SCHEDULE 14A INFORMATION
STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
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[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12.
INTELLI-CHECK, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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[X] No fee required.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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INTELLI-CHECK, INC.
246 CROSSWAYS PARK WEST
WOODBURY, NEW YORK 11797
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 8, 2005
To the Shareholders of
INTELLI-CHECK, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
INTELLI-CHECK, INC. (the "Company"), a Delaware corporation, will be held at the
American Stock Exchange, 86 Trinity Place, New York, New York 10006, on
Wednesday, June 8, 2005, at 11:00 a.m., local time, for the following purposes:
1. To elect, subject to the provisions of the By-laws, three directors
each to serve for a three-year term until their respective
successors have been duly elected and qualified;
2. To consider and act upon a proposal to approve the appointment of
Amper, Politziner and Mattia, P.C. as our independent public
accountants for the 2005 fiscal year; and
3. 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 21, 2005
as the record date for the meeting and only record holders of shares of the
Company's Common Stock at that time will be entitled to notice of and to vote at
the Annual Meeting of Shareholders or any adjournment or adjournments thereof.
This proxy statement and the accompanying proxy will be mailed on or about May
13, 2005.
By order of the Board of Directors,
Frank Mandelbaum
Chairman of the Board
Woodbury, New York
May 13, 2005
IMPORTANT
IF YOU CANNOT PERSONALLY ATTEND THE MEETING, IT IS
REQUESTED THAT YOU INDICATE YOUR VOTE ON THE ISSUES
INCLUDED ON THE ENCLOSED PROXY AND DATE, SIGN AND MAIL
IT IN THE ENCLOSED SELF-ADDRESSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES
INTELLI-CHECK, INC.
246 CROSSWAYS PARK WEST
WOODBURY, NEW YORK 11797
--------------------------------------------------------
P R O X Y S T A T E M E N T
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, JUNE 8, 2005
--------------------------------------------------------
SOLICITATION OF PROXY
The accompanying proxy is solicited on behalf of the Board of Directors of
Intelli-Check, Inc. (the "Company"), for use at the annual meeting of
shareholders of the Company (the "Annual Meeting") to be held on Wednesday, June
8, 2005 at the American Stock Exchange, 86 Trinity Place, New York, New York
10006 at 11:00 a.m., local time. This proxy statement contains information about
the matters to be considered at the meeting or any adjournments or postponements
of the meeting. In addition to mail, proxies may be solicited by personal
interview, telephone or telegraph by our officers and regular employees, without
additional compensation. We will bear the cost of solicitation of proxies.
Brokerage houses, banks and other custodians, nominees and fiduciaries will be
reimbursed for out-of-pocket and reasonable expenses incurred in forwarding
proxies and proxy statements. The Board of Directors has set April 21, 2005 as
the record date (the "Record Date") to determine those holders of record of
common stock, par value $.001 ("Common Stock") who are entitled to notice of,
and to vote at the Annual Meeting. On or about May 13, 2005, the Company's 2004
Annual Report, including financial statements, this Proxy Statement and the
proxy card (the "Proxy Card" or "Proxy") are being mailed to stockholders of
record as of the close of business on April 21, 2005.
ABOUT THE MEETING
WHAT IS BEING CONSIDERED AT THE MEETING?
You will be voting on the following:
o the election of three directors each to serve for a three year term;
o the approval of the appointment of Amper, Politziner and Mattia, P.C., as
our independent public accountants.
WHO IS ENTITLED TO VOTE AT THE MEETING?
You may vote if you owned common stock as of the close of business on
April 21, 2005. Each share of common stock is entitled to one vote.
HOW MANY VOTES MUST BE PRESENT TO HOLD THE MEETING?
Your shares are counted as present at the meeting if you attend the
meeting and vote in person or if you properly return a proxy by mail. In order
for us to conduct our meeting, a majority of the combined voting power of our
common stock as of April 21, 2005 must be present at the meeting. This is
referred to as a quorum. On April 21, 2005, there were 10,754,240 shares
outstanding of common stock entitled to vote.
HOW DO I VOTE?
You can vote in two ways:
o by attending the meeting in person; or
o by completing, signing and returning the enclosed proxy card.
CAN I CHANGE MY MIND AFTER I SUBMIT MY PROXY?
Yes, you may change your mind at any time before a vote is taken at the
meeting. You can do this by either (1) signing another proxy with a later date
and returning it to us prior to the meeting or filing with our corporate
secretary a written notice revoking your proxy, or (2) voting again at the
meeting.
WHAT IF I RETURN MY PROXY CARD BUT DO NOT INCLUDE VOTING INSTRUCTIONS?
Proxies that are signed and returned but do not include voting
instructions will be voted FOR the election of the three nominated directors and
FOR the approval of the appointment of our independent public accountants.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
It means that you have multiple accounts with brokers and/or our transfer
agent. Please vote all of these shares. We recommend that you contact your
broker and/or our transfer agent to consolidate as many accounts as possible
under the same name and address. Our transfer agent is Continental Sock Transfer
and Trust Company. The transfer agent's telephone number is (212) 509-4000.
WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY?
If you hold your shares directly in your own name, they will not be voted
if you do not provide a proxy. Your shares may be voted under certain
circumstances if they are held in the name of a brokerage firm. Brokerage firms
generally have the authority to vote customers' unvoted shares on certain
"routine" matters, including the election of directors and the ratification or
approval of the appointment of independent public accountants. When a brokerage
firm votes its customer's unvoted shares, these shares are counted for purposes
of establishing a quorum. At our meeting these shares will be counted as voted
by the brokerage firm in the election of directors and the approval of the
appointment of our independent public accountants.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
The affirmative vote of a plurality of the votes cast at the annual
meeting is required for approval of the election of directors and the
affirmative vote of a majority of the votes cast is required for the approval of
the appointment of our independent public accountants.
DO WE CURRENTLY HAVE, OR DO WE INTEND TO SUBMIT FOR STOCKHOLDER APPROVAL, ANY
ANTI-TAKEOVER DEVICE?
Our Certificate of Incorporation, By-Laws and other corporate documents do
not contain any provisions that contain material anti-takeover aspects except
for our classified board of directors. We have no plans or proposals to submit
any other amendments to the Certificate of Incorporation or By-Laws or other
measures in the future that have anti-takeover effects.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our board of directors is a classified board with each class of directors
being elected each year for a term of three years. The persons named in the
accompanying proxy will vote for the election of the following persons as
directors, two of which are presently members of the Board of Directors, to hold
office for the terms set forth below or until their respective successors have
been elected and qualified. Unless specified to be voted otherwise, each proxy
will be voted for the nominees named below. Evelyn Berezin's term as a director
expires in June 2005. Ms. Berezin has determined not to stand for re-election.
Such decision was not the result of a disagreement with the Company on any
matter relating to the Company's operations, policies or practices. All nominees
have consented to serve as directors if elected.
POSITION WITH THE COMPANY DIRECTOR CURRENT TERM
NAME AGE AND PRINCIPAL OCCUPATION SINCE EXPIRES
Edwin Winiarz 47 Senior Executive Vice President, Treasurer, 1999 June 8, 2005
Chief Financial Officer and Director
Arthur L. Money 64 Director 2003 June 8, 2005
Guy L. Smith 56 Director Nominee N/A N/A
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to each
director and executive officer as of April 21, 2005:
POSITION WITH THE COMPANY HELD OFFICE CURRENT TERM
NAME AGE AND PRINCIPAL OCCUPATION SINCE EXPIRES
Frank Mandelbaum 71 Chairman, Chief Executive Officer and Director 1996 July 2007
Edwin Winiarz 47 Senior Executive Vice President, Treasurer, Chief 1999 June 2005
Financial Officer and Director
Russell T. Embry 41 Senior Vice President and Chief Technology 2001 N/A
Officer
Todd Liebman 31 Senior Vice President, Marketing and Operations 2004 N/A
Ashok Rao 55 Vice Chairman and Director 2004 July 2007
John N. Hatsopoulos 71 Director 2003 July 2006
Arthur L. Money 64 Director 2003 June 2005
Charles McQuinn 64 Director 1999 July 2007
Thomas A. Prendergast 71 Director 2004 July 2007
Jeffrey Levy 62 Director 1999 July 2006
Evelyn Berezin 79 Director 1999 June 2005
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BUSINESS EXPERIENCE
FRANK MANDELBAUM has served as our Chairman of the Board and Chief
Executive Officer since July 1, 1996. He also served as Chief Financial Officer
until September 1999. From January 1995 through May 1997, Mr. Mandelbaum served
as a consultant providing strategic and financial advice to Pharmerica, Inc.
(formerly Capstone Pharmacy Services, Inc.), a publicly held company. Prior to
January 1995, Mr. Mandelbaum was Chairman of the Board, Chief Executive Officer
and Chief Financial Officer of Pharmerica, Inc. From July 1994 through December
1995, Mr. Mandelbaum served as Director and Chairman of the Audit and
Compensation Committees of Medical Technology Systems, Inc., also a publicly
held company. From November 1991 through January 1995, Mr. Mandelbaum served as
Director of the Council of Nursing Home Suppliers, a Washington, D.C. based
lobbying organization. From 1974 to date, Mr. Mandelbaum has been Chairman of
the Board and President of J.R.D. Sales, Inc., a privately held financial
consulting company. As required by his employment agreement, Mr. Mandelbaum
devotes substantially all his business time and attention to our business.
EDWIN WINIARZ was elected Senior Executive Vice President in July 2000 and
a director in August 1999 and became Executive Vice President, Treasurer and
Chief Financial Officer on September 7, 1999. From July 1994 until August 1999,
Mr. Winiarz was Treasurer and Chief Financial Officer of Triangle Service Inc.,
a privately held national service company. From November 1990 through July 1994,
Mr. Winiarz served as Vice President Finance/Controller of Pharmerica, Inc.
(formerly Capstone Pharmacy Services, Inc.). From March 1986 until November
1990, Mr. Winiarz was a manager with the accounting firm of Laventhal & Horwath.
Mr. Winiarz is a certified public accountant and holds an MBA in management
information systems from Pace University.
RUSSELL T. EMBRY was elected Senior Vice President and Chief Technology
Officer in July 2001 and was Vice President, Information Technology, since July
1999. From January 1998 to July 1999, Mr. Embry was Lead Software Engineer with
RTS Wireless. From April 1995 to January 1998, he served as Principal Engineer
at GEC-Marconi Hazeltine Corporation. From August 1994 through April 1995, he
was a staff software engineer at Periphonics Corporation. From September 1989 to
August 1994, Mr. Embry served as Senior Software Engineer at MESC/Nav-Com. From
July 1985 through September 1989, he was a software engineer at Grumman
Aerospace. Mr. Embry holds a B.S. in Computer Science from Stony Brook and an
M.S. in Computer Science from Polytechnic University, Farmingdale.
TODD LIEBMAN, age 31, joined Intelli-Check, Inc. in December 2004 as its
Senior Vice President of Marketing and Operations. Prior to joining
Intelli-Check, Mr. Liebman served as President of Quick Kiosk, a Kinetics
Company, LLC (QK), a self-service solution provider focused on the quick serve
restaurant market industry. In September 2004 Mr. Liebman completed the sale of
QK to NCR Corporation (NYSE:NCR). Prior to founding QK, Mr. Liebman served as
Director of Business Development of Trex Communications Corporation (TrexCom), a
telecommunications start-up focused on satellite communications systems and
multi-media interactive response systems, which was sold to L-3 Communications,
Inc. in February 2000. TrexCom grew from a complete start-up that was losing
money in 1997 to reaching $60 million in revenues and becoming profitable in
less than two years. Mr. Liebman received his Bachelor's of Science in
Management from Tulane University's A.B. Freeman School of Business. Mr. Liebman
has also participated in an Executive Education program at the University of
Pennsylvania's Wharton School of Business.
ASHOK RAO, age 55, was appointed as a director in December 2004 and Vice
Chairman in January 2005. Mr. Rao is currently an angel investor in numerous
high-tech start-ups as well as the producer of a major motion picture scheduled
for worldwide release in April 2005. Mr. Rao was CEO of Prime Wave
Communications, a broadband wireless access technology subsidiary of L3 L-3
Communications, Inc. ("L3") from 2000 to 2003. Prior to that, he was the founder
and chief executive officer of Trex Communications ("TrexCom"), a Thermo
Electron satellite communications business, which reached annual revenues of $60
million in the second year. He was instrumental in the sale of TrexCom to L3 in
2000. Mr. Rao holds a bachelor's degree in mechanical engineering from the
Indian Institute of Technology, New Delhi, a master's degree in systems
engineering from Marquette University, and a diploma in Financial Management
from the London School of Economics. Mr. Rao is also a trustee of numerous
charitable organizations.
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JOHN N. HATSOPOULOS, age 71, was elected as a director in December 2003.
Mr. Hatsopoulos is currently the chief executive officer of American Distributed
Generation Inc. He is the co-founder of Thermo Electron Corporation (NYSE:TMO)
and the retired president and vice chairman of its Board of Directors. Mr.
Hatsopoulos is also managing partner of Glen Rose Capital LLC, a leverage buyout
investment fund, and managing partner of Alexandros Partners LLC, a financial
advisory firm. Prior to his role at American Distributed Generation, which
provides a range of products and services in support of the emerging market for
on-site generation of electricity, heating and cooling at commercial,
institutional and light industrial facilities, Mr. Hatsopoulos held a wide
variety of positions at Thermo Electron Corporation. Over more than four
decades, Mr. Hatsopoulos served as vice president of corporate strategy, during
which time he handled acquisitions, financial and investor relations and
corporate investments, as chief financial officer and, at retirement, as
president and vice chairman of the Board of Directors, among other positions.
Mr. Hatsopoulos graduated from Athens College in Athens, Greece in 1953. He
holds a B.S. in history and mathematics from Northeastern University, together
with Honorary Doctorates in Business Administration from Boston College and
Northeastern University. He served on the Board of Directors of the American
Stock Exchange from 1994 through 2000. He is currently a member of the Board of
Directors of TEI BioSciences Inc. and a "Member of the Corporation" for
Northeastern University.
ARTHUR L. MONEY, age 65, was elected as a director in February 2003. Mr.
Money was confirmed by the Senate and served as the Assistant Secretary of
Defense for Command, Control, Communications and Intelligence from 1999 to 2001
and was also the Chief Information Officer for the Department of Defense from
1998 until 2001. Prior to that he served as the Senior Civilian Official, Office
of the Assistant Secretary of Defense, from 1998 to 1999 and was earlier
confirmed by the Senate as Assistant Secretary of the Air Force for Research,
Development and Acquisition and served as Chief Information Officer, from 1996
to 1998. Mr. Money currently serves as a member of the advisory board of several
corporations including the Boeing Company (NYSE: BA). He also serves on the
Board of Directors of Silicon Graphics, Inc. (NYSE: SGI) and CACI International
(NYSE: CAI) and has been recognized for his vision, leadership and commitment to
excellence in systems and process re-engineering. Mr. Money, who holds a Master
of Science Degree in Mechanical Engineering from the University of Santa Clara
(Calif.) and a Bachelor of Science Degree in Mechanical Engineering from San
Jose (Calif.) State University also currently serves on several U.S. Government
Boards and Panels such as NIMA Advisory Board, Defense Science Board, US Air
Force AC2ISR Center Advisory Board and the US Navy "DSAP" Special Advisory
Panel. Prior to his government service, he had a distinguished business career
having served as President of ESL Inc., a subsidiary of TRW, Inc., from 1990 to
1994 prior to its consolidation with its Avionics and Surveillance Group when he
became Vice President and Deputy General Manager of the Group.
CHARLES MCQUINN, age 64, was elected as a director in August 1999. He has
been, since 1997, an independent product development/marketing consultant to
Internet based companies. Mr. McQuinn has also served as CEO of The McQuinn
Group, Inc., a system integration and institutional marketing company, from
November 1998 to the present. From 1995 to 1997, Mr. McQuinn was President of
DTN West, a fixed income price quote company with products for banks and
governments. From 1990 to 1995, Mr. McQuinn was President of Bonneville Market
Information, an equities price quote company with products for traders and
brokers. From 1985 to 1990, Mr. McQuinn was President of Bonneville
Telecommunications Company, a satellite video and data company. Prior to 1985,
he held various product development/marketing/management positions with
Burroughs Corporation. Mr. McQuinn holds a BS in marketing from Ball State
University and an MBA in management from Central Michigan University.
THOMAS A. PRENDERGAST, age 71, was elected as a director in March 2004.
Mr. Prendergast is currently an investment and management consultant. He
presently serves as chairman of the board of The Steel Corporation of Texas,
Texzona Industries, Inc. and Scot Holding, Inc. and as director of Double Eagle
Petroleum, Inc., a public company. Throughout his career, Mr. Prendergast has
served as a member of the board of directors for more than seventeen publicly
traded companies across a broad range of industries. He has worked with
companies in special situations, including the initial public offering of Farah
Manufacturing, where he was executive vice president for ten years. He has been
involved in a number of turnaround situations and various high-profile
transactions, including the sale of Market Guide, Inc. to Multex, the global
provider of institutional research products, which has since been integrated
into Reuters Products & Services. Mr. Prendergast was the founding member and
President of the Board of Trustees of El Paso Community College from 1962 to
1982. He is a certified public accountant and holds a Bachelor of Science degree
from Fordham University.
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JEFFREY LEVY, age 62, was elected as a director in December 1999. He has
been, since February 1977, President and Chief Executive Officer of LeaseLinc,
Inc., a third-party equipment leasing company and lease brokerage company. Prior
to 1977, Mr. Levy served as President and Chief Executive Officer of American
Land Cycle, Inc. and Goose Creek Land Cycle, LLC, arboreal waste recycling
companies. During that time he also served as Chief Operating Officer of ICC
Technologies, Inc. and AWK Consulting Engineers, Inc. Mr. Levy has had a
distinguished career as a member of the United States Air Force from which he
retired as a colonel in 1988. He serves as a board member of the Northern
Virginia Chapter of Mothers Against Drunk Driving, the Washington Regional
Alcohol Program, the Zero Tolerance Coalition and the National Drunk and Drugged
Driving Prevention Month Coalition and is a member of the Virginia Attorney
General's Task Force on Drinking by College Students and MADD's National
Commission on Underage Drinking. Mr. Levy holds a BS in International Relations
from the United States Air Force Academy, a graduate degree in Economics from
the University of Stockholm and an MBA from Marymount University.
EVELYN BEREZIN, age 79, was elected as a director in August 1999. She has
been, since October 1987, an independent management consultant to technology
based companies. From July 1980 to September 1987, Ms. Berezin was President of
Greenhouse Management Company, a venture capital fund dedicated to investment in
early-phase high-technology companies. Ms. Berezin holds an AB in Physics from
New York University and has held an Atomic Energy Commission Fellowship. Ms.
Berezin has served on the boards of a number of public companies including
Bionova Corp., Cigna Corp., Datapoint Corp., Koppers Company, Inc. and Genetic
Systems Inc., as well as more than fourteen private technology-based companies.
She also serves on the boards of Sion Energy Inc. and BioPhotonics Corp. Ms.
Berezin holds honorary doctorates from Adelphi University and Eastern Michigan
University and is on the Board of the Stony Brook Foundation of Stony Brook
University, Boyce Thompson Institute, and Brookhaven Science Associates, the
manager of Brookhaven Laboratories.
GUY L. SMITH, age 56, is a director nominee. Mr. Smith has been the
Executive Vice President of Diageo, the world's leading premium drinks company,
since 2000 and is responsible for Corporate Relations and Marketing Public
Relations. At Diageo, Mr. Smith's responsibilities include overseeing the
corporation's civic and social responsibility efforts in North America,
including the Diageo Marketing Code. The Code governs the company's social
responsibility activities with regard to the marketing and sale of alcoholic
beverages and the company's undertakings to reduce underage access and abuse of
alcohol. From 1998 - 1999, prior to joining Diageo, Mr. Smith was Special
Advisor to President Clinton on The White House staff, where he served on the
impeachment defense team. Mr. Smith also served as an informal strategic
communications advisor to President Clinton from the beginning of the Clinton
Administration. From 1999 - 2000, Mr. Smith was associated with The Hawthorn
Group, a Washington-based public affairs firm, as well as with his own firm,
Smith Worldwide Inc., from 1994 - 1996, which focused on reputation and crisis
management. He was Chief Operating Officer of Hill & Knowlton International
Public Relations, from 1992 - 1993, where he consulted with the firm's largest
consumer product, technology, and legal clients. Prior to that Mr. Smith was
Vice President-Corporate Affairs, the senior public affairs and public relations
officer, for Philip Morris Companies Inc. from 1975 - 1992. During his 17 years
with Philip Morris, Mr. Smith led the Corporate Affairs departments of the
Miller Brewing Company and The Seven-Up Company, both then Philip Morris
operating companies. Mr. Smith began his career as a reporter and assistant city
editor for The Knoxville Journal. He is currently chairman of the Barrier Island
Trust, an environmental protection organization and sits on the Board of
Advisors of Mount Vernon, George Washington's home outside Washington, DC. Mr.
Smith also serves as an Honorary Battalion Chief of the Fire Department of New
York.
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Directors generally serve for staggered terms of three (3) years and hold
office until the next annual meeting, following the conclusion of their term, of
stockholders and the election and qualification of their successors. Executive
officers are elected by and serve at the discretion of the board of directors.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Securities and Exchange Commission has adopted rules relating to the
filing of ownership reports under Section 16 (a) of the Securities Exchange Act
of 1934. One such rule requires disclosure of filings, which are not deemed to
be timely under the Commission's rules. During the review of Forms 3, it was
determined that Mr. Prendergast failed to file a timely report of the grant of
7,500 stock options on April 1, 2004 due to his not having EDGAR access codes;
however, such failure was remedied by the reporting of this transaction on April
7, 2004. It was also determined that Mr. Rao failed to file a timely report
concerning his appointment as a director of the Company and the grant of 75,000
stock options on December 3, 2004 due to his not having EDGAR access codes;
however, such failure was remedied by the reporting of this transaction on
December 14, 2004. It was further determined that Mr. Liebman failed to file a
timely report concerning his becoming an executive officer of the Company on
December 10, 2004 and the grant of 175,000 stock options on December 10, 2004
due to his not having EDGAR access codes; however, such failure was remedied by
the reporting of this transaction on December 17, 2004. During the review of
Forms 4, it was determined that Mr. Hatsopoulos failed to file a timely report
concerning the purchase of 1,000 shares of common stock on January 12, 2004 and
the grant of 2,500 stock options on May 10, 2004; however, such failures were
remedied by the reporting of these transactions on January 15, 2004 and May 20,
2004, respectively. It was also determined that Mr. Levy failed to file a timely
report regarding the purchase of 500 shares of common stock on December 1, 2004;
however, such failure was remedied by the reporting of this transaction on
December 7, 2004. All other transactions were reported in a timely fashion.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 2004, the board of directors
held eight meetings, the audit committee held five meetings, the corporate
governance and nominating committee held three meetings and the compensation
committee held two meetings. All of the directors attended at least 75% of the
aggregate of all Board and meetings of committees on which they served. Jeffrey
Levy did not attend one meeting of the board of directors. The Board of
Directors has determined that Ms. Berezin, Messrs. Prendergast, McQuinn, Levy,
Rao, Money and Hatsopoulos, each of whom is independent pursuant as defined in
Section 121(A) of the American Stock Exchange's listing standards. The Company
does not have a written policy relating to attendance by members of the board of
directors at annual shareholder meetings. However, it is communicated and
understood by all directors that they are required to attend barring any
unforeseen circumstance. All directors attended last year's annual shareholder
meeting.
COMPENSATION COMMITTEE
The board of directors has established a compensation committee which is
currently comprised of Mr. Levy, chairperson, Mr. Hatsopoulos, Mr. Money and Mr.
Rao. The compensation committee reviews and recommends to the board the
compensation for all officers and directors of our company and reviews general
policy matters relating to the compensation and benefits of all employees. The
compensation committee also administers the stock option plans.
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CORPORATE GOVERNANCE AND NOMINATING COMMITTEE
The board of directors has established a corporate governance and
nominating committee, which is comprised of Mr. McQuinn, chairperson, Ms.
Berezin and Mr. Levy. The corporate governance and nominating committee has
adopted a written charter. The charter sets forth responsibilities, authority
and specific duties of the corporate governance and nominating committee. A copy
of the corporate governance and nominating committee charter is attached hereto
as EXHIBIT A. The corporate governance and nominating committee reviews our
internal policies and procedures and by-laws. With respect to nominating
director candidates, this committee identifies and evaluates potential director
candidates and recommends candidates for appointment or election to the Board.
The corporate governance and nominating committee may consider those
factors it deems appropriate in evaluating director nominees, including
judgment, skill, diversity, strength of character, experience with businesses
and organizations comparable in size or scope to the Company, experience and
skill relative to other board members, and specialized knowledge or experience.
Depending upon the current needs of our Board of Directors, certain factors may
be weighed more or less heavily by the corporate governance and nominating
committee. In considering candidates for our Board of Directors, the corporate
governance and nominating committee will evaluate the entirety of each
candidate's credentials and, other than the eligibility requirements established
by the corporate governance and nominating committee, will not have any specific
minimum qualifications that must be met by a nominee. The corporate governance
and nominating committee will consider candidates for the Board from any
reasonable source, including current board members, shareholders, professional
search firms or other persons. The corporate governance and nominating committee
will not evaluate candidates differently based on who has made the
recommendation.
Although we do not currently have a formal policy or procedure for
stockholder recommendations of director candidates, the Board of Directors
welcomes such recommendations and will consider candidates recommended by
stockholders. Because we do not prohibit or restrict such recommendations, we
have not implemented a formal policy with respect to stockholder
recommendations. However, the Board may consider implementing such a policy in
the future.
Our new director nominee, Guy L. Smith, was recommended to the committee
by a non-management director.
PROCESS FOR SENDING COMMUNICATIONS TO THE BOARD OF DIRECTORS
Shareholders that wish to communicate with the board of directors are
welcomed to put their comments in writing addressed to the Company's Investor
Relations Representative, Edwin Winiarz. Such communications may be sent to the
Company's corporate headquarters located at 246 Crossways Park West, Woodbury,
NY 11797. Upon receipt, Mr. Winiarz will distribute the correspondence to the
directors.
AUDIT COMMITTEE
The board of directors has a separately designated audit committee
established in accordance with Section 3(a)(58) of the Securities Exchange Act
of 1934, which is currently comprised of Mr. Prendergast, chairperson, Mr.
McQuinn and Ms. Berezin. The members of the Audit Committee are independent as
defined in Section 121(A) of the American Stock Exchange's listing standards.
The audit committee recommends to the board of directors the annual engagement
of a firm of independent accountants and reviews with the independent
accountants the scope and results of audits, our internal accounting controls
and audit practices and professional services rendered to us by our independent
accountants. The Audit Committee has adopted a written charter. The charter sets
forth the responsibilities, authority and specific duties of the Audit
Committee. A copy of the Audit Committee Charter is attached hereto as EXHIBIT
B.
- 8 -
The Board of Directors has determined that it has at least one audit
committee financial expert serving on our audit committee. Mr. Prendergast, who
is a certified public accountant and holds a Bachelor of Science degree from
Fordham University, is an "audit committee financial expert" and is an
independent member of the board of directors.
ACQUISITION COMMITTEE
The board of directors has recently established an acquisition committee
comprised of John Hatsopoulos, chairperson, Ashok Rao, Frank Mandelbaum and
Edwin Winiarz. The acquisition committee recommends to the board of directors
opportunities within the Corporation's area of strategic development for merger
and/or acquisition which may enhance shareholder value.
AUDIT COMMITTEE REPORT
The following shall not be deemed to be "soliciting material" or to be
"filed" with the Commission nor shall such information be incorporated by
reference into any future filing of Intelli-Check under the Securities Act of
1933 or the Securities and Exchange Act of 1934.
With respect to the audit of the fiscal year ended December 31, 2004, and
as required by its written charter which sets forth its responsibilities and
duties, we have reviewed and discussed the Company's audited financial
statements with management.
In the course of its review, we have discussed with the independent
auditors those matters required to be discussed by Statement on Accounting
Standards No. 61, as amended, "Communication with Audit Committees," by the
Auditing Standards Board of the American Institute of Certified Public
Accountants.
We have received and reviewed the written disclosures and the letter from
the independent auditors required by Independence Standard No. 1, as amended,
"Independence Discussions with Audit Committee," by the Independence Standards
Board and have discussed with the auditors the auditors' independence.
Based on the reviews and discussions referred to above, we recommended to
the board of directors that the financial statements referred to above be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2004.
Audit Committee: Thomas Prendergast (Chair)
Evelyn Berezin
Charles McQuinn
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of April 21, 2005 certain information
regarding beneficial ownership of Intelli-Check's common stock by each person
who is known by us to beneficially own more than 5% of our common stock. The
table also identifies the stock ownership of each of our directors, each of our
officers, and all directors and officers as a group. Except as otherwise
indicated, the stockholders listed in the table have sole voting and investment
powers with respect to the shares indicated.
Unless otherwise indicated, the address for each of the named individuals
is c/o Intelli-Check, Inc., 246 Crossways Park West, Woodbury, NY 11797-2015.
Shares of common stock which an individual or group has a right to acquire
within 60 days pursuant to the exercise or conversion of options, warrants or
other similar convertible or derivative securities are deemed to be outstanding
for the purpose of computing the percentage ownership of such individual or
group, but are not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person shown in the table.
- 9 -
The applicable percentage of ownership is based on 10,754,240 shares
outstanding as of April 21, 2005.
NAME SHARES BENEFICIALLY OWNED PERCENT
Frank Mandelbaum (1) 1,603,505 14.17
Edwin Winiarz (2) 192,000 1.83
Todd Liebman (3) 25,000 *
Russell T. Embry (4) 86,500 *
Evelyn Berezin (5) 136,400 1.31
Charles McQuinn (6) 145,600 1.40
Jeffrey Levy (7) 113,380 1.09
Arthur L. Money (8) 78,000 *
John Hatsopoulos (9) 72,600 *
Thomas Prendergast (10) 70,000 *
Ashok Rao (11) 38,000 *
Empire State Development formerly New York State Science and
Technology Foundation (12) 605,000 5.85
All Executive Officers & Directors as a group (11 persons) 2,560,985 23.41
* Indicates beneficial ownership of less than one percent of the total
outstanding common stock.
(1) Includes 1,024,928 shares issuable upon exercise of stock options
exercisable within 60 days. Does not include 12,100 shares and 1,190
rights held by Mr. Mandelbaum's wife, for which Mr. Mandelbaum disclaims
beneficial ownership
(2) Consists of 192,000 shares issuable upon exercise of stock options
exercisable within 60 days.
(3) Consists of 25,000 shares issuable upon exercise of stock options
exercisable within 60 days.
(4) Consists of 86,500 shares issuable upon exercise of stock options
exercisable within 60 days.
(5) Includes 127,900 shares issuable upon exercise of stock options
exercisable within 60 days.
(6) Includes 130,600 shares issuable upon exercise of stock options
exercisable within 60 days.
(7) Includes 110,980 shares issuable upon exercise of stock options
exercisable within 60 days.
(8) Includes 77,800 shares issuable upon exercise of stock options exercisable
within 60 days.
(9) Includes 56,500 shares issuable upon exercise of stock options exercisable
within 60 days.
(10) Includes 40,000 shares issuable upon exercise of stock options exercisable
within 60 days.
(11) Consists of 38,000 shares issuable upon exercise of stock options
exercisable within 60 days.
(12) Frances A. Walton, the Chief Financial Officer exercises voting and
dispositive power over the shares. The address is 633 Third Avenue, New
York, NY 10017
- 10 -
EXECUTIVE COMPENSATION
The following table sets forth compensation paid to executive officers
whose compensation was in excess of $100,000 for any of the three fiscal years
ended December 31, 2004. No other executive officers received total salary and
bonus compensation in excess of $100,000 during any of such fiscal years.
SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
------------ ------------
Securities
Underlying
Options/SARS (#)
Name and Principal Position Year Salary($)
Frank Mandelbaum 2004 250,000 75,000
Chairman and 2003 250,000 100,000
Chief Executive Officer 2002 250,000 350,000
Edwin Winiarz 2004 151,318 65,000
Senior Executive Vice President 2003 141,750 30,000
Chief Financial Officer 2002 135,000 --
Russell T. Embry 2004 152,063 10,000
Senior Vice President 2003 150,000 12,500
Chief Technology Officer 2002 150,000 12,500
Ralph Thomas 2004 103,855 --
Former Senior Vice President Sales 2003 11,060 50,000
The options shown above were granted under the 1998, 1999, 2001, 2003 and
2004 Stock Option Plans as well as outside these plans and are exercisable as
follows: (1) Frank Mandelbaum - 75,000 options at an exercise price of $4.37 per
share, of which 25,000 options became exercisable on January 1, 2005; 25,000
options shall become exercisable on January 1, 2006 and the remaining 25,000
options shall become exercisable on January 1, 2007; 100,000 options which are
currently exercisable at an exercise price of $8.22 per share and 350,000
options which are currently exercisable at an exercise price of $12.10 per
share. (2) Edwin Winiarz - 50,000 options at an exercise price of $4.37 per
share, of which 25,000 options became exercisable on January 1, 2005 and the
remaining 25,000 options shall become exercisable on January 1, 2006; 15,000
options which are currently exercisable at an exercise price of $5.25 per share
and 30,000 options which are currently exercisable at an exercise price of $8.22
per share; (3) Russell T. Embry - 10,000 options at an exercise price of $4.37
per share, of which 5,000 options are currently exercisable and an additional
5,000 options become exercisable on June 3, 2005; 12,500 options at an exercise
price of $7.44 per share, which are currently exercisable and 12,500 options at
an exercise price of $3.82 per share, which are currently exercisable; and (4)
Ralph H. Thomas - 50,000 options at an exercise price of $7.35 per share all of
which expired upon Mr. Thomas' departure from the Company. All options expire
five years after the date of vesting.
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes options granted during the year ended
December 31, 2004 to the named executive officers:
- 11 -
Individual Grants
-----------------------------------------------------------------------------------------------------------------------
% of Total Potential Realizable Value
Number of Options Assumed Annual Rates of
Securities Granted to Exercise Expiration Appreciation for Option (1)
Name Underlying Employees In Price Date
Options 2004 Fiscal 5% 10%
Granted Year
-----------------------------------------------------------------------------------------------------------------------
Russell T. Embry 5,000 1.3% $ 4.37 12/03/09 $6,037 $13,340
Russell T. Embry 5,000 1.3% $ 4.37 06/03/10 $6,037 $13,340
Frank Mandelbaum 25,000 6.6% $ 4.37 01/01/15 $30,184 $66,698
Frank Mandelbaum 25,000 6.6% $ 4.37 01/01/16 $30,184 $66,698
Frank Mandelbaum 25,000 6.6% $ 4.37 01/01/17 $30,184 $66,698
Todd Liebman 25,000 6.6% $ 4.57 12/10/09 $31,565 $69,751
Todd Liebman 25,000 6.6% $ 4.57 12/10/10 $31,565 $69,751
Todd Liebman 25,000 6.6% $ 4.57 12/10/11 $31,565 $69,751
Todd Liebman 100,000 26.5% $ 4.57 12/10/14 $126,261 $279,003
Edwin Winiarz 15,000 4.0% $ 5.25 07/08/14 $21,757 $48,078
Edwin Winiarz 25,000 6.6% $ 4.37 01/01/15 $30,184 $66,698
Edwin Winiarz 25,000 6.6% $ 4.37 01/01/16 $30,184 $66,698
(1) The amounts shown as potential realizable value represent hypothetical
gains that could be achieved for the respective options if exercised at the end
of the option term. The 5% and 10% assumed annual rates of compounded stock
price appreciation are mandated by rules of the Securities and Exchange
Commission and do not represent our estimate or projection of our future common
stock prices. These amounts represent certain assumed rates of appreciation in
the value of our common stock from the fair market value on the date of grant.
Actual gains, if any, on stock option exercises are dependent on the future
performance of the common stock and overall stock market conditions. The amounts
reflected in the table may not necessarily be achieved.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table summarizes unexercised options granted through the
year-end December 31, 2004 to the named executive officers:
-------------------------------------------------------------------------------------------------------------------------
No. of Aggregate
Shares Dollar Value Value of Unexercised
Name Received Received No. of Securities In-the-Money
Upon Upon Exercise Underlying Unexercised Options At Fiscal
Exercise Options / Warrants Year End 12/31/04
-------------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Frank Mandelbaum 0 0 900,000 75,000 $675,000 $9,750
Chairman & CEO
Edwin Winiarz
Senior Executive VP & CFO 0 0 165,000 50,000 0 $6,500
Russell T. Embry
Senior VP & CTO 0 0 82,500 5,000 $9,150 $650
Todd Liebman, Senior VP
Marketing & Operations 0 0 25,000 150,000 0 0
- 12 -
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
On November 9, 2004, we entered into a new one-year employment contract
with our Chairman and Chief Executive Officer, Frank Mandelbaum that was
effective on January 1, 2005. The agreement provides for an annual base salary
of $250,000. In addition, we granted to Mr. Mandelbaum an option to purchase
75,000 shares of common stock at an exercise price of $4.37 per share, of which
25,000 options became exercisable on January 1, 2005; 25,000 options shall
become exercisable on January 1, 2006 and the remaining 25,000 options shall
become exercisable on January 1, 2007.
If there shall occur a change of control, as defined in the employment
agreement, the employee may terminate his employment at any time and be entitled
to receive a payment equal to 2.99 times his average annual compensation,
including bonuses, during the three years preceding the date of termination,
payable in cash to the extent of three months salary and the balance in shares
of our common stock based on a valuation of $2.00 per share.
On November 9, 2004, we entered into a new employment agreement with our
Senior Executive Vice President and Chief Financial Officer, Edwin Winiarz,
effective January 1, 2005. The agreement, which expires December 31, 2006,
provides for a fixed base annual salary of $162,086. In addition, we granted to
Mr. Winiarz an option to purchase 50,000 shares of common stock at an exercise
price of $4.37 per share, of which 25,000 options became exercisable on January
1, 2005 and the remaining 25,000 options shall become exercisable on January 1,
2006.
Each of the employment agreements requires the executive to devote
substantially all his time and efforts to our business and contains
non-competition and nondisclosure covenants of the officer for the term of his
employment and for a period of two years thereafter. Each employment agreement
provides that we may terminate the agreement for cause.
COMPENSATION OF DIRECTORS
Non-employee directors receive a fee of $500 for attending board meetings
and $250 for attendance at such meetings telephonically. They also receive a fee
of $300 for each committee meeting held on a date other than that of a board
meeting and are reimbursed for expenses incurred in connection with the
performance of their respective duties as directors. Non-employee directors are
granted 25,000 options for each full year of service. In addition, non-employee
directors who are members of a committee are entitled to receive grants of stock
options for each year served. The chairperson of the audit committee receives
options to purchase 7,500 shares of our common stock and audit committee members
receive options to purchase 3,000 shares of our common stock. Of the remaining
committees, each chairperson receives options to purchase 2,500 shares of our
common stock, while a committee member receives options to purchase 1,500 shares
of our common stock. These options are immediately exercisable during the
committee members' term and expire ten years from date of grant.
On January 11, 2005, we issued options to purchase 60,000 shares of our
common stock, at a price of $4.55, to our Vice Chairman, Ashok Rao, as
compensation for providing us with advice in certain strategic and operational
aspects of the business. Of these options, 10,000 vested immediately and the
balance vest upon meeting certain goals.
- 13 -
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Introduction. The disclosure rules of the Securities and Exchange
Commission require us to provide certain information concerning the compensation
of the Chief Executive Officer and other executive officers of our company. We
review and recommend to our board of directors compensation of the executive
officers of our company. Decisions on the compensation of our Chief Executive
Officer are made by the board and salaries of other executive officers are set
in relation to the salary of the Chief Executive Officer.
Structure. Compensation of our executive officers consists of salary and
stock option grants. Stock options have been used to reward executives for
actions which increase shareholder value and to attract and retain high quality
executives by providing long-term incentives. The Company has no bonus plan for
executives nor does it provide retirement benefits. We believe our compensation
policy is fair to our employees and shareholders. Our total compensation package
is competitive within our industry.
Base Salary. Since 1996, we have relied on our own informal surveys of
compensation levels to gauge the reasonableness of the compensation of Frank
Mandelbaum, our Chief Executive Officer. Mr. Mandelbaum's compensation was at an
annual rate of $250,000 for the 2004 fiscal year which was established in
February 2002 when we entered into a new three year employment agreement with
him.
All executive officer salaries are reviewed on an annual basis. In
deciding on changes in the annual base salary of the Chief Executive Officer,
which occurs upon employment contract renewal, the Compensation Committee
considers several performance factors. Among these are operating and
administrative efficiency and the maintenance of an appropriately experienced
management team. The Compensation Committee also evaluates the Chief Executive
Officer's performance in the area of finding and evaluating new business
opportunities to establish the most productive strategic direction for our
company. Salary changes for other executives are based primarily on their
performance in supporting the strategic initiatives of the Chief Executive
Officer, meeting individual goals and objectives set by the Chief Executive
Officer, and improving the operating efficiency of our company. Also, where
applicable, changes in the duties and responsibilities of each other executive
officer may be considered in deciding on changes in annual salary.
Stock Options. Stock options have been administered by the Compensation
Committee of the Board of Directors. Our board and shareholders have approved
four stock option plans for employees, directors and consultants of our company.
Amounts available and options granted pursuant to those plans are set forth in
the tables below.
Compensation Committee: Jeffrey Levy (Chair)
John Hatsopoulos
Arthur L. Money
Ashok Rao
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The board of directors has established a compensation committee which is
currently comprised of Mr. Levy, chairman, Mr. Hatsopoulos, Mr. Money and Mr.
Rao. No member of the Compensation Committee has a relationship that would
constitute an interlocking relationship with Executive Officers or Directors of
the Company or another entity.
CERTAIN TRANSACTIONS
On January 1, 2005, we renewed our agreement with Alexandros Partners LLC
to act as consultants in advising us in financial and investor relation matters.
We agreed to pay a consulting fee of $50,000 payable in 12 equal monthly
installments. The agreement terminates on December 31, 2005. Mr. John
Hatsopoulos, a principal of Alexandros Partners LLC, is currently a member of
our Board of Directors. This transaction was approved by all of the independent
directors of our Board of Directors.
- 14 -
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return on
our common stock assuming a $100 investment as of November 19, 1999, and based
on the market prices at the end of each fiscal year, with the cumulative total
return of the AMEX Market Value Index and the AMEX Technology Index.
[GRAPHIC OMITTED][GRAPHIC OMITTED]
Cumulative Total Return
-----------------------------------------------
Fiscal Year Ending December 31,
12/99 12/00 12/01 12/02 12/03 12/04
INTELLI-CHECK, INC 100.00 97.75 163.51 62.02 71.10 40.45
AMEX MARKET VALUE (U.S.) 100.00 77.40 68.68 58.74 83.47 102.61
AMEX TECHNOLOGY 100.00 37.14 33.10 19.99 30.84 37.57
- 15 -
PROPOSAL NO. 2
APPROVAL OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Our board of directors appointed Amper, Politziner & Mattia, P.C. as
independent public accountants to examine Intelli-Check's financial statements
for the fiscal year ending December 31, 2005. The board of directors recommends
approval of such appointment
On April 21, 2004, the Company dismissed its independent auditors, Grant
Thornton LLP ("Grant Thornton"), and engaged Amper, Politziner & Mattia P.C.
("Amper") as its new independent registered public accounting firm. The change
in auditors became effective immediately. This determination followed the
Company's decision to seek proposals from independent accountants to audit the
financial statements of the Company, and was approved by the Company's Board of
Directors upon the recommendation and approval of its Audit Committee. The audit
reports of Grant Thornton on the Company's financial statements for the years
ended December 31, 2003 and 2002 did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles. During our fiscal years ended December 31,
2003 and 2002, and through the date of Grant Thornton's dismissal on April 21,
2004, there were no disagreements between the Company and Grant Thornton on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to Grant
Thornton's satisfaction, would have caused Grant Thornton to make reference to
the subject matter of the disagreement in connection with its reports.
Representatives of Amper, Politziner & Mattia, P.C. are expected to be
present at the annual meeting of shareholders with the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
During fiscal years ended December 31, 2003 until April 21, 2004, our
principal independent auditor was Grant Thornton LLP. Thereafter, our principal
independent auditor was Amper, Politziner & Mattia, P.C. The services of each
were provided in the following categories and amount:
AUDIT FEES
The aggregate fees billed by Grant Thornton LLP for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal years ended December 31, 2003, for the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for fiscal
year 2003 and for services performed in connection with the Company's Forms S-2
and S-3 registration statements filed in 2003, were $252,660. We were billed
$10,000 by Grant Thornton LLP for fees relating to the transition to Amper,
Politziner and Mattia, P.C. as our auditors during 2004.
The aggregate fees billed by Amper, Politziner and Mattia, P.C. for
professional services rendered for the audit of the Company's annual financial
statements for the fiscal year ended December 31, 2004 and for the reviews of
the financial statements included in the Company's Quarterly Reports on Form
10-Q for fiscal year 2004 amounted to $78,400.
AUDIT RELATED FEES
Other than the fees described under the caption "Audit Fees" above, Grant
Thornton LLP did not bill any fees for services rendered to us during fiscal
year 2003 for assurance and related services in connection with the audit or
review of our financial statements. Amper, Politziner and Mattia, P.C. did not
bill any fees for services rendered to us during fiscal year 2004 for assurance
and related services in connection with the audit or review of our financial
statements.
- 16 -
TAX FEES
There were no tax fees billed by Grant Thornton LLP during fiscal year
2003. Amper, Politziner and Mattia, P.C. has not billed us for tax fees for
fiscal 2004, but they did perform tax related services for us which we estimate
to be approximately $3,000.
ALL OTHER FEES
There were no fees billed by Grant Thornton LLP for other professional
services rendered during the fiscal year ended December 31, 2003.
There were no fees billed by Amper, Politziner and Mattia, P.C. for other
professional services rendered during the fiscal year ended December 31, 2004.
PRE-APPROVAL OF SERVICES
The Audit Committee pre-approves all services, including both audit and
non-audit services, provided by our independent accountants. For audit services,
each year the independent auditor provides the Audit Committee with an
engagement letter outlining the scope of proposed audit services to be performed
during the year, which must be formally accepted by the Committee before the
audit commences. The independent auditor also submits an audit services fee
proposal, which also must be approved by the Committee before the audit
commences.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
mentioned above to be presented to the meeting. However, if other matters
properly come before the meeting, the individual named in the accompanying proxy
shall vote on such matters in accordance with his best judgment.
ANNUAL REPORT
Our annual report to stockholders concerning our operations during the
fiscal year ended December 31, 2004, including audited financial statements, has
been distributed to all record holders as of the record date. The annual report
is not incorporated in the proxy statement and is not to be considered a part of
the soliciting material.
UPON WRITTEN REQUEST, WE WILL PROVIDE, WITHOUT CHARGE, A COPY OF OUR
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004, TO EACH
SHAREHOLDER OF RECORD OR TO EACH SHAREHOLDER WHO OWNED OUR COMMON STOCK LISTED
IN THE NAME OF A BANK OR BROKER, AS NOMINEE, AT THE CLOSE OF BUSINESS ON APRIL
21, 2005. ANY REQUEST BY A SHAREHOLDER FOR OUR ANNUAL REPORT ON FORM 10-K SHOULD
BE SENT TO INVESTOR RELATIONS AT INTELLI-CHECK, INC., 246 CROSSWAYS PARK WEST,
WOODBURY, NEW YORK 11797.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Stockholders' proposals intended to be presented at next year's Annual
Meeting of Shareholders must be submitted in writing to INVESTOR RELATIONS at
INTELLI-CHECK, INC., 246 CROSSWAYS PARK WEST, WOODBURY, NEW YORK 11797, no later
than January 23, 2006 for inclusion in the Company's proxy statement and form of
proxy for that meeting. Although proposals that are not timely submitted will
not be included in the proxy statement for next year's Annual Meeting of
Shareholders, the SEC rules allow proxies to grant discretionary authority to
vote on matters that were not timely submitted to the Company for inclusion in
the proxy statement, provided that the Company had notice of such matters no
later than March 29, 2006.
- 17 -
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Shareholders may read and copy any reports, statements
or other information that we file at the SEC's public reference rooms in
Washington, D.C., New York, New York, and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information about the public reference rooms. Our
public filings are also available from commercial document retrieval services
and at the Internet Web site maintained by the SEC at http://www.sec.gov.
SHAREHOLDERS SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROXY STATEMENT TO VOTE THEIR SHARES AT THE ANNUAL MEETING.
NO ONE HAS BEEN AUTHORIZED TO PROVIDE ANY INFORMATION THAT IS DIFFERENT FROM
WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED MAY 13,
2005. STOCKHOLDERS SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS
PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE.
By Order of the Board of Directors,
Frank Mandelbaum
Chairman
- 18 -
EXHIBIT A
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE CHARTER
Composition and Term of Office
The Board of Directors shall designate annually three or more of its independent
members to constitute members of the Nominating and Corporate Governance
Committee.
Responsibilities
The Committee shall have the power and duty to:
1. Review, at least annually, the structure of the Board to assure that
the proper skills and experience are represented on the Board. At
least 2/3 of the members of the Board shall be independent
directors.
2. Recommend to the full Board:
(a) nominees to fill vacancies on the Board as they occur; and
(b) prior to each annual meeting of shareholders, a slate of
nominees for election or reelection as Directors by the
shareholders at the annual meeting.
3. Seek out and evaluate candidates to serve as Board members, and
consider candidates submitted by shareholders of the Company in
accordance with the notice provisions and procedures set forth in
the by-laws of the Company.
4. Periodically make recommendations to the Board with respect to the
size of the Board.
5. Recommend to the Board the membership of the committees of the
Board.
6. Periodically make recommendations to the Board with respect to the
compensation of Board members.
7. Make all determinations as to whether or not an individual is
independent, taking into account any applicable regulatory
requirements and such other factors as the Committee may deem
appropriate.
8. Make recommendations to the Board regarding corporate governance
matters and practices, including formulating and periodically
reviewing corporate governance guidelines to be adopted by the
Board.
9. Perform such other functions as may from time to time be assigned by
the Board of Directors.
Meeting Times
The Committee shall meet prior to the annual meeting each year and at such other
times as any member of the Committee may request.
The Committee may diverge from the specific activities outlined throughout this
Charter as appropriate if circumstances or regulatory requirements change. In
addition to these activities, the Committee may perform such other functions as
necessary or appropriate under applicable laws, regulations, AMEX rules, the
Corporation's certificate of incorporation and by-laws, and the resolutions and
other directives of the Board.
- 19 -
This Charter is in all respects subject and subordinate to the Corporation's
certificate of incorporation and by-laws, the resolutions of the Board and the
applicable provisions of the Delaware General Corporation Law.
- 20 -
EXHIBIT B
AUDIT COMMITTEE CHARTER
The Audit Committee of the Board of Directors (the "Committee") shall assist the
Board of Directors in fulfilling its fiduciary and other obligations with
respect to accounting and financial matters. Specifically, and without limiting
the generality of the foregoing, the Committee shall:
1. Consist of at least three qualified (solely) Independent members of
the Board of Directors ("Board") appointed by the Board, each of
whom is able to read and understand fundamental financial
statements. The audit committee must have at least one member that
has employment experience in finance or accounting, professional
certification in accounting or any comparable experience or
background which results in the individual's financial
sophistication including being or having been a CEO, CFO or other
similar senior officer financial role. The Board also appoints the
chairperson of the Committee.
2. Review the qualification, performance and independence of the
Corporation's independent auditors and recommend independent
auditors for appointment annually by the Board.
3. Establish an open avenue of communications among the independent
accountants, financial and senior management and the Board of
Directors. Affirm that the independent accountants report directly
to the Audit Committee and the Board.
4. Review with the auditors the adequacy and effectiveness of the
Corporation's system of internal financial controls and accounting
practices to achieve reliability and integrity in the Corporation's
financial statements, and initiate such examinations of such
controls and practices as the Committee deems advisable. As part of
this process, the Committee shall review the auditor's management
review letter each year.
5. Review the authority and duties of the Corporation's chief financial
officer and chief accounting officer and the performance by each of
them of their respective duties.
6. As the outside auditors are ultimately accountable to the board of
directors and the audit committee, the audit committee will
evaluate, sole authority to select and where appropriate, replace
the outside auditor(or to nominate the outside auditor to be
proposed for shareholder approval in any proxy statement)
7. Prior to the commencement of the Corporation's annual external
audit, review with the Corporations' independent auditors the scope
of their audit function and estimated audit fees.
8. Subsequent to the completion of the Corporation's annual external
audit, review the report and recommendations of the independent
auditors with the independent auditors and the Corporations'
management, as well as any difficulties encountered during the
course of the audit.
9. Review the annual and quarterly consolidated financial statements of
the Corporation and other financial disclosures of the Corporation
and the accounting principles being applied in such statements and
disclosures.
10. Prior to public release, review with management and the independent
accountants, the financial results for the prior year including the
Corporation's annual report on Form 10-K.
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11. Meet with the chief financial officer and the independent
accountants, in separate executive sessions, to discuss any matters
that the committee or these groups believe should be considered
privately.
12. Review the insurance programs of the Corporation including
professional malpractice, general liability, director and officer
liability and property insurance, and the insurers carrying the
Corporation's insurance.
13. Oversee the establishment and thereafter periodically review a
corporate code of conduct and the Corporation's policies on ethical
business practices.
14. Define a policy on corporate securities trading.
15. Review and reassess the adequacy of this charter on an annual basis.
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