UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy [x]Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e) (2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c)Section 240.14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
MICROPOINT,Section
240.14a-12
FLEXPOINT SENSOR SYSTEMS, INC.
------------------------------
(Name of Registrant as Specified In Its Charter)
_______________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee requiredrequired.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)14a-6(i)(1) and 0-110-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materialsmaterials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
MICROPOINT, INC.
69061
[Company logo Flexpoint - flexible sensor systems ]
October 12, 2005
To our stockholders:
You are cordially invited to attend the annual meeting of stockholders of
Flexpoint Sensor Systems, Inc. on Tuesday, November 22, 2005, at the Grand
America Hotel, located at 555 South 300Main, Salt Lake City, Utah, at 10:00 a.m.
local time.
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-KSB for the year
ended December 31, 2004, as amended, 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 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.
We look forward to seeing you at the meeting.
Inasmuch as we have enclosed with this proxy our annual report, and having
dispensed with the formality of inviting you to the shareholder meeting, I
would like to share some of my thoughts about the past year and the Company's
vision for the future.
During the early part of the year we completed a successful Private Placement
Offering which provided the capital necessary to develop and market the bend
sensor and to provide for the future success of the Company. We have put in
place a new executive team and are moving the Company and its products
forward.
The Company is utilizing the funds to purchase and/or lease new equipment,
qualify the Company and its facilities to QS-9001, increase inventory and add
to and expand personnel in our engineering, manufacturing and sales
departments.
We have added engineering personnel and increased sales activity through the
creation of a network of sales representatives throughout strategic regions of
the country. The Company has initiated the QS-9001 qualification procedure,
(a process which could take up to a year to accomplish). The QS-9001
certification is required before Flexpoint Sensor Systems, Inc. can qualify to
manufacture products for usage in the American automotive industry. To
provide for any required production in the interim period until the company
receives its QS-9001 certification, and to insure the capability of meeting
future supply requirements, Flexpoint Sensor Systems has entered into
contracts with QS-9001 qualified manufactures certified for manufacturing for
the automotive industry.
Flexpoint Sensor Systems, Inc.
106 West Midvale,12200 South * Draper, UT 8404784020
Ph: (801) 568-5111 * Fax: (801) 568-2405 * Toll Free (866) 766-3539
www.flexpoint.com
ii
2
With all of this activity, our primary focus remains acquiring contracts with
competent companies both inside and outside of the automotive industry for our
products so we can move the company forward.
THE COMPANY'S MOST IMPORTANT ACCOMPLISHMENT TO DATE is the execution of a
contract with R&D Products on September 28, 2005 for production of their
Medical Bed. The contract calls for completion of sensors, connectors and the
required hardware, software and controls that will be used in the medical bed.
We are also making significant progress with three automotive manufacturers
and, five Tier one suppliers on Flexpoint's sensors. We have recently
completed tests on the operation of the pedestrian sensor which are very
positive and encouraging. These results have been shared with the various
manufacturers and suppliers and are expected to lead to additional cooperative
agreements.
We believe the future is bright and the Company is poised to move forward as
we aggressively seek to capitalize on the opportunities that we have created
and to develop new areas of opportunity.
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 up on 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 can contact us at (801) 568-5111. Once again, we
appreciate your confidence in Flexpoint as we move into the future.
Sincerely,
/s/ Clark M. Mower
Clark M. Mower
President and CEO
iii
3
______________________________________________________
NOTICE OF FLEXPOINT SENSOR SYSTEMS, INC.
ANNUAL MEETING OF STOCKHOLDERS
June 16, 1999
NOTICETo Be Held November 22, 2005
_______________________________________________________
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"), which will be held on Tuesday, November 22,
2005, at 10:00 a.m. local time, at the University Park MarriottGrand America Hotel, 500located at 555
South Wakara Way,Main, Salt Lake City, Utah 84108, at 10:00 a.m. (local
time) on June 16, 1999, for the following purposes:
1. To elect one memberUtah.
The purposes of the boardmeeting will be to:
. Elect three directors to our Board of directors.
2. To consider a proposal to amendDirectors;
. Approve the Certificate of Incorporation to
change the name of the Company to "Flexpoint Sensor Systems, Inc."
3. To consider a proposal to increase the number of shares of common
stock that may be issued under the Micropoint, Inc. Omnibus2005 Stock Option Plan.
4. To transactIncentive Plan; and
. 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 beOctober 11, 2005, 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 October 28, 2005. We must receive your proxy on or
before November 18, 2005, 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 M. Odom
-------------------
President
May 14, 1999
Please Return Your Signed 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
This Proxy Statement is being furnished to holders of Micropoint, Inc.
(the "Company") common stock, par value $0.001 per share ("Common Stock"), in
connection with the solicitation of proxies by the Company for use at the
Annual Meeting of StockholdersJohn A. Sindt
By: _____________________________________
John A. Sindt, Chairman of the Company (the "Annual Meeting") to be
held at the University Park Marriott Hotel, 500 South Wakara Way,Board
Salt Lake City, Utah
84108, at 10:00 a.m. (local time)October 12, 2005
iv
4
TABLE OF CONTENTS
General Information.........................................................1
Information Regarding the Meeting...........................................1
Proposal No. 1 - Election of Directors......................................4
Proposal No. 2 - 2005 Stock Incentive Plan..................................6
Our Management..............................................................8
Director and Executive Officer Compensation.................................9
Voting Securities and Principal Holders of Them............................10
Independent Public Accountants.............................................11
Stockholder Proposals for 2006 Annual Meeting..............................11
Other Matters..............................................................12
Appendices
Appendix A - 2005 Stock Incentive Plan
Appendix B - Audit Committee Charter
Appendix C - Proxy Card
v
5
----------------------------------------------------------------------------
GENERAL INFORMATION
----------------------------------------------------------------------------
Flexpoint Sensor Systems, Inc. is a development stage company principally
engaged in obtaining financing and seeking manufacturing contracts for the
design and engineering of technology and equipment using our Bend Sensor
technology, which is a flexible potentiometer technology. We emerged from
Chapter 11 bankruptcy on June 16, 1999,February 24, 2004, and at any
adjournment(s) or postponement(s) thereof. This Proxy Statement, the enclosed
Noticesince that time we have leased
a manufacturing facility, purchased necessary equipment to establish a
production line, negotiated contracts, manufactured Bend Sensor technology
devices and have further developed our technologies. Our focus is to acquire
contracts with companies for our products to move our business forward.
We sent you this proxy statement and the enclosed formproxy 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 October 11, 2005, are beingentitled to vote at the meeting. At the meeting, you
will be asked to:
.. Elect three directors to our Board;
.. Approve the 2005 Stock Incentive Plan; and
.. 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
of the Company on or about May 14, 1999.
VOTING ATOctober 28, 2005. We are paying all of the costs of
this proxy solicitation. We have included the information required by Rule
14a-3 of the Rules of the Securities and Exchange Commission ("SEC") in this
proxy statement. We have also provided our annual report on Form 10-KSB, as
amended, that includes audited financial statements for our last fiscal year,
which ended December 31, 2004. If you would like copies of any of our filings
with the 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:
Stockholder Relations
Flexpoint Sensor Systems, Inc.
106 West Business Park Drive
Draper, Utah 84020
We will not charge you for any of the copies.
----------------------------------------------------------------------------
INFORMATION REGARDING THE ANNUAL MEETING
----------------------------------------------------------------------------
What may I vote on? You will be entitled to vote, either in person or by
proxy, on the election of three directors, approval of the 2005 Stock
Incentive Plan and any other business properly brought before the meeting.
How does the Board recommend I vote on the proposals? The Board of Directors ofrecommends a
vote FOR each director and a vote FOR the Company (the "Board") has fixed2005 Stock Incentive Plan.
-1-
6
Who is entitled to vote? Stockholders as of the close of business on May 14, 1999, as theOctober
11, 2005 (the record date (the "Record Date") for the
determination of stockholdersdate) are entitled to notice of and to vote at the Annual
Meeting.meeting.
How do I vote? Sign and date the proxy card you receive with this proxy
statement and return it in the postage-paid envelope. If you return your
signed proxy 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 our Corporate Secretary, B. Fred Atkinson, Jr.; OR
.. voting in person; OR
.. returning a proxy card with a later date.
Who will count the votes? We have appointed B. Fred Atkinson, Jr. as the
inspector of the election. He will count and tabulate the votes.
Is my vote confidential? Your vote will not be disclosed except:
.. as needed to permit the inspector of the 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, thererecord date, 22,974,537 shares of common
stock were outstanding approximately
17,092,380 shares of 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 areand entitled to castvote. Each share of common stock is
entitled to one vote per
share, exercisable in person or by properly executed proxy, with respect toon each matter to be considered by them at the Annual Meeting. The presence, in
person or by properly executed proxy, of the holders ofbeing considered.
What is a "quorum"? A "quorum" is a majority of the outstanding shares of the Company's Common Stock is necessary to constitute a
quorum at the Annual Meeting.
Common Stock willshares. They
may be voted in accordance with the instructions indicated
in a properly executed proxy. If no instructions are indicated, such stock
will be voted as recommended by the Board. If any other matters are properly
presented to the Annual Meeting for action, the person(s) named in the
enclosed form(s) of proxy and acting thereunder will have discretion to vote
on such matters in accordance with their best judgment. Broker non-votes and
abstentions are not treated as votes cast for purposes of any of the matters
to be voted on at the meeting. A stockholder who has given a proxy may revoke
it by voting in personpresent 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. The three 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 intend 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
-2-
7
determining the presence of a quorum; however, we will not consider broker
non-votes as votes cast either for or against a particular matter.
Who can attend the annual meeting? All of our stockholders on October 11,
2005, may 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 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, then your signed proxy card gives authority to John A. Sindt, the
Chairman of the Board, and Clark M. Mower, our President, to vote on those
matters at their discretion.
Who are the largest principal stockholders? As of October 11, 2005, two of
our stockholders owned more than 5% of our capital stock. Those stockholders
are First Equity Holdings Corp., an affiliate, that beneficially owns
5,757,158 shares, or 25.1% of our outstanding common stock, and John A. Sindt,
Chairman of the Board, who beneficially owns 1,394,976 shares, or 6.1% of our
outstanding common stock. John A. Sindt currently serves as Chairman of the
Board and is a nominee for election as a director at the meeting.
How much did this proxy solicitation cost? We did hire third parties to
assist us in the printing and distribution of the proxy materials and the
solicitations of votes. We have retained Georgeson Shareholder to solicit
proxies at a cost of $6,500, plus reasonable out of pocket expenses. We
estimate that our total costs for these actions will be approximately $21,500.
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 Corporate Secretary a written notice of
revocation, or a later-datedduly executed proxy tobearing a later date, or by attending the
Secretary of the Company at any time
before the closing of the pollsmeeting and voting in person. Attendance at the meeting.meeting will not; however,
constitute revocation of your proxy without your further action. Any written
notice revoking ayour proxy should be sent to Micropoint,our principal executive offices
addressed as follows:
Stockholder Relations
Flexpoint Sensor Systems, Inc., 6906 South 300
106 West Midvale, UT
84047, Attention: Secretary.
The Company's Bylaws require the affirmative vote of a plurality of the
votes cast at the meeting for the election of directorsBusiness Park Drive
Draper, Utah 84020
-3-
8
- -----------------------------------------------------------------------------
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
- -----------------------------------------------------------------------------
Nominees
You are being asked to elect Messrs. John A. Sindt, Clark M. Mower and the affirmative
vote of a majority of the votes cast at the meeting for the approval of the
proposed amendmentRuland
J. Gill, Jr. 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, successors to the class of directors whose term expires at that
meeting shall be elected for a three-year term. Each
year a different 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.
AtBecause this meeting oneof
stockholders will be the first meeting of stockholders since emergence from
bankruptcy and two of the three directors have been appointed to replace
directors who have resigned during the past year, the directors shall be
divided into three classes and all will stand for election. Mr. Mower will be
elected to serve a one-year term, Mr. Sindt will serve a two year term and Mr.
Gill will serve a three-year term. Each will serve for the identified term or
until he is succeeded by another qualified director who has been nominated byelected.
Each of these nominees for director is now a member of the Board. Mr. Sindt
became a director in 1999 and Messrs. Mower and Gill joined the Board for election
toin
December of 2004. The Board met two (2) times during the class whose term expires atyear ended December
31, 2004, and has held six (6) regular meetings and two (2) special meetings
during the 2002 annual meeting. The person
nominated is Jeffrey A. Coleman, who is currently a director ofsix month period ended June 30, 2005.
Biographical Information about the Company.
Unless otherwise specified, proxy votes will be cast for the election of
the nominee as directors for the periods specified. If any such person should
be unavailable for election, the Board may designate a substitute nominee. It
is intended that proxy votes will be cast for the election of such substitute
nominees. Stockholder nominations of persons for election as directors are
subject 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.Nominees
The following pages contain information concerning the nominees. Unless
the context otherwise requires, all references in this Proxywas provided to the "Company"
shall mean Micropoint, Inc. ("Micropoint") and its wholly owned subsidiary,
Sensitron, Inc. ("Sensitron"), a Utah corporation, 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.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION AS A DIRECTOR OF THE NOMINEE
NAMED HEREIN.
Set forth below is certain information concerningus by each of the directors
and executive officers of the Company as of May 3, 1999.
With the
Name Age Position Company Sincenominees:
John A. Sindt - ---- --- -------- -------------
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. OdomSindt 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 was a key executive in the reorganization of EEC, Inc. from a public
company in bankruptcy to private company posting profits and positive cash
flow. From 1985 to 1990, Mr. Odom was Vice president of Operations of Comptec,
Inc., a world-wide plastic injection molder and electronic device corporation.
From 1983 to 1985, Mr. Odom was the manager of manufacturing engineering at
AMP Keyboard Technologies. Mr. Odom received a bachelors degree in General
Science/Chemistry from Grinnell College, Grinnell, Iowa in 1982. He completed
his masters studies at the American Graduate School of International
Management in Glendale, Arizona and furthered graduate studies at Harvard
University, Cambridge, MA.
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 the company since 1999
and served as President and Chief Executive Officer from 2001 to 2004. He
served as Secretary/Treasurer from January 2005 through July 12, 2005. Mr.
Sindt is also the Chairman of the Board of Sensitron, since January 1998. Mr.
Colemanour subsidiary. He has
been employed since 1965 as a Salt Lake County, Utah Constable and he
currently heads that department. He has also served as President, Corporate
Secretary and Director for the National Constables Association. He has owned
and operated a successful chain of retail jewelry stores in Utah.
Clark M. Mower - Mr. Mower was appointed our President and CEO in January
2005. He was appointed as Director, President and CEO of Sensitron in
February 2005. He formerly served as Senior Vice President - Mergers and
Acquisitions - Merchant Energy Group for El Paso Energy Corporation (NYSE:
EP). From August 2002 to 2004 he was the managing member of Coleman Capital Partners,Polaris Energy,
LLC, a private equity
investment group, since 1996.non-affiliated consulting company to energy related mergers and
acquisition. From 1985August 2002 to 1997 he was Director of Operations
for the Pyramid Group, a national real estate development, investment and
management firm. From 1982 to 1983July 2004 he was a consultantmanagement 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.
Ruland J. Gill, Jr. - Mr. Gill is Vice President of Government Affairs and
Senior Attorney for Questar Corporation (NYSE: STR), where he has worked since
1973. He was appointed as a Director of Sensitron in February 2005. In
addition to his professional career, Mr. Gill has held several important
positions including President of the Management
Information Consulting DivisionUtah Petroleum Association, and Trustee
of Arthur Andersen & Co. Mr. Coleman received
an MBA from the Amos Tuck School of Business at Dartmouth CollegeRocky Mountain Mineral Law Foundation.
-4-
9
Related Party Transactions with the Nominees
During the past three years, the following transactions were entered into by
Flexpoint Sensor Systems, Inc. and a BA
(honors) from Stanford University.
Don M. Jackson, Jr., PhD. Dr. Jackson hascurrent nominee for director. These
transactions between Flexpoint Sensor Systems, Inc. and the nominee for
director have been a director of Micropoint
since April 1998,negotiated between related parties without "arms length"
bargaining and, served as a directorresult, the terms 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 andthese transactions may be different
than transactions negotiated between unrelated persons.
John A. Sindt, 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 officers of the Company are elected by the Board on an annual
basis and serve at the discretion of the Board.
Board Committees
The Board has an Audit Committee and Compensation Committee. The Board
does 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 take 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. No director attended
fewer than 75 percent of the Board, meetings heldagreed to compromise his claims in
bankruptcy by surrendering his right to receive:
.. Any options granted to him prior to bankruptcy;
.. 5,000,000 common shares for accrued wages through March 2001;
.. 800,000 super-voting preferred shares that were authorized to be issued
to him in April 2001; and
.. Accrued wages of $300,000 through December 31, 2003.
In February 2004, we emerged from bankruptcy without settling a claim for
compensation by John A. Sindt for services rendered during the fiscal year ended
December 31, 1998.
Certain Relationships And Related Transactions
Mr. Jehu Hand, an officerperiod we were
in bankruptcy. At the date we emerged from bankruptcy, we acknowledged that
the claim existed but were unable to determine the range of potential loss
under the claim and directordid not record a liability at that date. Our Board
determined the amount of Micropoint prior to the April
1998 Acquisition, acted as legal counsel for Micropoint. In December 1997,claim on November 24, 2004, and on that date we
settled all amounts due under the Company issued 726,200claim and in payment of services received
after we emerged from bankruptcy, by issuing 1,200,000 shares of Common Stock in connectionour
restricted common stock to Mr. Sindt. We valued the common stock issued at
$1,776,000, or $1.48 per share, based upon the quoted market value of our
common stock.
Nominee Compliance 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
directorSection 16(a) of the Company, was issued 30, 303 shares of the Company's Common
Stock 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 ownership of the Common Stock 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 ComplianceExchange 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) forms filed by such persons.reports they
file and provide written representation that no Form 5 is required. Based
solely on the Company'supon a review of suchthese 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 withus during the fiscal year ended
December 31, 1998, except2004, we believe John A. Sindt filed late one Form 4 for one
transaction.
Proxy Vote
The persons named as proxy holders in the enclosed proxy cards (Messrs. Sindt
and Mower) have advised us that, (i)
Mr. Thomas E. Danielson filedunless a Form 5 reporting the exercise of stock options
in October 1998 which should have previously been reportedcontrary direction is indicated on a
Form 4, (ii)
30,303 shares of Common Stock were issuedproxy card, they intend to an entity that, on information
and belief, Jeffrey A. Coleman is deemed to beneficially own, for which Mr.
Coleman filed an amended Form 5 in March 1999 reportingvote FOR 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 resultelection 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 $100,000 (determined for the
year ended December 31, 1998) (the "Named Executive Officers"). The tables
include information related to stock options granted to the Named Executive
Officers.
Summary Compensation Table. The following table provides certain
information regarding compensation paid by the Company to the Named Executive
Officers.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation Awards
------------------- -----------------------------
Securities
Restricted Underlying All Other
Name and Other Annual Stock Options/ LTIP Compensation
Principal Position Year Salary($) 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 partthree nominees. They
have also advised us that if any of the Acquisition. Options to
acquire 5,000 shares were exercised in October 1998, options to acquire
385,000 sharesthree nominees are currently exercisable and options 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 priceavailable for
election for any reason, then they will vote FOR the election 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; options 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 service onsuch
substitute nominee or nominees, if any, as the Board through the grant of stock optionsmay propose. Each person
nominated for election has agreed 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 1998serve if elected, and the remaining optionsBoard has no
reason to acquire 60,000 shares of Common Stock vest equally in
three annual installments in July 1999, 2000 and 2001. During 1998 directors
of the Company who are also officers or employees of the Company did not
receive and are not expectedbelieve that any nominee will be unavailable to receive in the future any additional
compensation for their service as directors. All directors are entitled to
reimbursement for reasonable expenses incurred in the performance of their
duties as Board members.serve if elected.
The Company has made no other agreements regarding
compensation of directors.
Employment Agreements
Effective December 31, 1997, Flexpoint entered into an employment
agreement with Mr. Odom 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 options to acquire 780,000 shares of Common Stock of Micropoint at
an exercise price between $.16 and $.77 per share under the Micropoint Omnibus
Stock Option Plan (the "Plan"). As of December 31, 1998, options to acquire
515,000 shares of Common Stock were exercisable and options 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. Allrecommends that you vote -FOR- all
of the above described options became obligationsdirector nominees.
-5-
10
- -----------------------------------------------------------------------------
PROPOSAL NO. 2 - 2005 STOCK INCENTIVE PLAN
- -----------------------------------------------------------------------------
Features of Micropoint as
part ofPlan
On August 25, 2005, our Board adopted 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 persons of
the Company pursuant to the foregoing or otherwise. However, the Company has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
Stock Options
The Company has adopted an Omnibus Stock Option Plan for the benefit of
officers, directors, employees and consultants of the Company. The grant 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 shares of
the Company's Common Stock. The total number of shares authorized for the Plan
may be allocated 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, as amended (the "Code").
The Plan is currently being administered by the Board, which will select
optionees and determine 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 value of the Common
Stock of the Company on the date of grant 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 name of the Company to Flexpoint Sensor Systems, Inc. The name2005
Stock Incentive Plan (the "Plan") and is presenting the Plan for stockholder
approval. A copy of the CompanyPlan is currently Micropoint, Inc. At a meeting held
on April 24, 1999,attached as Appendix A. The purposes of the
Plan are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to employees,
directors and consultants, and to promote the success of our business.
The Plan became effective upon its adoption by the Board adoptedand shall continue in
effect for a resolution to amend, subject to
stockholder approval, the Certificateterm of Incorporation to change the name of
the Company to Flexpoint Sensor Systems, Inc.ten (10) years, unless terminated. 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 name of the corporation is Flexpoint Sensor Systems, Inc.
The proposed revisions to Article First 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 themaximum aggregate
number of shares of common stock that may be issuedsold under the Micropoint, Inc. Omnibus Stock Option Plan.
AtPlan is 2,500,000
shares. The term of each option and its exercise price shall be stated in an
option agreement; provided that the Annual Meeting, stockholders willterm does not exceed ten (10) years from
the date of grant. The plan provides that a grant of a stock option to an
employee shall have an exercise price of no less than 110% of the fair market
value per share on the date of grant. As a condition of the grant, vesting or
exercise of an option granted under the Plan, the participant shall be
askedrequired to approve ansatisfy any applicable federal, state, local or foreign
withholding tax obligations that may arise in connection with the grant,
vesting or exercise of the option or the issuance of shares.
The Plan shall be administered by our Compensation Committee, described below
in "Our Management," and this committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time
the Board may increase the size of any Compensation Committee and appoint
additional members, remove members (with or without cause) and appoint new
members in substitution, fill vacancies and/or remove all members of the
committee. The Compensation Committee may be composed of
employee/director(s), non-employee/director(s) and/or major stockholder(s) of
the company who are not a director.
The Compensation Committee shall have the authority, in its discretion:
.. to determine the fair market value of the common stock;
.. to select the employees, directors and consultants to whom options may
be granted;
.. to determine whether and to what extent options are granted;
.. to determine the number of shares of the Company's common stock thatto be covered by each
award granted;
.. to approve the form of agreements used under the Plan;
.. to determine the terms and conditions of any award granted, which terms
and conditions relate to the exercise or purchase price, the term,
vesting and any restriction or limitation regarding any option, optioned
stock or restricted stock issued upon exercise of an option;
.. to determine whether and under what circumstances an option may be
issued
pursuantsettled in cash instead of common stock;
.. to implement an option exchange program on certain terms and conditions;
.. to adjust the vesting of an option held by an employee, director or
consultant as a result of a change in the terms or conditions under
which such person is providing services to the Micropoint, Inc. Omnibus Stock Optioncompany;
.. to construe and interpret the terms of the Plan (the "Option
Plan"). Dueand awards granted under
the Plan, which constructions, interpretations and decisions shall be
final and binding on all Participants; and
.. in order to fulfill the purposes of the Plan and without amending the
Plan, to modify grants of options to participants who are foreign
nationals or employed outside of the United States in order to recognize
differences in local law, tax policies or customs.
Non-statutory stock options may be granted to employees, directors and
consultants who have the capacity
-6-
11
to contribute to the anticipated increase in demandsuccess of the company. Incentive stock options may be
granted only to employees, provided that employees of affiliates shall not be
eligible to receive incentive stock options.
Eligibility for its productsthe Plan
The following table provides a breakdown of the awards to be issued under development, the
Company must rapidly expand its operations. The Company needsPlan:
Number
Grants to hire experienced and qualified employeesbe received under the Plan In group Allocated
- ------------------------------------- -------- ---------
All current executive officers as a group 3 580,000 shares
vesting over 3 years
All current directors who are expertsnot 1 0
executive officers
Employees as a group who are not 10 609,000 shares
executive officers vesting over 3 years
Chief Executive Officer, Clark M. Mower 1 300,000 shares
vesting over 3 years
Proxy Vote
The persons named as proxy holders in the enclosed proxy cards (Messrs. Sindt
and skilled in
automotive designMower) have advised us that, unless a contrary direction is indicated on a
proxy card, they intend to vote -FOR- the Plan.
The Board of Directors recommends that you vote -FOR- the
Flexpoint Sensor Systems, Inc. 2005 Stock Incentive Plan.
-7-
12
- ------------------------------------------------------------------------------
OUR MANAGEMENT
- ------------------------------------------------------------------------------
Directors and manufacturing procedures. The Company believes that the
retention of skilled employees provides partExecutive Officers
Our directors and executive officers are listed below.
Name Age Position Held Director Since
- -------------------- ----- ------------------------------------ --------------
John A. Sindt 61 Chairman of the foundation upon whichBoard and Principal December 1999
Finance and Accounting Officer
Clark M. Mower 58 President, CEO and Director December 2004
Ruland J. Gill, Jr. 60 Director December 2004
B. Fred Atkinson, Jr. 57 Secretary/Treasurer and Comptroller July 2005
Audit Committee
The audit committee consists of Messrs. Atkinson and Gill, with Mr. Gill
serving as Chairman. The audit committee was not in existence at the Company can build value for its stockholders. The Company has been successful
in hiring experienced employees throughtime of
the usepreparation 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 provideour audited financials for the issuanceyear ended December 31,
2004. However, this committee has met three (3) times since its formation in
June 2005. The audit committee adopted a written charter in September 2005
and a copy of upthis 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 SAS 61 Communications with Audit Committees, as may be
modified or supplemented;
.. receive the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No. 1, 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-KSB.
Our Board has determined that Mr. Atkinson is an additional 1,000,000audit committee financial
expert serving on our audit committee due to his expertise in accounting
matters as well as his understanding of financial statements. However, Mr.
Atkinson is not independent as that term is defined by NASDAQ Marketplace Rule
4200 Definitions (a)(15) because he is an employee.
Mr. Gill is independent based upon NASDAQ Marketplace Rule 4200 Definitions
(a)(15), but our Board has determined that he is not a financial expert.
Compensation Committee
Mr. Ruland Gill is Chairman of our compensation committee and Mr. John
Clayton, a stockholder, serves as a non-director member of our compensation
committee. This committee was formed in May 2005 and has held three meetings
since its formation. This committee was appointed Administrator of the 2005
-8-
13
Stock Incentive Plan on August 25, 2005. This committee shall perform the
functions outlined under the Plan.
Nominating Committee
We do not have a nominating committee, therefore our full Board participates
in the consideration of director nominees. We believe it is not appropriate
for us to have a nominating committee at this time because we are a
development stage company with limited operations. Our Board will reevaluate
our need for a nominating committee at some future date.
Communications with the Board
Our Board and each director accepts 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 did not pay cash compensation, bonuses, stock appreciation rights, long
term compensation, stock awards or long-term incentive rights to our executive
officers in 2002 and 2003. John A. Sindt served as our Chief Executive
Officer during 2004 and we issued 1,200,000 common shares, valued at
$1,776,000, to him in 2004 in settlement of claims and as compensation for his
services during 2002, 2003 and 2004.
We have not entered into employment contracts with our executive officers and
their compensation, if any, will be determined at the discretion of our Board.
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 Compensation Committee will
from time to time evaluate the need to compensate directors for their services
on our behalf.
On August 25, 2005, the Board authorized the award of 18,350 shares of common
stock, undervalued at approximately $35,000, to Ruland J. Gill Jr. for his services
as a director in 2005.
- ------------------------------------------------------------------------------
VOTING SECURITIES AND PRINCIPAL HOLDERS OF THEM
- ------------------------------------------------------------------------------
The following tables set forth the Option Plan. Currently therebeneficial ownership of our outstanding
common stock by:
-9-
14
.. each person or group known by us to own more than 5%;
.. each of our executive officers;
.. each of our directors; and
.. all executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC and
generally includes voting or investing power with respect to securities. For
purposes of calculating the percentages shown in the chart, each person listed
is also deemed to beneficially own any shares issuable on either the exercise
of vested options or warrants held by that person and that are optionsexercisable
within 60 days after October 11, 2005. Except as indicated by footnote, the
persons named in the table have sole voting and investing power with respect
to acquire 341,450all shares of common stock availableshown as beneficially owned by them. The
inclusion of any shares as beneficially owned does not constitute an admission
of beneficial ownership of those shares. The percentage calculation of
beneficial ownership is based on 22,974,537 shares of common stock outstanding
as of October 11, 2005.
CERTAIN BENEFICIAL OWNERS
------------------------
Name and address of Percentage
beneficial owners Number of shares of class
- --------------------------------------- ----------------- -----------
First Equity Holdings Corp. 5,757,158 (1) 25.1%
2157 S. Lincoln Street
Salt Lake City, Utah 84106
(1) Includes 743,000 shares held by an officer of
First Equity Holdings Corp.
MANAGEMENT
----------
Name and address of Percentage
beneficial owners Number of shares of class
- --------------------------------------- ----------------- ------------
John A. Sindt 1,394,976 (1) 6.1%
106 West Business Park Drive
Draper, Utah 84020
Clark M. Mower 550,000 2.4%
106 West Business Park Drive
Draper, Utah 84020
Ruland J. Gill, Jr. 216,667 Less than 1%
532 Heritage Drive
Bountiful, UT 84010
Directors and officers 2,161,643 9.4%
as a group
(1) Includes 1,202,266 shares held by Mr. Sindt, 1,143 shares held by his
spouse and Mr. Sindt shares investment power with respect to 191,567
shares.
-10-
15
- ------------------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS
- ------------------------------------------------------------------------------
Our independent public accountant for the current year is Hansen Barnett &
Maxwell, Certified Public Accountants and this firm audited our financial
statements for the year ended December 31, 2004 and 2003. We expect a
representative from this firm to be present at the 6,000,000 shares authorizedstockholders' meeting on
November 22, 2005, to respond to appropriate questions.
Independent Public Accountant Fees
The following table presents the aggregate fees billed for issuance undereach of the Option Plan. Combininglast
two fiscal years by our independent accountant, Hansen Barnett & Maxwell, in
connection with the 6,000,000 sharesaudit of our financial statements and other professional
services rendered by that firm.
2004 2003
------------ -----------
Audit fees $ 20,113 $ 66,665
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 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 approvedservices normally provided by the
stockholders. Ofaccountant in connection with statutory and regulatory filings or engagements.
Audit-related fees represent professional services rendered for assurance and
related services by the 7,000,000 shares, there would be available optionsindependent accountant that are reasonably related to
acquire 1,341,450 shares under the Option Plan. A copyperformance of the Option Plan is
attachedaudit 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 advise, 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 this Proxy Statement as Appendix Aestablish pre-approval
procedures for all audit and is incorporated hereinnon-audit services provided by reference.the independent
accountant. Before the independent accountant renders audit and non-audit
services our audit committee will pre-approve the engagement.
- -----------------------------------------------------------------------------
STOCKHOLDER PROPOSALS FOR 2006 ANNUAL MEETING
- -----------------------------------------------------------------------------
The description belowrules of the Option Plan is qualifiedSEC provide that stockholder proposals may be considered for
inclusion in its
entirety by referencethe proxy material for an annual meeting under certain
circumstances. Our bylaws provide that any stockholder proposals for an
annual meeting must be made in writing and delivered to the complete textus or mailed and
received at our principal executive offices not less than 50 days, nor more
than 80 days prior to that meeting. However, if we provide you with less than
60 days notice (or public disclosure) of the Option Plan. Termsmeeting, nominations will be
deemed timely if they are received not defined herein shall havemore than the meanings set forth in10th day following the
Option Plan.
Description of Principal Featuresdate the notice was mailed or the public disclosure was made. Any such
proposals need to be accompanied by specific information regarding:
-11-
16
.. a brief description of the Option Plan
One ofbusiness desired to be brought before the
meeting and the reasons for conducting such business at the increasemeeting;
.. the name and address of the stockholder proposing the business;
.. the class and number of shares owned by the stockholder; and
.. any material interest the stockholder has is such business.
Stockholders proposals for the 2006 annual meeting must be received no later
then October 3, 2006, but no sooner than September 3, 2006, and should be
addressed to:
Stockholder Relations
Flexpoint Sensor Systems, Inc.
106 West Business Park Drive
Draper, Utah 84020
- ------------------------------------------------------------------------------
OTHER MATTERS
- ------------------------------------------------------------------------------
The Board does not presently intend to bring any other business before the
meeting and we know of no other matters that are to be brought before the
meeting except as specified in projected option requirements is
that the Companynotice of the meeting. If any additional
business properly comes before the meeting, then your shares will be retaining more employeesvoted 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
October 12, 2005
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.
-12-
17
APPENDIX A
FLEXPOINT SENSOR SYSTEMS, INC.
2005 STOCK INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this 2005 Stock Incentive Plan
are to attract and consultants than it
previously anticipated dueretain the best available personnel for positions of
substantial responsibility, to the acceleration of its projected manufacturing
obligations. The Option Plan is intended to afford anprovide additional incentive to employees,
Board membersEmployees,
Directors and consultants of the CompanyConsultants and its subsidiaries to acquire
or increase 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 work of the Company
and to align the interests of such persons with the Company's stockholders to promote the success 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 authorizedbusiness. Options granted under the Option Plan may be allocatedIncentive Stock Options or
Nonstatutory Stock Options, as determined by the Board betweenAdministrator at the non-qualified stock optionstime of
grant of an option and subject to the applicable provisions of Section 422 of
the Code and the incentiveregulations and interpretations promulgated thereunder.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or its Committee appointed
pursuant to Section 4 of the Plan.
(b) "Affiliate" means a business entity other than a Subsidiary (as
defined below) which, together with the Company, is under common control of a
third person or entity.
(c) "Applicable Laws" means the legal requirements relating to the
administration of stock
optionsoption and restricted stock purchase plans, including
under applicable U.S. state corporate laws, U.S. federal and applicable state
securities laws, other U.S. federal and state laws, the Code, any Stock
Exchange rules or regulations and the applicable laws, rules and regulations
of any other country or jurisdiction where Options are granted under the Plan,
as such laws, rules, regulations and requirements shall be in place from time
to time.
(d) "Board" means the Board of Directors of the Company.
(e) "Cause" for termination of a Participant's Continuous Service
Status will exist if the Participant is terminated by the Company for any of
the following reasons: (i) Participant's willful failure substantially to
perform his or her duties and responsibilities to the Company or deliberate
violation of a Company policy; (ii) Participant's commission of any act of
fraud, embezzlement, dishonesty or any other willful misconduct that has
caused or is reasonably expected to result in material injury to the Company;
(iii) unauthorized use or disclosure by Participant of any proprietary
information or trade secrets of the Company or any other party to whom the
Participant owes an obligation of nondisclosure as a result of his or her
relationship with the Company; or (iv) Participant's willful breach of any of
his or her obligations under any written agreement or covenant with the
Company. The determination as to whether a Participant is being terminated
for Cause shall be made in good faith by the Company and shall be final and
binding on the Participant. The foregoing definition does not in any way
limit the Company's ability to terminate a Participant's employment or
consulting relationship at any time subjectas provided in Section 5(d) below, and the
term "Company" will be interpreted to certain requirementsinclude any Subsidiary, Parent or
Affiliate, as appropriate.
1
18
(f) "Change of Control" means (1) a sale of all or substantially all
of the Company's assets, or (2) any merger, consolidation or other business
combination transaction of the Company with or into another corporation,
entity or person, other than a transaction in which the holders of at least a
majority of the shares of voting capital stock of the Company outstanding
immediately prior to such transaction continue to hold (either by such shares
remaining outstanding or by their being converted into shares of voting
capital stock of the surviving entity) a majority of the total voting power
represented by the shares of voting capital stock of the Company (or the
surviving entity) outstanding immediately after such transaction, or (3) the
direct or indirect acquisition (including by way of a tender or exchange
offer) by any person, or persons acting as a group, of beneficial ownership or
a right to acquire beneficial ownership of shares representing a majority of
the voting power of the then outstanding shares of capital stock of the
Company. A Change of Control; however shall not be considered to have
occurred until all conditions precedent to the transaction, including but not
limited to, all required regulatory approvals have been obtained.
(g) "Code" means the Internal Revenue Code of 1986, as amended (the "Code").
The principal objectivesamended.
(h) "Committee" means one or more committees or subcommittees of the
OptionBoard appointed by the Board to administer the Plan arein accordance with Section
4 below.
(i) to broaden"Common Stock" means the share
ownershipCommon Stock of the staffCompany.
(j) "Company" means Flexpoint Sensor Systems, Inc., a Delaware
corporation.
(k) "Consultant" means any person, including an advisor, who is
engaged by the Company or any Parent, Subsidiary or Affiliate to render
services and is compensated for such services, and any director of the Company
andwhether compensated for such services or not.
(l) "Continuous Service Status" means the absence of any
interruption or termination of service as an Employee, Director or Consultant.
Continuous Service Status as an Employee, Director or Consultant shall not be
considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Administrator, provided that
such leave is for a period of not more than ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to createCompany policy adopted from
time to time; or (iv) in effectthe case of transfers between locations of the
Company or between the Company, its Parents, Subsidiaries, Affiliates or their
respective successors. A change in status from an Employee to a bonus
program for management which compensates designated individualsConsultant or
from a Consultant to an Employee will not constitute an interruption of
Continuous Service Status.
(m) "Corporate Transaction" means a sale of all or substantially all
of the Company's assets, or a merger, consolidation or other capital
reorganization or business combination transaction of the Company with or into
another corporation, entity or person, or the direct or indirect acquisition
(including by way of a tender or exchange offer) by any person, or persons
acting as a group, of beneficial ownership or a right to acquire beneficial
ownership of shares representing a majority of the voting power of the then
outstanding shares of capital stock of the Company.
At2
19
(n) "Director" means a member of the Company's 1998 annual stockholder's meeting,Board.
(o) "Employee" means any person employed by the Board requested
andCompany or any
Parent, Subsidiary or Affiliate, with the stockholders approvedstatus of employment determined
based upon such factors as are deemed appropriate by the Administrator in its
discretion, subject to any requirements of the Code or the Applicable Laws.
The payment by the Company of a 762,950 increase in the number of shares
issueable under the Option Plan. At the time the Board believed that the 1998
increase woulddirector's fee to a Director shall not be
sufficient forto constitute "employment" of such Director by the foreseeable future. While there are still
options to acquire 341,450 sharesCompany.
(p) "Exchange Act" means the Securities Exchange Act of common stock available under1934, as
amended.
(q) "Fair Market Value" means, as of any date, the Option
Plan, the Company now anticipates that it will need options to acquire an
additional 1,000,000 sharesfair market value
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 goalsas determined by the Board
or, at the Board's election, the Compensation Committee (the body
administering the Option Plan is hereinafter referred toAdministrator in good faith on such
basis as either the Board
or the Compensation Committee). Awards under the Option Plan will be focused
on Company employees, Board membersit deems appropriate 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 determinationapplied consistently with respect to
who
may receive grants ofParticipants. The Administrator my look to the three week prior average
trading price for the Shares as a guide in determining fair market value but
shall be free to make such increases or decreases in such average as the
Administrator determines necessary in determining fair market value so as to
take into consideration such factors as blockage, spikes in trading price and
other similar factors.
(r) "Incentive Stock Option" means an Option intended to qualify as
an incentive 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")option within the meaning of Section 422 of the Internal
Revenue Code, (the "Code"), and nonqualified stock options ("NQSO's"),as
designated in the applicable Option Agreement.
(s) "Listed Security" means any security of the Company that is
listed or approved for listing on a national securities exchange or designated
or approved for designation as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc.
(t) "Named Executive" means any individual who, on the last day of
the Company's fiscal year, is the chief executive officer of the Company (or
is acting in such capacity) or among the four most highly compensated officers
of the Company (other than the chief executive officer). Such officer status
shall be determined pursuant to the executive compensation disclosure rules
under the Exchange Act.
(u) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable Option
Agreement.
(v) "Option" means a stock option granted pursuant to the Plan.
(w) "Option Agreement" means a written document, the form(s) of
which shall be approved from time to time by the Administrator, reflecting the
terms of an Option granted under the Plan and conditionsincludes any documents attached
to or incorporated into such Option Agreement, including, but not limited to,
a notice of stock option grant and a form of exercise notice.
(x) "Option Exchange Program" means a program approved by the
Administrator whereby outstanding Options are exchanged for Options with a
lower exercise
3
20
price or are amended to decrease the exercise price as a result of a decline
in the Fair Market Value of the Option Plan andCommon Stock.
(y) "Optioned Stock" means the Common Stock subject to an Option.
(z) "Optionee" means an Employee, Director or Consultant who
receives an Option.
(aa) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the agreement
evidencingCode, or any successor
provision.
(bb) "Participant" means any holder of one or more Options, or the
Shares issuable or issued upon exercise of such grant. The aggregate fair market value of the ISO's granted to
any one optioneeOptions, under the Option Plan,Plan.
(cc) "Plan" means this 2005 Stock Incentive Plan.
(dd) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act, as amended from time to time, 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 ofsuccessor provision.
(ee) "Share" means a share of the Common Stock, onas adjusted in
accordance with Section 14 of the datePlan.
(ff) "Stock Exchange" means any stock exchange or consolidated stock
price reporting system on which prices for the optionCommon Stock are quoted at any
given time.
(gg) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code, or any successor
provision.
(hh) "Ten Percent Holder" means a person who owns stock representing
more than ten percent (10%) of the voting power of all classes of stock,
issued and outstanding, of the Company or any Parent or Subsidiary.
3. Stock Subject to the Plan. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of Shares that may be sold under the
Plan is grantedTwo Million Five Hundred Thousand (2,500,000) Shares of Common Stock.
The Shares may be authorized, but unissued, or reacquired Common Stock. If an
award should expire or become unexercisable for any reason without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program,
the unpurchased Shares that were subject thereto shall, unless the Plan shall
have been terminated, become available for future grant under the Plan. In
addition, any Shares of Common Stock which are retained by the Company upon
exercise of an award in order to satisfy the exercise or purchase price for
such award or any withholding taxes due with respect to such exercise or
purchase shall be treated as not issued and shall continue to be available
under the Plan. Shares issued under the Plan and later repurchased by the
Company pursuant to any repurchase right which the Company may have shall be
available for future grant under the Plan.
4. Administration of the Plan.
4
21
(a) General. The Plan shall be administered by the Board or a
Committee, or a combination thereof, as determined by the Board. The Plan may
be administered by different administrative bodies with respect to different
classes of Participants and, if permitted by the Applicable Laws, the Board
may authorize one or more officers to make awards under the Plan.
(b) Committee Composition. If a Committee has been appointed
pursuant to this Section 4, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time
the Board may increase the size of any Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies (however caused) and remove
all members of a Committee and thereafter directly administer the Plan, all to
the extent permitted by the Applicable Laws and, in the case of NQSO's,a Committee
administering 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,Plan 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 satisfyaccordance with the requirements of Rule 16b-3 promulgated underor
Section 16162(m) of the Exchange Act ("Rule 16b-3") and, with
respectCode, to ISO's,the extent permitted or required by such
provisions. The Committee shall in all events conform 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 Committeeany requirements of
the Board.Applicable Laws. The Compensation Committee determines (i) which employees/independent
contractorsmay be composed of employee/Director(s),
non-employee/Director(s) and/or major shareholder(s) of the Company and its subsidiaries shall be granted an option to
acquire of stock; (ii) the number of shares into which the optionwho is
exercisable; (iii) the amount to be paid by(are) not 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 interpretationDirector.
(c) Powers of the Option Plan.
The Board may from timeAdministrator. Subject to time suspend, terminate, modify or amend the Option Plan, but may not, without the approvalprovisions 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), 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)Committee, the specific duties delegated by the
legal representative of an optionee who diesBoard to such Committee, the Administrator shall have the authority, in its
discretion:
(i) while into determine the employFair Market Value 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.
NonqualifiedCommon 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 purposesSection 2(q) 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 transactionprovided 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 awardedapplied consistently with respect to Participants 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)Plan;
(ii) to select the personsEmployees, Directors and Consultants to
whom Stock Options may from time to time be granted hereunder;
(b)granted;
(iii) 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)granted;
(iv) to determine the number of sharesShares of Common Stock to be
covered by each such Award granted hereunder; and
(d)award granted;
(v) to approve the form(s) of agreement(s) used under the
Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Awardaward granted hereunder, (including,which terms and
conditions include but are not limited to the optionexercise or purchase price, the
termtime or times when awards may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, any
pro rata adjustment to vesting as a result of a Participant's transitioning
from full- to part-time service (or vice versa), and any restriction or
limitation regarding any Option, Optioned Stock or restricted stock issued
upon exercise of an Option, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vii) to determine whether and under what circumstances an
Option may be settled in cash under Section 9(c) instead of Common Stock;
5
22
(viii) to implement an Option Exchange Program on such terms
and conditions as the Administrator in its discretion deems appropriate,
provided that no amendment or adjustment to an Option that would materially
and adversely affect the rights of any Optionee shall be made without the
prior written consent of the option,Optionee;
(ix) to adjust the vesting of an Option held by an Employee,
Director or Consultant as a result of a change in the terms or conditions
under which such person is providing services to the Company;
(x) to construe 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 Optionawards granted under the Plan, which constructions, interpretations and
decisions shall expire, terminate or be canceled for any reason without having been exercisedfinal and binding on all Participants; and
(xi) in full, the number of unpurchased shares shall again be available fororder to fulfill the purposes of the Plan.
4.2 Changes. InPlan and without
amending the eventPlan, to modify grants of any merger, reorganization,
consolidation, recapitalization, dividend (other than a dividendOptions to Participants who are foreign
nationals or its
equivalent which is creditedemployed outside of the United States in order to a Participantrecognize
differences in local law, tax policies or a regular cash dividend),
stock split, or other change in corporate structure affecting the Commoncustoms.
5. Eligibility.
(a) Recipients of Grants. Nonstatutory Stock such substitution or adjustment shall be made in the maximum aggregate
number of shares whichOptions may be issued under the Plan, in the number and option
price of shares subjectgranted
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 thatEmployees, Directors and Consultants who are not employeeshave the capacity to contribute to
the success of the Company or a SubsidiaryCompany. Incentive Stock Options may be granted only to
Employees, provided that Employees of Affiliates shall not be grantedeligible to
receive Incentive Stock options.
ARTICLE VI
Stock Options
6.1 Options.
(b) Type of Option. Each Stock Option granted under the Plan shall be designated in the Option
Agreement as 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 IncentiveNonstatutory Stock Option.
(c) Option Term. SubjectISO $100,000 Limitation. Notwithstanding any designation under
Section 5(b), 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 StockShares
with respect to which Options designated as Incentive Stock Options are
exercisable for the first time by the Participantany Optionee during any calendar year under the Plan
and/or any other stock option plan(under
all plans of the Company or any subsidiaryParent or parent
corporation (within the meaning of Section 424 of the Code)Subsidiary) exceeds $100,000, such
excess Options shall be treated as Options which are notNonstatutory Stock Options. For purposes
of this Section 5(c), Incentive Stock Options.Options shall be taken into account in
the order in which they were granted, and the Fair Market Value of the Shares
subject to an Incentive Stock Option shall be determined as of the date of the
grant of such Option.
(d) No Employment Rights. The Plan shall not confer upon any
Participant any right with respect to continuation of an employment or
consulting relationship with the Company, nor shall it interfere in any way
with such Participant's right or the Company's right to terminate the
employment or consulting relationship at any time for any reason.
6. Term of Plan. The Plan shall become effective upon its adoption by
the Board of Directors. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 14 of the Plan.
7. Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided that the term shall be no more than ten (10)
years from the date of grant
6
Should23
thereof or such shorter term as may be provided in the Option Agreement and
provided further that, in the case of an Incentive Stock Option granted to a
person who at the time of such grant is a Ten Percent Holder, the term of the
Option shall be five years from the date of grant thereof or such shorter term
as may be provided in the Option Agreement.
8. Option Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be such price as is
determined by the Administrator and set forth in the Option Agreement, but
shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who at the time of grant is a
Ten Percent Holder, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant; or
(B) granted to any other Employee, the per Share exercise
price shall be no less than 110% of the Fair Market Value per Share on the
date of grant.
(ii) In the case of a Nonstatutory Stock Option to any eligible
person, the per share Exercise Price shall be such price as determined by the
Administrator.
(iii) Notwithstanding the foregoing, provisionsOptions may be granted with
a per Share exercise price other than as required above pursuant to a merger
or other corporate transaction.
(b) Permissible Consideration. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Administrator (and, in the case of an
Incentive Stock Option, shall be determined at the time of grant) and may
consist entirely of (1) cash or its equivalent; (2) check; (3) other Shares
that have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which the Option is exercised; (4) if, as
of the date of exercise of an Option the Company then is permitting employees
to engage in a "same-day sale" cashless brokered exercise program involving
one or more brokers, through such a program that complies with the Applicable
Laws (including without limitation the requirements of Regulation T and other
applicable regulations promulgated by the Federal Reserve Board) and that
ensures prompt delivery to the company of the amount required to pay the
exercise price and any applicable withholding taxes; (5) use of the build-in
equity value of an Option resulting in reducing the number of net Shares that
will be received as a result of the exercise of such Option, or (6) any
combination of the foregoing methods of payment. In making its determination
as to the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company and the Administrator may, in its sole discretion, refuse to accept a
particular form of consideration at the time of any Option exercise.
7
24
9. Exercise of Option.
(a) General.
(i) Exercisability. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the
Administrator, consistent with the term of the Plan and reflected in the
Option Agreement, including vesting requirements and/or performance criteria
with respect to the Company and/or the Optionee.
(ii) Leave of Absence. The Administrator shall have the
discretion to determine whether and to what extent the vesting of Options
shall be tolled during any unpaid leave of absence; provided, however, that in
the absence of such determination, vesting of Options shall be tolled during
any such unpaid leave (unless otherwise required by the Applicable Laws). In
the event of military leave, vesting shall toll during any unpaid portion of
such leave, provided that, upon a Participant's returning from military leave
(under conditions that would entitle him or her to protection upon such return
under the Uniform Services Employment and Reemployment Rights Act), he or she
shall be given vesting credit with respect to Options to the same extent as
would have applied had the Participant continued to provide services to the
Company throughout the leave on the same terms as he or she was providing
services immediately prior to such leave.
(iii) Minimum Exercise Requirements. An Option may not be
necessaryexercised for a fraction of a Share. The Administrator may require that an
Option be exercised as to a minimum number of Shares, provided that such
requirement shall not prevent an Optionee from exercising the full number of
Shares as to which the Option is then exercisable.
(iv) Procedures for and Results of Exercise. An Option shall
be deemed exercised when written notice of such exercise has been given to the
Company in orderaccordance with the terms of the Option by the person entitled to
exercise the Option and the Company has received full payment for the Shares
with respect to which the Option is exercised. Full payment may, as
authorized by the Administrator, consist of any consideration and method of
payment allowable under Section 8(b) of the Plan, provided that the
Administrator may, in its sole discretion, refuse to accept any form of
consideration at the time of any Option exercise.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares that thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(v) Rights as Shareholder. Until the issuance of the Shares
(as evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. No adjustment
will be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 13
of the Plan.
(b) Termination of Employment or Consulting Relationship. Except as
otherwise set forth in this Section 9(b), the Administrator shall establish
and set forth in the applicable Option Agreement the terms and conditions upon
which an Option shall remain
8
25
exercisable, if at all, following termination of an Optionee's Continuous
Service Status, which provisions may be waived or modified by the
Administrator at any time. Unless the Administrator otherwise provides in the
Option Agreement, to the extent that the Optionee is not vested in Optioned
Stock at the date of termination of his or her Continuous Service Status, or
if the Optionee (or other person entitled to exercise the Option) does not
exercise the Option to the extent so entitled within the time specified in the
Option Agreement or below (as applicable), the Option shall terminate and the
Optioned Stock underlying the unexercised portion of the Option shall revert
to the Plan. In no event may any Option be exercised after the expiration of
the Option term as set forth in the Option Agreement (and subject to Section
7).
The following provisions (1) shall apply to the extent an Option
Agreement does not specify the terms and conditions upon which an Option shall
terminate upon termination of an Optionee's Continuous Service Status, and (2)
establish the minimum post-termination exercise periods that may be set forth
in an Option Agreement:
(i) Termination other than Upon Disability or Death or for
Cause. In the event of termination of Optionee's Continuous Service Status
other than under the circumstances set forth in subsections (ii) through (iv)
below, such Optionee may exercise an Option for 30 days following such
termination to the extent the Optionee was vested in the Optioned Stock as of
the date of such termination. No termination shall be deemed to occur and
this Section 9(b)(i) shall not apply if (i) the Optionee is a Consultant who
becomes an Employee, or (ii) the Optionee is an Employee who becomes a
Consultant.
(ii) Disability of Optionee. In the event of termination of an
Optionee's Continuous Service Status as a result of his or her disability
(including a disability within the meaning of Section 22(e)(3) of the Code),
such Optionee may exercise an Option at any time within twelve months
following such termination to the extent the Optionee was vested in the
Optioned Stock as of the date of such termination.
(iii) Death of Optionee. In the event of the death of an
Optionee during the period of Continuous Service Status since the date of
grant of the Option, or within thirty days following termination of Optionee's
Continuous Service Status, the Option may be exercised by Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance at any time within twelve months following the date of death, but
only to the extent the Optionee was vested in the Optioned Stock as of the
date of death or, if earlier, the date the Optionee's Continuous Service
Status terminated.
(iv) Termination for Cause. In the event of termination of an
Optionee's Continuous Service Status for Cause, any Option (including any
exercisable portion thereof) held by such Optionee shall immediately terminate
in its entirety upon first notification to the Optionee of termination of the
Optionee's Continuous Service Status. If an Optionee's employment or
consulting relationship with the Company is suspended pending an investigation
of whether the Optionee shall be terminated for Cause, all the Optionee's
rights under any Option likewise shall be suspended during the investigation
period and the Optionee shall have no right to exercise any Option.
9
26
(c) Buyout Provisions. The Administrator may at any time buy out
for a payment in cash or Shares unexercised Options previously granted under
the Plan based on the then fair market value of such Options and Shares as
determined by the Administrator. The fair market value of such Option in any
such buyout shall be equal to the fair market value of the Shares that may be
purchased by the Option, as determined by the Administrator, less the Option's
strike price for said Shares.
10. Taxes.
(a) As a condition of the grant, vesting or exercise of an Option
granted under the Plan, the Participant (or in the case of the Participant's
death, the person exercising the Option) shall make such arrangements as the
Administrator may require for the satisfaction of any applicable federal,
state, local or foreign withholding tax obligations that may arise in
connection with such grant, vesting or exercise of the Option or the issuance
of Shares. The Company shall not be required to issue any Shares under the
Plan until such obligations are satisfied. If the Administrator allows the
withholding or surrender of Shares to satisfy a Participant's tax withholding
obligations under this Section 10 (whether pursuant to Section 10(c), (d) or
(e), or otherwise), the Administrator shall not allow Shares to be withheld in
an amount that exceeds the minimum statutory withholding rates for federal and
state tax purposes, including payroll taxes.
(b) In the case of an Employee and in the absence of any other
arrangement, the Employee shall be deemed to have directed the Company to
withhold or collect from his or her compensation an amount sufficient to
satisfy such tax obligations from the next payroll payment otherwise payable
after the date of an exercise of the Option.
(c) This Section 10(c) shall apply only after the date, if any, upon
which the Common Stock becomes a Listed Security. In the case of Participant
other than an Employee (or in the case of an Employee where the next payroll
payment is not sufficient to satisfy such tax obligations, with respect to any
remaining tax obligations), in the absence of any other arrangement and to the
extent permitted under the Applicable Laws, the Participant shall be deemed to
have elected to have the Company withhold from the Shares to be issued upon
exercise of the Option that number of Shares having a Fair Market Value
determined as of the applicable Tax Date (as defined below) equal to the
amount required to be withheld. For purposes of this Section 10, the Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined under the Applicable Laws
(the "Tax Date").
(d) If permitted by the Administrator, in its discretion, a
Participant may satisfy his or her tax withholding obligations upon exercise
of an Option by surrendering to the Company Shares that have a Fair Market
Value determined as of the applicable Tax Date equal to the amount required to
be withheld. In the case of shares previously acquired from the Company that
are surrendered under this Section 10(d), such Shares must have been owned by
the Participant for more than six (6) months on the date of surrender (or such
other period of time as is required for the Company to avoid adverse
accounting charges).
10
27
(e) Any election or deemed election by a Participant to have Shares
withheld to satisfy tax withholding obligations under Section 10(c) or (d)
above shall be irrevocable as to the particular Shares as to which the
election is made and shall be subject to the consent or disapproval of the
Administrator. Any election by a Participant under Section 10(d) above must
be made on or prior to the applicable Tax Date.
(f) In the event an election to have Shares withheld is made by a
Participant and the Tax Date is deferred under Section 83 of the Code because
no election is filed under Section 83(b) of the Code, the Participant shall
receive the full number of Shares with respect to which the Option is
exercised but such Participant shall be unconditionally obligated to tender
back to the Company the proper number of Shares on the Tax Date.
11. Non-Transferability of Options.
(a) General. Except as set forth in this Section 11, Options may
not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent or distribution. The
designation of a beneficiary by an Optionee will not constitute a transfer.
An Option may be exercised, during the lifetime of the holder of an Option,
only by such holder or a transferee permitted by this Section 11.
(b) Limited Transferability Rights. Notwithstanding anything else
in this Section 11, the Administrator may in its discretion grant Nonstatutory
Stock Options that may be transferred by instrument to qualifyan inter vivos or
testamentary trust in which the Options are to be passed to beneficiaries upon
the death of the trustor (settlor) or by gift or pursuant to domestic
relations orders to "Immediate Family Members" (as defined below) of the
Optionee. "Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law (including adoptive relationships), a trust in which these
persons have more than fifty percent of the beneficial interest, a foundation
in which these persons (or the Optionee) control the management of assets, and
any other entity in which these persons (or the Optionee) own more than fifty
percent of the voting interests.
12. Adjustments Upon Changes in Capitalization, Merger or Certain Other
Transactions.
(a) Changes in Capitalization. Subject to any action required under
Applicable Laws by the shareholders of the Company, the number of Shares of
Common Stock covered by each outstanding Option and the number of Shares of
Common Stock that have been authorized for issuance under the Plan but as to
which no Options have yet been granted or that have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per Share
of Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination, recapitalization or reclassification of the
Common Stock, or any other increase or decrease in the number of issued Shares
of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the
11
28
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of Shares of Common Stock subject to
an Option.
(b) Dissolution or Liquidation. In the event of the dissolution or
liquidation of the Company, each Option will terminate immediately prior to
the consummation of such action, unless otherwise determined by the
Administrator.
(c) Corporate Transaction. In the event of a Corporate Transaction
(including without limitation a Change of Control), each outstanding Option
shall be assumed or an equivalent option or right shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation
(the "Successor Corporation"), unless the Successor Corporation does not agree
to assume the award or to substitute an equivalent option or right, in which
case such Option shall terminate upon the consummation of the transaction.
Notwithstanding the above, in the event of a Change of Control and
irrespective of whether outstanding awards are being assumed, substituted or
terminated in connection with the transaction, the vesting and exercisability
of each outstanding Option shall accelerate such that the Options shall become
vested and exercisable to the extent of 100% of the Shares then unvested, and
any repurchase right of the Company with respect to shares issued upon
exercise of an Option shall lapse as to 100% of the Shares subject to such
repurchase right prior to consummation of the Change of Control, in each case
effective as of immediately prior to consummation of the transaction. To the
extent that an Option is not exercised prior to consummation of a Corporate
Transaction in which the Option is not being assumed or substituted, such
Option shall terminate upon such consummation and the Administrator shall
notify the Optionee or holder of such fact at least five (5) days prior to the
date on which the Option terminates.
(d) Certain Distributions. In the event of any distribution to the
Company's shareholders of securities of any other entity or other assets
(other than dividends payable in cash or stock of the Company) without receipt
of consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.
13. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the
Administrator, provided that in the case of any Incentive Stock options,Option, the
grant date shall be the later of the date on which the Administrator makes the
determination granting such Incentive Stock Option or shouldthe date of commencement
of the Optionee's employment relationship with the Company. Notice of the
determination shall be given to each Employee, Director or Consultant to whom
an Option is so granted within a reasonable time after the date of such grant.
12
29
14. Amendment and Termination of the Plan.
(a) Authority to Amend or Terminate. The Board may at any additional provisions be required, the Committee maytime
amend, alter, suspend or discontinue the Plan, accordingly,but no amendment, alteration,
suspension or discontinuation (other than an adjustment pursuant to Section 12
above) shall be made that would materially and adversely affect the rights of
any Optionee under any outstanding grant, without his or her consent. In
addition, to the necessity of obtainingextent necessary and desirable to comply with the Applicable
Laws, the Company shall obtain shareholder approval of any Plan amendment in
such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Except as to amendments
which the stockholdersAdministrator has the authority under the Plan to make unilaterally,
no amendment or termination of the Plan shall materially and adversely affect
Options already granted, unless mutually agreed otherwise between the Optionee
and the Administrator, which agreement must be in writing and signed by the
Optionee or holder and the Company.
(1) Ten-Percent Stockholder Rule.15. Conditions Upon Issuance of Shares. Notwithstanding any other provision
of the Plan or any agreement entered into by the Company pursuant to the contrary,Plan,
the Company shall not be obligated, and shall have no Incentive Stockliability for failure,
to issue or deliver any Shares under the Plan unless such issuance or delivery
would comply with the Applicable Laws, with such compliance determined by the
Company in consultation with its legal counsel. As a condition to the
exercise of an Option, shall bethe Company may require the person exercising the award
to represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to sell
or distribute such Shares if, in the opinion of counsel for the Company, such
a representation is required by law. Shares issued upon exercise of Options
granted to any person who, immediately prior to the grant, owns stock
possessing more than ten percentdate on which the Common Stock becomes a Listed Security
shall be subject to a right of the total combined voting power of all
classes of stockfirst refusal in favor of the Company unlesspursuant
to which the option priceParticipant will be required to offer Shares to the Company
before selling or transferring them to any third party on such terms and
subject to such conditions as is reflected in the applicable Option Agreement.
16. Reservation of Shares. The Company, during the term of this Plan,
will at least 110%all times reserve and keep available such number of Shares as shall be
sufficient to satisfy 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 Amendmentrequirements of the Plan.
The Committee may
at any17. Agreements. Options shall be evidenced by Option Agreements in such
form(s) as the Administrator shall from 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 otherwisetime approve.
18. Shareholder Approval. If required by law, the rightsApplicable Laws,
continuance 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 ordersapproval by the shareholders of
the Company within twelve (12) months before or after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and other restrictions asto the
Committee may deem advisabledegree required under the rules,
regulationsApplicable Laws.
19. Information and other requirements ofDocuments to Optionees and Purchasers. Prior to the
Securities and Exchange Commission,date, if any, stock exchange or stock market upon which the Common Stock is then listed
or traded, any applicable Federal or state securities law,becomes a Listed Security 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 employmentrequired by the Company or any Subsidiary,
nor shall there be a limitation in any way on the right ofApplicable Laws, the Company or any
Subsidiary by which a Participant is employedshall provide financial
statements at least annually 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 respecteach Optionee and 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 deliverableeach individual who
acquired Shares pursuant to the Plan, byduring the period such Optionee or
13
30
purchaser has one or more Options outstanding, and in the case of an
amount that would have a Fair Market Value equalindividual who acquired Shares pursuant to the amount of all Federal, state and local taxesPlan, during the period such
individual owns such Shares. The Company shall not be required to be withheld, or to
deduct the amount ofprovide
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,information if 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 taxesOptions under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligationPlan is limited 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
whomkey
employees whose duties in connection with the administrationCompany assure their access to
equivalent information.
14
31
APPENDIX B
FLEXPOINT SENSOR SYSTEMS, INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee appointed by the board of the Plan have been
delegated or, except in circumstances involving bad faith, gross negligence or
fraud, for anything done or omitteddirectors of Flexpoint
Sensor Systems, Inc., hereafter (The "Company") to be done by himself.
9.10. Other Benefits. No payment pursuantknown as the Audit
Committee.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to an Award under
the Plan shall be deemed compensation for purposesboard of computing benefits under
any retirement plandirectors in
fulfilling their responsibility to the shareholders, potential shareholders,
and investment community relating to corporate accounting, reporting practices
of the Company or any Subsidiary nor affect any benefits
under any other benefit plan now or hereafter in effect under whichand 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 partquality and integrity 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 Successorsfinancial reports of the
Company. 9.14. Headings. ArticleIn so doing, it is the responsibility of the Audit Committee to
maintain free and section headings containedopen means of communication between the 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 and free of any relationship that, in the
Planopinion of the board of directors, would interfere with their exercise of
independent judgment as a committee member and the 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 appointed 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 circumstances dictate. As part of its responsibility to foster
open communication, the Audit Committee or its members are includedexpected to meet
for convenience onlydiscussions with Company management frequently, and will have at least two
formal meetings with Company management in the 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.
32
AUDIT COMMITTEE AUTHORITY
The Board of Directors shall grant to the audit committee:
.. 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.
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 the
Company are in accordance with all requirements 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)highest
quality.
In carrying out these responsibilities, 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 ofAudit Committee shall:
1. Develop an Award prior to Stockholder Approval will be subject to
Stockholder Approval being obtained within one year of the date of the Plan
waseffective 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 Audit Committee must determine whether the relationship between the
existing independent auditors and the Company complies with the
requirements of the listing standards, rules and regulations. Maintain
an active dialog with the independent auditors to identify and disclose
any relationship or services that may impact the objectivity and
independence of the auditors.
4. Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion thereof,
review the results of such audit, including any comments or
recommendations of the independent auditors.
5. Provide sufficient opportunity for the independent auditors to meet with
the members of the Audit Committee without members of management
present. Among the items to be discussed in these meetings are the
independent auditor's evaluation of the Company's boardfinancial and
accounting personnel, and the cooperation that the independent auditors
received during the course of directors.
ARTICLE XI
Termthe audit.
2
33
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 Plan
11.1. No Stock option shall be granted pursuantinternal 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 Plan
on or after the tenth anniversaryCompany's filing of its
approvalperiodic 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.
2. 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.
3. Establish pre-approval procedures for all audit and non-audit services.
4. 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.
5. Review the management representation letter issued to the independent
auditor.
6. Emphasize the adequacy of internal controls to identify any payments,
transactions, or procedures that might be deemed illegal or otherwise
improper.
7. Monitor the integrity and quality of annual and interim financial
reporting to shareholders in 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.
8. Monitor compliance with the Company code of ethics and regulatory
requirements, and review and assess conflicts of interest and
related-party transactions.
3
34
9. Evaluate and make recommendations regarding management initiatives
affecting the financing of the Company and related matters.
10. Review and approve any required stock exchange certifications, if any.
11. Review and approve any required proxy or information statement
disclosure.
12. Assess independent auditor performance.
13. Assess Audit Committee members' performance.
14. Provide a report of the audit committee's findings that result from its
financial reporting oversight responsibilities including representation
that the Audit Committee has:
(a) discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication
with Audit Committees, as amended.
(b) received and reviewed the written disclosures and the letter from
the independent auditors required by Independence Discussions with
Audit Committees, as amended, 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 BehalfIndependence Standards Board.
(c) discussed with the auditors the auditors' independence.
15. 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 Board Of Directors.Company's accounting
principles as applied in its financial reporting.
/s/ John A. Sindt
Date: 28 Sept. 2005 _____________________________________
John A. Sindt, Chairman
/s/ Clark M. Mower
Date: 28 Sept. 2005 _____________________________________
Clark M. Mower, Director
/s/ Ruland J. Gill, Jr.
Date: 28 Sept. 2005 _____________________________________
Ruland J. Gill, Jr., Director
4
35
APPENDIX C
- ------------------------------------------------------------------------------
P R O X Y
FLEXPOINT SENSOR SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints DouglasClark M. OdomMower and John A. Sindt, and either of them,
as Proxy, with the power to appoint his
substitute and hereby authorize them to represent andproxies, to vote as designated
below, all the shares of common stockCommon Stock of Micropoint,Flexpoint Sensor Systems,
Inc. (the "Company") held onof record by the undersigned on May 14, 1999as of October 11, 2005
(the record date) with respect to this solicitation, at the annual meetingCompany's 2005
Annual Meeting of stockholdersStockholders to be held at the Grand America Hotel located
at 550 South Main Street, Salt Lake City, Utah on June 16, 1999, or any adjournment thereof.
1. ElectionTuesday, November 22, 2005,
at 10:00 a.m. Mountain Time and all adjournments thereof, upon the following
matters.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
DIRECTOR NOMINEES IN PROPOSAL 1
AND A VOTE "FOR" THE 2005 STOCK INCENTIVE PLAN IN PROPOSAL 2.
IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE
SEE REVERSE SIDE
- ------------------------------------------------------------------------------
36
[X] Please mark votes as in
this example in dark ink only.
----------------------------------------------------------------------------
| THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE |
| DIRECTOR NOMINEES IN PROPOSAL 1 AND "FOR" THE 2005 STOCK INCENTIVE |
| PLAN IN PROPOSAL 2. |
|----------------------------------------------------------------------------|
| |
| Proposal 1: The election of Nominee Director.Clark Mower, Ruland Gill and John Sindt as |
| directors of the Company. (Check one of the following blanks): |
| |
| WITHHOLD |
| FOR AUTHORITY |
| [ ] FOR Jeffrey A. Coleman [ ] WITHHOLD AUTHORITY to vote for Jeffrey A
Coleman
2. Proposal to amend the Certificate of Incorporation to change the name|
| |
| (FOR all of the Company to "Flexpoint Sensor Systems, Inc."above mentioned nominees (except do not vote |
| for the nominee(s) whose name(s) appear(s) in the following space |
| |
| ________________________________________________________________ |
| |
| Proposal 2: The adoption of the 2005 Stock Incentive Plan |
| |
| FOR AGAINST ABSTAIN |
| [ ] 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)|
| |
----------------------------------------------------------------------------
Please sign below, date and return promptly:
Date: _____________________________, 2005
______________________________________________
Signature
______________________________________________
Additional signatures if jointly held (if
applicable). 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, trusteeAttorney,
Administrator, Executor, Guardian, or guardian,Trustee,
please give fulladd your 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))