<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [_]
Check the appropriate box:
[_] 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 Rule 14a-11(c) or Rule 14a-12
CASH TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of the Corporation as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box)
[X] No Fee Required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
N/A
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
N/A
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
-------------------------------------------------------------------------
[_] 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 form or schedule and the date of filing.
(1) Amount previously paid:
-------------------------------------------------------------------------
(2) Form schedule or registration number:
-------------------------------------------------------------------------
(3) Filing party:
-------------------------------------------------------------------------
(4) Date filed:
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<PAGE>
CASH TECHNOLOGIES, INC.
1434 West 11th Street
Los Angeles, California 90015
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 21, 1999
--------------------
To the Shareholders of
CASH TECHNOLOGIES, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of CASH
TECHNOLOGIES, INC. (the "Corporation" or "Company") will be held at The Radisson
Hotel, 3540 South Figueroa Street, Los Angeles, California 90007 on Monday, June
21, 1999 at 10:30 a.m., Los Angeles time, for the following purposes:
1. To elect six Directors to the Corporation's Board of Directors to hold
office for a period of one year or until their successors are duly elected and
qualified;
2. To consider and act upon a proposal to amend the 1996 Stock Option
Plan (the "1996 Plan") to increase by 200,000 shares of Common Stock the number
of shares of Common Stock reserved for issuance under the 1996 Plan;
3. To consider and act upon the adoption of the Non-Executive Director
Stock Option Plan (the "Director Plan") in the form of Exhibit A annexed hereto;
and
to transact such other business as may properly be brought before the
meeting or any adjournment thereof.
The close of business on May 12, 1999 has been fixed as the record date for
the determination of shareholders entitled to notice of, and to vote at, the
meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you plan
to attend, please complete, date and sign the accompanying proxy and return it
promptly in the enclosed envelope to assure that your shares are represented at
the meeting. If you do attend, you may revoke any prior proxy and vote your
shares in person if you wish to do so. Any prior proxy will automatically be
revoked if you execute the accompanying proxy or if you notify the Secretary of
the Corporation, in writing, prior to the Annual Meeting of Shareholders.
By Order of the Board of Directors
Robert M. Gielow, Secretary
Dated: May 14, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
<PAGE>
CASH TECHNOLOGIES, INC.
1434 West 11th Street
Los Angeles, California 90015
--------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 21, 1999
--------------------
This proxy statement and the accompanying form of proxy have been mailed on
or about May 14, 1999 to the holders of the Common Stock of record ("Record
Date") on May 12, 1999 of CASH TECHNOLOGIES, INC., a Delaware corporation (the
"Corporation" or "Company") in connection with the solicitation of proxies by
the Board of Directors of the Corporation for use at the Annual Meeting of
Shareholders to be held on Monday, June 21, 1999 and at any adjournment thereof.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The close of business on May 12, 1999 has been fixed as the Record Date for
the determination of the Common Stock shareholders entitled to notice of and to
vote at the meeting and any adjournment thereof. At that date, there were
3,488,665 shares of Common Stock issued and outstanding. Voting of the shares
of Common Stock is on a non-cumulative basis. Shares of the Corporation's
Common Stock represented by an effective proxy in the accompanying form will,
unless contrary instructions are specified in the proxy, be voted as follows:
FOR the election of the six persons nominated by the Board of Directors as
Directors; FOR the proposal to amend the 1996 Stock Option Plan (the "Employee
Plan") to increase by 200,000 shares of Common Stock the number of shares of
Common Stock reserved for issuance under the 1996 Plan; and FOR the adoption of
the Non-Executive Director Stock Option Plan (the "Director Plan") in the form
of Exhibit A annexed hereto.
Any such proxy may be revoked at any time before it is voted. A
shareholder may revoke this proxy by notifying the Secretary of the Corporation
either in writing prior to the Annual Meeting, in person at the Annual Meeting,
by submitting a proxy bearing a later date or by voting in person at the Annual
Meeting. Directors shall be elected by an affirmative vote of a plurality of
the votes cast at the meeting. A majority of the shares present and voting at
the meeting is required for approval of all other items being submitted to the
shareholders for their consideration. A shareholder voting through a proxy who
abstains with respect to the election of Directors is considered to be present
and entitled to vote on the election of Directors at the meeting for quorum
purposes, and is in effect a negative vote. Broker non-votes will counted in
the determination of a quorum, but will not be included in the calculation of
the vote for election of directors or any other matter. A shareholder voting
through a proxy who abstains with respect to approval of any other matter duly
presented at the Annual Meeting is considered to be present and entitled to vote
on that matter and is in effect a negative vote.
<PAGE>
The Corporation will bear the cost of the solicitation of proxies by the
Board of Directors. The Board of Directors may use the services of its
executive officers and certain directors to solicit proxies from shareholders in
person and by mail, telegram and telephone. Arrangements may also be made with
brokers, fiduciaries, custodians, and nominees to send proxies, proxy statements
and other material to the beneficial owners of the Corporation's Common Stock
held of record by such persons, and the Corporation may reimburse them for
reasonable out-of-pocket expenses incurred by them in so doing.
The Annual Report to Shareholders for the fiscal year ended May 31, 1998,
including financial statements, accompanies this proxy statement.
The principal executive offices of the Corporation are located at 1434 West
11th Street, Los Angeles, California 90015; the Corporation's telephone number
is (213) 745-2000.
Independent Public Accountants
The Board of Directors of the Corporation has selected BDO Seidman, LP,
Certified Public Accountants, as independent accountants of the Corporation for
the fiscal year ending May 31, 1999. Shareholders are not being asked to approve
such selection because such approval is not required. The audit services
provided by BDO Seidman, LP, consists of examination of financial statements,
services relative to filings with the Securities and Exchange Commission, and
consultation in regard to various accounting matters. Representatives of BDO
Seidman, LP, are expected to be present at the meeting, will have the
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions.
2
<PAGE>
VOTING SECURITIES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The securities entitled to vote at the meeting are the Corporation's common
stock, par value $.01 per share (the "Common Stock"). The presence, in person
or by proxy, of a majority of shares entitled to vote will constitute a quorum
for the meeting. Each share of Common Stock entitles its holder to one vote on
each matter submitted to shareholders. The close of business on May 12, 1999
has been fixed as the Record Date for the determination of the Common Stock
shareholders entitled to notice of and to vote at the meeting and any
adjournment thereof. At that date, there were 3,488,665 shares of Common Stock
issued and outstanding. Voting of the shares of Common Stock is on a non-
cumulative basis.
The following table sets forth certain information as of March 12, 1999,
with respect to each Director, each nominee for Director, all Directors and
Officers as a group and the persons (including any "group" as that term is used
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), known
by the Corporation to be the beneficial owner of more than five percent of any
class of the Corporation's Common Stock, the sole class of voting securities.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature Percentage of Shares
Beneficial Owners (1) (2) of Beneficial Owner Beneficially Owned
<S> <C> <C>
Bruce Korman (3) 996,657 27%
Richard Miller (4) 716,657 24.8%
Robert B. Fagenson (5) 30,000 *
Vincent A. Carrino (5) 30,000 *
Edward G. Harshfield (5) 30,000 *
Robin Richards (5) 30,000 *
Robert M. Gielow (6) 50,000 1.4%
Christine Dobbings (7) 50,000 1.4%
All directors and executive officers 1,933,314 49.45%
as a group (8 persons)
(1)(2)(3)(4)(5)(6)(7)
</TABLE>
*Denotes less than 1%.
- ------------------------------------------
footnotes appear on next page
3
<PAGE>
(1) Unless otherwise indicated, the address for each named individual or group
is in care of Cash Technologies, Inc., 1434 West 11th Street, Los Angeles,
California 90015.
(2) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them. A person is deemed to be the beneficial
owner of securities that can be acquired by such person within 60 days from May
12, 1999 upon the exercise of options, warrants or convertible securities. Each
beneficial owner's percentage ownership is determined by assuming that options,
warrants or convertible securities that are held by such person (but not those
held by any other person) and which are exercisable within 60 days of the date
of proxy statement.
(3) Includes 516,477 shares owned by First Bancorp L.P. Mr. Korman is a limited
partner of First Bancorp L.P. and the President of the general partner of First
Bancorp L.P. Also includes (i) 280,000 shares of Common Stock issued to
investors in October 1996 who have granted Mr. Korman a three-year right to vote
such shares which expires in October 1999, and (ii) 200,180 shares subject to
outstanding exercisable and unexercisable options.
(4) Includes 516,477 shares owned by Lakeview Enterprises, Ltd. Mr. Miller is a
limited partner of Lakeview Enterprises, Ltd. and the President of the general
partner of Lakeview Enterprises, Ltd. Also includes 200,180 shares subject to
outstanding exercisable and unexercisable options.
(5) Messrs. Fagenson, Harshfield and Carrino were elected to the Board of
Directors on August 4, 1998. Mr. Richards was appointed to the Board of
Directors effective March 16, 1999. The Board of Directors has determined to
submit for stockholder approval a proposal to adopt a Non-Executive Director
Plan pursuant to which each non-employee director of the Company will be granted
30,000 options to purchase Common Stock of the Company, which options will vest
in 1/3 increments commencing on the date of the grant. The date of the grant is
the date that such Director is elected to the Board of Directors. See Proposal
II. Does not include any shares of Common Stock or other securities owned by
Starr Securities, Inc. of which Mr. Fagenson is an officer and director.
(6) Includes five-year options to purchase an aggregate of $50,000 shares
exercisable at $8.56 per share. The options vest in increments of 1/3 per year
commencing January 2000.
(7) Includes five-year options to purchase an aggregate of 50,000 shares
exercisable at prices between $3.50 and $7.00 per share. The options vest in
increments of 1/3 commencing July, 1998.
Certain Reports
No person who, during the fiscal year ended May 31, 1998, was a Director,
officer of beneficial owner of more than ten percent of the Corporation's Common
Stock (which is the only class of securities of the Corporation registered under
Section 12 of the Securities Exchange Act of 1934 (the "Act"), (a "Reporting
Person") failed to file on a timely basis, reports required by Section 16 of the
Act during the most recent fiscal year. The Corporation was not subject to the
reporting requirements under the Act prior to its initial public offering in
July, 1998
4
<PAGE>
ELECTION OF DIRECTORS
A board of six directors is proposed to be elected at the Annual Meeting of
Stockholders to hold office for a term of one year and until their respective
successors shall have been duly elected and qualified. The affirmative vote of
a plurality of the outstanding shares of Common Stock entitled to vote thereon,
voting together as a single class at the Annual Meeting of stockholders is
required to elect the directors. All proxies received by the Board of Directors
will be voted for the election as directors of the nominees listed below if no
direction to the contrary is given. In the event that any nominee is unable to
serve, the proxy solicited hereby may be voted, in the discretion of the
proxies, for the election of another person in his stead. The Board of
Directors knows of no reason to anticipate that this will occur. No family
relationship exists between any nominee for election as a director.
The following table sets forth certain information as of May 12, 1999 with
respect to the six nominees for election as directors of the Company, all of
whom are incumbents.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Bruce Korman 39 President, Chief Executive Officer and
Chairman of the Board
Richard Miller 46 Director and Assistant Secretary
Robin Richards 43 Director
Robert B. Fagenson 50 Director
Vincent A. Carrino 43 Director
Edward G. Harshfield 62 Director
</TABLE>
Bruce Korman has been President, Chief Executive Officer and Chairman of
the Board of Directors of the Company since its inception, and has served in the
same capacities at National Cash Processors, Inc. ("NCP") and CoinBank Automated
Systems, Inc. ("CAS"), the Company's wholly-owned subsidiaries, since their
respective inceptions. Since 1984, Mr. Korman has been a principal and general
partner in a series of real estate limited partnerships engaged in the
development, construction and management of multi-family housing projects in
Southern California.
Richard Miller was Vice President, Secretary, Chief Financial Officer and a
Director of the Company since its inception and has served in the same
capacities at NCP and as Chief Financial Officer, Secretary and Director at CAS
since their respective inceptions. Effective January 11, 1999, Mr. Miller
resigned as a Vice President and chief Financial Officer of the Company and it
subsidiaries. Since 1985, Mr. Miller has served as President and Chief
Executive Officer of Union Fidelity, a mortgage banking firm
5
<PAGE>
which he founded. Mr. Miller is also the President of Lakeview Enterprises,
Ltd., a private real estate limited partnership.
Robin Richards was appointed to the Company's Board of Directors in March,
1999. Mr. Richards serves as the President and Chief Operating Officer of
MP3.Com, a internet music company, positoins he has held since January 1999.
Prior to joining MP3.Com, Mr. Richards was a President and and Chief Executive
Officer at Lexi International, a teleservices company from October 1985. Mr.
Richards also serves on the Board of Directors of Tickets.Com, Inc. and is the
President of The Chase Foundation.
Robert B. Fagenson has been a director since August 4, 1998. Mr. Fagenson
has, for more than the last five years, been a director and President of
Fagenson & Co., Inc., a New York Stock Exchange ("NYSE") specialist firm, and a
Vice President and director of Starr Securities, Inc. a registered broker-dealer
and member of the NYSE. Mr. Fagenson is also a director and Vice Chairman of
the NYSE; a director of Rent-Way, Inc., a company listed on the NYSE; a director
of Intrenet, Inc., a company listed on the Nasdaq SmallCap Market; and a
director of Hudson Hotel Corporation, a company listed on the Nasdaq National
Market. Mr. Fagenson serves as the representative of Starr Securities, Inc.,
the co-underwriter in the Company's initial public offering.
Edward Harshfield has been a director of the Company since August 4, 1998.
Mr. Harshfield is currently Chairman, Chief Executive Officer and Director of
MFN Financial Corporation, a specialty finance company. Mr. Harshfield was Vice
Chairman and Director of California Federal Bank from 1997 to 1998 and President
Chief Executive Officer and Director from 1993 until 1997, when the bank was
acquired by its current management. From October 1992 to March 1993, Mr.
Harshfield served as Chief Executive Officer and Director of First City Texas
National Bank and directed its restructure and sale. Mr. Harshfield was
President, Chief Executive Office of Household Financial Services from 1984 to
1987, and from 1988 to 1955 Chairman, Chief Executive Officer and General
Partner of U.S. Thrift Opportunity Partners, a Merrill Lynch sponsored
partnership investing in undercapitalized thrift institutions. Prior to
Household, Mr. Harshfield held management positions at Ford Motor Credit,
Pepsico and Citicorp/Citibank. He also currently serves as Chairman, Financial
Pacific Corp.; Director, California Federal Bank; and Advisory Board Member,
Provender Capital Group and Argonaut Private Equity Management, LLC.
Vincent A. Carrino has been a director of the Company since August 4, 1998.
Mr. Carrino founded Brookhaven Capital Management, Inc., an investment
management company headquartered in Menlo Park, California in 1986 and has been
its President since such time. Mr. Carino serves as a director of Rent Way,
Inc., a company listed on the NYSE.
Pursuant to the terms of the Underwriting Agreement between the Company and
Starr Securities, Inc, and Gunn Allen Financial Corp., the underwriters in its
initial public offering, the underwriters may appoint a designee as either a
member of the Board of Directors or as an advisor to attend all Board Meetings.
Mr. Fagenson serves as the nominee of the underwriters.
6
<PAGE>
Compensation of Directors, Committees of the Board and Board Meetings.
During the fiscal year ended May 31, 1998 the Company did not pay any
consideration to Mr. Korman or Mr. Miller for their services as members of the
Board. Mr. Korman and Mr. Miller were the only members of the Board of Directors
until August 4, 1998 when Messrs. Fagenson, Carrino and Harshfield were
appointed to the Board. Mr. Richard was appointed to the Board of Directors on
March 16, 1999. Prior to August 4, 1998 the Board of Directors had no
committees.
Directors do not receive cash compensation for serving on the Board of
Directors. The Corporation reimburses Directors who are not employees of the
Corporation the costs of attending meetings of the Board of Directors.
Directors employed by the Corporation are not entitled to any additional
compensation as such. All non-employee directors are eligible to participate in
the Non-Executive Director Stock Option Plan which is being submitted for
shareholder approval as Proposal II. Under the Non-Executive Director Plan each
non-employee director would receive 30,000 options upon joining the Board of
Directors. The options would vest as follows: 10,000 options vest upon the date
of joining the Board; 10,000 options vest on the first anniversary date; and
10,000 options vest on the director's second anniversary date. There are no
annual grants of options to directors under the Non-Executive Director Plan.
The Board of Directors has established two committees. The Audit Committee
is comprised of Robin Richards, Vincent Carrino and Richard Miller. Mr.
Richards serves as the Chairman of the Audit Committee. All of the members of
the Audit Committee are independent directors of the Company. The audit
committees' duties include: (i) reviewing with the Company's independent
auditors, the scope and results of any audits; and (ii) reviewing with the
independent auditors and management, the Company's accounting, financial and
operating controls and staff.
In addition, the Board of Directors has established a Compensation
Committee comprised of Messrs. Richards, Harshfield and Fagenson. Mr.
Harshfield serves as Chairman of the Compensation Committee. All of the members
of the Compensation Committee are independent directors of the Company. The
Compensation Committee will administer the Company's Employee Stock Option Plan
and negotiate and approve employment agreements between the Company and
executive officers of the Company.
It is anticipated that the Board of Directors will meet on a quarterly
basis in addition to such other occasions as the business of the Corporation may
from time to time require. During the fiscal year ended May 31, 1998, meetings
of the Board of Directors were held on 4 occasions and the directors took action
by unanimous written consent in lieu of a meeting on 3 occasions. Prior to
August 1998, Mr. Korman and Mr. Miller were the only directors of the
Corporation and there were no committees. Each Director of the Corporation
attended all meetings of the Board of Directors held during the period in which
he served.
7
<PAGE>
Vote Required for the Election of Directors
The affirmative vote of the holders of a majority of the shares of Common
Stock voting at the Annual Meeting is required for the approval of the nominees
for Directors.
THE BOARD OF DIRECTORS DEEMS THE NOMINEES FOR DIRECTORS TO BE IN THE BEST
INTERESTS OF THE CORPORATION AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE "FOR"
APPROVAL THEREOF.
8
<PAGE>
EXECUTIVE COMPENSATION AND RELATED MATTERS
The following table sets forth certain compensation paid by the Company
during the fiscal years ended May 31, 1998, May 31, 1997 and May 31, 1996 to its
President and Chief Executive Officer (the "Named Executive"). No officer of
the Company received compensation in excess of $100,000 for the fiscal year
ended May 31, 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
---------
Compensation
------------
Securities
---------- All Other
Name and Principal Position Annual Underlying ---------
- --------------------------- ------ ---------- Compensation
Compensation Options (#) (3)
------------ ----------- ---
Year Salary
---- ------
<S> <C> <C> <C> <C>
Bruce Korman 1998 $ 0(1) -- $ 0
President and Chief Executive 1997 $ 0(1) 85,000 $ 0
Officer
1996 $60,000(2) -- $11,023
</TABLE>
(1) Mr. Korman waived his salary for the fiscal years ended May 31, 1997 and
May 31, 1998.
(2) Of such amount, approximately $10,520 has been paid to Mr. Korman and the
balance is accrued but unpaid as of the date of this Proxy Statement.
(3) Consists of certain living expenses for Mr. Korman.
The following table discloses information concerning stock options granted
in the year ended May 31, 1998 to Mr. Korman, the Named Executive.
Option Grants in Fiscal Year Ended May 31, 1998
<TABLE>
<CAPTION>
Individual Grants
-----------------
Percent of Total
----------------
Number of Securities Options Granted Exercise
-------------------- --------------- -------- Expiration
Underlying Options to Employees in Price ----------
------------------ --------------- ----- Date
Name Granted (1) Fiscal Year (%) ($/Sh) ----
- ---- ----------- ---------------- ------
<S> <C> <C> <C> <C>
Bruce Korman 85,000 29.7 $3.50 12/31/01
</TABLE>
- --------------------
9
<PAGE>
(1) All of such options were exercisable in full from the date of grant.
The following table sets forth information concerning the number of options
owned by the Named Executive and the value of any in-the-money unexercised stock
options as of May 31, 1998. No options were exercised by the Named Executive
during the fiscal year ended May 31, 1998:
Aggregated Option Exercises And Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
May 31, 1998 May 31, 1998(1)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Bruce Korman 85,000 -0- $-0- $-0-
</TABLE>
(1) Year-end values for unexercised in-the-money options represent the positive
spread between the exercise price of such options and the fiscal year-end
market value of the Common Stock. An Option is "in-the-money" if the fiscal
year end fair market value of the Common Stock exceeds the option exercise
price. The Company's Common Stock was not publicly traded as of the end of
the fiscal year on May 31, 1998. The Company's initial public offering was
not consummated until July 1998.
Employment Agreements
The Company has entered into a three (3) year employment agreement with Mr.
Korman effective July 1998 which provides for an initial annual base salary of
$120,000, base salaries of $150,000 and $180,000 in the second and third years,
respectively, and payment of such bonuses as the Board of Directors determines.
Any such bonus will be voted on by the entire Board, including Mr. Korman,
unless Mr. Korman or another director chooses to abstain from voting on the
matter. The agreement will include Mr. Korman's covenant not to compete with
the Company's business during the term of the Agreement and for a period of one
year thereafter. The agreement will require Mr. Korman to devote not less than
40 hours per week of his business time to the business of the Company. Mr.
Korman also participates in other business endeavors which require a portion of
his business time. Although Mr. Korman has advised the Company that his
participation in outside business matters should not interfere with his
performance of his duties as President and Chief Executive Officer of the
Company, there can be no assurance that a conflict of interest will not arise
with respect to the allocation of Mr. Korman's time or that such conflict would
be resolved in the Company's favor. The loss of the services of Mr. Korman
could have a material adverse effect on the Company's business and prospects.
10
<PAGE>
Effective January 11, 1999, the Company entered into a three year
employment agreement with Robert M. Gielow, pursuant to which the Company
retained Mr. Gielow as its Chief Financial Officer and Secretary. The agreement
provides for an initial annual base salary of $175,000 with annual increases and
bonuses as may be determined by the Board of Directors. Mr. Gielow also
received options to purchase 50,000 shares of Common Stock with an exercise
price of $8.56 per share, which options vest in one-third increments commencing
on the January 2000. The agreement further provides that Mr. Gielow may receive
a severance payment of $150,000 under certain circumstances, including
termination without cause.
The Company has entered into an employment agreement with Christine
Dobbings effective January 1, 1998 whereby Ms. Dobbings is employed as Vice
President of Marketing and Sales. The agreement terminates in January 2003.
Pursuant to the employment agreement, Mrs. Dobbings receives a base salary of
$8,533 per month subject to annual increases of 15% per annum. Ms. Dobbings
also receives a monthly car allowance of $500 per month. In addition, Ms.
Dobbings received five year Common Stock options under the Employee Stock Option
Plan to purchase an aggregate of 50,000 shares with exercise prices ranging
between $3.50 and $7.00 per share. The options vest over a three year period.
Employee Stock Option Plan
In 1996, Company adopted the 1996 Employee Stock Option Plan (the "Employee
Plan''). The purpose of the Employee Plan is to attract and retain qualified
personnel, to provide additional incentives to employees, officers and
consultants of the Company and to promote the success of the Company's business.
A reserve of 575,887 shares of the Company's Common Stock had been established
for issuance under the Employee Plan. The Employee Plan is currently
administered by the Board of Directors. Subject to the Employee Plan, the Board
has complete discretion to determine which eligible individuals are to receive
option grants, the number of shares subject to each such grant, the exercise
price of the option, the status of any granted option as either an incentive
stock option or a non-qualified option, the vesting schedule to be in effect for
the option grant and the maximum term for which any granted option is to remain
outstanding.
Each option granted under the Employee Plan will have a maximum term of ten
years, subject to earlier termination following the optionee's cessation of
service with the Company. All options granted to date have a term of five years.
The exercise price of incentive stock options and non-qualified stock options
granted under the Employee Plan must be at least 100% of the fair market value
of the stock subject to the option on the date of grant, respectively (or 110%
with respect to incentive options granted to holders of more than 10% of the
voting power of the Company's outstanding stock). Such payment may be made in
cash, or at the discretion of the Board, in outstanding shares of Common Stock
held by the participant, through a full recourse promissory note payable in
installments over a period of years or any combination of the foregoing. The
Board is submitting for Shareholder approval a proposal to increase the number
of shares reserved under the 1996 Plan by 200,000 shares. See "Proposal I".
11
<PAGE>
PROPOSAL I
PROPOSED AMENDMENT OF THE 1996 PLAN
The Board of Directors has unanimously approved, and recommends shareholder
approval of, an amendment to the 1996 Plan to increase the number of shares of
Common Stock under the 1996 Plan from 575,887 shares to 775,887 shares. Options
issued prior to adoption of the proposed amendment will not be affected by the
amendment.
The Company has issued all of the available options under the Employee Plan
and in connection with the hiring of additional employees and grants to existing
employees, has committed to the grant of an additional 77,543 shares. The
Corporation desires to increase the number of shares reserved for issuance under
the 1996 Plan to attract and retain motivated employees. The Corporation
believes that awards granted under the 1996 Plan have a positive effect on the
Corporation's profits and growth potential by encouraging and assisting those
persons to acquire equity in the Corporation and thereby align their long term
interest with that of the Corporation. To date, the Corporation has awarded
338,531 options to executive officers in recognition of their contributions to
the Corporation and another 314,012 options to persons other than executive
officers. Approximtely 160,000 of the options granted to executives were to
compensate them for their efforts during periods when no compensation was
received and for their agreements to forgive debt owed to them. Frequently,
these awards are granted as bonuses for significant contributions to the
Corporation's business and as an inducement for high-producing individuals to
join the Corporation. The Corporation intends to continue this policy upon the
approval of the proposed amendment by the shareholders of the Corporation.
For a more complete discussion of the Employee Plan, reference is made to
the section under the heading "Stock Employee Plan".
Vote Required to Approve the Amendment to the Employee Plan
The affirmative vote of the holders of a majority of the shares of Common
Stock voting at the Annual Meeting is required for the approval of the proposed
amendment to the Employee Plan.
THE BOARD OF DIRECTORS DEEMS THE PROPOSED AMENDMENT TO THE EMPLOYEE PLAN TO
BE IN THE BEST INTERESTS OF THE CORPORATION AND ITS SHAREHOLDERS AND RECOMMENDS
A VOTE "FOR" APPROVAL THEREOF.
12
<PAGE>
PROPOSAL II
PROPOSED ADOPTION OF THE
NON-EXECUTIVE DIRECTOR STOCK OPTION PLAN
On August 4, 1998, the Board of Directors of the Corporation adopted,
subject to shareholder approval, a Non-Executive Director Stock Option Plan
(the "Director Plan") which will provide each non-executive director with
options to purchase 30,000 options upon joining the Board of Directors. The
options would vest as follows: 10,000 options vest upon joining the Board;
10,000 options vest on the first anniversary date; and 10,000 options vest on
the director's second anniversary date. There are no annual grants of options
to directors under the Director Plan. The Company's Board of Directors
recommends the Director Plan for shareholder approval. Only non-employee
directors of the Corporation are eligible to participate in the Director Plan.
The Board of Directors believes that equity-based incentive compensation plays a
critical role in retaining and attracting motivated directors. Directors receive
no other compensation for serving on the Board of Directors. A copy of the
Director Plan is set forth as Exhibit A annexed hereto and the description of
the Director Plan in this Proxy Statement is qualified in its entirety by
reference to Exhibit A.
The Director Plan is intended to attract and retain key personnel whose
performance is expected to have a positive effect on the Corporation's profits
and growth potential by encouraging and assisting those persons to acquire
equity in the Corporation. The Board believes that by compensating Directors
with stock options the Board will have similar interests to the shareholders of
the Corporation to promote growth and enhanced shareholder value.
Non-Executive Director Stock Option Plan
In August 1998, the Board Of Directors adopted the Non-Executive Director
Stock Option Plan (the "Director Plan"). The Director Plan provides for
issuance of a maximum of 150,000 shares of Common Stock upon the exercise of
stock options granted under the Director Plan. As of May 12, 1999, options to
purchase a total of 150,000 shares of the Corporation's Common Stock have been
issued under the Director Plan. Options may be granted under the Director Plan
until the year 2008 to (i) non-executive directors as defined and (ii) members
of any advisory board established by the Corporation who are not full time
employees of the Corporation or any of its subsidiaries. The Board of Directors
of the Corporation has unanimously approved, and recommends shareholder approval
of, the Director Plan.
The Director Plan provides that each non-executive director will
automatically be granted an option to purchase 30,000 shares upon joining the
Board of Directors. The options would vest as follows: 10,000 options vest upon
joining the Board; 10,000 options vest on the first anniversary date; and 10,000
options vest on the director's second anniversary date. There are no annual
grants of options to directors under the Director Plan.
The exercise price for options granted under the Director Plan shall be
100% of the fair market value of the Common Stock on the date of grant. Until
otherwise provided in the Director Plan the exercise price of options granted
under the Director Plan must be paid at the time of exercise, either in
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<PAGE>
cash, by delivery of shares of Common Stock of the Corporation or by a
combination of each. The term of each option commences on the date it is granted
and, unless terminated sooner as provided in the Director Plan, expires five
years from the date of grant. Options granted under the Director Plan are not
qualified for incentive stock option treatment.
Vote Required to Approve the Director Plan
The affirmative vote of the holders of a majority of the shares of Common
Stock voting at the Annual Meeting is required for the approval of adoption of
the Director Plan.
THE BOARD OF DIRECTORS DEEMS ADOPTION OF THE DIRECTOR PLAN TO BE IN THE
BEST INTERESTS OF THE CORPORATION AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE
"FOR" APPROVAL THEREOF.
FINANCIAL INFORMATION
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL
YEAR ENDED MAY 31, 1998 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
WITHOUT THE ACCOMPANYING EXHIBITS, HAS BEEN INCLUDED IN WITH THIS PROXY
STATEMENT. EXHIBITS SHALL BE FURNISHED TO SHAREHOLDERS, IF REQUESTED, UPON
PAYMENT TO THE CORPORATION OF REASONABLE EXPENSES INCLUDING PHOTOCOPYING AND
MAILING EXPENSES, TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST THEREFORE
SENT TO ROBERT M. GIELOW, CHIEF FINANCIAL OFFICER, CASH TECHNOLOGIES, INC., 1434
WEST 11TH STREET, LOS ANGELES, CA 90015. Each such request must set forth a
good faith representation that as of May 12, 1999 the person making the request
was the beneficial owner of Common Shares of the Corporation entitled to vote at
the 1999 Annual Meeting of Shareholders.
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<PAGE>
OTHER BUSINESS
As of the date of this proxy statement, the foregoing is the only business
which the Board of Directors intends to present, and is not aware of any other
matters which may come before the meeting. If any other matter or matters are
properly brought before the Annual Meeting, or any adjournments thereof, it is
the intention of the persons named in the accompanying form of proxy to vote the
proxy on such matters in accordance with their judgment.
Shareholder Proposals
Proposals of shareholders intended to be presented at the Corporation's
2000 Annual Meeting of Shareholders must be received by the Corporation on or
prior to January 31, 1999 to be eligible for inclusion in the Corporation's
proxy statement and form of proxy to be used in connection with the 2000 Annual
Meeting of Shareholders.
By Order of the Board of Directors
Robert M. Gielow, Secretary
Dated: May 14, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN
YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF IT IS
MAILED IN THE UNITED STATES OF AMERICA.
15
<PAGE>
EXHIBIT A
NON-EXECUTIVE DIRECTOR
STOCK OPTION PLAN OF
CASH TECHNOLOGIES, INC.
<PAGE>
NON-EXECUTIVE DIRECTOR
STOCK OPTION PLAN OF
CASH TECHNOLOGIES, INC.
l. PURPOSE
The purpose of the Non-Executive Director Stock Option Plan (the "Director
Plan") is to provide a means by which each director of CASH TECHNOLOGIES, INC.
(the "Company") who is not otherwise a full time employee of the Company or any
subsidiary of the Company (each such person being hereafter referred to as a
"Non-Executive Director") will be given an opportunity to purchase Common Stock,
$.01 par value per share, of the Company ("Common Stock"). The Company, by
means of the Director Plan, seeks to attract and retain the services of
qualified independent persons to serve as Non-Executive Directors of the Company
and to provide incentives for such persons to exert maximum efforts for the
success of the Company.
2. ADMINISTRATION
(a) The Director Plan shall be administered by a committee of the Board of
Directors of the Company (the "Committee") which shall at all times consist of
not less than two (2) officers or directors who are not entitled to participate
in the Director Plan, to be appointed by the Board of Directors and to serve at
the pleasure of the Board of Directors.
(b) Grant of options under the Director Plan and the amount and nature of
the awards to be granted shall be automatic as described in Section 5 hereof.
However, all questions of interpretation of the Director Plan or of any options
issued under it shall be determined by the Committee and such determination
shall be final and binding upon all persons having an interest in the Director
Plan. A majority of the Committee's members shall constitute a quorum, and all
determinations shall be made by a majority of such quorum. Any determination
reduced to writing and signed by all of the members of the Committee shall be
fully effective as if it had been made by a majority vote at a meeting duly
called and held.
3. SHARES SUBJECT TO THE PLAN
Subject to the provisions of Section l0 hereof, the shares that may be
acquired pursuant to options granted under the Director Plan ("Options") shall
not exceed in the aggregate 150,000 shares of the Company's Common Stock.
The Common Stock subject to the Director Plan may be in whole or in part
authorized and unissued shares of Common Stock or issued shares of Common Stock
which shall have been reacquired by the Company. If any Option shall expire or
terminate for any reason without having been exercised in full, the unissued
shares subject thereto shall again be available for purposes of the Director
Plan.
4. ELIGIBILITY
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<PAGE>
Options shall be granted only to Non-Executive Directors serving on the
Board of Directors of the Company. Non-Executive Directors are those persons
who (i) are have been elected or appointed to the Company's Board of Directors
in accordance with the laws of the State of Delaware or the Company's Bylaws and
are not otherwise a full time employee of the Company or any subsidiary of the
Company and (ii) are deemed "non-employee directors" as defined in Securities
and Exchange Commission Rule 16b-3.
5. NON-DISCRETIONARY GRANTS
(i) Commencing on August 1, 1998, Options to purchase 30,000 shares
of Common Stock on the terms and conditions set forth herein shall be granted to
each Non-Executive Director upon joining the Board of Directors. The Options
granted shall vest in annual one-third increments commencing on the date of
grant and thereafter on each anniversary date provided that the director has
been a member of the Board of Directors for the preceding 12 months.
(ii) The exercise price of any Options granted hereunder shall equal
the Fair Market Value (as defined in Subsection 6(b) below) of the Company's
Common Stock on the date of grant. All Options shall terminate and no Shares may
be purchased after the Expiration Date.
6. OPTION PROVISIONS
Each Option shall be evidenced by a written agreement ("Stock Option
Agreement") and shall contain the following terms and conditions:
(a) The term of each Option shall commence on the date it is granted and,
unless sooner terminated as set forth herein, expires on the date five years
from the date of grant ("Expiration Date"). The term of each Option may
terminate sooner than such Expiration Date if the optionee's service as a Non-
Executive Director of the Company terminates for any reason or for no reason.
In the event of termination of service by a director for a reason other than
death, the Option shall terminate on the earlier of the Expiration Date or the
date three (3) months following the date of termination of service as a
director. If termination of service is due to the optionee's death, the option
shall terminate on the earlier of the Expiration Date or twelve (l2) months
following the date of the optionee's death. In any and all circumstances, an
option may be exercised following termination of the optionee's service as a
Non-Executive Director only as to that number of shares as to which it was
exercisable on the date of termination of such service.
(b) The exercise price of each option shall be one hundred percent (l00%)
of the Fair Market Value of the shares subject to such option on the date such
option is granted. "Fair Market Value" of a share of Common Stock shall mean
(i) if the Common Stock is traded on a national securities exchange or on the
Nasdaq National Market System ("NMS"), the per share closing price of the
Common Stock on the principal securities exchange on which they are listed or on
NMS, as the case may be, on the date of grant (or if there is no closing price
for such date of grant, then the last preceding business day on which there was
a closing
3
<PAGE>
price); or (ii) if the Common Stock is on the Nasdaq SmallCap Market, the per
share closing bid price of the Common Stock on the date of grant as reported by
Nasdaq SmallCap (or if there is no closing bid price for such date of grant,
then the last preceding business day on which there was a closing bid price); or
(iii) if the Common Stock is traded in the over-the-counter market but bid
quotations are not published on Nasdaq, the closing bid price per share for the
Common Stock as furnished by a broker-dealer which regularly furnishes price
quotations for the Common Stock or (iv) if no such quote is available, the per
share price as determined by the Board of Directors.
(c) The optionee may elect to make payment of the exercise price under
one of the following alternatives:
(i) Payment of the exercise price per share in cash by
certified check at the time of exercise; or
(ii) Payment by delivery of shares of Common Stock of the Company
already owned by the optionee, which Common Stock shall be valued at Fair
Market Value on the date of exercise or such other forms of cashless exercise
acceptable to the Company and otherwise allowable under applicable regulations
of the Internal Revenue Service; or
(iii) Payment by a combination of the methods of payment
specified in Subsections 6(c)(i) and 6(c)(ii) above.
(d) An option shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person or by his guardian or
legal representative.
(e) All options granted under the Director Plan shall be non-qualified
stock options, which do not qualify as incentive stock options within the
meaning of Section 422A(b), or any successor section, of the Internal Revenue
Code of l986, as amended.
7. RIGHT OF COMPANY TO TERMINATE SERVICES
AS A NON-EXECUTIVE DIRECTOR
Nothing contained in the Director Plan or in any instrument executed
pursuant hereto shall confer upon any Non-Executive Director any right to
continue in the service of the Company or any of its subsidiaries or interfere
in any way with the right of the Company or a subsidiary to terminate the
service of any Non-Executive Director at any time, with or without cause.
8. NONALIENATION OF BENEFITS
No right or benefit under the Director Plan shall be subject to
alienation, sale, assignment, hypothecation, pledge, exchange, transfer,
encumbrance or charge, and any attempt to alienate,
4
<PAGE>
sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the
same shall be void. No right or benefit hereunder shall in any manner be liable
for or subject to the debts, contracts, liabilities or torts of the person
entitled to such benefit.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
The Stock Option Agreements evidencing options may contain such provisions
as the Committee shall determine to be appropriate for the adjustment of the
number and class of shares subject to all outstanding options and the option
prices thereof in the event of changes in the outstanding Common Stock of the
Company by reason of any stock dividend, distribution, split-up,
recapitalization, combination or exchange of shares, merger, consolidation or
liquidation and the like, and, in the event of any such change in the
outstanding Common Stock, the aggregate number and class of shares available
under the Director Plan and the number of shares subject to non-discretionary
grants pursuant to Section 5 hereof shall be appropriately adjusted by the
Committee, whose determination shall be conclusive.
l0. TERMINATION AND AMENDMENT OF PLAN
Unless the Director Plan shall theretofore have been terminated as
hereinafter provided, no grant of Options may be made under the Director Plan
after August 1, 2008. The Board may at any time, but not more than once every
six months except to comply with changes in the Internal Revenue Code, amend,
alter, suspend or terminate the Director Plan; provided, however, that the
Board may not, without the requisite vote of the stockholders of the Company
approving such action (i) materially increase (except as provided in Section 9
hereof) the maximum number of shares which may be issued under the Director
Plan; (ii) extend the term of the Director Plan; (iii) materially increase the
requirements as to eligibility for participation in the Director Plan; or (iv)
materially increase the benefits accruing to participants under the Director
Plan. No termination, modification or amendment of the Director Plan or any
outstanding Stock Option Agreement may, without the consent of the Non-Executive
Director or Advisor to whom any option shall theretofore have been granted,
adversely affect the rights of such Director with respect to such option.
l1. EFFECTIVENESS OF THE PLAN
The Director Plan shall become effective upon the requisite vote of the
stockholders of the Company approving such action, and upon the approvals, if
required, of any other public authorities. Any grant of options under the
Director Plan prior to such approval shall be expressly subject to the condition
that the Director Plan shall have been so approved. Unless the Director Plan
shall be so approved, the Director Plan and all options theretofore made
thereunder shall be and become null and void.
5
<PAGE>
l2. GOVERNMENT AND OTHER REGULATIONS
The obligation of the Company with respect to options shall be subject to
(i) all applicable laws, rules and regulations and such approvals by any
governmental agencies as may be required, including, without limitation, the
effectiveness of a registration statement under the Securities Act of l933, and
(ii) the rules and regulations of any securities exchange on which the Common
Stock may be listed and (iii) the Internal Revenue Code and related regulations.
l3. GOVERNING LAW
The Director Plan shall be governed by, and construed in accordance with,
the laws of the State of Delaware.
6
<PAGE>
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PROXY CARD
CASH TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS--JUNE 21, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE SIGN AND
RETURN THE PROXY IN THE ENCLOSED ENVELOPE.
Either of the proxies, who shall be present and acting, shall have and may
exercise all the powers hereby granted.
IF NO OTHER ELECTION IS MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED FOR: (i) THE ELECTION OF SIX DIRECTORS; (ii) THE PROPOSAL TO AMEND THE
1996 STOCK OPTION PLAN TO INCREASE 1996 STOCK OPTION PLAN BY 200,000 SHARES OF
COMMON STOCK; AND (iii) THE ADOPTION OF THE NON-EXECUTIVE DIRECTOR STOCK OPTION
PLAN.
Said proxies will use their discretion with respect to any other matters
which properly come before the meeting.
Dated: , 1999
---------------------------------------
---------------------------------------------------
Signature
---------------------------------------------------
Print Name
(Please date and sign exactly as accounts. Each
joint owner should sign. Executors,
administrators, trustees, etc. should also so
indicate when signing.)
The proxy is solicited on behalf of the Board of
Directors. Please sign and return in the enclosed
envelope.
<PAGE>
- --------------------------------------------------------------------------------
[X] Please mark your
votes as in this
example.
WITHHOLD
FOR AUTHORITY
all Nominees listed to vote for all
I. Election of below (except as marked nominees listed below
Directors to the contrary below)
[_] [_]
Set forth below are the names of nominees who will be elected to serve until
the next annual meeting of shareholders.
The undersigned hereby appoints BRUCE KORMAN and RICHARD MILLER and each of
them, proxies, with full powers of substitution to each to vote all shares of
Common Stock of CASH TECHNOLOGIES, INC. owned by the undersigned at the Annual
Meeting of Stockholders to be held on June 21, 1999 and at any adjournments
thereof, hereby revoking any proxy heretofore given. The undersigned instructs
such proxies to vote as follows:
(Instruction: Please check appropriate box. To withhold authority for any
individual nominee, strike a line through the nominee's name in the list below.)
<TABLE>
<S> <C> <C>
Bruce Korman Richard Miller Robin Richards
Robert B. Fagenson Vincent A. Carrino Edward G Harshfield
</TABLE>
FOR AGAINST ABSTAIN
II. Proposal to Amend the 1996 Stock Option Plan by
increasing the number of shares of Common Stock [_] [_] [_]
reserved for issuance under the 1996 Stock Option
Plan by 200,000 shares.
III. Proposal to Adopt the Non-Executive Director [_] [_] [_]
Stock Option Plan.
AND TO VOTE UPON ANY OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF, all as described in the Proxy Statement dated May 14,
1999, receipt of which is hereby acknowledged.
