assigns. The obligations of this Lease shall run with
the land, and this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that only
the Lessor named herein shall be liable for obligations accruing before the
beginning of the Lease Term, and thereafter each successive owner of the
Premises shall be liable only for obligations accruing during the period of
its ownership, said liability terminating upon termination of such ownership
and passing to the successor in ownership.
9.5 Limitation of Lessor's Liability. The obligations of Lessor under
this Lease do not constitute personal obligations of the individual parties,
directors, officers, shareholders or partners of Lessor, or its successors or
assigns, and Lessee shall look solely to the real estate that is the subject
of this Lease and to no other assets of the Lessor, or its successors or
assigns, for satisfaction of any liability in respect to this Lease and will
not seek recourse against the individual parties, directors, officers, or
shareholders of Lessor, or its successors of assigns, or any of their personal
assets for such satisfaction.
9.6 No Waiver. The failure of Lessor or of Lessee to seek redress for
violation, or to insist upon the strict performance of any covenant or
condition of this Lease, shall not be deemed a waiver of such violation nor
prevent a subsequent act which would have originally constituted a violation,
from having all the force and effect of an original violation. The receipt by
Lessor of Monthly Rent, additional rent or other monies due hereunder with
knowledge of the breach of any covenant of this Lease shall not be deemed a
waiver of such breach.
9.7 Severability. If any term of this Lease, or the application thereof,
to any person or circumstances shall, to any extent be invalid or
unenforceable, the remainder of this Lease, or the application of such term to
persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term of this Lease
shall be valid and enforceable to the fullest extent permitted by law.
9.8 Offset Statements. Lessee agrees from time to time that within
fifteen (15) days of receipt of written request by Lessor, to execute,
acknowledge and deliver to Lessor a statement in writing certifying that (a)
this Lease is unmodified and in full force and effect, (b) Lessee has no
defenses, offsets or counterclaims against its obligations to pay the Monthly
Rent and other monies hereunder and to perform its other covenants under this
Lease, or (c) if there have been any modifications that the Lease is in full
force and effect as modified and stating the modifications, and if, there are
any defenses, offsets, counterclaims, or defaults, setting them forth in
reasonable detail, and (d) the dates to which the rent has been paid and the
amount of any Prepaid Rent. Any such statement delivered pursuant to this
Section 9.8 may be relied upon by any prospective purchaser, or mortgagee or
encumbrancer of the Premises or any prospective assignee of any mortgage or
encumbrance upon the premises.
9.9 Attornment. Lessee shall, in the event any proceedings are brought
for the foreclosure of, or in the event of exercise of the power of sale
under, any mortgage or deed of trust made by the Lessor, its successors or
assigns, encumbering the Premises, Building or Lot, or any part thereof, or in
the event of termination of the Ground Lease, attorn to the purchaser upon
such foreclosure or sale and recognize such purchaser as the Lessor under this
Lease.
9.10 Subordination. The rights of Lessee hereunder are and shall be
subject and subordinate to the lien of any mortgage or mortgages, or the lien
resulting from any other method of financing or refinancing, now or hereafter
in force against the Premises, Building or Lot, and to all advances made, or
hereafter to be made upon the security thereof, provided, however, that
notwithstanding such subordination, as long as the Lessee herein is not in
default under any of the terms, covenants and conditions of this Lease,
neither this Lease nor any of the rights of Lessee shall be terminated or
subject to termination by any trustee's sale or by any proceeding or action in
foreclosure. If requested, Lessee agrees to execute whatever documentation
may be required to further effect the provisions of this Section.
9.11. Agency Disclosure. At the signing of this Agreement, the listing
agent, Robert L. Mills, represents the Lessor, and the selling agent, Robert
L. Mills represents the Lessee. Both Lessor and Lessee confirm that prior to
signing this Agreement, written disclosure of the agency relationship(s) was
provided to him/her.
( WO ) Lessor's initials ( DMO ) Lessee's initials
IN WITNESS WHEREOF, the parties hereto have executed one or more copies
of this Lease on the day and year first above written.
LESSOR:
SEVENTY SECOND SOUTH
PARTNERSHIP, a Utah Limited Partnership
BY: /s/ Wallace Ohvan
------------------
TITLE: Gen. Part.
---------------
LESSEE:
FLEXPOINT, INCORPORATED, A UTAH CORPORATION
BY: /s/ Douglas Odom
----------------------------
DOUGLAS ODOM, PRESIDENT
EXHIBIT B
IMPROVEMENTS TO BE PROVIDED BY LESSOR
No improvements to be made by Lessor except for the following:
The Lessor shall repair, at Lessor's own expense, the cracked and sunken
concrete floor in the northwest corner of the building. The Lessor shall also
repair the overhead door and replace the broken kick panels near the front
door.
( WO ) Lessor's initials
( DMO ) Lessee's initials
EXHIBIT C
SERVICES PROVIDED BY LESSOR
Lessor is to arrange for contract services for trash and snow removal and
landscape maintenance as needed. If snow and trash removal are not included
in the Operating Expense Base (by appropriate designation in Section 1.9.6
hereof) Lessee shall pay Lessor, as additional rent, upon demand, its prorata
portion (as determined by the percentage of the Building used by Lessee) of
the cost of such removal and maintenance.
At its own expense, and not as part of the Operating Expense, Lessor agrees
for the term of this Lease to maintain the roof in good condition and repair
and to repair any latent defects in the exterior walls, floor, and
foundations, and to repair any damage that might result from acts of Lessor or
Lessor's representatives.
The Lessor shall be responsible for all mechanical, lighting, electrical and
plumbing equipment to be in good working order for the first year of this
Lease, at its own expense.
Lessor shall not, however, be obligated to repair any such damage until
written notice of the need of repair shall have been given to Lessor and after
such notice is so given, Lessor shall have a reasonable time in which to make
such repair.
( WO ) Lessor's initials
( DMO ) Lessee's initials
EXHIBIT "D"
RIDER TO LEASE
Base Rent: $8,723.00 shall be paid upon the execution of this Lease, of
which $2,723.00 represents the rent for the balance of the month of October,
1996 and of which $6,000.00 represents the security deposit. Then
beginning November 1, 1996 the Lessee shall pay $4,965.00 to the Lessor on the
first day of each and every month until this Lease has expired.
Option to Renew: The Lessee shall have the option to renew this Lease for
two (2) additional one-year terms under the same terms and conditions as the
original lease except for the monthly base rent which shall be $5,710.00 for
year 4, and $5,995.00 for year 5. The Lessee shall exercise this option by
giving the Lessor 90 days prior written notice of the Lessee's intent to
renew. The Lessee's right to renew this Lease is contingent upon the Lessee
having complied with all previous terms and conditions of the Lease.
Early Occupancy: The Lessee herein shall have the right to enter the premises
and begin setting up, improving etc. as soon as the following has occurred.
1. The Lease is fully executed and a check for $10,965.00 has been
deposited with the Lessor.
2. The Lessee has placed the utilities in Lessee's own name.
3. The Lessee has complied with the insurance provisions of this Lease.
It is the intention of the parties that the Lessee may take immediate
occupancy to accomplish setting up and improving the facility. At the same
time, the Lessor will be repairing the cracked and sunken floor and roof, if
necessary; however, if the Lessor is unable to complete these improvements on
or before October 15, 1996, all rent shall abate until the earlier of November
15, 1996 or the date the Lessor completes these improvements. If the Lessor
does not complete these improvements by November 15, 1996, the Lessee may
cancel this Lease without further liability. If the improvements are
completed by November 15, 1996, the Lease shall be in full force and effect.
( WO ) Lessor's initials
( DMO ) Lessee's initials
Exhibit 10.3
SENSITRON LICENSE
May 21, 1997
----------------------------
SENSITRON PROPOSED LICENSE
PROPOSED TERMS
1. Rights Granted -
Ohio Art would have the worldwide exclusive right under the license to
use and sell products incorporating flexible potentiometers as covered by U.S.
Patent #5,157,372 and #5,157,476 for use in toy, traditional games, and video
game industries.
a. The license would not include the right to make sensors
themselves or have them made for Ohio Art.
b. It is understood that Ohio Art would have the non-exclusive
right to license both the technology and products incorporating the technology
in beverage containers (i.e. Coke and Pepsi cans and 2 liter bottles).
2. Licensed Products -
Ohio Art's license would cover the field of toys, traditional games,
and video games which use or incorporate a flexible potentiometer as covered
by U.S. Patent No. 5,157,372 and 5,157,476 with the following provision:
a. In the event Ohio Art does not close an agreement with Mike
Wallace for the Rubber/Guitar, Move-me and Sing and Shout concepts for special
feature plush,
* Information marked with an asterisk has been omitted from the public filing
and filed separately with the Commission pursuant to a request for
confidential treatment filed by Micropoint, Inc.
<PAGE>
Mr. Wallace or his designate will be allowed to purchase Bend Sensor TM
products for those items. In consideration of this, in the event Mr. Wallace
and Sensitron has an agreement for a license fee, * of the fees and/or
royalties will be paid to Ohio Art. It is understood that this licensing fee
would only be paid should Mr. Wallace incorporate the Bend Sensor TM
technology in his products.
3. Technology Ownership -
Sensitron shall own all patents and technology to be licensed and a
license agreement between Sensitron and Ohio Art would not depend on a license
between Sensitron and a third person. Sensitron will include in the agreement
language the holds Ohio Art harmless in the event a third party claims rights
to the licensed patents. Sensitron will complete a patent search to include
but not be limited to Japan, China, Korea, Europe, and Canada and will warrant
that there is no knowledge of other patents or claims to the licensed patents.
4. Sublicenses -
Ohio Art would have the right to grant sublicenses. Sensitron will have
the right to review such sublicense proposals to ensure that no conflict
would arise with other pertinent contracts that currently exist. This review
is provided to ensure that Sensitron will be able to protect its intellectual
property and prevent violation of other agreements that Sensitron may have
engaged in to use and sell the licensed products. In the event Ohio Art does
not meet the requirement of paragraph 6, the sublicensee, provided they are
meeting
* Information marked with an asterisk has been omitted from the public filing
and filed separately with the Commission pursuant to a request for
confidential treatment filed by Micropoint, Inc.
<PAGE>
all the terms of their contract with Ohio Art, will be allowed to maintain
their exclusivity. If Ohio Art loses their exclusivity any payments from the
sublicensees per paragraph 8 will revert to * to Sensitron and * to Ohio Art
for a period of 3 years then all payment will go the Sensitron.
5. Improvements -
All improvements, patents, know-how, and applications made by Ohio Art or
a sublicensee, affiliate or subcontractor are the property of Sensitron, but
Sensitron would grant back to Ohio Art a * license for the Licensed Products.
6. Up-Front Fee -
Ohio Art would pay Sensitron an up-front fee of $* separated into four
installments:
Installment Due Date
- ------------------- -------------
$ * On signing this Agreement
$ * December 31, 1997
$ * cumulative
$ * December 31, 1998
$ * cumulative
7. Exclusivity Requirements -
In order to maintain its exclusive license in the Licensed Product Ohio
Art would have to provide revenue from royalties and fees to Sensitron of at
least $* per year beginning January 1, 1999. In the event that this annual
revenue stream is not provided to Sensitron, Ohio Art would
* Information marked with an asterisk has been omitted from the public filing
and filed separately with the Commission pursuant to a request for
confidential treatment filed by Micropoint, Inc.
<PAGE>
be subject to the loss of the exclusive license agreement. However, Sensitron
and Ohio Art would engage on a non-exclusive basis in a renegotiating of this
contract clause with the hope to reach settlement within 6 months.
8. Royalties -
Ohio Art would pay Sensitron a royalty for all products sold in the United
States market by Ohio Art at the rate of *% of the net invoice of the selling
price of the product. In addition, Ohio Art would pay Sensitron at a rate of
*% of the net F.O.B. selling price of Ohio Art's products sold to its
International partners. In addition, Ohio Art would pay Sensitron * of any
royalties paid by sublicensees seeking the right to sublicense various toy
product categories from the Ohio Art company.
9. Sublicensee Allocation -
In the event Ohio Art enters into a toy category sublicense agreement
with a third party, * of any fees paid by the third party to Ohio Art will be
paid to Sensitron without any deduction by Ohio Art for tooling and expenses.
These payments would be advances against royalties in Paragraph 6 and Upfront
Fees in Paragraph 7.
10. Sensitron guarantees that Flexpoint or its designated manufacturing
arm will be able to provide Ohio Art and its sublicensees flexible
potentiometers for use in their products in marketable quantities by June 1,
1998. Should Sensitron not be able to perform under the stipulation of this
provision, all fees and advances received by Sensitron from Ohio Art would be
refunded.
11. Engineering and Design Support -
Sensitron agrees to offer Ohio Art and its sublicenses with engineering
and design support to help incorporate the flexible potentiometers in toy
product applications. It is understood that Sensitron will seek reasonable
remuneration from Ohio Art or its sublicensees for engineering and Design
support services rendered.
12. Term -
Life of the patents in paragraph 1 provided all other provisions of the
document are met. Any extensions to be negotiated by mutual consent separate
from the agreement.
Agreed Agreed
By: /s/ Martin L. Kilgallon II By: /s/ Gordon Langford
----------------------------- --------------------------
Martin L. Killgallon II Gordon Langford
of The Ohio Art Co of Sensitron Inc.
its President its Vice President/R&D
Date: Date:
* Information marked with an asterisk has been omitted from the public filing
and filed separately with the Commission pursuant to a request for
confidential treatment filed by Micropoint, Inc.
