<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Identix Incorporated
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
IDENTIX INCORPORATED
----------------
Notice of Annual Meeting of Stockholders
to be held October 26, 2000
----------------
TO THE STOCKHOLDERS OF IDENTIX INCORPORATED:
Notice is hereby given that the Annual Meeting of Stockholders of Identix
Incorporated (the "Company") will be held on Thursday, October 26, 2000 at 2:00
p.m. at the Wyndham Garden Hotel, 1300 Chesapeake Terrace, Sunnyvale,
California 94089, for the purpose of considering and acting upon the following
proposals:
1. To elect nine directors to serve for the ensuing year and until their
successors are elected.
2. To amend the Company's Certificate of Incorporation to effect an
increase in the number of authorized shares of the Company's common stock
from 50,000,000 to 100,000,000 shares.
3. To amend the Identix Incorporated Equity Incentive Plan to increase
the number of shares of the Company's common stock available for issuance
under that plan from 3,000,000 to 4,700,000 shares.
4. To amend the Identix Incorporated Non-Employee Directors Plan to
increase the number of shares of the Company's common stock available for
issuance under that plan from 410,000 to 860,000 shares and to approve the
other amendments to that plan described in the accompanying Proxy
Statement.
5. To ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of the Company for the fiscal year ending June 30,
2001.
6. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on September 1, 2000
are entitled to notice of and to vote at the meeting. A list of the
stockholders of record will be available for inspection at the Company's
headquarters at 510 North Pastoria Drive, Sunnyvale, California during ordinary
business hours for the ten-day period prior to the Annual Meeting.
All stockholders are cordially invited to attend the meeting in person. In
order to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy as promptly as possible in the postage
prepaid envelope enclosed for that purpose. Any stockholder attending the
meeting may vote in person even if he or she returned a proxy.
Sincerely,
James P. Scullion
President and Interim Chief
Executive Officer
Sunnyvale, California
September 18, 2000
<PAGE>
IDENTIX INCORPORATED
----------------
PROXY STATEMENT
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board") of Identix Incorporated (the "Company") for use at the Annual Meeting
of Stockholders (the "Annual Meeting") to be held on Thursday, October 26, 2000
at 2:00 p.m., local time, or at any adjournment thereof, for the purposes set
forth herein and in an accompanying Notice of Annual Meeting of Stockholders.
The Annual Meeting will be held at the Wyndham Garden Hotel, 1300 Chesapeake
Terrace, Sunnyvale, California 94089. The Company's principal executive offices
are located at 510 North Pastoria Avenue, Sunnyvale, California 94086. The
Company's telephone number is (408) 731-2000.
These proxy solicitation materials were mailed on or about September 18,
2000 to all stockholders entitled to vote at the Annual Meeting.
Record Date and Shares Outstanding
Stockholders of record at the close of business on September 1, 2000 (the
"Record Date") are entitled to notice of and to vote at the meeting. At the
Record Date, 33,283,789 shares of the Company's common stock, par value $0.01
per share ("Common Stock"), were issued and outstanding, and 234,558 shares of
the Company's Series A preferred stock, par value $0.01 per share ("Series A
Preferred Stock") were issued and outstanding.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it any time before its use by delivering to the Secretary of the Company
a written notice of revocation or a duly executed proxy bearing a later date or
by attending the Annual Meeting and voting in person.
Voting and Solicitation
In order to constitute a quorum for the conduct of business, a majority of
the outstanding shares of Common Stock and Series A Preferred Stock entitled to
vote must be represented at the Annual Meeting.
All shares represented by each properly executed, un-revoked proxy received
in time for the Annual Meeting will be voted in the manner specified in the
proxy. If the manner of voting is not specified in an executed proxy received
by the Company, the proxy will be voted for the election of the directors
(each, a "Director", and collectively, the "Directors") listed in the proxy for
election to the Board and for approval of the other proposals described in this
proxy statement (this "Proxy Statement").
Directors are elected by a plurality vote of the shares of voting stock
present and entitled to vote, in person or by proxy, at the Annual Meeting.
Accordingly, abstentions or non-votes by any institution that is a record
holder of shares as to the election of Directors will not affect the election
of the candidates receiving the plurality of votes.
Solely with respect to Proposal 2, the Proposed Amendment to the Company's
Certificate of Incorporation, the affirmative vote of a majority of the shares
of Common Stock and Series A Preferred Stock issued and
1
<PAGE>
outstanding as of the Record Date and entitled to vote is required for
approval. Abstentions will be treated as shares that are present or represented
and entitled to vote for the purpose of determining the presence of a quorum
but will not be treated as votes in favor of approval. Thus, abstentions have
the effect of negative votes on Proposal 2. If no specific instructions are
given in the proxy, the shares will be voted for approval of Proposal 2. Shares
as to which proxy authority has been withheld with respect to Proposal 2,
including non-votes by any institution that is the record holder of shares,
will not be considered as present or represented with respect to the proposal
but will otherwise have the same effect as a negative vote on Proposal 2.
With the exception of Proposal 2, all other matters submitted for
stockholder approval at this Annual Meeting will be decided by the affirmative
vote of a majority of shares present in person or represented by proxy and
entitled to vote on each matter. Abstentions with respect to any matter are
treated as shares present or represented and entitled to vote on that matter
and have the same effect as negative votes. If shares are not voted by the
institution that is the record holder of the shares, or if shares are not voted
in other circumstances in which proxy authority is effective or has been
withheld with respect to any matter, these non-voted shares are not deemed to
be present or represented for purposes of determining whether stockholder
approval of that a matter has been obtained.
The cost of this solicitation will be borne by the Company. The Company may
reimburse brokerage firms and other persons representing beneficial owners for
their expenses in forwarding solicitation materials to such beneficial owners.
Proxies may also be solicited by certain of the Company's directors, officers
and regular employees without additional compensation, personally or by
telephone or telegraph.
Deadline for Receipt of Stockholder Proposals for Inclusion in the Company's
Proxy Statement for the 2001 Annual Meeting
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the Company's 2001 Annual Meeting must be received by
the Company no later than June 1, 2001 in order to be eligible for inclusion in
the proxy statement and form of proxy relating to that meeting.
2
<PAGE>
PROPOSAL 1.
ELECTION OF DIRECTORS
General
A Board of nine Directors is to be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's nine nominees named below. In the event that any nominee
shall become unavailable, the proxy holders will vote the proxies at their
discretion for a substitute or additional nominee. It is expected that all
nominees will be able and willing to serve as Directors. The term of office of
each person elected as a Director will continue until the next annual meeting
of stockholders or until his successor has been elected and qualified.
Vote Required
The nine nominees receiving the highest number of affirmative votes of the
shares entitled to be voted shall be elected as Directors of the Company. Votes
withheld from any Director are counted for purposes of determining the presence
or absence of a quorum but have no other legal effect under Delaware law.
Nominees
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
Director
Name of Nominee Age Principal Occupation Since
--------------- --- -------------------- --------
<C> <C> <S> <C>
Randall C. Fowler.... 61 Chairman of the Board of the Company 1982
Patrick H. Morton.... 60 Chairman and Chief Executive Officer, 1985
QuadRep Incorporated
Randall Hawks, Jr.... 49 General Partner, Novus Ventures 1988
Fred U. Sutter....... 71 Retired President, Chairman and Chief 1988
Executive Officer of Ascom Holdings,
Inc.
Larry J. Wells....... 56 General Partner of the Management Company 1992
for Sundance Venture Partners, L.P.
Charles W. Richion... 64 Retired Vice President, Corporate 1998
Development, of the Company
James P. Scullion.... 44 President and Interim Chief Executive 1998
Officer of the Company
John E. Major........ 54 Chairman and Chief Executive Officer, *
Novatel Wireless, Inc.
Paul J. Bulger....... 39 President and Chief Executive Officer, *
ANADAC, Inc.
</TABLE>
--------
* Not currently a member of the Board
Except as set forth below, each of the nominees has been engaged in the
principal occupation described above during the past five years. There is no
family relationship between any Director or executive officer of the Company.
Randall C. Fowler is Chairman of the Board of the Company, a position he has
held since founding the Company in 1982. From 1982 until March 2000, Mr. Fowler
served as Chief Executive Officer of the Company. Mr. Fowler was the President
of the Company from 1982 until 1999. Mr. Fowler also served as a Director of
Ophthalmic Imaging Systems from 1998 until its acquisition in August 2000.
Since February 2000, Mr. Fowler has been a Director of Electronic Health Plans,
Inc.
Patrick H. Morton has been a Director since 1985. Mr. Morton is co-founder,
Chairman and Chief Executive Officer of QuadRep Incorporated, a manufacturers'
representative company. He held the position of President of QuadRep from 1981
through 1990 and has been Chairman since 1991. From May 1997 to June 2000, Mr.
Morton was President of Kokusai Semiconductor Equipment Company.
Randall Hawks, Jr. has been a Director since 1988. Mr. Hawks is a General
Partner of Novus Ventures, a venture capital firm he has been with since 1999.
From 1996 to 1998 Mr. Hawks was President and Chief
3
<PAGE>
Executive Officer at WHEB Systems, Inc. From 1994 to 1995, Mr. Hawks was
Executive Vice President of AT&T Paradyne, a communications equipment
subsidiary of AT&T. Prior to joining AT&T Paradyne, Mr. Hawks was Executive
Vice President of the Company from 1989 to November 1993 and was Vice President
of Marketing from 1985 to 1989.
Fred U. Sutter has been a Director since 1988. Until January 1996, Mr.
Sutter was Chairman, Chief Executive Officer and President of Ascom Holding
Inc., a United States subsidiary of Ascom Holding AG, the parent company of a
group of telecommunication companies and service automation providers. From
December 1993 to July 1995, Mr. Sutter was the Chief Executive Officer and
President of Ascom Holding AG. From January 1991 to August 1993, he was the
Deputy President of Ascom Holding AG. From January 1987 to December 1990, he
was President of Ascom Hasler AG. Ascom Hasler AG is a Swiss telecommunications
company and is a part of Ascom Holding AG.
Larry J. Wells has been a Director since 1992. Since 1989, Mr. Wells has
been a General Partner of Anderson and Wells Company, the management company
for Sundance Venture Partners, L.P. Prior to his affiliation with Anderson and
Wells Company, Mr. Wells held similar positions with Inco Venture Capital from
1988 to 1989 and Citicorp Venture Capital from 1983 to 1987. Mr. Wells
currently serves on the Board of Directors of Cellegy Pharmaceuticals, Inc., a
drug development company, Isonics Corporation, an advanced materials and
technology company and Wings America, Inc. a specialty retailer.
Charles W. Richion has been a Director since 1998. Mr. Richion served as
Vice President, Biometric Security Division of the Company from January 1998
until July 1998 and Vice President, Corporate Development of the Company from
June 1997 to January 1998. Mr. Richion serves on the Board of Directors of
Buy.Com. Prior to joining the Company, Mr. Richion worked at Hewlett-Packard
Company from 1965 through 1996 serving in a variety of functions. His most
recent positions included serving as Vice President and Director of U.S. Sales
Operations and building the Global Partners Program.
James P. Scullion has been a Director since 1998. Since March 2000, he has
been Interim Chief Executive Officer of the Company. He is also President of
the Company, a position held since April 1999, and Chief Financial Officer of
the Company, a position held since 1990. From 1996 to 1999, he was Executive
Vice President of the Company, and he was the Company's Vice President, Finance
from 1990 to 1996. From 1986 to 1990, he was Vice President, Finance and Chief
Financial Officer at DataTrak, Inc., a manufacturer of security access systems.
John E. Major is Chairman and Chief Executive Officer of Novatel Wireless,
Inc., a position he has held since July 2000. Prior to July 2000, he was the
founder and Chief Executive Officer of the Wireless Internet Solutions Group, a
strategic consulting practice focused on the wireless internet space. From
November 1998 to November 1999, Mr. Major was Chairman and CEO of Wireless
Knowledge, a Qualcomm, Inc. and Microsoft Corporation joint venture. From May
1997 until November 1998, he served as President of the Wireless Infrastructure
Division of Qualcomm. Prior to that, for some 18 years, he held various
positions at Motorola, Inc., the most recent of which was Senior Vice President
and Chief Technology Officer. Mr. Major currently serves on the Executive
Committee of both the Electronics Industry Association and the
Telecommunications Industry Association. He also serves on the Board of
Directors of Littelfuse, Inc., Verilink Corporation, Lennox International,
Inc., and Advanced Remote Communications Solutions, Inc.
Paul J. Bulger is the President and Chief Executive Officer of ANADAC, Inc.
Mr. Bulger joined ANADAC in March 1994 as Corporate Vice President for Business
Development and was appointed Chief Operating Officer in June 1998. He was
appointed to his present position in January 1999. Prior to joining ANADAC, he
was a strategic planning and business development consultant with W. S.
Thompson Associates from March 1992 to February 1994. Mr. Bulger has also held
various marketing and line management positions with I-NET Corporation, PRC
Inc., and Advanced Technology Inc.
4
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, Directors and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the
Securities and Exchange Commission ("SEC"). Such officers, Directors and 10%
stockholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms received by it, or
representations from certain reporting persons, the Company believes that,
during the fiscal year ended June 30, 2000, all Section 16(a) filing
requirements applicable to its officers, Directors and 10% stockholders were
complied with except the following: (1) each of Mr. Major and Mr. Daniel
Dellegrotti, an officer of the Company, filed a late Form 3 reporting their
initial holdings of Company stock; (2) Messrs. Fowler, Hawks, Morton, Richion,
Sutter and Wells each filed a late Form 5 reporting one exempt transaction; (3)
Mr. Bulger filed a late Form 5 reporting three exempt transactions; (4) Mr.
Scullion filed a late Form 5 reporting two exempt transactions; and
(5) Mr. Grant Evans, Mr. Oscar Pieper and Mr. William Spence, who are officers
of the Company, each filed a late Form 5 reporting one exempt transaction.
Board Meetings and Committees
The Board held a total of seven meetings during fiscal 2000.
The Board currently has two standing committees: the Compensation Committee
and the Audit Committee.
The Compensation Committee reviews and approves the Company's executive
officer compensation policy and administers the Company's employee stock option
plans. The Compensation Committee held two meetings during fiscal 2000. Messrs.
Wells, Morton, Hawks and Richion are currently the members of the Compensation
Committee.
The Audit Committee recommends engagement of the Company's independent
auditors and is primarily responsible for approving the services performed by
the Company's independent auditors and for reviewing and evaluating the
Company's accounting principles and its systems of internal controls. The Audit
Committee held six meetings during fiscal 2000. Messrs. Wells, Morton and Hawks
are currently the members of the Audit Committee.
Mr. Morton is a controlling shareholder of Integrated Manufacturing
Solutions, Inc., a supplier of integrated circuit boards and manufacturing
services to the Company that received payments from the Company during fiscal
2000 approaching four percent of the Company's consolidated gross revenue (see
"Certain Transactions" below). The Board believes Mr. Morton satisfies
guidelines for "independence" established under the Audit Committee Rules
adopted by the American Stock Exchange because, among other reasons, payments
received by Integrated Manufacturing Solutions, Inc. were less than five
percent of the Company's consolidated gross revenue during fiscal 2000.
Notwithstanding the foregoing, even if Mr. Morton were deemed not to satisfy
such guidelines for "independence", such rules provide that one non-independent
director may serve on the audit committee of a company if such committee is
comprised of at least three members and the board of directors determines that
it is in the best interests of the company and its shareholders for the non-
independent director to serve on the committee. In the Company's case, the
Board has determined that it is in the best interests of the Company and its
shareholders for Mr. Morton to serve on the three-person Audit Committee
because, among other reasons, he is a longstanding member of the Board with
intimate knowledge of the Company and its financial operations and has over 30
years of business experience managing companies (and their financial
operations) in executive officer capacities.
The Board does not have a Nominating Committee or any other committee
performing such function.
5
<PAGE>
During fiscal 2000, no Director attended fewer than 75% of the aggregate of
all meetings of the Board and committees, if any, upon which such Director
served.
Director Compensation
Each non-employee Director receives $2,000 for each Board meeting attended
up to a maximum of $8,000 annually. (Prior to July 28, 2000, each non-employee
Director received $1,000 for each Board meeting attended up to $4,000
annually.) The Company also reimburses non-employee Directors for certain
expenses incurred by them in connection with attendance of Board meetings.
Directors who are employees of the Company receive no additional or special
remuneration for serving as Directors.
Under the Company's Non-Employee Directors Stock Option Plan as currently in
effect (the "Directors Plan"), each non-employee Director of the Company, upon
such Director's first election to the Board, is entitled to receive an
automatic non-discretionary grant of (1) a nonqualified stock option ("NQO") to
purchase 20,000 shares of Common Stock if less than six months have elapsed
since the last annual meeting of stockholders or (2) an NQO to purchase 10,000
shares of Common Stock if more than six months have elapsed since the last
annual meeting of stockholders (in either case, "Initial Grant"). In addition,
on the date of the first meeting of the Board following each annual meeting of
the stockholders of the Company, each eligible Director is entitled to receive
an NQO to purchase 20,000 shares of Common Stock ("Annual Grant"). If the
shareholders of the Company approve the amendments to the Directors Plan
described under Proposal 4 below, then the Initial Grant shall be for an NQO
covering 30,000 shares of Common Stock, or 15,000 shares if more than six
months have elapsed since the last annual meeting of shareholders, and the
Annual Grant shall be for an NQO covering 30,000 shares of Common Stock, in
each case effective as of the date of the Annual Meeting.
The exercise price of the NQOs granted under the Directors Plan is equal to
the fair market value of such shares on the date of grant. The NQOs become
exercisable with respect to one fourth of the number of shares covered by such
NQO for each three-month period elapsing after the date of grant, so that such
NQO will be fully exercisable on the first anniversary of the date such NQO was
granted.
Mr. John E. Major, a nominee for election to the Board, is party to a
consulting agreement with the Company pursuant to which he is paid $1,000 per
week by the Company as a business development advisor. Pursuant to the
agreement, Mr. Major must use his best efforts to dedicate one day per week to
the Company, providing the Company's senior management with strategic advice
and contributing to the Company's efforts to develop and formalize strategic
alliances with established and emerging companies in the wireless marketplace.
As additional consideration under the agreement, the Board granted Mr. Major,
effective June 7, 2000, a NQO under the Identix Incorporated Equity Incentive
Plan to purchase 30,000 shares of Common Stock at an exercise price of $15.0625
per share. The NQO becomes exercisable with respect to one twelfth of the
number of shares covered thereby for each month elapsing after the date of
grant, so that the NQO will become fully exercisable on June 7, 2001.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of July 31, 2000 by (1) each person who is
known by the Company to own beneficially more than 5% of the outstanding shares
of Common Stock, (2) each of the Directors, (3) each of the Company's executive
officers identified in the Summary Compensation Table and (4) all Directors and
officers as a group. Percentage of ownership is based on 33,108,367 shares of
Common Stock outstanding as of July 31, 2000. Shares of Common Stock subject to
outstanding options or warrants currently exercisable or exercisable within 60
days after July 31, 2000 are deemed outstanding for computing the percentage
ownership of the person holding such options or warrants, but are not deemed
outstanding for computing the percentage ownership of any other person. Except
as otherwise indicated, the Company believes that the beneficial owners of the
securities listed below, based on information furnished by such owners, have
sole investment and voting power with respect to the Common Stock shown as
being beneficially owned by them.
<TABLE>
<CAPTION>
Number of Number Subject to
Shares Options and Warrants Percentage
Directors, Officers and 5% Beneficially Exercisable Beneficially
Stockholders Owned Within 60 Days Owned
-------------------------- ------------ -------------------- ------------
<S> <C> <C> <C>
State of Wisconsin......... 3,735,700(1) -- 11.28%
Investment Board
P.O. Box 7842
Madison, WI 53707
Capital Ventures
International............. 1,842,140 241,546 5.52%
c/o Heights Capital
Management, Inc.
425 California Street,
Suite 1100
San Francisco, CA 94104
Yuri Khidekel.............. 844,262(2) 174,188(4) 2.54%
Yury Shapiro............... 806,528(3) 136,454(5) 2.43%
Randall C. Fowler.......... 1,155,599 397,917 3.45%
Larry J. Wells............. 45,000 45,000 *
James P. Scullion.......... 308,539 300,128(6) *
Randall Hawks, Jr.......... 15,000 15,000 *
Patrick H. Morton.......... 123,169 75,000 *
Charles W. Richion......... 70,000 70,000 *
Fred U. Sutter............. 65,000 55,000 *
John Major................. 7,500 7,500 *
Oscar R. Pieper............ 394,173 213,466(7) 1.18%
Grant Evans................ 102,071 102,071(8) *
All directors and officers
as a group(19 persons).... 3,567,411 1,785,538(9)(10) 10.22%
</TABLE>
--------
*Less than one percent.
(1) This information was obtained from the Form 13G filed with the SEC by
State of Wisconsin Investment Board on February 9, 2000.
(2) Mr. Khidekel is a director, officer and 30% shareholder of International
Technology Concepts, Inc. which owns 580,074 shares of Common Stock and
options to purchase 70,000 shares of Common Stock. For purposes of the
beneficial ownership column above, Mr. Khidekel is attributed ownership of
all such shares of Common Stock and 7,292 options owned by International
Technology Concepts, Inc. which is the number of options owned by IT
Concepts that are exercisable on or prior to September 29, 2000.
Mr. Khidekel is an executive officer of the Company.
(3) Mr. Shapiro is a director, officer and 25% shareholder of International
Technology Concepts, Inc. which owns 580,074 shares of Common Stock and
options to purchase 70,000 shares of Common Stock. For purposes of the
beneficial ownership column above, Mr. Shapiro is attributed ownership of
all such shares of Common Stock and 7,292 options owned by International
Technology Concepts, Inc. which is the number of options owned by IT
Concepts that are exercisable on or prior to September 29, 2000.
Mr. Shapiro is an executive officer of the Company.
7
<PAGE>
(4) On April 27, 2000 the Board granted Mr. Khidekel an option to purchase
200,000 shares of Common Stock under the Identix Incorporated Equity
Incentive Plan. The grant, and any vesting of shares under the grant, is
subject to shareholder approval of an amendment to the Identix
Incorporated Equity Incentive Plan to increase the number of shares of
Common Stock available for issuance under the plan by 1,700,000 shares, as
described in Proposal 3. Of the 200,000 shares conditionally granted to
Mr. Khidekel, 20,833 are included in this figure. Also included in this
figure is an option to purchase 7,292 shares of Common Stock owned by IT
Concepts, Inc. and attributed to Mr. Khidekel because of his 30% ownership
of that company. See footnote 2 above.
(5) On April 27, 2000 the Board granted Mr. Shapiro an option to purchase
200,000 shares of Common Stock under the Identix Incorporated Equity
Incentive Plan. The grant, and any vesting of shares under the grant, is
subject to shareholder approval of Proposal 3. Of the 200,000 shares
conditionally granted to Mr. Shapiro, 20,833 are included in this figure.
Also included in this figure is an option to purchase 7,292 shares of
Common Stock owned by IT Concepts, Inc. and attributed to Mr. Shapiro
because of his 25% ownership of that company. See footnote 3 above.
(6) On April 27, 2000 the Board granted Mr. Scullion an option to purchase
166,667 shares of Common Stock under the Identix Incorporated Equity
Incentive Plan. The grant, and any vesting of shares under the grant, is
subject to shareholder approval of Proposal 3. Of the 166,667 shares
conditionally granted to Mr. Scullion, 17,361 are included in this figure.
(7) On April 27, 2000 the Board granted Mr. Pieper an option to purchase
10,000 shares of Common Stock under the Identix Incorporated Equity
Incentive Plan. The grant, and any vesting of shares under the grant, is
subject to shareholder approval of Proposal 3. Of the 10,000 shares
conditionally granted to Mr. Pieper, 1,042 are included in this figure.
(8) On April 27, 2000 the Board granted Mr. Evans an option to purchase
200,000 shares of Common Stock under the Identix Incorporated Equity
Incentive Plan. The grant, and any vesting of shares under the grant, is
subject to shareholder approval of Proposal 3. Of the 200,000 shares
conditionally granted to Mr. Evans, 20,833 are included in this figure.
(9) The Board has granted certain officers of the Company an aggregate of
1,146,667 shares of Common Stock under the Identix Incorporated Equity
Incentive Plan. These grants, and any vesting of shares under these
grants, are subject to shareholder approval of Proposal 3. Of the
1,146,667 shares conditionally granted to such officers, 116,112 are
included in this figure.
(10) This figure includes an option to purchase 7,292 shares of Common Stock
owned by IT Concepts, Inc. and attributed to Messrs. Khidekel and Shapiro.
While these shares are attributed separately and individually to each of
Mr. Khidekel and Mr. Shapiro under footnotes 2 and 3 above, such shares
are counted only once for purposes of this figure.
8
<PAGE>
EXECUTIVE COMPENSATION
The table set forth below provides certain summary information concerning
compensation paid to or accrued for the Company's Chief Executive Officer,
Interim Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company who served as executive officers
at June 30, 2000 and/or for the fiscal years ended June 30, 2000, 1999 and
1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term
----------------------- Compensation Other
Bonus Options Compensation
Name and Principal Position Year Salary ($) (#)(1)(2) ($)
--------------------------- ---- -------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Randall Fowler (3)......... 2000 $300,000 10,000 $52,000(4)
Chairman and CEO 1999 300,000 16,000 50,000 18,000(4)
1998 225,000 17,000 95,000 14,000(4)
James P. Scullion (5)...... 2000 250,000 200,000(12) 13,000(6)
President, Interim CEO 1999 250,000 8,000 75,000 13,000(6)
1998 190,000 11,000 95,000 12,000(6)
Oscar R. Pieper............ 2000 240,000 10,000(13) 13,200(8)
Vice President, 1999 32,000(7) 100,000 2,000(8)
Business Development 1998
Grant Evans................ 2000 188,000 12,000 200,000(13) 13,000(9)
Vice President and General 1999 25,000(7) 115,000 2,000(9)
Manager,
Security Division 1998
Yuri Khidekel.............. 2000 175,000 200,000(13) 15,000(10)
Vice President, Chief 1999 24,000(7) 100,000 2,000(10)
Software
Technology Officer, 1998
Security Division
Yury Shapiro............... 2000 175,000 200,000(13) 14,000(11)
Vice President, Chief 1999 24,000(7) 100,000 1,000(11)
Hardware
Technology Officer, 1998
Security Division
</TABLE>
--------
(1) All figures in this column reflect shares of Common Stock into which
options are exercisable.
(2) The Company re-priced stock options, which had an exercise price greater
than the market value, on April 28, 1998, which constituted a cancellation
of the old option and the grant of a new option. If a stock option was
granted prior to April 28, 1998 and then cancelled and reissued in
connection with the re-pricing on April 28, 1998, the stock option is only
counted once in the table under 1998.
(3) Mr. Fowler retired as Chief Executive Officer of the Company effective
March 31, 2000. He continues to serve as Chairman of the Board.
(4) Included in the fiscal 2000 figure is a payment of $2,306 by the Company
as a premium for Mr. Fowler's life insurance policy and a payment of
$38,526 to Mr. Fowler in lieu of accrued vacation, in each case as per a
Separation Agreement between Mr. Fowler and the Company dated December 20,
1999. Prior to March 31, 2000, Mr. Fowler's spouse and the Company were
each a 50% beneficiary of such life insurance policy. Pursuant to the
Separation Agreement, the parties agreed that Mr. Fowler's wife would
become the sole beneficiary of this policy. Also included in the fiscal
2000 figure is a payment of $7,500 for an auto allowance and a payment of
$3,615 representing a matching contribution by the Company under its
401(K) Plan. In fiscal 1999, Mr. Fowler's auto allowance equaled $10,000,
the premium for the life insurance policy equaled $1,845 and the matching
contribution for the 401(K) Plan equaled $6,125. In fiscal 1998, the auto
allowance equaled $8,000, the premium for the life insurance policy
equaled $1,845 and the matching contribution for the 401(K) Plan equaled
$4,299.
(5) Mr. Scullion assumed responsibilities as Interim Chief Executive Officer
of the Company on March 31, 2000.
9
<PAGE>
(6) Included in the fiscal 2000 figure is a payment of $8,000 for an auto
allowance and payment of $5,000 representing a matching contribution by
the Company under its 401(K) Plan. Included in each of the fiscal 1999 and
1998 figures is a payment of $8,000 for an auto allowance. Included in the
fiscal 1999 and 1998 figures are payments of $5,000 and $4,000,
respectively, representing matching contributions by the Company under its
401(K) Plan.
(7) Each of Messrs. Pieper, Evans, Khidekel and Shapiro joined the Company on
April 26, 1999.
(8) Included in the fiscal 2000 figure is a payment of $9,600 for an auto
allowance and a payment of $3,600 representing a matching contribution by
the Company under its 401(K) Plan. Included in the fiscal 1999 figure is a
payment of $1,477 for an auto allowance and a payment of $969 representing
a matching contribution by the Company under its 401(K) Plan.
(9) Included in the fiscal 2000 figure is a payment of $9,600 for an auto
allowance and a payment of $3,250 representing a matching contribution by
the Company under its 401(K) Plan. Included in the fiscal 1999 figure is a
payment of $1,477 for an auto allowance and a payment of $421 representing
a matching contribution by the Company under its 401(K) Plan.
(10) Included in the fiscal 2000 figure is a payment of $9,600 for an auto
allowance and a payment of $5,238 representing a matching contribution by
the Company under its 401(K) Plan. Included in the fiscal 1999 figure is a
payment of $1,477 for an auto allowance and a payment of $610 representing
a matching a contribution by the Company under its 401(K) Plan.
(11) Included in the fiscal 2000 figure is a payment of $9,600 for an auto
allowance and a payment of $3,900 representing a matching contribution by
the Company under its 401(K) Plan. Included in the fiscal 1999 figure is a
payment of $1,477 for an auto allowance.
(12) Represents two separate stock option grants, one to purchase 33,333 shares
of Common Stock, and one to purchase 166,667 shares of Common Stock. The
latter grant is subject to shareholder approval of an amendment to the
Identix Incorporated Equity Incentive Plan to increase the number of
shares of Common Stock available for issuance under the plan by 1,700,000
shares, as described in Proposal 3.
(13) This stock option grant is subject to shareholder approval of Proposal 3.
10
<PAGE>
2000 Option Grants Table
The following table sets forth stock options granted to the executive
officers identified in the Summary Compensation Table during fiscal 2000 under
the Identix Incorporated Equity Incentive Plan. Since inception, the Company
has not granted any stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable Value
Individual Grants at Assumed Annual
------------------------------------------------- Rates of Stock
Exercise Price
% of Total Price Appreciation for
Options Granted Per Options (4)
Options to Employees in Share Expiration -----------------
Name Granted (1) Fiscal Year 2000 (1) Date 5% 10%
---- ----------- ---------------- -------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Randall C. Fowler....... 10,000(2) 1% $8.1200 1/26/10 74,563 166,827
James P. Scullion....... 33,333(3) 2% $7.7031 1/05/10 235,290 526,751
166,667(5) 9% $14.000 4/27/04 502,849 1,082,902
Oscar R. Pieper......... 10,000(5) 1% $14.000 4/27/04 30,171 64,974
Grant Evans............. 200,000(5) 11% $14.000 4/27/04 603,418 1,299,480
Yuri Khidekel........... 200,000(5) 11% $14.000 4/27/04 603,418 1,299,480
Yury Shapiro............ 200,000(5) 11% $14.000 4/27/04 603,418 1,299,480
</TABLE>
--------
(1) Unless otherwise noted, options vest ratably over forty-eight months from
the date of grant, and exercise price is the fair market value on the date
of grant.
(2) Options vested 100% at date of grant. Exercise price is 85% of the fair
market value at date of grant.
(3) Options vested ratably over six months, and became fully vested on July 5,
2000. Exercise price is 85% of the fair market value at date of grant.
(4) Potential realizable value is based on an assumption that the market price
of the stock appreciates at the stated rate, compounded annually, from the
date of grant until the end of the option term. These values are calculated
based on the requirements promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimated future stock price
appreciation.
(5) This stock option grant is subject to shareholder approval of an amendment
to the Identix Incorporated Equity Incentive Plan to increase the number of
shares of Common Stock available for issuance under the plan by 1,700,000
shares, as described in Proposal 3.
11
<PAGE>
2000 OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth stock options exercised by the executive
officers identified in the Summary Compensation Table during fiscal 2000, and
the number and value of all unexercised options at June 30, 2000. The value of
"in-the-money" options refers to options having an exercise price which is less
than the market price of the Company's common stock on June 30, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised In-
Shares Number of Unexercised the-Money Options at
Acquired Value Options at Fiscal Year End Fiscal Year End (1)
on Exercise Realized -------------------------- -------------------------
Name (#) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- ---------- -------------------------- -------------------------
<S> <C> <C> <C> <C>
Randall C. Fowler....... -- $ -- 391,667/8,333 $ 4,269,745/75,518
James P. Scullion....... 30,000 474,375 274,781/180,903(2) $2,480,112/469,773
Oscar R. Pieper......... 135,000 1,060,114 207,840/86,250(3) $3,016,938/520,496
Grant Evans............. 15,012 170,970 79,832/284,128(4) $917,328/1,096,160
Yuri Khidekel........... 90,000 870,975 149,395/268,334(4) $1,999,207/850,254
Yury Shapiro............ 90,000 870,975 111,661/268,334(4) $1,412,349/850,254
</TABLE>
--------
(1) Value realized is determined by multiplying the exercised shares by the
difference between the market close price on the date of exercise and the
stated exercise price.
(2) On April 27, 2000, the Board granted Mr. Scullion an option to purchase
166,667 shares of Common Stock under the Identix Incorporated Equity
Incentive Plan. The grant, and any vesting of shares under the grant, is
subject to shareholder approval of an amendment to the Identix Incorporated
Equity Incentive Plan to increase the number of shares of Common Stock
available for issuance under the plan by 1,700,000 shares, as described in
Proposal 3. Of the 166,667 shares conditionally granted to Mr. Scullion,
6,945 are included in the exercisable options figure, and 159,722 are
included in the unexercisable options figure.
(3) On April 27, 2000, the Board granted Mr. Pieper an option to purchase
10,000 shares of Common Stock under the Identix Incorporated Equity
Incentive Plan. The grant, and any vesting of shares under the grant, is
subject to shareholder approval of Proposal 3. Of the 10,000 shares
conditionally granted to Mr. Pieper, 417 are included in the exercisable
options figure, and 9,583 are included in the unexercisable options figure.
(4) On April 27, 2000, the Board granted each of Mr. Evans, Mr. Khidekel and
Mr. Shapiro an option to purchase 200,000 shares of Common Stock under the
Identix Incorporated Equity Incentive Plan. The grants, and any vesting of
shares under the grants, are subject to shareholder approval of Proposal 3.
Of the 200,000 shares conditionally granted to each of Mr. Evans, Mr.
Khidekel and Mr. Shapiro, 8,333 are included in each respective
individual's exercisable options figure, and 191,667 are included each
respective individual's unexercisable options figure.
The Company did not make any awards during the fiscal year ended June 30,
2000 to any of the executive officers named in the Summary Compensation Table
under any long-term incentive plan providing compensation intended for
performance to occur over a period longer than one fiscal year.
12
<PAGE>
REPORT OF THE BOARD OF DIRECTORS COMPENSATION COMMITTEE
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, (the "Exchange Act") that might
incorporate this Proxy Statement or future filings with the SEC, in whole or in
part, the following report and the Performance Graph which follows shall not be
deemed to be incorporated by reference into any such filing.
The Compensation Committee is responsible for establishing and administering
the policies, which govern both annual compensation and stock ownership
programs for the Chief Executive Officer and certain other executive officers.
Each year, salaries are determined and awards are made, if warranted, under the
Company's stock option plans.
The Compensation Committee annually evaluates the Company's corporate
performance, and its executive compensation and incentive programs compared
with the industry and with a broader group of similar size companies. In
determining each of the Chief Executive Officer's compensation and the Interim
Chief Executive Officer's compensation for fiscal 2000, the Compensation
Committee considered the compensation paid by the Company's direct competitors,
a group of similar size companies and the corporate performance for the Company
for the prior fiscal year.
The Company's compensation programs are designed to reward executives for
long-term strategic management, to align the interests of the executive
officers with the interests of the Company's stockholders and to attract and
retain highly talented and productive executives, and are leveraged on the
basis of performance in terms of both cash compensation and incentive plans,
paying more with good performance and less when it is below standard.
The principal components of executive compensation are base salary,
performance bonuses and stock options.
Base salary is based on competitive factors and the historic salary
structure for various levels of responsibility within the Company. The
Compensation Committee annually evaluates the Company's corporate performance
and conducts surveys of companies in the industry and of a broader group of
similar size companies in order to determine whether the Company's executive
base salaries are in a competitive range.
Performance bonuses are linked directly to the financial performance of the
Company and specific performance objectives. These bonuses in particular
emphasize the Compensation Committee's belief that, when the Company is
successful, the executives should be highly compensated to reflect the
Company's success, but that, conversely, if the Company is not successful and
does not meet its financial objectives, only limited bonuses should be paid,
and only on a case-by case basis, absent extraordinary circumstances. With
respect to certain officers, a cash bonus is based on a formula using Company
financial and/or specific performance objectives.
The principal equity component of executive compensation is the stock option
program. Stock options are generally granted when an executive joins the
Company and in some, but not all cases, on an annual basis thereafter. Options
are occasionally granted for promotions or other special achievements. The
initial option granted to the executive usually vests over a period of four
years. The purpose of any annual option grant is to ensure that the executive
always has options that vest in increments in the future. This provides a
method of retention and motivation for the senior level executives of the
Company and also aligns senior management's objectives with the stockholders.
During fiscal 2000, certain executive officers received salary increases
equivalent to the amount required to align them with comparable executives in
similar industries, as well as, incentive stock options. Mr. Scullion received
one additional stock option grant during fiscal 2000 for assuming the role of
Interim Chief Executive Officer.
13
<PAGE>
During fiscal 2001, the Compensation Committee will continue to carefully
consider executive compensation in relation to the Company's performance
compared to that of industry performance levels.
COMPENSATION COMMITTEE
Larry J. Wells
Patrick H. Morton
Randall Hawks, Jr.
Charles W. Richion
Compensation Committee Interlocks and Insider Participation
Randall Hawks Jr., a member of the Compensation Committee of the Board
during fiscal 2000, was formerly Executive Vice President of the Company from
1989 to November 1993 and was Vice President of Marketing from 1985 to 1989.
Charles W. Richion, a member of the Compensation Committee of the Board for
fiscal 2000, was formerly Vice President, Biometric Security Division of the
Company from January 1998 to July 1998 and was Vice President, Corporate
Development from June 1997 to January 1998.
14
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock from July 1, 1995 to June 30, 2000 with cumulative total return on
the Russell 2000 Index and a Peer Group (Printrak International Inc., Digital
Biometrics, Inc. and National Registry Inc.) over the same period.
[PERFORMANCE GRAPH APPEARS HERE]
Research Data Group Peer Group Total Return Worksheet
IDENTIX INC
Cumulative Total Return
-----------------------------------------------
[S] [C] [C] [C] [C] [C] [C]
6/95 6/96 6/97 6/98 6/99 6/00
IDENTIX INCORPORATED 100.00 231.68 176.24 100.99 156.44 248.52
RUSSELL 2000 100.00 123.89 144.12 167.90 170.42 175.62
PEER GROUP 100.00 71.67 37.21 20.56 26.26 36.45
[/TABLE]
15
<PAGE>
EMPLOYMENT AGREEMENTS
In connection with his retirement as Chief Executive Officer of the Company,
Mr. Fowler and the Company entered into a Separation Agreement dated December
20, 1999. Under the agreement, Mr. Fowler agreed to provide ongoing services to
the Company through his retirement date, March 31, 2000, and the Company and
Mr. Fowler each agreed to release the other from certain claims, causes of
action and obligations as described in the agreement. The Company agreed to pay
Mr. Fowler his base salary of $300,000 through March 31, 2001 and continue to
provide through that date which is the later of Mr. Fowler's 65th birthday, or
in the event of his death, his spouses' 65th birthday (the "Benefit Termination
Date"), certain medical benefits. The Company also agreed to pay, through the
Benefit Termination Date, ongoing annual insurance premiums on a $1,000,000
term life insurance policy on Mr. Fowler's life. In furtherance of the
agreement, the Company agreed that Mr. Fowler's spouse would become the sole
beneficiary of the insurance policy; previously, the Company and Mr. Fowler's
spouse were each 50% beneficiaries of such policy. Under the agreement, stock
options previously granted to Mr. Fowler continue to vest through March 31,
2001, at which time Mr. Fowler will be able to exercise those vested options
pursuant to terms of applicable stock option agreements. Mr. Fowler currently
serves as Chairman of the Board, and has been re-nominated for election to the
Board as described in Proposal 1.
In connection with his assumption, on March 31, 2000, of additional
responsibilities as Interim Chief Executive Officer of the Company, Mr.
Scullion received a Compensation Continuation Agreement dated as of January 5,
2000. The agreement provides that Mr. Scullion is to devote all of his business
time, energy and skill to the affairs of the Company through the term of the
agreement, which expires March 31, 2002 unless earlier terminated in accordance
with the terms of the agreement. Under the agreement, the Company agreed to pay
Mr. Scullion a base salary of $250,000 per annum, with increases in such base
salary based on annual reviews of Mr. Scullion's performance, and a car
allowance of $666.67 per month. The agreement provides that the first annual
review of Mr. Scullion's performance will take place on or about September 30,
2000. The Company also agreed to pay Mr. Scullion a bonus, the amount of which
is determined on an annual basis by the Compensation Committee of the Board.
Under the agreement, Mr. Scullion was granted a NQO to purchase 33,333 shares
of Common Stock. The NQO has an exercise price equal to 85 percent of the
market value on the date of the agreement, and vested at a rate of 1/6 per
month, meaning that the NQO became fully vested on July 5, 2000. If, during the
term of the agreement, the Company terminates the employment of Mr. Scullion
for reasons other than his death or disability, or for reasons other than
"cause" (as defined in the agreement), or if he resigns for "good reason" (as
defined in the agreement), Mr. Scullion will: (a) immediately be paid all
salary, bonuses and vacation pay accrued to the effective date of termination;
(b) as severance compensation, continue to be paid his then current base salary
until that date which is one calendar year from the effective date of
termination (the "Severance Period"); and (c) continue to receive, during the
Severance Period, certain medical, dental and life insurance benefits from the
Company. Additionally, in the event of such termination or resignation, all
outstanding options to purchase Common Stock granted by the Company to Mr.
Scullion will immediately vest. In addition to serving as Interim Chief
Executive Officer of the Company, Mr. Scullion is a current Board member and
continues to serve the Company as President and Chief Financial Officer. He has
been re-nominated for election to the Board as described in Proposal 1.
Messrs. Oscar R. Pieper, Grant Evans, Yuri Khidekel and Yury Shapiro, each
of whom are executive officers of the Company, are each individually parties to
separate Employment Agreements with the Company dated as of April 26, 1999.
Each agreement provides that if the Company terminates the executive's
employment for reasons other than his death or disability or for "cause" (as
defined in the agreement) or he resigns for "good reason" (as defined in the
agreement), the executive will (a) immediately receive all accrued salary,
bonuses and vacation pay to the effective date of termination, (b) as severance
compensation, continue to receive, for a number of months identified in the
agreement (the "Severance Period"), his then current base salary, and (c)
continue to receive certain medical, dental and life insurance benefits from
the Company. Additionally, in the event of such termination or resignation, all
outstanding options to purchase Common Stock granted to each executive under
his agreement will fully vest immediately accordance with each
16
<PAGE>
executive's relevant stock option agreement. Mr. Pieper's agreement expires
April 26, 2003, unless earlier terminated in accordance with its terms, and
provides for a Severance Period of 15 months. The agreements of Messrs. Evans,
Khidekel and Shapiro each expires April 26, 2002, unless earlier terminated in
accordance with the terms of the agreement, and each such agreement provides
for a Severance Period of 12 months.
CERTAIN TRANSACTIONS
Patrick H. Morton is a member of the Board and its Audit Committee (see
"Board Meetings and Committees" above) and presently owns 38% of Integrated
Manufacturing Solutions, Inc. ("IMS"), a manufacturer of integrated circuit
boards that provides manufacturing services to the Company. IMS billed the
Company approximately $2,920,000, $2,798,000 and $2,437,000 in fiscal 2000,
1999 and 1998 respectively. Amounts outstanding to IMS at June 30, 2000 were
approximately $200,000.
The Company purchases certain complete biometric security I.T. products,
R&D, engineering and administrative services from International Technology
Concepts, Inc. Mr. Yury Shapiro, the Company's Vice President, Chief Hardware
Technology Officer, Security Division, and Mr. Yuri Khidekel, the Company's
Vice President, Chief Software Technology Officer, Security Division, are each
directors, officers and principal shareholders of International Technology
Concepts, Inc. Mr. Khidekel and Mr. Shapiro beneficially own approximately 30%
and 25%, respectively, of the shares of International Technology Concepts, Inc.
International Technology Concepts, Inc. billed the Company approximately
$3,080,000 in fiscal 2000, and $360,000 in the last quarter of fiscal 1999. The
Company did not purchase goods or services from International Technology
Concepts, Inc. prior to fiscal 1999. Amounts outstanding to that company at
June 30, 2000 were approximately $5,000.
17
<PAGE>
PROPOSAL 2.
PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
The Board unanimously adopted, subject to stockholder approval, an amendment
to the Company's Certificate of Incorporation (the"Amendment") increasing the
number of authorized shares of Common Stock from 50,000,000 to 100,000,000. The
Board is recommending stockholder approval of the Amendment.
DESCRIPTION OF THE PROPOSAL
The Company's Certificate of Incorporation currently authorizes the issuance
of 52,000,000 shares, of which 50,000,000 are authorized for issuance as Common
Stock and 2,000,000 are authorized for issuance as preferred stock, par value
$.01 per share ("Preferred Stock"). As of the Record Date, the Company had
33,283,789 shares of Common Stock outstanding and 234,558 shares of Series A
Preferred Stock outstanding. In addition, as of that date, the Company had
approximately (i) 5,626,875 shares of Common Stock reserved for issuance under
its stock option and purchase plans, (ii) 583,152 shares of Common Stock
reserved for issuance upon exercise of outstanding warrants and (iii) 234,558
shares of Common Stock reserved for issuance upon conversion of outstanding
shares of Series A Preferred Stock. If this Amendment is approved, the Board
intends to cause a certificate of amendment to the Certificate of Incorporation
to be filed as soon as practicable after the date of the Annual Meeting. Upon
effectiveness of the Amendment, the adoption of the amendment to the Identix
Incorporated Equity Incentive Plan (Proposal 3), and the adoption of the
amendment to the Identix Incorporated Non-Employee Director's Plan (Proposal
4), the Company will have approximately 58,356,184 shares of Common Stock
authorized but unreserved.
The increase in the number of outstanding shares of Common Stock shall be
accomplished by amending the first sentence of the Fourth Article of the
Certificate of Incorporation to read as follows:
"The total number of shares of all classes of capital stock which the
corporation shall have authority to issue is 102,000,000 shares, comprised
of 100,000,000 shares of Common Stock with a par value of $.01 per share
(the "Common Stock") and 2,000,000 shares of Preferred Stock with a par
value of $.01 per share (the "Preferred Stock")."
The Board considers it advisable to have additional authorized but unissued
shares of Common Stock available to (i) allow issuances under the Company's
employee stock option and benefit plans; (ii) allow the Company to act promptly
with respect to possible future acquisitions or financing; (iii) sell
additional shares, as necessary, to finance operations and growth of the
Company; and (iv) provide shares for other corporate purposes approved by the
Board, including, without limitation, stock splits and dividends. Having
additional authorized shares of Common Stock available for issuance would give
the Company greater flexibility and allow shares of Common Stock to be issued
without the expense or delay of a stockholders' meeting, except as may be
required by applicable laws or regulations. The Company has no specific plans
for issuance of additional shares of Common Stock, other than shares currently
reserved under option and purchase plans, shares reserved for exercise of
outstanding warrants and shares reserved for conversion of outstanding Series A
Preferred Stock.
The increase in authorized Common Stock will not have any immediate effect
on the rights of existing stockholders. The Board will have the authority to
issue authorized Common Stock without requiring future stockholder approval of
such issuances, except as may be required by applicable law or exchange
regulations.
To the extent that additional authorized shares are issued in the future,
they will decrease the existing stockholders' percentage equity ownership and,
depending upon the price at which they are issued as compared to the price paid
by existing stockholders for their shares, could be dilutive to the existing
stockholders. Except for the holder of shares of Series A Preferred Stock,
which has limited rights to participate in certain offerings of additional
shares by the Company, no Company stockholder has rights to participate in
offerings of additional shares by the Company.
18
<PAGE>
The increase in the number of authorized shares of Common Stock could have
an anti-takeover effect. If the Board desired to issue additional shares in the
future, such issuance could dilute the voting power of a person seeking control
of the Company, thereby deterring or rendering more difficult a merger, tender
offer, proxy contest or an extraordinary corporate transaction opposed by the
Company. However, the matter submitted herein is not being recommended in
response to any specific effort of which the Company is aware to obtain control
of or to acquire the Company.
PROPOSAL
Shareholders are being asked to approve the amendment to the Certificate of
Incorporation. The affirmative vote of the holders of a majority of the
outstanding shares of the Common Stock and Preferred Stock, voting together as
a single class, is required to adopt the amendment to the Certificate of
Incorporation.
BOARD RECOMMENDATION
The Board recommends a vote "FOR" approval of the proposal.
19
<PAGE>
PROPOSAL 3.
APPROVAL OF AMENDMENT TO THE IDENTIX INCORPORATED EQUITY INCENTIVE PLAN
DESCRIPTION OF THE PROPOSAL
The Board has approved, subject to shareholder approval, an amendment to the
Identix Incorporated Equity Incentive Plan (the "Incentive Plan") to increase
the number of shares of Common Stock available for issuance under the Incentive
Plan by 1,700,000 shares to a total of 4,700,000 shares. Currently, the
Incentive Plan provides that a total of 3,000,000 shares of Common Stock may be
issued thereunder. As of July 31, 2000, there were zero shares currently
unreserved and available for option grants under the Incentive Plan, and there
were 1,124,116 shares currently unreserved and available for option grants
under all of the Company's stock option plans. The Company believes the
proposed increase in the number of shares available for grant is necessary in
order to ensure that there will be a sufficient reserve of shares to permit the
grant of further options to existing and new employees and non-employee
Directors of and consultants to the Company.
The following table shows the number of shares covered by options awarded to
the executive officers and the identified groups under the Incentive Plan in
fiscal 2000. All options were granted at fair market value as of the date of
grant, except for (1) the option to purchase 10,000 shares granted to Mr.
Fowler, which was granted at 85 percent of the market value of the shares on
the date of the grant, and (2) an option granted to Mr. Scullion to purchase
33,333 shares, which was granted at 85 percent of the market value of the
shares on the date of the grant.
<TABLE>
<CAPTION>
NUMBER
NUMBER AND POSITION OF SHARES
------------------- ---------
<S> <C>
Randall C. Fowler.............................................. 10,000
Chairman and former CEO
James P. Scullion.............................................. 200,000(1)
President and Interim CEO
Oscar R. Pieper................................................ 10,000(2)
Vice President Business Development
Grant Evans.................................................... 200,000(2)
Vice President and GM, Security Division
Yuri Khidekel.................................................. 200,000(2)
Vice President, Chief Software Technology Officer, Security
Division
Yury Shapiro................................................... 200,000(2)
Vice President, Chief Hardware Technology Officer, Security
Division
All executive officers as a group.............................. 961,000(3)
All directors who are not executive officers as a group........ 30,000
All employees and consultants (other than executive officers)
as a group.................................................... 669,750(4)
</TABLE>
--------
(1) An option to purchase 166,667 of these shares is subject to shareholder
approval of an amendment to the Identix Incorporated Equity Incentive
Plan to increase the number of shares of Common Stock available for
issuance under the plan by 1,700,000 shares, as described in Proposal
3.
(2) These option grants are subject to shareholder approval of Proposal 3.
(3) Options to purchase 826,667 of these shares are subject to shareholder
approval of Proposal 3.
(4) Options to purchase 193,000 of these shares are subject to shareholder
approval of Proposal 3.
DESCRIPTION OF THE INCENTIVE PLAN
The Incentive Plan is intended to strengthen the Company by providing
selected eligible key employees and non-employee Directors of, and consultants
to, the Company an opportunity to participate in the Company's future by
offering them an opportunity to acquire stock in the Company so as to retain,
attract and motivate them. Administration of the Incentive Plan may either be
by the Board or a Committee of the Board (in either case, the "Committee"). The
Committee may select key employees, including executive officers,
20
<PAGE>
non-employee Directors or consultants to receive awards under the Incentive
Plan and has broad discretion to determine the amount and type of awards and
terms and conditions of the awards. However, the Committee may not grant, in
any one fiscal year, awards covering more than 200,000 shares of common stock
to any executive officer whose compensation is required to be disclosed under
Item 402 of Regulation S-K. Individual grants will generally be based on a
person's present and potential contribution to the Company. As of June 30,
2000, the Company had approximately 384 employees, non-employee Directors and
consultants eligible to participate in the Incentive Plan. Since the grant of
awards is based upon a determination made by the Committee after a
consideration of various factors, the Company currently cannot determine the
nature and amount of any awards that will be granted in the future to any
eligible individual or group of individuals.
Awards may be granted in the form of incentive stock options ("ISOs") within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), NQOs (each ISO or NQO, an "Option," and collectively, "Options"),
restricted stock ("Restricted Stock"), stock purchase rights ("Stock Purchase
Rights") or performance shares ("Performance Shares"). Any award may be granted
either alone or in addition to other awards granted under the Incentive Plan.
The Committee may condition the grant of the award upon the attainment of
specified Company, group or division performance goals or other criteria, which
need not be the same for all participants. No award may be granted under the
Incentive Plan on or after July 5, 2005, but outstanding awards may extend
beyond that date.
Options. Options granted under the Incentive Plan may be ISOs or NQOs. The
exercise price of ISOs may not be less than the fair market value of the shares
subject to the Option on the date of grant. The exercise price of NQOs must be
at least 85 percent of the fair market value of the shares subject to the
Option on the date of grant. The term of any ISO granted under the Incentive
Plan may not exceed ten years and the term of any NQO may not exceed fifteen
years. Certain other limitations are also applicable to ISOs in order to take
advantage of the favorable tax treatment that may be available for ISOs.
Restricted Stock. Restricted Stock awards consist of non-transferable shares
of Common Stock of the Company. The Committee may provide for the lapse of the
transfer restrictions over a period of not more than ten years or may
accelerate or waive such restrictions, in whole or in part, based on service,
performance or other criteria determined by the Committee.
Stock Purchase Rights. Stock Purchase Rights consist of a grant to purchase
Common Stock at a purchase price of not less than 85 percent of the fair market
value of the Common Stock on the grant date. Stock Purchase Rights are
generally exercisable for a period of up to 30 days after the grant date.
Performance Shares. Performance Shares are shares of Common Stock issuable
upon the attainment of performance criteria. At the time of a grant, the
Committee will determine the number of shares of Common Stock to be awarded at
the end of the performance period if and to the extent that the specified
performance targets are met. The consideration payable by a participant with
respect to a Performance Share award will be determined by the Committee but
may not exceed 50 percent of the fair market value of the Common Stock on the
date of grant. The Committee will determine the performance period, the
performance objectives to be used in granting the awards and the extent to
which awards have been earned. Performance periods may overlap, and
participants may be awarded Performance Shares having different performance
criteria. Performance Share awards may be payable in cash or stock, at the
discretion of the Committee, and may bear interest or earn dividends.
The consideration payable for, upon exercise of, or for tax payable in
connection with, an award may be paid in cash, by promissory note of the
participant or by delivery of other property, including securities of the
Company, as authorized by the Committee. The Company generally will not receive
any consideration upon the grant of any awards, although the Incentive Plan
provides that consideration may be payable with respect to the grant of
Performance Shares. Awards generally may be exercised at any time within three
months after a participant's employment by, or consulting relationship with,
the Company terminates (but, only to the extent exercisable or payable at the
time of termination). If termination is due to the participant's death,
retirement or
21
<PAGE>
disability, the award may be exercised for two years thereafter. Shares issued
under an award may be subject to a right of repurchase by the Company. No award
shall be assignable or otherwise transferable by a participant other than by
will or by the laws of descent and distribution.
The Committee may adjust the performance goals and measurements applicable
to awards. The Committee also may waive in whole or in part any or all
restrictions, conditions, vesting or forfeiture with respect to any award
granted under the Incentive Plan.
The Board may amend, alter or discontinue the Incentive Plan or any award at
any time, except that the consent of a participant is required if the
participant's rights under an outstanding award would be impaired. In addition,
to the extent required for the Incentive Plan to satisfy the conditions of Rule
16b-3 under the Exchange Act or, with respect to provisions solely as they
relate to ISOs, to the extent required for the Incentive Plan to comply with
Section 422 of the Code, the shareholders of the Company must approve any
amendment, alteration or discontinuance of the Incentive Plan that would (i)
increase the total number of shares reserved under the Incentive Plan, (ii)
change the minimum price terms for Option exercise, (iii) change the class of
employees and consultants eligible to participate in the Incentive Plan, (iv)
extend the maximum Option exercise period, or (v) materially increase the
benefits accruing to participants under the Incentive Plan.
The Incentive Plan constitutes an unfunded plan for incentive and deferred
compensation. The Committee may authorize the creation of trusts or
arrangements to meet the obligations under the Incentive Plan to deliver stock
or make payments.
Under the Incentive Plan, "change in control" is defined to include the
acquisition of 20 percent or more of the voting power of the Company's
outstanding stock, a proxy solicitation for one or more directors without
support of the then current Board, a dissolution or liquidation of the Company
and certain asset sales, mergers or reorganizations or other changes in
ownership of the Company's assets or stock. In the event of a "change in
control" of the Company, as defined in the Incentive Plan, the Board may,
subject to certain limitations, accelerate the vesting provisions of awards or
may cash out the awards. The Board has passed a resolution accelerating the
vesting of stock options under the Incentive Plan for certain changes of
control.
FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES IS BASED UPON
EXISTING STATUTES, REGULATIONS AND INTERPRETATIONS THEREOF. THE APPLICABLE
RULES ARE COMPLEX, AND INCOME TAX CONSEQUENCES MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH PLAN PARTICIPANT. THIS PROXY STATEMENT
DESCRIBES FEDERAL INCOME TAX CONSEQUENCES OF GENERAL APPLICABILITY, BUT DOES
NOT PURPORT TO DESCRIBE PARTICULAR CONSEQUENCES TO EACH INDIVIDUAL PLAN
PARTICIPANT OR FOREIGN, STATE OR LOCAL INCOME TAX CONSEQUENCES, WHICH MAY
DIFFER FROM THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
INCENTIVE STOCK OPTIONS
Awards; Exercise. ISOs are intended to constitute "incentive stock options"
within the meaning of Section 422 of the Code. ISOs may be granted only to
employees of the Company (including directors who are also employees). The
recipient of an Option (the "Optionee") does not recognize taxable income upon
either the grant or exercise of an ISO. However, the excess of the fair market
value of the shares purchased upon exercise over the Option exercise price (the
"Option Spread") is includable in the Optionee's "alternative minimum taxable
income" ("AMTI") for purposes of the alternative minimum tax ("AMT"). The
Option Spread is generally measured on the date of exercise and is includable
in AMTI in the year of exercise. Special rules regarding the time of AMTI
inclusion may apply for shares subject to a repurchase right or other
"substantial risk of forfeiture."
22
<PAGE>
Sale of Option Shares. If an Optionee holds the shares purchased under an
ISO for at least two years from the date the ISO was granted and for at least
one year from the date the ISO was exercised, any gain from a sale of the
shares other than to the Company should be taxable as long term capital gain.
Under these circumstances, the Company would not be entitled to a tax deduction
at the time the ISO was exercised or at the time the stock was sold. If an
Optionee were to dispose of stock acquired pursuant to an ISO before the end of
the required holding periods (a "Disqualifying Disposition"), the amount by
which the market value of the stock at the time the ISO was exercised exceeded
the exercise price (or, if less, the amount of gain realized on the sale) would
be taxable as ordinary income, and the Company would be entitled to a
corresponding tax deduction. Such income is subject to information reporting
requirements and may become subject to withholding. Gain from a Disqualifying
Disposition in excess of the amount required to be recognized as ordinary
income is capital gain. Optionees are required to notify the Company
immediately prior to making a Disqualifying Disposition. If stock is sold to
the Company rather than to a third party, the sale may not produce capital gain
or loss but will constitute a redemption of such shares, which could be taxable
as a dividend unless the redemption is "not essentially equivalent to a
dividend" within the meaning of the Code.
Exercise With Stock. If an Optionee pays for ISO shares with shares of the
Company acquired under an ISO or a qualified employee stock purchase plan
("statutory option stock"), the tender of shares is a Disqualifying Disposition
of the statutory option stock if the above described (or other applicable)
holding periods respecting those shares have not been satisfied. If the holding
periods with respect to the statutory option stock are satisfied, or the shares
were not acquired under a statutory stock option of the Company, then any
appreciation in value of the surrendered shares is not taxable upon surrender.
Special basis and holding period rules apply where previously-owned stock is
used to exercise an ISO.
Withholding Taxes. The present position of the Internal Revenue Service
("IRS") appears to be that income and employment withholding taxes are not
imposed upon the exercise of an ISO or the sale of ISO shares, including a
Disqualifying Disposition. The IRS is studying this position and may change it
at any time, possibly with retroactive effect.
NONQUALIFIED STOCK OPTIONS
Award; Exercise. An Optionee is not taxable upon the award of a NQO.
Federal income tax consequences upon exercise will depend upon whether the
shares thereby acquired are subject to a "substantial risk of forfeiture." If
the shares are not subject to a substantial risk of forfeiture, or if they are
so restricted and the Optionee files an election under Section 83(b) of the
Code (a "Section 83(b) Election") with respect to the shares, the Optionee will
have ordinary income at the time of exercise measured by the Option Spread on
the exercise date. The Optionee's tax basis in the shares will be the share's
fair market value on the date of exercise, and the holding period for purposes
of determining whether capital gain or loss upon sale is long- or short-term
also will begin on that date.
The amount of ordinary income taxable to an Optionee who was an employee at
the time of grant constitutes "supplemental wages" subject to withholding of
income and employment taxes by the Company, and the Company receives a
corresponding income tax deduction.
Sale of Option Shares. Upon sale, other than to the Company, of shares
acquired under a NQO, an Optionee generally will recognize capital gain or loss
to the extent of the difference between the sale price and the Optionee's tax
basis in the shares, which will be long-term gain or loss if the employee's
holding period in the shares is more than one year. If stock is sold to the
Company rather than to a third party, the sale may not produce capital gain or
loss but will constitute a redemption of such shares, which could be taxable as
a dividend unless the redemption is "not essentially equivalent to a dividend"
within the meaning of the Code.
Exercise with Stock. If an Optionee tenders common stock (other than
statutory option stock--see above) to pay all or part of the exercise price of
a NQO, the Optionee will not have a taxable gain or deductible loss on the
surrendered shares. Instead, shares acquired upon exercise that are equal in
value to the fair market
23
<PAGE>
value of the shares surrendered in payment are treated as if they had been
substituted for the surrendered shares, taking as their basis and holding
period the basis and holding period that the Optionee had in the surrendered
shares. The additional shares are treated as newly acquired with a zero basis.
If the surrendered shares are statutory option stock as described above
under "Incentive Stock Options", with respect to which the applicable holding
period requirements for favorable income tax treatment have not expired, then
the newly acquired shares substituted for the statutory option shares should
remain subject to the federal income tax rules governing the surrendered
shares, but the surrender should not constitute a Disqualifying Disposition of
the surrendered stock.
RESTRICTED STOCK
Upon receipt of Restricted Stock, a recipient generally has taxable income
in the amount of the excess of the then fair market value of the Common Stock
over any consideration paid for the Common Stock (the "spread"). However, if
the common stock is subject to a "substantial risk of forfeiture" (described
under "Incentive Stock Options," above) and the recipient does not make a
Section 83(b) Election, the recipient will have taxable income upon lapse of
the risk of forfeiture, rather than at receipt, in an amount equal to the
spread on the date of lapse. The taxable income constitutes supplemental wages
subject to income and employment tax withholding, and the Company receives a
corresponding income tax deduction. The consequences upon sale or disposition
of Restricted Stock generally are the same as for common stock acquired under a
NQO (see above).
PERFORMANCE SHARES
Depending on the exact terms of an award of Performance Shares, the Award
could be treated for tax purposes in the same manner as a Restricted Stock
Award, i.e., as transfer of property subject to restrictions, or as a transfer
which takes place only when the terms of the award are satisfied.
STOCK PURCHASE RIGHTS
The tax treatment of Stock Purchase Rights is identical to that of NQOs, as
described above.
PROPOSAL
Shareholders are being asked to approve the amendment to the Incentive Plan.
The affirmative vote of the holders of a majority of the shares of the Common
Stock and Preferred Stock represented and voting at the Annual Meeting is
required to adopt the amendment to the Incentive Plan.
BOARD RECOMMENDATION
The Board recommends a vote "FOR" approval of the proposal.
24
<PAGE>
PROPOSAL 4.
APPROVAL OF AMENDMENT TO THE IDENTIX INCORPORATED NON-EMPLOYEE DIRECTORS STOCK
OPTION PLAN
The Board has approved, subject to shareholder approval, the following
amendments to the Identix Incorporated Non-employee Directors Stock Option Plan
(the "Directors Plan"): (i) an amendment to increase the total number of shares
reserved for issuance under the Directors Plan by 450,000 from 410,000 to
860,000; and (ii) amendments to increase the number of shares covered by an
option grant made to a non-employee Director upon initial election to the Board
from 20,000 to 30,000 shares (or from 10,000 to 15,000 in case more than six
months have elapsed since the date of the last annual shareholders meeting at
the time of such election) and to increase the number of shares covered by the
annual option grant made to a non-employee director from 20,000 to 30,000
shares. The new grant levels described in the preceding sentence, if approved
by the shareholders of the Company, will be effective as of the date of the
Annual Meeting.
Currently, the Directors Plan provides that a total of 410,000 shares of
Common Stock may be issued thereunder upon exercise of NQOs granted under the
Directors Plan. As of July 31, 2000, there were 50,000 shares that were
currently unreserved and available for grant under the Directors Plan. The
Company believes that the proposed increase in the number of shares available
for grant is necessary to ensure that there will be a sufficient reserve of
shares to permit the grant of further options to non-employee Directors for the
next two years. The Company believes that the increase in the number of shares
covered by option grants under the Directors Plan is necessary in order to
continue to attract, motivate and retain high caliber Board members.
The following table shows the number of number of shares covered by options
granted to the identified groups under the Directors Plan in fiscal year 2000.
All options were granted at fair market value as of the date of grant.
<TABLE>
<CAPTION>
NUMBER
OF SHARES
---------
<S> <C>
All executive officers as a group.................................. 0
All Directors who are not executive officers as a group............ 80,000
All employees (other than executive officers) as a group........... 0
</TABLE>
DESCRIPTION OF THE DIRECTORS PLAN
Only non-employee Directors of the Company are eligible to participate in
the Directors Plan. The Directors Plan is designed to work automatically.
However, to the extent administration is necessary, it is provided by the Board
or the Board may delegate its authority to a committee of the Board. Option
grants to non-employee Directors are made on a formula basis and not on a
discretionary basis. The Directors Plan provided for grant to each Director who
was not, and had not been in the preceding twelve months, an officer or an
employee of the Company an NQO to purchase 20,000 shares of Common Stock on the
date of initial adoption of the Directors Plan in 1995. The Directors Plan, as
currently in effect, further provides that when a person who is not, and has
not been in the preceding twelve months, an officer or an employee of the
Company is elected or appointed a member of the Board, the Company will grant
that person on the effective date of such election or appointment (i) an NQO to
purchase 20,000 shares of Common Stock if less than six months have elapsed
since the last annual meeting of shareholders or (ii) an NQO to purchase 10,000
shares of Common Stock if at least six months have elapsed since the last
annual meeting of shareholders (in either case, an "Initial Grant"). The
Directors Plan, as currently in effect, further provides that on the first
meeting of the Board immediately following the annual meeting of shareholders
of the Company (even if held on the same day as the meeting of shareholders),
the Company will grant to each non-employee Director then in office an NQO to
purchase an additional 20,000 shares of Common Stock (an "Annual Grant"). If
the amendments to the Directors Plan proposed hereby are approved by the
Company's shareholders, effective on the date of the Annual Meeting, the
Initial Grant level shall be increased from 20,000 to 30,000 shares (or from
10,000 to
25
<PAGE>
15,000 if more than six months have elapsed since the last annual meeting of
shareholders) and the Annual Grant level shall be increased from 20,000 to
30,000 shares.
All NQOs granted under the Directors Plan have an exercise price equal to
the fair market value of such shares on the date of grant and become
exercisable with respect to one fourth of the number of shares covered by such
Option for each three month period which elapses after the date of grant, so
that such Option will be fully exercisable on the first anniversary of the date
such Option was granted. Including Mr. Fowler, who retired as Chief Executive
Officer of the Company effective March 31, 2000, the Company currently has six
non-employee Directors who are eligible to participate in the Directors Plan,
all of whom have been nominated for election at the Annual Meeting. If elected
to the Board as proposed under Proposal 1, Mr. Major would also be considered a
non-employee Director eligible to participate in the Director Plan.
The consideration payable in connection with any Option (including any
related taxes) may be paid by promissory note of the non-employee Director or
by delivery of shares of Common Stock of the Company. Options granted under the
Directors Plan have a term of ten years. Options generally terminate three
months after a non-employee Director ceases to be, for any reason, a Director,
but if a non-employee Director ceases to be a Director due to death, disability
or retirement, the Option may be exercised for two years after the termination.
The Board may amend, alter, or discontinue the Directors Plan or any Option
at any time, except that the consent of a participant is required if the
participant's existing rights under an outstanding Option would be impaired. In
addition, to the extent required under applicable tax and securities laws and
regulations, the shareholders of the Company must approve any amendment,
alteration, or discontinuance of the Directors Plan that would increase the
total number of shares reserved under the Directors Plan and in certain other
circumstances as the Board may deem advisable to comply with such laws and
regulations. In addition, the provisions of the Directors Plan governing who is
granted Options, the number of shares covered by each Option, the exercise
price, and the period of exercisability and the timing of Option grants may not
be amended more than once every six months, other than for changes to comport
with the Code or the Employee Retirement Income Security Act of 1974.
In the event of a "change in control" of the Company, as defined in the
Directors Plan, the vesting of Options will automatically accelerate. A "change
in control" is defined to include the acquisition of 20% or more of the voting
power of the Company's outstanding stock, a proxy solicitation for one or more
directors without support of the then-current Board, and certain mergers or
reorganizations or other changes in ownership of the Company's assets or stock.
The Company believes it important that Directors have meaningful equity
ownership in the Company and believes one way to provide the appropriate level
of ownership is through a formula plan such as that set forth in the Directors
Plan.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences of NQOs granted under the Directors Plan
are the same as NQOs granted under the Incentive Plan. See Proposal 3. Approval
of Amendment to Identix Incorporated Equity Incentive Plan -- Federal Income
Tax Consequences -- Nonqualified Stock Options."
PROPOSAL
Shareholders are being asked to approve the amendments to the Directors Plan
described above. The affirmative vote of the holders of a majority of the
shares of Common Stock and Preferred Stock of the Company represented and
voting at the Annual Meeting is required for approval of the amendments to the
Directors Plan.
BOARD RECOMMENDATION
The Board recommends a vote "FOR" approval of the proposal.
26
<PAGE>
PROPOSAL 5.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers LLP, independent
accountants, to audit the consolidated financial statements of the Company for
the fiscal year ending June 30, 2001, and recommends that stockholders vote
"FOR" ratification of such appointment. It is anticipated that a representative
of PricewaterhouseCoopers LLP will be present at the Annual Meeting with the
opportunity to make a statement and to respond to appropriate questions.
OTHER MATTERS
Management knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
Company that the persons named in the enclosed form of proxy vote the shares
they represent as Management may recommend.
Dated: September 18, 2000
THE BOARD OF DIRECTORS
27
<PAGE>
Please mark
your votes [X]
as indicated in
this example
FOR WITHHOLD
all nominees listed AUTHORITY
(except as noted to to vote for the
the contrary) nominees listed
1. TO ELECT DIRECTORS [_] [_]
Nominees:
01-Randall C. Fowler
02-Patrick H. Morton
03-Randall Hawks, Jr.
04-Fred U. Sutter
05-Larry J. Wells
06-Charles W. Richion
07-James P. Scullion
08-John E. Major
09-Paul J. Bulger
(INSTRUCTION: To withhold authority to vote for any nominee, write the
nominee's name in the space provided below.)
----------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2. To amend the Company's Certificate of [_] [_] [_]
Incorporation to effect an increase in number of
authorized shares of the Company's common stock
from 50,000,000 to 100,000,000 shares.
3. To amend the Identix Incorporated Equity [_] [_] [_]
Incentive Plan to increase the number of shares
of the Company's common stock available for issuance
under the plan from 3,000,000 to 4,700,000 shares.
4. To amend the Identix Incorporated Non-Employee Directors Plan [_] [_] [_]
to increase the number of shares of the Company's common
stock available for issuance under that plan from 410,000 to
860,000 shares and to approve the other amendments to that
plan described in the accompanying Proxy Statement.
5. To ratify the appointment of [_] [_] [_]
PricewaterhouseCoopers LLP
as independent accountants of
the Company for the fiscal year
ending June 30, 2001.
Date and sign exactly as name(s) appear(s) on this proxy. If signing for estates, trusts, corporations, or other entities, title or
capacity should be stated. If shares are held jointly, each holder should sign.
Signature ____________________________________________________________________ Date__________________________________
Signature ____________________________________________________________________Date____________________________________
</TABLE>
________________________________________________________________________________
/\ FOLD AND DETACH HERE /\
VOTE BY TELEPHONE OR INTERNET
QUICK *** EASY *** IMMEDIATE
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE IN ONE OF THREE WAYS:
1. VOTE BY PHONE Call toll-free 1-800-840-1208 on a touch tone telephone 24
hours a day-7 days a week.
There is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number which is located in the box in the
lower right hand corner of this form.
_________________________________________________________________________
| OPTION 1: To vote as the Board of Directors recommends on ALL proposals |
| Press 1. |
|_________________________________________________________________________|
When asked, please confirm by Pressing 1.
___________________________________________________________________________
| OPTION 2: If you choose to vote on each proposal separately, press 0. You |
| will hear these Instructions |
|___________________________________________________________________________|
Proposal 1 - To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL Nominees,
press 9.
To withhold FOR AN INDIVIDUAL nominee, press 0 and listen to the instruction
Proposal 2 - To vote FOR , press 1; AGAINST, press 9, ABSTAIN, press 0.
When asked, please confirm by pressing 1.
The instructions are the same for all remaining proposals.
or
2. VOTE BY INTERNET Follow the instructions at our Website Address http
//www.eproxy.com/IDX
or
3. VOTE BY PROXY Mark, sign and date our proxy card and return promptly in
the enclosed envelope.
NOTE: If you vote by internet or telephone, THERE IS NO NEED TO MAIL BACK
our Proxy card.
THANK YOU FOR VOTING.
<PAGE>
PROXY
For The Shares Of
IDENTIX INCORPORATED
A Delaware Corporation
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Common Stock and/or Preferred Stock of Identix
Incorporated (the "Company") hereby revokes all previous proxies, acknowledges
receipt of the notice of the stockholders' meeting to be held on October 26,
2000, and appoints James P. Scullion and Mark S. Molina, and each of them, as
proxy of the undersigned with power of substitution and revocation, to vote and
otherwise represent all the shares of the undersigned at said meeting and any
adjournment or postponement thereof with the same effect as if the under-signed
were present and voting the shares. The shares represented by this proxy shall
be voted as specified on the reverse side. If no choice is indicated, the shares
will be voted FOR all proposals.
(Continued on other side.)
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
