SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [x]
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14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to /Section/ 240.14a-11(c) or
/Section/ 240.14a-12
SAFLINK CORPORATION
-------------------
(Name of Registrant as Specified in its Charter)
NOT APPLICABLE
--------------
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<PAGE>
SAFLINK CORPORATION
(FORMERLY THE NATIONAL REGISTRY INC.)
18300 N.E. UNION HILL ROAD
SUITE 270
REDMOND, WASHINGTON 98052
APRIL 10, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
SAFLINK Corporation (the "Company"), to be held at 10:00 a.m., local time, on
Tuesday, May 9, 2000, at the Bellevue Hyatt Regency, 900 Bellevue Way N.E.,
Bellevue, Washington 98004.
Business scheduled to be considered at the meeting includes the election
of six directors and to transact such other business as may properly come
before the meeting.
The Board of Directors of the Company recommends that you vote "FOR" the
election of the six nominees of the Board of Directors as directors.
Additional information concerning these matters is included in the
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement. Also
enclosed is the Company's 1999 Annual Report to Stockholders, including its
Annual Report on Form 10-K, which contains information concerning the Company's
1999 fiscal year.
Please complete, sign and return the enclosed proxy card as soon as
possible. The Company's Board of Directors urges that all stockholders exercise
their right to vote at the meeting personally or by proxy.
Sincerely,
/s/ JEFFREY P. ANTHONY
Jeffrey P. Anthony
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER
AND PRESIDENT
<PAGE>
SAFLINK CORPORATION
(FORMERLY THE NATIONAL REGISTRY INC.)
18300 N.E. UNION HILL ROAD
SUITE 270
REDMOND, WASHINGTON 98052
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 9, 2000
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of SAFLINK Corporation, a Delaware corporation (the
"Company"), will be held at 10:00 a.m., local time, on Tuesday, May 9, 2000, at
the Bellevue Hyatt Regency, 900 Bellevue Way N.E., Bellevue, Washington 98004
for the following purposes:
1. To elect six directors to serve for a term of one-year or until their
successors have been duly elected and qualified;
2. To transact such other business as may properly come before the Annual
Meeting and any and all adjournments thereof.
Pursuant to the Company's Bylaws, the Board of Directors has fixed the
close of business on March 31, 2000 as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting. Only
holders of record of the Common Stock at the close of business on that date
will be entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof.
Stockholders are urged to attend the meeting in person. If you are not
able to do so, please sign, date and return the accompanying proxy in the
enclosed envelope. No postage is required if mailed in the United States.
By Order of the Board of Directors
/s/ JAMES W. SHEPPERD
James W. Shepperd
CHIEF FINANCIAL OFFICER AND SECRETARY
REDMOND, WASHINGTON
APRIL 10, 2000
<PAGE>
SAFLINK CORPORATION
(FORMERLY THE NATIONAL REGISTRY INC.)
18300 N.E. UNION HILL ROAD
SUITE 270
REDMOND, WASHINGTON 98052
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 9, 2000
SOLICITATION AND VOTING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of SAFLINK Corporation, a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders of the Company (the "Stockholders") to be held at 10:00 a.m.,
local time, on Tuesday, May 9, 2000, at the Bellevue Hyatt Regency, 900
Bellevue Way N.E., Bellevue, Washington 98004 and at any adjournments thereof
(the "Annual Meeting"). Only holders of record of the Company's common stock,
$.01 par value per share (the "Common Stock"), at the close of business on
March 31, 2000 (the "Record Date") are entitled to receive notice of, and to
vote at, the Annual Meeting. At the close of business on the Record Date,
19,477,740 shares of Common Stock were issued and outstanding.
The presence in person or by proxy of the holders of a majority of the
votes entitled to be cast by the outstanding shares of Common Stock shall
constitute a quorum for matters to be voted on at the Annual Meeting. Shares
represented by proxies that are marked "abstain" will be counted as shares
present for purposes of determining the presence of a quorum on all matters.
Proxies relating to "street name" shares that are voted by brokers on some but
not all of the matters will be treated as shares present for purposes of
determining the presence of a quorum on all matters, but will not be treated as
shares entitled to vote at the Annual Meeting on those matters as to which
authority to vote is withheld by such broker ("broker non-votes"). In the event
that there are not sufficient votes present either in person or by proxy to
constitute a quorum at the time of the Annual Meeting, the Annual Meeting may
be adjourned in order to permit the solicitation of additional proxies.
The Company's Annual Report to Stockholders, including its Annual Report
on Form 10-K for the fiscal year ended December 31, 1999 with certified
financial statements, has either preceded or is now enclosed with, this Proxy
Statement. This Proxy Statement and the accompanying proxy card are being
mailed to the Stockholders on or about April 10, 2000.
<PAGE>
The Common Stock was the only voting security of the Company outstanding
and entitled to vote at the Annual Meeting on the Record Date. Holders of
Common Stock are entitled to one vote per share on each matter to be voted upon
at the Annual Meeting. The Company's Bylaws provide that a plurality of the
votes present in person or represented by proxy at the Annual Meeting entitled
to vote on the election of directors shall be sufficient to elect directors
(Proposal 1). Accordingly, abstentions and broker non-votes will not affect the
outcome on Proposal 1 provided that a quorum is present. The vote of shares of
Common Stock will be counted by representatives of the Company's stock transfer
agent, U.S. Stock Transfer Corporation, and/or another inspector of elections
appointed by the Company.
Shares of Common Stock represented by properly executed proxy cards
received by the Company at or prior to the Annual Meeting will be voted
according to the instructions indicated on such proxy cards. Unless contrary
instructions are given, the persons named on the proxy card intend to vote the
shares so represented "FOR" the election of the six nominees for director named
in this Proxy Statement. As to any other business which may properly come
before the Annual Meeting, the persons named on the proxy card will vote
according to its or their sole discretion.
Any Stockholder has the power to revoke his, her or its proxy at any time
before it is voted at the Annual Meeting by delivering a written notice of
revocation to the Secretary of the Company, by a duly executed proxy bearing a
later date or by voting by ballot at the Annual Meeting.
The cost of preparing, assembling and mailing this proxy solicitation
material and Notice of Annual Meeting will be paid by the Company. Additional
solicitation by mail, telephone, e-mail or by personal solicitation may be done
by directors, officers and regular employees of the Company for which they will
receive no additional compensation. Brokerage houses and other nominees,
fiduciaries and custodians nominally holding shares of Common Stock as of the
Record Date will be requested to forward proxy solicitation material to the
beneficial owners of such shares, and will be reimbursed by the Company for
their reasonable expenses.
Dissenters' rights of appraisal will not be available under Delaware law
with respect to any of the proposals being submitted by the Board to the
Stockholders at the Annual Meeting.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of the Record Date by (i) each person
who is known by the Company to own beneficially more than 5% of the outstanding
Common Stock; (ii) each of the Company's directors; (iii) each person nominated
to serve as a director of the Company; (iv) each of the Named Executive
Officers (as hereinafter defined); and (v) all executive officers and directors
of the Company as a group:
<TABLE>
<CAPTION>
AMOUNTS AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------------------- ---------------------- -------------------
<S> <C> <C>
RMS Limited Partnership ............. 11,618,427(1) 50.4
50 West Liberty Street
Suite 650
Reno, NV 89501
Francis R. Santangelo ............... 991,710(2) 5.1
10926 Tamarisk Trail
Boynton Beach, FL 33436
Home Shopping Network, Inc. ......... 2,600,532(4) 11.8
P. O. Box 9090
Clearwater, FL 34618
Hector J. Alcalde ................... 20,000(2) *
Jeffrey P. Anthony .................. 366,667(2) 1.9
Frank M. Devine ..................... 347,249(2) 1.8
Donald C. Klosterman ................ 267,222(2)(3) 1.4
Robert J. Rosenblatt ................ 0 *
Walter G. Hamilton .................. 61,333(2) *
Gregory C. Jensen ................... 18,333(2) *
Bob Perez ........................... 0(2) *
James W. Shepperd ................... 110,000(2)(3) *
Executive officers and directors
as a group (10 persons) ........... 2,182,514 11.0(2)(3)
</TABLE>
- ----------------
(1) Excludes 59,500 shares of Common Stock owned by certain trusts of which Roy
Speer's children and grandchildren are beneficiaries. Mr. Speer is the
sole stockholder and a director of Crystal Diamond, Inc., the managing
general partner of RMS, and is a non-managing partner of RMS. RMS and Mr.
Speer disclaim beneficial ownership of such shares of Common Stock.
Includes 3,597,122 shares of Common Stock issuable upon conversion of
100,000 currently convertible shares of Series D Preferred Stock.
(2) Includes shares of Common Stock that can be acquired by exercise of vested
and exercisable stock options within 60 days of March 31, 2000, as
follows: Mr. Santangelo - 83,333 shares; Mr. Alcalde - 20,000 shares; Mr.
Anthony - 366,667 shares; Mr. Devine - 331,666 shares; Mr. Klosterman -
42,222 shares; Mr. Hamilton - 61,333 shares; Mr. Jensen - 18,333 shares;
Mr. Shepperd - 75,000 shares.
3
<PAGE>
Excludes 50,000, 180,000, 17,778, 140,414, 94,778, 150,000 and 90,000 shares
issuable upon exercise of outstanding options which either have not vested
or are not exercisable and which will not vest or which may not be
exercisable within 60 days of March 31, 2000 in favor of Messrs. Alcalde,
Anthony, Klosterman, Hamilton, Jensen, Perez and Shepperd, respectively.
(3) Includes 75,000 and 10,000 shares of Common Stock issuable upon exercise of
warrants within 60 days of March 31, 2000, by Mr. Klosterman and Mr.
Shepperd, respectively.
(4) Includes 2,600,532 shares of Common Stock issuable upon conversion of
100,000 currently convertible shares of Series A Preferred Stock.
* Less than 1%.
PROPOSAL 1. ELECTION OF DIRECTORS
Six directors are to be elected at the Annual Meeting to hold office for a
term of one year or until their successors have been duly elected and
qualified. Proxies will be voted for election of each of the six directors
named below, unless otherwise directed.
Election of directors will require the affirmative vote of the holders of
a plurality of the votes of shares of Common Stock present in person or
represented by Proxy and entitled to vote on the election of directors at the
Annual Meeting. Although the Board anticipates that all of the nominees will be
available to serve as directors of the Company, should any one or more of them
not accept the nomination, or otherwise be unwilling or unable to serve, it is
intended that the proxies will be voted for the election of a substitute
nominee or nominees designated by the Board.
The Board has nominated the persons named below for election as directors
at the Annual Meeting. The name of each nominee, the nominee's age as of March
31, 2000, the nominee's current position with the Company, when the nominee's
current term expires and when the nominee became a member of the Board is set
forth in the following table.
<TABLE>
<CAPTION>
TERM DIRECTOR
NAME AGE POSITION EXPIRES SINCE
- --------------------------------------- ----- ------------------------------------- --------- ---------
<S> <C> <C> <C> <C>
Jeffrey P. Anthony .................... 42 President, Chief Executive Officer, 2000 1998
Chairman and Director
Hector J. Alcalde (1) ................. 67 Director 2000 1999
Frank M. Devine (2) ................... 58 Director 2000 1997
Donald C. Klosterman (2) .............. 71 Director 2000 1997
Robert J. Rosenblatt (1) .............. 43 Director 2000 1998
Francis R. Santangelo (1) (2) ......... 68 Director 2000 1997
</TABLE>
- ----------------
(1) Audit Committee member.
(2) Compensation Committee member.
4
<PAGE>
INFORMATION REGARDING NOMINEES
JEFFREY P. ANTHONY has served as President and Chief Executive Officer of
the Company since May 1998, Chairman of the Board since March 1998 and as a
director of the Company since February 1998. Mr. Anthony served as the Director
of Business Development for the Company from March 1995 to March 1998 and as a
Senior Vice President from February 1992 to March 1995. From April 1987 to
February 1992, Mr. Anthony was Managing Director of Shinnecock Capital
Corporation, a venture capital firm he co-founded. From October 1983 to April
1987, Mr. Anthony was Assistant to the Chairman and a director of Spear
Financial Services Inc., a publicly owned brokerage firm that provided computer
accessible financial services including online trading and specialist
operations on the floor of the Pacific Coast Stock Exchange. Mr. Anthony
received his BA in Anthropology from Vassar College.
HECTOR J. ALCALDE has served as a director of the Company and as a member
of the Board's Audit Committee (the "Audit Committee") since February 1999.
Since its creation in 1973, Mr. Alcalde has served as President and Chief
Executive Officer of Alcalde & Fay, a government and public affairs consulting
firm in Washington, D.C., which he helped found. Mr. Alcalde is a director of
Precision Systems, Inc., a publicly owned company that delivers
telecommunications solutions to service providers and corporations. Mr. Alcalde
received a BA in Government from the University of Tampa, and an MA in
Education and Administration from Peabody College.
FRANK M. DEVINE has served as a director of the Company and as a member of
the Board's Compensation Committee since June 1997 and the Audit Committee from
September 1997 to May 1999. Mr. Devine also serves as a business consultant for
various entities. He has founded or co-founded Bachmann-Devine, Incorporated, a
venture capital firm and Shapiro, Devine & Craparo, Inc., a manufacturers'
agency serving the retail industry. Mr. Devine also serves on the Board of
Directors of these companies. Since December 1994, Mr. Devine has served as a
member of the Board of Directors of Salton, Inc., a publicly owned company that
markets and sells electrical appliances to the retail trade under various brand
names. Mr. Devine received a BS from Iowa State University.
DONALD C. KLOSTERMAN has served as a director of the Company and as a
member of the Compensation Committee since June 1997. Mr. Klosterman also
serves as a business consultant for various entities. From July 1994 to
November 1995, Mr. Klosterman was co-founder and President of Pacific Casino
Management Inc., a casino operator. Mr. Klosterman was a co-founder and the
Chairman of the Board of Directors of NTN Communications, Inc. ("NTN"), a
satellite broadcasting company that provides interactive entertainment
programming, from April 1983 to September 1994, and a consultant to NTN from
1991 to 1992. From 1989 to 1991, Mr. Klosterman was a consultant to Comcheck, a
credit verifying Company. Mr. Klosterman is currently a director of NTN, and
has been a director of Aldila Shaft Manufacturer, Inc., a manufacturer of
graphite golf shafts, since March 1994. Mr. Klosterman served as Vice
President/General Manager of the Los Angeles Rams from 1971 until 1982, General
Manager of the Baltimore Colts from 1970 until 1971
5
<PAGE>
and General Manger of the Houston Oilers from 1966 until 1970. Mr. Klosterman
played professional football for Cleveland, Dallas, Los Angeles and Calgary.
ROBERT J. ROSENBLATT has served as a director of the Company and as a
member of the Audit Committee since March 1998. Mr. Rosenblatt has been
Executive Vice President and Chief Operating Officer of Home Shopping Network
("HSN") since December 1999 and was Executive Vice President and Chief
Financial Officer of HSN from December 1997 until December 1999. From 1984
until December 1997, Mr. Rosenblatt held several positions of increasing
responsibility at Bloomingdale's, a division of Federated Department Stores,
including Assistant Controller, Vice President of Finance and Vice President of
Stores Operations and Purchasing. Mr. Rosenblatt was most recently Senior Vice
President and Chief Financial Officer of Bloomingdale's. Mr. Rosenblatt
received his BS in Accounting from Brooklyn College.
FRANCIS R. SANTANGELO has served as a director of the Company and as a
member of the Compensation Committee since September 1997 and as a member of
the Audit Committee since May 1999. Mr. Santangelo is a financial consultant
with more than 30 years experience in the financial community. In addition,
from 1959 to 1988, Mr. Santangelo was a principal in Francis R. Santangelo &
Co., a specialist firm on the American Stock Exchange, and is also a former
member of the Board of Directors of the American Stock Exchange.
Pursuant to that certain Stock Purchase Agreement, dated as of April 28,
1992, by and between the Company and HSN (the "Stock Purchase Agreement"), HSN
has the right to nominate up to three directors for the Board. HSN has
nominated the following individuals: Jed B. Trosper, who resigned effective
March 10, 1998 and Robert J. Rosenblatt, who has served on the Board since
March 11,1998.
RMS Limited Partnership, a Nevada limited partnership controlled by Roy M.
Speer ("RMS") and Francis R. Santangelo, acting together, are in a position
immediately to exercise significant control over the general affairs of the
Company, to control the vote on any matters presented to stockholders and to
direct the business policies of the Company. As of March 31, 2000, RMS and Mr.
Santangelo beneficially owned approximately 41.2% and 3.5% of the common stock
of the Company, respectively. RMS and Mr. Santangelo are parties to a certain
stockholders' voting agreement pursuant to which they agreed to vote certain
shares for directors nominated by RMS, and not to vote in favor of certain
specified actions unless agreed to by RMS. In addition, RMS owns 100,000 shares
of the Company's Series D Preferred Stock which are convertible into
approximately 3.6 million shares of the Company's common stock and, if
converted, would result in RMS beneficially owning approximately 50.4% of the
Company's then outstanding common stock.
6
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "SEC") and the Nasdaq SmallCap Market
(the "SmallCap Market"). Officers, directors and greater than ten-percent
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on its review of the copies
of such forms received by it, or written representations from certain reporting
persons that no Forms 5 were required for those persons, the Company believes
that, during fiscal 1999, all required reports were filed timely.
THE BOARD AND ITS COMMITTEES
The Board held seven meetings during fiscal year 1999.
The Board has two standing committees, the Audit Committee and the
Compensation Committee. In addition, from time to time the Board establishes
committees of limited duration for special purposes. The Company does not have
a separate nominating committee for recommending to Stockholders candidates for
positions on the Board.
The Audit Committee, which held no meetings separate from full Board
meetings during fiscal 1999, consisted of Hector J. Alcalde, Robert J.
Rosenblatt and Francis R. Santangelo. The Committee's responsibilities include
reviewing (i) the scope and findings of the annual audit, (ii) accounting
policies and procedures and the Company's financial reporting and (iii) the
internal controls employed by the Company.
The Compensation Committee, which held no meetings separate from full
Board meetings during fiscal year 1999, consisted of Frank M. Devine, Donald C.
Klosterman and Francis R. Santangelo. The Committee's responsibilities include
(i) making recommendations to the Board on salaries, bonuses and other forms of
compensation for the Company's officers and other key management and executive
employees, (ii) administering the Plan and (iii) reviewing management
recommendations for grants of stock options and any proposed plans or practices
of the Company relating to compensation of its employees and directors.
Other than Robert Rosenblatt and Francis Santangelo, who attended
approximately 57% and 71%, respectively, of the applicable meetings, each
incumbent director attended at least 75% of all meetings of the Board and
committees of the Board to which he was assigned that were held during the
portion of fiscal year 1999 as to which such director was a member of the Board
or applicable committee.
7
<PAGE>
COMPENSATION OF DIRECTORS
During 1999, no cash compensation was paid to any of the directors of the
Company for serving as a director of the Company, except that such persons were
reimbursed for out-of-pocket expenses incurred in attending meetings of the
Board or committees of the Board.
In lieu of cash compensation for serving on the Board each new director of
the Company, upon such persons' election and qualification to the Board, is
granted options to purchase 60,000 shares of the Company's Common Stock.
One-third of such stock options become exercisable on the date of grant and an
additional one-third on each of the first two anniversaries of the grant date,
if such person is still serving as a director of the Company, with an exercise
price of the mean of the closing bid and asked price of the Common Stock on the
SmallCap Market on the date of such grant. Since Mr. Rosenblatt was nominated
to serve on the Board by HSN, he declined the options granted to him.
EXECUTIVE OFFICERS
The names, ages, current positions held and date from which the current
position was held of all executive officers of the Company (the "Named
Executive Officers") as of March 31, 2000 are set forth below.
<TABLE>
<CAPTION>
POSITION
NAME AGE OFFICER SINCE
- ---------------------------- ----- ------------------------------- ---------
<S> <C> <C> <C>
Jeffrey P. Anthony ......... 42 President and Chief Executive 1998
Officer
Walter G. Hamilton ......... 56 Vice President of Sales and 1999
Marketing
Gregory C. Jensen .......... 32 Chief Technology Officer 1999
Bob Perez .................. 47 Vice President of Product 2000
Development
James W. Shepperd .......... 51 Chief Financial Officer and 1998
Corporate Secretary
</TABLE>
The following sets forth the business experience, principal occupations
and employment of each of the Named Executive Officers who do not serve on the
Board (See "Election of Directors -- Information Regarding Nominees" above for
such information with respect to Mr. Anthony):
WALTER G. HAMILTON, promoted to Vice President of Sales and Marketing in
August 1999, has more than 34 years of experience in the information technology
industry. Prior to joining the Company as Director of Business Development in
December 1995, Mr. Hamilton was employed by Unisys Corporation and its
successor, Loral Corporation, as Director of Business Development for the
worldwide postal automation business segment, having previously held various
sales management and product management related assignments with both domestic
and international responsibilities. Mr. Hamilton received a BS in Business
Administration from the University of Southern Mississippi.
8
<PAGE>
GREGORY C. JENSEN joined the Company in August 1992 and has served as
Chief Systems Engineer and Director of Technical Services until October 1999,
when he accepted his current position as Chief Technology Officer. The Board
appointed him as a corporate officer of the Company on March 20, 2000. Prior to
joining the Company, Mr. Jensen was a Member of the Technical Staff of TRW,
Inc., involved in the research & development of image processing, signal
processing, high volume data storage, and high bandwidth data communication
technologies. Mr. Jensen received a B.S. in Electrical Engineering from
California Institute of Technology.
BOB PEREZ joined the Company in January 2000 as Vice President of Product
Development. Prior to that, Mr. Perez was, from October 1997, Director of
Product Management and Product Marketing at Sequel Technology Corporation. He
was Vice President, ECCO Division for NetManage, Inc. from September 1994 to
September 1996 and, from October 1990 to September 1994, Chief Operating
Officer of Arabesque Software, Inc. Mr. Perez received a BA degree from San
Jose State University, a JD from Harvard Law School, and practiced law for nine
years in the Silicon valley before entering the software industry.
JAMES W. SHEPPERD has been Chief Financial Officer of the Company since
May 1998, and Secretary of the Company since June 1998. He served in these
positions on a part-time, contract basis from May 1998 until December 31, 1999
when he became a full-time employee of the Company. From May 1997 to December
31, 1999, Mr. Shepperd was also a principal in James Shepperd & Associates
providing accounting and financial consulting, strategic planning and corporate
finance services to a variety of clients. From January 1994 to April 1997, Mr.
Shepperd was a Senior Vice President with Key Bank, as Chief Financial Officer
of the bank's Oregon subsidiary from January 1994 until March 1996 when he
relocated to Seattle to assume responsibility for all administrative activities
of the bank's Northwest Region. From 1983 to 1993, Mr. Shepperd served as Chief
Financial Officer for various financial institutions. Mr. Shepperd, who is a
certified public accountant, received a B.S. in Business Administration from
California State University, Long Beach.
9
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation with respect to the Named
Executive Officers receiving more than $100,000 in aggregate compensation in
1999, including the Chief Executive Officer of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL
COMPENSATION SECURITIES
---------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY OPTIONS(#)
- ---------------------------------------- ------ ---------------- -------------
<S> <C> <C> <C>
Jeffrey P. Anthony 1999 $165,001 180,000
President and Chief Executive Officer 1998 146,544 366,667
1997 N/A N/A
Walter G. Hamilton 1999 $131,006 90,000
Vice President of Sales and Marketing 1998 N/A N/A
1997 N/A N/A
James W. Shepperd (1) 1999 $124,304 90,000
Chief Financial Officer 1998 40,911 75,000
1997 N/A N/A
Clinton C. Fuller (2) 1999 $128,316 90,000
Former Chief Operating Officer 1998 142,108 213,333
1997 128,465 20,000
</TABLE>
- ----------------
(1) Mr. Shepperd served as the Company's Chief Financial Officer and Corporate
Secretary on a part-time basis through December 31, 1999 pursuant to a
Consulting Agreement (the "Consulting Agreement") entered into on May 22,
1998. The Consulting Agreement was terminated effective December 31, 1999
when Mr. Shepperd became a full-time employee.
(2) Mr. Fuller's employment with the Company was terminated effective October
26, 1999.
The Company offers a plan (the "401(k) Plan") pursuant to Section 401(k)
of the Internal Revenue Code of 1986, as amended (the "Code"), covering
substantially all employees, including the Named Executive Officers who are
also employees. Matching employer contributions are set at the discretion of
the Board. There were no employer contributions made for 1999, 1998 or 1997.
THE 1992 STOCK INCENTIVE PLAN
The 1992 Stock Incentive Plan (the "Plan"), adopted by the Board and
approved by the Stockholders in January 1992, authorizes the granting of stock
incentive awards to qualified officers, employees, directors and third parties
providing valuable services to the Company (e.g., independent contractors,
consultants and advisors to the Company). On September 8, 1999, the Company's
Board of Directors unanimously adopted a resolution to approve amending the
Plan for the purpose of increasing from 2,500,000 to 4,000,000 the number of
shares of Common Stock reserved for issuance pursuant to the Plan. Three
stockholders,
10
<PAGE>
holding approximately 54.0% of the outstanding shares of Common Stock, voted
all of such shares in favor of this amendment which vote was sufficient to
approve the increase. The Company's Stockholders previously approved amendments
to the Plan increasing the authorized number of shares of Common Stock under
the Plan in 1993, 1996, 1997 and 1998.
On September 8, 1999, the Board, on the recommendation of the Compensation
Committee, granted options to purchase shares of Common Stock to officers and
employees of the Company in order to provide long-term incentives to such
officers and employees. Such options become exercisable pro rata on each of the
next three anniversaries of the grant date and the exercise price of such
options was set at $1.34 (the average of the closing bid and ask price of the
Common Stock on the SmallCap Market on the date of such grant). With the
exception of Mr. Anthony, who was granted options to purchase 180,000 shares of
Common Stock and Mr. Alcalde and Mr. Klosterman who were granted options to
purchase 60,000 and 26,667 shares of Common Stock, respectively, for joining
the Board, no options were granted to directors during fiscal year 1999.
There were no awards of SARs made during fiscal year 1999 to any of the
Named Executive Officers. The following table sets forth all options granted to
any of the Named Executive Officers during fiscal year 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO EXERCISE OR
UNDERLYING EMPLOYEES IN BASE PRICE GRANT DATE
NAME OPTIONS FISCAL YEAR ($/SH) EXPIRATION DATE PRESENT VALUE($)
- ------------------------------ ------------ -------------- ------------ ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Jeffrey P. Anthony, 180,000 11.5% $ 1.34 09/08/09 $181,800
Chief Executive
Officer and
President
Walter G. Hamilton, 90,000 5.8% 1.34 09/08/09 90,900
Vice President of
Sales and Marketing
Gregory C. Jensen, 45,000 2.9% 1.34 09/08/09 45,450
Chief Technical
Officer
James W. Shepperd, 45,000 2.9% 1.34 09/08/09 45,450
Chief Financial Officer and 45,000 2.9% 1.78 12/22/09 60,300
Secretary
Clinton C. Fuller, 90,000 5.8% 1.34 10/26/99 90,900
Former Chief
Operating Officer
</TABLE>
- ----------------
11
<PAGE>
All options, except those granted to Mr. Fuller, become exercisable pro
rata on each of the first three anniversaries of the grant date. The options
granted to Mr. Fuller became fully exercisable upon his termination of
employment on October 26, 1999.
No stock options were exercised by any director of the Company during
1999. The following table sets forth the number and value of stock options
exercised during 1999 and outstanding as of December 31, 1999 for the Named
Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
OPTIONS FISCAL YEAR END (#) FISCAL YEAR END ($)(1)
NAME EXERCISED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---------------------------- ----------- --------------------------- --------------------------
<S> <C> <C> <C>
Jeffrey P. Anthony ......... 0 366,667/180,000 325,200/135,720
Walter G. Hamilton ......... 0 61,333/90,000 35,232/118,260
Gregory C. Jensen .......... 0 104,333/45,000 93,224/33,930
Bob Perez .................. 0 0/0 0/0
James W. Shepperd .......... 0 75,000/90,000 65,040/48,060
Clinton C. Fuller .......... 15,000 283,333/0 252,270/0
</TABLE>
- ----------------
(1) Assumes a market price equal to $2.094 per share, the average of the
closing bid and asked price on the SmallCap Market on December 31, 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee presently consists of Messrs. Devine,
Klosterman and Santangelo. During the most recently completed fiscal year, the
Board did not have an option committee. The full Board, based upon
recommendations of the Compensation Committee, determined whether to make
option grants.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has furnished the following report on executive
compensation:
Under the supervision of the Compensation Committee, the Company has
developed and implemented compensation policies which seek to enhance the
profitability of the Company, and thus stockholder value, by aligning the
financial interests of the Company's executive officers with those of its
Stockholders. In furtherance of these goals, the Company relies to a large
degree on long-term incentive compensation provided through the Plan to attract
and retain corporate officers and other key employees of outstanding abilities
and to motivate them to perform to the full extent of their abilities.
12
<PAGE>
Total compensation for executive officers of the Company presently
consists of both cash and equity based compensation. The Compensation Committee
determines the salary of executive officers based upon competitive norms. Under
the Plan, the Board, based upon recommendations by the Compensation Committee,
may grant stock options, SARs, performance share awards and restricted share
awards based upon competitive industrial practice. To date, the Board has only
granted stock options. The Board has the authority to determine the individuals
to whom such options are awarded, the terms at which option grants shall be
made and the terms of the options and the number of shares subject to each
option. The size of option grants are based upon competitive practice and
position level. Through the award of stock option grants, the objective of
aligning executive officers' long-range interests with those of the
Stockholders are met by providing executive officers with the opportunity to
build a meaningful stake in the Company. Salary levels and stock option awards
may be adjusted up or down for an executive's achievement of specified
objectives and individual job performance.
Mr. Anthony has served as Chairman of the Board of the Company since March
11, 1998 and as President and Chief Executive Officer of the Company since May
19, 1998. In establishing Mr. Anthony's salary, the Compensation Committee
reviewed and considered Mr. Anthony's past experiences with the Company, his
contacts and expertise in the Company's industry and with its potential
customers and suppliers, as well as the Company's then current cash flow
position and its prospects for raising additional cash. Mr. Anthony's salary
was set at $150,000 when he became Chairman of the Board and, in light of the
Company's then ongoing need for additional funding, Mr. Anthony's salary
remained at that level until it was increased to $200,000 per year effective
September 8, 1999. The current annual salary for each of the other Named
Executive Officers was set by Mr. Anthony after consultation with the
Compensation Committee and is as follows: Mr. Hamilton - $145,000; Mr. Jensen -
$138,000; Mr. Perez - $130,000; and Mr. Shepperd - $138,000.
Compensation Committee
Frank M. Devine
Donald C. Klosterman
Francis R. Santangelo
13
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing total Stockholder return on the
Common Stock against the cumulative total return of the Center for Research in
Securities Prices ("CRSP") Index for the SmallCap Market and the CRSP Index for
Nasdaq Computer and Data Processing Stocks for the period commencing December
31, 1994 and ending December 31, 1999.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN *
AMONG SAFLINK CORP., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
SAFLINK CORP
CUMULATIVE TOTAL RETURN
-----------------------
12/94 3/95 6/95 9/95 12/95 3/96 6/96 9/96 12/96 3/97
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAFLINK CORP. 100.00 233.33 133.33 185.71 209.52 130.95 138.10 111.90 195.24 128.57
NASDAQ STOCK MARKET (U.S.) 100.00 108.95 124.62 139.63 141.33 147.95 160.01 165.70 173.89 164.46
NASDAQ COMPUTER & DATA PROCESSING 100.00 112.56 133.42 145.74 152.28 159.42 177.21 180.75 187.95 174.46
<CAPTION>
6/97 9/97 12/97 3/98 6/98 9/98 12/98 3/99 6/99 9/99
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAFLINK CORP. 104.76 71.43 23.81 38.10 16.67 11.51 13.49 30.16 20.63 15.47
NASDAQ STOCK MARKET (U.S.) 194.59 227.52 213.07 249.36 256.21 231.37 300.25 335.86 367.47 375.85
NASDAQ COMPUTER & DATA PROCESSING 223.71 244.66 230.90 304.97 337.94 317.49 412.23 495.85 515.96 532.96
<CAPTION>
12/99
-------
<S> <C>
SAFLINK CORP. 25.79
NASDAQ STOCK MARKET (U.S.) 542.43
NASDAQ COMPUTER & DATA PROCESSING 871.27
</TABLE>
* $100 INVESTED ON 12/31/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
Notes:
A. Assumes $100 invested on December 31, 1994 in the CRSP Index for the
SmallCap Market, the CRSP Index for Nasdaq Computer and Data Processing Stocks
and the Common Stock.
B. The Common Stock began trading on the SmallCap Market on April 27,
1993. Prior to that date, the Common Stock traded sporadically in the
over-the-counter market since February 1992.
14
<PAGE>
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, THAT MIGHT INCORPORATE PAST OR
FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE REPORT
OF THE COMPENSATION COMMITTEE REGARDING EXECUTIVE COMPENSATION (ENTITLED
"COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION") BEGINNING ON PAGE 12
AND THE PERFORMANCE GRAPH ON PAGE 14 SHALL NOT BE INCORPORATED BY REFERENCE
INTO ANY SUCH FILINGS.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's Proxy Statement for
the 2001 Annual Meeting of Stockholders, Stockholder proposals must be received
by the Secretary of the Company at its executive offices by December 8, 2000.
Any Stockholder proposals received after such date will be considered untimely
and may be excluded from the proxy statement and form of proxy. Proxies
received in respect of Common Stock to be voted at the 2001 Annual Meeting will
be voted in accordance with the best judgment of the persons appointed by such
proxies with respect to any matters properly before such meeting submitted by
Stockholders after December 8, 2000.
OTHER BUSINESS
It is not intended that any business other than that set forth in the
Notice of Annual Meeting and more specifically described in this Proxy
Statement will be brought before the Annual Meeting. However, if any other
business should properly come before the Annual Meeting, it is the intention of
the persons named on the enclosed proxy card to vote the signed proxies
received by them in accordance with their sole discretion on such business and
any matters dealing with the conduct of the Annual Meeting.
By Order of the Board of Directors
/s/ JAMES W. SHEPPERD
James W. Shepperd
CHIEF FINANCIAL OFFICER AND CORPORATE SECRETARY
APRIL 10, 2000
15
<PAGE>
SAFLINK CORPORATION
ANNUAL MEETING OF STOCKHOLDERS -- MAY 9, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SAFLINK CORPORATION
The undersigned hereby appoints Jeffrey P. Anthony and James W. Shepperd,
each of them with full power of substitution, as proxies and with all powers
the undersigned would possess if personally present, to vote all of the shares
of common stock, $.01 par value per share (the "Common Stock"), of SAFLINK
Corporation (the "Company") that the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Company to be held at 10:00 a.m., local
time on May 9, 2000, and any adjournments or postponements thereof, at the
Bellevue Hyatt Regency, 900 Bellevue Way N.E., Bellevue, Washington 98004, as
directed herein upon the matters set forth below and on the reverse side hereof
and described in the accompanying Notice of Annual Meeting of Stockholders and
Proxy Statement and upon such other matters as may properly be brought before
such meeting according to their sole discretion.
Receipt of the Notice of Annual Meeting, the Proxy Statement and the
Company's 1999 Annual Report to Stockholders, including its Annual Report on
Form 10-K, is hereby acknowledged.
THE BOARD OF DIRECTORS OF SAFLINK CORPORATION RECOMMENDS A VOTE FOR
PROPOSAL 1, WHICH WAS PROPOSED BY THE BOARD OF DIRECTORS OF SAFLINK
CORPORATION.
(1) Election of Six Directors for a one-year term:
<TABLE>
<S> <C>
[ ] VOTE FOR all listed Nominees [ ] WITHHOLD AUTHORITY to vote
except as indicated below for all nominees
</TABLE>
To withhold authority to vote for any individual nominee, write that nominee's
name on the line below:
<TABLE>
<S> <C> <C> <C> <C>
NOMINEES: Hector J. Alcalde Jeffrey P. Anthony Frank M. Devine Donald C. Klosterman
Robert J. Rosenblatt Francis R. Santangelo
</TABLE>
- --------------------------------------------------------------------------------
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREBY BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF ALL OF THE DIRECTORS LISTED IN PROPOSAL 1. AS
TO ANY OTHER MATTER COMING BEFORE THE MEETING, EACH OF THE PERSONS AUTHORIZED
AS PROXIES HEREWITH IS AUTHORIZED TO VOTE IN HIS DISCRETION ON SUCH MATTER.
_________________________
Signature
Dated_____________, 2000
________________________
Signature
Dated_____________, 2000
Please date this card and
sign your name exactly as
it appears on this Proxy.
If the Common Stock
represented by this Proxy
is registered in the
names of two or more
persons, each should sign
this proxy. Persons
signing in a
representative or
fiduciary capacity and
corporate officers should
add their full titles as
such.
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY.
