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 ss.240.14a-11(c) or ss.240.14a-12
ATS MONEY SYSTEMS, 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)(4) 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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4) Date Filed:
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<PAGE>
ATS MONEY SYSTEMS, INC.
25 ROCKWOOD PLACE
ENGLEWOOD, NEW JERSEY 07631
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 4, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ATS
Money Systems, Inc. (the "Company"), will be held at The Clinton Inn, 145 Dean
Drive, Tenafly, New Jersey 07670, at 5:00 p.m., on Friday, June 4, 1999, for the
following purposes:
1. To elect four directors for a term of one year and until their
respective successors are elected and qualified;
2. To ratify the selection of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999; and
3. To transact such other business as properly may come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 9, 1999
as the record date for determining stockholders entitled to receive notice of
the Annual Meeting and to vote at such meeting or any adjournment or
adjournments thereof.
The Board of Directors appreciates and welcomes stockholder
participation in the Company's affairs. Whether or not you plan to attend the
Annual Meeting, please vote by completing, signing and dating the enclosed proxy
and returning it promptly to the Company in the enclosed self-addressed, postage
prepaid envelope. If you attend the meeting, you may revoke your proxy and vote
your shares in person.
By Order of the Board of Directors,
Thomas J. Carey
SECRETARY
April 27, 1999
<PAGE>
ATS MONEY SYSTEMS, INC.
25 ROCKWOOD PLACE
ENGLEWOOD, NEW JERSEY 07631
----------
PROXY STATEMENT
----------
1999 ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION
This Proxy Statement is furnished to stockholders of ATS Money Systems,
Inc., a Nevada corporation (the "Company"), in connection with the solicitation
of proxies by the Board of Directors of the Company (the "Board of Directors")
for use at the Annual Meeting of Stockholders of the Company to be held at 5:00
p.m. on Friday, June 4, 1999 at The Clinton Inn, 145 Dean Drive, Tenafly, New
Jersey 07670, and any adjournment or adjournments thereof (the "Annual
Meeting"), for the purposes set forth in the accompanying Notice of Annual
Meeting. This Proxy Statement, the attached Notice of Annual Meeting and the
accompanying form of proxy, together with the Annual Report to Stockholders of
the Company for the fiscal year ended December 31, 1998, are first being sent to
stockholders of the Company on or about April 27, 1999.
The record date for stockholders of the Company entitled to notice of,
and to vote at, the Annual Meeting is the close of business on April 9, 1999
(the "Record Date"). On the Record Date, there were issued and outstanding
5,660,042 shares of the Company's common stock, par value $.001 per share (the
"Common Stock"). All of such shares are of one class, with equal voting rights,
and each holder thereof is entitled to one vote on all matters voted on at the
Annual Meeting for each share registered in such holder's name. Presence in
person or by proxy of holders of 2,830,022 shares of Common Stock will
constitute a quorum at the Annual Meeting. Assuming a quorum is present (i) the
affirmative vote by the holders of a plurality of the shares represented at the
Annual Meeting and entitled to vote will be required to act on the election of
directors, and (ii) the affirmative vote by the holders of a majority of the
shares represented at the Annual Meeting and entitled to vote will be required
to act on all other matters to come before the Annual Meeting, including the
ratification of the selection of Deloitte & Touche LLP as independent auditors
for the current fiscal year.
In accordance with applicable law, all stockholders of record on the
Record Date are entitled to receive notice of, and to vote at, the Annual
Meeting. If a stockholder, present in person or by proxy, abstains on any
matter, the stockholder's shares will not be voted on such matter. Thus, an
abstention from voting on a matter has the same legal effect as a vote "against"
the matter, even though a stockholder may interpret such action differently. A
proxy submitted by a stockholder may indicate that all or a portion of the
shares represented by such proxy are not being voted by such stockholder with
respect to a particular matter. This could occur, for example, when a broker is
not permitted to vote shares of Common Stock held in street name on certain
matters in the absence of instructions from the beneficial owner of the shares.
The shares subject to any such proxy which are not being voted with respect to a
particular matter (the "non-voted shares") will be considered shares not present
and entitled to vote on such matter, although such shares may be considered
present and entitled to vote for other purposes and will count for purposes of
determining the presence of a quorum. (Shares voted to abstain as to a
particular matter will not be considered non-voted shares).
A proxy, in the accompanying form, which is properly executed, duly
returned to the Company and not revoked will be voted in accordance with the
instructions contained thereon. If no specific instructions are indicated on the
proxy, the shares represented thereby will be voted FOR (i) the election of the
persons nominated herein as
<PAGE>
directors, and (ii) the ratification of the selection of Deloitte & Touche LLP
as the Company's independent auditors for the current fiscal year; as well as
FOR the transaction of such other business as properly may come before the
Annual Meeting.
Each proxy granted may be revoked by the person granting it at any time
(i) by giving written notice to such effect to the Secretary of the Company,
(ii) by execution and delivery of a proxy bearing a later date, or (iii) by
attendance and voting in person at the Annual Meeting; except as to any matter
upon which, prior to such revocation, a vote shall have been cast at the Annual
Meeting pursuant to the authority conferred by such proxy. The mere presence at
the Annual Meeting of a person appointing a proxy does not revoke the
appointment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AS A GROUP
Set forth below is information, as of the Record Date, with respect to
the beneficial ownership of the Common Stock by (i) each person or group who is
known by the Company to be the beneficial owner of 5% or more of the outstanding
Common Stock, (ii) each of the directors of the Company (which directors also
constitute the nominees for election as directors at the Annual Meeting), (iii)
each of the executive officers of the Company named in the compensation table
under the section entitled "Executive Compensation", and (iv) all directors and
executive officers of the Company, as a group (6 persons).
Number of Shares Percent
Name and Address of Common Stock of Class
- ---------------- --------------- --------
Michael M. Smith 1,296,970 22.9%
35-20 Broadway
Astoria, New York 11106
Gerard F. Murphy 1,135,127(1) 20.0%
218 Park Street
Montclair, New Jersey 07043
Fred Den 1,077,637(2) 19.0%
102 Glen Way
Syosset, New York 11791
A. Paul Cox, Jr. 79,667(3) 1.4%
3615 Atlantic Avenue
Virginia Beach, Virginia 23451
Thomas J. Carey 46,667(4) 0.8%
52 Hominy Hill Road
Colts Neck, New Jersey 07722
James H. Halpin 39,729(5) 0.7%
27 Danvers Road
New Milford, Connecticut 06776
All directors and executive 2,417,222(6) 42.0%
officers as a group
- -------------------------
(1) Includes 10,375 shares of Common Stock which are the subject of
incentive stock options granted to Mr. Murphy which are currently
exercisable or are exercisable within 60 days after the Record Date. See
"COMMON STOCK INCENTIVE PLAN".
2
<PAGE>
(2) Includes (i) 108,000 shares of Common Stock owned by Mr. Den's wife, and
(ii) 16,667 shares of Common Stock which are the subject of
non-qualified stock options granted to Mr. Den which are currently
exercisable or are exercisable within 60 days after the Record Date. See
"DIRECTOR STOCK PLAN".
(3) Includes 16,667 shares of Common Stock which are the subject of
non-qualified stock options granted to Mr. Cox which are currently
exercisable or are exercisable within 60 days after the Record Date. See
"DIRECTOR STOCK PLAN".
(4) Includes 16,667 shares of Common Stock which are the subject of
non-qualified stock options granted to Mr. Carey which are currently
exercisable or are exercisable within 60 days after the Record Date. See
"DIRECTOR STOCK PLAN".
(5) Includes 27,831 shares of Common Stock which are the subject of
incentive stock options granted to Mr. Halpin which are currently
exercisable or are exercisable within 60 days after the Record Date. See
"COMMON STOCK INCENTIVE PLAN".
(6) In addition to the information included above for Messrs. Murphy, Den,
Halpin, Cox and Carey, includes 15,864 shares of Common Stock owned by
another executive officer of the Company and 22,531 shares of Common
Stock which are the subject of incentive stock options granted to such
executive officer which are currently exercisable or are exercisable
within 60 days after the Record Date. See "COMMON STOCK INCENTIVE PLAN".
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)
NOMINEES
The Company's by-laws provide for a Board of Directors of not less than
three directors nor more than seven directors, as fixed by the vote of the
stockholders. The size of the Board has been fixed at five directors. At
present, the Board of Directors consists of four directors and there is one
vacancy. At the Annual Meeting, four persons will be elected to the Board of
Directors to serve until the next annual meeting and until their respective
successors are elected and qualified. The persons named in the accompanying form
of proxy, unless otherwise instructed, intend to vote the shares of Common Stock
covered by valid proxies FOR the election of the four persons named in the
following table who have been designated by the Board of Directors as nominees
for director, each of whom is currently serving as a director. In the event that
any of such persons is unable to continue to be available for election, the
persons named in the accompanying form of proxy will have discretionary power to
vote FOR a substitute and will have discretionary power to vote or withhold
their vote for any additional nominees named by stockholders. There are no
circumstances presently known to the Board of Directors which would render any
of the following persons unavailable to continue to serve as a director, if
elected.
Name Age Other Relationships With the Company Director Since
- ---- --- ------------------------------------ --------------
A. Paul Cox, Jr. 61 Chairman of the Board October 1995
Gerard F. Murphy 63 President and Chief Executive Officer August 1988
Fred Den 57 Treasurer August 1988
Thomas J. Carey 62 Secretary October 1995
3
<PAGE>
There is no family relationship between any of the nominees to the
Board of Directors or between any of such persons and the executive officers of
the Company.
The business experience of each of the foregoing persons, during the
past five years, is as follows:
Mr. Cox has been the Chairman of the Board since October 1996. Since
January 1995, Mr. Cox has been the sole proprietor of Asset Protection Company,
a management consulting firm. From 1992 through 1994, Mr. Cox was Vice-President
and General Manager of the Business Equipment and Systems Division of Standard
Register Corporation.
Mr. Murphy has been the President and Chief Executive Officer of the
Company for more than the past five years.
Mr. Den has been a real estate manager for Marteva Corp. for more than
the past five years and is involved in managing and operating various real
estate ventures. Mr. Den has been Treasurer of the Company since May 30,1997;
for more than the five years prior thereto, Mr. Den was Secretary of the
Company.
Mr. Carey, a certified public accountant, has been Secretary of the
Company since May 30, 1997 and the Chief Financial Officer of Driver Harris
Company, a publicly-traded multi-national manufacturer of electrical resistance
wire, since May 1995. From 1992 through 1994, Mr. Carey served as Chief
Financial Officer and Treasurer of The Home News Company and its successor,
Glenwood Communications Corporation, a newspaper publisher.
Each of the foregoing nominees is a current director of the Company,
elected as such at the May 1998 annual meeting of stockholders, and holds office
until the next annual meeting of stockholders and until his respective successor
has been duly elected and qualified or until his earlier resignation.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE ABOVE NOMINEES AS DIRECTORS OF THE COMPANY.
ADDITIONAL INFORMATION WITH RESPECT TO THE BOARD OF DIRECTORS AND ITS COMMITTEES
SETTLEMENT AGREEMENT
On August 30, 1995, the Company, Fred Den and each of Michael M. Smith
and Louis Z. Weitz (then directors of the Company), entered into a Settlement
Agreement (the "Settlement Agreement") which resolved a then threatened proxy
contest for the election of directors at the 1995 Annual Meeting of
Stockholders. The Settlement Agreement, among other matters, provided that,
notwithstanding anything to the contrary contained therein, if at any time when
Mr. Den is a director of the Company or any subsidiary of the Company he does
not beneficially own at least 10% of the outstanding Common Stock (the "10%
Condition"), and irrespective of whether he subsequently increases his
beneficial ownership of Common Stock to 10% or more of the outstanding Common
Stock, then the Board, by a vote of a majority of the directors other than Mr.
Den, may at any time thereafter request that Mr. Den resign as a director of the
Company and as a director of any subsidiary of the Company, and within two
business days following such request, Mr. Den will resign. In addition, in the
event that Mr. Den fails to meet the 10% Condition and at such time has been
nominated by the Board to stand for election or re-election to the Board then,
if pursuant to the aforementioned requirements Mr. Den would be required to
resign as a director, he will immediately withdraw as a nominee (or, in the
absence of such withdrawal, the Company may remove Mr. Den from its slate of
nominees). The Settlement Agreement further provided that if Mr. Den is in
compliance with the 10% Condition and, solely as a result of the issuance by the
Company of additional shares of Common Stock, Mr. Den no longer owns at least
10% of the outstanding Common Stock, Mr. Den will not be deemed to have failed
the 10% Condition unless and until he shall, in one or more transactions, sell,
transfer or dispose of shares of Common Stock which, in the aggregate, represent
1% or more of the then outstanding Common Stock.
4
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company has standing Audit and Compensation Committees of the Board
of Directors. The members of each committee are appointed by, and serve at the
discretion of, the Board of Directors. Messrs. Carey, Cox and Den comprise the
members of each committee. The Board of Directors does not have a Nominating
Committee or a committee performing similar functions.
The Audit Committee is authorized to confer with the auditors and
financial officers of the Company, review reports submitted by the auditors,
establish or review, and monitor compliance with codes of conduct of the
Company, inquire about procedures for compliance with laws and regulations
relating to the management of the Company, and report and make recommendations
to the Board of Directors.
The Compensation Committee is responsible for establishing the
compensation of the President and Chief Executive Officer of the Company and the
compensation of key employees of the Company based upon the recommendation of
the President and Chief Executive Officer. The Compensation Committee also is
responsible for administering the Company's stock option plans, including the
designating of individuals to be granted options, prescribing the terms and
conditions of such options and making all other determinations deemed necessary
for the administration of such plans.
During 1998, there were ten meetings of the Board of Directors, one
meeting of the Audit Committee and four meetings of the Compensation Committee.
During this period, each director attended all of the meetings of the Board of
Directors and the committees thereof on which he served.
COMPENSATION OF DIRECTORS
Each director who is not a full-time employee of the Company or any of
its subsidiaries (a "Non-Employee Director") receives an annual payment of
$5,000. Each of Messrs. Carey, Cox and Den is a Non-Employee Director. In
addition, each director (including Mr. Murphy) receive compensation of $500 for
attendance at each day of duly called meetings of the Board of Directors, Mr.
Cox, as Chairman of the Board of Directors, receives an additional $300 per day
of Board of Directors meetings, and the director who prepares the minutes for
the Board of Directors meeting receives an additional $100 for acting as
secretary of the meeting. Non-Employee Directors also receive compensation of
$300 for attendance at each committee meeting.
In addition to cash compensation, immediately following the election of
directors at each annual meeting of stockholders, each elected Non-Employee
Director receives an option to purchase 10,000 shares of Common Stock at an
exercise price equal to the fair market value of the Common Stock on the date of
grant. See "DIRECTOR STOCK PLAN".
5
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are:
Name Age Position With the Company
- ---- --- -------------------------
A. Paul Cox, Jr. 61 Chairman of the Board and Director
Gerard F. Murphy 63 President and Chief Executive Officer and Director
James H. Halpin 56 Executive Vice President - Sales and Marketing
Joseph M. Burke 57 Vice President - Finance
Thomas J. Carey 62 Secretary and Director
Fred Den 57 Treasurer and Director
Executive officers of the Company are appointed by, and serve at the
discretion of, the Board of Directors.
The business experience of each of Messrs. Cox, Murphy, Carey and Den
is set forth above. Messrs Halpin and Burke have been associated with the
Company for more than the past five years as the Company's Executive Vice
President and Vice President - Finance, respectively.
In addition to the foregoing, the Company considers Messrs. Timothy J.
Eames, Kenneth Andersen and Val Kida to be significant employees of the Company.
Mr. Eames, 63, has been associated with the Company for more than the past five
years as Vice President - Sales. Mr. Andersen, 50, has been associated with the
Company for more than the past five years as Chief Technology Officer. Mr. Kida,
54, has been associated with the Company since January 1996 as Vice President -
Finance of the Company's subsidiary, Innovative Electronics, Inc. ("IEI"). From
June 1991 until joining IEI in January 1996, Mr. Kida served as controller of M.
Epstein's Department Store in Morristown, New Jersey.
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION IN FISCAL YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(RESPECTIVELY, "FISCAL 1998", "FISCAL 1997" AND "FISCAL 1996")
The following Summary Compensation table sets forth information
concerning compensation for services in all capacities awarded to or earned (on
an accrual basis) by the Company's chief executive officer and each other
executive officer of the Company earning more than $100,000 during Fiscal 1998,
Fiscal 1997 or Fiscal 1996.
6
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation Long-term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Securities LTIP
Name and Fiscal Underlying Payouts ($)(4) All Other
Principal Position Year Salary Bonus Options (#) -------------- Compensation
- ------------------ ---- ------ ----- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerard F. Murphy 1998 $154,500 $10,000 6,000(1) $40,538 $1,695 (5)
President and 1997 $153,509 $10,000 -- $38,163 $1,695 (5)
Chief Exec. Officer 1996 $150,491 -- 8,375(2) $34,563 $1,695 (5)
James H. Halpin 1998 $458,264 -- 3,000(1) $22,975 --
Exec. V.P. - 1997 $252,564 -- 5,000(3) $20,600 --
Sales & Marketing 1996 $117,269 $13,000 4,682(2) $18,423 --
</TABLE>
- -------------------------
(1) Represents incentive options granted on March 6, 1998. See "COMMON
STOCK INCENTIVE PLAN".
(2) Represents incentive stock options granted on February 2, 1996. See
"COMMON STOCK INCENTIVE PLAN".
(3) Represents incentive stock options granted on February 14, 1997. See
"COMMON STOCK INCENTIVE PLAN".
(4) Represents accrued amounts allocated as of December 31 of each year
pursuant to the Company's Profit Sharing Plan. See "LONG TERM INCENTIVE
PLANS" for a description of such plan.
(5) Represents insurance premiums paid by the Company with respect to a
life insurance policy on the life of Mr. Murphy, the beneficiary of
which is his spouse.
COMMON STOCK INCENTIVE PLAN
GENERAL
The Common Stock Incentive Plan (the "Incentive Plan") was originally
adopted by the Board of Directors in January 1993 and approved by the Company's
stockholders on May 26, 1993. The Incentive Plan, as amended, currently
authorizes the issuance until January 2003 of options covering up to an
aggregate of 480,000 shares of Common Stock (subject to anti-dilution and
similar adjustments). As of April 9, 1999, options for an aggregate of 189,811
shares of Common Stock, at per share exercise prices ranging from $.28125 to
$1.375, were outstanding under the Incentive Plan and 154,612 shares of Common
Stock were available for the grant of future options under the Incentive Plan.
All key employees of the Company and its affiliates, as well as
Non-Employee Directors of the Company and its affiliates and certain
consultants, advisors and other persons who provide services to the Company and
its affiliates are eligible to participate in the Incentive Plan. The Incentive
Plan is intended to provide incentive to continued employment or association and
dedication of such persons by enabling them to acquire a proprietary interest in
the Company, and by offering comparable incentives to enable the Company to
better attract, compete for and retain highly qualified employees and advisors.
7
<PAGE>
Options granted under the Incentive Plan may be either "Incentive Stock
Options", as that term is defined in Section 422 of the Internal Revenue Code of
1986 (the "Code"), or options which do not qualify as Incentive Stock Options
("Non-Qualified Stock Options"). An Incentive Stock Option must expire within
ten years from the date it is granted (five years in the case of such options
granted to a holder of more than 10% of the outstanding Common Stock). The
exercise price of an Incentive Stock Option must be at least equal to the fair
market value of the Common Stock on the date such Incentive Stock Option is
granted and must be paid in cash, a cash equivalent, shares of Common Stock or
any other consideration acceptable to the Board of Directors or the Compensation
Committee which administers the Incentive Plan. To the extent the aggregate fair
market value of Incentive Stock Options that are exercisable for the first time
by an optionee during any calendar year exceeds $100,000, such options will be
treated as Non-Qualified Stock Options. The exercise price of Non-Qualified
Stock Options is not limited and may be below fair market value.
Incentive Stock Options terminate three months (one year if termination
is by reason of death or disability) after the optionee's relationship with the
Company or its affiliate is terminated without cause. In the case of
Non-Qualified Stock Options, such options terminate as determined by the Board
of Directors or the Compensation Committee, and as set forth in the option
agreement between the Company and the optionee.
Options granted under the Incentive Plan are not transferable by an
optionee (unless allowed by the Board of Directors or the Compensation
Committee) otherwise than by will or the laws of descent and distribution, and
are exercisable during the holder's lifetime only by the holder.
The Board of Directors, with respect to shares of Common Stock not then
subject to options, may amend or terminate the Incentive Plan at any time or
from time to time, without the approval of the stockholders, except as otherwise
required by (i) the Code, (ii) the laws of the State of Nevada (the Company's
jurisdiction of incorporation), and (iii) the Exchange Act or the rules
promulgated thereunder.
STOCK OPTIONS GRANTED IN FISCAL 1998
The following table sets forth information concerning individual grants
of stock options made during Fiscal 1998 to each executive officer listed in the
Summary Compensation table. The Company did not grant any stock appreciation
rights during Fiscal 1998.
<TABLE>
<CAPTION>
Number of Securities % of Total
Underlying Options Options Granted to Exercise
Granted (#) Employees in Price Expiration
Name -------------------- Fiscal Year (Per Share) Date
- ---- --------------- ----------- ----
<S> <C> <C> <C> <C> <C>
Gerard F. Murphy 6,000 24.3% $1.01 3/6/2003
James H. Halpin 3,000 12.1% $ .92 3/6/2008
</TABLE>
The foregoing options were granted by the Compensation Committee on
March 6, 1998 pursuant to the Incentive Plan, when the fair market value of the
Common Stock was $.92 per share. All of the foregoing options become exercisable
as to one-third of the shares included in the grant on each anniversary of the
grant. The right to purchase shares of Common Stock pursuant to such options is
cumulative, and the optionee may exercise his right to purchase shares of Common
Stock at any time and from time to time after the option becomes exercisable and
prior to the expiration or termination of the option. In the event of the
termination of the optionee's employment, the optionee's option may be exercised
by the optionee or the optionee's legal representative, to the extent that the
option has not expired, within three months (one year in the case of termination
as a result of disability or death) from the date of the optionee's termination
of employment.
8
<PAGE>
STOCK OPTIONS HELD AT END OF FISCAL 1998
The following table indicates the total number of exercisable and
unexercisable stock options held by each executive officer named in the Summary
Compensation table as of December 31, 1998. Mr. Murphy exercised options to
purchase 18,816 shares of Common Stock on September 13, 1998. No other options
to purchase Common Stock were exercised during Fiscal 1998 by the named
executive officers and no stock appreciation rights were outstanding during
Fiscal 1998.
<TABLE>
<CAPTION>
Number of Shares of Common Stock Value of Unexercised
Underlying Unexercised In-the-money Options At
Options At December 31, 1998 December 31, 1998 (1)
---------------------------- ---------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Gerard F. Murphy 5,583 8,792 $ 0 $ 0
James H. Halpin 23,604 7,894 $12,727 $811
</TABLE>
- -------------------------
(1) On December 31, 1998, the average of the high bid and low asked prices
of the Common Stock was $.9375 per share. On April 1, 1999, based upon
the average of the high bid and low asked price of the Common Stock on
such date ($.8126 per share), the value of in-the-money securities
underlying the unexercised options referred to in the table held by
Messrs. Murphy and Halpin was $0 and $10,511, respectively.
DIRECTOR STOCK PLAN
The 1995 Director Stock Plan (the "Director Stock Plan") was adopted by
the Board of Directors in September 1995 and approved by the Company's
stockholders on October 25, 1995. The Director Stock Plan has been designed to
help the Company attract and retain as directors of the Company and its
subsidiaries persons of outstanding ability and potential. The Company has
reserved 150,000 shares of Common Stock for issuance of awards under the
Director Stock Plan (subject to anti-dilution and similar adjustments). No
options may be granted under the Director Stock Plan on or after October 31,
2005. As of April 9, 1999, options for an aggregate of 60,000 shares of Common
Stock, at a per share exercise price ranging from $.8281 to $.9531, were
outstanding under the Director Stock Plan and 90,000 shares of Common Stock were
available for the future grants under the Director Stock Plan.
The Director Stock Plan provides for each Non-Employee Director to
receive an award of 10,000 shares of Common Stock upon first being elected to
the Board of Directors by the stockholders and a grant of 10,000 Non-Qualified
Stock Options immediately following such person's reelection to the Board at
each annual meeting of the stockholders.
The Director Stock Plan is administered by the Board of Directors and
is intended to satisfy the provisions of Rule 16b-3 under the Exchange Act. The
Board of Directors, subject to and not inconsistent with the express provisions
of the Director Plan, administers and interprets the Director Stock Plan and
adopts rules and regulations related thereto.
Generally, each option granted under the Director Stock Plan may be
exercised for a period of up to ten years from the date of grant. Options are
granted with an option price equal to the "Fair Market Value" (as defined in the
Director Stock Plan) of the Common Stock on the date of grant. The option price
is required to be paid in full in cash or its equivalent at the time the option
is exercised. Options granted under the Director Stock Plan are
9
<PAGE>
exercisable as to 33-1/3% of the shares subject thereto on the date of grant and
become exercisable as to an additional 33-1/3% of the shares subject thereto on
each of the first and second anniversaries of such date of grant if the
Non-Employee Director continues to be a Non-Employee Director. An option granted
to a Non-Employee Director may not be exercised by such grantee unless the
grantee has remained continuously in service as a director since the date of
grant of such option. In the event that service of a Non-Employee Director as a
director is terminated other than by reason of death, "Disability" or
"Retirement" (each as defined in the Director Stock Plan), all options held by
such Non-Employee Director may be exercised within six months after such
cessation to the extent such options are then exercisable; provided, however,
that if the termination of such Non-Employee Director's service was for "Cause"
(as defined in the Director Stock Plan), all options held by such Non-Employee
Director terminate immediately. In the event that the Non-Employee Director
ceases to be a director by reason of death, Disability or Retirement, or if the
Non-Employee Director dies within three months after such termination of service
other than for Cause, all options held by such Non-Employee Director, to the
extent such options are then exercisable, remain exercisable for two years after
the date of such death, Disability or Retirement. The Director Stock Plan also
provides for acceleration of the exercisability of options in the event of a
"Change in Control" (as defined in the Director Stock Plan).
The Board of Directors, at any time and from time to time, may suspend,
terminate, modify or amend the Director Stock Plan; provided however, that the
Director Stock Plan may not be amended without stockholder approval to the
extent that such approval is required (i) for the Director Stock Plan to meet
the requirements of Rule 16b-3 under the Exchange Act, or (ii) by any other
provision of applicable law. In addition, no such change may adversely affect
any option previously granted, except with the written consent of the grantee.
LONG TERM INCENTIVE PLANS
The Company has a discretionary non-contributory Profit Sharing Plan,
the Trustees of which are the Company's directors. All of the Company's
full-time employees who have attained the age of 21 and have completed one year
of continuous service with the Company, subject to certain requirements, are
eligible to participate in the plan. Pursuant to the plan, the Company may make
annual cash contributions, limited to 15% of the salaries of participating
employees, if the Board of Directors of the Company determines that the
Company's profits warrant such a contribution. Contributions made by the Company
are allocated to participating employees in proportion to their compensation.
Effective January 1, 1998, the Company adopted provisions under the plan to
provide a 401k feature, pursuant to which the Company will match 25% of the
participant's contribution up to 6% of the participant's compensation. Employee
contributions to the 401k feature, which are voluntary, can range up to 20% of
compensation. A participant's right to the Company's contributions to the plan
become 20% vested after two full years of service and 20% vested for each full
year of service thereafter, except that a participant who is not fully vested
becomes fully vested upon death, total disability, the termination of the plan
or retirement at age 65. The following table shows, for Fiscal 1998, the amounts
allocated under the plan to each executive officer listed in the Summary
Compensation table. Previously accrued awards under the plan are shown in the
Summary Compensation table under "LTIP Payouts".
<TABLE>
<CAPTION>
Long-term Incentive Plans-awards in Fiscal 1998
-----------------------------------------------
Dollar Amount
Name Allocated for 1998 Period Until Maturation(1) Future Payout
- ---- ------------------ ----------------------- -------------
<S> <C> <C> <C>
Gerard F. Murphy $2,375 -- (2)
James H. Halpin $2,375 -- (2)
</TABLE>
- -------------------------
(1) Each of the named individuals is fully vested in contributions made to
him under the plan.
(2) It is impossible to estimate the benefits that any participant may be
entitled to under the plan upon retirement or death, since the amount
of such benefits will be dependent upon, among other things, future
10
<PAGE>
profits and contributions by the Company, future net income earned by
the trust to which contributions are deposited and forfeitures of
non-fully vested participants on future termination of employment.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Other than the Incentive Plan and the Profit Sharing Plan, the Company
does not have any program providing compensation to its executive officers which
is intended to serve as an incentive for performance to occur over a period
longer than one fiscal year. The incentive stock options granted to Messrs.
Murphy and Halpin provide that if their respective employments are terminated,
for any reason other than death or retirement, their options only may be
exercised, to the extent not expired, within three months (one year in the case
of termination as a result of disability or death) from the date of termination
of employment.
Mr. Murphy is employed under an employment agreement entered into in
1996 which currently expires on December 31, 1999 and provides for a minimum
annual salary of $152,000. Under his employment agreement, Mr. Murphy receives
the use of a luxury size automobile, at the Company's expense, and reimburses
the Company (currently at the rate of $.11 per mile) for non-business use of
such automobile.
Pursuant to a written arrangement with Mr. Halpin, effective January 1,
1995, Mr. Halpin was receiving an annual base salary of $73,000 plus a 5%
commission on sales to certain specified accounts and a 0.5% commission on all
other sales by the Company. Mr. Halpin's employment arrangement was modified,
effective January 1, 1999, to increase his base salary to $125,000 and for a
commission of 1% of all sales by IEI and 0.7% on all other sales by the Company.
In addition, Mr. Halpin was granted an incentive stock option under the
Incentive Plan to acquire up to 50,000 shares of Common Stock, subject to the
Company achieving certain performance objectives in 1999.
Pursuant to the Director Stock Plan, which covers each Non-Employee
Director of the Company, all options granted thereunder become immediately
exercisable in the event of a "Change in Control" (as defined in the Director
Stock Plan). See "DIRECTOR STOCK PLAN".
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1997, the Company engaged A. Paul Cox, Jr., a director of the
Company, as a consultant and paid Mr. Cox an aggregate of $14,792 in fees and
expenses pursuant to this arrangement.
On April 1, 1999, the Company made a $40,000 loan to Fred Den, a
director of the Company, repayable on March 15, 2000 with interest at 9% per
annum. The loan is secured by 100,000 shares of Common Stock owned by Mr. Den.
SELECTION OF INDEPENDENT AUDITORS
(ITEM 2 ON THE PROXY CARD)
The Board of Directors has selected, subject to ratification by the
stockholders, the firm of Deloitte & Touche LLP as the independent auditors to
audit the Company's financial statements for its fiscal year ending December 31,
1999. Deloitte & Touche LLP currently is, and for more than the Company's last
two fiscal years has been, the Company's independent auditors. Since the
beginning of such two fiscal year period, (i) Deloitte & Touche LLP has not
expressed reliance, in its audit report, on the audit services of any other
accounting firm, and (ii) there have been no reported disagreements between the
Company and Deloitte & Touche LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure.
A representative of Deloitte & Touche LLP is expected to be present at
the Annual Meeting, will have
11
<PAGE>
the opportunity to make a statement if such representative desires to do so, and
will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely upon a review of Forms 3, 4 and 5 filed with the
Securities and Exchange Commission and the Company under the Exchange Act, and
upon a review of other information received by the Company, except as provided
below, no person who at any time during 1998 was a director, executive officer
or beneficial owner of more than 10% of the Company's outstanding Common Stock
failed to file, on a timely basis since January 1, 1998, reports required by
Section 16(a) of the Exchange Act.
In March 1998, Gerard F. Murphy, Joseph M. Burke and James H. Halpin
were granted incentive stock options to acquire 6,000 shares, 2,700 shares and
3,000 shares of Common Stock, respectively, pursuant to the Incentive Plan;
however, each of them inadvertently neglected to timely file a Form 5 for his
respective option grant. Additionally, Mr. Murphy failed to timely file a Form 4
in connection with his exercise of incentive stock options to acquire 18,816
shares of Common Stock in September 1998. Such inadvertent failures to report
these transactions were corrected by each individual by the filing of a Form 4
in April 1999.
STOCKHOLDERS' PROPOSALS FOR THE 2000 ANNUAL MEETING
The Company intends to hold the 2000 annual meeting of stockholders of
the Company during or about the first week of June 2000. Stockholder proposals
for the 2000 annual meeting of stockholders must be received by the Company a
reasonable time before the solicitation is made with respect to the 2000 annual
meeting of stockholders for the proposal to be considered for inclusion in the
proxy statement for such meeting. Any proposal received after January 29, 2000
may be considered not to have been timely received. Such proposal must also meet
the other requirements of the Securities and Exchange Commission relating to
stockholder proposals required to be included in the Company's proxy statement.
OTHER MATTERS
The Board of Directors does not know of any other business to be
presented for consideration at the Annual Meeting. If other matters properly
come before the Annual Meeting, the persons named in the accompanying form of
proxy intend to vote thereon in accordance with their best judgment.
12
<PAGE>
The Company will bear the cost of the Annual Meeting and the cost of
soliciting proxies, including the cost of mailing the proxy materials. In
addition to solicitation by mail, directors, officers and regular employees of
the Company (none of whom will be specifically compensated for such services)
may solicit proxies by telephone or otherwise. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries to forward forms
of proxy and proxy materials to their principals and the Company will reimburse
them for their expenses.
By Order of the Board of Directors
----------------------------------
Thomas J. Carey
SECRETARY
April 27, 1999
----------
THE COMPANY WILL FURNISH, WITHOUT CHARGE, TO EACH PERSON WHOSE PROXY IS
BEING SOLICITED, UPON REQUEST, A COPY OF ITS ANNUAL REPORT ON FORM 10-KSB FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1998, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS, NOTES TO THE FINANCIAL
STATEMENTS AND THE FINANCIAL SCHEDULES CONTAINED THEREIN. COPIES OF ANY EXHIBITS
THERETO ALSO WILL BE FURNISHED UPON THE PAYMENT OF A REASONABLE DUPLICATING
CHARGE. REQUESTS FOR COPIES OF ANY SUCH MATERIALS SHOULD BE DIRECTED TO THOMAS
J. CAREY, SECRETARY, ATS MONEY SYSTEMS, INC., 25 ROCKWOOD PLACE, ENGLEWOOD, NEW
JERSEY 07631.
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED FOR
MAILING IN THE UNITED STATES.
13
<PAGE>
ATS MONEY SYSTEMS, INC.
PROXY - ANNUAL MEETING OF STOCKHOLDERS - JUNE 4, 1999
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned stockholder of ATS Money Systems, Inc. hereby
constitutes and appoints Gerard F. Murphy and A. Paul Cox, Jr., and each of
them, the attorneys and proxies of the undersigned, with full power of
substitution, to represent and to vote on behalf of the undersigned all of the
shares of ATS Money Systems, Inc. which the undersigned is entitled to vote at
the Annual Meeting of Stockholders to be held at The Clinton Inn, 145 Dean
Drive, Tenafly, New Jersey 07670, at 5:00 p.m. on Friday, June 4, 1999, and at
any adjournments thereof, upon the following proposals which are more fully
described in the notice of, and proxy statement for, the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS (1) AND (2)
(1) Election of Directors FOR all nominees listed below (except [ ]
as marked to the contrary below)
WITHHOLD AUTHORITY [ ]
to vote for all nominees
THOMAS J. CAREY, A. PAUL COX, JR., FREDDEN, GERARD F. MURPHY
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
------------------------------
(2) Proposal to ratify the selection of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending December 31,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
EACH OF THE FOREGOING MATTERS HAS BEEN PROPOSED BY THE COMPANY AND IS
INDEPENDENT AND NOT CONDITIONED ON THE APPROVAL OF ANY OTHER MATTER.
(3) In their discretion, upon such other matters as properly may come
before the Annual Meeting.
(Continued and to be signed on reverse side.)
<PAGE>
Said attorneys and proxies, or their substitutes (or if only one, that
one) at the Annual Meeting, and any adjournments thereof, may exercise all of
the powers hereby given. Any proxy heretofore given is hereby revoked.
Receipt is acknowledged of the Notice of Annual Meeting of
Stockholders, the Proxy Statement accompanying said Notice and the Annual Report
to Stockholders for the fiscal year ended December 31, 1998.
THIS PROXY, 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).
IN WITNESS WHEREOF, the undersigned has signed this proxy.
Dated:__________________________, 1999
-------------------------------------
Stockholder(s) signature
-------------------------------------
Stockholder(s) signature
NOTE: Signature(s) of stockholder(s)
should correspond exactly with the
name(s) shown hereon. If shares are
held jointly, both holders should sign.
Attorneys, executors, administrators,
trustees, guardians or others signing
in a representative capacity should
give their full titles. Proxies
executed in the name of a corporation
should be signed on behalf of the
corporation by its president or other
authorized officer.
I DO [ ] DO NOT [ ] EXPECT TO ATTEND THE ANNUAL MEETING.
NOTE: This proxy, properly filled in, dated and signed, should be returned
promptly in the enclosed envelope.
