SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
DIGITAL BIOMETICS, INC.
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(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
[LOGO] DBI
DIGITAL BIOMETRICS, INC.
5600 Rowland Road
Minnetonka, MN 55343-4315
Tel: 612.932.0888
Fax: 612.932.7181
January 7, 2000
Dear DBI Stockholder:
On behalf of the board of directors and management of Digital
Biometrics, I am pleased to invite you to attend our annual meeting of
stockholders, which will be held at the Lutheran Brotherhood Auditorium, located
at 625 Fourth Avenue South, Minneapolis, Minnesota, on Tuesday, February 8, 2000
at 3:30 p.m. central time. We look forward to greeting those stockholders who
are able to attend.
At the annual meeting, in addition to electing the board of directors,
we are asking you to approve an increase in the number of shares authorized for
issuance under the 1992 Restricted Stock Plan and 1998 Stock Option Plan. These
two plans enable the Company to attract, retain and compensate employees,
contractors and directors of the Company, thus preserving our cash resources and
encouraging stock ownership in the Company. DBI's board of directors unanimously
recommends a vote FOR each of the proposals.
Whether or not you are able to attend the Annual Meeting in person, it
is very important that you VOTE YOUR SHARES. IF YOU DO NOT PLAN TO VOTE IN
PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY IN
THE ENVELOPE PROVIDED AT YOUR EARLIEST CONVENIENCE.
As always, we thank you for your continued support. We will keep you
updated on our progress throughout the year.
Sincerely,
/s/ James C. Granger
James C. Granger
Chairman, President and
Chief Executive Officer
<PAGE>
DIGITAL BIOMETRICS, INC.
5600 ROWLAND ROAD
MINNETONKA, MN 55343-4315
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, FEBRUARY 8, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Digital Biometrics, Inc., a Delaware corporation (the "Company"), will be held
at the Lutheran Brotherhood Auditorium, 625 Fourth Avenue South, Minneapolis,
Minnesota, on Tuesday, February 8, 2000, at 3:30 p.m. Minneapolis time, and at
any adjournment or postponement thereof, for the following purposes, as more
fully described in the accompanying Proxy Statement:
1. To elect six directors, each to serve until the next Annual
Meeting of Stockholders and until their successors are duly
elected and qualified;
2. To consider and vote upon the amendment to the 1992 Restricted
Stock Plan which increases the number of shares authorized for
issuance thereunder by 100,000 shares;
3. To consider and vote upon the amendment to the 1998 Stock
Option Plan which increases the number of shares authorized
for issuance thereunder by 800,000 shares; and
4. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting or
any adjournment or postponement thereof.
Only stockholders of record at the close of business on December 10,
1999 are entitled to receive notice of, and to vote at, the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James C. Granger
James C. Granger
Chairman, President and Chief Executive Officer
Minnetonka, Minnesota
January 7, 2000
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All stockholders are cordially invited to attend the Annual Meeting in
person. Stockholders who are unable to attend in person are requested to
complete, date and sign the enclosed proxy exactly as your name appears on it
and promptly return it in the envelope provided, which requires no postage if
mailed in the United States. Your proxy is being solicited by the Board of
Directors of the Company. Your attendance at the Annual Meeting, whether in
person or by proxy, is important to ensure a quorum. If you return your proxy,
you still may vote your shares in person by giving written notice (by subsequent
proxy or otherwise) to the Secretary of the Company at any time prior to your
vote at the Annual Meeting.
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<PAGE>
DIGITAL BIOMETRICS, INC.
5600 ROWLAND ROAD
MINNETONKA, MN 55343-4315
--------------------
PROXY STATEMENT FOR
2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 8, 2000
--------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors (the "Board of Directors" or the "Board")
of Digital Biometrics, Inc. (the "Company"), to be voted at the Annual Meeting
of Stockholders (the "Annual Meeting") to be held at the Lutheran Brotherhood
Auditorium, 625 Fourth Avenue South, Minneapolis, Minnesota, on Tuesday,
February 8, 2000, at 3:30 p.m. Minneapolis time, and at any adjournment or
postponement thereof, for the purposes set forth in the accompanying Notice of
Meeting. The Notice of Annual Meeting, this Proxy Statement and the enclosed
proxy are first being mailed to stockholders on or about January 7, 2000.
The Board of Directors knows of no business which will be presented at
the Annual Meeting other than the matters referred to in the accompanying Notice
of Meeting. However, if any other matters are properly presented at the Annual
Meeting, it is intended that the persons named in the proxy will vote on such
matters in accordance with their judgment. If the enclosed proxy is executed and
returned, it nevertheless may be revoked at any time before it has been voted by
a later-dated proxy or a vote in person at the Annual Meeting. Shares of the
Company's common stock represented by properly executed proxies received on
behalf of the Company will be voted at the Annual Meeting (unless revoked prior
to their vote) in the manner specified therein. It is the intention of the
persons named as proxies in the accompanying form of proxy, unless such
authority is withheld, to vote in favor of: (a) the election of each nominee
identified below to the Company's Board of Directors; (b) the proposal to
increase by 100,000 the number of shares of the Company's common stock reserved
for issuance under the 1992 Restricted Stock Plan; and (c) the proposal to
increase by 800,000 the number of shares of the Company's common stock reserved
for issuance under 1998 Stock Option Plan. Pursuant to Delaware law, abstentions
and broker non-votes are counted as present for purposes of determining the
presence of a quorum. However, abstentions are treated as present and entitled
to vote, and thus have the effect of a vote against a matter. A broker non-vote
on a matter is considered not entitled to vote on that matter, and thus is not
considered when counting votes cast on the matter.
VOTING RIGHTS AND OUTSTANDING COMMON STOCK
Only holders of the common stock of the Company whose names appear of
record on the books of the Company at the close of business on December 10, 1999
(the "Record Date") are entitled to receive notice of, and to vote at, the
Annual Meeting. On the Record Date, the voting shares of the Company consisted
of 16,200,130 shares of common stock, each entitled to one vote per share.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of common stock issued and outstanding
and entitled to vote is necessary to constitute a quorum for the transaction of
business at the Annual Meeting. All votes will be tabulated by the inspector of
election for the Annual Meeting, who will separately tabulate affirmative and
negative votes, abstentions and broker non-votes.
Assuming the presence of a quorum, in all matters other than the
election of directors, stockholder approval requires the affirmative vote of a
majority of the shares of common stock represented and entitled to vote at the
Annual Meeting. Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the Annual Meeting.
1
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors oversees the management of the Company on behalf
of the stockholders. The Board reviews the Company's long-term strategic plans
and exercises direct decision-making authority in certain areas, such as the
selection and appointment of the Company's executive officers, as well as the
nature and amounts of their compensation. Four of the six proposed members of
the Board of Directors are not employed by the Company. Only non-employee
directors serve as the Company's Audit Committee and Compensation and Personnel
Committee.
The Company's Bylaws permit the election of at least four, but not more
than nine, directors. The Company's Board of Directors has determined that the
Board to be elected at the next Annual Meeting of Stockholders shall consist of
six members.
Stockholders do not have cumulative voting rights with respect to the
election of directors, and proxies cannot be voted for a greater number of
directors than the number of nominees named below. Each of the nominees listed
below has advised the Company of his willingness to continue service on the
Board of Directors. In the event that a nominee is unable or unwilling to serve,
the proxy may be voted in favor of the election of such person as the Proxies,
in their discretion, determine following a recommendation by the Nominating
Committee or, alternatively (subject to the provisions of the Company's Bylaws),
the Board may elect to reduce the number of directors serving on the Board to
eliminate the vacancy.
The Board of Directors held 13 meetings during the fiscal year ended
September 30, 1999. Each director attended 75 percent or more of the total
number of meetings of the Board and the total number of meetings held by all
committees of the Board on which he served during the year (see "Committees").
John E. Lawler and John J. Metil joined the Board of Directors in December 1999.
NOMINEES FOR ELECTION AS DIRECTOR
The following table sets forth certain information regarding nominees
for election as members of the Board of Directors. All of the directors of the
Company elected at the Annual Meeting will serve until the next Annual Meeting
and until their successors are duly elected and qualified. There are no family
relationships between any director or officer.
<TABLE>
<CAPTION>
Name of Nominee Age Position
--------------- --- --------
<S> <C> <C>
James C. Granger(1) 53 Chairman of the Board of Directors, President and
Chief Executive Officer
C. McKenzie Lewis III(1)(2)(3) 53 Director
George Latimer(2)(3) 64 Director
John E. Haugo(2)(3) 64 Director
John E. Lawler(2)(3) 50 Director
John J. Metil 49 Executive Vice President, Chief Operating Officer,
Chief Financial Officer and Director
</TABLE>
(1) Member of Nominating Committee.
(2) Member of Compensation and Personnel Committee.
(3) Member of Audit Committee.
The following discussion sets forth the business experience and
background of the nominees for director, each of whom currently serves as a
director of the Company.
James C. Granger. Mr. Granger became the Company's President and Chief
Executive Officer on January 1, 1997, was appointed to the Board of Directors of
the Company effective January 27, 1997 and appointed as Chairman effective
December 14, 1999. Prior to joining the Company, Mr. Granger was employed by ADC
Telecommunications, Inc. as President of its Access Platforms Systems Division
between March 1995 and December 1996. Between 1989 and February 1995, Mr.
Granger was employed by Sprint/United Telephone, Orlando, Florida, in
2
<PAGE>
various senior marketing and management positions. Prior to 1989, Mr. Granger
was employed by American Telephone & Telegraph in various management positions.
C. McKenzie Lewis III. Mr. Lewis was elected Chairman of the Company's
Board of Directors on October 28, 1996 and served as Chairman through December
14, 1999. Mr. Lewis has served as a director of the Company since 1994. From
1986 to 1996, Mr. Lewis served as Chief Executive Officer and President and a
director of Computer Network Technology Corporation, a developer and
manufacturer of high performance extended channel networking systems. Mr. Lewis
has over 26 years experience in the computer and data communications industry.
Mr. Lewis is currently President of Sherpa Partners, LLC and a General Partner
in Minnesota Management Partners, L.P.
George Latimer. Mr. Latimer has served on the Company's Board of
Directors since 1990. He is a Distinguished Visiting Professor of Urban Studies
at Macalester College, St. Paul, Minnesota. From November 1995 through December
1997, Mr. Latimer served as Chief Executive Officer of the National Equity Fund,
a financing syndication for affordable housing in Chicago, Illinois. From July
1993 to November 1995, Mr. Latimer served as Director, Office of Special
Actions, U.S. Department of Housing and Urban Development ("HUD"). From February
1993 to July 1993, Mr. Latimer was employed as a consultant to HUD. From 1990 to
1993, Mr. Latimer was Dean of Hamline University School of Law in St. Paul,
Minnesota. From 1976 to 1990, Mr. Latimer served as the Mayor of St. Paul,
Minnesota.
John E. Haugo. Dr. Haugo has served on the Company's Board of Directors
since February 1998. Dr. Haugo has been Chairman and Chief Executive Officer of
MedServe Link, Inc. since January 1998. Dr. Haugo has served as a director of
Global Maintech, Inc. since June 1997. Dr. Haugo served as Vice President and
General Manager of the Serving Software Group Business Unit of HBO and Company
from September 1994 to March 1997. From April 1986 until September 1994, prior
to its acquisition by HBO, Dr. Haugo was founder, President, Chairman and Chief
Executive Officer of Serving Software, Inc. a provider of health care scheduling
and resource management systems. From January 1976 to January 1981 he served as
Chief Executive Officer of Minnesota Educational Computing Corporation.
John E. Lawler. Mr. Lawler has served on the Company's Board of
Directors since December 1999. Mr. Lawler has been President of East/West
Financial Services, Inc., a diversified financial management, real estate
finance and tax consulting firm, since November 1987. He is also a co-founder of
Sterling Wealth Management, Inc., a registered investment advisor and has served
on its Board since October 1999. From November 1984 to March 1988, Mr. Lawler
served as Executive Vice President of The Kamber Group, a public relations firm
in Washington D.C. From March 1982 to October 1984, Mr. Lawler served as a
Senior Vice President and Chief Financial Officer with Gray and Company, a
public relations and lobbying firm. From January 1975 to March 1982, Mr. Lawler
served as Chief of the Office of Finance of the U.S. House of Representatives in
Washington, D.C.
John J. Metil. Mr. Metil has served on the Company's Board of Directors
since December 1999. Mr. Metil was hired as the Company's Chief Operating
Officer and Chief Financial Officer in April 1997, and was promoted to Executive
Vice President in November 1998. From August 1992 to April 1997, Mr. Metil
served as Executive Vice President with the Zebulon Group, Inc. Previously, he
was a co-founder and served as Chief Financial Officer of Tricord Systems, Inc.,
and held senior finance and corporate development positions at National Computer
Systems, Control Data Corporation and Pillsbury Company.
All shares represented by proxies will be voted FOR the election of the
foregoing nominees unless otherwise specified; provided, however, that if any
such nominee should withdraw or otherwise become unavailable for reasons not
presently known, such shares may be voted for another person in place of such
nominee in accordance with the best judgement of the persons named in the proxy.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE
ELECTION OF THE NOMINEES IDENTIFIED ABOVE.
3
<PAGE>
COMMITTEES
The Board of Directors appoints committees to study and act on key
issues in greater detail then would be possible at full Board meetings. Each
Committee reviews the results of the meetings and other actions with the full
Board.
During fiscal year 1999, the Audit Committee was comprised of Messrs.
Latimer (Chairman), Haugo and Lewis. The responsibilities of the Audit
Committee, in addition to such other duties as may be specified by the Board of
Directors, include the following: (1) reviewing the timing, scope and results of
the independent auditors' examination and related fees; (2) reviewing periodic
comments and recommendations concerning the Company's accounting systems and
internal controls made by the independent auditors; and (3) reviewing the scope
and adequacy of internal accounting controls. The Audit Committee held one
meeting during fiscal year 1999.
During fiscal year 1999, the Compensation and Personnel Committee was
comprised of Messrs. Haugo (Chairman), Lewis and Latimer. The responsibilities
of the Compensation and Personnel Committee include making recommendations to
the Board of Directors with respect to compensation for executive employees of
the Company and overseeing the Company's stock option plans and the grant of
stock options thereunder. The Compensation and Personnel Committee met five
times during fiscal year 1999.
A Nominating Committee was established by the Board of Directors on
December 5, 1996. During fiscal year 1999, this Committee was comprised of
Messrs. Lewis (Chairman) and Granger. The Nominating Committee makes
recommendations regarding the composition of the Board of Directors and
nomination of individuals for election to the Board by the stockholders of the
Company. The Nominating Committee met one time during fiscal year 1999.
DIRECTOR COMPENSATION
Employees of Digital Biometrics, Inc. receive no supplemental
compensation for serving on the Board of Directors. Outside directors of the
Company received cash and stock compensation in fiscal 1999 as described below.
Effective with their election or re-election to the Board, each outside
director receives $8,000 per year paid on a quarterly basis.
Pursuant to the Company's 1992 Restricted Stock Plan, each time a
non-employee director is elected or re-elected to the Board, he or she will be
granted the number of shares of restricted stock equal to $18,000 divided by the
fair market value of one share of common stock at the close of business on the
day prior to the date of grant. Restricted stock awards are granted on the date
of the annual stockholders' meeting at which the non-employee director is
elected or re-elected to the Board. Restricted stock awards as described above
were made to each of the Company's outside directors who served the entire
fiscal 1999 (John E. Haugo, C. McKenzie Lewis III, and George Latimer).
Effective with his appointment to the Board in December 1999, the Board
awarded 1,125 shares of restricted common stock to Mr. Lawler. The market value
of the award on the date of grant was $4,500.
Grants of restricted shares of the Company's common stock typically
vest over a three-year period.
Pursuant to the terms and conditions of the Company's 1998 Stock Option
Plan, each time a non-employee director is elected or re-elected to the Board of
Directors he or she will be granted an option to purchase 15,000 shares of the
Company's common stock at an exercise price per share equal to 100 percent of
the fair market value of the common stock on the date of such election or
re-election. Effective with re-election to the Board on March 16, 1999, a stock
option grant to purchase 15,000 shares of the Company's common stock at an
exercise price of $1.25 was issued to each of the Company's outside directors,
John E. Haugo, C. McKenzie Lewis III, and George Latimer. Each such option vests
on March 15, 2000 and has a term of five years.
Effective with his appointment to the Board in December 1999, the Board
awarded to Mr. Lawler an option to purchase 4,000 shares of the Company's common
stock at an exercise price of $4.00 per share.
4
<PAGE>
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO THE 1992 RESTRICTED STOCK PLAN
GENERAL
In February 1993, the Company's stockholders ratified the Company's
1992 Restricted Stock Plan (the "Restricted Stock Plan") and the reservation for
issuance thereunder of 250,000 shares of the Company's common stock. In December
1999, the Board of Directors adopted a resolution, subject to stockholder
approval, to amend the 1992 Restricted Stock Plan to increase from 250,000 to
350,000 the number of shares of common stock reserved for issuance thereunder.
DESCRIPTION OF THE PLAN
PURPOSE. The purpose of this Restricted Stock Plan is to provide for
the grant of restricted stock to members of the Board of Directors who are not
employees of the Company. The Board of Directors believes that the grant of
restricted stock to non-employee directors will increase the attractiveness of
service on the Board of Directors and will provide additional incentive for such
directors to enhance the Company's long-term success and progress. The
Restricted Stock Plan may also be used to provide additional incentives to key
employees who are making and can continue to make substantial contributions to
the success of the Company by providing them with an equity interest in the
Company.
ADMINISTRATION. The Restricted Stock Plan is administered by the
Compensation and Personnel Committee of the Board of Directors.
ELIGIBILITY AND GRANTS OF RESTRICTED STOCK TO EMPLOYEES. Each employee
who is considered to be a key administrative, managerial, executive or technical
employee, as determined in the sole discretion of the Committee, shall be
eligible to be granted Restricted Stock under the Restricted Stock Plan. Subject
to the provisions of the Restricted Stock Plan, the Committee, at any time and
from time to time, may grant shares of Restricted Stock under the Restricted
Stock Plan to eligible employees in such amounts as it shall determine. The
Committee shall have full discretion to determine the terms and conditions of
the grant of Restricted Stock to any employee.
GRANTS OF RESTRICTED STOCK TO NON-EMPLOYEE DIRECTORS. Each time that a
non-employee director is elected or re-elected to the Board, he or she shall be
granted the number of shares of Restricted Stock equal to $18,000 divided by the
fair market value (as defined in the Restricted Stock Plan) of one share of
common stock on the close of business on the day prior to the date of grant. The
Restricted Stock shall be granted on the date of the annual stockholders'
meeting to such non-employee directors elected or re-elected at such meeting.
Such grants to non-employee directors shall be automatic and not subject to any
discretion by the Committee.
GENERAL PROVISIONS. The Company may deduct and withhold from any cash
otherwise payable to the holder of Restricted Stock (whether payable as salary,
bonus or other compensation) such amount as may be required for the purpose of
satisfying the Company's obligation to withhold federal, state and local taxes.
With the consent of the Committee, the holder of Restricted Stock may
be permitted to satisfy the Company's withholding tax requirements by electing
to deliver to the Company shares of common stock having a fair market value on
the date income is recognized with respect to any Restricted Stock equal to the
amount required to be withheld.
During the restriction period, holders of Restricted Stock may exercise
full voting rights and shall be entitled to receive all dividends and other
distributions paid with respect to those shares. If any such dividends or
distributions are paid in shares of common stock, the shares shall be subject to
the same restrictions on transferability as the shares of Restricted Stock with
respect to which they were paid.
The Committee shall impose restrictions on any shares of Restricted
Stock granted pursuant to the Restricted Stock Plan as it may deem advisable and
may include legends on the certificates to give appropriate notice of such
restrictions. The Committee may require the Restricted Stock certificates be
held by the Company until the restriction period lapses.
5
<PAGE>
The granting of Restricted Stock shall be subject to all applicable
federal and state laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
TRANSFERABILITY. No shares of Restricted Stock granted under the
Restricted Stock Plan may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, otherwise than by will or by the laws of descent and
distribution until the termination of the applicable restriction period. All
rights with respect to Restricted Stock granted to an employee or non-employee
director under the Restricted Stock Plan shall be exercisable during his or her
lifetime only by such employee or non-employee director.
AMENDMENT. The Company shall have the right at any time to amend the
Plan by action of its Board without obtaining the approval of the stockholders
of the Company. Except that, the Board shall obtain the approval of the
stockholders if such amendment increases the number of shares of common stock
that may be granted as Restricted Stock under the Restricted Stock Plan (other
than increases as a result of stock splits or stock dividends); or if the
amendment materially increases benefits accruing to participants under the Plan.
Amendments to the Restricted Stock Plan shall be set forth in writing and shall
not, without the consent of a participant, impair any rights or obligations with
respect to any Restricted Stock previously granted to the participant.
TERMINATION. The Company shall have the right at any time to terminate
the Restricted Stock Plan by action of its Board without obtaining the approval
of the stockholders, provided however, that termination of the Restricted Stock
Plan shall not affect the rights of employees or non-employee directors under
Restricted Stock previously granted to them and all grants of Restricted Stock
shall continue in force and operation after termination of the Restricted Stock
Plan except as they may lapse or be terminated by their terms and conditions.
TAX INFORMATION
Generally, no income will be recognized by a participant upon the grant
of Restricted Stock. At the time the Period of Restriction lapses with respect
to the Restricted Stock, the participant will recognize ordinary income in an
amount equal to the fair market value of such shares. The Company will be
entitled to a federal income tax deduction in an amount equal to the ordinary
income recognized by the participant. Any disposition of the Restricted Stock by
a participant after the end of the Period of Restriction will result in the
recognition of capital gain or loss (long-term or short-term depending on the
length of time the Restricted Stock is held after the end of the Period of
Restriction). Dividends paid in cash and received by a participant prior to the
end of the Period of Restriction will constitute ordinary income to the
participant (and are deductible by the Company). Any dividends paid in stock
will be treated as a grant of additional Restricted Stock subject to the tax
treatment described herein.
All shares represented by proxies will be voted FOR the proposal to
amend the Company's 1992 Restricted Stock Plan to increase the number of shares
of common stock issuable thereunder by 100,000 unless otherwise specified.
THE BOARD OF DIRECTORS CONSIDERS THE AMENDMENT TO THE 1992 RESTRICTED
STOCK PLAN TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE AMENDMENT.
6
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PROPOSAL NO. 3
APPROVAL OF AMENDMENT TO THE 1998 STOCK OPTION PLAN
GENERAL
In April 1998, the Company's stockholders ratified the Company's 1998
Stock Plan (the "Plan") and reserved for issuance thereunder 600,000 shares of
the Company's common stock. In December 1999, the Board of Directors adopted a
resolution, subject to stockholder approval, to amend the Plan to increase from
600,000 to 1,400,000 the number of shares of common stock reserved for issuance
thereunder. The decision to issue additional shares of common stock pursuant to
the Plan will be made by the Board of Directors in its discretion, as described
below.
DESCRIPTION OF THE PLAN
PURPOSE. The purpose of the Plan is to promote the success of the
Company by facilitating the employment and retention of competent personnel and
by furnishing incentive to directors, officers, key employees, independent
contractors and others upon whose efforts the success of the Company will depend
to a large degree by encouraging stock ownership in order to increase the
proprietary interest of such individuals in the Company's success.
TERM. The term of the Plan is indefinite; however, the Board may
terminate the Plan at any time, provided that such termination will not affect
options then outstanding and provided further that no incentive stock options
may be granted under the Plan after January 18, 2008.
ADMINISTRATION. The Plan is administered by the Compensation and
Personnel Committee of the Board. The Plan gives broad powers to the Committee
to administer and interpret the Plan, including the authority to select the
individuals to be granted options and to prescribe the particular form and
conditions of each option (which may vary from optionee to optionee).
ELIGIBILITY. All employees of the Company or any subsidiary are
eligible to receive incentive stock options pursuant to the Plan. All employees,
directors and officers of, and consultants and advisors to, the Company or any
subsidiary are eligible to receive nonqualified stock options. As of November
30, 1999, the Company had approximately 106 employees and officers and four
outside directors.
DIRECTOR OPTIONS. Under the Plan, each outside (non-employee) director
of the Company is automatically granted an option to purchase 15,000 shares of
common stock each year upon his or her election or re-election to the Board by
the stockholders. Each such option will be a nonqualified stock option, will
expire five years after the date it is granted, and will become exercisable in
full twelve months following the date of grant or the next succeeding annual
meeting, whichever occurs earlier. If a non-employee director ceases to be a
director of the company the option will remain exercisable for three months,
provided, that if such termination is because of death, the option will remain
exercisable until the earlier of the six-month anniversary of the director's
death or the expiration of the option's original term.
OPTIONS. When an option is granted under the Plan, the Committee, in
its discretion, specifies the option price, the type of option (either
"incentive" or "nonqualified") to be granted, and the number of shares of common
stock which may be purchased upon exercise of the option. The exercise price of
a stock option may not be less than 100% of the fair market value of the
Company's common stock on the date of grant. On November 30, 1999, the closing
price of the company's common stock as reported on the Nasdaq National Market
System was $3.781. The term during which an option may be exercised and whether
an option will be exercisable immediately, in stages or otherwise are set by the
Committee, but the term of any option may not exceed seven years from the date
of grant. Optionees may pay for shares upon exercise of options with cash,
certified check or common stock of the Company valued at the stock's then fair
market value. Each option granted under the Plan is nontransferable during the
lifetime of the optionee.
The Committee will determine the form of stock option agreements which
will be used for stock options granted under the Plan. Such agreements will
govern the right of an optionee to exercise an option upon termination of
employment or affiliation with the company during the life of an optionee and
following an optionee's death. The Board or the Committee may impose additional
or alternative conditions and restrictions on the incentive or nonqualified
stock options granted under the Plan; however, each incentive option must
contain such limitations and
7
<PAGE>
restrictions upon its exercise as are necessary to ensure that the option will
be an incentive stock option as defined under the Internal Revenue Code.
AMENDMENT. The Board of Directors may from time to time suspend or
discontinue the Plan or amend it in any respect; provided, however, that no such
revision or amendment may impair the terms and conditions of any outstanding
option to the material detriment of the optionee without the consent of the
optionee. An amendment shall be subject to the approval of the Company's
stockholders only to the extent required by applicable law, rule or regulation.
ANTIDILUTION PROVISIONS. The Board of Directors shall equitably adjust
the maximum number of shares of common stock reserved for issuance under the
Plan, the number of shares covered by each outstanding option and the option
price per share in the event of stock splits or consolidations, stock dividends
or other transactions in which the Company receives no consideration.
TAX INFORMATION
Under present law, tax liability is not created upon the grant of
nonqualified options pursuant to the Plan. However, in the year that a
nonqualified stock option is exercised, the optionee must recognize
compensation, taxable as ordinary income, equal to the difference between the
option price and the fair market value of the shares on the date of exercise.
The Company normally will receive a deduction equal to the amount of
compensation the optionee is required to recognize as ordinary income if the
company complies with any applicable federal income tax withholding
requirements.
Incentive stock options granted under the Plan are intended to qualify
for favorable tax treatment under Section 422 of the Internal Revenue Code.
Under Section 422, an optionee recognizes no taxable income when the option is
granted. Further, the optionee generally will not recognize any taxable income
when the option is exercised if he or she has at all times from the date of the
option's grant until three months before the date of exercise been an employee
of the Company. The Company ordinarily is not entitled to any income tax
deduction upon the grant or exercise of an incentive stock option. Certain other
favorable tax consequences may be available to the optionee if he or she does
not dispose of the shares acquired upon the exercise of an incentive stock
option for a period of two years from the granting of the option and one year
from the receipt of the shares.
The foregoing is only a summary of the general effect of U.S. federal
income taxation upon the optionee and the Company with respect to the grant and
exercise of options under the Plan and the subsequent sale of shares. This
summary does not discuss the income tax laws of any state or foreign country in
which an optionee may reside.
All shares represented by proxies will be voted FOR the proposal to
amend the Company's 1998 Stock Option Plan to increase the number of shares of
common stock issuable under it by 800,000 unless otherwise specified.
THE BOARD OF DIRECTORS CONSIDERS THE AMENDMENT TO THE 1998 STOCK OPTION
PLAN TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE AMENDMENT.
8
<PAGE>
REPORT OF COMPENSATION AND PERSONNEL COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation and Personnel Committee (the "Compensation Committee")
is composed of the independent, outside directors whose names appear following
this report. The Compensation Committee considers how the achievement of the
Company's overall goals and objectives can be aided through the use of an
appropriate compensation program. The Compensation Committee's responsibilities
include determining the amount and type of compensation paid to the executive
officers of the Company, as well as administering the Company's common
stock-based benefit plans.
The Compensation Committee believes that the Company's annual cash
compensation package (base salary plus bonus opportunities) must be sufficient
to retain and attract highly qualified and experienced executives and management
personnel. The Compensation Committee also believes that stockholder value
depends, to a significant extent, on a close alignment between the financial
interests of the Company's stockholders and those of its employees, in
particular its executive officers. Compensation of the Company's executive
officers includes three primary elements: base compensation, annual incentives,
and long-term incentives in the form of stock options or restricted stock.
BASE COMPENSATION
Annual base salaries of the Company's executive officers, other than
the Company's President and Chief Executive Officer, are recommended by the
President, subject to approval by the Compensation Committee. Individual salary
recommendations may vary based upon the President's assessment of the value of
each executive's position in the Company, Company performance, the executive's
individual performance and compensation for similar positions at comparable
companies. Compensation for the Company's President and Chief Executive Officer
is determined by the Compensation Committee as discussed further below.
INCENTIVE COMPENSATION
The Company's Executive Compensation Plan (the "Plan") is based on
annual performance components. Performance under each Plan component is measured
against predetermined revenue and profitability objectives with a "threshold,"
"target" and "maximum" for each. The Plan also permits the assignment of
individual management objectives to each participant. Target amounts are based
upon the annual budget for revenue and profitability established by the Board of
Directors as of the beginning of each fiscal year. Threshold and maximum amounts
are determined annually for revenue and profitability by the Compensation
Committee in connection with the Board of Directors' consideration of the annual
budget. Performance below the threshold objective results in no annual or
long-term incentive award. Performance between threshold and target and target
and maximum objectives result in incentive awards determined on a prorated
basis. There is no additional award payable under the Plan for performance above
the maximum objective. The Plan provides that the Compensation Committee may
elect to pay all or any portion of any incentive award in restricted shares of
the Company's common stock, vesting over a three-year period. Long-term
incentive awards consist of stock options grants under the Company's 1990 Stock
Option Plan and 1998 Stock Option Plan with vesting typically over a three-year
period.
Awards were paid under the revenue, profitability and individual
management objective components of the Plan for fiscal 1999.
Stock option plans maintained by the Company were established to
provide employees, including executive officers, with an opportunity to
financially participate in the Company's long-term performance. Grants are
authorized by the Compensation Committee in its sole discretion. Historically,
discretionary awards have been made in circumstances such as commencement of
employment, significant change in job responsibility or title, or completion of
significant product installations and execution of significant agreements.
Virtually all regular, full-time employees of the Company have been granted
stock options. Stock options granted under the 1990 Stock Option Plan generally
have a three-year vesting schedule and expire ten years from the date of grant.
Stock options granted under the 1998 Stock Option Plan generally have a
three-year vesting schedule and expire seven years from the date of grant. The
exercise price of options granted under the 1990 Stock Option Plan and 1998
Stock Option Plan is equal to the fair market value of the underlying stock on
the date of grant.
9
<PAGE>
CEO COMPENSATION
Mr. Granger's base salary, bonus opportunities and awards and stock
option awards are reviewed annually and determined by the Compensation
Committee. Mr. Granger's base salary, bonuses and stock option awards are, in
general, determined using the same criteria described above for other executive
officers. Mr. Granger is eligible to participate in the Company's 401(k)
retirement plan. The level of Mr. Granger's compensation reflects, among other
factors, the Compensation Committee's evaluation of his role in implementing
strategies to achieve the Company's goals and his duties and responsibilities
with the Company.
The Compensation Committee believes that the Company's compensation
programs for executive officers of the Company are aligned with the long-term
interests of the Company's stockholders.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), the deduction for corporate taxpayers with respect to the
compensation of executive officers is limited to specified amounts unless the
amount of such compensation is based upon performance objectives meeting certain
regulatory criteria or is otherwise excluded from the limitation. The
Compensation Committee believes that the Company's executive compensation
practices are sufficiently linked to performance to permit the full
deductibility of such compensation under Section 162(m).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no interlocking relationships, as defined in the regulations
of the Securities and Exchange Commission, involving members of the Board of
Directors, or its Compensation and Personnel Committee.
December 15, 1999
The Compensation and Personnel Committee:
John E. Haugo, CHAIRMAN
George Latimer
C. McKenzie Lewis III
John E. Lawler
EXECUTIVE OFFICERS
The following table sets forth, as of the date of this Proxy Statement,
certain information regarding the executive officers of the Company.
<TABLE>
<CAPTION>
Year First
Name Title Age Became Officer
---- ----- --- --------------
<S> <C> <C> <C>
James C. Granger President and Chief Executive Officer 53 1997
John J. Metil Executive Vice President, Chief Operating
Officer and Chief Financial Officer 49 1997
Barry A. Fisher Vice President of Sales, Marketing and
Business Development 45 1997
Michel R. Halbouty Vice President of Operations 58 1997
</TABLE>
The following sets forth the business experience and background of the
executive officers of the Company not previously described.
Barry A. Fisher. Mr. Fisher became the Company's Vice President of
Sales, Marketing and Business Development in March 1997. From June 1995 to March
1997, Mr. Fisher was a partner in American Connexions, an organization which
provided sales management services to small businesses selling products to
retail and government markets. During the period from December 1987 to June
1995, Mr. Fisher served as Vice President of Sales for Recovery Engineering,
Inc. From September 1976 to December 1987, Mr. Fisher held management positions
at Tennant Company.
10
<PAGE>
Michel R. Halbouty. Mr. Halbouty serves as the Company's Vice President
of Operations, a position he has held since May 1997. From March 1992 to April
1997, Mr. Halbouty was employed as Vice President of Manufacturing with NetStar,
Inc. From June 1979 to February 1992, Mr. Halbouty held manufacturing and
corporate quality management positions with Apertus Technologies (formerly Lee
Data Corporation). From September 1963 to May 1979, Mr. Halbouty held various
manufacturing and project management positions with Control Data Corporation.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning
compensation paid by the Company for the last three fiscal years to its Chief
Executive Officer and other executive officers whose cash compensation exceeded
$100,000 in fiscal year 1999 (collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------
ANNUAL COMPENSATION SECURITIES
NAME AND -------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(5)
- --------------------------------------- ---- ------ ----- ------- ---------------
<S> <C> <C> <C> <C> <C>
James C. Granger(1) 1999 $197,918 $100,000 -- $ 4,995
President and Chief Executive 1998 175,020 17,500 250,000 4,667
Officer 1997 131,265 32,816 250,000 --
John J. Metil(2) 1999 162,917 82,500 -- 5,000
Executive Vice President 1998 138,750 14,000 100,000 3,563
Chief Operating Officer and 1997 62,500 9,374 100,000 --
Chief Financial Officer
Barry A. Fisher(3) 1999 126,249 75,000 -- 5,000
Vice President of Sales, Marketing 1998 106,667 11,000 75,000 2,377
and Business Development 1997 48,750 6,750 75,000 --
Michel R. Halbouty(4) 1999 136,666 94,151 -- --
Vice President of Operations 1998 109,167 11,000 75,000 --
1997 37,500 6,750 75,000 --
</TABLE>
- ---------------------------------------
(1) Mr. Granger has served as President and Chief Executive Officer of the
Company since January 1, 1997.
(2) Mr. Metil has served as Executive Vice President of the Company since
November 1, 1998 and as Chief Operating Officer and Chief Financial Officer
since April 1, 1997.
(3) Mr. Fisher has served as Vice President of Sales, Marketing and Business
Development since March 17, 1997.
(4) Mr. Halbouty has served as Vice President of Operations of the Company
since May 1, 1997.
(5) Represents Company match, paid in shares of the Company's common stock, of
employee 401(k) contributions.
STOCK OPTION GRANTS IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OR OPTION TERM(3)
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE)(2) DATE 5% 10%
- ------------------------- ---------- ---------------- ------------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
</TABLE>
There were no options granted to executive officers during the fiscal year.
- ---------------------------------------
(1) Subject to acceleration at the discretion of the Compensation Committee or
upon the death or disability of the optionee, each option becomes
cumulatively exercisable with respect to 33 1/3 percent of the shares
covered on each of the first three anniversaries of the grant date.
(2) Fair market value per share on the date of grant or the effective date,
whichever is less, in accordance with the terms of the stock option plans.
(3) The 5 percent and 10 percent assumed rates of appreciation are mandated by
the rules of the Securities and Exchange Commission and do not represent
the Company's estimate or projection of the future market price of the
Company's common stock price.
11
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY OPTIONS
SHARES UNDERLYING UNEXERCISED AT FISCAL YEAR END(1)
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR END ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James C. Granger -- $ -- 250,000 250,000 $190,225 $208,450
John J. Metil -- -- 100,000 100,000 80,257 85,463
Barry A. Fisher -- -- 75,000 75,000 47,818 57,910
Michel R. Halbouty 10,000 11,250 65,000 75,000 60,188 68,785
</TABLE>
- -----------------------
(1) Market value of underlying securities at fiscal year end minus the exercise
price
TERMINATION OF EMPLOYMENT AND CHANGE-OF-CONTROL ARRANGEMENTS
During fiscal 1997, the Board of Directors of the Company adopted a
change of control plan for the benefit of executive officers. Upon a change of
control of the Company, an executive officer will, upon termination of his
employment, be entitled to payment of an amount equal to such officer's base
salary immediately prior to the change of control, payable on or before the 30th
day following the termination of such officer's employment. An officer is not
entitled to such payment if he is offered employment following a change of
control by the successor to the Company or its business, provided such
employment is comparable to his employment with the Company and is at a base
salary level comparable to, or greater than, that paid by the Company. In the
event the employment of an officer is not terminated, or such officer is offered
employment by the successor and is employed, but such employment is terminated
within a period of one year following the change of control, the officer shall
be entitled to payment of an amount equal to his base salary, less compensation
actually paid during the period in which he was employed by the Company or a
successor entity subsequent to the change of control. The change of control
payment is limited to an amount not to exceed the safe harbor under Section 280G
of the Internal Revenue Code.
12
<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of November 30, 1999, the number of
shares of the Company's common stock beneficially owned by (i) each person known
to be the beneficial owner of five percent or more of the total issued and
outstanding shares of the Company's common stock, (ii) each director, (iii) each
of the Named Officers appearing in the Summary Compensation Table above and (iv)
all officers and directors as a group. Any shares reflected in the following
table which are subject to an option or a warrant are deemed to be outstanding
for the purpose of computing the percentage of the Company's issued and
outstanding common stock owned by the option or warrant holder but are not
deemed to be outstanding for the purpose of computing the percentage of the
Company's issued and outstanding common stock owned by any other person. Except
as otherwise indicated, each beneficial owner has sole voting and investment
power over the outstanding shares of which he has beneficial ownership.
Shares Beneficially Owned(1)
--------------------------------
Name of Beneficial Owner/Group Number Percent
------------------------------ ------ -------
Perkins Capital Management Inc.
730 East Lake Street
Wayzata, Minnesota 55391 1,065,859 6.6
George Latimer(2) 69,026 *
C. McKenzie Lewis III(3) 98,055 *
John E. Haugo(4) 43,476 *
John E. Lawler -- *
James C. Granger(5) 351,953 2.1
John J. Metil(6) 106,916 *
Barry A. Fisher(7) 80,157 *
Michel R. Halbouty(8) 75,000 *
All officers and directors as a group of 8 824,583 4.9
* Indicates an amount less than one percent
(1) The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission and, accordingly, may
include securities owned by or for, among others, the spouse, children or
certain other relatives of such person as well as other securities as to
which the person has or shares voting or investment power or has the right
to acquire within 60 days. The same shares may be beneficially owned by
more than one person.
(2) Includes 46,526 shares of common stock beneficially owned by Mr. Latimer
and options for the purchase of an aggregate of 22,500 shares of common
stock.
(3) Includes 35,055 shares of common stock beneficially owned by Mr. Lewis and
options and a warrant for the purchase of an aggregate of 63,000 shares of
common stock.
(4) Includes 28,476 shares of common stock beneficially owned by Mr. Haugo and
an option for the purchase of 15,000 shares of common stock.
(5) Includes 18,620 shares of common stock beneficially owned by Mr. Granger
and options for the purchase of an aggregate of 333,333 shares of common
stock.
(6) Includes 6,916 shares of common stock beneficially owned by Mr. Metil and
options for the purchase of an aggregate of 100,000 shares of common stock.
(7) Includes 5,157 shares of common stock beneficially owned by Mr. Fisher and
options for the purchase of an aggregate of 75,000 shares of common stock.
(8) Includes 45,000 shares of common stock beneficially owned by Mr. Halbouty
and options for the purchase of an aggregate of 30,000 shares of common
stock.
There are no arrangements known to the Company which at a later date
may result in a change in control of the Company.
13
<PAGE>
COMMON STOCK PERFORMANCE
The following graph compares cumulative total stockholder return on an
investment in the Company's common stock during the period from September 30,
1994 to September 30, 1999, with the Nasdaq Stock Market Index and Digital
Biometrics, Inc.'s primary competitor, Identix Inc. The cumulative total
stockholder return assumes an initial investment of $100 on September 30, 1994.
[PLOT POINTS GRAPH]
INDEXED AS OF: 9/30/94
SOURCE: CENTER FOR RESEARCH IN SECURITY PRICES AT THE UNIVERSITY OF CHICAGO
Digital Biometrics, Inc. Identix Inc. Nasdaq
9/30/94 100.000 100.000 100.000
3/31/95 118.966 103.921 107.728
9/29/95 98.276 407.779 138.067
3/29/96 46.552 352.886 146.292
9/30/96 51.724 301.913 163.845
3/31/97 28.455 262.704 162.617
9/30/97 35.352 358.783 224.968
3/31/98 21.559 266.625 246.566
9/30/98 17.890 188.206 228.773
3/31/99 18.110 209.787 332.109
9/30/99 38.800 262.704 371.516
The common stock of the Company has been traded on the Nasdaq National
Market since April 25, 1993, and was traded on the Nasdaq SmallCap Market prior
to that time. The Company's common stock is traded under the symbol DBII.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers and the holders of 10 percent or
more of the Company's stock to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of equity
securities of the Company. Based on the Company's review of copies of such
reports received by it, or written representations from reporting persons, the
Company believes that during fiscal year 1999 its directors and executive
officers filed all reports on a timely basis.
STOCKHOLDER PROPOSALS
Any stockholder who desires to submit a proposal for action by the
stockholders at the next annual meeting must submit such proposal in writing to
James C. Granger, Chairman, Digital Biometrics, Inc., 5600 Rowland Road,
Minnetonka, Minnesota 55343-4315 by September 9, 2000. Due to the complexity of
the respective rights of the stockholders and the Company in this area, any
stockholder desiring to propose such an action is advised to consult with his or
her legal counsel with respect to such rights. It is suggested that any such
proposal be submitted by certified mail, return receipt requested.
14
<PAGE>
Notice of a stockholder proposal which the stockholder has not
previously sought to include in the Company's proxy statement for the Annual
Meeting of Stockholders to be held in calendar 2001 must be submitted to the
Company by November 23, 2000, or management proxies will be allowed to use their
discretionary authority as outlined above.
PROXY SOLICITATION
The cost of this solicitation of proxies will be paid by the Company.
Proxies will also be solicited by mail, except that solicitation personally or
by telephone may also be made by the Company's regular employees who will
receive no additional compensation for their services in connection with the
solicitation. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation
materials and the annual report to beneficial owners of stock held by such
persons. The Company will reimburse such parties for their expenses in so doing.
ANNUAL REPORT TO STOCKHOLDERS
A copy of the 1999 Annual Report to Stockholders of the Company
accompanies this Proxy Statement. A copy of the Company's Annual Report on Form
10-K for fiscal year 1999 will be provided without charge upon written request
of any stockholder whose proxy is being solicited by the Board of Directors. The
written request should be directed to Stockholder Relations, Digital Biometrics,
Inc., 5600 Rowland Road, Minnetonka, Minnesota 55343-4315. No part of the 1999
Annual Report to Stockholders is incorporated herein and no part thereof is to
be considered proxy-soliciting material.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James C. Granger
James C. Granger
Chairman, President and Chief Executive Officer
Minnetonka, Minnesota
January 7, 2000
15
<PAGE>
EXHIBIT A
PROPOSED AMENDMENT TO ARTICLE III OF THE
DIGITAL BIOMETRICS, INC.
1992 RESTRICTED STOCK PLAN
Article III of the 1992 Restricted Stock Plan (which is the only
portion of the 1992 Restricted Stock Plan affected by Proposal 2) shall be
deleted and replaced by the following:
ARTICLE III.
SHARES SUBJECT TO PLAN
3.1 The total number of shares of common stock which is available for the
granting of Restricted Stock shall be 350,000 shares. If the Company shall
at any time hereafter subdivide, combine or reclassify its common stock, or
declare a dividend payable in common stock, the number of shares available
for granting of Restricted Stock hereunder shall be proportionately
increased or decreased, as the case may be, to prevent dilution or
inflation.
3.2 At all times during the term of this Plan, the Company shall reserve for
issuance and delivery such number of shares of common stock as will be
sufficient to satisfy the requirements hereof.
16
<PAGE>
EXHIBIT B
PROPOSED AMENDMENT TO SECTION 6 OF THE
DIGITAL BIOMETRICS, INC.
1998 STOCK OPTION PLAN
Section 6 of the 1998 Stock Option Plan (which is the only portion of the
1998 Stock Option Plan affected by Proposal 3) shall be deleted and replaced by
the following:
SECTION 6.
STOCK
The Stock to be optioned under this Plan shall consist of authorized but
unissued shares of Option Stock. One Million Four Hundred Thousand (1,400,000)
shares of Option Stock shall be reserved and available for options under the
Plan; provided, however, that the total number of shares of Option Stock
reserved for options under this Plan shall be subject to adjustment as provided
in Section 13 of the Plan. In the event that any outstanding option under the
Plan for any reason expires or is terminated prior to the exercise thereof, the
shares of Option Stock allocable to the unexercised portion of such option shall
continue to be reserved for options under the Plan and may be optioned
hereunder.
17
<PAGE>
[LOGO] DBI
DIGITAL BIOMETRICS, INC.
DIGITAL BIOMETRICS, INC.
ANNUAL MEETING OF STOCKHOLDERS
Lutheran Brotherhood Auditorium
625 Fourth Avenue South
Minneapolis, Minnesota
TUESDAY, FEBRUARY 8, 2000
3:30 P.M.
DIGITAL BIOMETRICS, INC.
5600 ROWLAND ROAD
MINNETONKA, MN 55343-4315 PROXY
- --------------------------------------------------------------------------------
The undersigned, a stockholder of Digital Biometrics, Inc. (the "Company"),
hereby appoints James C. Granger and John J. Metil, and each of them as proxies,
with full power of substitution, to vote on behalf of the undersigned the number
of shares which the undersigned is then entitled to vote, at the Annual Meeting
of the Stockholders of Digital Biometrics, Inc. to be held at the Lutheran
Brotherhood Auditorium, 625 Fourth Avenue South, Minneapolis, Minnesota, on
Tuesday, February 8, 2000, at 3:30 p.m., and any adjournments or postponements
thereof, upon the matters set forth below, with all the powers which the
undersigned would possess if personally present.
The undersigned hereby revokes all previous proxies relating to the shares
covered hereby and acknowledges receipt of the Notice and Proxy Statement
relating to the Annual Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. It will be voted on
the matters set forth on the reverse side of this form as directed by the
stockholder, but if no direction is made in the space provided, it will be voted
FOR the proposal to amend the 1992 Restricted Stock Plan, the proposal to amend
the 1998 Stock Option Plan, and all nominees to the Board of Directors.
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
provided or return it to Digital Biometrics, Inc., c/o Shareowner Services(SM)
P.O. Box 64873, St. Paul, MN 55164-9397.
[ARROW] PLEASE DETACH HERE [ARROW]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
<TABLE>
<S> <C>
1. Election of directors: 01 James C. Granger 04 John E. Haugo [ ] Vote FOR [ ] Vote WITHHELD
02 C. McKenzie Lewis III 05 John E. Lawler all nominees from all nominees
03 George Latimer 06 John J. Metil
______________________________________
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, | |
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |______________________________________|
2. Approval of Amendment to the 1992 Restricted Stock Plan to increase the
number of shares authorized for issuance thereunder by 100,000 shares. [ ] For [ ] Against [ ] Abstain
3. Approval of Amendment to the 1998 Stock Option Plan to increase the
number of shares authorized for issuance thereunder by 800,000 shares. [ ] For [ ] Against [ ] Abstain
4. Upon such other business as may properly come before the meeting and any adjournments or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED
FOR EACH PROPOSAL.
Address Change? Mark Box [ ]
Indicate changes below: Date ____________________________
______________________________________
| |
| |
|______________________________________|
Signature(s) in Box
Stockholder must sign exactly as the name
appears at left. When signed as a corporate
officer, executor, administrator, trustee,
guardian, etc., please give full title as
such. Both joint tenants must sign.
</TABLE>
