SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): NOVEMBER 9, 1999
SAFLINK CORPORATION
(formerly The National Registry Inc.)
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE 0-2027 95-4346070
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
2502 ROCKY POINT DRIVE, SUITE 100, TAMPA, FLORIDA 33607
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (813) 636-0099
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ITEM 1. CHANGE IN CONTROL OF REGISTRANT
Not applicable
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Not applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
The attached exhibits are incorporated by reference herein, and the
description set forth below is qualified in its entirety by reference to
such exhibits.
On November 9, 1999 the Company issued 100,000 shares of Series D
Preferred Stock to RMS Limited Partnership, the Company's largest
stockholder, for an aggregate purchase price of $5 million. The Series D
Preferred Stock has a conversion price of $1.39 per share and may be
converted into 3.6 million shares of the Company's common stock based on
the aggregate liquidation preference of the Series D Preferred Stock.
Shares of the Series D Preferred Stock outstanding as of November 9, 2004
will be automatically converted. The Company has the right, but not the
obligation, to redeem the Series D Preferred Stock for $50 per share plus
accrued dividends at any time prior to conversion. The Series D Preferred
Stock has no voting rights, except as required by law, carries a 10% per
annum cumulative dividend, and has a liquidation preference of $50 per
share plus unpaid dividends.
On November 10, 1999, the Company announced that, effective on such
date, its wholly-owned subsidiary, SAFLINK Corporation completed the change
of its legal name to SAFLINK International, Inc. and the Company completed
the change of its legal name to SAFLINK Corporation. The majority of the
Company's stockholders approved the Company's name change.
The Nasdaq National Market ticker symbol for SAFLINK Corporation's
Common Stock will be "ESAF." The predecessor ticker symbol for the Common
Stock was "NRID" prior to the name change. The change in the Nasdaq ticker
symbol is expected to be effective at the opening of the market on Friday,
November 12, 1999.
2
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These events were announced in a press release, a copy of which is
attached hereto as Exhibit 99.1 and is incorporated by reference herein.
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS
On November 9, 1999, two members of the Company's board of
directors (the "Board"), J. Anthony Forstmann and O. G. Greene, delivered
letters to the Chairman of the Board (the "Chairman") resigning from the
Board "due to other pressures on their time." The resignations were
effective upon receipt and acceptance thereof, on behalf of the Board, by
the Chairman of the Board.
3
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable.
(b) Not applicable.
(c) Exhibits
The exhibits listed on the Exhibit Index on page 5 are filed as part of
this Report.
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SAFLINK Corporation
(formerly The National Registry Inc.)
Date: November 11, 1999
By: /s/ JEFFREY P. ANTHONY
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Jeffrey P. Anthony
President and Chief Executive Officer
5
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EXHIBIT INDEX
EXHIBIT PAGE NO.
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4 Certificate of Designation, Preferences and Rights of 7
Series D Preferred Stock (as corrected)
10 Subscription Agreement by and between The National 18
Registry Inc. and RMS Limited Partnership, dated
November 9, 1999
99.1 Press Release dated November 10, 1999 35
EXHIBIT 4
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES D PREFERRED STOCK
SAFLINK CORPORATION (FORMERLY THE NATIONAL REGISTRY INC.)
(AS CORRECTED)
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PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW
The National Registry, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation") and the
undersigned officers of the Corporation, do hereby certify that (i) the
Corporation is authorized by its Certificate of Incorporation to issue 1,000,000
shares of Preferred Stock, $.01 par value per share, and pursuant thereto has
determined to issue 100,000 shares of a series of Preferred Stock which shall be
designated and known as "Series D Preferred Stock," and (ii) the following
resolution was duly adopted by the members of the Board of Directors of the
Corporation on November 9, 1999:
RESOLVED that pursuant to the authority expressly vested in the Board
of Directors of the Corporation, the Board of Directors hereby establishes a
series of the Preferred Stock of the Corporation, which series is hereby
designated "Series D Preferred Stock" (referred to herein as "Series D Preferred
Stock") consisting of 100,000 shares, par value $.01 per share, and hereby fixes
and determines the voting rights, designations, preferences, qualifications,
privileges, limitations, options and other rights of the Series D Preferred
Stock of the Corporation as follows:
1. VOTING RIGHTS. The holders of Series D Preferred Stock shall not be
entitled to vote on any matters submitted to the stockholders of the
Corporation, except as required by applicable law.
2. DIVIDEND PROVISIONS.
(a) DIVIDEND AMOUNT. The holders of shares of Series D
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available therefor, cash dividends at
the rate of 10% of the initial liquidation preference per annum per share. The
initial liquidation preference is Fifty U.S. Dollars (US$50) per share (the
"Initial Liquidation Preference"). The right to dividends on the Series D
Preferred Stock shall be cumulative (whether or not earned or declared) from the
Original Issue Date, whether or not in any Dividend Period or Periods there
shall be funds of the Corporation legally available for the payment of such
dividends. All accumulated and unpaid dividends on the Initial Liquidation
Preference shall compound annually at the annual dividend rate of 10% from the
preceding Dividend Payment Date (from the Original Issue Date in the case of the
first dividend period). Such dividends (whether or not earned or declared) will
cumulate on a daily basis from the Original Issue Date and will be payable in
arrears in equal amounts annually on March 31 of each year, commencing on March
31, 2000 (each of such dates a "Dividend Payment Date" and each annual period
being a "Dividend Period") to holders of record on the
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fifteenth day immediately preceding the relevant Dividend Payment Date. The
Initial Liquidation Preference plus any accumulated and unpaid dividends are
referred to herein as "Accreted Liquidation Preference."
(b) DIVIDEND POLICY. For so long as accumulated dividends with
respect to the Series D Preferred Stock remain unpaid, (i) no dividend or other
distribution (except for dividends payable solely in Common Stock or other
securities and rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock of the
Corporation) shall be paid or made on any Junior Securities (as hereinafter
defined), (ii) no Junior Securities shall be purchased or otherwise acquired by
the Corporation or any subsidiary of the Corporation during the period any share
of the Series D Preferred Stock is outstanding (except for shares purchased in
connection with the administration of an employee benefit or retirement plan
which plan has been approved by the Board of Directors of the Corporation), and
(iii) no deposit, payment, or distribution of any kind shall be made in or to
any purchase or redemption requirement applicable to any Junior Securities. The
term "Junior Securities" shall refer to Common Stock, any class or series of
preferred stock issued after the Original Issue Date or any security or right
convertible into or entitling the holder to receive shares of Common Stock;
provided, however that in no event shall shares of Series A or Series D
Preferred Stock be considered Junior Securities hereunder.
3. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, either voluntary or involuntary, the holders of each share
of Series D Preferred Stock shall be entitled to receive, immediately after any
distributions to Senior Securities required by the Corporation's Certificate of
Incorporation or any certificate of designation of preferences, and prior and in
preference to any distribution of Junior Securities but in parity with any
distribution with any Parity Securities, an amount per share equal to the
Accreted Liquidation Preference. If upon the occurrence of such event, the
assets and funds thus distributed among the holders of the Series D Preferred
Stock and Parity Securities shall be insufficient to permit payment to such
holders of the full preferential amounts due to the holders of the Series D
Preferred Stock and the Parity Securities, respectively, then the entire assets
and funds of the holders of Parity Securities shall be distributed among the
holders of the Series D Preferred Stock and the holders of Parity Securities
shall be distributed among the holders of the Series D Preferred Stock and the
Parity Securities, pro rata, based on the respective liquidation amounts to
which each such series of stock is entitled by the Corporation's Certificate of
Incorporation and any certificate(s) of designation of preferences.
The term "Senior Securities" shall refer to, any class or series of
preferred stock or any security or right convertible into or entitling the
holder to receive shares of Common Stock hereinafter created and is specifically
ranked senior to Series D Preferred Stock.
The term "Parity Securities" shall refer to, any class or series of
preferred stock or any security or right convertible into or entitling the
holder to receive shares of Common Stock hereinafter created and is specifically
ranked on parity with Series D Preferred Stock. The term "Senior Securities"
shall refer to, any class or series of preferred stock or any security or right
convertible into or entitling the holder to receive shares of Common Stock
hereinafter created and is specifically ranked senior to Series D Preferred
Stock.
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(b) Upon the completion of the distribution required by
subsection 3(a), if assets remain in this Corporation, they shall be distributed
to holders of Junior Securities in accordance with the Corporation's Certificate
of Incorporation including any duly adopted certificates(s) of designation of
preferences.
(c) A consolidation or merger of the Corporation with or into
any other corporation or corporations, or a sale, conveyance or disposition of
all or substantially all of the assets of the Corporation or the effectuation by
the Corporation of a transaction or series of related transactions in which more
than 50% of the voting power of the Corporation is disposed of, shall be deemed
to be a liquidation, dissolution or winding up within the meaning of this
section.
4. CONVERSION OF SERIES D PREFERRED STOCK. The holders of the Series D
Preferred Stock shall have conversion rights as follows (the "Conversion
Rights"):
(a) CONVERSION. (i) Each outstanding share of Series D
Preferred Stock may be converted upon the election of a holder thereof into
shares of Common Stock of the Corporation at any time following the Original
Issue Date. Each share of Series D Preferred Stock may be converted at the
office of the Corporation, or any transfer agent for such stock, into such whole
number of fully paid and nonassessable shares of Common Stock as is determined
by dividing the Accreted Liquidation Preference by the Conversion Price. The
initial price at which shares of Common Stock shall be deliverable upon
conversion of shares of Series D Preferred Stock (the "Conversion Price") shall
be equal to $1.39 per share. The Conversion Price shall be subject to adjustment
as hereinafter provided (ii) All shares of Series D Preferred Stock outstanding
on the fifth anniversary of the Original Issue Date shall automatically be
converted into the right to receive that number of shares of Common Stock which
would otherwise have been issuable to the holder thereof if such holder had
delivered the Conversion Notice (as hereinafter defined) and such date was the
Conversion Date (as hereinafter defined). Thereafter, all shares of the Series D
Preferred Stock shall cease to be outstanding and shall have the status of
authorized but unissued shares of undesignated shares of Preferred Stock.
(b) MECHANICS OF CONVERSION.
(i) Before any holder of Series D Preferred Stock shall be
entitled to convert the same into shares of Common Stock, he shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for such stock, and shall give written
notice (the "Conversion Notice") to the Corporation at such office that he
elects to convert the same and shall state therein the name or names in which he
wishes the certificate or certificates for shares of Common Stock to be issued.
The Corporation shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Series D Preferred Stock, a certificate or
certificates for the number of shares of Common Stock to which he shall be
entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of surrender of the
shares of Series D Preferred Stock to be converted (the "Conversion Date"), and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date.
(ii) If the conversion is in connection with an
underwritten offering of securities pursuant to the Securities Act of 1933, as
amended, the conversion may, at the option of any holder tendering shares of
Series D Preferred Stock for conversion, be conditioned upon the closing with
the underwriters of the sale of securities pursuant to such offering, in which
event the person(s) entitled to receive the Common Stock upon conversion of the
Series D Preferred Stock shall not be deemed to have converted such Series D
Preferred Stock until immediately prior to the closing of such sale of
securities.
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(c) ADJUSTMENTS TO CONVERSION PRICE FOR CERTAIN DILUTING
ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of this
subsection (c), the following definitions apply:
(1) "OPTIONS" shall mean rights, options
(excluding options issued to officers, directors or employees of or consultants
to the Corporation pursuant to a stock option plan on terms approved by the
Board of Directors), or warrants to subscribe for, purchase or otherwise acquire
either Junior Securities or Convertible Securities (defined below).
(2) "ORIGINAL ISSUE DATE" shall mean
November 10, 1999.
(3) "CONVERTIBLE SECURITIES" shall mean any
evidence of indebtedness, shares (other than Common Stock), any series of
Preferred Stock (other than Series D Preferred Stock) or other securities
convertible into or exchangeable for Junior Securities.
(4) "ADDITIONAL SHARES OF COMMON STOCK"
shall mean all shares of Common Stock issued (or, pursuant to subsection
(c)(iii), deemed to be issued) by the Corporation after the Original Issue Date,
other than shares of Common Stock issued or issuable:
(A) upon conversion of shares of
Series A Preferred Stock or Series D Preferred Stock;
(B) to officers, directors or
employees of, or consultants to, the Corporation as restricted stock or pursuant
to stock option or stock purchase plans or agreements on terms approved by the
Board of Directors;
(C) as a dividend or distribution on
Series D Preferred Stock; or
(D) for which adjustment of the
Conversion Price is made pursuant to
subsection 4(c)(iv) below.
(ii) NO ADJUSTMENT OF CONVERSION PRICE. Any provision
herein to the contrary notwithstanding, no adjustment in the Conversion Price
for Series D Preferred Stock shall be made in respect of the issuance of
Additional Shares of Common Stock unless the consideration per share (determined
pursuant to subsection 4(c)(v) hereof) for an Additional Share of Common Stock
issued or deemed to be issued by the Corporation is less than the Conversion
Price for the Series D Preferred Stock, in effect immediately prior to the date
of such issue.
(iii) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON
STOCK. In the event the Corporation at any time or from time to time after the
Original Issue Date shall issue any Options or Convertible Securities or shall
fix a record date for the determination of holders of any class of securities
then entitled to receive any such Options or Convertible Securities, then the
maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein designed to protect against
dilution) of Common Stock issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or
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exchange of such Convertible Securities, shall be deemed to be Additional Shares
of Common Stock issued as of the time of such issue or, in case such a record
date shall have been fixed, as of the close of business on such record date,
provided that in any such case Additional Shares of Common Stock shall be deemed
to have been issued;
(1) no further adjustments in the Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of Options or conversion or exchange of
such Convertible Securities;
(2) if such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase or decrease in the consideration payable to the Corporation, or
decrease or increase in the number of shares of Common Stock issuable, upon the
exercise, conversion or exchange thereof, the Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such increase
or decrease in proportion to its affect on such Options or the rights of
conversion or exchange under such Convertible Securities (provided, however,
that no such adjustment of the Conversion Price shall affect Common Stock
previously issued upon conversion of the Series D Preferred Stock);
(3) upon the expiration of any such Options
or any rights of conversion or exchange under such Convertible Securities which
shall not have been exercised, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon such expiration, be
recomputed as if in the case of Convertible Securities or Options for Common
Stock the only Additional Shares of Common Stock issued were the shares of
Common Stock, if any, actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the Corporation for
the issue of all such Options, whether or not exercised, plus the consideration
actually received by the Corporation upon such exercise, or for the issue of all
such Convertible Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the Corporation upon such
conversion or exchange.
(4) in the case of any Options which expire
by their terms not more than 30 days after the date of issue thereof, no
adjustment of the Conversion Price shall be made until the expiration or
exercise of all such Options, whereupon such adjustment shall be made in the
same manner provided in clause (3) above.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON Stock. In the event this Corporation, at any time
after the Original Issue Date shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
subsection (c)(iii)) without consideration or for a consideration per share less
than the Conversion Price in effect on the date of and immediately prior to such
issue, then and in such event, the Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest cent)
determined by multiplying such Conversion Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of shares of Common Stock which the
aggregate consideration received by the
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Corporation for the total number of Additional Shares of Common Stock so issued
would purchase at such Conversion Price in effect immediately prior to such
issuance, and the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issue plus the number of such
Additional Shares of Common Stock so issued. For the purpose of the above
calculation, the number of shares of Common Stock outstanding immediately prior
to such issue shall be calculated on a fully diluted basis, as if all shares of
Series D Preferred Stock and all Convertible Securities had been fully converted
into shares of Common Stock immediately prior to such issuance and any
outstanding warrants, options or other rights for the purchase of shares of
stock or Convertible Securities had been fully exercised immediately prior to
such issuance (and the resulting securities fully converted into shares of
Common Stock, if so convertible) as of such date, but not including in such
calculation any additional shares of Common Stock issuable with respect to
shares of Series D Preferred Stock, Convertible Securities, or outstanding
options, warrants or other rights for the purchase of shares of stock or
convertible securities, solely as a result of the adjustment of the respective
Conversion Prices (or other conversion ratios) resulting from the issuance of
Additional Shares of Common Stock causing such adjustment.
(v) DETERMINATION OF CONSIDERATION. For purposes of
this subsection (c), the consideration received by the Corporation for the issue
of any Additional Shares of Common Stock shall be computed as follows:
(1) CASH AND PROPERTY. Such consideration shall:
(A) insofar as it consists of cash,
be computed at the aggregate amount of cash received by the Corporation
excluding amounts paid for accrued interest or accrued dividends;
(B) insofar as it consists of
property other than cash, be computed at the fair value thereof at the time of
receipt of such property, as determined in good faith by the Board; and
(C) in the event Additional Shares
of Common Stock are issued together with other shares or securities or other
assets of the Corporation for consideration which covers both, the proportion of
such consideration so received, computed as provided in clauses (A) and (B)
above, as determined in good faith by the Board of Directors of the Corporation.
(2) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to subsection 4(c)(iii),
relating to Options and Convertible Securities shall be determined by dividing:
(A) the total amount, if any,
received or receivable by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein designed to protect against
dilution) payable to the Corporation upon the exercise of such Options or the
conversion or exchange of such Convertible Securities by
(B) the maximum number of shares of
Common Stock (as set
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forth in the instruments relating thereto, without regard to any provision
contained therein designed to protect against the dilution) issuable upon the
exercise of such Options or conversion or exchange of such Convertible
Securities.
(d) ADJUSTMENTS TO CONVERSION PRICE FOR STOCK DIVIDENDS AND
FOR COMBINATIONS OR SUBDIVISIONS OF COMMON STOCK. In the event that this
Corporation at any time or from time to time after the Original Issue Date shall
declare or pay, without consideration, any dividend on the Common Stock payable
in Common Stock or in any right to acquire Common Stock for no consideration, or
shall effect a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by stock split, reclassification or
otherwise than by payment of a dividend in Common Stock or in any right to
acquire Common Stock), or in the event the outstanding shares of Common Stock
shall be combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, the Conversion Price for Series D
Preferred Stock in effect immediately prior to such event shall, concurrently
with the effectiveness of such event, be proportionately decreased or increased,
as appropriate. In the event that this Corporation shall declare or pay, without
consideration, any dividend on the Common Stock payable in any right to acquire
Common Stock for no consideration, then the Corporation shall be deemed to have
made a dividend payable in Common Stock in any amount of shares equal to the
maximum number of shares issuable upon exercise of such rights to acquire Common
Stock.
(e) ADJUSTMENTS FOR RECLASSIFICATION AND REORGANIZATION. If
the Common Stock issuable upon conversion of the Series D Preferred Stock shall
be changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares provided for in
subsection (d) above), the Conversion Price then in effect shall, concurrently
with the effectiveness of such reorganization or reclassification, be
proportionately adjusted so that the Series D Preferred Stock shall be
convertible into, in lieu of the number of shares of Common Stock which the
holders would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock equivalent to the number of shares of
Common Stock that would have been subject to receipt by the holders upon
conversion of the Series D Preferred Stock immediately before the change.
(f) NO IMPAIRMENT. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series D Preferred Stock against impairment.
(g) CERTIFICATES AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of any Conversion Price pursuant to this Section
4, the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Series D Preferred Stock a certificate executed by the Corporation's
President or Chief Financial Officer setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series D Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the
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Conversion Price for the Series D Preferred Stock at the time in effect, and
(iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of the Series D
Preferred Stock.
(h) NOTICES OF RECORD DATE. In the event that the Corporation
shall propose at any time; (i) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus; (ii) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or
other rights; (iii) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common Stock; or (iv) to
merge or consolidate with or into any other corporation where the Corporation is
not the surviving corporation, or sell, lease or convey all or substantially all
of its assets, or to liquidate, dissolve or wind up; then, in connection with
each such event, the Corporation shall send to the holders of Series D Preferred
Stock;
(1) at least twenty (20) days prior written notice of
the record date for such dividend, distribution or subscription rights (and
specifying the date upon which the holders of Common Stock shall be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in (iii)
and (iv) above, at least twenty (20) days prior written notice of the date when
the same shall take place (and specifying the date on which the holders of
Common Stock shall be entitled to exchange their Common Stock for securities or
other property deliverable upon the occurrence of such event).
(i) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Series D Preferred Stock, such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series D Preferred Stock; and if at
any time the number of authorized but unissued shares of Common stock shall not
be sufficient to effect the conversion of all then outstanding shares of Series
D Preferred Stock, the Corporation will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
5. REDEMPTION
(a) OPTIONAL REDEMPTION. To the extent the Corporation shall have funds
legally available for such payment, the Corporation may, but shall not be
required to, redeem the Series D Preferred Stock at any time (the "Redemption
Date"), in whole or in part, at the Redemption Price (as defined below).
(b) REDEMPTION PRICE. The redemption price per share of the Series D
Preferred Stock to be paid upon a redemption under this Section 5 shall be equal
the Accreted Liquidation Preference at the Redemption Date (the "Redemption
Price"). The Redemption Price shall be adjusted proportionally in the event the
Series D Preferred Stock is adjusted into a lesser number of shares or
subdivided into a greater number of shares. The Redemption Price shall be paid
in cash.
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(c) REDEMPTION NOTICE. Notice of any redemption pursuant to this
Section 5, shall be given by the Corporation by mailing notice (the "Redemption
Notice"), via registered or certified mail, postage prepaid, or by hand delivery
to the holders of record of the Series D Preferred Stock (at the close of
business on the business day next preceding the day on which the Redemption
Notice is given) at their respective addresses as the same shall appear on the
stock books of the Corporation, not less than 5 days prior to the date of such
redemption and the Redemption Notice shall state the Redemption Date, time and
place fixed for such redemption; provided, however, the Corporation shall not be
permitted to redeem the Series D Preferred Stock if the holder of such Series D
Preferred Stock has properly submitted such stock for conversion prior to the
Redemption Date specified in the Redemption Notice.
(d) SURRENDER OF CERTIFICATES. Upon surrender of a certificate or
certificates representing shares to be redeemed pursuant to this Section 5, the
Corporation shall remit an amount equal to the product of (i) the Redemption
Price, times (ii) the number of shares of the Series D Preferred Stock to be
redeemed.
(e) CANCELLATION OF REDEEMED SHARES. Any shares of the Series D
Preferred Stock that shall at any time have been redeemed or repurchased by the
Corporation shall, after such redemption or repurchase, be canceled by the
Corporation, but shall be available for reissuance at a subsequent date.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
duly executed as of this 10th day of November, 1999.
SAFLINK CORPORATION (FORMERLY THE NATIONAL REGISTRY INC.)
By: /s/ JEFFREY P. ANTHONY
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Name: Jeffrey P. Anthony
Title: President & CEO
ATTEST:
By: /s/ JAMES W. SHEPPERD
-----------------------
Name: James W. Shepperd
Title: CFO and Secretary
EXHIBIT 10
SUBSCRIPTION AGREEMENT
By and Between
THE NATIONAL REGISTRY, INC.
A DELAWARE CORPORATION,
and
RMS LIMITED PARTNERSHIP,
A NEVADA LIMITED PARTNERSHIP
Dated as of November 9, 1999
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 Purchase of Securities 1
1.1 Subscription 1
1.2 Purchase Price 1
ARTICLE 2 Closing 2
2.1 Closing of Subscription 2
ARTICLE 3 Representations and Warranties 2
3.1 Investor Representations and Warranties 2
3.2 Company Representations and Warranties 7
ARTICLE 4 Registration Rights 10
4.1 Registration 10
4.2 [Intentionally Omitted] 10
4.3 Precedence of Registration Rights 10
4.4 Registration Procedures 10
ARTICLE 5 Miscellaneous 17
5.1 Indemnity 17
5.2 Modification 17
5.3 Notices 17
5.4 Counterparts 18
5.5 Binding Effect 18
5.6 Entire Agreement 18
5.7 Assignability 18
5.8 Governing Law; Jurisdiction and Choice of Forum 18
5.9 Pronouns 18
5.10 Severability 18
5.11 Waiver 19
5.12 Further Assurances 19
<PAGE>
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is made and entered into
as of the 9th day of November, 1999 by and among The National Registry, Inc., a
Delaware corporation (the "Company"), with its principal office at 2502 Rocky
Point Drive, Suite 100, Tampa, Florida and RMS Limited Partnership, a Nevada
limited partnership ("Subscriber"), with its principal office at 50 West Liberty
Street, Suite 650, Reno, Nevada 89501.
WITNESSETH
WHEREAS the Company desires to issue 100,000 shares of Series D
Preferred Stock, $.01 par value per share.
NOW, THEREFORE, in consideration of the premises and in further
consideration of the mutual covenants, promises and agreements hereinafter set
forth, it has been and IT IS HEREBY AGREED AS FOLLOWS:
ARTICLE I
PURCHASE OF SECURITIES
1.1 SUBSCRIPTION. The Subscriber, intending to be legally bound, hereby
irrevocably subscribes for and agrees to purchase One Hundred Thousand (100,000)
shares of Series D Preferred Stock. (the "Securities").
1.2 PURCHASE PRICE. The Company agrees to issue and sell to the
Subscriber the Securities for a purchase price of Five Million U.S. Dollars
($5,000,000) (the "Subscription Price"). Payment of the Subscription Price shall
be made by wire transfer or check payable to and delivered to the Company or, if
by wire transfer in accordance with the instructions of the Company, together
with an executed copy of this Agreement and any other documents required to be
executed under this Agreement.
ARTICLE II
CLOSING
2.1 CLOSING OF SUBSCRIPTION. The closing of the purchase and sale of
the Securities (the "Closing") shall take place at the offices of the Company on
such date as is mutually agreed to by the Company and the Subscriber. At the
Closing, the Company shall deliver to the Subscriber the Securities, duly
registered in the Subscriber's name against payment in full by the Subscriber of
the Subscription Price against execution by the Subscriber of this Agreement.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 INVESTOR REPRESENTATIONS AND WARRANTIES. The Subscriber hereby
acknowledges, represents and warrants to the Company as follows:
(a) The Subscriber is acquiring the Securities for its own
account as principal, not as a nominee or agent, for investment purposes only,
and not with a view to, or for, resale, distribution or fractionalization
thereof in whole or in part and no other person has a direct or indirect
beneficial interest in the Securities. Further, the Subscriber does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person with
respect to any of the Securities for which it is subscribing.
(b) The Subscriber has full power and authority to enter
into this Agreement, the execution and delivery of this Agreement has been duly
authorized, and this Agreement constitutes a valid and legally binding
obligation of the Subscriber.
(c) The Subscriber acknowledges its understanding that the
offering and sale of the Securities is intended to be exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act"), by virtue
of Section 4(2) of the Securities Act and the provisions of Regulation D
promulgated thereunder ("Regulation D") and that it is an "accredited investor"
as that term is defined in Rule 501 of Regulation D. The Subscriber has the
financial ability to bear the economic risk of its investment, has adequate
means for providing for its current needs and personal contingencies and has no
need for liquidity with respect to its investment in the Company. The Subscriber
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Securities.
(d) The Subscriber will not sell or otherwise transfer the
Securities without registration under the Securities Act or an exemption
therefrom and the Subscriber fully understands and agrees that it must bear the
economic risk of its purchase because, among other reasons, the Securities have
not been registered under the Securities Act or under the securities laws of any
state and, therefore, cannot be resold, pledged, assigned or otherwise disposed
of unless they are subsequently registered under the Securities Act and under
the applicable securities laws of such states or unless exemptions from such
registration requirements are available. In particular, the Subscriber is aware
that the Securities are "restricted securities," as such term is defined in Rule
144 promulgated under the Securities Act ("Rule 144"), and they may not be sold
pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The
Subscriber also understands that, except as otherwise provided herein, the
Company is under no obligation to register the Securities on its behalf or to
assist him in complying with any exemption from the registration requirements of
the Securities Act or applicable state securities laws. The Subscriber further
understands that sales or transfers of the Securities are further restricted by
state securities laws and the provisions of this Agreement.
(e) No representations or warranties have been made to the
Subscriber by the Company, or any officer, employee, agent, affiliate or
subsidiary of the Company, other than the representations of the Company
contained herein, and in subscribing for Securities the Subscriber is not
relying upon any representations other than those contained herein or in the
documents filed
<PAGE>
by the Company with the Securities and Exchange Commission ("SEC Filings").
(f) The Subscriber understands and agrees that the
certificates representing the Securities and the shares of Common Stock issued
upon conversion of the Securities shall bear the following legend until (i) such
securities shall have been registered under the Securities Act and effectively
been disposed of in accordance with the registration statement; or (ii) in the
opinion of counsel for the Company such securities may be sold without
registration under the Securities Act as well as any applicable "Blue Sky" or
similar state securities laws:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THEY MAY NOT BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i)
PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH HAS
BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR
(ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE
WRITTEN OPINION OF COUNSEL TO THE CORPORATION, OR OTHER COUNSEL
REASONABLY ACCEPTABLE TO THE CORPORATION, THAT THE PROPOSED DISPOSITION
IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS
WELL AS ANY APPLICABLE "BLUE SKY" OR OTHER STATE SECURITIES LAW.
(g) The Subscriber understands that an investment in the
Securities is a speculative investment which involves a high degree of risk of
loss of its entire investment.
(h) To the Subscriber's best knowledge, no consents,
approvals, authorizations, expiration of any statutory waiting periods, or
orders of any court or government agency relating to the Subscriber or its
business is required as a condition of the Subscriber's purchase of the
Securities in the manner contemplated herein, and receipt of the Securities in
exchange therefor, or the execution and delivery of this Agreement or
consummation of the transactions contemplated herein.
(i) The foregoing representations, warranties and agreements
shall survive the execution of this Agreement.
3.2 COMPANY REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants to the Subscriber as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has or
will have on or prior to Closing all requisite corporate power and authority (i)
to own and operate its properties and assets and to carry on its business as now
conducted; (ii) to execute and deliver this Agreement; (iii) to issue and sell
the Securities; (iv) upon the conversion of the Securities to issue shares of
Common Stock; and (v) to carry out the provisions of this Agreement.
(b) All corporate action on the part of the Company, its
officers and directors
<PAGE>
necessary for the authorization, execution and delivery of this Agreement, the
performance of all obligations of the Company hereunder at the Closing, and the
authorization, issuance (or reservation for issuance, as applicable), sale, and
delivery of the Securities being sold hereunder has been taken or will be taken
prior to the Closing. This Agreement constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with its terms except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, or as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
(c) The authorized capital stock of the Company consists of
(i) 50,000,000 shares of Common Stock, of which 18,511,154 shares (including
shares held in treasury) are issued and outstanding as of September 30, 1999;
and (ii) 1,000,000 shares of preferred stock, of which 100,000 shares have been
designated Series A Preferred Stock and are issued and outstanding and are
convertible at the election of the holder thereof into 2,379,055 shares of
Common Stock (subject to adjustment pursuant to certain anti-dilution
provisions). In addition, the Company has granted (i) options to acquire up to
2,935,609 shares of Common Stock to certain former and current employees,
consultants and directors of the Company pursuant to stock option plans whereby
the Company has reserved for issuance up to 4,000,000 shares of Common Stock and
(ii) 1,152,522 Common Stock purchase warrants to investors, finders and others.
Except as set forth in this subsection (c) or otherwise provided in this
Agreement, there are no options, warrants or other rights to purchase any of the
Company's authorized but unissued capital stock.
(d) The Securities, when issued, sold and delivered in
accordance with the terms of this Agreement for the purchase price, will be duly
and validly issued, fully paid, non-assessable, not subject to any preemptive
rights, and free and clear of all liens, claims and encumbrances. When issued
upon the conversion of the Securities, the Common Stock will be duly and validly
issued, fully paid, non-assessable, not subject to any preemptive rights, and
free and clear of all liens, claims and encumbrances.
(e) To the best of the Company's knowledge, no consent,
approval, qualification, order or authorization of, or filing with, any local,
state, or federal governmental authority is required on the part of the Company
in connection with the Company's valid execution, delivery, or performance of
this Agreement, the offer, sale or issuance of the Securities.
(f) Subject in part to the truth and accuracy of the
Company's representations and warranties set forth in this Agreement, the offer,
sale and issuance of the Securities, as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act of 1933, as
amended ("Securities Act"). Neither the Company nor any authorized agent acting
on its behalf will take any action hereafter that would cause the loss of such
exemption.
(g) [Intentionally Omitted]
(h) The Company is not in violation or default of any
provision of its Certificate of Incorporation, Bylaws, or any mortgage,
indenture, agreement, instrument, or contract to which it is a party or by which
it is bound or, to the best of its knowledge, of any
<PAGE>
federal or state judgment, order, writ, decree, statute, rule or regulation
applicable to the Company, except to the extent that the failure to do so would
not have a material adverse effect on the Company. The execution, delivery, and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby will not result in any such violation or be in
material conflict with or constitute, with or without the passage of time or
giving of notice, either a material default under any such provision or an event
that results in the creation of any material lien, charge, or encumbrance upon
any assets of the Company or the suspension, revocation, impairment, forfeiture,
or non-renewal of any material permit, license, authorization, or approval
applicable to the Company, its business or operations, or any of its assets or
properties.
(i) No representation or warranty of the Company contained
in this Agreement or any other such document furnished to the Subscriber by or
on behalf of the Company, including without limitation, the SEC Filings contains
an untrue statement of a material fact or omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading. The SEC Filings conformed
in all material respects as of the date each was filed with the SEC to the
disclosure requirements applicable to such filing.
(j) The Company has filed the required federal, state and
local tax returns required of it and has paid all material taxes shown on such
returns as they become due. No claim has been assessed and is unpaid with
respect to such taxes.
(k) Except as described in the SEC filings, there is no
action or proceeding pending or, to the knowledge of the Company, currently
threatened against the Company in any court or before any arbitration panel or
before or by any federal, state or other governmental department or agency which
may substantially affect the validity of this Agreement or the right of the
Company to enter into it, or to consummate the transactions contemplated hereby,
or which might result, either individually or in the aggregate, in any material
adverse change in the assets, condition, affairs or prospects of the Company,
financially or otherwise, or any change in the current equity ownership of the
Company.
(l) The Company owns its property and assets free and clear
of all mortgages, liens, claims, and encumbrances other than liens arising by
operation of law which do not affect the Company's use of such property and
assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to the best of its knowledge, holds a valid
leasehold interest free of any liens, claims, or encumbrances.
(m) Except as otherwise disclosed in the audited financial
statements at and for the year ended December 31, 1998, copies of which have
been previously delivered by the Company to the Subscriber (the "Financial
Statements") or in the SEC Filings, since December 31, 1998 there has not been
(i) any changes in the assets, liabilities, financial condition or operations of
the Company from that reflected in the Financial Statements except changes in
the ordinary course of business which have not been, either in any individual
case or in the aggregate, materially adverse; (ii) any material change, except
in the ordinary course of business, in the contingent obligations of the
Company, whether by way of guaranty, endorsement, indemnity, warranty or
otherwise; (iii) any damage, destruction or loss, whether or not covered by
insurance,
<PAGE>
materially and adversely affecting the properties or business of the Company;
(iv) any declaration or payment of a dividend or other distribution of the
assets of the Company; or (v) to the best of the Company's knowledge, any other
event or condition of any character which materially and adversely affected the
Company's assets, liabilities, financial condition or operations. Subscriber has
been informed that the Company has received notice from the National Association
of Securities Dealers that the Company's securities will be delisted from The
Nasdaq SmallCap Market effective from the close of business on November 10,1999.
(n) The foregoing representations, warranties and agreements
shall survive the execution of this Agreement.
ARTICLE IV
REGISTRATION RIGHTS
4.1 REGISTRATION
(a) Upon the request of the Subscriber, the Company shall
use its best efforts to effect the registration under the Securities Act of the
Common Stock to the extent required to permit the disposition of the shares of
Common Stock in the manner specified by the Subscriber and shall keep such
registration statement effective until the time as such shares of Common Stock
are disposed of by the Subscriber; PROVIDED, however, that the Company shall not
be required to maintain the effectiveness of such registration at any time when
an exemption from registration is otherwise available to the Subscriber
affording the Subscriber the right to dispose of all of the shares of Common
Stock issued upon the conversion of the Securities and held by Subscriber. Any
registration requested pursuant to this Section 4.1 shall be effected by the
filing of a registration statement on Form S-1, S-2 or S-3 (or any other form
that includes substantially the same information as would be required to be
included in a registration statement on such forms as presently constituted,
other than a registration statement relating to offers to employees pursuant to
plans or of securities to be issued in business combinations).
4.2 [Intentionally Omitted]
4.3 PRECEDENCE OF REGISTRATION RIGHTS.
The Subscriber and the Company agree that the registration rights
contained in this Article IV are in addition to any and all registration rights
which Subscriber is entitled to under any other agreement with the Company.
<PAGE>
4.4 REGISTRATION PROCEDURES.
(a) If, whenever and to the extent that the Company is
required to use its best efforts to register shares of Common Stock pursuant to
this Article IV, the Company shall as promptly as practicable:
(i) Prepare and file with the SEC a registration
statement with respect to such shares, and cause such registration statement to
comply as to form and content in all material respects with the SEC's forms,
rules and regulations and use its reasonable best efforts to cause such
registration statement to become effective;
(ii) Prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement
until such time as all of such shares have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof set forth
in such registration statement;
(iii) Furnish to the Subscriber such number of
conformed copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits, except that the Company
shall not be obligated to furnish the Subscriber with more than three copies of
such exhibits), and such number of copies of the prospectus that is a part of
such registration statement (including each preliminary prospectus and any
summary prospectus), as the Subscriber may reasonably request in order to
facilitate the disposition of the shares of Common Stock issued upon the
conversion of the Securities;
(iv) Use its best efforts to register or qualify the
shares of Common Stock issued upon the conversion of the Securities for sale
under the securities or blue sky laws of such jurisdictions in the United States
as the Subscriber shall reasonably request in writing, and to keep such
registration or qualification in effect for so long as the period of
distribution contemplated thereby, and do any and all other acts and things
which may be necessary or advisable to enable the disposition in such
jurisdictions of the shares of Common Stock issued upon the conversion of the
Securities, except that the Company shall not for any such purpose be required
to qualify generally to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified, to subject itself to taxation in any such
jurisdiction, or to consent to general service of process in any such
jurisdiction;
(v) [Intentionally Omitted];
(vi) Notify the Subscriber, at any time when a
prospectus relating to a registration statement is required to be delivered
under the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and at the request
of the Subscriber prepare and furnish to the Subscriber a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such shares, such
<PAGE>
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(vii) Use its best efforts to list the shares of
Common Stock so registered on any securities exchange (including NASDAQ) on
which the Common Stock of the Company is then listed, if such shares are not
already so listed and if such listing is then permitted under the rules of such
exchange; and
(viii) Make available for inspection by the
Subscriber, any underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent retained by
such seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
the Subscriber, underwriter, attorney, accountant or agent in connection with
such registration statement.
(b) REQUIRED ACTIONS BY THE SUBSCRIBER. In connection with the
registration of shares of Common Stock issued upon the conversion of the
Securities pursuant to this Article IV, the Subscriber hereby agrees as follows:
(i) the Subscriber shall cooperate with the Company
and any underwriters to facilitate the timely preparation and filing of the
registration statement, and for so long as the Company is obligated to file and
keep effective the registration statement, shall provide to the Company, in
writing, for use in the registration statement, all such information regarding
the Subscriber and its plan of distribution of the shares of Common Stock as may
be necessary to enable the Company to prepare the registration statement and
prospectus covering such shares of Common Stock issued upon the conversion of
the Securities, to maintain the currency and effectiveness thereof and otherwise
to comply with all applicable requirements of law in connection therewith;
(ii) the Subscriber shall timely complete and execute
all questionnaires, powers of attorney, indemnities, hold-back agreements,
underwriting agreements and other documents required under the terms of any
underwriting arrangements or by the SEC or by any state securities regulatory
body;
(iii) during such time as the Subscriber may be
engaged in a distribution of the shares of Common Stock issued upon the
conversion of the Securities registered pursuant to this Article IV, the
Subscriber shall comply with Regulation M promulgated under the Exchange Act
(the "Rules"), to the extent applicable, and pursuant thereto it shall, among
other things: (w) not engage in any stabilization activity in connection with
the securities in contravention of the Rules; (x) distribute the shares solely
in the manner described in the registration statement; (y) cause to be furnished
to each broker through whom the shares may be offered, if any, or to the offeree
if an offer is not made through a broker, such copies of the prospectus and any
amendment or supplement thereto and documents incorporated by reference therein
as may be required by law; and (z) not bid for or purchase any securities of the
Company or attempt to induce any person to purchase any securities of the
Company other than as permitted under the Exchange Act;
<PAGE>
(iv) upon receipt of a notice from the Company,
promptly discontinue any distribution of shares until notified by the Company
that the distribution of shares may re-commence;
(v) upon written notice from the Company that the
Company intends to proceed with a distribution of any of its shares and that in
connection therewith it requires the suspension by the Subscriber of the
distribution of its shares, to cease distributing such shares until such time as
the distribution by the Company has been completed; and
(c) REGISTRATION EXPENSES. The registration expenses incurred
in connection with any registration pursuant to this Article IV shall be paid in
full by the Company except that the Subscriber shall pay its own legal expenses
and all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of any shares of Common Stock owned by the
Subscriber and sold pursuant to a registration statement effected pursuant to
this Article IV.
(d) POSTPONEMENT. The Company shall be entitled to postpone
the filing of a registration statement otherwise required to be prepared and
filed by it pursuant to Section 4.1, for a reasonable period of time not to
exceed (x) with respect to clause (i) of this sentence, the date which is five
(5) days after the filing with the SEC of the Company's next regularly required
quarterly or annual report and (y) with respect to clauses (ii) and (iii) of
this sentence, 60 days, if, at the time it receives a registration request from
Subscriber, (i) such registration would require the public disclosure of
material non-public information concerning any transaction or negotiations
involving the Company or any affiliate (as defined in Rule 12b-2 under the
Exchange Act) that, in the opinion of counsel to the Company, is not yet
required to be publicly disclosed and the Board of Directors of the Company, in
good faith, determines that such disclosure would materially interfere with such
transaction or negotiations, (ii) such registration would interfere, in the good
faith judgment of the Board of Directors, with bona fide financing plans of the
Company or would otherwise require premature disclosure of information which
would adversely affect or otherwise be detrimental to the Company, or (iii) the
Company proposes to file a registration statement under the Securities Act for
the offering and sale of securities for its own account in an underwritten
offering and the managing underwriter therefor shall advise the Company in
writing that in its opinion the filing or effectuation of a registration
requested pursuant to Section 4.1 herein would materially adversely affect the
success of the offering of the securities proposed to be registered for the
account of the Company.
(e) HOLDBACK AGREEMENTS. If any registration of shares of
Common Stock issued upon the conversion of the Securities pursuant to this
Article IV shall be in connection with an underwritten public offering, the
Subscriber agrees not to effect any public sale or distribution, including any
sale under Rule 144 of any shares of Common Stock or any other security
convertible into or exchangeable or exercisable for any shares of Common Stock
(in each case, other than as part of such underwritten public offering) during
the ten (10) days prior to, and during the 90-day period (or such longer period
as any underwriter may reasonably request) beginning on, the effective date of
the related registration statement. The Company may impose stop-transfer
instructions with respect to the shares subject to the foregoing restrictions
during such period.
<PAGE>
(f) TERM. The indemnification obligations contained in
subsections (g) and (h) shall survive for the period of the statute of
limitations with respect thereto.
(g) INDEMNIFICATION. Each of the Subscriber and the Company
agree to indemnify the other in connection with any registration effected
pursuant to this Article IV as follows:
(i) To the extent permitted by law, the Company will
indemnify the Subscriber, its officers, directors, partners, employees,
subcontractors, consultants, agents, legal counsel, and accountants and each
underwriter, broker or dealer, if any, of the Company's securities covered by
such a registration statement, and each person who controls the Subscriber or
such underwriter, broker or dealer within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages, and liabilities
(or actions, proceedings, or settlements in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular, or other document (including any
related registration statement, notification, or the like) incident to any such
registration, qualification, or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act, the Exchange Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification, or
compliance, and will reimburse the Subscriber and its officers, directors,
partners, employees, subcontractors, consultants, agents, legal counsel, and
accountants, each such underwriter, broker or dealer, and each person who
controls the Subscriber or such underwriter, for any legal and other expenses
reasonably incurred in connection with investigating and defending or settling
any such claim, loss, damage, liability, or action, provided that the Company
will not be liable in any such case to the extent that any such claim, loss,
damage, liability, or expense arises out of or is based on any untrue statement
or omission based upon written information furnished to the Company by or on
behalf of the Subscriber or such underwriter, broker or dealer and stated to be
specifically for use therein or any failure by the Subscriber or such
underwriter, broker or dealer to deliver a final prospectus or supplement or
amendment correcting earlier documents. It is agreed that the indemnity
agreement contained in this Article IV shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company.
(ii) To the extent permitted by law, the Subscriber
will indemnify the Company, each of its officers, directors, partners,
employees, subcontractors, consultants, agents, legal counsel, and accountants
and each underwriter, if any, of the Company's securities covered by such a
registration statement, and each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages, and liabilities (or actions, proceedings, or
settlements in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular, or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company, each of its officers,
<PAGE>
directors, partners, employees, subcontractors, consultants, agents, legal
counsel, and accountants, each such underwriter, and each such control person,
for any legal and other expenses reasonably incurred in connection with
investigating and defending or settling any such claim, loss, damage, liability,
or action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular, or other
document in reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Subscriber; PROVIDED, HOWEVER, that the
Subscriber will be liable hereunder in any such case if and only to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in strict conformity with information pertaining to
the Subscriber, as such, furnished in writing to the Company by the Subscriber
stated to be specifically for use in such registration statement and prospectus;
PROVIDED, FURTHER, HOWEVER, that the liability of the Subscriber hereunder shall
be limited to the proportion that the public offering price of the Shares of
Common Stock issued upon the conversion of the Securities sold by the Subscriber
under such registration statement bears to the total public offering price of
all securities sold thereunder, but not in any event to exceed the proceeds
received by the Subscriber from the sale of the Shares of Common Stock issued
upon the conversion of the Securities covered by such registration statement;
and PROVIDED, FURTHER, HOWEVER, that the obligations of the Subscriber hereunder
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Subscriber.
(iii) If the indemnification provided for in Section
4.5(g) is held by a court of competent jurisdiction to be unavailable to the
party seeking such indemnification (the "Indemnified Party") with respect to any
loss, liability, claim, damage, or expense referred to therein, then the party
which is required to provide indemnification pursuant to Section 4.5(g) (the
"Indemnifying Party") in lieu of indemnifying such Indemnified Party hereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party on the
one hand and of the Indemnified Party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim, damage, or
expense as well as any other relevant equitable considerations, PROVIDED,
HOWEVER, that in any such case, (x) no such Indemnifying Party will be required
to contribute any amount in excess of the public offering price of all shares
offered by it pursuant to such registration statement; and (y) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation. The relative
fault of the Indemnifying Party and of the Indemnified Party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
(iv) Notwithstanding the foregoing or Section 4.5(h)
below, to the extent that the provisions on indemnification contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
<PAGE>
(h) INDEMNIFICATION PROCEDURES. Each party entitled to
indemnification under Section 4.5(g) of this Agreement (the "Indemnified Party")
shall give notice to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and (if the claim is made by a
third party) shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its indemnification obligations to
the extent such failure is not prejudicial. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of the
Indemnified Party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
(i) DELAY OF REGISTRATION. the Subscriber shall have no right
to take an action to restrain, enjoin or otherwise delay any registration as a
result of any controversy that might arise with respect to the interpretation or
implementation of this Article IV.
<PAGE>
ARTICLE V
MISCELLANEOUS
5.1 INDEMNITY. Without prejudicing any other remedy available to the
parties at law or in equity and except as set forth in Article IV hereof, the
parties hereby covenant, immediately upon demand therefor, to indemnify, defend,
and hold each other (and their respective subsidiary, affiliated, or parent
entities, officers, directors, partners, stockholders, attorneys, employees,
agents, and representatives) harmless from and against any and all costs,
losses, damages, penalties, fines, or expenses (including without limitation
reasonable attorneys' fees, court costs, and associated expenses) suffered,
imposed upon, or incurred by them in any manner arising out of, relating to, or
in connection with the following:
(a) any representation or warranty of either of the parties
set forth herein being untrue or incorrect in any material respect or the
failure of either of the parties to materially observe or timely and fully
perform any of their respective obligations hereunder;
(b) any material misrepresentation in or material omission
from any information provided by the parties to each other in connection with
this Agreement or the consummation of the transactions contemplated herein; and
(c) any expenses, claims, costs, or other liabilities or
obligations of any description whatsoever arising from or in any way connected
with any claim that may be brought against either party by a stockholder of that
party.
5.2 MODIFICATION. Neither this Agreement nor any provisions hereof
shall be modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is
sought.
5.3 NOTICES.
(a) Any notice, demand or other communication which any party
hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (i) deposited, postage prepaid, in a United
States mail letter box, registered or certified mail, return receipt requested,
addressed to such address as may be given herein, or (ii) delivered personally
at such address.
<PAGE>
(b) Addresses:
If to the Company to:
The National Registry Inc.
2502 Rocky Point Drive
Suite 1000
Tampa, Florida
Attn: President
If to Subscriber to the address set forth on the
signature page hereof.
5.4 COUNTERPARTS. This Agreement may be executed through the use of
separate signature pages or in any number of counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding on all
parties, notwithstanding that all parties are not signatories to the same
counterpart.
5.5 BINDING EFFECT. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and assigns. If the
Subscriber is more than one person, the obligation of the Subscriber shall be
joint and several and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made by and be binding
upon each such person and its heirs, executors, administrators and successors
5.6 ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and there are no representations, covenants or other agreements
except as stated or referred to herein.
5.7 ASSIGNABILITY. This Agreement is not transferable or assignable by
the Subscriber.
5.8 GOVERNING LAW; JURISDICTION AND CHOICE OF FORUM. Notwithstanding
the place where this Agreement may be executed by any of the parties hereto, the
parties expressly agree that all the terms and provisions hereof shall be
construed in accordance with and governed by the laws of the State of Delaware.
5.9 PRONOUNS. The use herein of the masculine pronouns "him" or "his"
or similar terms shall be deemed to include the feminine and neuter genders as
well and the use herein of the singular pronoun shall be deemed to include the
plural as well.
5.10 SEVERABILITY. The holding of any provision of this Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Agreement, which shall remain in full force and
effect.
5.11 WAIVER. It is agreed that a waiver by either party of a breach of
any provision of this Agreement shall not operate, or be construed, as a waiver
of any subsequent breach by that same party.
5.12 FURTHER ASSURANCES. The parties agree to execute and deliver all
such further
<PAGE>
documents agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
IN WITNESS WHEREOF, the Company and the Subscriber have executed this
Agreement as of the date first written above.
RMS LIMITED PARTNERSHIP THE NATIONAL REGISTRY, INC.,
a Nevada limited partnership a Delaware Corporation
/s/ RICHARD W. BAKER /s/ JEFFREY P. ANTHONY
- ---------------------------- -----------------------------
By: Richard W. Baker By: Jeffrey P. Anthony
Its: Secretary/Treasuer of Crystal Its: President and CEO
Diamond Inc.
General Partner of
RMS Limited Partnership
Address:
50 West Liberty Street
Suite 650
Reno, Nevada 89501
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT: James W. Shepperd
Chief Financial Officer
The National Registry Inc.
(813) 636-0099
NRI COMPLETES $5 MILLION FINANCING AND IDENTITY CHANGE
TAMPA, FL (NOVEMBER 10, 1999) - The National Registry Inc. (NRI) (NASDAQ: NRID)
today announced that it had issued 100,000 shares of Series D Preferred Stock to
RMS Limited Partnership, the Company's largest shareholder, for an aggregate
purchase price of $5 million. The Company also announced that it had received
stockholder approval to change its name from The National Registry Inc. to
SAFLINK Corporation and has requested that a new stock ticker symbol (NASDAQ:
ESAF) be assigned for trading effective November 12, 1999.
"This important financing strengthens our balance sheet and provides the working
capital needed to expand our business as needed in the coming year," said
Jeffrey P. Anthony, Chairman and Chief Executive Officer. "We are experiencing a
significant increase in activity and interest in our biometric products and a
strong financial footing is critical if we expect to play an important role in
the post-Y2K information assurance market. I believe that our ability to attract
new partners and key employees, expand our Secure Authentication Facility
(SAF(TM)) product line, and implement our brand development, distribution, and
acquisition strategies will be significantly enhanced by these two
developments."
The Series D Preferred Stock may be converted into 3.6 million shares of the
Company's common stock at a price of $1.39 per share, subject to customary
anti-dilution provisions. Shares of Series D Preferred Stock outstanding as of
November 9, 2004 will be automatically converted and the Company has the right,
but not the obligation, to redeem the Series D Preferred Stock for $50 per share
plus accrued dividends at any time prior to conversion. The Series D Preferred
Stock has no voting rights, except as required by law, carries a 10% per annum
cumulative dividend, and has a liquidation preference of $50 per share plus
unpaid dividends.
The Company had previously proposed the name change on July 7, 1998 but
stockholder action on the initiative had been deferred by the Board of Directors
until recently. "National Registry is the wrong message to be sending to Wall
Street and Main Street," said Mr. Anthony. "SAFLINK and our ESAF symbol more
clearly communicate our secure e-business and e-commerce focus while helping to
build awareness for our brand in the marketplace."
SAFLINK Corporation, based in Tampa, Florida, brings the Power of Biometric
Identification(TM) to enterprise networks and the Internet. The Company provides
cost-effective multi-biometric software
<PAGE>
solutions to verify individual identity, to protect business and personal
information, and to replace passwords and PINs in order to safeguard and
simplify access to electronic systems and enable new online services for
customers. The Company's Secure Authentication Facility (SAF(TM)) suite of
multi-biometric network security products delivers enterprise-level secure
access control to a range of software platforms and network applications,
including Microsoft(R) Windows NT(R) and Internet Information Server(R), Novell
NetWare(R), and Computer Associates' Unicenter(R) TNG(TM) and its Single
Sign-On(TM) option. Further information is available through the Company's world
wide web site (http://www.saflink.com).
SECURE AUTHENTICATION FACILITY, SAF, and Power of Biometric Identification are
trademarks of SAFLINK Corporation. All other brands and products referenced
herein are acknowledged to be trademarks or registered trademarks of their
respective holders.
THE AFOREMENTIONED REMARKS CONTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES INCLUDING WITHOUT LIMITATION THOSE RELATED TO INDUSTRY TRENDS,
THOSE RELATING TO COMPETITION AND THOSE RELATING TO EXPANSION PLANS. THE
COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED ABOVE.
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