<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:
--------------------------------------------------------------------------------
(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> 2
GLOBAL ELECTION SYSTEMS INC.
(the "Company")
NOTICE OF 2000 ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the 2000 Annual General Meeting (the "Meeting") of
the Shareholders of GLOBAL ELECTION SYSTEMS INC. will be held on FRIDAY, THE
10TH DAY OF NOVEMBER, 2000 AT THE HOUR OF 10:00 O'CLOCK IN THE FORENOON
(VANCOUVER TIME) at The Four Seasons Hotel, 791 West Georgia Street, Vancouver,
British Columbia, Canada for the following purposes:
1. To receive the audited consolidated financial statements of the Company
for the fiscal year ended June 30, 2000 (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 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 to ratify and
approve options previously granted to insiders of the Company; and
6. To transact such other business as may properly come before the
Meeting.
Accompanying this Notice of 2000 Annual General Meeting is the Company's Annual
Report which contains its audited consolidated financial statements for the
fiscal year ended June 30, 2000, 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 2000 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, PACIFIC CORPORATE TRUST COMPANY,
Suite 830, 625 Howe Street, Vancouver, British Columbia, Canada, V6C 3B8, within
the time set out in the said Notes. The enclosed Proxy is solicited by
Management. 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 27th day of September, 2000.
BY ORDER OF THE BOARD
Signed: "ROBERT J. UROSEVICH"
------------------------------
Robert J. Urosevich
President and Chief Operating Officer
<PAGE> 3
GLOBAL ELECTION SYSTEMS INC.
1200 West 73rd Avenue, Suite 350
Vancouver, British Columbia
Canada
V6P 6G5
INFORMATION CIRCULAR
(all information as at September 30, 2000 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 Friday, the 10th day of November, 2000 at 10:00 o'clock
in the forenoon (Vancouver time) at The Four Seasons Hotel, 791 West Georgia
Street, Vancouver, British Columbia, Canada 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. To-date the Company has incurred
approximately C$7,500 in legal and accounting costs in connection with the
Meeting. Mailing costs for the Meeting are not expected to exceed C$3,500. The
Company anticipates mailing this proxy statement on October 6, 2000 to
shareholders of record as of October 4, 2000.
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 PACFIC CORPORATE TRUST
COMPANY, Suite 830, 625 Howe Street, Vancouver, British Columbia, Canada, V6C
3B8, 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
<PAGE> 4
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.
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
Votes cast by proxy or in person will be counted by the Company's registrar and
transfer agent, Pacific Corporate Trust Company. Shares represented by proxies
that reflect abstentions will be treated as shares that are present and entitled
to vote for the purpose of determining the presence of a quorum. Abstentions
will have no effect on the outcome of the election of directors or the proposal
to approve the 2000 Stock Option Plan.
Broker non-votes occur where a broker holding stock in street name votes the
shares on some matters but not others. Brokers are permitted, pursuant to the
applicable rules which govern their voting client shares in the United States,
to vote on routine, non-controversial proposals in instances where they have not
received voting instructions from the beneficial owner of the stock but are not
permitted to vote on non-routine matters. The uncounted votes on the non-routine
matters are deemed to be "broker non-votes." Pacific Corporate Trust Company
will treat broker non-votes as shares that are present and entitled to vote for
the purpose of determining the presence of a quorum. However, for the purpose of
determining the outcome of any matter as to which the broker or nominee has
indicated on the proxy that it does not have discretionary authority to vote,
those shares will be treated as not present and not entitled to vote with
respect to that matter (even though those shares are considered entitled to vote
for quorum purposes and may be entitled to vote on other matters). Broker
non-votes will have no effect on the outcome of the election of directors or the
proposal to approve the 2000 Stock Option Plan.
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: 18,583,672 Common shares without par value
</TABLE>
Only shareholders of record at the close of business on October 4, 2000 (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.
-2-
<PAGE> 5
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 PACIFIC CORPORATE TRUST COMPANY 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 August 31, 2000, 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
-----------------------------------------------------------------------------------------
<S> <C> <C>
DAVID H. BROWN 1,310,067 7.1%
Toronto, Ontario
-----------------------------------------------------------------------------------------
CLINTON H. RICKARDS 1,023,419 (4) 5.5%
Surrey, British Columbia
-----------------------------------------------------------------------------------------
HOWARD T. VAN PELT 968,000 5.2%
McKinney, Texas
-----------------------------------------------------------------------------------------
</TABLE>
(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: Rickards - 50,000 option shares exercisable
at C$1.25 per share.
The following table sets forth, as at August 31, 2000, 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)(6) BENEFICIALLY OWNED
---------------------------------------------------------------------------------------------------
<S> <C> <C>
BRIAN W. COURTNEY 50,000 (4) 0.3%
Director and Nominee
---------------------------------------------------------------------------------------------------
P. NICHOLAS M. GLASS 50,000 (4) 0.3%
Director and Nominee
---------------------------------------------------------------------------------------------------
JOHN W. LARMER II 50,100 (4) 0.3%
Director and Nominee
---------------------------------------------------------------------------------------------------
CLINTON H. RICKARDS (5) 1,023,419 (4) 5.5%
Director, Named Executive Officer and
Nominee
---------------------------------------------------------------------------------------------------
ROBERT J. UROSEVICH (5) 166,023 (4) 0.9%
Director, Named Executive Officer and
Nominee
---------------------------------------------------------------------------------------------------
LARRY ENSMINGER (5) 402,835 (4) 2.1%
Named Executive Officer
---------------------------------------------------------------------------------------------------
TALBOT R. IREDALE (5) 24,900 0.1%
Named Executive Officer
---------------------------------------------------------------------------------------------------
MAURICE E. SOKULSKI (5) 276,700 (4) 1.5%
Named Executive Officer
---------------------------------------------------------------------------------------------------
DIRECTORS AND OFFICERS 2,043,977 11.0%
AS A GROUP
---------------------------------------------------------------------------------------------------
</TABLE>
-3-
<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) 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 June 30, 2000.
(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:
Courtney - 50,000 option shares exercisable at C$1.25 per share;
Glass - 50,000 option shares exercisable at C$1.49 per share;
Larmer - 50,000 option shares exercisable at C$1.69 per share;
Rickards - 50,000 option shares exercisable at C$1.25 per share;
Urosevich - 120,000 option shares exercisable at C$1.25 per share);
Ensminger - 50,000 option shares exercisable at C$1.25 per share; and
Sokulski - 100,000 option shares exercisable at C$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.
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
October 6, 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 no later than October
27, 2000.
ELECTION OF DIRECTORS
It is intended to determine the number of directors at five, and to elect five
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 15, 2000, and notice was
provided to the Executive Directors, British Columbia and Ontario Securities
Commissions and The Toronto Stock Exchange on September 8, 2000.
-4-
<PAGE> 7
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 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 ELECTED DIRECTOR, OCCUPATION DURING APPOINTED SHARES
COUNTRY OF RESIDENCE(1) PAST FIVE YEARS(1)(2) A DIRECTOR OWNED(3)
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BRIAN W. COURTNEY Chairman and Chief Executive Officer of Patent July 2000 Nil
Director Enforcement and Royalties Ltd.
Age: 58
Canada
-----------------------------------------------------------------------------------------------------------
P. NICHOLAS M. GLASS(4) Barrister and Solicitor; Chairman of the Board of the December Nil
Director Company 1997
Age: 55
Canada
-----------------------------------------------------------------------------------------------------------
JOHN W. LARMER II(4) President of Soza & Company, Ltd. December 100(5)
Director 1999
Age: 57
USA
-----------------------------------------------------------------------------------------------------------
CLINTON H. RICKARDS(4) Director of Investor Relations for the Company November 973,419(5)
Director 1991
Age: 52
Canada
-----------------------------------------------------------------------------------------------------------
ROBERT J. UROSEVICH President and Chief Operating Officer of the Company July 2000 46,023(5)
Director
Age: 52
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 June 30, 2000. 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.
BRIAN W. COURTNEY has served as a Director of the Company since July 2000. Mr.
Courtney is the Chairman and Chief Executive Officer of Patent Enforcement and
Royalties Ltd., a company which makes investments in intellectual property with
an emphasis on patents relating to computer applications, software and the
Internet. Mr. Courtney, was the founding President of Oracle Canada from 1985 to
1991. Later he became Vice-President of Oracle Corporation (USA), responsible
for Latin America, Canada and Mexico. During a 17-year period with Xerox, he
held a number of senior positions including Manager of Major Accounts (Western
Europe) and Manager of Marketing Planning (Canada). Mr. Courtney holds a
Bachelor of Commerce Degree from the University of Manitoba.
-5-
<PAGE> 8
P. NICHOLAS M. GLASS has served as a Director of the Company since 1997 and
Chairman of the Board of the Company since 2000. 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.
JOHN W. LARMER II has served as a Director of the Company since 1999. Mr. Larmer
is President of Soza & Company, Ltd., an international finance and management
information technology consulting company. His senior level consulting practice
encompasses a wide range of technology areas and he has lectured on numerous
topics, including the use of computers in management related to tax liabilities
and national and local election systems. Mr. Larmer has served as President of
the Washington Chapter of the Data Processing Management Association and as the
Accounting Chairman for the International Business Exposition and Conference.
Mr. Larmer holds an ABA degree in Accounting from Benjamin Franklin School of
Accounting, George Washington University, Washington, D.C.
CLINTON H. RICKARDS was appointed a Director of the Company in 1991, and until
1995 served as the Company's President. From 1993 to present, Mr. Rickards has
managed the Company's Marketing Division, Investor Relations. Involved in the
computer industry since 1968, Mr. Rickards formed a private computer company in
1980 with several partners. In 1983, he bought out his partners and founded
North American Professional Technologies ("NAPT"). NAPT began the development of
ES-2000 in 1986 which subsequently became the Company's signature product.
ROBERT J. UROSEVICH was appointed President and Chief Operating Officer of the
Company on July 31, 2000. From 1997 to 2000, he served as Global USA's
Vice-President, Sales, Marketing and Business Development. Mr. Urosevich has
over 24 years of experience in the election systems industry. His background
with leading edge election products began in 1976 with the development of the
first OMR-based centralized vote counting system utilizing standard test scoring
equipment in the United States. In 1979, he founded American Information Systems
(AIS), which developed and marketed proprietary election counting systems to
small and medium sized jurisdictions nationwide. Mr. Urosevich served as the
President of AIS from 1979 through 1992 during which time AIS grew to be the
largest processor of OMR ballots handling approximately 400 jurisdictions and 40
million documents per year. In 1995, he launched I-Mark Systems after designing
a robust touch screen voting system anchored by smart card and biometric
encryption authorization technology. The Company acquired I-Mark in 1997, at
which time Mr. Urosevich joined the Company.
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS:
LARRY ENSMINGER
Age: 61
Mr. Ensminger has served with the Company for nine years. From 1991 to 1993 he
was a sales representative, from 1993 to 1997 he was Manager, Sales and
Operations, from 1997 to August 31, 2000 he was Vice-President of Operations,
and from September 1, 2000 to present he serves as the Company's Vice-President,
Business Development. Mr. Ensminger holds an Associate of Arts Degree
(Education) from Dodge City Community College and Bachelor and Master of Science
(Education) degrees from Kansas State College.
-6-
<PAGE> 9
TALBOT R. IREDALE
Age: 43
Mr. Iredale has served as Vice President Research and Development of the Company
since 1991. During that time Mr. Iredale has been instrumental in developing the
companies products, including the Accu-Vote-OS (optical mark sense reader), the
Accu-Votes-TS (touch screen voting system) and GEMS (Global Election Management
System). From 1986 to 1991 Mr. Iredale was in charge of research and development
for North American Professional Technologies. In this position Mr. Iredale
managed the team who developed the original Accu-Vote-OS and VTS (Vote Tally
System), which were the predecessors to Global Election Systems products. Mr.
Iredale is a Registered Professional Engineer in the Province of British
Columbia and holds a Bachelor of Applied Science Degree from the University of
British Columbia.
MAURICE E. SOKULSKI
Age: 57
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, clothing manufacturer and
distributor. He is a Chartered Accountant and holds a Bachelor of Commerce
degree from the University of Alberta.
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
C$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, 2000, there were
six Named Executive Officers of the Company, namely:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
NAME TITLE
-----------------------------------------------------------------------------------------
<S> <C>
LARRY ENSMINGER Vice-President, Business Development, Secretary of the Company
-----------------------------------------------------------------------------------------
TALBOT R. IREDALE Vice-President, Research and Development
-----------------------------------------------------------------------------------------
CLINTON H. RICKARDS Director of Investor Relations; Director of the Company
-----------------------------------------------------------------------------------------
MAURICE E. SOKULSKI Treasurer of the Company
-----------------------------------------------------------------------------------------
ROBERT J. UROSEVICH Former Vice-President, Sales, Marketing and Business Development of
Global USA (1)
-----------------------------------------------------------------------------------------
HOWARD T. VAN PELT Former President and Chief Executive Officer of the Company (2)
-----------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Urosevich was appointed President and Chief Operating Officer of
the Company on July 31, 2000.
(2) Mr. Van Pelt resigned as a Director of the Company in August 2000.
-7-
<PAGE> 10
The following table sets forth the compensation awarded, paid to or earned by
the Company's Named Executive Officers during the fiscal years ended June 30,
2000, 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
---------- ---------------------
SECURITIES RESTRICTED
OTHER UNDER SHARES OR
ANNUAL OPTIONS RESTRICTED LTIP ALL OTHER
NAME AND PRINCIPAL YEAR SALARY(5) BONUS COMPENSATION GRANTED SHARE UNITS PAY-OUTS COMPENSATION
POSITION ENDED ($) ($) ($) (#) (#) ($) ($)
=================== ======= ============= ============= ============ ========== =========== ======== ============
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HOWARD T. VAN PELT 2000(1) US$180,000 NIL NIL NIL NIL NIL US $1,388
Former President 1999(2) US$180,000 US$ 22,143(5) NIL NIL NIL NIL US $1,044
and CEO of the 1998(3) US$177,500 US$126,015 NIL 50,000 NIL NIL US $1,607
Company 1997(4) US$ 75,000 US$ 63,610 NIL NIL NIL NIL NIL
Former President of
Global USA(6)
------------------- ------- ------------- ------------- ------------ ---------- ----------- -------- ------------
CLINTON H. RICKARDS 2000(1) C $154,332(8) NIL NIL NIL NIL NIL C $1,407
Director 1999(2) C $145,577 C $ 35,006 NIL NIL NIL NIL C $1,308
1998(3) C $136,000 C $ 33,026 NIL 50,000 NIL NIL C $ 171
1997(4) C $ 68,000 C $ 42,155 NIL NIL NIL NIL C $ 150
------------------- ------- ------------- ------------- ------------ ---------- ----------- -------- ------------
ROBERT J. UROSEVICH 2000(1) US$115,000 US$ 10,000 NIL NIL NIL NIL US $ 858
Former VP, Sales, 1999(2) US$115,000 NIL NIL NIL NIL NIL US $ 812
Marketing and 1998(3) US$105,417 US$ 25,000 NIL 120,000 NIL NIL NIL
Business 1997(4) N/A N/A NIL N/A NIL NIL N/A
Development (Global
USA)(7)
------------------- ------- ------------- ------------- ------------ ---------- ----------- -------- ------------
MAURICE E. SOKULSKI 2000(1) US$ 80,833 US$ 10,000 NIL NIL NIL NIL US$ 589
Treasurer 1999(2) US$ 75,000 NIL NIL NIL NIL NIL US$ 638
1998(3) US$ 75,000 US$ 35,000 NIL 100,000 NIL NIL NIL
1997(4) US$ 27,324 NIL NIL NIL NIL NIL NIL
------------------- ------- ------------- ------------- ------------ ---------- ----------- -------- ------------
TALBOT R. IREDALE 2000(1) C $105,000 C $ 1,500 NIL NIL NIL NIL C $ 2,313
VP, Research and 1999(2) C $ 96,667 N/A N/A N/A N/A N/A C $ 1,875
Development 1998(3) N/A N/A N/A N/A N/A N/A N/A
1997(4) N/A N/A N/A N/A N/A N/A N/A
------------------- ------- ------------- ------------- ------------ ---------- ----------- -------- ------------
LARRY ENSMINGER 2000(1) US$107,083 US$ 10,000 NIL NIL NIL NIL US$ 733
VP, Business 1999(2) US$ 95,500 NIL NIL NIL NIL NIL US$ 789
Development; 1998(3) US$ 90,000 US$ 40,000 NIL 50,000 NIL NIL US$ 916
Secretary of the 1997(4) US$ 45,000 NIL NIL NIL NIL NIL NIL
Company
------------------- ------- ------------- ------------- ------------ ---------- ----------- -------- ------------
</TABLE>
(1) For the fiscal year ended June 30, 2000.
(2) For the fiscal year ended June 30, 1999.
(3) For the fiscal year ended June 30, 1998.
(4) For the six months and fiscal year ended at June 30, 1997.
(5) Refer to "Management Contracts" for further particulars.
(6) Mr. Van Pelt resigned as a Director of the Company in August 2000.
(7) Subsequent to the fiscal year ended June 30, 2000, Mr. Urosevich was
appointed President and Chief Operating Officer of the Company
effective July 31, 2000.
(8) This amount includes C$12,381 paid to Mr. Rickards as a result of
exchange rate fluctuations between United States and Canadian currency.
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
-8-
<PAGE> 11
through restricted shares or units". No LTIPs were granted to the Named
Executive Officers or Directors during the fiscal year ended June 30, 2000.
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, 2000.
OPTION GRANTS DURING THE FISCAL YEAR ENDED JUNE 30, 2000
During the fiscal year ended June 30, 2000, stock options were granted to John
W. Larmer II, a Director of the Company, to purchase up to a total of 50,000
common shares at a price of C$1.69 per share, exercisable on or before February
7, 2005. No other stock options were granted to the Named Executive Officers or
Directors during the fiscal year ended June 30, 2000. Subsequent to the fiscal
year ended June 30, 2000, Bryan W. Courtney, a Director of the Company, was
granted an option to purchase up to a total of 50,000 common shares at a price
of C$1.25 per share exercisable on or before August 2, 2005.
AGGREGATED OPTION EXERCISES DURING THE FISCAL YEAR ENDED JUNE 30, 2000
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, 2000. Subsequent to the fiscal year ended
June 30, 2000, Mr. Van Pelt, the Company's former President, Chief Executive
Officer and a former Director, exercised his option to purchase 50,000 shares at
C$1.25 per share.
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, 2000 (including all such officers, directors and
employees of Global USA) is as follows:
<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 C$1.25 August 22, 2002
-------------------------------------------------------------------------------------------------------
DIRECTORS 100,000 50,000 C$1.49 December 17, 2002
50,000 C$1.69 February 7, 2005
-------------------------------------------------------------------------------------------------------
EMPLOYEES 830,000 830,000 205,000 @ C$2.05 October 15, 2001
625,000 @ C$1.25 August 22, 2002
-------------------------------------------------------------------------------------------------------
TOTAL 1,300,000 1,300,000
-------------------------------------------------------------------------------------------------------
</TABLE>
Subsequent to the fiscal year ended June 30, 2000, Bryan W. Courtney, a Director
of the Company, was granted an option to purchase up to a total of 50,000 common
shares at a price of C$1.25 per share exercisable on or before August 2, 2005.
The following table provides the details of stock options exercised during the
fiscal year ended June 30, 2000, and the fiscal year end stock option values for
the Named Executive Officers:
-9-
<PAGE> 12
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS, IN-THE-MONEY OPTIONS,
ALL OF WHICH WERE ALL OF WHICH WERE
OPTIONEES SHARES ACQUIRED VALUE REALIZED EXERCISABLE, AT EXERCISABLE, AT JUNE
ON EXERCISE JUNE 30, 2000 30, 2000
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOWARD T. VAN PELT Nil(1) N/A 50,000 Not in the Money
---------------------------------------------------------------------------------------------------------
CLINTON H. RICKARDS Nil N/A 50,000 Not in the Money
---------------------------------------------------------------------------------------------------------
LARRY ENSMINGER Nil N/A 50,000 Not in the Money
---------------------------------------------------------------------------------------------------------
MAURICE E. SOKULSKI Nil N/A 100,000 Not in the Money
---------------------------------------------------------------------------------------------------------
TALBOT R. IREDALE N/A N/A N/A N/A
---------------------------------------------------------------------------------------------------------
ROBERT J. UROSEVICH Nil N/A 120,000 Not in the Money
---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Subsequent to the fiscal year ended June 30, 2000, Mr. Van Pelt exercised
his stock option to purchase a total of 50,000 shares in the capital of the
Company at a price of C$1.25 per share.
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, 2000 other than to
David H. Brown, the former Chairman of the Company (C$46,667), George Cobbe, a
former director of the Company (US$5,000) P. Nicholas M. Glass (US$12,500) and
John W. Larmer II (US$7,500). These amounts included Directors' fees for the
fiscal year ended June 30, 2000. The Company has no standard arrangement
pursuant to which the Directors are compensated by the 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 P. Nicholas M. Glass, Robert J.
Urosevich and Brian W. Courtney. However, compensation matters may also be
reviewed and approved by the entire Board of Directors.
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, 2000, Howard T. Van Pelt, the Company's
former President and Chief Executive Officer and a Director, was paid a salary
of US$180,000. For further particulars, reference should be made to "Management
Contracts" below.
-10-
<PAGE> 13
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 expired July 31, 2000. Subsequent to the fiscal year ended June
30, 1999, Mr. Urosevich was appointed President and Chief Operating Officer of
the Company at a salary of US$150,000 per year. For further particulars,
reference should be made to "Management Contracts" below.
During the fiscal year ended June 30, 2000, Clinton H. Rickards, a Director of
the Company, was paid a salary of C$154,332, Larry Ensminger, the
Vice-President, Business Development, was paid a salary of US$107,083, Maurice
E. Sokulski, Treasurer, was paid a salary of US$80,833 and Talbot R. Iredale,
Vice-President, Research and Development, was paid a salary of C$105,000.
PERFORMANCE GRAPH
The following chart compares the total cumulative shareholder return for C$100
invested in common shares of the Company beginning December 31, 1995 with the
cumulative total return of the TSE 300 Total Return Index for the Company's five
most recently completed fiscal years.
[GRAPH]
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
31-Dec-95 31-Dec-96 31-Dec-97 30-Jun-98 30-Jun-99 30-Jun-00
---------- ----------- ----------- ----------- ----------- -----------
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Global C$ 1.15 C$ 0.65 C$ 0.67 C$ 3.00 C$ 2.65 C$ 1.03
-----------------------------------------------------------------------------------------------------
TSE 300 9,397.97 12,061.95 13,222.76 15,367.27 14,864.79 10,195.50
-----------------------------------------------------------------------------------------------------
</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 2000 fiscal year, to the best knowledge of the
Company, all Forms required by Section 16(a) were timely filed with the
exception of a Form 4 to be filed by Mr. Courtney.
-11-
<PAGE> 14
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 seven regular and special meetings during fiscal
2000 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. P. Nicholas M. Glass,
Clinton H. Rickards and John W. Larmer II, all of whom are outside Directors and
all of whom are unrelated Directors. It held four meetings during fiscal 2000
and passed various audit committee consent resolutions in lieu of holding
meetings. The Audit Committee carries out the following responsibilities:
-12-
<PAGE> 15
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, of P. Nicholas M. Glass,
Robert J. Urosevich and Brian W. Courtney. Two of whom are outside Directors and
unrelated Directors. The Compensation Committee did not hold a meeting during
fiscal 2000 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, which was for a term of three years, expired
July 31, 2000 and was not renewed. Subsequent to the fiscal year ended June 30,
2000, Mr. Van Pelt resigned as a Director of the Company. Severance of
US$162,000 was negotiated and will be expensed in the 2001 fiscal year.
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, which
was for a term of three years, expired July 31, 2000.
Mr. Urosevich was appointed President and Chief Operating Officer of the Company
on July 31, 2000. On August 1, 2000 he entered into an Employment Agreement with
Global USA pursuant to which he will receive an annual salary of US$150,000 plus
an annual bonus of 3% of the consolidated pre-tax earnings to a maximum of
US$200,000 per year. The agreement, which is for a term of two years, will
expire July 31, 2002.
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
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 former President and Chief Executive Officer
and former Director.
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.
-13-
<PAGE> 16
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 2000 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 because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. Although the change in date has occurred, it is not possible to conclude
that all aspects of the Year 2000 Issue that may affect the entity, including
those related to customers, suppliers, or other third parties, have been fully
resolved.
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
-14-
<PAGE> 17
(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:
(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
Since the Company's 1999 Annual General Meeting of Shareholders held October 28,
1999, the Company granted stock options to one director prior to the fiscal year
ended June 30, 2000 to purchase up to a total of 50,000 common shares at a price
of C$1.60 per share exercisable on or before February 7, 2000. It also granted
stock options to one director subsequent to the fiscal year ended June 30, 2000
to purchase up to a total of 50,000 common shares at a price of C$1.25 per share
exercisable on or before August 2, 2005.
The Company currently has outstanding stock options exercisable into 1,300,000
common shares. This amount includes the stock options to purchase up to a total
of 470,000 common issuable to insiders (as
-15-
<PAGE> 18
defined by the TSE) pursuant to the exercise of stock options. See the
disclosure 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 June 30, 2000 a total of eight "insiders" (five of whom
are Named Executive Officers and three 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. 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, 2000, the
market value, based on the closing price, of common stock was C$1.03 per share.
UNITED STATES TAX LAW
Incentive Stock Options
For taxpayers subject to U.S. federal income tax law, compensatory stock options
granted may or may not qualify as "incentive stock options" under Section 422 of
the Internal Revenue Code of 1986, as amended. In such case, under present U.S.
federal income tax law, no tax consequences attend the grant or timely exercise
of an incentive stock 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
or exchange of the shares received upon the exercise equal to the difference
between the amount realized on the sale or exchange and the adjusted basis of
the stock. The adjusted basis of shares transferred to an optionee pursuant to
the exercise of an incentive stock option is the price paid for such shares. 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 a loss, if
sustained, would be recognized by the optionee), 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 an 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.
-16-
<PAGE> 19
Non-Qualified Stock Options
No income generally will be recognized by an optionee for U.S. federal income
tax purposes upon the grant of a non-qualified stock option. Upon exercise of a
non-qualified stock option, the optionee generally 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, if any, paid for those shares. Income,
if any, recognized upon the exercise of a non-qualified stock option, 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 provide the Company with a
deduction equal to the amount of income recognized by the optionee, subject to
certain deduction limitations. The adjusted basis of shares transferred to an
optionee pursuant to the exercise of a non-qualified stock option 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 adjusted basis of the shares will constitute capital gain to
the optionee for U.S. 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
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: "Robert J. Urosevich"
-------------------------------------
ROBERT J. UROSEVICH
PRESIDENT AND CHIEF OPERATING OFFICER
-17-
<PAGE> 20
PROXY
2000 ANNUAL GENERAL MEETING OF MEMBERS
OF
GLOBAL ELECTION SYSTEMS INC.
TO BE HELD ON FRIDAY, NOVEMBER 10, 2000 AT 10:00 A.M. (VANCOUVER TIME)
AT THE FOUR SEASONS HOTEL
791 WEST GEORGIA STREET, VANCOUVER, BRITISH COLUMBIA, CANADA
THE UNDERSIGNED, A REGISTERED SHAREHOLDER OF THE COMPANY, HEREBY APPOINTS P.
NICHOLAS M. GLASS, the Chairman and a Director of the Company, or failing this
person, ROBERT J. UROSEVICH, the President, Chief Operating Officer and a
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 FRIDAY, THE 10TH DAY OF
NOVEMBER, 2000 AT THE HOUR OF 10 O'CLOCK IN THE FORENOON (VANCOUVER 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:
Brian W. Courtney;
-------- --------
P. Nicholas M. Glass;
-------- --------
John W. Larmer II;
-------- --------
Clinton H. Rickards;
-------- --------
Robert J. Urosevich;
-------- --------
</TABLE>
THE UNDERSIGNED MEMBER HEREBY REVOKES ANY PROXY PREVIOUSLY GIVEN TO ATTEND AND
VOTE AT SAID MEETING.
SIGN HERE:
--------------------------------------------
PLEASE PRINT NAME:
--------------------------------------------
DATE:
--------------------------------------------
<PAGE> 21
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 Pacific Corporate
Trust Company.
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 Pacific Corporate Trust Company 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.
================================================================================
To be represented at the Meeting, this Instrument of Proxy must be
RECEIVED at the office of PACIFIC CORPORATE TRUST COMPANY 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 Pacific Corporate Trust Company is Suite 830, 625
Howe Street, Vancouver, British Columbia, Canada, V6C 3B8 and its FAX
number is (604) 689-8144
================================================================================
