SCHEDULE 14A
(Rule 14a-101)
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
[_] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant
to Rule 14a-11(c) or Rule 14a-12
GLOBAL PAYMENT TECHNOLOGIES, INC.
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(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
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<PAGE>
2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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<PAGE>
GLOBAL PAYMENT TECHNOLOGIES, INC.
20 EAST SUNRISE HIGHWAY, SUITE 201
VALLEY STREAM, NEW YORK 11581
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 10, 1998
------------------
To the Stockholders of GLOBAL PAYMENT TECHNOLOGIES, INC.:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of
Global Payment Technologies, Inc. (the "Company") will be held at the Garden
City Hotel, 45 7th Street, Garden City, New York 11530, on Tuesday, March 10,
1998 at 10:00 a.m., Eastern Standard Time, for the following purposes:
1. To elect seven (7) directors;
2. To approve an amendment to the Company's By-laws to provide for
a classified Board of Directors;
3. To approve an amendment to the Company's 1994 Stock Option Plan
to limit the number of shares for which options may be granted
to any one individual in any fiscal year to 200,000; and
4. To transact such other business as may properly be brought
before the Annual Meeting or any adjournment or adjournments
thereof.
Only stockholders of record at the close of business on January 23, 1998
are entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
By Order of the Board of Directors
Thomas McNeill
Secretary
Dated: Valley Stream, NY
January 26, 1998
- --------------------------------------------------------------------------------
IMPORTANT: WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE AND SIGN THE PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
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<PAGE>
GLOBAL PAYMENT TECHNOLOGIES, INC.
20 EAST SUNRISE HIGHWAY, SUITE 201
VALLEY STREAM, NEW YORK 11581
January 26, 1998
Dear Fellow Stockholders:
You are cordially invited to attend our 1998 Annual Meeting of
Stockholders which will be held on Tuesday, March 10, 1998 at 10:00 a.m., at the
Garden City Hotel, 45 7th Street, Garden City, New York 11530.
The Notice of Annual Meeting and Proxy Statement which follow describe
the business to be conducted at the meeting.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the enclosed Notice of
Annual Meeting and Proxy Statement, I urge you to complete, sign, date and
return your proxy card in the envelope provided. If the address on the
accompanying material is incorrect, please advise our Transfer Agent, American
Stock Transfer & Trust Company, in writing, at 40 Wall Street, New York, New
York 10005.
Your vote is very important, and we would appreciate a prompt return of
your signed proxy card. We hope to see you at the meeting.
Cordially,
Stephen Katz
Chairman and Chief Executive Officer
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<PAGE>
GLOBAL PAYMENT TECHNOLOGIES, INC.
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of Global Payment
Technologies, Inc. (the "Company") in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the 1998 Annual
Meeting of Stockholders of the Company (the "Annual Meeting") to be held at the
Garden City Hotel, 45 7th Street, Garden City, New York 11530, on Tuesday, March
10, 1998 at 10:00 a.m., Eastern Standard Time, and at any adjournments thereof,
for the purposes set forth in the accompanying Notice of Annual Meeting.
The Company intends to mail this proxy statement and the accompanying
proxy to stockholders on or about January 30, 1998.
The cost of solicitation of proxies will be borne by the Company. The
Company may also reimburse brokerage houses and other custodians, nominees and
fiduciaries for their expenses incurred in forwarding solicitation materials to
the beneficial owners of shares held of record by such persons. It is
contemplated that proxies will be solicited principally through the mail, but
directors, officers and regular employees of the Company may, without additional
compensation, solicit proxies personally or by telephone, facsimile or special
letter.
Proxies in the accompanying form, duly executed, returned to the Company
and not revoked, will be voted at the Annual Meeting. Any proxy given pursuant
to such solicitation may be revoked by the stockholder at any time prior to the
voting of the proxy by a subsequently dated proxy, by written notification to
the Secretary of the Company or by personally withdrawing the proxy at the
meeting and voting in person.
The address and telephone number of the principal executive offices of
the Company are:
20 East Sunrise Highway, Suite 201
Valley Stream, New York 11581
Telephone No.: (516) 256-1000
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on January 23, 1998
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
As of the Record Date, there were issued and outstanding [5,506,500] shares of
the Company's common stock, par value $.01 per share ("Common Stock"), the only
class of voting securities of the Company. Each share of Common Stock entitles
the holder thereof to one vote on each matter submitted to a vote at the Annual
Meeting. All information contained in this Proxy Statement has been
retroactively restated to give effect to a two-for-one stock split, in the form
of a stock dividend, effected on September 4, 1997.
<PAGE>
VOTING PROCEDURES
Directors will be elected by a plurality of the votes cast by the
holders of Common Stock in person or represented by proxy at the Annual Meeting.
All other matters to be acted upon at the Annual Meeting require the affirmative
vote of a majority of the votes cast by the holders of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting. The
foregoing matters may be acted upon only if a quorum is present at the Annual
Meeting. The holders of a majority of the issued and outstanding shares of
Common Stock as of the Record Date, present in person or represented by proxy,
constitute a quorum. Votes will be counted and certified by one or more
Inspectors of Election who are expected to be either employees of the Company,
counsel to the Company or employees of American Stock Transfer & Trust Company,
the Company's transfer agent.
Shares of Common Stock represented at the Annual Meeting by a properly
executed, dated and returned proxy will be treated as present at the Annual
Meeting for purposes of determining a quorum, without regard to whether the
proxy is marked as casting a vote or abstaining. Proxies submitted which contain
abstentions or "broker non votes" (i.e., proxies from a broker or nominee
indicating that such person has not received instructions from the beneficial
owner or other persons entitled to vote shares as to a matter with respect to
which the broker or nominee does not have discretionary power to vote) also will
be treated as present for purposes of determining the presence of a quorum.
The enclosed proxy will be voted in accordance with the instructions
thereon. Unless otherwise stated, all shares represented by such proxy will be
voted as instructed. Proxies may be revoked as noted above.
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<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, a total of seven directors will be elected.
Subject to adoption by the stockholders at the Annual Meeting, an amendment to
the Company's By-laws provides that the Board of Directors will be divided into
three classes, with the term of office of the first class to expire at the 1999
Annual Meeting of Stockholders, the term of office of the second class to expire
at the 2000 Annual Meeting of Stockholders and the term of office of the third
class to expire at the 2001 Annual Meeting of Stockholders. See "Proposal 2:
Amendment to the Company's By-laws." If the amendment to the Company's By-laws
is not adopted, each of the seven directors elected shall serve until the next
Annual Meeting of Stockholders and until his successor is elected and qualified.
Shares represented by valid proxies in the accompanying form will be
voted for the election of all of the nominees named below, unless authority is
withheld. Should any nominee listed below be unable to serve, it is intended
that the proxies will be voted for such other nominee as may be designated by
the Board of Directors. Unless otherwise directed, the persons named in the
proxy accompanying this Proxy Statement intend to cast all proxies received for
the election of Stephen Katz, William H. Wood, Edward Seidenberg, Henry B.
Ellis, Richard E. Gerzof, Jay Goldberg and Martin H. Kern to serve as directors
upon their nomination at the Annual Meeting. Each of such persons has indicated
to the Board that he expects to be available to serve as a director of the
Company. If Proposal 2 is adopted and the nominees listed above are elected, the
terms of office will expire as follows: (i) William H. Wood, Richard E. Gerzof
and Jay Goldberg, 1999 Annual Meeting of Stockholders; (ii) Stephen Katz and
Martin H. Kern, 2000 Annual Meeting of Stockholders; and (iii) Edward Seidenberg
and Henry B. Ellis, 2001 Annual Meeting of Stockholders.
RECOMMENDATION
THE BOARD OF DIRECTORS BELIEVES THAT THE ELECTION OF THE NOMINATED
DIRECTORS IS IN THE BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ELECT THE NOMINATED DIRECTORS.
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<PAGE>
NOMINEES FOR DIRECTOR
The following table sets forth certain information concerning the
nominees for director of the Company:
PRINCIPAL OCCUPATION
NAME OR EMPLOYMENT AGE
- ---- --------------------- ---
Stephen Katz Chairman of the Board of Directors and 54
Chief Executive Officer of the Company
William H. Wood President and Director 55
Edward Seidenberg Chief Operating Officer, Vice President 40
and Director
Henry B. Ellis (1) Director 48
Richard E. Gerzof (1) Director 53
Jay Goldberg (1) Director 56
Martin H. Kern Director 56
____________
(1) Member of the Compensation and Audit Committees
INFORMATION ABOUT NOMINEES
Stephen Katz has been Chairman of the Board of Directors since September
1996 and Chief Executive Officer and a director of the Company since May 1996.
Mr. Katz served as Vice Chairman of the Board of Directors from May 1996 until
September 1996. From September 1984 until September 1995 Mr. Katz was Chairman
of the Board and Chief Executive Officer, and from September 1984 until
September 1993 was President, of Nationwide Cellular Service, Inc., a reseller
of cellular telephone services. Since 1992 Mr. Katz has been Chairman of the
Board and Chief Executive Officer of Cellular Technical Services Company, Inc.,
a publicly held company engaged in developing software for the cellular
telephone industry.
William H. Wood has been President of the Company since January 1993 and
served as Chief Executive Officer of the Company from April 1993 to May 1996. He
has been a director of the Company since May 1993. From January 1990 until
January 1993 he held various executive positions at Maytag Corp./Dixie Narco
Division, including Director of Product Development (January 1990 to June 1990),
Vice President, Engineering and Technical Resources (July 1990 to April 1992),
and Vice President, Gaming and OEM Business (May 1992 to January 1993). From
July 1990 to January 1993 he was also a corporate officer of Maytag Corp., with
responsibilities in its Dixie Narco Division.
-4-
<PAGE>
Edward Seidenberg has been Chief Operating Officer and Vice President of
the Company since March 1997 and a director of the Company since August 1996.
From August 1996 to March 1997 he served as Vice President of the Company and
from January 1997 to March 1997 he served as Secretary of the Company. From
March 1990 to July 1996 he was Vice President and Chief Financial Officer of
Nationwide Cellular Service, Inc., a reseller of cellular telephone services.
Henry B. Ellis has been a director of the Company since July 1996. Since
1992 Mr. Ellis has acted as President and Chief Executive Officer of Bassett
California Company, a family-owned real estate holding company located in El
Paso, Texas. From June 1992 to February 1994 Mr. Ellis served as Chairman of the
Board and Chief Executive Officer of Grayson County State Bank, located in
Sherman, Texas. Since 1992 Mr. Ellis has served as a member of the Board of
Directors of Bluebonnet Savings Bank, a savings and loan institution located in
Dallas, Texas.
Richard E. Gerzof has been a director of the Company since its inception
in 1988. Mr. Gerzof has been a partner of Sun Harbor Manor, a nursing home,
since 1974. He has also been a licensed real estate broker since 1982 and was a
partner or principal in Sonom Realty Co., a property management and construction
firm, from 1974 through 1992. He was also a partner in TFTS Restaurant, Inc., a
restaurant, from 1985 to 1992 and has been a partner in Frank's Steaks, a
restaurant, since 1993.
Jay Goldberg has served as a director of the Company since July 1996.
Since July 1996 Mr. Goldberg has been Chief Executive Officer of two technical
consulting firms, Opcenter, LLC and Lexstra, Inc. Since August 1991 Mr. Goldberg
has served as director of Cellular Technical Services Company, Inc., a publicly
held company engaged in developing software for the cellular telephone industry.
Mr. Goldberg has been Chairman of the Board since November 1990 of Image
Business Systems Inc., a company previously engaged in image processing that has
been inactive since August 1994. From July 1989 to January 1996 Mr. Goldberg was
Chairman of the Board and Chief Executive Officer of Zeitech, Inc., a technical
consulting company.
Martin H. Kern is a nominee for director of the Company. Since 1988 Mr.
Kern has been President of Diversified Resources Inc., a management consulting
firm specializing in turnarounds and the marketing of consumer products. Prior
thereto and for more than five years he was Executive Vice President of The
Great Atlantic & Pacific Tea Co., Inc. ("A&P"), and also served as Chairman of
the Board/President of Super Market Service Corp. and President of Supermarket
Distributing Corp., both A&P operating subsidiaries.
COMMITTEES
During the fiscal year ended September 30, 1997 the Company's Board of
Directors held four meetings and took action by unanimous written consent on
three occasions. The Board of Directors has a Compensation Committee and an
Audit Committee, each of which is comprised of Messrs. Ellis, Gerzof and
Goldberg. The Compensation Committee reviews and recommends to the Board of
Directors the compensation and benefits of all officers of the Company, reviews
general
-5-
<PAGE>
policy matters relating to the compensation and benefits of employees of the
Company and administers the issuance of stock options to the Company's officers,
employees, directors and consultants. The Compensation Committee held one
meeting during fiscal 1997. The Audit Committee meets with management and the
Company's independent auditors to determine the adequacy of internal controls
and other financial reporting matters. The Audit Committee held one meeting
during fiscal 1997. Each director attended all meetings of the Board of
Directors held while he was a director and all meetings held by a committee of
the Board on which he served.
INFORMATION ABOUT NON-DIRECTOR EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
non-director executive officers of the Company. Officers are elected annually by
the Board of Directors and serve at the discretion of the Board.
NAME AGE POSITION
Michael Walsh 42 Vice President, Chief Scientist
Robert W. Nader 38 Vice President, Market/Product
Development
Thomas McNeill 35 Vice President, Chief Financial Officer and
Secretary
Michael Walsh has been a Vice President of the Company since April 1990
and Vice President, Chief Scientist since August 1997. From December 1987 until
April 1990 he was a Systems Engineer at Aerospace Technologies, Inc., which
provides consulting services with respect to computer systems integration, where
he had responsibility for specification of that corporation's main product line
utilizing 386 microprocessor-based high performance systems.
Robert W. Nader has been Vice President, Market/Product Development of
the Company since January 1995. From September 1991 through December 1994 he was
Engineering Manager for United Gaming, Inc., a manufacturer and route operator
of electronic gaming machines. From July 1991 through September 1991 he was a
design specialist in the Air Defense Systems Division of General Dynamics, Inc.
Thomas McNeill has been Secretary of the Company since March 1997 and
Vice President and Chief Financial Officer of the Company since September 1997.
From October 1996 to September 1997 he served as Controller of the Company. From
March 1995 through October 1996 Mr. McNeill was Director of Finance for Bellco
Drug Corp., a pharmaceutical distribution company. From January 1991 through
August 1992 he was Controller and from August 1992 to May 1994 he was Vice
President of Operations, for the Marx & Newman Co. division of the United States
Shoe Corporation, a manufacturer and distributor of women's footwear.
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<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than ten percent of the Company's Common Stock, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock of the Company. To the Company's knowledge, based
solely on a review of such reports furnished to the Company with respect to its
most recent fiscal year, the Company believes that during the fiscal year ended
September 30, 1997, all reports applicable to executive officers, directors and
10% stockholders have been timely filed, except that Thomas McNeill did not
timely file one report reflecting his election as an executive officer of the
Company.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 9, 1998, certain
information as to the Common Stock ownership of each of the Company's directors
and nominees for director, each of the officers included in the Summary
Compensation Table below, all executive officers and directors as a group and
all persons known by the Company to be the beneficial owners of more than five
percent of the Company's Common Stock. Unless otherwise noted, the Company
believes that each person named in the table below has sole voting and
investment power with respect to all shares of Common Stock beneficially owned
by such person.
<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE OF
NATURE OF OUTSTANDING
BENEFICIAL SHARES
NAMES AND ADDRESS OWNERSHIP OWNED
- ----------------- --------- -----
<S> <C> <C>
Stephen Katz.................................................... 891,300(1) 15.1%
c/o Global Payment Technologies, Inc.
20 East Sunrise Highway, Suite 201
Valley Stream, NY 11581
Joan Vogel...................................................... 407,000(2) 7.4%
400 East 56th Street
New York, NY 10022
Richard E. Gerzof............................................... 403,674(3) 7.3%
161 Sportsman Avenue
Freeport, NY 11520
Odyssey Financial Company....................................... 400,000 7.3%
c/o Stephen Katz
20 East Sunrise Highway, Suite 201
Valley Stream, NY 11581
William H. Wood................................................. 315,786(4) 5.7%
c/o Global Payment Technologies, Inc.
621 Farr Shores Drive
Hot Springs, AR 71913
Michael Walsh................................................... 145,590(5) 2.6%
c/o Global Payment Technologies, Inc.
425-B Oser Avenue
Hauppauge, NY 11788
Edward Seidenberg............................................... 90,000(6) 1.6%
c/o Global Payment Technologies, Inc.
20 East Sunrise Highway, Suite 201
Valley Stream, NY 11581
-8-
<PAGE>
Jay Goldberg.................................................... 41,666(3) *
c/o Hudson Partners
660 Madison Avenue
New York, NY 10021
Robert W. Nader................................................. 29,600(7) *
c/o Global Payment Technologies, Inc.
20 East Sunrise Highway, Suite 201
Valley Stream, NY 11581
Henry B. Ellis.................................................. 21,666(3) *
303 Texas Avenue #15
El Paso, Texas 79901
Martin H. Kern.................................................. 0 *
c/o Global Payment Technologies, Inc.
20 East Sunrise Highway, Suite 201
Valley Stream, NY 11581
Thomas McNeill.................................................. 5,000(8) *
c/o Global Payment Technologies, Inc.
20 East Sunrise Highway, Suite 201
Valley Stream, NY 11581
All directors and executive officers as a group (10 persons).... 1,944,282(9) 32.4%
</TABLE>
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* Less than 1%
(1) Includes 400,000 shares issuable upon exercise of currently exercisable
stock options and 400,000 shares owned of record by Odyssey Financial
Company, a partnership of which Mr. Katz is Managing General Partner.
(2) Includes 375,000 shares beneficially owned by the Joseph Vogel Revocable
Trust, of which Ms. Vogel is a trustee and beneficiary. The information as
to Ms. Vogel is based on a Statement of Changes in Beneficial Ownership on
Form 4 dated December 15, 1997 filed with the Securities and Exchange
Commission by Ms. Vogel.
(3) Includes 1,666 shares issuable upon exercise of currently exercisable
options.
(4) Includes 40,000 shares issuable upon exercise of currently exercisable
options.
(5) Includes 1,600 shares issuable upon exercise of currently exercisable
options.
(6) Includes 10,000 shares issuable upon exercise of currently exercisable
options.
(7) Includes 25,600 shares issuable upon exercise of currently exercisable
options.
(8) Includes 3,000 shares issuable upon exercise of currently exercisable
options.
(9) Includes 485,198 shares issuable upon exercise of currently exercisable
options.
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation earned for the last
three fiscal years by the Company's Chief Executive Officer and other most
highly compensated executive officers, whose salary and bonus exceeded $100,000
for the 1997 fiscal year (the "Named Executive Officers"), for services in all
capacities to the Company during its 1997, 1996 and 1995 fiscal years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stephen Katz 1997 $150,000 $25,000 --
Chairman of the Board and Chief Executive 1996 78,000(1) -- 400,000
Officer
William H. Wood 1997 200,000 -- --
President 1996 200,000 -- --
1995 193,000 -- 50,000
Edward Seidenberg 1997 141,000 45,000 7,500
Chief Operating Officer and Vice President 1996 20,000(2) -- 50,000
Michael Walsh 1997 125,000 10,000 4,000
Vice President, Chief Scientist 1996 125,000 -- 8,000
1995 125,000 -- --
Robert W. Nader 1997 161,000 -- 7,500
Vice President, Market/Product 1996 112,000 -- 8,000
Development 1995 78,000 -- 30,000
</TABLE>
- --------------------------
(1) Represents compensation paid to Mr. Katz from May 1996, when he became
employed by the Company.
(2) Represents compensation paid to Mr. Seidenberg from August 1996, when he
became employed by the Company.
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<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
% OF TOTAL
OPTIONS
NUMBER OF SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES PRICE EXPIRATION
NAME OPTIONS GRANTED IN FISCAL YEAR ($/SHARE) DATE
- --------------------------------------------------------------------------------
Edward Seidenberg 7,500(1) 12.5% $11.5625 9/25/04
Michael Walsh 4,000(1) 6.7% $11.5625 9/25/04
Robert W. Nader 7,500(1) 12.5% $11.5625 9/25/04
- -----------------------
(1) The option was awarded at the fair market value of the Company's Common
Stock at September 26, 1997, the date of the award, and becomes exercisable
in cumulative annual installments of 25% per year on each of the first four
anniversaries of the grant date.
<TABLE>
<CAPTION>
AGGREGATED FISCAL YEAR END OPTION VALUES
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT IN-THE-MONEY OPTIONS
ON EXERCISE VALUE SEPTEMBER 30, 1997 SEPTEMBER 30, 1997
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE(1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stephen Katz 0 $ 0 400,000 0 $ 3,340,000 $ 0
William H. Wood 0 0 30,000 20,000 180,000 120,000
Edward Seidenberg 0 0 10,000 47,500 76,250 305,000
Michael Walsh 0 0 1,600 10,400 12,350 49,400
Robert W. Nader 0 0 19,600 25,900 120,350 121,400
</TABLE>
- --------------
(1) The closing price of the Company's Common Stock as reported on the Nasdaq
National Market on September 30, 1997 was $11.50 per share. Value is
calculated by multiplying (a) the difference between the closing price and
the option exercise price by (b) the number of shares of Common Stock
underlying the option.
COMPENSATION OF DIRECTORS
No director received compensation during the 1997 fiscal year for
services rendered as a director.
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<PAGE>
EMPLOYMENT AGREEMENTS
Effective September 30, 1997 the Company entered into an agreement with
Stephen Katz providing for his employment as Chief Executive Officer and
Chairman of the Board of Directors for a two-year term, with an automatic
extension for an additional one-year term unless either the Company or Mr. Katz
provides advance written notice of a desire to terminate the agreement. The
agreement provides for a salary at a rate of $150,000 per year and bonuses and
stock options as determined by the Board of Directors. To the extent Mr. Katz'
outstanding stock options to purchase an aggregate of 400,000 shares of Common
Stock previously granted under the Company's 1994 and 1996 Stock Option Plans
were not exercisable, such options became fully exercisable upon execution of
the agreement. The agreement also provides for participation in employee benefit
plans, the use of an automobile and other fringe benefits.
In January 1993 the Company entered into an agreement with William H.
Wood providing for his employment as President for a five-year term expiring on
January 31, 1998. The agreement provides for a base salary of $150,000 per year
for the first year of the term, $175,000 for the second year of the term and
$200,000 for each of the final three years of the term, as well as bonuses and
stock options as determined by the Board of Directors. The agreement also
provides for participation in employee benefit plans, the use of an automobile
and other fringe benefits.
In December 1994 the Company entered into an employment agreement with
Robert W. Nader providing for his employment as Vice President Market/Product
Development for a three-year term commencing in January 1995. The agreement
provides for a base salary of $100,000 for the first year of the term, $110,000
for the second year of the term and $120,000 for the final year of the term, as
well as bonuses and stock options as determined by the Board of Directors. The
agreement also provides for participation in employee benefit plans and other
fringe benefits.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases approximately 6,600 square feet in Valley Stream, New
York, from a company in which Stephen Katz, Chairman of the Board of Directors
and Chief Executive Officer of the Company, is a part owner. The lease, which
expires February 28, 2002, provides for an annual base rental of $150,000,
increasing annually to approximately $170,000 in the final year of the term. The
facility houses the executive, accounting and certain sales functions of the
Company. The Company believes that the terms of the lease are fair and
reasonable and as favorable to it as could be obtained from unaffiliated third
parties.
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<PAGE>
PROPOSAL 2
AMENDMENT TO THE COMPANY'S BY-LAWS
The Board of Directors has adopted an amendment to the Company's
By-laws, subject to stockholder approval, which provides for a classified Board
of Directors.
The following summary of the amendment does not purport to be complete
and is subject to and qualified in its entirety by reference to the By-law
amendment included as Exhibit A attached hereto.
CLASSIFIED BOARD OF DIRECTORS
The By-laws, as amended (the "Amended and Restated By-laws") provide
that the Board of Directors shall be divided into three classes of directors,
with each class containing as equal a number of directors as possible. After an
interim period of one year, all of the directors will be elected for three-year
terms and, beginning at the 1999 Annual Meeting of Stockholders, only one class
of directors will be nominated for election each year. Because only one class of
directors will be nominated for election in any given year, at least two years
would be required to effect a change in control of the Board of Directors. Under
the present By-laws of the Company, all directors are elected for a one-year
term, and only one year would be required to effect a change in control of the
Board of Directors. Under the Amended and Restated By-laws, vacancies which
occur during the year may be filled by the Board of Directors, but only to serve
until the next annual meeting of stockholders.
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote of a majority of the votes cast by the holders of
the shares of Common Stock present in person or represented by proxy at the
Annual Meeting will be required for approval of the amendment to the Company's
By-laws.
THE BOARD OF DIRECTORS BELIEVES THAT THE ADOPTION OF THE AMENDMENT TO
THE BY-LAWS IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS APPROVE THE AMENDMENT TO THE
BY-LAWS.
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<PAGE>
PROPOSAL 3
PROPOSAL TO AMEND THE 1994 STOCK OPTION PLAN
The Board of Directors has unanimously adopted, subject to stockholder
approval, an amendment to the Company's 1994 Stock Option Plan (the "1994 Plan")
to limit the number of shares for which options may be granted to any one
employee in any fiscal year of the Company to 200,000, subject to the
anti-dilution provisions of the 1994 Plan. Imposing such a limit is a
prerequisite for options which may be granted in the future under the 1994 Plan
to be considered "performance based compensation" under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), and is intended to
preserve the federal income tax deductibility by the Company of any compensation
expense that may arise from their exercise or disqualifying disposition of the
underlying shares.
The following summary of the 1994 Plan, as amended (the "Amended and
Restated Plan"), does not purport to be complete, and is subject to and
qualified in its entirety by reference to the full text of the Amended and
Restated Plan, set forth as Exhibit B attached hereto and made a part hereof. If
the amendment is not approved by stockholders, the 1994 Plan as in effect prior
to such amendment will continue in full force and effect.
THE AMENDED AND RESTATED 1994 STOCK OPTION PLAN
The following is a summary of certain terms of the Amended and Restated
Plan:
Types of Grants and Eligibility
-------------------------------
The Amended and Restated Plan is designed to attract and retain the best
qualified personnel for positions of substantial responsibility, to provide
additional incentive to employees (as defined in the Amended and Restated Plan)
of the Company or its subsidiaries, as well as other individuals who perform
services for the Company or its subsidiaries, and to promote the success of the
Company's business. The Amended and Restated Plan provides for the grant of
"incentive stock options" ("ISOs"), as defined in Section 422 of the Code, and
"non-qualified stock options" ("NQSOs"). ISOs may be granted only to employees.
NQSOs may be granted to employees, directors, independent contractors and agents
of the Company or its subsidiaries, as determined by a Committee (as defined
below).
Shares Subject to the Amended and Restated Plan
-----------------------------------------------
The aggregate number of shares of Common Stock for which options may be
granted under the Amended and Restated Plan may not exceed 300,000, subject to
the anti-dilution provisions of the Amended and Restated Plan. Any option which
expires or becomes unexercisable for any reason without having been exercised in
full shall become available for further grant under the Amended and Restated
Plan.
-15-
<PAGE>
Administration of the Amended and Restated Plan
-----------------------------------------------
The Amended and Restated Plan is administered by the Board of Directors,
which may appoint a committee to administer the Amended and Restated Plan on its
behalf, subject to such terms and conditions as the Board of Directors may
prescribe (the Board of Directors or the committees, as the case may be, the
"Committee"). The Committee must consist of not less than two directors, each of
whom shall be a "non-employee director" within the meaning of rules and
regulations promulgated by the Securities and Exchange Commission. The Committee
currently consists of Messrs. Ellis, Gerzof and Goldberg.
Subject to the provisions of the Amended and Restated Plan, the
Committee shall have the authority, in its discretion, to, among other things:
(i) grant ISOs or NQSOs; (ii) determine the fair market value of the Common
Stock; (iii) determine the exercise price per share of options to be granted;
(iv) determine the persons to whom options should be granted, the number of
shares subject to each option and the time of such grants; (v) interpret the
Amended and Restated Plan and prescribe, amend or rescind rules and regulations
relating thereto; (vi) determine the terms and provisions of each option
granted; (vii) with the consent of the holder thereof, modify or amend each such
option; and (viii) accelerate or defer the exercise date thereof.
Limitation on Options
---------------------
No ISO may be granted to an employee if, as the result of such grant,
the aggregate fair market value, determined at the time of grant, of the Common
Stock with respect to which such ISOs are exercisable for the first time by such
employee during any calendar year exceeds $100,000.
If the amendment is adopted by the stockholders, the maximum number of
shares of Common Stock for which options may be granted to any employee in any
fiscal year is 200,000.
Term
----
The term of each option is ten years from the date of grant, or such
shorter time as provided in the stock option contract. In the case of an ISO
granted to an employee who, immediately before such ISO is granted, owns or is
deemed to own stock representing more than 10% of the voting power of all
classes of the Company's stock, however, the term of the ISO is five years from
the date of grant, or such shorter time as provided in the option contract.
Exercise Price
--------------
The exercise price of the shares of Common Stock underlying each option
must be at least 100% of the fair market value of the Common Stock underlying
such option on the date of grant, except that in the case of an ISO granted to
an employee who immediately before such grant owns or is deemed to own stock
representing more than 10% of the voting power of all classes of
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<PAGE>
stock of the Company the exercise price shall be no less than 110% of the fair
market value per share on the date of grant.
Exercise
--------
An option is deemed exercised when written notice of such exercise has
been given to the Company by the optionee and full payment for the shares of
Common Stock underlying the option has been received by the Company. Full
payment may consist of: (i) cash, check or promissory note; (ii) other shares of
Common Stock owned by the employee having a fair market value on the date of
surrender equal to the aggregate exercise price of the shares of Common Stock as
to which such option shall be exercised; (iii) an assignment by the employee of
the net proceeds to be received from a registered broker upon the sale of the
underlying shares of Common Stock, or the proceeds of a loan from such broker in
such amount; and (iv) any combination of the above. An option may not be
exercised for a fraction of a share of Common Stock.
Termination of Employee Status or Disability
--------------------------------------------
Any employee who ceases to serve as an employee, for any reason other
than permanent disability or death, may exercise his option within 30 days, or
such other period of time not exceeding three months, as determined by the
Committee, after the date he ceases to be an employee of the Company, to the
extent that such option was exercisable as of the termination date. To the
extent such optionee was not entitled to exercise the option as of such
termination date, or if he does not exercise an otherwise exercisable option
within the time period specified herein, the option shall terminate.
In the event an employee is unable to continue his employment with the
Company as a result of his total and permanent disability, as defined in the
Code, he may exercise his option within three months or such other period of
time not exceeding 12 months, as determined by the Committee, from the date of
disability, to the extent that such option was exercisable as of the date of
disability. To the extent such optionee was not entitled to exercise the option
as of such date of disability, or if he does not exercise an otherwise
exercisable option within the time period specified herein, the option shall
terminate.
The termination of the relationship with the Company of an optionee who
is not an employee shall not affect the option held by such optionee, except as
otherwise provided by the Committee.
Death of Optionee
-----------------
In the event of the death of an optionee during the term of the option
who at the time of death is an employee and has had continuous status as an
employee since the date of grant, the option may be exercised at any time within
12 months following the date of death by the optionee's
-17-
<PAGE>
estate or by a person who acquired the right to exercise that would have accrued
had the optionee continued living and serving continuously as an employee one
month after the date of death.
In the event of the death of an optionee within 30 days, or such other
period of time not exceeding three months, as determined by the Committee, after
the termination of his continuous status as an employee, for reasons other than
death, an option may be exercised by the optionee's estate or by a person who
acquired the right to exercise the option by bequest or inheritance, but only to
the extent that the option was exercisable at the date of termination.
Non-transferability of Options
------------------------------
No option granted may be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
optionee, only by such optionee.
Adjustments Upon Changes in Common Stock
----------------------------------------
Subject to any required action by Company stockholders, in the event of
any change in the outstanding Common Stock as a result of a stock split or
payment of a stock dividend or any other increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company, the number of shares of Common Stock covered by each outstanding option
and the number of shares of Common Stock which have been authorized for issuance
under the Amended and Restated Plan but as to which no options have been granted
or which have been returned to the plan upon cancellation or expiration of an
option, as well as the price per share of Common Stock covered by each
outstanding option, shall be proportionately adjusted by the Committee.
In the event of dissolution or liquidation of the Company, a proposed
sale of all or substantially all of the assets of the Company or the merger of
the Company with or into another corporation, the Committee shall, as to
outstanding options, either: (i) make appropriate provision for the protection
of any such outstanding options by the substitution on an equitable basis of
appropriate stock of the Company or of the merged or otherwise reorganized
corporation which will be issuable in respect to shares of the Company's Common
Stock, provided that the excess of the aggregate fair market value of the shares
subject to the options immediately after such substitution over the purchase
price thereof is not more than the excess of the aggregate fair market value of
the shares subject to such options immediately before such substitution over the
purchase price thereof; or (ii) upon written notice to an optionee provide that
all unexercised options must be exercised within a specified number of days of
the date of such notice, or they will be terminated. The Committee has the
discretion to advance the lapse of any waiting or installment periods and
exercise dates.
-18-
<PAGE>
Amendment and Termination
-------------------------
The Amended and Restated Plan will continue in effect until October 17,
2004, unless sooner terminated. The Committee may amend or terminate the Amended
and Restated Plan from time to time in such respects as it may deem advisable;
provided, however, that (i) any increase in the number of shares of Common Stock
subject to the Amended and Restated Plan, other than in connection with an
adjustment as provided by the Amended and Restated Plan, or (ii) any change in
the designation of the class of persons eligible to be granted options requires
approval of the holders of a majority of the outstanding shares of the Company
entitled to vote on such matters. Any amendment or termination shall not affect
options already granted, which options shall remain in full force and effect as
if such amendment or termination had not occurred, unless mutually agreed upon
in writing by the Company and the optionee.
Federal Income Tax Treatment
----------------------------
The following is a general summary of the federal income tax
consequences under current tax law of ISOs and NQSOs. It does not purport to
cover all of the special rules, including the exercise of an option with
previously acquired shares, or the state or local income or other tax
consequences inherent in the ownership and exercise of stock options and the
ownership and disposition of the underlying shares.
An optionee will not recognize taxable income for federal income tax
purposes upon the grant of an ISO or NQSO.
Upon the exercise of an ISO, the optionee will not recognize taxable
income. If the optionee disposes of the shares acquired pursuant to the exercise
of an ISO more than two years after the date of grant and more than one year
after the transfer of the shares to him, the optionee will recognize long-term
capital gain or loss and the Company will not be entitled to a deduction.
However, if the optionee disposes of such shares within the required statutory
holding period, all or a portion of the gain will be treated as ordinary income
and the Company will generally be entitled to deduct such amount. Long-term
capital gain of a non-corporate taxpayer is generally subject to more favorable
tax treatment than ordinary income or short-term capital gain. Such long-term
capital gain is generally subject to a 20% maximum federal income tax rate if
the shares are held for more than 18 months and a 28% maximum tax rate if the
shares are held for more than 12 months but not greater than 18 months.
Upon the exercise of a NQSO, the optionee will recognize ordinary income
in an amount equal to the excess, if any, of the fair market value of the shares
acquired on the date of exercise over the exercise price thereof and the Company
will generally be entitled to a deduction for such amount at that time. If the
optionee later sells shares acquired pursuant to the exercise of a NQSO, he will
recognize long-term or short-term capital gain or loss, depending on the period
for which the shares were held.
-19-
<PAGE>
In addition to the federal income tax consequences described above, an
optionee may be subject to the alternative minimum tax, which is payable to the
extent it exceeds the optionee's regular tax. For this purpose, upon the
exercise of an ISO the excess of the fair market value of the shares over the
exercise price thereof is an adjustment which increases alternative minimum
taxable income. In addition, the optionee's basis in such shares is increased by
such excess for purposes of computing the gain or loss on the disposition of the
shares for alternative minimum tax purposes. If an optionee is required to pay
an alternative minimum tax, the amount of such tax which is attributable to
deferral preferences (including the ISO adjustment) is allowed as a credit
against the optionee's regular tax liability in subsequent years. To the extent
the credit is not used, it is carried forward.
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote of a majority of the votes cast by the holders of
the shares of Common Stock present in person or represented by proxy at the
Annual Meeting will be required for approval of the amendment to the 1994 Plan.
THE BOARD OF DIRECTORS BELIEVES THAT AMENDING THE 1994 PLAN IS IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS
THAT THE STOCKHOLDERS APPROVE THE AMENDMENT TO THE 1994 PLAN.
INDEPENDENT AUDITORS
Arthur Andersen LLP has audited and reported upon the financial
statements of the Company for the fiscal year ended September 30, 1997. It is
currently anticipated that Arthur Andersen LLP will be selected by the Board of
Directors to examine and report on the financial statements of the Company for
the year ending September 30, 1998. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting, will have the opportunity to make
a statement if they desire to do so and are expected to be available to respond
to appropriate questions.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the Company's Annual
Meeting to be held in 1999 must be received by the Company for inclusion in the
Company's proxy statement relating to that meeting not later than October 2,
1998. Such proposals should be addressed to Secretary, Global Payment
Technologies, Inc., 20 East Sunrise Highway, Suite 201, Valley Stream, New York
11581.
-20-
<PAGE>
OTHER INFORMATION
AN ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED SEPTEMBER 30, 1997
IS BEING FURNISHED HEREWITH TO EACH STOCKHOLDER OF RECORD AS OF THE CLOSE OF
BUSINESS ON JANUARY 23, 1998. COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM
10-KSB WILL BE PROVIDED FREE OF CHARGE UPON WRITTEN REQUEST TO:
GLOBAL PAYMENT TECHNOLOGIES, INC.
20 EAST SUNRISE HIGHWAY, SUITE 201
VALLEY STREAM, NEW YORK 11581
ATTENTION: THOMAS MCNEILL, SECRETARY
IN ADDITION, COPIES OF ANY EXHIBITS TO THE ANNUAL REPORT ON FORM 10-KSB
WILL BE PROVIDED FOR A NOMINAL CHARGE TO STOCKHOLDERS WHO MAKE A WRITTEN REQUEST
TO THE COMPANY AT THE ABOVE ADDRESS.
The Board of Directors is aware of no other matters, except for those
incident to the conduct of the Annual Meeting, that are to be presented to
stockholders for formal action at the Annual Meeting. If, however, any other
matters properly come before the Annual Meeting or any adjournments thereof, it
is the intention of the persons named in the proxy to vote the proxy in
accordance with their judgment.
By order of the Board
of Directors
Thomas McNeill
Secretary
January 26, 1998
-21-
<PAGE>
PROXY CARD
PROXY PROXY
GLOBAL PAYMENT TECHNOLOGIES, INC.
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned holder of Common Stock of GLOBAL PAYMENT TECHNOLOGIES,
INC., revoking all proxies heretofore given, hereby constitutes and appoints
Stephen Katz and Edward Seidenberg, and each of them, Proxies, with full power
of substitution, for the undersigned and in the name, place and stead of the
undersigned, to vote all of the undersigned's shares of said stock, according to
the number of votes and with all the powers the undersigned would possess if
personally present, at the 1997 Annual Meeting of Stockholders of GLOBAL PAYMENT
TECHNOLOGIES, INC., to be held at the Garden City Hotel, 45 7th Street, Garden
City, New York 11530, on Tuesday, March 10, 1998 at 10:00 a.m., Eastern Standard
time, and at any adjournments or postponements thereof.
The undersigned hereby acknowledges receipt of the Notice of Meeting and
Proxy Statement relating to the meeting and hereby revokes any proxy or proxies
heretofore given.
Each properly executed Proxy will be voted in accordance with the
specifications made below and in the discretion of the Proxies on any other
matter that may come before the meeting. Where no choice is specified, this
Proxy will be voted FOR all listed nominees to serve as directors and FOR each
of the proposals set forth below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL LISTED NOMINEES AND FOR EACH OF
PROPOSALS 2 AND 3
1. Election of |_| FOR all nominees listed |_| WITHHOLD AUTHORITY
seven Directors. (except as marked to to vote for all
the contrary) listed nominees
Nominees: Stephen Katz, William H. Wood, Edward Seidenberg,
Henry B. Ellis, Richard E. Gerzof, Jay Goldberg and Martin H.
Kern
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, CIRCLE THAT NOMINEE'S NAME IN THE LIST PROVIDED ABOVE.)
PLEASE MARK, DATE AND SIGN THIS PROXY ON THIS AND THE REVERSE SIDE
<PAGE>
2. Proposal to approve an amendment to the Company's By-laws to provide for a
classified Board of Directors.
|_| FOR |_| AGAINST |_| ABSTAIN
3. Proposal to amend the Company's 1994 Stock Option Plan to limit the
number of shares for which options may be granted to any one individual
in any fiscal year to 200,000.
|_| FOR |_| AGAINST |_| ABSTAIN
4. The Proxies are authorized to vote in their discretion upon such other
matters as may properly come before the meeting.
The shares represented by this proxy
will be voted in the manner directed. In the
absence of any direction, the shares will be
voted FOR each nominee named in Proposal 1 and
FOR each of Proposals 2 and 3 and in accordance
with their discretion on such other matters as
may properly come before the meeting.
Dated ____________________________________, 1998
________________________________________________
Signature(s)
(Signature(s) should conform to names as
registered. For jointly owned shares, each owner
should sign. When signing as attorney, executor,
administrator, trustee, guardian or officer of a
corporation, please give full title).
PLEASE MARK AND SIGN ABOVE AND
RETURN PROMPTLY
<PAGE>
EXHIBIT A
---------
GLOBAL PAYMENT TECHNOLOGIES, INC.
AMENDED AND RESTATED BY-LAWS
ARTICLE III
MEETINGS OF STOCKHOLDERS
2. The annual meeting of stockholders shall be held on such day and
at such time as may be determined from time to time by resolution of the Board
of Directors. Any proper business may be transacted at the annual meeting.
ARTICLE IV
DIRECTORS
2. Except as otherwise provided by these By-laws, the directors
shall be divided, with respect to the time for which they severally hold office,
into three classes, as nearly equal in number as possible, with the term of
office of the first class to expire at the 1999 Annual Meeting of Stockholders,
the term of office of the second class to expire at the 2000 Annual Meeting of
Stockholders and the term of office of the third class to expire at the 2001
Annual Meeting of Stockholders. Each director shall hold office until his
respective successor has been duly elected and qualified. At each Annual Meeting
of Stockholders, commencing with the 1999 Annual Meeting, directors elected to
succeed those directors whose terms then expire shall be elected for a term of
office to expire at the third succeeding Annual Meeting of Stockholders after
their election, with the directors to hold office until their respective
successors shall have been duly elected and qualified.
<PAGE>
EXHIBIT B
---------
GLOBAL PAYMENT TECHNOLOGIES, INC.
AMENDED AND RESTATED
1994 STOCK OPTION PLAN
1. PURPOSES. The purposes of this Stock Option Plan are to attract
and retain the best qualified personnel for positions of substantial
responsibility, to provide additional incentive to the Employees of the Company
or its Subsidiaries, if any (as defined in Section 2 below), as well as other
individuals who perform services for the Company or its Subsidiaries, and to
promote the success of the Company's business.
Options granted hereunder may be either "incentive stock options", as
defined in Section 422 of the Internal Revenue Code of 1986, as amended, or
"non-qualified stock options", at the discretion of the Board and as reflected
in the terms of the written instrument evidencing an Option.
2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "BOARD" shall mean the Committee, if one has been
appointed, or the Board of Directors of the Company, if no Committee is
appointed.
(b) "COMMON STOCK" shall mean the Common Shares of the
Company (par value $.01 per share).
(c) "COMPANY" shall mean Global Payment Technologies, Inc.,
a Delaware corporation.
(d) "COMMITTEE" shall mean the Committee appointed by the
Board of Directors in accordance with paragraph (a) of Section 4 of the Plan, if
one is appointed.
(e) "CONTINUOUS STATUS AS AN EMPLOYEE" shall mean the
absence of any interruption or termination of service as an Employee. Continuous
Status as an Employee shall not be considered interrupted in the case of sick
leave, military leave, or any other leave of absence approved by the Board.
(f) "EMPLOYEE" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(g) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
<PAGE>
(h) "INCENTIVE STOCK OPTION" shall mean a stock option
intended to qualify as an incentive stock option within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended.
(i) "NON-QUALIFIED STOCK OPTION" shall mean a stock option
not intended to qualify as an Incentive Stock Option.
(j) "OPTION" shall mean a stock option granted pursuant to
the Plan.
(k) "OPTIONED STOCK" shall mean the Common Stock subject to
an Option.
(l) "OPTIONEE" shall mean an Employee or other person who
receives an Option.
(m) "PARENT" shall mean a "parent corporation", whether now
or hereafter existing, as defined in Section 424(e) of the Internal Revenue Code
of 1986, as amended.
(n) "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
(o) "SEC" shall mean the Securities and Exchange Commission.
(p) "SHARE" shall mean a share of the Common Stock, as
adjusted in accordance with Section 11 of the Plan.
(q) "SUBSIDIARY" shall mean a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended.
3. STOCK.
Subject to the provisions of Section 11 of the Plan, the maximum
aggregate number of shares which may be optioned and sold under the Plan is
300,000 shares of Common Stock. If an Option should expire or become
unexercisable for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless the Plan shall have
been terminated, become available for further grant under the Plan.
4. ADMINISTRATION.
(a) PROCEDURE. The Company's Board of Directors may appoint
a Committee to administer the Plan. The Committee shall consist of not less than
two members of the Board of Directors, each of whom shall be a "non-employee
director" within the meaning of Rule 16b-3 or its successors under the Exchange
Act who shall administer the Plan on behalf of the Board of Directors, subject
to such terms and conditions as the Board of Directors may prescribe. Once
appointed, the Committee shall continue to serve until otherwise directed by the
Board of Directors. From time to time the Board of Directors may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause), and appoint new members in substitution therefor,
<PAGE>
fill vacancies, however caused, or remove all members of the Committee and
thereafter directly administer the Plan.
(b) POWERS OF THE BOARD. Subject to the provisions of the
Plan, the Board shall have the authority, in its discretion: (i) to grant
Incentive Stock Options, in accordance with Section 422 of the Internal Revenue
Code of 1986, as amended, or to grant Non-qualified Stock Options; (ii) to
determine, upon review of relevant information and in accordance with Section
8(b) of the Plan, the fair market value of the Common Stock; (iii) to determine
the exercise price per share of Options to be granted which exercise price shall
be determined in accordance with Section 8(a) of the Plan; (iv) to determine the
persons to whom, and the time or times at which, Options shall be granted and
the number of shares subject to each Option; (v) to interpret the Plan; (vi) to
prescribe, amend and rescind rules and regulations relating to the Plan; (vii)
to determine the terms and provisions of each Option granted (which need not be
identical) and, with the consent of the holder thereof, modify or amend each
Option; (viii) to accelerate or defer (with the consent of the Optionee) the
exercise date of any Option; (ix) to authorize any person to execute on behalf
of the Company any instrument required to effectuate the grant of an Option
previously granted by the Board; and (x) to make all other determinations deemed
necessary or advisable for the administration of the Plan.
(c) EFFECT OF THE BOARD'S DECISION. All decisions,
determinations, and interpretations of the Board shall be final and binding on
all Optionees and any other holders of any Options granted under the Plan.
5. ELIGIBILITY; NON-DISCRETIONARY GRANTS.
(a) GENERAL. Incentive Stock Options may be granted only to
Employees. Non- qualified Stock Options may be granted to Employees as well as
directors (subject to the limitations set forth in Section 4), independent
contractors and agents, as determined by the Board. Any person who has been
granted an Option may, if he is otherwise eligible, be granted an additional
Option or Options. The Plan shall not confer upon any Optionee any right with
respect to continuation of employment by the Company, nor shall it interfere in
any way with his right or the Company's right to terminate his employment at any
time.
(b) LIMITATION ON INCENTIVE STOCK OPTIONS. No Incentive
Stock Option may be granted to an Employee if, as the result of such grant, the
aggregate fair market value (determined at the time each option was granted) of
the Shares with respect to which such Incentive Stock Options are exercisable
for the first time by such Employee during any calendar year (under all such
plans of the Company and any Parent and Subsidiary) shall exceed One Hundred
Thousand Dollars ($100,000).
(c) ANNUAL LIMITATION ON ALL STOCK OPTIONS. No Option may be
granted to any Employee in any fiscal year if, as a result of such grant, the
aggregate number of shares subject to options granted to such Employee that year
(under all such plans of the Company and any Parent or Subsidiary) exceeds
200,000 shares subject to the anti-dilution provisions of this Plan (Section
11).
<PAGE>
6. TERM OF THE PLAN. The Plan shall become effective upon the
earlier to occur of (i) its adoption by the Board of Directors, or (ii) its
approval by vote of the holders of a majority of the outstanding shares of the
Company entitled to vote on the adoption of the Plan. The Plan shall continue in
effect until October 17, 2004 unless sooner terminated under Section 13 of the
Plan.
7. TERM OF THE OPTION. The term of each Option shall be ten (10)
years from the date of grant hereof or such shorter term as may be provided in
the instrument evidencing the Option. However, in the case of an Incentive Stock
Option granted to an Employee who, immediately before the Incentive Stock Option
is granted, owns (or is deemed to own) stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the term of the Incentive Stock Option shall be five (5) years
from the day of grant thereof or such shorter time as may be provided in the
instrument evidencing the Option.
8. EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price for the Shares to be issued
pursuant to the exercise of an Option shall be such price as is determined by
the Board of Directors, but shall be subject to the following:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, immediately
before the grant of such Incentive Stock Option, owns
(or is deemed to own) stock representing more than ten
percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of
the fair market value per Share on the date of grant, as
the case may be;
(B) granted to an Employee not subject to the
provisions of Section 8(a)(i)(A), the per Share exercise
price shall be no less than one hundred percent (100%)
of the fair market value per Share on the date of grant.
(ii) In the case of a Non-qualified Stock Option, the
per Share exercise price shall be no less than one hundred
percent (100%) of the fair market value per Share on the date of
grant.
(b) The fair market value shall be determined by the Board
in its discretion; provided, however, that where there is a public market for
the Common Stock, the fair market value per Share shall be the mean of the bid
and asked prices or, if applicable, the closing price of the Common Stock on the
date of grant, as reported by the National Association of Securities Dealers
Automated Quotation (NASDAQ) System or, in the event the Common Stock is listed
on a stock exchange, the fair market value per Share shall be the closing price
on such exchange on the date of grant of the Option, as reported in the Wall
Street Journal.
<PAGE>
(c) The consideration to be paid for the Shares to be issued
upon exercise of an Option or in payment of any withholding taxes thereon,
including the method of payment, shall be determined by the Board and may
consist entirely of (i) cash, check or promissory note; (ii) other Shares of
Common Stock owned by the Employee having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised; (iii) an assignment by the Employee of the net
proceeds to be received from a registered broker upon the sale of the Shares or
the proceeds of a loan from such broker in such amount; or (iv) any combination
of such methods of payment, or such other consideration and method of payment
for the issuance of Shares to the extent permitted under Delaware law and
meeting rules and regulations of the SEC to plans meeting the requirements under
Rule 16b-3 under the Exchange Act.
9. EXERCISE OF OPTION.
(a) PROCEDURE OR EXERCISE; RIGHTS AS A STOCKHOLDER. Any
Option granted hereunder shall be exercisable at such times and subject to such
conditions as may be determined by the Board, including performance criteria
with respect to the Company and/or the Optionee, and as shall be perishable
under the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
instrument evidencing the Option by the person entitled to exercise the Option
and full payment for the Shares with respect to which the Option is exercised
has been received by the Company. Full payment may, as authorized by the Board,
consist of any consideration and method of payment allowable under Section 8(c)
of the Plan; it being understood that the Company shall take such action as may
be reasonably required to permit use of an approved payment method. Until the
issuance, which in no event will be delayed more than (30) days from the date of
the exercise of the Option (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), of the
stock certificate evidencing such Shares, no right to vote or receive dividends
or any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF STATUS AS AN EMPLOYEE. If any Employee
ceases to serve as an Employee, he may, but only within thirty (30) days (or
such other period of time not exceeding three (3) months as is determined by the
Board) after the date he ceases to be an Employee of the Company, exercise his
Option to the extent that he was entitled to exercise it as of the date of such
termination. To the extent that he was not entitled to exercise the Option at
the date of such termination, or if he does not exercise such Option (which he
was entitled to exercise) within the time specified herein, the Option shall
terminate.
<PAGE>
(c) Notwithstanding the provisions of Section 9(b) above, in
the event an Employee is unable to continue his employment with the Company as a
result of his total and permanent disability (as defined in Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended), he may, but only within three
(3) months (or such other period of time not exceeding twelve (12) months as is
determined by the Board) from the date of disability, exercise his Option to the
extent he was entitled to exercise it at the date of such disability. To the
extent that he was not entitled to exercise it at the date of such disability,
or if he does not exercise such Option (which he was entitled to exercise)
within the time specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an
Optionee:
(i) during the term of the Option who is at the time
of his death an Employee of the Company and who
shall have been in Continuous Status as an
Employee since the date of grant of the Option,
the Option may be exercised, at any time within
twelve (12) months following the date of death,
by the Optionee's estate or by a person who
acquired the right to exercise that would have
accrued had the Optionee continued living in
Continuous Status one (1) month after the date
of death; or
(ii) within thirty (30) days (or such other period of
time not exceeding three (3) months as is
determined by the Board) after the termination
of Continuous Status as an Employee (other than
due to death), the Option may be exercised by
the Optionee's estate or by a person who
acquired the right to exercise the Option by
bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the
date of termination.
(e) The termination of the relationship of an Optionee, who
is not an Employee, with the Company or any Parent or Subsidiary shall not
affect the Option held by such Optionee, except as the Board may otherwise
provide.
10. NON-TRANSFERABILITY OF OPTIONS. No Option may be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to
any required action by the Stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split or the payment of a stock dividend with
respect to the Common Stock or any other
<PAGE>
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration". Such adjustment shall be
made by the Board, whose determination in that respect by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company,
or in the event of a proposed sale of all or substantially all of the assets of
the Company, or the merger of the Company with or into another corporation, the
Board shall, as to outstanding Options, either (i) make appropriate provision
for the protection of any such outstanding Options by the substitution on an
equitable basis of appropriate stock of the Company or of the merged,
consolidated or otherwise reorganized corporation which will be issuable in
respect to one share of Common Stock of the Company; provided, only that the
excess of the aggregate fair market value of the shares subject to the Options
immediately after such substitution over the purchase price thereof is not more
than the excess of the aggregate fair market value of the shares subject to such
Options immediately before such substitution over the purchase price thereof, or
(ii) upon written notice to an Optionee, provided that all unexercised Options
must be exercised within a specified number of days of the date of such notice
or they will be terminated. In any such case, the Board may, in its discretion,
advance the lapse of any waiting or installment periods and exercise dates.
12. TIME FOR GRANTING OPTIONS. The date of grant of an Option shall,
for all purposes, be the later of (a) the date on which the Board makes the
determination granting such Option or (b) the date on which all conditions to
the Option grant have been satisfied. Notice of the determination shall be given
to each person to whom an Option is so granted within a reasonable time after
the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) The Board may amend or terminate the Plan from time to
time in such respects as the Board may deem advisable; provided, however, that
the following revisions or amendments shall require approval of the holders of a
majority of the outstanding shares of the Company entitled to vote:
(i) any increase in the number of Shares subject to
the Plan, other than in connection with an
adjustment under Section 11 of the Plan; or
(ii) any change in the designation of the class of
persons eligible to be granted options.
(b) STOCKHOLDER APPROVAL. If any amendment requiring
stockholder approval under Section 13(a) of the Plan is made, such stockholder
approval shall be solicited as described in Section 17(a) of the Plan.
<PAGE>
(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment
or termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares, if in the opinion of
counsel for the Company, such a representation is required by, or appropriate
under, any of the aforementioned relevant provisions of law.
15. RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
16. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
17. STOCKHOLDER APPROVAL. Continuation of the Plan shall be subject
to approval by the stockholders of the Company within twelve (12) months before
or after the date the Plan is adopted. If such stockholder approval is obtained
at a duly held stockholders' meeting, it may be obtained by the affirmative vote
of the holders of a majority of the outstanding shares of the Company entitled
to vote thereon. The approval of such stockholders of the Company shall be (a)
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder, or (b) solicited after the
Company has furnished in writing to the holders entitled to vote substantially
the same information concerning the Plan as that which would be required by the
rules and regulations in effect under Section 14(a) of the Exchange Act at the
time such information is furnished.
18. OTHER PROVISIONS. The Stock Option Agreement authorized under
the Plan shall contain such other provisions, including, without limitations,
restrictions upon the exercise of
<PAGE>
the Option, as the Board of Directors shall deem advisable. Any Stock Option
Agreement with respect to an Incentive Stock Option shall contain such
limitations and restrictions upon the exercise of the Incentive Stock Option as
shall be necessary in order that such option will be an Incentive Stock Option
as defined in Section 422 of the Internal Revenue Code of 1986, as amended.
19. INDEMNIFICATION OF BOARD. In addition to such other rights of
indemnification as they may have as directors or as members of the Board of
Directors, the members of the Board shall be indemnified by the Company against
the reasonable expenses, including attorneys' fees actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action that such Board member is liable for
negligence or misconduct in the performance of his duties, provided that within
sixty (60) days after institution of any such action, suit or proceeding a Board
member shall, in writing, offer the Company the opportunity, at its own expense,
to handle and defend the same.
20. OTHER COMPENSATION PLANS. The adoption of the Plan shall not
affect any other stock option or incentive or other compensation plans in effect
for the Company or any Subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees
and directors of the Company or any Subsidiary.
21. COMPLIANCE WITH EXCHANGE ACT RULE 16B-3. With respect to persons
subject to Section 16 of the Exchange Act, transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provision of the Plan or
action by the Board fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Board.
22. SINGULAR, PLURAL; GENDER. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender.
23. HEADINGS, ETC., NO PART OF PLAN. Headings of Articles and
Sections hereof are inserted for convenience and reference; they constitute no
part of the Plan.
24. EFFECT OF STOCK SPLIT. The maximum aggregate number of shares
which may be optioned and sold under the Plan as set forth in Section 3 hereof
reflects the effect of that certain two-for-one stock split by dividend issued
to all of the Company's shareholders of record on August 18, 1997.
