<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
IDENTIX INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / 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:
_
<PAGE> 2
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
IDENTIX INCORPORATED
TO BE HELD ON OCTOBER 30, 1996
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Identix
Incorporated (the "Company") will be held on Wednesday, October 30, 1996 at 2:00
p.m. at the Company's principal executive offices located at 510 North Pastoria
Avenue, Sunnyvale, California 94086, for the purpose of considering and acting
upon the following proposals:
1. To elect directors to serve for the ensuing year and until their
successors are elected;
2. To approve certain amendments to the Identix Incorporated Equity
Incentive Plan;
3. To approve an amendment to the Company's Articles of Incorporation
to increase the authorized shares of Common Stock from 30,000,000
to 50,000,000;
4. To ratify the appointment of Price Waterhouse LLP as independent
accountants of the Company for the fiscal year ended June 30,
1997; and
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 2, 1996
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 30, 1996
<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 (the "Annual Meeting") to be held on Wednesday, October 30, 1996 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 Company's principal executive offices. The
Company's principal executive offices are located at 510 North Pastoria Avenue,
Sunnyvale, California 94086. The Company's telephone number is (408) 731-2000.
These proxy solicitation materials were mailed on or about September 30,
1996 to all shareholders entitled to vote at the Annual Meeting.
RECORD DATE AND SHARES OUTSTANDING
Shareholders of record at the close of business on September 2, 1996 (the
"Record Date") are entitled to notice of and to vote at the meeting. At the
Record Date, 24,323,937 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 Annual 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
Annual 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 1997 ANNUAL MEETING
Proposals of shareholders of the Company which are intended to be presented
by such shareholders at the Company's 1997 Annual Meeting must be received by
the Company no later than June 2, 1997 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 Annual 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 57 Chairman, President, and Chief 1982
Executive Officer of the Company
Patrick H. Morton 56 Chairman of the Board of Directors 1985
of QuadRep, Inc.
Randall Hawks, Jr. 45 President and Chief Executive Officer of WHEB 1988
Systems, Inc.
Fred U. Sutter 68 President of the Swiss Management 1988
Association
Larry J. Wells 53 General Partner of the management 1992
company for Sundance Venture Partners, L.P.
Harrison N. Walther 59 President and Chief Executive Officer 1995
of ANADAC, Inc.
Ed Zschau 56 Senior Lecturer of Business Administration, 1995
Harvard Business School, Harvard University
</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, Chairman of the Board, President, and Chief Executive
Officer 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 President and Chief Executive Officer at WHEB Systems, Inc. From
1994 to 1995, Mr. Hawks was 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.
2
<PAGE> 5
Fred U. Sutter has been a director of the Company since 1988. Mr. Sutter is
currently President of the Swiss Management Association. Until January 1996, Mr.
Sutter was Chairman, Chief Executive Officer and President of Ascom Enterprise
Network, Inc., 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 President of Ascom Holding AG. From January 1991
to August 1993, he was the Deputy President of Ascom Holding AG. From January
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 has been a director of the Company since 1992. Since 1989,
Mr. Wells has been a general partner of Anderson and Wells Company, the
management company for Sundance Venture Partners, L.P. Prior to his affiliation
with Anderson and Wells Company, Mr. Wells held similar positions with Inco
Venture Capital from 1988 to 1989 and Citicorp Venture Capital from 1983 to
1987.
Harrison N. Walther has been a director of the Company since February 1995.
Mr. Walther is the President and Chief Executive Officer of ANADAC Inc.
("ANADAC"), Mr. Walther joined ANADAC in 1982. He served as Vice President of
ANADAC from 1982 through 1984 and Executive Vice President from 1984 through
1985 before assuming the duties of President in 1986.
Ed Zschau was appointed a director of the Company in December 1995.
Currently, Mr. Zschau is a Senior Lecturer of Business Administration at Harvard
Business School, Harvard University. Mr. Zschau served for two years as
General Manager of the IBM Storage Systems Divisions from 1993 to 1995. From
1988 through 1992 Mr. Zschau was Chairman of the Board and Chief Executive
Officer of Genstar Corporation, a developer of rigid disk media and thin-film
magnetic recording heads. Mr. Zschau is a former United States congressman.
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 1996 as well as certain representations made to the Company, and
based thereon has determined that for fiscal year 1996, Randall C. Fowler,
Chairman, President, and Chief Executive Officer, James P. Scullion, Executive
Vice President and Chief Financial Officer, Daniel F. Maase, Vice President,
Engineering, and Harrison N. Walther, President and Chief Executive Officer of
ANADAC, Inc. each failed to file in a timely manner one report required by
Section 16 (a) of the Exchange Act covering one, two, three and four
transactions, respectively. Each officer identified filed a report for their
respective transactions on June 17, 1996.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four meetings during
fiscal year 1996.
The Compensation Committee held one meetings during fiscal year 1996.
Messrs. Morton, Wells and Hawks are currently the members of the Compensation
Committee. The Compensation Committee reviews and approves the Company's
executive officer compensation policy and administers the Company's employee
option plans.
The Audit Committee held three meetings during fiscal year 1996. Messrs.
Morton, Wells, and Hawks are currently the members of the Audit Committee.
William E. Colby, formally a member of the Board of Directors, was a member of
the Audit Committee during fiscal year 1996. Mr. Colby died in April 1996. 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.
3
<PAGE> 6
The Board of Directors does not have a standing Nominating Committee nor
any committee performing such function.
During fiscal year 1996, 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 1996, members of the Board of Directors received no cash
compensation for serving on the Board of Directors, but received options granted
under the Identix Incorporated Nonemployee Directors Stock Option Plan.
Under the Directors Plan, each nonemployee director of the Company, upon
such director's first election to the Board, is entitled to receive an automatic
nondiscretionary grant of (i) a nonqualified stock option ("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 more than six months have elapsed since the last annual meeting
of the shareholders. In addition, on the date of the first meeting of the Board
following the annual meeting of the shareholders of the Company, each eligible
director is entitled to receive an NQO to purchase 10,000 shares of Common
Stock.
The exercise price of the NQO's granted under the Directors Plan is equal
to the fair market value of such shares on the date of grant. The NQOs become
exercisable with respect to one fourth of the number of shares covered by such
NQO for each three month period which elapses after the date of grant, so that
such NQO will be fully exercisable on the first anniversary of the date such NQO
was granted.
Beginning August 1, 1996, the nonemployee directors of the Company
receive $1,000 for each Board meeting attended up to a maximum of $4,000
annually plus expenses incurred in traveling to the meeting.
4
<PAGE> 7
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, 1996 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 USA Inc. 5,418,224 (2) 22.28%
9 East Ninth Steet, Apt. 1
New York, NY 10003
Randall C. Fowler 6,701,973 (3) 27.56%
510 N. Pastoria Avenue
Sunnyvale, CA 94086
Patrick H. Morton 118,320 (4) *
Randall Hawks, Jr. 80,000 (5) *
Fred U. Sutter 80,000 (6) *
Larry J. Wells 45,575 (7) *
Harrison N. Walther 287,796 (8) 1.18%
James P. Scullion 143,957 (9) *
Daniel F. Maase 103,166 (10) *
Ed Zschau 7,500 (11) *
All directors and officers
as a group (11 persons) 7,584,927 (3)(12) 31.19%
</TABLE>
- -----------------
* Less than one percent.
(1) Applicable percentage of ownership is based on 24,320,464 shares of Common
Stock outstanding as of July 31, 1996. Shares of Common Stock subject to
outstanding options or warrants currently exercisable or exercisable within
60 days after July 31, 1996 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 USA Inc. beneficially owned shares are held in a voting
trust for which Mr. Randall C. Fowler, the Chairman of the Board,
President, and Chief Executive Officer of the Company, is temporarily
serving as the trustee until a new trustee is appointed. The trustee of the
voting trust votes all the shares held in the voting trust.
(3) Includes 5,418,224 shares held by Ascom USA Inc. in a voting trust for
which Mr. Fowler is currently serving as voting trustee until a replacement
is appointed (See Footnote 2). Also includes 249,167 shares issuable upon
exercise of options.
5
<PAGE> 8
(4) Includes 60,000 shares issuable upon exercise of a warrant and 20,000
shares issuable upon exercise of options.
(5) Includes 80,000 shares issuable upon exercise of options.
(6) Includes 60,000 shares issuable upon exercise of a warrant and 20,000
shares issuable upon exercise of options.
(7) Includes 25,575 shares issuable upon the exercise of a warrant. Such
warrant is held by Sundance Venture Partners, L.P. of which Anderson and
Wells Company is a general partner. Mr. Wells is a general partner of
Anderson and Wells Company. Also includes 20,000 shares issuable upon
exercise of options held by Mr. Wells.
(8) Includes 53,416 shares issuable upon exercise of options.
(9) Includes 143,567 shares issuable upon exercise of options.
(10) Includes 103,166 shares issuable upon exercise of options.
(11) Includes 7,500 shares issuable upon exercise of options.
(12) Includes 859,058 shares issuable upon exercise of warrants and options.
6
<PAGE> 9
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
$100,000 in the year ended June 30, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term
Name and ------------------- Compensation
Principal Position Year Salary ($) Bonus ($) Options (#) (1)
- ------------------ ---- ---------- --------- ---------------
<S> <C> <C> <C> <C>
Randall C. Fowler 1996 $168,000 $ -- 45,000
Chairman, President and 1995 148,446 12,500 --
Chief Executive Officer 1994 132,825 -- 60,000(2)
Harrison N. Walther 1996 $146,910 $110,448 20,000
President and Chief 1995 146,910 84,113 --
Executive Officer of 1994 146,910 4,803 --
ANADAC, Inc.
James P. Scullion 1996 $126,000 $ -- 45,000
Executive Vice 1995 110,662 17,500 --
President and Chief 1994 96,000 -- 30,000
Financial Officer
Daniel F. Maase 1996 $126,000 $ 5,000 25,000
Vice President, 1995 111,482 -- --
Engineering 1994 105,000 -- --
</TABLE>
- --------
(1) All figures in this column reflect options to purchase Common Stock.
(2) Represents compensation for being a member of the Board of Directors.
1996 OPTION GRANTS TABLE
The following table sets forth stock options granted to the executive
officers identified in the Summary Compensation Table during the fiscal year
1996 under the Company's 1995 Equity Incentive Plan. Since inception, the
Company has not granted any stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
Individual Grants at Assumed Annual Rates
% of Total Exercise of Stock Price Appreciation
Options Granted (#) Price for Option (1)
Options to Employees Per Expiration --------------
Name Granted in Fiscal Year 1996 Share (4) Date 5% 10%
---- ------- ------------------- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Randall C. Fowler 25,000 (2) 4% $7.06 8/1/2005 $111,039 281,395
20,000 (3) 3% 7.06 8/1/2005 88,831 225,116
Harrison N. Walther 20,000 (3) 3% 7.06 8/1/2005 88,831 225,116
James P. Scullion 25,000 (2) 4% 7.06 8/1/2005 111,039 281,395
20,000 (3) 3% 7.06 8/1/2005 88,831 225,116
Daniel F. Maase 25,000 (2) 4% 7.06 8/1/2005 111,039 281,395
</TABLE>
- ---------------------
7
<PAGE> 10
(1) Potential realizable value is based on an assumption that the market price
of the stock appreciates at the stated rate, compounded annually, from the
date of grant until the end of the ten year option term. These values are
calculated based on the requirements promulgated by the Securities and
Exchange Commission and do not reflect the Company's estimated future stock
price appreciation.
(2) Options granted in 1996 are incentive stock options which vest ratably over
sixty months with cliff vesting of all options if the Company achieves
certain fiscal 1996 financial goals set by the Compensation Committee. These
options became fully vested as a result of meeting these goals. These
options have a term of ten years. These options were granted on August 2,
1995.
(3) Options granted in 1996 are incentive stock options which vest to the extent
of one fourth for each three month period which elapses after grant date.
These options have a term of ten years. These options were granted on August
2, 1995.
(4) Exercise price is the fair market value on the date of grant.
1996 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 1996,
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, 1996.
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 (#) Realized ($)(1) Fiscal Year End Fiscal Year End (1)
----------- --------------- --------------- -------------------
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
- ---- ------------- -------------
<S> <C> <C> <C> <C>
Randall C. Fowler -- $ -- 241,667/ 3,333 $2,721,257/25,206
Harrison N. Walther 80,902 763,172 46,000/14,000 474,374/151,876
James P. Scullion 45,000 547,012 134,067/ 9,083 1,422,402/94,502
Daniel F. Maase 51,267 690,496 100,433/ 1,300 1,115,688/15,763
</TABLE>
(1) Value realized is determined by multiplying the exercised shares by the
difference between the market close price on the date of exercise and the
stated exercise price.
(2) Represents market value of the Company's Common Stock at fiscal year end
less the exercise price.
The Company did not make any awards during the fiscal year ended June 30,
1996 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.
8
<PAGE> 11
AGREEMENTS WITH EXECUTIVE OFFICER
As of June 30, 1996, Mr. Walther, a director of the Company and President
and Chief Executive Officer of ANADAC, was indebted to ANADAC in the amount of
$109,921 for premium payments made on his behalf for a split dollar life
insurance policy. Such indebtedness is represented by non-interest-bearing
notes, and will be paid 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 $44,094 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
Notwithstanding anything to the contrary set forth in any of the Company's
pervious or future filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 (the "Exchange Act") that might incorporate this Proxy
Statement or future filings with the Securities and Exchange Commission, in
whole or in part, the following report and the Performance Graph which follows
shall not be deemed to be incorporated by reference into any such filing.
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 Compensation 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 1996, the Compensation
Committee considered the compensation paid by the Company's direct competitors,
a group of peer companies, 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, to align the interests of the executive officers
with the interests of the Company's shareholders and to attract and retain
highly talented and productive executives, 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 fiscal 1996, the Chief Executive Officer and the other executive
officers received a 5% salary increase and incentive stock options. Mr. Walther
received performance bonuses pursuant to an incentive bonus agreement. Mr. Maase
received a bonus during fiscal 1996 for meeting certain performance objectives.
During fiscal 1997, 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.
9
<PAGE> 12
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 1996, 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 shareholder return on the
Common Stock of the Company from July 1, 1991 to June 30, 1996 with cumulative
total return on the Russell 2000 Index and a Peer Group (Digital Biometrics,
Inc. and National Registry 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, 1991, and reinvestment of all dividends).
COMPARATIVE SIX-YEAR TOTAL RETURNS
IDENTIX INC., RUSSELL 2000, PEER GROUP
(Performance results through 6/30/96)
<TABLE>
<CAPTION>
----------------FISCAL YEAR ENDING-------------------
<S> <C> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995 1996
COMPANY
IDENTIX INC. 100 73.33 51.67 95.00 168.33 390.00
PEER GROUP 100 105.63 184.00 153.14 114.30 89.76
BROAD MARKET 100 114.54 144.27 150.62 180.86 224.28
</TABLE>
10
<PAGE> 13
CERTAIN TRANSACTIONS
At July 31, 1996, Ascom USA Inc. ("Ascom") owns approximately 22.3% 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.
2. APPROVAL OF AMENDMENTS TO THE IDENTIX INCORPORATED EQUITY INCENTIVE PLAN
BACKGROUND
The Board has approved, subject to shareholder approval, two amendments to
the Identix Incorporated Equity Incentive Plan (the "Incentive Plan") as
described below.
DESCRIPTION OF THE PROPOSAL
Currently, the Incentive Plan provides that a total of 1,000,000 shares of
Common Stock may be issued thereunder. As of July 31, 1996, there were 72,967
shares that were currently unreserved and available for option grants under the
Incentive Plan. The proposed amendments to the Incentive Plan (i) increase the
number of shares available for issuance under the Incentive Plan by 250,000
shares to a total of 1,250,000 shares and (ii) allow nonemployee directors of
the Company to participate under the Incentive Plan. The Company believes that
the proposed increase in the number of shares available for grant is necessary
in order to ensure that there will be a sufficient reserve of shares to permit
the grant of further options to existing and new employees of and consultants to
the Company. The proposed inclusion of nonemployee directors is intended to
allow the Company to take advantage of the flexibility afforded by recent
amendments to the rules under Section 16 of the Securities and Exchange Act of
1934, as amended.
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The following table shows the number of shares awarded to the executive
officers and the identified groups under the Incentive Plan in fiscal 1996. All
options were granted at fair market value as of the date of grant.
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER
- ----------------- OF SHARES (1)
------------
<S> <C>
Randall C. Fowler........................................................................ 45,000
Chairman, President and Chief Executive Officer
Harrison N. Walther...................................................................... 20,000
President and Chief Executive Officer of ANADAC, Inc.
James P. Scullion........................................................................ 45,000
Executive Vice President, Chief Financial Officer
and Secretary
Daniel F. Maase.......................................................................... 25,000
Vice President, Engineering
Edward S. Murrer........................................................................ 75,000
Vice President, Sales and Marketing
All executive officers as a group........................................................ 210,000
All directors who are not executive officers as a group.................................. - 0 -
All employees and consultants (other than executive officers) as a group................. 376,000
</TABLE>
(1) The following option grants were made in July 1996 at fair market value as
of the date of grant to the executive officers and identified groups under
the Incentive Plan: Randall C. Fowler, 50,000 shares; Harrison N. Walther,
25,000 shares; James P. Scullion, 50,000 shares; Daniel F. Maase, 25,000
shares; all executive officers as a group, 165,000 shares; all directors
who are not executive officers as a group, no shares; and all employees and
consultants (other than executive officers) as a group, 189,000 shares.
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. Administration of the Incentive Plan may either be by the Board
or a Committee of the Board (in either case, the "Committee"). The Committee may
select key employees, including executive officers, or consultants to receive
awards under the Incentive Plan and has broad discretion to determine the amount
and type of awards and terms and conditions of the awards. However, the
Committee may not grant, in any one fiscal year, 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. As currently in effect, nonemployee directors and members of the
Committee are not eligible to participate in the Incentive Plan. As of June 30,
1996, the Company had approximately 290 employees eligible to participate in the
Incentive Plan. Since the grant of awards is based upon a determination made by
the Committee after a consideration of various factors, the Company currently
cannot determine the nature and amount of any awards that will be granted in the
future to any eligible individual or group of individuals.
Awards may be granted in the form of incentive stock options ("ISOs")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended ("the "Code"), nonqualified stock options ("NQOs") (each ISO or NQO, an
"Option," and collectively, "Options"), 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.
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<PAGE> 15
Options. Options granted under the Incentive Plan may be ISOs or 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 (which, prior to
adoption of the amendment proposed hereby, was required to be at least two years
and not more than six years), 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.
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 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 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.
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<PAGE> 16
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.
FEDERAL INCOME TAX CONSEQUENCES
For a discussion of the federal income tax consequences of awards issued
pursuant to the Incentive Plan, see "Certain Federal Income Tax Consequences"
below.
PROPOSAL
Shareholders are being asked to approve the amendment to 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 to adopt the amendment to the Incentive Plan.
BOARD RECOMMENDATION
The Board recommends a vote "FOR" approval of the proposal.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES IS BASED UPON
EXISTING STATUTES, REGULATIONS AND INTERPRETATIONS THEREOF. THE APPLICABLE RULES
ARE COMPLEX, AND INCOME TAX CONSEQUENCES MAY VARY DEPENDING UPON THE PARTICULAR
CIRCUMSTANCES OF EACH PLAN PARTICIPANT. THIS PROXY STATEMENT DESCRIBES FEDERAL
INCOME TAX CONSEQUENCES OF GENERAL APPLICABILITY, BUT DOES NOT PURPORT TO
DESCRIBE PARTICULAR CONSEQUENCES TO EACH INDIVIDUAL PLAN PARTICIPANT OR FOREIGN,
STATE OR LOCAL INCOME TAX CONSEQUENCES, WHICH MAY DIFFER FROM THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES.
INCENTIVE STOCK OPTIONS
Awards; Exercise. 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). The
recipient of an Option (the "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" (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). In addition, when stock
is acquired subject to a "substantial risk of forfeiture", an 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").
Sale of Option Shares. 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 should be taxable as 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.
Optionees are required to notify the Company immediately prior to making a
Disqualifying Disposition. 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.
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<PAGE> 17
Exercise With Stock. 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.
NONQUALIFIED STOCK OPTIONS
Award; Exercise. 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.
Sale of Option Shares. 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 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.
Exercise with Stock. 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.
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<PAGE> 18
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.
3. APPROVAL OF AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
The Board unanimously adopted, subject to shareholder approval, an
amendment to the Company's Articles of Incorporation (the "Amendment")
increasing the number of authorized shares of Common Stock from 30,000,000 to
50,000,000. The Board is requesting shareholder approval of the Amendment, a
copy of which is attached as Exhibit I to this proxy statement.
DESCRIPTION OF THE PROPOSAL
The Company's Articles of Incorporation currently authorize the issuance of
32,000,000 shares, of which 30,000,000 are authorized for issuance as Common
Stock and 2,000,000 are authorized for issuance as Preferred Stock. As of Record
Date, the Company had 24,323,937 shares of Common Stock outstanding and no
shares of Preferred Stock outstanding. In addition, as of that date, the Company
had approximately (i) 2,056,000 shares of Common Stock reserved for issuance
under the Company's 1995 Equity Incentive Plan, 1995 Nonemployee Directors Stock
Option Plan, 1992 Employee Stock Option Plan, 1983 Incentive Stock Option Plan
and ANADAC's 1984 Incentive Stock Option Plan, and (ii) 171,000 shares of Common
Stock issuable upon exercise of outstanding warrants. If the Amendment is
approved, the Board intends to cause a certificate of amendment to the Articles
of Incorporation to be filed as soon as practicable after the date of the Annual
Meeting. Upon effectiveness of the Amendment, the Company will have
approximately 23,451,000 shares of Common Stock authorized but unreserved.
The Company has issued shares of Common Stock in connection with recent
acquisitions of related businesses and anticipates that it will continue to seek
to acquire assets and businesses which the Company believes will complement its
existing business and enhance its position as a leading provider of biometric
identification products and services. The Company also expects to sell
additional shares, as necessary, to finance operations and growth of the
Company. The Board considers it advisable to have additional authorized but
unissued shares of Common Stock available to allow the Company to act promptly
with respect to possible future acquisitions, as well as possible financings,
issuances under the Company's employee benefit plans and for other corporate
purposes approved by the Board. Having additional authorized shares of Common
Stock available for issuance in the future would give the Company greater
flexibility and allow shares of Common Stock to be issued without the expense or
delay of a shareholders' meeting, except as may be required by applicable laws
or regulations. The Company has no specific plans for issuance of additional
shares of Common Stock, other than shares currently reserved under option plans
and for exercise of outstanding warrants.
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The Board is authorized to approve the issuance of additional Common Stock
at any time. Although the increase in the authorized number of shares is not
proposed for the purpose of any anti-takeover effect and the Company has no
present intention of issuing additional shares of Common Stock for that purpose,
the issuance of such shares may have an anti-takeover effect, depending upon the
identity of the purchasers, the number of shares issued and the then current
ownership of outstanding shares of the Company. The Listing Standards, Policies
and Requirements of the American Stock Exchange, Inc. generally require the
Company nevertheless to obtain the approval of the shareholders holding a
majority of the shares of the Company voting for the issuance of Common Stock
(or securities convertible or exercisable for Common Stock) pursuant to any
stock option or purchase plan in which officers or directors may participate,
resulting in a change in control of the Company, in connection with certain
acquisitions of the stock or assets of another corporation, or in private
placements for a price less than the greater of the book value or market value
involving 20% or more of the Common Stock outstanding before the issuance. In
addition, the issuance of additional shares of Common Stock would dilute
existing shareholders' equity interest in the Company. Except for Ascom Holding
Inc., shareholders of the Company do not have rights to participate in offerings
of additional shares by the Company.
PROPOSAL
Shareholders are being asked to approve the Amendment. The affirmative vote
of the holders of a majority of the outstanding shares of Common Stock entitled
to vote is required to approve the Amendment. Properly executed, unrevoked
proxies will be voted "FOR" the proposal unless a vote against the proposal or
abstention is specifically indicated in the proxy.
BOARD RECOMMENDATION
The Board recommends a vote "FOR" approval of the Amendment.
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, 1997, and recommends that shareholders vote
"FOR" ratification of such appointment. 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 30, 1996
THE BOARD OF DIRECTORS
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<PAGE> 20
IDENTIX INCORPORATED
EQUITY INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
(a) Purpose. The purpose of the Plan is to provide selected eligible
employees and directors 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.
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<PAGE> 21
(xii) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, and any successor statute.
(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).
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<PAGE> 22
(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, or director of, the Company, a subsidiary or an
affiliate; provided, that for 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 or director
of 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,
directors and consultants. In particular and without limitation, the Committee,
subject to the terms of the Plan, shall:
(i) select the officers, other key employees, directors 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
3
<PAGE> 23
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.
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 1,250,000
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 1,250,000 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, directors
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.
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<PAGE> 24
(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 (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
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the consent of the optionee affected, to disqualify any Incentive Stock Option
under such Section 422.
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).
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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 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;
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(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 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
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<PAGE> 28
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, directorship or consulting, as
the Committee shall determine. 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
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<PAGE> 29
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
(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;
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(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.
(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,
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<PAGE> 31
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 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, directors 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
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<PAGE> 32
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
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.
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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 October 26, 1995.
Amendment to the Plan as approved by the Board of Directors on _________, 1996.
Amendment to the Plan as approved by the Shareholders on _________, 1996.
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SIDE 1
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PROXY FOR THE SHARES OF IDENTIX INCORPORATED,
A California Corporation
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Common Stock of Indentix
Incorporated (the "Company") hereby revokes all previous proxies,
acknowledges receipt of the notice of the shareholders' meeting to
be held on October 30, 1996, 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)
SIDE 2
1. To elect directors (same wording as on last years proxy card).
Randal C. Fowler, Patrick H. Morton, Randall Hawks, Jr.,
Fred U. Sutter, Larry J. Wells, Harrison N. Walther,
Ed Zschau
2. To approve certain amendments to the Indentix Incorporated
Equity Incentive Plan;
3. To approve an amendment to the Company's Articles of
Incorporation to increase the authorized shares of Common
Stock from 30,000,000 to 50,000,000;
4. To ratify the appointment of Price Waterhouse LLP as
independent accountants of the Company for the fiscal year
ended June 30, 1997;
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
