<PAGE> 1
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
(AMENDMENT NO. )
[X] Filed by the Registrant
[ ] 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
Soliciting Material Pursuant to Rule 14a-11 (e) or Rule 14a - 12
Global Election Systems Inc.
Payment of Filing Fee (Check the appropriate box):
[X] No Filing Fee Required
[ ] $125 per Exchange Act Rules 0-11 (c) (1) (ii), 14a-6 (i) (1), or
14a-6 (i) (2) or Item 22(a) (2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6 (i) (3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6 (i) (4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
<PAGE> 2
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and which the filing fee is calculated and state how it was
determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11
(a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 3
GLOBAL ELECTION SYSTEMS INC.
(the "Company")
NOTICE OF 1999 ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the 1999 Annual General Meeting (the "Meeting") of
the Shareholders of GLOBAL ELECTION SYSTEMS INC. will be held on Thursday, the
28th day of October, 1999 at the hour of 10:00 a.m. in the forenoon (McKinney
time) at 1611 Wilmeth Road, McKinney, Texas, 75069, USA for the following
purposes:
1. To receive the audited consolidated financial statements of the Company
for the fiscal year ended June 30, 1999 (with comparative statements
relating to the preceding fiscal period) together with the Auditor's
Report thereon;
2. To determine the number of Directors for the ensuing year at five (5);
3. To elect the following Directors for the ensuing year;
4. To appoint the Auditor for the ensuing fiscal year and to authorize the
Directors to fix its remuneration;
5. To consider and if thought appropriate to grant authority to the
directors to adopt a stock option plan and to amend such plan or options
as, from time to time, may be required; and
6. To transact such other business as may properly come before the Meeting.
Accompanying this Notice of Annual General Meeting is the Company's Quarterly
Report for its fourth fiscal quarter which contains the Company's audited
consolidated financial statements for the fiscal year ended June 30, 1999, as
well as the Information Circular, Proxy and Supplemental Mailing List Form. The
accompanying Information Circular provides information relating to the matters
to be addressed at the Meeting and is incorporated into this Notice.
Shareholders unable to attend the Annual General Meeting in person should read
the Notes accompanying the enclosed Proxy and complete and return the Proxy to
the Company's Registrar and Transfer Agent, Montreal Trust Company of Canada,
4th Floor, 510 Burrard Street, Vancouver, British Columbia, V6C 3B9, within the
time set out in the said Notes. The enclosed Proxy is solicited by Management
and you may amend it, if you so desire, by striking out the names listed therein
and inserting in the space provided the name of the person you wish to represent
you at the Meeting.
DATED this 24th day of September, 1999.
BY ORDER OF THE BOARD
/s/ HOWARD T. VAN PELT
-----------------------------------
HOWARD T. VAN PELT, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
<PAGE> 4
GLOBAL ELECTION SYSTEMS INC.
1200 West 73rd Avenue, Suite 350
Vancouver, British Columbia
Canada
V6P 6G5
INFORMATION CIRCULAR
(all information as at September 22, 1999 unless otherwise noted)
PERSONS MAKING THE SOLICITATION
This Information Circular is furnished in connection with the solicitation of
proxies being made by management of GLOBAL ELECTION SYSTEMS INC. (the "Company")
for use at the Annual General Meeting of the Company's shareholders (the
"Meeting") to be held on Thursday, the 28th day of October, 1999 at 10:00 a.m.
C.D.T. at 1611 Wilmeth Road, McKinney, Texas, USA, 75069 and for the purposes
set forth in the accompanying Notice of Annual General Meeting. While it is
expected the solicitation will be primarily by mail, proxies may be solicited
personally or by telephone by directors, officers and employees of the Company.
All costs of this solicitation will be borne by the Company. Mailing costs are
not expected to exceed $1,000. The Company anticipates mailing this proxy
statement on September 24, 1999 to shareholders of record as of September 22,
1999.
The contents and the sending of this Information Circular have been approved by
the Directors of the Company.
APPOINTMENT AND REVOCATION OF PROXIES
The individuals named in the accompanying form of proxy are directors of the
Company. A SHAREHOLDER WISHING TO APPOINT SOME OTHER PERSON (WHO NEED NOT BE A
SHAREHOLDER) TO REPRESENT HIM OR HER AT THE MEETING HAS THE RIGHT TO DO SO,
EITHER BY INSERTING SUCH PERSON'S NAME IN THE BLANK SPACE PROVIDED IN THE FORM
OF PROXY OR BY COMPLETING ANOTHER PROXY. A Proxy will not be valid unless the
completed, dated and signed form of proxy is received by MONTREAL TRUST COMPANY
OF CANADA, 4th Floor, 510 Burrard Street, Vancouver, British Columbia, Canada,
V6C 3B9, not less than 48 hours (excluding Saturdays and holidays) before the
Meeting at which the person named therein purports to vote in respect thereof,
or deposited with the Chairman of the Meeting at any time prior to the
commencement of the Meeting.
A shareholder who has given a Proxy may revoke it by an instrument in writing
executed by the shareholder or by his or her attorney authorized in writing or,
where the shareholder is a corporation, by a duly authorized officer or attorney
of the corporation, and delivered to the registered office of the Company
located at Gowling, Strathy & Henderson, Suite 2300, 1055 Dunsmuir Street,
Vancouver, British Columbia, Canada, V7X 1J1, at any time up to and including
the last business day preceding the day of the Meeting or, if adjourned, any
reconvening thereof, or to the Chairman of the Meeting on the day of the Meeting
prior to its commencement or, if adjourned, any reconvening thereof, or in any
other manner provided by law. A revocation of a Proxy does not affect any matter
on which a vote has been taken before the revocation.
VOTING OF PROXIES
SHARES REPRESENTED BY PROXY ARE ONLY ENTITLED TO BE VOTED ON A POLL AND, WHERE A
CHOICE WITH RESPECT TO ANY MATTER TO BE ACTED UPON HAS BEEN SPECIFIED IN THE
FORM OF PROXY, THE SHARES WILL, ON A POLL, BE VOTED OR WITHHELD FROM VOTING IN
ACCORDANCE WITH THE SPECIFICATIONS SO MADE.
IN THE ABSENCE OF ANY INSTRUCTION IN THE PROXY, IT IS INTENDED THAT SUCH SHARES
WILL BE VOTED IN FAVOR OF THE MOTIONS PROPOSED TO BE MADE AT THE MEETING, AS
STATED UNDER THE HEADINGS IN THIS INFORMATION CIRCULAR.
<PAGE> 5
The enclosed Proxy when properly completed and delivered and not revoked confers
discretionary authority upon the person appointed proxy thereunder to vote on
amendments or variations of matters identified in the Notice of Annual General
Meeting, and on other matters which may properly come before the Meeting. In the
event that amendments or variations to matters identified in the Notice of
Annual General Meeting are properly brought before the Meeting or any further or
other business is properly brought before the Meeting, it is the intention of
the persons designated in the enclosed form of proxy to vote in accordance with
their best judgment on such matters or business. At the time of printing of this
Information Circular, management of the Company knows of no such amendment,
variation or other matter to come before the Meeting.
APPROVAL OF MATTERS
Unless otherwise noted, approval of matters to be placed before the Meeting is
by an "ordinary resolution", which is a resolution passed by a simple majority
(50% plus one) of the votes cast by shareholders of the Company present and
entitled to vote in person or by proxy.
VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES
<TABLE>
<S> <C>
Authorized Capital: 120,000,000 shares divided into:
100,000,000 Common shares without par value; and
20,000,000 Convertible voting preferred shares
without par value
Issued and Outstanding: 18,483,672 Common shares without par value
</TABLE>
Only shareholders of record at the close of business on September 22, 1999 (the
"Record Date"), who either personally attend the Meeting or who have completed
and delivered a form of proxy in the manner and subject to the provisions
described above shall be entitled to vote or to have their shares voted at the
Meeting.
Each shareholder is entitled to one vote for each share registered in his or her
name on the list of members, which is available for inspection during normal
business hours at MONTREAL TRUST COMPANY OF CANADA and at the Meeting.
To the knowledge of the directors and senior officers of the Company, there are
no individuals or companies who beneficially own, directly or indirectly, or
exercise control or direction over shares carrying more than 10% of the voting
rights attached to all outstanding shares of the Company.
The following table sets forth, as of June 30, 1999, the beneficial ownership of
common shares by each person who is known by the Company to beneficially own
more than 5% of outstanding common shares in the capital of the Company:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF CLASS
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1)(2)(3) BENEFICIALLY OWNED(2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DAVID H. BROWN 1,260,067 6.8%
350 - 1200 West 73rd Avenue
Vancouver, British Columbia
Canada V6P 6G5
- --------------------------------------------------------------------------------------------------------------------
CLINTON H. RICKARDS 1,019,419(4) 5.5%
350 - 1200 West 73rd Avenue
Vancouver, British Columbia
Canada V6P 6G5
- --------------------------------------------------------------------------------------------------------------------
HOWARD T. VAN PELT 968,000(4) 5.2%
1611 Wilmeth Road
McKinney, Texas
USA 75069
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE> 6
(1) Not being within the knowledge of the Company, the ownership
information disclosed above has been furnished by the respective
directors individually.
(2) To the Company's knowledge, except where otherwise noted, each person
listed above has sole voting power of his shares.
(3) Free trading shares, except as to option shares. See footnote (4) below
as to number of stock option shares included in the table.
(4) Includes, as to the named person, the number of shares underlying
exercisable stock options: Clinton H. Rickards (50,000 shares), Howard
T. Van Pelt (50,000 shares). Messrs. Rickards and Van Pelt's stock
options are exercisable at a price of $1.25 per share until August 22,
2002.
The following table sets forth, as at August 31, 1999, the beneficial ownership
of common shares held by each director and nominee for director of the Company,
each Named Executive Officer, and by all directors and officers as a group:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
AMOUNT AND NATURE OF PERCENT OF CLASS
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1)(2)(3)(4) BENEFICIALLY OWNED
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DAVID H. BROWN 1,260,067 6.8%
Director and Nominee
- --------------------------------------------------------------------------------------------------------------------
GEORGE B. COBBE 100,000(6) less than 1%
Director and Nominee
- --------------------------------------------------------------------------------------------------------------------
P. NICHOLAS M. GLASS 50,000(6) less than 1%
Director and Nominee
- --------------------------------------------------------------------------------------------------------------------
CLINTON H. RICKARDS(5) 1,019,419(6) 5.5%
Director and Nominee
- --------------------------------------------------------------------------------------------------------------------
HOWARD T. VAN PELT(5) 968,000(6) 5.2%
Director and Nominee
- --------------------------------------------------------------------------------------------------------------------
LARRY G. ENSMINGER(5) 402,835(6) 2.2%
- --------------------------------------------------------------------------------------------------------------------
MAURICE E. SOKULSKI(5) 276,700(6) 1.5%
- --------------------------------------------------------------------------------------------------------------------
ROBERT J. UROSEVICH(5) 160,000(6) less than 1%
- --------------------------------------------------------------------------------------------------------------------
DIRECTORS AND OFFICERS 4,237,021(7) 22.9%
AS A GROUP
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Not being within the knowledge of the Company, the ownership
information disclosed above has been furnished by the respective
directors individually.
-3-
<PAGE> 7
(2) A person is deemed, under United States securities law, to be the owner
of securities that can be acquired by that person within 60 days of the
date of the table upon exercise of options or warrants. Each beneficial
owner's percentage ownership is determined by assuming that options or
warrants that are held by that person and that are exercisable within
60 days of the date of this table have been exercised. The information
as to the shares beneficially owned or over which a director exercises
control or direction been furnished by the respective Directors
individually and is for the month ended August 31, 1999.
(3) To the Company's knowledge, except where otherwise noted, each person
has sole voting and investment power as to the shares.
(4) Includes, as to the person listed, stock options to purchase shares in
the capital of the Company as follows:
Cobbe - 100,000 option shares exercisable at $1.60 per share;
Glass - 50,000 option shares exercisable at $1.49 per share;
Rickards - 50,000 option shares exercisable at $1.25 per share;
Van Pelt - 50,000 option shares exercisable at $1.25 per share;
Ensminger - 50,000 option shares exercisable at $1.25 per share;
Sokulski - 100,000 option shares exercisable at $1.25 per share; and
Urosevich - 120,000 option shares exercisable at $1.25 per share.
(5) Named Executive Officer.
(6) Free trading shares under Canadian law, except for the stock option
shares which are subject to US Rule 144. See footnote (4) above as to
the number of stock option shares included in the table.
(7) Includes stock options to purchase a total of 520,000 shares which are
exercisable at $1.25 to $1.60 per share.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL GENERAL MEETING
Shareholders must submit proposals intended to be considered at the next annual
general meeting, in writing, to the Secretary of the Company no later than May
27, 2000 for inclusion in the Company's Information Circular and Proxy relating
to the meeting. Shareholders who wish to propose proper business from the floor
for consideration at the 2000 Annual General Meeting of shareholders, and who
have not properly submitted that proposal for possible inclusion in the
Company's 2000 proxy materials, must notify the Company not later than August
10, 2000.
ELECTION OF DIRECTORS
It is intended to determine the number of directors at five (5), and to elect
five (5) directors for the ensuing year.
Each director serves for a term of one year or until his or her successor is
elected and qualified. The term of office of each of the present directors
expires at the Meeting. The persons named below, each of whom has consented to
be nominated and, if elected, to serve as a director, will be presented for
election at the Meeting as management's nominees and the persons named in the
accompanying form of Proxy intend to vote for the election of these nominees.
Management does not contemplate that any of these nominees will be unable to
serve as a director. Each director elected will hold office until the next
annual general meeting of the Company or until his successor is elected or
appointed, unless his office is earlier vacated in accordance with the Articles
of the Company, or with the provisions of the Company Act (British Columbia),
R.S.B.C. 1996, c.62 (the "Company Act").
Pursuant to Section 111 of the Company Act, Advance Notice of the Meeting was
published in The Province Newspaper on September 2, 1999, and notice was
provided to the Executive Directors, British Columbia and Ontario Securities
Commissions and The Toronto Stock Exchange on August 30, 1999.
The following table and notes thereto state the name of each director and each
person proposed to be nominated by management for election as a director, the
country in which he is ordinarily resident, all offices of the Company now
-4-
<PAGE> 8
held by him, his principal occupation, and the period of time for which he has
been a director of the Company, and the number of shares of the Company
beneficially owned by him, directly or indirectly, or over which he exercises
control or direction, as at the date hereof.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION AND, IF NOT AT PRESENT AN DATE FIRST NO. OF
NAME, POSITION, AGE AND COUNTRY ELECTED DIRECTOR, OCCUPATION DURING APPOINTED SHARES
OF RESIDENCE(1) PAST FIVE YEARS (1)(2) A DIRECTOR OWNED (3)
<S> <C> <C> <C>
DAVID H. BROWN(4) Chairman of the Board and Director of the Company November 1,260,067(5)
Chairman and Director 1991
Age: 69
Canada
GEORGE B. COBBE(4) Businessman; Vice-President, Hewlett-Packard Company February Nil
Director (retired); Managing Director, Americas Geographic 1998
Age: 61 Operations (retired)
USA
P. NICHOLAS M. GLASS(4) Barrister and Solicitor December Nil
Director 1997
Age: 54
Canada
CLINTON H. RICKARDS Businessman; Director of the Company November 969,419(5)
Director 1991
Age: 51
Canada
HOWARD T. VAN PELT President and Chief Executive Officer of the Company; November 918,000(5)
President, CEO and Director President of Global USA 1991
Age: 57
USA
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The information as to country of residence and principal occupation, not
being within the knowledge of the Company, has been furnished by the
respective Directors individually.
(2) Unless otherwise stated above, each of the above-named nominees has held
the principal occupation or employment indicated for at least five
years. For the purposes of disclosing positions held in the Company,
"Company" includes the Company and its subsidiary.
(3) The information as to the shares beneficially owned or over which a
Director exercises control or direction, not being within the knowledge
of the Company, has been furnished by the respective Directors
individually and is for the month ended August 31, 1999. Shares
underlying stock options are not included in these amounts.
(4) Denotes member of Audit Committee.
(5) Free trading shares under Canadian law, subject to US Rule 144.
DAVID H. BROWN has served as a Director of the Company since 1991 and Chairman
of the Board since 1993. At his retirement in 1989, Mr. Brown was Vice-Chairman
of the investment firm Burns Fry Limited, located in Toronto,
-5-
<PAGE> 9
Ontario, Canada. Mr. Brown holds a Bachelor of Science degree from Concordia
University, and a Masters of Business Administration from Harvard University.
GEORGE B. COBBE has served as a Director of the Company since 1998. Mr. Cobbe
worked in various marketing and executive capacities for Hewlett-Packard Company
from 1961 to 1998. He was General Manager and Director of North American Field
Operations for Hewlett-Packard Company, and was elected a Vice-President of that
company in 1995, and retired in 1998. Mr. Cobbe holds a Bachelor of Science
degree in electrical engineering from Standford University.
P. NICHOLAS M. GLASS has served as a Director of the Company since 1997. Mr.
Glass is a member of the British Columbia Bar, and of England and Wales, and
currently practices in the field of labour relations as a mediator and
arbitrator. He is a Director of Belvedere Resources, a Vancouver Stock Exchange
listed company, which owns mineral rights in Finland. From 1992 to 1996, Mr.
Glass was a Director of Tradepoint Investment Exchange, a public company traded
on AIM in London and the Vancouver Stock Exchange that has started a new
electronic stock exchange based in London. From 1972 to 1990, he was a civil
trial lawyer with Swinton and Company in Vancouver, British Columbia. Mr. Glass
holds a Master of Arts degree from Trinity College, Oxford University.
CLINTON H. RICKARDS has served as a Director of the Company since 1991. From
1991 to 1995 he served as President of the Company. From 1993 to present, Mr.
Rickards has been involved in the Company's Canadian sales and shareholder
relations efforts. Mr. Rickards has been involved in the computer industry since
1968. In 1980 he started his own company with partners. In 1983, he bought out
his partners and founded the private computer company, North American
Professional Technologies. This company began the development of ES-2000 in 1986
which subsequently became the Company's signature product.
HOWARD T. VAN PELT has served as a Director of the Company since 1991. He has
served as its President from April 1995 to the present and was appointed Chief
Executive Officer in 1997. Since 1991, he has served as President of Global USA.
In 1970, he became Regional Marketing Manager for Computer Election Systems
Inc., an election voting machine company, and was Regional Manager, Southern
Division, of that company when it was sold in 1981 to Hale Bros. From 1964 to
1968, Mr. Van Pelt was a marketing representative for IBM Corporation, and from
1968 to 1970, he was a registered representative for Rauscher Pierce Securities.
Mr. Van Pelt attended the University of New Mexico from 1960 to 1964 and the New
York Institute of Finance in 1968.
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS:
LARRY G. ENSMINGER
Age: 60
Mr. Ensminger has been employed with the Company since 1991 as Vice-President of
Operations for Global USA. From 1993 to 1997 to present, he was the Manager,
Sales and Operations, and from 1991 to 1993, he was a sales representative for
the Company. Mr. Ensminger holds an Associate of Arts Degree (Education) from
Dodge City Community College and Bachelor and Master of Science (Engineering)
degrees from Kansas State College.
MAURICE E. SOKULSKI
Age: 56
Mr. Sokulski was appointed Treasurer of the Company in 1994. He served as a
Director of the Company from 1996 to 1997 and Controller from 1994 to 1996. From
1993 to 1994, he was Controller of Northcoast Building Products Ltd., a British
Columbia, Canada, distributor of lumber products. In 1992, he was Controller for
Adagio Enterprises Ltd, a British Columbia, Canada, manufacturer and distributor
of lingerie. He is a Chartered Accountant and holds a Bachelor of Commerce
degree from the University of Alberta.
-6-
<PAGE> 10
ROBERT J. UROSEVICH
Age: 51
Mr. Urosevich has been employed with the Company since 1997 as Vice-President,
Sales, Marketing and Business Development of Global USA. From 1995 to 1997, he
was President of I-Mark Systems, Inc., which was acquired by the Company in
1997. From 1994 to 1995, he was President of DATA Duplicating, Inc. Mr.
Urosevich attended Coe College in Cedar Rapids, Iowa from 1966 to 1970.
-7-
<PAGE> 11
STATEMENT OF EXECUTIVE COMPENSATION
Set out below are particulars of compensation paid to the following persons (the
"Named Executive Officers"):
(a) the Company's chief executive officer;
(b) each of the Company's four most highly compensated executive officers
who were serving as executive officers at the end of the most recently
completed financial year and whose total salary and bonus exceeds (Cdn)
$100,000 per year; and
(c) any additional individuals for whom disclosure would have been provided
under (b) but for the fact that the individual was not serving as an
executive officer of the Company at the end of the most recently
completed financial year.
Based on the foregoing, during the fiscal year ended June 30, 1999, there were
five Named Executive Officers of the Company, namely:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NAME TITLE
<S> <C>
HOWARD T. VAN PELT President, Chief Executive Officer and a Director of the Company
President of Global USA
CLINTON H. RICKARDS Director of the Company
LARRY G. ENSMINGER Vice-President, Operations of Global USA
MAURICE E. SOKULSKI Treasurer of the Company
ROBERT J. UROSEVICH Vice-President, Sales, Marketing and Business Operations of Global USA
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth the compensation awarded, paid to or earned by
the Company's current Named Executive Officers during the fiscal years ended
June 30, 1999 and 1998 and the six months and fiscal year ended June 30, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
- -----------------------------------------------------------------------------------------------------------------------
AWARDS PAYOUTS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RESTRICTED
SECURITIES SHARES OR
OTHER UNDER RESTRICTED LTIP ALL OTHER
NAME AND PRINCIPAL YEAR ANNUAL OPTIONS SHARE PAY-OUTS COMPENSATION
POSITION ENDED SALARY (4) BONUS COMPENSA- GRANTED UNITS ($) ($)
($) ($) TION (#) (#)
($)
HOWARD T. VAN PELT 1999(1) US$180,000 US$22,143(5) NIL NIL NIL NIL US$1,044
President and CEO 1998(2) US$177,500 US$126,015 NIL 50,000 NIL NIL US$1,607
of the Company; 1997(3) US$ 75,000 US$ 63,610 NIL NIL NIL NIL NIL
President of Global
USA
CLINTON H. RICKARDS 1999(1) $145,577 $35,006 NIL NIL NIL NIL $1,308
Director 1998(2) $136,000 $33,026 NIL 50,000 NIL NIL $ 171
1997(3) $ 68,000 $42,155 NIL NIL NIL NIL $ 150
ROBERT J. UROSEVICH 1999(1) US$115,000 NIL NIL NIL NIL NIL US$812
VP, Sales, 1998(2) US$105,417 US$25,000 NIL 120,000 NIL NIL NIL
Marketing and 1997(3) N/A N/A NIL N/A NIL NIL N/A
Business
Development (Global
USA)
MAURICE E. SOKULSKI 1999(1) US$75,000 NIL NIL NIL NIL NIL US$638
Treasurer 1998(2) US$75,000 US$35,000 NIL 100,000 NIL NIL NIL
1997(3) US$27,324 NIL NIL NIL NIL NIL NIL
LARRY G. ENSMINGER 1999(1) US$95,500 NIL NIL NIL NIL NIL US$789
VP, Operations 1998(2) US$90,000 US$40,000 NIL 50,000 NIL NIL US$916
(Global USA) 1997(3) US$45,000 NIL NIL NIL NIL NIL NIL
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE> 12
(1) For the fiscal year ended June 30, 1999.
(2) For the fiscal year ended June 30, 1998.
(3) For the six months and fiscal year ended at June 30, 1997.
(4) Refer to "Management Contracts" for further particulars.
(5) Accrued but not paid during the fiscal year ended June 30, 1999.
LONG TERM INCENTIVE PLAN AWARDS
Long term incentive plan awards ("LTIP") means "any plan providing compensation
intended to serve as an incentive for performance to occur over a period longer
than one financial year whether performance is measured by reference to
financial performance of the Company or an affiliate, or the price of the
Company's shares but does not include option or stock appreciation rights plans
or plans for compensation through restricted shares or units". No LTIPs were
granted to the Named Executive Officers or Directors during the fiscal year
ended June 30, 1999.
STOCK APPRECIATION RIGHTS
Stock appreciation rights ("SAR's") means a right, granted by an issuer or any
of its subsidiaries as compensation for services rendered or in connection with
office or employment, to receive a payment of cash or an issue or transfer of
securities based wholly or in part on changes in the trading price of the
Company's shares. No SARs were granted to or exercised by the Named Executive
Officers or Directors during the fiscal year ended June 30, 1999.
OPTION GRANTS DURING THE FISCAL YEAR ENDED JUNE 30, 1999
No stock options were granted to the Named Executive Officers or Directors
during the fiscal year ended June 30, 1999.
AGGREGATED OPTION EXERCISES DURING THE FISCAL YEAR ENDED JUNE 30, 1999
AND FISCAL YEAR END OPTION VALUES
No stock options were exercised by the Named Executive Officers or Directors
during the fiscal year ended June 30, 1999.
OUTSTANDING OPTIONS
The total number of outstanding stock options to purchase common shares held by
the Named Executive Officers, Directors who were not Named Executive Officers,
and employees who were neither Directors nor Named Executive Officers of the
Company as at June 30, 1999 (including all such officers, directors and
employees of Global USA) is as follows:
-9-
<PAGE> 13
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
OPTIONEES NO. OF SHARES NO. OF OPTIONS EXERCISE PRICE EXPIRY DATES
UNDER OPTION EXERCISABLE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NAMED EXECUTIVE OFFICERS 370,000 370,000 $1.25 August 22, 2002
- --------------------------------------------------------------------------------------------------------------------
DIRECTORS 150,000 50,000 $1.49 December 17, 2002
100,000 $1.60 February 13, 2003
- --------------------------------------------------------------------------------------------------------------------
EMPLOYEES 930,000 930,000 100,000 @ $1.33 November 1, 1999
205,000 @ $2.05 October 15, 2001
625,000 @ $1.25 August 22, 2002
- --------------------------------------------------------------------------------------------------------------------
TOTAL 1,450,000 1,450,000
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table provides the details of stock options exercised during the
fiscal year ended June 30, 1999, and the fiscal year end stock option values for
the Named Executive Officers:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
OPTIONEES SHARES ACQUIRED VALUE REALIZED NUMBER OF SHARES VALUE OF UNEXERCISED
ON EXERCISE UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS, OPTIONS, ALL OF
ALL OF WHICH WERE WHICH WERE
EXERCISABLE, AT EXERCISABLE, AT
JUNE 30, 1999 JUNE 30, 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOWARD T. VAN PELT Nil N/A 50,000 $70,000
- --------------------------------------------------------------------------------------------------------------------
CLINTON H. RICKARDS Nil N/A 50,000 $70,000
- --------------------------------------------------------------------------------------------------------------------
LARRY G. ENSMINGER Nil N/A 50,000 $70,000
- --------------------------------------------------------------------------------------------------------------------
MAURICE E. SOKULSKI Nil N/A 100,000 $140,000
- --------------------------------------------------------------------------------------------------------------------
ROBERT J. UROSEVICH Nil N/A 120,000 $168,000
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
The Company has no Defined Benefit or Actuarial Plan benefits payable upon
retirement of the Named Executive Officers.
TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS
No employment contracts exist between the Company and the Named Executive
Officers, other than set out below under the heading entitled "Management
Contracts".
COMPENSATION OF DIRECTORS
No cash compensation was paid to any Director of the Company for the Director's
services as a Director during the fiscal year ended June 30, 1999 other than to
Messrs. Glass and Cobbe who were each paid a total of US$20,000. This amount
included Directors' fees for the fiscal years ended June 30, 1999 and 1998 in
the amount of US$10,000 per year. The Company has no standard arrangement
pursuant to which the Directors are compensated by the
-10-
<PAGE> 14
Company for the services in their capacity as Directors except for the granting
from time to time of incentive stock options in accordance with the policies of
The Toronto Stock Exchange. The Company reimburses Directors for expenses they
incur to attend board meetings.
COMPOSITION OF THE COMPENSATION COMMITTEE
The Company's Compensation Committee consists of Howard T. Van Pelt, P. Nicholas
Glass and George B. Cobbe. However, compensation matters may also be reviewed
and approved by the entire Board of Directors. Howard T. Van Pelt was, during
the past fiscal year,
o the Company's President and Chief Executive Officer;
o President of Global USA; and
o an employee of the Company.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has no formal compensation policy. However, executive
officers are compensated in a matter consistent with the respective
contributions to their overall benefit to the Company. Compensation is based on
a combination of factors, including a comparative review of information provided
to the Compensation Committee by compensation consultants, recruitment agencies
and auditors as well as historical precedent.
During the fiscal year ended June 30, 1999, the Company's President and Chief
Executive Officer, Howard T. Van Pelt, was paid a salary of US$180,000 together
with an annual bonus of US$22,143. This bonus, which was accrued but not paid
during the fiscal year ended June 30, 1999, represents 3% of the Company's
consolidated pre-tax earnings during the fiscal year. During the fiscal year
ended June 30, 1999, the Company paid Clinton H. Rickards a salary of $145,577
plus a bonus of $35,006 which represents 3% of Canadian sales and 1% of net
profits before taxes for all sales, excluding those in Canada, of the Company
during the fiscal year. Pursuant to an Employment Agreement dated August 1,
1997, Global USA employed Robert J. Urosevich as its Vice-President of Sales,
Marketing and Business Development at an annual salary of US$115,000, as
adjusted from time to time. The agreement is for a term of three years expiring
July 31, 2000. During the fiscal year ended June 30, 1999, Larry G. Ensminger
was paid a salary of US$95,500 and Maurice E. Sokulski, the Company's Treasurer,
was paid a salary of US$75,000.
PERFORMANCE GRAPH
The following chart compares the total cumulative shareholder return for $100
invested in common shares of the Company beginning December 31, 1994 with the
cumulative total return of the TSE 300 Total Return Index for the Company's five
most recently completed fiscal years.
-11-
<PAGE> 15
[GRAPH]
<TABLE>
<CAPTION>
31-DEC-94 31-DEC-95 31-DEC-96 30-JUN-97 30-JUN-98 30-JUN-99
--------- --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
GLOBAL $ 1.34 $ 1.15 $ 0.65 $ 0.67 $ 3.00 $ 2.65
TSE 300 8,205.73 9,397.97 12,061.95 13,222.76 15,367.27 14,864.79
</TABLE>
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the US Securities Exchange Act of 1934 (the "Act"), directors and officers
of public companies are required to report to the Securities and Exchange
Commission all personal transactions involving the Company's common shares.
Based solely upon a review of Forms 3, 4 and 5 filed by Directors and officers
of the Company during the 1999 fiscal year, the Forms 3 for each of the
Directors were filed late. All other reports required by Section 16(a) of the
Act were timely filed.
-12-
<PAGE> 16
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
MANDATE OF THE BOARD
Generally speaking, the Company's Board supervises the management of the
business and affairs of the Company. More specifically, the Board has a mandate
to provide guidance to the Company's management in the following areas:
o long term strategic planning
o risk analysis and monitoring of risk management systems
o overseeing the appointment and training of senior management and
monitoring their performance, including succession planning
o establishing and monitoring the Company's communications policy as
implemented by the Company's investor relations personnel and ensuring
that they address the feedback and concerns of shareholders in
particular
o ensuring the integrity of the Company's systems for internal controls
and management information
o developing and implementing the Company's corporate governance
guidelines
o reviewing management's performance on a regular basis, being at least
once annually
o reviewing the Company's business plan on a regular basis, being at
least once annually
o reviewing and approving the terms of all debt and equity financings,
mergers, acquisitions and divestitures and the granting of incentive
stock options, reviewing and approving the quarterly and annual
financial statements, reviewing and approving all major public
disclosure documents
o calling shareholders' meetings
o appointing members to the various committees.
The Board is aware of the expectations of The Toronto Stock Exchange (the "TSE")
regarding corporate governance and it conducts itself, to the best of its
ability, in a manner consistent with those expectations.
COMPOSITION OF THE BOARD
The Company's Board consists of five Directors. Three members of the board are
outside Directors who are not members of management. All of these outside
Directors, representing a majority of the Board, can be considered "unrelated"
Directors in that they do not have an interest or business or other relationship
which could or could reasonably be perceived to materially interfere with their
ability to act with a view to the best interests of the Company.
The Board of Directors held five regular and special meetings during fiscal 1999
and passed various directors' consent resolutions in lieu of holding meetings.
In addition to meetings of the full Board, Directors attended meetings of Board
committees. Each director attended more than 75% of the aggregate Board and
meetings of those committees of which he was a member.
The Company does not have a significant shareholder who is able to elect a
majority of the Company's Board.
To ensure that the Board is able to function independently from management, the
Company has a Chair who is independent of management.
COMMITTEES
The Board presently has two committees to which it assigned specific
responsibilities.
Audit Committee
The Audit Committee consists of three Directors, Messrs. Brown, Glass and Cobbe,
all of whom are outside Directors and all of whom are unrelated Directors. It
held one meeting during fiscal 1999 and passed various audit committee consent
resolutions in lieu of holding meetings. The Audit Committee carries out the
following responsibilities:
-13-
<PAGE> 17
o reviewing the Company's audited financial statements;
o meeting with the Company's management and Auditor for that purpose; and
o preparing a report to the Directors of the Company on the financial
statements.
Compensation Committee
The Compensation Committee consists of three Directors, Howard T. Van Pelt, P.
Nicholas M. Glass and George B. Cobbe, two of whom are outside Directors and
unrelated Directors. The Compensation Committee did not hold a meeting during
fiscal 1999 nor did it pass any consent resolutions as the Company's
compensation arrangements did not change from the previous fiscal year. The
Compensation Committee carries out the following responsibilities:
o considering and approving compensation of management of the Board and
ensuring that it is commensurate with the level of responsibility and
risk involved;
o assessing the effectiveness of the Board, performance of committees and
the contribution of individual directors;
o providing orientation and education for newly appointed directors;
o defining responsibilities for the Board and management; and
o developing corporate objectives to be met by the Chief Executive
Officer.
Disclosure regarding the Compensation Committee and the Report on Executive
Compensation is also made under the heading entitled "Executive Compensation".
MANAGEMENT CONTRACTS
HOWARD T. VAN PELT
Pursuant to an Employment Agreement dated August 1, 1997, Global USA employed
Howard T. Van Pelt as its President at an annual salary of US$180,000 plus an
annual bonus of 3% of the consolidated pre-tax earnings to a maximum of
US$200,000 per year. The agreement is for a term of three years expiring July
31, 2000. The employment agreement also provides that Mr. Van Pelt's employment
may be terminated only for cause and that upon termination for other than
criminal behaviour, Global USA will pay a severance benefit equal to six months
base salary at the time of termination.
ROBERT J. UROSEVICH
Pursuant to an Employment Agreement dated August 1, 1997, Global USA employed
Mr. Urosevich as Vice-President, Sales, Marketing and Business Development at an
annual salary of US$115,000, as adjusted from time to time. The agreement is for
a term of three years expiring July 31, 2000. The Employment Agreement also
provides that Mr. Urosevich's employment may be terminated for cause as defined
in the agreement, and that upon termination for other than criminal behaviour,
the Company will pay a severance benefit equal to 12 months base salary at the
time of termination.
CLINTON H. RICKARDS
Pursuant to an Employment Agreement dated October 1, 1996, the Company retained
the services of Clinton H. Rickards, a Director of the Company, at an annual
salary of $136,000 plus an annul bonus of 3% of Canadian sales and 1% of the net
profits before taxes for all sales, excluding those in Canada, of the Company
during the term of the agreement. The agreement, which was for a term of two
years expired October 1, 1998. Mr. Rickards current remuneration is US$100,000
converted to and payable in Canadian dollars.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
Except as disclosed herein, since the commencement of the last completed fiscal
year, no insider of the Company, nominee for Director, or any associate or
affiliate of an insider or nominee, had any material interest, direct or
-14-
<PAGE> 18
indirect, in any transaction or any proposed transaction which has materially
affected or would materially affect the Company or its subsidiary, other than
Howard T. Van Pelt, the Company's President.
In May 1999, Mr. Van Pelt loaned the Company US$300,000 on an unsecured
short-term promissory note bearing interest at a rate of 10% per annum. This
loan was repaid in full by the Company in August 1999.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Except as disclosed herein, no Person has any material interest, direct or
indirect, by way of beneficial ownership of securities or otherwise, in matters
to be acted upon at the Meeting. For the purpose of this paragraph "Person"
shall include each person: (a) who has been a Director, senior officer or
insider of the Company at any time since the commencement of the Company's last
fiscal year; (b) who is a proposed nominee for election as a Director of the
Company; or (c) who is an associate or affiliate of a person included in
subparagraphs (a) or (b).
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
During the last completed fiscal year, no Director, executive officer, senior
officer or nominee for Director of the Company or any of their associates have
been indebted to the Company or its subsidiary, nor have any of these
individuals been indebted to another entity which indebtedness is the subject of
a guarantee, support in agreement, letter of credit or other similar arrangement
or understanding provided by the Company or Global USA.
APPOINTMENT AND REMUNERATION OF AUDITOR
Shareholders will be asked to approve the appointment of Staley, Okada, Chandler
& Scott as Auditor of the Company to hold office until the next annual general
meeting of the shareholders at a remuneration to be fixed by the Board of
Directors. Staley, Okada, Chandler & Scott was first appointed Auditor on
January 27, 1989.
The auditor has no direct interest in the Company and has had no such interest
during the past fiscal year. Representatives of the Auditor will be present at
the 1999 Annual General Meeting, and will be given the opportunity to make a
statement if they so wish and will be available to respond to appropriate
questions.
YEAR 2000
The Year 2000 issue arises from a computer's inability to recognize the
two-digit field "00" as the year 2000 instead of the year 1900. The computer's
mistaking "00" as the year 1900 could result in system failures or
miscalculations causing disruptions to operations, including manufacturing, a
temporary inability to process transactions, send invoices, or engage in other
normal business activities. This is a significant issue for most companies, with
far-reaching implications, some of which cannot be anticipated or predicted with
any degree of certainty.
The Company completed an assessment of the magnitude of the Year 2000 issue with
respect to its products. The Company's AccuVote-OS and AccuTouch-TS systems are
designed to be Year 2000 compliant, which is generally a requirement in requests
for proposals for voting systems. The Company does not expect any material
problems or difficulties to arise out of its systems. The Company has
communicated with its customers to determine the extent of the Company's
vulnerability to the failure of third parties to remediate their own Year 2000
issues. All of the Company's customers are governmental entities, and, as such,
all customers have certified that they are Year 2000 compliant.
In conjunction with the Company's assessment of Year 2000 issues which might
affect it, the Company has formulated plans to address the Year 2000 issue,
including contingencies to address unforeseen problems. The Company has
contacted all vendors and has made a list of whether each vendor is Year 2000
compliant, and, if not, alternate sources of product have been located. The only
sole source supplier's product is not date sensitive, and the Company has made
plans to have a sufficient inventory to cover any delays that the supplier might
have in delivering product. The Company has not been required to incur costs for
remedial work and accordingly has not set aside any
-15-
<PAGE> 19
contingency fund to deal with any contingencies which may arise. The costs for
Year 2000 compliance are based upon management's best estimates, which were
derived from numerous assumptions about future events, including third-party
modification plans and other factors. However, there can be no guarantee that
those estimates will be accurate and actual results could differ materially from
those plans. Specific factors that might cause material differences include, but
are not limited to, the availability and cost of personnel trained in this area
and the ability to identify and correct all relevant computer codes.
SPECIAL BUSINESS
APPROVAL OF INCENTIVE STOCK OPTIONS - REGULATORY REQUIREMENTS
Director, officer, and employee stock options are a means of rewarding future
services provided to the Company and are not intended as a substitute for
salaries or wages, or as a means of compensation for past services rendered.
The TSE requires that a listed company obtain the approval of its shareholders
for all "share compensation arrangements", where:
(a) pursuant to the stock option plan or employee stock purchase plan, the
majority of the shares to be allocated under the plan will or may be
issuable to "insiders" of the company;
(b) it is a share compensation arrangement for an "insider", other than a
stock option plan or employee stock purchase plan, unless the share
compensation arrangement is used as an inducement to a person, not
previously employed by and not previously an insider of the company, to
enter into a contract of full-time employment with the company; or
(c) it is a share compensation arrangement which, together with all of the
company's other previously established or proposed share compensation
arrangements, could result, at any time, in:
(i) the number of shares reserved for issuance pursuant to share
compensation arrangements exceeding 10% of the company's
issued and outstanding share capital; or
(ii) the issuance, within a one year period, of a number of shares
exceeding 10% of the company's issued and outstanding share
capital.
For the purpose of paragraphs (a) and (b) above, the term "insider" is defined
by the TSE to have the meaning given to that term in the Ontario Securities Act,
excluding those persons that would be insiders by virtue only of being Directors
or senior officers of a subsidiary of the listed company, but including
"associates" of insiders. The term "associate" is also defined to have the
meaning given to that term in the Ontario Securities Act.
The term "insider" is defined in the Ontario Securities Act to mean:
(a) every director or senior officer of a reporting issuer;
(b) every director or senior officer of a company that is itself an insider
or subsidiary of a reporting issuer;
(c) any person or company who beneficially owns, directly or indirectly,
voting securities of a reporting issuer or who exercised control or
direction over voting securities of a reporting issuer or a combination
of both carrying more than 10% of the voting rights attached to all
voting securities of the reporting issuer for the time being
outstanding other than voting securities held by the person or company
as underwriter in the course of a distribution; and
(d) a reporting issuer where it has purchased, redeemed or otherwise
acquired any of its securities, for so long as it holds any of its
securities.
The term "associate" is defined in the Ontario Securities Act to mean, in
relation to a person that is an insider:
-16-
<PAGE> 20
(a) any company of which such person or company beneficially owns, directly
or indirectly, voting securities carrying more than 10% of the voting
rights attached to all voting securities of the company for the time
being outstanding;
(b) any partner of that person or company;
(c) any trust or estate in which such person or company has a substantial
beneficial interest or as to which such person or company serves as
trustee or in a similar capacity;
(d) any relative of that person;
(e) any person of the opposite sex to whom that person is married or with
whom that person is living in a conjugal relationship outside marriage;
and
(f) any relative of a person mentioned in clause (e) who has the same home
as that person.
For the purposes of subparagraph (c)(ii) above, a company's issued and
outstanding share capital is determined on the basis of the number of shares
that are issued and outstanding immediately prior to the share issuance in
questions, excluding shares issued pursuant to share compensation arrangements
over the preceding one year period.
OPTIONS GRANTED TO INSIDERS SINCE THE COMPANY'S LAST SHAREHOLDERS' MEETING
The Company did not grant any stock options since the Company's 1998 Annual
General Meeting of its shareholders.
The Company currently has outstanding stock options exercisable into 1,450,000
common shares. This amount includes the 250,000 common shares issuable to
insiders (as defined by the TSE) pursuant to the exercise of stock options. See
the tables under "Outstanding Options" above for options held by individual
insiders for which ratification, approval or confirmation is proposed. No
financial assistance is to be provided by the Company to the optionees to
facilitate the purchase of the shares issuable upon the exercise of any of the
outstanding Options. The Options were granted pursuant to agreements dated as at
the issuance date noted in the above table. With respect to Options granted to
Directors of the Company, the options will terminate 30 days after the Director
ceases to be a Director of the Company save and except where a Director ceases
to be a Director of the Company as a result of ceasing to meet the
qualifications set forth in the Company Act (British Columbia), pursuant to a
special resolution passed by the shareholders of the Company under the Company
Act or by an order of the BC Securities Commission, the Ontario Securities
Commission, the TSE or any securities regulatory body having jurisdiction to do
so, in which case the option shall terminate on the day the Director ceases to
be a Director of the Company. With respect to the Options granted to employees,
the options shall terminate 30 days after a person ceases to be an employee of
the Company save and except where the person ceases to be an employee of the
Company as a result of termination for cause or by an order of the Executive
Director for BC or Ontario, BC Securities Commission, Ontario Securities
Commission, the TSE or any securities regulatory body having jurisdiction to so
order, in which case the options shall terminate on the day he ceases to be an
employee of the Company. If any of the insiders shall die while a Director or an
employee of the Company, as applicable, the Option may then be exercised by that
person's legal heirs or personal representatives to the same extent as if the
optionee were alive and a Director or employee, as applicable, of the Company
over a period of one year after such person's death.
Reference should be made to the table under "Outstanding Options" above for
stock options held by individual insiders.
The Company, had, as of September 22, 1999 seven "insiders" (five of whom are
Named Executive Officers and two of whom are Directors who are not Named
Executive Officers) who could benefit from the adoption of these resolutions and
grants of or amendments to stock options.
Other than as disclosed under the heading "Options Granted to Insiders Since the
Company's Last Shareholders' Meeting", no grants to insiders, and no amendments
to stock options, have been made or are currently proposed.
-17-
<PAGE> 21
Because the issuance of future stock options pursuant to the resolutions is
entirely within the discretion of the Directors (subject to TSE limitations and
requirements), no estimate can be given of what eligible participants would have
received during the last fiscal year had plans been implemented or options
granted pursuant to these resolutions. Also, no estimate can be given as to
which persons are to receive 5% or more of the options which may be granted. As
of June 30, 1999, the market value, based on the closing price, of common stock
was $1.40 per share.
UNITED STATES TAX LAW
For those taxpayers subject to US tax law, options granted may or may not
qualify as "incentive stock options" under Section 422 of the Internal Revenue
Code. If they do, under present tax law, no tax consequences attend the grant or
timely exercise of a qualified option. If the optionee holds the shares for at
least one year after the transfer of the shares to the optionee and two years
after the grant of the option, the optionee will recognize capital gain or loss
upon sale of the shares received upon the exercise equal to the difference
between the amount realized on the sale and the basis of the stock. Generally,
if the shares are not held for that period, the optionee will recognize ordinary
income upon disposition in an amount equal to the excess of the fair market
value of the shares on the date of exercise over the amount paid for those
shares, or if less (and if the disposition is a transaction in which loss, if
any, will be recognized), the gain on disposition. Any additional gain realized
by the optionee upon that disposition will be a capital gain. The excess of the
fair market value of shares received upon the exercise of a Section 422
incentive stock option over the option price for the shares is an item of
adjustment for the optionee for purposes of the alternative minimum tax. Expense
deductions are not allowed to the Company, unless the optionee recognizes
ordinary income.
No income will be recognized by an optionee for federal income tax purposes upon
the grant of a non-qualified stock option. Upon exercise of a non-qualified
stock option, the optionee will recognize ordinary income in an amount equal to
the excess of the fair market value of the shares on the date of exercise over
the amount paid for those shares. Income recognized upon the exercise of
non-qualified stock options will be considered compensation subject to
withholding at the time the income is recognized, and, therefore, the Company
must make the necessary arrangements with the optionee to ensure that the amount
of the tax required to be withheld is available for payment. Non-qualified stock
options are designed to provide the Company with a deduction at the time of the
recognition by the optionee, subject to the deduction limitations. The basis of
shares transferred to an optionee pursuant to exercise of a non-qualified stock
options is the price paid for those shares plus an amount equal to any income
recognized by the optionee as a result of the exercise of the option. If an
optionee thereafter sells shares acquired upon exercise of a non-qualified stock
option, any amount realized over the basis of the shares will constitute capital
gain to the optionee for federal income tax purposes.
PROPOSED STOCK OPTION APPROVAL
Management of the Company is seeking shareholder approval to the following
resolution:
"RESOLVED THAT:
1. the Directors are authorized in their absolute discretion to implement
a stock option plan and to grant to Directors, officers and employees
of the Company, who may be insiders of the Company (as that term is
defined in the Securities Act (Ontario)), incentive stock options,
either individually or under a stock option plan, exercisable into an
aggregate number of common shares of the Company, not to exceed the
prescribed number of the outstanding capital of the Company, from time
to time, within the policy of The Toronto Stock Exchange;
2. incentive stock options previously granted to insiders of the Company
be ratified, approved and confirmed;
3. the Directors be authorized to amend incentive stock options held by
insiders of the Company during the ensuing year; and
-18-
<PAGE> 22
4. no further shareholder approval will be required prior to the
exercising of these options or amended options for the ensuing year."
OTHER BUSINESS
Management is not aware of any matters to come before the Meeting other than
those set forth in the Notice of Meeting. If any other matter properly comes
before the Meeting, it is the intention of the persons named in the form of
Proxy to vote the shares represented thereby in accordance with their best
judgment on such matter.
ON BEHALF OF THE BOARD
Signed: "HOWARD T. VAN PELT"
- ------------------------------
HOWARD T. VAN PELT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
-19-
<PAGE> 23
PROXY
GENERAL MEETING OF MEMBERS
OF
GLOBAL ELECTION SYSTEMS INC.
TO BE HELD ON THURSDAY, OCTOBER 28, 1999 AT 10:00 A.M. (MCKINNEY TIME)
AT 1611 WILMETH ROAD, MCKINNEY, TEXAS, USA
THE UNDERSIGNED, A REGISTERED SHAREHOLDER OF THE COMPANY, HEREBY APPOINTS DAVID
H. BROWN, the Chairman and a Director of the Company, or failing this person,
HOWARD T. VAN PELT, the President, Chief Executive Officer and Director of the
Company, or in the place of the foregoing, __________________________, (print
the name) as proxyholder for and on behalf of the Member with the power or
substitution to attend, act and vote for and on behalf of the Member in respect
of all matters that may properly come before the Annual General Meeting of the
Members of the Company (the "Meeting") on THURSDAY, THE 28TH DAY OF OCTOBER,
1999 AT THE HOUR OF 10 O'CLOCK IN THE FORENOON (MCKINNEY TIME) and at every
adjournment thereof, to the same extent and with the same powers as if the
undersigned were present at the said Meeting, or any adjournment thereof.
The undersigned hereby directs the proxyholder to vote the securities of the
Company registered in the name of the undersigned as specified herein.
THIS PROXY MAY NOT BE VALID UNLESS IT IS SIGNED AND DATED.
SEE IMPORTANT INFORMATION AND INSTRUCTIONS ON REVERSE.
RESOLUTIONS (For full details of each item, please see the enclosed Notice of
Meeting and Information Circular)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For Against
<S> <C> <C>
1. To determine the number of Directors at five (5);
--- ---
2. To authorize the directors to adopt a stock option plan
providing for the future grant of stock options and to
ratify and approve options previously granted to insiders of
the Company, and to amend options held by insiders of the
Company during the ensuing year;
--- ---
For Withhold
3. To appoint Staley, Okada, Chandler and Scott as auditor for the
ensuing year at a remuneration to be fixed by the directors;
--- ---
4. To elect each of the following persons as a director of the Company
for the ensuing year:
--- ---
David H. Brown;
--- ---
George B. Cobbe;
--- ---
P. Nicholas M. Glass;
--- ---
Clinton H. Rickards;
--- ---
Howard T. Van Pelt;
--- ---
</TABLE>
- -------------------------------------------------------------------------------
THE UNDERSIGNED MEMBER HEREBY REVOKES ANY PROXY PREVIOUSLY GIVEN TO ATTEND AND
VOTE AT SAID MEETING.
SIGN HERE:
-----------------------------------------------------------
PLEASE PRINT NAME:
-----------------------------------------------------------
DATE:
-----------------------------------------------------------
<PAGE> 24
INSTRUCTIONS FOR COMPLETION OF PROXY
1. THIS PROXY IS SOLICITED BY THE MANAGEMENT OF THE COMPANY.
2. This form of proxy ("Instrument of Proxy") MAY NOT BE VALID UNLESS IT
IS SIGNED by the Member or by his attorney duly authorized by him in
writing, or, in the case of a corporation, by a duly authorized
officer or representative of the corporation; and IF EXECUTED BY AN
ATTORNEY, OFFICER, OR OTHER DULY APPOINTED REPRESENTATIVE, the
original or a notarial copy of the instrument so empowering such
person, or such other documentation in support as shall be acceptable
to the Chairman of the Meeting, must accompany the Instrument of
Proxy.
3. IF THIS INSTRUMENT OF PROXY IS NOT DATED in the space provided,
authority is hereby given by the Member for the proxy holder to date
this proxy on the date on which it is received by Montreal Trust
Company of Canada.
4. YOU HAVE THE RIGHT TO APPOINT A PERSON TO PRESENT YOU AT THE MEETING
OTHER THAN THE PERSON DESIGNATED IN THE ENCLOSED FORM OF PROXY. IF YOU
WISH TO EXERCISE THIS RIGHT, INSERT THE NAME OF YOUR NOMINEE IN THE
BLANK SPACE PROVIDED FOR THAT PURPOSE IN THE FORM OF PROXY AND STRIKE
OUT THE TWO PRINTED NAMES. WHERE NO CHOICE ON A RESOLUTION IS
SPECIFIED BY THE MEMBER, THIS PROXY FORM CONFERS DISCRETIONARY
AUTHORITY UPON THE MEMBER?S APPOINTED PROXYHOLDER.
5. In the case of shares registered in the name of two or more persons
(including legal representatives), the vote of the senior who
exercises a vote, whether in person or by proxy, shall be accepted to
the exclusion of the votes of other joint registered holders. For this
purpose, seniority is determined by the order in which names stand in
the register of members.
6. The directors of the Company have determined by regulation that
proxies may be sent to Montreal Trust Company of Canada by mail,
delivery or facsimile or any method of transmitting legibly recorded
messages so as to arrive before the times specified herein.
7. If you are a non-registered shareholder of the Company and receive
these materials through your broker or through another intermediary,
please complete and return the materials in accordance with the
instructions provided to you by your broker or by the other
intermediary. Failure to do so may result in your shares not being
eligible to be voted by proxy at the Meeting. Please contact your
broker or the Company if you have questions.
8. THE SECURITIES REPRESENTED BY THIS INSTRUMENT OF PROXY WILL BE VOTED
OR WITHHELD FROM VOTING IN ACCORDANCE WITH THE INSTRUCTIONS OF THE
MEMBER ON ANY POLL of a resolution that may be called for and, if the
Member specifies a choice with respect to any matter to be acted upon,
the securities will be voted accordingly. Further, if so authorized by
this Instrument of Proxy, the securities will be voted by the
appointed proxy holder with respect to any amendments or variations of
any of the resolutions set out on the Instrument of Proxy or matters
which may properly come before the Meeting as the proxy holder in his
or her sole discretion sees fit. Where no choice on a resolution is
specified by the Member, this proxy form confers discretionary
authority upon the Member's appointed proxy holder.
9. If the member cannot attend the Meeting but wishes to vote on the
resolutions and to appoint one of the management appointees named,
please leave the wording appointing a nominee as show, sign and date
and return the proxy form. Where no choice is specified by a member on
a resolution shown on the proxy form, a nominee of management acting
as proxy holder will vote the securities as if the member had
specified an affirmative vote.
10. If a registered Member has returned the Instrument of Proxy, THE
MEMBER MAY STILL ATTEND THE MEETING and may vote in person should the
Member later decide to do so. However, to do so, the Member must
record his/her attendance with the scrutineer at the Meeting and
revoke the Instrument of Proxy in writing.
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TO BE REPRESENTED AT THE MEETING, THIS INSTRUMENT OF PROXY MUST BE RECEIVED AT
THE OFFICE OF "MONTREAL TRUST COMPANY OF CANADA" BY MAIL OR BY FAX NO LATER
THAN FORTY EIGHT (48) HOURS (EXCLUDING SATURDAYS, SUNDAYS AND HOLIDAYS) PRIOR
TO THE TIME OF THE MEETING, OR ADJOURNMENT THEREOF. THE MAILING ADDRESS OF
MONTREAL TRUST COMPANY OF CANADA IS 510 BURRARD STREET, 4TH FLOOR, VANCOUVER,
BRITISH COLUMBIA, V6C 3B9 AND ITS FAX NUMBER IS (604) 683-3694.
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