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As filed with the Securities and Exchange Commission on July 2, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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IDENTIX INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)
Delaware 94-2842496
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
510 North Pastoria Avenue, Sunnyvale, California 94086, (408) 731-2000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JAMES P. SCULLION,
President and Chief Financial Officer
Identix Incorporated
510 North Pastoria Avenue,
Sunnyvale, California 94086, (408) 731-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
RICHARD A. PEERS
Heller Ehrman White & McAuliffe
525 University Avenue
Palo Alto, California 94301
Telephone: (650) 324-7000
Facsimile: (650) 324-0638
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, please
check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering:
[_] __________________________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, as amended check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_] ____________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Amount to be Proposed Maximum Proposed Maximum Amount of
Title of Securities to be Registered Registered(1) Offering Price Per Share(2) Aggregate Offering Price(2) Registration Fee
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 3,112,897 $ 8.531 $ 26,556,124 $ 7,383
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</TABLE>
(1) In accordance with Rule 416 under the Securities Act of 1933, Common Stock
offered hereby shall also be deemed to cover additional securities to be
offered or issued to prevent dilution resulting from stock splits, stock
dividends or similar transactions.
(2) Estimated in accordance with Rule 457(c) under the Securities Act of 1933
for the purpose of computing the amount of the registration fee based on
the average of the high and low prices of the Company's Common Stock on the
American Stock Exchange on June 28, 1999.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
================================================================================
<PAGE>
************************************************************************
*Information contained herein is subject to completion or amendment. A *
*registration statement relating to these securities has been filed *
*with the Securities and Exchange Commission. These securities may not *
*be sold nor may offers to buy be accepted prior to the time the *
*registration statement becomes effective. This prospectus shall not *
*constitute an offer to sell or the solicitation of an offer to buy *
*nor shall there by any sale of these securities in any state in which *
*such offer, solicitation or sale would be unlawful prior to *
*registration or qualification under the securities laws of any such *
*state. *
************************************************************************
SUBJECT TO COMPLETION, DATED JULY 2, 1999
PROSPECTUS
IDENTIX INCORPORATED
3,112,897 Shares of Common Stock
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The stockholders of Identix identified on page 8 may offer and sell the
shares covered by this prospectus from time to time. The selling stockholders
will receive all of the proceeds from the sale of the shares and will pay all
underwriting discounts and selling commissions, if any, applicable to the sale
of the shares. Identix will receive proceeds from the exercise of warrants
issued to the selling stockholders if the warrants are exercised. Identix will
pay the expenses of registration of the sale of the shares.
Our common stock trades on the AMEX under the symbol "IDX". On June 30,
1999, the last reported sale price of our common stock on AMEX was $9.875 per
share.
Beginning on page 2, we have listed several "RISK FACTORS" which you should
consider. You should read the entire prospectus carefully before you make your
investment decision.
The Securities and Exchange Commission and state regulatory authorities
have not approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The Date of this Prospectus is ________________, 1999
<PAGE>
RISK FACTORS
You should consider carefully the following risk factors, along with the
other information contained or incorporated by reference in this prospectus, in
deciding whether to invest in our shares. These factors, among others, may
cause actual results, events or performance to differ materially from those
expressed in any forward-looking statements we made in this prospectus.
ALL OF OUR PRODUCT REVENUES ARE DERIVED FROM THE SALE OF BIOMETRIC PRODUCTS
AND OUR BUSINESS WILL NOT GROW UNLESS THE MARKET FOR BIOMETRIC PRODUCTS EXPANDS
BOTH DOMESTICALLY AND INTERNATIONALLY.
Biometric products have not gained widespread commercial acceptance. We
cannot accurately predict the future growth rate, if any, or the ultimate size
of the biometric technology market. The expansion of the market for our products
depends on a number of factors including:
. the cost, performance and reliability of our products and products of
competitors
. customers' perception of the perceived benefit of these products
. public perceptions of the intrusiveness of these products and the manner in
which firms are using the fingerprint information collected
. public perceptions regarding the confidentiality of private information
. customers' satisfaction with our products
. marketing efforts and publicity regarding these products.
Certain groups have publicly objected to the use of biometric products for
some applications on civil liberties grounds and legislation has been proposed
to regulate the use of biometric security products.
EVEN IF BIOMETRIC MARKETS DEVELOP, OUR PRODUCTS MAY NOT GAIN WIDE MARKET
ACCEPTANCE.
We face intense competition from other biometric identification providers
as well as traditional identification and security systems providers. A
significant number of established and startup companies are developing and
marketing software and hardware for fingerprint biometric security applications
that could compete directly with our biometric security products. Some of these
companies are developing semiconductor or optically-based direct contact
fingerprint image capture devices. Other companies are developing and marketing
other methods of biometric identification such as retinal blood vessel or iris
pattern, hand geometry, voice and facial structure. If one or more of these
approaches were widely adopted, it would significantly reduce the potential
market for our products.
Our biometric security products also compete with non-biometric
technologies such as traditional key, card, surveillance systems and passwords.
Our biometric imaging products face intense competition from a limited
number of competitors who are actively engaged in developing and marketing live
scan products, including Digital Biometrics, Inc., Heimann Biometric Systems
GmbH and Printrak International Inc.
We expect competition to increase as other companies introduce products
that are competitively priced, that may have increased performance or
functionality or that incorporate technological advances not yet developed or
implemented by us. Some present and potential competitors have financial,
marketing and research resources substantially greater than ours. In order to
compete effectively in this environment, we must continually develop and market
new and enhanced products at competitive prices and must have the resources
available to invest in significant research and development activities.
IN OUR SERVICES BUSINESS, WE FACE SUBSTANTIAL COMPETITION FROM PROFESSIONAL
SERVICES PROVIDERS OF ALL SIZES IN THE GOVERNMENT MARKETPLACE.
ANADAC is increasingly being required to bid on firm fixed price and
similar contracts that result in greater performance risk to ANADAC. If ANADAC
is not able to maintain a competitive cost structure, support specialized market
niches, retain highly qualified personnel or align with technology leaders, we
may lose our ability to compete successfully in the services business.
THE BIOMETRICS INDUSTRY IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE AND
EVOLVING INDUSTRY STANDARDS WHICH COULD RENDER EXISTING PRODUCTS OBSOLETE.
<PAGE>
Our future success will depend upon our ability to develop and introduce a
variety of new products and product enhancements to address the changing,
sophisticated needs of the marketplace. Material delays in introducing new
products and enhancements or the failure to offer innovative products at
competitive prices may cause customers to forego purchases of our products and
purchase those of our competitors.
OUR REVENUES AND OPERATING RESULTS OFTEN VARY SIGNIFICANTLY FROM QUARTER TO
QUARTER AND MAY BE NEGATIVELY AFFECTED BY A NUMBER OF FACTORS, INCLUDING THE
TIMING OF LARGE ORDERS.
Usually, most of our revenues in a quarter come from a small number of
large orders. Accordingly, revenues in a particular quarter depend on the
timing and size of major orders. The following are some other reasons why our
financial results may fluctuate from quarter to quarter:
. reduced demand for products caused by a competitor's price reductions or
introduction of new or enhanced products
. changes in the mix of products and services we or our distributors sell
. cancellation, delays or contract amendments by government agency customers
. litigation costs
. expenses related to acquisitions
. other one-time financial charges
. the lack of availability or increase in cost of key components
. economic downturns domestically or internationally.
We also may reduce prices or increase spending in response to competition
or to pursue new market opportunities.
Our products often have a lengthy sales cycle while the customer evaluates
and receives approvals for purchase. If after expending significant funds and
effort we fail to receive an order, a severe negative impact on our financial
results and stock price could result. It is difficult to predict accurately the
sales cycle of any large order. If we do not ship one or more large orders as
forecast for a fiscal quarter, our total revenues and operating results for that
quarter could be materially and adversely affected.
Further, the lead time for ordering parts and materials and building our
products can be many months. As a result, we must order parts and materials and
build our products based on forecast demand. If demand for our products lags
significantly behind our forecasts, we may produce more products than we can
sell, which can result in cash flow problems and write-offs or write-downs of
obsolete inventory.
WE DERIVE A MAJORITY OF OUR REVENUE FROM GOVERNMENT CONTRACTS WHICH ARE
OFTEN NON-STANDARD, INVOLVE COMPETITIVE BIDDING AND MAY BE SUBJECT TO
CANCELLATION WITHOUT PENALTY.
Government contracts frequently include provisions that are not standard in
private commercial transactions. For example, government contracts may include
bonding requirements and provisions permitting the purchasing agency to cancel
the contract without penalty in certain circumstances. As public agencies, our
prospective customers are also subject to public agency contract requirements
that vary from jurisdiction to jurisdiction. Some of these requirements may be
onerous or impossible to satisfy.
In addition, public agency contracts are frequently awarded only after
formal competitive bidding processes, which have been and may continue to be
protracted, and typically impose provisions that permit cancellation in the
event that funds are unavailable to the public agency. There is a risk that we
may not be awarded any of the contracts for which our products are bid or, if
awarded, that substantial delays or cancellations of purchases may follow as a
result of protests initiated by losing bidders. In addition, local government
agency contracts may be contingent upon availability of matching funds from
state or federal entities.
During fiscal 1998, we derived approximately 89% of our services revenue
directly from contracts relating to the Department of Defense and other U.S.
Government agencies. The loss of a material government contract due to budget
cuts or otherwise could have a severe negative impact on our financial results
and stock price.
During fiscal 1998, we derived approximately 68% of our services revenue
from time and materials contracts and firm-fixed-price contracts. We assume
certain performance risk on these contracts. If we fail to estimate accurately
ultimate costs or to control costs during performance of the work, our profit
margins may be reduced and we may suffer losses. In addition, revenues generated
from government contracts are subject to audit and
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<PAGE>
subsequent adjustment by negotiation with representatives of the government
agencies. The Defense Contract Audit Agency has completed an audit of ANADAC for
the period from July 1, 1992 to June 30, 1995. We believe that the results of
this audit will not result in a material adjustment of revenues, but there is a
risk that significant adjustments could be required.
WE RELY ON MARKETING PARTNERS TO DISTRIBUTE OUR PRODUCTS AND MAY BE
ADVERSELY AFFECTED IF THOSE PARTIES DO NOT ACTIVELY PROMOTE OUR PRODUCTS OR
PURSUE INSTALLATIONS WHICH USE OUR EQUIPMENT.
A significant portion of our product revenues come from sales to marketing
partners including OEMs, systems integrators, distributors and resellers. Some
of these relationships are formalized in agreements; however, the agreements are
often terminable with little or no notice and subject to periodic amendment. We
cannot control the amount and timing of resources that our marketing partners
devote to activities on our behalf.
We intend to continue to seek strategic relationships to distribute and
sell certain of our products. We, however, may not be able to negotiate
acceptable distribution relationships in the future and cannot predict whether
current or future distribution relationships will be successful.
LOSS OF SOLE OR LIMITED SOURCE SUPPLIERS MAY RESULT IN DELAYS OR ADDITIONAL
EXPENSES.
We obtain certain components for our products from a single source or a
limited group of suppliers. We do not have long term agreements with any of our
suppliers. We will experience delays in manufacturing and shipping of products
to customers if we lose these sources or if supplies from these sources are
delayed. As a result, we may be required to incur additional development and
other costs to establish alternative sources of supply. It may take several
months to locate alternative suppliers, if required, or to re-tool our products
to accommodate components from different suppliers. We cannot predict if we will
be able to obtain replacement components within the time frames we require at an
affordable cost, or at all. Any delays resulting from suppliers failing to
deliver components on a timely basis in sufficient quantities and of sufficient
quality or any significant increase in the price of components from existing or
alternative suppliers could have a severe negative impact on our financial
results and stock price.
THE SUCCESS OF OUR STRATEGIC PLAN TO PURSUE SALES IN INTERNATIONAL MARKETS
MAY BE LIMITED BY RISKS RELATED TO INTERNATIONAL TRADE AND MARKETING.
During fiscal 1998, we derived 18% of our net product revenues from
international sales. We currently have offices overseas in Australia,
Singapore, Brazil and Switzerland. There is a risk that we may not be able to
market, sell and deliver our products in foreign countries. Our net product
revenues attributable to international sales declined by 68% in the nine months
ended March 31, 1999 from the nine months ended March 31, 1998, mainly due to a
decline in sales resulting from economic instability in Asia.
In addition to the uncertainty as to our ability to maintain and expand our
international presence, there are certain risks inherent in foreign operations,
including:
. regional economic conditions
. delays in or prohibitions on exporting products resulting from export
. restrictions for certain products and technologies, including "crime
control" products and encryption technology
. fluctuations in foreign currencies and the U.S. dollar
. loss of revenue, property and equipment from expropriation,
nationalization, war, insurrection, terrorism and other political risks
. the overlap of different tax structures
. seasonal reductions in business activity
. risks of increases in taxes and other government fees
. involuntary renegotiation of contracts with foreign governments.
In addition, foreign laws treat the protection of proprietary rights
differently from laws in the United States and may not protect our proprietary
rights to the same extent as U.S. laws.
WE MAY NEED TO RAISE ADDITIONAL DEBT OR EQUITY FINANCING IN THE NEXT TWELVE
MONTHS.
As of March 31, 1999, we had $19,230,000 in working capital, which included
$829,000 in cash and cash equivalents. In addition, we had $1,353,000 available
under our bank line of credit, which expires
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in December 1999. ANADAC had $3,203,000 available under its bank line of credit,
which expires in March 2000. We may need to raise additional debt or equity
financing in the next 12 months if current sources of capital are not sufficient
to finance our operations or if our lines of credit are not renewed or if we
fail to obtain a waiver of any covenant breaches under our lines of credit. We
were in default of certain covenants at December 31, 1998 and March 31, 1999 for
which waivers were obtained. We may not be able to obtain additional equity or
debt financing on terms that are not excessively dilutive to existing
stockholders or more costly than existing sources of debt financing.
A SINGLE STOCKHOLDER OWNS A SIGNIFICANT PORTION OF OUR STOCK AND MAY DELAY
OR PREVENT A CHANGE IN CONTROL OF IDENTIX.
As of April 30, 1999, Ascom USA, Inc. beneficially owned approximately
17.5% of our outstanding common stock. This concentration of ownership may delay
or prevent a change in control of Identix. Ascom deposited all of its shares of
Identix common stock into a voting trust which expires in 2004. Ascom has
preemptive rights with respect to issuances of Identix securities and
registration rights with respect to the securities it holds. In March of 1999,
we registered 1,700,000 shares held by Ascom. As a result, those shares are now
freely tradable. If Ascom sells a significant number of our shares in the open
market, our common stock price may be adversely affected. In addition, we may
not be able to obtain additional financing on favorable terms in the future
because of Ascom's preemptive rights and registration rights.
WE MAY EXPERIENCE UNANTICIPATED EXPENSES AND OTHER PROBLEMS RELATED TO YEAR
2000 ISSUES.
Year 2000 problems are caused by computer systems that only use a two-digit
year value and, accordingly, will be subject to error or failure when the year
2000 arrives. We have a program for evaluating and addressing risks related to
the Year 2000 that is described under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our most recent Form 10-Q.
The Year 2000 problem is pervasive and complex and there is a risk that we have
not identified all of the Year 2000 issues that may affect us or that our
remedial efforts do not adequately address identified Year 2000 problems. Our
products are used in systems that perform a number of critical functions. For
example, the biometric security products are used to verify individual identity
in a number of high risk situations such as prisons and airports. The biometric
security products are also used to protect computer data and to verify
commercial transactions, such as the authorization of money transfers by bank
personnel. Although we believe that we should not have liability for a system
failure relating to the Year 2000, any failure in these or other critical
applications could potentially require us to expend substantial resources to
assist in remediating the failure or result in litigation to ascertain liability
or recover costs.
OUR PRODUCTS ARE COMPLEX AND MAY CONTAIN UNDETECTED OR UNRESOLVED DEFECTS
WHEN SOLD OR MAY NOT MEET CUSTOMER'S PERFORMANCE CRITERIA.
Performance failure may cause loss of market share, delay in or loss of
market acceptance, additional warranty expense or product recall. The negative
effects of any failure could be exacerbated if the failure occurred in products
that provide personal security, secure sensitive computer data, authorize
significant financial transactions or perform other functions where a security
breach could have significant consequences.
If a product fails to meet performance criteria, we may delay recognizing
revenue associated with a product and face higher operating expenses during the
period required to correct the defects. There is a risk that for unforeseen
reasons we may be required to repair or replace a substantial number of products
in use or to reimburse customers for products that fail to work or meet strict
performance criteria. We carry product liability insurance, but existing
coverage may not be adequate to cover potential claims.
FAILURE BY US TO MAINTAIN THE PROPRIETARY NATURE OF OUR TECHNOLOGY,
PRODUCTS AND MANUFACTURING PROCESSES WOULD NEGATIVELY IMPACT OUR ABILITY TO
COMPETE EFFECTIVELY.
We principally rely upon patent, copyright, trade secret and contract law
to establish and protect our proprietary rights. There is a risk that claims
allowed on any patents we hold may not be broad enough to protect our
technology. In addition, our patents may be challenged, invalidated or
circumvented and we cannot be certain that the rights granted thereunder will
provide competitive advantages to us. Moreover, any current or future
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issued or licensed patents, trade secrets or know-how may not afford sufficient
protection against competitors with similar technologies or processes, and the
possibility exists that already issued patents may infringe upon or be designed
around by others. In addition, there is a risk that others may independently
develop proprietary technologies and processes, which are the same as,
substantially equivalent or superior to ours.
There is a risk that we have infringed or in the future will infringe
patents owned by others, that we will need to acquire licenses under patents
belonging to others for technology potentially useful or necessary to us, and
that licenses will not be available to us on acceptable terms, if at all.
We may have to litigate to enforce our patents or to determine the scope
and validity of other parties' proprietary rights. Litigation could be costly
and divert management's attention. An adverse outcome in any litigation may have
a severe negative impact on our financial results and stock price. To determine
the priority of inventions, we may have to participate in interference
proceedings declared by the United States Patent and Trademark Office or
oppositions in foreign patent offices, which could result in substantial cost to
us and limitations on the scope or validity of our patents.
We also rely on trade secrets and proprietary know-how which we seek to
protect by confidentiality agreements with our employees, consultants, service
providers and third parties. There is a risk that these agreements may be
breached, and that the remedies available to us may not be adequate. In
addition, our trade secrets and proprietary know-how may otherwise become known
to or be independently discovered by others.
IF WE FAIL TO ADEQUATELY MANAGE GROWTH OF OUR BUSINESS, IT COULD HAVE A
SEVERE NEGATIVE IMPACT ON OUR FINANCIAL RESULTS OR STOCK PRICE.
We have experienced significant growth recently and believe that in order
to be successful we must grow rapidly. In order to do so, we must expand, train
and manage our employee base, particularly skilled technical, marketing and
management personnel. Rapid growth will also require an increase in the level
of responsibility for both existing and new management. In addition, we will be
required to implement and improve operational, financial and management
information procedures and controls. The management skills and systems currently
in place may not be adequate and we may not be able to manage any significant
growth we experience effectively.
WE MAY ENCOUNTER DIFFICULTIES IN ACQUIRING AND EFFECTIVELY INTEGRATING
COMPLEMENTARY ASSETS AND BUSINESSES.
As part of our business strategy, we intend to acquire assets and
businesses principally relating to or complementary to our current operations.
We acquired Identicator Technology in fiscal 1999, one company in fiscal 1998
and two companies in fiscal 1996. These and any other acquisitions by Identix
will be accompanied by the risks commonly encountered in acquisitions of
companies. These risks include, among other things:
. potential exposure to unknown liabilities of acquired companies
. higher than anticipated acquisition costs and expenses
. effects of costs and expenses of acquiring and integrating new businesses
on our operating results and financial condition
. the difficulty and expense of assimilating the operations and personnel of
the companies
. the potential disruption of our ongoing business
. diversion of management time and attention
. failure to maximize our financial and strategic position by the successful
incorporation of acquired technology
. the maintenance of uniform standards, controls, procedures and policies
. loss of key employees and customers as a result of changes in management
. the incurrence of amortization expenses
. possible dilution to our stockholders.
In addition, geographic distances may make integration of businesses more
difficult. We may not be successful in overcoming these risks or any other
problems encountered in connection with any acquisitions.
LOSS OF CURRENT SENIOR EXECUTIVES AND KEY TECHNICAL, MARKETING AND SALES
PERSONNEL WOULD ADVERSELY AFFECT OUR BUSINESS.
Our personnel may voluntarily terminate their relationship with us at any
time, and competition for qualified personnel, especially engineers, is
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intense. The process of locating additional personnel with the combination of
skills and attributes required to carry out our strategy could be lengthy,
costly and disruptive.
We are dependent on the services of certain key personnel, including the
following:
. Randall C. Fowler, Chairman, CEO and founder of Identix, has approximately
thirty years of experience in the biometrics industry and is considered one
of the industry's pioneers.
. James P. Scullion, President and Chief Financial Officer, and Daniel F.
Maase, Vice President, Biometric Imaging Division, have a combined total of
20 years experience with Identix and have a substantial amount of acquired
knowledge regarding Identix and the biometrics industry generally and play
a major role in the execution of Identix' strategic plan.
. Oscar Pieper, President of Identicator Technology, has approximately thirty
years of experience in the biometrics industry and is considered one of the
industry's pioneers.
. Grant Evans, Vice President--Sales and Marketing of Identicator Technology,
has established relationships with major companies and plays a central role
in the company's marketing strategy.
. Yuri Khidekel, Vice President--Software of Identicator Technology, and Yury
Shapiro, Vice President--Hardware of Identicator Technology, serve as key
researchers and developers and are responsible for Identicator Technology's
research and development activities.
If we lose the services of key personnel, it could have a severe negative
impact on our financial results and stock price.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy statements, and other
documents with the Securities and Exchange Commission. You may read and copy any
document we file at the SEC's public reference room at Judiciary Plaza Building,
450 Fifth Street, NW, Room 1024, Washington, D.C. 20549. You should call 1-800-
SEC-0330 for more information on the public reference room. The SEC maintains an
Internet site at http://www.sec.gov where certain information regarding issuers
(including Identix) may be found.
This prospectus is part of a registration statement that we filed with the
SEC (Registration No. 333-______). The registration statement contains more
information than this prospectus regarding Identix and its common stock,
including certain exhibits and schedules. You can get a copy of the registration
statement from the SEC at the address listed above or from its Internet site.
You should rely only on the information contained, or incorporated by
reference, in this prospectus or the registration statement. We have not
authorized anyone to provide you with information different from that contained
in this prospectus. The selling stockholder is offering to sell, and seeking
offers to buy, shares of our common stock only in jurisdictions where offers and
sales are permitted. The information contained in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of delivery of
this prospectus or of any sale of the shares.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate" into this prospectus information we file
with the SEC in other documents. This means that we can disclose important
information to you by referring to other documents that contain that
information. The information may include documents filed after the date of this
prospectus which update and supersede the information you read in this
prospectus. We incorporate by reference the documents listed below, except to
the extent information in those documents is different from the information
contained in this prospectus, and all future documents filed with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until
we terminate the offering of these shares.
SEC Filing Period/Filing Date
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Annual Report on Form 10-K/A Year ended June 30, 1998
Quarterly Reports on Form 10-Q Quarter ended September 30, 1998
Quarter ended December 31, 1998
Quarter ended March 31, 1999
Current Reports on Form 8-K Dated December 16, 1998
Dated May 4,1999
Description of Common Stock contained in April 8, 1991
Registration Statement on Form 8-A
You may request a copy of these documents, at no cost, by calling (408) 731-2000
or writing to:
Identix Incorporated
510 North Pastoria Avenue
Sunnyvale, California 94086
Attention: Chief Financial Officer
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SELLING STOCKHOLDERS
The following table sets forth the names of the selling stockholders, the
number of shares of common stock owned beneficially by the selling
stockholders as of July 1, 1999 and the number of shares that may be offered
pursuant to this prospectus. This information is based upon information
provided by the selling stockholders. There are currently no agreements,
arrangements or understandings with respect to the sale of any of the shares.
The shares are being registered to permit public secondary trading of the
shares, and the selling stockholders may offer the shares for resale from time
to time.
On July 1, 1999, Identix sold 1,811,594 shares of common stock in a private
placement to Capital Ventures International and Marshall Capital Management,
Inc., two of the selling stockholders. The shares were sold at a five-percent
discount from the average closing bid price for the previous ten trading days.
The prospectus covers the resale by those selling stockholders of the 1,811,594
shares issued in the private placement and 1,268,117 shares issuable upon the
exercise of warrants issued to those selling stockholders. Identix also issued
a warrant for the purchase of up to 33,186 shares of common stock to Hambrecht &
Quist L.L.C. as compensation for investment banking services Hambrecht & Quist
provided in connection with the private placement. The private placement was
exempt from the registration requirements of the Securities Act of 1933 pursuant
to Rule 506 of Regulation D of the Act.
In addition to warrants issued to Hambrecht & Quist, Identix paid $900,000
to Hambrecht & Quist for its services as placement agent. Identix has also
agreed to reimburse Hambrecht & Quist for its reasonable out-of-pocket
expenses incurred in connection with the private placement, including the
reasonable fees and expenses of Hambrecht & Quist's counsel, up to a maximum
of $25,000.
The applicable percentage of ownership listed below is based on 30,438,498
shares of common stock outstanding as of July 1, 1999, and, with respect to
each selling stockholder, assumes the exercise of warrants for the purchase of
common stock in addition to the common stock held by such selling stockholder.
<TABLE>
<CAPTION>
Common Stock Common Common Stock
Beneficially Owned Stock to be Beneficially Owned
Prior to Offering Sold After Offering
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Holder Number Percent Number Percent
------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Capital Ventures International 2,053,140 6.56% 2,053,140 -0- -0-
Marshall Capital Management, Inc. 1,026,571 3.33% 1,026,571 -0- -0-
Hambrecht & Quist L.L.C. 33,186 * 33,186 -0- -0-
------------------------------------------------------------------------------------
TOTAL 3,112,897 9.81% 3,112,897 -0- -0-
</TABLE>
* Less than 1%
The amount of common stock beneficially owned prior to the offering by each
selling stockholder listed in the preceding table is equal to the sum of:
. Shares of common stock held by each selling stockholder; and
. Shares of common stock issuable upon the exercise of warrants held by each
selling stockholder.
The table on the following page provides a breakdown of the total number of
shares of common stock beneficially owned by each selling shareholder prior to
the offering. Each Series 1 Warrant listed has an exercise price of $11.18 per
share and expires on July 1, 2004. Each Series 2 Warrant listed has an exercise
price of $11.33
8
<PAGE>
per share and expires on January 1, 2001. The H&Q Warrant listed has an exercise
price of $10.85 per share and expires on July 1, 2004.
<TABLE>
<CAPTION>
Common Stock
Beneficially
Owned Prior Common Common Stock Issuable Upon the
to Offering Stock Exercise of:
------------ --------- -------------------------------
Series 1 Series 2 H&Q
Warrants Warrants Warrants
---------- ---------- ----------
Holder Number Number Number Number Number
- ------ ------ ------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Capital Ventures
International 2,053,140 1,207,729 241,546 603,865 -0-
Marshall Capital
Management, Inc. 1,026,571 603,865 120,773 301,933 -0-
Hambrecht &
Quist L.L.C. 33,186 -0- -0- -0- 33,186
-------------------------------------------------------
TOTAL 3,112,897 1,811,594 362,319 905,798 33,186
</TABLE>
PLAN OF DISTRIBUTION
The selling stockholders may offer their shares at various times in one
or more of the following transaction:
. on AMEX (or any other exchange on which the shares may be listed);
. in the over-the-counter market;
. in negotiated transactions other than on such exchanges, which may
include long or short sales;
. in a combination of any of the above transactions, or by any other
legally-available means.
The selling stockholders may sell their shares at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices. The selling stockholders may
use broker-dealers to sell their shares. The broker-dealers will either
receive discounts or commissions from the selling stockholders, or they will
receive commissions from purchasers of shares. The selling stockholders may
also enter into hedging transactions with broker-dealers who may make short
sales of common stock in the course of hedging any position they assume with
the selling stockholders. The selling stockholders may enter into option or
other transactions with broker-dealers that require the delivery by such
broker-dealers of the shares of common stock, which common stock may be later
resold pursuant to this prospectus.
Under certain circumstances the selling stockholders and any
broker-dealers that participate in the distribution may be deemed to be
"underwriters" within the meaning of the Securities Act. Any commissions
received by such broker dealers and any profits realized on the resale of
shares by them may be considered underwriting discounts and commissions under
the Securities Act.
The selling stockholders will pay all commissions, transfer taxes, and
other expenses associated with the sale of securities by them. The shares
offered hereby are being registered pursuant to contractual obligations of
Identix, and Identix has paid the expenses of the preparation of this
prospectus. We have not made any underwriting arrangements with respect to the
sale of shares offered hereby.
9
<PAGE>
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares by the
selling stockholders. We will receive approximately $14,600,000 if the selling
stockholders exercise their warrants in full. We intend to use any such
proceeds for general working capital.
LEGAL MATTERS
Heller Ehrman White & McAuliffe of Palo Alto, California, our counsel, has
issued an opinion about the validity of the securities being offered.
EXPERTS
The consolidated financial statements of Identix Incorporated as of June
30, 1998 and 1997 and for each of the three years in the period ended June 30,
1998 have been incorporated in this prospectus by reference to the Annual Report
on Form 10-K for the year ended June 30, 1998 in reliance upon the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The consolidated financial statements of IDT Holdings, Inc. (formerly
Identicator Technology, a California general partnership) as of December 31,
1998 and 1997 and for each of the three years in the period ended December 31,
1998 have been incorporated in this prospectus by reference to the Current
Report on Form 8-K of Identix Incorporated dated May 6, 1999 in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the registrant in connection
with the resale of the shares being registered. All amounts are estimated
except the SEC Registration Fee and the Amex listing application fee.
SEC Registration fee $ 7,383
Amex Listing Application fee.. 17,500
Accounting Fees and Expenses.. 3,000
Legal Fees and Expenses....... 7,000
Miscellaneous................. 5,117
Total...................... $40,000
=======
Item 15. Indemnification of Directors and Officers
Pursuant to the Delaware General Corporation Law, the Registrant has
included in its Certificate of Incorporation provisions regarding the limitation
of liability and indemnification of officers and directors of the Registrant.
Articles NINTH and TENTH of the Registrant's Certificate of Incorporation
provide as follows:
NINTH.
No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability: (a) for any breach of the director's
duty of loyalty to the corporation or its stockholders; (b) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (c) under Section 174 of the Delaware General Corporation Law;
or (d) for any transaction from which the director derived any improper personal
benefit. If the Delaware General Corporation Law is amended to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended. Any repeal or modification of this paragraph
shall not adversely affect any right or protection of a director of the
corporation existing at the time of the repeal or modification.
TENTH.
A. RIGHT TO INDEMNIFICATION
Each person who was or is made a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding"), by reason of the fact that he
or she or a person of whom he or she is the legal representative, is or was a
director or officer of the corporation or is or was serving at the request of
the corporation as a director or officer, employee or agent of another
corporation, or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless by the
corporation to the fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the corporation
to provide broader indemnification rights than that law permitted the
corporation to provide before the amendment) against all expenses, liabilities
and losses including, without limitation, attorneys' fees, judgments, fines,
ERISA excise taxes and penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith. Such
indemnification
II-1
<PAGE>
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of his or her heirs, executors and
administrators. However, the corporation shall indemnify any such person seeking
indemnity in connection with an action, suit or proceeding (or part thereof)
initiated by that person only if that action, suit or proceeding (or part
thereof) was authorized by the board of directors of the corporation. The rights
set forth in this Article TENTH shall be contract rights and shall include the
right to be paid expenses incurred in defending any such proceeding in advance
of its final disposition. However, the payment of such expenses incurred by a
director or officer of the corporation in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of such
proceeding shall be made only upon delivery to the corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it should be determined ultimately that such director or officer
is not entitled to be so indemnified.
B. RIGHT OF CLAIMANT TO BRING SUIT
If a claim under Paragraph A of this Article TENTH is not paid in full by
the corporation within 90 days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim. If successful in whole
or in part, the claimant shall be entitled to be paid the expense of prosecuting
that claim. It shall be a defense to any such action (other than an action an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to this corporation) that the claimant has not met the
standards of conduct which make it permissible under the Delaware General
Corporation Law for the corporation to indemnify the claimant for the amount
claimed. However, the burden of proving such defense shall be on the
corporation. Neither the failure of the corporation (including its board of
directors, independent legal counsel or its stockholders) to have made a
determination before the commencement of such action that indemnification of the
claimant is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the corporation (including its board of directors,
independent legal counsel or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
C. NON EXCLUSIVITY OF RIGHTS
The rights conferred on any person by Paragraphs A and B of this Article
TENTH shall not be exclusive of any other rights which such person may have or
hereafter may acquire under any statute, provision of the Certificate of
Incorporation, by law, agreement, vote of stockholders or of disinterested
directors, or otherwise.
D. EXPENSES AS A WITNESS
To the extent that any director, officer, employee, or agent of the
corporation is by reason of such position, or a position with another entity at
the request of the corporation, a witness in any action, suit or proceeding, he
or she shall be indemnified and held harmless against all costs and expenses
actually and reasonably incurred by him or her on his or her behalf in
connection therewith.
E. INDEMNITY AGREEMENTS
The corporation may enter into agreements with any director, officer,
employee or agent of the corporation or any person who serves at the request of
the corporation as a director, officer, employee, or agent of another
corporation or other enterprise, providing for indemnification to the fullest
extent permissible under the Delaware General Corporation Law and the
corporation's Certificate of Incorporation.
II-2
<PAGE>
F. EFFECT OF REPEAL OR MODIFICATION
Any repeal or modification of this Article TENTH shall not adversely affect
any right of indemnification or advancement of expenses of a director or
officer, employee or agent of the corporation existing at the time of such
repeal or modification with respect to any action or omission occurring before
the repeal or modification.
G. SEPARABILITY
Each and every paragraph, sentence, term and provision of this Article
TENTH is separate and distinct. If any paragraph, sentence, term or provision
is held to be invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of any other
such paragraph, sentence, term or provision. To the extent required in order to
make any such paragraph, sentence, term or provision of this Article TENTH valid
or enforceable, the corporation shall, and the indemnitee or potential
indemnitee may, request a court of competent jurisdiction to modify the
paragraph, sentence, term or provision in order to preserve its validity and
provide the broadest possible indemnification permitted by applicable law.
H. INSURANCE
The corporation may maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of the corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss of the type referred to in this Article TENTH,
whether or not the corporation would have the power to indemnify such person
against such expense, liability or loss under applicable law.
I. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION
The corporation may, to the extent authorized from time to time by the
board of directors, grant rights to indemnification, and to the advancement of
expenses to any employee or agent of the corporation to the fullest extent of
the provisions of this Article with respect to the indemnification and
advancement of expenses of directors and officers of the corporation.
Item 16. Exhibits
(a) Exhibits
--------
4.1 Securities Purchase Agreement dated June 30, 1999
4.2 Registration Rights Agreement dated June 30, 1999
4.3 Form of Series 1 Warrant
4.4 Form of Series 2 Warrant
4.5 Hambrecht & Quist Warrant
5.1 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Heller Ehrman White & McAuliffe (contained in opinion
filed as Exhibit 5. 1)
23.2 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.3 Consent of PricewaterhouseCoopers LLP, Independent Accountants
24.1 Power of Attorney (see page II-6)
Item 17. Undertakings
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
II-3
<PAGE>
(b) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offering herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Registrant's Restated Certificate of Incorporation
and Bylaws, and the Delaware General Corporation Law, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in a
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person for liabilities arising under the Act in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against policy as expressed in the Act and will be
governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Sunnyvale, California on June 30, 1999.
IDENTIX INCORPORATED
By:/s/ JAMES P. SCULLION
------------------------------------
James P. Scullion
President, Chief Financial Officer and Director
II-5
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Randall
C. Fowler and James P. Scullion his true and lawful attorneys-in-fact and
agents, each acting alone, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to the Registration
Statement, and to sign any registration statement for the same offering covered
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, each acting alone, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirement of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
Signature Office Date
--------- ------ ----
/s/ RANDALL C. FOWLER
- ---------------------- Chief Executive Officer and
Randall C. Fowler Chairman of the Board June 30, 1999
(Principal Executive Officer)
/s/ JAMES P.SCULLION
- ---------------------- President, Chief Financial Officer June 30, 1999
James P. Scullion and Secretary (Principal Financial
and Accounting Officer)
/s/ RANDALL HAWKS, JR.
- ---------------------- Director June 30, 1999
Randall Hawks, Jr.
/s/ PATRICK H. MORTON
- ---------------------- Director June 30, 1999
Patrick H. Morton
/s/ CHARLES W. RICHION
- ---------------------- Director June 30, 1999
Charles W. Richion
/s/ FRED U. SUTTER
- ---------------------- Director June 30, 1999
Fred U. Sutter
/s/ LARRY J. WELLS
- ---------------------- Director June 30, 1999
Larry J. Wells
II-6
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Description Page
- ------- ----------- ----
4.1 Securities Purchase Agreement dated June 30, 1999
4.2 Registration Rights Agreement dated June 30, 1999
4.3 Form of Series 1 Warrant
4.4 Form of Series 2 Warrant
4.5 Hambrecht & Quist Warrant
5.1 Opinion of Heller, Ehrman, White & McAuliffe
23.1 Consent of Heller, Ehrman, White & McAuliffe (contained in opinion
filed as Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.3 Consent of PricewaterhouseCoopers LLP, Independent Accountants
24.1 Power of Attorney (see page II-6)
<PAGE>
Exhibit 4.1
SECURITIES PURCHASE AGREEMENT
-----------------------------
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of June 30,
1999, by and among Identix Incorporated, a corporation organized under the laws
of the State of Delaware (the "Company"), and the purchasers (the "Purchasers")
set forth on Schedule 1 attached hereto.
WHEREAS:
A. The Company and each Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").
B. Each Purchaser desires to purchase, severally and not jointly, subject
to the terms and conditions stated in this Agreement, (i) the number of shares
of the Company's common stock, $0.01 per share par value (the "Common Stock")
set forth opposite such purchaser's name on Schedule 1, (ii) warrants in the
form attached hereto as Exhibit A (including any warrants issued in replacement
---------
thereof, the "Series 1 Warrants"), to acquire shares of Common Stock and, (iii)
warrants in the form attached hereto as Exhibit B (including any warrants issued
---------
in replacement thereof, the "Series 2 Warrants,") and, together with the Series
1 Warrants, the "Warrants", to acquire shares of Common Stock. The shares of
Common Stock issuable upon exercise of or otherwise pursuant to the Warrants are
referred to herein as the "Warrant Shares."
C. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement in
the form attached hereto as Exhibit C (the "Registration Rights Agreement"),
---------
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act and the rules and regulations promulgated thereunder,
and applicable state securities laws.
NOW, THEREFORE, the Company and the Purchasers hereby agree as follows:
1. CERTAIN DEFINITIONS.
-------------------
For purposes of this Agreement, the following terms shall have the meanings
ascribed to them as provided below:
"Business Day" shall mean any day on which the principal United States
securities exchange or trading market on which the Common Stock is listed or
traded as reported by Bloomberg (as defined below) is open for trading.
1
<PAGE>
"Closing Price" shall mean for the Common Stock as of any date, the closing
bid price of such security on the principal United States securities exchange or
trading market on which such security is listed or traded as reported by
Bloomberg Financial Markets (or a comparable reporting service of national
reputation selected by the Purchasers as provided in Section 8(o) hereof, and
reasonably acceptable to the Company if Bloomberg Financial Markets is not then
reporting closing bid prices of such security) (collectively, "Bloomberg"), or
if the foregoing does not apply, the last reported sale price of such security
in the over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg, or, if no sale price is reported for such
security by Bloomberg, the average of the bid prices of any market makers for
such security as reported in the "pink sheets" by the National Quotation Bureau,
Inc., in each case for such date or, if such date was not a Trading Day (as
defined below) for such security, on the next preceding day which was a Trading
Day provided such next preceding Trading Day occurred no more than 5 business
--------
days prior to the date for which the Closing Price is being determined. If the
Closing Price cannot be calculated for a share of Common Stock as of any such
dates on any of the foregoing bases, the Closing Price of such security on such
date shall be the fair market value as determined by an investment banking firm
selected by the Purchasers and reasonably acceptable to the Company, with the
costs of such appraisal to be borne by the Company.
"Investment Amount" shall mean the dollar amount to be invested in the
Company at the Closing pursuant to this Agreement by any Purchaser, as set forth
opposite such Purchaser's name on Schedule 1.
"Market Price" shall mean, with respect to any date of determination, the
average Closing Price during the ten (10) Trading Days prior to such date, but
in no event greater than the closing bid price on the Trading Day prior to such
date, in each case appropriately adjusted to reflect any stock dividend, stock
split or similar transaction during such period.
"Material Adverse Effect" shall mean any material adverse effect on (i) the
ability of the Company to perform its obligations hereunder (including the
issuance of the Shares and the Warrants), under the Warrants (including the
issuance of the Warrant Shares) or under the Registration Rights Agreement or
(ii) the business, operations, properties or financial condition of the Company
and its subsidiaries, taken as a whole.
"Penalty Shares" shall mean any shares of Common Stock issued pursuant to
Section 2(c) of the Registration Rights Agreement.
"Pro Rata Percentage" shall mean, with respect to any Purchaser, a
percentage computed by dividing such Purchaser's Investment Amount by the
aggregate Investment Amounts of all Purchasers.
"Securities" shall mean the Shares, the Warrants, the Warrant Shares and
the Penalty Shares.
"Shares" means the shares of Common Stock to be issued and sold by the
Company and purchased by the Purchasers at the Closing.
2
<PAGE>
"Trading Day" shall mean a Business Day on which at least 10,000 shares of
Common Stock are traded on the principal United States securities exchange or
trading market on which such security is listed or traded as reported by
Bloomberg.
2. PURCHASE AND SALE OF SHARES AND WARRANTS.
----------------------------------------
a. Generally. Except as otherwise provided in this Section 2 and subject
---------
to the satisfaction (or waiver) of the conditions set forth in Section 6 and
Section 7 below, each Purchaser shall purchase the number of Shares and
Warrants determined as provided in this Section 2, and the Company shall issue
and sell such number of Shares and Warrants to each Purchaser for such
Purchaser's Investment Amount as provided below.
b. Number of Closing Shares and Warrants; Form of Payment; Closing Date.
--------------------------------------------------------------------
i. On the Closing Date (as defined below), the Company shall sell and
each Purchaser shall buy (A) the number of Shares set forth opposite such
Purchaser's name on Schedule 1 (B) Series 1 Warrants exercisable for the
purchase of the number of shares set forth opposite such Purchaser's name on
Schedule 1 and, (C) Series 2 Warrants exercisable for the purchase of the number
- ----------
of shares set forth opposite such Purchaser's name on Schedule 1. On the
----------
Closing Date, each Purchaser shall pay the Company an amount equal to such
Purchaser's Investment Amount.
ii. On the Closing Date, each Purchaser shall pay its Investment
Amount by wire transfer to the Company, in accordance with the Company's written
wiring instructions against delivery of certificates representing the Shares and
duly executed Warrants being purchased by such Purchaser, and the Company shall
deliver such Shares and Warrants against delivery of the such Purchaser's
Investment Amount.
iii. Subject to the satisfaction (or waiver) of the conditions
thereto set forth in Section 6 and Section 7 below, the date and time of the
sale of the Shares and the Warrants pursuant to this Agreement (the "Closing")
shall be 2:00 p.m. San Francisco Time on July 1, 1999 or such other date or time
as the parties may mutually agree ("Closing Date"). The Closing shall occur at
the offices of Gibson, Dunn & Crutcher LLP, One Montgomery Street, Telesis
Tower, San Francisco, CA 94104, or at such other place as the parties may
otherwise agree.
3. THE PURCHASER'S REPRESENTATIONS AND WARRANTIES.
----------------------------------------------
Each Purchaser severally and not jointly represents and warrants to the
Company as follows:
a. Purchase for Own Account. The Purchaser is purchasing the Securities
------------------------
for the Purchaser's own account and not with a present view towards the
distribution thereof. The Purchaser understands that the Purchaser must bear
the economic risk of this investment indefinitely, unless the Securities are
registered pursuant to the Securities Act and any applicable
3
<PAGE>
state securities or blue sky laws or an exemption from such registration is
available, and that the Company has no present intention of registering any
such Securities other than as contemplated by the Registration Rights
Agreement. Notwithstanding anything in this Section 3(a) to the contrary, by
making the foregoing representation, the Purchaser does not agree to hold the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption from registration under the Securities
Act and any applicable state securities laws.
b. Information. The Purchaser has been furnished all materials relating
-----------
to the business, finances and operations of the Company and its subsidiaries and
materials relating to the offer and sale of the Securities which have been
requested by the Purchaser. The Purchaser has been afforded the opportunity to
ask questions of the Company and has received satisfactory answers to any such
inquiries. Neither such inquiries nor any other due diligence investigation
conducted by the Purchaser or its counsel or any of its representatives shall
modify, amend or affect the Purchaser's right to rely on the Company's
representations and warranties contained in Section 4 below.
c. Governmental Review. The Purchaser understands that no United States
-------------------
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
d. Authorization; Enforcement. The Purchaser has the requisite power and
--------------------------
authority to enter into and perform its obligations under this Agreement and to
purchase the Shares and the Warrants in accordance with the terms hereof. This
Agreement has been duly and validly authorized, executed and delivered on behalf
of the Purchaser and is a valid and binding agreement of the Purchaser
enforceable against the Purchaser in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other laws affecting creditors' rights and remedies generally and
to general principles of equity (regardless of whether enforcement is sought in
a proceeding at law or in equity).
e. Transfer or Resale. The Purchaser understands that (i) except as
------------------
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be transferred unless (a) subsequently registered thereunder, (b)
the Purchaser shall have delivered to the Company an opinion of counsel
reasonably acceptable to the Company (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions) to the
effect that the Securities to be sold or transferred may be sold or transferred
under an exemption from such registration, (c) sold under Rule 144 promulgated
under the Securities Act (or a successor rule), or (d) sold or transferred to an
affiliate of the Purchaser pursuant to an exemption under the Securities Act;
and (ii) neither the Company nor any other person is under any obligation to
register such Securities under the Securities Act or any state securities laws
or to comply with the terms and conditions of any exemption thereunder, in each
case, other than pursuant to the Registration Rights Agreement.
4
<PAGE>
f. Legends. The Purchaser understands that the Shares and the Warrants
-------
and, until such time as the Shares and Warrant Shares have been registered under
the Securities Act as contemplated by the Registration Rights Agreement or
otherwise may be sold by the Purchaser under Rule 144, the certificates for the
Shares and Warrant Shares may bear a restrictive legend in substantially the
following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state of the United States. The securities
represented hereby may not be offered or sold in the absence of an
effective registration statement for the securities under applicable
securities laws unless offered, sold or transferred under an available
exemption from the registration requirements of those laws.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, (a) the sale of such Security is registered under the Securities
Act, (b) such holder provides the Company with an opinion of counsel, in form,
substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Security may
be made without registration under the Securities Act or (c) such holder
provides the Company with reasonable assurances that such Security can be sold
under Rule 144(k). The Purchaser agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been removed, pursuant
to an effective registration statement or under an exemption from the
registration requirements of the Securities Act. The legend shall be removed
when such Security may be sold pursuant to an effective registration statement
or sold under Rule 144(k). In consideration of such removal, the Purchaser
agrees and covenants that, except with respect to sales under Rule 144(k), it
will sell all Securities in accordance with the plan of distribution contained
in the registration statement pursuant to which it is selling its Securities, it
will deliver a prospectus in accordance with the prospectus delivery
requirements of the Securities Act, and in the event that the Company informs
such Purchaser that the registration statement has ceased to be effective under
the Securities Act, such Purchaser shall, at the request of the Company, return
its Securities for legending unless at such time such Securities may be sold
under Rule 144(k).
g. Accredited Investor Status. The Purchaser is an "accredited investor"
--------------------------
as that term is defined in Rule 501(a) of Regulation D. The Purchaser is not
registered as a broker or dealer under Section 15(a) of the Securities Exchange
Act of 1934, as amended, or a member of the NASD (as defined below).
h. Company Reliance. The Purchaser understands that the Shares are being
----------------
offered and sold and the Warrants are being issued to it in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying upon the truth and
accuracy of, and the Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments, and understandings of the Purchaser
5
<PAGE>
set forth herein in order to determine the availability of such exemptions and
the eligibility of the Purchaser to acquire the Shares and the Warrants.
i. No Tax Advice Provided By Company. Purchaser acknowledges and agrees
---------------------------------
that the Company and its advisors have not provided any advice to the Purchaser
regarding the federal, state, local or foreign tax implications of the
acquisition, ownership or disposition of the Securities and that it has been
advised to consult its own tax advisor with respect to such implications.
j. HSR. The Purchaser has no present intention of (1) participating in
---
the formulation, determination or direction of the basic decisions of the
Company; (2) nominating a candidate for the board of directors of the Company;
(3) proposing corporate action requiring shareholder approval; (4) soliciting
proxies; (5) having a controlling shareholder, director, or employee of the
Purchaser simultaneously serving as an officer or director of the Company; (6)
being a competitor of the Company; or (7) doing any of the foregoing with
respect to any entity directly or indirectly controlling the Company. If at the
time the Purchaser exercises the Warrant the Purchaser's intention is any
different than the foregoing, and in light of such change a filing under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 is required in connection
with such exercise, the Purchaser shall so notify the Company in writing at or
prior to the time of such exercise.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
---------------------------------------------
The Company represents and warrants to each Purchaser as follows:
a. Organization and Qualification. The Company and each of its
------------------------------
subsidiaries is a corporation duly organized and existing under the laws of the
jurisdiction in which it is incorporated, and has the requisite corporate power
to own its properties and to carry on its business as now being conducted. The
Company and each of its subsidiaries is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which the nature
of the business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect. Schedule 4(a) sets
-------------
forth the Company's jurisdiction of incorporation and the name of each of the
Company's subsidiaries and its jurisdiction of incorporation.
b. Authorization; Enforcement. (i) The Company has the requisite
--------------------------
corporate power and authority to enter into and perform its obligations under
this Agreement, the Warrants and the Registration Rights Agreement, to issue and
sell the Shares and the Warrants in accordance with the terms hereof and to
issue the Warrant Shares upon exercise of the Warrants in accordance with the
terms of the Warrants and to issue the Penalty Shares in accordance with the
Registration Rights Agreement; (ii) the execution, delivery and performance of
this Agreement, the Warrants and the Registration Rights Agreement by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including, without limitation, the reservation for issuance and
issuance of the Shares and the issuance of the Warrants, and the reservation for
issuance and issuance of the Warrant Shares) have been duly authorized by the
6
<PAGE>
Company's Board of Directors and no further consent or authorization of the
Company, its Board of Directors or its stockholders is required; (iii) this
Agreement has been duly executed and delivered by the Company; and (iv) this
Agreement constitutes, and, upon execution and delivery by the Company of the
Registration Rights Agreement and the Warrants, such agreements will constitute,
valid and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other laws
affecting creditors' rights and remedies generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).
c. Capitalization. The capitalization of the Company and each of its
--------------
subsidiaries as of the date hereof is set forth on Schedule 4(c), including the
-------------
authorized capital stock, the number of shares issued and outstanding, the
number of shares issuable and reserved for issuance pursuant to the Company's
stock option plans, the number of shares issuable and reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for
any shares of capital stock. Schedule 4(c) also sets forth the number of Shares
-------------
to be issued pursuant to the terms hereof and the number of Warrant Shares to be
issued upon the exercise of the Warrants. All of such outstanding shares of the
Company's capital stock have been, or upon issuance will be, validly issued,
fully paid and nonassessable. Except as set forth on Schedule 4(c), no shares
-------------
of capital stock of the Company (including the Shares, the Warrant Shares or the
Penalty Shares, if any) or any of the subsidiaries are subject to preemptive
rights or any other similar rights of the stockholders of the Company or any
liens or encumbrances. Except for the Securities and as disclosed in Schedule
--------
4(c), as of the date of this Agreement, (i) there are no outstanding options,
- ----
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exercisable
or exchangeable for, any shares of capital stock of the Company or any of its
subsidiaries, or arrangements by which the Company or any of its subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or such subsidiaries, and (ii) there are no agreements or arrangements under
which the Company or any of its subsidiaries is obligated to register the sale
of any of its or their securities under the Securities Act (except the
Registration Rights Agreement). Except as set forth on Schedule 4(c), there are
-------------
no securities or instruments containing antidilution or similar provisions that
may be triggered by the issuance of the Securities in accordance with the terms
of this Agreement, the Warrants or the Registration Rights Agreement and the
holders of the securities and instruments listed on such Schedule 4(c) have
-------------
waived any rights they may have under such antidilution or similar provisions in
connection with the issuance of the Securities in accordance with the terms of
this Agreement, the Warrants or the Registration Rights Agreement. The Company
has made available to each Purchaser true and correct copies of the Company's
Certificate of Incorporation as in effect on the date hereof ("Certificate of
Incorporation"), the Company's By-laws as in effect on the date hereof (the "By-
laws") and all other instruments and agreements governing securities convertible
into or exercisable or exchangeable for capital stock of the Company, except for
stock options granted under any employee benefit plan or director stock option
plan of the Company.
d. Issuance of Shares. The Shares are duly authorized and when issued and
------------------
paid for in accordance with the terms hereof, will be validly issued, fully paid
and non-assessable, and
7
<PAGE>
free from all taxes, liens, claims and encumbrances, and will not be subject
to preemptive rights or other similar rights of stockholders of the Company
and will not impose personal liability upon the holder thereof. The Warrant
Shares are duly authorized and reserved for issuance, and, upon exercise of
the Warrants in accordance with the terms thereof, will be validly issued,
fully paid and non-assessable and free from all taxes and liens, claims and
encumbrances and will not be subject to preemptive rights or other similar
rights of stockholders of the Company and will not impose personal liability
upon the holder thereof.
e. No Conflicts. The execution, delivery and performance of this
------------
Agreement, the Registration Rights Agreement and the Warrants by the Company,
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the reservation for issuance and
issuance of the Shares and the Warrant Shares and the issuance of the Warrants)
will not (i) conflict with or result in a violation of the Certificate of
Incorporation or By-laws or (ii) conflict with, or constitute a default (or an
event which, with notice or lapse of time or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including United States federal and state
securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected (except, with respect to clause (ii), for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation, By-laws and other organizational
documents and neither the Company nor any of its subsidiaries is in default (and
no event has occurred which, with notice or lapse of time or both, would put the
Company or any of its subsidiaries in default) under, nor has there occurred any
event giving others (with notice or lapse of time or both) any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, except for actual or possible violations, defaults or rights as would
not, individually or in the aggregate, have a Material Adverse Effect, and
except as set forth on Schedule 4(e). The businesses of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental entity, except for actual or possible violations,
if any, the sanctions for which either singly or in the aggregate would not have
a Material Adverse Effect. Except as specifically contemplated by this
Agreement or the Warrants and as required under the Securities Act and any
applicable state securities laws, the Company is not required to obtain any
consent, approval, authorization or order of, or make any filing or registration
with, any court or governmental agency or any regulatory or self regulatory
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement (including, without limitation, the issuance and sale of
the Shares and Warrants as provided hereby), or the Warrants (including the
issuance of the Warrant Shares), in each case in accordance with the terms
hereof or thereof. The Company is not in violation of the listing requirements
of the American Stock Exchange ("AMEX") and does not reasonably anticipate that
the Common Stock will be delisted by AMEX in the foreseeable future based on its
rules (and interpretations thereof) as currently in effect.
8
<PAGE>
f. SEC Documents; Financial Statements. Since June 30, 1997, the Company
-----------------------------------
has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and has filed all registration
statements and other documents required to be filed by it with the SEC pursuant
to the Securities Act (all of the foregoing filed prior to the date hereof, and
financial statements and schedules thereto and documents incorporated by
reference therein, being hereinafter referred to herein as the "SEC Documents").
The Company has made available to each Purchaser true and complete copies of the
SEC Documents, except for the exhibits and schedules thereto and the documents
incorporated therein. The exhibits filed by the Company with the SEC Documents
are true and complete copies of the indicated documents. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any statements made in any such SEC Documents that are or were
required to be updated or amended under applicable law have been so updated or
amended. As of their respective dates, the financial statements of the Company
included in the SEC Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
applicable with respect thereto. Such financial statements have been prepared
in accordance with United States generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the consolidated financial position of the Company and its
subsidiaries as of the dates thereof and the results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
SEC Documents, the Company has no liabilities, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent to
the date of such SEC Documents and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in such SEC Documents,
which liabilities and obligations referred to in clauses (i) and (ii),
individually or in the aggregate, would not have a Material Adverse Effect.
g. Absence of Certain Changes. Except as disclosed in the SEC Documents,
--------------------------
since March 31, 1999, there has been no change or development which individually
or in the aggregate has had or could reasonably be expected to have a Material
Adverse Effect.
h. Absence of Litigation. Except as disclosed in the SEC Documents, there
---------------------
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, threatened in writing against or affecting the Company, or any of its
subsidiaries, or any of their directors or officers in their capacities as such
which would reasonably be expected to have a Material Adverse Effect or which
would adversely affect the validity, enforceability of, or the authority or
ability of the
9
<PAGE>
Company to perform its obligations under this Agreement (including the
issuance of the Shares and the Warrants), the Registration Rights Agreement,
the Warrants (including the issuance of the Warrant Shares) or any other
agreement or document delivered pursuant hereto or thereto.
i. Intellectual Property. The Company and each of its subsidiaries owns
---------------------
or is licensed to use all patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, copyright applications,
licenses, permits, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures) and
other similar rights and proprietary knowledge (collectively, "Intangibles")
necessary for the conduct of its business as now being conducted and as proposed
to be conducted. To the knowledge of the Company, after reasonable inquiry,
neither the Company nor any of its subsidiaries is infringing or in conflict
with any other person with respect to any Intangibles which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect. Except as set forth in Schedule 4(i),
-------------
neither the Company nor any of its subsidiaries has received written notice
that it is infringing upon third party Intangibles. Neither the Company nor any
of its subsidiaries has entered into any consent, indemnification, forbearance
to sue or settlement agreements with respect to the validity of the Company's or
such subsidiary's ownership or right to use its Intangibles and to the Company's
knowledge, after reasonable inquiry, there is no basis for any claim relating to
any consent, indemnification, forbearance to sue or settlement agreement with
respect to the validity of the Company's or such subsidiary's ownership or right
to use its Intangibles to be successful. The Intangibles are valid and
enforceable, and no registration relating thereto has lapsed, expired or been
abandoned or canceled or is the subject of cancellation or other adversarial
proceedings, and all applications therefor are pending and in good standing.
The Company has complied, in all material respects, with its contractual
obligations relating to the protection of the Intangibles used pursuant to
licenses. To the Company's knowledge, no person is infringing on or violating
the Intangibles owned or used by the Company.
j. Foreign Corrupt Practices. Neither the Company, nor any of its
-------------------------
subsidiaries, nor any director or officer, nor, to the Company's knowledge, any
agent, employee or other person acting on behalf of the Company or any of its
subsidiaries has, in the course of such person's actions for, or on behalf of,
the Company, or any of its subsidiaries, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the United States Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
k. Environment. Except as disclosed in the SEC Documents (i) there is no
-----------
environmental liability, nor factors likely to give rise to any environmental
liability, affecting any of the properties of the Company or any of its
subsidiaries that, individually or in the aggregate, would have a Material
Adverse Effect and (ii) neither the Company nor any of the subsidiaries has
violated any environmental law applicable to it now or previously in effect,
other than such
10
<PAGE>
violations or infringements that, individually or in the aggregate, have not
had and will not have a Material Adverse Effect.
l. Title. The Company and each of its subsidiaries has good title in fee
-----
simple to all real property and good title to all personal property owned by it
which is material to its business, free and clear of all liens, encumbrances and
defects except for liens to secure the Company's bank lines of credit and such
defects in title that, individually or in the aggregate, could not have a
Material Adverse Effect. Any real property and facilities held under lease by
the Company or any of its subsidiaries are held by the Company or such
subsidiary under valid, subsisting and enforceable leases with such exceptions
which have not had and will not have a Material Adverse Effect.
m. Insurance. The Company and its subsidiaries maintain such insurance
---------
relating to their business, operations, assets, key-employees and officers and
directors as is appropriate to their business, assets and operations, in such
amounts and against such risks as are customarily carried and insured against by
owners of comparable businesses, assets and operations, and such insurance
coverages will be continued in full force and effect to and including the
Closing Date other than those insurance coverages in respect of which the
failure to continue in full force and effect could not reasonably be expected to
have a Material Adverse Effect.
n. Disclosure. All information relating to or concerning the Company and
----------
its subsidiaries set forth in this Agreement or provided to the Purchaser in
connection with the transactions contemplated hereby (excluding analyst reports
prepared by investment banking firms), including the disclosure contained in
Schedule 4(n), viewed in its entirety, is true and correct in all material
- -------------
respects and the Company has not omitted to state any material fact necessary in
order to make the statements made herein or therein, in light of the
circumstances under which they were made, not misleading, provided, that as to
--------
forward-looking information provided by the Company, the Company represents only
that there is a good-faith basis for such information. No event or circumstance
has occurred or exists with respect to the Company or its subsidiaries or their
businesses, properties, operations, prospects or financial conditions, which has
not been publicly disclosed but, under applicable law, rule or regulation, would
be required to be disclosed by the Company in a registration statement filed on
the date hereof by the Company under the Securities Act with respect to a
primary issuance of the Company's securities. The Company has not provided, and
without the Purchaser's request therefore, will not hereafter provide to the
Purchaser, any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been disclosed. The Purchasers acknowledge that any forward looking statements
regarding the Company are subject to substantial risks and uncertainties,
including those described in the SEC Documents, and that actual events, results
or performance may differ materially.
o. Acknowledgment Regarding the Purchaser's Purchase of the Securities.
-------------------------------------------------------------------
The Company acknowledges and agrees that the Purchaser is not acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement or the transactions contemplated hereby, and the
relationship between the Company and the Purchaser is "arms length" and that any
statement made by the Purchaser or any of its representatives or
11
<PAGE>
agents in connection with this Agreement and the transactions contemplated
hereby is not advice or a recommendation and is merely incidental to the
Purchaser's purchase of Securities and has not been relied upon by the
Company, its officers or directors in any way. The Company further represents
to the Purchaser that the Company's decision to enter into this Agreement has
been based solely on an independent evaluation by the Company and its
representatives.
p. No Brokers. The Company has not engaged any person except Hambrecht &
----------
Quist, whose fees are being paid exclusively by the Company, to which or to whom
brokerage commissions, finder's fees, financial advisory fees or similar
payments are or will become due in connection with this Agreement or the
transactions contemplated.
q. Tax Status. The Company and each of its subsidiaries has made or filed
----------
(or has sought extensions for) all material federal, state and local income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company or the
applicable subsidiary has set aside on its books provisions adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions adequate
for the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. Except with respect to amounts totaling
in the aggregate less than $50,000, there are no unpaid taxes claimed to be due
by the taxing authority of any jurisdiction. The Company has not executed a
waiver with respect to any statute of limitations relating to the assessment or
collection of any federal, state or local tax. Since June 30, 1996, none of the
Company's tax returns has been or is being audited by any taxing authority.
r. No General Solicitation. Neither the Company nor any person
-----------------------
participating on the Company's behalf in the transactions contemplated hereby
has conducted any "general solicitation" or "general advertising" as such terms
are used in Regulation D, with respect to any of the Securities being offered
hereby.
s. No Integrated Offering. Neither the Company, nor any of its
----------------------
affiliates, nor any person acting on its or their behalf, has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration of the
Securities being offered hereby under the Securities Act or cause this offering
of Securities to be integrated with any prior offering of securities of the
Company for purposes of the Securities Act or any applicable stockholder
approval provisions.
t. Year 2000. To the Company's knowledge, after reasonable inquiry,
---------
except as disclosed on Schedule 4(t): (i) All hardware and software products
-------------
used by the Company and its subsidiaries in the administration and the business
operations of the Company and such subsidiaries will be able to process date
data (including, but not limited to, calculating, comparing and sequencing) in a
consistent manner from, into and between the twentieth century (through 1999),
the year 2000 and the twenty-first century, including leap year calculations,
when used in accordance with the product documentation accompanying such
hardware and
12
<PAGE>
software products; (ii) all software developed and sold by the Company and any
of its subsidiaries (other than third party software) will be able to process
date data (including, but not limited to, calculating, comparing and
sequencing) in a consistent manner from, into and between the twentieth
century (through 1999), the year 2000 and the twenty-first century, including
leap year calculations, when used in accordance with the product documentation
accompanying such software.
u. Form S-3 Eligibility. The Company is currently eligible to register
--------------------
the resale of its Common Stock on a registration statement on Form S-3 under the
Securities Act. To the Company's knowledge, after reasonable investigation,
there exist no facts or circumstances (including without limitation any required
approvals or waivers of any circumstances that may delay or prevent the
obtaining of accountant's consents) that would prohibit or delay the preparation
and filing of a registration statement on Form S-3 with respect to the
Registrable Securities (as defined in the Registration Rights Agreement).
5. COVENANTS.
---------
a. Best Efforts. The parties shall use their best efforts timely to
------------
satisfy each of the conditions set forth in Section 6 and Section 7 of this
Agreement.
b. Form D. The Company agrees to file a Form D with respect to the
------
Securities as required under Regulation D and to provide a copy thereof to each
Purchaser promptly after such filing. The Company shall take such action as the
Company shall reasonably determine is necessary to qualify the Securities for
sale to the Purchasers pursuant to this Agreement under applicable securities
or "blue sky" laws of the states of the United States or obtain exemption
therefrom, and shall provide evidence of any such action so taken to each
Purchaser on or prior to the Closing Date.
c. Reporting Status. So long as any Purchaser beneficially owns any
----------------
Securities or has the right to acquire any Securities pursuant to this
Agreement, the Company shall timely file all reports required to be filed with
the SEC pursuant to the Exchange Act, and shall not terminate its status as an
issuer required to file reports under the Exchange Act even if the Exchange Act
or the rules and regulations thereunder would permit such termination, provided,
--------
however, that the obligations of the Company in this subsection 5(c) shall
- -------
terminate on the date on which (i) all rights to acquire Securities pursuant to
this Agreement or the Warrants have been exercised in full or have expired, and
(ii) all Securities beneficially owned by all Purchasers and their permitted
assigns may be immediately sold to the public in a single transaction pursuant
to Rule 144(k) under the Securities Act or otherwise without registration or
restriction.
d. Use of Proceeds. The Company shall use the net proceeds from the sale
---------------
of the Shares and the Warrants for general working capital purposes and the
repayment of up to $6.4 million of outstanding indebtedness, but in no event
shall the Company use such net proceeds to repurchase any outstanding securities
of the Company, provided, however, that nothing in the foregoing shall restrict
-------- -------
the Company's ability to repay indebtedness under its existing lines of credit
incurred after the date of this Agreement.
13
<PAGE>
e. Expenses. At the Closing, the Company shall reimburse Capital Ventures
--------
International ("CVI") or its designee for the out-of-pocket expenses reasonably
incurred by CVI and its affiliates and advisors in connection with the
negotiation, preparation, execution and delivery of this Agreement, the
Registration Rights Agreement, the Warrants and the other agreements to be
executed in connection herewith, including, without limitation, in conducting
CVI's and its affiliates' and advisors' reasonable due diligence and CVI's and
its affiliates' reasonable attorneys' fees and expenses (collectively, the
"Expenses"). Notwithstanding the foregoing, the Company shall not be obligated
to reimburse CVI for more than $35,000 of Expenses pursuant to this Section
5(e).
f. Press Releases. For a period of two (2) years following the Closing,
--------------
the Company agrees to send to each Purchaser within two business days after
release, copies of all press releases issued by the Company or any of its
subsidiaries, if any.
g. Reservation of Shares. The Company has and shall at all times have
---------------------
authorized and reserved for the purpose of issuance a sufficient number of
shares of Common Stock to provide for the issuance of the Shares as provided in
Section 2 hereof, and the full exercise of the Warrants and the issuance of the
Warrant Shares in connection therewith and as otherwise required hereby and by
the Warrants. The Company shall not reduce the number of shares of Common Stock
reserved for issuance under this Agreement (except as a result of the issuance
of the Shares hereunder) or the Warrants (except as a result of the expiration
of the Warrants or the issuance of the Warrant Shares upon the exercise of the
Warrants), without the consent of the Purchasers.
h. Listing. On the Closing Date, the Company shall have secured the
-------
listing of the Shares and Warrant Shares, in each case, upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed or quoted (subject to official notice of issuance)
and shall maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all Shares from time to time issuable hereunder and all
Warrant Shares from time to time issuable upon exercise of the Warrants. The
Company will use its best efforts to continue the listing and trading of its
Common Stock on the AMEX, the New York Stock Exchange ("NYSE") or the Nasdaq
National Market ("NASDAQ") and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the AMEX.
i. Corporate Existence. The Company shall maintain its corporate
-------------------
existence, except in the event of a merger, consolidation or sale of all or
substantially all of the Company's assets, as long as the surviving or successor
entity in such transaction (A) assumes the Company's obligations hereunder and
under the Warrants and under the agreements and instruments entered into in
connection herewith and (B) is a publicly trading Company whose common stock is
listed and trades on NASDAQ, the NYSE or AMEX, provided, however, that the
-------- -------
obligations in this Section 5(i) shall terminate on the date that each Purchaser
or its assignee no longer has any right to acquire Securities pursuant to this
Agreement or the Warrants, and all Securities beneficially owned by the
Purchasers and their permitted assigns may be immediately sold to the public in
a
14
<PAGE>
single transaction pursuant to Rule 144(k) under the Securities Act or
otherwise without registration or restriction.
j. No Integrated Offering. Neither the Company, nor any of its
----------------------
affiliates, nor any person acting on its or their behalf, shall, directly or
indirectly, make any offers or sales of any security or solicit any offers to
buy any security under circumstances that would require registration of the
Securities being offered hereby under the Securities Act or cause this offering
of Securities to be integrated with any prior or future offering of securities
of the Company for purposes of the Securities Act or any applicable stockholder
approval provisions.
k. Additional Equity Capital.
-------------------------
(i) The Company agrees that during the period beginning on the date
hereof and ending on the date which is 180 days following the Closing Date (the
"Lock-Up Period"), the Company will not, without the prior written consent of
the Purchasers, contract with any party to obtain additional financing in which
any equity or equity-linked securities are issued (including any debt financing
with an equity component) pursuant to any offering exempt from the registration
requirements of the Securities Act which grants any registration rights
exercisable within one year of the Closing Date ("Future Offerings"). The
limitations referred to in this Section 5(k) are collectively referred to as the
"Capital Raising Limitations". The Capital Raising Limitations shall not apply
to securities issued pursuant to (1) any transaction involving issuances of
securities as consideration in a merger, consolidation or acquisition of assets,
or in connection with any strategic partnership or joint venture (the primary
purpose of which is not to raise equity capital), or as consideration for the
acquisition of a business, product or license by the Company, (2) the issuance
of securities pursuant to a syndicated underwritten public offering, (3) the
issuance of securities upon exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of the date hereof, (4)
the grant of additional options or warrants, or the issuance of additional
securities, under any duly authorized Company stock option, stock purchase or
restricted stock plan for the benefit of the Company's employees, consultants or
directors, or (5) the issuance of securities to a strategic business partner of
the Company, (6) the issuance of securities in connection with a bank or
equipment financing transaction, or (7) the issuance of any securities pursuant
to a transaction made in reliance on Rule 144A under the Securities Act.
(ii) The Company agrees that during the period beginning immediately
upon the termination of the Lock-Up Period and ending on the date which is 180
days following such date (the "Participation Period"), each Purchaser shall have
a right of first refusal to purchase its Pro Rata Percentage of 20% of the total
amount of any issuance of any shares of Common Stock or Preferred Stock of any
kind of the Company, whether now or hereafter authorized, and rights, options,
or warrants to purchase said Common Stock or Preferred Stock, and securities of
any type whatsoever that are, or by their terms may become, convertible into
said Common Stock or Preferred Stock that the Company, from time to time, may
propose to sell and issue (the "Participation Securities"), provided, however,
-------- -------
that the term Participation Securities shall not apply to securities issued
pursuant to (1) any transaction involving issuances of securities as
15
<PAGE>
consideration in a merger, consolidation or acquisition of assets, or in
connection with any strategic partnership or joint venture (the primary purpose
of which is not to raise equity capital), or as consideration for the
acquisition of a business, product or license by the Company, (2) the issuance
of securities pursuant to a syndicated public offering, (3) the issuance of
securities upon exercise or conversion of the Company's options, warrants or
other convertible securities outstanding as of the date hereof, (4) the grant of
additional options or warrants, or the issuance of additional securities, under
any duly authorized Company stock option, stock purchase or restricted stock
plan for the benefit of the Company's employees, consultants or directors, or
(5) the issuance of securities to a strategic business partner of the Company
(6) the issuance of securities in connection with a bank or equipment financing
transaction, or (7) the issuance of any securities pursuant to a transaction
made in reliance on Rule 144A under the Securities Act
(iii) If the Company proposes to issue Participation Securities, it
will give each Purchaser written notice (the "Rights Notice") of the Company's
intention to do so, describing the Participation Securities, the price, and the
general terms upon which the Company proposes to issue them. Each such
Purchaser will have 14 days from the date of delivery of the Rights Notice to
agree to purchase up to its Pro Rata Percentage of 20% of the total amount of
such Participation Securities for the price and upon the general terms specified
in the Rights Notice by giving written notice to the Company setting forth the
quantity of Participation Securities to be purchased.
(iv) The Company will have 120 days after the date of delivery of the
Rights Notice to sell the Participation Securities that were not purchased by
the Purchasers, at a price and upon general terms no more favorable to the
purchasers thereof than the price and general terms specified in the Rights
Notice. If the Company does not sell the Participation Securities within said
120-day period as provided in the preceding sentence, the Company will not
thereafter issue or sell any of such Participation Securities during the
Participation Period without complying with the provisions of Section (iii)
above.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
The obligation of the Company hereunder to issue and sell Shares and
Warrants to a Purchaser at the Closing hereunder is subject to the
satisfaction, at or before the Closing Date, of each of the following conditions
thereto; provided, however, that these conditions are for the Company's sole
-------- -------
benefit and may be waived by the Company at any time in its sole discretion.
a. The applicable Purchaser shall have executed the signature page to this
Agreement and the Registration Rights Agreement, and delivered the same to the
Company.
b. The applicable Purchaser shall have delivered to the Company such
Purchaser's Investment Amount in accordance with Section 2(b) above.
c. The representations and warranties of the applicable Purchaser shall be
true and correct as of the date when made and as of the Closing Date as though
made at that time (except
16
<PAGE>
for representations and warranties that speak as of a specific date, which
representations and warranties shall be true and correct as of such date), and
the applicable Purchaser shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the applicable
Purchaser at or prior to the Closing Date.
d. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
e. The applicable Purchaser shall have completed and provided to the
Company the questionnaire provided by the Company pursuant to Section 4(a) of
the Registration Rights Agreement.
7. CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE SHARES AND WARRANTS.
-------------------------------------------------------------------------
The obligation of each Purchaser hereunder to purchase Shares and Warrants
to be purchased by it hereunder is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
--------
conditions are for such Purchaser's sole benefit and may be waived by such
Purchaser at any time in such Purchaser's sole discretion:
a. The Company shall have executed the signature pages to this Agreement
and the Registration Rights Agreement, and delivered the same to the Purchaser.
b. The Company shall have delivered to the Purchaser duly executed
certificates representing the number of Shares and duly executed Warrants as
provided in Section 2(b) above, and prior to the Closing, the Purchaser's
attorney shall have received, in escrow, share certificate(s) representing the
Shares to be purchased by the Purchaser.
c. The Shares shall be authorized for quotation on AMEX and trading in the
Common Stock (or on AMEX generally) shall not have been suspended or be under
threat of suspension by the SEC or AMEX.
d. The representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date, which representations and warranties shall be true and correct as of such
date) and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. The Purchaser shall have received a certificate,
executed on behalf of the Company by its Chief Financial Officer, dated as of
the Closing Date, to the foregoing effect and attaching true and correct copies
of the resolutions adopted by the Company's Board of
17
<PAGE>
Directors authorizing the execution, delivery and performance by the Company
of its obligations under this Agreement, the Warrants and the Registration
Rights Agreement.
e. No statute, rule, regulation, executive order, decree, ruling,
injunction, action, proceeding or interpretation shall have been enacted,
entered, promulgated, endorsed or adopted by any court or governmental authority
of competent jurisdiction or any self-regulatory organization, or the staff of
any thereof, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.
f. The Purchaser shall have received an opinion of the Company's counsel,
dated as of the Closing Date, in substantially the form of Exhibit D attached
---------
hereto.
g. From the date of this Agreement through the Closing Date, there shall
not have occurred any Material Adverse Effect.
h. The Company shall have provided Purchaser a draft of the Registration
Statement (as defined in the Registration Rights Agreement) at least 48 hours
prior to Closing.
i. Ascom USA, Inc. ("Ascom") shall have executed and delivered to the
Company a waiver, pursuant to agreements disclosed to the Purchaser prior to
Closing , of all rights to retain percentage ownership held by Ascom respecting
the issuances of securities contemplated by this Agreement, the Registration
Rights Agreement and the Warrant.
8. GOVERNING LAW; MISCELLANEOUS.
----------------------------
a. Governing Law; Jurisdiction. This Agreement shall be governed by and
---------------------------
construed in accordance with the laws of the State of California applicable to
contracts made and to be performed in the State of California. Each party
hereto irrevocably consents to the jurisdiction of the United States federal
courts and the state courts located in San Francisco, California in any suit or
proceeding based on or arising under this Agreement. Each party hereto
irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding. Each party hereto further agrees that service of
process upon the Company mailed by first class mail to the address set forth in
Section 8(f) shall be deemed in every respect effective service of process upon
the Company in any such suit or proceeding. Nothing herein shall affect the
right of any Purchaser to serve process in any other manner permitted by law.
Each party hereto agrees that a final non-appealable judgment in any such suit
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
b. Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In
18
<PAGE>
the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed Execution
Page(s) hereof to be physically delivered to the other party within five (5)
days of the execution hereof.
c. Headings. The headings of this Agreement are for convenience of
--------
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid or
------------
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments; Waiver. This Agreement and the
------------------------------------
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Purchasers
make any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the Company and by the Purchasers as
provided in Section 8(o) hereof. Any waiver by the Purchasers, on the one hand,
or the Company, on the other hand, of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision of or any breach of any other provision of this
Agreement. The failure of the Purchasers, on the one hand, or the Company, on
the other hand to insist upon strict adherence to any term of this Agreement on
one or more occasions shall not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Agreement.
f. Notices. Any notices required or permitted to be given under the terms
-------
of this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five (5) days after being placed in the mail, if mailed, one
(1) business day after being deposited with a nationally recognized overnight
delivery service, or immediately if delivered personally, by same-day courier or
by confirmed telecopy (such confirmation being conclusive proof of receipt or
delivery), in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Identix Incorporated
510 N. Pastoria Ave.
Sunnyvale, CA 94086
Telephone No.: 408-731-2000
Facsimile No.: 408-739-0178
Attention: President
With a copy to:
19
<PAGE>
Richard A. Peers
Heller Ehrman White & McAuliffe
525 University Ave.
Palo Alto, CA 94301-1900
Telephone No.: 650-324-7000
Facsimile No.: 650-324-0638
If to the Purchaser, to the address set forth under the Purchaser's name on the
Execution Page hereto executed by such Purchaser.
Each party shall provide notice to the other parties of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of the parties and their successors and permitted assigns. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers, except in connection with
a merger, consolidation or sale of all or substantially all of the Company's
assets in which the surviving or successor entity in such transaction (A)
assumes the Company's obligations hereunder and under the Warrants and under the
agreements and instruments entered into in connection herewith and (B) is a
publicly trading Company whose common stock is listed and trades on NASDAQ, the
NYSE or AMEX. Without the prior written consent of the Company, no Purchaser
shall assign this Agreement or any of its rights or obligations hereunder except
to a assignee who is acquiring from the Purchaser either (A) that number of
Warrants and/or Shares such that the assignee would beneficially own or have the
right to acquire at least 500,000 Warrant Shares and/or Shares at the close of
such transaction, or (B) all of the Warrants and/or Shares held by such
Purchaser (a "Permitted Transferee").
h. Third Party Beneficiaries. This Agreement is intended for the benefit
-------------------------
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by any other
person.
i. Survival. The agreements and covenants set forth in Section 5 shall
--------
survive the closing. The representations and warranties of the Purchasers set
forth in Section 3 and of the Company set forth in Section 4 shall survive three
--------- ---------
years following the Closing Date, notwithstanding any due diligence
investigation conducted by or on behalf of the Company or the Purchasers,
respectively. Moreover, none of the representations and warranties made by the
Company herein shall act as a waiver of any rights or remedies a Purchaser may
have under applicable federal or state securities laws.
j. Publicity. The Company and each Purchaser shall have the right to
---------
review and comment upon the issuance of any press releases, or the filing of any
SEC, AMEX or NASD filings, or any other public statements with respect to the
transactions contemplated hereby, other than the initial listing application for
the Shares and the Warrant Shares, which has been submitted to AMEX by the
Company prior to the date hereof. Each Purchaser shall be provided documents to
review at least 48 hours prior to the filing or other issuance thereof except
that draft press releases shall be provided to each Purchaser at least 24 hours
prior to issuance.
20
<PAGE>
Within five business days after the Closing Date, the Company shall file a
Current Report on Form 8-K or other appropriate form with the SEC disclosing
the transactions contemplated hereby.
k. Further Assurances. Each party shall do and perform, or cause to be
------------------
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the Closing Date shall not have
-----------
occurred on or before July 1, 1999, unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date.
Notwithstanding any termination of this Agreement, any party not in breach of
this Agreement shall preserve all rights and remedies it may have against
another party hereto for a breach of this Agreement prior to or relating to the
termination hereof.
m. Joint Participation in Drafting. Each party to this Agreement has
-------------------------------
participated in the negotiation and drafting of this Agreement, the Registration
Rights Agreement and the Warrants. As such, the language used herein and therein
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party to this Agreement, the Registration Rights Agreement or the Warrants.
n. Equitable Relief. The Company acknowledges that a breach by it of its
----------------
obligations hereunder will cause irreparable harm to a Purchaser by vitiating
the intent and purpose of the transactions contemplated hereby. Accordingly,
the Company acknowledges that the remedy at law for a breach of its obligations
hereunder will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Agreement, that a Purchaser
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
o. Determinations. Except as otherwise expressly provided herein, all
--------------
amendments, consents, approvals and other determinations to be made by the
Purchasers pursuant to this Agreement and all waivers to or of any provisions in
this Agreement prior to the Closing Date shall be made by Purchasers that have
agreed to invest a majority of the aggregate Investment Amounts to be invested
by all Purchasers and except as otherwise expressly provided herein, all
amendments, consents, approvals and other determinations to be made by the
Purchasers pursuant to this Agreement and all waivers to or of any provisions in
this Agreement after the Closing Date shall be made by Purchasers that have
invested a majority of the aggregate Investment Amounts invested by all
Purchasers.
21
<PAGE>
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY:
IDENTIX INCORPORATED
By: /s/ JAMES P. SCULLION
---------------------------
Name: James P. Scullion
---------------------
Title: President and CFO
--------------------
The Purchaser:
CAPITAL VENTURES INTERNATIONAL
By: Heights Capital Management, Inc.,
its authorized agent
By: /s/ MICHAEL SPOLAN
------------------------------------
Name: Michael Spolan
------------------------------
Title: Secretary and General Counsel
-----------------------------
Residence: Cayman Islands
Address: c/o Heights Capital Management, Inc.
425 California, Suite 1100
San Francisco, CA 94104
Telephone No.: (415) 403-6500
Telecopy No.: (415) 403-6525
Attention: Michael Spolan, Esq.
with copies of all notices to:
Gibson, Dunn & Crutcher LLP
One Montgomery Street
Telesis Tower
San Francisco, CA 94104
Telephone No.: (415) 393-8300
Telecopy No.: (415) 986-5309
Attention: William Hudson, Esq.
-------------------------------
Investment Amount $10,000,000
--------------------
22
<PAGE>
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY:
IDENTIX INCORPORATED
By: /s/ JAMES P. SCULLION
---------------------------
Name: James P. Scullion
---------------------
Title: President and CFO
--------------------
The Purchaser:
MARSHALL CAPITAL MANAGEMENT, INC.
By: /s/ ALLAN WEINE
---------------------------
Name: Allan Weine
---------------------
Title: President
--------------------
Residence: Credit Suisse First Boston
--------------------------
Address: 227 W. Monroe St.
--------------------------
Chicago, IL 60606
--------------------------
Telephone No.: (312)750-3239
Telecopy No.: (312)750-1031
Attention: Allan Weine
----------------------------
with copies of all notices to:
Solomon, Zauderer, Elenhorn, Frischer & Sharp
---------------------------------------------
45 Rockefeller Plaza
---------------------------------------------
Suite 730
---------------------------------------------
New York, NY 10111
---------------------------------------------
Telephone No.: (212)424-0733
Telecopy No.: (212)956-4068
Attention: Bob Mazzeo
----------------------------------
Investment Amount $5,000,000
--------------------------
23
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Purchaser Investment Shares Series 1 A Series 1 B Series 2
Amount Warrants Warrants Warrants
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Ventures International $10,000,000 1,207,729 241,546 402,577 603,865
Marshall Capital Management, Inc. $ 5,000,000 603,865 120,773 201,288 301,933
TOTAL $15,000,000 1,811,594 362,319 603,865 905,798
</TABLE>
24
<PAGE>
EXHIBIT 4.2
EXHIBIT C
to Securities Purchase Agreement
--------------------------------
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 30,
1999, by and among Identix Incorporated, a corporation organized under the laws
of the State of Delaware (the "Company"), and the undersigned (the "Initial
Investors").
WHEREAS:
A. The Company and the Initial Investors have entered into a Securities
Purchase Agreement dated the date hereof (the "Securities Purchase Agreement;"
capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement). In
connection with the Securities Purchase Agreement, the Company has agreed, upon
the terms and subject to the conditions contained therein, to issue and sell to
the Initial Investors (i) shares of the Company's common stock, par value $0.01
per share (the "Common Stock"), (ii) the Series 1 Warrants, (iii) the Series 2
Warrants (together, the Series 1 Warrants and the Series 2 Warrants are the
"Warrants"). The shares of Common Stock issued on the Closing Date under the
Securities Purchase Agreement (the "Closing Date") are referred to herein as the
"Shares" and the shares of Common Stock issuable upon exercise of or otherwise
pursuant to the Warrants are referred to herein as the "Warrant Shares."
B. To induce the Initial Investors to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investors, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
-----------
As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investors" means the Initial Investors and any permitted
transferees or assignees who agree to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
-1-
<PAGE>
(ii) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(iii) "Registrable Securities" means (i) the Shares, (ii) the
Warrant Shares, (iii) any shares of Common Stock issued to an Investor in lieu
of any cash penalty payment pursuant to Section 2(c) hereof and (iv) any shares
of capital stock issued or issuable, from time to time (with any adjustments),
as a distribution on or in exchange for or otherwise with respect to any of the
foregoing, whether as default payments or otherwise.
(iv) "Registration Statement" means one or more registration
statements of the Company under the Securities Act registering all of the
Registrable Securities, including the Initial Registration Statement, any
Uncovered Shares Amendments and Uncovered Shares Registration Statements (each,
as defined below).
2. REGISTRATION.
------------
a. Mandatory Registration. The Company shall file with the United
----------------------
States Securities and Exchange Commission ("SEC"), on or prior to the date which
is two (2) business days after the Closing Date (the "Filing Deadline") a
Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of all of the Registrable Securities, subject to the consent of the
Initial Investors as to the use of such form (as determined pursuant to Section
11(j) hereof)) covering the resale of at least 3,079,711 shares of Common Stock,
which Registration Statement, to the extent allowable under the Securities Act
and the Rules promulgated thereunder shall state that such Registration
Statement also covers such indeterminate number of additional shares of Common
Stock as may become issuable upon exercise of the Warrants to prevent dilution
resulting from stock splits, stock dividends or similar transactions (the
"Initial Registration Statement"). Upon the request of the Investors made more
than 15 business days after the Closing Date but prior to the Effective Date of
the Initial Registration Statement, the Company will file a pre-effective
amendment to the Initial Registration Statement (the "Pre-Effective Amendment")
such that the Initial Registration Statement shall additionally cover
Registrable Securities equal to a good faith estimate of the number of shares of
Common Stock issuable upon exercise of the Series 1 B Warrants (with a
presumption that such estimate will equal the maximum number of shares of Common
Stock issuable under the Series 1 B Warrant). The Pre-Effective Amendment shall
be filed as soon as practicable, but in all events within five (5) days, after
such request. The Registrable Securities included in the Initial Registration
Statement shall be registered on behalf of the Investors as set forth in Section
11(k) hereof. The Initial Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided to (and subject to the review by) the Initial Investors and
their counsel at least two business days prior to its filing or other
submission. If for any reason (including, but not limited to, a determination
by the staff of the
-2-
<PAGE>
SEC that all or any portion of the Warrant Shares or any other Registrable
Securities cannot be included in the Initial Registration Statement (an "SEC
Determination")) the Initial Registration Statement declared effective by the
SEC does not include all of the Registrable Securities (any such shares that are
not included being the "Uncovered Shares"), the Company shall prepare and file
with the SEC, as soon as practicable, but in any event prior to the later of (x)
the tenth (10th) day after an Investor delivers to the Company notice of the
existence of any Uncovered Shares and (y) the tenth (10th) day after the date on
which the Initial Registration Statement is declared effective by the SEC (such
later date referred to herein as the "Uncovered Share Filing Deadline"), either
(a) an amendment (the "Uncovered Shares Amendment") to the Initial Registration
Statement effecting a registration of all of the Uncovered Shares or (b) a
registration statement which registers all of the Uncovered Shares (the
"Uncovered Shares Registration Statement"). The Uncovered Shares Amendment or
the Uncovered Shares Registration Statement (and each amendment or supplement
thereto, and each request for acceleration of effectiveness thereof) shall be
provided to the Initial Investors and their counsel for review and comment at
least two business days prior to its filing or other submission. The Company
shall use its best efforts to cause each of the Initial Registration Statement
and the Uncovered Shares Amendment or the Uncovered Shares Registration
Statement to become effective as soon as practicable after the filing thereof.
b. Underwritten Offering. The Investors may offer and sell the
---------------------
Registrable Securities pursuant to a Registration Statement filed in accordance
with Section 2(a) in an underwritten offering. In any such underwritten
offering, the Investors who hold a majority in interest of the Registrable
Securities subject to such underwritten offering, shall have the right to select
one legal counsel to represent the Investors and an investment banker or bankers
and manager or managers to administer the offering, which investment banker or
bankers or manager or managers shall be reasonably satisfactory to the Company.
In the event that any Investors elect not to participate in such underwritten
offering, the Registration Statement covering all of the Registrable Securities
shall contain appropriate plans of distribution reasonably satisfactory to the
Investors participating in such underwritten offering and the Investors electing
not to participate in such underwritten offering (including, without limitation,
the ability of nonparticipating Investors to sell from time to time and at any
time during the effectiveness of such Registration Statement).
c. Payments by the Company.
-----------------------
(i) The Company shall use its best efforts to cause each Registration
Statement required to be filed pursuant to Section 2(a) hereof to become
effective as soon as practicable, but, as to the Initial Registration Statement
including all Registrable Securities for which the Investors have requested a
Pre-Effective Amendment filed pursuant to Section 2(a), in no event later than
the ninetieth (90th) day after the Closing Date (the "Registration Deadline"),
and as to any Uncovered Shares Amendment or Uncovered Shares Registration
Statement, in no event later than the sixtieth (60th) day after the Uncovered
Share Filing Deadline (the "Uncovered Share Registration Deadline"). If (A) the
Registration Statement(s) covering the Registrable Securities required to be
filed by the Company pursuant to Section 2(a) hereof is not filed with the SEC
by the Filing Deadline or the Uncovered Share Filing Deadline, as applicable,
-3-
<PAGE>
or (B) the Initial Registration Statement including all Registrable Securities
for which the Investors have requested a Pre-Effective Amendment is not declared
effective by the SEC on or before the Registration Deadline, or (C) any
Uncovered Share Registration Statement is not declared effective by the SEC on
or before the Uncovered Share Registration Deadline, or (D) after a Registration
Statement has been declared effective by the SEC, sales of all the Registrable
Securities (including any Registrable Securities required to be registered
pursuant to Section 3(b) hereof) required to be included therein (except, in the
case of the Initial Registration Statement, for Uncovered Shares which are the
subject of an SEC Determination) cannot be made pursuant to the Registration
Statement because such Registration Statement ceases to be effective under the
Securities Act or the Company informs the Investors that they should not use the
Registration Statement for sales of Registrable Securities (each a "Registration
Suspension"), then the Company will, subject to Section 2(c)(iv) below, make
payments to the Investors in such amounts and at such times as shall be
determined pursuant to this Section 2(c) as relief for the damages to the
Investors by reason of any such delay in or reduction of their ability to sell
the Registrable Securities (which remedy shall not be exclusive of any other
remedies available to obtain specific performance by the Company of its
obligations hereunder).
(ii) Filing and Effectiveness Deadlines. In the event the penalty
----------------------------------
provisions of Section 2(c)(i) are triggered with respect to the Initial
Registration Statement, the Company shall pay to each Investor an amount equal
to (A) the Investment Amount (as defined in the Securities Purchase Agreement)
paid by such Investor (or if such Investor is not an Initial Investor, the
Investment Amount paid by such Investor's transferor or assignor with respect to
the transferred Shares and Warrants) for the Shares and Warrants purchased by
such Investor (or such Investor's transferor or assignor) pursuant to the
Securities Purchase Agreement (the "Aggregate Purchase Price"), multiplied by
(B) one percent (with respect to the period commencing on the Filing Deadline or
the Registration Deadline, as applicable; provided that such percentage shall
increase to and remain at two percent (2%) for purposes of all calculations to
the extent that such calculations apply to time periods after the thirtieth
(30th) day after the Filing Deadline or the Registration Deadline, as
applicable), multiplied by (C) the sum of (1) the quotient calculated by
dividing (aa) the number of days after the Filing Deadline and prior to the date
the Registration Statement as required to be filed pursuant to Section 2(a), is
filed with the SEC by (bb) thirty, plus (2) the quotient calculated by dividing
====
(aa) the number of days after the Registration Deadline and prior to the date
the Registration Statement including all Registrable Securities for which the
Investors have requested a Pre-Effective Amendment pursuant to Section 2(a), is
declared effective by the SEC by (bb) thirty, plus (3) in the event of a
====
Registration Suspension, except in the case of a Blackout Period (as defined
below), the quotient calculated by dividing (aa) the sum of the number of
additional days that sales of any Registrable Securities required to be included
in a Registration Statement (except, in the case of the Initial Registration
Statement, for any Uncovered Shares which are the subject of an SEC
Determination) cannot be made pursuant to a Registration Statement after such
Registration Statement has been declared effective by (bb) thirty.
(iii) Uncovered Share Filing and Effectiveness Deadlines. In the
--------------------------------------------------
event the penalty provisions of Section 2(c)(i) are triggered with respect to
any Uncovered Shares, the Company shall pay to each Investor an amount equal to
(A) the aggregate value of the B Warrant
-4-
<PAGE>
Shares (as defined in the Series 1 Warrant) issued to such Investor based on a
price per share equal to the Average Price (as defined in the Series 1 Warrant)
of the Company's Common Stock on the effective date of the Initial Registration
Statement, multiplied by (B) one percent (with respect to the period commencing
on the Uncovered Share Filing Deadline or the Uncovered Share Registration
Deadline, as applicable; provided that such percentage shall increase to and
remain at two percent (2%) for purposes of all calculations to the extent that
such calculations apply to time periods after the thirtieth (30th) day after the
Uncovered Share Filing Deadline or the Uncovered Registration Deadline, as
applicable), multiplied by (C) the sum of (1) the quotient calculated by
dividing (aa) the number of days after the Uncovered Share Filing Deadline and
prior to the date the Uncovered Share Amendment or Uncovered Share Registration
Statement, as applicable, in each case as required to be filed pursuant to
Section 2(a), is filed with the SEC by (bb) thirty, plus (2) the quotient
====
calculated by dividing (aa) the number of days after the Uncovered Share
Registration Deadline, as applicable, and prior to the date the Uncovered Share
Amendment or Uncovered Share Registration Statement, as applicable, in each case
as filed pursuant to Section 2(a), is declared effective by the SEC by (bb)
thirty.
(iv) Notwithstanding the foregoing, a Registration Suspension effected
by the Company pursuant to a Blackout Period (as defined below) shall not give
rise to an obligation to make such payments. For purposes of this Agreement,
"Blackout Period" shall mean such day or days, not to exceed an aggregate of
thirty (30) business days during any period of twelve (12) consecutive months,
with respect to which the Board of Directors of the Company determines in good
faith (A) that an amendment or supplement to a Registration Statement or
prospectus contained therein is necessary, in light of subsequent events, in
order to correct a material misstatement made therein or to include information
the absence of which would render the Registration Statement or such prospectus
materially misleading and (B) that the filing of such amendment or supplement
would result in the disclosure of information which the Company has a bona fide
---- ----
business purpose for preserving as confidential; provided that the Company shall
--------
be entitled to impose no more than two (2) Blackout Periods during any period of
twelve (12) consecutive months.
(v) Method of Payment. Amounts payable under this Section 2(c) shall
-----------------
be paid in cash provided, however, that, with respect to each Investor, upon
-------- -------
mutual agreement between the Company and such Investor, such amount may be paid
in shares of Common Stock at a price equal to the Market Price (as defined in
the Securities Purchase Agreement) as of the date such shares are issued, and
any shares of Common Stock so issued shall be Registrable Securities.
Payments of cash pursuant hereto shall be made within five (5) days after the
end of each period that gives rise to such obligation, provided that, if any
such period extends for more than thirty (30) days, interim payments shall be
made for each such thirty (30) day period. Delivery of shares of Common Stock
issued as payment of the amounts set forth in this Section 2(c) shall be made
within three (3) business days after the Investor and the Company agree that
such Investor shall receive Common Stock instead of cash. If such payment is
not made, or securities are not delivered, as the case may be, within the
applicable period, the Investor thereafter shall be
-5-
<PAGE>
entitled to interest on the unpaid amount at a rate equal of two percent (2%)
per month until such amount is paid in full to the Investor. If the Company is
unable to pay all amounts due and payable with respect to the penalties, the
Company will pay the Investors such amounts pro rata based upon the total
amounts payable to each Investor as a percentage of the total amounts payable to
all Investors.
(vi) Notwithstanding anything else in this Section 2(c), penalties
shall cease accruing under this Section 2(c) upon the expiration of the
Registration Period (as defined below).
d. Eligibility for Form S-3. The Company represents and warrants
------------------------
that it is eligible to register the resale of Registrable Securities on a
registration statement on Form S-3 under the Securities Act. To the Company's
knowledge, after reasonable investigation, there exist no facts or circumstances
(including without limitation any required approvals or waivers or any
circumstances that may delay or prevent the obtaining of accountant's consents)
that would prohibit or delay the preparation and filing of a registration
statement on Form S-3 with respect to the Registrable Securities. The Company
shall file all reports required to be filed by the Company with the SEC in a
timely manner so as to maintain or, if applicable, regain its eligibility for
the use of Form S-3.
3. OBLIGATIONS OF THE COMPANY.
--------------------------
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare and file with the SEC, on or before the
Filing Deadline or the Uncovered Share Filing Deadline, as applicable, the
applicable Registration Statement required by Section 2(a) and shall use its
best efforts to cause such Registration Statement to become effective as soon as
practicable after such filing (but in no event later than the Registration
Deadline or the Uncovered Share Registration Deadline, as applicable). The
Company shall keep such Registration Statement effective pursuant to Rule 415 at
all times until the date on which all of the Registrable Securities (in the
reasonable opinion of counsel to the Initial Investors or the Company) may be
immediately sold to the public in a single transaction pursuant to Rule 144(k)
under the Securities Act or otherwise without registration or restriction (the
"Registration Period"). Each such Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein and all
documents incorporated by reference therein) (i) shall comply in all material
respects with the requirements of the Securities Act and the rules and
regulations of the SEC promulgated thereunder and (ii) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein not misleading.
The financial statements of the Company included in the Registration Statement
or incorporated by reference therein will comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC applicable with respect thereto. Such financial
statements will be prepared in accordance with U.S. generally accepted
accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in
-6-
<PAGE>
such financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed on summary statements and fairly present in all material respects the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end adjustments)).
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement. If for any reason the number
of shares registered under the Initial Registration Statement filed pursuant to
this Agreement plus the number of shares then required to be registered under an
Uncovered Share Amendment or Uncovered Share Registration Statement is, for any
three (3) consecutive trading days (the last of such three (3) trading days
being the "Registration Trigger Date"), insufficient to cover one hundred
percent (100%) of the Registrable Securities (including Registrable Securities
issuable upon exercise of the Warrants (without giving effect to any limitations
on exercise contained in Section 7(g) of the Warrants)), the Company shall amend
the Registration Statement, or file a new Registration Statement (on the
shortest form available therefor, if applicable), or both, so as to cover one
hundred percent (100%) of the Registrable Securities (including Registrable
Securities issuable upon exercise of the Warrants (without giving effect to any
limitations on exercise contained in Section 7(g) of the Warrants)) as of the
Registration Trigger Date, in each case, as soon as practicable, but in any
event within ten (10) days after the Registration Trigger Date. The Company
shall use its best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following the filing
thereof. Any failure by the Company to effectuate the provisions of this
Section shall result in the accrual of penalties as set forth in Section 2.
c. The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement and its legal counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto. In the case of the Registration Statement referred to in
Section 2(a), at the request of any Investor, the Company shall furnish to such
Investor a copy of each letter written by or on behalf of the Company to the SEC
or the staff of the SEC at least 2 days prior to the date of submission of such
letter (including, without limitation, any request to accelerate the
effectiveness of any Registration Statement or amendment thereto), and, promptly
upon receipt, each item of correspondence from the SEC or the staff of the SEC,
in each case relating to such Registration Statement (other than any portion, if
any, thereof which contains information for which the Company has sought
confidential treatment), and the Company shall cooperate with each Investor in
making all reasonable
-7-
<PAGE>
modifications requested by such Investor to any portion of any letter or other
correspondence from the Company to the SEC that addresses the transactions
contemplated by the Securities Purchase Agreement or such Investor, (ii) on the
date of effectiveness of the Registration Statement or any amendment thereto, a
notice stating that the Registration Statement or amendment has been declared
effective, and (iii) such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor.
d. In the event the Investors who hold a majority in interest of the
Registrable Securities being offered in an offering select underwriters for the
offering, the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriters of such offering.
e. As promptly as practicable after becoming aware of such event, the
Company shall notify each Investor by telephone and facsimile of the happening
of any event, of which the Company has knowledge, as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and, except during a Blackout Period, use its best efforts promptly
to prepare a supplement or amendment to the Registration Statement to correct
such untrue statement or omission and deliver such number of copies of such
supplement or amendment to each Investor as such Investor may reasonably
request.
f. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest practicable date (including in each case by amending or supplementing
such Registration Statement) and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof
(and if such Registration Statement is supplemented or amended, deliver such
number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request).
g. The Company shall permit a single firm of counsel designated by
the Initial Investors to review the Registration Statement and all amendments
and supplements thereto a reasonable period of time prior to their filing with
the SEC.
h. The Company shall make generally available to its security holders
as soon as practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement.
-8-
<PAGE>
i. At the request of any Investor whose Registrable Securities are
included, in the case of an underwritten offering, in a Registration Statement,
the Company shall furnish, on the date of effectiveness of the Registration
Statement (i) an opinion, dated as of such date, from counsel representing the
Company addressed to the Investors and in form, scope and substance as is
customarily given in an underwritten public offering and (ii) a letter, dated
such date, from the Company's independent certified public accountants in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
Investors and the underwriters, if any.
j. The Company shall make available for inspection by (i) any
Investor whose Registrable Securities are included in a Registration Statement,
(ii) any underwriter participating in any disposition pursuant to a Registration
Statement, (iii) one firm of attorneys and one firm of accountants or other
agents retained by the Investors, and (iv) one firm of attorneys retained by all
such underwriters (collectively, the "Inspectors") all pertinent financial and
other records, and pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably deemed necessary by each
Inspector to enable each Inspector to exercise its due diligence responsibility,
and cause the Company's officers, directors and employees to supply all
information which any Inspector may reasonably request for purposes of such due
diligence, provided, however, that each such Inspector shall, if reasonably
-------- -------
requested to do so by the Company, be required to execute a confidentiality
agreement in form and substance reasonably acceptable to such Inspector and the
Company.
k. The Company shall hold in confidence and not make any disclosure
of information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement, or (v) such Investor
consents to the form and content of any such disclosure. The Company agrees
that it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor prior
to making such disclosure, and allow the Investor, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
l. The Company shall use its best efforts to promptly either (i)
cause all the Registrable Securities covered by the Registration Statement to be
listed on the NYSE or the AMEX or another national securities exchange and on
each additional national securities exchange on which securities of the same
class or series issued by the Company are then listed, if any, if the listing of
such Registrable Securities is then permitted under the rules of such exchange,
or (ii) secure the designation and quotation, of all the Registrable Securities
covered by the Registration Statement on the NNM and, without limiting the
generality of the foregoing, to arrange for or maintain at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities.
-9-
<PAGE>
m. The Company shall provide a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.
n. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Investors may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Investors may request, and, within three (3)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel selected by the Company to deliver, to the transfer agent
for the Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) an opinion of such
counsel in the form attached hereto as Exhibit 1.
o. Following effectiveness of the Initial Registration Statement, at
the request of an Initial Investor or Investors who holds a majority-in-interest
of the Registrable Securities, the Company shall prepare and file with the SEC
such amendments (including post-effective amendments) or supplements to a
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary in order to change the plan of
distribution set forth in such Registration Statement; provided, however, that
-------- -------
in the event that the Company files an amendment at the request of the Initial
Investors pursuant to this paragraph and the SEC reviews such amendment, then
the Company shall not be responsible for any penalties under Section 2(c) from
any resulting Registration Suspension arising solely from said review so long as
the Company uses its best efforts to have the Registration Statement declared
effective as soon as practicable following such Registration Suspension.
p. The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including without limitation the Securities Act and the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated by the SEC).
q. The Company shall take all such other actions as any Investor or
the underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities.
r. From and after the date of this Agreement, the Company shall not,
and shall not agree to, allow the holders of any securities of the Company to
include any of their securities in the Initial Registration Statement under
Section 2(a) hereof or any amendment or supplement thereto under Section 3(b)
hereof without the consent of the holders of a majority in interest of the
Registrable Securities, provided, however, that up to 33,186 shares of the
-------- -------
-10-
<PAGE>
Company's Common Stock issuable upon exercise of warrants issued to Hambrecht &
Quist as compensation for its role in the transactions contemplated by the
Securities Purchase Agreement may be included in the Initial Registration
Statement.
4. OBLIGATIONS OF THE INVESTORS.
----------------------------
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. Each Investor shall use its best efforts to promptly provide the
Company with any information reasonably requested by the Company relating to
such Investor, the plan of distribution or otherwise within the knowledge of
such Investor in connection with responding to comments received by the Company
from the SEC or in connection with the preparation, filing or effectiveness of
any registration statement hereunder. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Investor
that such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least three (3) business days prior to the first
anticipated filing date of the Registration Statement, the Company shall notify
each Investor of any information the Company requires from each such Investor.
The Company shall provide each Investor with a draft registration statement
prior to filing, and if such Investor does not object to the contents of such
draft within two (2) days of its delivery, the Company may file such
registration statement after such second day.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
c. In the event Investors holding a majority in interest of the
Registrable Securities being offered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriter(s) of such offering and the Company and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of the Registrable Securities, unless such Investor has notified
the Company in writing of such Investor's election not to participate in such
underwritten distribution.
d. No Investor may participate in any underwritten distribution
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements in usual and
customary form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
-11-
<PAGE>
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions and any expenses in excess of those
payable by the Company pursuant to Section 5 below. Notwithstanding anything in
this Section 4(d) to the contrary, this Section 4(d) is not intended to limit an
Investor's rights under Section 2(a) or 3(b) hereof.
e. In the event that the Company informs the Investor that the
Company must file an amendment or supplement to the Registration Statement to
correct an untrue statement or omission pursuant to Section 3(d) of this
Agreement, the Investor will not sell any Shares until the Company notifies the
Investor that the Company has filed such amendment or supplement.
5. EXPENSES OF REGISTRATION.
------------------------
All reasonable expenses incurred by the Company in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3 above,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company, shall be borne by the Company. Fees and disbursements of one
counsel selected by the Investors in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3 above shall be deemed reimbursable
"Expenses" under Section 5(e) of the Securities Purchase Agreement.
6. INDEMNIFICATION.
---------------
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Investor who holds such Registrable Securities, and
(ii) the directors, officers, partners, members, employees and agents of such
Investor and each person who controls any Investor within the meaning of Section
15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), if any (each, an "Indemnified Person"), against
any joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in respect
thereof, "Claims") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the omission
or alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or
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<PAGE>
any rule or regulation thereunder relating to the offer or sale of the
Registrable Securities (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). Subject to the restrictions set forth in
Section 6(c) with respect to the number of legal counsel, the Company shall
reimburse the Investors and each other Indemnified Person, promptly as such
expenses are incurred and are due and payable, for any reasonable legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person expressly for use in the Registration
Statement or any such amendment thereof or supplement thereto; (ii) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld; and (iii) with respect to any preliminary prospectus,
shall not inure to the benefit of any Indemnified Person if the untrue statement
or omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or supplemented,
if such corrected prospectus was timely made available by the Company pursuant
to Section 3(c) hereof, and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving rise to a
Violation and such Indemnified Person, notwithstanding such advice, used it.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9.
b. In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees severally and not jointly to
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, its employees, agents and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder or underwriter
within the meaning of the Securities Act or the Exchange Act (collectively and
together with an Indemnified Person, an "Indemnified Party"), against any Claim
to which any of them may become subject, under the Securities Act, the Exchange
Act or otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and subject to Section 6(c) such Investor will
reimburse any legal fees and expenses (promptly as such expenses are incurred
and are due and payable) reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld;
provided, further, however, that the Investor shall be liable under this
Agreement (including this Section 6(b) and Section 7) for only that amount as
does not exceed the net proceeds actually received by such Investor as a result
of the sale of Registrable Securities pursuant to such Registration
-13-
<PAGE>
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9.
c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that such indemnifying party shall not be entitled to assume such
defense and an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential conflicts of interest between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action include both the Indemnified Person or the Indemnified Party and the
indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are in conflict with those
available to such indemnifying party. The indemnifying party shall pay for only
one separate legal counsel for the Indemnified Persons or the Indemnified
Parties, as applicable, and such legal counsel shall be selected by Investors
holding a majority-in-interest of the Registrable Securities included in the
Registration Statement to which the Claim relates (with the approval of the
Initial Investors if any of them holds Registrable Securities included in such
Registration Statement), if the Investors are entitled to indemnification
hereunder, or by the Company, if the Company is entitled to indemnification
hereunder, as applicable. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
7. CONTRIBUTION.
------------
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section
6, (ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section
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<PAGE>
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (iii) contribution (together with any indemnification or
other obligations under this Agreement) by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
------------------------------
With a view to making available to the Investors the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees,
during the Registration Period, to:
a. file with the SEC in a timely manner and make and keep available
all reports and other documents required of the Company under the Securities Act
and the Exchange Act so long as the Company remains subject to such requirements
(it being understood that nothing herein shall limit the Company's obligations
under Section 5(c) of the Securities Purchase Agreement) and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
b. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
---------------------------------
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall only
be assignable by an Investor to a Permitted Transferee (as defined in the
Securities Purchase Agreement) and only if: (i) the Investor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company after such assignment, (ii) the Company is
furnished with written notice of (a) the name and address of such transferee or
assignee and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) following such transfer or assignment,
the further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws, (iv)
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein, and (v) such transfer shall have been made
in accordance with the applicable requirements of the Securities Purchase
Agreement. In addition, and notwithstanding anything to the contrary contained
in this Agreement, the Securities Purchase Agreement or the Warrants, the
Securities (as defined in the Securities Purchase Agreement) may be pledged, and
all rights of the Investors under this Agreement or any other agreement or
document related to the transaction
-15-
<PAGE>
contemplated hereby may be assigned, without further consent of the Company, to
a bona fide pledgee in connection with an Investor's margin or brokerage
accounts.
10. AMENDMENT OF REGISTRATION RIGHTS.
--------------------------------
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with written consent of the Company, and the Investors
who hold a majority in interest of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.
11. MISCELLANEOUS.
-------------
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities and/or any of the Warrants. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities with
respect to the same Registrable Securities or Warrants, the Company shall act
upon the basis of instructions, notice or election received from the registered
owner of such Registrable Securities.
b. Any notices required or permitted to be given under the terms of
this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five (5) days after being placed in the mail, if mailed, one
(1) business day after being deposited with a nationally recognized overnight
delivery service, or immediately if delivered personally, by same-day courier or
by confirmed telecopy, (such confirmation being conclusive proof of receipt or
delivery) in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Identix Incorporated
510 N. Pastoria Ave.
Sunnyvale, CA 94086
Telephone No.: 408-731-2000
Facsimile No.: 408-739-0178
Attention: President
With a copy to:
Richard A. Peers
Heller Ehrman White & McAuliffe
525 University Ave.
Palo Alto, CA 94301-1900
Telephone No.: 650-324-7000
Facsimile No.: 650-324-0638
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<PAGE>
If to an Investor, at such address as such Investor shall have provided in
writing to the Company or such other address as such Investor furnishes by
notice given in accordance with this Section 11(b).
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
d. This Agreement shall be governed by and construed in accordance
with the laws of the State of California applicable to contracts made and to be
performed in the State of California. Each party irrevocably consents to the
jurisdiction of the United States federal courts and state courts located in San
Francisco, California in any suit or proceeding based on or arising under this
Agreement and irrevocably agrees that all claims in respect of such suit or
proceeding shall be determined in such courts. Each party irrevocably waives
the defense of an inconvenient forum to the maintenance of such suit or
proceeding. Each party further agrees that service of process upon it mailed by
first class mail to the address set forth in Section 11(b) shall be deemed in
every respect effective service of process upon it in any such suit or
proceeding. Nothing herein shall affect any party's right to serve process in
any other manner permitted by law. Each party agrees that a final non-
appealable judgment in any such suit or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
e. This Agreement, the Securities Purchase Agreement and the Warrants
(including all schedules and exhibits thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement, the
Securities Purchase Agreement and the Warrants supersede all prior agreements
and understandings among the parties hereto and thereto with respect to the
subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates,
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<PAGE>
instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
j. All consents, approvals and other determinations to be made by the
Investors pursuant to this Agreement shall be made by the Investors holding a
majority in interest of the Registrable Securities (determined as if all
Warrants then outstanding had been exercised by the payment of cash) then held
by all Investors.
k. The initial number of Registrable Securities included on any
Registration Statement and each increase to the number of Registrable Securities
included thereon shall be registered on behalf of each Investor pro rata based
on the number of Registrable Securities held by each Investor at the time of
such establishment or increase, as the case may be. In the event an Investor
shall sell or otherwise transfer any of such holder's Registrable Securities,
each transferee shall be deemed to have registered on its behalf a pro rata
portion of the number of Registrable Securities included on a Registration
Statement for such transferor. Any shares of Common Stock included on a
Registration Statement on behalf of any person or entity which does not hold any
Registrable Securities shall be deemed registered on behalf of the remaining
Investors, pro rata based on the number of shares of Registrable Securities then
held by such Investors. For the avoidance of doubt, (A) the number of
Registrable Securities held by an Investor shall be determined as if all
Warrants then outstanding and held by an Investor were exercised by the payment
of cash and (B) no provision of this subsection shall operate to reduce the
number of Registrable Securities registered on behalf of any Investor pursuant
to the first sentence of this subsection.
l. For purposes of this Agreement, the term "business day" means any
day other than a Saturday or Sunday or a day on which banking institutions in
the State of California are authorized or obligated by law, regulation or
executive order to close.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
IDENTIX INCORPORATED
By:/s/ JAMES P. SCULLION
-----------------------------------
Name: James P. Scullion
---------------------------------
Its: President and CFO
----------------------------------
INITIAL INVESTORS:
CAPITAL VENTURES INTERNATIONAL
By: Heights Capital Management, Inc.,
Its authorized agent
By: /s/ MICHAEL SPOLAN
---------------------------------
Name: Michael Spolan
-------------------------------
Title: Secretary and General Counsel
------------------------------
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
IDENTIX INCORPORATED
By: /s/ JAMES P. SCULLION
-----------------------------------
Name: James P. Scullion
---------------------------------
Its: President and CFO
----------------------------------
INITIAL INVESTORS:
MARSHALL CAPITAL MANAGEMENT, INC.
By: /s/ ALLAN WEINE
------------------------------
Name: Allan Weine
----------------------------
Title: President
---------------------------
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<PAGE>
EXHIBIT 1
to
Registration
Rights
Agreement
[Date]
[Name and address
of transfer agent]
RE: IDENTIX INCORPORATED
Ladies and Gentlemen:
We have acted as counsel to Identix Incorporated, a Delaware corporation
(the "Company"), in connection with the Registration Statement on Form S-3 (the
"Registration Statement") filed with the Securities and Exchange Commission (the
"Commission") on or about _______ __, 1999, for the purpose of registering under
the Securities Act of 1933, as amended, up to ________ shares of its Common
Stock, $.01 par value (the "Shares") for resale by certain selling stockholders.
It is our opinion that the Registration Statement on Form S-3 (File No.
333- _____________) naming [names of Purchaser] as selling stockholders of the
Shares was declared effective by the Securities and Exchange Commission on July
__, 1999.
Our opinion expressed in this letter is based solely upon a letter from the
Commission date _______, 1999 confirming that the registration was declared
effective and telephone communications between Larry Wainblat, an attorney of
this office, and M_. ___________, a member of the Commission staff on July __,
1999, confirming that no stop order has been issued as of the date of such
communication.
This opinion is rendered to you in connection with the resale of the shares
under the Registration Statement and is solely for your benefit. This opinion
may not be relied upon by you for any other purpose, or relied upon by any other
person, firm, corporation or other entity for any purpose without our prior
consent. We disclaim any obligation to advise you of any change of law that
occurs, or any facts of which we may become aware, after the date of this
opinion.
Very truly yours,
cc: [Names of Investor]
<PAGE>
EXHIBIT 4.3
EXHIBIT A
to Securities Purchase Agreement
--------------------------------
VOID AFTER 5:00 P.M., SAN FRANCISCO TIME,
ON JULY 1, 2004
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY NOT BE
OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
Date: July 1, 1999
IDENTIX INCORPORATED
SERIES 1 STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, ____________________________, or
its registered assigns, is entitled to purchase from Identix Incorporated, a
corporation organized under the laws of the State of Delaware (the "Company"),
(A) at any time or from time to time during the A Warrant Exercise Period (as
defined in Section 2 below), up to _______ fully paid and nonassessable shares
(the "A Warrant Shares") of the Company's common stock, par value $.01 per share
(the "Common Stock"), at an exercise price per share equal to $11.18 (the "A
Warrant Exercise Price"), and (B) at any time or from time to time during the B
Warrant Exercise Period (as defined in Section 2 below), up to ______ fully paid
and nonassessable shares of Common Stock, (the "B Warrant Shares") at an
exercise price per share equal to $0.01 (the "B Warrant Exercise Price", and
together with the A Warrant Exercise Price, the "Exercise Prices"). The number
of shares of Common Stock purchasable hereunder (the "Warrant Shares") and the
Exercise Prices are subject to adjustment as provided in Section 4 hereof. The
term "Warrants" means this Warrant, the other Series 1 Warrants (the "Series 1
Warrants") and the Series 2 Warrants of the Company, all issued pursuant to that
certain Securities Purchase Agreement, dated as of June 30, 1999, by and among
the Company and the other signatories thereto (the "Securities Purchase
Agreement").
<PAGE>
This Warrant is subject to the following terms, provisions and conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for Shares.
----------------------------------------------------------------
(a) Exercisable Portion of B Warrant Shares. If the "Market Price" (as
---------------------------------------
defined in the Securities Purchase Agreement) for the Company's common stock on
the earlier of (x) the date the "Initial Registration Statement" (as that term
is defined in the Registration Rights Agreement) is declared effective by the
SEC, or (y) the date the Holder deems the B Warrant exercisable pursuant to
Section 2 hereof (the earlier to occur of (x) or (y) being the "Effective
Date"), is less than $8.71, the number of B Warrant Shares for which this
Warrant is exercisable shall be equal to (A) the quotient of the Holder's
Investment Amount (as defined in the Securities Purchase Agreement) divided by
the Market Price (as defined in the Securities Purchase Agreement) of the Common
Stock on the Effective Date less (B) the number of shares of Common Stock issued
to holder at the closing under the Securities Purchase Agreement (the
"Closing"), provided, however, that notwithstanding anything to the contrary in
-------- -------
the foregoing, in no event shall the number of B Warrant Shares issuable upon
exercise of this Warrant plus the number of shares of Common Stock issued to the
holder at the Closing exceed the applicable maximum below:
(i) If the Effective Date is fifteen or fewer business days following
the day on which the Closing occurs (the "Closing Date"), this Warrant shall
not be exercisable for any B Warrant Shares and the holder's rights with respect
to any B Warrant Shares shall expire.
(ii) If the Effective Date is more than fifteen business days, but
fewer than 31 business days following the Closing Date, _________ shares of
Common Stock .
(iii) If the Effective Date is thirty-one or more business days
following the Closing Date, _________ shares of Common Stock.
Notwithstanding anything in the foregoing to the contrary, if the Market Price
for the Company's common stock on the Effective Date is greater than or equal to
the Market Price for the Company's common stock on the Closing Date, this
Warrant shall not be exercisable for any B Warrant Shares and the holder's
rights with respect to any B Warrant Shares shall expire.
(b) Exercise. Subject to the provisions hereof, including, without
--------
limitation, the limitations contained in Section 7 hereof, this Warrant may be
exercised, with respect to the A Warrant Shares, at any time or from time to
time during the A Warrant Exercise Period, and with respect to the B Warrant, at
any time or from time to time during the B Warrant Exercise Period, by the
holder hereof, in whole or in part, in accordance with the procedures set forth
in this Section 1. In order to exercise this Warrant, the holder shall (i)
deliver in accordance with Section 9 hereof, a copy of the fully executed
exercise agreement in the form attached hereto (the "Exercise Agreement"), to
the Company by 11:59 p.m. San Francisco, California time on the Exercise Date,
(ii) surrender or cause to be surrendered this Warrant along with a copy of the
2
<PAGE>
Exercise Agreement as soon as practicable thereafter (but in any event within
five (5) business days after the Exercise Date) to the Company at the Company's
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof) and (iii), unless this Warrant is
being exercised pursuant to the cashless exercise provisions of Section 11(c)
hereof, make payment to the Company in cash, by certified or official bank check
or by wire transfer for the account of the Company, of the applicable Exercise
Price for the Warrant Shares specified in the Exercise Agreement within three
(3) business days after the Exercise Date). The Warrant Shares so purchased
shall be deemed to be issued to the holder hereof or such holder's designee, as
the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered and the completed Exercise
Agreement shall have been delivered and payment shall have been made for such
shares as set forth above or, if such day is not a business day, on the next
succeeding business day. The Warrant Shares so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding three (3)
business days, after this Warrant shall have been so exercised (the "Delivery
Period"). If the Company's transfer agent is participating in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer program, and so long as
the certificates therefor are not required to bear a legend and the holder is
not obligated to return such certificate for the placement of a legend thereon,
the Company shall cause its transfer agent to electronically transmit the
Warrant Shares so purchased to the holder by crediting the account of the holder
or its nominee with DTC through its Deposit Withdrawal Agent Commission system
("DTC Transfer"). If the aforementioned conditions to a DTC Transfer are not
satisfied, the Company shall deliver to the holder physical certificates
representing the Warrant Shares so purchased. Further, the holder may instruct
the Company to deliver to the holder physical certificates representing the
Warrant Shares so purchased in lieu of delivering such shares by way of DTC
Transfer. Any certificates so delivered shall be in such denominations as may
be requested by the holder hereof, shall be registered in the name of such
holder or such other name as shall be designated by such holder and, following
the date on which the Warrant Shares have been registered under the Securities
Act pursuant to that certain Registration Rights Agreement, dated as of June 30,
1999, by and between the Company and the other signatories thereto (the
"Registration Rights Agreement") or otherwise may be sold by the holder pursuant
to Rule 144(k) promulgated under the Securities Act (or a successor rule), shall
not bear any restrictive legend. If this Warrant shall have been exercised only
in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the holder a
new Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised.
(c) Default. If, at any time during the A Warrant Exercise Period or the B
-------
Warrant Exercise Period, a holder of this Warrant submits this Warrant, an
Exercise Agreement and payment to the Company of the applicable Exercise Price
for each of the Warrant Shares specified in the Exercise Agreement (or elects a
cashless exercise pursuant to Section 11(c) if applicable), and the Company
fails for any reason to deliver, on or prior to the tenth (10th) business day
following the expiration of the Delivery Period for such exercise, the number of
3
<PAGE>
shares of Common Stock to which the holder is entitled upon such exercise (an
"Exercise Default"), then the Company shall pay to the holder payments
("Exercise Default Payments") for an Exercise Default in the amount of (a)
(N/365), multiplied by (b) the Average Price (as defined in Section 4(i) hereof)
on the date the Exercise Agreement giving rise to the Exercise Default is
transmitted in accordance with this Section 1 (the "Exercise Default Date"),
multiplied by (c) the number of shares of Common Stock the Company failed to so
deliver in such Exercise Default, multiplied by (d) .18, where N = the number of
days from the Exercise Default Date to the date that the Company effects the
full issuance and delivery of the Warrant Shares which gave rise to the Exercise
Default. The accrued Exercise Default Payment for each thirty day period shall
be paid in cash or Common Stock, at the holder's election, as follows:
(x) Unless otherwise agreed to by the parties, cash payment shall be
made to the holder on the fifth day after the end of each successive thirty day
(or shorter) period during the continuance of the Exercise Default; and
(y) In the event the holder and the Company mutually agree that the
holder may take such payment in Common Stock rather than cash, the Company shall
issue to holder the number of shares of Common Stock equal to the amount of such
Exercise Default Payment divided by the Average Price (as defined in Section
4(i)) (as in effect at the time of conversion) on the fifth day after the end of
each thirty day (or shorter) period during the continuance of the Exercise
Default, which shares of Common Stock shall be delivered within two (2) business
days thereafter.
Nothing herein shall limit the holder's right to pursue actual damages for
the Company's failure to maintain a sufficient number of authorized shares of
Common Stock as required pursuant to the terms of Section 3(b) hereof or to
otherwise issue shares of Common Stock upon exercise of this Warrant in
accordance with the terms hereof, and the holder shall have the right to pursue
all remedies available at law or in equity (including a decree of specific
performance and/or injunctive relief).
2. Period of Exercise. The A Warrant may be exercised at any time or from
------------------
time to time during the period (the "A Warrant Exercise Period") beginning on
(a) the Closing Date and ending (b) at 5:00 p.m., San Francisco, California
time, on the fifth anniversary of the date of original issuance hereof, and the
B Warrant may be exercised at any time or from time to time during the period
(the "B Warrant Exercise Period") beginning on (a) the date the Initial
Registration Statement is declared effective by the SEC and ending (b) at 5:00
p.m., San Francisco, California time, on the fifth business day following such
date provided, however, that in the event the Initial Registration Statement has
-------- -------
not been declared effective by the SEC within 90 days of the date hereof, the
holder may at any time thereafter but before the one year anniversary of the
Closing, by written notice delivered to the Company, deem the B Warrant
exercisable on the date of such notice and the B Warrant shall expire five
business days thereafter, provided further, that if such election has not been
-------- -------
made before the one year
4
<PAGE>
anniversary of the Closing, then the B Warrant will automatically be deemed
exercisable on such one year anniversary and the B Warrant shall expire five
business days thereafter.
3. Certain Agreements of the Company. The Company hereby covenants and
---------------------------------
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance
-----------------------
in accordance with the terms of this Warrant, be validly issued, fully paid and
nonassessable and free from all taxes, liens, claims and encumbrances.
(b) Reservation of Shares. During the period (the "Investment
---------------------
Period") beginning on the Closing Date and ending upon the expiration of both
the A Warrant Exercise Period and the B Warrant Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise in full of this Warrant (without giving effect to the
limitations on exercise set forth in Section 7(g) hereof).
(c) Listing. The Company has secured the listing of the shares of
-------
Common Stock issuable upon exercise of or otherwise pursuant to this Warrant
upon each national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are then listed or become listed (subject to
official notice of issuance upon exercise of this Warrant) and shall maintain,
so long as any other shares of Common Stock shall be so listed, such listing of
all shares of Common Stock from time to time issuable upon the exercise of or
otherwise pursuant to this Warrant; and the Company shall so list on each
national securities exchange or automated quotation system, as the case may be,
and shall maintain such listing of, any other shares of capital stock of the
Company issuable upon the exercise of or otherwise pursuant to this Warrant if
and so long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not avoid or seek to
--------------------------
avoid the observance or performance of any of the terms to be observed or
performed by it hereunder, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all such
action as may reasonably be requested by the holder of this Warrant in order to
protect the economic benefit inuring to the holder hereof and the exercise
privilege of the holder of this Warrant against dilution or other impairment,
consistent with the tenor and purpose of this Warrant. Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any shares of Common Stock receivable upon the exercise of this Warrant above
the lowest Exercise Price then in effect, and (ii) will take all such actions as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.
5
<PAGE>
(e) Successors and Assigns. This Warrant will be binding upon any
----------------------
entity succeeding to the Company by merger, consolidation, or acquisition of all
or substantially all of the Company's assets.
(f) Blue Sky Laws. The Company shall, on or before the date of
-------------
issuance of any Warrant Shares, take such actions as the Company shall
reasonably determine are necessary to qualify the Warrant Shares for, or obtain
exemption for the Warrant Shares for, sale to the holder of this Warrant upon
the exercise hereof under applicable securities or "blue sky" laws of the states
of the United States, and shall provide evidence of any such action so taken to
the holder of this Warrant prior to such date; provided, however, that the
Company shall not be required to qualify as a foreign corporation or file a
general consent to service of process in any such jurisdiction.
4. Antidilution Provisions. During the Investment Period, the Exercise
-----------------------
Prices and the number of Warrant Shares issuable upon the exercise of this
Warrant, shall be subject to adjustment from time to time as provided in this
Section 4.
In the event that any adjustment of any Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded up
or down to the nearest cent.
(a) Subdivision or Combination of Common Stock. If the Company, at
------------------------------------------
any time, subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) its shares of Common Stock into a
greater number of shares, then, after the date of record for effecting such
subdivision, the Exercise Prices in effect immediately prior to such subdivision
will be proportionately reduced. If the Company, at any time during the
Investment Period, combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) its shares of Common Stock into a
smaller number of shares, then, after the date of record for effecting such
combination, the Exercise Prices in effect immediately prior to such combination
will be proportionately increased.
(b) Adjustment in Number of Shares. Upon each adjustment of an
------------------------------
Exercise Price pursuant to the provisions of this Section 4, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be increased
or decreased to equal the quotient obtained by dividing (i) the product of (A)
the Exercise Price in effect immediately prior to such adjustment, multiplied by
(B) the number of shares of Common Stock issuable upon exercise of this Warrant
immediately prior to such adjustment, by (ii) the adjusted Exercise Price.
(c) Consolidation, Merger or Sale. In case of any consolidation of
-----------------------------
the Company with, or merger of the Company into, any other entity, or in case of
any sale or conveyance of all or substantially all of the assets of the Company
other than in connection with a plan of complete liquidation of the Company at
any time during the Investment Period, then as a condition of such
consolidation, merger or sale or conveyance, adequate provision will be made
whereby the holder of this Warrant will have the right to acquire and receive
upon exercise of
6
<PAGE>
this Warrant in lieu of the shares of Common Stock immediately theretofore
acquirable upon the exercise of this Warrant, such shares of stock, securities,
cash or assets as may be issued or payable with respect to or in exchange for
the number of shares of Common Stock immediately theretofore acquirable and
receivable upon exercise of this Warrant had such consolidation, merger or sale
or conveyance not taken place. In any such case, the Company will make
appropriate provision to insure that the provisions of this Section 4 will
thereafter be applicable as nearly as may be in relation to any shares of stock
or securities thereafter deliverable upon the exercise of this Warrant. The
Company will not effect any consolidation, merger or sale or conveyance unless
prior to the consummation thereof, the successor entity (if other than the
Company) assumes by written instrument the obligations under this Warrant and
the obligations to deliver to the holder of this Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the holder
may be entitled to acquire.
(d) Distribution of Assets. In case the Company shall declare or make
----------------------
any distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, stock repurchase, by way of
return of capital or otherwise (including any dividend or distribution to the
Company's shareholders of cash or shares (or rights to acquire shares) of
capital stock of a subsidiary) (a "Distribution"), at any time during the
Investment Period, then, upon exercise of this Warrant for the purchase of any
or all of the shares of Common Stock subject hereto, the holder of this Warrant
shall be entitled to receive its pro-rata amount of such assets (or such rights)
as would have been payable to the holder had such holder been the holder of such
shares of Common Stock on the record date for the determination of shareholders
entitled to such Distribution.
(e) Notice of Adjustment. Upon the occurrence of any event which
--------------------
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the holder of this Warrant, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease in the number of Warrant Shares issuable upon exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Such calculation shall be certified
by the chief financial officer of the Company.
(f) No Fractional Shares. No fractional shares of Common Stock are to
--------------------
be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Average Price of a share of
Common Stock on the date of such exercise.
(g) Other Notices. In case at any time:
-------------
(i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution (other
than dividends or distributions payable in cash out of retained earnings
consistent with the Company's past
7
<PAGE>
practices with respect to declaring dividends and making distributions and
rights issued pursuant to any "poison pill" plan adopted by the Board of
Directors) to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class or other
rights;
(iii) there shall be any capital reorganization of the Company, or
reclassification of the Common Stock, or consolidation or merger of the Company
with or into another corporation or entity such that the holders of the
Company's capital stock immediately prior to such transaction or series of
related transactions hold less than 50% of the capital stock of the surviving
corporation or entity immediately after such transaction or series of
transactions, or sale of all or substantially all of the Company's assets to
another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date or estimated date on which the books of the Company shall
close or a record shall be taken for determining the holders of Common Stock
entitled to receive any such dividend, distribution, or subscription rights or
for determining the holders of Common Stock entitled to vote in respect of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable estimate
thereof by the Company) when the same shall take place. Such notice shall also
specify the date on which the holders of Common Stock shall be entitled to
receive such dividend, distribution, or subscription rights or to exchange their
Common Stock for stock or other securities or property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such notice shall be given at
least twenty (20) days prior to the record date or the date on which the
Company's books are closed in respect thereto. Failure to give any such notice
or any defect therein shall not affect the validity of the proceedings referred
to in clauses (i), (ii), (iii) and (iv) above. Notwithstanding the foregoing,
the Company shall publicly disclose the events with respect to which any notice
delivered hereunder relates prior to delivery of such notice to the holder of
this Warrant.
(h) Certain Events. If, at any time during the Investment Period, any
--------------
event occurs of the type contemplated by the adjustment provisions of this
Section 4 but not expressly provided for by such provisions, the Company will
give notice of such event as provided in Section 4(e) hereof, and the Company's
Board of Directors will make an appropriate adjustment in the Exercise Price and
the number of shares of Common Stock acquirable upon exercise of this Warrant so
that the rights of the holder shall be neither enhanced nor diminished by such
event.
8
<PAGE>
(i) Certain Definitions.
-------------------
(i) "Average Price" shall mean, with respect to any date of
determination, the lower of (i) the average Closing Price during the five (5)
Trading Days ending on the Trading Day immediately preceding such date of
determination or (ii) the Closing Price on the Trading Day immediately preceding
such date of determination, and in each case appropriately adjusted to reflect
any stock dividend, stock split or similar transaction during either such
relevant period. The manner of determining the Average Price of the Common
Stock set forth in the foregoing definition shall apply with respect to any
other security in respect of which a determination as to market value must be
made hereunder.
(ii) "business day" means any day, other than a Saturday or
Sunday or a day on which banking institutions in the State of California are
authorized or obligated by law, regulation or executive order to close.
(iii) "Closing Price" shall mean for the Common Stock as of any
date, the closing bid price of such security on the principal United States
securities exchange or trading market on which such security is listed or traded
as reported by Bloomberg Financial Markets (or a comparable reporting service of
national reputation selected by the holder and reasonably acceptable to the
Company if Bloomberg Financial Markets is not then reporting closing bid prices
of such security) (collectively, "Bloomberg"), or if the foregoing does not
apply, the last reported sale price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no sale price is reported for such security by Bloomberg, the
average of the bid prices of any market makers for such security as reported in
the "pink sheets" by the National Quotation Bureau, Inc., in each case for such
date or, if such date was not a Trading Day (as defined below) for such
security, on the next preceding day which was a Trading Day provided such next
--------
preceding Trading Day occurred no more than 5 business days prior to the date
for which the Closing Price is being determined. If the Closing Price cannot be
calculated for a share of Common Stock as of either of such dates on any of the
foregoing bases, the Closing Price of such security on such date shall be the
fair market value as determined by an investment banking firm selected by the
holder and reasonably acceptable to the Company, with the costs of such
appraisal to be borne by the Company. The manner of determining the Closing
Price of the Common Stock set forth in the foregoing definition shall apply with
respect to any other security in respect of which a determination as to market
value must be made.
(iv) "Common Stock," for purposes of this Section 4, includes the
Common Stock and any additional class of stock of the Company having no
preference as to dividends or distributions on liquidation, provided that the
shares purchasable pursuant to this Warrant shall include only Common Stock in
respect of which this Warrant is exercisable, or shares resulting from any
subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 4(c) hereof, the stock or other securities or
property provided for in such Section.
9
<PAGE>
(v) "SEC" shall mean the United States Securities and Exchange
Commission.
(vi) "Trading Day" shall mean a business day on which at least
10,000 shares of Common Stock are traded on the principal United States
securities exchange or trading market on which such security is listed or traded
as reported by Bloomberg.
(j) Minimum Adjustment of Exercise Price. No adjustment of any
------------------------------------
Exercise Price shall be made in an amount of less than 1% of such Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
5. Issue Tax. The issuance of certificates for Warrant Shares upon the
---------
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
6. No Rights or Liabilities as a Shareholder. This Warrant shall not
-----------------------------------------
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
7. Transfer, Exchange, Redemption and Replacement of Warrant.
---------------------------------------------------------
(a) Restriction on Transfer. This Warrant and the rights granted to
-----------------------
the holder hereof are transferable, in whole or in part, to any Permitted
Transferee (as defined in the Securities Purchase Agreement) upon surrender of
this Warrant, together with a properly executed assignment in the form attached
hereto, at the office or agency of the Company referred to in Section 7(e)
below, provided, however, that any transfer or assignment shall be subject to
the conditions set forth in Sections 7(f) and 7(g) hereof and to the provisions
of Sections 3(e) and 3(f) of the Securities Purchase Agreement. Until due
presentment for registration of transfer on the books of the Company, the
Company may treat the registered holder hereof as the owner and holder hereof
for all purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein, the
registration rights
10
<PAGE>
described in Section 8 hereof are assignable only in accordance with the
provisions of the Registration Rights Agreement.
(b) Warrant Exchangeable for Different Denominations. This Warrant is
------------------------------------------------
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 7(e) below, for new Series 1
Warrants of like tenor of different denominations representing in the aggregate
the right to purchase the number of shares of Common Stock which may be
purchased hereunder, each of such new Series 1 Warrants to represent the right
to purchase such number of shares as shall be designated by the holder hereof at
the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
----------------------
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender of this
---------------------------------
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 7, this Warrant shall be promptly canceled by the Company. The
Company shall pay all taxes (other than securities transfer taxes or income
taxes) and all other expenses (other than legal expenses, if any, incurred by
the holder or transferees) and charges payable in connection with the
preparation, execution, and delivery of Series 1 Warrants pursuant to this
Section 7.
(e) Warrant Register. The Company shall maintain, at its principal
----------------
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at the time of the
-----------------------------------------
surrender of this Warrant in connection with any exercise, transfer, or exchange
of this Warrant, this Warrant (or, in the case of any exercise, the Warrant
Shares issuable hereunder), shall not be registered under the Securities Act and
under applicable state securities or blue sky laws, the Company may require, as
a condition of allowing such exercise, transfer, or exchange, (i) that the
holder or transferee of this Warrant, as the case may be, furnish to the Company
a written opinion of counsel (which opinion shall be in form, substance and
scope customary for opinions of counsel in comparable transactions) to the
effect that such exercise, transfer, or exchange may be made without
registration under the Securities Act and under applicable state securities or
blue sky laws, (ii) that the holder or transferee execute and deliver to the
Company an investment letter in form and substance reasonably acceptable to the
Company and (iii) that the transferee be an "accredited investor" as defined in
Rule 501(a) promulgated under the Securities Act;
11
<PAGE>
provided that no such opinion, letter, or status as an "accredited investor"
shall be required in connection with a transfer pursuant to Rule 144 under the
Securities Act.
(g) Additional Restrictions on Exercise or Transfer. Notwithstanding
-----------------------------------------------
anything contained herein to the contrary, that portion of this Warrant
exercisable for A Warrant Shares, shall not be exercisable by a holder hereof to
the extent (but only to the extent) that (a) the number of shares of Common
Stock beneficially owned by such holder and its affiliates and (b) the number
of shares of Common Stock issuable upon exercise of this Warrant (or portion
thereof) with respect to which the determination described herein is being made,
would result in beneficial ownership by such holder and its affiliates of more
than 4.99% of the outstanding shares of Common Stock. To the extent the above
limitation applies, the determination of whether and to what extent this Warrant
shall be exercisable with respect to other securities owned by such holder shall
be in the sole discretion of the holder and submission of this Warrant for full
or partial exercise shall be deemed to be the holder's determination of whether
and the extent to which this Warrant is exercisable, in each case subject to
such aggregate percentage limitation. No prior inability to exercise the
Warrants pursuant to this Section shall have any effect on the applicability of
the provisions of this Section with respect to any subsequent determination of
exercisability. For purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13D-G thereunder. The
restrictions contained in this Section 7(g) may not be amended without the
consent of the holder of this Warrant and the holders of a majority of the
Company's then outstanding Common Stock.
8. Registration Rights. The initial holder of this Warrant (and certain
-------------------
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement, including the right to assign such rights to certain assignees, as
set forth therein.
9. Notices. Any notices required or permitted to be given under the terms
-------
of this Warrant shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five days after being placed in the mail, if mailed, one (1)
business day after being deposited with a nationally recognized overnight
delivery service, or immediately if delivered personally, by same-day courier or
by confirmed telecopy (such confirmation being conclusive proof of receipt and
delivery), in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Identix Incorporated
510 N. Pastoria Ave.
Sunnyvale, California 94086
Telephone No.: (408)731-2000
Facsimile No.: (408) 739-0178
12
<PAGE>
Attention: President
If to the holder, at such address as such holder shall have provided in writing
to the Company, or at such other address as such holder furnishes by notice
given in accordance with this Section 9.
10. Governing Law; Jurisdiction. This Warrant shall be governed by and
---------------------------
construed in accordance with the laws of the State of California applicable to
contracts made and to be performed in the State of California. Each of the
Company and the holder irrevocably consents to the jurisdiction of the United
States federal courts and state courts located in San Francisco, California in
any suit or proceeding based on or arising under this Warrant and irrevocably
agree that all claims in respect of such suit or proceeding shall be determined
in such courts. Each of the Company and the holder irrevocably waives any
objection to the laying of venue and the defense of an inconvenient forum to the
maintenance of such suit or proceeding. Each of the Company and the holder
further agrees that service of process upon it mailed by certified or registered
mail to the address set forth in Section 9 shall be deemed in every respect
effective service of process upon it in any such suit or proceeding. Nothing
herein shall affect the holder's right to serve process in any other manner
permitted by law. Each of the Company and the holder agrees that a final non-
appealable judgment in any such suit or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
11. Miscellaneous.
-------------
(a) Amendments. Except as provided in Section 7(g) hereof, this
----------
Warrant and any provision hereof may only be amended by an instrument in writing
signed by the Company and the holder hereof.
(b) Descriptive Headings. The descriptive headings of the several
--------------------
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.
(c) Cashless Exercise. At any time after the Registration Deadline
-----------------
(as defined in the Registration Rights Agreement), provided that there is then
no effective registration statement covering the sale of the Warrant Shares, and
notwithstanding anything to the contrary contained in this Warrant, this Warrant
may be exercised for the purchase of Warrant Shares any time or from time to
time during the Warrant Exercise Period, by presentation and surrender of this
Warrant to the Company at its principal executive offices with a written notice
of the holder's intention to effect a cashless exercise, including a calculation
of the number of shares of Common Stock to be issued upon such exercise in
accordance with the terms hereof (a "Cashless Exercise"). In the event of a
Cashless Exercise, in lieu of paying the Warrant Exercise Price in cash, the
holder shall surrender this Warrant for that number of shares of Common Stock
determined by multiplying (i) the number of Warrant Shares to which it would
otherwise be entitled by (ii) a fraction, the numerator of which shall be the
difference between the then current
13
<PAGE>
Average Price per share of the Common Stock and the Warrant Exercise Price, and
the denominator of which shall be the Average Price per share of Common Stock.
(d) HSR Act. The Company hereby acknowledges that exercise of this
-------
Warrant by holder may subject the Company and/or holder to the filing
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"HSR Act") and that holder may be prevented from exercising this Warrant until
the expiration or early termination of all waiting periods imposed by the HSR
Act. The Company and the Holder each hereby covenant that it will use
reasonable commercial efforts to effect promptly all necessary or appropriate
registrations, filings and submissions that may be required pursuant to the HSR
Act in connection with the exercise of this Warrant.
(e) Partial Exercise. Upon any partial exercise of this Warrant, the
----------------
Company shall cancel the Warrant upon surrender thereof, and shall, within 2
business days of such surrender, execute and deliver a new Warrant of like tenor
and date for the balance of the outstanding Warrant Shares
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
14
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.
IDENTIX INCORPORATED
By: _________________________________
Name:________________________________
Title:_______________________________
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
To: Identix Incorporated
510 N. Pastoria Ave.
Sunnyvale, California 94086
Telephone No.: (408) 731-2000
Facsimile No.: (408) 739-0178
Attention: President
The undersigned hereby irrevocably exercises the right to purchase
_____________ shares of the Common Stock of Identix Incorporated, a corporation
organized under the laws of the State of Delaware (the "Company"), pursuant to
subclause ___ of the first paragraph of the attached Warrant and herewith makes
payment of the applicable Exercise Price with respect to such shares in full,
all in accordance with the conditions and provisions of said Warrant.
The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any Common Stock obtained on exercise of the Warrant, except under circumstances
that will not result in a violation of the Securities Act of 1933, as amended,
or any state securities laws.
[_] The undersigned requests that the Company cause its transfer agent to
electronically transmit the Common Stock issuable pursuant to this Exercise
Agreement to the account of the undersigned or its nominee (which is
_________________) with DTC through its Deposit Withdrawal Agent Commission
System ("DTC Transfer").
[_] In lieu of receiving the shares of Common Stock issuable pursuant to this
Exercise Agreement by way of DTC Transfer, the undersigned hereby requests
that the Company cause its transfer agent to issue and deliver to the
undersigned physical certificates representing such shares of Common Stock.
15
<PAGE>
The undersigned requests that a Warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant, in the name of the Holder and
delivered to the undersigned at the address set forth below:
Dated:_________________ _____________________________________
Signature of Holder
_____________________________________
Name of Holder (Print)
Address:
_____________________________________
_____________________________________
_____________________________________
16
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all the rights of the undersigned under the attached Warrant, with respect to
the number of shares of Common Stock covered thereby issuable pursuant to
subclause (i) of the first paragraph of the attached Warrant set forth
hereinbelow (plus a proportionate amount of shares issuable pursuant to
subclause (ii) of the first paragraph of the attached Warrant), to:
Name of Assignee Address No of Shares
- ---------------- ------- ------------
, and hereby irrevocably constitutes and appoints _____________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated: ___________________, ____
In the presence of
__________________________
Name: ______________________________________
Signature: _______________________________
Title of Signing Officer or Agent (if any):
Address: ______________________________
______________________________
______________________________
Note: The above signature should
correspond exactly with the name
on the face of the within
Warrant.
<PAGE>
EXHIBIT 4.4
EXHIBIT B
to Securities
Purchase
Agreement
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY NOT BE
OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
Right to Purchase _______ shares
of Common Stock, $.01 par value per share
Date: July 1, 1999
IDENTIX INCORPORATED
SERIES 2 STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, ______________________________, or its
registered assigns, is entitled to purchase from IDENTIX INCORPORATED, a
corporation organized under the laws of the State of Delaware (the "Company"),
at any time or from time to time during the Exercise Period (as defined in
Section 2 below), _______ fully paid and nonassessable shares of the Company's
common stock, $.01 par value per share (the "Common Stock"), at an exercise
price per share (the "Exercise Price") equal to $11.33. The number of shares
of Common Stock purchasable hereunder (the "Warrant Shares") and the Exercise
Price are subject to adjustment as provided in Section 4 hereof. The term
"Warrants" means this Warrant, the other Series 2 Warrants (the "Series 2
Warrants") and the Series 1 Warrants of the Company issued pursuant to that
certain Securities Purchase Agreement, dated as of June 30, 1999, by and among
the Company and the other signatories thereto (the "Securities Purchase
Agreement").
1
<PAGE>
This Warrant is subject to the following terms, provisions and conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for Shares.
----------------------------------------------------------------
Subject to the provisions hereof, including, without limitation, the limitations
contained in Section 7 hereof, this Warrant may be exercised at any time and
from time to time during the Exercise Period by the holder hereof, in whole or
in part, in accordance with the procedures set forth in this Section 1. In
order to exercise this Warrant, the holder shall (i) deliver in accordance with
Section 9 hereof, a copy of the fully executed exercise agreement in the form
attached hereto (the "Exercise Agreement"), to the Company by 11:59 p.m. San
Francisco, California time on the Exercise Date, (ii) surrender or cause to be
surrendered this Warrant along with a copy of the Exercise Agreement as soon as
practicable thereafter (but in any event within five (5) business days after the
Exercise Date) to the Company at the Company's principal executive offices (or
such other office or agency of the Company as it may designate by notice to the
holder hereof) and (iii), unless this Warrant is being exercised pursuant to the
cashless exercise provisions of Section 11(c) hereof, make payment to the
Company in cash, by certified or official bank check or by wire transfer for the
account of the Company, of the Exercise Price for the Warrant Shares specified
in the Exercise Agreement within three (3) business days after the Exercise
Date. The Warrant Shares so purchased shall be deemed to be issued to the
holder hereof or such holder's designee, as the record owner of such shares, as
of the close of business on the date on which this Warrant shall have been
surrendered and the completed Exercise Agreement shall have been delivered and
payment shall have been made for such shares as set forth above or, if such day
is not a business day, on the next succeeding business day. The Warrant Shares
so purchased, representing the aggregate number of shares specified in the
Exercise Agreement, shall be delivered to the holder hereof within a reasonable
time, not exceeding three business days, after this Warrant shall have been so
exercised (the "Delivery Period"). If the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, and so long as the certificates therefor are not required to
bear a legend and the holder is not obligated to return such certificate for the
placement of a legend thereon, the Company shall cause its transfer agent to
electronically transmit the Warrant Shares so purchased to the holder by
crediting the account of the holder or its nominee with DTC through its Deposit
Withdrawal Agent Commission system ("DTC Transfer"). If the aforementioned
conditions to a DTC Transfer are not satisfied, the Company shall deliver to
the holder physical certificates representing the Warrant Shares so purchased.
Further, the holder may instruct the Company to deliver to the holder physical
certificates representing the Warrant Shares so purchased in lieu of delivering
such shares by way of DTC Transfer. Any certificates so delivered shall be in
such denominations as may be requested by the holder hereof, shall be registered
in the name of such holder or such other name as shall be designated by such
holder and, following the date on which the Warrant Shares have been registered
under the Securities Act pursuant to that certain Registration Rights Agreement,
dated as of June 30, 1999, by and between the Company and the other signatories
thereto (the "Registration Rights Agreement") or otherwise may be sold by the
holder pursuant to Rule 144(k) promulgated under the Securities Act (or a
successor rule), shall not bear any restrictive legend. If this Warrant shall
have been exercised only in part, then, unless this Warrant has expired, the
Company shall, at its expense, at the time of delivery of such certificates,
deliver to the holder a new Warrant representing the number of shares with
respect to which this Warrant shall not then have been exercised.
2
<PAGE>
If, at any time during the Investment Period, a holder of this Warrant
submits this Warrant, an Exercise Agreement and payment to the Company of the
applicable Exercise Price for each of the Warrant Shares specified in the
Exercise Agreement, and the Company fails for any reason to deliver, on or prior
to the tenth (10th) business day following the expiration of the Delivery Period
for such exercise, the number of shares of Common Stock to which the holder is
entitled upon such exercise (an "Exercise Default"), then the Company shall pay
to the holder payments ("Exercise Default Payments") for an Exercise Default in
the amount of (a) (N/365), multiplied by (b) the Market Price (as defined in
Section 4(i) hereof) on the date the Exercise Agreement giving rise to the
Exercise Default is transmitted in accordance with this Section 1 (the "Exercise
Default Date"), multiplied by (c) the number of shares of Common Stock the
Company failed to so deliver in such Exercise Default, multiplied by (d) .18,
where N = the number of days from the Exercise Default Date to the date that the
Company effects the full issuance and delivery of the Warrant Shares which gave
rise to the Exercise Default. The accrued Exercise Default Payment for each
thirty day period shall be paid in cash or Common Stock, at the holder's
election, as follows:
(x) In the event there is no mutual agreement regarding the payment of
any such default payment in Common Stock, cash payment shall be made to the
holder on the fifth day after the end of each successive thirty day (or shorter)
period during the continuance of the Exercise Default; and
(y) In the event the holder and the Company mutually agree that the
holder may take such payment in Common Stock rather than cash, the Company shall
issue to holder the number of shares of Common Stock equal to the amount of such
Exercise Default Payment divided by the Market Price (as defined in Section
4(i)) (as in effect at the time of conversion) on the fifth day after the end of
each thirty day (or shorter) period during the continuance of the Exercise
Default, which shares of Common Stock shall be delivered within two (2) business
days thereafter.
Nothing herein shall limit the holder's right to pursue actual damages for
the Company's failure to maintain a sufficient number of authorized shares of
Common Stock as required pursuant to the terms of Section 3(b) hereof or to
otherwise issue shares of Common Stock upon exercise of this Warrant in
accordance with the terms hereof, and the holder shall have the right to pursue
all remedies available at law or in equity (including a decree of specific
performance and/or injunctive relief).
2. Period of Exercise.
------------------
(a) Subject to subsection (b) of this Section 2, this Warrant may be
exercised at any time or from time to time on or after the date hereof and on or
before 5:00 p.m., San Francisco, California time on the eighteen month
anniversary of the Closing Date (as defined in the Securities Purchase Agreement
(the "Exercise Period").
3
<PAGE>
(b) Notwithstanding the forgoing, any time beginning 9 months after
the Closing Date, in the event that (i) the closing bid price for the Company's
Common Stock has been greater than $14.81 (as adjusted for stock splits, reverse
stock splits, combinations and the like) on each of the 15 consecutive Trading
Days immediately preceding the date the Company delivers an Exercise Request (as
defined below), (ii) all of the Registrible Securities (as defined in the
Registration Rights Agreement) are registered for resale pursuant to a
registration statement that has been declared effective by the United States
Securities and Exchange Commission and remains effective and (iii) the Company
is not then in material breach of the Securities Purchase Agreement, the
Registration Rights Agreement or the Warrants, then the Company may deliver to
holder a written request to holder to exercise this Warrant (the "Exercise
Request"). Subject to the Company's compliance with the foregoing terms, the
Exercise Period shall expire at the end of the 10th day following the holder's
receipt of such Exercise Request.
(c) The date on which this Warrant is exercised is the "Exercise
Date".
3. Certain Agreements of the Company. The Company hereby covenants and
---------------------------------
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance
-----------------------
in accordance with the terms of this Warrant, be validly issued, fully paid and
nonassessable and free from all taxes, liens, claims and encumbrances.
(b) Reservation of Shares. During the period (the "Investment
---------------------
Period") beginning on the date hereof and ending on the termination of the
Exercise Period, the Company shall at all times have authorized, and reserved
for the purpose of issuance upon exercise of this Warrant, a sufficient number
of shares of Common Stock to provide for the exercise in full of this Warrant
(without giving effect to the limitations on exercise set forth in Section 7(g)
hereof).
(c) Listing. The Company has secured the listing of the shares of
-------
Common Stock issuable upon exercise of or otherwise pursuant to this Warrant
upon each national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are then listed or become listed (subject to
official notice of issuance upon exercise of this Warrant) and shall maintain,
so long as any other shares of Common Stock shall be so listed, such listing of
all shares of Common Stock from time to time issuable upon the exercise of or
otherwise pursuant to this Warrant; and the Company shall so list on each
national securities exchange or automated quotation system, as the case may be,
and shall maintain such listing of, any other shares of capital stock of the
Company issuable upon the exercise of or otherwise pursuant to this Warrant if
and so long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not avoid or seek to
--------------------------
avoid the observance or performance of any of the terms to be observed or
performed by it hereunder, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all such
action as may reasonably be requested by the holder of this Warrant
4
<PAGE>
in order to protect the economic benefit inuring to the holder hereof and the
exercise privilege of the holder of this Warrant against dilution or other
impairment, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.
(e) Successors and Assigns. This Warrant will be binding upon any
----------------------
entity succeeding to the Company by merger, consolidation, or acquisition of all
or substantially all of the Company's assets.
(f) Blue Sky Laws. The Company shall, on or before the date of
-------------
issuance of any Warrant Shares, take such actions as the Company shall
reasonably determine are necessary to qualify the Warrant Shares for, or obtain
exemption for the Warrant Shares for, sale to the holder of this Warrant upon
the exercise hereof under applicable securities or "blue sky" laws of the states
of the United States, and shall provide evidence of any such action so taken to
the holder of this Warrant prior to such date; provided, however, that the
Company shall not be required to qualify as a foreign corporation or file a
general consent to service of process in any such jurisdiction.
4. Antidilution Provisions. During the Investment Period, the Exercise
-----------------------
Price and the number of Warrant Shares issuable hereunder shall be subject to
adjustment from time to time as provided in this Section 4.
In the event that any adjustment of the Exercise Price as required herein
results in a fraction of a cent, such Exercise Price shall be rounded up or down
to the nearest cent.
(a) Subdivision or Combination of Common Stock. If the Company, at
------------------------------------------
any time during the Investment Period, subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or otherwise) its
shares of Common Stock into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company, at
any time during the Investment Period, combines (by reverse stock split,
recapitalization, reorganization, reclassification or otherwise) its shares of
Common Stock into a smaller number of shares, then, after the date of record for
effecting such combination, the Exercise Price in effect immediately prior to
such combination will be proportionately increased.
(b) Adjustment in Number of Shares. Upon each adjustment of the
------------------------------
Exercise Price pursuant to the provisions of this Section 4, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be increased
or decreased to equal the quotient obtained by dividing (i) the product of (A)
the Exercise Price in effect immediately prior to such adjustment, multiplied by
(B) the number of shares of Common Stock issuable upon exercise of this Warrant
immediately prior to such adjustment, by (ii) the adjusted Exercise Price.
5
<PAGE>
(c) Consolidation, Merger or Sale. In case of any consolidation of
-----------------------------
the Company with, or merger of the Company into, any other entity, or in case of
any sale or conveyance of all or substantially all of the assets of the Company
other than in connection with a plan of complete liquidation of the Company at
any time during the Investment Period, then as a condition of such
consolidation, merger or sale or conveyance, adequate provision will be made
whereby the holder of this Warrant will have the right to acquire and receive
upon exercise of this Warrant in lieu of the shares of Common Stock immediately
theretofore acquirable upon the exercise of this Warrant, such shares of stock,
securities, cash or assets as may be issued or payable with respect to or in
exchange for the number of shares of Common Stock immediately theretofore
acquirable and receivable upon exercise of this Warrant had such consolidation,
merger or sale or conveyance not taken place. In any such case, the Company
will make appropriate provision to insure that the provisions of this Section 4
will thereafter be applicable as nearly as may be in relation to any shares of
stock or securities thereafter deliverable upon the exercise of this Warrant.
The Company will not effect any consolidation, merger or sale or conveyance
unless prior to the consummation thereof, the successor entity (if other than
the Company) assumes by written instrument the obligations under this Warrant
and the obligations to deliver to the holder of this Warrant such shares of
stock, securities or assets as, in accordance with the foregoing provisions, the
holder may be entitled to acquire.
(d) Distribution of Assets. In case the Company shall declare or make
----------------------
any distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, stock repurchase, by way of
return of capital or otherwise (including any dividend or distribution to the
Company's shareholders of cash or shares (or rights to acquire shares) of
capital stock of a subsidiary) (a "Distribution"), at any time during the
Investment Period, then, upon exercise of this Warrant for the purchase of any
or all of the shares of Common Stock subject hereto, the holder of this Warrant
shall be entitled to receive its pro-rata amount of such assets (or rights) as
would have been payable to the holder had such holder been the holder of such
shares of Common Stock on the record date for the determination of shareholders
entitled to such Distribution.
(e) Notice of Adjustment. Upon the occurrence of any event which
--------------------
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the holder of this Warrant, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease in the number of Warrant Shares issuable upon exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Such calculation shall be certified
by the chief financial officer of the Company.
(f) Minimum Adjustment of Exercise Price. No adjustment of the
------------------------------------
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
6
<PAGE>
(g) No Fractional Shares. No fractional shares of Common Stock are to
--------------------
be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.
(h) Other Notices. In case at any time:
-------------
(i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution (other
than dividends or distributions payable in cash out of retained earnings
consistent with the Company's past practices with respect to declaring dividends
and making distributions and rights issued pursuant to any "poison pill" plan
adopted by the Board of Directors) to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class or other
rights;
(iii) there shall be any capital reorganization of the Company, or
reclassification of the Common Stock, or consolidation or merger of the Company
with or into another corporation or entity such that the holders of the
Company's capital stock immediately prior to such transaction or series of
related transactions hold less than 50% of the capital stock of the surviving
corporation or entity immediately after such transaction or series of
transactions, or sale of all or substantially all of the Company's assets to,
another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date or estimated date on which the books of the Company shall
close or a record shall be taken for determining the holders of Common Stock
entitled to receive any such dividend, distribution, or subscription rights or
for determining the holders of Common Stock entitled to vote in respect of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable estimate
thereof by the Company) when the same shall take place. Such notice shall also
specify the date on which the holders of Common Stock shall be entitled to
receive such dividend, distribution, or subscription rights or to exchange their
Common Stock for stock or other securities or property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such notice shall be given at
least twenty (20) days prior to the record date or the date on which the
Company's books are closed in respect thereto. Failure to give any such notice
or any defect therein shall not affect the validity of the proceedings referred
to in clauses (i), (ii), (iii) and (iv) above. Notwithstanding the foregoing,
the Company shall publicly disclose the events with respect to which any notice
delivered hereunder relates prior to delivery of such notice to the holder of
this Warrant.
7
<PAGE>
(i) Certain Events. If, at any time during the Investment Period, any
--------------
event occurs of the type contemplated by the adjustment provisions of this
Section 4 but not expressly provided for by such provisions, the Company will
give notice of such event as provided in Section 4(g) hereof, and the Company's
Board of Directors will make an appropriate adjustment in the Exercise Price and
the number of shares of Common Stock acquirable upon exercise of this Warrant so
that the rights of the holder shall be neither enhanced nor diminished by such
event.
(j) Certain Definitions.
-------------------
(i) "business day" means any day, other than a Saturday or Sunday
or a day on which banking institutions in the State of California are authorized
or obligated by law, regulation or executive order to close.
(ii) "Common Stock," for purposes of this Section 4, includes the
Common Stock and any additional class of stock of the Company having no
preference as to dividends or distributions on liquidation, provided that the
shares purchasable pursuant to this Warrant shall include only Common Stock in
respect of which this Warrant is exercisable, or shares resulting from any
subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 4(c) hereof, the stock or other securities or
property provided for in such Section.
(iii) "Market Price," as of any date, (i) means the average of the
closing bid prices for the shares of Common Stock as reported on The American
Stock Exchange ("AMEX") by Bloomberg Financial Markets ("Bloomberg") for the
five (5) consecutive Trading Days immediately preceding such date, or (ii) if
AMEX is not the principal trading market for the shares of Common Stock, the
average of the last reported bid prices as reported by Bloomberg on the
principal trading market for the Common Stock during the same period, or, if
there is no bid price for such period, the last reported sales price as reported
by Bloomberg for such period, or (iii) if market value cannot be calculated as
of such date on any of the foregoing bases, the Market Price shall be the
average fair market value as reasonably determined by an investment banking firm
selected by the Company and reasonably acceptable to the holder, with the costs
of the appraisal to be borne by the Company. The manner of determining the
Market Price of the Common Stock set forth in the foregoing definition shall
apply with respect to any other security in respect of which a determination as
to market value must be made hereunder.
(iv) "Trading Day" shall mean a business day on which at least
10,000 shares of Common Stock are traded on the principal United States
securities exchange or trading market on which such security is listed or traded
as reported by Bloomberg.
5. Issue Tax. The issuance of certificates for Warrant Shares upon the
---------
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
8
<PAGE>
6. No Rights or Liabilities as a Shareholder. This Warrant shall not
-----------------------------------------
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
7. Transfer, Exchange, Redemption and Replacement of Warrant.
---------------------------------------------------------
(a) Restriction on Transfer. This Warrant and the rights granted to
-----------------------
the holder hereof are transferable, in whole or in part, to any Permitted
Transferee (as defined in the Securities Purchase Agreement) upon surrender of
this Warrant, together with a properly executed assignment in the form attached
hereto, at the office or agency of the Company referred to in Section 7(e)
below, provided, however, that any transfer or assignment shall be subject to
the conditions set forth in Sections 7(f) and 7(g) hereof and to the provisions
of Sections 3(e) and 3(f) of the Securities Purchase Agreement. Until due
presentment for registration of transfer on the books of the Company, the
Company may treat the registered holder hereof as the owner and holder hereof
for all purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Section 8 hereof are assignable only in
accordance with the provisions of the Registration Rights Agreement.
(b) Warrant Exchangeable for Different Denominations. This Warrant is
------------------------------------------------
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 7(e) below, for new Series 2
Warrants of like tenor of different denominations representing in the aggregate
the right to purchase the number of shares of Common Stock which may be
purchased hereunder, each of such new Series 2 Warrants to represent the right
to purchase such number of shares as shall be designated by the holder hereof at
the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
----------------------
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender of this
---------------------------------
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 7, this Warrant shall be promptly canceled by the Company. The
Company shall pay all taxes (other than securities transfer taxes or income
taxes) and all other expenses (other than legal expenses, if any, incurred by
the Holder or transferees) and charges payable in connection with the
preparation, execution, and delivery of Series 2 Warrants pursuant to this
Section 7.
9
<PAGE>
(e) Warrant Register. The Company shall maintain, at its principal
----------------
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at the time of the
-----------------------------------------
surrender of this Warrant in connection with any exercise, transfer, or exchange
of this Warrant, this Warrant (or, in the case of any exercise, the Warrant
Shares issuable hereunder), shall not be registered under the Securities Act and
under applicable state securities or blue sky laws, the Company may require, as
a condition of allowing such exercise, transfer, or exchange, (i) that the
holder or transferee of this Warrant, as the case may be, furnish to the Company
a written opinion of counsel (which opinion shall be in form, substance and
scope customary for opinions of counsel in comparable transactions) to the
effect that such exercise, transfer, or exchange may be made without
registration under the Securities Act and under applicable state securities or
blue sky laws, (ii) that the holder or transferee execute and deliver to the
Company an investment letter in form and substance reasonably acceptable to the
Company and (iii) that the transferee be an "accredited investor" as defined in
Rule 501(a) promulgated under the Securities Act; provided that no such opinion,
letter, or status as an "accredited investor" shall be required in connection
with a transfer pursuant to Rule 144 under the Securities Act.
(g) Additional Restrictions on Exercise or Transfer. Notwithstanding
-----------------------------------------------
anything contained herein to the contrary, this Warrant shall not be
exercisable by a holder hereof to the extent (but only to the extent) that (a)
the number of shares of Common Stock beneficially owned by such holder and its
affiliates and (b) the number of shares of Common Stock issuable upon exercise
of this Warrant (or portion thereof) with respect to which the determination
described herein is being made, would result in beneficial ownership by such
holder and its affiliates of more than 9.99% of the outstanding shares of Common
Stock. To the extent the above limitation applies, the determination of whether
and to what extent this Warrant shall be exercisable with respect to other
securities owned by such holder shall be in the sole discretion of the holder
and submission of this Warrant for full or partial exercise shall be deemed to
be the holder's determination of whether and the extent to which this Warrant is
exercisable, in each case subject to such aggregate percentage limitation. No
prior inability to exercise the Warrants pursuant to this Section shall have any
effect on the applicability of the provisions of this Section with respect to
any subsequent determination of exercisability. For purposes of the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13D-G thereunder. The restrictions contained in this Section 7(g) may not be
amended without the consent of the holder of this Warrant and the holders of a
majority of the Company's then outstanding Common Stock.
8. Registration Rights. The initial holder of this Warrant (and certain
-------------------
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement, including the right to assign such rights to certain assignees, as
set forth therein.
10
<PAGE>
9. Notices. Any notices required or permitted to be given under the terms
-------
of this Warrant shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five days after being placed in the mail, if mailed one (1)
business day after being deposited with a nationally recognized overnight
delivery service, or immediately if delivered personally, by same-day courier or
by confirmed telecopy (such confirmation being conclusive proof of receipt and
delivery), in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Identix Incorporated
510 N. Pastoria Ave.
Sunnyvale, California 94086
Telephone No.: (408) 731-2000
Facsimile No.: (408) 739-0178
Attention: President
If to the holder, at such address as such holder shall have provided in writing
to the Company, or at such other address as such holder furnishes by notice
given in accordance with this Section 9.
10. Governing Law; Jurisdiction. This Warrant shall be governed by and
---------------------------
construed in accordance with the laws of the State of California applicable to
contracts made and to be performed in the State of California. Each of the
Company and the holder irrevocably consents to the jurisdiction of the United
States federal courts and state courts located in San Francisco, California in
any suit or proceeding based on or arising under this Warrant and irrevocably
agree that all claims in respect of such suit or proceeding shall be determined
in such courts. Each of the Company and the holder irrevocably waives any
objection to the laying of venue and the defense of an inconvenient forum to the
maintenance of such suit or proceeding. Each of the Company and the holder
further agrees that service of process upon it mailed by certified or registered
mail to the address set forth in Section 9 shall be deemed in every respect
effective service of process upon it in any such suit or proceeding. Nothing
herein shall affect the holder's right to serve process in any other manner
permitted by law. Each of the Company and the holder agrees that a final non-
appealable judgment in any such suit or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
11. Miscellaneous.
-------------
(a) Amendments. Except as provided in Section 7(g) hereof, this
----------
Warrant and any provision hereof may only be amended by an instrument in writing
signed by the Company and the holder hereof.
11
<PAGE>
(b) Descriptive Headings. The descriptive headings of the several
--------------------
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.
(d) HSR Act. The Company hereby acknowledges that exercise of this
-------
Warrant by holder may subject the Company and/or holder to the filing
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"HSR Act") and that holder may be prevented from exercising this Warrant until
the expiration or early termination of all waiting periods imposed by the HSR
Act. The Company and the Holder each hereby covenants that it will use
reasonable commercial efforts to effect promptly all necessary or appropriate
registrations, filings and submissions that may be required pursuant to the HSR
Act in connection with the exercise of this Warrant.
(d) Cashless Exercise. At any time after the Registration Deadline
-----------------
(as defined in the Registration Rights Agreement), provided that there is then
no effective registration statement covering the sale of the Warrant Shares, and
notwithstanding anything to the contrary contained in this Warrant, this Warrant
may be exercised for the purchase of Warrant Shares any time or from time to
time, by presentation and surrender of this Warrant to the Company at its
principal executive offices with a written notice of the holder's intention to
effect a cashless exercise, including a calculation of the number of shares of
Common Stock to be issued upon such exercise in accordance with the terms hereof
(a "Cashless Exercise"). In the event of a Cashless Exercise, in lieu of paying
the Exercise Price in cash, the holder shall surrender this Warrant for that
number of shares of Common Stock determined by multiplying (i) the number of
Warrant Shares to which it would otherwise be entitled by (ii) a fraction, the
numerator of which shall be the difference between the then current Market Price
per share of the Common Stock and the Exercise Price, and the denominator of
which shall be the Market Price per share of Common Stock.
(e) Partial Exercise. Upon any partial exercise of this Warrant, the
----------------
Company shall cancel the Warrant upon surrender thereof, and shall, within 2
business days of such surrender, execute and deliver a new Warrant of like tenor
and date for the balance of the outstanding Warrant Shares
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.
IDENTIX INCORPORATED
By: _________________________________
Name: ______________________
Title: _______________________
<PAGE>
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
To: IDENTIX INCORPORATED
510 N. Pastoria Ave.
Sunnyvale, California 94086
Telephone No.: (408) 731-2000
Facsimile No.: (408) 739-0178
Attention: President
The undersigned hereby irrevocably exercises the right to purchase
_____________ shares of the Common Stock of Identix Incorporated, a corporation
organized under the laws of the State of Delaware (the "Company"), evidenced by
the attached Warrant and herewith makes payment of the Exercise Price with
respect to such shares in full, all in accordance with the conditions and
provisions of said Warrant.
The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any Common Stock obtained on exercise of the Warrant, except under circumstances
that will not result in a violation of the Securities Act of 1933, as amended,
or any state securities laws.
[_] The undersigned requests that the Company cause its transfer agent to
electronically transmit the Common Stock issuable pursuant to this Exercise
Agreement to the account of the undersigned or its nominee (which is
_________________) with DTC through its Deposit Withdrawal Agent Commission
System ("DTC Transfer").
[_] In lieu of receiving the shares of Common Stock issuable pursuant to this
Exercise Agreement by way of DTC Transfer, the undersigned hereby requests
that the Company cause its transfer agent to issue and deliver to the
undersigned physical certificates representing such shares of Common Stock.
The undersigned requests that a Warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant, in the name of the Holder and
delivered to the undersigned at the address set forth below:
Dated:_________________ _____________________________________
Signature of Holder
_____________________________________
Name of Holder (Print)
Address:
_____________________________________
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all the rights of the undersigned under the attached Warrant, with respect to
the number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No of Shares
- ---------------- ------- ------------
, and hereby irrevocably constitutes and appoints ____________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated: _____________________, ____
In the presence of
__________________
Name: ____________________________
Signature: ______________________
Title of Signing Officer or Agent
(if any):
________________________
Address: ________________________
________________________
Note: The above signature should
correspond exactly with the name on
the face of the within Warrant.
<PAGE>
EXHIBIT 4.5
Warrant to Purchase a Maximum of
33,186 Shares of Common Stock of
Identix Incorporated
Issue Date: July 1, 1999
(Void after July 1, 2004)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
THIS WARRANT AND THE SHARES PURCHASABLE HEREUNDER ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AS SET FORTH HEREIN.
This certifies that Hambrecht & Quist L.L.C. (the "Holder"), or assigns,
for value received, is entitled to purchase from Identix Incorporated, a
Delaware corporation (the "Company"), subject to the terms set forth below, a
maximum of 33,186 fully paid and nonassessable shares (the "Warrant Shares")
(subject to adjustment as provided herein) of the common stock of the Company,
par value $.01 (the "Common Stock") for cash at a price of $10.85 per share
(the "Exercise Price") (subject to adjustment as provided herein) at any time
or from time to time up to and including 5:00 p.m. (California Time) on July
1, 2004 (the "Expiration Date") upon surrender to the Company at its principal
office (or at such other location as the Company may advise the Holder in
writing) of this Warrant properly endorsed with the Form of Subscription
attached hereto duly filled in and signed and upon payment in cash or by check
of the aggregate Exercise Price for the number of shares for which this
Warrant is being exercised determined in accordance with the provisions
hereof. The Exercise Price is subject to adjustment as provided in Section 3
of this Warrant. This Warrant is issued subject to the following terms and
conditions:
1. Exercise, Issuance of Certificates. This Warrant is exercisable at the
option of the Holder of record hereof on or prior to the Expiration Date, at any
time or from time to time following its issuance, for all or any part of the
Warrant Shares (but not for a fraction of a share) which may be purchased
hereunder, as that number may be adjusted pursuant to Section 3 of this Warrant.
The Company agrees that the Warrant
<PAGE>
Shares purchased under this Warrant shall be and are deemed to be issued to the
Holder hereof as the record owner of such Warrant Shares as of the close of
business on the date on which this Warrant shall have been surrendered, properly
endorsed, the completed and executed Form of Subscription delivered, and payment
made for such Warrant Shares. Certificates for the Warrant Shares so purchased
shall be delivered to the Holder hereof by the Company at the Company's expense
as soon as practicable after the rights represented by this Warrant have been so
exercised. In case of a purchase of less than all the Warrant Shares which may
be purchased under this Warrant, the Company shall cancel this Warrant and
execute and deliver to the Holder hereof within a reasonable time a new Warrant
or Warrants of like tenor for the balance of the Warrant Shares purchasable
under the Warrant surrendered upon such purchase. Each stock certificate so
delivered shall be registered in the name of such Holder.
2. Shares to be Fully Paid. The Company covenants and agrees that all Warrant
Shares, will, upon issuance and, if applicable, payment of the applicable
Exercise Price, be duly authorized, validly issued, fully paid and
nonassessable.
3. Adjustment of Exercise Price and Number of Shares. The Exercise Price and
the total number of Warrant Shares shall be subject to adjustment from time to
time upon the occurrence of certain events described in this Section 3. Upon
each adjustment of the Exercise Price, the Holder of this Warrant shall
thereafter be entitled to purchase, at the Exercise Price resulting from such
adjustment, the number of shares obtained by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment, and dividing the product
thereof by the Exercise Price resulting from such adjustment.
3.1 Subdivision or Combination of Stock. In case the Company shall at any
time subdivide its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced and the number of Warrant Shares issuable hereunder
proportionately increased, and conversely, in case the outstanding shares of the
Common Stock of the Company shall be combined into a smaller number of shares,
the Exercise Price in effect immediately prior to such combination shall be
proportionately increased and the number of Warrant Shares issuable hereunder
proportionately decreased.
3.2 Merger or Other Transaction. This Warrant shall terminate immediately
prior to the consummation of any consolidation of the Company with, or merger of
the Company into, any other entity, or in the case of sale or conveyance of all
or substantially all of the assets of the Company or other transaction if the
stockholders of the Company immediately prior to such merger, consolidation,
asset sale of other transaction own less than 50% of the voting securities of
the surviving or acquiring entity immediately thereafter. The Company shall
give the Holder notice of any event described
2
<PAGE>
in the preceding sentence 10 days before the consummation thereof and shall
allow the Holder the ability to exercise the Warrant through the business day
immediately preceding the consummation thereof.
3.3 Notice of Adjustment. Upon any adjustment of the Exercise Price or any
increase or decrease in the number of Warrant Shares, the Company shall give
written notice thereof, by first class mail postage prepaid, addressed to the
registered Holder of this Warrant at the address of such Holder as shown on the
books of the Company.
4. No Voting or Dividend Rights. Nothing contained in this Warrant shall be
construed as conferring upon the holder hereof the right to vote or to consent
to receive notice as a shareholder of the Company on any other matters or any
rights whatsoever as a shareholder of the Company. No dividends or interest
shall be payable or accrued in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until, and only to the
extent that, this Warrant shall have been exercised.
5. Compliance with Securities Act: Transferability of Warrant, Disposition of
Shares.
5.1 Compliance with Securities Act. The Holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the Warrant Shares to be issued
upon exercise hereof are being acquired for investment and that it will not
offer, sell, or otherwise dispose of this Warrant or any Warrant Shares except
under circumstances which will not result in a violation of the Act or any
applicable state securities laws. This Warrant and all Warrant Shares (unless
registered under the Act) shall be stamped or imprinted with a legend in
substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED OR THE SECURITIES OR BLUE SKY LAWS OF ANY STATE.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED, OR UNLESS SOLD
PURSUANT TO RULE 144 OF SUCH ACT.
5.2 Access to Information; Pre-Existing Relationship. Holder has had the
opportunity to ask questions of, and to receive answers from, appropriate
executive officers of the Company with respect to the terms and conditions of
the transactions
3
<PAGE>
contemplated hereby and with respect to the business, affairs, financial
condition and results of operations of the Company. Holder has had access to
such financial and other information as is necessary in order for Holder to make
a fully informed decision as to investment in the Company, and has had the
opportunity to obtain any additional information necessary to verify any of such
information to which Holder has had access. Holder further represents and
warrants that he has either (i) a pre-existing relationship with the Company or
one or more of its officers or directors consisting of personal or business
contacts of a nature and duration which enable him to be aware of the character,
business acumen and general business and financial circumstances of the Company
or the officer or director with whom such relationship exists or (ii) such
business or financial expertise as to be able to protect his own interests in
connection with the purchase of the Shares.
5.3 Warrant Transferable. Subject to compliance with applicable federal
and state securities laws under which this Warrant was purchased, this Warrant
and all rights hereunder are transferable, in whole but not in part, without
charge to the Holder (except for transfer taxes), upon surrender of this Warrant
properly endorsed; provided, however, that the Holder shall notify the Company
in writing in advance of any proposed transfer and shall not transfer this
Warrant or any rights hereunder to any person or entity which is then engaged in
a business that in the reasonable judgment of the Company is in direct
competition with the Company.
5.4 Disposition of Warrant. With respect to any offer, sale, or other
disposition of the Warrant, the Holder hereof and each subsequent Holder of this
Warrant agrees to give written notice to the Company prior thereto, describing
briefly the manner thereof, together with a written opinion of such holder's
counsel, if reasonably requested by the Company, to the effect that such offer,
sale or other disposition may be effected without registration or qualification
(under the Act as then in effect or any federal or state law then in effect) of
the Warrant and indicating whether or not under the Act certificates for such
Warrant to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to insure compliance with
the Act. Promptly upon receiving such written notice and opinion, the Company,
as promptly as practicable, shall notify such Holder that such Holder may sell
or otherwise dispose of such Warrant, all in accordance with the terms of the
notice delivered to the Company. Notwithstanding the foregoing, such Warrant
may be offered, sold or otherwise disposed of in accordance with Rule 144 under
the Act, provided that the Company shall have been furnished with such
information as the Company may request to provide reasonable assurance that the
provisions of Rule 144 have been satisfied. Each certificate representing the
Warrant thus transferred (except a transfer pursuant to Rule 144) shall bear a
legend as to the applicable restrictions on transferability in order to insure
compliance with the Act, unless in the aforesaid opinion of counsel for the
Holder, such
4
<PAGE>
legend is not required in order to insure compliance with the Act. The Company
may issue stop transfer instructions to its transfer agent in connection with
such restrictions.
6. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
7. Notices. Any notice, request, or other document required or permitted to be
given or delivered to the Holder hereof or the Company shall be delivered or
shall be sent by certified mail, postage prepaid, to each such Holder at its
address as shown on the books of the Company or to the Company at the address
indicated therefor in the first paragraph of this Warrant or such other address
as either may from time to time provide to the other.
8. Other Notices. If at any time:
(1) the Company shall declare any cash dividend upon its Common Stock;
(2) the Company shall declare any dividend upon its Common Stock payable in
stock or make any special dividend or other distribution to the holders of its
Common Stock;
(3) the Company shall offer for subscription pro rata to the holders of its
Common Stock any additional shares of stock of any class or other rights;
(4) there shall be any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with, or
sale of all or substantially all of its assets to, another corporation; or
(5) there shall be a voluntary or involuntary dissolution, liquidation, or
winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, (a) at least 10 days' prior
written notice of the date on which the books of the Company shall close or a
record shall be taken for such dividend, distribution, or subscription rights or
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, winding-up, or public
offering, at least 10 days' prior written notice of the date when the same shall
take place; provided,
5
<PAGE>
however, that the Holder shall make a best efforts attempt to respond to such
notice as early as possible after the receipt thereof. Any notice given in
accordance with the foregoing clause (a) shall also specify, in the case of any
such dividend, distribution, or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto.
9. Governing Law. This Warrant shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of California.
10. Lost Warrants. The Company represents and warrants to the Holder hereof
that upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction, or mutilation of this Warrant and, in the case of any
such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
11. Fractional Shares. No fractional shares shall be issued upon exercise of
this Warrant. The Company shall, in lieu of issuing any fractional share, pay
the Holder entitled to such fraction a sum in cash equal to such fraction
(calculated to the nearest 1/100th of a share) multiplied by the then effective
Exercise Price on the date the Form of Subscription is received by the Company.
12. No Impairment. The Company will not, by charter amendment or by
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holder against impairment. Upon the request of the Holder, the Company will
at any time during the period this Warrant is outstanding acknowledge in
writing, in form satisfactory to Holder, the continued validity of this Warrant
and the Company's obligations hereunder.
13. Cashless Exercise. At any time after September 30, 1999, provided that
there is then no effective registration statement covering the sale of the
Warrant Shares, and notwithstanding anything to the contrary contained in this
Warrant, this Warrant may be exercised for the purchase of Warrant Shares any
time or from time to time prior to the Expiration Date, by presentation and
surrender of this Warrant to the Company at its principal executive offices
with a written notice of the holder's intention to effect a cashless exercise,
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, in lieu of paying the
Exercise Price in cash, the holder shall surrender this Warrant for that
number of shares of Common Stock determined by multiplying (i) the number of
Warrant Shares to which it would otherwise be entitled by (ii) a fraction, the
numerator of which shall be the difference between the then current Average
Price (as defined herein) of the Common Stock and the Exercise Price, and the
denominator of which shall be the Average Price per share of Common Stock.
13.1 "Average Price" shall mean, with respect to any date of
determination, the lower of (i) the average Closing Price during the five (5)
Trading Days ending on the Trading Day immediately preceding such date of
determination or (ii) the Closing Price on the Trading Day immediately
preceding such date of determination, and in each case appropriately adjusted
to reflect any stock dividend, stock split or similar transaction during
either such relevant period. The manner of determining the Average Price of
the Common Stock set forth in the foregoing definition shall apply with
respect to any other security in respect of which a determination as to market
value must be hereunder.
13.2 "Closing Price" shall mean for the Common Stock as of any
date, the closing bid price of such security on the principal United States
securities exchange or trading market on which such security is listed or
traded as reported by Bloomberg Financial Markets (or a comparable reporting
service of national reputation selected by the holder and reasonably acceptable
to the Company if Bloomberg Financial Markets is not then reporting closing
bid prices of such security)(collectively, "Bloomberg"), or if the foregoing
does not apply, the last reported sale price of such security in the over-the-
counter market on the electronic bulletin board for such security as reported
by Bloomberg, or, if no sale price is reported for such security by Bloomberg,
the average of the bid prices of any market makers for such security as
reported in the "pink sheets" by the National Quotation Bureau, Inc., in each
case for such date or, if such date was not a Trading Day (as defined below)
for such security, on the next preceding day which was a Trading Day provided
such next preceding Trading Day occurred no more than 5 business days prior to
the date for which the Closing Price is being determined. If the Closing Price
cannot be calculated for a share of Common Stock as of either of such dates on
any of the foregoing bases, the Closing Price of such security on such date
shall be the fair market value as determined by an investment banking firm
selected by the holder and reasonably acceptable to the Company, with the
costs of such appraisal to be borne by the Company. The manner of determining
the Closing Price of the Common Stock set forth in the foregoing definition
shall apply with respect to any other security in respect of which a
determination as to market value must be made.
13.3 "Trading Day" shall mean a business day on which at least
10,000 shares of Common Stock are traded on the principal United States
securities exchange or trading market on which such security is listed or
traded as reporting by Bloomberg.
13.4 "business day" means any day, other than a Saturday or
Sunday or a day on which banking institutions in the State of California are
authorized or obligated by law, regulation or executive order to close.
14. Successors and Assigns. This Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors of the Company and
the Holder. The provisions of this Warrant are intended to be for the benefit
of all Holders from time to time of this Warrant, and shall be enforceable by
any such Holder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
<PAGE>
IN WITNESS WHEREOF, the Company and Holder have caused this Warrant to be
duly executed by their respective officers, thereunto duly authorized as of this
____ day of July, 1999.
IDENTIX INCORPORATED
By: ____________________________________
Name: __________________________________
Title: _________________________________
HAMBRECHT & QUIST LLC
By: ____________________________________
Name: __________________________________
Title: _________________________________
7
<PAGE>
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: Identix Incorporated
The undersigned, the holder of the attached Common Stock Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, (1)__________________________ shares of
Common Stock of Identix Incorporated (the "Company") and herewith makes
payment of $_________ therefor.
The undersigned represents that it is acquiring such Common for its own account
for investment and not with a view to or for sale in connection with any
distribution thereof. The undersigned requests that certificates for such
shares be issued in the name of, and delivered to,
_________________________________ whose address is ______________
_____________________________________________________________________.
DATED: _________________
___________________________________________
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
Name: ____________________________________
Title: ___________________________________
(1) Insert here the number of shares called for on the face of the Warrant (or,
in the case of a partial exercise, the portion thereof as to which the Warrant
is being exercised), in either case without making any adjustment for any stock
or other securities or property or cash which, pursuant to the adjustment
provisions of the Warrant, may be deliverable upon exercise.
<PAGE>
EXHIBIT 5.1
July 1, 1999
17506-0001
Identix Incorporated
510 N. Pastoria
Sunnyvale, California 94086
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Identix Incorporated, a Delaware corporation (the
"Company"), in connection with the Registration Statement on Form S-3 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission on or about July 6, 1999, for the purpose of registering under the
Securities Act of 1933, as amended, up to 3,112,897 shares of its Common Stock,
$.01 par value (the "Shares"). Of the Shares, 1,811,594 were issued on July 1,
1999 (the "Issued Shares") and the remaining shares of Common Stock may be
issued (the "Warrant Shares") upon exercise of the Warrants (as defined below).
The Shares are issuable pursuant to (A) the Securities Purchase Agreement, dated
June 30, 1999, (the "Purchase Agreement") among the Company and the purchasers
named therein and (B) the Placement Agent Engagement Agreement dated as of April
12, 1999 between the Company and Hambrecht & Quist LLC (the "H&Q Agreement").
In connection with this opinion, we have assumed the authenticity of all
records, documents and instruments submitted to us as originals, the genuineness
of all signatures, the legal capacity of natural persons and the conformity to
the originals of all records, documents and instruments submitted to us as
copies. We have based our opinion upon our review of the following records,
documents and instruments:
(a) The Certificate of Incorporation of the Company certified by the
Secretary of State of the State of Delaware as of June 23, 1999
and certified to us by an officer of the Company as being
complete and in full force and effect as of the date of this
opinion;
<PAGE>
Identix Incorporated
July 1, 1999
Page 2
(b) The By-laws of the Company certified to us by an officer of the
Company as being complete and in full force and effect as of the
date of this opinion;
(c) Records certified to us by an officer of the Company as
constituting all records of proceedings and actions of the Board
of Directors of the Company relating to the issuance of the
Shares;
(d) A letter from ChaseMellon Shareholder Services L.L.C., the
Company's Transfer Agent, dated June 30, 1999 as to the number of
shares of Common Stock that were outstanding as of June 29, 1999;
(e) The Registration Statement;
(f) The Purchase Agreement;
(g) The Registration Rights Agreement dated as of June 30, 1999,
between the Company and the Purchasers (the "Registration Rights
Agreement");
(h) The Series 1 Warrants dated as of July 1, 1999 issued pursuant to
the Purchase Agreement (the "Series 1 Warrants");
(i) The Series 2 Warrants dated as of July 1, 1999 issued pursuant to
the Purchase Agreement (the "Series 2 Warrants");
(j) The H&Q Agreement; and
(k) The Hambrecht & Quist Warrant dated as of July 1, 1999 issued
pursuant to the H&Q Agreement (the "H&Q Warrant" and collectively
with the Series 1 Warrants and the Series 2 Warrants, the
"Warrants").
The Purchase Agreement, the Registration Rights Agreement and the Warrants are
referred to collectively herein as the "Transaction Documents." The H&Q
Agreement and the H&Q Warrant are referred to collectively herein as the "H&Q
Documents."
This opinion is limited to the General Corporation Law of the State of
Delaware. We disclaim any opinion as to any other statute, rule, regulation,
ordinance, order or other promulgation of any other jurisdiction or any regional
or local governmental body.
<PAGE>
Identix Incorporated
July 1, 1999
Page 3
Our opinion expressed herein assumes that the Transaction Documents and the
H&Q Documents were duly authorized, executed and delivered by the parties
thereto in the form that we have reviewed as of the date of this opinion, and
that the full consideration stated in the Agreement and set by the Board of
Directors when authorizing the issuance of the Shares has been (or, in the case
of the Warrant Shares, will be) paid.
Based upon the foregoing and our examination of such questions of law as we
have deemed necessary or appropriate for the purpose of this opinion and
assuming that (i) the Shares are issued in accordance with the terms of the
Transaction Documents, the H&Q Documents and the resolutions authorizing their
issuance; (ii) appropriate stock certificates evidencing the Shares are executed
and delivered; and (iii) all applicable securities laws are complied with, it is
our opinion that (A) the Issued Shares were duly authorized and validly issued,
and are fully paid and nonassessable, and (B) the Warrant Shares, when issued in
accordance with the terms of the Warrants, will be duly authorized, validly
issued, fully paid and nonassessable.
This opinion is rendered to you in connection with the Registration Statement
and is solely for your benefit. This opinion may not be relied upon by you for
any other purpose, or relied upon by any other person, firm, corporation or
other entity for any purpose, without our prior written consent. We disclaim
any obligation to advise you of any change of law that occurs, or any facts
which we become aware after the date of this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ HELLER EHRMAN WHITE & McAULIFFE
Heller Ehrman White & McAuliffe
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated July 28, 1998 relating to the
financial statements and financial statement schedules, which appears in Identix
Incorporated's Annual Report on Form 10-K/A for the year ended June 30, 1998.
We also consent to the reference to us under the heading "Experts" in such
Registration Statement.
PricewaterhouseCoopers LLP
/s/ PRICEWATERHOUSECOOPERS LLP
San Jose, California
June 28, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 26, 1999, relating to the
consolidated financial statements of IDT Holdings, Inc., which appears on page
F-2 of the Registration Statement on Form S-4 (File No. 333-68805) of Identix
Incorporated which is incorporated by reference in the Current Report on Form 8-
K of Identix Incorporated dated May 4, 1999. We also consent to the reference to
us under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
/s/ PRICEWATERHOUSECOOPERS LLP
San Jose, California
June 28, 1999
