<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
AXIOHM TRANSACTION SOLUTIONS, INC.
- --------------------------------------------------------------------------------
(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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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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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 1999 Annual Meeting of the Shareholders of Axiohm Transaction Solutions,
Inc., a California corporation (the "Company") will be held at the Philadelphia
Marriott West, 111 Crawford Avenue, West Conshocken, Pennsylvania 19428 on May
5, 1999 at 11:00 a.m., local time, to act on the following matters:
(1) To elect five (5) persons to the Company's Board of Directors;
(2) To ratify the appointment of KPMG LLP as the Company's independent
auditors for the current fiscal year; and
(3) 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 25, 1999 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.
BY ORDER OF THE BOARD OF DIRECTORS OF
AXIOHM TRANSACTION SOLUTIONS, INC.
CORINNE BELMONT
SECRETARY
Blue Bell, Pennsylvania
April 19, 1999
<PAGE>
AXIOHM TRANSACTION SOLUTIONS, INC.
PROXY STATEMENT FOR 1999 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., a California corporation (the "Company"),
for use at the Annual Meeting of Shareholders to be held on May 5, 1999 at 11:00
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 Philadelphia Marriott West, 111 Crawford
Avenue, West Conshocken, Pennsylvania 19428. The Marriott's telephone number at
that address is (610) 941-5600, and the Company's telephone number at its
headquarters is (215) 591-0940.
These proxy solicitation materials were mailed on or about April 19, 1999 to
all shareholders entitled to vote at the meeting.
RECORD DATE AND SHARES OUTSTANDING
Shareholders of record at the close of business on March 25, 1999 are
entitled to notice of and to vote at the meeting. At the record date, 6,519,301
shares of the Company's Common Stock were issued and outstanding and were held
by 419 holders of record.
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 1787 Sentry Parkway West, Building 16, Suite
450, Blue Bell, Pennsylvania 19422 (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.
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 SHAREHOLDER PROPOSALS TO BE INCLUDED IN 2000 ANNUAL MEETING PROXY
STATEMENT
Shareholders of the Company are entitled to present proposals for
consideration at forthcoming shareholder meetings provided that they comply with
the proxy rules promulgated by the Securities and Exchange Commission. If a
Shareholder wishes to have a proposal for the Company's 2000 Annual Meeting of
Shareholders included in the Company's proxy statement and form of proxy
relating to that meeting, then the shareholder must cause such proposal to have
been received by the Company at its headquarters no later than December 21,
1999. In connection with its 2000 Annual Shareholder Meeting, the Company
intends to solicit proxies granting discretionary authority to the proxyholders
to vote on any matters submitted to the Company by shareholders after March 5,
2000.
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.
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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>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- --------------------------------------------- --- --------------------------------------------- ---------------
<S> <C> <C> <C>
Nicolas Dourassoff........................... 44 President and Chief Executive Officer of the 1997
Company
Patrick Dupuy................................ 46 Co-Chairman of the Company 1997
William H. Gibbs............................. 55 Private Investor 1985
Gilles Gibier................................ 44 Co-Chairman of the Company and Private 1997
Investor
Don M. Lyle.................................. 59 Independent Consultant 1992
</TABLE>
MR. DOURASSOFF has served as a director of the Company since October 1997,
as President and Chief Executive Officer of the Company since May 1998 and as a
director of Axiohm S.A.R.L. (formerly Axiohm S.A.) since 1996. See "Executive
Compensation--Employment Agreements." Prior to that, Mr. Dourassoff served as
Managing Director of ABN AMRO, Investissement, the investment subsidiary of ABN
AMRO (a Dutch bank), a position he held since June 1993. Concurrently, he 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 July 14, 1997 merger agreement among the Company, Axhiom
S.A.R.L. and a subsidiary of Axiohm S.A.R.L. (the "Merger Agreement").
MR. DUPUY has served as a director and Co-Chairman of the Company since
October 1997. Mr. Dupuy served as Co-Chief Executive Officer of the Company from
January 1998 through May 1998 and has been Chairman of Axiohm S.A.R.L., 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.R.L. 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.
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. GIBIER has served as a director and Co-Chairman of the Company since
October 1997. He served as Co-Chief Executive Officer of the Company from
January 1998 through May 1998 and has been a director of Axiohm S.A.R.L. since
its purchase from Schlumberger by Axiohm S.A.R.L. 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.
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
3
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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 six meetings during
1998. 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 Committee have been performed by the Board of
Directors. The Nominating Committee held no meetings in 1998.
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 William H. Gibbs and Don M. Lyle, held
one meeting during 1998.
The Compensation Committee, currently consisting of Patrick Dupuy, Gilles
Gibier and Don M. Lyle, reviews and administers the compensation of the officers
of the Company and administers the Company's 1992 Stock Plan. The Compensation
Committee held no meetings during 1998. During 1998 the determination of Mr.
Dourassoff's salary as Chief Executive Officer was made by Messrs. Dupuy and
Gibier, and Mr. Dourassoff determined the salaries of the Company's other
officers. Stock option grants under the Company's 1992 Stock Plan during 1998
were made by the Board of Directors as a whole.
COMPENSATION OF DIRECTORS
RETAINER AND MEETING FEES
All non-employee directors received a $12,000 annual retainer plus $1,500
for each Board of Directors meeting attended and for each committee meeting
which did not occur on a regularly scheduled date.
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.
4
<PAGE>
PROPOSAL NO. 2
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 LLP,
independent public auditors to serve for the fiscal year ending January 1, 2000.
The Board of Directors recommends that the shareholders vote for
ratification of the appointment of KPMG LLP as the Company's independent
auditors to audit the financial statements for the Company for the year ending
January 1, 2000. In the event of a negative vote on such ratification, the Board
of Directors will reconsider its selection.
Representatives of KPMG 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 LLP as the Company's independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
5
<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
$100,000 in salary and bonus in 1998 (together the "Named Executive Officers"),
as well as the total compensation paid to each such individual for the Company's
two previous fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS(#) COMPENSATION($)(2)
- ---------------------------------------- --------- ----------- ----------- ------------------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Nicolas Dourassoff(3) .................. 1998 128,731 50,000 26,162 120,000 64,574
Chief Executive Officer
Patrick Dupuy(4) ....................... 1998 80,000 -- -- -- --
Co-Chief Executive Officer 1997 80,000 -- -- -- --
Gilles Gibier(4) ....................... 1998 80,000 -- -- -- --
Co-Chief Executive Officer 1997 80,000 -- -- -- --
William H. Gibbs(5) .................... 1998 99,250 -- -- -- 11,034,293
Chief Executive Officer 1997 349,973 75,000 -- 200,000 1,966
1996 285,000 44,599 -- -- 1,784
Walter S. Sobon(6) ..................... 1998 190,238 25,000 9,000 40,000 1,296
Chief Financial Officer 1997 119,407 37,500 6,750 80,000 300
and Treasurer
Malcolm Unsworth(7) .................... 1998 173,936 25,000 -- 15,000 7,330
Vice President of Operations 1997 156,028 95,000 -- -- --
</TABLE>
- ------------------------
(1) Represents automobile allowances.
(2) For Mr. Dourassoff represents relocation and tuition expenses in connection
with his relocation from France to the United States. For Mr. Gibbs in 1998
represents payments in connection with the termination of his employment
with the Company, including the distribution of amounts held in rabbi trusts
with respect to the acceleration and payout of options in connection with
the Merger Agreement, the payment of certain tax obligations in connection
with such payouts, and payments under a noncompetition agreement. For Mr.
Gibbs in 1997 and 1996, and for Messrs. Unsworth and Sobon, represents life
and/or disability insurance premiums.
(3) Mr. Dourassoff joined the Company in May 1998.
(4) Messrs. Dupuy and Gibier served and Co-Chief Executive Officers of the
Company from January 1998 through May 1998.
(5) Mr. Gibbs' employment with the Company terminated in January 1998.
(6) Mr. Sobon joined the Company in March 1997.
(7) Mr. Unsworth joined the Company in September 1997. Represents payments made
to Mr. Unsworth in 1997 in his capacity as an executive officer of the
Company and, until joining the Company in September 1997, in his capacity as
an executive officer of Axiohm IPB, Inc.
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OPTION GRANTS
The following tables set forth certain information for the Named Executive
Officers with respect to grants in 1998, and year end values, of options to
purchase Common Stock of the Company:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------------ ANNUAL RATES OF STOCK
NUMBER OF PRICE APPRECIATION
SECURITIES PERCENTAGE OF TOTAL FOR
UNDERLYING OPTIONS GRANTED TO EXERCISE OR OPTION TERM(3)
OPTIONS GRANTED EMPLOYEES IN FISCAL BASE PRICE EXPIRATION ---------------------
NAME ($)(1) YEAR(2) ($/SH) DATE 5%($) 10%($)
- ------------------------------- --------------- ----------------------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Nicolas Dourassoff............. 120,000 36 13.125 4/28/06 751,992 1,801,152
Patrick Dupuy.................. -- -- -- -- -- --
Gilles Gibier.................. -- -- -- -- -- --
William H. Gibbs............... -- -- -- -- -- --
Walter S. Sobon................ 40,000 12 13.125 4/28/06 250,664 600,384
Malcolm Unsworth............... 15,000 5 13.125 4/28/06 93,999 225,144
</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. In January 1999, the Company's Board of Directors amended the
exercise price of Mr. Dourassoff's options to purchase 120,000 shares of
Common Stock to a per share exercise price of $6.00.
(2) An aggregate of 333,000 options to purchase shares of Common Stock were
granted to employees during 1998.
(3) Potential realizable value is based on an assumption that the stock price of
Common Stock appreciates at the annual rate shown (compounded annually) from
the date of grant until the end of the eight year option term. These numbers
are calculated based on the requirements promulgated by the Securities and
Exchange Commission (the "SEC") and do not reflect the Company's estimate of
future stock price.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL YEAR END(#) OPTIONS AT FISCAL YEAR END($)(1)
---------------------------------- ----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Nicolas Dourassoff...................... -- 120,000 -- --
Patrick Dupuy........................... -- -- -- --
Gilles Gibier........................... -- -- -- --
William H. Gibbs........................ -- -- -- --
Walter S. Sobon......................... 30,000 50,000 -- --
Malcolm Unsworth........................ 138,805 92,313 -- --
</TABLE>
- ------------------------
(1) Per share market value of underlying securities at year end minus the per
share exercise price, multiplied by the number of shares.
7
<PAGE>
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENTS
The Company has entered into employment agreements with Messrs. Dupuy and
Gibier, Co-Chairmen of the Company, Mr. Dourassoff, the Company's Chief
Executive Officer, and Mr. Sobon, Chief Financial Officer of the Company. The
Company has also entered into a change-in-control agreement with Mr. Dourassoff.
The Co-Chairman Employment Agreements, each dated effective as of October 2,
1997, between the Company and Mr. Dupuy (the "Dupuy Agreement") and the Company
and Mr. Gibier (the "Gibier Agreement"), respectively, provide that the Company
will employ Messrs. Dupuy and Gibier, and Messrs. Dupuy and Gibier agree, to
serve as Co-Chairmen of the Company and to oversee the Company's investment in
certain of its foreign subsidiaries. Each of Mr. Dupuy and Mr. Gibier receives
compensation therefor of $80,000 per year (along with French social security
taxes with respect thereto). Each of these agreements 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 $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. Dourassoff (the "Dourassoff Agreement")
provides for Mr. Dourassoff to be employed as Chief Executive Officer of the
Company at a base salary of $200,000 during his first year of employment which
began May 15, 1998, 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 terminated in the first six months,
nine months' salary if terminated in the second six months, and six months'
salary if terminated thereafter.
The Change in Control Agreement dated March 22, 1999 between the Company and
Mr. Dourassoff (the "Dourassoff Change in Control Agreement") provides that if
(i) there is a "change in control" of the Company, and (ii) within 12 months of
such change in control (but not later than March 21, 2001) Mr. Dourassoff's
employment with the Company is terminated (i) by the Company other than for
"cause", (ii) by Mr. Dourassoff for "good reason", or (iii) due to death or
disability, then Mr. Dourassoff shall receive certain severance amounts from the
Company. Such severance consists of (i) a cash payment equal to 299% of Mr.
Dourassoff's annual compensation (including salary, bonus, and car and
children's tuition allowances), (ii) continued health insurance coverage, and
(iii) reasonable relocation expenses. A change in control is deemed to occur if
(i) any "person" as defined in Section 13(d) of the Securities Exchange Act of
1934 becomes the beneficial owner of 35% of the voting power in the Company,
unless Messrs. Dupuy and Gibier in the aggregate are still beneficial owners of
a higher percentage than such person, (ii) there occurs a change in Board
composition within a two year period as a result of which less than a majority
of the Board consists of incumbent directors, (iii) the Company's Board or
shareholders approve a merger in which the Company is not the surviving
corporation or in which the Company's Common Stock would be converted to cash,
securities or other property, unless the shareholders immediately prior to the
merger have the same proportionate ownership of Common Stock of the surviving
corporation immediately after the merger, (iv) there occurs a sale of 50% of the
assets or earning power of the Company, or (v) the Company liquidates or
dissolves. Good reason is generally defined as certain specified reductions in
duties or compensation, certain relocations, or a termination other than for
disability or cause.
8
<PAGE>
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 $180,000. Mr. Sobon is also eligible to receive a minimum
target bonus of $80,000, 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.
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 18 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 Company's 1992 Stock Plan contains certain provisions which provide,
except as otherwise determined by the Board, for an acceleration of
exercisability and vesting, and cash payouts with respect to, options issued
under such Plan in connection with any "change in control". For purposes of such
Plan a change in control is deemed to occur if (i) any "person" as defined in
Section 13(d) of the Securities Exchange Act of 1934 becomes the beneficial
owner of 50% of the voting power in the Company, (ii) there occurs a change in
Board composition as a result of which less than a majority of the Board
consists of incumbent directors, or (iii) the Company's shareholders approve
either a merger (unless voting securities of the Company outstanding immediately
prior to the merger would continue to represent at least 50% of the voting power
of the Company or surviving entity immediately after the merger) or a sale of
substantially all the Company's assets.
In February 1999, the Board of Directors resolved to modify certain terms
concerning option acceleration in case of a change of control contained in an
outstanding option held by Malcolm Unsworth to purchase 231,118 shares of the
Company's Common Stock (the "Unsworth Option"). The modification replaces the
former change in control provisions of the Unsworth Option, which were
equivalent to the change in control provisions of the 1992 Stock Plan described
above, with new change in control provisions comparable to those contained in
the Dourassoff Change in Control Agreement.
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 12% of such officers' base salaries for 1998. The Committee
believes this to be commensurate with overall performance against the objectives
utilized in the executive bonus program.
9
<PAGE>
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 1998, the Compensation Committee granted options to
purchase a total of 175,000 shares of the Company's Common Stock to executive
officers.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Company has an employment agreement with Mr. Dourassoff, the Company's
Chief Executive Officer, which provides that he will receive a base salary
determined annually by the Board of Directors, in any event not to be less than
$250,000. As part of his employment agreement, Mr. Dourassoff received a
guaranteed bonus of $50,000 for 1998. The Compensation Committee believes that
his total compensation (salary, bonus and stock options) should be heavily
influenced by the performance of the Company. In establishing his base salary,
the Committee also considers the salaries of chief executive officers of
comparable companies, their years of experience and their performance, according
to the AEA data referred to above. Mr. Dourassoff is also entitled to a target
bonus of up to $75,000 upon the Company meeting certain objectives as set by the
Board of Directors.
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 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 of the Gilles Gibier, Member of the Don M. Lyle, Member of the
Compensation Committee Compensation Committee 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 from January 1998 to May 1998. Messrs. Dupuy and Gibier have been
directors and shareholders of Axiohm S.A.R.L. and Axiohm Technologies E.U.R.L.
See "Certain Relationships and Related Transactions."
Mr. Lyle is a non-employee director with no interlocking relationships as
defined by the Securities and Exchange Commission.
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SNC La Noire, which is owned by Mr. Dupuy, Mr. Gibier and Jean-Georges
Huglin, formerly the Chief Financial Officer of Axhiom S.A.R.L., has
historically provided and continues to provide real estate and office management
services to Axhiom S.A.R.L. SNC La Noire owns the Montrouge facility. In July
1997, SNC La Noire entered into separate leases with Axhiom S.A.R.L. and Axiohm
Technologies E.U.R.L. (formerly Dardel Technologies E.U.R.L.) with respect to
such facility. Following renovations that were completed in October 1997, Axhiom
S.A.R.L. leased 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.R.L. believes that the terms of the Montrouge
lease are comparable to what Axhiom S.A.R.L. could have obtained from unrelated
third parties.
SNC La Noire also provides Axhiom S.A.R.L. with management services for the
space leased at the Montrouge facility. In 1997 and 1998, Axiohm S.A.R.L. paid
SNC La Noire $379,000 and $615,000, respectively, for such services. Axhiom
S.A.R.L. believes that the terms of these transactions between Axhiom S.A.R.L.
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 Axhiom S.A.R.L.
and SNC La Noire are negotiated annually and can be terminated by either party
upon three months' written notice.
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"). 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 his
Employment Agreement dated July 14, 1997. The Gibbs Noncompetition Agreement
provides, among other things, that the Company 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.
11
<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):
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>
1993 $100.00 $100.00 $100.00
1994 $136.20 $97.80 $114.90
1995 $208.50 $138.30 $184.60
1996 $204.30 $170.00 $254.30
1997 $144.70 $208.50 $306.80
1998 $55.30 $293.80 $675.20
</TABLE>
12
<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information regarding the Common
Stock owned on March 25, 1999 (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"), 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 OF
BENEFICIAL PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) OWNERSHIP
- ----------------------------------------------------------------------------- ---------------------- -------------
<S> <C> <C>
Patrick Dupuy(2) ............................................................ 1,753,141 26.9%
c/o Axiohm Transaction Solutions, Inc.
1787 Sentry Parkway West
Building 16, Suite 450
Blue Bell, Pennsylvania 19422
Gilles Gibier(3) ............................................................ 1,740,133 26.7%
c/o Axiohm Transaction Solutions, Inc.
1787 Sentry Parkway West
Building 16, Suite 450
Blue Bell, Pennsylvania 19422
Royce & Associates, Inc.(4) ................................................. 449,677 6.7%
1414 Avenue of the Americas
New York, New York 10019
Nicolas Dourassoff(5)(6)..................................................... 46,768 *
Walter S. Sobon(6)........................................................... 30,000 *
Malcolm Unsworth(6).......................................................... 142,555 2.1%
William H. Gibbs............................................................. 572 *
Don M. Lyle.................................................................. -- --
All executive officers and directors as a group (8 persons)(7)............... 3,713,169 55.2%
</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) Includes 1,632,284 shares held of record by Ysatis BV, of which Mr. Dupuy is
the sole shareholder, and 90,540 shares held of record by Mr. Dupuy's
children.
(3) Includes 1,639,528 shares held of record by Cargyl BV, of which Mr. Gibier
is the sole shareholder, and 100,605 shares held of record by Carole Gibier,
Mr. Gibier's daughter.
(4) Based solely on information on a group Schedule 13G/A filed with the SEC
February 10, 1999. 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
13
<PAGE>
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 449,677 shares; Royce may be
deemed to have sole voting and dispositive power over 445,759 shares; and
RMC may be deemed to have sole voting and dispositive power over 3,918
shares.
(5) Includes 16,768 shares held of record by Somafin S.P.R.L., an entity wholly
owned by Mr. Dourassoff and Veronique Dourassoff, Mr. Dourassoff's wife.
(6) Includes the following number of shares issuable upon exercise of options or
warrants that are currently exercisable or will have become exercisable
within 60 days of March 25, 1999: Nicolas Dourassoff: 30,000; Walter S.
Sobon: 30,000; and Malcolm Unsworth: 142,555.
(7) Includes 202,555 shares issuable upon exercise of options that are currently
exercisable or will have become exercisable within 60 days of March 25,
1999.
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 than as follows. Each of Jack Confrey, Carmen Conicelli, Rudy
Falkenburg, Patrick Frimat and Charlotte Podowski failed to timely file a Form 3
upon becoming subject to the reporting requirements of Section 16(a). The
Company is not aware of any transactions during 1998 which any of such persons
would have been required to report on Form 4 or Form 5.
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.
By Order of the Board of Directors of
AXIOHM TRANSACTION SOLUTIONS, INC.
CORINNE BELMONT
SECRETARY
April 19, 1999
14
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AXIOHM TRANSACTION SOLUTIONS, INC.
ANNUAL MEETING OF SHAREHOLDERS
May 5, 1999
The undersigned hereby appoints Walter S. Sobon and Carmen J. Conicelli,
or either of them, as proxyholders, each with the power to appoint his
substitutes, and hereby authorizes them to represent and to vote, as
designated on the reverse side of this proxy card, all the shares of Common
Stock of Axiohm Transaction Solutions, Inc. (the "Company") which the
undersigned would be entitled to vote if then and there personally present,
on March 25, 1999 at the Company's 1999 Annual Meeting of Shareholders to be
held on May 5, 1999, at 11:00 a.m. local time at the Philadelphia Marriott
West, 111 Crawford Avenue, West Conshocken, Pennsylvania 19428, or at any
adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE RATIFICATION
OF THE APPOINTMENT OF THE COMPANY'S INDEPENDENT PUBLIC AUDITORS, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING
AND ANY ADJOURNMENTS THEREOF.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
<PAGE>
-Please Detach and Mail in the Envelope Provided-
- ------------------------------------------------------------------------------
/ X / PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
FOR WITHHELD
1. ELECTION OF DIRECTORS / / / /
Nominees: Nicolas Dourassoff
Patrick Dupuy
William H. Gibbs
Gilles Gibier
Don M. Lyle
For all nominees except as noted below:
2. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS OF
THE COMPANY.
FOR AGAINST ABSTAIN
/ / / / / /
3. 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 and 2 and 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.)
