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.
For further information: Kelly Reid, ComnetiX Inc., (905) 829-9988,
Investor.relations@comnetix.com
