UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRELIMINARY
SCHEDULE 14A INFORMATION
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MICROPOINT,Section 240.14a-12
FLEXPOINT SENSOR SYSTEMS, INC.
(Name
(Name of Registrant as Specified In Its Charter)
_______________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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MICROPOINT,
![[flexpointpre14av51.jpg]](https://capedge.com/proxy/PRE 14A/0001548123-18-000315/flexpointpre14av51.jpg)
December ____, 2018
To our stockholders:
You are cordially invited to attend the annual meeting of stockholders of Flexpoint Sensor Systems, Inc. on Friday, December 28, 2018, at 1:00 p.m. Mountain Time, at the SpringHill Suites by Marriott, located at 12111 South State Street, Draper, Utah 84020.
The matters expected to be acted upon at the meeting are described in detail in the attached Notice of Annual Meeting of Stockholders and Proxy Statement. We have also enclosed a copy of the annual report on Form 10-K for the year ended December 31, 2017 which includes audited financial statements and certain other information.
It is important that you use this opportunity to take part in the affairs of Flexpoint Sensor Systems, Inc. by voting on the business to come before this meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Returning the proxy does not deprive you of your right to attend the meeting and vote your shares in person.
In light of the upcoming stockholders meeting I would like to share some of my thoughts about the past year and the Company’s vision for the future.
During 2018 we have focused our marketing efforts on a number of larger domestic and international companies that have applications which have the potential to greatly increase the volume of sensors we are currently manufacturing. As of the date of this report, the Company had at least sixteen global commercial partners covering a variety of different products. In coordination with its partners, the Company introduced at least eight new products. Management believes this growth in sales channels will allow the Company to grow at an increasingly accelerated rate over the next several quarters.
The Company currently manufactures, and has jointly developed, twenty-five products that are being sold and supplied to current customers and we continue to receive orders for custom prototype sensors as well as our standard sensors. We are continuing to develop and enhance our intellectual properties that will result in additional patents being filed.
FLEXPOINT SENSOR SYSTEMS, INC.
6906
106 West 12200 South 300 West
Midvale,• Draper, UT 84047
84020
Ph: (801) 568-5111 • Fax: (801) 568-2405
www.flexpoint.com
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On October 18, 2018, the Company announced it had signed a five year manufacturing and supply agreement with Counted LLC. Counted LLC conceived of a medication delivery monitoring system and dispensing monitoring system. Flexpoint designed and produced the monitoring system with Flexpoint features, Flexpoint technology and Flexpoint designed electronics to track and report the dispensing of medications in real time. This information has the potential to be transmitted to physicians, pharmacists and governmental agencies. Prototypes have been built and successfully tested and it is expected that additional production and testing will continue throughout the remainder of the year with production increasing in 2019.
The Company has completed delivery of two different products to Haemoband, Ltd. and continues to work with them toward the completion of their testing program for product launch.
The Company continues to develop relationships in a number of application fields. We have a working relationship for the production of sensors for glove based IR/VR applications with Manus VR and others. Flexpoint has also established relationships with several medical IoT vendors. These include companies like Neofect, Gloreha and YouReHab; all with a focus on medical rehabilitation with a different approach. Products from these companies range from gloves to prosthetics to virtual reality, all with the intention of improving medical health or medical rehab.
We continue to work with OEM’s and Tier 1 automotive suppliers on a variety of products that are in various stages of development and implementation. Due to the size and the numerous regulations inherent in the automotive industry, it requires a significantly longer time to develop and acquire approvals for new technologies. However, as there are high volumes associated within the automotive industry, we anticipate that this industry will potentially generate significant long-term revenue streams. Both the medical and automotive industries have undergone significant changes over the past several years. Based upon the current interest in our sensors from both the automotive and medical industries, we anticipate that over the next twelve months, we will begin producing larger repeatable volumes of sensors and devices in these focus industries.
We appreciate the confidence you have shown in the Company and acknowledge your important contribution toward the future success of Flexpoint and its technology. You can keep informed about the Company through our periodic press releases and on our web-site at www.flexpoint.com. If you have any questions regarding the Company you may contact us at (801) 568-5111. Once again, we appreciate your confidence in Flexpoint as we move into the future.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Clark M. Mower
Clark M. Mower
President and CEO
NOTICE OF FLEXPOINT SENSOR SYSTEMS, INC.
ANNUAL MEETING OF STOCKHOLDERS
June 16, 1999
NOTICE
To Be Held December 28, 2018
Dear Stockholders:
It is hereby given thatmy pleasure to invite you to the Annual Meeting of the Stockholders of Micropoint,Flexpoint Sensor Systems, Inc. (the "Company", (“Flexpoint” or ‘the Company”) which will be held on Friday, December 28, 2018, at 1:00 p.m., at the University ParkSpringHill Suites by Marriott Hotel, 500located at 12111 South Wakara Way, Salt Lake City,State Street, Draper, Utah, 84108, at 10:00 a.m. (local
time) on June 16, 1999, for the following purposes:
1. To elect one member84020.
The purposes of the board of directors.
2. meeting will be:
1)
To consider a proposal to amend theFlexpoint’s Certificate of Incorporation to change the nameeffect an increase of the Company to "Flexpoint Sensor Systems, Inc."
3. To consider a proposal to increase the number of shares ofauthorized common stock that may befrom One Hundred Million (100,000,000) to Two Hundred Million (200,000,000);
2)
To amend Flexpoint’s Certificate of Incorporation to effect a reverse split (the “Reverse Split”) of the Company’s issued under the Micropoint, Inc. Omnibus Stock
Option Plan.
4. To transactand outstanding common stock by a ratio of 1-for-50;
3)
Elect two directors to our board of directors; and
4)
Transact such other business as may properly come before suchthe meeting, or any adjournments thereof.
Theadjournment or postponement of the meeting.
Only stockholders of record date for the meeting isat the close of business on May 14, 1999
and only the holders of Common Stock of the Company on that date will beNovember 16, 2018, are entitled to vote at suchthe meeting, or any adjournment thereof.
or postponement of the meeting. We are mailing proxy solicitation material to our stockholders commencing on or about December 7, 2018. We must receive your proxy card on or before December 26, 2018, in order for your proxy to be voted at the meeting.
You are invited to attend the meeting. Regardless of whether you expect to attend the meeting in person, we urge you to read the attached proxy statement and sign and date the accompanying proxy card and return it in the enclosed postage-paid envelope. It is important that your shares be represented at the meeting.
By orderOrder of the Board of Directors,
/s/ Douglas
By: /s/ John A. Sindt
John A. Sindt, Chairman of the Board
Draper, Utah
December ____, 2018
FLEXPOINT SENSOR SYSTEMS, INC.
PROXY STATEMENT
TABLE OF CONTENTS
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General Information | 6 |
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Information Regarding the Meeting | 7 |
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Proposal No. 1 – Amend Certificate of Incorporation to Increase Authorized Shares of Common Stock |
10 |
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Proposal No. 2 – Amend Certificate of Incorporation to Effect Reverse Stock Split | 11 |
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Proposal No. 3 – Election of Directors | 14 |
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Our Management | 15 |
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Director and Executive Officer Compansation | 17 |
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Voting Securities and Principal Holders of Them | 19 |
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Independent Public Accountants | 19 |
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Stockholder Proposals for 2018 Annual Meeting | 20 |
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Other Matters | 21 |
Appendices
Appendix A – Proxy Card
Appendix B – Audit Committee Charter
Flexpoint Sensor Systems, Inc., a Delaware corporation, is principally engaged in designing, engineering and manufacturing bend sensor technology and products using its patented Bend Sensor® technology, a flexible potentiometer technology. We continue to make further improvements to our technologies, manufacturing and developing fully integrated devices and related products that we have been marketing and selling to a variety of companies in diverse industries. We are negotiating and signing agreements, purchase orders and contracts that have provided some revenues and have proven that our sensors are more durable, adaptable and cost effective than any other product currently on the market.
The Company owns five patents, including patents on specific devices that use the Bend Sensor® and we have exclusive rights through licensing agreements to other patents and devices. We are continuing to develop and enhance our intellectual properties that will result in additional patents being filed. The Company currently manufactures, and has jointly developed, twenty-five products that are being sold and supplied to current customers and we continue to receive orders for custom prototype sensors as well as our standard sensors. We are continuing to develop and enhance our intellectual properties that will result in additional patents being filed.
We sent you this proxy statement and the enclosed proxy card because our board of directors (the “Board”) is soliciting your proxy for use at our annual meeting of stockholders. All holders of record of our shares of common stock on November 16, 2018, are entitled to vote at the meeting. At the meeting, you will be asked to:
•
Approve the amendment of Flexpoint’s Certificate of Incorporation to effect an increase of the authorized common stock from One Hundred Million (100,000,000) to Two Hundred Million (200,000,000);
•
Approve the amendment of Flexpoint’s Certificate of Incorporation to effect a Reverse Split of the Company’s issued and outstanding common stock by a ratio of 1-for-50;
•
Elect two directors to our Board;
•
Transact such other business as may properly come before the meeting, or any adjournment or postponement of the meeting.
This proxy statement and the accompanying proxy card were first mailed to our stockholders on or about December 30, 2018. We are paying all of the costs of this proxy solicitation. We have included the information required by Rule 14a-3 of the Securities and Exchange Act of 1934 in this proxy statement.
We have provided our annual report on Form 10-K that includes audited financial statements for our last fiscal year, which ended December 31, 2017.
If you would like copies of any of our filings with the Securities and Exchange Commission (“SEC”), other than the filings we are delivering to you in connection with this proxy statement, you may request copies of the filings by sending your request in writing to:
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Stockholder Relations
Flexpoint Sensor Systems, Inc.
c/o Standard Registrar & Transfer Company, Inc.
440 East 400 South, Suite 200
Salt Lake City, Utah 84111
We will not charge you for any of the copies.
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INFORMATION REGARDING THE MEETING |
Why am I receiving these materials? The Board is providing materials to you in connection with the annual meeting of stockholders, which will take place on December 28, 2018. As a stockholder you are invited to attend the annual meeting and are requested to vote on the items of business described in this Proxy Statement.
How does the Board recommend I vote on the proposals? The Board recommends a vote FOR:
1)
Increasing the authorized common stock from One Hundred Million (100,000,000) to Two Hundred Million (200,000,000);
2)
Effecting a reverse split (the “Reverse Split”) of the Company’s issued and outstanding common stock by a ratio of 1-for-50; and
3)
Electing two directors to our board of directors
Who is entitled to vote? Stockholders as of the close of business on November 16, 2018 (“Record Date”) are entitled to vote at the meeting.
What is the difference between holding shares as a “stockholder of record” and as a “beneficial owner”? Many Flexpoint common stockholders hold their shares through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between common shares held of record and those owned beneficially.
Stockholder of Record: If your common shares are registered directly in your name with Flexpoint’s common stock transfer agent, Standard Registrar & Transfer Company, Inc., you are considered the stockholder of record with respect to those shares. As the stockholder of record, you have the right to grant your voting proxy directly to Flexpoint or to vote in person at the annual meeting. A proxy card is enclosed for your use.
Beneficial Owner: If your shares are held in a brokerage account or by another nominee (often referred to as being held in “street name”), you are considered the beneficial owner of such shares, and these proxy materials are being forwarded to you together with a voting instruction card by your broker, trustee or nominee, as the case may be. As the beneficial owner you have the right to direct your broker, trustee or nominee, how to vote and you are also invited to attend the annual meeting.
Since a beneficial owner is not a stockholder of record, you may not vote your shares in person at the annual meeting unless you obtain a “legal proxy” from the broker, trustee or nominee that holds your
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shares, giving you the right to vote the shares at the meeting. Your broker, trustee or nominee should have enclosed or provided voting instructions for you to use in directing the broker, trustee or other nominee hot to vote your shares.
How do I vote without attending the meeting? Sign and date the proxy card or voting instruction card you receive with this proxy statement and return it in the prepaid envelope. If you return your signed proxy card or voting instruction card but do not mark the boxes showing how you wish to vote, your shares will be voted FOR the proposals. You have the right to revoke your proxy at any time before the meeting by:
·
Notifying Standard Registrar & Transfer Company, Inc.; or
·
Voting in person; or
·
Returning a later-date proxy card
Who can attend the annual meeting? All of our stockholders on November 16, 2018, can attend. Due to limited space in the meeting room, we are limiting the persons who can attend the meeting to our stockholders, their representatives, our employees and directors and our representatives.
How can I attend the annual meeting? Because seating is limited, admission to the meeting will be on a first-come, first-served basis. You should be prepared to present photo identification for admittance. If you are not a stockholder of record as of the record date but held the shares in street name, you should provide proof of beneficial ownership as of the record date, such as you most recent account statement prior to November 16, 2018, a copy of the voting instruction card provided by your broker, trustee or nominee, or other similar evidence of ownership. If you do not provide photo identification or comply with the other procedures outlined above, you may not be admitted to the annual meeting.
How will voting on any other business be conducted? Although we do not know of any business to be considered at the meeting other than the proposals described in this proxy statement, if any other business is presented at the meeting, your signed proxy card gives authority to John A. Sindt, our Chairman of the Board, and Clark M. Odom
-------------------Mower, our President, May 14, 1999
Please Return to vote on those matters at their discretion.
Who will count the votes? We have appointed Standard Registrar & Transfer Company, Inc. as the inspector of the election. Their representative will count and tabulate the votes.
Is my vote confidential? Your Signedvote will not be disclosed except:
·
as needed to permit the inspector of election to tabulate and certify the vote;
·
as required by law; or
·
in limited circumstances, such as a proxy contest in opposition to the Board.
Additionally, all comments written on the proxy card or elsewhere will be forwarded to our management, but your identity will be kept confidential unless you ask that your name be disclosed.
What shares are included on the proxy card? The shares on your proxy card represent ALL of your shares, including those shares held in your accounts at various brokerages. If you do not return your proxy card, your shares will not be voted.
What does it mean if I get more than one proxy card? If your shares are registered differently and are in more than one account, you will receive more than one proxy card. Sign and return all the proxy cards you receive to ensure that all your shares are voted.
How many shares can vote? As of the Record Date, 92,863,464 shares of common stock were outstanding and entitled to vote. Each share of common stock is entitled to one vote on each matter being considered.
What is a “quorum”? A “quorum” is a majority of the outstanding shares. They may be present at the meeting or represented by proxy. There must be a quorum for the meeting to be held, and for a proposal to be adopted it must be approved by more than 50% of the shares voting at a meeting at which there is a quorum present. The two nominees for director receiving the highest number of affirmative votes will be elected as directors. If you submit a properly executed proxy card, even if you abstain from voting, then you will be considered part of the quorum. However, abstentions are not counted in the tally of votes FOR or AGAINST a proposal. We intended to treat shares referred to as “broker non-votes” (i.e., shares held by brokers or nominees as to which the broker or nominee indicates on a proxy that it does not have discretionary authority to vote) as shares that are presented and entitled to vote for purposes of determining the presence of a quorum. We will not consider broker non-votes as votes cast either for or against a particular matter.
Who are the largest principal stockholders? As of November 16, 2018, one stockholder owned more than 5% of our capital stock. First Equity Holdings Corp. beneficially owns 5,985,858 shares of our common stock, representing 6.4% of our outstanding common stock.
How much did this proxy solicitation cost? We did hire Standard Registrar & Transfer Company, Inc. to assist us in the distribution of the proxy materials and the solicitations of votes. We estimate that our costs for those actions (which will be conducted by our employees, officers and directors) will be approximately $5,700. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to our stockholders.
How do I revoke my proxy after I give it? A stockholder giving a proxy pursuant to this solicitation may revoke it at any time prior to its exercise at the meeting by delivering to our President a written notice of revocation, or a duly executed proxy bearing a later date, or by attending the meeting and voting in person. Attendance at the meeting will not, however, constitute revocation of your proxy without your further action. Any written notice revoking your proxy should be sent to our transfer agent’s offices addressed as follows:
Stockholder Relations
Flexpoint Sensor Systems, Inc.
c/o Standard Registrar & Transfer Company, Inc.
440 East 400 South, Suite 200
Salt Lake City, Utah 84111
How may I obtain Flexpoint’s annual report for the fiscal year ended December 31, 2017? A copy of the Flexpoint’s Form 10-K for the year ended December 31, 2017 is included with this Proxy PLEASE COMPLETE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE. THIS
WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE MEETING. IT WILL, HOWEVER,
HELP ASSURE A QUORUM AND AVOID ADDED PROXY SOLICITATION COSTS.
PROXY STATEMENT
------------------
MICROPOINT, INC.
6906 South 300 West
Midvale, UT 84047
------------------
ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 16, 1999
------------------
INTRODUCTION
ThisStatement. In addition, stockholders may request a free copy of Flexpoint’s annual report by writing to the Stockholder Relations address listed above. Current and prospective investors can also access or order free copies of Flexpoint’s annual report, this Proxy Statement, is being furnishedand other financial information and reports from the SEC website at http://www.sec.gov.
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PROPOSAL NO. 1 – AMEND CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED SHARES OF COMMON STOCK |
Proposed Amendment
On November 16, 2018, the Board adopted resolutions (i) proposing to submit an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock from 100,000,000 to 200,000,000; and (ii) directing that a proposal to approve the increase in authorized common stock be submitted to the holders of Micropoint, Inc.
(the "Company")the Company’s common stock for their approval.
The Company currently has authority under its Certificate of Incorporation, as amended, to issue 100,000,000 shares of common stock, par value $0.001 per share, ("Common Stock"), in
connection withof which 92,863,464 shares were issued and outstanding as of the solicitationRecord Date. In addition, the Company’s Certificate of proxies byIncorporation provides for 1,000,000 shares of preferred stock, par value of $0.001 (the “Preferred Stock”). No Preferred Stock has been issued to date.
Purpose of the Proposed Amendment
For the reasons described below, the Board believes the Company must seek to increase its common equity capital by a substantial amount. We currently have only 7,136,536 shares of common stock available for useissuance under our Certificate of Incorporation. Currently, the number of our remaining authorized shares is insufficient to satisfy our convertible debt.
The Board believes the additional authorized shares of common stock may be used for corporate purposes, such as, raising capital for operations, conversion of debt, stock dividends and possible acquisitions of other technologies or businesses. However, any such future actions must be deemed appropriate by our board of directors and, if applicable, be approved by other regulatory authorities.
The Board has approved the proposed amendment and recommends that the stockholders vote to approve it at the Annual Meeting in order to provide the Company with the ability to satisfy debt and to act quickly in response to market conditions to raise capital through issuances of Stockholdersour common stock as opportunities arise.
Effects of the Company (the "Annual Meeting")Proposed Amendment
The proposed amendment would not change the rights provided by our common stock, nor would it affect the rights of the holders of currently issued and outstanding shares of our common stock. If this proposal is approved, the additional shares of our common stock may be issued from time to be
held attime upon authorization of the University Park Marriott Hotel, 500 South Wakara Way, Salt Lake
City, Utah 84108, at 10:00 a.m. (local time) on June 16, 1999,Board, unless otherwise required by applicable law, without further approval by the stockholders and at any
adjournment(s)such price or postponement(s) thereof. This Proxy Statement,for such other consideration as the enclosed
Notice andBoard may deem appropriate.
No further stockholder approval would be required under the enclosed form of proxy are being first mailed to stockholderslisting rules of the Company on or about May 14, 1999.
VOTING AT THE ANNUAL MEETINGFinancial Industry Regulatory Authority (FINRA). The Board of Directorsauthorization of the additional shares of our common stock sought by this proposal would not have any immediate dilutive effect on the proportionate voting power or other rights of our existing stockholders. The Company’s existing stockholders, however, do not have preemptive rights to purchase any additional shares of our common stock that may be issued in the future. Accordingly, to the extent that the additional authorized shares of our common stock are issued in the
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future they may decrease the existing stockholders’ percentage of equity ownership and depending on the price at which they are issued, could be dilutive to the book value per share and earnings per share of existing stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL TO AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE THE COMPANY’S NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
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PROPOSAL NO. 2 – AMEND CERTIFICATE OF INCORPORATION TO EFFECT REVERSE SPLIT |
Proposed Amendment
On November 16, 2018, the Board adopted resolutions (i) proposing to submit an amendment to the Company’s Certificate of Incorporation to effect a Reverse Split of the Company’s issued and outstanding common stock, and (ii) directing that a proposal to approve the Reverse Split be submitted to the holders of the Company’s common stock for their approval. The Reverse Split of the Company’s issued and outstanding common stock will be set at a ratio of 1-for-50. Fractional shares of 0.5 and higher will be rounded up to one share
Currently, the Company (the "Board") has fixed the closeis authorized to issue 100,000,000 shares of business on May 14, 1999,common stock and 92,863,464 shares were issued and outstanding as the record date (the "Record Date") for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting. As of the Record Date, there were outstandingDate. The Reverse Split will result in approximately 17,092,3801,857,278 shares of common stock outstanding. The Reverse Split will require the Company's Common Stock held by approximately 417
holders of record. On the Record Date there were no shares of the Company's
Common Stock held as treasury stock by the Company. Holders of record of the
Company's Common Stock on the Record Date are entitled to cast one vote per
share, exercisable in person or by properly executed proxy, with respect to
each matter to be considered by them at the Annual Meeting. The presence, in
person or by properly executed proxy,approval of the holders of a majority of the outstanding shares of the Company'sCompany’s common stock.
Purpose of the Proposed Amendment
The Board believes the reduction of outstanding common stock as a result of the Reverse Split will provide additional authorized shares of common stock available for other corporate purposes, including capital raising, satisfaction of debt, stock dividends and possible acquisitions of other technologies or businesses. In the future, such actions must be deemed appropriate by our board of directors and approved by applicable regulatory authorities.
The Board believes that the Reverse Split is in the best interest of the Company. Under economic theory, and as experience shows, the factor the Company uses for the reverse stock split becomes the multiple that the market automatically uses to adjust the share price. Accordingly, the market price of our common stock should rise in an inverse amount to the ratio of the Reverse Split. The Board believes that the proposed ratio of 1-for-50 will result in an increased stock price that may limit the application of the Penny Stocks Rules (Exchange Act Rules 3a51-1 and 15g-1 through 15g-100) that regulate the sale of our trading shares. This action may improve the marketability and liquidity of the Company’s common stock, as well as encourage investor interest. However, the market price of our common stock is also based on other factors including our performance, general economic and market conditions and other factors, many of which are beyond our control. Accordingly, following the initial expected rise of the market price following the implementation of the Reverse Split, the market price of our stock may fall, resulting in a loss of net value to your portfolio.
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Potential Risks of the Reverse Split
There can be no assurance that the bid price of the Company’s common stock will continue at a level in proportion to the reduction in the number of outstanding shares resulting from the Reverse Split. Further, we cannot give any assurances that the Reverse Split will encourage investor interest and improve the marketability and liquidity of the Company’s common stock.
Additionally, the liquidity of the Company’s common stock could be adversely affected by the reduced number of shares outstanding after the Reverse Split. Although the Board believes that a higher stock price may help generate investor interest, there can be no assurance that the Reverse Split will result in a per-share price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds. As a result, any decreased liquidity that may result from having fewer shares outstanding may not be offset by increased investor interest in the Company’s common stock.
Effects of the Reverse Split on Common Stock
The effective date of the Reverse Split shall be determined in the discretion of our Board and subject to market regulations. After the effective date of the Reverse Split, but no later than 90 days from the filing of the Certificate of Amendment related to the Reverse Split, each stockholder will own a reduced number of shares of our common stock, but will hold the same percentage of the outstanding shares as such stockholder held prior to the effective date. The Reverse Split will affect all of our stockholders uniformly, except to the extent that the Reverse Split results in any of the Company’s stockholders receiving additional shares as a result of or owning a fractional share that is necessaryrounded up, as described below.
The number of stockholders of record will not be affected by the Reverse Split. Proportionate voting rights and other rights and preferences of the holders of the Company’s common stock will not be affected by the Reverse Split other than as a result of the rounding up of fractional shares. All shares underlying outstanding options and warrants will also be automatically adjusted on the effective date of the Reverse Split.
The Reverse Split will not affect the par value of our common stock and the Company should not recognize any gain or loss as a result of the Reverse Split. As a result, on the effective date of any such implementation, the stated capital on our balance sheet attributable to constitute a
quorum at the Annual Meeting.
Common Stock will be voted in accordance with the instructions indicated
in a properly executed proxy. If no instructions are indicated, suchour common stock will be votedreduced in proportion with the exchange ratio for the Reverse Split and our additional paid-in capital account will be credited with the amount by which the stated capital is reduced. These accounting entries will have no impact on total stockholders' equity. In future SEC periodic report filings all share and per share information will be retroactively adjusted following the effective date to reflect the Reverse Split for all periods presented.
Fractional Shares
No fractional shares of the Company’s common stock will be issued as recommended bya result of the Board. Ifproposed Reverse Split. In lieu of issuing fractional shares, the Company will round up any other matters are properly
presentedfractional shares of 0.5 and higher to the Annual Meetingnext highest full share.
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Implementation and Exchange of Stock Certificates
The Reverse Split will be effective upon approval of the Company-Related Action Notification filed with the Financial Industry Regulatory Authority (“FINRA”). As of the effective date set by FINRA, each certificate representing shares of the Company common stock before the Reverse Split would be deemed, for action,all corporate purposes, to evidence ownership of the person(s) namedreduced number of shares of the Company’s common stock resulting from the Reverse Split.
There will be no mandatory exchange of certificates; rather certificates will be exchanged in the enclosed form(s)ordinary course of proxy and acting thereunderbusiness.
The Company’s transfer agent, Standard Registrar & Transfer Company, Inc., will have discretion to vote
on such matters in accordance with their best judgment. Broker non-votes and
abstentions are not treatedact as votes castexchange agent for purposes of implementing the exchange of stock certificates. No new certificates will be issued to a stockholder until such stockholder has surrendered any outstanding certificates to the transfer agent. Until surrendered, each certificate representing shares before the Reverse Split will continue to be valid and will represent the adjusted number of shares based on the ratio of the mattersReverse Split. Stockholders should not destroy any stock certificate and should not submit any certificates until after the Reverse Split has become effective. Persons who hold their shares in brokerage accounts or “street name” will not be required to be voted ontake any further actions to effect the exchange of their shares.
Material U.S. Federal Income Tax Considerations
TO ENSURE COMPLIANCE WITH REQUIREMENTS IMPOSED BY THE U.S. INTERNAL REVENUE SERVICE, WE INFORM YOU THAT ANY FEDERAL TAX ADVICE CONTAINED IN THIS INFORMATION STATEMENT IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR PURPOSES OF (I) AVOIDING PENALTIES UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (II) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TRANSACTION OR TAX-RELATED MATTER ADDRESSED HEREIN. YOU ARE ENCOURAGED TO CONSULT YOUR TAX ADVISOR TO DETERMINE FOR YOURSELF THE TAX EFFECTS OF THE REVERSE SPLIT, IF ANY, INCLUDING SUCH TAX EFFECTS UNDER STATE, LOCAL AND FOREIGN TAX LAWS.
The following discussion sets forth the anticipated material U.S. federal income tax consequences that management believes will apply to the Company and the Company’s stockholders who are U.S. holders at the meeting. Aeffective time of the Reverse Split. This discussion does not address the tax consequences of transactions effectuated prior to or after the Reverse Split, including, without limitation, the tax consequences of the exercise of options, warrants or similar rights to purchase stock. Furthermore, no foreign, state or local tax considerations are addressed herein. For this purpose, a U.S. holder is a stockholder who has giventhat is: (a) a proxy may revoke
it by votingcitizen or resident of the United States, (b) a domestic corporation, (c) an estate whose income is subject to U.S. federal income tax regardless of its source, or (d) a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust.
The following discussion is not binding on the Internal Revenue Service. The following discussion is based upon the Internal Revenue Code, laws, regulations, rulings and decisions in person ateffect as of the meeting, or by giving written noticedate of revocation or a later-dated proxythis information statement, all of which are subject to change, possibly with retroactive effect. Holders of shares of the Common Stock are strongly urged to consult their tax advisors as to the Secretaryspecific tax consequences to them of the Company at any time
beforeReverse Split, including the closingapplicability and effect of federal, state, local and foreign income and other tax laws in their particular circumstances.
No gain or loss should be recognized by a stockholder upon his or her exchange of pre-Reverse Split shares for post-Reverse Split shares. The aggregate tax basis of the polls at the meeting. Any written notice revoking a
proxy should be sent to Micropoint, Inc., 6906 South 300 West, Midvale, UT
84047, Attention: Secretary.
The Company's Bylaws require the affirmative votepost-Reverse Split shares received (including any fraction of a plurality ofnew share deemed to have been received) will be the votes cast atsame as the meetingstockholder’s aggregate tax basis in the pre-Reverse Split shares exchanged therefore. The stockholder’s holding period for the election ofpost-Reverse Split shares will include the period during which the stockholder held the pre-Reverse Split shares surrendered in the Reverse Split.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL
TO AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT THE REVERSE SPLIT.
|
PROPOSAL NO. 3 – ELECTION OF DIRECTORS |
Nominees
You are being asked to elect two directors and the affirmative
vote of a majority of the votes cast at the meeting for the approval of the
proposed amendment to the Company's Certificate of Incorporation and Omnibus
Stock Option Plan. The Board recommendsour Board. Our bylaws provide that holders of the Company's Common
Stock vote FOR the approval of election of the directors proposed by the
Board, FOR the approval of the proposed amendment to the Company's Certificate
of Incorporation and FOR the approval of the proposed amendments to the
Company's Omnibus Stock Option Plan.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
1. Election of Directors
Board of Directors
The Company's Board isshall be divided into three classes. OneA class of directors isshall be elected atfor a one-year term, a class of directors for a two-year term and a class of directors for a three-year term. At each succeeding annual meeting of stockholders, for a three-year term. Each
year a differentsuccessors to the class of directors is elected on a rotating basis. The term
of Jeffrey A. Coleman expires in 1999. The terms of Don M. Jackson expires in
2000 and the term of Douglas M. Odom expires in 2001.
At this meeting one director has been nominated by the Board for election
to the class whose term expires at that meeting shall be elected for the appropriate term.
The nominees for director are the following current members of the Board:
•
John A. Sindt
Three-year term
•
Clark M. Mower
Two-year term
Mr. John A. Sindt became a Flexpoint director in 1999 and Mr. Clark M. Mower joined the Board in February 2005. The Board will continue to have a vacancy for the one-year term class. Each will serve for the identified term or until he is succeeded by another qualified director who has been elected.
Biographical Information about the Nominees
The following information was provided to us by each of the nominees:
Clark M. Mower – Mr. Mower was appointed President and CEO of Flexpoint in January 2005. He was appointed as Director, President and CEO of our former subsidiary, Sensitron, Inc. in February 2005. In November 2005 he was elected to serve a one year term as director (or until the next annual meeting). He formerly served as Senior Vice President - Mergers and Acquisitions - Merchant Energy Group for El Paso Energy Corporation (NYSE: EP). From August 2002 annual meeting. The person
nominated is Jeffreythrough 2004 he was the managing member of Polaris Energy, LLC, a non-affiliated consulting company to energy related mergers and acquisition. From August 2002 to July 2004 he was a management committee member for Saguaro Power Company, a non-affiliated company operating a 100 megawatts power plant in Henderson, Nevada. Prior to that he served as President and Chief Executive Officer of Bonneville Pacific Corporation (a public company) for eight years until El Paso Corporation acquired Bonneville Pacific Corporation in October 1999.
John A. Coleman, who is currentlySindt – Mr. Sindt has served as a director of the Company.
Unless otherwise specified,Company since 1999 and served as President and Chief Executive and Financial Officer from 2001 to 2004. He also served as Secretary/Treasurer from
14
January 2005 through July 2005. In November 2005 he was elected to serve a two year term as director (or until the next annual meeting). Mr. Sindt also served as Chairman of the Board of Sensitron, Inc., our former subsidiary. He has been employed since 1965 as a Salt Lake County, Utah Constable. He has also served as President, Corporate Secretary and Director for the National Constables Association.
Proxy Vote
Messrs. Sindt and Mower, the persons named as proxy votes will be cast forholders on the enclosed proxy cards, have advised the Company that, unless a contrary direction is indicated on a proxy card, they intend to vote FOR the election of the nominee as directors fortwo nominees. They have also advised us that if any of the periods specified. If any such person should
be unavailabletwo nominees are not available for election the Board may designate a substitute nominee. It
is intended that proxy votesfor any reason, then they will be cast for vote FOR the election of such substitute nominees. Stockholder nominations of personsnominee or nominees, if any, as the Board may propose. Each person nominated for election as directors are
subjecthas agreed to the notice requirements described under the caption "Other Matters"
appearing later in this proxy statement. Election of the nominee director
requires the affirmative vote of a plurality of the votes cast at the meeting
for the election of directors.
The following pages contain information concerning the nominees. Unless
the context otherwise requires, all references in this Proxy to the "Company"
shall mean Micropoint, Inc. ("Micropoint") and its wholly owned subsidiary,
Sensitron, Inc. ("Sensitron"), a Utah corporation,serve if elected, and the wholly owned
subsidiaries of Sensitron, Flexpoint, Inc. ("Flexpoint"), a Utah corporation
and Technology and Machine Company, Inc. ("Tamco"), a Utah corporation, on a
consolidated basis and, where the context so requires, shall include their
predecessors.
Board has no reason to believe that any nominee will be unavailable to serve if elected.
THE BOARD RECOMMENDS ATHAT YOU VOTEFOR THE ELECTION AS A DIRECTORALL OF THE NOMINEE
NAMED HEREIN.
Set forth below is certain information concerning each of theDIRECTOR NOMINEES.
Directors and Executive Officers
Our current directors and executive officers are listed below.
| | | |
Name | Age | Position Held | Director Term of Office |
Clark M. Mower | 72 | President, Chief Executive Officer, Principal Financial Officer and Director | From November 2005 until next annual meeting |
John A. Sindt | 74 | Chairman of the Board | From November 2005 until next annual meeting |
Legal Proceedings: During the past ten years none of the Company asour executive officers have been involved in any legal proceedings that are material to an evaluation of May 3, 1999.
With the
Name Age Position Company Since
- ---- --- -------- -------------
Douglas M. Odom 38 President, Chief Executive Officer
and Director 1995
Thomas E. Danielson 37 Vice-President 1995
Jeffrey A. Coleman 37 Director 1998
Don M. Jackson, Jr. 63 Director 1998
Douglas M. Odom. Mr. Odom has been the President, Chief Executive Officer
and Director of Micropoint since April 1998, and has held the same positions
with respect to Flexpoint since 1995 and with respect to Sensitron since 1996.
From 1993 to 1995, Mr. Odom served as the Marketing and Sales Manufacturing
Director of Xymox Technologies, Inc. Xymox Technologies, Inc. is one of the
world's largest manufacturers of membrane switches and related electronic
interface devices. Prior to his employment at Xymox Technologies, Inc., Mr.
Odom wastheir ability or integrity; namely: (1) filed a key executive in the reorganization of EEC, Inc. frompetition under federal bankruptcy laws or any state insolvency laws, nor had a public
company in bankruptcy to private company posting profits and positive cash
flow. From 1985 to 1990, Mr. Odom was Vice president of Operations of Comptec,
Inc.,receiver, fiscal agent or similar officer appointed by 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.
Thomas E. Danielson. Mr. Danielson has been the Vice-President of
Micropoint since 1995. Mr. Danielson was with Xymox Technologies, Inc.,
Milwaukee, WI from 1993-95, in an operations management and sales management
role. Prior to that, Mr. Danielson was with W.H. Brady Company, Milwaukee, WI
from 1986-93, in a variety of roles, including engineering, manufacturing and
sales. Mr. Danielson holds a bachelors of science degree in Civil Engineering
from the University of Wisconsin and a MBA in Production Operations Management
from the University of Wisconsin-Whitewater.
Jeffrey A. Coleman. Mr. Coleman has been a director of Micropoint since
April 1998, and served as a director of Sensitron since January 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 Operationscourt for the Pyramid Group, a national real estate development, investment and
management firm. From 1982 to 1983business or property of such person, or any partnership in which he was a consultantgeneral partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; (2) been convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) been the Management
Information Consulting Divisionsubject of Arthur Andersen & Co. Mr. Coleman received
an MBAany order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from or otherwise limiting his/her involvement in any type of business, securities or banking activities; or (4) been found by a court of competent jurisdiction in a civil action, by the Amos Tuck School of Business at Dartmouth CollegeSEC or the Commodity Futures Trading Commission to have violated any federal or state securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated.
Board and Committee Meetings: The Flexpoint Board did not hold a BA
(honors) from Stanford University.
Don M. Jackson, Jr., PhD. Dr. Jackson has been a director of Micropoint
since April 1998, and served as a director of Sensitron since January 1998.
Dr. Jackson founded Global Semiconductor Technology, LLC, in May 1996. Global
Semiconductor Technology, LLC is in the semiconductor materials and equipment
business and Dr. Jackson has been President and Chairman since inception of
that company. Dr. Jackson has been active in the founding and operating of a
number of semiconductor equipment and materials companies since 1976 when he
founded ASM America in Phoenix. From 1960 until 1976, Dr. Jackson held a
number of technical and management positions in the semiconductor industry,
specifically Motorola and General Electric Corporation. Dr. Jackson is a
director of M & I Thunderbird Bank in Phoenix and three other high-technology
corporations. He received a Ph.D. in
Electrical Engineering from Arizona State University, an M.S. in Physics from
Iowa State University and a B.A. in Physics from William Jewell College.
Executive officersformal meeting of the Company are electedBoard during the fiscal year. Board actions were authorized by the Board on an annual
basis and serve at the discretion of the Board.
Board Committeesunanimous written consent. The Board has an Audit Committee and Compensation Committee. The Board
does did
15
not have a nominating committee.
The Company's Audit Committee was organized in November, 1999 and, thus,
did not meet in 1998. The function of the Audit Committee is (a) to review the
professional services and independence of the Company's independent auditors
and the scope of the annual external audit as recommended by the independent
auditors, (b) to ensure that the scope of the annual external audit is
sufficiently comprehensive, (c) to review, in consultation with the
independent auditors, the plan and results of the annual external audit and
the adequacy of the Company's internal control systems, (d) to review, with
management and the independent auditors, the Company's annual financial
statements, financial reporting practices and the results of each external
audit, and (e) to undertake reasonably related activities to those set forth
in clauses (a) through (d) above.
The Company's Compensation Committee was organized in November, 1999 and,
thus, did not meet in 1998. The Compensation Committee administers the
Company's stock option plan, establishes a general compensation policy for the
Company and, except as prohibited by applicable law, may takehold any and all
actions that the Board could take relating to the compensation of employees,
directors and other parties.
Board Meetings and Directors' Attendance
The Board held 8 meetings and took action by unanimous consent on 19
occasions during the fiscal year ended December 31, 1998. No2017. We do not have a standing nominating committee for directors or a compensation committee, but our Board (Messrs. Sindt and Mower) acts as our nominating and compensation committee.
Director Independence: An independent director attended
fewer than 75 percentis defined under NASDAQ Stock Market Rule 5605(a) (2). This rule defines persons as "independent" who are neither officers nor employees of the company and have no relationships that, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors. We do not currently have a director who qualifies as an independent director.
Audit Committee: Our Audit Committee consists of our current directors, Messrs. Sindt and Mower. Our audit committee adopted a written charter in June 2005 and a copy of this charter is attached as Appendix B. The audit committee’s functions include:
$
the direct responsibility for the appointment, compensation and oversight of the outside auditor;
$
the authority and funding to engage independent counsel and other outside advisors if the audit committee deems it necessary to carry out its duties;
$
the sole duty and responsibility to review and approve all related party transactions;
$
review and discuss the audited financial statements with management;
$
discuss with the independent auditors the matters required to be discussed by Auditing Standards No. 61, as may be modified or supplemented;
$
receive the written disclosures and the letter from the independent accountants required by the Public Company Accounting Oversight Board, as may be modified or supplemented,
$
discuss with the independent accountant the independent accountant’s independence; and
$
based on its review and discussions, will recommend to the Board whether the audited financial statements be included in our Annual Report on Form 10-K.
Management believes Mr. Mower qualifies as an audit committee financial expert because of his extensive experience in finance. However, based upon the definition of independent director under NASDAQ Stock Market Rule 5605(a)(2), Mr. Mower is not independent of management.
Oversight of Risk Management Our Board is responsible for identifying, assessing and managing our exposure to risk. The Board evaluates our business, regulatory, operational and other risks associated with our planned strategies and tactics, as well as, identifies and manages enterprise-wide risks. In addition, the leadership structure of the Board meetings held during the fiscal year ended
December 31, 1998.
Certain Relationships And Related Transactions
Mr. Jehu Hand, an officer and directorcurrently consists of Micropoint prior to the April
1998 Acquisition, acted as legal counsel for Micropoint. In December 1997, the
Company issued 726,200 shares of Common Stock in connection with the
conversion of certain convertible debentures held by Mr. Hand, dated April 1,
1995, in the principal amount of $2,421.
Sens Partnership, LLC, which is beneficially owed by Mr. Coleman who is a directorChairman of the Company, was issued 30, 303 sharesBoard who oversees the Board meetings. We separate the roles of Chairman of the Company's Common
StockBoard and Chief Executive Office in December 1998. These shares were issued to satisfy in full certain
obligations that the Company made to Mr. Coleman in connection with his
investment in the Company in December 1997.
Security Ownership of Management and Certain Beneficial Owners
The following table sets forth certain information with respect to the
beneficial ownershiprecognition of the Common Stockdifferences between the two roles. Our board believes this division of responsibility is an effective approach for addressing the risks we face.
Compliance with Section 16(a) of the Company as of May 3, 1999,
for: (i) each person who is known by the Company to beneficially own more than
five percent of the Company's Common Stock, (ii) each of the Company's
directors, (iii) each of the Company's Named Executive Officers (defined
below), and (iv) all directors and executive officers as a group. As of May 3,
1999, the Company had 17,092,380 shares of Common Stock outstanding.
Name and Address Shares Beneficially Percentage of
of Beneficial Owner(1) Owned(2) Total(2) Position
- ---------------------- -------- -------- --------
Douglas Odom 650,000(3) 3.8% President, CEO and
Director
Jeffrey A. Coleman 245,303(4) 1.5% Director
Don M. Jackson, Jr. 20,000(5) * Director
All offices and directors
as a group (3 persons) 915,303
Bull Ventures, Ltd.
Katerina Court
101 E Hill Place
Nassau, Bahamas 832,654(6) 5.0%
Northridge Investment, LLC
47 E. 7200 South, #221
Midvale, UT 84047 1,647,750(7) 10.0%
John Sindt
47 E. 7200 South, #221
Midvale, UT 84047 1,366,620(8) 8.1%
Jules A. deGreef
47 E. 7200 South, #201
Midvale, UT 84047 2,152,667(9) 13%
* Less than 1%.
_______________
(1) Except where otherwise indicated, the address of the beneficial owner
is deemed to be the same address as the Company.
(2) Beneficial ownership is determined in accordance with SEC rules and
generally includes holding voting and investment power with respect to the
securities. Shares of Common Stock subject to options or warrants currently
exercisable, or exercisable within 60 days, are deemed outstanding for
computing the percentage of the total number of shares beneficially owned by
the designated person, but are not deemed outstanding for computing the
percentage for any other person.
(3) Includes 5,000 shares and vested options to purchase 645,000 shares.
Does not include options to acquire an additional 130,000 shares of Common
Stock vest on January 1, 2000.
(4) Includes 225,303 shares owned by a limited liability company
controlled by Sens Partners, LLC, of which Mr. Coleman is a Member of and
options to acquire 20,000 shares of Common Stock. Does not include options to
acquire 60,000 shares of Common Stock that vests in equal installments in July
1999, 2000 and 2001.
(5) Includes options to acquire 20,000 shares of Common Stock. Does not
include options to acquire 60,000 shares of Common Stock that vests in equal
installments in July 1999, 2000 and 2001.
(6) Represents the number of shares of Common Stock held of record by Bull
Ventures, Ltd. Bull Ventures, Ltd. filed a Schedule 13D, dated April 9, 1998,
but has not made any subsequent filing under Section 13(d) or 13(g) reporting
a change in beneficial ownership although it appears that such filing was
required. As a result, the Company makes no representation concerning the
number of shares beneficially owned by Northridge Investments, LLC.
(7) Represents 1,647,750 shares. Does not include shares, warrants or
options ned by Messrs. Sindt and DeGreef, as to which Northridge disclaims
beneficial ownership.
(8) Represents 297,000 shares held by Mr. Sindt, 895,750 shares held by
Northridge Investment LLC, and 455,000 shares underlying warrants held in the
name of Jules A. DeGreef. Does not include 825,987
shares held by Bull Ventures, Ltd. with which Mr. Sindt is affiliated and as
to which Mr. Sindt disclaims beneficial ownership.
(9) Represents 1,386,917 shares held by Mr. DeGreef and 765,750 shares
held by Northridge Investment LLC. Does not include 825,987 shares held by
Bull Ventures, Ltd. with which Mr. DeGreef is affiliated and as to which Mr.
DeGreef disclaims beneficial ownership.
The Company is not aware of any arrangements, the operation of which may,
at a subsequent date, result in a change in control of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Exchange Act:Section 16(a) of the Securities Exchange Act of 1934 requires the
Company'sour directors, executive officer, directorsofficers and persons who beneficially own more than 10%five percent of the Company's Common Stocka registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership with the Securitiesof our common stock. Officers, directors and Exchange
Commission ("SEC"). Such personsten-percent or more beneficial owners of our common stock are required by SEC regulations to furnish the CompanyFlexpoint Sensor Systems, Inc. with copies of all Section 16(a) formsreports they file and provide written representation that no Form 5 is required. We believe no Forms 5 were required to be filed by such persons.
Based solely on the Company's review of such forms furnished to the
Company and representations from certain reporting persons, management
believes that all filing requirements under Section 16(a) applicable to the
Company's executive officers, directors and more than 10% stockholders were
complied with during the fiscal year ended December 31, 1998, except that (i)2017.
Related Party Transactions: During the past two fiscal years and through the date of this proxy statement, the following transactions were entered into by Flexpoint and current nominees for director.
16
These transactions between Flexpoint and the nominees have been negotiated between related parties without “arm’s length” bargaining and, as a result, the terms of these transactions may be different than transactions negotiated between unrelated persons.
At December 31, 2017, Mr. Thomas E. Danielson filedSindt, Chairman of the Board, has loaned funds to the Company for operations and the Company has notes outstanding of $27,256 due Mr. Sindt. The notes bear an 8% annual rate of interest with a Form 5 reporting12% default rate. All of the convertible notes are convertible into shares of common stock at the rate of $0.07 per share.
On August 28, 2018, the Company entered into another convertible note with Mr. Sindt for $5,000. This note is due December 31, 2019 and is convertible into shares of common stock at the rate of $0.06 per share.
At December 31, 2017, Mr. Mower had notes outstanding of $87,257 related to funds loaned to the Company to pay for various operating expenses of the business. The notes bear an 8% annual rate of interest with a 12% default rate. These notes were due as follows: $10,000 was due November 30, 2016, $10,000 was due December 31, 2016, $30,000 was due December 31, 2017, and $64,513 is due December 31, 2018. These notes are convertible into shares of common stock at the rate of $0.07 per share.
On August 28, 2018, the Company entered into a convertible note with Mr. Mower for $60,000. This note is due December 31, 2019 and is convertible into shares of common stock at the rate of $0.06 per share.
Communications with the Board
Our Board and each director accept communications from stockholders and any such communications should be directed to the Board or an individual director at:
Board of Directors
Flexpoint Sensor Systems, Inc.
106 West Business Park Drive
Draper, Utah 84020
|
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION |
Executive Officers
We have not entered into employment contracts with our executive officer and his compensation, if any,
will be determined at the discretion of our Board. The following table shows the compensation paid to our Chief Executive Officer, Principal Financial Officer and our most highly compensated executive officer for the last two fiscal years:
| | | | | |
Name and Principal Position |
Year |
Salary ($) | Option Awards ($) | All Other Compensation ($) |
Total ($) |
Clark M. Mower, President, CEO, PFO and Director | 2017 2016 | $ 72,000 $ 72,000 | $ 0 $ 0 | $ 0 $ 0 | $ 72,000 $ 72,000 |
Because the Company did not meet its projected revenues during the year ending December 31, 2014, Mr. Mower continued to voluntarily take reduced compensation through the end of 2017.
Outstanding Equity Awards The following table shows outstanding equity awards granted to our named executive officer as of December 31, 2017.
| | | | | |
| Option Awards |
Name
(a) |
Number of Securities Underlying Unexercised Options (#) Exercisable
(b) |
Number of Securities Underlying Unexercised Options (#) Unexercisable
(c) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
(d) |
Option Exercise Price ($)
(e) |
Option Expiration Date
(f) |
Clark M. Mower, CEO, President and Director | 500,000 600,000 |
0 0 |
0 0 |
$0.15 $0.20 |
8/25/25 8/25/25 |
Compensation of Directors
We do not have any standard arrangement for compensation of our directors for any services provided as a director, including services for committee participation or for special assignments. Our Board will from time to time evaluate the need to compensate directors for their services on our behalf.
|
VOTING SECURITIES AND PRINCIPAL HOLDERS OF THEM |
The following table lists the beneficial ownership of our outstanding common stock by our management and each person or group known to us to own beneficially more than 5% of our voting common stock. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Based on these rules, two or more persons may be deemed to be the beneficial owners of the same securities. Except as indicated by footnote, the persons named in the table below have sole voting power and investment power with respect to the shares of common stock shown as beneficially owned by them. The percentage of beneficial ownership is based on 92,863,464 shares of common stock outstanding as of November 16, 2018, plus an aggregate of 1,300,000 shares which the following persons may acquire within 60 days by the exercise of stockrights, warrants and/or options.
| | |
CERTAIN BENEFICIAL OWNERS |
Name and address of beneficial owner | Amount and nature of beneficial ownership | Percent of class |
First Equity Holdings Co First Equity Holdings Corp. 2157 S. Lincoln Street Salt Lake City, Utah 84106 | 5,985,858 (1) | 6.4 |
(1) Includes 743,000 shares held by an officer of First Equity Holdings Corp.
| | |
MANAGEMENT |
Name of beneficial owner | Amount and nature of beneficial ownership | Percent of class |
Clark M. Mower | 1,989,100 (1) | 2.1 |
John A. Sindt | 1,430,838 (2) | 1.5 |
Directors and officers as a group | 3,419,938 | 3.6 |
(1) Represents 889,100 shares and vested options in October 1998 which should have previously been reported on a Form 4, (ii)
30,303to purchase 1,100,000 shares.
(2) Represents 1,230,838 shares of Common Stock were issuedheld by Mr. Sindt and vested options to an entity that, on informationpurchase 200,000 shares.
|
INDEPENDENT PUBLIC ACCOUNTANTS |
Our independent public accountant for the current year is Sadler, Gibb & Associates, LLC, Certified Public Accountants and belief, Jeffrey A. Coleman is deemed to beneficially own, for which Mr.
Coleman filed an amended Form 5 in March 1999 reporting the transaction, (iii)
the Company has not received Form 5 filings or written representations that
such no such filing in required for Jules A. DeGreef and Northridge
Investment, LLC.
Change in Control
In April 1998, Micropoint consummated an Agreement and Plan of
Reorganization (the "Agreement") with Sensitron pursuant to which Sensitron
became a wholly owned subsidiary of Company. As a result of the Agreement, the
former stockholders of Sensitron became the controlling stockholders of
Micropoint when their Sensitron securities were exchanged for Micropoint
securities. In addition, the officers and directors of Sensitron became the
officers and directors of Micropoint.
Executive Compensation
The tables below set forth certain information concerning compensation
paid by the Company to its Chief Executive Officer and all other executive
officers with annual compensation in excess of $100,000 (determinedthis firm audited our financial statements for the year ended December 31, 1998) (the "Named Executive Officers"). The tables
include information related2017 and 2016. We expect a representative from this firm to stock options grantedbe present at the stockholders’ meeting on December 28, 2018, to the Named Executive
Officers.
Summary Compensation Table. respond to appropriate questions.
19
Independent Public Accountant Fees
The following table provides certain
information regarding compensation paidpresents the aggregate fees billed for each of the last two fiscal years by our independent accountant, Sadler, Gibb & Associates, LLC, in connection with the audit of our financial statements and other professional services rendered by that firm.
| | |
| 2017 | 2016 |
Audit fees | $ 24,000 | $ 22,000 |
Audit-related fees | 0 | 0 |
Tax fees | 0 | 0 |
All other fees | 0 | 0 |
Audit fees represent the professional services rendered for the audit of our annual financial statements and the review of our financial statements included in quarterly reports, along with services normally provided by the Companyaccountant in connection with statutory and regulatory filings or engagements. Audit-related fees represent professional services rendered for assurance and related services by the independent accountant that are reasonably related to the Named Executive
Officers.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation Awards
------------------- -----------------------------
Securities
Restricted Underlying All Other
Name and Other Annual Stock Options/ LTIP Compensation
Principal Position Year Salary($) Bonus($) Compensation($) Awards SARs(#) Payouts($) ($)
- ------------------ ---- --------- -------- --------------- ------ ------- ---------- ---
Douglas M. Odom (1) 1996 103,750 -- -- -- -- -- --
President, CEO and 1997 120,000 -- -- -- 520,000(2) -- --
Director 1998 120,000 10,000 -- -- -- -- --
(1) Note Summary Compensation Table reflects salary and bonus
compensation paid by Flexpoint to Mr. Odom. Mr. Odom received no compensation
from Micropoint, Sensitron or TAMCO during the periods specified.
(2) These options were granted by Sensitron and converted into
outstanding obligations of Micropoint as partperformance of the Acquisition. Optionsaudit or review of our financial statements that are not reported under audit fees.
Tax fees represent professional services rendered by the independent accountant for tax compliance, tax advice, and tax planning. All other fees represent fees billed for products and services provided by the independent accountant, other than the services reported for the other categories.
Audit Committee Pre-approval Policies
Our audit committee has the responsibility to acquire 5,000 shares were exercisedestablish pre-approval procedures for all audit and non-audit services provided by the independent accountant. Before the independent accountant renders audit and non-audit services, our audit committee will pre-approve the engagement.
|
STOCKHOLDER PROPOSALS FOR 2019 ANNUAL MEETING |
Eligibility to Submit a Proposal. Under Rule 14a-8 promulgated under the Exchange Act, in October 1998, optionsorder to acquire
385,000 shares are currently exercisable and optionsbe eligible to acquire 130,000 shares
do not become exercisable until January 1, 2000.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Fiscal Options/SARs at Fiscal
Shares Year-End Year-End($)
Acquired On Value (Exercisable/ (Exercisable/
Name Exercise(#) Realized($) Unexercisable) Unexercisable(1)
- ---- ------------ ----------- ------------- ----------------
Douglas M. Odom 5,000 $35,550(2) 515,000/260,000(3) $2,797,950/826,800
(1) The closing pricesubmit a proposal, you must have continuously held at least $2,000 in market value or 1%, of the
Company's Common Stock on December 31, 1998 was
$6.75 per share.
(2) Options exercisable for 5,000 shares of the Company's Common Stock at
$.16 per share were exercised on October 11, 1998.(3) Represents options
currently exercisable for 125,000 shares of Common Stock at an exercise price
of $.16 per share; options currently exercisable for 130,000 shares of Common
Stock at $.39 per share; optionsCompany’s securities entitled to
acquire 260,000 shares of Common Stock at
an exercise price of $.39 per share vest in equal increments on January 1,
1999 and 2000; and options currently exercisable for 260,000 shares of Common
Stock at $.77 per share.
Compensation of Directors
Non-employee directors are each being compensated for servicebe voted on the
Boardproposal at the meeting for at least one year by the date you submit the proposal. You must continue to hold those securities through
the grant of stock options to purchase 80,000 shares of the
Company's Common Stock which stock options are exercisable at $.75 per share.
An initial 20,000 options vested on the date of
grant during 1998the meeting and provide a written statement that you intend to do so.
Inclusion in Next Year’s Proxy Statement. A stockholder who desires to have his or her proposal included in next year’s proxy statement must deliver the proposal to our principal executive offices (at the address noted below) no later than the close of business on October 19, 2019. If the Company does not hold a meeting within a year, our bylaws provide that any qualified stockholder proposals for an annual meeting must be made in writing and delivered to us or mailed and received at our principal executive offices not less than 50 days and not more than 80 days prior to that meeting. However, if we provide you with less than 60 days’ notice (or public disclosure) of the meeting, stockholder proposals will be deemed timely if they are received not more than the 10th day following the date the notice was mailed or the public disclosure was made.
Presentation at Meeting. Rule 14a-4(c) under the Exchange Act provides that if a proponent of a proposal fails to notify us at the address below at least 45 days prior to the month and day of mailing of the prior year’s proxy statement (or any date specified in an advance notice provision), then the management proxy holders will be allowed to use their discretionary voting authority with respect to the voting of proxies when the proposal is presented at the meeting, without any discussion of the matter in the proxy statement. With respect to our 2019 Annual Meeting of Stockholders, if we are not provided notice of a stockholder proposal, which the stockholder has not previously sought to include in our proxy statement, by October 19, 2019, then the management proxy holders will be allowed to use their discretionary authority with respect to the voting of proxies.
Any such proposals need to be accompanied by specific information regarding:
$
a brief description of the business desired to be brought before the meeting and the remaining options to acquire 60,000 shares of Common Stock vest equally in
three annual installments in July 1999, 2000reasons for conducting such business at the meeting;
$
the name and 2001. During 1998 directorsaddress of the Company whostockholder proposing the business;
$
the class and number of shares owned by the stockholder; and
$
any material interest the stockholder has is such business.
Stockholder Relations
Flexpoint Sensor Systems, Inc.
106 West Business Park Drive
Draper, Utah 84020
The Board does not presently intend to bring any other business before the meeting and we know of no other matters that are also officers or employeesto be brought before the meeting except as specified in the notice of the Company did not
receive and are not expected to receive in the futuremeeting. If any additional compensationbusiness properly comes before the meeting, then your shares will be voted in accordance with the judgment of the persons voting your proxy.
By Order of the Board of Directors
/s/ John A. Sindt
John A. Sindt, Chairman of the Board
Salt Lake City, Utah
December ____, 2018
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THANK YOU FOR YOUR PROMPT ATTENTION TO THIS MATTER.
21
Appendices
Appendix A – Proxy Card
Appendix B – Audit Committee Charter
Documents incorporated by reference:
Flexpoint Sensor Systems, Inc. Form 10-K for their service as directors. All directors are entitled to
reimbursement for reasonable expenses incurred in the performance of their
duties as Board members. The Company has made no other agreements regarding
compensation of directors.
Employment Agreements
Effectiveyear ended December 31, 1997, Flexpoint entered into an employment
agreement with Mr. Odom2017
P R O X Y
FLEXPOINT SENSOR SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Clark M. Mower and John A. Sindt, and either of them, as its Chief Executive Officer. Under the Employment
Agreement, Flexpoint pays Mr. Odom an annual base salary of $120,000 per year
plus such discretionary bonus as the Flexpoint Board of Directors may deem
appropriate. The Employment Agreement has an initial term of three years and
will be automatically renewed successive one-year terms (the "Renewal Terms")
unless terminated by either party. The Employment Agreement also provides Mr.
Odom with optionsproxies, to acquire 780,000vote all shares of Common Stock of MicropointFlexpoint Sensor Systems, Inc. (the “Company”) held of record by the undersigned as of November 16, 2018 (the Record Date) with respect to this solicitation, at an exercise price between $.16the Company’s 2018 Annual Meeting of Stockholders to be held on Friday, December 28, 2018, at 1:00 p.m. Mountain Time, at the SpringHill Suites by Marriott, located at 12111 South State Street, Draper, Utah 84020 and $.77 per share underall adjournments thereof, upon the Micropoint Omnibus
Stock Option Plan (the "Plan")following matters.
THE COMPANY’S BOARD OF DIRECTORS RECOMMENDS
A VOTE “FOR” THE INCREASE IN AUTHORIZED COMMON STOCK IN PROPOSAL 1,
A VOTE “FOR” THE REVERSE STOCK SPLIT IN PROPOSAL 2,
AND A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES IN PROPOSAL 3
IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE
Please return in the enclosed envelope, or fax to 801-328-4058, or e-mail to amy@standardregistrar.com.
SEE REVERSE SIDE
| |
x |
Please mark votes as in this example in dark ink only. |
|
THE COMPANY’S BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE INCREASE IN AUTHORIZED COMMON STOCK IN PROPOSAL 1, A VOTE “FOR” THE REVERSE STOCK SPLIT IN PROPOSAL 2 AND A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES IN PROPOSAL 3 |
Proposal 1: The increase of authorized common stock. FOR AGAINST ABSTAIN (Check one of the following blanks): ¨¨¨
Proposal 2: The reverse stock split. FOR AGAINST ABSTAIN ¨¨¨
Proposal 3: The election of Clark Mower and John Sindt as directors of the Company. FOR WITHHOLD AUTHORITY ¨ ¨ (FOR all of the above mentioned nominees (except do not vote for the nominee(s) whose name(s) appear(s) in the following space
_________________________________________________________________________________________ |
Please sign below, date and return promptly:
Date: _____________________________, 2018
Signature
Additional signatures if jointly held (if applicable). AsIf signing as Attorney, Administrator,
Executor, Guardian, or Trustee, please add your title as such.
23
APPENDIX B
FLEXPOINT SENSOR SYSTEMS, INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee appointed by the board of December 31, 1998, optionsdirectors of Flexpoint Sensor Systems, Inc., hereafter (The "Company") to acquire
515,000 sharesbe known as the Audit Committee.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the board of Common Stock were exercisabledirectors in fulfilling their responsibility to the shareholders, potential shareholders, and optionsinvestment community relating to acquire 5,000
shares had been exercised. Options to acquire an additional 260,000 shares of
Common Stock at $.39 per share vest in equal installments in January 1999 and
2000. All of the above described options became obligations of Micropoint as
part of the Acquisition. The Company does not have employment agreements with
any of its other employees.
Indemnification for Securities Act Liabilities
Delaware law authorizes, and the Company's Bylaws and Indemnity
Agreements provide for, indemnification of the Company's directors and
officers against claims, liabilities, amounts paid in settlement and expenses
in a variety of circumstances. Indemnification for liabilities arising under
the Act may be permitted for directors, officers and controlling personscorporate accounting, reporting practices of the Company pursuantand the quality and integrity of the financial reports of the Company. In so doing, it is the responsibility of the Audit Committee to maintain free and open means of communication between the foregoing or otherwise. However,directors, the independent auditors and Company management.
COMPOSITION
The Audit Committee may be composed of as few as two members. At least one of the members of the Audit Committee must be a director who is independent of the management of the Company has
been advisedand free of any relationship that, in the opinion of the Securitiesboard of directors, would interfere with their exercise of independent judgment as a committee member and Exchange Commission,
such indemnificationthe other member(s) may not be independent.
All members of the Audit Committee shall have a working familiarity with basic finance and accounting practices, and at least one member of the Audit Committee shall have accounting or related financial management expertise.
The members of the Audit Committee shall be appointed by the Board and shall serve until their successors shall be duly qualified and appointed. Unless a chair is against public policyappointed by the full Board, the members of the Audit Committee may designate a chair by majority vote of the full Audit Committee membership.
MEETINGS
The Audit Committee shall meet at least four times annually, or more frequently as expressedcircumstances dictate. As part of its responsibility to foster open communication, the Audit Committee or its members are expected to meet for discussions with Company management frequently, and will have at least two formal meetings with Company management in the Act and is,
therefore, unenforceable.
Stock Options
presence of the independent auditors or may meet in separate executive sessions to discuss any matters that the Audit Committee believes should be discussed privately.
AUDIT COMMITTEE AUTHORITY
The Company has adopted an Omnibus Stock Option PlanBoard of Directors shall grant to the audit committee:
·
the direct responsibility for the benefit of
officers, directors, employeesappointment, compensation and consultantsoversight of the Company. The grantoutside auditor
24
·
the authority and funding to engage independent counsel and other outside advisors if the Audit Committee deems it necessary to carry out its duties
·
the sole duty and responsibility to review and approve all related party transactions.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee's policies and procedures will remain flexible, in order to best react to changing conditions and to ensure that the corporate accounting and reporting practices of
options to acquire an aggregate of 6,000,000 shares of Common Stock have been
authorized under the Plan. The Plan will permit the Company to grant "non-
qualified stock options" and/or "incentive stock options" to acquire sharesare in accordance with all requirements and are of the Company's Common Stock.highest quality.
In carrying out these responsibilities, the Audit Committee shall:
1. Develop an effective audit committee charter approved by the Board of Directors. Update this charter at least annually or as business development may dictate.
2. Influence the overall Company "tone" for quality financial reporting, sound business risk controls, and ethical behavior.
3. The total number of shares authorized forAudit Committee must determine whether the Plan
may be allocatedrelationship between the non-qualified stock optionsexisting independent auditors and the incentive
stock options from time to time, subject to certainCompany complies with the requirements of the Internal Revenue Code of 1986, as amended (the "Code").
The Plan is currently being administered bylisting standards, rules and regulations. Maintain an active dialog with the Board, which will select
optioneesindependent auditors to identify and determinedisclose any relationship or services that may impact the number of shares of Common Stock subject to each
option. The Plan provides that no option which is to be a qualified option may
be granted at an exercise price less than the fair market valueobjectivity and independence of the Common
Stock ofauditors.
4. Meet with the Company on the date of grantindependent auditors and in all cases the term of the
stock option shall not exceed ten years. Options to acquire 5,658,550 shares
of Common Stock at exercise prices ranging from $.16 to $ 4.00 are presently
outstanding under the Plan.
Compensation Committee Interlocks and Insider Participation
No executive officers of the Company serve on the Compensation Committee
(or in a like capacity) for the Company or any other entity.
2. Approval of the proposal to amend the Certificate of Incorporation to
change the namefinancial management of the Company to Flexpoint Sensor Systems, Inc.
The namereview the scope of the Company is currently Micropoint, Inc. At a meeting held
on April 24, 1999,proposed audit for the Board adopted a resolutioncurrent year and the audit procedures to amend, subject to
stockholder approval,be utilized, and at the Certificateconclusion thereof, review the results of Incorporation to change the namesuch audit, including any comments or recommendations of the Companyindependent auditors.
5. Provide sufficient opportunity for the independent auditors to Flexpoint Sensor Systems, Inc. The amendment would be effected
by amending Article First of this Company's Certificate of Incorporation to
read in its entirety substantially as follows:
FIRST: The namemeet with the members of the corporation is Flexpoint Sensor Systems, Inc.
The proposed revisionsAudit Committee without members of management present. Among the items to Article Firstbe discussed in these meetings are proposed because it is
believed that the name "Flexpoint" has more name recognition than the name
"Micropoint" and, therefore, the adoption of the new name will benefit the
Company in its efforts to commercialize its products and to further promote
its name recognition. The operations of the Company are commonly recognized
under the name Flexpoint. The name Flexpoint continues to receive both
magazine and television coverage and recognition in the automotive industry.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS A VOTE "FOR"
APPROVAL OF THE PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO CHANGE
THE NAME OF THE COMPANY TO FLEXPOINT, INC.
3. Approval of proposal to increase the number of shares of common stock that
may be issued under the Micropoint, Inc. Omnibus Stock Option Plan.
At the Annual Meeting, stockholders will be asked to approve an increase
in the number of sharesindependent auditor's evaluation of the Company's common stockfinancial and accounting personnel, and the cooperation that may be issued
pursuantthe independent auditors received during the course of the audit.
6. Ensure that the independent auditors review interim financial statements and conduct a quality discussion with the independent auditors before the Company files its quarterly report.
7. The Audit Committee on a regular basis shall also monitor the integrity and quality of internal financial and operating information used by management in its decision making process.
8. Consider and review with the independent auditors:
(a) Any significant findings in the independent auditors SAS 71 interim financial statement review prior to the Micropoint, Inc. Omnibus Stock Option Plan (the "Option
Plan"). DueCompany's filing of its periodic report.
(b) The adequacy of the Company's internal controls, including computerized information system controls and security.
(c) Any significant findings and recommendations of the independent auditors together with management's responses thereto.
25
9. Discuss with the party responsible for investor relations what is being said or asked about the Company, as it may further assist the Audit Committee in asking probing questions to management.
10. Establish pre-approval procedures for all audit and non-audit services.
11. Establish appropriate procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by employees regarding questionable accounting matters.
12. Review the management representation letter issued to the anticipated increaseindependent auditor.
13. Emphasize the adequacy of internal controls to identify any payments, transactions, or procedures that might be deemed illegal or otherwise improper.
14. Monitor the integrity and quality of annual and interim financial reporting to shareholders in demand for its products under
development,coordination with management and the independent auditors. Determine that the independent auditors are satisfied with the disclosure and content of the financial statements to be presented to the shareholders. Review changes in accounting principles and concur as to their appropriateness.
15. Monitor compliance with the Company must rapidly expand its operations. The Company needs
to hire experiencedcode of ethics and qualified employees who are expertsregulatory requirements, and skilled in
automotive designreview and manufacturing procedures. The Company believes thatassess conflicts of interest and related-party transactions.
16. Evaluate and make recommendations regarding management initiatives affecting the retention of skilled employees provides part of the foundation upon which the
Company can build value for its stockholders. The Company has been successful
in hiring experienced employees through the use of stock option incentives.
The stock incentives give the Company great flexibility to continue to attract
and hire qualified employees.
It is proposed that the Option Plan be amended to provide for the
issuance of up to an additional 1,000,000 shares of common stock under the
Option Plan. Currently there are options to acquire 341,450 shares of common
stock available from the 6,000,000 shares authorized for issuance under the
Option Plan. Combining the 6,000,000 shares with an additional 1,000,000
shares would result in an aggregate of 7,000,000 shares being authorized for
issuance under the Option Plan if this amendment is approved by the
stockholders. Of the 7,000,000 shares, there would be available options to
acquire 1,341,450 shares under the Option Plan. A copy of the Option Plan is
attached to this Proxy Statement as Appendix A and is incorporated herein by
reference. The description below of the Option Plan is qualified in its
entirety by reference to the complete text of the Option Plan. Terms not
defined herein shall have the meanings set forth in the Option Plan.
Description of Principal Features of the Option Plan
One of the reasons for the increase in projected option requirements is
that the Company will be retaining more employees and consultants than it
previously anticipated due to the acceleration of its projected manufacturing
obligations. The Option Plan is intended to afford an incentive to employees,
Board members and consultantsfinancing of the Company and its subsidiaries to acquirerelated matters.
17. Review and approve any required stock exchange certifications, if any.
18. Review and approve any required proxy or increaseinformation statement disclosure.
19. Assess independent auditor performance.
20. Assess Audit Committee members' performance.
21. Provide a proprietary interest in the Company, to assist the Company in
attracting and retaining employees, outside consultants and Board members, to
encourage optionees to devote their best efforts to the workreport of the Company
and to alignaudit committee's findings that result from its financial reporting oversight responsibilities including representation that the interests of such personsAudit Committee has:
(a) discussed with the Company's stockholdersindependent auditors the matters required to promotebe discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended.
(b) received and reviewed the successwritten disclosures and the letter from the independent auditors required by Independence Discussions with Audit Committees, as amended, by the Independence Standards Board.
(c) discussed with the auditors the auditors' independence.
22. Conduct an annual quality discussion with the independent auditors wherein the independent auditors discuss their judgment about the quality, not just the acceptability, of the Company's business..
The Option Plan permits the Company to grant "non-qualified stock
options" and/or "incentive stock options" to acquire the Company's Common
Stock. The total number of shares authorized under the Option Plan may be
allocated by the Board between the non-qualified stock options and the
incentive stock
options from time to time, subject to certain requirements of the Internal
Revenue Code of 1986,accounting principles as amended (the "Code").
The principal objectives of the Option Plan are (i) to broaden the share
ownership of the staff of the Company and (ii) to create in effect a bonus
program for management which compensates designated individuals with shares of
the Company.
At the Company's 1998 annual stockholder's meeting, the Board requested
and the stockholders approved a 762,950 increase in the number of shares
issueable under the Option Plan. At the time the Board believed that the 1998
increase would be sufficient for the foreseeable future. While there are still
options to acquire 341,450 shares of common stock available under the Option
Plan, the Company now anticipates that it will need options to acquire an
additional 1,000,000 shares of the Common Stock in the foreseeable future to
continue to attract and retain qualified personnel.
It is intended that all of such shares that are issued under the Option
Plan will be drawn from the authorized stock. It is not anticipated that any
of such shares will be purchased on the open market or allocated from treasury
shares, if any.
Award Plan
The grant of options or awards is dictated by the achievement of a
mixture of individual and corporate performance goals determined by the Board
or, at the Board's election, the Compensation Committee (the body
administering the Option Plan is hereinafter referred to as either the Board
or the Compensation Committee). Awards under the Option Plan will be focused
on Company employees, Board members and consultants whose contribution and
achievement can make a difference to Company financial performance and hence,
indirectly, stockholder value creation. As of May 3, 1999, the Company had 35
employees, three Board members and was utilizing the services on at least of
part time basis of 16 consultants.
The Compensation Committee has made no determination with respect to who
may receive grants of stock options under the Option Plan in the future. The
specific structure of the Option Plan for this and subsequent years will be
determined by the Compensation Committee.
The Option Plan authorizes the Compensation Committee to grant "incentive
stock options," ("ISO's") within the meaning of Section 422 of the Internal
Revenue Code (the "Code"), and nonqualified stock options ("NQSO's"), pursuant
to the applicable terms and conditions of the Option Plan and of the agreement
evidencing such grant. The aggregate fair market value of the ISO's granted to
any one optionee under the Option Plan, or any similar plan, that first become
exercisable in any calendar year may not exceed $100,000.
The option exercise price per share may not be less than the fair market
value of a share of Common Stock on the date on which the option is granted
unless, in the case of NQSO's, the Compensation Committee determines
otherwise. Each option agreement shall provide the exercise schedule for the
option as determined by the Compensation Committee (which may include a
requirement for achieving performance goals), provided, that the Compensation
Committee shall have the authority to accelerate the exercisability of any
outstanding option at such time and under such circumstances as it,applied in its sole discretion, deems appropriate. The exercise period shall be ten years
from the date of the grant of the option unless otherwise determined by the
Compensation Committee, provided, however, that in the case of an ISO, such
exercise period shall not exceed ten years from the date of grant of such
option. The exercise period is subject to early termination and accelerated
vesting as provided in the Option Plan.
Options granted under the Option Plan are not transferable other than by
will or by the laws of descent and distribution or to a beneficiary upon the
death of a grantee, and such options that may be exercisable shall be
exercised during the lifetime of the grantee only by the grantee or his or her
guardian or legal representative; except as otherwise provided in the Option
Plan.
General
The Option Plan is intended to satisfy the requirements of Rule 16b-3
promulgated under Section 16 of the Exchange Act ("Rule 16b-3") and, with
respect to ISO's, to generally serve as a qualified performance-based
compensation program under OBRA. However, the compensation received by certain
individuals under the Company's Option Plan may fall outside the deductibility
limitations of OBRA if the Company is successful as reflected in the Company's
stock price and/or income.
The Option Plan will be administered by the Compensation Committee of the
Board. The Compensation Committee determines (i) which employees/independent
contractors of the Company and its subsidiaries shall be granted an option to
acquire of stock; (ii) the number of shares into which the option is
exercisable; (iii) the amount to be paid by a grantee upon exercise of an
option or award; (iv) the time or times and the conditions subject to which
options or awards may be made and become exercisable; and (v) the form of
consideration that may be used to pay for shares issued upon exercise thereof.
The Compensation Committee is also responsible for other questions involving
the administration and interpretation of the Option Plan.
The Board may from time to time suspend, terminate, modify or amend the
Option Plan, but may not, without the approval of the Company's stockholders,
increase the aggregate number of shares of Common Stock subject to the Option
Plan (except for increases due to certain adjustments)financial reporting.
Date: 28 Sept. 2005 /s/ John A. Sindt
John A. Sindt, Chairman
Date: 28 Sept. 2005
/s/ Clark M. Mower
Clark M. Mower, Director
Date: 28 Sept. 2005
/s/ Ruland J. Gill, Jr.
Ruland J. Gill, Jr., decrease the minimum
exercise price specified by the Option Plan in respect of ISO's or change the
class of persons eligible to receive options or awards under the Option Plan
or adopt any amendment for which stockholder approval is required under
applicable Delaware law.
The Board may terminate the Option Plan at any time. The termination of
the Option Plan will not alter or impair any rights or obligations under any
option or award previously granted under the Option Plan.
The selection of the eligible individuals who will receive options under
the Option Plan and the size and type of options is generally to be determined
by the Compensation Committee in its discretion. The potential grant of
options or awards in the future is not now determinable. Thus, it is not
possible to predict the benefits or amounts that will be received by or
allocated to particular individuals or groups of employees in the future.
Certain Federal Tax Consequences
The following is a brief summary of the principal federal income tax
consequences under current federal income tax laws relating to options granted
under the Option Plan. This summary is not intended to be exhaustive and,
among other things, does not describe state, local or foreign income tax
consequences.
Incentive Stock Options
The Company understands the federal income tax consequences of ISO's to
be generally as follows: an employee receiving an ISO will not be in receipt
of taxable income upon the grant of the ISO or upon its timely excise.
Exercise of an ISO will be timely if made during its term and if the optionee
remains an employee of the Company or its subsidiaries at all times during the
period beginning on the date of the grant of the ISO and ending on the date
three months before the date of exercise (or one year before the date of
exercise in the case of a disabled optionee). Exercise of an ISO will also be
timely if made at any time (provided it is exercisable by its terms) by the
legal representative of an optionee who dies (i) while in the employ of the
Company or its subsidiaries or (ii) within three months after termination of
employment. The Option Plan, however, limits the right of the legal
representative of any optionee who has died within one month of his or her
termination of employment. Upon ultimate sale of the stock received upon such
exercise, except as noted below, the optionee will recognize capital gain or
loss (if the
stock is a capital asset of the optionee) equal to the difference between the
amount realized upon such sale and the option exercise price. The Company,
under these circumstances, will not be entitled to any federal income tax
deduction in connection with either the exercise of the ISO or the sale of
such stock by the optionee.
If, however, the stock acquired pursuant to such exercise of an ISO is
disposed of by the optionee prior to the expiration of two years from the date
of grant of the option or one year from the date that such stock is
transferred to the optionee upon exercise (a "disqualifying disposition"), any
gain realized by the optionee generally will be taxable at the time of such
disqualifying disposition as follows: (i) as ordinary income to the extent of
the difference between the option exercise price and the lesser of the fair
market value of the stock on the date the ISO is exercised and the amount
realized on such disqualifying disposition and (ii) if the stock is a capital
asset of the optionee, as capital gain to the extent of any excess of the
amount realized on such disqualifying disposition over the fair market value
of the stock on the date that governs the determination of his or her ordinary
income. In such case, the Company may claim a federal income tax deduction at
the time of such disqualifying disposition for the amount taxable to the
optionee as ordinary income, provided the Company satisfies certain tax
information reporting requirements.
The amount by which the fair market value of the stock on the exercise
date of an ISO exceeds the option exercise price will constitute an item of
tax preference for purposes of the "alternative minimum tax" set forth in the
Code.
Nonqualified Stock Options
In the case of NQSO's, the Company understands that the optionee will not
generally be taxed upon grant of any such option. Rather, at the time of
exercise of an NQSO, the optionee will, except as noted below, realize
ordinary income for federal tax purposes in an amount equal to the excess of
the fair market value of the shares purchased over the option exercise price.
The Company will generally be entitled to a tax deduction at such time and in
the same amount that the optionee realizes ordinary income, provided the
Company satisfies certain tax information reporting requirements. If stock so
acquired is later sold or exchanged, then the difference between the sales
price and the fair market value of such stock on the date of exercise of the
option is generally taxable as long-term capital gain or loss if such stock is
held for a sufficient period of time.
THE BOARD HAS UNANIMOUSLY APPROVED AND RECOMMENDS A VOTE "FOR" APPROVAL
OF THE PROPOSAL TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE
ISSUED UNDER THE OPTION PLAN.
4. Other Matters
Discretionary Authority
At the time of mailing of this proxy statement, the Board was not aware
of any other matters which might be presented at the meeting. If any matter
not described in this Proxy Statement should properly be presented, the
persons named in the accompanying proxy form will vote such proxy in
accordance with their judgment.
Independent Public Accountants
On June 23, 1998, the Board elected to retain Hansen Barnett & Maxwell
("HBM") as its independent auditor. Micropoint did not have a prior
independent auditor. The decision to retain HBM was recommended by the Board.
Notice Requirements
Any stockholder who desires to have a proposal included in the Company's
proxy soliciting material relating to the Company's 2000 annual meeting of
stockholders should send to the Secretary of the Company a signed notice of
intent. This notice, including the text of the proposal, must be received no
later than February 16, 2000.
Annual Report
This Proxy Statement has been preceded or accompanied by an Annual Report
for the fiscal year ended December 31, 1998. Stockholders are referred to such
report for financial and other information about the activities of the
Company, but such report is not to be deemed a part of the proxy soliciting
material.
Expenses and Methods of Solicitation
The expenses of soliciting proxies will be paid by the Company. In
addition to the use of the mails, proxies may be solicited personally, or by
telephone or other means of communications, by directors, officers and
employees of the Company and its subsidiaries, who will not receive additional
compensation therefor. Arrangements will also be made with brokerage firms and
other custodians, nominees and fiduciaries for the forwarding of proxy
solicitation material to certain beneficial owners of the Company's Common
Stock, and the Company will reimburse such forwarding parties for reasonable
expenses incurred by them.
By order of the Board of Directors,
By /s/ Douglas M. Odom
-------------------
President
APPENDIX A
MICROPOINT, INC.
OMNIBUS STOCK OPTION PLAN
ARTICLE I
Purpose
The purpose of the Omnibus Stock Option Plan (the "Plan") is to
enable Micropoint, Inc. (the "Company") to offer employees and directors of,
and consultants to, the Company and its subsidiaries, options to acquire
equity interests in the Company, thereby attracting, retaining and rewarding
such persons, and strengthening the mutuality of interests between such
persons and the Company's stockholders.
ARTICLE II
Definitions
For purposes of the Plan, the following terms shall have the
following meanings:
2.1 "Award" shall mean an award under the Plan of any Stock
Option.
2.2 "Board" shall mean the Board of Directors of the
Company.
2.3 "Change of Control" shall mean the occurrence of any one of
the following: (i) the Company enters into an agreement of reorganization,
merger or consolidation pursuant to which the Company or a Subsidiary is not
the surviving corporation, (ii) the Company sells substantially all its assets
to a purchaser other than a Subsidiary, or (iii) other than in a transaction
that has been approved by the Board, shares of stock of the Company
representing in excess of 25% of the total combined voting power of all
outstanding classes of stock of the Company or Parent are acquired, in one
transaction or a series of transactions, by a single purchaser or group of
related purchasers.
2.4 "Code"shall mean the Internal Revenue Code of 1986, as
amended.
2.5 "Committee" shall mean the Compensation Committee of the
Board consisting of two or more Directors of the Company. If the Board has not
established a Compensation Committee, the Committee shall consist of the
Board.
2.6 "Common Stock" shall mean the Common Shares, without par
value, of the Company.
2.7 "Consultant" shall mean any individual who is a consultant
to the company or a subsidiary.
2.8 "Director" shall mean any individual who is a member of the
Board or the Board of Directors of a Subsidiary.
2.9 "Disability" shall mean a disability that results in the
termination of a Participant's employment with the Company or a Subsidiary, as
determined pursuant to standard Company procedures.
2.10 "Fair Market Value" for purposes of the Plan, unless
otherwise required by any applicable provision of the Code or any regulations
issued thereunder, shall mean, as of any date, the average of the high and low
sales prices of a share of Common Stock as reported on the principal national
securities exchange on which the Common Stock is listed or admitted to
trading, or, if not listed or traded on any such exchange, the Nasdaq Stock
Market ("Nasdaq"), or, if such sales prices are not available, the average of
the bid and asked prices per share reported on Nasdaq, or, if such quotations
are not available, the fair market value as determined by the Board, which
determination shall be conclusive.
2.11 "Incentive Stock Option" shall mean any Stock
Option awarded under the Plan intended to be and designated as an "Incentive
Stock Option" within the meaning of Section 422 of the Code.
2.12 "Non-Qualified Stock Option" shall mean any Stock Option
awarded under the Plan that is not an Incentive Stock Option.
2.13 "Participant" shall mean an employee, Director or
Consultant to whom an Award has been made pursuant to the Plan.
2.14 "Stock Option" or "Option" shall mean any option to
purchase shares of Common Stock granted pursuant to Article VI.
2.15 "Subsidiary" shall mean any subsidiary of the Company, 80%
or more of the voting stock of which is owned, directly or indirectly, by the
Company.
2.16 "Termination for Cause" shall mean a Termination of
Employment that has been designated as a "termination for cause" pursuant to
standard Company procedures.
2.17 "Termination of Employment" shall mean a termination of
employment with, or service as a Director or Consultant of, the Company and
all of its Subsidiaries for reasons other than a military or personal leave of
absence granted by the Company or any subsidiary.
ARTICLE III
Administration
3.1 The Committee. The Plan shall be administered and
interpreted by the Committee.
3.2 Awards. The Committee shall have full authority to grant
Stock Options, pursuant to the terms of the Plan, to persons eligible under
Article V. In particular, the Committee shall have the authority:
(a) to select the persons to whom Stock Options may from
time to time be granted hereunder;
(b) to determine whether and to what extent Incentive Stock
Options and Non-Qualified Stock Options, or any combination thereof, are to be
granted hereunder to one or more persons eligible to receive Awards under
Article V;
(c) to determine the number of shares of Common Stock to be
covered by each such Award granted hereunder; and
(d) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Award granted hereunder (including, but not
limited to, the option price, the term of the option, and any provision
affecting the exercisability or acceleration of, any Award).
3.3 Guidelines. Subject to Article VII hereof, the Committee
shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time,
deem advisable; to interpret the terms and provisions of the Plan and any
Award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or
in any Award granted in the manner and to the extent it shall deem necessary
to carry the Plan into effect. Notwithstanding the foregoing, no action of
the Committee under this Section 3.3 shall impair the rights of any
Participant without the Participant's consent, unless otherwise
required by law.
3.4 Decisions Final. Any decision, interpretation or other
action made or taken in good faith by the Committee arising out of or in
connection with the Plan shall be final, binding and conclusive on the
Company, all Participants and their respective heirs, executors,
administrators, successors and assigns.
ARTICLE IV
Share Limitation
4.1 Shares. The maximum aggregate number of shares of Common
Stock which may be issued under the Plan shall be 6,000,000 shares of Common
Stock (subject to any increase or decrease pursuant to Section 4.2),
which may be either authorized and unissued Common Stock or issued Common
Stock reacquired by the Company. If any Option granted under the Plan shall
expire, terminate or be canceled for any reason without having been exercised
in full, the number of unpurchased shares shall again be available for the
purposes of the Plan.
4.2 Changes. In the event of any merger, reorganization,
consolidation, recapitalization, dividend (other than a dividend or its
equivalent which is credited to a Participant or a regular cash dividend),
stock split, or other change in corporate structure affecting the Common
Stock, such substitution or adjustment shall be made in the maximum aggregate
number of shares which may be issued under the Plan, in the number and option
price of shares subject to outstanding options granted under the Plan as may
be determined to be appropriate by the Committee, in its sole discretion,
provided that the number of shares subject to any Award shall always be a
whole number.
ARTICLE V
Eligibility
5.1 Employees. Officers and other employees of the Company and
its Subsidiaries are eligible to be granted Awards under the Plan.
5.2 Directors and Consultants. Directors and Consultants are
eligible to be granted Awards under the Plan, provided that Directors and
Consultants who are not employees of the Company or a Subsidiary may not be
granted Incentive Stock options.
ARTICLE VI
Stock Options
6.1 Options. Each Stock Option granted under the Plan shall be
either an Incentive Stock Option or a Non-Qualified Stock Option.
6.2 Grants. The Committee shall have the authority to grant to
any person eligible under Article V one or more Incentive Stock Options,
Non-Qualified Stock Options, or both types of Stock Options. To the extent
that any Stock Option does not qualify as an Incentive Stock Option (whether
because of its provisions or the time or manner of its exercise or otherwise),
such Stock Option or the portion thereof which does not qualify as an
Incentive Stock Option shall constitute a separate Non-Qualified Stock Option.
6.3 Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term of the Plan relating to Incentive Stock
Options shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be exercised, so as to disqualify the Plan
under Section 422 of the Code, or, without the consent of the Participants
affected, to disqualify any Incentive Stock Option under such Section 422.
6.4 Terms of Options. Options granted under the Plan shall be
subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan,
as the Committee shall deem desirable:
(a) Stock Option Contract. Each Stock Option shall be
evidenced by, and subject to the terms of, a Stock Option Contract executed by
the Company and the Participant. The Stock Option Contract shall specify
whether the Option is an Incentive Stock Option or a Non-Qualified Stock
Option, the number of shares of Common Stock subject to the Stock Option, the
option price, the option term, and the other terms and conditions applicable
to the Stock Option.
(b) Option Price. Subject to section (1) below, the option
price per share of Common Stock purchasable upon exercise of a Stock Option
shall be determined by the Committee at the time of grant but shall be not
less than 100% of the Fair Market Value of the Common Stock on the date of
grant if the Stock Option is intended to be an Incentive Stock Option.
(c) Option Term. Subject to section (1) below, the term of
each Stock Option shall be fixed by the Committee, but no Stock Option shall
be exercisable more than ten years after the date it is granted.
(d) Exercisability. Stock Options shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Committee at the time of grant; provided, however, that the
Committee may waive any installment exercise or waiting period provisions, in
whole or in part, at any time after the date of grant, based on such factors
as the Committee shall deem appropriate in its sole discretion.
(e) Method of Exercise. Subject to such installment
exercise and waiting period provisions as may be imposed by the Committee,
Stock Options may be exercised in whole or in part at any time during the
option term by giving written notice of exercise to the Company specifying the
number of shares of Common Stock to be purchased and the option price
therefor. The notice of exercise shall be accompanied by payment in full of
the option price in such form as the Committee may accept and, if requested,
by the representation described in Section 9.2. The option price may be paid
in cash or check acceptable to the Company or by any other consideration as
the Committee deems acceptable. Unless otherwise determined by the Committee
in its sole discretion at or after grant, if there is an established trading
market in the Common Stock, payment in full or in part may be made in the form
of
Common Stock duly owned by the Participant (and for which the Participant has
good title free and clear of any liens and encumbrances), based on the Fair
Market Value of the Common Stock on the last trading date preceding payment.
Upon payment in full of the option price, as provided herein, a stock
certificate or stock certificates representing the number of shares of Common
Stock to which the Participant is entitled shall be issued and delivered to
the Participant. A Participant shall not be deemed to be the holder of Common
Stock, or to have the rights of a holder of Common Stock, with respect to
shares subject to the Option, unless and until a stock certificate or stock
certificates representing such shares of Common Stock are issued to such
Participant.
(f) Death. If a Participant's employment by the Company or a
Subsidiary terminates by reason of death, unless otherwise determined by the
Committee at the time of grant, any Stock Option held by such Participant
which was exercisable at the date of death may be exercised by the legal
representative of the Participant's estate at any time or times during the
period beginning on the date of death and ending one year after the date of
death or until the expiration of the stated term of such Stock option,
whichever period is shorter, and any Stock Option not exercisable at the date
of death shall be forfeited.
(g) Disability. If a Participant's employment by the
Company or a Subsidiary terminates by reason of Disability, unless otherwise
determined by the Committee at the time of grant, any Stock Option held by
such Participant which was exercisable on the date of such Termination of
Employment may thereafter be exercised by the Participant at any time or times
during the period beginning on the date of such termination and ending one
year after the date of such termination or until the expiration of the stated
term of such Stock Option, whichever period is shorter, and any Stock Option
not exercisable on the date of such Termination of Employment shall be
forfeited. If an Incentive Stock Option is exercised after the expiration of
the exercise period that applies for purposes of Section 422 of the Code, such
Stock Option will thereafter be treated as a Non-Qualified Stock Option.
(h) Termination of Employment. In the event of a
Termination of Employment by reason of retirement or for any reason other than
death, Disability or Termination for Cause, unless otherwise determined by the
Committee at the time of grant, any Stock Option held by such Participant
which was exercisable on the date of such Termination of Employment may be
exercised by the Participant at any time or times during the period beginning
on the date of such Termination of Employment and ending one month after such
date or until the expiration of the stated term of such Stock Option,
whichever period is shorter, and any Stock Option not exercisable on the date
of such Termination of Employment shall be forfeited.
(i) Termination for Cause. In the event of a Termination for
Cause, any Stock Option held by the Participant which was not exercised prior
to the date of such Termination for Cause shall be forfeited.
(j) Change of Control. In the event of a Change of Control,
all outstanding Stock Options shall immediately become fully exercisable, and
upon payment by the Participant of the option price (and, if requested,
delivery of the representation described in Section 9.2), a stock
certificate or certificates representing the Common Stock covered thereby
shall be issued and delivered to the Participant.
(k) Incentive Stock option Limitations. To the extent that
the aggregate Fair Market Value (determined as of the date of grant) of the
Common Stock with respect to which Incentive Stock Options are exercisable for
the first time by the Participant during any calendar year under the Plan
and/or any other stock option plan of the Company or any subsidiary or parent
corporation (within the meaning of Section 424 of the Code) exceeds $100,000,
such Options shall be treated as Options which are not Incentive Stock
Options.
Should the foregoing provisions not be necessary in order for
the Stock Options to qualify as Incentive Stock options, or should any
additional provisions be required, the Committee may amend the Plan
accordingly, without the necessity of obtaining the approval of the
stockholders of the Company.
(1) Ten-Percent Stockholder Rule. Notwithstanding any other
provision of the Plan to the contrary, no Incentive Stock Option shall be
granted to any person who, immediately prior to the grant, owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company, unless the option price is at least 110% of
the Fair Market Value of the Common Stock on the date of grant and the option,
by its terms, expires no later than five years after the date of grant.
ARTICLE VII
Termination or Amendment
7.1. Termination or Amendment of the Plan. The Committee may
at any time amend, discontinue or terminate the Plan or any part thereof
(including any amendment deemed necessary to ensure that the Company may
comply with any regulatory requirement referred to in Article IX);
provided, however, that, unless otherwise required by law, the rights of a
Participant with respect to Awards granted prior to such amendment,
discontinuance or termination, may not be impaired without the consent of such
Participant and, provided further, without the approval of the Company's
stockholders, no amendment may be made that would (i) materially increase the
aggregate number of shares of Common Stock that may be issued under the Plan
(except by operation of Section 4.2); (ii) materially modify the requirements
as to eligibility to participate in the Plan; or (iii) materially increase the
benefits accruing to Participants.
7.2. Amendment of Awards. The Committee may amend the terms
of any Award theretofore granted, prospectively or retroactively, but, subject
to Article IV, no such amendment or other action by the Committee shall impair
the rights of any holder without the holder's consent. The Committee may also
substitute new Stock-Options for previously granted Stock Options having
higher option prices.
ARTICLE VIII
Unfunded Plan
8.1. Unfunded Status of Plan. The Plan is intended to
constitute an "unfunded" plan for incentive compensation. With respect to any
payment not yet made to a Participant by the Company, nothing contained herein
shall give any such Participant any rights that are greater than those of a
general creditor of the Company.
ARTICLE IX
General Provisions
9.1. Nonassignment. Except as otherwise provided in the
Plan, Awards made hereunder and the rights and privileges conferred thereby
shall not be sold, transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise), and shall not be subject to
execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of such Award, right or
privilege contrary to the provisions hereof, or upon the levy of any
attachment or similar process thereon, such Award and the rights and
privileges conferred hereby shall immediately terminate and the Award shall
immediately be forfeited to the Company.
9.2. Legend. The Committee may require each person
acquiring shares pursuant to an Award under the Plan to represent to the
Company in writing that the Participant is acquiring the shares without a view
to distribution thereof. The stock certificates representing such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
All certificates representing shares of Common Stock
delivered under the Plan shall be subject to such stock transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission,
any stock exchange or stock market upon which the Common Stock is then listed
or traded, any applicable Federal or state securities law, and any applicable
corporate law, and the Committee may cause a legend or legends to be put on
any such certificates to make appropriate reference to such restrictions.
9.3. Other Plans. Nothing contained in the Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to stockholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in specific
cases.
9.4. No Right to Employment. Neither the Plan nor the grant
of any Award hereunder shall give any Participant or other employee any right
with respect to continuance of employment by the Company or any Subsidiary,
nor shall there be a limitation in any way on the right of the Company or any
Subsidiary by which a Participant is employed to terminate such Participant's
employment at any time. Neither the Plan nor the grant of any Award hereunder
shall give any Director or Consultant any right with respect to continued
service as a director or consultant, nor shall the Plan impose any limitation
on the right of the Company to terminate a Consultant's services at any time
or constitute evidence of any agreement or understanding by the Company's
stockholders that the Company will nominate any director for reelection.
9.5. Withholding of Taxes. The Company shall have the right
to reduce the number of shares of Common Stock otherwise deliverable pursuant
to the Plan by an amount that would have a Fair Market Value equal to the
amount of all Federal, state and local taxes required to be withheld, or to
deduct the amount of such taxes from any cash payment otherwise to be made to
the Participant. In connection with such withholding, the Committee may make
such arrangements as are consistent with the Plan as it may deem appropriate.
9.6. Listing and Other Conditions.
(a) If the Common Stock is listed on a national securities
exchange, the issuance of any shares of Common Stock pursuant to an Award
shall be conditioned upon such shares being listed on such exchange. The
Company shall have no obligation to issue such shares unless and until such
shares are so listed, and the right to exercise any Option shall be suspended
until such listing has been effected.
(b) If at any time counsel to the Company shall be of the
opinion that any sale or delivery of shares of Common Stock pursuant to an
Award is or may in the circumstances be unlawful or result in the imposition
of excise taxes under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933, as amended, or
otherwise with respect to shares of Common Stock or Awards, and the right to
exercise any option shall be suspended until, in the opinion of such counsel,
such sale or delivery shall be lawful or shall not result in the imposition of
excise taxes.
(c) Upon termination of any period of suspension under
this Section 9.6, any Award affected by such suspension which shall not then
have expired or terminated shall be reinstated as to all shares available
before such suspension and as to shares which would otherwise have become
available during the period of such suspension, but no such suspension shall
extend the term of any option.
9.7. Governing Law. The Plan and actions taken in
connection herewith shall be governed and construed in accordance with the
laws of the State of Utah.
9.8. Construction. Wherever any words are used in the Plan
in the masculine gender they shall be construed as though they were also used
in the feminine gender in all cases where they would so apply, and wherever
any words are used herein in the singular form they shall be construed as
though they were also used in the plural form in all cases where they would so
apply.
9.9. Liability Of the Board and the Committee. No member of
the Board or the Committee nor any employee of the Company or any of its
subsidiaries shall be liable for any act or action hereunder, whether of
omission or commission, by any other member or employee or by any agent to
whom duties in connection with the administration of the Plan have been
delegated or, except in circumstances involving bad faith, gross negligence or
fraud, for anything done or omitted to be done by himself.
9.10. Other Benefits. No payment pursuant to an Award under
the Plan shall be deemed compensation for purposes of computing benefits under
any retirement plan of the Company or any Subsidiary nor affect any benefits
under any other benefit plan now or hereafter in effect under which the
availability or amount of benefits is related to the level of compensation.
9.11. Costs. The Company shall bear all expenses incurred in
administering the Plan, including expenses of issuing Common Stock upon the
exercise of options granted.
9.12. Severability. If any part of the Plan shall be
determined to be invalid or void in any respect, such determination shall not
affect, impair, invalidate or nullify remaining provisions of the Plan which
shall continue in full force and effect.
9.13. Successors. The Plan shall be binding upon and inure
to the benefit of any successor or Successors of the Company.
9.14. Headings. Article and section headings contained in
the Plan are included for convenience only and are not to be used in
construing or interpreting the Plan.
ARTICLE X
Effective Date of Plan
10.1. The Plan shall be effective as of the earlier of(i)
the date of first issuance of any Award under the Plan and (ii) the date of
its approval by the Company's stockholders ("Stockholder Approval); provided,
that any issuance of an Award prior to Stockholder Approval will be subject to
Stockholder Approval being obtained within one year of the date of the Plan
was approved by the Company's board of directors.
ARTICLE XI
Term of Plan
11.1. No Stock option shall be granted pursuant to the Plan
on or after the tenth anniversary of its approval by the Company's
stockholders, but Awards granted prior to such tenth anniversary may extend
beyond that date.
APPENDIX B
PROXY CARD
for
ANNUAL MEETING OF STOCKHOLDERS
of
MICROPOINT, INC
This Proxy is Solicited on Behalf of the Board Of Directors. The undersigned
hereby appoints Douglas M. Odom as Proxy, with the power to appoint his
substitute and hereby authorize them to represent and to vote, as designated
below, all the shares of common stock of Micropoint, Inc. held on record by
the undersigned on May 14, 1999 at the annual meeting of stockholders to be
held on June 16, 1999, or any adjournment thereof.
1. Election of Nominee Director.
[ ] FOR Jeffrey A. Coleman [ ] WITHHOLD AUTHORITY to vote for Jeffrey A
Coleman
2. Proposal to amend the Certificate of Incorporation to change the name of
the Company to "Flexpoint Sensor Systems, Inc."
[ ] For [ ] Against [ ] Abstain
3. Proposal to increase the number of shares of common stock that may be
issued under the Micropoint, Inc. Omnibus Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder(s). If no directions are made, this proxy will
be voted for the above Proposals.
Please sign below. When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full
corporation name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Dated: ________________________, 1999
Please mark, sign, date and return the proxy card promptly using the enclosed
envelope or proxy cards may be sent by facsimile to Colonial Stock at (801)
355-6505.
_____________________________________________
(signature)
_____________________________________________
(signature if held jointly)
_____________________________________________
(print name of stockholder(s))
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