Will Take Legal Action to Stop Bio-key's Offer to Purchase ComnetiX
Shares
OAKVILLE, ON, Feb. 2 /CNW/ - ComnetiX Inc. (TSX: CXI) wishes to respond to a press release issued on January 31, 2007 by Bio-key International, Inc.
On May 17, 2006, during preliminary discussions between ComnetiX and Bio-key with respect to a possible merger or other business combination, which did not materialize, ComnetiX and Bio-key entered into a five-page letter agreement. The agreement provided for exclusive negotiations between the two companies for a period of 30 days. The agreement also included a standard "standstill" clause, which provided that Bio-key would not acquire ComnetiX's shares, or make an offer to acquire ComnetiX's shares, for a period of one year.
The agreement stated that it would terminate in 30 days if the parties did not sign a definitive acquisition agreement, but that the one-year "standstill" clause would continue in effect even after the termination of the agreement.
The agreement terminated on June 16, 2006, 30 days after the date of the agreement, because ComnetiX and Bio-key did not sign a definitive acquisition agreement. The one-year "standstill" clause continues in effect until May 17, 2007.
Bio-key stated in its press release that: (i) the continuation of negotiations between ComnetiX and Bio-key after June 16, 2006 "effectively extended" the agreement; (ii) by meeting with L-1 Identity Solutions, Inc., ComnetiX breached the exclusivity clause of the agreement; (iii) therefore, the agreement was at an end; and (iv) therefore, Bio-key is no longer bound by the one-year "standstill" provision.
Bio-key's claims are without merit for the following reasons:
- ComnetiX never agreed to an extension of the 30-day term of the
agreement;
- It is ComnetiX's position that Bio-key's claim that on-going
discussions "effectively extended" the written agreement is without
foundation; and
- ComnetiX did not breach the exclusivity clause of the agreement while
it was in effect.
The agreement and its exclusivity clause terminated on June 16, 2006. The one-year "standstill" provision remains in effect to this day. Bio-key breached the "standstill" provision by making its unsolicited offer to acquire all of ComnetiX's outstanding shares.
Accordingly, ComnetiX intends to commence legal proceedings compelling Bio-key to withdraw its offer, so that the written agreement between the parties is respected.
The Board of Directors of ComnetiX unanimously recommends that ComnetiX's shareholders vote FOR the special resolution approving the plan of arrangement with L-1 Identity Solutions, Inc., under which L-1 will pay ComnetiX shareholders US$1.12 per share in cash for all of the issued and outstanding shares of ComnetiX, at the annual and special meeting of shareholders to be held on February 8, 2007. Further, the Board of Directors of ComnetiX has unanimously recommended that ComnetiX shareholders reject the offer from Bio-key.
Shareholders who have already voted against the plan of arrangement with L-1 can revoke their proxies and vote FOR the plan of arrangement. If shareholders have not yet voted, ComnetiX urges them to immediately vote FOR the plan of arrangement with L-1.
Shareholders should contact ComnetiX's solicitation agent Georgeson toll-free at 1-866-598-9985 for assistance in voting.
About ComnetiX(TM) Inc (www.ComnetiX.com)
ComnetiX(TM) Inc provides secure identification and authentication solutions to both the public and private sectors throughout North America. ComnetiX offers multimode biometric identification solutions for use in areas such as applicant screening, financial services, health care, transportation, airlines and airports, casinos and gaming, and energy and utilities. Clients include American Airlines, Lehman Brothers, New York City Health and Hospital Corporation, New York State Division of Criminal Justice Services, Toronto Police Services Board, Boston Police Department and the Royal Canadian Mounted Police. ComnetiX is also Canada's premier applicant fingerprinting services company, facilitating tens of thousands of criminal background checks each year through its chain of ten offices across Canada. In addition, ComnetiX has established more than 40 applicant fingerprinting services locations throughout the United States.
Forward Looking Statements
Statements made in this news release that relate to future plans, events or performances are forward-looking statements. Any statement in this release containing words such as "believes," "plans," "expects" or "intends" and other statements that are not historical facts are forward-looking, and these statements involve risks and uncertainties and are based on current expectations. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements.