UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
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:
[X] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
SAC TECHNOLOGIES, 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):
[ ] 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 transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
________________________________________________________________________________
[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
3) Filing Party:
________________________________________________________________________________
4) Date Filed:
________________________________________________________________________________
PRELIMINARY COPY
SAC TECHNOLOGIES, INC.
1285 CORPORATE CENTER DRIVE
SUITE NO. 175
EAGAN, MINNESOTA 55121
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
(the "Meeting") of SAC Technologies, Inc., d/b/a BIO-key International (the
"Company"), which will be held at Best Western Yankee Square Inn, 3450
Washington Drive, Eagan Minnesota, on Wednesday, February 27, 2002 at 1:30 P.M.
Central Time. Your Board of Directors and management look forward to meeting
shareholders able to attend.
As shareholders, you are being asked to approve amendments to our
Amended and Restated Articles of Incorporation ("Articles of Incorporation") to
increase the number of shares of common stock we are authorized to issue from
20,000,000 to 60,000,000 and to change our name from "SAC Technologies, Inc." to
"Bio-Key International, Inc." No other business will be considered at the
Meeting. Your Board of Directors recommends a vote FOR the approval of the
amendments to our Articles of Incorporation.
Over the last six months, while operating on restricted budgets, our
efforts have resulted in significant advancements in product development, market
engagement and meeting the objectives of our business plan. In order to take
advantage of the opportunities that now present themselves, to increase
shareholder value and to build the infrastructure necessary for us to compete in
the biometric market place, we remain in need of and are seeking additional
capital.
We recently completed the first steps to attracting additional capital
by restructuring our existing financing. As explained in greater detail in the
attached Proxy Statement, we entered into a recapitalization transaction
pursuant to which we were able to convert approximately $4.6 million of short
term debt into long term obligations, raise $1,065,000 of additional financing
and obtain a commitment for an additional $1,080,000. In order to complete this
transaction, we issued promissory notes and debentures which are convertible
into shares of common stock which exceed the number of shares we are authorized
to issue.
Under the terms of our agreement, and in order to obtain any additional
financing under the agreement, we are required to amend our Articles of
Incorporation to increase the number of shares we are authorized to issue. In
order to do this, we need your approval. Failure to approve this amendment will
result in our being in default under the promissory note we issued in the
transaction which is secured by a pledge of substantially all of our assets.
This transaction was required in order to raise the financing necessary
to continue to execute our business plan and keep us moving forward in the
marketplace. Your Broad of Directors and management believe that this was the
only alternative available to enable us to
continue operations and provide our shareholders with an opportunity to realize
any future value. We also believe that we are now better positioned to attract
additional capital to help us capture a share of the growing biometric market,
provided that we can obtain shareholder approval of the proposed amendments to
our Articles of Incorporation. For these and the reasons set forth in greater
detail in the attached Proxy Statement, we recommend and strongly urge each
shareholder to vote FOR the proposed amendments to our Articles of
Incorporation.
Regardless of the number of shares you own, even if you plan to attend
the Meeting, it is very important that your shares be represented and voted at
the Meeting. We ask that you promptly complete, sign, date and mail the enclosed
proxy voting FOR both proposals. A non-voted proxy or an abstention is the same
as a vote against, so please vote FOR both proposals and mail today.
We wish to thank our shareholders for their participation and support.
Sincerely,
-----------------------------
Jeffry R. Brown
Chairman of the Board and
Chief Executive Officer
PLEASE CAREFULLY READ THIS LETTER AND THE ATTACHED PROXY STATEMENT. YOUR VOTE
FOR THE PROPOSALS IS NEEDED.
2
PRELIMINARY COPY
SAC TECHNOLOGIES, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 27, 2002
To the Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of SAC Technologies, Inc. (the "Company") will be held at Best
Western Yankee Square Inn, 3450 Washington Drive, Eagan, Minnesota, 55121, on
Wednesday, February 27, 2002 at 1:30 P.M. Central Time for the following
purposes:
(1) To authorize an amendment to the Company's Amended and
Restated Articles of Incorporation ("Articles of Incorporation") to increase the
number of shares of common stock the Company is authorized to issue from
20,000,000 to 60,000,000; and
(2) To authorize an amendment to the Company's Articles of
Incorporation to change the Company's name from "SAC Technologies, Inc." to
"Bio-Key International, Inc."
No other business will be considered at the Meeting.
Only shareholders of record as of the close of business on January 3,
2002 will be entitled to vote at the Meeting and any adjournment(s) or
postponement(s) thereof.
All shareholders are cordially invited to attend the Meeting. However,
to assure your representation at the Meeting, you are urged to complete, sign,
date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose.
By Order of the Board of Directors,
----------------------
Jeffry R. Brown
Chairman of the Board and
Chief Executive Officer
Eagan, Minnesota
January __, 2002
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO SIGN, DATE AND PROMPTLY
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
PRELIMINARY COPY
SAC TECHNOLOGIES, INC.
1285 CORPORATE CENTER DRIVE, SUITE NO. 175
EAGAN, MINNESOTA 55121
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of
SAC Technologies, Inc. (the "Company") to be voted at the Special Meeting of
Shareholders (the "Meeting") of the Company to be held at Best Western Yankee
Square Inn, 3450 Washington Drive, Eagan, Minnesota, 55121, on Wednesday,
February 27, 2002 at 1:30 P.M. Central Time, and at any adjournment(s) or
postponement(s) thereof for the purposes set forth in the accompanying Notice of
Special Meeting of Shareholders. The proxy solicitation materials were mailed on
or about January __, 2002 to all shareholders entitled to vote at the Meeting.
RECORD DATE AND SHARE OWNERSHIP
Shareholders of record at the close of business on January 3, 2002 (the
"Record Date") are entitled to notice of and to vote at the Meeting, and at any
adjournment(s) or postponement(s) thereof. At the Record Date, 12,528,346 shares
of common stock, $.01 par value per share, were issued and outstanding.
REVOCABILITY OF PROXIES
The execution of a proxy will not affect a shareholder's right to
attend the Meeting and vote in person. Any proxy given pursuant to this
solicitation may be revoked by the person giving it at any time before the vote
at the Meeting by filing with an officer of the Company either (i) a written
notice of revocation; or (ii) a proxy bearing a later date than the most
recently submitted proxy. Attendance at the Meeting will not, by itself, revoke
a proxy.
The mailing address of the Company's executive office is 1285 Corporate
Center Drive, Suite No. 175, Eagan, Minnesota, 55121.
VOTING AND SOLICITATION
Each share of common stock is entitled to one vote. The affirmative
vote of a majority of the outstanding shares of common stock is required to
approve the amendments to the Company's Amended and Restated Articles of
Incorporation ("Articles of Incorporation") to increase the number of shares of
common stock the Company is authorized to issue from 20,000,000 to 60,000,000
and to change the Company's name from "SAC Technologies, Inc." to "Bio-Key
International, Inc." No other business will be considered at the Meeting.
Proxies which are validly executed by shareholders and which are
received by the Company no later than the business day preceding the Meeting
will be voted in accordance with
1
the instructions contained thereon. If no instructions are given, the proxy will
be voted in accordance with the recommendations of the Board of Directors. For
the reasons set forth in more detail in this Proxy Statement, the Board of
Directors recommends a vote FOR the approval of the amendment to the Company's
Articles of Incorporation to increase the number of authorized shares of common
stock to 60,000,000 and FOR the approval of the amendment to the Company's
Articles of Incorporation to change the Company's name to "Bio-Key
International, Inc."
The cost of this proxy solicitation will be borne by the Company. In
addition to the use of mail, proxies may be solicited in person or by telephone
by employees of the Company without additional compensation. The Company will
reimburse brokers and other persons holding stock in their names or in the names
of nominees for their expenses incurred in sending proxy material to principals
and obtaining their proxies.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The Company's bylaws provide that the shareholders holding a majority
of the outstanding shares entitled to vote on the Record Date must be present in
person or represented by proxy at the Meeting in order to constitute a quorum
for the transaction of business. Abstentions and broker non-votes will be
counted for the purpose of determining a quorum but will not be counted in
voting on the amendments to the Company's Articles of Incorporation.
2
PROPOSAL 1
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK THE COMPANY IS
AUTHORIZED TO ISSUE FROM 20,000,000 TO 60,000,000
The Company's Board of Directors has adopted and determined to submit
to the shareholders of the Company a resolution to amend the Company's Articles
of Incorporation to increase the number of shares of common stock the Company is
authorized to issue from 20,000,000 to 60,000,000. A true and correct copy of
the proposed amendment is attached hereto as Exhibit "A." The statements made in
this Proxy Statement regarding this proposed amendment should be read in
conjunction with and are qualified in their entirety by reference to Exhibit
"A."
OUTSTANDING AND RESERVED SHARES
The Company is currently authorized to issue 20,000,000 shares of
common stock, $0.01 par value per share. As of the Record Date, there were
outstanding 12,528,346 shares of common stock and a substantial number of
additional securities convertible into shares of common stock. At this time, the
Company has insufficient authorized but unissued shares to cover the exercise or
conversion of these securities and is contractually obligated to increase the
number of shares of common stock it is authorized to issue to 60,000,000. For
this and the other reasons more fully set forth below, your Board of Directors
recommends that shareholders vote FOR this Proposal.
RECAPITALIZATION TRANSACTION
On November 26, 2001, the Company completed a comprehensive
recapitalization transaction (the "Transaction") with The Shaar Fund, Ltd. (the
"Fund"). As a result of the Transaction, the Company converted approximately
$4.6 million of short term debt and accruals into long term convertible notes,
obtained $1.065 million of additional funding, and issued shares of its newly
designated Series B Convertible Preferred Stock, $0.01 par value per share (the
"Series B Shares"), in exchange for all of the issued and outstanding shares of
its Series A Convertible Preferred Stock and all accrued dividends and interest
due thereon. Notes in the principal amount of approximately $4 million are
secured by a pledge of substantially all assets of the Company, including its
intellectual property. Under the terms of the Transaction, the Fund agreed to
provide up to $1.08 million of additional financing in monthly installments
during the six (6) month period commencing March 1, 2002. The Fund's obligation
to provide this financing is conditioned upon, among other things, the approval
of this Proposal and the average closing bid prices of the Company's common
stock during the calendar month preceding the advance exceeding $1.00 per share.
All proceeds from the Transaction have or will be utilized for working capital
and other general corporate purposes.
Your Board of Directors believes that the Transaction has improved the
Company's balance sheet and has better positioned the Company to execute its
business plan. Your Board of Directors also believes that the continued survival
of the Company is dependent upon obtaining
3
additional financing from the Fund and other sources which cannot be done unless
this Proposal is approved by the shareholders.
The material terms of the convertible securities issued to the Fund in
the Transaction are set forth below:
* 5% Convertible Debenture. A 5% Convertible Debenture in the principal
amount of $539,625.93 was issued in exchange for the cancellation of an
outstanding debenture in the principal amount of $418,000 and accrued
interest of $121,625.93. The 5% Debenture is due September 30, 2003,
accrues interest at the rate of 5% per annum payable quarterly in
arrears commencing August 31, 2002, may be prepaid without penalty, and
is convertible into shares of common stock at a per share conversion
price equal to the lesser of $0.75 or a 22% discount to the average of
the closing bid prices of the common stock during the five trading days
preceding conversion. Assuming conversion as of the Record Date, the
principal amount of the 5% Debenture would be convertible into ________
shares of common stock. In the event of a decline in the market price
of the common stock, the Company will be required to issue an
indeterminate number of additional shares of common stock upon
conversion of the Debenture.
* No Interest Convertible Debenture. During the past two years, the
Company has accrued fines and penalties under a registration rights
agreement with the Fund in the amount of approximately $1,312,500. The
Fund converted this accrual into a Convertible Debenture in the
principal amount of $1,000,000. The Debenture is due September 30,
2003, does not accrue interest, may be prepaid without penalty, and is
convertible into shares of common stock at a conversion price of $0.75
per share. The principal amount of the Debenture is convertible into
1,333,333 shares of common stock.
* Secured Convertible Note. During the past 18 months, the Company has
obtained unsecured loans from the Fund in the aggregate principal
amount of $2,770,000. The Fund converted this amount and associated
accrued interest of $263,377.78 together with additional financing of
$1,065,000 into a Convertible Note in the principal amount of
$4,092,920. The Convertible Note is due September 30, 2003, is secured
by a pledge of substantially all of the Company's assets, including its
intellectual property, accrues interest at the rate of 10% per annum
payable quarterly in arrears commencing September 30, 2002, may be
prepaid without penalty and is convertible into shares of common stock
at a conversion price of $0.75 per share. The security interest
terminates upon the Company obtaining $5,000,000 of additional equity
financing. The principal amount of the Note is convertible into
5,457,226 shares of common stock. Subject to the satisfaction of
certain conditions, the Fund agreed to provide up to $1,080,000 of
additional financing through monthly advances in the amount of $180,000
during the six (6) month period commencing March 1, 2002. The advances,
if any, will be made pursuant to a Convertible Note on the terms
described above.
* Series B Shares. The Company issued 21,430 Series B Shares in exchange
for all 18,449 outstanding shares of Series A Convertible Preferred
Stock and all accrued
4
dividends and interest due thereon. The Series B Shares accrue
dividends at the rate of 9% per annum which are payable semi annually
in cash, or at the option of the Company in additional shares of common
stock, are redeemable at the option of the Company and are convertible
into shares of common stock at a per share conversion price equal to
the lesser of $0.75 or a 22% discount to the average of the closing bid
prices of the common stock during the five trading days preceding
conversion. Assuming conversion as of the Record Date, the $2,143,000
face amount of the Series B Shares would be convertible into __________
shares of common stock. In the event of a decline in the market price
of the common stock, the Company will be required to issue an
indeterminate number of additional shares of common stock upon
conversion of the Series B Shares.
* Warrants. The Company issued warrants to purchase 4,000,000 shares of
common stock at an exercise price of $1.00 per share.
Although the Debentures, the Secured Convertible Note, Series B Shares
and Warrants may be converted into an aggregate of at least 13,647,892 shares of
common stock, the terms of these securities preclude the Fund from exercising or
converting such securities if such exercise or conversion would result in it
beneficially owning in excess of 4.99% of the Company's common stock.
Under its agreement with the Fund, the Company is required to increase
the number of shares of common stock it is authorized to issue from 20,000,000
to 60,000,000 by no later than February 28, 2002. The Company's failure to do so
would constitute an event of default under the Secured Convertible Note. If this
were to occur, the Company would be required to immediately repay all
outstanding amounts due under the Note. Since the Note is secured by the pledge
of substantially all assets of the Company, the Company's failure to repay such
indebtedness could result in the Fund foreclosing on the Company's assets. The
Fund's obligation to provide additional financing to the Company is conditioned
upon, among other things, the approval of this Proposal. Accordingly, in the
event that this Proposal is not approved, the Fund would be under no obligation
to provide any additional financing to the Company.
PURPOSES FOR AND EFFECTS OF PROPOSAL
In addition to the securities recently issued to the Fund, the Company
has issued options and warrants to purchase 5,634,265 additional shares of
common stock to employees, consultants and others. The principal purpose for the
Proposal is to comply with the Company's existing obligations to the Fund and to
the holders of its other convertible securities and to avoid an immediate
foreclosure on the Company's assets.
As set forth in the Company's filings with the Securities and Exchange
Commission, the Company anticipates that it will need substantial additional
capital to fund the continued operation of its business and commercialize its
technology and products. Unless this Proposal is approved, the Company will have
virtually no ability to raise additional financing. In such event, the Fund
would be under no obligation to provide any additional financing to the Company.
In addition, since substantially all of the Company's assets have been pledged
and the Company has
5
no authorized but unissued shares of common stock available for future issuance,
the Company would have no ability to raise any significant debt financing or any
additional equity capital.
In addition to the shares of common stock needed to meet the Company's
existing obligations and to raise additional capital, the Company may need to
issue additional shares of common stock for other corporate purposes, including
stock splits, stock dividends or other obligations, acquisitions, or to attract
or retain employees, advisors or consultants. In many of these situations the
Company may be required to act quickly, such that obtaining shareholder approval
to authorize the issuance of such additional shares would not be possible. Your
Board of Directors believes that it is important to have the flexibility to act
promptly and in the best interests of the Company's shareholders.
The additional shares of common stock to be authorized by this Proposal
would be available for issuance without further action by the Company's
shareholders, unless such action is required by applicable law or rules of any
stock exchange on which the Company's common stock may be listed. As of the date
of this Proxy Statement, the Company's common stock is not listed on Nasdaq or
any stock exchange.
The additional shares of common stock to be authorized by this Proposal
would have identical rights to the currently outstanding shares of common stock.
Increasing the number of shares of common stock the Company is authorized to
issue and the issuance of any such additional shares would not affect the rights
of the holders of currently outstanding shares of common stock, except for
effects that are incidental to the increase, such as dilution of any earnings
per share and reduction of the relative voting rights of such current holders.
Holders of common stock do not have preemptive rights to subscribe for or
purchase any part of any issue of common stock or securities convertible into
common stock.
Although neither the Board of Directors nor the management of the
Company views this proposal as an anti-takeover measure, the Company could use
authorized but unissued common stock to frustrate persons seeking to effect a
takeover or otherwise gain control of the Company. For example, the Company
could privately place shares of the common stock with purchasers who might side
with the Board of Directors in opposing a hostile takeover bid or issue shares
to a holder which would, thereafter, have sufficient voting power to assure that
any proposal to amend or repeal the Bylaws or certain provisions of the Articles
of Incorporation would receive the requisite vote.
CONCLUSION
Your Board of Directors believes that the Company's continued survival
and ability to obtain additional financing from the Fund or any other source is
dependent upon approval of this Proposal. For all of the forgoing reasons, your
Board of Directors recommends that shareholders vote FOR this Proposal.
6
VOTE REQUIRED FOR APPROVAL
Under applicable Minnesota law and the Articles of Incorporation,
approval of Proposal 1 requires the affirmative vote of the holders of at least
a majority of the shares of common stock outstanding as of the Record Date. An
abstention or failure to vote on this proposal is not an affirmative vote and
will, therefore, have the same effect as a negative vote on this proposal at the
Meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO 60,000,000.
PROPOSAL 2
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO
CHANGE THE COMPANY'S NAME FROM "SAC TECHNOLOGIES, INC." TO
"BIO-KEY INTERNATIONAL, INC."
The Company's Board of Directors has adopted and determined to submit
to the shareholders of the Company a resolution to amend the Company's Articles
of Incorporation to change the Company's name from "SAC Technologies, Inc." to
"Bio-Key International, Inc." A true and correct copy of the proposed amendment
is attached hereto as Exhibit "B." The statements made in this Proxy Statement
regarding this proposed amendment should be read in conjunction with and are
qualified in their entirety by reference to Exhibit "B."
REASONS FOR PROPOSAL
Your Board of Directors believes that the Company has been a pioneer in
the development of biometric identification technologies and that the Company's
current name does not sufficiently identify the Company's business. The
Company's various biometric security solutions are marketed under names
utilizing the words "Bio-key". Your Board of Directors believes that changing
the Company's name to "Bio-Key International, Inc." will create a natural
association between the Company, its products and market applications. For the
past several months, the Company has been operating under the fictitious name
"Bio-Key International" which appears to have been well received in the market.
VOTE REQUIRED FOR APPROVAL
Under applicable Minnesota law and the Articles of Incorporation,
approval of Proposal 2 requires the affirmative vote of the holders of at least
a majority of the shares of common stock outstanding as of the Record Date. An
abstention or failure to vote on this proposal is not an affirmative vote and
will, therefore, have the same effect as a negative vote on this proposal at the
Meeting.
7
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE ARTICLES OF INCORPORATION TO CHANGE THE
COMPANY'S NAME.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of January 3, 2002, information with
respect to the securities holdings of all persons which the Company, pursuant to
filings with the Securities and Exchange Commission, has reason to believe may
be deemed the beneficial owners of more than five percent (5%) of the Company's
outstanding common stock. The following table also sets forth, as of such date,
the beneficial ownership of the Company's common stock by all officers and
directors, individually and as a group.
AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS(1)
------------------------------------ ------------ -----------
Jeffry R. Brown 783,338(2) 5.9%
1285 Corporate Center Drive
Suite No. 175
Eagan, MN 55121
Gary E. Wendt 520,180(3) 4.8%
1285 Corporate Center Drive
Suite No. 175
Eagan, MN 55121
H. Donald Rosacker II 97,777(4) *
1285 Corporate Center Drive
Suite No. 175
Eagan, MN 55121
Jeffrey J. May 62,500(5) *
1285 Corporate Center Drive
Suite No. 175
Eagan, MN 55121
Mira LaCous 149,025(6) *
1285 Corporate Center Drive
Suite No. 175
Eagan, MN 55121
8
Barry M. Wendt 960,800 7.7%
c/o SAC Technologies, Inc.
1285 Corporate Center Drive
Suite No. 175
Eagan, MN 55121
Richard T. Fiskum 1,237,500 9.9%
28690 660th Avenue
Litchfield, MN 55355
N. Deanne Wittig and Richfield Bank & Trust Co., 1,237,500 9.9%
Co-Trustees under the Will dated October 23,
1998, The Qualified Property Marital Trust II
10264 Scarborough Circle
Bloomington, MN 55437
All officers and directors as a group 1,162,820 11.7%
(5) persons
---------------------
*Less than 1%
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations promulgated under the Securities Exchange Act of 1934 and,
accordingly, may include securities owned by or for, among others, the spouse
and/or minor children of an individual and any other relative who has the same
home as such individual, as well as, other securities as to which the individual
has or shares voting or investment power or which each person has the right to
acquire within 60 days through the exercise of options or otherwise. Beneficial
ownership may be disclaimed as to certain of the securities. This table has been
prepared based on 12,528,346 shares of common stock outstanding as of January 3,
2002.
(2) Consists of shares issuable upon exercise of options. Does not include
246,662 shares issuable upon exercise of options subject to vesting.
(3) Includes 115,180 shares issuable upon exercise of options. Does not include
58,200 shares issuable upon exercise of options subject to vesting.
(4) Consists of shares issuable upon exercise of options. Does not include
302,223 shares issuable upon exercise of options subject to vesting.
(5) Consists of shares issuable upon exercise of options. Does not include
137,500 shares issuable upon exercise of options subject to vesting.
(6) Consists of shares issuable upon exercise of options. Does not include
290,975 shares issuable upon exercise of options subject to vesting.
9
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
In order for proposals of shareholders to be considered for inclusion
in the proxy statement and form of proxy relating to the Company's next annual
meeting of shareholders, such proposals are required to be received by the
Company a reasonable time prior to the time the Company begins to print and mail
proxy solicitation material relating to such meeting.
BY ORDER OF THE BOARD OF DIRECTORS
------------------------------------
Jeffry R. Brown
Chairman of the Board and
Chief Executive Officer
Dated: January __, 2002
10
EXHIBIT "A"
RESOLVED, that the first sentence of Article V of the Amended and
Restated Articles of Incorporation of the Corporation, as amended to date, be
amended to provide in its entirety as follows:
The Corporation is authorized to issue an aggregate total of
sixty million (60,000,000) shares of voting common stock
having a par value of $0.01 per share.
A-1
EXHIBIT "B"
RESOLVED, that Article I of the Amended and Restated Articles of
Incorporation of the Corporation, as amended to date, be amended to provide in
its entirety as follows:
The name of the Corporation shall be: Bio-Key International,
Inc.
B-1
PRELIMINARY COPY
SAC TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jeffry R. Brown, with power to appoint
a substitute, and hereby authorizes him to represent and to vote all shares of
common stock of SAC Technologies, Inc. held of record by the undersigned on
January 3, 2002 at the Special Meeting of Shareholders of SAC Technologies, Inc.
to be held on February 27, 2002 and at any adjournment(s) or postponement(s)
thereof, and to vote as directed on the reverse side of this form and in his
discretion upon such other matters not specified as may come before said
meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX (SEE
REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
THE PROXY CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD
----------------------------------------------------------------------
SEE REVERSE SIDE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE AMENDMENT TO THE
ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK AND FOR THE AMENDMENT TO THE ARTICLES OF INCORPORATION TO CHANGE THE
COMPANY'S NAME.
--------------------------------------------------------------------------------
1. Proposal 1
Approval of amendment to the FOR AGAINST ABSTAIN
Articles of Incorporation to
increase the number of authorized
shares of common stock to 60,000,000 [ ] [ ] [ ]
2. Proposal 2
Approval of amendment to the FOR AGAINST ABSTAIN
Articles of Incorporation to change
the name of the Company to "Bio-Key
International, Inc." [ ] [ ] [ ]
Check appropriate box
Indicate changes below:
Address Change [ ] Name Change [ ]
The undersigned hereby acknowledges receipt of the Company's February 27, 2002
Special Meeting of Shareholders Proxy Statement.
PLEASE SIGN, DATE AND RETURN YOUR PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE REQUIRED IF MAILED IN THE UNITED
STATES.
NOTE: Please sign name(s) exactly as printed
hereon. Joint owners should each sign. When
signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such.
SIGNATURE(S)________________________________
______________________________________, 2002
DATE