<PAGE> 1
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant /X/
Filed by Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
IDENTIX INCORPORATED
(Name of Registrant as Specified In Its Charter)
IDENTIX INCORPORATED
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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:
---------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
/ / 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:
---------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------
4) Date Filed:
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<PAGE> 2
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
IDENTIX INCORPORATED
TO BE HELD ON OCTOBER 26, 1995
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Identix
Incorporated (the "Company") will be held on Thursday, October 26, 1995 at 2:00
p.m. at the Sheraton Inn Sunnyvale, 1100 North Mathilda Avenue, Sunnyvale,
California 94089, for the purpose of considering and acting upon the following
proposals:
1. To elect seven persons to the Company's Board of Directors;
2. To approve the Identix Incorporated Equity Incentive Plan;
3. To approve the Identix Incorporated Nonemployee Directors Stock
Option Plan;
4. To ratify the appointment of Price Waterhouse LLP as independent
accountants of the Company for the fiscal year ended June 30, 1996;
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on September 1, 1995
are entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date, and return the enclosed Proxy as promptly as possible in the postage
prepaid envelope enclosed for that purpose. Any shareholder attending the
meeting may vote in person even if he or she returned a proxy.
Sincerely,
JAMES P. SCULLION, Secretary
Sunnyvale, California
September 15, 1995
<PAGE> 3
IDENTIX INCORPORATED
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Identix Incorporated (the "Company") for use at the Annual Meeting of
Shareholders to be held on Thursday, October 26, 1995 at 2:00 p.m., local time,
or at any adjournment thereof, for the purposes set forth herein and in an
accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting will
be held at the Sheraton Inn Sunnyvale, 1100 North Mathilda Avenue, Sunnyvale,
California 94089. The Company's principal executives offices are located at 510
N. Pastoria Avenue, Sunnyvale, California 94086.
These proxy solicitation materials were mailed on or about September 15,
1995 to all shareholders entitled to vote at the meeting.
RECORD DATE AND SHARES OUTSTANDING
Shareholders of record at the close of business on September 1, 1995 are
entitled to notice of and to vote at the meeting. On September 1, 1995,
22,934,834 shares of the Company's Common Stock were issued and outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it any time before its use by delivering to the Secretary of the Company
a written notice of revocation or a duly executed proxy bearing a later date or
by attending the meeting of shareholders and voting in person.
VOTING AND SOLICITATION
Except in the election of directors, each share of Common Stock has one
vote. Every shareholder voting in the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of shares held on the record
date, or distribute the shareholder's votes among the candidates at the
shareholder's discretion. However, no shareholder shall be entitled to cumulate
votes unless the candidates name has been placed in nomination prior to the
voting and the shareholder or any other shareholder has given notice at the
meeting prior to the voting of the intention to cumulate the shareholder's
votes.
Abstentions and broker non-votes will be counted towards the tabulations of
votes cast on proposals presented to the shareholders and will have the same
effect as negative votes.
The cost of this solicitation will be borne by the Company. The Company may
reimburse brokerage firms and other persons representing beneficial owners for
their expenses in forwarding solicitation materials to such beneficial owners.
Proxies may also be solicited by certain of the Company's directors, officers,
and regular employees without additional compensation, personally or by
telephone or telegraph.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Proposals of shareholders of the Company which are intended to be presented
by such shareholders at the Company's 1996 Annual Meeting must be received by
the Company no later than May 16, 1996 in order to be eligible for inclusion in
the proxy statement and form of proxy relating to that meeting.
<PAGE> 4
1. ELECTION OF DIRECTORS
A board of seven directors is to be elected at the meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's seven nominees named below, all of whom are presently
directors of the Company. In the event that any nominee shall become
unavailable, the proxy holders will vote the proxies at their discretion for a
substitute or additional nominee. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner in accordance with cumulative voting
as will assure the election of as many of the nominees listed below as possible
and, in such event, the specific nominees to be voted for will be determined by
the proxy holders. It is expected that all nominees will be able and willing to
serve as directors. The term of office of each person elected as a director will
continue until the next Annual Meeting of Shareholders or until his successor
has been elected and qualified.
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- -------------------- ---- ---------------------------------------------- --------------
<S> <C> <C> <C>
Randall C. Fowler 56 President and Chief Executive Officer 1982
of the Company
Patrick H. Morton 55 Chairman of the Board of Directors 1985
of QuadRep, Inc.
Randall Hawks, Jr. 44 Senior Vice President of AT&T Paradyne 1988
Fred U. Sutter 67 Chairman, Chief Executive Officer and 1988
President of Ascom Enterprise Network, Inc.
Larry J. Wells 52 General Partner of the Management 1992
Company for Sundance Venture Partners, L.P.
William E. Colby 75 Counsel to Donovan, Leisure, 1994
Newton & Irvine
Harrison N. Walther 58 President and Chief Executive Officer 1995
of ANADAC, Inc.
</TABLE>
Except as set forth below, each of the nominees has been engaged in the
principal occupation described above during the past five years. There is no
family relationship between any director or executive officer of the Company.
Randall C. Fowler, President, Chief Executive Officer and a director of the
Company, positions he has held since 1982, is also founder of the Company.
Patrick H. Morton has been a director of the Company since 1985. Mr. Morton
is Chairman of the Board of Directors and co-founder of QuadRep, Inc., a
manufacturers' representative company. He held the position of President of
QuadRep, Inc. from 1981 through 1990 and has been Chairman since 1991.
Randall Hawks, Jr., has been a director of the Company since 1988. Mr.
Hawks is currently Executive Vice President of AT&T Paradyne, a communications
equipment subsidiary of AT&T. Prior to joining AT&T Paradyne, Mr. Hawks was
Executive Vice President of the Company from 1989 to November 1993 and was Vice
President of Marketing from 1985 to 1989.
Fred U. Sutter is a director of the Company, a position he has held since
1988. Mr. Sutter is currently Chairman, Chief Executive Officer and President of
Ascom Enterprise Network, Inc., a subsidiary of Ascom Holding Inc., a United
States subsidiary of Ascom Holding AG, the parent company of a group of
telecommunication companies and service automation providers. From December 1993
to July 1995, Mr. Sutter was the Chief Executive Officer and Vice Chairman of
the Board of Directors of Ascom Holding AG. From January 1991 to August 1993, he
was the Deputy President of Ascom Holding AG. From January
2
<PAGE> 5
1987 to December 1990, he was President of Ascom Hasler AG. Ascom Hasler AG is a
Swiss telecommunications company and is a part of Ascom Holding AG.
Larry J. Wells was appointed a director of the Company in May 1992. Since
1989, Mr. Wells has been a general partner of Sundance Management Company, the
management company for Sundance Venture Partners, L.P. Prior to his affiliation
with Sundance Management Company, Mr. Wells held similar positions with Inco
Venture Capital from 1988 to 1989 and Citicorp Venture Capital from 1983 to
1987.
William E. Colby was appointed a director of the Company in October 1994.
Mr. Colby is currently employed as counsel to Donovan, Leisure, Newton & Irvine,
a position he has held since 1990. Mr. Colby is also a member of the Board of
Directors of Chas T. Allman Trust.
Harrison N. Walther was appointed a director of the Company in February
1995. Mr. Walther is currently the President and Chief Executive Officer of
ANADAC, Inc. positions he has held since 1986. From 1982 to 1986, Mr. Walther
held various executive positions with ANADAC, Inc.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company has reviewed all Forms 3, 4 and 5 filed with respect to fiscal
year 1995 as well as certain representations made to the Company and, based
thereon, has determined that for fiscal year 1995, D. Michael McGarr, Vice
President, Marketing and Sales, failed to file in a timely manner one report
required by Section 16(a) of the Exchange Act covering one transaction. Mr.
McGarr's report for such transaction was filed on September 13, 1995.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four meetings during
fiscal year 1995.
The Compensation Committee held one meeting during fiscal year 1995.
Messrs. Morton, Wells and Hawks are currently the members of the Compensation
Committee. The Compensation Committee reviews and approves the Company's
executive officers' compensation policy and administers the Company's employee
option plans.
The Audit Committee met two times during the fiscal year 1995. Messrs.
Morton, Wells, Hawks, and Colby are currently the members of the Audit
Committee. The Audit Committee recommends engagement of the Company's
independent auditors and is primarily responsible for approving the services
performed by the Company's independent auditors and for reviewing and evaluating
the Company's accounting principles and its systems of internal controls.
The Board of Directors does not have a standing nominating committee nor
any committee performing such function.
During fiscal year 1995, no director attended fewer than 75% of the
aggregate of all meetings of the Board of Directors and committees, if any, upon
which such director served except Mr. Sutter who attended 25% of the Board of
Directors meetings.
DIRECTOR COMPENSATION
In fiscal year 1995, members of the Board of Directors received no
compensation for serving on the Board of Directors.
3
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of July 31, 1995 by (i) each person
who is known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) by each of the Company's directors and each of the
Company's executive officers identified in the Summary Compensation Table and
(iii) by all directors and officers as a group. Except as otherwise indicated,
the Company believes that the beneficial owners of the securities listed below,
based on information furnished by such owners, have sole investment and voting
power with respect to the Common Stock shown as being beneficially owned by
them.
<TABLE>
<CAPTION>
DIRECTORS,
OFFICERS AND NUMBER OF SHARES PERCENTAGE
5% SHAREHOLDERS BENEFICIALLY OWNED BENEFICIALLY OWNED(1)
- ----------------------------------- ------------------ ---------------------
<S> <C> <C>
Ascom Holding Inc.................. 5,418,224(2) 24.16%
41 Pine Street
Rockaway, NJ 07866
Randall C. Fowler.................. 1,343,393(3) 5.94%
510 N. Pastoria Avenue
Sunnyvale, CA 94086
Patrick H. Morton.................. 164,120(4) *
Randall Hawks, Jr. ................ 245,000(5) 1.08%
Fred U. Sutter..................... 60,000(6) *
Larry J. Wells..................... 344,665(7) 1.54%
William E. Colby................... 5,418,224(8) 24.16%
Harrison N. Walther................ 385,818(9) 1.71%
James P. Scullion.................. 127,317(10) *
Daniel F. Maase.................... 122,667(11) *
All directors and officers
as a group (10 persons).......... 8,286,919(8)(12) 35.28%
</TABLE>
- ---------------
* Less than one percent.
(1) Applicable percentage of ownership is based on 22,424,899 shares of Common
Stock outstanding as of July 31, 1995. Shares of Common Stock subject to
outstanding options or warrants currently exercisable or exercisable within
60 days after July 31, 1995 are deemed outstanding for computing the
percentage ownership of the person holding such options or warrants but are
not deemed outstanding for computing the percentage ownership of any other
person.
(2) All of the Ascom Holding Inc. beneficially owned shares are held in a
voting trust for which Mr. Colby, a director of the Company, is the voting
trustee. The trustee of the voting trust votes all the shares held in the
voting trust. Fred U. Sutter may be deemed to be the beneficial owner of
Ascom Holding Inc. shares. Mr. Sutter is Chairman, Chief Executive Officer
and President of Ascom Enterprise Network, Inc., a subsidiary of Ascom
Holding Inc., and is a director of the Company. Mr. Sutter disclaims
beneficial owership of such shares.
(3) Includes 196,111 shares issuable upon exercise of options.
(4) Includes 60,000 shares issuable upon exercise of a warrant.
(5) Includes 245,000 shares issuable upon exercise of options.
(6) Includes 60,000 shares issuable upon exercise of a warrant.
(7) Includes 250,000 shares of the Company's Common Stock and 25,575 shares
issuable upon the exercise of a warrant. Such shares and warrant are held
by Sundance Venture Partners, L.P. of which Sundance Management Company is
a general partner. Mr. Wells is a general partner of Sundance Management
Company. Also includes 60,000 shares issuable upon exercise of a warrant
held by Mr. Wells.
(8) Includes 5,418,222 shares held by Ascom Holding Inc. in a voting trust for
which Mr. Colby is the voting trustee. The address of Mr. Colby is 1250
Twenty Fourth Street, N.W., Washington, D.C. 20037.
(9) Includes 104,235 shares issuable upon exercise of options.
(10) Includes 127,317 shares issuable upon exercise of options.
(11) Includes 122,667 shares issuable upon exercise of options.
(12) Includes 1,060,905 shares issuable upon exercise of warrants and options.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The table set forth below provides, with respect to Messrs. Fowler,
Walther, Scullion, and Maase, certain compensation information for each of the
last three fiscal years. Messrs. Fowler, Walther, Scullion, and Maase are the
only executive officers of the Company whose annual salary and bonus exceeded
$100,000 in the year ended June 30, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
NAME AND -------------------- COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)
- ------------------------------ ----- -------- ------- ------------
<S> <C> <C> <C> <C>
Randall C. Fowler 1995 $148,446 $12,500 --
President and Chief 1994 132,825 -- 60,000(1)
Executive Officer 1993 126,500 -- 140,000
Harrison N. Walther 1995 $146,910 $84,113 --
President and Chief Executive 1994 146,910 4,803 --
Officer of ANADAC, Inc. 1993 97,940(2) 22,619(2) 40,000
James P. Scullion 1995 $110,662 $17,500 --
Chief Financial Officer and 1994 96,000 -- 30,000
Vice President, Finance 1993 90,000 -- 115,000
Daniel F. Maase 1995 $111,482 -- --
Vice President, 1994 105,000 -- --
Engineering 1993 100,000 -- 75,000
</TABLE>
- ---------------
(1) Represents compensation for being a member of the Board of Directors.
(2) Represents officer's compensation for partial year of service. ANADAC, Inc.
was acquired by the Company on October 23, 1992.
1995 OPTION GRANTS TABLE
During fiscal year 1995, the Company did not grant stock options to the
executive officers identified in the Summary Compensation Table. Since
inception, the Company has not granted any stock appreciation rights.
1995 OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth stock options exercised by the executive
officers identified in the Summary Compensation Table during fiscal year 1995,
and the number and value of all unexercised options at fiscal year end. The
value of "in-the-money" options refers to options having an exercise price which
is less than the market price of the Company's Common Stock on June 30, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS AT OPTIONS AT
EXERCISE (#)(1) REALIZED ($) FISCAL YEAR END FISCAL YEAR END(2)
--------------- ------------ --------------- ------------------
<S> <C> <C> <C> <C>
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ----------------------------- --------------- ------------------
Randall C. Fowler............ -- -- 184,444/15,556 $ 681,854/ 61,796
Harrison N. Walther.......... -- -- 102,235/18,667 427,138/ 66,501
James P. Scullion............ -- -- 117,067/26,083 439,206/101,962
Daniel F. Maase.............. -- -- 115,767/12,233 456,828/ 47,972
</TABLE>
- ---------------
(1) During fiscal year 1995, there were no stock options exercised by the
executive officers listed in this table.
(2) Represents market value of the Company's Common Stock at fiscal year end
less the exercise price.
5
<PAGE> 8
The Company did not make any awards during the fiscal year ended June 30,
1995 to any of the executive officers named in the Summary Compensation Table
under any long-term incentive plan providing compensation intended for
performance to occur over a period longer than one fiscal year.
AGREEMENTS WITH EXECUTIVE OFFICER
In October 1992, ANADAC and Harrison N. Walther entered into a three-year
employment agreement providing for a base annual salary of $147,000. The term of
the agreement commenced on October 23, 1992, the date of the acquisition of
ANADAC by Identix. Mr. Walther is entitled to a guaranteed bonus of $4,800 for
calendar years 1992, 1993 and 1994 (in 1993 and 1994, to be deducted from
incentive bonuses otherwise earned) and additional bonus amounts if certain
revenue and profit targets are met. If Mr. Walther's employment is terminated
without cause, Mr. Walther shall be entitled to receive the greater of (a) one
month's base salary for each full year that he has been employed by ANADAC (his
employment with ANADAC commenced in 1982), or (b) the remainder of his base
salary under the original three-year term of the agreement. Such severance
amounts are subject to reduction if he becomes employed or retained as a
consultant by any other corporation or other entity. As of June 30, 1995, Mr.
Walther was indebted to ANADAC in the amount of $97,510 for premium payments
made on his behalf for a split dollar life insurance policy. Such indebtedness
is represented by non-interest-bearing notes, is payable upon demand and may be
paid, at the option of ANADAC, with the proceeds from the policy or, in the
event the policy is canceled or terminated, with the policy's cash surrender
value. ANADAC will continue to make such premium payments as a loan to Mr.
Walther in an amount equal to approximately $12,500 per year. Mr. Walther is
also indebted to ANADAC in the principal amount of $56,520 for a loan made to
Mr. Walther in July 1989. This loan bears interest at the rate of 7.5% per
annum. Interest is payable monthly and principal is payable upon demand.
REPORT OF THE BOARD OF DIRECTORS COMPENSATION COMMITTEE
The Compensation Committee is responsible for establishing and
administering the policies which govern both annual compensation and stock
ownership programs for the Chief Executive Officer and certain other executive
officers. Each year, salaries are determined and awards are made, if warranted,
under the Company's stock option plans.
The Committee annually evaluates the Company's corporate performance, and
its executive compensation and incentive programs compared with our own industry
and with a broader group of companies. In determining the Chief Executive
Officer's compensation for fiscal year 1995, the Compensation Committee
considered the compensation paid by the Company's direct competitor, and the
level of revenues for the Company for the fiscal year.
The Company's compensation programs are designed to reward executives for
long-term strategic management and enhancement of shareowner value, and are
leveraged on the basis of performance in terms of both cash compensation and
incentive plans, paying more with good performance and less when it is below
standard.
During 1995, the Chief Executive Officer and the other executive officers
initially received a 5% salary increase. In January 1995, Mr. Fowler, Mr.
Scullion, and Mr. Maase received an annual base salary increase to $160,000,
$120,000 and $120,000, respectively, for meeting certain financial objectives
established by the Compensation Committee. In addition, Mr. Fowler and Mr.
Scullion were paid bonuses totaling $12,500 and $17,500, respectively. Mr.
Walther received a bonus pursuant to an agreement entered into in connection
with the acquisition of ANADAC.
During 1996, the Compensation Committee will continue to carefully consider
executive compensation in relation to the Company's performance compared to that
of industry performance levels.
Larry J. Wells
Patrick H. Morton
Randall Hawks, Jr.
6
<PAGE> 9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Randall Hawks Jr., a member of the Compensation Committee of the Company's
Board of Directors during fiscal year 1995, formerly was Executive Vice
President of the Company from 1989 to November 1993 and was Vice President of
Marketing from 1985 to 1989.
IDENTIX STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company from July 1, 1990 to June 30, 1995 with cumulative
total return on the Russell 2000 Index and a Peer Group (a competitor, Digital
Biometrics, Inc.) over the same period (assuming the investment of $100 in the
Company's Common Stock and in the Index and the Peer Group on July 1, 1990, and
reinvestment of all dividends).
COMPARATIVE FIVE-YEAR TOTAL RETURNS*
IDENTIX INC., RUSSELL 2000, PEER GROUP
(Performance results through 6/30/95)
STOCK PERFORMANCE GRAPH
- ---------------
* Cumulative total return assumes reinvestment of dividends.
7
<PAGE> 10
CERTAIN TRANSACTIONS
At July 31, 1995, Ascom Holding, Inc. ("Ascom") owns approximately 24.2% of
the outstanding Common Stock of the Company. The Company granted Ascom
registration rights with respect to the Common Stock acquired from the Company
and preemptive rights to participate in any offering of certain securities of
the Company. Ascom's preemptive rights allow it to purchase a sufficient number
of shares of Common Stock to preserve its ownership interest in the Company at a
purchase price per share equal to the lower of (a) the weighted average price of
the shares sold in the dilutive event or (b) the average closing price of the
Common Stock for the 20 trading days immediately preceding the dilutive event.
The presence of Ascom's registration and preemptive rights may adversely affect
the terms on which the Company could obtain additional financing. On September
2, 1994, the Company entered into a Voting Trust Agreement (the "Agreement")
with Ascom whereby Ascom deposited all of its shares of the Company's Common
Stock held by Ascom totaling 5,418,224 (the "Voting Stock") into a voting trust.
The trustee of the voting trust is on the Company's Board of Directors and has
voting control of the Voting Stock. The term of the Agreement is 10 years. In
consideration for Ascom entering into the agreement, the Company granted Ascom
certain additional registration rights with respect to the Voting Stock,
modified certain contractual transfer restrictions with respect to the Voting
Stock, and granted Ascom price protections regarding certain sales of Voting
Stock.
Fred U. Sutter, a director of the Company, is the Chairman, Chief Executive
Officer and President of Ascom Enterprise Network, Inc., a subsidiary of Ascom
Holding Inc.
On March 18, 1992, the Company entered into a convertible promissory note
and warrant purchase agreement with Sundance Venture Partners, L.P.
("Sundance"), which agreement was amended on July 29, 1992. Under the agreement,
the Company received $500,000 from Sundance in exchange for a promissory note.
Interest on the note accrues at 10% per annum and is payable quarterly. On June
30, 1995, the Company, at its option, converted the note into 166,666 shares of
the Company's Common Stock. As additional consideration for the note, the
Company issued Sundance a warrant to purchase 25,575 shares of Common Stock with
an exercise price of $3.00 per share. The closing price of the Common Stock on
March 18, 1992 was $3.50. The warrant is currently exercisable and expires on
March 18, 1997.
Larry J. Wells is a general partner of Sundance Management Company, the
general partner of Sundance. Mr. Wells became a member of the Company's Board of
Directors in May 1992. The Company believes that the agreements with Sundance
discussed above were negotiated and consummated on an arms-length basis and on
terms no more favorable to Sundance than would be obtainable from an unrelated
third party.
2. APPROVAL OF THE IDENTIX INCORPORATED EQUITY INCENTIVE PLAN
The Board of Directors adopted on July 5, 1995, subject to shareholder
approval, the Identix Incorporated Equity Incentive Plan (the "Incentive Plan").
The Incentive Plan provides for the discretionary award of options, restricted
stock, stock purchase rights, performance shares, or any combination of these
(collectively, the "awards") to eligible employees, including executive
officers, and consultants. The Incentive Plan may be administered by the Board
of Directors or the Board may delegate its authority to a committee composed of
not less than two outside directors (in either case, the "Committee").
A total of 1,000,000 shares of Common Stock is reserved for issuance under
the Incentive Plan. To the extent an award is paid in cash, the number of shares
of Common Stock, based on the fair market value thereof on the payment date,
that represents the value of the cash payment will not be available for later
grant under the Incentive Plan. No award may be granted under the Incentive Plan
after July 5, 2005, but outstanding awards may extend beyond that date.
DESCRIPTION OF THE INCENTIVE PLAN
The Incentive Plan is intended to strengthen the Company by providing
selected eligible key employees of, and consultants to, the Company an
opportunity to participate in the Company's future by offering them an
opportunity to acquire stock in the Company so as to retain, attract and
motivate them. The Committee may select key employees, including executive
officers, or consultants, to receive awards under the Incentive Plan
8
<PAGE> 11
and has broad discretion to determine the amount and type of awards and terms
and conditions of the awards. However, in any one fiscal year, the Committee may
not grant awards covering more than 200,000 shares of Common Stock to any
executive officer whose compensation is required to be disclosed under Item 402
of Regulation S-K. Individual grants will generally be based on a person's
present and potential contribution to the Company. Nonemployee directors and
members of the Committee are not eligible to participate in the Incentive Plan.
As of July 31, 1995, the Company had approximately 49 employees eligible to
participate in the Incentive Plan. A total of 1,000,000 shares of Common Stock
are reserved for issuance under the Incentive Plan.
Awards may be granted in the form of options ("Option"), restricted stock
("Restricted Stock"), stock purchase rights ("Stock Purchase Rights") or
performance shares ("Performance Shares"). Any award may be granted either alone
or in addition to other awards granted under the Incentive Plan. The Committee
may condition the grant of the award upon the attainment of specified Company,
group or division performance goals or other criteria, which need not be the
same for all participants. No award may be granted under the Incentive Plan on
or after July 5, 2005, but outstanding awards may extend beyond that date.
Options. Stock options granted under the Incentive Plan may be incentive
stock options under Section 422 of the Internal Revenue Code ("ISOs") or
non-qualified stock options ("NQOs"). The exercise price of ISOs may not be less
than the fair market value of the shares subject to the Option on the date of
grant. The exercise price of NQOs must be at least 85 percent of the fair market
value of the shares subject to the Option on the date of grant. The term of any
ISO granted under the plan may not exceed ten years and the term of any NQO may
not exceed fifteen years. Certain other limitations are also applicable to ISOs
in order to take advantage of the favorable tax treatment that may be available
for ISOs.
Restricted Stock. Restricted Stock awards consist of non-transferable
shares of Common Stock of the Company. The Committee may provide for the lapse
of the transfer restrictions over a period of not more than ten years, or may
accelerate or waive such restrictions, in whole or in part, based on service,
performance or other criteria determined by the Committee.
Stock Purchase Rights. Stock Purchase Rights consist of a grant to purchase
Common Stock at a purchase price of not less than 85 percent of the fair market
value of the Common Stock on the grant date. Stock Purchase Rights are generally
exercisable for a period of up to 30 days after the grant date.
Performance Shares. Performance Shares are shares of Common Stock issuable
upon the attainment of performance criteria. At the time of a grant the
Committee will determine the number of shares of Common Stock to be awarded at
the end of the performance period if and to the extent that the specified
performance targets are met. The consideration payable by a participant with
respect to a Performance Share award will be determined by the Committee but may
not exceed 50 percent of the fair market value of the Common Stock on the date
of grant. The Committee will determine the performance period, the performance
objectives to be used in granting the awards and the extent to which awards have
been earned. Performance periods may overlap, and participants may be awarded
Performance Shares having different performance criteria. Performance Share
awards may be payable in cash or stock, at the discretion of the Committee, and
may bear interest or earn dividends.
The consideration payable for, upon exercise of, or for tax payable in
connection with, an award may be paid in cash, by promissory note of the
participant, or by delivery of other property, including securities of the
Company, as authorized by the Committee. The Company generally will not receive
any consideration upon the grant of any awards, although the Incentive Plan
provides that consideration may be payable with respect to the grant of
Performance Shares. Awards generally may be exercised at any time within three
months after a participant's employment by, or consulting relationship with, the
Company terminates (but, only to the extent exercisable or payable at the time
of termination). If termination is due to the participant's death, retirement or
disability, the award may be exercised for two years thereafter. Shares issued
under an award may be subject to a right of repurchase by the Company. No award
shall be assignable or otherwise transferable by a participant other than by
will or by the laws of descent and distribution.
9
<PAGE> 12
The Committee may adjust the performance goals and measurements applicable
to awards. The Committee also may waive in whole or in part any or all
restrictions, conditions, vesting or forfeiture with respect to any award
granted under the Incentive Plan.
The Board may amend, alter or discontinue the Incentive Plan or any award
at any time, except that the consent of a participant is required if the
participant's rights under an outstanding award would be impaired. In addition,
to the extent required for the Incentive Plan to satisfy the conditions of Rule
16b-3 under the Securities and Exchange Act of 1934 ("Exchange Act") or, with
respect to provisions solely as they relate to ISOs, to the extent required for
the Incentive Plan to comply with Section 422 of the Internal Revenue Code
("Code"), the shareholders of the Company must approve any amendment, alteration
or discontinuance of the Incentive Plan that would (i) increase the total number
of shares reserved under the Incentive Plan, (ii) change the minimum price terms
for Option exercise, (iii) change the class of employees and consultants
eligible to participate in the Incentive Plan, (iv) extend the maximum option
exercise period, or (v) materially increase the benefits accruing to
participants under the Incentive Plan.
The Incentive Plan constitutes an unfunded plan for incentive and deferred
compensation. The Committee may authorize the creation of trusts or arrangements
to meet the obligations under the Incentive Plan to deliver stock or make
payments.
In the event of a "change in control" of the Company, as defined in the
Incentive Plan, the Board may, subject to certain limitations, accelerate the
vesting provisions of awards or may cash out the awards. A "change in control"
is defined to include the acquisition of 20 percent or more of the voting power
of the Company's outstanding stock, a proxy solicitation for one or more
directors without support of the then current Board, a dissolution or
liquidation of the Company and certain asset sales, mergers or reorganizations
or other changes in ownership of the Company's assets or stock.
The following table shows the number of awards granted under the Incentive
Plan to the named individuals and groups that are subject to the shareholders
approving the Incentive Plan:
PLAN BENEFITS
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND POSITION COVERED BY AWARD(1)
- ----------------------------------------------------------------------------------
<S> <C>
Randall C. Fowler.............................................. 45,000
President and Chief Executive Officer
Harrison N. Walther............................................ 20,000
President and Chief Executive Officer of ANADAC, Inc.
James P. Scullion.............................................. 45,000
Chief Financial Officer and Vice President, Finance
Daniel F. Maase................................................ 25,000
Vice President, Engineering
All executive officers as a group.............................. 160,000
All directors who are not executive officers as a group........ 0
All employees (other than executive officers) as a group....... 0
</TABLE>
- ---------------
(1) All awards granted at fair market value as of the date of grant.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. ISOs are intended to constitute "incentive stock
options" within the meaning of Section 422 of the Code. ISOs may be granted only
to employees of the Company (including directors who are also employees). An
Optionee does not recognize taxable income upon either the grant or exercise of
an ISO. However, the excess of the fair market value of the shares purchased
upon exercise over the Option exercise price (the "Option Spread") is includable
in the Optionee's "alternative minimum taxable income" ("AMTI") for purposes of
the alternative minimum tax ("AMT"). The Option Spread is generally measured on
the date of exercise and is includable in AMTI in the year of exercise. Special
rules regarding the time of AMTI inclusion may apply for shares subject to a
repurchase right or other "substantial risk of forfeiture"
10
<PAGE> 13
(including, in the case of each person subject to the reporting requirements of
Section 16 of the Exchange Act, any limitations on resale of shares imposed
under Section 16(b) of the Exchange Act).
If an Optionee holds the shares purchased under an ISO for at least two
years from the date the ISO was granted and for at least one year from the date
the ISO was exercised, any gain from a sale of the shares other than to the
Company is taxable as long term capital gain. Under these circumstances, the
Company would not be entitled to a tax deduction at the time the ISO was
exercised or at the time the stock was sold. If an Optionee were to dispose of
stock acquired pursuant to an ISO before the end of the required holding periods
(a "Disqualifying Disposition"), the amount by which the market value of the
stock at the time the ISO was exercised exceeded the exercise price (or, if
less, the amount of gain realized on the sale) would be taxable as ordinary
income, and the Company would be entitled to a corresponding tax deduction. Such
income is subject to information reporting requirements and may become subject
to withholding. Gain from a Disqualifying Disposition in excess of the amount
required to be recognized as ordinary income is capital gain, and is "long term"
if the shares have been held more than one year as of the date of sale.
Optionees are required to notify the Company immediately prior to making a
Disqualifying Disposition. If the stock sold in the Disqualifying Disposition
had been acquired subject to a "substantial risk of forfeiture", the Optionee's
holding period for purposes of determining whether any capital gain or loss on
sale is long-term will generally not begin until the restriction lapses or the
Optionee files an election under Section 83(b) of the Code (a "Section 83(b)
Election"). If stock is sold to the Company rather than to a third party, the
sale may not produce capital gain or loss. A sale of shares to the Company will
constitute a redemption of such shares, which could be taxable as a dividend
unless the redemption is "not necessarily equivalent to a dividend" within the
meaning of the Code.
If an Optionee pays for ISO shares with shares of the Company acquired
under an ISO or a qualified employee stock purchase plan ("statutory option
stock"), the tender of shares is a Disqualifying Disposition of the statutory
option stock if the above described (or other applicable) holding periods
respecting those shares have not been satisfied. If the holding periods with
respect to the statutory option stock are satisfied, or the shares were not
acquired under a statutory stock option of the Company, then any appreciation in
value of the surrendered shares is not taxable upon surrender. Special basis and
holding period rules apply where previously-owned stock is used to exercise an
ISO.
The present position of the Internal Revenue Service ("IRS") appears to be
that income and employment withholding taxes are not imposed upon the exercise
of an ISO or the sale of ISO shares. The IRS is studying this position and may
change it at any time possibly with retroactive effect.
Nonqualified Stock Options. An Optionee is not taxable upon the award of a
NQO. Federal income tax consequences upon exercise will depend upon whether the
shares thereby acquired are subject to a "substantial risk of forfeiture." If
the shares are not subject to a substantial risk of forfeiture, or if they are
so restricted and the Optionee files a Section 83(b) Election with respect to
the shares, the Optionee will have ordinary income at the time of exercise
measured by the Option Spread on the exercise date. The Optionee's tax basis in
the shares will be their fair market value on the date of exercise, and the
holding period for purposes of determining whether capital gain or loss upon
sale is long- or short-term also will begin on that date. If the shares are
subject to a substantial risk of forfeiture and no Section 83(b) Election is
filed, the Optionee will not be taxable upon exercise, but instead will have
ordinary income, on the date the restrictions lapse, in an amount equal to the
difference between the amount paid for the shares under the Option and their
fair market value as of the date of lapse; in addition, the Optionee's holding
period will begin on the date of lapse.
Whether or not the shares are subject to a substantial risk of forfeiture,
the amount of ordinary income taxable to an Optionee who was an employee at the
time of grant constitutes "supplemental wages" subject to withholding of income
and employment taxes by the Company, and the Company receives a corresponding
income tax deduction.
Upon sale, other than to the Company, of shares acquired under a NQO, an
Optionee generally will recognize capital gain or loss to the extent of the
difference between the sale price and the Optionee's tax basis in the shares,
which will be long-term gain or loss if the employee's holding period in the
shares is more than
11
<PAGE> 14
one year. If stock is sold to the Company rather than to a third party, the sale
may not produce capital gain or loss. A sale of shares to the Company will
constitute a redemption of such shares, which could be taxable as a dividend
unless the redemption is "not necessarily equivalent to a dividend" within the
meaning of the Code.
If an Optionee tenders Common Stock (other than statutory option
stock -- see above) to pay all or part of the exercise price of a NQO, the
Optionee will not have a taxable gain or deductible loss on the surrendered
shares. Instead, shares acquired upon exercise that are equal in value to the
fair market value of the shares surrendered in payment are treated as if they
had been substituted for the surrendered shares, taking as their basis and
holding period the basis and holding period that the Optionee had in the
surrendered shares. The additional shares are treated as newly acquired with a
zero basis.
If the surrendered shares are statutory option stock as described above
under "Incentive Stock Options", with respect to which the applicable holding
period requirements for favorable income tax treatment have not expired, then
the newly acquired shares substituted for the statutory option shares should
remain subject to the federal income tax rules governing the surrendered shares,
but the surrender should not constitute a "disqualifying disposition" of the
surrendered stock.
Restricted Stock. Upon receipt of Restricted Stock, a recipient generally
has taxable income in the amount of the excess of the then fair market value of
the Common Stock over any consideration paid for the Common Stock (the
"spread"). However, if the Common Stock is subject to a "substantial risk of
forfeiture" (described under "Incentive Stock Options," above) and the recipient
does not make a Section 83(b) Election, the recipient will have taxable income
upon lapse of the risk of forfeiture, rather than at receipt, in an amount equal
to the spread on the date of lapse. The taxable income constitutes supplemental
wages subject to income and employment tax withholding, and the Company receives
a corresponding income tax deduction. Supplemental wages are subject to federal
income tax withholding at a rate of 28 percent. The consequences upon sale or
disposition of Restricted Stock generally are the same as for Common Stock
acquired under a NQO (see above).
Performance Shares. Depending on the exact terms of an award of Performance
Shares, the Award could be treated for tax purposes in the same manner as a
Restricted Stock Award, i.e., as receipt of property, subject to restrictions.
Stock Purchase Rights. The tax treatment of Stock Purchase Rights is
identical to that of NQOs, as described above.
Special Federal Income Tax Consideration Due to Short Swing Profit
Rule. The potential liability of a person subject to Section 16 of the Exchange
Act to repay short-swing profits from the resale of shares acquired under a
Company plan constitutes a "substantial risk of forfeiture" within the meaning
of the above-described rules, which is treated as lapsing at such time as the
potential liability under Section 16 lapses. Persons subject to Section 16 who
would be required by Section 16 to repay profits from the immediate resale of
stock acquired under a Company plan should consider whether to file a Section
83(b) Election at the time they acquire stock under a Company plan in order to
avoid deferral of the date that they are deemed to acquire shares for federal
income tax purposes.
PROPOSAL
Shareholders are being asked to approve the Incentive Plan. The affirmative
vote of the holders of a majority of the outstanding shares of the Common Stock
of the Company represented and voting at the Annual Meeting is required for
approval of the Incentive Plan.
BOARD RECOMMENDATION
The Board recommends a vote "FOR APPROVAL" of the proposal.
12
<PAGE> 15
3. APPROVAL OF THE IDENTIX INCORPORATED NONEMPLOYEE
DIRECTORS STOCK OPTION PLAN
The Board adopted on August 2, 1995, subject to shareholder approval, the
Identix Incorporated Nonemployee Directors Stock Option Plan (the "Directors
Plan"). A total of 250,000 shares of Common Stock are reserved for issuance upon
exercise of NQOs granted thereunder. Only nonemployee directors of the Company
are eligible to participate in the Directors Plan. The Directors Plan is
designed to work automatically. However, to the extent administration is
necessary, it is provided by the Board or the Board may delegate its authority
to a committee of the Board.
DESCRIPTION OF THE DIRECTORS PLAN
Option grants to nonemployee directors are made on a formula basis and not
on a discretionary basis. The Directors Plan provides that the Company will
grant each director who is not, and has not been in the preceding twelve months,
an officer or an employee of the Company an NQO to purchase 20,000 shares of
Common Stock on the date of adoption of the Directors Plan. The Directors Plan
further provides that when a person who is not, and has not been in the
preceding twelve months, an officer or an employee of the Company is elected or
appointed a member of the Board, the Company will grant that person on the
effective date of such election or appointment (i) an NQO to purchase 10,000
shares of Common Stock if less than six months have elapsed since the last
annual meeting of shareholders or (ii) an NQO to purchase 5,000 shares of Common
Stock if at least six months have elapsed since the last annual meeting of
shareholders. The Directors Plan further provides that on the first meeting of
the Board immediately following the annual meeting of shareholders of the
Company (even if held on the same day as the meeting of shareholders),
commencing with the annual meeting of shareholders held in 1996, the Company
will grant to each nonemployee director then in office an NQO to purchase an
additional 10,000 shares of Common Stock. All NQOs granted under the Directors
Plan shall have an exercise price equal to the fair market value of such shares
on the date of grant and will become exercisable with respect to one fourth of
the number of shares covered by such Option for each three month period which
elapses after the date of grant, so that such Option will be fully exercisable
on the first anniversary of the date such Option was granted. The Company
currently has five nonemployee directors who are eligible to participate in the
Directors Plan, all of whom have been nominated for election at the Annual
Meeting.
The consideration payable in connection with any option (including any
related taxes) may be paid by promissory note of the nonemployee director or by
delivery of shares of Common Stock of the Company. Options granted under the
Directors Plan have a term of ten years. Options generally terminate three
months after a nonemployee director ceases to be, for any reason, a director of
the Company, but if a nonemployee director ceases to be a director due to death,
disability or retirement, the Option may be exercised for two years after the
termination.
The Board may amend, alter, or discontinue the Directors Plan or any Option
at any time, except that the consent of a participant is required if the
participant's existing rights under an outstanding Option would be impaired. In
addition, to the extent required under applicable tax and securities laws and
regulations, the shareholders of the Company must approve any amendment,
alteration, or discontinuance of the Directors Plan that would increase the
total number of shares reserved under the Directors Plan and in certain other
circumstances as the Board may deem advisable to comply with such laws and
regulations. In addition, the provisions of the Directors Plan plan governing
who is granted Options, the number of shares covered by each Option, the
exercise price, and the period of exercisability and the timing of Option grants
may not be amended more than once every six months, other than for changes to
comport with the Code or the Employee Retirement Income Security Act of 1974.
In the event of a "change in control" of the Company, as defined in the
Directors Plan, the vesting of Options will automatically accelerate. A "change
in control" is defined to include the acquisition of 20% or more of the voting
power of the Company's outstanding stock, a proxy solicitation for one or more
directors without support of the then-current Board, and certain mergers or
reorganizations or other changes in ownership of the Company's assets or stock.
13
<PAGE> 16
The following table shows, based on the current composition of the Board,
the number of options which will be granted to the listed groups under the
Directors Plan in fiscal 1996.
<TABLE>
<CAPTION>
NUMBER OF
OPTIONS(1)
---------
<S> <C>
All executive officers as a group............................................... 0
All directors who are not executive officers as a group......................... 100,000
All employees (other than executive officers) as a group........................ 0
</TABLE>
- ------------
(1) All options granted at fair market value as of the date of grant.
Under the Incentive Plan, directors are not eligible to receive Options.
The Company believes it important that directors have meaningful equity
ownership in the Company. The reason for creating a nondiscretionary option plan
for nonemployee directors and limiting their participation in the Incentive Plan
is so that outside directors will be able to administer such plans (and any
subsequently approved discretionary stock plans) in the future under rules of
the Securities and Exchange Commission.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences of NQOs granted under the Directors
Plan are the same as NQOs granted under the Incentive Plan. See "Approval of
Identix Incorporated Equity Incentive Plan -- Federal Income Tax
Consequences -- Nonqualified Stock Options."
PROPOSAL
Shareholders are being asked to approve the Directors Plan. The affirmative
vote of the holders of a majority of the outstanding shares of Common Stock of
the Company represented and voting at the Annual Meeting is required for
approval of the Directors Plan.
BOARD RECOMMENDATION
The Board recommends a vote "FOR APPROVAL" of the proposal.
4. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Price Waterhouse LLP, independent
accountants, to audit the consolidated financial statements of the Company for
the fiscal year ending June 30, 1996, and recommends that shareholders vote
"FOR" ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection. It is
anticipated that a representative of Price Waterhouse LLP will be present at the
Annual Meeting with the opportunity to make a statement and to respond to
appropriate questions.
5. OTHER MATTERS
Management knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
Company that the persons named in the enclosed form of proxy vote the shares
they represent as Management may recommend.
Dated: September 15, 1995
THE BOARD OF DIRECTORS
14
<PAGE> 17
1. ELECTION OF DIRECTORS:
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for the
to the contrary) nominees listed
/ / / /
2. To approve the Identix Incorporated Equity Incentive Plan;
FOR AGAINST ABSTAIN
/ / / / / /
NOMINEES: Randall C. Fowler, Patrick H. Morton, Randall
Hawks, Jr., Fred U. Sutter, Larry J. Wells, William
E. Colby and Harrison N. Walther
(INSTRUCTION: To withhold authority to vote for any nominee, write
the nominee's name in the space provided below.)
_________________________________________________________________
3. To approve the Identix Incorporated Nonemployee Directors Stock Option
Plan;
FOR AGAINST ABSTAIN
/ / / / / /
4. To ratify the appointment of Price Waterhouse LLP as independent
accountants of the Company for the fiscal year ending June 30, 1996;
FOR AGAINST ABSTAIN
/ / / / / /
5. To transact such other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
/ / / / / /
Dated:______________________________________, 1995
__________________________________________________
Signature(s) of Shareholder or Shareholders,
(Executors, Administrators, Trustees, etc. should
give full title.)
__________________________________________________
Signature (if held jointly)
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO
MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY, USING THE ENCLOSED
ENVELOPE.
____________________________________________________________________________
FOLD AND DETACH HERE
<PAGE> 18
PROXY
IDENTIX INCORPORATED
A California Corporation
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of common stock of Identix Incorporated (the
"Company") hereby revokes all previous proxies, acknowledges receipt of the
notice of the shareholders' meeting to be held on October 26, 1995, and
appoints Randall C. Fowler and James P. Scullion, and each of them, as
proxy of the undersigned with power of substitution and revocation, to vote
and otherwise represent all the shares of the undersigned at said meeting
and any adjournment or postponement thereof with the same effect as if the
undersigned were present and voting the shares. The shares represented by
this proxy shall be voted as specified on the reverse side. If no choice is
indicated, the shares will be voted FOR all proposals.
(Continued on other side)
___________________________________________________________________________
FOLD AND DETACH HERE
<PAGE> 19
IDENTIX INCORPORATED
EQUITY INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
(a) Purpose. The purpose of the Plan is to provide selected
eligible employees of, and consultants to, Identix Incorporated, a California
corporation, its subsidiaries and affiliates an opportunity to participate in
the Company's future by offering them an opportunity to acquire stock in the
Company so as to retain, attract and motivate them.
(b) Definitions. For purposes of the Plan, the following terms have the
following meanings:
(i) "Award" means any award under the Plan, including any Option,
Restricted Stock, Stock Purchase Right or Performance Share Award.
(ii) "Award Agreement" means, with respect to each Award, the signed
written agreement between the Company and the Plan participant setting forth the
terms and conditions of the Award.
(iii) "Board" means the Board of Directors of the Company.
(iv) "Change in Control" has the meaning set forth in Section 9(a).
(v) "Change in Control Price" has the meaning set forth in Section
9(c).
(vi) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute.
(vii) "Commission" means the Securities and Exchange Commission and
any successor agency.
(viii) "Committee" means the Committee referred to in Section 2, or
the Board in its capacity as administrator of the Plan in accordance with
Section 2.
(ix) "Company" means Identix Incorporated, a California corporation.
(x) "Disability" means permanent and total disability as determined
by the Committee for purposes of the Plan.
(xi) "Disinterested Person" has the meaning set forth in Rule
16b-3(c)(2)(i) under the Exchange Act, and any successor definition adopted by
the Commission.
(xii) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
EXHIBIT A
<PAGE> 20
(xiii) "Fair Market Value" means as of any given date (a) if the
Stock is listed on any established stock exchange or a national market system,
the closing sales price for the Stock or the closing bid if no sales were
reported, as quoted on such system or exchange, as reported in the Wall Street
Journal; or (b) in the absence of an established market for the Stock, the fair
market value of the Stock as determined by the Committee in good faith.
(xiv) "Incentive Stock Option" means any Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
(xv) "Nonqualified Stock Option" means any Option that is not an
Incentive Stock Option.
(xvi) "Option" means an option granted under Section 5.
(xvii) "Performance Period" means the period determined by the
Committee under Section 8(a).
(xviii) "Performance Share" means the equivalent, as of any time such
assessment is made, of the Fair Market Value of one share of Stock.
(xix) "Performance Share Award" means an Award under Section 8.
(xx) "Plan" means this Identix Incorporated Equity Incentive Plan, as
amended from time to time.
(xxi) "Restricted Stock" means an Award of Stock subject to
restrictions, as more fully described in Section 6.
(xxii) "Restriction Period" means the period determined by the
Committee under Section 6(b).
(xxiii) "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the
Exchange Act, as amended from time to time, and any successor rule.
(xxiv) "Stock" means the no par value Common Stock of the Company,
and any successor security.
(xxv) "Stock Purchase Right" means an Award granted under Section 7.
(xxvi) "Subsidiary" has the meaning set forth in Section 424 of the
Code.
(xxvii) "Tax Date" means the date defined in Section 10(f).
(xxviii) "Termination" means, for purposes of the Plan, with respect
to a participant, that the participant has ceased to be, for any reason,
employed by, or consulting to, the Company, a subsidiary or an affiliate;
provided, that for
2
<PAGE> 21
purposes of this definition, if so determined by the President of the Company,
in his sole discretion, Termination shall not include a change in status from an
employee of, to a consultant to, the Company or any subsidiary or affiliate, or
vice versa.
SECTION 2. ADMINISTRATION.
(a) Committee. The Plan shall be administered by the Board or, upon
delegation by the Board, by a committee of the Board appointed by the Board. In
connection with the administration of the Plan, the Committee shall have the
powers possessed by the Board. The Committee may act only by a majority of its
members, except that the Committee may from time to time select another
committee or one or more other persons to be responsible for any matters for
which Disinterested Persons are not required pursuant to Rule 16b-3. The Board
at any time may abolish the Committee and revest in the Board the administration
of the Plan.
(b) Authority. The Committee shall grant Awards to eligible employees and
consultants. In particular and without limitation, the Committee, subject to the
terms of the Plan, shall:
(i) select the officers, other key employees and consultants to whom
Awards may be granted;
(ii) determine whether and to what extent Awards are to be granted
under the Plan;
(iii) determine the number of shares to be covered by each Award
granted under the Plan;
(iv) determine the terms and conditions of any Award granted under
the Plan and any related loans to be made by the Company, based upon factors
determined by the Committee; and
(v) determine to what extent and under what circumstances any Award
payments may be deferred by a participant.
(c) Committee Determinations Binding. The Committee may adopt, alter and
repeal administrative rules, guidelines and practices governing the Plan as it
from time to time shall deem advisable, may interpret the terms and provisions
of the Plan, any Award and any Award Agreement and may otherwise supervise the
administration of the Plan. Any determination made by the Committee pursuant to
the provisions of the Plan with respect to any Award shall be made in its sole
discretion at the time of the grant of the Award or, unless in contravention of
any express term of the Plan or Award, at any later time. All decisions made by
the Committee under the Plan shall be binding on all persons, including the
Company and Plan participants.
3
<PAGE> 22
SECTION 3. STOCK SUBJECT TO PLAN.
(a) Number of Shares. The total number of shares of Stock reserved and
available for issuance pursuant to Awards under this Plan shall be 1,000,000
shares. Such shares may consist, in whole or in part, of authorized and unissued
shares or treasury shares or shares reacquired in private transactions or open
market purchases, but all shares issued under the Plan, regardless of source
shall be counted against the 1,000,000 share limitation. If any Option
terminates or expires without being exercised in full or if any shares of Stock
subject to an Award are forfeited, or if an Award otherwise terminates without a
payment being made to the participant in the form of Stock, the shares issuable
under such Option or Award shall again be available for issuance in connection
with Awards. To the extent an Award is paid in cash, the number of shares of
Stock representing, at Fair Market Value on the date of the payment, the value
of the cash payment shall not be available for later grant under the Plan. Any
Award under this Plan shall be governed by the terms of the Plan and any
applicable Award Agreement.
(b) Adjustments. In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split or other change in corporate
structure affecting the Stock, such substitution or adjustments shall be made in
the aggregate number of shares of Stock reserved for issuance under the Plan, in
the number and exercise price of shares subject to outstanding Options, and in
the number of shares subject to other outstanding Awards, as may be determined
to be appropriate by the Committee, in its sole discretion; provided, however,
that the number of shares subject to any Award shall always be a whole number.
SECTION 4. ELIGIBILITY.
Awards may be granted to officers and other key employees of, and
consultants to, the Company, its subsidiaries and affiliates (excluding members
of the Committee and any person who serves only as a director).
SECTION 5. STOCK OPTIONS.
(a) Types. Any Option granted under the Plan shall be in such form as the
Committee may from time to time approve. The Committee shall have the authority
to grant to any participant Incentive Stock Options, Nonqualified Stock Options
or both types of Options. Incentive Stock Options may be granted only to
employees of the Company, its parent (within the meaning of Section 424(e) of
the Code) or Subsidiaries. Any portion of an Option that is not designated as,
or does not qualify as, an Incentive Stock Option shall constitute a
Nonqualified Stock Option.
(b) Terms and Conditions. Options granted under the Plan shall be subject
to the following terms and conditions:
(i) Option Term. The term of each Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
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<PAGE> 23
(10) years after the date the Option is granted, and no Nonqualified Stock
Option shall be exercisable more than fifteen (15) years after the date the
Option is granted. If, at the time the Company grants an Incentive Stock Option,
the optionee owns directly or by attribution stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company, or any
parent or Subsidiary of the Company, the Incentive Stock Option shall not be
exercisable more than five (5) years after the date of grant.
(ii) Grant Date. The Company may grant Options under the Plan at any
time and from time to time before the Plan terminates. The Committee shall
specify the date of grant or, if it fails to, the date of grant shall be the
date of action taken by the Committee to grant the Option. However, if an Option
is approved in anticipation of employment, the date of grant shall be the date
the intended optionee is first treated as an employee for payroll purposes.
(iii) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be equal to at least 85% of the Fair Market
Value on the date of grant, and in the case of Incentive Stock Options
shall be equal to at least the Fair Market Value on the date of grant; provided,
however, that if, at the time the Company grants an Incentive Stock Option, the
optionee owns directly or by attribution stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company, or any
parent or Subsidiary of the Company, then the exercise price shall be not less
than 110% of the Fair Market Value on the date the Incentive Stock Option is
granted.
(iv) Exercisability. Subject to the other provisions of the Plan, an
Option shall be exercisable in its entirety at grant or at such times and in
such amounts as are specified in the Award Agreement evidencing the Option. The
Committee, in its absolute discretion, at any time may waive any limitations
respecting the time at which an Option first becomes exercisable in whole or in
part.
(v) Method of Exercise; Payment. To the extent the right to purchase
shares has accrued, Options may be exercised, in whole or in part, from time to
time, by written notice from the optionee to the Company stating the number of
shares being purchased, accompanied by payment of the exercise price for the
shares.
(vi) No Disqualification. Notwithstanding any other provision in the
Plan, 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 optionee affected, to disqualify any
Incentive Stock Option under such Section 422.
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<PAGE> 24
SECTION 6. RESTRICTED STOCK.
(a) Price. The Committee may grant to a participant Restricted Stock. The
grantee shall pay no consideration therefor.
(b) Restrictions. Subject to the provisions of the Plan and the Award
Agreement, during the Restriction Period set by the Committee, commencing with,
and not exceeding ten (10) years from, the date of such Award, the participant
shall not be permitted to sell, assign, transfer, pledge or otherwise encumber
shares of Restricted Stock. Within these limits, the Committee may provide for
the lapse of such restrictions in installments and may accelerate or waive such
restrictions, in whole or in part, based on service, performance or such other
factors or criteria as the Committee may determine.
(c) Dividends. Unless otherwise determined by the Committee, with respect
to dividends on shares of Restricted Stock, dividends payable in cash shall be
automatically reinvested in additional Restricted Stock, and dividends payable
in Stock shall be paid in the form of Restricted Stock.
(d) Termination. Except to the extent otherwise provided in the Award
Agreement and pursuant to Section 6(b), in the event of a Termination during the
Restriction Period, all shares still subject to restriction shall be forfeited
by the participant.
SECTION 7. STOCK PURCHASE RIGHTS.
(a) Price. The Committee may grant Stock Purchase Rights which shall enable
the recipients to purchase Stock at a price equal to not less than 85% of its
Fair Market Value on the date of grant.
(b) Exercisability. Stock Purchase Rights shall be exercisable for a period
determined by the Committee not exceeding 30 days from the date of the grant.
The Committee, however, may provide that if required under Rule 16b-3 Stock
Purchase Rights granted to persons subject to Section 16(b) of the Exchange Act
shall not become exercisable until six months and one day after the grant date
and shall then be exercisable for 10 trading days at the purchase price
specified by the Committee in accordance with Section 7(a).
SECTION 8. PERFORMANCE SHARES.
(a) Awards. The Committee shall determine the nature, length and starting
date of the Performance Period for each Performance Share Award, which period
shall be at least one (1) year (subject to Section 9) and not more than six (6)
years. The consideration payable by a participant with respect to a Performance
Share Award shall be an amount determined by the Committee in the exercise of
the Committee's discretion at the time of the Award; provided, that the amount
of consideration may be zero and may in no event exceed 50% of the Fair Market
Value at the time of grant. The Committee shall determine the performance
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<PAGE> 25
objectives to be used in awarding Performance Shares and the extent to which
such Performance Shares have been earned. Performance Periods may overlap and
participants may participate simultaneously with respect to Performance Share
Awards that are subject to different Performance Periods and different
performance factors and criteria. At the beginning of each Performance Period,
the Committee shall determine for each Performance Share Award subject to such
Performance Period the number of shares of Stock (which may consist of
Restricted Stock) to be awarded to the participant at the end of the Performance
Period if and to the extent that the relevant measures of performance for such
Performance Share Award are met. Such number of shares of Stock may be fixed or
may vary in accordance with such performance or other criteria as may be
determined by the Committee. The Committee may provide that (i) amounts
equivalent to interest at such rates as the Committee may determine, or (ii)
amounts equivalent to dividends paid by the Company upon outstanding Stock shall
be payable with respect to Performance Share Awards.
(b) Termination. Except as otherwise provided in the Award Agreement or
determined by the Committee, in the event of a Termination during a Performance
Period, the participant shall not be entitled to any payment with respect to the
Performance Shares subject to the Performance Period.
(c) Form of Payment. Payment shall be made in the form of cash or whole
shares of Stock, as the Committee, in its discretion, shall determine.
SECTION 9. CHANGE IN CONTROL.
(a) Definition of "Change in Control". For purposes of Section 9(b), a
"Change in Control" means the occurrence of any one of the following:
(i) Any "person", as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Company, a subsidiary, an affiliate, or a
Company employee benefit plan, including any trustee of such plan acting as
trustee) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities;
(ii) the solicitation of proxies (within the meaning of Rule 14a-1(k)
under the Exchange Act and any successor rule) with respect to the election of
any director of the Company where such solicitation is for any candidate who is
not a candidate proposed by a majority of the Board in office prior to the time
of such election; or
(iii) the dissolution or liquidation (partial or total) of the Company
or a sale of assets involving 30% or more of the assets of the Company, any
merger or reorganization of the Company whether or not another entity is the
survivor, a transaction pursuant to which the holders, as a group, of all of the
shares of the Company outstanding prior to the transaction hold, as a group,
less than 70% of
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<PAGE> 26
the shares of the Company outstanding after the transaction, or any other event
which the Board determines, in its discretion, would materially alter the
structure of the Company or its ownership.
(b) Impact of Event. In the event of a "Change in Control" as defined in
Section 9(a), but only if and to the extent so specifically determined by the
Board in its discretion, which determination may be amended or reversed only by
the affirmative vote of a majority of the persons who were directors at the time
such determination was made, acceleration and valuation provisions no more
favorable to participants than the following may apply:
(i) Subject to Section 5(b)(vi), any Options outstanding as of the date
such Change in Control is determined to have occurred and not then exercisable
and vested shall become fully exercisable and vested.
(ii) The restrictions and limitations applicable to any Restricted
Stock and Stock Purchase Rights shall lapse, and such Restricted Stock shall
become fully vested.
(iii) The value (net of any exercise price) of all outstanding Options,
Restricted Stock and Stock Purchase Rights, unless otherwise determined by the
Committee at or after grant and subject to Rule 16b-3, shall be cashed out on
the basis of the "Change in Control Price", as defined in Section 9(c), as of
the date such Change in Control is determined to have occurred or such other
date as the Board may determine prior to the Change in Control.
(iv) Any outstanding Performance Share Awards shall be vested and paid
in full as if all performance criteria had been met.
(c) Change in Control Price. For purposes of this Section 9, "Change in
Control Price" means the highest price per share paid in any transaction
reported on the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation System or paid or offered in any bona fide
transaction related to a potential or actual Change in Control of the Company at
any time during the preceding 60-day period as determined by the Board, except
that, in the case of Incentive Stock Options, such price shall be based only on
transactions reported for the date on which the Board decides to cash out such
Options.
SECTION 10. GENERAL PROVISIONS.
(a) Award Grants. Any Award may be granted either alone or in addition to
other Awards granted under the Plan. Subject to the terms and restrictions set
forth elsewhere in the Plan, the Committee shall determine the consideration, if
any, payable by the participant for any Award and, in addition to those set
forth in the Plan, any other terms and conditions of the Awards. The Committee
may condition the grant or payment of any Award upon the attainment of specified
performance goals or such other factors or criteria, including vesting based on
continued employment or consulting, as the Committee shall determine.
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<PAGE> 27
Performance objectives may vary from participant to participant and among groups
of participants and shall be based upon such Company, subsidiary, group or
division factors or criteria as the Committee may deem appropriate, including,
but not limited to, earnings per share or return on equity. The other provisions
of Awards also need not be the same with respect to each recipient. Unless
specified otherwise in the Plan or by the Committee, the date of grant of an
Award shall be the date of action by the Committee to grant the Award. The
Committee may also substitute new Options for previously granted Options,
including previously granted Options having higher exercise prices.
(b) Award Agreement. As soon as practicable after the date of an Award
grant, the Company and the participant shall enter into a written Award
Agreement identifying the date of grant, and specifying the terms and conditions
of the Award. Options are not exercisable until after execution of the Award
agreement by the Company and the Plan participant, but a delay in execution of
the agreement shall not affect the validity of the Option grant.
(c) Certificates. All certificates for shares of Stock or other securities
delivered under the Plan shall be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Commission, any market in which the
Stock is then traded and any applicable federal, state or foreign securities
law.
(d) Termination. Unless otherwise provided in the applicable Award
Agreement or by the Committee, in the event of Termination for any reason other
than death, retirement or Disability, Awards held at the date of Termination
(and only to the extent then exercisable or payable, as the case may be) may be
exercised in whole or in part at any time within three (3) months after the date
of Termination, or such lesser period specified in the Award Agreement (but in
no event after the expiration date of the Award), but not thereafter. If
Termination is due to retirement or to death or Disability, Awards held at the
date of Termination (and only to the extent then exercisable or payable, as the
case may be) may be exercised in whole or in part by the participant in the case
of retirement or Disability, by the participant's guardian or legal
representative or by the person to whom the Award is transferred by will or the
laws of descent and distribution, at any time within two (2) years from the date
of Termination or any lesser period specified in the Award Agreement (but in no
event after the expiration of the Award).
(e) Delivery of Purchase Price. If and only to the extent authorized by the
Committee, participants may make all or any portion of any payment due to the
Company
(i) with respect to the consideration payable for an Award,
(ii) upon exercise of an Award, or
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<PAGE> 28
(iii) with respect to federal, state, local or foreign tax payable in
connection with an Award, by delivery of (x) cash, (y) check, or (z) any
property other than cash (including a promissory note of the participant or
shares of Stock or securities) so long as, if applicable, such property
constitutes valid consideration for the Stock under, and otherwise complies
with, applicable law. No promissory note under the Plan shall have a term
(including extensions) of more than five years or shall be of a principal amount
exceeding 90% of the purchase price paid by the borrower.
(f) Tax Withholding. Any shares or other securities so withheld or tendered
will be valued by the Committee as of the date they are withheld or tendered;
provided, however, that Stock shall be valued at Fair Market Value on such date.
The value of the shares withheld or tendered may not exceed the required
federal, state, local and foreign withholding tax obligations as computed by the
Company. Unless the Committee permits otherwise, the participant shall pay to
the Company in cash, promptly when the amount of such obligations becomes
determinable (the "Tax Date"), all applicable federal, state, local and foreign
withholding taxes that the Committee in its discretion determines to result, (i)
from the lapse of restrictions imposed upon an Award, (ii) upon exercise of an
Award, or (iii) from a transfer or other disposition of shares acquired upon
exercise or payment of an Award, or otherwise related to the Award or the shares
acquired in connection with an Award.
A participant who has received an Award or payment under an Award may,
to the extent, if any, authorized by the Committee in its discretion, make an
election to (x) deliver to the Company a promissory note of the participant on
the terms set forth in Section 10(e), or (y) tender any such securities to the
Company to pay the amount of tax that the Committee in its discretion determines
to be required to be withheld by the Company subject to the following
limitations:
(i) such election shall be irrevocable;
(ii) such election shall be subject to the disapproval of the
Committee;
(iii) in the case of participants subject to Section 16(b) of the
Exchange Act, such tender may not be made within six (6) months of the
acquisition of the securities to be tendered to satisfy the tax withholding
obligation (except that this limitation shall not apply in the event of death or
Disability of such person before the six-month period expires); and
(iv) in the case of participants subject to Section 16(b) of the
Exchange Act, such election must be made in any ten-day period beginning on the
third business day following the date of release for publication of quarterly or
annual summary statements of sales and earnings.
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<PAGE> 29
(g) No Transferability. No Award shall be assignable or otherwise
transferable by the participant other than by will or by the laws of descent and
distribution. During the life of a participant, an Award shall be exercisable,
and any elections with respect to an Award may be made, only by the participant
or participant's guardian or legal representative.
(h) Adjustment of Awards; Waivers. Subject to Section 5(b)(vi), the
Committee may adjust the performance goals and measurements applicable to Awards
(i) to take into account changes in law and accounting and tax rules, (ii) to
make such adjustments as the Committee deems necessary or appropriate to reflect
the inclusion or exclusion of the impact of extraordinary or unusual items,
events or circumstances in order to avoid windfalls or hardships, and (iii) to
make such adjustments as the Committee deems necessary or appropriate to reflect
any material changes in business conditions. In the event of hardship or other
special circumstances of a participant and otherwise in its discretion, the
Committee may waive in whole or in part any or all restrictions, conditions,
vesting, or forfeiture with respect to any Award granted to such participant.
(i) Non-Competition. The Committee may condition its discretionary waiver
of a forfeiture, the acceleration of vesting at the time of Termination of a
participant holding any unexercised or unearned Award, the waiver of
restrictions on any Award, or the extension of the expiration period to a period
not longer than that provided by the Plan upon such participant's agreement (and
compliance with such agreement) to (i) not engage in any business or activity
competitive with any business or activity conducted by the Company and (ii) be
available for consultations at the request of the Company's management, all on
such terms and conditions (including conditions in addition to (i) and (ii)) as
the Committee may determine.
(j) Dividends. The reinvestment of dividends in additional Stock or
Restricted Stock at the time of any dividend payment pursuant to Section 6(c)
shall only be permissible if sufficient shares of Stock are available under
Section 3 for such reinvestment (taking into account then outstanding Awards).
(k) Regulatory Compliance. Each Award under the Plan shall be subject to
the condition that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of the shares of Stock upon any
securities exchange or for trading in any securities market or under any state
or federal law, (ii) the consent or approval of any government or regulatory
body or (iii) an agreement by the participant with respect thereto, is necessary
or desirable, then such Award shall not be consummated in whole or in part
unless such listing, registration, qualification, consent, approval or agreement
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
(l) Rights as Shareholder. Unless the Plan or the Committee expressly
specifies otherwise, an optionee shall have no rights as a shareholder with
respect to any shares covered by an Award until the stock certificates
representing the shares are actually delivered to the optionee. Subject to
Sections 3(b) and 6(c), no
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<PAGE> 30
adjustment shall be made for dividends or other rights for which the record date
is prior to the date the certificates are delivered.
(m) Beneficiary Designation. The Committee, in its discretion, may
establish procedures for a participant to designate a beneficiary to whom any
amounts payable in the event of the participant's death are to be paid.
(n) Additional Plans. Nothing contained in the Plan shall prevent the
Company, a subsidiary or an affiliate from adopting other or additional
compensation arrangements for its employees and consultants.
(o) No Employment Rights. The adoption of the Plan shall not confer upon
any employee any right to continued employment nor shall it interfere in any way
with the right of the Company, a subsidiary or an affiliate to terminate the
employment of any employee at any time.
(p) Rule 16b-3. Notwithstanding any provision of the Plan, the Plan shall
always be administered, and Awards shall always be granted and exercised, in
such a manner as to conform to the provisions of Rule 16b-3.
(q) Governing Law. The Plan and all Awards shall be governed by and
construed in accordance with the laws of the State of California.
(r) Use of Proceeds. All cash proceeds to the Company under the Plan shall
constitute general funds of the Company.
(s) Unfunded Status of Plan. The Plan shall constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or arrangements to meet the obligations created under the
Plan to deliver Stock or make payments; provided, however, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan.
(t) Assumption by Successor. The obligations of the Company under the Plan
and under any outstanding Award may be assumed by any successor corporation,
which for purposes of the Plan shall be included within the meaning of
"Company".
(u) Limitation on Award Grants to Certain Executive Officers. The Company
may not in any one fiscal year grant Awards under the Plan for more than 200,000
shares to any executive officer whose compensation is required to be disclosed
under Item 402 of Regulation S-K.
SECTION 11. AMENDMENTS AND TERMINATION.
The Board may amend, alter or discontinue the Plan or any Award, but no
amendment, alteration or discontinuance shall be made which would impair the
rights of a participant under an outstanding Award without the participant's
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<PAGE> 31
consent. In addition, to the extent required for the Plan to comply with Rule
16b-3 or, with respect to provisions solely as they relate to Incentive Stock
Options, to the extent required for the Plan to comply with Section 422 of the
Code, the Board may not amend or alter the Plan without the approval of a
majority of the voting power of the shares of the Company entitled to vote at a
duly held shareholders' meeting or by an action by written consent and, if at a
meeting, a quorum of the voting power of the Company is represented in person or
by proxy, where such amendment or alteration would:
(a) except as expressly provided in the Plan, increase the total number of
shares reserved for issuance pursuant to Awards under the Plan;
(b) except as expressly provided in the Plan, change the minimum price
terms of Section 5(b)(iii);
(c) change the class of employees and consultants eligible to participate
in the Plan;
(d) extend the maximum Option period under Section 5(b)(i); or
(e) materially increase the benefits accruing to participants under the
Plan.
SECTION 12. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is adopted by the Board but all
Awards shall be conditioned upon approval of the Plan (a) at a duly held
shareholders' meeting by the affirmative vote of the holders of a majority of
the voting power of the shares of the Company entitled to vote and represented
in person or by proxy at the meeting, or (b) by an action by written consent of
the holders of a majority of the voting power of the shares of the Company
entitled to vote.
SECTION 13. TERM OF PLAN.
No Award shall be granted on or after July 5, 2005, but Awards granted
prior to July 5, 2005 may extend beyond that date.
Plan, as approved by the Board of Directors on July 5, 1995.
Plan, as approved by the Shareholders on _____________, 1995.
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<PAGE> 32
IDENTIX INCORPORATED
NONEMPLOYEE DIRECTORS STOCK OPTION PLAN
1. Purpose.
The purpose of this Plan is to offer Nonemployee Directors of Identix
Incorporated an opportunity to acquire a proprietary interest in the success of
the Company, or to increase such interest, by purchasing shares of the Company's
Common Stock. This Plan provides for the grant of Options to purchase Shares.
Options granted hereunder shall be "Nonstatutory Options," and shall not include
"incentive stock options" intended to qualify for treatment under Sections 421
and 422 of the Internal Revenue Code of 1986, as amended.
2. Definitions.
As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the entity, either the Board or the
committee of the Board, responsible for administering this Plan, as provided in
Section 3.
(b) "Affiliate" means a parent or subsidiary corporation as defined in
the applicable provisions (currently, Sections 424(e) and (f), respectively) of
the Code.
(c) "Board" shall mean the Board of Directors of the Company, as
constituted from time to time.
(d) "Change in Control" shall mean the occurrence of any one of the
following:
(i) any "person", as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, an Affiliate, or a Company
employee benefit plan, including any trustee of such plan acting as trustee) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding securities;
(ii) the solicitation of proxies (within the meaning of Rule
14a-1(k) under the Exchange Act and any successor rule) with respect to the
election of any director of the Company where such solicitation is for any
candidate who is not a candidate proposed by a majority of the Board in office
prior to the time of such election; or
(iii) the dissolution or liquidation (partial or total) of the
Company or a sale of assets involving 30% or more of the assets of the Company,
or any merger or reorganization of the Company, whether or not another entity is
the survivor, or other transaction pursuant to which the holders, as a group, of
<PAGE> 33
all of the shares of the Company outstanding prior to the transaction hold, as a
group, less than 70% of the shares of the Company outstanding after the
transaction.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute.
(f) "Company" shall mean Identix Incorporated, a California
corporation.
(g) "Common Stock" shall mean the Common Stock of the Company.
(h) "Disability" means permanent and total disability as determined by
the Administrator in accordance with the standards set forth in Section 22(e)(3)
of the Code.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
(j) "Expiration Date" shall mean the last day of the term of an Option
established under Section 6(c).
(k) "Fair Market Value" means as of any given date (a) the closing
price of the Common Stock on American Stock Exchange, Inc. as reported in the
Wall Street Journal; or (b) if the Common Stock is no longer quoted on American
Stock Exchange, Inc. but is listed on another established stock exchange or
quoted on any established interdealer quotation system, the closing price for
the Common Stock on such exchange or system, as reported in the Wall Street
Journal.
(l) "Nonemployee Director" shall mean any person who is a member of the
Board but is not an employee of the Company or any Affiliate of the Company and
has not been an employee of the Company or any Affiliate of the Company at any
time during the preceding twelve months. Service as a director does not in
itself constitute employment for purposes of this definition.
(m) "Option" shall mean a stock option granted pursuant to this Plan.
Each Option shall be a nonstatutory option not intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
(n) "Option Agreement" shall mean the written agreement described in
Section 6 evidencing the grant of an Option to a Nonemployee Director and
containing the terms, conditions and restrictions pertaining to such Option.
(o) "Optionee" shall mean a Nonemployee Director who holds an Option.
(p) "Plan" shall mean this Identix Incorporated Nonemployee Directors
Stock Option Plan, as it may be amended from time to time.
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<PAGE> 34
(q) "Section" unless the context clearly indicates otherwise, shall
refer to a Section of this Plan.
(r) "Shares" shall mean the shares of Common Stock subject to an Option
granted under this Plan.
(s) "Tax Date" means the date defined in Section 7(c).
(t) "Termination" means, for purposes of the Plan, with respect to an
Optionee, that the Optionee has ceased to be, for any reason, a director of the
Company.
(u) "Window Period" means any 10-day period beginning on the third
business day following the date of release for publication of the Company's
quarterly or annual summary statements of earnings or such other period as is
specified in Rule 16b-3(e) under the Exchange Act, as such rule may be amended
from time to time, or any successor to such rule.
3. Administration.
(a) Administrator. The Plan shall be administered by the Board or, upon
delegation by the Board, by a committee consisting of not less than two
directors (in either case, the "Administrator"). The Administrator shall have no
authority, discretion or power to select the Nonemployee Directors who will
receive Options hereunder or to set the number of shares to be covered by each
Option granted hereunder, the exercise price of such Option, the timing of the
grant of such Option or the period within which such Option may be exercised. In
connection with the administration of the Plan, the Administrator shall have the
powers possessed by the Board. The Administrator may act only by a majority of
its members. The Administrator may delegate administrative duties to such
employees of the Company as it deems proper, so long as such delegation is not
otherwise prohibited by Rule 16b-3 under the Exchange Act. The Board at any time
may terminate the authority delegated to any committee of the Board pursuant to
this Section 3(a) and revest in the Board the administration of the Plan.
(b) Administrator Determinations Binding. Subject to the limitations
set forth in Section 3(a), the Administrator may adopt, alter and repeal
administrative rules, guidelines and practices governing the Plan as it from
time to time shall deem advisable, may interpret the terms and provisions of the
Plan, any Option and any Option Agreement and may otherwise supervise the
administration of the Plan. All decisions made by the Administrator under the
Plan shall be binding on all persons, including the Company and Optionees. No
member of the Administrator shall be liable for any action that he or she has in
good faith taken or failed to take with respect to this Plan or any Option.
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4. Eligibility.
Only Nonemployee Directors may receive Options under this Plan.
5. Shares Subject to Plan.
(a) Aggregate Number. Subject to Section 9, the total number of shares
of Common Stock reserved and available for issuance pursuant to Options under
this Plan shall be 250,000 shares. Such shares may consist, in whole or in part,
of authorized and unissued shares or shares reacquired in private transactions
or open market purchases, but all shares issued under the Plan regardless of
source shall be counted against the 250,000 share limitation. If any Option
terminates or expires without being exercised in full, the shares issuable under
such Option shall again be available for issuance in connection with other
Options. If shares of Common Stock issued pursuant to an Option are repurchased
by the Company, such Common Stock shall not again be available for issuance in
connection with Options. To the extent the number of shares of Common Stock
issued pursuant to an Option is reduced to satisfy withholding tax obligations,
the number of shares withheld to satisfy the withholding tax obligations shall
not be available for later grant under the Plan.
(b) No Rights as a Shareholder. An Optionee shall have no rights as a
shareholder with respect to any Shares covered by his or her Option until the
issuance (as evidenced by the appropriate entry on the books of the Company or
its duly authorized transfer agent) of a stock certificate evidencing such
Shares. Subject to Section 9, no adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions, or other rights for which the record date is prior to the date
the certificate is issued.
6. Grant of Options.
(a) Mandatory Option Grants upon Adoption of the Plan. Subject to the
terms and conditions of this Plan, the Company shall, upon adoption of this
Plan, grant to each Nonemployee Director an Option to purchase 20,000 shares of
Common Stock at an exercise price equal to the Fair Market Value of such Shares
on the date of adoption.
(b) Mandatory Initial Option Grants. Subject to the terms and
conditions of this Plan, if any person who is not, and has not been in the
preceding twelve months, an officer or employee of the Company is elected or
appointed as a member of the Board, then on the effective date of such
appointment or election the Company shall grant to such new Nonemployee
Director: (i) an Option to purchase 10,000 Shares at an exercise price equal to
the Fair Market Value of such Shares on the date of such option grant if less
than six months have elapsed since the Company's last annual meeting of the
shareholders or (ii) an
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Option to purchase 5,000 shares of Common Stock if at least six months have
elapsed since the Company's last annual meeting of shareholders.
(c) Mandatory Annual Option Grants. Subject to the terms and conditions
of this Plan, on the date of the first meeting of the Board immediately
following the annual meeting of shareholders of the Company (even if held on the
same day as the meeting of shareholders) commencing with the annual meeting of
shareholders held in 1996, the Company shall grant to each such Nonemployee
Director then in office an Option to purchase 10,000 Shares at an exercise price
equal to the Fair Market Value of such Shares on the date of such option grant.
(d) Terms; Vesting. Subject to the other provisions of this Plan, each
Option granted pursuant to this Plan shall be for a term of ten years. Each
Option granted under this Plan shall become exercisable with respect to
one-fourth of the number of Shares covered by such Option for each three month
period which elapses after the date of grant, so that such Option shall be fully
exercisable on the first anniversary of the date such Option was granted.
(e) Limitation on Other Grants. The Administrator shall have no
discretion to grant Options under this Plan other than as set forth in Sections
6(a), 6(b) and 6(c).
(f) Option Agreement. As soon as practicable after the grant of an
Option, the Optionee and the Company shall enter into a written Option Agreement
which specifies the date of grant, the number of Shares, the option price, and
the other terms and conditions applicable to the Option.
(g) Transferability. No Option shall be transferable otherwise than by
will or the laws of descent and distribution, and an Option shall be exercisable
during the Optionee's lifetime only by the Optionee.
(h) Limits on Exercise. Subject to the other provisions of this Plan,
an Option shall be exercisable in such amounts as are specified in the Option
Agreement.
(i) Exercise Procedures. To the extent the right to purchase Shares has
accrued, Options may be exercised, in whole or in part, from time to time, by
written notice from the Optionee to the Company stating the number of Shares
being purchased, accompanied by payment of the exercise price for the Shares,
and other applicable amounts, as provided in Section 7.
(j) Termination. In the event of Termination, Options held at the date
of Termination (and only to the extent then exercisable) may be exercised in
whole or in part at any time within three months after the date of Termination
(but in no event after the Expiration Date), but not thereafter. Notwithstanding
the foregoing, if Termination is due to
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retirement or to death or Disability, Options held at the date of Termination
(and only to the extent then exercisable) may be exercised in whole or in part
by the Optionee in the case of retirement or Disability, by the participant's
guardian or legal representative or by the person to whom the Option is
transferred by will or the laws of descent and distribution, at any time within
two years from the date of Termination (but in no event after the Expiration
Date).
7. Payment and Taxes upon Exercise of Options.
(a) Purchase Price. The purchase price of Shares issued under this Plan
shall be paid in full at the time an Option is exercised.
(b) Delivery of Purchase Price. Optionees may make all or any portion
of any payment due to the Company
(i) upon exercise of an Option, or
(ii) with respect to federal, state, local or foreign tax payable
in connection with the exercise of an Option, by delivery of (x) cash, (y)
check, or (z) a promissory note of the Optionee or shares of Common Stock so
long as, if applicable, such property constitutes valid consideration for the
Common Stock under, and otherwise complies with, applicable law. No promissory
note under the Plan shall have a term (including extensions) of more than five
years or shall be of a principal amount exceeding 90% of the purchase price paid
by the borrower. Exercise of an Option may be made pursuant to a "cashless
exercise/sale" procedure pursuant to which funds to pay for exercise of the
Option are delivered to the Company by a broker upon receipt of stock
certificates from the Company, or pursuant to which Optionees obtain margin
loans from brokers to fund the exercise of the Option.
(c) Tax Withholding. The Optionee shall pay to the Company in cash,
promptly upon exercise of an Option or, if later, the date that the amount of
such obligations becomes determinable (in either case, the "Tax Date"), all
applicable federal, state, local and foreign withholding taxes that the
Administrator, in its discretion, determines to result upon exercise of an
Option or from a transfer or other disposition of shares of Common Stock
acquired upon exercise of an Option or otherwise related to an Option or shares
of Common Stock acquired in connection with an Option.
A person who has exercised an Option may make an election (i) to
deliver to the Company a promissory note of the Optionee on the terms set forth
in Section 7(b), (ii) to tender to the Company previously-owned shares of Common
Stock held for at least six months, or (iii) to have shares of Common Stock to
be obtained upon exercise of the Option withheld by the Company on behalf of the
Optionee, to pay the amount of tax that the Administrator, in its discretion,
determines to be required to be
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withheld by the Company. Any election pursuant to clause (iii) above by a
Optionee subject to Section 16 of the Exchange Act shall be subject to the
following limitations: (1) such election must be made at least six months before
the Tax Date and shall be irrevocable; or (2) such election must be made in (or
made earlier to take effect in) any Window Period (and the withholding of the
shares of Common Stock shall take place during such Window Period) and shall be
subject to approval by the Board, which approval may be given any time after
such election has been made, and the Option must be held at least six months
prior to the Tax Date; provided, that, the election referenced in clause (2)
above may not be made unless (A) such election is consistent with Rule
16b-3(c)(2)(ii) under the Exchange Act, and (B) the Company has been subject to
the reporting requirements of Section 13(a) of the Exchange Act for at least one
year and has filed all reports and statements required to be filed pursuant to
that section for that year. The right to so withhold shares of Common Stock
shall relate separately to each Option.
Any shares tendered to or withheld by the Company will be valued at
Fair Market Value on such date. The value of the shares of Common Stock tendered
or withheld may not exceed the required federal, state, local and foreign
withholding tax obligations as computed by the Company.
8. Use of Proceeds.
Proceeds from the sale of Shares pursuant to this Plan shall be used
for general corporate purposes.
9. Adjustment of Shares.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split or other change in corporate
structure affecting the Common Stock, appropriate adjustments shall be made by
the Administrator in the aggregate number and kind of shares of Stock reserved
for issuance under the Plan and in the number, kind and exercise price of shares
subject to outstanding Options; provided, however, that the number of shares
subject to any Option shall always be a whole number.
10. Effect of Change in Control.
In the event of a "Change in Control," any Options outstanding as of
the date such Change in Control is determined to have occurred and not then
exercisable and vested shall become fully exercisable and vested.
11. No Right to Directorship.
Neither this Plan nor any Option granted hereunder shall confer upon
any Optionee any right with respect to continuation of the Optionee's membership
on the Board or shall interfere in any way with provisions in the Company's
Articles of
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Incorporation and By-Laws relating to the election, appointment, terms of
office, and removal of members of the Board.
12. Legal Requirements.
The Company shall not be obligated to offer or sell any Shares upon
exercise of any Option unless the Shares are at that time effectively registered
or exempt from registration under the federal securities laws and the offer and
sale of the Shares are otherwise in compliance with all applicable securities
laws and the regulations of any stock exchange on which the Company's securities
may then be listed. The Company shall have no obligation to register the
securities covered by this Plan under the federal securities laws or take any
other steps as may be necessary to enable the securities covered by this Plan to
be offered and sold under federal or other securities laws. Upon exercising all
or any portion of an Option, an Optionee may be required to furnish
representations or undertakings deemed appropriate by the Company to enable the
offer and sale of the Shares or subsequent transfers of any interest in the
Shares to comply with applicable securities laws. Certificates evidencing Shares
acquired upon exercise of Options shall bear any legend required by, or useful
for purposes of compliance with, applicable securities laws, this Plan or the
Option Agreements.
13. Duration and Amendments.
(a) Duration. This Plan shall become effective upon adoption by the
Board provided, however, that no Option shall be exercisable unless and until
written consent of the shareholders of the Company, or approval of shareholders
of the Company voting at a validly called shareholders' meeting, is obtained
within 12 months after adoption by the Board. If such shareholder approval is
not obtained within such time, Options granted hereunder shall terminate and be
of no force and effect from and after expiration of such 12-month period.
(b) Amendment and Termination. The Board may amend, alter or
discontinue the Plan or any Option, but no amendment, alteration or
discontinuance shall be made which would impair the rights of an Optionee under
an outstanding Option without the Optionee's consent. In addition, the Board may
not amend or alter the Plan without the approval of shareholders of the Company
entitled to vote at a duly held shareholders' meeting or by an action by written
consent and, if at a meeting, a quorum of the voting power of the Company is
represented in person or by proxy, where such amendment or alteration would,
except as expressly provided in the Plan, increase the total number of shares
reserved for issuance pursuant to Options under the Plan or in such other
circumstances as the Board deems appropriate to comply with Rule 16b-3 under the
Exchange Act or otherwise. Notwithstanding any other provision of this Section
12(b), the provisions of the Plan governing (A) who is granted Options, (B) the
number of Shares to be covered by each Option, (C) the exercise price of each
Option, (D) the timing of the grant of
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each Option, or (E) the period within which each Option may be exercised, shall
not be amended more than once every six months, other than to comport with
changes in the Code or the rules thereunder or the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
(c) Effect of Amendment or Termination. No Shares shall be issued or
sold under this Plan after the termination hereof, except upon exercise of an
Option granted before termination. Termination or amendment of this Plan shall
not affect any Shares previously issued and sold or any Option previously
granted under this Plan.
14. Rule 16b-3.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with the applicable
conditions of Rule 16b-3 under the Exchange Act. To the extent any provision of
this Plan or action by the Administrator fails to so comply, it shall be
adjusted to comply with Rule 16b-3, to the extent permitted by law and deemed
advisable by the Administrator. It shall be the responsibility of persons
subject to Section 16 of the Exchange Act, not of the Company or the
Administrator, to comply with the requirements of Section 16 of the Exchange
Act; and neither the Company nor the Administrator shall be liable if this Plan
or any transaction under this Plan fails to comply with the applicable
conditions of Rule 16b-3, or if any such person incurs any liability under
Section 16 of the Exchange Act.
Adopted by the Board of Directors: August 2, 1995.
Approved by the shareholders: , 1995.
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