UNITES
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported): July 19, 2006
Sentex
Sensing Technology, Inc.
(Exact
name of registrant as specified in its charter)
|
New
Jersey
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000-13328
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22-2333899
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(State
or other
jurisdiction
|
(Commission
|
(IRS
Employer
|
|
of
incorporation)
|
File
Number)
|
Identification
No.)
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1801
East 9th
Street
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|
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Cleveland,
Ohio
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44114
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|
(Address
of principal executive
offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (216) 687-0289
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneouslly
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2 . below):
[
]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
| Item
1.01 |
Entry
into a Material Definitive
Agreement.
|
On
July
19, 2006, Sentex Sensing Technologies, Inc. (“Sentex”) and Security IT Vision,
Inc., an Oregon corporation (“SecITV”), entered into an exclusive distribution
agreement (the “Distribution Agreement”). SecITV is the head U.S. company of
Astro Datensysteme AG, a biometrics technology provider.
The
Distribution Agreement gives Sentex, effective as of the Closing (as defined
below), the exclusive world-wide rights over the fifty-year term of the
agreement to market SecITV technology to end users in the biometric and security
product arena based on Fingerprint Identification, Face Recognition and Voice
Recognition technology. SecITV will receive a fee from Sentex equal to 5% of
the
net manufacturing cost to Sentex if any products using SecITV’s technology are
manufactured by Sentex. If Sentex purchases the products from SecITV, then
Sentex may resell the products to its customers at any price it determines.
The
exclusive distribution rights were granted in exchange for 69,082,924 Sentex
common shares issued to SecITV or its affiliates and 27,000,000 Sentex common
shares issued to the Financial Advisors (as defined below) and other terms
and
conditions set forth in a share issuance and corporate governance agreement
(the
“SICG Agreement”) entered into on July 19, 2006 among Sentex, SecITV, Henrik
Rubinstein, who directly and indirectly owns SecITV, Robert Kendall, the
president and significant shareholder of Sentex, Balmoral Financial Services
Company (“Balmoral”) and Viewpoint Technology, Inc. (“Viewpoint” and together
with Balmoral, the “Financial Advisors”).
Pursuant
to the SICG Agreement, at the Closing, Sentex will issue the 69,082,924 Sentex
common shares, at the direction of SecITV, to 1st
Management Finance, Inc., a 90% shareholder of SecITV wholly-owned by Mr.
Rubinstein (“1stMF”). Such shares will represent approximately 35% of the issued
and outstanding shares of Sentex (taking into account the issuance of shares
to
the Financial Advisors described below), based on the number of shares
outstanding on the date hereof. 1stMF will have demand registration rights
with
respect to up to 100,000,000 Sentex common shares that it receives and piggyback
registration rights with respect to its Sentex common shares, as well as any
Sentex common shares issued to other SecITV afilliates under the SICG Agreement,
in any registration statement that Sentex files, in each case, for specified
periods after the Closing.
The
SICG
Agreement also provides for additional financing and management arrangements
for
Sentex involving Mr. Kendall, Mr. Rubinstein and the Financial Advisors. At
the
Closing, Sentex will issue 15,000,000 common shares to Balmoral and 12,000,000
common shares to Viewpoint in exchange for the services provided by the
Financial Advisors to SecITV and Sentex. The Financial Advisors will then hold
approximately 14% of the issued and outstanding shares of Sentex (taking into
account the issuance of shares to 1stMF described above), based on the number
of
shares outstanding on the date hereof. In addition, the Financial Advisors
have
committed to
raise
additional funding for Sentex on a best-efforts basis. Of this additional
funding, $600,000 is to be raised through the sale of 10,000,000 Sentex common
shares held by Mr. Kendall, subject to the approval of Mr. Kendall’s bank, which
holds the shares as collateral. The proceeds from this sale will be paid to
Sentex in exchange for its agreement to issue 10,000,000 common shares to Mr.
Kendall by November 16, 2006.
Within
180 days of the Closing, Mr. Kendall will also have the right to sell 40,000,000
of the Sentex common shares beneficially owned by him (which includes the
10,000,000 shares discussed above), also subject to his bank’s approval, either
to Mr. Rubinstein or to other investors, as arranged by Mr. Rubinstein through
a
private transaction or a registered resale arrangement, for a purchase price
of
$0.05 per share, or an aggregate of $2,000,000. If such shares are sold to
Mr.
Rubinstein or entities affiliated with him, Mr. Rubinstein would then control
approximately 52% of the issued and outstanding shares of Sentex (based on
the
number of shares outstanding on the date hereof and assuming the issuance of
the
shares to the Financial Advisors and an additional 10,000,000 shares are issued
to Mr. Kendall). Alternatively, Mr. Kendall may in his sole discretion decide
to
retain the 40,000,000 shares for an additional 18 months and instead sell them
at a price of $0.08 per share, for an aggregate purchase price of $3,200,000,
at
such later date. Mr. Kendall will retain his ownership of approximately
8,000,000 additional shares.
Mr.
Kendall will also contribute $4,000,000 of the debt owed to him by Sentex,
which
debt will be sold to investors as arranged by SecITV for proceeds to be used
by
Sentex as working capital. After Mr. Kendall’s 40,000,000 shares have been sold
as discussed above, the remaining $3,500,000 of Sentex debt held by Mr. Kendall
will be distributed on a monthly basis over a three-year period among Messrs.
Kendall and Rubinstein and the Financial Advisors.
Under
the
SICG Agreement, following the Closing, Mr. Rubinstein will be the president
and
Mr. Kendall will be the treasurer of Sentex, the parties agree to elect Messrs.
Rubinstein and Kendall as its sole directors and Mr. Kendall will enter into
an
employment agreement with Sentex (the “Employment Agreement”) pursuant to which
he will serve as the chairman of the board until the earlier to occur of his
death, permanent disability, sale of his 40,000,000 shares (at which time Mr.
Rubinstein will become Sentex’s chief executive officer), or conviction of a
crime resulting in at least one year of incarceration. In addition, if not
terminated earlier, Mr. Kendall will retire from Sentex not later than the
end
of the second fiscal year following the Closing. Mr. Kendall’s annual base
salary is still subject to negotiation. The Employment Agreement will also
provide for a one-year non-compete and confidentiality obligations.
The
Sentex common shares to be issued to each of SecITV (or its affiliates) and
the
Financial Advisors are expected to placed into escrow as soon as practicable
and
released at the Closing. The closing of the transactions contemplated by the
Distribution Agreement and the SICG Agreement (the “Closing”) will occur
following receipt by the parties of all necessary approvals and submission
of
all required governmental filings, including the filing of a definitive
information statement with the Securities and Exchange Commission. The
transactions contemplated by the Distribution Agreement and the SICG Agreement
have been approved by the parties’ boards of directors and by a majority of the
Sentex shareholders in an action by written consent. The information statement
will also be mailed to Sentex shareholders who did not approve the transactions
by written consent.
The
foregoing descriptions of the Distribution Agreement and the SICG Agreement
are
qualified in their entirety by the full text of the Distribution Agreement
and
the SICG Agreement, which are filed as Exhibits 10.1 and 10.2, respectively,
and
are incorporated by reference herein.
| Item
3.02 |
Unregistered
Sales of Equity Securities.
|
The
information set forth under Item 1 above is incorporated herein by reference.
The issuances by Sentex of the common shares described under Item 1 above will
occur in transactions exempt from registration under the Securities Act of
1933
(the “Act”) pursuant to Rule 506 of Regulation D and Section 4(2) of the
Act.
| Item
5.01 |
Changes
in Control of Registrant.
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The
information set forth under Item 1 above is incorporated herein by reference.
| Item
9.01 |
Financial
Statements and Exhibits.
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(d)
Exhibits
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10.1
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Exclusive
Distribution Agreement executed on June 5, 2006 (to take effect as
of the
date of the SICG Agreement) by and among Sentex Sensing Technology,
Inc.
and Security IT Vision, Inc.
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10.2
|
Share
Issuance and Corporate Governance Agreement dated July 19, 2006 by
and
among Sentex Sensing Technology, Inc., Security IT Vision, Inc.,
Robert
Kendall, Henrik Rubinstein, Balmoral Financial Services Company and
Viewpoint Technology, Inc.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Sentex Sensing Technology,
Inc. |
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| Date:
July 25, 2006 |
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/s/
Robert S. Kendall |
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Robert S. Kendall,
President |