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
GAME FINANCIAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(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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3) Filing Party:
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4) Date Filed:
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GAME FINANCIAL CORPORATION
13705 First Avenue North
Plymouth, Minnesota 55441-6114
(612) 476-8500
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1997
-------------------------------------
TO THE SHAREHOLDERS OF
GAME FINANCIAL CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Game
Financial Corporation, a Minnesota corporation (the "Company"), will be held on
Thursday, May 8, 1997, at 3:30 p.m. (Central Daylight Time), at the Radisson
Hotel, Ballroom East, 35 South Seventh Street, Minneapolis, Minnesota, for the
following purposes:
1. To elect four directors to the Company's Board of Directors for the
coming year.
2. To consider and act upon a proposal to amend the Game Financial
Corporation 1994 Stock Option and Incentive Plan to increase the
number of shares reserved for issuance under the Plan and provide for
automatic grants of stock options to non-employee directors.
3. To ratify the appointment of Ernst & Young, LLP, as independent
auditors for the fiscal year ending December 31, 1997.
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only holders of record of the Company's common stock at the close of
business on April 2, 1997, are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof.
Each of you is invited to attend the Annual Meeting in person if possible.
Whether or not you plan to attend in person, please mark, date and sign the
enclosed proxy, and mail it promptly. A return envelope is enclosed for your
convenience.
By Order of the Board of Directors
/s/ Gary A. Dachis
Gary A. Dachis
PRESIDENT AND CHIEF EXECUTIVE OFFICER
April 8, 1997
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WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING,
PLEASE SIGN THE PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
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GAME FINANCIAL CORPORATION
13705 First Avenue North
Plymouth, Minnesota 55441-6114
(612) 476-8500
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PROXY STATEMENT
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SOLICITATION OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Game Financial Corporation, a Minnesota corporation (the "Company"), for use
at the Annual Meeting of Shareholders ("Annual Meeting") to be held on May 8,
1997, and any adjournment thereof. This Proxy Statement and the accompanying
form of proxy are being mailed to shareholders on or about April 8, 1997.
The expense of the solicitation of proxies for the Annual Meeting,
including the cost of mailing, has been or will be borne by the Company.
Arrangements will be made with brokerage houses and other custodian nominees and
fiduciaries to send proxies and proxy materials to their principals, and the
Company will reimburse them for their expense in so doing. In addition to
solicitation by mail, proxies may be solicited by telephone, telegraph or
personally.
VOTING AND REVOCATION OF PROXY
Only holders of record of the Company's common stock at the close of
business on April 2, 1997, the record date for the Annual Meeting, are entitled
to notice of and to vote at the Annual Meeting. On the record date, 4,520,742
shares of the Company's common stock were outstanding. Each share of common
stock entitles the holder thereof to one vote upon each matter to be presented
at the Annual Meeting.
Each proxy returned to the Company will be voted in accordance with the
instructions indicated thereon. If no instructions are indicated, the shares
will be voted (i) FOR the election of the nominees for the Board of Directors
named in this Proxy Statement; (ii) FOR the approval of an amendment to the Game
Financial Corporation 1994 Stock Option and Incentive Plan to increase the
number of shares reserved for issuance under the Plan and provide for automatic
grants of stock options to non-employee directors; and (iii) FOR the
ratification of the appointment of Ernst & Young, LLP, as independent auditors
for the fiscal year ending December 31, 1997. While the Board of Directors knows
of no other matters to be presented at the Annual Meeting or any adjournment
thereof, all proxies returned to the Company will be voted on any such matter in
accordance with the judgment of the proxy holders.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (a) giving
written notice of such revocation to the Secretary of the Company, (b) giving
another written proxy bearing a later date, or (c) attending the Annual Meeting
and voting in person (although attendance at the Annual Meeting will not in and
of itself constitute a revocation of a proxy).
A quorum, consisting of a majority of the shares of common stock entitled
to vote at the Annual Meeting, must be present in person or by proxy before
action may be taken at the Annual Meeting. If an executed proxy is returned and
the shareholder has abstained from voting on any matter, the shares represented
by such proxy will be considered present at the meeting for purposes of
determining a quorum and for purposes of calculating the vote on the matter, but
will not be considered to have been voted in favor of such matter. If a proxy is
returned by a broker holding shares in "street name" which indicates that the
broker does not have discretionary authority as to certain shares to vote on one
or more matters, such shares will be considered present at the meeting for
purposes of determining a quorum, but will not be considered to be represented
at the meeting for purposes of calculating the vote with respect to such matter.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The business and affairs of the Company are managed under the direction of
its Board of Directors. Each director is elected for a term of one year or until
his or her successor is elected.
Shareholders will be asked at the Annual Meeting to elect four directors.
The Board has nominated the four individuals named below to serve as directors
of the Company. Unless authority is withheld, all proxies received in response
to this solicitation will be voted FOR the election of the nominees named below.
Each of the nominees named below is now a director of the Company and has served
continuously as a director since the year indicated. Such nominees collectively
comprise the entire Board. All nominees have indicated a willingness to serve if
elected. If any nominee becomes unable to serve prior to the Annual Meeting, the
proxies received in response to this solicitation will be voted for a
replacement nominee selected in accordance with the best judgment of the proxy
holders named therein.
<TABLE>
<CAPTION>
DIRECTOR
NAME POSITIONS WITH THE COMPANY AGE SINCE
- ---- -------------------------- --- --------
<S> <C> <C> <C>
Gary A. Dachis President, Chief Executive Officer, 52 1990
Secretary, Treasurer and Director
Tom Grossman Director 52 1997
Paul H. Ravich Director 57 1994
Stephen P. Weisbrod Vice President, Information Systems 56 1994
and Development and Director
</TABLE>
SHAREHOLDER APPROVAL
The affirmative vote of a plurality of the shares of common stock of the
Company represented at the Annual Meeting either in person or by proxy, assuming
a quorum is present, is required for the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS AS SET FORTH IN PROPOSAL 1.
INFORMATION CONCERNING DIRECTORS,
NOMINEES AND EXECUTIVE OFFICERS
DIRECTORS AND NOMINEES
All of the nominees for election to the Company's Board of Directors are
presently serving as directors of the Company. The following discussion sets
forth certain information concerning the directors and nominees of the Company.
GARY A. DACHIS is the founder of the Company and has been the President,
Chief Executive Officer, Secretary, Treasurer and a director of the Company
since its inception in 1990. Since 1984, Mr. Dachis has been the President of
The Company, which provides check cashing and related services in locations
other than gaming facilities. See "Information Concerning Directors, Nominees
and Executive Officers -- Certain Transactions."
TOM GROSSMAN has been a director of the Company since February 1997. Mr.
Grossman has owned and operated five automobile dealerships and related entities
in the Minneapolis and Saint Paul, Minnesota, metropolitan area since 1972.
PAUL H. RAVICH has been a director of the Company since February 1994. Mr.
Ravich has been an attorney in private practice since 1966. He has been a
principal in the law firm of Ravich, Meyer, Wilson, Kirkman, McGrath & Nauman,
P.A., Minneapolis, Minnesota, since 1991. From 1985 to 1991, Mr. Ravich was a
partner in the law firm of Robins, Kaplan, Miller & Ciresi, Minneapolis,
Minnesota.
STEPHEN P. WEISBROD has been Vice President, Information Systems and
Development, and a director of the Company since February 1994. Mr. Weisbrod was
an independent computer systems consultant from 1989 to February 1994, and
provided software development services to the Company as an independent
contractor from 1990 to 1994. Mr. Weisbrod also served as President of Coda
Music Technology, a music software development company, from January 1993 to
February 1994.
Directors of the Company are elected annually to serve until the next
annual meeting of shareholders or until their successors are duly elected. The
Company knows of no arrangements or understandings between any director or
nominee and any other person pursuant to which he has been selected as a
director or nominee.
BOARD COMMITTEES, ACTIONS AND COMPENSATION
During calendar year 1996, the Board of Directors met four times. The Board
of Directors has two standing committees, a Compensation Committee and an Audit
Committee, each of which met once during 1996. Each director attended at least
75% of the total number of meetings of the Board and of committees on which the
director served.
The Compensation Committee reviews and makes recommendations to the Board
of Directors regarding salaries, compensation and benefits of executive officers
and senior management of the Company and administers the Game Financial
Corporation 1994 Stock Option and Incentive Plan. The members of the
Compensation Committee are Mr. Grossman and Mr. Ravich.
The Audit Committee reviews the internal and external financial reporting
of the Company and reviews the scope of the independent audit. The members of
the Audit Committee are Mr. Grossman and Mr. Ravich.
The Board of Directors does not have a nominating committee.
Non-employee directors of the Company currently receive an annual fee of
$3,000 plus a fee of $500 per meeting for their service as directors.
Non-employee directors of the Company also receive stock options in connection
with their service as directors. See "Information Concerning Directors, Nominees
and Executive Officers -- Stock Options" and "Approval of Amendments to 1994
Stock Option and Incentive Plan (Proposal 2)."
EXECUTIVE OFFICERS
The following discussion sets forth information about the executive
officers of the Company who are not directors.
<TABLE>
<CAPTION>
OFFICER
NAME POSITIONS WITH THE COMPANY AGE SINCE
- ---- -------------------------- --- -----
<S> <C> <C> <C>
Deanna Frederichs-Moose Vice President, Operations 34 1990
Louis A. Dachis Vice President, National Sales 27 1996
Jeffrey L. Ringer Vice President and Chief Financial 34 1995
Officer
</TABLE>
DEANNA FREDERICHS-MOOSE has been Vice President, Operations of the Company
since December 1990. From 1987 to December 1990, Ms. Frederichs-Moose was
employed by The Company as Vice President of Operations.
LOUIS A. DACHIS has been Vice President, Marketing of the Company since
February 1996. Louis Dachis served as Director of Marketing of the Company from
1994 to 1996, and from 1990 to 1993 worked as a freelance artist, providing
creative design services to various commercial and television production
companies. Louis Dachis is the son of Gary A. Dachis.
JEFFREY L. RINGER has been Vice President, Finance and Chief Financial
Officer of the Company since September 1995. Mr. Ringer served as Vice President
of Argosy Electronics, Inc., a privately-held manufacturing company, from 1989
to 1995, and as an auditor for Arthur Andersen & Co. from 1985 to 1989.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
earned by or awarded to Mr. Gary A. Dachis and Mr. Stephen P. Weisbrod for the
fiscal years ended December 31, 1996, 1995 and 1994. No other executive officers
received total salary and bonus compensation in excess of $100,000 for such
years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
AWARDS
OTHER ANNUAL ------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION OPTIONS(#) COMPENSATION
- --------------------------- ---- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Gary A. Dachis 1996 $ 192,000 $ 6,000 -- $ 30,000(1)
(President, Chief Executive Officer, 1995 180,000 -- -- 30,000(1)
Treasurer and Secretary) 1994 180,000 -- -- 10,680(1)
Stephen P. Weisbrod 1996 $ 158,000 $ 5,000 -- $ 9,000(1)
(Vice President, Information Systems 1995 125,000 -- -- 1,875(1)
and Development) 1994 93,100(2) 19,700(2) 117,188 --
</TABLE>
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(1) Represents the Company's contribution under its Profit Sharing and Savings
Plan.
(2) Mr. Weisbrod became an executive officer of the Company March 1994, and
served as a consultant to the Company during January and February 1994. The
amount set forth under "Salary" represents compensation for the period from
March to December 1994. Amounts set forth under "Other Annual Compensation"
represent consulting fees paid to Mr. Weisbrod for January and February
1994.
The Company does not currently maintain a bonus plan for the compensation
of executive officers. The Company provides a vehicle to Mr. Gary A. Dachis for
business purposes which is used by Mr. Dachis and other employees of the
Company.
Mr. Dachis has an employment agreement with the Company which expires in
February 1998 and will automatically renew for successive one year periods,
absent contrary notice from either party. The agreement restricts Mr. Dachis
from competing with the Company in providing cash access services at gaming
locations for a period of three years following the termination of his
employment. Mr. Weisbrod and Ms. Frederichs-Moose have entered into
non-competition agreements with the Company restricting them from competing with
the Company in providing cash access services at gaming locations for a period
of three years following the termination of employment with the Company.
PROFIT SHARING AND SAVINGS PLAN
In 1995, the Company adopted a Profit Sharing and Savings Plan under
section 401(k) of the Internal Revenue Code, under which the Company may, at the
discretion of its Board of Directors, make annual contributions not to exceed
15% of the annual compensation of eligible employees. The plan also allows
employees to make pre-tax contributions. Prior to 1995, the Company made
contributions as an adopting employer under a similar plan originally adopted by
The UnBank Company. The Company made contributions of $68,500, $47,700 and
$21,685 to the plans for 1996, 1995 and 1994, respectively.
STOCK OPTIONS
The Game Financial Corporation 1994 Stock Option and Incentive Plan (the
"Option Plan") permits the granting of awards to employees and directors of the
Company in the form of "incentive stock options" (options meeting the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended),
non-qualified stock options (options which do not meet the requirements of
Section 422), and grants of restricted stock. Awards may be granted in any one
or a combination of these forms. A total of 1,000,000 shares of the Company's
common stock has been reserved for issuance pursuant to awards under the Option
Plan, of which 726,563 shares have previously been approved by the shareholders.
On February 18, 1997, the Board of Directors adopted amendments to the Option
Plan to increase the number of shares reserved for issuance under the Option
Plan to 1,000,000 shares and to provide for automatic grants of stock options to
non-employee directors. The shareholders are being asked to approve these
amendments at the Annual Meeting. See "Approval of Amendments to 1994 Stock
Option and Incentive Plan (Proposal 2)." At April 2, 1997, options for an
aggregate of 380,543 shares were outstanding under the Option Plan, and 562,612
shares were available for grant, assuming the amendments to the Option Plan are
approved.
The Option Plan is administered by the Compensation Committee of the Board
of Directors of the Company. The Option Plan gives broad powers to the Committee
to administer and interpret the Option Plan, including the authority to select
the individuals to be granted awards and to prescribe the particular form and
conditions of each award granted. Awards may be granted under the Option Plan
through February 2004. The Option Plan may be terminated earlier by the Board of
Directors in its sole discretion.
The following table sets forth certain information regarding the number and
value of unexercised stock options held by the executive officers named in the
Summary Compensation Table as of the end of the Company's 1996 fiscal year.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
NAME SHARES OPTIONS AT YEAR-END(#) AT YEAR-END($)(1)
- ----- ACQUIRED VALUE ------------------------ -------------------------
ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Gary A. Dachis -- -- -- /-- -- /--
Stephen P. Weisbrod -- -- 45,314 / 46,874 $236,539 / $244,682
</TABLE>
- ---------------------
(1) Based on the difference between the December 31, 1996 closing price of
$7.50 per share as reported on The Nasdaq National Market and the exercise
price of the options.
The Company grants non-qualified stock options under the Option Plan to its
directors who are not employees of the Company. In 1994, Paul H. Ravich was
granted an option for 23,438 shares. At the date of the 1997 Annual Meeting, Mr.
Ravich and Tom Grossman will each be granted an option for 25,000 shares. Each
of the options has an exercise price equal to the fair market value of the
common stock at the date of grant, vests with respect to one-third of the option
shares on each of the first, second and third anniversaries of the date of
grant, and expires ten years from the date of grant. See "Approval of Amendments
to 1994 Stock Option and Incentive Plan (Proposal 2)."
CERTAIN TRANSACTIONS
The Company, of which Mr. Gary A. Dachis is President and part owner, is
engaged in the check cashing business at a variety of non-casino locations
throughout the Twin Cities area. Because the Company offers check-cashing
services only in gaming venues, the Company does not believe that the business
of The Company presents any conflicts of interest in connection with the
Company's present or future business opportunities.
Mr. Paul H. Ravich is a principal in the law firm of Ravich, Meyer, Wilson,
Kirkman, McGrath & Nauman, P.A., which provides legal services to the Company.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth, as of April 2, 1997, certain information
regarding the beneficial ownership of shares of common stock of the Company by
(i) each person or entity who is known by the Company to own more than 5% of the
Company's common stock, (ii) each director or nominee for director of the
Company, (iii) each executive officer named in the Summary Compensation Table,
and (iv) all directors, nominees and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OUTSTANDING(2)
- ------------------------------------ --------------------- --------------
<S> <C> <C>
Bruce Dachis 703,120(3) 15.6%
13705 First Avenue North
Plymouth, MN 55441-6114
DIRECTORS AND EXECUTIVE OFFICERS
Gary A. Dachis 2,050,070 45.4%
13705 First Avenue North
Plymouth, MN 55441-6114
Paul H. Ravich 46,876(4) 1.0%
4545 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Stephen P. Weisbrod 67,314(4) 1.5%
13705 First Avenue North
Plymouth, MN 55441-6114
Tom Grossman -- *
7625 Metro Boulevard, Suite 300
Edina, MN 55439
All directors and executive officers as a group
(7 persons, including those named above) 2,208,136(3)(4) 47.8%
</TABLE>
- -----------------------
* Less than one percent.
(1) Each person has sole voting and sole dispositive power with respect to all
outstanding shares, except as noted.
(2) Based on 4,520,742 shares outstanding. Does not include 1,000,000 shares of
Common Stock reserved for issuance under the Game Financial Corporation
1994 Stock Option and Incentive Plan (under which options for 380,543
shares of Common Stock were outstanding at April 2, 1997). Each figure
showing the percentage of outstanding shares owned beneficially has been
calculated by treating as outstanding and owned the shares which could be
purchased by the indicated person(s) within 60 days upon the exercise of
existing stock options.
(3) Such shares are held by Bruce Dachis as sole trustee of two irrevocable
trusts for the benefit Mr. Gary A. Dachis' two children, with respect to
which Bruce Dachis has sole investment and dispositive powers. Mr. Gary A.
Dachis has no investment or dispositive powers with respect to such shares
and disclaims beneficial ownership of such shares.
(4) Includes shares subject to stock options that are exercisable within 60
days, as follows: Mr. Ravich, 23,438 shares; Mr. Weisbrod, 47,314 shares;
and all directors and executive officers as a group, 95,440 shares.
COMPLIANCE WITH SECTION 16(a)
The Company's directors, executive officers, and any persons holding more
than 10% of the outstanding common stock are required to file reports concerning
their initial ownership of common stock and any subsequent changes in that
ownership. The Company believes that during the fiscal year ended December 31,
1996, the filing requirements were satisfied by each such person. In making this
disclosure, the Company has relied solely on written representations of its
directors, executive officers and beneficial owners of more than 10% of the
outstanding common stock and copies of the reports that they have filed with the
Securities and Exchange Commission.
APPROVAL OF AMENDMENTS TO
1994 STOCK OPTION AND INCENTIVE PLAN
(PROPOSAL 2)
The Game Financial Corporation 1994 Stock Option and Incentive Plan
("Option Plan") is intended to assist the Company in hiring and retaining
well-qualified employees and directors by allowing them to participate in the
ownership and growth of the Company through the grant of incentive and
non-statutory stock options ("Options"), awards of restricted stock or any
combination thereof. Management believes that the granting of Options and
restricted stock awards will serve as an additional inducement to well-qualified
employees and directors to remain in the service of the Company and provide them
with an increased incentive to work for the Company's success.
The proposed amendments and the principal features and effects of the
Option Plan are discussed below.
PROPOSED AMENDMENTS
INCREASE IN NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER OPTION PLAN. The
Option Plan was adopted by the Board of Directors and approved by the
shareholders of the Company in 1994. An aggregate of 726,563 shares have
previously been reserved for issuance under the Option Plan. Effective February
18, 1997, the Board of Directors increased the number of shares reserved for
issuance under the Option Plan to 1,000,000 shares, subject to the approval of
the Company's shareholders on or before February 18, 1998. The shareholders are
being asked to approve the additional shares at the Annual Meeting.
AUTOMATIC GRANTS OF STOCK OPTIONS TO NON-EMPLOYEE DIRECTORS. The Option
Plan has been amended to provide for the automatic grant of stock options to
persons elected to serve as non-employee directors of the Company. If the
shareholders approve the amendments to the Option Plan, options will be granted
to each person elected to serve as a non-employee director of the Company at the
1997 Annual Meeting (i.e., Mr. Ravich and Mr. Grossman). If, subsequent to the
1997 Annual Meeting, the Company elects additional non-employee directors, each
such person will, on the date of his or her initial election, automatically be
granted a stock option. Each person who continues to serve as a non-employee
director of the Company will, on the date of every third subsequent Annual
Meeting at which such person is reelected as a director automatically be granted
an additional stock option. Each such option will entitle the director to
purchase 25,000 shares of Common Stock, will have an exercise price equal to the
fair market value of the Common Stock at the date of grant, will vest with
respect to one-third of the shares on each of the first, second and third
anniversaries of the date of grant, and will expire ten years after the date of
grant. If the person ceases to serve as a director of the Company, the option
shall continue to be exercisable for the remainder of its term with respect to
the number of shares vested at the date of such termination of service.
ADMINISTRATION
The Option Plan is administered by the Compensation Committee of the Board
of Directors, which selects the employees and directors who will be granted
Options and restricted stock awards under the Option Plan. Subject to the
provisions of the Option Plan, the Compensation Committee also determines the
type, amount, size and terms of Options and restricted stock awards; the time
when Options and awards should be granted; whether any restrictions should be
placed on shares purchased pursuant to any Option or issued pursuant to any
restricted stock award; and all other determinations necessary or advisable for
the administration of the Option Plan. The determinations by the Compensation
Committee are final and conclusive. Grants of Options and restricted stock
awards and other decisions of the Compensation Committee are not required to be
made on a uniform basis.
SHARES SUBJECT TO OPTION PLAN
The Option Plan, as amended, provides that the total number of shares of
the Company's common stock that may be purchased pursuant to the exercise of
Options and the grant of restricted stock awards shall not exceed 1,000,000
shares, subject to adjustment as provided in the Option Plan. The shares to be
issued upon the exercise of Options and restricted stock awards granted under
the Option Plan will be currently authorized but unissued shares of common
stock. The number of shares of the Company's common stock available under the
Option Plan, the exercise price of an Option, or the value of a restricted stock
award, may be adjusted by the Compensation Committee in its sole discretion upon
any stock dividend or split, recapitalization, reclassification, combination,
exchange of shares, or other similar corporate change, if the Compensation
Committee determines that such change necessarily or equitably requires such an
adjustment.
ELIGIBILITY
Employees of the Company and any of its "Affiliates" (as such term is
defined in the Option Plan) are eligible for selection to receive Options
qualified as incentive stock options ("ISOs") under Section 422 of the Code.
Employees and directors of the Company or its Affiliates may be granted
non-qualified Options ("NQOs") or restricted stock awards. Approximately 225
persons are eligible for selection to receive awards of Options or restricted
stock under the Option Plan. Options have been granted under the Option Plan to
approximately 145 persons.
The following table sets forth certain information regarding the allocation
of the additional shares under the Option Plan, to the extent such allocation is
presently determinable.
<TABLE>
<CAPTION>
NEW PLAN BENEFITS
OPTIONS EXERCISE EXPIRATION
NAME AND POSITION GRANTED(#) PRICE($/Sh) DATE
- ----------------- ---------- ----------- ----
<S> <C> <C> <C>
Gary A. Dachis, (President and Chief -- -- --
Executive Officer)
Stephen P. Weisbrod (Vice President, 10,000(1) $6.25 03/19/2007
Information Systems and Development)
All current executive officers as a group
(5 persons, including those named above) 40,000(1) $6.25 03/19/2007
Tom Grossman (Director) 25,000(2) (2) 05/08/2007
Paul H. Ravich (Director) 25,000(2) (2) 05/08/2007
All other employees 64,200(3) $6.25 03/19/2007
</TABLE>
- --------------------
(1) Each option granted to the executive officers of the Company will vest and
become exercisable in five equal installments on the date of grant and the
first, second, third and fourth anniversaries of the date of grant, and
will expire ten years after the date of grant.
(2) The Option Plan, as amended, provides for the automatic grant of an option
for 25,000 shares to each non-employee director upon his or her election at
the 1997 Annual Meeting. The exercise price of such options will be equal
to the fair market value of the common stock at the date of grant. Each
option granted to non-employee directors of the Company will vest and
become exercisable in three equal installments on the first, second and
third anniversaries of the date of grant, and will expire ten years after
the date of grant.
(3) Of such options granted to other employees of the Company, options for an
aggregate of 25,200 shares were vested immediately at the date of grant and
options for an aggregate of 39,000 shares will vest and become exercisable
in five equal installments on the date of grant and the first, second,
third and fourth anniversaries of the date of grant, and will expire ten
years after the date of grant.
The additional shares which are not currently allocated, together with
shares previously authorized and available for issuance under the Plan, may be
allocated to such employees as the Compensation Committee may determine. At
April 2, 1997, the closing price for the Company's common stock as reported on
The Nasdaq Stock Market was $6.50 per share.
TERMS OF OPTIONS
Upon the grant of an Option, the Compensation Committee fixes the number of
shares of the Company's common stock that the optionee may purchase upon
exercise of the Option and the price at which the shares may be purchased. With
regard to ISOs, the exercise price cannot be less than the "fair market value"
of the common stock at the time the ISO is granted or 110% of such fair market
value in certain cases (as set forth below). NQOs may be granted at less than
the fair market value of the common stock. See "Federal Income Tax
Consequences."
With regard to ISOs only, the aggregate fair market value of common stock
(determined at the time the ISO is granted) subject to ISOs granted to an
employee under all stock option plans of the Company and any Affiliate of the
Company that become exercisable for the first time by such employee during any
calendar year may not exceed $100,000. Furthermore, no ISO may be granted to any
employee who, immediately after the grant of such ISO, would own more than 10%
of the total combined voting power of all classes of the Company's stock unless
such ISO has an exercise price equal to at least 110% of the common stock's fair
market value at the time of grant and the term of the ISO is no longer than five
years.
Each Option will be exercisable by the optionee only during the term fixed
by the Compensation Committee, with such term ending not later than 121 months
after the date of grant (ten years in the case of ISOs). Upon exercise of any
Option, payment for shares as to which the Option is exercised may be made in
cash, in shares of the Company's common stock having an aggregate fair market
value on the date of exercise which is not less than the exercise price of the
Option, or by a combination of cash and such shares, as the Compensation
Committee may determine.
TRANSFERABILITY OF OPTIONS; TERMINATION OF EMPLOYMENT
Options granted under the Option Plan are non-transferable except to the
extent permitted by the agreement evidencing such Option. However, no Option
will be transferable by any optionee other than by will or the laws of descent
and distribution. If, pursuant to the agreement evidencing any Option, such
Option remains exercisable after the optionee's death, it may be exercised to
the extent permitted by such agreement by the personal representative of the
optionee's estate or by any person who acquired the right to exercise such
option by bequest, inheritance, or otherwise, by reason of the optionee's death.
RESTRICTED STOCK AWARDS
Restricted stock awards granted pursuant to the Option Plan entitle the
holder to receive shares of the Company's common stock, which will be subject to
forfeiture to the Company if specified conditions are not satisfied by the end
of a specified period, as determined in each case by the Compensation Committee.
The Compensation Committee is to establish a period (the "Restricted Period") at
the time a restricted stock award is granted during which the holder will not be
permitted to sell, transfer, pledge, encumber, or assign the shares of the
Company common stock subject to the award. During the Restricted Period, the
holder of shares subject to the restricted stock award shall have all of the
rights of a shareholder of the Company with respect to such shares, including
the right to vote the shares and to receive any dividends and other
distributions with respect to the shares. However, any and all stock dividends,
stock rights, and stock issued upon split-ups or reclassifications of shares
subject to restricted stock awards shall be subject to the same restrictions as
the shares with respect to which such stock dividends, rights, or additional
stock are issued. Except to the extent otherwise provided in the restricted
stock agreement governing each restricted stock award, all shares of the Company
common stock then subject to any restriction will be forfeited to the Company
without further obligation of the Company to the holder thereof, and all rights
to the holder with respect to such shares will terminate, if the holder ceases
to provide services to the Company or its Affiliates as an employee, consultant
or other service provider, or if any condition established by the Compensation
Committee for the release of any restriction has not occurred, prior to the
expiration of the Restricted Period. The Compensation Committee may permit a
gift of restricted stock to the holder's spouse, child, stepchild, grandchild,
or legal dependent, or to a trust whose sole beneficiary or beneficiaries is the
holder of the stock, and/or any one or more of such persons. However, the donee
must enter into an agreement with the Company pursuant to which it agrees that
the restricted shares shall be subject to the same restrictions in the hands of
such donee as it was in the hands of the donor.
IMMEDIATE ACCELERATION OF AWARDS
The Option Plan provides that, notwithstanding any other provisions
contained in the Option Plan or the agreement evidencing any Option or
restricted stock award thereunder, the restrictions on all shares of restricted
stock shall lapse immediately, and all outstanding Options will become
exercisable immediately, if any of the following events occur: (i) any person or
group of persons, other than a shareholder of record of the Company on the date
the plan was adopted, becomes a beneficial owner of 30% or more of any equity
security of the Company entitled to vote for the election of directors; (ii) a
change in the composition of the Board of Directors of the Company within any
consecutive two-year period occurs such that the "Continuing Directors" cease to
constitute a majority of the Board (as such term is defined in the Option Plan);
or (iii) the shareholders of the Company approve an agreement to merge or
consolidate with or into another corporation or an agreement to sell or
otherwise dispose of all or substantially all of the Company's assets (including
a plan of liquidation). However, a participant under the Option Plan will not be
entitled to the immediate acceleration of an award as provided above if such
acceleration would, with respect to such participant, constitute a "parachute
payment" for purposes of Section 280G of the Internal Revenue Code of 1986, as
amended, or any successor provision.
TERMINATION AND AMENDMENT
The Option Plan will terminate on the earlier of the date on which the
Option Plan is terminated by the Board of Directors of the Company or February
24, 2004. Options or restricted stock rights outstanding at the termination of
the Option Plan may continue to be exercised in accordance with their terms
after such termination. The Option Plan may be amended at any time by the Board
of Directors. However, without the approval of a majority of the Company's
shareholders voting at a meeting at which a quorum is present, no such amendment
may (i) materially increase the benefits accruing to participants under the
Option Plan; (ii) increase the number of shares available for issuance or sale
pursuant to the Option Plan (other than as permitted in certain circumstances
provided by the Option Plan); or (iii) materially modify the requirements as to
eligibility for participation in the Option Plan, without the affirmative vote
of shareholders holding at least a majority of the voting stock of the Company
represented in person or by proxy at a duly held shareholders' meeting.
FEDERAL INCOME TAX CONSEQUENCES
The following description is a general summary of the current federal
income tax provisions relating to the grant and exercise of ISOs and NQOs under
the Option Plan, the grant of restricted stock awards thereunder, and the sale
of shares of common stock acquired upon exercise of Options or under a
restricted stock award. The provisions summarized below are subject to changes
in federal income tax laws and regulations, and the effects of such provisions
may vary with individual circumstances.
INCENTIVE STOCK OPTIONS
ISOs granted under the Option Plan are intended to be "incentive stock
options" as defined by Section 422 of the Code. Under present law, the recipient
of an ISO will not realize taxable income upon the grant or the exercise of an
ISO; and the Company will not receive an income tax deduction at either such
time. Generally, if an optionee exercises an ISO at any time prior to three
months after termination of the optionee's employment and does not sell the
shares acquired upon exercise of an ISO within either (i) two years after the
grant of the ISO or (ii) one year after the date of exercise of the ISO, the
gain upon a subsequent sale of the shares will be taxed as long-term capital
gain. If the optionee does not satisfy these requirements, the optionee
generally will recognize ordinary income in an amount equal to the difference
between the exercise price paid in connection with exercise of the ISO and the
fair market value of the shares acquired as of the date of exercise of the ISO,
and will recognize capital gain on the difference between the sale price of the
shares and the fair market value of the shares as of the date of exercise. In
such event, the Company would be entitled to a corresponding income tax
deduction equal to the amount recognized as ordinary income by the optionee.
Upon the exercise of an ISO, the excess of the stock's fair market value on
the date of exercise over the exercise price will be included in the optionee's
alternative minimum taxable income ("AMTI") and may result in the imposition of
a tax on such AMTI. Liability for the alternative minimum tax is complex and
depends upon an individual's overall tax situation.
NON-STATUTORY STOCK OPTIONS
Generally, upon the grant of an NQO, neither the Company nor the optionee
will experience any tax consequences. Upon exercise of an NQO granted under the
1994 Option Plan, or upon the exercise of an Option initially intended to be an
ISO that does not qualify for the tax treatment described above, the optionee
will realize ordinary income in an amount equal to the excess of the fair market
value of the shares of common stock received over the exercise price paid by the
optionee with respect to such shares. The amount recognized as ordinary income
by the optionee will increase the optionee's basis in the stock acquired
pursuant to the exercise of the NQO. The Company will be allowed a federal
income tax deduction for the amount recognized as ordinary income by the
optionee upon the optionee's exercise of the NQO. Upon a subsequent sale of the
stock, the optionee will recognize short-term or long-term gain or loss
depending upon the holding period for the stock and upon the stock's subsequent
appreciation or depreciation in value.
RESTRICTED STOCK AWARDS
A participant who receives an award of restricted stock under the Option
Plan generally will recognize ordinary income at the time at which the
restrictions on such shares (the "Restrictions") lapse, in an amount equal to
the excess of (i) the fair market value of such shares at the time the
Restrictions lapse, over (ii) the price, if any, paid for such shares. If the
participant makes an election with respect to such shares under Section 83(b) of
the Internal Revenue Code of 1986, as amended (the "Code"), not later than 30
days after the date shares are transferred to the participant pursuant to such
award, the participant will recognize ordinary income at the time of transfer in
an amount equal to the excess of (i) the fair market value of the shares covered
by the award (determined without regard to any restriction other than a
restriction which by its terms will never lapse) at the time of such transfer
over (ii) the price, if any, paid for such shares.
A participant's tax basis in shares received pursuant to a restricted stock
award granted under the Option Plan will be equal to the sum of the price paid
for such shares, if any, and the amount of ordinary income recognized by such
participant with respect to the transfer of such shares or the lapse of the
Restrictions thereon. The participant's holding period for such shares for
purposes of determining gain or loss on a subsequent sale will begin immediately
after the transfer of such shares to the participant, if a Section 83(b)
election is made with respect to such shares, or immediately after the
Restrictions on such shares lapse, if no Section 83(b) election is made.
Generally, a deduction will be allowed to the Company, for federal income
tax purposes, in an amount equal to the ordinary income recognized by a
participant with respect to shares awarded pursuant to the Option Plan, provided
that such amount constitutes an ordinary and necessary business expense of the
Company and is reasonable.
If, subsequent to the lapse of Restrictions on his or her shares, the
participant sells such shares, the difference, if any, between the amount
realized from such sale and the tax basis of such shares to the holder will be
taxed as long-term or short-term capital gain or loss, depending on whether the
participant's holding period for such shares exceeds the applicable holding
period at the time of sale and provided that the participant holds such shares
as a capital asset at such time.
If a Section 83(b) election is made and, before the Restrictions on the
shares lapse, the shares which are subject to such election are resold to the
Company or are forfeited, (i) no deduction would be allowed to such participant
for the amount included in the income of such participant by reason of such
Section 83(b) election, and (ii) the participant would realize a loss in an
amount equal to the excess, if any, of the amount paid for such shares over the
amount received by the participant upon such resale or forfeiture (which loss
would be a capital loss if the shares are held as a capital asset at such time).
In such event, the Company would be required to include in its income the amount
of any deduction previously allowable to it in connection with the transfer of
such shares.
The Compensation Committee will have the discretion to provide with respect
to any restricted stock award that upon a change in control of the Company, any
Restrictions on the shares of the Company's common stock covered by the award
will lapse. In general, if the total amount of payments in the nature of
compensation that are contingent upon a "change in control" of the Company (as
defined in Section 280G of the Code) equals or exceeds three times a recipient's
"base amount" (generally, such recipient's average annual compensation for the
five years preceding the change in control), then, subject to certain
exceptions, the payments may be treated as parachute payments under Section 280G
of the Code, in which case a portion of the payments would be nondeductible to
the Company and the recipient would be subject to a 20% excise tax on such
portion of the payments under Section 4999 of the Code.
SHAREHOLDER APPROVAL
The affirmative vote of a majority of the shares of common stock of the
Company represented at the Annual Meeting either in person or by proxy, assuming
a quorum is present, is required to approve the amendment to the Option Plan
increasing the number of share reserved for issuance thereunder.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL
OF THE AMENDMENT TO THE 1994 STOCK OPTION AND INCENTIVE PLAN AS SET FORTH IN
PROPOSAL 2.
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 3)
The Board of Directors has appointed the firm of Ernst & Young, LLP, as
independent auditors for the fiscal year ending December 31, 1997. The firm of
Ernst & Young, LLP, also served as the Company's auditors for the fiscal year
ended December 31, 1996. A representative of Ernst & Young, LLP, will be present
at the Annual Meeting, will have an opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions from
shareholders.
All proxies received in response to this solicitation will be voted in
favor of the ratification of the appointment of the independent auditors, unless
other instructions are indicated thereon. If the shareholders do not ratify the
appointment of Ernst & Young, LLP, the selection of independent auditors will be
reconsidered and made by the Board of Directors.
SHAREHOLDER APPROVAL
The affirmative vote of a majority of the shares of common stock of the
Company represented at the Annual Meeting either in person or by proxy, assuming
a quorum is present, is required to ratify the appointment of Ernst & Young,
LLP, as independent auditors for the Company for the year ending December 31,
1997.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG, LLP, AS INDEPENDENT AUDITORS
AS SET FORTH IN PROPOSAL 3.
PROPOSALS OF SHAREHOLDERS
Any shareholder wishing to have a proposal considered for inclusion in the
Company's proxy solicitation materials and form of proxy for the Annual Meeting
of Shareholders to be held in 1998 must set forth such proposal in writing and
file it with the Secretary of the Company no later than December 8, 1997.
OTHER BUSINESS
At the date of this Proxy Statement, management knows of no other business
that may properly come before the Annual Meeting. However, if any other matters
properly come before the meeting, the persons named in the enclosed form of
proxy will vote the proxies received in response to this solicitation in
accordance with their best judgment on such matters.
FINANCIAL INFORMATION
The Company will provide without charge to any shareholder solicited
hereby, upon written request of such shareholder, a copy of its 1996 Annual
Report on Form 10-KSB, which has been filed with the Securities and Exchange
Commission. Requests should be directed to Investor Relations, Game Financial
Corporation, 13705 First Avenue North, Plymouth, Minnesota 55441-6114.
By Order of the Board of Directors
/s/ Gary A. Dachis
Gary A. Dachis
PRESIDENT AND CHIEF EXECUTIVE OFFICER
April 8, 1997
PROXY
GAME FINANCIAL CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 8, 1997
The undersigned, revoking all prior proxies, hereby appoints Gary A. Dachis and
Stephen P. Weisbrod, or either of them, as proxy or proxies ("Proxies"), with
full power of substitution and revocation, to vote all shares of common stock of
Game Financial Corporation (the "Company") of record in the name of the
undersigned at the close of business on April 2, 1997, at the Annual Meeting of
Shareholders to be held on Thursday, May 8, 1997, or at any adjournment thereof,
upon the following matters:
1. Election of the following nominees as directors:
GARY A. DACHIS, TOM GROSSMAN, PAUL H. RAVICH, STEPHEN P. WEISBROD
[_] FOR ALL NOMINEES [_] WITHHOLD FOR ALL NOMINEES
FOR ALL NOMINEES EXCEPT THE FOLLOWING:
(MARK NO BOX AND WRITE THE NAME(S) OF THE NOMINEE(S) WITHHELD IN THE SPACE
PROVIDED BELOW.)
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2. Approval of amendments to the Game Financial Corporation 1994 Stock Option
and Incentive Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Ratification of appointment of Ernst & Young, LLP, as independent auditors
for the fiscal year ending December 31, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
4. In their discretion the Proxies are authorized to vote upon such matters
as may properly come before the meeting.
Please mark, date, sign, and mail this proxy promptly in the enclosed envelope.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR Proposals 1, 2 and 3. The Board of Directors recommends a vote FOR Proposals
1, 2 and 3.
Dated:_______________________________, 1996.
____________________________________________
Signature of Shareholder
____________________________________________
Signature of Shareholder
Please sign your name exactly as it appears
at left. In the case of shares owned in
joint tenancy or as tenants in common, all
should sign. Fiduciaries should indicate
their title and authority.
APPENDIX
GAME FINANCIAL CORPORATION
1994 STOCK OPTION AND INCENTIVE PLAN
The purpose of the Game Financial Corporation 1994 Stock Option and
Incentive Plan (the "Plan") is to promote the growth and profitability of Game
Financial Corporation (the "Company") and its Affiliates by providing its key
employees and directors with an incentive to achieve long-term corporate
objectives, to attract and retain persons of outstanding competence, and to
provide such persons with an equity interest in the Company.
1. STOCK SUBJECT TO PLAN. An aggregate of 265,000 shares (the "Shares") of
the Common Stock, par value $.01 per share, ("Common Stock") of the Company may
be subject to awards granted under the Plan. The number of shares authorized for
issuance under the Plan may be increased from time to time by approval of the
Board of Directors and, if required pursuant to Rule 16b-3 under the Securities
Exchange Act of 1934 or the applicable rules of any securities exchange or the
NASD, the shareholders of the Company. Shares that are subject to an award which
expires or is terminated unexercised, or which are reacquired by the Company
upon the forfeiture of restricted Shares, shall again be available for issuance
under the Plan.
2. ADMINISTRATION.
a. COMMITTEE. The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors of the Company (the
"Board"). The Committee shall be comprised of the entire Board or, if the
Board so determines, of two or more members of the Board.
b. POWERS AND DUTIES. The Committee shall have the authority to make
rules and regulations governing the administration of the Plan; to select
the eligible employees to whom awards shall be granted; to determine the
type, amount, size, and terms of awards; to determine the time when awards
shall be granted; to determine whether any restrictions shall be placed on
Shares purchased pursuant to any option or issued pursuant to any award;
and to make all other determinations necessary or advisable for the
administration of the Plan. The Committee's determinations need not be
uniform, and may be made by it selectively among persons who are eligible
to receive awards under the Plan, whether or not such persons are
similarly situated. Notwithstanding the foregoing, the grant of options
under paragraph 7 of this Plan shall be automatic. All interpretations,
decisions, or determinations made by the Committee pursuant to the Plan
shall be final and conclusive.
3. ELIGIBILITY. Any employee of the Company or of any of its Affiliates
shall be eligible to receive awards under the Plan. Persons serving as
non-employee directors of the Company at the Effective Date of this Plan shall
automatically be granted options under paragraph 7 of this Plan. A person who
has been granted an award under this Plan, or under any predecessor plan, may be
granted additional awards if the Committee shall so determine. Except to the
extent otherwise provided in the agreement evidencing an award, the granting of
an award under this Plan shall not affect any outstanding award previously
granted under this Plan or under any other plan of the Company or any Affiliate.
For purposes of the Plan, the term "Affiliate" shall mean any "parent
corporation" or "subsidiary corporation" of the Company, as those terms are
defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as
amended.
4. AWARDS. The Committee may make awards to eligible persons in the form
of stock options which are intended to qualify as "Incentive Stock Options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, or stock options which are not intended to so qualify ("Non-qualified
Options"), or awards of restricted stock, or any combination thereof. Options
under paragraph 7 of this Plan shall be granted automatically without further
action of the Committee, and shall be Non-qualified Options.
5. STOCK OPTIONS. A stock option granted pursuant to the Plan shall
entitle the optionee, upon exercise, to purchase Shares at a specified price
during a specified period. Options shall be subject to such terms and conditions
as the Committee shall from time to time approve; provided, that each option
shall be subject to the following requirements:
a. TYPE OF OPTION. Each option shall be identified in the agreement
pursuant to which it is granted as an Incentive Stock Option or as a
Non-qualified Option, as the case may be.
b. TERM. No option shall be exercisable more than 121 months after
the date on which it is granted.
c. PAYMENT. The purchase price of Shares subject to an option shall
be payable in full at the time the option is exercised. Payment may be
made in cash, in shares of Common Stock having an aggregate fair market
value on the date of exercise which is not less than the option price, or
by a combination of cash and such shares, as the Committee may determine,
and subject to such terms and conditions as the Committee deems
appropriate.
d. OPTIONS NOT TRANSFERABLE. Options shall not be transferable
except to the extent permitted by the agreement evidencing such option;
provided, that in no event shall any option be transferable by the
optionee, other than by will or the laws of descent and distribution.
Options shall be exercisable during an optionee's lifetime only by such
optionee. If, pursuant to the agreement evidencing any option, such option
remains exercisable after the optionee's death, it may be exercised, to
the extent permitted by such agreement, by the personal representative of
the optionee's estate or by any person who acquired the right to exercise
such option by bequest, inheritance, or otherwise by reason of the
optionee's death.
e. INCENTIVE STOCK OPTIONS. If an option is an Incentive Stock
Option, it shall be subject to the following additional requirements:
i. Incentive Stock Options may be granted only to persons who
are employees of the Company or of an Affiliate.
ii. The purchase price of Shares that are subject to an
Incentive Stock Option shall not be less than 100% of the fair
market value of such Shares at the time the option is granted, as
determined in good faith by the Committee.
iii. The aggregate fair market value (determined at the time
the option is granted) of the Shares with respect to which Incentive
Stock Options are exercisable by the optionee for the first time
during any calendar year, under this Plan or any other plan of the
Company or any Affiliate, shall not exceed $100,000.
iv. An Incentive Stock Option shall not be exercisable more
than ten years after the date on which it is granted.
v. The purchase price of Shares that are subject to an
Incentive Stock Option granted to an employee who, at the time such
option is granted, owns 10% or more of the total combined voting
power of all classes of stock of the Company or of any Affiliate
shall not be less than 110% of the fair market value of such Shares
on the date such option is granted, and such option may not be
exercisable more than five years after the date on which it is
granted. For the purposes of this subparagraph, the rules of Section
424(d) of the Code shall apply in determining the stock ownership of
any employee.
Subject to the foregoing, options may be made exercisable in one or more
installments, upon the happening of certain events, upon the fulfillment of
certain conditions, or upon such other terms and conditions as the Committee
shall determine.
6. RESTRICTED STOCK. Restricted stock awards granted pursuant to the Plan
shall entitle the holder to receive Shares, subject to forfeiture if specified
conditions are not satisfied at the end of a specified period. Restricted stock
awards shall be subject to such terms and conditions as the Committee shall from
time to time approve; provided, that each award shall be subject to the
following requirements:
a. RESTRICTED PERIOD. The Committee shall establish a period (the
"Restricted Period") at the time an award is granted during which the
holder will not be permitted to sell, transfer, pledge, encumber, or
assign the Shares subject to the award. The Committee may provide for the
lapse of restrictions in installments, or upon the occurrence of certain
events, where deemed appropriate. Any attempt by a holder to dispose of
restricted Shares in a manner contrary to the applicable restrictions
shall be void, and of no force and effect.
b. RIGHTS DURING RESTRICTED PERIOD. Except to the extent otherwise
provided in this paragraph 6 or under the terms of any restricted stock
agreement, during the Restricted Period the holder of restricted Shares
shall have all of the rights of a shareholder in the Company with respect
to such Shares, including the right to vote the Shares and to receive
dividends and other distributions with respect to the Shares; provided,
that all stock dividends, stock rights, and stock issued upon split-ups or
reclassifications of Shares shall be subject to the same restrictions as
the Shares with respect to which such stock dividends, rights, or
additional stock are issued, and may be held in custody as provided below
in this paragraph 6 until the restrictions thereon shall have lapsed.
c. FORFEITURES. Except to the extent otherwise provided in the
restricted stock agreement, all Shares then subject to any restriction
shall be forfeited to the Company without further obligation of the
Company to the holder thereof, and all rights of the holder with respect
to such Shares shall terminate, if the holder shall cease to be an
employee of to the Company and its Affiliates, or if any condition
established by the Committee for the release of any restriction shall not
have occurred, prior to the expiration of the Restricted Period.
d. CUSTODY. The Committee may provide that the certificates
evidencing restricted Shares shall be held in custody by a bank or other
institution, or by the Company or any Affiliate, until the restrictions
thereon have lapsed, and may require that the holder of any restricted
Shares shall have delivered to the Company one or more stock powers,
endorsed in blank, relating to the restricted Shares as a condition of
receiving the award.
e. CERTIFICATES. A recipient of a restricted stock award shall be
issued a certificate or certificates evidencing the Shares subject to such
award. Such certificates shall be registered in the name of the recipient,
and may bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award, which legend shall be in
substantially the following form:
"The transferability of this certificate and the shares represented
hereby are subject to the terms and conditions (including
forfeiture) of the Game Financial Corporation 1994 Stock Option and
Incentive Plan and an Agreement entered into between the registered
owner and Game Financial Corporation. Copies of such Plan and
Agreement are on file in the offices of Game Financial Corporation."
f. GIFTS, ETC. Notwithstanding any other provision of this paragraph
6, the Committee may permit a gift of restricted stock to the holder's
spouse, child, stepchild, grandchild, or legal dependent, or to a trust
whose sole beneficiary or beneficiaries shall be the holder and/or any one
or more of such persons; provided, that the donee shall have entered into
an agreement with the Company pursuant to which it agrees that the
restricted stock shall be subject to the same restrictions in the hands of
such donee as it was in the hands of the donor.
7. STOCK OPTION GRANTS TO NON-EMPLOYEE DIRECTORS. Each person serving as a
non-employee director of the Company at the Effective Date of this Plan shall
automatically be granted a Non-qualified Option to purchase 15,000 shares of
Common Stock, as follows:
a. Such options shall become vested with respect to 5,000 shares on
the first anniversary of the date of grant, shall vest with respect to an
additional 5,000 shares on the second anniversary of the date of grant,
and shall become fully vested on the third anniversary of the date of
grant, provided that the director shall have served as a director of the
Company continuously from the date of grant until such respective vesting
dates. Such options shall expire ten years after the date of grant.
b. The exercise price of such options shall be $5.00 per share.
Payment of the exercise price of options may be made in cash, by personal
check payable to the Company, by delivery of shares of Common Stock having
an aggregate fair market value on the date of exercise which is not less
than the option price, or by a combination thereof.
c. If the recipient of an option under this paragraph 7 shall cease
to serve as a director of the Company, the option shall continue to be
exercisable for the remainder of its term, with respect to the number of
shares vested at the date of such termination of service.
d. Options granted under this paragraph 7 shall not be assignable or
transferable during the lifetime of the director, either voluntarily or
involuntarily. Options shall be exercisable during a director's lifetime
only by such director. In the event of the death of a director, such
option may be transferred by will or the laws of descent and distribution
and may only be exercised by the executors or administrators of such
director's estate or by the person or persons to whom such director's
rights under the option shall pass by the director's will or the laws of
descent and distribution.
8. AGREEMENTS. Each option or award granted pursuant to the Plan shall be
evidenced by an agreement setting forth the terms and conditions upon which it
is granted. Multiple options or awards may be evidenced by a single agreement.
Subject to the limitations set forth in the Plan, the Committee may, with the
consent of the person to whom an award has been granted, amend any such
agreement to modify the terms or conditions governing the award evidenced
thereby.
9. ADJUSTMENTS. In the event of any change in the outstanding Shares of
Common Stock by reason of any stock dividend or split, recapitalization,
reclassification, combination, or exchange of Shares or other similar corporate
change, then if the Committee shall determine, in its sole discretion, that such
change necessarily or equitably requires an adjustment in the number of Shares
subject to an award, in the option price or value of an award, or in the maximum
number of Shares subject to this Plan, such adjustments shall be made by the
Committee and shall be conclusive and binding for all purposes of this Plan. No
adjustment shall be made in connection with the issuance by the Company of any
warrants, rights, or options to acquire additional Common Stock or of securities
convertible into Common Stock.
10. MERGER, CONSOLIDATION, REORGANIZATION, LIQUIDATION, ETC. Subject to
the provisions of the agreement evidencing any award, if the Company shall
become a party to any corporate merger, consolidation, major acquisition of
property for stock, reorganization, or liquidation, the Board of Directors of
the Company shall have the power to make any arrangement it deems advisable with
respect to outstanding awards and in the number of Shares subject to this Plan,
which shall be binding for all purposes of this Plan, including, but not limited
to, the substitution of new awards for any awards then outstanding, the
assumption of any such awards, and the termination of such awards.
11. EXPENSES OF PLAN. The expenses of administering this Plan shall be
borne by the Company and its Affiliates.
12. RELIANCE ON REPORTS. Each member of the Committee and each member of
the Board of Directors shall be fully justified in relying or acting in good
faith upon any report made by the independent public accountants of the Company
and its Affiliates and upon any other information furnished in connection with
this Plan by any person or persons other than himself. In no event shall any
person who is or shall have been a member of the Committee or of the Board of
Directors be liable for any determination made or other action taken or omitted
in reliance upon any such report or information, or for any action taken or
omitted, including the furnishing of information, in good faith.
13. RIGHTS AS SHAREHOLDER. Except to the extent otherwise specifically
provided hereon, no recipient of any award shall have any rights as a
shareholder with respect to Shares sold or issued pursuant to the Plan until
certificates for such Shares have been issued to such person.
14. GENERAL RESTRICTIONS. Each award granted pursuant to the Plan shall be
subject to the requirement that if, in the opinion of the Committee, the
listing, registration, or qualification of any Shares related thereto upon any
securities exchange or under any state or federal law, the consent or approval
of any regulatory body, or an agreement by the recipient with respect to the
disposition of any such Shares, is necessary or desirable as a condition of the
issuance or sale of such Shares, such award shall not be consummated unless and
until such listing, registration, qualification, consent, approval, or agreement
is effected or obtained in form satisfactory to the Committee.
15. EMPLOYMENT RIGHTS. Nothing in this Plan, or in any agreement entered
into hereunder, shall confer upon any person the right to continue to serve as
an employee or director of the Company or an Affiliate, or affect the right of
the Company or Affiliate to terminate such person's service at any time, with or
without cause.
16. WITHHOLDING. If the Company proposes or is required to issue Shares
pursuant to the Plan, it may require the recipient to remit to it, or may
withhold from such award or from the recipient's other compensation, an amount,
in the form of cash or Shares, sufficient to satisfy any applicable federal,
state, or local tax withholding requirements prior to the delivery of any
certificates for such Shares.
17. AMENDMENTS. The Board of Directors of the Company may at any time, and
from time to time, amend the Plan in any respect, except that no amendment that
would:
a. materially increase the benefits accruing to participants under
the Plan;
b. increase the number of Shares available for issuance or sale
pursuant to the Plan (other than as permitted by paragraphs 9 and 10); or
c. materially modify the requirements as to eligibility for
participation in the Plan;
shall be made without the affirmative vote of shareholders holding at least a
majority of the voting stock of the Company represented in person or by proxy
and voting upon the matter at a duly held shareholders' meeting.
18. IMMEDIATE ACCELERATION OF AWARDS. Notwithstanding any provision in
this Plan or in any award to the contrary, the restrictions on all shares of
restricted stock shall lapse immediately and all outstanding options will become
exercisable immediately if, subsequent to the Effective Date of this Plan, any
of the following events occur:
a. Any person or group of persons, other than the shareholders of
record of the Company as of the date of this Plan is adopted by the Board,
becomes the beneficial owner of 30% or more of any equity security of the
Company entitled to vote for the election of directors;
b. A change in the composition of the Board within any consecutive
two-year period such that the "Continuing Directors" cease to constitute a
majority of the board. For purposes of this event, the "Continuing
Directors" shall mean those members of the Board who either: (i) were
directors at the beginning of such two-year period, or (ii) were elected
by, or on nominations or recommendations of, a majority of the
then-existing Board members; or
c. The shareholders of the Company approve an agreement to merge or
consolidate with or into another corporation or an agreement to sell or
otherwise dispose of all or substantially all of the Company's assets
(including a plan of liquidation).
For purposes of this paragraph 18, beneficial ownership by a person or
group of persons shall be determined in accordance with Regulation 13D (or any
similar successor regulation) promulgated by the Securities and Exchange
Commission pursuant to the 1934 Act. Beneficial ownership of more than 30% of an
equity security may be established by any reasonable method, but shall be
presumed conclusively to exist as to any person who files a Schedule 13D report
with the Securities and Exchange Commission reporting such ownership. If the
restrictions and forfeiture periods are eliminated by reason of subparagraph a.,
the limitations of this Plan shall not become applicable again should the person
cease to own 30% or more of any equity security of the Company.
A participant shall not be entitled to the immediate acceleration of an
award as provided in this paragraph 18 if such acceleration would, with respect
to the participant, constitute a "parachute payment" for purposes of Internal
Revenue Code Section 280G, or any successor provision. The participant shall
have the right to designate those awards which would be reduced or eliminated so
that the participant will not receive a "parachute payment."
Prior to the occurrence of one of the events described in subparagraph a.,
b. or c. above, the participant shall have no rights under this paragraph 18,
and the Board shall have the power and right, within its sole discretion, to
rescind, modify or amend this paragraph 18 without any consent of the
participant. In all other cases, and notwithstanding the authority granted to
the Board or the Committee, as the case may be, to exercise discretion in
interpreting, administering, amending or terminating this Plan, neither the
Board nor the Committee shall, following the occurrence of one of the events
described in subparagraph a., b. or c. above, have the power to exercise such
authority or otherwise take any action which is inconsistent with the provisions
of this paragraph 18.
19. SHAREHOLDER APPROVAL. The Plan shall be subject to approval by the
shareholders holding at least a majority of the voting stock of the Company
represented in person or by proxy at a duly held shareholders' meeting, or by
written consent of all shareholders, and any option granted under the Plan prior
to the date of such approval shall be contingent upon such approval.
20. EFFECTIVE DATE; DURATION. This Plan shall be effective as of February
24, 1994, subject to shareholder approval of the Plan as described above on or
before February 24, 1995. No options or rights shall be granted under the Plan
after the earlier of (a) the date on which the Plan is terminated by the Board
of Directors of the Company; or (b) February 24, 2004. Options or rights
outstanding at the termination of the Plan may continue to be exercised in
accordance with their terms after such termination.
FIRST AMENDMENT TO
GAME FINANCIAL CORPORATION
1994 STOCK OPTION AND INCENTIVE PLAN
The Game Financial Corporation 1994 Stock Option and Incentive Plan
(the "Plan") was adopted by the Board of Directors of Game Financial Corporation
(the "Company") and approved by the shareholders of the Company on February 24,
1994, and is now in full force and effect. This First Amendment is adopted in
order to amend the Plan with respect to the exercise price at which stock
options may be granted under the Plan.
A. AMENDMENT. Section 4 of the Plan is hereby amended by adding a new
subsection 4.c, which shall read as follows:
"c. EXERCISE PRICE. The purchase price of Shares that are subject to
an option under this Plan shall not be less than 85% of the fair market
value of such Shares at the time the option is granted, as determined in
good faith by the Committee."
The subsequent subsections of section 4 shall be renumbered accordingly.
B. EFFECTIVE DATE. This First Amendment shall be effective as of April 14,
1994.
SECOND AMENDMENT TO THE
GAME FINANCIAL CORPORATION
1994 STOCK OPTION AND INCENTIVE PLAN
RECITALS:
1. The Game Financial Corporation 1994 Stock Option and Incentive Plan (the
"Plan") was adopted by the Board of Directors of Game Financial
Corporation (the "Company") and approved by the shareholders of the
Company on February 24, 1994, and is now in full force and effect.
2. A First Amendment to the Plan was adopted by the Board of Directors of the
Company on April 14, 1994, did not require approval by the shareholders of
the Company, and is now in full force and effect.
3. This Second Amendment is adopted in order to increase the number of shares
of common stock of the Company available for issuance pursuant to the
Plan.
AMENDMENT:
THEREFORE, the Plan is hereby amended as follows:
a. AMENDMENT. The first sentence of paragraph 1 of the Plan is hereby
amended to read as follows:
"1. STOCK SUBJECT TO PLAN. An aggregate of 581,250 shares (the
"Shares") of the Common Stock, par value $.01 per share, ("Common Stock")
of the Company may be subject to awards granted under the Plan."
b. EFFECTIVE DATE. This Second Amendment shall be effective as of April 1,
1996, and shall be subject to approval by the shareholders of the Company at an
Annual or Special Meeting of shareholders held on or before April 1, 1997.
THIRD AMENDMENT TO THE
GAME FINANCIAL CORPORATION
1994 STOCK OPTION AND INCENTIVE PLAN
RECITALS:
1. The Game Financial Corporation 1994 Stock Option and Incentive Plan (the
"Plan") was adopted by the Board of Directors of Game Financial
Corporation (the "Company") and approved by the shareholders of the
Company on February 24, 1994, and is now in full force and effect.
2. A First Amendment to the Plan was adopted by the Board of Directors on
April 14, 1994, did not require approval by the shareholders of the
Company, and is now in full force and effect.
3. A Second Amendment to the Plan was adopted by the Board of Directors and
approved by the Shareholders of the Company on May 9, 1996, and is now in
full force and effect.
4. This Third Amendment is adopted in order to increase the number of shares
of common stock of the Company available for issuance pursuant to the Plan
and to provide for the automatic grant of options to non-employee
directors.
AMENDMENTS:
THEREFORE, the Plan is hereby amended as follows:
A. INCREASE IN NUMBER OF SHARES. The first sentence of paragraph 1 of the
Plan is hereby amended to read as follows:
"1. STOCK SUBJECT TO PLAN. An aggregate of 1,000,000 shares (the
"Shares") of the Common Stock, par value $.01 per share, ("Common Stock")
of the Company may be subject to awards granted under the Plan."
B. DIRECTOR STOCK OPTIONS. Paragraph 7 of the Plan is hereby amended to
read as follows:
"7. STOCK OPTION GRANTS TO NON-EMPLOYEE DIRECTORS. Persons elected
to serve as non-employee directors of the Company shall automatically be
granted Non-qualified Stock Options to purchase shares of Common Stock as
follows:
i. Each person elected to serve as a non-employee director of the
Company at the 1997 Annual Meeting of Shareholders shall, on
the date the 1997 Annual Meeting, automatically be granted a
Non-qualified Option to purchase 25,000 shares of Common
Stock.
ii. Each person who is first elected to serve as a non-employee
director of the Company after the date of the 1997 Annual
Meeting shall, on the date of his or her initial election,
automatically be granted a Non-qualified Option to purchase
25,000 shares of Common Stock.
iii. Each person serving as a non-employee director of the Company
shall, on the date of every third subsequent Annual Meeting of
Shareholders at which such person is reelected as a director
automatically be granted a Non-qualified Option to purchase
25,000 shares of Common Stock.
The principal terms and conditions of such stock options shall be as
follows:
a. Such options shall become vested with respect to one-third
of the shares on the first anniversary of the date of grant, shall
vest with respect to an additional one-third of the shares on the
second anniversary of the date of grant, and shall become fully
vested on the third anniversary of the date of grant, provided that
the director shall have served as a director of the Company
continuously from the date of grant until such respective vesting
dates. Such options shall expire ten years after the date of grant.
b. The per share exercise price of such options shall be equal
to the fair market value of such Shares at the time the option is
granted, as determined in good faith by the Committee. Payment of
the exercise price of the options may be made in cash, by personal
check payable to the Company, by delivery of shares of Common Stock
having an aggregate fair market value on the date of exercise which
is not less than the option price, or by a combination thereof.
c. If the recipient of an option under this paragraph 7 shall
cease to serve as a director of the Company, the option shall
continue to be exercisable for the remainder of its term with
respect to the number of shares vested at the date of such
termination of service.
d. Options granted under this paragraph 7 shall not be
assignable or transferable during the lifetime of the director,
either voluntarily or involuntarily. Options shall be exercisable
during a director's lifetime only by such director. In the event of
the death of a director, such option may be transferred by will or
the laws of descent and distribution and may only be exercised by
the executors or administrators of such director's estate or by the
person or persons to whom such director's rights under the option
shall pass by the director's will or the laws of descent and
distribution.
e. The number of shares subject to options to be granted under
this paragraph 7 shall be subject to adjustment pursuant to
paragraph 9 of this Plan.
C. EFFECTIVE DATE. This Third Amendment shall be effective as of February
18, 1997, and shall be subject to approval by the shareholders of the Company at
an Annual or Special Meeting of shareholders held on or before February 18,
1998.
