<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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 state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(4) Date Filed:
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<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
AXIOHM TRANSACTION SOLUTIONS, INC.
To All Shareholders:
The 1998 Annual Meeting of the Shareholders of Axiohm Transaction Solutions,
Inc. (the "Company") will be held at the Sheraton Hotel West Tower on Harbor
Island, San Diego, California 92101 on April 28, 1998 at 10:00 a.m., to act on
the following matters:
(1) To elect five persons to the Company's Board of Directors;
(2) To amend the Company's 1992 Stock Plan to increase the number of shares
of Common Stock available for issuance under the Plan by 500,000 shares;
(3) To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the current fiscal year; and
(4) To act on such other matters as may properly come before the meeting or
any adjournment(s) thereof.
In accordance with the Company's Bylaws, the Board of Directors has fixed
the close of business on March 2, 1998 as the record date for the determination
of shareholders entitled to notice of, and to vote at, this meeting or any
adjournment(s) thereof. The stock transfer books will not be closed. Your
attention is directed to the enclosed Proxy Statement setting forth information
regarding the matters to be acted upon at the meeting. You are cordially invited
to attend the meeting in person.
Dated: April 15, 1998
By Order of the Board of Directors of
AXIOHM TRANSACTION SOLUTIONS, INC.
By: Janet W. Shanks, SECRETARY
<PAGE>
AXIOHM TRANSACTION SOLUTIONS, INC.
PROXY STATEMENT FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Axiohm Transaction Solutions, Inc. (the "Company") for use at the Annual Meeting
of Shareholders to be held on April 28, 1998 at 10:00 a.m., local time, or at
any adjournment(s) thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting will
be held at the Sheraton Hotel West Tower on Harbor Island, San Diego, California
92101. The Company's principal offices are located at 15070 Avenue of Science,
San Diego, California 92128. The telephone number at that address is (619)
451-3485.
These proxy solicitation materials were mailed on or about April 15, 1998 to
all shareholders entitled to vote at the meeting.
RECORD DATE AND SHARES OUTSTANDING
Shareholders of record at the close of business on March 2, 1998 are
entitled to notice of and to vote at the meeting. At the record date, 6,512,926
shares of the Company's Common Stock (the "Common Stock") were issued and
outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company at the
Company's headquarters, located at 15070 Avenue of Science, San Diego,
California 92128 (Attn: Corporate Secretary), a written notice of revocation or
a duly executed proxy bearing a later date, or by attending the meeting and
voting in person.
VOTING AND SOLICITATION
Every shareholder voting at the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of votes to which the
shareholder's shares are entitled, or distribute the shareholder's votes on the
same principle among as many candidates as the shareholder thinks fit, provided
that votes cannot be cast for more than five candidates. However, no shareholder
shall be entitled to cumulate votes unless the candidate's name has been placed
in nomination prior to the voting and the shareholder, or any other shareholder,
has given notice at the meeting prior to the voting of the intention to cumulate
the shareholder's votes. On all other matters, each share has one vote.
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone, telefax, telegram or express mail service.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting is
a majority of the shares of Common Stock issued and outstanding on the record
date. Shares that are voted "FOR", "AGAINST" or "ABSTAIN" on a matter are
treated as being present at the meeting for purposes of establishing a quorum
and are also treated as shares "represented and voting" at the Annual Meeting
(the "Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in California
as to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both (i) the presence or absence
of a quorum for the transaction of business and (ii) the total number of Votes
Cast with respect to a proposal (other than the election of directors). In the
absence of controlling
<PAGE>
precedent to the contrary, the Company intends to treat abstentions in this
manner. Accordingly, abstentions will have the same effect as a vote against the
proposal.
Broker non-votes will be counted for purposes of determining the presence or
absence of a quorum for the transaction of business, but will not be counted for
purposes of determining the number of Votes Cast with respect to the proposal on
which the broker has expressly not voted. Thus, a broker non-vote will not
affect the outcome of the voting on a proposal.
An automated system administered by the Company's transfer agent will be
used to tabulate proxies. Tabulated proxies will be transmitted to an employee
of the Company who will serve as inspector of elections.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders of the Company that are intended to be presented
by such shareholders at the Company's 1999 Annual Meeting of Shareholders must
be received by the Company no later than December 1, 1998 in order to be
eligible for inclusion in the proxy statement and form of proxy relating to that
meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES AND VOTE REQUIRED
A board of five (5) directors is to be elected at the meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the five nominees named below, all of whom are presently directors of the
Company. In the event that any such nominee is unable or declines to serve as a
director at the time of the Annual Meeting of Shareholders, the proxies will be
voted for any nominee who shall be designated by the present Board of Directors
to fill the vacancy. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them in such a manner in accordance with cumulative voting as will assure the
election of as many of the nominees listed below as possible, and, in such
event, the specific nominees to be voted for will be determined by the proxy
holders. The five nominees for director receiving the highest number of
affirmative votes of the shares entitled to be voted for them shall be elected
as directors. Votes withheld from any director are counted for purposes of
determining the presence or absence of a quorum, but have no other legal effect
under California law. It is not expected that any nominee will be unable or will
decline to serve as a director. The term of office of each person elected as a
director will continue until the next Annual Meeting of Shareholders or until a
successor has been elected and qualified. The term of office of each person
elected as a director will continue until the next Annual Meeting of
Shareholders or until a successor has been elected and qualified.
The Board of Directors recommends the election of the nominees listed below.
The names of the nominees, and certain information about them as of the record
date, are set forth below.
<TABLE>
<CAPTION>
NOMINEE
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- ---------------------------------------- --- -------------------------------------------------- ---------------
<S> <C> <C> <C>
Nicolas Dourassoff...................... 43 Managing Director, ABN-AMRO Investissement 1997
Patrick Dupuy........................... 45 Co-Chief Executive Officer of the Company 1997
Gilles Gibier........................... 43 Co-Chief Executive Officer of the Company 1997
William H. Gibbs........................ 54 Private Investor 1985
Don M. Lyle............................. 58 Independent Consultant 1992
</TABLE>
2
<PAGE>
Mr. Dupuy has served as a director and Co-Chairman of the Company since
October 1997 and as Co-Chief Executive Officer of the Company since January
1998. Mr. Dupuy has been Chairman of Axiohm S.A., a French manufacturer of
transaction printers and mechanisms which acquired the Company in 1997, since
its purchase from Schlumberger Limited ("Schlumberger") by Axiohm S.A.
management in 1988. Mr. Dupuy joined Schlumberger in 1984 as Marketing and Sales
Manager for several Schlumberger divisions, including printer products and low
voltage equipment. Prior to joining Schlumberger, Mr. Dupuy was employed as head
of export sales for IER S.A., a world leader in airline ticket printers. Mr.
Dupuy was elected to the Board of Directors pursuant to the Merger Agreement (as
defined below). See "Certain Relationships and Related
Transactions--Transactions in Connection with the Acquisition of DH Technology,
Inc. by Axiohm S.A."
Mr. Gibier has served as a director and Co-Chairman of the Company since
October 1997 and as Co-Chief Executive Officer of the Company since January
1998. Mr. Gibier has been a director of Axiohm S.A. since its purchase from
Schlumberger by Axiohm S.A. management in 1988. Mr. Gibier joined Schlumberger
in 1983. Mr. Gibier held various positions at Schlumberger, including Divisional
General Manager in France, where he was responsible for divesting certain
non-strategic operations, Manager of Internal Business Audit in the U.S., and
Plant Manager of an energy meter plant in the United Kingdom. Mr. Gibier was
elected to the Board of Directors pursuant to the Merger Agreement (as defined
below). See "Certain Relationships and Related Transactions--Transactions in
Connection with the Acquisition of DH Technology, Inc. by Axiohm S.A."
Mr. Dourassoff has served as a director of the Company since October 1997,
and as a director of Axiohm S.A. since 1996. Mr. Dourassoff has agreed to become
the Chief Executive Officer of the Company in May 1998. See "Executive
Compensation--Employment Agreements." Mr. Dourassoff is currently a Managing
Director of ABN AMRO Investissement, the investment subsidiary of ABN AMRO (a
Dutch bank), a position he has held since June 1993. Prior to that, he had
served as the Director of the Acquisition Financing Department of Banque De
Neuflize, Schlumberger Mallet, a subsidiary of ABN AMRO, from January 1994
through June 1995. Mr. Dourassoff received his MBA from Groupe HEC (France) and
his Bachelor of Science degree from the Ecole Nationale Superieure de Techniques
Avancees (France) and holds an engineering degree from the French Naval Academy,
where he graduated as an officer. Mr. Dourassoff was elected to the Board of
Directors pursuant to the Merger Agreement (as defined below). See "Certain
Relationships and Related Transactions--Transactions in Connection with the
Acquisition of DH Technology, Inc. by Axiohm S.A."
Mr. Gibbs has served as a director of the Company since 1987. From November
1985 to January 1998 Mr. Gibbs served as President and Chief Executive Officer
of the Company, and from March 1987 through October 1997 as Chairman of the
Board of Directors of the Company.
Mr. Lyle has been an independent consultant since 1983 to a number of
technology-based companies in the United States, Europe and Japan. From 1984
through 1987, Mr. Lyle was President and Chief Executive Officer of Data
Electronics, Inc. Mr. Lyle is also a director of Emulex Network Systems and The
National Registry, Inc.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of seven meetings during
1997. No director attended fewer than 75% of such meetings or of committee
meetings held while such director was a member of the Board or of a committee.
The Board of Directors has a Nominating Committee, an Audit Committee and a
Compensation Committee.
The Nominating Committee recommends new members for the Company's Board of
Directors. The Committee consists of Patrick Dupuy and Gilles Gibier. Thus far,
the functions of the Nominating
3
<PAGE>
Committee have been performed by the Board of Directors. The Nominating
Committee held no meetings in 1997.
The Audit Committee recommends engagement of the Company's independent
auditors, approves services performed by such auditors and reviews and evaluates
the Company's accounting system and its system of internal accounting controls.
This Committee, currently consisting of Nicolas Dourassoff and Don M. Lyle, held
one meeting during 1997.
The Compensation Committee reviews and administers the compensation of the
officers of the Company and administers the Company's 1992 Stock Plan and, to
the extent necessary with respect to outstanding options, the Company's 1983
Incentive Stock Option Plan. This Committee, currently consisting of Patrick
Dupuy, Gilles Gibier and Don M. Lyle, held one meeting during 1997.
COMPENSATION OF DIRECTORS
RETAINER AND MEETING FEES
All non-employee directors received a $6,000 annual retainer plus $1,250 for
each Board of Directors meeting attended and for each committee meeting which
did not occur on a regularly scheduled date.
DIRECTOR WARRANT PLAN
The Company has a Director Warrant Plan (the "Warrant Plan"), however, all
warrants outstanding under the Warrant Plan were purchased from the directors in
connection with the acquisition of the Company by Axiohm S.A., and no warrants
were issued in 1997. The Company intends to terminate the Warrant Plan in 1998.
See "Certain Relationships and Related Transactions--Treatment of Stock Options
and Director Warrants."
CO-CHAIRMEN AGREEMENTS
The Company has entered into Co-Chairman Agreements with Messrs. Dupuy and
Gibier. See "Executive Compensation--Employment Agreements."
VOTE REQUIRED
If a quorum is present and voting, the five nominees receiving the highest
number of votes will be elected to the Board of Directors. Votes withheld from
any nominee will be counted for purposes of determining the presence or absence
of a quorum for transaction of business at the meeting and the total number of
Votes Cast with respect to a nominee. Accordingly, abstentions will have the
same effect as a vote against the nominee. Broker non-votes will be counted for
purposes of determining the presence or absence of a quorum for the transaction
of business, but will not be counted for purposes of determining the number of
votes cast with respect to a nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF THE ABOVE CANDIDATES FOR THE COMPANY'S BOARD OF DIRECTORS.
PROPOSAL NO. 2
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
1992 STOCK PLAN TO INCREASE THE NUMBER OF
SHARES OF COMMON STOCK AVAILABLE
FOR ISSUANCE BY 500,000 SHARES
The Company is seeking shareholder approval of an amendment to the 1992
Stock Plan to increase in the number of shares of Common Stock issuable under
the 1992 Stock Plan by 500,000 shares.
4
<PAGE>
The Company's 1992 Stock Plan was adopted by the Board of Directors in
February 1992 and approved by the shareholders at the 1992 Annual Meeting. To
date, a total of 1,473,469 shares have been approved by the shareholders for
issuance under the 1992 Stock Plan. In February 1998, the Board of Directors
approved a further increase of 500,000 shares issuable under the 1992 Stock
Plan, which, if approved by the shareholders, would increase the total shares
reserved for issuance under the Plan since its inception to 1,973,469 shares. A
summary of the 1992 Stock Plan is located in Appendix A to this Proxy Statement.
The Board believes this increase is in the best interests of the Company for
two principal reasons. First, the Board believes that the increase is necessary
to enable the Company to continue to compete successfully with other companies
to attract and retain valuable employees. Second, the Board believes that it is
appropriate to have a substantial pool of options available for grant in
connection with acquisitions that the Company may make from time to time. The
ability to make such grants enhances the Company's ability to structure
attractive offers to potential acquisition targets and their key personnel.
As of March 2, 1998, options to purchase 223,988 shares of Common Stock were
outstanding under the 1992 Stock Plan, 1,122,443 shares remained available for
future option grants (subject to shareholder approval of the increase of 500,000
shares), and options to purchase 535,890 shares had been exercised. On March 2,
1998, the aggregate market value of the unexercised and outstanding options for
shares of Common Stock under the 1992 Stock Plan was $6,030,154, based on a
closing price of $13.250 on the Nasdaq National Market on that date.
INFORMATION REGARDING RECENT GRANTS
The Company has not determined the number of stock options to be granted in
the future to the Named Executive Officers (as defined in "Executive
Compensation--Summary Compensation Table"), all current executive officers as a
group, all current directors who are not executive officers as a group or all
employees (including current officers who are not executive officers) as a
group. However, the Company has agreed to grant (i) 350,000 options to
management and employees of the Company pursuant to an Agreement and Plan of
Merger, and (ii) 120,000 options to Nicolas Dourassoff, who has agreed to become
the Company's Chief Executive Officer. See "Certain Relationships and Related
Transactions--Transactions in Connection with the Acquisition of DH Technology
by Axiohm S.A." and "Executive Compensation--Employment Agreements." The
following table sets forth certain information with respect to stock option
grants under the 1992 Stock Plan during the year ended December 31, 1997:
AMENDED PLAN BENEFITS
<TABLE>
<CAPTION>
NUMBER OF SHARES
SUBJECT TO AGGREGATE
OPTIONS EXERCISE
NAME OF INDIVIDUAL OR IDENTITY OF GROUP AND POSITION GRANTED(#) PRICE ($)
- ---------------------------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
William H. Gibbs(1) ........................................................ 200,000 3,100,000
Chief Executive Officer
Walter S. Sobon ............................................................ 80,000 1,240,000
Chief Financial Officer
David T. Ledwell(1) ........................................................ 50,000 775,000
Executive Vice President--Transaction Products
All current executive officers as a group (5 persons)....................... 80,000 1,240,000
All non-executive directors as a group (4 persons).......................... -- --
All other employees as a group.............................................. 30,000 460,750
</TABLE>
- ------------------------
(1) The employment of both Mr. Gibbs and Mr. Ledwell with the Company terminated
in January 1998.
5
<PAGE>
VOTE REQUIRED
The affirmative vote of a majority of the Votes Cast will be required to
approve the amendment to the 1992 Stock Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
AMENDMENT TO THE COMPANY'S 1992 STOCK PLAN TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK AVAILABLE FOR ISSUANCE BY 500,000 SHARES.
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee and subject to the
ratification by the shareholders, the Board of Directors appointed KPMG Peat
Marwick LLP, independent public auditors to serve for the fiscal year ending
December 31, 1998.
The Board of Directors recommends that the shareholders vote for
ratification of the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors to audit the financial statements for the Company for the
year ending December 31, 1998. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
meeting with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
VOTE REQUIRED
The affirmative vote of a majority of the Votes Cast will be required to
ratify KPMG Peat Marwick LLP as the Company's independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
6
<PAGE>
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLES
The following table shows the total compensation of (i) the Chief Executive
Officer and (ii) all other executive officers of the Company who earned over
$100,000 in salary and bonus in 1997 (together the "Named Executive Officers"),
as well as the total compensation paid to each such individual for the Company's
two previous fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
AWARDS
ANNUAL COMPENSATION -------------------------- PAYOUTS
------------------------------------------------------ RESTRICTED -----------
OTHER ANNUAL STOCK SECURITIES LTIP
NAME AND PRINCIPAL COMPENSATION AWARD UNDERLYING PAYOUTS
POSITION YEAR SALARY($) BONUS($) ($) (S)($) OPTIONS(#) ($)
- -------------------------- --------- ----------- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
William H. Gibbs(2) ...... 1997 $ 349,973 $ 75,000 -- -- 200,000 --
Chief Executive Officer 1996 285,000 44,599 -- -- -- --
1995 274,998 155,000 -- -- 150,000 --
David T. Ledwell(2) ...... 1997 $ 123,973 -- -- -- 50,000 --
Executive Vice President 1996 132,981 $ 35,000 -- -- -- --
Transaction Products 1995 121,831 42,500 -- -- 22,500 --
Malcolm Unsworth(3) ...... 1997 $ 156,028 $ 95,000 -- -- -- --
Walter S. Sobon(4) ....... 1997 $ 119,407 $ 37,500 -- -- 80,000 --
Chief Financial Officer
Bernard Patry(3) ......... 1997 $ 110,664 $ 65,083 -- -- -- --
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL COMPENSATION
POSITION ($)(1)
- -------------------------- -------------
<S> <C>
William H. Gibbs(2) ...... $ 1,966
Chief Executive Officer 1,784
1,510
David T. Ledwell(2) ...... $ 1,456
Executive Vice President 959
Transaction Products 820
Malcolm Unsworth(3) ...... --
Walter S. Sobon(4) ....... $ 300
Chief Financial Officer
Bernard Patry(3) ......... --
</TABLE>
- ------------------------
(1) Represents payments of insurance premiums on behalf of the Named Executive
Officers.
(2) The employment of both Mr. Gibbs and Mr. Ledwell terminated with the Company
in January 1998.
(3) Messrs. Unsworth and Patry joined the Company in September 1997. Represents
payments made to Messrs. Unsworth and Patry in 1997 in their capacities as
executive officers of the Company and, until joining the Company in
September 1997, in their capacities as executive officers of Axiohm IPB,
Inc. and Axiohm S.A., respectively. See "Certain Relationships and Related
Transactions--Transactions in connection with the Acquisition of DH
Technology, Inc. by Axiohm S.A."
(4) Mr. Sobon joined the Company in March 1997.
7
<PAGE>
The following tables set forth certain information for the Named Executive
Officers with respect to exercises in 1997 of options to purchase Common Stock
of the Company:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE OR FOR OPTION TERM(3)
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME GRANTED(#)(1) FISCAL YEAR(2) ($/SH) DATE 5%($) 10%($)
- -------------------------- ------------- ----------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
William H. Gibbs.......... 200,000 33.83% $ 15.50 3/28/05 $ 1,480,000 $ 3,546,000
David T. Ledwell.......... 50,000 8.46% 15.50 3/28/05 370,000 886,500
Malcolm Unsworth.......... 231,118(4) 39.10% 7.15 12/31/05 4,493,893 7,265,098
Walter S. Sobon........... 80,000 13.53% 15.50 3/4/05 592,040 1,418,048
</TABLE>
- ------------------------
(1) Except where otherwise indicated, these options were granted pursuant to the
1992 Stock Plan. All options have eight year terms and vest at the rate of
25% of the total shares on each of the first four anniversaries of the date
of grant, except for options granted to Mr. Gibbs which vest generally at a
rate of 1/48 of the total shares each month from the date of grant.
(2) An aggregate of 591,118 options to purchase shares of Common Stock were
granted to employees during 1997. Does not include options to purchase
231,118 shares of the Company's Common Stock granted to Mr. Unsworth in
exchange for options to purchase shares of Axiohm S.A. See note 4 below.
(3) Potential realizable value is based on an assumption that the stock price of
Common Stock appreciates at the annual rate shown (compounded annually) from
the date of grant until the end of the eight year option term. One share of
stock purchased at $15.50 in 1997 would yield profits of $7.40 per share at
5% appreciation over eight years, or $17.73 per share at 10% appreciation
over the same period. These numbers are calculated based on the requirements
promulgated by the Securities and Exchange Commission (the "SEC") and do not
reflect the Company's estimate of future stock price.
(4) These options were granted to Mr. Unsworth in exchange for options to
purchase shares of Common Stock of Axiohm S.A. pursuant to the Merger
Agreement. 20% of these options were immediately exercisable on the date of
grant, with 20% of the options vesting on January 1 of each year thereafter,
commencing January 1, 1998. See "Certain Relationships and Related
Transactions--Transactions in Connection with the Acquisition of DH
Technology, Inc. by Axiohm S.A."
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES VALUE FISCAL YEAR END(#) AT FISCAL YEAR END(1)($)
ACQUIRED ON REALIZED ------------------------ ------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ----------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
William H. Gibbs.......... 624,578 9,667,240 35,416 237,506 73,176 255,485
David T. Ledwell.......... 43,125 612,188 -- 63,125 -- 72,967
Walter S. Sobon........... 40,000 380,000 -- 40,000 -- 50,000
Malcolm Unsworth.......... -- -- 46,223 184,895 443,740 1,774,992
</TABLE>
- ------------------------
(1) Market value of underlying securities at year-end minus the exercise price
multiplied by the number of shares.
8
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Dupuy and
Gibier, Co-Chairmen of the Company, Mr. Sobon, Chief Financial Officer of the
Company, and Mr. Dourassoff, who has agreed to become the Company's Chief
Executive Officer in May 1998.
The Co-Chairman Employment Agreement dated effective as of October 2, 1997
between the Company and Mr. Dupuy (the "Dupuy Agreement") provides that the
Company will employ Mr. Dupuy, and Mr. Dupuy agrees, to serve as Co-Chairman of
the Company and to oversee the Company's investment in certain of its foreign
subsidiaries. Mr. Dupuy's compensation therefor is to be $80,000 per year (along
with French social security taxes with respect thereto). The Dupuy Agreement may
be terminated by either party on one year's notice.
The Co-Chairman Employment Agreement dated effective as of October 2, 1997
between the Company and Mr. Gibier (the "Gibier Agreement") provides that the
Company will employ Mr. Gibier, and Mr. Gibier agrees, to serve as Co-Chairman
of the Company and to oversee the Company's investment in certain of its foreign
subsidiaries. Mr. Gibier's compensation therefor is to be $80,000 per year
(along with French social security taxes with respect thereto). The Gibier
Agreement may be terminated by either party on one year's notice.
The Employment Agreement with Mr. Sobon (the "Sobon Agreement") provides for
Mr. Sobon to be employed as the Company's Chief Financial Officer at a base
salary of no less than $160,000. Mr. Sobon is also eligible to receive a minimum
target bonus of $50,000, to be awarded based on the Company's financial
performance and is entitled to a car allowance and to participate in other
employee benefit plans and programs available to the Company's other employees.
The Sobon Agreement also contemplates that he will be granted an option to
purchase a number of shares of the Company's Common Stock as determined by the
Compensation Committee of the Board of Directors at an exercise price which
shall be equal to the then fair market value of the Company's Common Stock. The
option shall vest as to 50% of the shares 24 months following the grant date and
as to an additional 25% of the shares each year thereafter. In the event Mr.
Sobon's employment with the Company terminates in an Involuntary Termination (as
defined in the Sobon Agreement), Mr. Sobon shall receive a lump sum severance
payment equal to 12-months' compensation, except that (i) in the event that
William H. Gibbs' (the Company's former President and Chief Executive Officer,
who resigned from such positions effective January 10, 1998) employment is
terminated in the first 12 months following August 21, 1997 and Mr. Sobon is
terminated in the same 12-month period, Mr. Sobon shall receive a lump sum
severance payment equal to 18-months' compensation and (ii) in the event that
Mr. Gibbs' employment is terminated in the second 12 months following August 21,
1997 and Mr. Sobon is terminated in the same 12-month period, Mr. Sobon shall
receive a lump sum severance payment equal to 15-months' compensation. In
addition, in the event Mr. Sobon's employment is terminated as a result of an
Involuntary Termination, disability or death, the vesting and exercisability of
all outstanding stock options that were granted to Mr. Sobon prior to August 21,
1997 shall accelerate in full. The Sobon Agreement supersedes the employment
arrangement between the Company and Mr. Sobon as set forth in a letter from the
Company to Mr. Sobon dated September 20, 1996 and amended September 30, 1996.
The Employment Agreement with Mr. Dourassoff (the "Dourassoff Agreement")
provides for Mr. Dourassoff to be employed as Chief Executive Officer of the
Company effective May 15, 1998 at a base salary of $200,000 during his first
year of employment, and a base salary of not less than $250,000 for the second
and succeeding years of employment. Mr. Dourassoff will also be eligible to
receive a minimum target bonus of up to $75,000, to be awarded based on the
Company's financial performance, and will be entitled to participate in other
employee benefit plans and programs available to the Company's other employees.
The Dourassoff Agreement also provides that, in the event that the Company
employment terminates Mr. Dourassoff's employment without cause (as defined in
the Dourassoff Agreement), Mr. Dourassoff shall receive a lump sum severance
payment equal to one year's compensation if
9
<PAGE>
terminated in the first six months, nine months' salary if terminated in the
second six months, and six months' salary if terminated thereafter. The
Dourassoff Agreement provides that Mr. Dourassoff will be granted an option to
purchase 120,000 shares of the Company's Common Stock at an exercise price equal
to the then fair market value of the Company's Common Stock. The option shall
vest as to 25% of the shares each year commencing after the first 12 months of
employment.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors establishes the
compensation plans and policies and the specific compensation levels for
executive officers, and administers the Company's stock option plans.
COMPENSATION POLICIES
The Compensation Committee reviews and approves the salaries of executive
officers primarily by reference to data contained in the American Electronics
Association (AEA) survey of executive compensation in the electronics industry.
The Committee establishes base salaries that are within the range of salaries
for persons holding positions of similar responsibility at comparably-sized
technology companies. In addition, the Committee considers factors such as
relative Company performance, the individual's past performance, his or her
future potential and the individual's experience and ability as judged by the
Committee.
Annual bonuses for executive officers are primarily based on the achievement
of performance targets set forth in the Company's operating plan for the year.
The annual cash bonus for executive officers is based on four elements: (i)
pretax profits in relation to the Company's operating plan; (ii) the operating
results of the businesses or functions reporting to the executive, (iii)
achievement of specific, measurable objectives related to the executive's area
of responsibilities, and (iv) a factor based on subjective judgments of the
executive's performance. Bonus payments to executive officers averaged
approximately 27% of such officers' base salaries for 1997. The Committee
believes this to be commensurate with overall performance against the objectives
utilized in the executive bonus program.
The Compensation Committee believes that stock options are an effective
incentive device for attracting and retaining employees, and also serve to align
the interests of the executive officers with those of the shareholders. In
determining stock option grants, the Committee considers ranges of options
granted to executives at various levels in other companies and the relationship
of such grants to the number of vested options then held. While this data is
somewhat imprecise, the Compensation Committee feels comfortable that the ranges
are reasonable. All options are granted at the market price of the Common Stock
on the date of grant. During 1997, the Compensation Committee granted no options
to executive officers.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Internal Revenue Code limits the federal income tax deductibility of
compensation paid to the Company's Chief Executive Officer and to each of the
other four most highly compensated executive officers. For this purpose,
compensation can include, in addition to cash compensation, the difference
between the exercise price of stock options and the value of the underlying
stock on the date of exercise. Under the new legislation, the Company may deduct
compensation with respect to any of these individuals only to the extent that
during any fiscal year such compensation does not exceed $1 million or meets
certain other conditions (such as shareholder approval). Based on the Company's
current compensation
10
<PAGE>
plans and policies, the Company and the Committee believe that, for the near
future, there is little risk that the Company will lose any significant tax
deduction for executive compensation.
<TABLE>
<S> <C> <C>
Patrick Dupuy, Member Gilles Gibier, Member Don M. Lyle, Member
of the Compensation Committee of the Compensation Committee of the Compensation Committee
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Patrick Dupuy, Gilles Gibier and
Don M. Lyle. Messrs. Dupuy and Gibier have served as Co-Chief Executive Officers
of the Company since January 1998. Messrs. Dupuy and Gibier have been directors
and shareholders of Axiohm S.A. and Dardel Technologies S.A. See "Certain
Relationships and Related Transactions--Transactions in Connection with the
Acquisition of DH Technology, Inc. by Axiohm S.A." and "Certain Relationships
and Related Transactions-- Other Transactions."
Mr. Lyle is a non-employee director with no interlocking relationships as
defined by the Securities and Exchange Commission. In connection with the
Acquisition of the Company by Axiohm S.A., the Company purchased from Mr. Lyle
warrants to purchase 5,250 shares of the Company's Common Stock issued to Mr.
Lyle under the Director Warrant Plan for a total purchase price of $8,531. See
"See "Certain Relationships and Related Transactions--Treatment of Stock Options
and Director Warrants."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS IN CONNECTION WITH THE ACQUISITION OF DH TECHNOLOGY, INC. BY AXIOHM
S.A.
TREATMENT OF STOCK OPTIONS AND DIRECTOR WARRANTS
On October 2, 1997 the Company completed a series of transactions with
Axiohm S.A., a private French company ("Axiohm"), pursuant to an Agreement and
Plan of Merger, dated July 14, 1997 among the Company, Axiohm and AX Acquisition
Corporation, a California corporation ("Purchaser") and an indirect wholly-owned
subsidiary of Axiohm (the "Merger Agreement"), pursuant to which Purchaser was
merged with and into the Company (the "Merger"). Previously, on August 21, 1997,
Purchaser had completed a cash tender offer (the "Tender Offer") for 7,000,000
shares of the Company's Common Stock at a price of $25 per share (the "Tender
Offer Price"). Immediately following the Merger, the Company changed its name
from DH Technology, Inc. to Axiohm Transaction Solutions, Inc.
Pursuant to the Merger Agreement, upon completion of the Tender Offer, all
Vested Company Options (as hereinafter defined), other than Company Options held
by Mr. Gibbs, Mr. Sobon and Mr. Ledwell (the "Designated Optionees"), were
canceled and each holder thereof was paid an amount in cash by the Company equal
to the product of (i) the number of shares of Company Common Stock subject to
Vested Company Options held by such holder and (ii) the Tender Offer Price minus
the exercise price applicable to such Vested Company Options (the "Option
Spread"), less applicable taxes. The Designated Optionees had the option to
elect to be covered under the preceding sentence as to all or any portion of
their Vested Company Options or to receive the Option Spread on a deferred basis
over a period not to exceed seven years following the time of closing of the
Merger (the "Merger Effective Time"), subject to earlier distribution upon
termination of such individual's employment for any reason. Pursuant to the
Merger Agreement, the Company also agreed to pay a tax subsidy payment on the
Option Spread consisting of (i) a payment to reflect the federal and state tax
rate differential between long-term capital gains and ordinary income and (ii) a
payment to reimburse each optionee for taxes due as a result of the rate
differential payment, provided that such tax subsidy payment is limited so as to
avoid triggering the golden parachute excise tax under Sections 280G and 4999 of
the Internal Revenue Code. For purposes of the foregoing, "Vested Company
Options" means: (i) all stock options to purchase shares of Common Stock of the
Company ("Company Options") that were exercisable as of the completion of the
Tender Offer or that would have become exercisable through September 6, 1997;
(ii) one-half of all Company
11
<PAGE>
Options granted to Mr. Sobon as of the date of the Merger Agreement; and (iii)
all warrants outstanding under the Company's Director Warrant Plan (the
"Director Warrants").
Pursuant to the foregoing arrangements, the Company purchased Vested Company
Options exercisable for 877,000 shares of Company Common Stock for an aggregate
purchase price of $12.2 million. Of this total, the Company acquired 624,578
Vested Company Options from Mr. Gibbs for a total purchase price of $9,667,241;
40,000 Vested Company Options from Mr. Sobon for a total purchase price of
$380,000; and 43,125 Vested Company Options from Mr. Ledwell for a total
purchase price of $612,189. In addition, the Company purchased a total of 56,250
Director Warrants for an aggregate purchase price of $1,016,626. Of this total,
the Company acquired 14,250 Director Warrants from William Bowers, a former
director for a total purchase price of $88,406; 15,750 Director Warrants from
Bruce Klaas for a total purchase price of $105,656; 5,250 Director Warrants from
Mr. Lyle for a total purchase price of $8,531; and 21,000 Director Warrants from
Mr. Ryan for a total purchase price of $187,031.
Pursuant to the Merger Agreement, all Company Options other than Vested
Company Options ("Unvested Company Options") remained outstanding and subject to
the terms and conditions of the applicable option plan and option agreement, but
were modified to provide for full vesting acceleration in the event the
employee's employment is terminated (i) by the Company other than for cause, or
(ii) as the result of the employee's death or disability. Unvested Company
Options held by Mr. Gibbs, Mr. Sobon and Mr. Ledwell were also modified to
provide for acceleration upon a constructive termination of employment. See
"Executive Compensation--Employment Agreements." In the event the Company
engages in a transaction prior to April 1, 2001, as a result of which the
Company's Common Stock is no longer registered under the Exchange Act, each
holder of Unvested Company Options shall be entitled to receive from the Company
a cash payment equal to the product of (i) the number of shares subject to
Unvested Company Options held by such holder and (ii) the Offer Price minus the
exercise price applicable to such Unvested Company Options, less applicable
taxes. See "--Other Transactions."
EXCHANGE OFFER WITH AXIOHM S.A. SHAREHOLDERS
Pursuant to the Merger Agreement, Purchaser entered into stock purchase
agreements with each of the shareholders of Axiohm (the "Axiohm Holders")
pursuant to which Purchaser acquired on October 2, 1997 all of the outstanding
shares of capital stock of Axiohm for an aggregate purchase price of (i)
5,518,524 shares (the "Exchange Shares") of Company Common Stock (out of the
total of 7,000,000 shares of the Company's Common Stock acquired by Purchaser in
the Tender Offer) and (ii) $12.2 million in cash. Upon the closing of the
Exchange, the following directors and executive officers of Axiohm received
Exchange Shares and cash in the following amounts: Mr. Dupuy, 1,753,144 shares
and $3,875,075 in cash (includes 1,632,284 shares and $3,607,925 in cash
received by BV Instrumentenfabriek HM Smitt, an entity wholly owned by Mr.
Dupuy, 120,726 shares and $266,850 in cash received by Marie Dupuy, Mr. Dupuy's
wife and 90,540 shares and $200,250 in cash received by Mr. Dupuy's children);
Mr. Gibier, 1,740,133 shares and $3,846,300 in cash (includes 1,639,528 shares
and $3,623,925 in cash received by Van der Hoorn & Wouda BV, an entity wholly
owned by Mr. Gibier and 100,605 shares and $222,375 in cash received by Carole
Gibier, Mr. Gibier's daughter); Mr. Dourassoff, 16,768 shares and $37,063 in
cash (includes 16,768 shares and $37,063 in cash received by SOMAFIN, an entity
wholly owned by Mr. Dourassoff and Veronique Dourassoff, Mr. Dourassoff's wife,
Mr. Unsworth, 134 shares and $300 in cash (does not include an option to
purchase 231,118 shares of the Company's Common Stock which Mr. Unsworth
received in exchange for an option to purchase shares of Axiohm S.A.); and Mr.
Patry, 317,509 shares and $701,825 in cash (includes 115,092 shares and $254,400
in cash received by Marie-Pierre Patry, Mr. Patry's wife). The Merger Agreement
provides that the Company (i) shall file a registration statement on Form S-3
with the Commission covering the resale of the Exchange Shares by the Axiohm
S.A. Holders; (ii) shall cause such registration statement to be declared
effective by the Commission as soon as possible thereafter; and (iii) shall keep
such registration statement effective for a period of not less than two years.
The Company currently expects to file this registration statement in May 1998.
12
<PAGE>
TREATMENT OF AXIOHM S.A. STOCK OPTIONS
Pursuant to the Merger Agreement, upon the closing of the Exchange, the
Company caused the stock options to purchase 1,583 shares of the Common Stock of
Axiohm S.A. held by Mr. Unsworth to be replaced with an option to purchase
231,118 shares of the Company's Common Stock at an exercise price of $7.15 per
share (the "Replacement Option"). The Replacement Option granted to Mr. Unsworth
contains such general provisions as are typically contained in Company Options
and becomes exercisable as follows: 20% upon the closing date of the Exchange,
and 20% on each of January 1, 1998, 1999, 2000 and 2001. The Company is
obligated to register the shares of the Company's Common Stock issuable upon the
exercise of the Replacement Option under the Securities Act.
GRANT OF ADDITIONAL STOCK OPTIONS
The Merger Agreement contemplates that on a date within the first two
quarters following consummation of the Merger, the Compensation Committee of the
Board of Directors of the Company will grant stock options (the "New Options")
to management and employees to purchase up to an aggregate of 350,000 shares of
the Company's Common Stock at an exercise price equal to the fair market value
of the Company's Common Stock on the date of grant. The New Options shall have a
term of eight years and shall vest cumulatively as to 50% of the shares subject
to the options on the second anniversary of the date of grant, 25% on the third
anniversary and 25% on the fourth anniversary.
BOARD OF DIRECTORS COMPOSITION
The Merger Agreement contemplates that immediately upon the purchase by
Purchaser of the shares pursuant to the Tender Offer, the Company shall use all
reasonable efforts to cause three individuals designated by Purchaser to be
elected to the Board of Directors of the Company, and to cause two of such
designees to be identified as Co-Chairmen of the Board of Directors. Pursuant to
the foregoing, Messrs. Dupuy, Gibier and Dourassoff were elected to the Board of
Directors in October 1997, and Messrs. Dupuy and Gibier were identified as
Co-Chairmen of the Board of Directors.
OTHER TRANSACTIONS
Dardel Technologies E.U.R.L. (formerly Dardel Technologies, S.A.) ("Dardel
Technologies") is a French corporation, formerly wholly-owned by Mr. Dupuy and
Mr. Gibier and now wholly owned by the Company as a result of the Transactions,
that historically provided insurance services, legal services, management
services (including the services of Mr. Dupuy and Mr. Gibier) and
telecommunications services to its only two former subsidiaries, Axiohm and
Dardel Measurement and Control International S.A. ("DMCI"). In 1995 and 1996,
Axiohm paid fees to Dardel Technologies in the amount of $995,000 and $991,000,
respectively, for services rendered to Axiohm S.A. In anticipation of the Axiohm
Exchange, Dardel Technologies sold DMCI to Dardel Industries, a company owned by
Mr. Dupuy and Mr. Gibier, and Dardel Technologies transferred all of its
employees, assets and contracts to either Axiohm or Dardel Industries, depending
on which company had historically received the benefit of such employees, assets
or contracts. As a result, immediately following the Axiohm Exchange, the sole
assets of Dardel Technologies consisted of 48% of the voting stock of Axiohm
S.A. and cash to pay taxes.
Prior to the Exchange, Dardel Technologies owned 48% of Axiohm and had no
ownership interest in Dardel Industries.
Mr. Dupuy and Mr. Gibier each owned 49.9% of Dardel Technologies before and
after the transfer of employees, assets and contracts, including Dardel
Technologies' 85.33% ownership interest in Dardel Measurement and Control
International, from Dardel Technologies to Dardel Industries.
In the Axiohm Exchange, Purchaser transferred shares of the Company (which
it had acquired in the Tender Offer) and cash to the shareholders of Axiohm, and
the shareholders of Axiohm transferred their
13
<PAGE>
shares of Axiohm to Purchaser. The only exception was with respect to Dardel
Technologies, which owned 48% of Axiohm. Dardel Technologies did not transfer
its shares of Axiohm but rather retained them. Instead, ownership of Dardel
Technologies was transferred to AX Acquisition Corporation. Thus Purchaser
obtained 100% ownership of Axiohm, 48% of that interest being held indirectly
through the still extant Dardel Technologies.
Pursuant to the Exchange, Dardel Technologies became wholly-owned by the
Company and the only transactions between the Company and Dardel Industries
(wholly-owned by Mr. Dupuy and Mr. Gibier) that are expected to continue will be
as follows: (i) Axiohm S.A. will continue to sublease a portion of its 3,500
square feet of office space in Sevres to Dardel Industries on substantially the
same terms and conditions that Axiohm pays to the independent third party
landlord, pro rated based on the amount of space used by Dardel Industries; (ii)
Dardel Industries will continue to render legal services to Axiohm at hourly
rates that are equal to or less than those of outside counsel; and (iii) certain
employees of the Company, namely Mr. Dupuy, Mr. Gibier and Mr. Andy Shih, will
continue to serve as consultants to Dardel Industries. Mr. Dupuy and Mr. Gibier
are paid salaries of $80,000 per annum by the Company and will continue to
render management and other services to Dardel Industries. Mr. Shih, a
shareholder of Axiohm and the sole employee of Axiohm Taiwan (a subsidiary of
Axiohm S.A.), negotiates product sales and manufacturing arrangements for Axiohm
Taiwan and Dardel Industries in Taiwan, Hong Kong and the People's Republic of
China. In 1995 and 1996, Axiohm Taiwan incurred operating expenses (consisting
of office space, traveling expenses and similar costs) of approximately $120,000
per year and paid Mr. Shih a salary of approximately $75,000 per year. Pursuant
to an arrangement between Axiohm and Dardel Industries, Axiohm has historically
billed Dardel Industries an amount equal to half of the costs of operating
Axiohm Taiwan and half of Mr. Shih's salary. Mr. Shih will continue to serve as
an employee of the Company and the Company will continue to bill Dardel
Industries for half of the overhead of Axiohm Taiwan and half of Mr. Shih's
salary. The Company does not believe that the continuing arrangements between
Mr. Dupuy, Mr. Gibier, Mr. Shih, Axiohm Taiwan and Dardel Industries will have
an adverse effect on the ability of Mr. Dupuy, Mr. Gibier or Mr. Shih to serve
in their respective capacities with the Company.
Axiohm believes that the terms of the transactions entered into between
Axiohm and Dardel Technologies or Axiohm and Dardel Industries prior to the
Exchange were on terms that were comparable to or better than could have been
obtained from unrelated third parties and that the terms of the transactions
that have been or are to be entered between Axiohm and Dardel Industries after
the Exchange are or will be on terms comparable to or better than could be
obtained from unrelated third parties. There are no contractual agreements
between Axiohm and Dardel Industries that require either party to use the
services of the other.
SNC La Noire, which is owned by Mr. Dupuy, Mr. Gibier and Jean-Georges
Huglin, the Chief Financial Officer of Axiohm, has historically provided and is
expected to continue to provide real estate and office management services to
Axiohm S.A. SNC La Noire owns the Montrouge facility and, prior to July 1997,
Dardel Technologies was the primary tenant. Pursuant to this arrangement, Dardel
Technologies subleased a portion of this space to Axiohm and Dardel Industries.
In July 1997, SNC La Noire terminated the existing lease with Dardel
Technologies and entered into separate leases with Axiohm and Dardel Industries.
Following renovations that are scheduled to be completed in October 1997, Axiohm
will lease approximately 26,000 square feet of space from SNC La Noire at the
Montrouge facility at a cost of approximately $15 per square foot. Based on
independent appraisals, Axiohm S.A. believes that the terms of the Montrouge
lease is comparable to what Axiohm could have obtained from unrelated third
parties.
SNC La Noire also provides Axiohm with management services for the space
leased at the Montrouge facility. In 1995 and 1996, Axiohm S.A. paid SNC La
Noire $288,000 and $263,000, respectively, for such services. Axiohm believes
that the terms of these transactions between Axiohm and SNC La Noire
historically have been, and will continue to be, on terms that are comparable to
or better than could have been obtained from unrelated third parties. The real
estate management services agreements between
14
<PAGE>
Axiohm and SNC La Noire are negotiated annually and can be terminated by either
party upon three months' written notice.
In 1996, Axiohm participated in cash pooling arrangement with Dardel
Technologies that allowed each company to borrow or loan cash as considered
necessary. At December 31, 1996, Axiohm had an outstanding loan to Dardel
Technologies amounting to $1.8 million and bearing interest at 6.42%. This loan
was repaid by Dardel Technologies in April 1997 and the cash pooling arrangement
has since been terminated.
On January 10, 1998, William H. Gibbs resigned his position as President and
Chief Executive Officer of the Company, while remaining a member of the
Company's Board of Directors. In connection with such resignation, Mr. Gibbs and
the Company entered into a Resignation Agreement (the "Gibbs Resignation
Agreement") and a Noncompetition and Mutual Release Agreement (the "Gibbs
Noncompetition Agreement"), both dated January 10, 1998. Pursuant to the Gibbs
Resignation Agreement, the Company paid Mr. Gibbs the amounts due and owing to
him through the date of termination of his employment, including salary, bonus
and benefits, as well as $1,524,873 in full satisfaction of all currently
accrued tax payment obligations to Mr. Gibbs under the Option Cancellation
Agreement dated August 10, 1997 (the "Gibbs Option Cancellation Agreement") and
the termination obligations, if any, pursuant to the Employment Agreement
between the Company and Mr. Gibbs dated July 14, 1997 (the "Gibbs Employment
Agreement"). The Gibbs Resignation Agreement also provides that all outstanding
options held by Mr. Gibbs were canceled without further consideration therefor,
and that the Gibbs Resignation Agreement constitutes full and final satisfaction
of all rights of Mr. Gibbs under the Gibbs Option Cancellation Agreement and the
Gibbs Employment Agreement. The Gibbs Noncompetition Agreement provides, among
other things, that the Company will pay Mr. Gibbs $1,350,000. In return, Mr.
Gibbs has agreed for a period of two years not to compete with the Company. The
Gibbs Noncompetition Agreement also contains a mutual release of all claims
between the parties.
15
<PAGE>
COMPANY PERFORMANCE
The following graph shows a five-year comparison of cumulative total returns
for the Company, the Nasdaq CRSP Total Return Index and the Nasdaq Computer
Manufacturing Stock Index (both Nasdaq indices were prepared by the Center for
Research in Securities Prices at the University of Chicago):
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
ASSUMES $100 INVESTED ON DECEMBER 31, 1992
TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AXIOHM TRANSACTION SOLUTIONS INC. NASDAQ COMP. MFG NASDAQ TOTAL RETURN
<S> <C> <C> <C>
1992 $100.00 $100.00 $100.00
1993 $114.78 $94.77 $115.82
1994 $112.20 $104.09 $112.33
1995 $158.68 $163.96 $157.75
1996 $195.18 $220.16 $193.20
1997 $195.18 $220.16 $236.47
</TABLE>
16
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the Common
Stock owned on March 2, 1998 (except as otherwise specified) by (i) each person
who is known by the Company to own beneficially more than five percent of the
Company's Common Stock, (ii) each of the Company's directors, (iii) Named
Executive Officers (as defined in "Executive Compensation Tables" under Proposal
No. (1), and (iv) all directors and executive officers as a group. Except as
otherwise indicated, the Company believes that the beneficial owners of the
Common Stock listed below have sole investment and voting power with respect to
such shares, subject to community property laws.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL PERCENTAGE
BENEFICIAL OWNER OWNERSHIP(1) OWNER
- -------------------------------------------------------------- ------------------ -----------
<S> <C> <C>
Patrick Dupuy................................................. 1,753,141 26.9%
c/o Axiohm Transaction Solutions, Inc.
15070 Avenue of Science
San Diego, California 92128
Gilles Gibier................................................. 1,740,133 26.7
c/o Axiohm Transaction Solutions, Inc.
15070 Avenue of Science
San Diego, California 92128
Royce & Associates, Inc....................................... 468,025(2) 5.9
1414 Avenue of the Americas
New York, New York 10019
Bernard Patry................................................. 317,510 4.9
Malcolm Unsworth.............................................. 92,581(3) 1.4
David T. Ledwell.............................................. 63,555(3) 1.0
Nicolas Dourassoff............................................ 16,768(4) *
Walter S. Sobon............................................... 10,000(3) *
William H. Gibbs.............................................. 572 *
Bruce G. Klaas................................................ -- *
Don M. Lyle................................................... -- *
All officers and directors as a group (10 persons)............ 3,994,260(5) 59.8
</TABLE>
- ------------------------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities. Shares of Common Stock subject to options or warrants currently
exercisable or exercisable within 60 days are deemed to be beneficially
owned by the person holding such option or warrant for computing the
percentage ownership of such person, but are not treated as outstanding for
computing the percentage of any other person.
(2) Based on information on a Schedule 13G filed with the SEC February 5, 1998.
Includes shares held of record by Royce & Associates, Inc. ("Royce") and
Royce Management Company ("RMC"). Charles M. Royce may be deemed to be a
controlling person of Royce and RMC, and as such may be deemed to
beneficially own the shares held by Royce and RMC. Mr. Royce does not own
any shares outside of Royce and RMC, and disclaims beneficial ownership of
the shares held by Royce and RMC. Mr. Royce may be deemed to have sole
voting and dispositive power over 468,025 shares; Royce may be deemed to
have sole voting and dispositive power over 429,120 shares; and RMC may be
deemed to have sole voting and dispositive power over 38,905 shares.
17
<PAGE>
(3) Includes the following number of shares issuable upon exercise of options or
warrants that are currently exercisable or exercisable within 60 days of
March 3, 1997: Malcolm Unsworth: 92,477; David T. Ledwell: 63,125; and
Walter S. Sobon: 10,000.
(4) Includes 16,768 shares held of record by SOMAFIN, an entity wholly and by
Mr. Dourassoff and Veronique Dourassoff, Mr. Dourassoff's wife.
(5) Includes 165,572 shares issuable upon exercise of options or warrants that
are currently exercisable or exercisable within 60 days of March 2, 1998.
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors and
persons who own more than ten percent of a registered class of the Company's
equity securities to file an initial report of ownership on Form 3 and changes
in ownership on Form 4 or 5 with the Securities and Exchange Commission (the
"SEC") and the National Association of Securities Dealers, Inc. Executive
officers, directors and greater than ten percent shareholders are also required
by SEC rules to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that during the fiscal year ended December 31, all filing requirements
applicable to its officers, directors and ten percent shareholders were
fulfilled.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote the shares they represent as the
Board of Directors may recommend.
It is important that your stock be represented at the meeting, regardless of
the number of shares that you hold. You are, therefore, urged to execute and
return the accompanying proxy in the envelope that has been enclosed, at your
earliest convenience.
The Board of Directors
By: Janet W. Shanks, SECRETARY
Dated April 15, 1998
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APPENDIX A
SUMMARY OF THE 1992 STOCK PLAN
The 1992 Stock Plan is not a qualified deferred compensation plan under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
nor is it subject to the Employee Retirement Income Security Act of 1974, as
amended.
PURPOSE. The purpose of the 1992 Stock Plan is to provide an incentive to
eligible employees, consultants and officers whose present and potential
contributions are important to the continued success of the Company, to afford
these individuals the opportunity to acquire a proprietary interest in the
Company, and to enable the Company to enlist and retain in its employment
qualified personnel for the successful conduct of its business. This purpose is
effected through the granting of (i) Stock Options, (ii) Stock Appreciation
Rights, (iii) Stock Purchase Rights, and (iv) Long-Term Performance Awards.
ELIGIBILITY. Officers, consultants and other employees of the Company and
its subsidiaries whom the administrators deem to have the potential to
contribute to the success of the Company are eligible to receive awards under
the 1992 Stock Plan. The 1992 Stock Plan provides that Nonstatutory Stock
Options, Stock Appreciation Rights, Stock Purchase Rights and Long-Term
Performance Awards may be granted to employees (including officers) and
consultants of the Company or any parent or subsidiary of the Company. Incentive
Stock Options may be granted only to employees (including officers) of the
Company or any parent or subsidiary of the Company.
ADMINISTRATION. With respect to grants of Stock Options, Stock Purchase
Rights, Stock Appreciation Rights or Long-Term Performance Awards to employees
or consultants who are also officers or directors of the Company, the 1992 Stock
Plan is administered by (i) the Board of Directors of the Company if the Board
of Directors may administer the 1992 Stock Plan in compliance with Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or any successor rule thereto ("Rule 16b-3") with respect to a plan
intended to qualify thereunder as a discretionary grant or award plan, or (ii) a
committee designated by the Board of Directors to administer the 1992 Stock
Plan, which committee is constituted in such a manner as to permit the plan (a)
to comply with Rule 16b-3 with respect to a plan intended to qualify thereunder
as a discretionary grant or award plan, and (b) to satisfy the legal
requirements relating to the administration of stock option plans under
applicable securities laws, California corporate law and the Internal Revenue
Code of 1986, as amended (the "Code"). With respect to grants of Stock Options,
Stock Purchase Rights, Stock Appreciation Rights or Long-Term Performance Awards
to employees or consultants who are neither officers nor directors of the
Company, the 1992 Stock Plan is administered by (i) the Board of Directors, or
(ii) a committee designated by the Board of Directors, which committee is
constituted in such a manner as to satisfy the legal requirements, if any,
relating to the administration of stock option and equity incentive plans under
applicable securities laws, California corporate law and the Code. If permitted
by Rule 16b-3, the 1992 Stock Plan may be administered by different bodies with
respect to directors who are employees, officers who are not directors, and
employees who are neither directors nor officers.
The administrators of the 1992 Stock Plan have full power to select, from
among the approximately 1,600 officers, employees and consultants of the Company
eligible for awards, the individuals to whom awards are granted, to make any
combination of awards to any participant and to determine the specific terms of
each grant, subject to the provisions of the 1992 Stock Plan. The interpretation
and construction of any provision of the 1992 Stock Plan by the administrators
shall be final and conclusive. The 1992 Stock Plan is currently administered by
the Compensation Committee of the Board of Directors. Members of the Board of
Directors receive no additional compensation for their services in connection
with the administration of the 1992 Stock Plan.
RESERVED SHARES. The total number of shares of Common Stock reserved and
available for distribution under the 1992 Stock Plan is 1,122,443 shares,
subject to shareholder approval of the increase in shares available under the
1992 Stock Plan. The Company, during the term of the 1992 Stock Plan, will at
all times reserve and keep available such number of shares as shall be
sufficient to satisfy the requirements of the 1992 Stock Plan.
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Inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of shares under the 1992 Stock Plan, shall
relieve the Company of any liability in respect of the non-issuance of such
shares as to which such requisite authority shall not have been obtained.
STOCK OPTIONS. The 1992 Stock Plan permits the granting of non-transferable
stock options that either qualify as incentive stock options under Section 422
of the Code ("Incentive Stock Options" or "ISOs") or do not so qualify
("Nonstatutory Stock Options" or "NSOs").
The term of each option is fixed by the administrators but may not exceed
ten years from the date of grant in the case of ISOs, or five years from the
date of grant in the case of ISOs granted to the owner of Common Stock
possessing, on the date of such grant, more than 10% of the total combined
voting power of all classes of stock of the Company or any subsidiary. When the
fair market value of shares subject to ISOs first exercisable in one calendar
year is greater than $100,000, the excess options shall be treated as NSOs. For
these purposes, fair market value is determined on the date of grant, and all
ISOs granted by the Company or its subsidiaries to an individual are aggregated.
The administrators determine the time or times each option may be exercised.
Options may be made exercisable in installments, and the exercisability of
options may be accelerated by the administrators.
OPTION PRICE. The option exercise price for each share covered by an ISO is
not less than 100% of the fair market value of a share of Common Stock on the
date of grant of such option. In the case of ISOs granted to the owner of Common
Stock possessing, on the date of such grant, more than 10% of the total combined
voting power of all classes of stock of the Company or any subsidiary, the
option exercise price for each share covered by such option is not less than
110% of the fair market value of a share of Common Stock on the date of grant of
such option. The option exercise price for each share covered by an NSO will be
determined by the administrators.
FAIR MARKET VALUE. The fair market value of a share of Common Stock, as
determined by the administrators of the 1992 Stock Plan, shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") National Market (or the exchange with the greatest volume
of trading in Common Stock) on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the administrators deem reliable. Should the Common Stock of the Company be
quoted on the Nasdaq (but not on the National Market thereof) or regularly
quoted by a recognized securities dealer but selling prices are not reported,
the fair market value of a share of Common Stock of the Company shall be the
mean between the high bid and low asked prices for the Common Stock on the last
market trading day prior to the date of determination, as reported in The Wall
Street Journal or such other source as the administrators deem reliable. In the
absence of an established market for the Common Stock, the fair market value
thereof shall be determined in good faith by the administrators.
CONSIDERATION. The consideration to be paid for shares issued upon exercise
of options granted under the 1992 Stock Plan, including the method of payment,
shall be determined by the administrators (and, in the case of ISOs, determined
at the time of grant) and may consist entirely of (1) cash, (2) check, (3)
promissory note, (4) other shares of Common Stock which, in the case of shares
acquired upon exercise of an option, have been owned for at least six months,
with a fair market value on the exercise date not greater than the exercise
price, (5) the delivery of a properly executed notice together with such other
documentation as the administrators and any broker approved by the Company, if
applicable, shall require to effect an exercise of the option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price, (6)
any combination of the foregoing methods, or (7) such other consideration and
methods as are permitted by applicable laws.
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GRANT LIMITS. The 1992 Stock Plan provides for two limitations on the
number of shares which may be granted to any one participant. First, there is a
$100,000 limit on the total market value of shares subject to all Incentive
Stock Options which are granted by the Company or any parent or subsidiary of
the Company to any employee which are exercisable for the first time in any one
calendar year. Second, no employee may be granted an option to purchase more
than 1,050,000 shares in any fiscal year. This limit is subject to appropriate
adjustment in the case of stock splits, reverse stock splits and the like. The
purpose of this provision, which is intended to comply with Section 162(m) of
the Internal Revenue Code and the regulations thereunder, is to preserve the
Company's ability to deduct in full any compensation expense related to stock
options and stock appreciation rights.
MISCELLANEOUS PROVISIONS. Under the 1992 Stock Plan, in the event of an
optionee's termination of employment or consulting relationship for any reason
other than death or total and permanent disability, an option may thereafter be
exercised, to the extent it was exercisable at the date of such termination, for
such period of time as the administrators shall determine at the time of grant
(not to exceed five years, or three months in the case of Incentive Stock
Options), but only to the extent that the term of the option has not expired.
However, if an optionee's employment or consulting relationship is terminated as
a result of the optionee's permanent and total disability, the option is
exercisable for such period of time following such termination not exceeding ten
years as is determined by the administrators (not exceeding one year, with such
termination being made at the time of the grant of the option in the case of an
Incentive Stock Option), but only to the extent it was exercisable at the date
of termination and to the extent that the term of the option has not expired. If
an optionee's employment or consulting relationship is terminated by reason of
the optionee's death, the option is exercisable by the optionee's estate or
successor for ten years following death, but only to the extent it was
exercisable at the date of death and to the extent that the term of the option
has not expired.
The administrators of the 1992 Stock Plan may at any time offer on behalf of
the Company to buy out, for a payment in cash or shares of Common Stock of the
Company, an option previously granted, based on such terms and conditions as the
administrators shall establish and communicate to the optionee at the time that
such offer is made; provided however, that buy-out offers made to Insiders (as
defined below) may only be payable in cash. Any such cash offer made to an
officer or director shall comply with all applicable provisions of Rule 16b-3,
if any.
All options granted under the 1992 Stock Plan shall be evidenced by a stock
option agreement between the Company and the optionee to whom such option is
granted. Options granted to persons who are subject to Section 16 of the
Exchange Act are subject to any additional restrictions applicable to options
granted to such persons in compliance with Rule 16b-3.
STOCK APPRECIATION RIGHTS. The 1992 Stock Plan also permits the granting of
nontransferable stock appreciation rights ("SARs"). SARs may be granted in
connection with all or any part of an option, either concurrently with the grant
of the option or at any time thereafter during the term of the option. A SAR
granted in connection with an option shall entitle the optionee to exercise the
SAR by surrendering to the Company the unexercised portion of the related
option. The optionee shall receive in exchange from the Company an amount equal
to the excess of the fair market value, on the date of exercise of the SAR, of
the Common Stock covered by the surrendered portion of the related option over
the exercise price of the Common Stock covered by the surrendered portion of the
related option. Notwithstanding the foregoing, the administrators of the 1992
Stock Plan may place limits on the aggregate amount that may be paid upon
exercise of a SAR; provided, however, that such limits shall not restrict the
exercisability of the related option. When a SAR granted in connection with an
option is exercised, the related option, to the extent surrendered, shall cease
to be exercisable. A SAR granted in connection with an option shall be
exercisable until, and shall expire no later than, the date on which the related
option ceases to be exercisable or expires. A SAR granted in connection with an
option may only be exercised at a time when the fair market value of the Common
Stock covered by the related option exceeds the exercise price of the Common
Stock covered by the related option.
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SARs may also be granted without related options. In such an event, the SAR
entitles the optionee, by exercising the SAR, to receive from the Company an
amount equal to the excess of the fair market value of the Common Stock covered
by the exercised portion of the SAR as of the date of such exercise, over the
fair market value of the Common Stock covered by the exercised portion of the
SAR, as of the last market trading date prior to the date on which the SAR was
granted. Notwithstanding the foregoing, the administrators of the 1992 Stock
Plan may place limits on the aggregate amount that may be paid upon exercise of
a SAR. A SAR granted without a related option shall be exercisable, in whole or
in part, at such time as the administrators shall specify in the recipient's SAR
agreement.
The Company's obligation arising upon the exercise of a SAR may be paid in
Common Stock or in cash, or any combination thereof, as the administrators may
determine. Shares issued upon the exercise of a SAR shall be valued at their
fair market value as of the date of exercise.
SARs granted to persons who are subject to Section 16 of the Exchange Act
are subject to any additional restrictions applicable to SARs granted to such
persons to qualify under Rule 16b-3. As of the date of this proxy statement, no
SARs have been granted under the 1992 Stock Plan.
STOCK PURCHASE RIGHTS. The 1992 Stock Plan permits the Company to grant
stock purchase rights to purchase Common Stock of the Company ("Stock Purchase
Rights") either alone, in addition to, or in tandem with other awards under the
1992 Stock Plan and/or cash awards made outside the Plan. Upon the granting of a
Stock Purchase Right under the 1992 Stock Plan, the offeree shall be advised in
writing of the terms, conditions and restrictions related to the offer,
including the number of shares of Common Stock that the offeree shall be
entitled to purchase, the price to be paid and the time within which the offeree
must accept such offer (which shall in no event exceed 30 days from the date
upon which the administrators made the determination to grant the Stock Purchase
Right). The offer shall be accepted by execution of a restricted stock purchase
agreement between the Company and the offeree.
Unless the administrators of the 1992 Stock Plan determine otherwise, the
restricted stock purchase agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment or consulting relationship with the Company for any reason (including
death or permanent and total disability). The purchase price for shares
repurchased pursuant to the restricted stock purchase agreement shall be the
original price paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall lapse
at such rate as the administrators may determine.
Upon exercise of a Stock Purchase Right, the purchaser shall have rights
equivalent to those of a shareholder of the Company. As of the date of this
proxy statement no Stock Purchase Rights had been granted under the 1992 Stock
Plan.
LONG-TERM PERFORMANCE AWARDS. The 1992 Stock Plan also permits the granting
of Long-Term Performance Awards. Such awards shall be based upon Company,
subsidiary and/or individual performance over designated periods based on such
performance factors or other criteria as the administrators deem appropriate.
Performance objectives may vary from participant to participant, group to group,
and period to period. Such awards shall be granted for no cash consideration.
The administrators may adjust Long-Term Performance Awards as they deem
necessary or appropriate in order to avoid windfalls or hardships or to
compensate for changes in tax, accounting or legal rules.
Long-Term Performance Awards will be payable in cash or Common Stock
(including restricted stock). As of the date of this proxy statement, no
Long-Term Incentive Awards have been granted under the 1992 Stock Plan except
for a stock bonus aggregating 3,620 shares (10 shares to each employee) granted
by the Company in 1993.
NONTRANSFERABILITY OF OPTIONS, STOCK APPRECIATION RIGHTS, STOCK PURCHASE
RIGHTS AND LONG-TERM PERFORMANCE AWARDS. Options, SARs, Stock Purchase Rights
and Long-Term Performance Awards granted
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pursuant to the 1992 Stock Plan are nontransferable by the participant, other
than by will or by the laws of descent and distribution and may be exercised,
during the lifetime of the participant, only by the participant.
ACCELERATION OF OPTIONS, STOCK APPRECIATION RIGHTS, STOCK PURCHASE RIGHTS
AND LONG-TERM PERFORMANCE AWARDS. Subject to the 1992 Stock Plan's change in
control provisions (see below), in the event of a sale of substantially all of
the assets of the Company or the merger of the Company with or into another
corporation, each outstanding option, SAR, Stock Purchase Right and Long-Term
Performance Award shall be assumed or substituted by such successor corporation
or a parent or subsidiary of such successor corporation. In the event that the
successor corporation does not agree to such assumption or substitution, the
administrators shall, in lieu of such assumption or substitution, provide for
the participant to have the right to exercise the option, SAR, Stock Purchase
Right or Long-Term Performance Award as to all or a portion of the shares
subject to such option, SAR, Stock Purchase Right or Long-Term Performance Award
including shares as to which the option, SAR, Stock Purchase Right or Long-Term
Performance Award would not otherwise be exercisable. If the administrators make
options, SARs, Stock Purchase Rights and Long-Term Performance Awards fully
exercisable in lieu of assumption or substitution, the administrators shall
notify the participant that the option, SAR, Stock Purchase Right or Long-Term
Performance Award shall be exercisable for a period of 15 days from the date of
such notice and the option, SAR, Stock Purchase Right or Long-Term Performance
Award will terminate upon the expiration of such period.
CHANGE IN CONTROL PROVISIONS. The 1992 Stock Plan provides that in the
event of a "Change in Control" of the Company (as defined below) the following
acceleration and valuation provisions shall apply, except as otherwise
determined by the Board of Directors in its discretion prior to the Change in
Control: (i) all stock options, SARs, Stock Purchase Rights and Long-Term
Performance Awards granted under the 1992 Stock Plan, outstanding on the date
such Change in Control is determined to have occurred, that are not yet
exercisable and vested on such date, will become immediately vested and fully
exercisable; (ii) to the extent they are exercisable and vested, all outstanding
options, SARs, Stock Purchase Rights and Long-Term Performance Awards will be
cashed out at the "Change in Control Price" (as defined below) reduced by the
exercise price, if any, applicable to such options, SARs, Stock Purchase Rights
or Long-Term Performance Awards. A "Change in Control" means the occurrence of
(i) the acquisition, directly or indirectly, by a person or entity (other than
the Company, one of its subsidiaries, or a Company employee benefit plan or
trustee thereof) of securities representing 50% or more of the combined voting
power of the Company's then outstanding securities entitled to vote generally in
the election of directors, or (ii) shareholder approval of the Company's merger
or consolidation with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent of the total voting power represented
by the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or shareholder approval of an
agreement for the sale or disposition of all or substantially all of the
Company's assets, or (iii) a change in the composition of the Board of Directors
of the Company, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" shall mean directors who either (a)
are directors of the Company as of the date the Plan is approved by the
shareholders, or (b) are elected, or nominated for election, to the Board of
Directors of the Company with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company), or a transaction requiring the approval of the shareholders and
involving the sale of all or substantially all of the assets of the Company or a
merger of the Company with or into another corporation. The "Change in Control
Price" shall be, as determined by the Board of Directors, (i) the highest
closing sale price of a share of Common Stock as reported on any established
stock exchange as appearing in The Wall Street Journal at any time within the
60-day period immediately preceding the date of determination of the Change in
Control Price by the Board of Directors, (ii) the
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highest price paid or offered per share of Common Stock, as determined by the
Board, in any bona fide transaction or bona fide offer related to the Change in
Control of the Company at any time within such 60-day period, or (iii) some
lower price, as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a share of Common Stock.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION. Subject to any required action
by the shareholders of the Company, in the event any change, such as a stock
split or dividend, is made in the Company's capitalization which results in an
increase or decrease in the number of outstanding shares of Common Stock without
receipt of consideration by the Company, an appropriate adjustment shall be made
in the number of shares which have been reserved for issuance under the 1992
Stock Plan and the price per share covered by each outstanding option, SAR,
Stock Purchase Right and Long-Term Performance Award. In the event of the
proposed dissolution or liquidation of the Company, all outstanding options,
SARs, Stock Purchase Rights, Long-Term Performance Awards and Stock Bonus Awards
will terminate immediately prior to the consummation of such proposed action.
However, the Board of Directors may, in its discretion, make provision for
accelerating the exercisability of shares subject to options, SARs, Stock
Purchase Rights and Long-Term Performance Awards under the 1992 Stock Plan in
such event.
AMENDMENT AND TERMINATION. The Board of Directors may amend, alter, suspend
or discontinue the 1992 Stock Plan at any time, but such amendment, alteration,
suspension or discontinuation shall not adversely affect any option, SAR, Stock
Purchase Right or Long-Term Performance Award then outstanding under the 1992
Stock Plan, without the written consent of the participant. To the extent
necessary and desirable to comply with Rule 16b-3 or Section 422 of the Code (or
any other applicable law or regulation), the Company shall obtain shareholder
approval of any amendment to the 1992 Stock Plan in such a manner and to such a
degree as required. Subject to applicable laws and the specific terms of the
1992 Stock Plan, the administrators may accelerate any option, right or award or
waive any condition or restriction pertaining to such option, right or award at
any time. The administrators may also substitute new options, rights or awards
for previously granted options, rights or awards, including previously granted
options, rights or awards having higher option, right or award prices and may
reduce the exercise price of any option, right or award to the then current fair
market value if the fair market value of the Common Stock covered by such
option, right or award shall have declined since the date the option, right or
award was granted.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a brief summary of the federal income tax consequences of
transactions under the 1992 Stock Plan based on federal securities and income
tax laws in effect on January 1, 1998. This summary is not intended to be
exhaustive and does not discuss the tax consequences of a participant's death or
provisions of the income tax laws of any municipality, state or foreign country
in which an optionee may reside.
Options granted under the 1992 Stock Plan may be either Incentive Stock
Options, as defined in Section 422 of the Code, or Nonstatutory Stock Options.
INCENTIVE STOCK OPTIONS. No taxable income is recognized by the optionee
upon grant or exercise of an Incentive Stock Option unless the alternative
minimum tax rules apply. If Common Stock is issued to an optionee pursuant to
the exercise of an Incentive Stock Option, and if no disqualifying disposition
of such shares is made by such optionee within two years after the date of grant
or within one year after the transfer of such shares to such optionee, then (a)
upon sale of such shares, any amount realized in excess of the option exercise
price will be treated as a long-term capital gain and any loss sustained will be
a long-term capital loss, and (b) no deduction will be allowed to the Company
for federal income tax purposes. The exercise of an incentive stock option may
result in alternative minimum tax liability for the optionee.
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If Common Stock acquired upon the exercise of an Incentive Stock Option is
disposed of before the expiration of either holding period described above,
generally (a) the optionee will recognize ordinary income in the year of
disposition in an amount equal to the excess (if any) of the fair market value
of the shares at exercise (or, if less, the amount realized on the disposition
of the shares) over the option exercise price paid for such shares, and (b) the
Company is entitled to a tax deduction in the same amount. Any further gain (or
loss) realized by the participant will be taxed as short-term or long-term
capital gain (or loss), as the case may be, and will not result in any deduction
by the Company. Different rules may apply if shares are purchased by an optionee
who is also an officer, director or more than 10% shareholder. See discussion
below of "Special Rules Applicable to Corporate Insiders and Restricted Stock
Purchasers."
NONSTATUTORY STOCK OPTIONS. Except as noted below, with respect to
Nonstatutory Stock Options, (a) no income is recognized by the optionee at the
time the option is granted; (b) generally, at exercise, ordinary income is
recognized by the optionee in an amount equal to the difference between the
option exercise price paid for the shares and the fair market value of the
shares on the date of exercise, and the Company is entitled to a tax deduction
in the same amount; and (c) at disposition, any gain (or loss) is treated as
capital gain (or loss). In the case of an optionee who is also an employee, any
income recognized upon exercise of a Nonstatutory Stock Option will constitute
wages for which withholding will be required. However, different rules may apply
if restricted stock is purchased or if shares are purchased by an optionee who
is also an officer, director or more than 10% shareholder. See discussion below
of "Special Rules Applicable to Corporate Insiders and Restricted Stock
Purchasers."
STOCK APPRECIATION RIGHTS. No income will be recognized by a recipient in
connection with the grant of a SAR. When the SAR is exercised, the recipient
will generally be required to include as taxable ordinary income in the year of
exercise an amount equal to the amount of cash received and the fair market
value of any Common Stock received on the exercise. In the case of a recipient
who is also an employee, any income recognized upon exercise of a SAR will
constitute wages for which withholding will be required. The Company will be
entitled to a tax deduction in the same amount. If the optionee receives Common
Stock upon the exercise of a SAR, any gain or loss on the sale of such stock
will be treated in the same manner as discussed above under "Nonstatutory Stock
Options." See also "Special Rules Applicable to Corporate Insiders and
Restricted Stock Purchasers."
STOCK PURCHASE RIGHTS. Stock Purchase Rights will generally be taxed in the
same manner as Nonstatutory Options. However, restricted stock is usually
purchased upon exercise of a Stock Purchase Right. At the time of purchase,
restricted stock is subject to a "substantial risk of forfeiture" within the
meaning of Section 83 of the Code. As a result, the purchaser will not recognize
ordinary income at the time of purchase. Instead, the purchaser will recognize
ordinary income on the dates when the stock ceases to be subject to substantial
risk of forfeiture. The stock will generally cease to be subject to a
substantial risk of forfeiture when it is no longer subject to the Company's
right to repurchase the stock upon the purchaser's termination of employment
with the Company (i.e., as it "vests"). At such times, the purchaser will
recognize the ordinary income measured as the difference between the purchase
price and the fair market value of the stock on the date the stock is no longer
subject to a substantial risk of forfeiture. However, a purchaser may accelerate
to the date of purchase his or her recognition of ordinary income, if any, and
the beginning of any capital gain holding period by timely filing an election
pursuant to Section 83(b) of the Code. In such event, the ordinary income
recognized, if any, would be equal to the difference between the purchase price
and the fair market value of the stock on the date of purchase, and the capital
gain holding period would commence on the purchase date. The ordinary income
recognized by a purchaser who is an employee will be treated as wages and will
be subject to tax withholding by the Company. Generally, the Company will be
entitled to a tax deduction in the amount and at the time the purchaser
recognizes ordinary income.
LONG-TERM PERFORMANCE AWARDS. Generally, no income will be recognized by a
recipient in connection with the grant of a Long-Term Performance Award, unless
an election under Section 83(b) of the Code
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is filed with the Internal Revenue Service within 30 days of the date of grant.
Otherwise, at the time the Long-Term Performance Award vests, the recipient will
generally recognize compensation income in an amount equal to the fair market
value of the award at the time of vesting. Generally, the recipient will be
subject to the tax consequences discussed under "Nonstatutory Stock Options." In
the case of a recipient who is also an employee, any amount included in income
will be subject to withholding by the Company. The Company will be entitled to a
tax deduction in the amount and at the time the recipient recognizes ordinary
income with respect to a Long-Term Performance Award.
SPECIAL RULES APPLICABLE TO CORPORATE INSIDERS AND RESTRICTED STOCK
PURCHASERS. Generally, individuals subject to Section 16(b) of the Exchange Act
("Insiders") and individuals who purchase restricted stock may have their
recognition of compensation income and the beginning of their capital gains
holding period deferred for up to six months after option exercise (for
Insiders), or until the restrictions lapse (for restricted stock purchasers)
(the "Deferral Date"), with the excess of the fair market value of the stock
determined as of the Deferral Date over the purchase price being taxed as
ordinary income, and the tax holding period for any subsequent gain (or loss)
beginning on the Deferral Date. However, an Insider or restricted stock
purchaser who so elects under Code Section 83(b) on a timely basis may instead
be taxed on the difference between the excess of the fair market value on the
date of transfer over the purchase price, with the tax holding period beginning
on such date. Similar rules apply for alternative minimum tax purposes with
respect to the exercise of an Incentive Stock Option by an Insider.
CAPITAL GAIN. Generally, net capital gain on property held more than 18
months is taxed at a maximum rate of 20% and capital gain on property held more
than one year and up to 18 months is taxed at a maximum rate of 28%. Capital
losses are allowed in full against capital gains plus up to $3,000 of ordinary
income.
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EXHIBIT A
DH TECHNOLOGY, INC.
1992 STOCK PLAN
As Amended September 22, 1995
1. PURPOSE OF THE PLAN. The purpose of the DH Technology, Inc. 1992
Stock Plan is to enable DH Technology, Inc. to provide an incentive to eligible
employees, consultants and officers whose present and potential contributions
are important to the continued success of the Company, to afford these
individuals the opportunity to acquire a proprietary interest in the Company,
and to enable the Company to enlist and retain in its employment qualified
personnel for the successful conduct of its business. It is intended that this
purpose will be effected through the granting of (a) stock options, (b) stock
purchase rights, (c) stock appreciation rights, and (d) long-term performance
awards.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or such of its Committees as
shall be administering the Plan, in accordance with Section 5 of the Plan.
(b) "APPLICABLE LAWS" means the legal requirements relating to the
administration of stock option plans under applicable securities laws,
California corporate law and the Code.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a Committee appointed by the Board in
accordance with Section 5 of the Plan.
(f) "COMMON STOCK" means the Common Stock of the Company.
(g) "COMPANY" means DH Technology, Inc., a California corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.
(i) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
employment or consulting relationship is not interrupted or terminated by the
Company, any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Board, including sick leave, military leave,
<PAGE>
or any other personal leave; PROVIDED, however, that for purposes of
Incentive Stock Options, any such leave may not exceed ninety (90) days,
unless reemployment upon the expiration of such leave is guaranteed by
contract (including certain Company policies) or statute; or (ii) transfers
between locations of the Company or between the Company, its Parent, its
Subsidiaries or its successor.
(j) "DIRECTOR" means a member of the Board.
(k) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
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(p) "LONG-TERM PERFORMANCE AWARD" means an award under Section 9
below. A Long-Term Performance Award shall permit the recipient to receive a
cash or stock bonus (as determined by the Administrator) upon satisfaction of
such performance factors as are set out in the recipient's individual grant.
Long-term Performance Awards will be based upon the achievement of Company,
Subsidiary and/or individual performance factors or upon such other criteria as
the Administrator may deem appropriate.
(q) "LONG-TERM PERFORMANCE AWARD AGREEMENT" means a written agreement
between the Company and an Optionee evidencing the terms and conditions of an
individual Long-Term Performance Award grant. The Long-Term Performance Award
Agreement is subject to the terms and conditions of the Plan.
(r) "NONSTATUTORY STOCK OPTION" means any Option that is not an
Incentive Stock Option.
(s) "NOTICE OF GRANT" means a written notice evidencing certain terms
and conditions of an individual Option, Stock Purchase Right, SAR or Long-Term
Performance Award grant. The Notice of Grant is part of the Option Agreement,
the SAR Agreement and the Long-Term Performance Award Agreement.
(t) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(u) "OPTION" means a stock option granted pursuant to the Plan.
(v) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(w) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(x) "OPTIONED STOCK" means the Common Stock subject to an Option or
Right.
(y) "OPTIONEE" means an Employee or Consultant who holds an
outstanding Option or Right.
(z) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(aa) "PLAN" means this 1992 Stock Plan.
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(bb) "RESTRICTED STOCK" means shares of Common Stock subject to a
Restricted Stock Purchase Agreement acquired pursuant to a grant of Stock
Purchase Rights under Section 8 below.
(cc) "RESTRICTED STOCK PURCHASE AGREEMENT" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.
(dd) "RIGHT" means and includes SARs, Long-Term Performance Awards and
Stock Purchase Rights granted pursuant to the Plan.
(ee) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any
successor rule thereto, as in effect when discretion is being exercised with
respect to the Plan.
(ff) "SAR" means a stock appreciation right granted pursuant to
Section 7 of the Plan.
(gg) "SAR AGREEMENT" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual SAR grant. The
SAR Agreement is subject to the terms and conditions of the Plan.
(hh) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(ii) "STOCK PURCHASE RIGHT" means the right to purchase Common Stock
pursuant to Section 8 of the Plan, as evidenced by a Notice of Grant.
(jj) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. ELIGIBILITY. Nonstatutory Stock Options and Rights may be granted to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. If otherwise eligible, an Employee or Consultant who has been
granted an Option or Right may be granted additional Options or Rights.
4. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of
the Plan, the total number of Shares reserved and available for distribution
under the Plan is 1,473,469 Shares. Subject to Section 11 of the Plan, if any
Shares that have been optioned under an Option cease to be subject to such
Option (other than through exercise of the Option), or if any Option or Right
granted hereunder is forfeited or any such award otherwise terminates prior to
the issuance of Common Stock to the participant, the shares that were subject to
such Option or Right shall again be available
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for distribution in connection with future Option or right grants under the
Plan; PROVIDED, however, that Shares that have actually been issued under the
Plan, whether upon exercise of an Option or Right, shall not in any event be
returned to the Plan and shall not become available for future distribution
under the Plan.
5. ADMINISTRATION.
(a) COMPOSITION OF ADMINISTRATOR.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by
Rule 16b-3 and Applicable Laws, the Plan may (but need not) be administered by
different administrative bodies with respect to (A) Directors who are employees,
(B) Officers who are not Directors and (C) Employees who are neither Directors
nor Officers.
(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS.
With respect to grants of Options and Rights to eligible participants who are
Officers or Directors of the Company, the Plan shall be administered by (A) the
Board, if the Board may administer the Plan in compliance with Rule 16b-3 as it
applies to a plan intended to qualify thereunder as a discretionary grant or
award plan, or (B) a Committee designated by the Board to administer the Plan,
which Committee shall be constituted (1) in such a manner as to permit the Plan
to comply with Rule 16b-3 as it applies to a plan intended to qualify thereunder
as a discretionary grant or award plan and (2) in such a manner as to satisfy
the Applicable Laws.
(iii) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With
respect to grants of Options to eligible participants who are neither Directors
nor Officers of the Company, the Plan shall be administered by (A) the Board or
(B) a Committee designated by the Board, which Committee shall be constituted in
such a manner as to satisfy the Applicable Laws.
(iv) GENERAL. Once a Committee has been appointed pursuant to
subsection (ii) or (iii) of this Section 5(a), such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of any Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies (however caused) and remove
all members of a Committee and thereafter directly administer the Plan, all to
the extent permitted by the Applicable Laws and, in the case of a Committee
appointed under subsection (ii), to the extent permitted by Rule 16b-3 as it
applies to a plan intended to qualify thereunder as a discretionary grant or
award plan.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
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(i) to determine the Fair Market Value of the Common Stock,
in accordance with Section 2(n) of the Plan;
(ii) to select the Consultants and Employees to whom Options
and Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and
Rights or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option and Right granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options or Rights may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or Right or the shares of
Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vii) to construe and interpret the terms of the Plan;
(viii) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(ix) to determine whether and under what circumstances an
Option or Right may be settled in cash instead of Common Stock or Common Stock
instead of cash;
(x) to reduce the exercise price of any Option or Right;
(xi) to modify or amend each Option or Right (subject to
Section 13 of the Plan);
(xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Right
previously granted by the Administrator;
(xiii) to institute an Option Exchange Program;
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(xiv) to determine the terms and restrictions applicable to
Options and Rights and any Restricted Stock; and
(xv) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Rights.
6. DURATION OF THE PLAN. The Plan shall remain in effect until
terminated by the Board under the terms of the Plan, provided that in no event
may Incentive Stock Options be granted under the Plan later than 10 years from
the date the Plan was adopted by the Board.
7. OPTIONS AND SARS.
(a) OPTIONS. The Administrator, in its discretion, may grant Options
to eligible participants and shall determine whether such Options shall be
Incentive Stock Options or Nonstatutory Stock Options. Each Option shall be
evidenced by a Notice of Grant which shall expressly identify the Options as
Incentive Stock Options or as Nonstatutory Stock Options, and be in such form
and contain such provisions as the Administrator shall from time to time deem
appropriate. Without limiting the foregoing, the Administrator may at any time
authorize the Company, with the consent of the respective recipients, to issue
new Options or Rights in exchange for the surrender and cancellation of
outstanding Options or Rights. Option agreements shall contain the following
terms and conditions:
(i) EXERCISE PRICE; NUMBER OF SHARES. The per Share exercise
price for the Shares issuable pursuant to an Option shall be such price as is
determined by the Administrator; PROVIDED, however, that in the case of an
Incentive Stock Option, the price shall be no less than 100% of the Fair Market
Value of the Common Stock on the date the Option is granted, subject to any
additional conditions set out in Section 7(a)(iv) below.
The Notice of Grant shall specify the number of Shares to which
it pertains.
(ii) WAITING PERIOD AND EXERCISE DATES. At the time an Option
is granted, the Administrator will determine the terms and conditions to be
satisfied before Shares may be purchased, including the dates on which Shares
subject to the Option may first be purchased. The Administrator may specify
that an Option may not be exercised until the completion of the service period
specified at the time of grant. Any such period is referred to herein as the
"waiting period." At the time an Option is granted, the Administrator shall fix
the period within which the Option may be exercised, which shall not be earlier
than the end of the waiting period, if any, nor, in the case of an Incentive
Stock Option, later than ten (10) years, from the date of grant.
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(iii) FORM OF PAYMENT. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant) and may consist entirely of:
(1) cash;
(2) check;
(3) promissory note;
(4) other Shares which (1) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (2) have a Fair Market Value on
the date of surrender not greater than the aggregate exercise price of the
Shares as to which said Option shall be exercised;
(5) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and any broker
approved by the Company, if applicable, shall require to effect an exercise of
the Option and delivery to the Company of the sale or loan proceeds required to
pay the exercise price;
(6) any combination of the foregoing methods of
payment; or
(7) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.
(iv) SPECIAL INCENTIVE STOCK OPTION PROVISIONS. In addition
to the foregoing, Options granted under the Plan which are intended to be
Incentive Stock Options under Section 422 of the Code shall be subject to the
following terms and conditions:
(1) DOLLAR LIMITATION. To the extent that the
aggregate Fair Market Value of (a) the Shares with respect to which Options
designated as Incentive Stock Options plus (b) the shares of stock of the
Company, Parent and any Subsidiary with respect to which other incentive stock
options are exercisable for the first time by an Optionee during any calendar
year under all plans of the Company and any Parent and Subsidiary exceeds
$100,000, such Options shall be treated as Nonstatutory Stock Options. For
purposes of the preceding sentence, (a) Options shall be taken into account in
the order in which they were granted, and (b) the Fair Market Value of the
Shares shall be determined as of the time the Option or other incentive stock
option is granted.
(2) 10% SHAREHOLDER. If any Optionee to whom an
Incentive Stock Option is to be granted pursuant to the provisions of the Plan
is, on the date of grant, the owner of Common Stock (as determined under
Section 424(d) of the Code) possessing more than 10% of the
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total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary of the Company, then the following special provisions
shall be applicable to the Option granted to such individual:
(a) The per Share Option price of Shares subject
to such Incentive Stock Option shall not be less than 110% of the Fair Market
Value of Common Stock on the date of grant; and
(b) The Option shall not have a term in excess of
five (5) years from the date of grant.
Except as modified by the preceding provisions of this subsection 7(a)(iv) and
except as otherwise limited by Section 422 of the Code, all of the provisions of
the Plan shall be applicable to the Incentive Stock Options granted hereunder.
(v) OTHER PROVISIONS. Each Option granted under the Plan may
contain such other terms, provisions, and conditions not inconsistent with the
Plan as may be determined by the Administrator.
(vi) BUY-OUT PROVISIONS. The Administrator may at any time
offer on behalf of the Company to buy out, for a payment in cash or Shares, an
Option previously granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee at the time that
such offer is made; provided, however, that buy-out offers made to Insiders may
only be payable in cash. Any such cash offer made to an Officer or Director
shall comply with the applicable provisions of Rule 16b-3, if any.
(b) SARS.
(i) IN CONNECTION WITH OPTIONS. At the sole discretion of
the Administrator, SARs may be granted in connection with all or any part of an
Option, either concurrently with the grant of the Option or at any time
thereafter during the term of the Option. The following provisions apply to
SARs that are granted in connection with Options:
(1) The SAR shall entitle the Optionee to exercise the
SAR by surrendering to the Company unexercised a portion of the related Option.
The Optionee shall receive in Exchange from the Company an amount equal to the
excess of (1) the Fair Market Value on the date of exercise of the SAR of the
Common Stock covered by the surrendered portion of the related Option over
(2) the exercise price of the Common Stock covered by the surrendered portion of
the related Option. Notwithstanding the foregoing, the Administrator may place
limits on the amount that may be paid upon exercise of an SAR; PROVIDED,
however, that such limit shall not restrict the exercisability of the related
Option.
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(2) When an SAR is exercised, the related Option, to
the extent surrendered, shall cease to be exercisable.
(3) An SAR shall be exercisable only when and to the
extent that the related Option is exercisable and shall expire no later than the
date on which the related Option expires.
(4) An SAR may only be exercised at a time when the
Fair Market Value of the Common Stock covered by the related Option exceeds the
exercise price of the Common Stock covered by the related Option.
(ii) INDEPENDENT OF OPTIONS. At the sole discretion of the
Administrator, SARs may be granted without related Options. The following
provisions apply to SARs that are not granted in connection with Options:
(1) The SAR shall entitle the Optionee, by exercising
the SAR, to receive from the Company an amount equal to the excess of (1) the
Fair Market Value of the Common Stock covered by the exercised portion of the
SAR, as of the date of such exercise, over (2) the Fair Market Value of the
Common Stock covered by the exercised portion of the SAR, as of the last market
trading date prior to the date on which the SAR was granted; PROVIDED, however,
that the Administrator may place limits on the aggregate amount that may be paid
upon exercise of an SAR.
(2) SARs shall be exercisable, in whole or in part, at
such times as the Administrator shall specify in the Optionee's SAR agreement.
(iii) FORM OF PAYMENT. The Company's obligation arising upon
the exercise of an SAR may be paid in Common Stock or in cash, or in any
combination of Common Stock and cash, as the Administrator, in its sole
discretion, may determine. Shares issued upon the exercise of an SAR shall be
valued at their Fair Market Value as of the date of exercise.
(c) METHOD OF EXERCISE.
(i) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option or SAR granted hereunder shall be exercisable at such times and under
such conditions as determined by the Administrator and as shall be permissible
under the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option or SAR shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option or SAR by the person entitled to exercise the Option or SAR
and full payment for the Shares with respect to
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which the Option is exercised has been received by the Company. Full payment
may, as authorized by the Administrator (and, in the case of an Incentive
Stock Option, determined at the time of grant) and permitted by the Option
Agreement consist of any consideration and method of payment allowable under
subsection 7(a)(iii) of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such
Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding
the exercise of the Option. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter shall be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised. Exercise of an SAR in any manner shall, to the extent the
SAR is exercised, result in a decrease in the number of Shares which thereafter
shall be available for purposes of the Plan, and the SAR shall cease to be
exercisable to the extent it has been exercised.
(ii) RULE 16B-3. Options and SARs granted to individuals
subject to Section 16 of the Exchange Act ("Insiders") must comply with the
applicable provisions of Rule 16b-3 and shall contain such additional conditions
or restrictions as may be required thereunder to qualify for the maximum
exemption from Section 16 of the Exchange Act with respect to Plan transactions.
(iii) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In
the event an Optionee's Continuous Status as an Employee or Consultant
terminates (other than upon the Optionee's death or Disability), the Optionee
may exercise his or her Option or SAR, but only within such period of time as is
determined by the Administrator at the time of grant, not to exceed five (5)
years (three (3) months in the case of an Incentive Stock Option) from the date
of such termination, and only to the extent that the Optionee was entitled to
exercise it at the date of such termination (but in no event later than the
expiration of the term of such Option or SAR as set forth in the Option or SAR
Agreement). To the extent that Optionee was not entitled to exercise an Option
or SAR at the date of such termination, and to the extent that the Optionee does
not exercise such Option or SAR (to the extent otherwise so entitled) within the
time specified herein, the Option or SAR shall terminate.
(iv) DISABILITY OF OPTIONEE. In the event an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option or SAR, but
only within such period of time following the date of termination due to
Disability not exceeding ten (10) years as is determined by the Administrator
(with such determination being made at the time of grant of the Option in the
case of an Incentive Stock Option and not exceeding one (1) year), and only to
the extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option or
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SAR as set forth in the Option or SAR Agreement). To the extent that
Optionee was not entitled to exercise an Option or SAR at the date of such
termination, and to the extent that the Optionee does not exercise such
Option or SAR (to the extent otherwise so entitled) within the time specified
herein, the Option or SAR shall terminate.
(v) DEATH OF OPTIONEE. In the event of an Optionee's death,
the Optionee's estate or a person who acquired the right to exercise the
deceased Optionee's Option or SAR by bequest or inheritance may exercise the
Option or SAR, but only within ten (10) years following the date of death, and
only to the extent that the Optionee was entitled to exercise it at the date of
death (but in no event later than the expiration of the term of such Option or
SAR as set forth in the Option or SAR Agreement). To the extent that Optionee
was not entitled to exercise an Option or SAR at the date of death, and to the
extent that the Optionee's estate or a person who acquired the right to exercise
such Option does not exercise such Option or SAR (to the extent otherwise so
entitled) within the time specified herein, the Option or SAR shall terminate.
(d) OPTION AND SAR LIMITATION. The following limitation shall apply
to grants of Options and SARs under the Plan:
(i) No Employee shall be granted, in any fiscal year of the
Company, Options and SARs under the Plan to purchase more than 1,050,000 Shares.
(ii) The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 11(a).
(iii) If an Option or SAR is cancelled (other than in
connection with a transaction described in Section 11), the cancelled Option or
SAR shall be counted against the limits set forth in Section 7(d)(i). For this
purpose, if the exercise price of an Option or SAR is reduced, the transaction
will be treated as a cancellation of the Option or SAR and the grant of a new
Option or SAR.
8. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing of the terms, conditions and restrictions related to the
offer, including the number of Shares that the offeree shall be entitled to
purchase, the price to be paid, and the time within which the offeree must
accept such offer, which shall in no event exceed thirty (30) days from the date
upon which the Administrator made the determination to grant the Stock Purchase
Right. The offer shall be accepted by execution of a Restricted Stock Purchase
Agreement in the form determined by the Administrator.
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(b) REPURCHASE OPTION. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine.
(c) OTHER PROVISIONS. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.
(d) RULE 16B-3. Stock Purchase Rights granted to Insiders, and
Shares purchased by Insiders in connection with Stock Purchase Rights, shall be
subject to any restrictions applicable thereto in compliance with Rule 16b-3.
An Insider may only purchase Shares pursuant to the grant of a Stock Purchase
Right, and may only sell Shares purchased pursuant to the grant of a Stock
Purchase Right, during such time or times as are permitted by Rule 16b-3.
(e) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 11
of the Plan.
9. LONG-TERM PERFORMANCE AWARDS.
(a) ADMINISTRATION. Long-Term Performance Awards are cash or
stock bonus awards that may be granted either alone or in addition to other
awards granted under the Plan. Such awards shall be granted for no cash
consideration. The Administrator shall determine the nature, length and
starting date of any performance period (the "Performance Period") for each
Long-Term Performance Award, and shall determine the performance or
employment factors, if any, to be used in the determination of Long-Term
Performance Awards and the extent to which such Long-Term Performance Awards
are valued or have been earned. Long-Term Performance Awards may vary from
participant to participant and between groups of participants and shall be
based upon the achievement of Company, Subsidiary, Parent and/or individual
performance factors or upon such other criteria as the Administrator may deem
appropriate. Performance Periods may overlap and participants may
participate simultaneously with respect to Long-Term Performance Awards that
are subject to different Performance Periods and different performance
factors and criteria. Long-Term Performance Awards shall be confirmed by,
and be subject to the terms of, a Long-Term Performance Award agreement. The
terms of such awards need not be the same with respect to each participant.
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At the beginning of each Performance Period, the Administrator may
determine for each Long-Term Performance Award subject to such Performance
Period the range of dollar values or number of shares of Common Stock to be
awarded to the participant at the end of the Performance Period if and to the
extent that the relevant measures of performance for such Long-Term Performance
Award are met. Such dollar values or number of shares of Common Stock may be
fixed or may vary in accordance with such performance or other criteria as may
be determined by the Administrator.
(b) ADJUSTMENT OF AWARDS. The Administrator may adjust the
performance factors applicable to the Long-Term Performance Awards to take into
account changes in legal, accounting and tax rules and to make such adjustments
as the Administrator deems necessary or appropriate to reflect the inclusion or
exclusion of the impact of extraordinary or unusual items, events or
circumstances in order to avoid windfalls or hardships.
10. NON-TRANSFERABILITY OF OPTIONS AND RIGHTS. Options and Rights may not
be sold, pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER, ASSET
SALE OR CHANGE OF CONTROL.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Right, and the number of shares of Common Stock
which have been authorized for issuance under the Plan but as to which no
Options or Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Right, as well as the price per
share of Common Stock covered by each such outstanding Option or Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; PROVIDED, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option or Right.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option or Right
has not been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in
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the exercise of its sole discretion in such instances, declare that any
Option or Right shall terminate as of a date fixed by the Board and give each
Optionee the right to exercise his or her Option or Right as to all or any
part of the Optioned Stock, including Shares as to which the Option or Right
would not otherwise be exercisable.
(c) MERGER OR ASSET SALE. Subject to the provisions of paragraph (d)
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option and Right shall be assumed or an equivalent Option or Right
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation does not
agree to assume the Option or to substitute an equivalent option, the
Administrator shall, in lieu of such assumption or substitution, provide for the
Optionee to have the right to exercise the Option or Right as to all or a
portion of the Optioned Stock, including Shares as to which it would not
otherwise be exercisable. If the Administrator makes an Option or Right
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee that the Option or
Right shall be exercisable for a period of fifteen (15) days from the date of
such notice, and the Option or Right will terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or Right shall be
considered assumed if, immediately following the merger or sale of assets, the
Option or Right confers the right to purchase, for each Share of Optioned Stock
subject to the Option or Right immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); PROVIDED, however, that if such
consideration received in the merger or sale of assets was not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation and the participant, provide for the
consideration to be received upon the exercise of the Option or Right, for each
Share of Optioned Stock subject to the Option or Right, to be solely common
stock of the successor corporation or its Parent equal in Fair Market Value to
the per share consideration received by holders of Common Stock in the merger or
sale of assets.
(d) CHANGE IN CONTROL. In the event of a "Change in Control" of the
Company, as defined in paragraph (e) below, then the following acceleration and
valuation provisions shall apply:
(i) Except as otherwise determined by the Board, in its
discretion, prior to the occurrence of a Change in Control, any Options and
Rights outstanding on the date such Change in Control is determined to have
occurred that are not yet exercisable and vested on such date shall become fully
exercisable and vested;
(ii) Except as otherwise determined by the Board, in its
discretion, prior to the occurrence of a Change in Control, all outstanding
Options and Rights, to the extent they are exercisable and vested
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(including Options and Rights that shall become exercisable and vested
pursuant to subparagraph (i) above), shall be terminated in exchange for a
cash payment equal to the Change in Control Price, (reduced by the exercise
price, if any, applicable to such Options or Rights). These cash proceeds
shall be paid to the Optionee or, in the event of death of an Optionee prior
to payment, to the estate of the Optionee or to a person who acquired the
right to exercise the Option or Right by bequest or inheritance.
(e) DEFINITION OF "CHANGE IN CONTROL". For purposes of
this Section 11, a "Change in Control" means the happening of any of the
following:
(i) When any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities entitled to vote generally in the election of directors;
or
(ii) The shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the shareholders
of the Company approve an agreement for the sale or disposition by the Company
of all or substantially all the Company's assets; or
(iii) A change in the composition of the Board of Directors of
the Company, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" shall mean directors who either
(A) are directors of the Company as of the date the Plan is approved by the
shareholders, or (B) are elected, or nominated for election, to the Board of
Directors of the Company with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company).
(f) CHANGE IN CONTROL PRICE. For purposes of this Section 11,
"Change in Control Price" shall be, as determined by the Board, (i) the highest
Fair Market Value of a Share within the 60-day period immediately preceding the
date of determination of the Change in Control Price by the Board (the "60-Day
Period"), or (ii) the highest price paid or offered per Share, as determined by
the Board, in any bona fide transaction or bona fide offer related to the Change
in Control of the Company, at any time within the 60-Day Period, or (iii) such
lower price as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a Share.
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12. DATE OF GRANT. The date of grant of an Option or Right shall be, for
all purposes, the date on which the Administrator makes the determination
granting such Option or Right, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each Optionee
within a reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is listed or
quoted). Such shareholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
14. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS.
(a) ABILITY TO USE STOCK TO SATISFY WITHHOLDING. At the discretion
of the Administrator, Optionees may satisfy withholding obligations as provided
in this Section 14. When an Optionee incurs tax liability in connection with
the award, vesting or exercise of an Option or Right, which tax liability is
subject to tax withholding under applicable tax laws (including federal, state
and local laws), the Optionee may satisfy the withholding tax obligation (up to
an amount calculated by applying such Optionee's maximum marginal tax rate) by
electing to have the Company withhold from the Shares to be issued upon award,
vesting or exercise of the Option or Right that number of Shares, or by
delivering to the Company that number of previously owned Shares, having a Fair
Market Value equal to the amount required to be withheld. The Fair Market Value
of the Shares to be withheld or delivered, as the case may be, shall be
determined on the date that the amount of tax to be withheld is determined (the
"Tax Date").
(b) ELECTION TO HAVE STOCK WITHHELD. All elections by an Optionee to
have Shares withheld or to deliver previously owned Shares pursuant to this
Section 14 shall be made in writing in a form acceptable to the Administrator
and shall be subject to the following restrictions:
(i) the election must be made on or prior to the applicable
Tax Date;
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(ii) all elections shall be subject to the consent or
disapproval of the Administrator; and
(iii) if the Optionee is an Insider, the election must comply
with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
(c) SECTION 83(B) ELECTIONS. In the event that (i) an election to
have Shares withheld is made by an Optionee, (ii) no election is filed under
Section 83(b) of the Code by such Optionee and (iii) the Tax Date is deferred
under Section 83 of the Code, the Optionee shall receive the full number of
Shares with respect to which the Option or Right has been awarded, has vested or
has been exercised, as the case may be, but such Optionee shall be
unconditionally obligated to tender back to the Company the proper number of
Shares on the Tax Date.
15. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option or Right unless the exercise of such Option or Right and
the issuance and delivery of such Shares shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder,
Applicable Laws, and the requirements of any stock exchange or quotation system
upon which the Shares may then be listed or quoted, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Option or Right, the Company may require the person exercising such Option or
Right to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required.
16. LIABILITY OF COMPANY.
(a) INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
(b) GRANTS EXCEEDING ALLOTTED SHARES. If the Optioned Stock covered
by an Option or Right exceeds, as of the date of grant, the number of Shares
which may be issued under the Plan without additional shareholder approval, such
Option or Right shall be void with respect to
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such excess Optioned Stock, unless shareholder approval of an amendment
sufficiently increasing the number of Shares subject to the Plan is timely
obtained in accordance with Section 13(b) of the Plan.
17. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
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PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
AXIOHM TRANSACTION SOLUTIONS, INC.
APRIL 28, 1998
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
- ------------------------------------------------------------------------------
A /X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
FOR WITHHELD
1. ELECTION OF DIRECTORS / / / /
For all nominees except as noted below:
- ---------------------------------------
NOMINEES:
Nicolas Dourussoff
Patrick Dupuy
Gilles Gibier
William H. Gibbs
Don M. Lyle
FOR AGAINST ABSTAIN
2. PROPOSAL TO AMEND THE COMPANY'S 1992 STOCK / / / / / /
PLAN TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK AVAILABLE FOR ISSUANCE UNDER
THE PLAN BY 500,000 SHARES.
FOR AGAINST ABSTAIN
3. PROPOSAL TO APPROVE THE APPOINTMENT OF / / / / / /
KPMG PEAT MARWICK LLP AS INDEPENDENT
AUDITORS OF THE CORPORATION.
FOR AGAINST ABSTAIN
4. IN THEIR DISCRETION THE PROXYHOLDERS ARE / / / / / /
AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT(S) THEREOF.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW / /
WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3 AS SAID PROXYHOLDERS DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE:________________________________ DATE:___________
SIGNATURE:________________________________ DATE:___________
NOTE: (This Proxy should be marked, dated, signed by the shareholder(s)
exactly as his or her name appears hereon, and returned promptly
in the enclosed envelope. Persons signing in a fiduciary capacity
should so indicate. If shares are held by joint tenants or as a
community property, both should sign).
