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
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box: [ ] Confidential, for Use of the
[ ] Preliminary Proxy Statement Commission Only (as permitted
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to [ ] Rule 240.14a-11(c)
or [ ] Rule 240.14a-12
Applied Biometrics, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rule 0-11(c)(1)(II), 14a-6(I)(1) or Item 22(a)(2) of
Schedule 14A
[ ] 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:
[APPLIED BIOMETRICS, INC. LETTERHEAD]
Dear Shareholder:
On behalf of the Board of Directors, I invite you to attend your
Company's Annual Meeting of Shareholders. The Annual Meeting will be held on
Monday, June 14, 1999 at 3:30 p.m. at the Marquette Hotel, 701 Marquette Avenue,
in Minneapolis, Minnesota.
We would like all our shareholders to be represented at the Annual
Meeting, in person or by proxy. To that end, our staff works earnestly to follow
up on proxies that are not returned. Please help us by taking a few minutes to
complete the enclosed proxy card and drop it in the mail even if you plan to
attend the Annual Meeting. Shareholders who attend the Annual Meeting may revoke
their proxies and vote in person if they desire. Your promptness is much
appreciated.
Very truly yours,
Andrew M. Weiss
Chief Executive Officer and President
APPLIED BIOMETRICS, INC.
---------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 14, 1999
Notice is hereby given that the Annual Meeting of Shareholders of
Applied Biometrics, Inc. (the "Company") will be held on June 14, 1999 at the
Marquette Hotel, 701 Marquette Avenue, Minneapolis, Minnesota 55402. The meeting
will convene at 3:30 p.m. for the following purposes:
1. To elect three directors to hold office until the next Annual
Meeting of Shareholders or until their successors are elected
and qualify:
2. To approve an amendment to the Company's Articles of
Incorporation to increase the Company's authorized shares of
common stock from 10,000,000 to 20,000,000 and to authorize
the creation of a class of undesignated stock;
3. To ratify and approve the appointment of independent public
accountants for the Company for the current fiscal year; and
4. To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 26,
1999 as the record date for the determination of shareholders entitled to notice
of and to vote at the meeting.
For the Board of Directors,
Patrick Delaney
SECRETARY
Burnsville, Minnesota 55337
April 30, 1999
To assure your representation at the meeting, please sign, date, and return your
proxy which is located on the outside of this envelope. A postage-paid envelope
is enclosed for this purpose. The proxy is solicited by management and may be
revoked or withdrawn by you at any time before it is exercised.
1
APPLIED BIOMETRICS, INC.
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished to the shareholders of Applied
Biometrics, Inc. (the "Company") in connection with the solicitation of proxies
by the Board of Directors of the Company to be voted at the Annual Meeting of
Shareholders to be held on June 14, 1999 or any adjournment thereof.
The cost of this solicitation will be borne by the Company. In addition
to solicitation by mail, officers, directors and employees of the Company may
solicit proxies by telephone, telegraph or in person. The Company may also
request banks and brokers to solicit their customers who have a beneficial
interest in shares registered in the names of nominees and will reimburse such
banks and brokers for their reasonable out-of-pocket expenses. The Company's
principal offices are located at 501 East Highway 13, Suite 108, Burnsville,
Minnesota 55337, its telephone number is (612) 890-1123 and its facsimile number
is (612) 890-1104. The mailing of this Proxy Statement to shareholders of the
Company commenced on or about May 10, 1999.
Any proxy may be revoked by request in person at the Annual Meeting or
by written notice mailed or delivered to the Secretary of the Company at any
time before it is voted. If not revoked, proxies will be voted as specified by
the shareholders. The shares represented by proxies that are signed but which
lack any such specification will be voted in favor of the slate of directors
proposed by the Board of Directors and listed herein and in favor of the
proposals set forth in the Notice of Annual Meeting of Shareholders.
The Company has outstanding only one class of stock, $.01 par value
Common stock of which 4,467,337 shares were issued and outstanding on April 26,
1999. Each share is entitled to one vote on all matters presented to
shareholders. Cumulative voting in the election of directors is not permitted.
Only shareholders of record at the close of business on April 26, 1999 will be
entitled to vote at the meeting. The presence, in person or by proxy, of the
holders of a majority of the shares of Common stock entitled to vote at the
Annual Meeting of Shareholders constitutes a quorum for the transaction of
business.
Under Minnesota law, each item of business properly presented at a
meeting of shareholders generally must be approved by the affirmative vote of
the holders of a majority of the voting power of the shares present, in person
or by proxy, and entitled to vote on that item of business. However, if the
shares present and entitled to vote on that item of business would not
constitute a quorum for the transaction of business at the meeting, then the
item must be approved by a majority of the voting power of the minimum number of
shares that would constitute such a quorum. Votes cast by proxy or in person at
the Annual Meeting of Shareholders will be tabulated by the election inspectors
appointed for the meeting and will determine whether or not a quorum is present.
The election inspectors will treat abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a
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quorum but as unvoted for purposes of determining the approval of the matter
submitted to the shareholders for a vote. If a broker indicates on the proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth as of April 1, 1999 the number and
percentage of outstanding shares of Common stock of the Company beneficially
owned by each person who is known to the Company to beneficially own more than
five percent (5%) of the Common stock of the Company, by each director and
nominee of the Company, by each executive officer named in the Summary
Compensation Table below, and by all directors and executive officers of the
Company as a group:
Name and Address of Number of Shares Percent
Beneficial Owner Beneficially Owned(1) of Class
---------------- --------------------- --------
David B. Johnson................................ 402,100(2) 9.0%
c/o Miller, Johnson & Kuehn, Incorporated
Suite 800 - Eighth Floor
5500 Wayzata Boulevard
Minneapolis, MN 55416
Aaron Boxer Revocable Trust..................... 307,000(3) 6.9%
c/o Miller, Johnson & Kuehn, Incorporated
Suite 800 - Eighth Floor
5500 Wayzata Boulevard
Minneapolis, MN 55416
Andrew M. Weiss (4)............................. 83,334 1.8%
Joseph A. Marino (5)............................ 148,929 3.3%
Demetre Nicoloff, M.D., Ph.D (4)(6)............. 109,100 2.4%
Jeffrey W. Green (4)............................ 56,600 1.3%
All directors, nominees and executive officers
as a group (6 persons) (4)...................... 433,563 9.2%
- ----------------------
* Less than 1%
(1) Unless otherwise indicated, each person has sole voting and dispositive
power over such shares.
(2) Based on a Schedule 13G dated February 12, 1998 and filed with the
Securities and Exchange Commission. Of the 402,100 shares reported, Mr.
Johnson has sole voting and dispositive power with respect to 107,450
shares and shares voting and dispositive power with respect to 294,650
shares.
(3) Based on a Schedule 13G dated February 12, 1998 and filed with the
Securities and Exchange Commission.
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(4) Includes the following number of shares which could be purchased under
stock options exercisable within sixty (60) days of April 1, 1999. Mr.
Weiss, 83,334 shares; Dr. Nicoloff, 88,267 shares; Mr. Green, 26,600
shares; and by all directors, nominees and executive officers as a
group, 230,701 shares. Includes options to purchase 28,200 shares held
by Dr. Nicoloff which will vest if he is re-elected to the Company's
Board of Directors at the Annual Meeting of Shareholders.
(5) Includes 29,166 shares held by Mr. Marino's minor children.
(6) Includes 5,000 shares held by Nicoloff Profit Sharing Plan and 7,500
shares held by Nicoloff Properties.
ELECTION OF DIRECTORS
(PROPOSAL #1)
The Board of Directors has nominated for election the three persons
named below and each has consented to being named a nominee. Mr. Weiss, Mr.
Green and Dr. Nicoloff are currently directors of the Company. It is intended
that proxies will be voted for such nominees. Each of the nominees was elected
at last year's Annual Meeting of Shareholders, except Mr. Weiss, who was elected
to the Board by the directors in March 1999. The Board of Directors believes
that each nominee named herein will be able to serve, but should any nominee be
unable to serve as a director, the persons named in the proxies have advised
that they will vote for the election of such substitute nominee as the Board of
Directors may propose.
The names of the nominees, their principal occupations for at least the
past five years and other information is set forth in the following table:
Principal Occupation Director
Name and Age and Other Directorships Since
- ------------ ----------------------- -----
Andrew M. Weiss Chief Executive Officer and President of the March
(42) Company since March 1, 1999. Acting President 1999
of INTELLX of Boulder, Colorado in 1998. From
1995 to 1998, Chief Executive Officer and
President of Vital Images, Inc.
[Minneapolis-based provider of diagnostic and
surgical visualization systems.] In 1994 and
1995, Vice-President of Global Sales and
Marketing of Marquette Medical Systems, a
Milwaukee, Wisconsin-based manufacturer of
patient monitoring systems.
Demetre Nicoloff, Dr. Nicoloff has been a cardiac surgeon for March
M.D., Ph.D. (65) more than 15 years, and is presently a Senior 1997
Partner of Cardiac Surgical Associates with
practices at the Minneapolis Heart Institute
and the Saint Paul Heart and Lung Institute.
Dr. Nicoloff is a member of the Board of
Directors of Optical Sensors, Inc. and Jundt
Associates Funds.
Jeffrey W. Green Co-founder and Chairman of the Board of June
(58) Hutchinson Technology, Inc. (a manufacturer of 1998
disk drive components). Mr. Green has been
Chairman of the Board of Hutchinson Technology,
Inc. since 1983 and served as its Chief
Executive Officer from January 1983 to May
1996. Mr. Green is also a director of Medwave,
Inc. (manufacturer of blood pressure measuring
devises) and of Contimed, Inc. (a manufacturer
of catheters).
MANAGEMENT RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED ABOVE
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OTHER INFORMATION REGARDING THE BOARD
BOARD MEETINGS
The Board of Directors met six times during 1998 and took action in
writing in lieu of a meeting once. None of the incumbent directors attended
fewer than 75% of the aggregate of the total number of Board meetings and
Committee meetings on which he served during 1998.
BOARD COMMITTEES
The Audit Committee of the Board of Directors, which is currently
composed of Dr. Nicoloff and Mr. Green, met once during 1998. Among other
duties, the Audit Committee reviews and evaluates significant matters relating
to the audit and internal controls of the Company, reviews the scope and results
of the audits by, and the recommendations of, the Company's independent auditors
and approves services provided by the auditors. The Audit Committee also reviews
the audited financial statements of the Company.
The Compensation Committee of the Board of Directors, which consists of
Dr. Nicoloff and Mr. Green, did not take action during 1998. The Compensation
Committee makes recommendations to the Board of Directors regarding the
employment practices and policies of the Company and the compensation paid to
Company officers and administers the Company's stock plans.
The Company does not have a Nominating Committee.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ending December 31,
1998, 1997 and 1996, the cash compensation paid by the Company, as well as
certain other compensation paid or accrued for those years, to Joseph A. Marino,
the Company's Chairman, Chief Executive Officer and President (the "Named
Executive"). None of the Company's other executive officers received more than
$100,000 in cash compensation during 1998.
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
Name and Principal Securities Underlying
Position Year Salary Options
-------- ---- ------ -------
Joseph A. Marino, Chairman 1998 $170,000 -0-
Chief Executive 1997 170,000 -0-
and President 1996 170,000 -0-
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OPTIONS GRANTED IN LAST FISCAL YEAR
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Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
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Number of % of Total
Securities Option
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted Fiscal Year ($/Sh) Date 5% 10%
- ------------------------------------------------------------------------------------------------------
Joseph Marino 40,000 19% 7.50 3/10/08 165,398 407,384
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Joseph Marino 110,000 53% 7.50 3/10/08 454,846 1,120,307
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FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT 12/31/98 OPTIONS AT 12/31/98 (1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Joseph A. Marino 300,000 100,000 $2,400,000 $800,000
- -------------------
(1) Based on the closing market price of $8.00 per share for the Company's
Common stock on December 31, 1998.
EMPLOYMENT AGREEMENT OF CHIEF EXECUTIVE OFFICER
Joseph A. Marino entered into an employment agreement with the Company
as of May 7, 1993 for a term of one year beginning January 1, 1994 and
thereafter continuing in effect from year to year unless terminated. Under the
employment agreement, as amended by Amendment No. 1 dated as of July 1, 1994,
Mr. Marino was paid an annual compensation of $170,000. In connection with the
Company's spin-off of Cardia, Inc. in 1999, Mr. Marino resigned as Chief
Executive Officer effective March 1, 1998, as noted below.
Subsequent to the 1998 year end, on March 1, 1999, Andrew M. Weiss
succeeded Mr. Marino as Chief Executive Officer and on that date entered into an
employment arrangement with the Company under which he is entitled to base
compensation at the rate of $175,000 per year. On March 1, 1999, the Company
granted to Mr. Weiss an option to purchase 250,000 shares of the Company's
Common stock at the closing market price on the day of grant of $8.00 per share.
The option granted to Mr. Weiss vested one-third on grant and will vest
one-third on each of March 1, 2000 and March 1, 2001. Mr. Marino will not be a
candidate for reelection to the Board at the shareholders meeting of June 14,
1999.
DIRECTOR COMPENSATION
Non-employee directors did not receive cash compensation from the
Company for their services as members of the Board of Directors during 1998. The
Company, in the past, has granted options to non-employee directors with the
shares subject to the option to vest in installments over a several year period.
On June 12, 1998, the Company granted options to purchase 40,000 shares to each
of its three
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non-employee directors, Mr. Delaney, Mr. Green and Dr. Nicoloff . The options
were granted at a price of $9.75, which was equal to fair market value on the
date of grant. The options vested as to 13,334 shares on the date of grant and
will vest with respect to 13,333 additional shares on the date of the annual
shareholders meetings during the two succeeding years at which these directors
are re-elected to the Board of Directors. The Minneapolis-based law firm of
Lindquist & Vennum P.L.L.P., of which Patrick Delaney, a Director of the Company
during 1998 and the current Secretary of the Company, is a partner was paid
legal fees by the Company during 1998. Mr. Delaney voluntarily resigned as a
Director on April 19, 1999 and will not be a candidate for election to the Board
at the Shareholders' meeting of June 14, 1999.
Board Compensation Committee Report
This is a report of the Compensation Committee of the Board of
Directors of the Company. This report shall not be deemed incorporated by
reference into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934 and shall not otherwise be deemed to be filed under either
such Act.
COMPENSATION PHILOSOPHY.
The philosophy of the Company is to provide competitive levels of
compensation that are consistent with the Company's annual and long-term
performance goals, recognize individual initiative and achievements and assist
the Company in attracting and retaining qualified executives.
BASE SALARY.
Executive base salary is reviewed annually and adjustments, if any, are
based upon levels of responsibility, experience, external pay practices and the
rate of inflation.
CASH BONUSES.
Bonuses are awarded to executive officers in consideration of
contributions to the Company and the Company's overall performance. No bonuses
were paid to executive officers in 1998.
STOCK OPTIONS.
The Company's Stock Plan includes executive officers. Stock options are
generally granted to executive officers at the time they are elected. The
Compensation Committee has adopted the position that stock ownership by
management and stock-based performance compensation arrangements are beneficial
in aligning management and shareholders' interest in enhancing shareholder
value.
CHIEF EXECUTIVE OFFICER COMPENSATION.
Joseph A. Marino entered into an employment agreement with the Company
as of May 7, 1993 for a term of one year beginning January 1, 1994 and
thereafter continuing in effect from year to year unless terminated. Under the
employment agreement, as amended by Amendment No. 1 dated as of July 1, 1994,
Mr. Marino was paid an annual compensation of $170,000. On March 1, 1999, the
Company hired Andrew M. Weiss as Chief Executive Officer and President.
BOARD ACTION.
All recommendations of the Compensation Committee have been or are
subject to Board of Director approval.
Submitted by the Compensation Committee of the Board of Directors
DEMETRE NICOLOFF, M.D., PH.D.
JEFFREY W. GREEN
7
PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Company include in this
Proxy Statement a line graph presentation comparing cumulative, five-year share
returns on an indexed basis with a broad market index and either a
nationally-recognized industry standard or an index of peer companies selected
by the Company. The Company has chosen the use of the Nasdaq Stock Market (U.S.
Companies) Index as its broad market index and has created a peer index of
Nasdaq Surgical, Medical and Dental Instruments and Suppliers stocks which is
composed of Nasdaq issuers (U.S. Companies) with a SIC code beginning with the
digits 384. The Company has presented a table below that compares the cumulative
total return as of the end of each of the Company's last five fiscal years on
$100 invested as of December 31, 1993, with the Nasdaq Stock Market Index and
the Company created Surgical, Medical and Dental Instruments and Suppliers
Index, assuming the reinvestment of all dividends:
COMPANY INDEX MARKET INDEX PEER INDEX
12/31/93 100.000 100.000 100.000
12/30/94 84.444 97.752 16.575
12/29/95 151.111 138.265 162.507
12/31/96 231.111 170.025 152.275
12/31/97 120.000 208.532 173.768
12/31/98 146.667 293.832 194.534
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AMENDMENT OF ARTICLES OF INCORPORATION
(PROPOSAL NO. 2)
In April 1999, the Board of Directors of the Company adopted a
resolution, subject to shareholder approval and ratification, approving an
amendment to the Company's Articles of Incorporation to increase the aggregate
number of shares of common stock authorized for issuance from 10,000,000 to
20,000,000 and authorizing the creation of 5,000,000 shares of undesignated
stock that would be available for issuance by the Board of Directors in the
future. The relative rights, preferences and other terms of the undesignated
stock would be determined by the Board prior to any issuance. A copy of the
proposed amendment is attached as Exhibit A.
As of April 26, 1999, of the 10,000,000 shares of common stock
currently authorized, the Company had (i) 4,467,337 shares outstanding, (ii)
677,167 shares reserved for issuance pursuant to options, warrants, convertible
securities and other arrangements, and (iii) 246,580 shares authorized and
available for future issuance. If this proposal is adopted to increase the
Company's authorized shares of Common stock to 20,000,000, the Company will have
14,608,916 shares of common stock authorized and available for future issuance.
The proposed increase in the number of shares of common stock
authorized for issuance by the Company is designed to ensure that shares of
common stock will be available, if needed, for various corporate purposes
including, but not limited to, stock splits, stock dividends and other
distributions. Although the Company plans to seek additional equity capital
during fiscal 1999, it currently has no arrangements, commitments or
understandings with respect to the issuance of any of the additional shares that
would be authorized by the proposed amendment; however, the Board believes it is
desirable to have the authorized capital of the Company sufficiently flexible so
that future business needs and corporate opportunities may be dealt with by the
Board of Directors without undue delay or the necessity of holding a special
shareholders' meeting.
The Board of Directors believes the creation of undesignated stock and
the ability to issue multiple classes of stock is in the best interests of the
Company and its shareholders in that the existence of such shares would provide
the Board with flexibility in managing the Company's capital structure by
allowing the issuance of additional equity, rather than debt, when the Board
deems it to be advantageous. The undesignated stock could be issued in
connection with, among other things, stock dividends, financing transactions,
corporate mergers, acquisitions, employee benefit plans and other corporate
purposes. The availability of undesignated stock would allow the issuance of
such shares in the future without the expense and delay of a special
Shareholder's Meeting. The shares of undesignated stock would be available for
issuance without further shareholder action unless such action were required by
applicable law or the rules of the Nasdaq Stock Market or any other stock
exchange on which the Company's securities may then be listed or traded.
The proposed undesignated stock would be "blank check" undesignated
stock, which means that the Board of Directors would have the discretion, from
time to time, to determine the designations and relative voting, distribution,
dividend, conversion, liquidation, and other rights, preferences, and
limitations of undesignated stock, including, among other things: (i) the
designation of each class or series and number of shares in a class or series;
(ii) the dividend rights, if any, of the class or series; (iii) the redemption
provisions, if any, of the shares; (iv) the preference, if any, to which any
class or series would be entitled in the event of the liquidation or
distribution of the Company's assets; (v) the provisions of a purchase,
retirement or sinking fund, if any, to accommodate redemption of the
undesignated stock; (vi) the rights, if any, to convert or exchange the shares
into or for other securities; (vii) the voting rights, if any (in addition to
any prescribed by law), of the holders of the shares of the class or series;
(viii) the
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conditions or restrictions, if any, on specified actions of the Company
affecting the rights of the shares; and (ix) any other preferences, privileges,
powers, rights, qualifications, limitations or restrictions of or on the class
or series. Depending on the rights and preferences designated for any particular
series, issuances of undesignated stock could have the effect of diluting
shareholders' equity, earnings per share and voting rights attributable to the
common stock. In so designating any of these shares, the Board could designate
the stock as preferred stock.
The Board of Directors will make any determination to issue shares of
undesignated stock based on its judgment at the time as to the best interests of
the Company and its shareholders. Although the Board of Directors has no current
plans of doing so, it could issue a series of undesignated stock that might,
depending on the terms of such series, impede or discourage an attempt to obtain
control of the Company by means of a merger, tender offer, proxy contest or
other means that the Board of Directors determines not to be in the best
interests of the Company and its shareholders. Under certain circumstances, for
example, such shares could be used to create voting impediments or to deter
persons or entities seeking to effect a takeover or otherwise gain control of
the Company. The issuance of Undesignated Stock could also be used to dilute the
stock ownership of a potential acquirer. Such shares could be sold in public or
private transactions to purchasers who might side with the Board of Directors in
opposing a takeover bid that the Board of Directors determines not to be in the
best interests of the Company and its shareholders. In addition, shares of
Undesignated Stock could be used in connection with the adoption by the Board of
a shareholder rights plan in which rights to purchase shares of Undesignated
Stock could become exercisable by holders of Common stock upon the occurrence of
certain triggering events. The existence of such a shareholder rights plan could
delay, impede or prevent offers for the Company that the Board of Directors
determines not to be in the best interests of the Company and its shareholders.
While the Board has in the past discussed the merits of a shareholder
rights plan and may in the future decide to adopt such a plan, the Board of
Directors has no current arrangements, agreements or understandings regarding
the adoption of a shareholder rights plan or for the issuance of any series of
undesignated Stock, should the proposed amendment to the Company's Articles of
Incorporation be approved and adopted.
If adopted by the shareholders, the proposed amendment will be
accomplished by the filing of Articles of Amendment with the Secretary of State
of the State of Minnesota, which would be expected to be accomplished promptly
following shareholder approval.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the Common stock
of the Company, voting at the meeting in person or by proxy, is required for the
approval of the increase in authorized shares of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" ADOPTION OF PROPOSAL 2.
10
APPROVAL OF AUDITORS
(PROPOSAL #3)
PricewaterhouseCoopers LLP, independent public accountants, have been
the auditors for the Company since 1987. They have been reappointed by the Board
of Directors as the Company's auditors for the current fiscal year and
shareholder approval of the appointment is requested. In the event the
appointment of PricewaterhouseCoopers LLP should not be approved by the
shareholders, the Board of Directors will make another appointment to be
effective at the earliest feasible time.
A representative of PricewaterhouseCoopers LLP is expected to be
present at the Annual Meeting of Shareholders, will have an opportunity to make
a statement if he or she desires to do so, and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP.
-----------------------
SHAREHOLDER PROPOSALS
The rules of the Securities and Exchange Commission permit shareholders
of a company, after timely notice to the Company, to present proposals for
shareholder action in the Company's proxy statement where such proposals are
consistent with applicable law, pertain to matters appropriate for shareholder
action and are not properly omitted by Company action in accordance with the
proxy rules. Shareholder proposals for the 2000 Annual Meeting of Shareholders
prepared in accordance with the proxy rules must be received by the Company in
writing no later than January 15, 2000. Additionally, if the Company receives
notice of a shareholder proposal after April 2, 2000, the proposal will be
considered untimely pursuant to SEC rule 14a-4 and 14a-5(d) and the persons
named in proxies solicited by the Board of Directors of the Company for its 2000
Annual Meeting of Shareholder may exercise discretionary voting power with
respect to the proposal.
11
GENERAL
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors to file initial reports of ownership
and reports of changes in ownership with the Securities and Exchange Commission.
Executive officers and directors are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on a
review of the copies of such forms furnished to the Company and written
representations from the Company's executive officers and directors, the Company
believes that all such reports have been filed in a timely manner, except that
Mr. Morino, Mr. Dalaney, Dr. Nicoloff and Mr. Buonomo filed forms 5 in May 1999
reporting the June 1998 grant of options by the Company to them.
OTHER BUSINESS
The management of the Company knows of no matters other than the
foregoing to be brought before the meeting. However, the enclosed proxy gives
discretionary authority in the event that any additional matters should be
presented.
The Company's 10-K Annual Report to the Securities and Exchange
Commission for the fiscal year ended December 31, 1998 is enclosed herewith.
By Order of the Board of Directors,
Andrew M. Weiss
CHIEF EXECUTIVE OFFICER AND PRESIDENT
12
EXHIBIT A
PROPOSAL 2
Article 5 of the Company's Articles of Incorporation is hereby amended
to read as follows
The aggregate number of shares that the Corporation has authority to
issue shall be twenty-five million (25,000,000) shares, which shall consist of
Twenty Million (20,000,000) shares that shall be designated as common shares,
$.01 par value and five million (5,000,000) of undesignated shares. The Board of
Directors of the Corporation is authorized to establish from the undesignated
shares by resolution adopted and filed in the manner provided by law, one or
more classes or series of shares, to designate each class or series, and to fix
the relative powers, qualifications, restrictions, rights and preferences of
each such class or series, including, without limitation, the right to create
voting, dividend and liquidation rights and preferences greater than those of
common stock. The Board of Directors may designate such shares as shares of
Preferred Stock or may designate such shares as additional common shares.
A-1
PROXY
APPLIED BIOMETRICS, INC.
ANNUAL MEETING OF SHAREHOLDERS - JUNE 14, 1999
The undersigned hereby appoints Andrew M. Weiss, Chief Executive Officer
and Patrick Delaney, Secretary of the Company (the "Proxies"), each with the
power to appoint his substitute, and hereby authorizes them to represent and to
vote, as designated below, all the shares of Common stock of Applied Biometrics,
Inc., held of record by the undersigned on April 26, 1999, at the ANNUAL MEETING
OF SHAREHOLDERS to be held on June 14, 1999, or any adjournment thereof.
(1) ELECTION OF |_| FOR all nominees |_| WITHHOLD AUTHORITY
DIRECTORS: (except as marked below) to vote for nominees listed
ANDREW M. WEISS, DEMETRE NICOLOFF, M.D., PH.D., AND JEFFREY W. GREEN
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
(2) PROPOSAL TO AMEND ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED SHARES
OF COMMON STOCK FROM 10,000,000 to 20,000,000 AND TO AUTHORIZE 5,000,000
UNDESIGNATED SHARES:
|_| FOR |_| AGAINST |_| ABSTAIN
(3) PROPOSAL TO RATIFY AND APPROVE THE APPOINTMENT OF PRICEWATERHOUSECOOPERS
LLP FOR THE CURRENT FISCAL YEAR.
|_| FOR |_| AGAINST
(continued, and to be completed and signed on the reverse side)
(continued from the other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL
BE VOTED IN FAVOR OF THE PROPOSALS.
Dated:___________________________, 1999
Signed:________________________________
Signature of Shareholder
Signed:________________________________
Signature of Shareholder
Please vote, date and sign this proxy as
your name is printed hereon. When
signing as attorney, executory
administrator, trustee, guardian, etc.
give full title as such. If the stock is
held jointly, each owner should sign. If
a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.